Budget 2023- AK

Direct Tax Proposals

 Personal Income-tax:

(i) Rebate limit increased to 7 Lakh INR in the New Tax Regime i.e, No tax on income upto 7
lacs
(ii) Proposes to reduce the number of slabs to 5 and increase the exemption limit to 3 Lakhs
(0-3 lakhs - NIL, 3-6 lakhs 5%, 6-9 lakhs 10%, 9-12 lakhs 15%, 12-15 lakhs 20%, above 15
lakhs 30%)
(iii) Nominal Increase in Standard Deduction
(iv) Highest surcharge for income above INR 5 Cr. to be reduced from 37% to 25%, resultant
reduction in MMR to 39%. I.e, Surcharge @ 25% on income exceeding INR 2 Cr.
(v) No change in old regime & New income tax regime to become default tax regime but
taxpayers allowed to take benefit of the old regime

 Next generation ITR i.e, Common ITR Form to be rolled out

 Enhanced limits for presumptive taxation for MSMEs and Professionals at Rs. 3 cr & Rs.75 lacs
turnover, respectively provided the receipts on cash are less than 5%.
 Expenses allowable on payment basis in case of MSMEs u/s 43B
 Default u/s 194R & 194S, the newly introduced TDS provision in Budget 2022, to now attract
penalty/prosecution in line with other sections.
 Expands the definition of ‘perquisite’ u/s 28 to cover benefits received in cash
 In case of special audit, the scope has been extended by including stock valuation.
 Reducing litigations in income tax - 100 joint commissioner to dispose of pending appeals and
reducing the number of cases subject to scrutiny.
 Reduces time provided for furnishing TP report to 10 days from previous 30 days.
 Propose to limit capital gains exemption u/s 54 & 54F on investment in residential housing
restricted to Rs.10 Cr.
 Proposes increasing TCS from 5% to 20% for certain classes of overseas remittance w.e.f 01 July,
2023.
 New Cooperatives into manufacturing to enjoy lower tax rate of 15%
 Start-ups sunset clause extended upto Mar 31, 2024 & to be allowed carry forward of losses on
change in shareholding for 10 years
 Extension of period for relocation of funds into IFSC upto Mar'25
 EEE status to Agniveer Fund, accordingly payment received from fund exempt.
 Exclude notified NBFCs for interest deductions from thin capitalisation limitations.
 Allow the taxpayers to take TDS credit w.r.t. deduction made in a subsequent FY
 The exemption limit of leave encashment has been increased from 3 lacs to 25 lacs for central
govt. employees. Clarity awaited on private sector employees.
 Finance Bill stipulates 'time-period' of 6 months for SEZ units to bring forex in India for claiming
Sec.10AA deduction.
 Widening of scope of Sec. 9 to cover gifts from resident to ‘not ordinarily resident’, further
proposes bringing non-residents within Sec. 56(2)(vii)(b) ambit;
 Restrict the exemption of charitable trusts and institutions on donations made to other charitable
trusts and institutions to only 85% of the donation amount.
 New capital gains provision for market linked debentures, taxing income from insurance policies
where premium is more than Rs.5 lacs.
 Cost of acquisition of the asset or the cost of improvement thereto shall not include the
deductions claimed on the amount of interest under clause (b) of section 24 or under the
provisions of Chapter VIA;”.
 Conversion of gold into electronic gold receipts and vice versa not to be treated as capital gains
 Reduces TDS on taxable portion of EPF from 30% to 20%.
 Relaxation in TDS on cash withdrawal in cooperative sector
 Online Gaming TDS threshold of Rs.10,000 to be removed

Goods & Service Tax (GST) Proposals

 Disallowance of Input tax Credit on CSR expenditure
 Raises the threshold for launching prosecution from Rs 1 cr. to Rs. 2 cr, reduces the compounding
amount from 50%-150% to 35%-100%, and decriminalize certain offences specified in section
132(1) (g), (j) & (k) relating to obstruction an officer, tempering of material evidence and failure to
supply the information, respectively;
 On return filing front, proposes to restrict the filing of returns/ statements to a maximum period
of 3 years from the due date of filing of the relevant return / statement.
 Revises the definition of “non-taxable online recipient” and “online information and database
access or retrieval services
 Specifies the ‘place of supply’ irrespective of destination of the goods, in cases where the supplier
of services and recipient of services are located in India.
 Enables unregistered suppliers and composition taxpayers to make intra-state supply of goods
through E-Commerce Operators (ECOs), subject to certain conditions.
 New section 158A in CGST Act to enable sharing of information furnished by taxpayers in his
return or application of registration or statement of outward supplies, or the details uploaded by
him for generation of electronic invoice or E-way bill or any other details on the common portal,
with other systems