Individuals:
- No changes in old tax regime
- Changes in New tax regime: Income tax slabs were changed (see below table). Limit for 100% Rebate on Income tax is enhanced from 5 lac to 7 lac. Standard deduction for salary (50K) and family pension (15K) can be claimed henceforth. Scope of assesses eligible for new tax regime extended to AOPs, BOIs and Artificial Judicial Persons.
- Capital gain exemption under Sec. 54 (sale of residential house) and Sec. 54F (sale of any long-term asset other than residential house) limited to 10 Cr
- TDS exemption on interest from listed bonds paid to a resident removed
- No capital gain arises on conversion of physical gold into Electronic gold receipts or vice versa
- Distribution in the nature of repayment of debt by REITs/InvITs is taxable only if they (cumulative of such distributions to date) exceed cost of acquisition of units
- TCS at 20% (instead of 5%) on a) overseas Tour package payments and b) LRS remittances (other than education & medical treatment purpose remittances) – w.e.f. July 1, 2023
- Capital gain/loss arising from Sale/redemption/maturity of MLDs (Market linked debentures) to be treated as short term and taxed at slab rates (& no grandfathering allowed)
- Redemption or maturity of large life insurance policies (other than ULIPs) issued on or after Apr 1, 2023 where annual premium payable is > 5 lac are taxable. No deduction for premiums paid from proceeds if they are claimed as deductions in earlier years. No tax on amount received on account of death of policy holder.
- Any capital gain arising on Non-equity oriented Mutual funds (i.e. where <=35% of a MF proceeds are invested in Indian equity shares) purchased on or after Apr 1, 2023 will be treated as Short term capital gain and taxed at slab rate
Businesses:
- Eligible turnover limits under Presumptive income scheme (under Sec. 44AD/44ADA for small businesses/professions – Individuals/HUFs/Partnership firms) raised to 3 Cr/75 lac (provided cash receipts does not exceed 5% of turnover)
- Startups incorporated till Apr 1, 2024 (instead of 1 Apr 1, 2023) continue to be eligible for 100% income tax exemption for any 3 consecutive years out first 10 years
- Dues to Micro and Small businesses (i.e. trade payables) are deductible on payment basis (however allowed on accrual basis if paid within 45 days or 15 days, as the case may be)
- 15% concessional tax rate (plus surcharge at 10%) for new manufacturing co-operative societies set up on or after Apr 1, 2023. These should commence manufacturing or production on or before 31.03.2024 and does not avail of any specified incentive or deductions,
- Equity fund raising by private companies (other than DPIIT recognised startups) from non-residents in excess of fair value of shares is taxable in hands of the company
- The 10% special tax rate on Royalty & FTS earned by a non-resident or a foreign company, as mentioned in Section 115(1)(b)(A)/(B), has been increased to 20%.
Source: Memo to Finance Bill 2023 and Finance Act 2023