In Union Budget 2023 Detailed Analysis Noexp

Union Budget 2023
India’s spectrum of
opportunities
February 2023
Economic Direct Indirect Policy Industry Glossary
indicators tax taxes updates impact
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Economic indicators Direct tax Indirect taxes Policy updates Industry impact Glossary
Economic indicators
The economy is expected to grow 7.0 percent
in FY23, followed by 6.0-6.8 percent in FY24.
Early signs of easing domestic inflation,

possibly fewer rate hikes by the RBI, and stable
crude oil prices bode well for growth in FY24.
In FY24, geopolitical uncertainties, global

slowdown, higher inflation and tighter
monetary policies by major central banks
weigh on India’s outlook.
3
Economy: A quick snapshot of the current status

Weak outlook Strong outlook Neutral outlook
GDP growth Inflation Credit growth** Fiscal deficit
The Economy Survey expects GDP to grow by CPI averaged between April and December 2022 Credit growth in the commercial sector was The early estimates suggest that the government
7.0 percent in FY23. Uncertain demand, cost at 6.8 percent compared with 5.2 percent in the 13.2 percent during April–December 2022 is likely to meet its targeted fiscal deficit of
pressures, and supply bottlenecks impacted previous period. Prices started easing since against 6.9 percent in the same period last year. 6.4 percent in FY23, owing to strong tax
manufacturing. Improved mobility aided in November 2022 and stood at 5.7 percent in So far, rising policy rates have not dampened revenues. However, lower inflation will likely
services growth. December 2022. credit growth. reduce tax collections, widening the deficit.
What to expect in FY24 What to expect in FY24 What to expect in FY24 What to expect in FY24
Global slowdown and tightening fiscal Global inflation, high oil prices, a strong dollar, Demand for credit may not be as affected by The fiscal deficit is estimated to be 5.9 percent
conditions weigh on the outlook. The economy and supply-chain disruptions may keep inflation rising borrowing costs because of falling prices of GDP in FY24. The government intends to bring
is likely to grow 6.0-6.8 percent in FY24. relatively high but not as much as last year. and pick up in private capital expenditure. the fiscal deficit below 4.5 percent of the GDP by
FY26.
Government’s 10-year
Rupee Current account deficit FDI
security yields
The Indian rupee depreciated nearly India’s current account deficit widened to Net FDI inflow to India fell marginally to
India’s bond yields averaged 7.3 percent
10.8 percent, during January–December 2022, 3.3 percent of GDP in H1 FY23, compared with US$20.0 billion in H1 FY23 as against US$20.3
during April–December 2022 from
due to the strengthening of the US dollar and 0.2 percent of GDP in H1 FY22, because of rising billion in H1 FY22. FDI inflows have tempered
6.2 percent in the same period, the previous
capital outflows. However, it appreciated against merchandise trade deficit and increase in since US Fed’s tightening and the Russia-
year.
the EUR, GBP, and YEN. payments of investment income. Ukraine crisis.
What to expect in FY24
What to expect in FY24 What to expect in FY24 What to expect in FY24
Yields may remain volatile because of global
Global uncertainties may result in continued The current account may deteriorate further FDI is expected to remain volatile due to
uncertainties and inflation concerns. A strong
dollar appreciation. That said, a strong growth owing to rising import bills (due to higher oil global slowdown concerns and falling liquidity
domestic outlook may help bring down yields.
outlook may keep INR steady in FY24. prices and depreciating INR) and falling exports post the monetary policy tightening in
(due to a global slowdown). advanced countries.
Note: **Domestic credit is summation of net bank credit to government and bank credit to commercial sector. Growth is measured on year-on-year basis on real values, wherever applicable.
Sources: CMIE, RBI
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Economy is projected to grow by 7.0 percent in FY23; 6.0-6.8 percent in FY24

Higher capital spending and improving FDI flows to sustain India’s growth
Growth drivers Downside economic risks % YoY The four growth engines of real GDP % YoY
The consumer demand especially from the affluent class remains The year 2022 saw global inflation touch historic highs and central 100 Private consumption Government consumption 40
strong. High tax collections will enable the government to incur capex banks of advanced economies tighten their monetary policies Total fixed investment Exports, goods, and services
spending, thereby cushioning the impact of the global slowdown. The aggressively. Tighter liquidity conditions have impacted credit 20
50 GDP (RHS)
continued emphasis on infrastructure spending, reforms, and demand in these countries, while risk aversion has led to a slowdown
logistics schemes is likely to kickstart the private capex spending. in private investments. Wages and jobs have been impacted as well, 0
although the labour market in industrial countries remains tight.
The private sector, which is yet to boost investment sustainably, has a 0
healthy balance sheet. A sustained demand recovery and improved Global exigencies weigh on India’s outlook. The INR has depreciated -20
business environment may encourage them to invest later next year. by 10.8 percent during January-December 2022, owing to the rise in
Government incentives, such as the PLI scheme are likely to boost the US$ index and capital outflows. With demand for exports likely to -50 -40
manufacturing, especially in sunrise sectors, and create jobs. fall, a depreciated currency, higher oil prices, and a stronger Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
domestic economy will raise imports more than exports in H1 FY24, FY18 FY19 FY20 FY21 FY22 FY23
Exports did well last year but is expected to slow down due to global
further widening CAD significantly. Capital outflows along with a
exigencies. Imports may remain strong because of a relatively strong
widening CAD could pressure INR valuation against US$ (and a IMF GDP Forecasts
economy and higher energy prices. This may pressure the CAD, which
vicious cycle of depreciated INR and higher CAD). Consequently, the
has increased over the past few quarters. 2022 2023 2024
RBI may have to intervene to stabilise currency, leading to a fall in (Estimate) (Forecast) (Forecast)
The FDI is showing recent signs of improvement. Additionally, FDI foreign exchange reserves. World 3.4 2.9 3.1
inflow from Japan, Singapore, the UK, and the UAE in H1 FY23 have Advanced
Inflation has eased over the past two months and remained in the 2.7 1.2 1.4
been upbeat even as inflows from the US have slowed down. India’s economies
tolerance range of the RBI. However, it is expected to remain high in
recent trade agreements aimed at integrating the manufacturing US 2.0 1.4 1.0
FY24 due to high oil prices, a strong dollar, and supply-chain
sector with the global supply chain may further diversify investments Euro Area 3.5 0.7 1.6
disruptions. As the economy recovers, it may further add to
and boost long-term growth. Germany 1.9 0.1 1.4
inflationary pressure. It will be a tightrope walk for the RBI as it will
have to balance growth and inflation objectives. A tighter credit UK 4.1 -0.6 0.9
condition may delay strong recovery, while not tightening it enough Japan 1.4 1.8 0.9
could result in inflation spiralling up. China 3.0 5.2 4.5
Emerging market
Despite the government’s focus on job creation, wage growth and developing 3.9 4.0 4.2
continues to fall behind the inflation rate. India needs more economies
employment, or it will impact household demand and pose a long-
Source: CMIE, RBI, IMF Forecasts
term risk to the biggest growth driver—private consumption
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Balanced monetary and fiscal policies will be key to improving GDP growth
The RBI will keep a close eye on the growth-inflation dynamics while calibrating monetary policy
Monetary policy Fiscal policy % YoY Consumer price inflation

The US Fed increased policy rates by 425 bps in a span of 10 months The government estimates the fiscal deficit to be at 6.4 percent of
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in 2022. With the signs of inflation peaking, there are speculations the GDP in FY23 and 5.9 percent in FY24. The FM announced the CPI: overall Core Food
that the Fed may go for fewer policy rate hikes this year. path of fiscal consolidation, reaching a fiscal deficit below 4.5 percent 14
by 2025-26 with a fairly steady decline over the period. 12
During the same period, the RBI also increased policy rates by 225
10
bps to control inflation. However, it kept the liquidity buoyant. This The revenue receipts of the central government during April-
partially offset the adverse impact of high borrowing costs on growth. November 2022 have increased by 4.8 percent YoY, with the gross 8
tax revenue growing by 15.5 percent. The gross monthly GST 6
The good news is that inflation is slowing down with the last two CPI collections crossed INR 1.5 trillion in January 2023, its second-highest
inflation prints being inside the RBI’s inflation target of 2-6 percent. 4
level since April 2022.
The magnitude of the rate hikes is also slowing; the RBI increased 2
policy rates by only 35 bps in the December 2022 monetary policy The government has consistently emphasised raising capital 0
meeting. expenditure. The total capital expenditure between April and Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22
November 2022 was INR 4.5 trillion, which is 81.7 percent of the
The RBI will likely be cautious about the emerging growth-inflation amount budgeted for FY23 and double the amount spent in the same % of GDP
dynamics. The MPC hinted at the possibility of further interest rate Gross fiscal deficit of the centre
period last year. The revenue expenditure has grown by 10.8 percent 12
hikes if inflation expectations are not anchored, or if core inflation during the same time.
continues to remain high. The MPC members currently have 10
divergent views on the RBI’s future course of action, with some of the By the end of December 2022, the government managed to contain
members wanting to first note the impact of the increased rates. The its fiscal deficit at 59.8 percent of the budget estimates. 8
RBI will also be watchful of the US FED actions.
To raise funds for its expenses, the government aimed at raising 6
Apart from targeting inflation, the RBI has also been intervening in funds through asset monetisation. It exceeded its asset monetisation
the currency market to stabilise INR using its reserves and is expected target in FY22 but may miss the target for the ongoing fiscal year, as 4
to continue to do so. The challenge would be to find the optimal level it has raised only INR 334.2 billion against the target of INR 1.6
as peer currencies have depreciated more, thereby putting pressure trillion. Going forward, the government may opt to raise funds 2
on our export competitiveness. through bond issuance or by bringing in strategic partnerships with
private players for private capital to flow into select sectors.
Source: CMIE, RBI, PIB Deloitte analysis
Note: Data for FY22 are Revised Estimates and data for FY23 are Budget
Estimates
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Budget 2023: Seven priorities
77
A people-centric agenda with seven priorities as “Saptarishi”
1. Infrastructure and investment 2. Financial sector

Deloitte’s views: At a time of global uncertainties, the Government has shouldered Deloitte’s views: The policies announced will help de-bottleneck the financial sector
the responsibility of investing in infrastructure and assets. These will help crowd in and improve better and faster service delivery. Access to fast and easy credit using
private investment and improve sentiments. A 33 percent jump in capex spending can digital services will enhance financial inclusion.
also effectively help the economy counter global headwinds. • To alleviate stress for MSMEs, an infusion of INR 90 billion in the corpus will allow
collateral-free credit of INR 2 trillion. The changes will be effective from 1 April 2023
The Capex outlay increased to INR 10 trillion for FY24, “effective capital • A national financial information registry will be set up to serve as the central
expenditure” of the centre is budgeted at 13.7 trillion, which will be 4.5 percent of repository of financial and ancillary information
the GDP. • Enhance business activities in GIFT IFSC
The 50-year, interest-free loans to state Governments to be continued for one more − Setting up of data embassies
year with a significantly enhanced outlay of INR 1.3 trillion. − Delegating powers under the SEZ Act to IFSCA to avoid dual regulation
• Railways capex outlay of INR 2.4 trillion, highest ever; nine times of that in FY14 − Setting up a single window IT system for registrations and approvals
• 50 additional airports, heliports, water aerodromes, and advanced landing zones to • Empowerment of SEBI to develop, regulate, maintain, and enforce norms and
be revitalised standards for capacity building in the securities market
• 100 critical transport infra projects with an investment of INR 750 billion including • Integrated IT portal to be established for reclaiming shares and dividends
INR 150 billion from private sources • Fiscal support for this digital public infrastructure will continue in FY23-24
• INR 100 billion for urban development • Azadi Ka Amrit Mahotsav Mahila Samman Bachat Patra scheme and enhanced SCSS
• States and cities will be encouraged to undertake urban planning reforms and for personal saving
actions to build sustainable cities of tomorrow
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3. Green growth
Deloitte’s views: With an aim to drive sustainable economic development, the Government continues to prioritise the adoption of green energy and practices for farming,
construction, and mobility to reduce the carbon footprint and create new job opportunities. These will be a big step towards achieving India’s carbon emission goals.
• National Green Hydrogen Mission with an outlay of INR 197 billion will help India reach a target of five MMT per annum by 2030.
• This Budget provides INR 350 billion in capital investment towards energy transition and the net-zero and energy security objectives.
• Battery Energy Storage Systems with a capacity of 4,000 megawatt-hours will be supported with a viability gap funding. A detailed framework for Pumped Storage Projects will
also be formulated.
• The inter-state transmission system for evacuation and grid integration of 13-gigawatt renewable energy from Ladakh will be set up with an investment of INR 207 billion
including central support of
INR 83 billion.
• A green credit programme will be notified under the Environment (Protection) Act to encourage a behavioural change amongst companies and local bodies.
• PM programme for PRANAM (Restoration, Awareness, Nourishment and Amelioration of Mother Earth) will be launched to incentivise states and union territories to promote
alternative fertilisers and balanced use of chemical fertilisers.
• 500 new waste-to-wealth plants under GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme at a total investment of INR 100 billion will be established for
promoting a circular economy.
• 10,000 bio-input research centres will be set up over the next three years to facilitate 10 million farmers to adopt natural farming.
• The Government will promote the optimal use of wetlands through the Amrit Dharohar scheme over the next three years.
• Coastal shipping will be promoted as the energy-efficient and lower-cost mode of transport.
• In accordance with the vehicle scrapping policy mentioned in Budget FY22, funds have been allocated to scrap old vehicles.
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4. Inclusive development 5. Youth power

Deloitte’s views: The Government’s focus on digitising the agricultural sector and Deloitte’s views: India’s competitive advantage lies in its demographic dividend, and
education will help bring benefits to grass-root levels and encourage start-up by focussing on quality education, aligning education with the required job skills and
entrepreneurs in these areas. Enhanced credit support to the farm sector will improve technology changes, and providing an apprenticeship programme, the Government
agricultural supply. aimed to build the workforce for the future.
• India to become a global hub for Shree Anna or millets • The launch of Pradhan Mantri Kaushal Vikas Yojana 4.0 to skill youth within the
• Launch of the Atmanirbhar Clean Plant Programme at an outlay of INR 22 billion to next three years
improve the availability of disease-free quality planting material for high-value • Expansion of Skill India Digital Platform for enabling demand-based skilling, linking
horticultural crops with employers including MSMEs, and facilitating access to entrepreneurship
• Decentralised storage capacity to be set up to help farmers store their produce schemes
• Agriculture credit target expanded to INR 20 trillion • National Apprenticeship Promotion Scheme to provide stipend support to 4.7
• An agriculture accelerator fund to encourage young rural entrepreneurs million youth in three years
• Tourism: At least 50 destinations will be selected through a “challenge” mode and
developed as a complete package
• States will be encouraged to set up a Unity Mall for the promotion and sale of their
own ODOPs (one district, one product), GI products, and other handicraft products
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6. Unleashing the potential 7. Reaching the last mile

Deloitte’s views: Emphasis on governance, transparent administration, R&D, and Deloitte’s views: The Government continues to reach out to the vulnerable segments.
innovation will help India move up the value chain. Core infrastructure, such as housing, remains in focus
• A National Data Governance Policy will be brought out to enable access to • PM Awas Yojana being enhanced by 66 percent to over INR 790 billion
anonymised data.
• Make AI in India and for India: Three AI centres will be developed within top
educational institutions
• Digilocker and Aadhaar for one-stop KYC maintenance system; PAN to be used as a
common identifier for all digital systems
• R&D grant to be given to one IIT for five years for the production of lab-grown
diamonds
• 100 labs for developing applications using 5G services will be set up in engineering
institutions to realise a range of opportunities, business models, and employment
potential
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Direct tax
12
Individual taxation
Simplified tax regime
Proposed changes to the simplified tax regime Proposed income slabs and tax rates vs. the existing
• Basic exemption limit to be increased from INR 0.25 ones under the simplified tax regime
million to INR 0.3 million
• Income threshold for the tax rebate available for Income slabs Tax rates under the
resident individuals to be increased from INR 0.5 (in INR) simplified tax regime
million to INR 0.7 million FY23 FY24
• Highest applicable surcharge on income above INR 50 (proposed)
million to be reduced from 37 percent to 25 percent
(lowering the highest marginal tax rate from Up to 2,50,000 NIL NIL
42.74 percent to 39 percent) 2,50,001–3,00,000 5% NIL
• Benefit of standard deduction up to INR 50,000 to be
3,00,001–5,00,000 5% 5%
available on salary/pension income
• Deduction up to INR 15,000 to be available on family 5,00,001–6,00,000 10% 5%
pension 6,00,001–7,50,000 10% 10%
• Simplified tax regime to be the default regime; option
to opt for the normal tax regime to be available 7,50,001–9,00,000 15% 10%
• Simplified tax regime extended to certain non- 9,00,001–10,00,000 15% 15%
corporate taxpayers
10,00,001–12,00,000 20% 15%
• Changes proposed to be effective from FY24
12,00,001–12,50,000 20% 20%
12,50,001–15,00,000 25% 20%
Above 15,00,000 30% 30%
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Individual taxation
Exemption and deductions
Enhanced exemption limit for leave encashment Rationalisation of exemption claimed in respect of Deductions from capital gains
• Maximum exemption limit for leave encashment to be proceeds of life insurance policies (other than ULIPs) • While computing the deduction from capital gains
enhanced from INR 0.3 million to INR 2.5 million for • Sum received under life insurance policies (other than arising on transfer of a residential house or any other
non-government employees, notification to this effect ULIPs) taken on or after 1 April 2023 to be subject to asset by reason of investing in a new residential house,
to be issued tax, where the premium/aggregate of premiums paid in for the limited purpose of computing the deduction,
any year exceeds INR 0.5 million the investment in the new house to be considered as
Gift of money by residents to not-ordinarily residents on • Where the proceeds are not exempt from tax, the maximum INR 100 million even if the actual investment
or after 1 April 2023 taxable amount received in excess of the aggregate of the is higher
• Any gift of money over INR 50,000 made by a resident premiums paid (to the extent not claimed as a
to a not-ordinarily resident on or after 1 April 2023 to deduction under any other provision) to be taxed under Electronic gold receipt
be deemed to be an income arising in India, ensuring the head “Income from other sources” in the manner • Conversion of physical gold into EGR (issued by a Vault
parity with non-resident recipients to be prescribed Manager) and vice versa not to be considered as a
“transfer” for capital gains purposes
Interest on home loan not eligible for double deduction TDS on PF withdrawal for non-PAN cases • Holding period of EGR/gold to include the holding
• Interest claimed as deduction under certain provisions • In the absence of PAN, TDS will apply at 20 percent period of the gold prior to conversion/EGR, respectively
to be excluded from cost of acquisition/cost of (instead of MMR) at the time of withdrawal of the PF • Cost of acquisition of EGR/gold to be deemed to be the
improvement upon transfer of the house property, to balance from the EPFO cost of the gold prior to conversion/EGR, respectively
prevent double deduction; same rule to apply to non-
individual taxpayers as well Valuation of accommodation perquisite
• The revised methodology for computation of perquisite
on account of provision of rent-free
accommodation/concession in terms of rent to be
prescribed
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Corporate tax
Coverage of “benefit and perquisite” clarified Rationalisation of presumptive taxation regime schemes
• Clarified that benefit or perquisite is taxable as business • Turnover/gross receipts threshold limit for availing the
income covers benefit or perquisite provided in cash or presumptive taxation schemes increased as under:
in kind or partly in cash and partly in kind − For eligible business under the Section 44AD* from
INR 20 million to INR 30 million
− For eligible professionals under the Section 44ADA
from INR 5 million to INR 7.5 million
Claim for deduction of amounts paid to MSME
The amount or aggregate of the amount received during
• Deduction for payment made to MSME beyond the
the previous year, in cash, should not exceed 5 percent of
time limit specified in the Section 15 of the MSMEDA to
the total turnover or gross receipts
be allowed only on based on actual payment
• The receipt by a cheque drawn on a bank or by a bank
• Benefit of claiming deduction, if payment is made on or
draft, which is not account payee, to be deemed to be
before the due date of filing the tax return not available
receipt in cash
for such payments
• Tax audit report exempted for such taxpayers
• No set-off of unabsorbed depreciation and brought
forward loss to be allowed in the year when income
from business is offered to tax on presumptive basis by
specified NR taxpayers**
*business other than the business of plying, hiring or leasing goods carriages
** Specified NR taxpayers engaged in business of providing services or facilities in connection with or supplying plant and machinery on hire to be used in the prospecting for/ extraction/ production of mineral oil and engaged in
business of civil construction etc. in certain turnkey power projects
15
Tax incentives for the IFSC units and start-ups
Tax exemption extended for fund located in IFSC Extension of incorporation date for eligible start-ups to
• The timeline for availing exemption on transfer of avail tax holiday
assets of the original fund or its wholly owned special • The date of incorporation for eligible start-ups to avail
purpose vehicle to a resultant fund in case of relocation tax holiday to be extended until 31 March 2024.
to be extended from 31 March 2023 to 31 March 2025.
• Consequently, timeline for exemption to
shareholder/unitholder/interest holder of the original
Relief in carrying forward and set-off of losses
fund for transfer of share/unit/interest to be extended
• Relaxation provided to eligible start-ups for carrying
until 31 March 2025.
forward and set-off of losses even upon change in
• Exemption proposed to be extended to NR on
shareholding, is extended from 7 years to 10 years
distribution of income on ODI entered with OBU of an
IFSC, provided such income is chargeable to tax in the
hands of the OBU.
16
NBFC
NBFC
• Provisions of thin-capitalisation rules (limitation on
interest deduction) in respect of debt issued by a NR,
being an AE of taxpayer not to apply to notified NBFCs
• Existing provisions for allowability of deduction of
interest on actual payment to NBFC and taxability of
interest income in relation to certain bad and doubtful
debts of NBFC to apply to such class of NBFCs, which
would be notified by the CG
17
Impetus to co-operative sector
Concessional tax regime extended to new co-operative Relaxation of the threshold for loans/deposits in Relaxation of requirement to deduct tax on cash
societies engaged in manufacturing businesses cash/certain other modes involving primary agricultural withdrawal by a co-operative society
• The concessional tax rate of 15 percent (available to credit societies/primary co-operative agricultural/rural • Threshold limit for cash withdrawal without TDS
companies since 2019) has now been extended to new development bank, and its members increased to INR 30 million for co-operative societies
resident co-operative societies engaged in • Threshold limit for undertaking transactions of (as against INR 10 million for other taxpayers) subject
manufacturing businesses, which commence taking/accepting and repaying loans and deposits to compliance with certain past tax return filing related
manufacturing up to 31 March 2024, subject to certain increased to INR 0.2 million (from INR 0.02 million conditions
conditions applicable to other cases)
• The income is required to be computed in a specified
manner
• Certain incomes are taxable at a higher rate of
22 percent/30 percent
18
Rationalisation of provisions of charitable trusts and institutions
Redepositing corpus and repayment of loans Treatment of donations to other trusts Streamlining various due dates and timelines
• Usage of funds out of corpus or loans treated as an • Eligible donations made by a trust to another trust shall • Filing of forms for accumulation of income need to be
application before 1 April 2021 will not be treated as an be treated as an application of income only to the done at least two months prior to the due date for
application again when such an amount is deposited extent of 85 percent of such donations. furnishing return of income for it to be completed
back into the corpus or when such loans are repaid before the due date of the audit report, which is a
• Redeposit of the amount in corpus/repayment of loans month prior to the due date for furnishing returns.
is to be done within five years from the end of the Streamlining of exemption for specified statutory • Tax exemption will be available only if the return of
previous year from the usage of these funds for being authorities, boards, etc. income has been furnished within the time allowed for
allowed as an application in the year of depositing • Recently, the SC held that sums charged by certain filing the original return of income or for filing belated
back/repayment, subject to the fulfilment of the notified bodies, authorities, boards, trusts, or returns (and not in the case of updated returns). This
prescribed conditions. commissions would require evaluation on the nature of amendment is applicable from FY2023.
• Such redeposit/repayment to be allowed only if the their activities, i.e., whether it is at a cost with a
earlier usage of funds from the corpus/loan has nominal mark-up or with a significantly higher mark-up,
satisfied the prescribed conditions, such as appropriate to determine if the activities are commercial in nature.
TDS, non-cash payments, application on a payment • However, the SC also held that income of statutory
basis, payment not to benefit specified related parties, authorities, boards, etc., established by the State
and application to be in India. Government or Central Government, for achieving
• These amendments are applicable from FY2023. essential “public functions/services” are to be prima
facie excluded from commercial receipts.
• A separate clause has been proposed to be introduced
to provide an omnibus exemption to such statutory
authorities, boards, etc. dealing with housing
accommodation, planning, development of cities,
towns, and villages, regulating activities for the benefit
of the general public, as may be notified for these
purposes.
19
Rationalisation of provisions of charitable trusts and institutions
Other amendments
• To address the practical challenges faced in seeking
provisional/regular registration, it is proposed that
trusts or institutions apply for provisional registration
only before the commencement of activities. The trusts
or institutions, which have already commenced their
activities, will directly make an application for regular
registration. This amendment is applicable from
1 October 2023.
• The ambit of “specified violation” (wherein registration
may be cancelled by PCIT/ CIT) is proposed to be
expanded to cover filing of an application for
registration, which is not complete, or where it contains
false or incorrect information.
• Tax on accreted income shall be payable if the trust or
institution fails to make an application for registration
per the prescribed method/provisions and within the
prescribed timeline.
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M&A
Share premium received over fair value from non- Sale consideration on the transfer of land/building
residents taxable in the hands of the company under JDA
• Premium received by a closely held company for the • Full value of the consideration to include the
issue of shares (in excess of fair value) from non- consideration received in cash, cheque, draft, or any
residents to be taxed in the hands of the company. other mode. Share premium received over fair value
from non-residents to be taxable in the
hands of the company
Taxation of capital gains on market-linked debentures Lapsing of losses in case of change in shareholding of
• Capital gains on transfer or redemption or maturity of closely held start-ups
market-linked debentures will be deemed to be short- • Provision triggering the lapse of losses in case of
term capital gains. change in shareholding will not apply to closely held
• In computing capital gains, no deduction to be allowed start-ups up to 10 years from the date of incorporation,
in respect of any STT paid. if the shareholding of the founders remains intact.
• The amendment is proposed to be effective from
FY23.
21
M&A
Taxation of distributions to unit holders of business Cost of acquisition of capital assets (intangibles or
trusts rights)
• Taxability of income of unit holders has been widened • The cost of acquisition of intangible assets or rights to
to include any sum received from a business trust be taken as nil, except when covered under specified
(which is not in the nature of income exempt in the cases. Certain distributions to unit holders of a
hands of the business trust and is not taxed in the • The cost of improvement of intangible assets or business trust are taxable as income from
hands of the business trust at MMR) under “income rights to be taken as nil.
from other sources”.
other sources
• While computing the income on redemption of units,
cost of the units to be reduced will be limited to the
sum received on such redemption. Assessment or reassessment in business re-organization
• The AO to consider the modified return of income filed
by the successor to give the effect of order of the
tribunal or court where assessment or reassessment
proceedings have been completed or are pending as
on the date of furnishing the modified return.
• The amendment is proposed to be effective from
FY23.
22
M&A
Carry forward of losses and unabsorbed depreciation in

case of strategic disinvestment
• Definition of “strategic disinvestment” amended to also
include the following:
− Sale of shareholding by public-sector companies
− Sale of shareholding in any company, resulting in the
following:
◦ Reduction of shareholding of the Government or
public-sector company to under 51 percent; and
◦ Transfer of control to the buyer
• Carry forward of losses is also permitted in case of
amalgamation of a banking company with any other
banking institution or company within five years of
strategic disinvestment
• These amendments are proposed to be effective from
FY23.
23
TDS and tax on winnings from online games and others
Tax on winnings from online games TDS on net winnings from online games Rationalisation of TDS provisions for winnings from
• Specific provisions have been introduced to tax net • Net winnings from online games to be subjected to TDS lotteries, crosswords, horse races, etc.
winnings from online games at 30 percent with effect at the rates in force (currently 30 percent) from 1 July • A threshold of INR 10,000 (during an FY) to apply on an
from FY2023-24. 2023 as follows: aggregate basis for TDS on winnings from lotteries,
• Online games have been defined to mean a game that − On withdrawal from user account during the FY (on crossword, and other games.
is offered on the internet and is accessible by a user the net winnings comprised in such withdrawal) • A similar aggregate TDS threshold of INR 10,000 (during an
through a computer resource, including any − On the net winnings in the user account/remaining FY) to apply for TDS on winnings from horse races.
telecommunication device. in the user account at the end of the FY (to be • TDS provisions of lottery, crossword puzzles, etc., have
• The method of computation of net winnings from computed in a prescribed manner); and been amended to include winnings from “gambling or
online games is to be prescribed. Further, terms such as Manner of computing net winnings in the user account to betting of any form or nature whatsoever”.
computer resource and internet have been defined. be prescribed. • These amendments are proposed to be effective from
• Such winnings from online games have been excluded • Where net winnings are wholly or partly in kind and, 1 April 2023.
from existing provisions relating to the taxation of cash is insufficient to cover TDS liability, the payer • It is proposed that winnings from online gaming be
winnings from lotteries, crossword puzzles, card games, should ensure that the payee has paid tax before excluded from the ambit of TDS on lottery, crosswords,
and others. releasing the winnings. etc., with effect from 1 July 2023.
• Terms such as online gaming intermediary, user, user
account, etc., have been defined.
24
Rationalisation of TDS provisions
Provision of benefits and perquisites in cash TDS on payment of specified income to NR: DTAA relief TCS on certain foreign remittances and on sale of
• It has been clarified that TDS provisions on the benefits • TDS on payment to NR of income on units of specified overseas tour packages
or perquisites arising from business or exercise of a mutual funds or specified company, to be at lower of • With effect from 1 July 2023, the TCS rates to be
profession will apply, whether it is in cash or kind or following rates: amended as follows:
partly in cash or partly in kind. − 20 percent or − Remittance for certain education and medical
• The amendment is proposed to be effective from − Applicable rate as per DTAA, subject to furnishing of treatment: Nil for remittance less than
1 April 2023. TRC INR 0.7 million and 5 percent for amount exceeding
INR 0.7 million
− TCS increased from 5 percent to 20 percent in case
of sale of overseas tour programme package and
TDS credit for income disclosed in income returns of the Certificate for TDS at lower or Nil rate other LRS remittances
past years • Nil/lower TDS certificate can be obtained in case of
• Where the taxpayer has included a particular income in specified income distributed/payable by business trust
the return for a year and TDS on such income has been to its unitholder
deducted and paid in a subsequent year, then the TDS on interest on listed dematerialised securities
taxpayer can claim credit for such TDS in a prescribed introduced
manner. • Existing exemption from TDS on interest payable to
• The amendment is proposed to be effective from Relief from TDS/TCS at higher rates for certain non filers resident taxpayer on specified security issued by a
1 October 2023. of income-tax returns company, which is in dematerialised form and listed on
• Relief from TDS/TCS at higher rates for specified person a recognised stock exchange in India withdrawn
who are not required to furnish return of income for
specified period and notified by CG
25
Other key proposals
Clarification on interest computation for defaults in the Rationalising provisions for withholding refunds and
payment of advance tax in case of updated returns setting-off of refunds against tax payable
• It has been clarified that the interest (for default in • To remove any existing overlaps, provisions relating to
payment of advance tax) shall be computed on the withholding of refund (in case refund is likely to
assessed tax after reducing the advance tax claimed in adversely affect revenue) and set-off of refund against
earlier returns, if any. tax payable have been merged.
• This amendment will take effect retrospectively from
1 April 2022.
Sunset for exemption of news agencies

Tax holiday exemption in case of SEZ units • Exemption available to news agencies to be withdrawn
• Tax holiday provisions to apply to SEZ units only if the from FY2023-24.
proceeds are received/brought into India in convertible
foreign exchange, within six months from the end of the
FY (or within such period as a competent authority viz.
RBI, may allow).
• AO would be able to amend the assessment order at a
later date when the export earning is realised in India
after the permitted period.
• No deduction shall be allowed unless the return of
income is furnished by the specified due date.
26
Transfer pricing
Key amendments
Reduction in the time limit for furnishing TP

Local File
• It is proposed to reduce the time limit for filing
of TP local file to 10 days, from the date of Reduction in the time limit for furnishing
receipt of notice from the AO or CIT(A). TP Local File
• This time limit can be extended at the
discretion of the AO or CIT(A). The extension
period remains 30 days.
• This amendment is proposed to be effective
from 1 April 2023.
27
Procedural aspects
Timeline to file return pursuant to its reassessment • Enabling the AO to direct the taxpayer to get the Introduction of a new appellate authority, viz JCIT(A)
notice inventory valued by a cost accountant, nominated by a • A new appellate authority, viz JCIT(A) has been
• The return in relation to the reassessment proceedings relevant tax authority introduced, to handle a certain class of cases involving
will be furnished within three months from the end of • Expenses relating to inventory valuation to be small amount of disputes
the month in which the reopening notice is issued, or determined by relevant tax authorities in accordance
within the time extended by the AO. with guidelines, and to be paid by the Central
Government
• Taxpayers will be given an opportunity to be heard, Re-alignment of timelines for completion of tax
except in case of best judgement assessment assessments
Issuance of reassessment notice pursuant to search-and- • It is proposed to provide that the assessments for and
seizure proceedings from the assessment year commencing 1 April 2022,
• In case of search, etc., initiated after 15 March of any shall be completed within a period of 12 months from
FY, where the period for the issue of notice under Penalty and prosecution for failure to pay or ensure the end of the assessment year; assessment
section 148 expires on 31 March of such FY, a period of payment of tax proceedings in case of an updated return shall also be
15 days shall be excluded for computing period of • Penalty introduced for failure to pay or ensure payment completed within a period of 12 months from the end
limitation for the issuance of such notice and the notice of the whole or any part of the tax, but the part in cash of the financial year in which the updated return is
so issued will be deemed to have been issued on is not sufficient to meet the TDS liability on: furnished
31 March of such FY. − Provision of benefit or perquisite in respect of • Clarifications to be inserted for timelines to complete
business or profession, assessment in cases post revision and for completion of
− Transfer of virtual digital asset assessment/re-assessment in search cases
− Winning from any online game (effective 1 July 2023)
Undervaluation of inventory • Prosecution provisions are proposed for the aforesaid
To ensure that the inventory is valued in accordance with failure to pay the tax or ensure payment of tax/TDS
the law, the following amendments have been proposed:
28
Procedural aspects
Rationalisation of appeals to ITAT Amortisation of preliminary expenditure Strengthen search and seizure provisions
• Appeal against the following orders enabled to be • The taxpayer is required to furnish a statement • Provisions related to search and seizure to be
made to the ITAT containing the particulars of expenditure in connection rationalised to inter-alia provide for assistance to the
− Penalty orders passed under the Section 271AAB, with the following (within a prescribed period to authorised officer during and after the search
271AAC, and 271AAD by CIT(A) income-tax authority and in prescribed form and
− Order passed by PCCIT or CCIT under the Section 263 manner):
• Filing of cross-objections provided for all classes of − Preparation of feasibility report or the project report
cases or conducting of market survey or of any other
survey or engineering services
Penalty for furnishing inaccurate SFT or reportable

account Decriminalisation of the Section 276A
• If the inaccuracy in the SFT submitted by a prescribed • Prosecution on the liquidator (who fails to give notice
RFI is due to false or inaccurate information submitted to the AO entitled to assess the income of company
by the account holder, a penalty of INR 5,000 (in within 30 days of appointment; or fails to set aside the
addition to the existing penalty of INR 0.05 million) is amount or part with any of the company assets or
proposed to be imposed on such RFI for every properties in his hands in contravention of the
inaccurate reportable account provision) not to be initiated on or after 1 April 2023
• The RFI is entitled to recover/retain the amount so paid
on behalf of the account holder
29
Indirect taxes
30
GST
The Finance Bill, 2023
Legislative changes • E-commerce operators

• Scope of taxability of OIDAR services (digital or − Composition levy: Registered persons engaged
electronic services) proposed to be expanded in supplying goods through e-commerce
− Condition of OIDAR service being essentially operator may opt to pay GST under the
Scope of OIDAR services widened by
automated and involving minimal human composition levy
intervention proposed to be removed; ambit of − Penalty: INR 10,000 or an amount equivalent removing the criteria of minimal human
OIDAR services has been substantially to the amount of tax, whichever is higher, is intervention and including B2C supplies
expanded. proposed for the following circumstances for business purposes
− Definition of “non-taxable online recipient” has where an e-commerce operator:
been proposed to be amended to include any ◦ Allows supply of goods or services or both
“unregistered person” receiving OIDAR services through it by an un-registered person other
even for business purposes, located in taxable than a person exempted from registration by
territory a notification issued to make such a supply;
− Unregistered person to include government or
entities registered only to deduct TDS ◦ Allows an inter-state supply of goods or
• Place of supply of transportation services for services or both by a person who is not
goods transported outside India: In case the eligible to make such inter-state supplies; or
supplier and recipient are located in India, the ◦ Fails to furnish the correct details in the
place of supply shall be the location of registered statement to be furnished for outward
recipient in case of registered recipient and supply of goods affected through it by a
location where goods are handed over for person exempted from obtaining registration
transportation in case of unregistered recipient
31
GST
Legislative changes • Amendment in punishment for offences

• Retrospective amendment to Schedule III − Decriminalisation of below offences from
− Following activities or transactions to be imprisonment has been proposed:
considered neither as supply of goods nor as ◦ Obstructing or preventing any officer in
Decriminalisation of certain offences
supply of services from 1 July 2017: discharge of his duties under this Act
◦ Supply of goods from a place in the non- ◦ Tampering with or destroying any material
taxable territory to another place in the evidence or documents Increase in monetary threshold for
non-taxable territory without such goods ◦ Failing to supply information or supplying prosecution with exceptions for offences
entering India false information, which is required to be related to issuance of invoice or bill
◦ Supply of warehoused goods to any person supplied
before clearance for home consumption − Monetary threshold for launching prosecution without supply of goods or services
◦ Supply of goods by the consignee to any of the offences is proposed to be increased
other person, by endorsement of from INR 10 million to INR 20 million, except
documents of title to the goods, after the for offences related to issuance of invoice or
goods have been dispatched from the port bill without supply of goods or services or both
of origin located outside India but before in violation of the provisions, or the rules
clearance for home consumption made, leading to wrongful availment or
− No refund shall be made of all the tax on these utilisation of ITC or refund of tax
activities or transactions, which has been
collected, due to the proposed amendment
32
GST
Procedural changes Return filing Consent-based sharing of information

• Disclosure alignment Monthly statements/returns • A new provision has been proposed for
− Provisions pertaining to reversal of GST ITC, on Registered person shall not be allowed to furnish prescribing the manner and conditions for
account of non-payment to the vendors within monthly statements or returns as below: sharing the information furnished by the
180 days, has been proposed to be aligned • Details of outward supplies (Form GSTR-1) for a registered person in relation to GST registration,
with the disclosure in the GST returns tax period after the expiry of a period of three GST returns, e-invoice, e-way bill or any other
− Refunds years from the due date of furnishing the said detail furnished on the common portal with such
◦ Provision for refund is proposed to be details other systems, as may be notified.
amended to remove the reference to the • Return (Form GSTR-3B) for a tax period after the
provisionally accepted ITC and align with the expiry of a period of three years from the due date
present scheme of availment of self-assessed of furnishing the said return
ITC • E-commerce operator shall not be allowed to
◦ Enabling provision for interest on refunds is furnish a statement (Form GSTR-8) after the expiry
proposed to be amended to prescribe the of a period of three years from the due date of
manner of computation of period of delay for furnishing the said statement
calculation of interest on delayed refunds Annual statement/returns Enabling provisions for consent-based
• Registered person shall not be allowed to furnish sharing of information
an annual return (Form GSTR-9/9C) for a financial
year after the expiry of a period of three years
from the due date of furnishing the said annual
return
33
GST
Legislative changes Procedural changes • Registration

• Input tax credit • Compounding of offences − Retrospective exemption from 1 July 2017 has
− Value of exempt supply for the purpose of − Restriction for compounding of offence by a been proposed from obtaining GST registration
apportionment of credits is proposed to be person who has been allowed to compound for persons exclusively supplying non-taxable,
expanded to include supply of warehoused once in respect of any offence, except as exempted goods or services or persons
goods to any person before clearance for home provided, in respect of supplies of value specifically exempted from obtaining
consumption exceeding INR 10 million has been proposed registration
− ITC is proposed to be considered as ineligible in to be omitted
respect of goods or services received by a − Option for compounding of offence is
taxable person, which are used or intended to proposed to be disallowed for offences where
be used for activities related to his obligations a person issues any invoice or bill without
under the CSR (referred in Section 135 of the supply of goods or services or both in
Companies Act, 2013) violation of the provisions of this Act, or the
rules made thereunder leading to wrongful
availment or utilisation of input tax credit or ITC on expenses pertaining to CSR
refund of tax obligations to be considered as
− Minimum and maximum percent amount for
compounding of offences has been ineligible credit
rationalised as 25 percent and 100 percent,
respectively of the tax involved
34
The Central Excise Act

Rate change
• Central excise duty exemption is provided on blended CNG from the amount equal to the GST paid on
biogas/compressed biogas contained in such blended CNG subject to specified conditions
• Amendment in the NCCD rates on specified cigarettes are provided below:
Description of goods Until 1 February 2023 From 2 February 2023

(INR per 1,000 sticks) (INR per 1,000 sticks)
Other than filter cigarettes of length not exceeding 200 230
65 mm
Other than filter cigarettes of length exceeding 65 250 290
mm but not exceeding
70 mm
Filter cigarettes of length not exceeding 65 mm 440 510

Filter cigarettes of length exceeding 65 mm but not 440 510
exceeding 70 mm
Filter cigarettes of length exceeding 70 mm but not 545 630
exceeding 75 mm
Other cigarettes 735 850
Cigarettes made of tobacco substitutes 600 690
35
The Central Sales Tax Act

• New section proposed, which will declare CESTAT

as the authority for settlement of inter-state
disputes
• Provision related to authority for advance rulings
constituted under the Income Tax Act, 1961
functioning as authority for advance rulings under
the Central Sales Tax Act is proposed to be omitted
• Proposal for transfer of pending proceedings
before the erstwhile authority for advance rulings
to CESTAT
36
Customs
Changes in the Customs Act, 1962
Legislative changes Time limit for disposal of application by the Settlement

Validity period of exemption notifications Commission
• Validity period of two years in case of conditional • Time limit of nine months from the last date of the
exemptions do not apply to exemptions issued in month is proposed for disposal of the application
relation to: filed before the Settlement Commission Removal of validity period of two years
‒ Any multilateral or bilateral trade agreements • This period may be extended up to three months for several exemptions provides certainty
‒ Obligations under the international agreements, • In case no order is passed within this period, the
treaties, or conventions or other conventions with settlement proceedings shall abate and the
to long-term exemptions under the
respect to United Nations agencies, diplomats, and adjudicating authority before whom the proceeding multilateral or bilateral trade agreement,
international organisation at the time of making the application was pending schemes under the foreign trade policy,
‒ Privileges of constitutional authorities shall dispose off the application as if no application
‒ Schemes under the Foreign Trade Policy had been made
re-import or temporary import,
‒ The Central Government schemes with the validity obligations under the international
of more than two years agreements and so on
‒ Re-imports, temporary imports, goods imported as
gifts or personal baggage Time limit prescribed for finalisation of
‒ Any duty of customs imposed under any law for the proceedings before the Settlement
time being in force, including IGST other than BCD
Commission to ensure timely closure of
the proceedings
Legislative changes shall come into effect
from the date of enactment of the
Finance Bill, 2023
37
Customs
Changes in the Customs Tariff Act, 1975
Legislative changes • Appeal provisions amended to prescribe that an

Countervailing duty and anti-dumping duty appeal may be filed against the recommendation of
• Provisions pertaining to levy and appeal in relation to the DGTR issued in accordance with the Rules made
countervailing duty and anti- dumping duty under the under the Customs Tariff Act
Customs Tariff Act amended to remove ambiguity and • Other amendments clarify that the Central Amendments in appeal provisions for
clarify that determination and review shall be done in Government does not make determination of countervailing duty and anti-dumping
the manner prescribed under the Rules dumping or injury duty made to remove ambiguity and
• In India, two-tier system is followed for levy of anti- • These changes are made with retrospective effect
dumping or countervailing duty; the DGTR conducts from 1 January 1995
future litigations
investigation and recommends whether such duty
should be levied or not. In case the recommendation
by the DGTR is positive, the Ministry of Finance can
decide to levy or not levy such duties
• There have been divergent rulings as to whether the
decision of the Ministry of Finance not to levy duty is
appealable or not
38
Customs
Changes in the Customs Tariff Act, 1975
Import tariff amendments Export tariff amendments

• First Schedule to the Customs Tariff Act amended to • Second Schedule to the Customs Tariff Act containing
introduce new tariff lines or modify the existing tariff export duty rate amended to align the entries under
lines from 1 May 2023; these changes have been made the heading 1202 with the entries of the First Schedule
in several chapters of the Customs Tariff Act containing import duty rate Amendments made in the import and
• Amendments made to the general explanatory note to export tariff to align with the
the general rules for interpretation of the Schedule one
complementary amendments to HSN 2022
of Customs Tariff Act; with this amendment, an article
preceded by “----” ‘in addition to being a sub-
classification of “-” or “--”, the said article or group of
Amendments to be effective from 1 May
articles may be considered a sub-classification of the 2023
immediately preceding description of the article or
group of articles which has “---”
• These changes have been made to align the
abbreviations and the import tariff with
complementary amendments to the HSN 2022
39
Customs
Increase in the customs duty rates
Description of goods Up to 1 February 2023 From 2 February 2023

Imitation jewellery 20% or INR 400/kg, whichever is higher 25% or INR 600/kg, whichever is higher
Styrene 2% 2.5%
Vinyl chloride monomer 2% 2.5%
Compounded rubber 10% 25% or INR 30/kg, whichever is lower
Articles of precious metals 20% 25%
Electric kitchen chimney (Hoods) 7.5% 15%
Bicycles 30% 35%
Toys and parts of toys (other than parts of electronic 60% 70%
toys)
Some of the exemptions, concessions from customs duty are subject to fulfilment of prescribed conditions. There have been amendments, revisions in conditions for certain
exemptions, concessions.
40
Customs
Increase in the customs duty rates

Naphtha 1% 2.5%
Silver (including silver plated with gold or platinum) in 7.5% 10%
unwrought or semi manufactured or powder form other than
specified silver dore
Silver dore with silver content not exceeding 95 percent 6.1% 10%
Vehicle (including electric vehicles) in the SKD form 30% 35%
Vehicles in the CBU form, other than with CIF of more than 60% 70%
US$40,000 or with engine capacity of more than 3,000 cc for
petrol-run vehicles and more than 2,500 cc for diesel-run
vehicles, or with both
Electrically operated vehicles in the CBU form, other than with 60% 70%
CIF value of more than US$40,000
41
Customs
Decrease in the customs duty rates

Pecan nuts 100% 30%
Denatured ethyl alcohol for use in the manufacturing of 5% Nil
industrial chemicals
Fish meal and Krill Meal for use in the manufacturing of aquatic 15% 5%
feed
Seeds for use in the manufacturing of rough and lab-grown 5% Nil
diamonds (provided that nothing contained in this entry shall
have effect after 1 February 2025)
Camera lens and inputs/sub-parts for use in the manufacturing 2.5% Nil
of camera module/camera lens of camera module of cellular
mobile phone
Chip on film, PCBA and Cell (glass board/substrate) for 5% 2.5%
manufacturing open cell of LCD/LED TV panel
Heat coil for use in the manufacturing of 20% 15%

electric kitchen chimneys
42
Customs
Decrease in the customs duty rates

Vehicles, specified automobile parts/components, sub-systems, As applicable Nil
and tyres when imported by notified testing agencies for the
purpose of testing and/or certification, subject to conditions
Specific capital goods/machinery for the manufacturing of As applicable Nil
lithium-ion cell for use in the batteries of EVs
43
Customs
Validity of customs duty exemptions
Extension of exemption/concession of customs duty • Parts, components, and accessories for use in the
until 31 March 2024 for the purpose of undertaking manufacturing of reception apparatus for TV and sub-
review subject to fulfillment of conditions (if any) on the parts for manufacturing of these items
following: • Parts and components of digital still image video
• Gold ores and concentrates for use in the cameras
manufacturing of gold • Parts, components, and accessories for manufacturing
• Drugs and materials required for clinical trials CCTV camera/IP camera and sub-parts for
• Moulds, tools (excluding tungsten carbide micro PCB manufacturing of these items
drills), and dies for manufacturing parts of electronic • All goods of Heading 8802 (except 88026000-
components or electronic equipment’s spacecraft)
• Pipes and tubes for use in the manufacturing of boilers • Components or parts, including engines, of aircraft of
• Specified capital goods/machinery for printing industry Heading 8802
• Cash dispenser and parts • Specified life-saving drugs/medicines, including
• All parts for use in the manufacturing of LED lights or medicines for spinal muscular atrophy or duchenne
fixtures, including LED lamps muscular dystrophy, for personal use
• Batteries for electrically operated vehicles, including
two- and three-wheeled electric motor vehicles
• Photographic, filming, sound recording and radio
equipments, raw films, video tapes and sound
recording tapes of foreign origin, if imported in India
after having been exported therefrom
44
Customs
Change in end date of exemption of customs duty

amongst others (No change in effective rate of duty)
Validity extended until 31 March 2024
• Ferrous waste and scrap Out of 196 exemptions, 146 exemptions
• Lithium-ion cell for use in the manufacturing of
battery or battery pack of cellular mobile phone extended for a period of 1 year, i.e., up to
• Lithium-ion cell for use in the manufacturing of 31 March 2024 for the purpose of
battery or battery pack of EVs or hybrid motor vehicle undertaking review
• Solar tempered glass for use in the manufacturing of
solar cell or solar module Of the remaining, a few extended for
Validity extended until 31 March 2025 5 years, 2 years, and 1 year, while some
• Specified inputs and sub-parts for use in the exemption entries to be discontinued with
manufacturing of telecommunication grade optical effect from 31 March 2023
fibre or optical fibre cables
• Specified drugs, medicines, diagnostics kits or
equipment, bulk drugs used in manufacturing drugs
or medicines
• Life-saving drugs/medicines and diagnostic test kits,
bulk drugs used in manufacturing life-saving drugs or
medicines
45
Customs
Extension of exemption/concession of customs duty Extension of exemption of customs duty until 31 March
until 31 March 2024 subject to fulfillment of conditions 2028 subject to fulfillment of conditions (if any) on the
(if any) on the following: following:
• Exemption to specified goods for carrying out repairs, • Used bonafide personal and household effects of a
reconditions, testing calibration or maintenance deceased person
• Exemptions to specified free gifts, donations, relief, • Exemption to import of cups, trophies to be awarded
and rehabilitation material imported by charitable to winning teams in international tournaments/world
trusts, Red Cross, CARE, and the Government of India cup to be held in India
• Exemption to goods of foreign origin imported for • Exemption to import of challenge cups and trophies
repair and return won by a unit of defence force or its members
• Exemption to specified equipment, instruments, raw
material, etc., imported for R&D projects
• Exemption to machinery/components for initial setting
up of non-conventional power generation plants
• Exemption to work of art, antiques in museum or art
gallery imported for public exhibition
• Import of specified goods related to defence and
internal security forces
46
Customs
Reduction/increase in the BCD rate with corresponding change in AIDC/SWS (no change in effective customs) duty)
Description of goods BCD AIDC SWS

Up to From Up to From Up to From
1 February 2 February 1 February 2 February 1 February 2 February
2023 2023 2023 2023 2023 2023
New or retreaded pneumatic tyres, of rubber, of a kind 3% 2.5% Nil 0.5% Nil Nil
used on aircraft of Heading 8802
Gold (including gold plated with platinum) unwrought or 12.5% 10% 2.5% 5% Nil Nil
in semi manufactured forms or in powder form
Gold dore bar 11.85% 10% 2.5% 4.35% Nil Nil
Platinum, unwrought or in semi manufactured form or in 12.5% 10% 1.5% 5.4% 10% Nil
powder form (effective
rate 1.4%)
Aeroplanes and other aircrafts 3% 2.5% Nil 0.5% Nil Nil
Coal, peat, lignite 1% 2.5% 1.5% Nil Nil Nil
47
Customs
Changes in the SWS rate

All goods falling under CTH 7113, other than the goods 10% Nil
covered under S. Nos. 356, 357, and 364C of the Table in
notification No. 50/2017-Customs
All goods falling under CTH 7114, other than the goods 10% Nil
covered under S. Nos. 356 and 357 of the Table in
notification No. 50/2017-Customs
Bicycles 10% Nil
Vehicle (including EV) in the SKD form 10% Nil
Vehicles in the CBU form, other than with CIF of more than 10% Nil
US$40,000 or with engine capacity of more than 3,000 cc for
petrol-run vehicle and more than 2,500 cc for diesel-run
vehicles, or with both
Electrically operated vehicles in the CBU form, other than 10% Nil
with CIF value of more than US$40,000
Toys and parts of toys (CTH 9503), other than parts of 10% Nil
electronic toys for manufacturing electronic toys
48
Customs
Other changes
Certain exemption/concessions withdrawn from Project Import

31 March 2023 • The Government has amended the CTH 9801, including
• Exemption to “human embryo” to be discontinued as it the sub classification of the first schedule of the
is redundant on account of prohibition of import of Customs Tariff Act, 1975 to exclude solar power
human embryo under the Assisted Reproductive plant/solar power project from the purview of project
Technology (Regulation) Act, 2021 and the Surrogacy imports by excluding the same from power projects
(Regulation) Act, 2021 and residual entry under the CTH 9801; the same shall
• Exemption to “monofilament yarn” to be withdrawn as come into effect from the date of enactment of the
tariff rate is 5 percent and redundant Finance Bill
• Exemption to catering cabin equipment, food and • In 2022, the Government issued a notification to
drinks on re-importation by aircrafts of the Indian exclude solar power plant/solar power project benefits
Airlines Corporation from foreign flights from power plant projects by amending project import
regulations; to remove the ambiguity, solar power
plant/solar power projects have been removed from
the CTH 9801
• The same amendment has been made in the residual
category, i.e., “any other plant and project”, of the
Project Import Regulations 1986 as well, which shall
come into effect from 2 February 2023
49
Policy updates
• Enable a digitised and simplified
governance framework
• Launch knowledge, innovation, and
tourism initiatives
• Focus on agriculture and sustainable
growth
• Strengthen financial services and
infrastructure
50
Enable a digitised and simplified governance framework
Data governance and digitisation MSME EoDB

• Three CoEs to be set up to develop AI-based solutions • Vivad se Vishwas-I to provide relief to MSMEs by • The KYC process to be simplified by adopting a “risk-
in areas of agriculture, health, and sustainable cities – enabling refunds up to 95 percent of the deposit for based” approach instead of “one size fits all”
Make AI in India, Make AI work for India contracts not executed during the COVID-19 period • Business establishments to use PAN as a common
• A National Data Governance Policy to be introduced to • The PM Vishwakarma Kaushal Samman (PM Vikas) identifier for all the Government digital systems.
access anonymised data package conceptualised for traditional artisans to Entity-based DigiLocker to be set up for sharing
• DigiLocker and Aadhar to be used as the foundational integrate them in the MSME value chain. The scheme documents
identity for individuals by various government agencies will include financial support, skilling, knowledge and • Integrated IT portal to be established to enable
• Phase three of e-courts to be launched with an outlay usage of newer technologies, linkage with global investors reclaim unclaimed shares and unpaid
of INR 70 billion markets, and social security dividends from IEPF
• Facilitate setting up data embassies in GIFT IFSC for • Enhanced corpus of INR 2 trillion to be provided for • Unified Filing Process to be set up to avoid
countries looking for digital continuity solutions MSMEs under the Credit Guarantee Scheme duplications
• Central data processing centre to be set up for handling • Central Data Processing Centre to be set up for faster
forms under the Companies Act, 2013 administration of forms filed under the Companies
Act, 2013
51
Launch knowledge, innovation, and tourism initiatives
R&D Education Tourism

• Making India a global hub for millets (Shree Anna) by • One fifty-seven nursing colleges to be established as • Fifty tourist destinations to be selected through
supporting the Indian Institute of Millet Research, colocation with existing institutions challenge mode and developed as a whole package
Hyderabad, as CoE to share best practices • District Institutes of Education and Training to be for domestic and international tourism
internationally developed for teacher training • States to set up Unity Malls for promotion of ODOPs,
• Hundred labs to be set up for developing smart • National Digital Library to be set up for children and GI products, handicraft products, etc.
applications, such as smart classrooms, precision adolescents to access quality books • Under the Vibrant Villages Programme, tourism
farming, intelligent transport systems, and health-tech • States to set up physical libraries at the panchayat and infrastructure and amenities to be facilitated across
using 5G services ward levels border villages
• Encourage collaborative research and innovation • Recruitment of 38,800 teachers and support staff for • Bharat Shared Repository of Inscriptions to be set up
amongst the public and private medical colleges using 740 Eklavya Model Residential Schools in a digital epigraphy museum, with digitisation of 1
the ICMR lab facilities • Collaboration between Book Trusts and NGOs to lakh ancient inscriptions
• A new programme to be launched to promote research provide non-curricular titles in regional languages and
and innovation in pharmaceuticals through CoEs English
• Dedicated multidisciplinary courses for medical devices
to be supported in existing institutions to skill Skilling
manpower in the high-end manufacturing and research • PMKVY 4.0 to be launched to provide on-the-job
areas training, industry partnership, and introduction of
• The R&D grant to be provided to one of the five IITs for Industry 4.0 relevant courses
five years and encourage indigenous production of LGD • Thirty Skill India International Centres to be opened to
seeds and machines skill youth for international opportunities
• Unified Skill India Digital platform to be launched to
strengthen digital ecosystem for skilling
52
Focus on agriculture and sustainable growth
Agriculture and allied sectors Green Growth • Amrit Dharohar to be implemented over the next three
• Digital Public Infrastructure to be built as an open • INR 350 billion to be allocated for priority capital years to encourage optimal use of wetlands and
source and inter-operable public good to provide investments towards energy transitions and net-zero enhance bio-diversity, carbon stock, eco-tourism
farmer-centric solutions objectives opportunities, and income generation for local
• Agriculture Accelerator Fund to be set up to encourage • Battery energy storage systems with capacity of 4,000 communities
agri-startups in rural areas MWH to be supported with Viability Gap Funding • Adequate funds to be allocated for scrapping old
• Atmanirbhar Horticulture Clean Plant Programme to be • PM-PRANAM to be launched to incentivise states and vehicles of the Central and State Government under the
launched with an outlay of INR 220 billion to provide UTs to promote alternative fertilisers vehicle scrapping policy
disease free quality planting material • Green Credit Programme to be introduced to
• Agriculture credit target increased to INR 20 trillion incentivise environmentally sustainable and responsive
targeting animal husbandry, dairy, and fisheries actions
• Decentralised storage capacity to be set up to help • Over the next three years, 10,000 Bio-Input Resource
farmers realise remunerative prices Centres to be set up and create a national-level
• New sub-scheme of PM Matsya Sampada Yojana to be distributed micro-fertiliser and pesticide manufacturing
launched to improve value chain efficiencies and network
expand market for fishermen, fish vendors, and micro • The GOBARdhan scheme to be introduced to promote
and small enterprises the circular economy and MISHTI to be taken up for
• National cooperative database to be built for country- mangrove plantation along the coastline and on salt
wide mapping of cooperative societies pan lands
• Multipurpose cooperative societies, primary fishery • Coastal shipping to be promoted as the energy efficient
societies, and dairy cooperative societies to be set up in and lower cost mode of transport, both for passengers
uncovered villages and freight, through PPP mode with viability gap
funding
53
Strengthen financial services and infrastructure
Financial services GIFT City-IFSC Infrastructure

• NFIR will be set up in consultation with financial To enhance business activities in GIFT IFSC, • Harmonised master list for infrastructure to be revised
services regulators to serve as the central repository of inter-alia, the following measures will be taken: for recommending the classification and financing
financial and ancillary information • Delegate powers under the SEZ Act to IFSCA to avoid framework suitable for Amrit Kaal
• Financial services regulators to undertake dual regulation. • An Urban Infrastructure Development Fund will be
comprehensive review of existing regulations to • Set up a single-window IT system for registration and established by using priority sector lending shortfall.
simplify and reduce the cost of compliance approval from the IFSCA, SEZ authorities, GSTN, RBI, This will be managed by the National Housing Bank for
• Time limits to decide the applications under various SEBI, and IRDAI. creating urban infrastructure in Tier-2 and Tier-3 cities
regulations will also be laid down • Permit acquisition financing by the IFSC Banking Units • Increased outlay of INR 10 trillion for development
• Certain amendments are proposed to the Banking of foreign banks. projects across sub-sectors
Regulation Act, Banking Companies Act, and Reserve • Establish a subsidiary of EXIM Bank for trade re- • Infrastructure Finance Secretariat will assist
Bank of India Act to improve bank governance and financing. stakeholders for private investment in the infrastructure
investor protection in the banking sector • Amend the IFSCA Act for statutory provisions for sector, including railways, roads, urban infrastructure,
arbitration, ancillary services, and to avoid dual and power
regulation under the SEZ Act. • Cities to be given incentives to improve their credit
• Recognise offshore derivative instruments as valid worthiness for municipal bonds through property tax
contracts. governance reforms and ring-fencing user charges on
urban infrastructure
• Coastal shipping to be promoted through the PPP Mode
with viability gap funding
54
Industry impact
• Automotive
• Banking and capital markets
• Consumer products
• Education
• Energy and infrastructure
• Industrial products, mining, and metals
• Insurance
• Investment management
• Life sciences and health care
• Media
• Oil, gas, and chemicals
• Real estate
• Technology
• Telecommunication 55
Automotive
Budget proposals
Government grants and incentives Customs duty

FAME – II scheme: Budget allocation has been enhanced The customs duty rate recalibration has resulted in
to INR 51.72 billion for FY2023–24 (from INR 29.08 billion increase of effective duty rates on import of vehicles
for FY2022–2023) (including electric vehicles) falling under HSN 8703:
• In SKD condition: From the existing 33 percent to Customs duty revisions for SKD and CBU
The PLI Scheme for automobiles: INR 6.04 billion has 35 percent imports could result in an overall cost
been allocated for FY2023–24 • In CBU condition: From the existing 66 percent to
70 percent
impact of 6–7 percent for imported
vehicles
The above rate revisions could result in an overall
incremental cost impact of 6–7 percent for imported
vehicles
Support measures for domestic
manufacturing are evident from budget
BCD has been exempted on import of specified capital allocations made to the automotive
goods/machinery to manufacture lithium-ion cells for
batteries used in electric vehicles
incentives’ schemes for the next FY
The existing concessional duty rates on lithium-ion cells

for manufacturing of battery packs have been extended
until 31 March 2024
56
Banking and capital markets
Key policy measures IFSC-GIFT City:

Financial regulations: Financial regulators to • The SEZ Act to be amended to delegate powers to the
comprehensively review existing regulations to simplify, IFSCA to avoid dual regulation.
ease, and reduce the cost of compliance. Financial • The IFSC Act to be amended to permit arbitration,
Regulators to be encouraged to have a KYC system that is ancillary services, and avoid dual regulation under the Financial Sector identified as one of the
amenable to meet the needs of Digital India. SEZ Act. seven priorities of the Union Budget
• A single-window IT system to be set up for registrations
FinTechs: and approvals from IFSCA, SEZ authorities, GSTN, RBI,
• To enable more FinTech innovation services, the scope SEBI, and IRDAI. Significant announcements made to grow
of documents available in DigiLocker for individuals is
to be expanded.
• Foreign Bank IFSC Units to be permitted to provide the IFSC-GIFT City
acquisition financing.
• An Entity DigiLocker is to be set up for use by MSMEs
• EXIM bank to establish a subsidiary in IFSC-GIFT City for
and large businesses. This will be towards securely
trade re-financing.
storing and sharing documents online, with various
regulators, banks, and other business entities. • ODIs to be recognised as valid contracts under the
Indian securities laws.
• Fiscal support for digital payment infrastructure to
continue in FY2023-24. • Data embassies to be set up in IFSC-GIFT City, to
support foreign countries looking for digital continuity
solutions.
57
Banking and capital markets
Key tax measures • NBFC categorisation: With RBI updating its NBFC
• Foreign investors to be exempted from tax on any categorisation norms, an update of the corresponding
income distributed on ODIs with IFSC banking units. reference of erstwhile classes of NBFCs in the income-
• TCS on general LRS remittances to be increased from 5 tax law of taxability of interest income in the hands of
to 20 percent, effective 1 July 2023 NBFCs is proposed. This will help obviate any NBFCs with foreign ownership to benefit
• Indian residents to be subjected to TDS on interest unnecessary confusion on the different terminology
being used in RBI’s NBFC regulations and the Indian
from the exemption now provided to
earned on listed debt securities.
income-tax law. them from applicability of thin
• Carry forward of losses to be allowed in case of
strategic divestments, including mergers involving • Market Linked Debentures: All profits/gains arising for capitalisation rules
banks, post such strategic divestments. This should investors in MLDs issued by NBFCs will now be taxed as
help expedite the proposed sale of IDBI Bank. STCGs in the hands of the investors, on the
transfer/redemption/maturity of such debentures, New tax treatment provided for MLDs to
• NBFCs – Thin capitalisation rules: Certain classes of
NBFCs (to be notified separately) will be exempt from irrespective of their holding period. The aforesaid make the security less popular amongst
the applicability of thin capitalisation rules that restrict measure will help plug the tax rate arbitrage that investors (typically HNIs and family
tax deductibility of interest payments made to existed in the Indian income-tax law, whereby investors
in MLDs would enjoy LTCGs treatment on such offices, etc.), and might adversely impact
associated enterprises. This has been a long-standing
ask of the NBFC industry and will help provide a level- investments if held for more than 12 months and paid NBFCs’ ability to raise short-term finance
playing field between NBFCs and banks. LTCG tax at 10 percent.
58
Consumer products
Budget proposals
Customs duty Direct tax

The customs duty rate recalibration has resulted in Ease of doing business for MSME’s: Payments to them are
increase of effective duty rates for toys (including proposed to be made deductible only on “payment” basis
specified parts), bicycles, and imitation jewelry. There To promote electronic gold, income tax enablements are
could be 2–5 percent increase in the landed cost of these provided to exclude conversion of physical gold to Impetus to indigenous manufacturing and
products electronic gold and vice versa from the ambit of capital localisation by reduction of customs duty
gains tax. Towards this, the period of holding of the
LGD has been recognised as an emerging technology- original physical gold would be included in the period of
rates on key inputs or capital goods/
driven and high employment potential sector. Customs holding, and cost of acquisition of the original physical machinery required for manufacturing of
duty exemption has been provided on seeds for gold would also be allowed. certain items
manufacturing LGD
TDS provisions for online gamers have been amended;
The customs duty has been reduced from the existing online gaming companies to withhold taxes on net Economic Survey 2023: Make in India 2.0,
30 percent to 15 percent, on agricultural products for winnings of more than INR 10,000 within a financial year to cover additional sectors such as
usage in manufacturing aquatic feed (in case of fish lipid at 30 percent at year-end unless the winnings are
oil and algal prime); and from the existing 15 percent to withdrawn
furniture, footwear, toys, ceramics,
5 percent in case of fish meal, krill meal, mineral, and sporting goods, fisheries and
vitamin premixes agri-produce
Measures for improving localisation in manufacturing
white goods, for which the customs duty has been
reduced on specified parts for manufacturing of kitchen
chimneys and TV panels
59
Education
Increase in education budget 2023 by 8.3 percent
Education Skilling Direct and indirect tax proposals

• About 157 nursing colleges to be established in co- • Pradhan Mantri Kaushal Vikas Yojana 4.0 to be • Refer to direct tax and indirect tax section covered in
location with the existing medical colleges established launched to skill the youth in the next three years by preceding slides for direct tax and indirect tax
since 2014 on-the-job training, industry partnerships, and proposals
• Dedicated multidisciplinary courses for medical devices introduction of Industry 4.0-relevant courses
in the existing institutions to train manpower in • Thirty Skill India International Centres to be opened to
futuristic medical tech skill youth for international opportunities
• District Institutes of Education and Training to be • Unified Skill India Digital platform to be launched to
developed as institutes of excellence for teacher strengthen the digital ecosystem for skilling
training
• A National Digital Library to be set up to make quality Others
books available across geographies, languages, genres, • Three Centres of Excellence for AI to be set-up to “Teachers’ training will be re-envisioned
and provide device agnostic accessibility encourage partnership between industry players in
• States to set up physical libraries at the panchayat and through innovative pedagogy, curriculum
conducting interdisciplinary research and developing
ward levels cutting-edge applications transaction, continuous professional
• Collaboration between Book Trusts and NGOs to • Labs to be set up in engineering institutes for development, dipstick surveys, and ICT
provide non-curricular titles in regional languages and developing applications on smart classrooms using
English implementation”
the 5G services
• About 38,800 teachers and support staff to be • R&D grant to be provided to one of the IITs for five
recruited for 740 Eklavya Model Residential Schools years to encourage indigenous production of lab- A major impact on the foreign
grown diamonds universities/institutes catering to Indian
• Encouraging collaborative research and innovation
amongst the public and private medical college students on account of widening of OIDAR
faculty and R&D teams using the ICMR lab facilities
60
Energy and infrastructure
Overview Corporate tax • Tax on benefits in cash - Benefits in cash, which were
• Infrastructure and Green Growth, two of the seven • Tax on income distributed by InvITs - It has been out of purview of business income, are taxable as
priorities of Budget 2023 clarified that the amount distributed by business trust business income. Consequently, tax is also to be
• Heavy capital investment outlay towards infrastructure (including InvIT) to its unit holders, other than the withheld on such cash benefits.
and Green Energy transition proportion of the income of interest, dividend, and the Impact: Increase in tax base and compliance burden
• INR 197 billion outlay towards the National Green amount on which tax is already paid at InvIT level is now for the benefit provider
Hydrogen Mission to lower carbon intensity and reduce taxable; This amount shall be taxed in the hands of unit
dependence on fossil fuel imports; Target to reach an holders at the applicable tax rates.
annual production of 5 MMT by 2030 Impact: Income distributed by InvIT to unit holders
• 13GW green energy from Ladakh via investment of (which InvIT had received in repayment of debt) is
INR 207 billion taxable in the hands of unit holders
• 100 transport infrastructure projects identified for
• Coverage of non-resident investors to be taxed on the
connectivity for ports, coal, steel, and fertiliser sectors
issue of shares for excess consideration - Issue of
• Promoting battery energy storage systems
shares to non-resident investors at a premium, where Policies focussed on infrastructure
consideration exceeds fair market value now taxable in
the hands of closely held issuing company. development
Impact: Funding by foreign companies should be exactly
at fair market value for not attracting this provision Green economy to be pushed beyond the
• Withholding tax on interest paid on listed debentures - realm
Tax to be withheld on interest paid on listed debentures
for resident investors at 10 percent.
Impact: Cash flow in the hands of investor to the extent
of withholding
61
Indirect tax Extension in import duty concession/exemption until

Restriction on project import benefits to solar power 31 March 2024 with respect to wind power on import
plants and projects: of goods:
• Chapter 98 and relevant sub-headings of Schedule I of • Catalysts and resin used in manufacturing cast
Customs Tariff Act amended to exclude solar power components of wind-operated electricity generators • Exclusion of solar power plants and
plants and solar power projects from availing project • Forged steel rings for the manufacture of special
import benefits bearings for use in wind-operated electricity
solar power projects from project
[Effective with Presidential Assent] generators import benefits
• Residual entry number 4 in the table annexed to project
import regulations amended to exclude solar power Extension in import duty concession/exemption until
plants or solar power projects within its purview 31 March 2025 with respect to wind power on import
• Extension of concessional customs
[Effective from 2 February 2023] of goods: benefits on import of parts/raw
• Specified parts of wind-operated electricity materials related to solar and wind
Extension in import duty concession/exemption until generators for their manufacture or maintenance
31 March 2024 with respect to solar power on import • Parts for the manufacture or maintenance of blades
power
of goods: for the rotor of wind-operated electricity generators
• Goods used in the manufacture of EVA (Ethylene Vinyl • Raw materials for the manufacture of blades for the
Acetate) sheets or backsheet rotor of wind-operated electricity generators, or
• Solar tempered glass used in manufacturing of solar parts, sub-parts of such blades
cells/panels/modules • Permanent magnets for the manufacture of PM
• Flat copper wire used in the manufacturing of photo synchronous generators above 500KW for use in
voltaic ribbon (tinned copper interconnect) for wind-operated electricity generators
manufacturing solar photovoltaic cells or modules
• Specified goods for the manufacture of semiconductor
devices, photovoltaic cells, light-emitting diodes, mounted
piezo-electric crystals, electronic integrated circuits, etc.
62
Indirect tax Limitation of import duty concession/exemption until

Extension in import duty concession/exemption until 31 March 2024:
31 March 2024: • Import of machinery, apparatus, control gear, and
• Temporary import of goods to warehouses under transmission equipment, etc., required for initial set up
Section 65 of the Customs Act for repairs, of a project for power generation using non-
reconditioning, re-engineering, testing, calibration or conventional materials, namely agricultural, forestry,
maintenance of captive power generating sets and agro-industrial, industrial, municipal and urban waste,
their spares, fuel, lubricants, and other consumables bio waste, or poultry litter
for such generating sets (including service) • Import of machinery, apparatus, control gear and
• Import of parts, raw materials, etc., required for the transmission equipment, etc., required for (a) initial set
production, transportation, maintenance, etc., of up of fuel-cell-based system for power generation or
semiconductor devices or wafers for demonstration purposes; or (b) balance of systems
• Import of liquefied natural gas and natural gas for the operating on biogas, bio-methane, or by-product
generation of electrical energy by a generating hydrogen
company (other than a captive generating plant)
63
Industrial products, mining, and metals
Changes in import duty rate: • Specific HSN codes for certain metals introduced under
[Change in effective import duty rate] Chapter 71 without a change in tariff rate, effective
Effective from 2 February 2023 from 1 May 2023
• Import duty on articles made of precious metals has
been effectively increased from 22 percent to • Increase in the BCD rate of precious
25 percent. Exemption from import duty:
• BCD on “seeds” for use in the manufacture of rough lab- • Customs duty exemption is being provided for the metals and silver bars and dore
grown diamonds is being reduced to nil, subject to IGCR import of specified capital goods and machinery • Extension of customs duty exemption
conditions for two years. required for the manufacture of lithium-ion cells for for ferrous waste and scrap; remelting
• BCD on compounded rubber is being increased from batteries used in electric vehicles.
10 percent to 25 percent, or INR 30/kg, whichever is
scrap ingots of iron or steel for an
lower. additional year
Extension in import duty concession/exemption until
Effective from the date of Presidential Assent 31 March 2024:
• BCD and AIDC on silver bar and silver dore has been • Organic or inorganic coating material for the
enhanced with SWS exemption, resulting in increased manufacture of electrical steel,
duty of 15 percent and 14.35 percent, respectively, • Gold ores and concentrates for manufacturing gold,
effective from the date of Presidential Assent. • Alatheon and copper wire
• Spinnerets made of gold, platinum, and rhodium, or
[Changes without any economic impact] any one or more of these metals, when imported in
• BCD on coal, peat, and lignite is being increased to exchange of worn out or damaged spinnerets exported
2.5 percent but these are being exempted from AIDC out of India
effective from 2 February 2023. • Ferrous waste and scrap
• Change in import duty structure without any economic • Raw material used in the manufacturing of CRGO steel
impact for gold bars, gold dore, and platinum, effective
from the date of Presidential Assent.
64
Industrial products, mining, and metals
• Precious stones imported by posts on “approval or Extension of import duty concession/exemption until
return” basis 31 March 2025:
• Pipes and tubes for use in the manufacture of boilers • Raw materials and parts, for use in the manufacture of
• Zinc metal recovered by toll smelting or toll processing cruise ships, ferry boats, cargo ships, barges, fishing
from zinc concentrates exported from India for such vessels, factory ships, tugs, pusher crafts, light vessels
processes (except floating or submersible drilling or production
• CNC systems for use in the manufacture of CNC lathes, platforms), warships, lifeboats (other than rowing
machining centres, or all types of CNC machine tools boats)
that come under 8456 to 8463
• Goods for use in the manufacture of Brushless Direct
Current (BLDC) motors Limitation in import duty concession/exemption until
• Capital goods and spares, raw materials, parts, material 31 March 2024:
handling equipment, and consumables for repairs of • Cruise ships and excursion ships (excluding vessels and
ocean-going vessels by a ship-repair unit floating structures imported for breaking up)
• Spare parts and consumables for repairs of ocean-going • Fishing vessels, tugs and pusher crafts, light vessels
vessels registered in India (excluding vessels and floating structures imported for
• Ethylene – propylene – non-conjugated diene rubber breaking up)
(EPDM) for use in the manufacture of insulated wires • Vessels such as warships and life-boats (excluding
and cables vessels and floating structures imported for breaking
up)
• Lithium-ion cell for use in the manufacture of batteries
or battery packs
• Parts, sub-parts (except lithium-ion cell) for
manufacturing lithium-ion batteries, lithium-ion cell
battery packs, and printed circuit board assembly, etc.
65
Insurance
Starting 1 April 2023, new Investment Products (other

than ULIPs) offered by life insurance companies to
become taxable in the hands of policyholders
Investors to now pay tax on all life insurance policies
(other than ULIPs) purchased on or after 1 April 2023, if Investment products offered by life
the premium payable for any year during the term of the
policy exceeds INR 500,000. Tax will be payable in a
insurance companies post 31 March 2023
manner prescribed on the net receipts (i.e., amount in to become taxable in the hands of
excess of the aggregate premiums paid). This provision policyholders
will apply on a consolidated basis, across all life insurance
policies held by the policyholder. However, sums received
on the death of the insured will continue to be tax- Pure-term insurance products not
exempt in the hands of the insured. impacted by the proposed amendment
General insurance companies’ ask for

parity in corporate tax treatment with life
insurance companies remains
unaddressed
66
Investment management
Foreign private equity and venture capital funds: Indian mutual funds:
• Share capital infusions in closely held Indian companies, • Indian mutual funds are now permitted to grant tax
made by non-resident investors (e.g., foreign private treaty relief to non-resident unit holders while
equity and venture capital funds) at a value that withholding tax on income distributed to the unit
exceeds the FMV of the shares of the Indian company holders, instead of withholding tax at the flat rate of Closely held Indian companies, including
will now be treated as ordinary income and taxed in the 20 percent as is currently provided in the Indian
hands of the Indian company to the extent that the income-tax law. This is a welcome move on the part of
FinTechs to be adversely affected by
consideration exceeds the FMV of the shares. While the the Indian Government as it was a longstanding ask of extension of the SAAR provision on
aforesaid provision is a SAAR in the Indian income-tax the Indian mutual fund segment. receipt of share premium above FMV from
law and previously applied only to transactions
involving Indian resident investors, it has now been
non-resident investors (e.g., foreign
extended to non-resident investors. The aforesaid could IFSC-GIFT City: private equity and venture capital funds)
adversely impact closely held Indian companies • The sunset clause granting tax exemptions to foreign
(including FinTechs) that are dependent on funding investment funds keen to relocate to IFSC-GIFT City has
from foreign private equity and venture capital funds. been extended by two years, from 31 March 2023 to
31 March 2025
67
Life sciences and health care
-The Budget address acknowledged that the life sciences • Health care also finds focus in proposals relating to
and health care industry contributed to India’s rising global technology – the proposed “Centres of Excellence for
profile through the COVID-19 vaccination drive. The policy Artificial Intelligence” will include health as a key area
measures on health care are mainly aimed at promoting of inter-disciplinary research and for developing
inclusive development, an identified priority in the scalable solutions. Also, labs proposed for developing Emphasis on research and innovation,
Budget. applications using 5G services will cover health care
applications.
education, and skilling
Policy measures No significant increase in budgetary

• The Budget lays considerable emphasis on medical
research and innovation in the pharma sector Tax proposals allocations
– ICMR labs will be made available to public and private • No specific direct tax proposals/incentives
medical college faculties and private sector R&D • No new exemption or reduction of customs duties
teams to facilitate collaborative research introduced
– A new programme to promote research and • Exemption on certain products including life-saving
innovation in pharmaceuticals through centres of drugs, medicines, and diagnostic kits to be extended for
excellence has been planned a period ranging from one to two years.
• Education is another focus area. Dedicated • Input tax credit on CSR expenses will be classified as
multidisciplinary courses for medical devices will be “blocked credits” and will not be available to businesses
provided to ensure skilled manpower for futuristic
technologies and high-end manufacturing. Also, 157
new nursing colleges to be established in co-locations
with existing medical colleges.
• A mission to eliminate sickle cell anemia by 2047 will be
launched.
68
Media
Direct tax proposals Indirect tax proposals

• Specific provision proposed for taxing income from net • Input tax credit on expenses incurred towards CSR
winnings from online games at 30 percent; obligations to be ineligible credit
consequential WHT obligation casted at the time of • Scope of taxability of digital services (OIDAR services)
withdrawal and year-end balance expanded; condition of OIDAR supply being essentially Net winnings from online gaming – tax at
• Withdrawal of exemption in relation to income of automated and involving minimal human intervention is
notified news agencies set up in India solely for removed. The definition of non-taxable online recipient
30 percent; WHT obligation casted
collection and distribution of news to include services received by unregistered persons
even in relation to business purposes and the Exemption related to income of notified
Government entities liable to deduct TDS shall be
treated as unregistered person
news agencies withdrawn
69
Oil, gas, and chemicals
Overview Indirect tax

• Five hundred new waste-to-wealth plants to be Changes in the rate of import duty:
established under the GOBARdhan scheme [Effective from 2 February 2023 with the change in
• Five percent compressed biogas to be mandated in due effective rate of import duty]
course for all organisations marketing natural and • BCD on Styrene and Vinyl Chloride increased from Cascading tax on biogas eliminated; excise
biogas 2 percent to 2.50 percent
• BCD on denatured ethyl alcohol for manufacturing
duty exemption introduced on the
Direct tax industrial chemicals reduced from 5 percent to nil, amount covered by GST
• Rationalisation of set-off of brought-forward subject to IGCR conditions
losses/unabsorbed depreciation in presumptive taxation • BCD on Naphtha increased from 1 percent to
• Non-residents engaged in the business of exploration of 2.50 percent
mineral oils have the option to pay tax on presumptive
taxation, where income is deemed to be 10 percent of Extension of import duty concession/exemption until
receipts; it is provided that such income cannot be set 31 March 2024:
off against brought-forward losses/unabsorbed • Bunker fuel for use in ships or vessels;
depreciation if presumptive taxation has been opted for • Excess liquefied petroleum gases (LPG) returned by
Impact: Set-off of losses and unabsorbed depreciation DTA unit to SEZ unit
of foreign companies in exploration of oils is restricted. • Anthraquinone or 2-Ethyl Anthraquinone, for
Comparative analysis to be undertaken in the year of manufacturing Hydrogen Peroxide
profits
Exemption from central excise duty on blended CNG:
• Central excise duty exemption on blended Compressed
Natural Gas (CNG) from the amount that is equal to the
GST paid on biogas/compressed biogas contained in
such blended CNG, subject to prescribed conditions
70
Real estate
Repayment of debt by REIT/InVIT taxable in the hands of Capital gain tax exemption on investment in residential
unitholders property capped
• Distributions by REIT/InVIT in repayment of debt now • The set-off of long-term capital gains arising on the
taxable in the hands of unit holders as “income from sale of a residential unit or any other long-term asset
other sources”. The provisions will prospectively apply (other than a residential unit) by way of investment in Proposal of tax repayment of debt by
from FY2023–24 and subsequent years. another residential unit is proposed to be capped at
• Non-taxability of repayment of debt was an incentive INR 100 million, which was not capped earlier.
REIT/InVIT likely to significantly impact
for many sponsors/unitholders. Any foreign investor • This proposal will impact HNIs on their high-value post-tax IRR of unitholders
receiving the distribution of repayment of debt will transactions.
now be taxed at 40 percent plus surcharge.
Interest paid on borrowed capital

Eligibility to obtain lower deduction certificate • Interest paid on the acquisition or reconstruction of a
• Eligibility to apply for lower/nil withholding tax property to be excluded as a cost when computing
certificate has been extended to income payable to capital gains on the sale of such property (if such
REIT/InVIT unitholders. interest cost is already claimed as a deduction under
• This is a welcome move and will benefit notified income from residential property).
sovereign wealth funds and pension funds that are • The proposal mitigates the double deduction of
eligible for tax exemption. interest expense.
71
Technology
The first budget in Amrit Kaal sought to build up on the ‒ “Unified Filing Process” to eliminate the need for
foundation laid in the previous budget and the blueprint separate submission of information to various
for India@100. The Budget 2023 has proposed various government agencies
technology-based initiatives listed below:
Relaxation with respect to carry forward
• Agri-tech Direct tax proposals
To promote and support agri-tech start-ups, proposal • For incentives to eligible start-ups under the Section
and set-off of losses for eligible start-ups
for an open source, open standard, and inter-operable 80-IAC, the period of incorporation has been extended increased from 7 years to 10 years
public infrastructure for agriculture by 1 year to 31 March 2024
• Digital education • Time period for relaxation in relation to carry forward
‒ CoE for AI - Set up centres to achieve the vision of and set-off of losses of eligible start-ups, in case of
Make AI in India and Make AI work for
“Make AI in India and Make AI work in India” change in shareholding, has been increased from India
‒ Set up a National Digital library for children and 7 years to 10 years
adolescents to facilitate the availability of quality
books across geographies, languages, and genres
Scope of GST taxability of digital services
‒ Set up Skill India Digital Platform, a unified digital Indirect tax proposals widened
ecosystem, to facilitate access to entrepreneurship • Scope of OIDAR services widened by removing the
programmes, marketplace for employers, demand- criteria of minimal human intervention and including
based skilling B2C supplies for business purposes. Digital supplies to
• Fin-tech the Government are deemed as B2C supplies unless
‒ The scope of documents available in DigiLocker for regular GST registration is obtained by the Government
individuals to be expanded • BCD exemption for micro ATM, fingerprint
‒ Entity-based DigiLocker to be set up for large reader/scanner, miniaturised POS card reader for
businesses, MSMEs, and charitable trusts mobile POS and its parts and components has been
extended until 31 March 2024
72
Telecommunication
Outlook for the industry Indirect tax proposals

To realise the 5G ecosystem potential, the Government • Reduction of customs duty from 2.5 percent to NIL on
has announced setting up 100 labs in engineering camera lens and its parts used in manufacturing the
institutions to realise a new range of opportunities, camera module of mobile phones
business models, and employment potential • BCD exemption on the following goods extended until Deepen domestic value addition in
31 March 2024:
‒ Goods required for basic telephone/internet service
manufacturing mobile phones
and parts
‒ Specified goods for manufacturing of microphones
• Concessional customs duty on lithium-ion cells for
manufacturing batteries or battery packs of mobile
phones extended until 31 March 2024
• Concessional customs duty on specified inputs and
sub-parts for use in manufacturing telecommunication
grade optical fibre or optical fibre cables extended until
31 March 2025
73
Glossary
74
Glossary
AI Artificial Intelligence EPFO Employees Provident Fund Organisation

AIDC Agriculture Infrastructure and Development Cess EVA Ethylene Vinyl Acetate
AO Assessing Officer EXIM Export Import
ATMs Automated Teller Machine FinTech Financial Technology
B2C Business to Consumer FMV Fair Market Value
BCD Basic Customs Duty FY Financial Year
BLDC Brushless Direct Current GIFT City Gujarat International Finance Tec-City
CAD Computer-aided Design GIFT-IFSC Gujarat International Finance Tec City
International Financial Services Centre
CESTAT Central Excise and Service Tax Appellate Tribunal
GOBARdhan Galvanising Organic Bio-Agro Resources Dhan
CIT Commissioner of Income-tax
GST Goods and Services Tax
CIT(A) Commissioner of Income Tax (Appeals)
HNIs High Net-Worth Individuals
CNG Compressed Natural Gas
IBU International Banking Unit
CoE Centre of Excellence
ICMR Indian Council of Medical Research
CPI Consumer Price Index
CSR Corporate Social Responsibility IEPF Investor Education and Protection Fund
DBT Direct Benefit Transfer IFSC International Financial Services Centre
EGR Electronic Gold Receipt
75
Glossary
IFSCA International Financial Services Centres Authority NBFC Non-Banking Financial Company
INR Indian Rupee NCCD National Calamity Contingent Duty
InVIT Infrastructure Investment Trust NFIR National Financial Information Registry
IRDAI Insurance Regulatory and Development Authority of India NGO Non Governmental Organisation
IRR Internal Rate of Return OBU Offshore Banking Unit
ITC Input Tax Credit
ODI Offshore derivative instruments
JDA Joint Development Agreement
ODOP One District One Product Geographical Indications
KYC Know Your Customer
OIDAR Online Information and Database Access and Retrieval
LGD Lab-grown Diamonds Services
LRS Liberalised Remittance Scheme OTC Over-the-counter
LTCG Long-term capital gain PAN Permanent Account Number
MISHTI Mangrove Initiative for Shoreline Habitats & Tangible Incomes PF Provident Fund
MMR Maximum Marginal Rate PMKVY Pradhan Mantri Kaushal Vikas Yojana
MMR Maximum Marginal Rate
PMLA Prevention of Money Laundering Act, 2002
MMT Million Metric Tonnes
POS Point of Sale
MSME Micro Small and Medium Enterprises
76
Glossary
PPP Public-Private Partnership

PRANAM Prime Minister Programme for Restoration, Awareness,
Nourishment and Amelioration of Mother Earth
RBI Reserve Bank of India
REIT Real Estate Investment Trust
SAAR Specific Anti-Avoidance Rule
SEBI Securities Exchange Board of India
SEZ Special Economic Zone
SEZ Act Special Economic Zone Act, 2005
SPV Special Purpose Vehicle
STT Securities Transaction Tax
TCG Short-term capital gain
TDS Tax Deduction at Source
TP Transfer Pricing
ULIP Unit Linked Insurance Policy
WHT Withholding Tax
77
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In Union Budget 2023 Detailed Analysis Noexp

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Union Budget 2023

Early signs of easing domestic inflation,

In FY24, geopolitical uncertainties, global

Economy: A quick snapshot of the current status

GDP growth Inflation Credit growth** Fiscal deficit

Economy is projected to grow by 7.0 percent in FY23; 6.0-6.8 percent in FY24

Monetary policy Fiscal policy % YoY Consumer price inflation

Budget 2023: Seven priorities

A people-centric agenda with seven priorities as “Saptarishi”

1. Infrastructure and investment 2. Financial sector

A people-centric agenda with seven priorities as “Saptarishi”

A people-centric agenda with seven priorities as “Saptarishi”

4. Inclusive development 5. Youth power

A people-centric agenda with seven priorities as “Saptarishi”

6. Unleashing the potential 7. Reaching the last mile

Tax incentives for the IFSC units and start-ups

Impetus to co-operative sector

Rationalisation of provisions of charitable trusts and institutions

Rationalisation of provisions of charitable trusts and institutions

Carry forward of losses and unabsorbed depreciation in

TDS and tax on winnings from online games and others

Rationalisation of TDS provisions

Other key proposals

Sunset for exemption of news agencies

Reduction in the time limit for furnishing TP

Penalty for furnishing inaccurate SFT or reportable

Legislative changes • E-commerce operators

Legislative changes • Amendment in punishment for offences

Procedural changes Return filing Consent-based sharing of information

Legislative changes Procedural changes • Registration

The Central Excise Act

Description of goods Until 1 February 2023 From 2 February 2023

Filter cigarettes of length not exceeding 65 mm 440 510

The Central Sales Tax Act

• New section proposed, which will declare CESTAT

Legislative changes Time limit for disposal of application by the Settlement

Legislative changes • Appeal provisions amended to prescribe that an

Import tariff amendments Export tariff amendments

Description of goods Up to 1 February 2023 From 2 February 2023

Description of goods Up to 1 February 2023 From 2 February 2023

Description of goods Up to 1 February 2023 From 2 February 2023

Heat coil for use in the manufacturing of 20% 15%

Description of goods Up to 1 February 2023 From 2 February 2023

Change in end date of exemption of customs duty

Description of goods BCD AIDC SWS

Coal, peat, lignite 1% 2.5% 1.5% Nil Nil Nil

Description of goods Up to 1 February 2023 From 2 February 2023

Certain exemption/concessions withdrawn from Project Import

Enable a digitised and simplified governance framework

Data governance and digitisation MSME EoDB

Launch knowledge, innovation, and tourism initiatives

R&D Education Tourism

Focus on agriculture and sustainable growth

Strengthen financial services and infrastructure

Financial services GIFT City-IFSC Infrastructure

Government grants and incentives Customs duty

The existing concessional duty rates on lithium-ion cells

Banking and capital markets

Key policy measures IFSC-GIFT City:

Banking and capital markets

Customs duty Direct tax

Education Skilling Direct and indirect tax proposals

Energy and infrastructure