Tax Exceller: Union Budget 2023

Key Highlights and Takeaways

Economic & business highlights

1. Fastest growing income in the World – expected growth rate of 7% in FY 23

2. Fiscal deficit within expected target of 6.4% for FY 23 with target of 5.9% for FY 24

3. Vision is to create a technology driven economy

4. Focus on investment in the infra sector, green growth, skill development and financial sector

5. Permanent Account Number (PAN) to be used as company identification for government digital systems

6. Single window system for approvals and registrations in IFSC Gift City

Key Proposals – Personal Taxes

1. New regime to be default tax regime

2. Taxpayers allowed to opt for the old regime

3. No tax for income upto INR 7 lakhs under new regime

4. Number of tax slab under new regime reduced from 6 to 5

5. Exemption limit under new regime increased to 3 lakhs

6. No change in income tax slab under old regime

7. Standard deduction allowed for salaried and pensioners under new regime

8. Highest surcharge for HNIs reduced from 37% to 25% under new regime

9. Leave encashment limit increased from 3 lakhs to 25 lakhs

10. The sum received under a new life insurance policy taxable if the premium paid is more than 5 lakhs in any year

11. Limit for presumptive taxation for eligible business and professionals increased to INR 3 crores / INR 75 lakhs

12. Capital gains exemption on investment in residential house capped at INR 10 Cr

13. Interest claimed as deduction under any other provision not part of cost of acquisition/ improvement of the property

14. Gains arising from the transfer or redemption or maturity of Market Linked Debentures to be treated as short term capital gain

15. Winning from online games taxable at 30%

16. TCS on overseas tour packages increased to 20%

Key Proposals – Corporate Taxes & Transfer Pricing

1. No change in corporate tax rates

2. Time period for loss of eligible start-ups increased fromseven years to ten years from the date of incorporation

3. Period of incorporation of eligible start-ups extended to 1st April 2024

4. Concessional tax rate of 15% provided to a new manufacturing co-operative society which commences manufacturing or production on or before 31.03.2024

5. Deduction to SEZ unit available if consideration against export proceeds is brought into India within specified time

6. Deductions for payment to MSME allowed on actual payment basis

7. Time limit for assessment proceedings increased from 9 months to 12 months

8. Tax payer to claim TDS deducted in subsequent year in respect of income already offered to tax

9. Share premium received from non-resident investors in a closely held company in excess of its fair market value taxable in hands of the company in certain cases

10. New authority for appeals - Joint Commissioner (Appeals) to handle certain class of cases involving small amount of disputed demand

11. Time allowed by TPO to furnish information and documentation reduced from 30 days to 10 days

12. Specified domestic transactions to include transaction between taxpayer and certain new manufacturing cooperative societies

Key Proposals – Indirect Taxes

Central Excise

1. Increase in rates of duty with respect to cigarettes

Customs

1. Reduction in basic custom duty on import of capital goods for Li-on battery manufacturing units and heat coils used in manufacturing of electric kitchen chimney

2. Increase in basic custom duty on styrene, vinyl chloride monomer, toys and parts of toys (other than parts of electronic toys), bicycles, automobiles in SKD and CBU form, Silver bar, Silver dore, naphtha and kitchen chimney

3. Amendment in rules relating to import of goods at concessional rate to introduce end to end automation and to provide option to importer for voluntary payment of the necessary duties and interest, through the Common Portal.

GST

1. Wrong availment and utilisation of input tax credit to attract interest rate of 18%.

2. Time for availment of input tax credit / issuance of credit notes extended upto 30th day of November of the following financial year

3. Levy of late fee for delayed filing of TCS return

4. Extended time upto 30th day of November of the following financial year for rectification of errors in respect of details of outward supplies

5. Conditions provided for communication of details of inward & outward supplies and input tax credit by means of an auto-generated statement and to do away with two-way communication process in return filing

Key Takeaways – Tax

1. Focus on simplified personal tax regime

2. Level playing field for new manufacturing cooperative societies

3. Stability in corporate tax regime - few procedural changes

4. Procedural changes in GST

5. Changes in the basic custom duty to promote domestic manufacturing

For more information, connect with the Expert Tax Advisors at Tax Exceller.

Team Tax Exceller