Articles

Our hon’ble FM Smt. Nirmala Sitharaman ji has presented the Union Budget 2023-24 including the Finance Bill 2023-24, for the FY 2023-24, before the Parliament on 1.2.2023.

The Key Highlights of the Budget 2023 Amendments pertaining to Direct Tax Domain are discussed below for ready reference of our Readers:

1. The rebate limit u/s 87A has been increased from Rs. 5 lakhs to Rs. 7 lakhs in New Personal Tax Regime u/s 115BAC.

2. The Basic Exemption Limit has been increased from Rs. 2.5 lakhs to Rs. 3 lakhs in New Personal Tax Regime u/s 115BAC. The new slab rates in New Personal Tax Regime are as under:

3. Standard Deduction of Rs. 50,000 u/s 16 is now available to all salaried employees, even in new personal taxation regime u/s 115BAC.

4. New Personal Tax Regime to be the Default Tax Regime. However, the citizens will continue to have the option to avail the benefit of the old tax regime.

5. No Changes in Tax Slabs in Old Personal Tax Regime, Corporates, Firms & LLPs.

6.  The Online Declaration Forms 9A & 10 in respect of declaration concerning the application of unutilised 85% of the receipts of Charitable Trusts & Organistaions in subsequent 5 years towards the charitable objectives, have now to be electronically filed atleast 2 months before the due date of filing of original return of income u/s 139(1).

7. Threshold limit for Presumptive Taxation Scheme u/s 44AD in respect of small business increased from Rs 2 crores to Rs 3 crores, and u/s 44ADA in respect of professionals increased from Rs 50 lakhs to Rs 75 lakhs, provided, their respective cash receipts don’t exceed 5% of their total receipts.

8. A new clause (h) to be inserted in section 43B to provide that Deduction in respect of business expenditure pertaining to payments payable to MSMEs by Businesses, will be available only on actual payment basis and not on accrual basis, and that too only if the payment has been made within a period of 45 days in case of written agreement and 15 days in case of no written agreements. Deduction will not be allowed even if payment has been made before the due date of filing return of income u/s 139(1).

9. With a view to reduce the pendency of appeals at Commissioner level, the deployment of about 100 Joint Commissioners for disposal of small appeals has been proposed.

10. A new section 115BBJ has been introduced to provide for taxability of winnings from online gaming activity at @ 30% plus applicable surcharge and cess. A new section 194BA to be inserted in the Act, with effect from 1st July 2023, to provide for deduction of tax at source on net winnings in the user account at the end of the financial year, from online gaming activities. 

11. The TCS rate increased from 5% to 20% in respect of Foreign Remittances relating to Overseas Tour Packages and also in respect of other Foreign Remittances in excess of Rs 7,50,000 in a year.

12. Deduction in respect of Capital Gains available u/s 54 and 54F restricted to Rs 10 crores, in a year.

13. In order to ensure that the inventory is valued in accordance with various provisions of law, it is proposed to amend section 142 of the Act relating to Inquiry before assessment to enable the Assessing Officer to direct the assessee to get the inventory valued by a cost accountant, nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in this behalf. Assessee is then required to furnish the report of inventory valuation in the prescribed form duly signed and verified by such cost accountant and setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require.

14. The time available u/s 153 for completion of assessment relating to the assessment year commencing on or after the 1st day of April, 2022 has been increased from nine months to twelve months from the end of the assessment year in which the income was first assessable.

15. The share proceeds from Non Residents also brought within the realms of valuation requirements u/s 56(2)(viib) of the Act.