ON 1st February 2023, Finance Minister of India presented Union budget 2023 . The Finance bill is the part of union budget which includes various tax proposal for next FY i.e. 1st April 2023 to 31st March 2024.
The Finance bill is a weapon under Fiscal policy to control economic conditions in the country. For understanding by common man, union budget can be understood as annual accounts of country. It includes revenue budget and capital budget for last year, current year and next year. For example, union budget 2023, shows figures of revenue and capital budget with fiscal deficit for following years:-
- Actual Figures for FY 2021-22
- Budget Estimates for FY 2022-23
- Revised Estimates for FY 2022-23
- Budget Estimates for FY 2023–24
As per budget documents, Fiscal Deficit target set at 5.9% for FY 2023-24. (Rs. 17.86 Lakh crore)
- FY2023-24 total expenditure estimated at Rs 45.03 lakh crore.
- Total Receipts other than borrowing estimated at Rs 27.16 lakh crore.
Finance bill provides supporting details to budget estimates for next year i.e. FY 2023-24. Highlights of Union Budget 2023 is given below:-
Direct Tax proposals in Budget 2023
1. Personal Income Tax
- The new tax regime for Individual and HUF, introduced by the Finance Act 2020, is now proposed to be the default regime.
- The New tax regime would also become the default regime for AOP (other than co-operative), BOI and AJP.
- Any individual, HUF, AOP (other than co-operative), BOI or AJP not willing to be taxed under this new regime can opt to be taxed under the old regime. For those person having income under the head “profit and gains of business or profession” and having opted for old regime can revoke that option only once and after that they will continue to be taxed under the new regime. For those not having income under the head “profit and gains of business or profession”, option for old regime may be exercised in each year.
- Substantial relief is proposed under the new regime with new slabs and tax rates as under:
- Income upto Rs. 300000/- : Tax Rate NIL
- From 300001 to 600000 : Tax rate 5%
- From 600001 to 900000 : Tax rate 10%
- From 900001 to 1200000 : Tax rate 15%
- From 1200001 to 1500000 : Tax rate 20%
- above 1500000 : Tax rate 30%
- Resident individual with total income up to ` 5,00,000 do not pay any tax due to rebate under both old and new regime. It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to ` 7,00,000.
- Standard deduction of ` 50,000 to salaried individual, and deduction from family pension up to ` 15,000, is currently allowed only under the old regime. It is proposed to allow these two deductions under the new regime also.
- Following change in proposed in Surcharge on income-tax under in new tax regime :-
- 10 per cent if income is above Rs. 50 lakh and up to Rs. 1 crore
- 15 per cent if income is above Rs. 1 crore and up to Rs. 2 crore
- 25 per cent if income is above Rs. 2 crore
- No change in surcharge is proposed for those who opt to be under the old regime. (where 37% surcharge if income above Rs. 5 crore)
- Encashment of earned leave up to 10 months of average salary, at the time of retirement in case of an employee (other than an employee of the Central Government or State Government), is exempt under sub-clause (ii) of clause (10AA) of section 10 of the Income-tax Act (“the Act”) to the extent notified. The maximum amount which can be exempted is ` 3 lakh at present. It is proposed to issue notification to extend this limit to ` 25 lakh.
|B.1 Promoting timely payments to Micro and Small Enterprises |
In order to promote timely payments to micro and small enterprises, it is proposed to include payments made to such enterprises within the ambit of section 43B of the Act. Thus, deduction for such payments would be allowed only when actually paid. It will be allowed on accrual basis only if the payment is within the time mandated under the Micro, Small and Medium Enterprises Development Act.
B.2 Agnipath Scheme, 2022
The payment received from the Agniveer Corpus Fund by the Agniveers enrolled in Agnipath Scheme, 2022 is proposed to be exempt from taxes. Deduction in the computation of total income is proposed to be allowed to the Agniveer on the contribution made by him or the Central Government to his Seva Nidhi account.
B.3 Relief to sugar co-operatives from past demand
It is proposed that for sugar co-operatives, for years prior to A.Y. 2016-17, if any deduction claimed for expenditure made on purchase of sugar has been disallowed, an application may be made to the Assessing Officer, who shall recompute the income of the relevant previous year after allowing such deduction up to the price fixed or approved by the Government for such previous year.
B.4 Increasing threshold limit for Co-operatives to withdraw cash without TDS It is proposed to enable co-operatives to withdraw cash up to ` 3 crore in a year without being subjected to TDS on such withdrawal.
B.5 Penalty for cash loan/transactions against primary co-operatives It is proposed to amend section 269SS of the Act to provide that where a deposit is accepted by a primary agricultural credit society or a primary co-operative agricultural and rural development bank from its member or a loan is taken from a primary agricultural credit society or a primary co-operative agricultural and rural development bank by its member in cash, no penal consequence would arise, if the amount of such loan or deposit in cash is less than ` 2 lakh. Further, section 269T of the Act is proposed to be amended to provide that where a deposit is repaid by a primary agricultural credit society or a primary co-operative agricultural and rural development bank to its member or such loan is repaid to a primary agricultural credit society or a primary co-operative agricultural and rural development bank by its member in cash, no penal consequence shall arise, if the amount of such loan or deposit in cash is less than ` 2 lakh.
B.6 Relief to start-ups in carrying forward and setting off of losses The condition of continuity of at least 51 per cent shareholding for setting off of carried forward losses is relaxed for an eligible start up if all the shareholders of the company continue to hold those shares. At present this relaxation applies for losses incurred during the period of 7 years from incorporation of such start-up. It is proposed to increase this period to 10 years.
B.7 Extension of date of incorporation for eligible start up for exemption Certain start-ups are eligible for some tax benefit if they are incorporated before 1st April, 2023. The period of incorporation of such eligible start-ups is proposed to be extended by one year to before 1st April, 2024.
B.8 Gold to Electronic Gold Receipt The conversion of physical gold to Electronic Gold Receipt and vice versa is proposed not to be treated as a transfer and not to attract any capital gains. This would promote investments in electronic equivalent of gold.
B.9 Incentives to IFSC Relocation of funds to IFSC has certain tax exemptions, if the relocation is before 31.03.2023. This date is proposed to be extended to 31.03.2025. Further, any distributed income from the offshore derivative instruments entered into with an offshore banking unit is also proposed to be exempted subject to certain conditions.
B.10 Exemption to development authorities etc. It is proposed to provide exemption to any income arising to a body or authority or board or trust or commission, (not being a company) which has been established or constituted by or under a Central or State Act with the purposes of satisfying the need for housing or for planning, development or improvement of cities, towns and villages or for regulating any activity or matter, irrespective of whether it is carrying out commercial activity.
B.11 Facilitating certain strategic disinvestments To facilitate certain strategic disinvestments, it is proposed to allow carry forward of accumulated losses and unabsorbed depreciation allowance in the case of amalgamation of one or more banking company with any other banking institution or a company subsequent to a strategic disinvestment, if such amalgamation takes place within 5 years of strategic disinvestment. It is also proposed to modify the definition of ‘strategic disinvestment’.
B.12 15 per cent concessional tax to promote new manufacturing co-operative society In order to promote the growth of manufacturing in co-operative sector, a new co-operative society formed on or after 01.04.2023, which commences manufacturing or production by 31.03.2024 and do not avail of any specified incentive or deduction, is proposed to be allowed an option to pay tax at a concessional rate of 15 per cent similar to what is available to new manufacturing companies.
|C. EASE OF COMPLIANCE|
|C.1 Ease in claiming deduction on amortization of preliminary expenditure At present for claiming amortization of certain preliminary expenses, the activity is to be carried out either by the assessee or by a concern approved by the Board. In order to ease the process of claiming amortization of these expenses it is proposed to remove the condition of activity in connection with these expenses to be carried out by a concern approved by the Board. Format for reporting of such expenses by the assessee shall be prescribed. |
C.2 Increasing threshold limits for presumptive taxation schemes In order to ease compliance and to promote non-cash transactions, it is proposed to increase the threshold limits for presumptive scheme of taxation for eligible businesses from ` 2 crore to ` 3 crore and for specified professions from ` 50 lakh to` 75 lakh. The increased limit will apply only in case the amount or aggregate of the amounts received during the year, in cash, does not exceed five per cent of the total gross receipts/turnover.
C.3 Extending the scope for deduction of tax at source at lower or nil rate It is proposed to allow a taxpayer to obtain certificate of deduction of tax at source to lower or nil rate on sums on which tax is required to be deducted under section 194LBA of the Act by Business Trusts.
|D. WIDENING & DEEPENING OF TAX BASE AND ANTI AVOIDANCE|
|D.1 It is proposed to extend the deemed income accrual provision relating to sums of money exceeding fifty thousand rupees, received from residents without consideration to a not ordinarily resident with effect from 1st April, 2023. |
D.2 It is proposed to omit the provision to allow tax exemption to news agencies set up in India solely for collection and distribution of news from the financial year 2023-24.
D.3 It is proposed to tax distributed income by business trusts in the hands of a unit holder (other than dividend, interest or rent which is already taxable) on which tax is currently avoided both in the hands of unit holder as well as in the hands of business trust.
D.4 It is proposed to withdraw the exemption from TDS currently available on interest payment on listed debentures.
D.5 With respect to presumptive schemes for non-residents, it is proposed to disallow carried forward and set off of loss computed as per books of account with presumptive income.
D.6 For online games, it is proposed to provide for TDS and taxability on net winnings at the time of withdrawal or at the end of the financial year. Moreover, TDS would be without the threshold of` 10,000. For lottery, crossword puzzles games, etc threshold limit ` 10,000 for TDS shall continue but shall apply to aggregate winnings during a financial year.
D.7 The rate of TCS for foreign remittances for education and for medical treatment is proposed to continue to be 5 per cent for remittances in excess of ` 7 lakh. Similarly, the rate of TCS on foreign remittances for the purpose of education through loan from financial institutions is proposed to continue to be 0.5 per cent in excess of `7 lakh. However, for foreign remittances for other purposes under LRS and purchase of overseas tour program, it is proposed to increase the rates of TCS from 5 per cent to 20 per cent.
D.8 Tax on capital gains can be avoided by investing proceeds of such gains in residential property. This is proposed to be capped at ` 10 crore.
D.9 The income from market linked debentures is proposed to be taxed as short-term capital gains at the applicable rates.
D.10 It is proposed to provide for some provisions to minimise risk to revenue due to undervaluation of inventory.
D.11 It is proposed to provide that where aggregate of premium for life insurance policies (other than ULIP) issued on or after 1st April, 2023 is above ` 5 lakh, income from only those policies with aggregate premium up to ` 5 lakh shall be exempt. This will not affect the tax exemption provided to the amount received on the death of person insured. It will also not affect insurance policies issued till 31st March, 2023.
D.12 It is proposed to amend provisions for computing capital gains in case of joint development of property to include the amount received through cheque etc. as consideration.
D.13 While interest paid on borrowed capital for acquiring or improving a property can, subject to certain conditions, be claimed as deduction from income, it can also be included in the cost of acquisition or improvement on transfer, thereby reducing capital gains. It is proposed to provide that the cost of acquisition or improvement shall not include the amount of interest claimed earlier as deduction.
D.14 There are certain assets like intangible assets or rights for which no consideration has been paid for acquisition and the transfer of which may result in generation of income. Their cost of acquisition is proposed to be defined to be NIL.
|E. IMPROVING COMPLIANCE AND TAX ADMINISTRATION|
|E.1 With respect to rectification of orders by the Interim Board of Settlement, it is proposed to provide that where the time-limit for amending an order by it or for making an application to it expires on or after 01.02.2021 but before 01.02.2022, such time-limit shall stand extended to 30.09.2023. |
E.2 To expedite the disposal of certain appeals pending with Commissioner (Appeals), it is proposed to introduce a new authority in the rank of Joint Commissioner/ Additional Commissioner [JCIT(Appeals)], for appeals against certain orders passed by or with the approval of an authority below the rank of Joint Commissioner. Certain related and consequential amendments are also proposed in this regard.
E.3 It is proposed to reduce the minimum time period required to be provided by the transfer pricing officer to assessee for production of documents and information from 30 days to 10 days.
E.4 It is proposed to provide for appeal against penalty orders passed by Commissioner (Appeals) under certain sections of the Act before the Appellate Tribunal. It is also proposed to provide that an order under section 263 of the Act passed by the Principal Chief Commissioner or Chief Commissioner and any rectification order for the same shall also be appealable before the Appellate Tribunal. Further, it is proposed to enable filing of memorandum of cross-objections in all classes of cases against which appeal can be made to the Appellate Tribunal.
E.5 It is proposed to amend section 132 of the Act, dealing with search and seizure, to allow the authorised officer to take assistance of specific domain experts like digital forensic professionals, valuers and services of other professionals like locksmiths, carpenters etc. during the course of search and also to aid in accurate estimation of undisclosed income held in the form of property by the assessee.
E.6 Section 170A of the Act, inserted vide Finance Act, 2022 is proposed to be substituted to clarify that a modified return shall be furnished by an entity to whom the order of the business reorganisation applies, and to introduce provisions for assessment or reassessment in cases where such modified return is furnished.
E.7 It is proposed that an order of assessment may be passed within a period of 12 months from the end of the relevant assessment year or the financial year in which updated return is filed, as the case may be. It is also proposed that in cases where search under section 132 of the Act or requisition under section 132A of the Act has been made, the period of limitation of pending assessments shall be extended by twelve months.
E.8 It is proposed to make amendments to empower the Central Government to make modifications in the already notified schemes regarding e-Verification, Dispute Resolution, Advance Rulings, Appeal and Penalty, at any time to enable better implementation of such schemes.
E.9 It is proposed to limit the time for furnishing of a return for reassessment. Further, it is also proposed to provide that in cases where search related information is available after 15th March of any financial year, an additional period of fifteen days shall be allowed for issuance of notice, for assessment/reassessments etc, under section 148 of the Act. It is also proposed to clarify that the specified authority for granting approval shall be Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.
E.10 It is proposed to provide a penalty of ` 5,000 if there is any inaccuracy in the statement of financial transactions submitted by a prescribed reporting financial institution due to false or inaccurate information submitted by the account holder.
E.11 It is proposed to amend section 271C and section 276B of the Act to provide for penalty and prosecution where default in TDS relates to transaction in kind.
E.12. It is proposed to amend the time period for filing of appeal against the order of the Adjudicating authority under Benami Act within a period of 45 days from the date when such order is received by the Initiating Officer or the aggrieved person. The definition of ‘High Court’ is also proposed to be modified to allow determination of jurisdiction for filing appeal in the case of non-residents.
|F.1 The restriction on interest deductibility on interest payment to overseas associated enterprise does not apply to those in the business of banking and insurance. It is proposed to extend this benefit to non-banking financial companies, as may be notified. |
F.2 TDS on payment of certain income to a non-resident is currently at the rate of 20 per cent, but the tax rate in treaties may be lower. It is proposed to allow the benefit of tax treaty at the time of TDS on such income under section 196A of the Act.
F.3 At present the TDS rate on withdrawal of taxable component from Employees’ Provident Fund Scheme in non-PAN cases is 30 per cent. It is proposed to reduce it to 20 per cent, as in other non-PAN cases.
F.4 Sometimes, tax for income of an earlier year is deducted later, while tax thereon has already been paid in the earlier year. Amendment is proposed to facilitate such taxpayers to claim credit of this TDS in the earlier year.
F.5 Higher TDS/TCS rate applies, if the recipient is a non-filer i.e. who has not furnished his return of income of preceding previous year and has aggregate of TDS and TCS of ` 50,000 or more. It is proposed to exclude a person who is not required to furnish the return of income for such previous year and who is notified by the Central Government in the Official Gazette in this behalf.
F.6 It is proposed to clarify that the amount of advance tax paid is reduced only once for computing the interest payable u/s 234B in the case of an updated return.
F.7 It is proposed to extend taxability of the consideration (share application money/ share premium) for shares exceeding the face value of such shares to all investors including non-residents.
F.8 It is proposed to enable prescription of a uniform methodology for computing the value of perquisite with respect to accommodation provided by employers to their employees.
F.9 It is proposed to provide a time limit for an SEZ unit to bring the proceeds from exports of goods or services into India. The filing of income-tax return is also proposed to be made mandatory for claiming deduction on export income.
F.10 Due to changes in classification of non-banking financial companies by the Reserve Bank of India, it is proposed to make necessary amendments to align such classifications in the Act with the same.
F.11 It is proposed to clarify that for taxability under section 28 of the Act as well for tax deduction at source under section 194R of the Act, the benefit could also be in cash.
F.12 It is proposed to make amendments relating to exemption provided to charitable trusts and institution to provide clarity on tax treatment on replenishment of corpus and on repayment of loans/borrowings;treat only 85 per cent of donation made to another trust as application;omit the redundant provisions related to rolling back of exemption;combine provisional and regular registration in some cases;modify the scope of specified violation;provide for payment of tax on assets if a trust does not apply for exemption after getting provisional exemption and for re-exemption after expiry of exemption;align of time for furnishing of certain forms;clarify that the time provided for furnishing return of income for claiming exemption shall not include the time provided for furnishing updated return.
F.13 It is proposed to omit certain name-based funds from section 80G of the Act, which provides for deduction of donation to such funds from the income of the donor.
F.14 It is proposed to provide that where refund is due to a person, such refund shall be set off against existing demand, and if proceedings for assessment or reassessment are pending in such case, the refund due will be withheld by the Assessing Officer till the date of assessment or reassessment.
|G.1 It is proposed to omit section 88 and some of the clauses of section 10 of the Act which are no longer in force. |
G.2 It is proposed to extend tax exemption to Specified Undertaking of Unit Trust of India (SUUTI) till 30th September, 2023. It is also proposed to enable the Central Government to notify the date of vacation of office of administrator of SUUTI.
G.3 It is proposed to decriminalize certain acts of omission of liquidators under section 276A of the Act with effect from 1st April, 2023.
Indirect Tax proposals in Budget 2023
|A. LEGISLATIVE CHANGES IN CUSTOMS LAWS|
|A.1 Amendments in the Customs Act, 1962 Section 25 (4A) is being amended to exclude certain categories of conditional customs duty exemptions from the validity period of two years, such as, notifications issued in relation to multilateral or bilateral trade agreements; obligations under international agreements, treaties, conventions including with respect to UN agencies, diplomats, international organizations; privileges of constitutional authorities; schemes under Foreign Trade Policy; Central Government schemes having a validity of more than two years; re-imports, temporary imports, goods imported as gifts or personal baggage; any other duties of Customs under any other law in force including IGST levied under section 3(7) of Customs Tariff Act, 1975, other than duty of customs levied under section 12 of the Customs Act 1962. Section 127C is being amended to specify a time limit of nine months from date of filing application for passing final order by Settlement Commission. |
A.2 Amendments in the provisions relating to Anti-Dumping Duty (ADD), Countervailing Duty (CVD), and Safeguard Measures Sections 9, 9A, 9C of the Customs Tariff Act are being amended to clarify the intent and scope of these provisions. They are also being validated retrospectively with effect from 1st January 1995.
A.3 Amendments in the First Schedule to the Customs Tariff Act, 1975 The First Schedule to the Customs Tariff Act, 1975 is being amended to increase the rates on certain tariff items with effect from 02.02.2023 and also modify the rates on certain other tariff items as part of rate rationalisation with effect from date of assent. The First Schedule to the Customs Tariff Act is being proposed to be amended in accordance with HSN 2022 amendments. New tariff lines are also proposed to be created, which will help in better identification of millet-based products, mozzarella cheese, medicinal plants and their parts, certain pesticides, telecom products, synthetic diamonds, cotton, fertilizer grade urea etc. This will also help in trade facilitation by better identification of the above items, getting clarity on availing concessional import duty through various notifications and thus reducing dwell time. These changes shall come into effect from 01.05.2023.
A.4 Amendment in the Second Schedule to the Customs Tariff Act, 1975 The Second Schedule (Export Tariff) is being amended to align the entries under heading 1202 with that of the First Schedule (Import Tariff) .
|B. LEGISLATIVE CHANGES IN GST LAWS|
|B.1 Decriminalisation Section 132 and section 138 of CGST Act are being amended, inter alia, to – raise the minimum threshold of tax amount for launching prosecution under GST from ` one crore to ` two crore, except for the offence of issuance of invoices without supply of goods or services or both;reduce the compounding amount from the present range of 50 per cent to 150 per cent of tax amount to the range of 25 per cent to 100 per cent;decriminalize certain offences specified under clause (g), (j) and (k) of sub-section (1) of section 132 of CGST Act, 2017, viz.-obstruction or preventing any officer in discharge of his duties; deliberate tempering of material evidence;failure to supply the information. |
B.2 Facilitate e-commerce for micro enterprises Amendments are being made in section 10 and section 122 of the CGST Act to enable unregistered suppliers and composition taxpayers to make intra-state supply of goods through E-Commerce Operators (ECOs), subject to certain conditions.
B.3 Amendment to Schedule III of CGST Act, 2017 Paras 7, 8 (a) and 8 (b) were inserted in Schedule III of CGST Act, 2017 with effect from 01.02.2019 to keep certain transactions/ activities, such as supplies of goods from a place outside the taxable territory to another place outside the taxable territory, high sea sales and supply of warehoused goods before their home clearance, outside the purview of GST. In order to remove the doubts and ambiguities regarding taxability of such transactions/ activities during the period 01.07.2017 to 31.01.2019, provisions are being incorporated to make the said paras effective from 01.07.2017. However, no refund of tax paid shall be available in cases where any tax has already been paid in respect of such transactions/ activities during the period 01.07.2017 to 31.01.2019.
B.4 Return filing under GST Sections 37, 39, 44 and 52 of CGST Act, 2017 are being amended to restrict filing of returns/ statements to a maximum period of three years from the due date of filing of the relevant return / statement.
B.5 Input Tax Credit for expenditure related to CSR Section 17(5) of CGST Act is being amended to provide that input tax credit shall not be available in respect of goods or services or both received by a taxable person, which are used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013.
B.6 Sharing of information A new section 158A in CGST Act is being inserted to enable sharing of the information furnished by the registered person 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 in a manner to be prescribed
B.7 Amendments in section 2 clause (16) of IGST Act, 2017 Clause (16) of section 2 of IGST Act is amended to revise the definition of “non-taxable online recipient” by removing the condition of receipt of online information and database access or retrieval services for purposes other than commerce, industry or any other business or profession so as to provide for taxability of OIDAR service provided by any person located in non-taxable territory to an unregistered person receiving the said services and located in the taxable territory. Further, it also seeks to clarify that the persons registered solely in terms of clause (vi) of Section 24 of CGST Act shall be treated as unregistered person for the purpose of the said clause.
B.8 Online information and database access or retrieval services Clause (17) of section 2 of IGST Act is being amended to revise the definition of “online information and database access or retrieval services” to remove the condition of rendering of the said supply being essentially automated and involving minimal human intervention. B.9 Place of supply in certain cases Proviso to sub-section (8) of section 12 of the IGST Act is being omitted so as to specify 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.
C. CUSTOMS DUTY RATE CHANGES
C.1. Reduction in basic customs duty to reduce input costs, deepen value addition, to promote export competitiveness, correct inverted duty structure so as to boost domestic manufacturing etc [with effect from 02.02.2023]
|S. No.||Commodity||From (per cent)||To (per cent)|
|2.||Fish meal for manufacture of aquatic feed||15||5|
|3.||Krill meal for manufacture of aquatic feed||15||5|
|4.||Fish lipid oil for manufacture of aquatic feed||30||15|
|5.||Algal Prime (flour) for manufacture of aquatic feed||30||15|
|6.||Mineral and Vitamin Premixes for manufacture of aquatic feed||15||5|
|7||Crude glycerin for use in manufacture of Epichlorohydrin||7.5||2.5|
|8||Denatured ethyl alcohol for use in manufacture of industrial chemicals.||5||Nil|
|1||Acid grade fluorspar (containing by weight more than 97 per cent of calcium fluoride)||5||2.5|
|III.||Gems and Jewellery Sector|
|1.||Seeds for use in manufacturing of rough lab-grown diamonds||5||Nil|
|1.||Specified capital goods/machinery for manufacture of lithium-ion cell for use in battery of electrically operated vehicle (EVs)||As applicable||Nil (up to 31.03.2024)|
|V.||IT and Electronics|
|1.||Specified chemicals/items for manufacture of Pre-calcined Ferrite Powder||7.5||Nil (up to 31.03.2024)|
|2.||Palladium Tetra Amine Sulphate for manufacture of parts of connectors||7.5||Nil (up to 31.03.2024)|
|3.||Camera lens and its inputs/parts for use in manufacture of camera module of cellular mobile phone||2.5||Nil|
|4.||Specified parts for manufacture of open cell of TV panel||5||2.5|
|1.||Heat coil for manufacture of electric kitchen chimneys||20||15|
|1.||Warm blood horse imported by sports person of outstanding eminence for training purpose||30||Nil|
|2.||Vehicles, specified automobile parts/components, sub-systems and tyres when imported by notified testing agencies, for the purpose of testing and/ or certification, subject to conditions.||As applicable||Nil|
C.2. Increase in Customs duty [with effect from 02.02.2023]
|S. No.||Commodity||Rate of duties|
|From (per cent)||To (per cent)|
|1.||Styrene||2 (+0.2 SWS)||2.5 (+0.25 SWS)|
|2.||Vinyl chloride monomer||2 (+0.2 SWS)||2.5 (+0.25 SWS)|
|1||Naphtha||1 (+ 0.1 SWS)||2.5 (+0.25 SWS)|
|1.||Silver (including silver plated with gold or platinum), unwrought or in semi-manufactured forms, or in powder form||7.5 (+ 2.5 AIDC+ 0.75 SWS)||10 (+ 5 AIDC+ Nil SWS)|
|2.||Silver dore||6.1 (+ 2.5 AIDC+ 0.61 SWS)||10 (+ 4.35 AIDC+ Nil SWS)|
|IV.||Gems and Jewellery Sector|
|1.||Articles of Precious Metals such as gold/silver/platinum||20 (+Nil AIDC +2 SWS)||25 (+Nil AIDC +Nil SWS)|
|2.||Imitation Jewellery||20 or ` 400/kg., whichever is higher (+Nil AIDC +2 or ` 40 per Kg SWS)||25 or ` 600/kg., whichever is higher (+Nil AIDC +Nil SWS)|
|1||Vehicle (including electric vehicles) in Semi-Knocked Down (SKD) form .||30 (+3 SWS)||35 (+Nil SWS)|
|2||Vehicle in Completely Built Unit (CBU) form, other than with CIF more than USD 40,000 or with engine capacity more than 3000 cc for petrol-run vehicle and more than 2500 cc for diesel-run vehicles, or with both||60 (+6 SWS)||70 (+Nil SWS)|
|3||Electrically operated Vehicle in Completely Built Unit (CBU) form, other than with CIF value more than USD 40,000||60 (+ 6 SWS)||70 (+Nil SWS)|
|Bicycles||30 (+ Nil AIDC +3 SWS)||35 (+ Nil AIDC +Nil SWS)|
|Toys and parts of toys (other than parts of electronic toys)||60 (+Nil AIDC+ 6 SWS)||70 (+Nil AIDC+ Nil SWS)|
|Compounded Rubber||10||25 or ` 30/kg., whichever is lower|
|Electric Kitchen Chimney||7.5||15|
* AIDC -Agriculture Infrastructure Development Cess; SWS – Social Welfare Surcharge
D. CHANGES IN CENTRAL EXCISE
D.1. NCCD Duty rate on Cigarettes [with effect from 02.02.2023]
|Description of goods||change of Rate of excise duty per 1000 strip|
|To (` per 1000 sticks)|
|Other than filter cigarettes, of length not exceeding 65 mm||200 to||230|
|Other than filter cigarettes, of length exceeding 65 mm but not exceeding 70 mm||250 to||290|
|Filter cigarettes of length not exceeding 65 mm||440 to||510|
|Filter cigarettes of length exceeding 65 mm but not exceeding 70 mm||440 to||510|
|Filter cigarettes of length exceeding 70 mm but not exceeding 75 mm||545 to||630|
|Other cigarettes||735 to||850|
|Cigarettes of tobacco substitutes||600 to||690|
D.2. Other changes in Central Excise [with effect from 02.02.2023]
In order to promote green fuel, central excise duty exemption is being provided to blended Compressed Natural Gas from so much of the amount as is equal to the GST paid on Bio Gas/Compressed Bio Gas contained in the blended CNG.
There are few other changes of minor nature. For details of the budget proposals, the Explanatory Memorandum and other relevant budget documents may be referred to.
Other proposals in Budget 2023
- One hundred and fifty-seven new nursing colleges will be established in co-location with the existing 157 medical colleges established since 2014.
- In the next three years, centre will recruit 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools, serving 3.5 lakh tribal students.
- The outlay for PM Awas Yojana is being enhanced by 66 per cent to over ` 79,000 crore.
- For poor persons who are in prisons and unable to afford the penalty or the bail amount, required financial support will be provided.
- Capital investment outlay is being increased steeply for the third year in a row by 33 per cent to ` 10 lakh crore, which would be 3.3 per cent of GDP. This will be almost three times the outlay in 2019-20.
- It is decided to continue the 50-year interest free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of ` 1.3 lakh crore.
- A capital outlay of ` 2.40 lakh crore has been provided for the Railways. This highest ever outlay is about 9 times the outlay made in 2013-14.
- Under Mission Karmayogi, Centre, States and Union Territories are making and implementing capacity-building plans for civil servants. The government has also launched an integrated online training platform, iGOT Karmayogi, to provide continuous learning opportunities for lakhs of government employees to upgrade their skills and facilitate people-centric approach.
- For enhancing ease of doing business, more than 39,000 compliances have been reduced and more than 3,400 legal provisions have been decriminalized. For furthering the trust-based governance, we have introduced the Jan Vishwas Bill to amend 42 Central Acts. This Budget proposes a series of measures to unleash the potential of our economy.
- For realizing the vision of “Make AI in India and Make AI work for India”, three centres of excellence for Artificial Intelligence will be set-up in top educational institutions. Leading industry players will partner in conducting interdisciplinary research, develop cutting-edge applications and scalable problem solutions in the areas of agriculture, health, and sustainable cities. This will galvanize an effective AI ecosystem and nurture quality human resources in the field.
- The KYC process will be simplified adopting a ‘risk-based’ instead of ‘one size fits all’ approach. The financial sector regulators will also be encouraged to have a KYC system fully amenable to meet the needs of Digital India.
- A one stop solution for reconciliation and updating of identity and address of individuals maintained by various government agencies, regulators and regulated entities will be established using DigiLocker service and Aadhaar as foundational identity.
- For the business establishments required to have a Permanent Account Number (PAN), the PAN will be used as the common identifier for all digital systems of specified government agencies. This will bring ease of doing business; and it will be facilitated through a legal mandate.
- For obviating the need for separate submission of same information to different government agencies, a system of ‘Unified Filing Process’ will be set-up. Such filing of information or return in simplified forms on a common portal, will be shared with other agencies as per filer’s choice.
- In cases of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security, will be returned to them by government and government undertakings. This will provide relief to MSMEs.
- To settle contractual disputes of government and government undertakings, wherein arbitral award is under challenge in a court, a voluntary settlement scheme with standardized terms will be introduced. This will be done by offering graded settlement terms depending on pendency level of the dispute.
- For efficient administration of justice, Phase-3 of the E-Courts project will be launched with an outlayof ` 7,000 crore.
- Fintech services in India have been facilitated by our digital public infrastructure including Aadhaar, PM Jan Dhan Yojana, Video KYC, India Stack and UPI. To enable more Fintech innovative services, the scope of documents available in DigiLocker for individuals will be expanded.
- An Entity DigiLocker will be set up for use by MSMEs, large business and charitable trusts. This will be towards storing and sharing documents online securely, whenever needed, with various authorities, regulators, banks and other business entities.
- Lab Grown Diamonds (LGD) is a technology-and innovation-driven emerging sector with high employment potential. These environment-friendly diamonds which have optically and chemically the same properties as natural diamonds. To encourage indigenous production of LGD seeds and machines and to reduce import dependency, a research and development grant will be provided to one of the IITs for five years.
- Over the next 3 years, we will facilitate 1 crore farmers to adopt natural farming. For this, 10,000 Bio-Input Resource Centres will be set-up,
- Replacing old polluting vehicles is an important part of greening our economy. In furtherance of the vehicle scrapping policy mentioned in Budget 2021-22, I have allocated adequate funds to scrap old vehicles of the Central Government. States will also be supported in replacing old vehicles and ambulances.
- For commemorating Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman Savings Certificate, will be made available for a two-year period up to March 2025. This will offer deposit facility upto ` 2 lakh in the name of women or girls for a tenor of 2 years at fixed interest rate of 7.5 per cent with partial withdrawal option.
- The maximum deposit limit for Senior Citizen Savings Scheme will be enhanced from ` 15 lakh to ` 30 lakh.
- The maximum deposit limit for Monthly Income Account Scheme will be enhanced from ` 4.5 lakh to ` 9 lakh for single account and from ` 9 lakh to ` 15 lakh for joint account.
- FOR 2023-24, the total receipts other than borrowings and the total expenditure are estimated at ` 27.2 lakh crore and ` 45 lakh crore respectively. The net tax receipts are estimated at ` 23.3 lakh crore. The fiscal deficit is estimated to be 5.9 per cent of GDP. To finance the fiscal deficit in 2023-24, the net market borrowings from dated securities are estimated at ` 11.8 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at ` 15.4 lakh crore.
Some Important changes by Finance ACT 2023
Central Govt. Notifies Finance Act, 2023 Applicable from 1st April and following further changes are announced in FINANCE ACT 2023:-
- As per the Finance Act 2023, capital gains of investors in funds with 35% or less of its assets in domestic equities will be classified as Short-Term capital gains, regardless of the period of holding. This will come into effect on April 1, 2023. NOW w.e.f. 1.4.2023 debt fund will be subject to short-term capital gain irrespective of holding period and gain from such funds will be taxed as per applicable slab rate. The impact of this change is likely to be felt not only by debt funds but also by other categories of funds, such as ETFs, funds of funds, international funds, and gold funds.
- From April 1, 2023, Business Trusts will be taxed on distributions made in the form of debt repayment or proceeds from amortization of debt as income from other sources. Previously, unit holders of Business Trusts were not taxed on such capital payments, but now they will have to pay tax at a rate of 40 percent (for non-residents) or applicable slab rates (for residents).
- The Finance Act 2023 outlines that the cost of acquisition of a unit of Business Trust should be decreased by any amount received by a unit holder from the Trust that does not fall under the category of interest or dividend as mentioned in section 10(23FC) or 10(23FCA) of the Income-tax Act, and is not taxable under Sections 56(2)(xii) or 115UA(2) of the Income-tax Act.
- The Finance Act 2023 amends Section 193 of the Income-tax Act to remove the obligation for Indian companies to withhold tax on interest payments made to Business Trusts that hold controlling interest or interest as per specific regulations. Earlier, Section 194A1 of the Income-tax Act exempted Business Trusts from tax withholding on interest payments, except for interest on securities like debentures.
- The Finance Bill 2023 had earlier proposed a new tax regime for taxing winnings from online games, with withholding tax provisions to take effect on July 1, 2023. However, the Amendment Bill 2023 moved the date for the withholding tax provision up to April 1, 2023, and it was enforced through the Finance Act 2023. Starting April 1, this year – 30 percent tax deducted at source will apply to withdrawals of net winnings.
- The STT on the sale of options has been increased to Rs. 2,100 on a turnover of Rs. 10 million against an earlier levy of Rs. 1,700, an increase of 23.5 percent, while on the sale of futures contracts, the STT has been raised to Rs. 12,500 on a turnover of INR 10 million against Rs. 10,000 earlier, indicating a 25 percent hike
Source and Application of funds for Government
Income tax along with others like GST, Excise duty, Customs, corporation tax and non-tax revenue, form the the part of total revenue of government. This revenue is used by the government in various forms like pensions, defence, social security schemes, subsidy, Interest on loan and state transfers etc. As per budget 2023, following are the sources of revenue along with their percentage shares in Total Revenue:-
- Income tax (15%)
- Union Excise duties (7%)
- Corporation tax (15%)
- GST (17%)
- Customs (4%)
- Non-tax Revenue (6%)
- Non-Debt capital Receipts (2%)
- Borrowings and other liabilities (34%)
Total Revenue so collected is applied for following expenditure (also showing their percentage share in Total Expenditure):-
- Pensions (4%)
- Interest payment (20%)
- Defence (8%)
- Subsidies (7%)
- Central Sector Schemes (17%)
- Centrally sponsored schemes (9%)
- Finance commissions and other transfers (9%)
- States’s Share of taxes and duties (18%)
- Other expenditure (8%)
Click below given link for Complete budget documents:-