Budget 2023- Key Points Related to Direct Taxes: Exploring the Highlights and Implications
Budget 2023- Key Points Related to Direct taxes: Budget 2023 is the first budget of Amrit Kaal as usual it’s always debatable among taxpayers whether it’s a Good Budget or Average Budget. I will try to decode this in simple terms to our readers. I will try to keep it as simple as I can be, I will not go in big numbers and nor in Fiscal Deficit so that average taxpayers or citizens can understand.
I will start with the most important announcement from our Hon. FM regarding Slab Rate:-
New tax rates:
0 to Rs 3 lakhs – Nil
Rs 3 to 6 lakhs – 5%
Rs 6 to 9 Lakhs – 10%
Rs 9 to 12 Lakhs – 15%
Rs 12 to 15 Lakhs – 20%
Above 15 Lakhs – 30%
No income tax will be charged till Rs 7 lakh in the new tax regime.
Old Tax regime continues too.
Leave Encashment
Here is good news for the salaried class, the limit of 3 lacks for tax exemption on leave encashment on the retirement of non-government salaried employees was last fixed in the year 2002 when the highest basic pay in the government was 30,000/- pm. In line with the increase in government salaries, now one can claim a deduction of up to 25 lacks.
MSMEs and Professionals
MSMEs are the growth engines of our economy. During the Previous year, Micro-enterprises with a turnover of up to 2 crore and certain professionals with a turnover of up to 50 lacks can avail of the benefit of presumptive taxation. Now, this limit stands to increase to 3 crores and 75 lacks respectively, to taxpayers whose cash receipts are no more than 5 percent.
Moreover, to support MSMEs in the timely receipt of payments, deductions for expenditures incurred are allowed only when payment is actually made.
Start- Ups
Startups are the growth engine of the new economy but they have suffered many tax issues, to overcome this GOI has extended the date of Incorporation for Income tax benefits to start-ups from 31.03.23 to 31.03.24.
Also increases the benefit of carry forward losses on change of shareholding of start-ups from seven years of incorporation to ten years.
Capital Gain
For Small Taxpayers there is not a major change but for high net-worth Individuals there will be restrictions on Deduction and exemption u/s 54 & 54F of the IT Act.
One cannot claim a Deduction of more than Rs 10 Cr under the above section for Capital Gain on the Sale of Property.
Other Important Points
TCS – foreign remittances for other purposes under LRS and purchase of overseas tour program, it is proposed to increase the rates of TCS from 5 percent to 20 percent.
Insurance Maturity Taxable – where the aggregate of premium for life insurance policies (other than ULIP) issued on or after 1st April 2023 is above 5 lacks, income from only those policies with aggregate premiums up to 5 lacks shall be exempt. This will not affect the tax exemption provided to the amount received on the death of the person insured. It will also not affect insurance policies issued till 31st March 2023.
At present, the TDS rate on withdrawal of taxable components from the Employees’ Provident Fund Scheme in non-PAN cases is 30 percent. It is now reduced to 20 percent, as in other non-PAN cases.
Mahila Samman Saving certificate for 2 year period up to March 2025. Deposit facility till 2 lakhs in the name of women/girls at a fixed interest rate of 7.5% with partial withdrawal option.
Senior Citizen Savings Schemes (SCSS) limit has been doubled From ₹15L to ₹30L. SCSS provides 8% p.a. interest*.
Author Bio:
Name: CA Karan Singh
Qualification: CA in Practice
Contact info: 8087397644
Company: Bashmakh & Co
Location: Shill, Thane.
Disclaimer: This is meant purely for general education purposes. While the information is believed to be accurate to the best of my knowledge, I do not make any representations or warranties, express or implied, as to the accuracy or completeness of this information.
Readers should conduct and rely upon their own examination and analysis. This note is not an offer, invitation, advice, or solicitation of any kind. I accept no responsibility for any errors it may contain, whether caused by negligence or otherwise, or for any loss, however, caused or sustained, by the person who relies upon it. This information provided is for the intended recipient for knowledge and guidance purposes only.