Amendment by Finance Bill 2023

Key amendments of Finance Bill 2023

On 1 February 2023, The Finance Minister Nirmala Sitharaman has represented Finance Bill 2023 (Union Budget 2023) in the lower house of Parliament. This budget is the last full budget of Modi Government 2.0 as next year there will be parliamentary elections and interim budget will be produced. People were expecting huge tax relief as inflation is on peak and interest rates are also high. After going through with Finance Bill 2023 we have made simplified interpretation for the users.

Amendment made by finance Bill 2023 for Direct Tax:

Now any taxpayer other than Firm and Company can avail new tax regime specified u/s 115BAC. Previously only Individual and HUF can claim new tax regime.

New Tax Regime will be “default tax regime”. Now if tax payer wants to continue with old tax regime then has to opt for old regime by filing specified forms.

Taxpayer have income from Business or profession will be given once in a life option to change from OLD to new regime. Other taxpayer can each year exercise their option to choose between OLD or new regime.

Rebate u/s 87A will also be available to person opting for new tax regime u/s 115BAC. Benefit of rebate 87A will be available if taxable income is upto INR 7 Lakh. If taxable income is more than 7 lakh the rebate cannot be claimed.

New Tax Slab are notified for person opting new tax regime u/s 115BAC. New Tax Slab for new tax regime is as following:

0-3L : Nil

3L-6L : 5%

6L-9L : 10%

9L-12L: 15%

12-15 L : 20%

15L +: 30%
Previously taxpayer has to pay tax at 25% for income between 12.5L to 15L which is now merged to 20% tax.

Salaried class taxpayer can claim standard deduction of INR 50,000 under new tax regime also. Previously this deductions were available only for old tax regime.

Surcharge under new tax regime has been reduced to 25% as compare to 37% if income exceeds from 5 crores.

Special provisions inserted under section 43B for deduction on account of payment made to MSME. Now business expenditure cannot be claimed if such amount was payable to MSME and were not paid till the end of financial year.

Tax audit limit has been increased for presumptive taxation. Now taxpayer opting for filing return under 44AD or 44ADA can filing return without audit if their cash transaction are less than 5%. However to avail this benefit their turnover/receipt from their respective business/profession should not exceeds from 3 Crore or 75 Lakh respectively.

Limit has been inserted under section 54 and 54F. Now capital gain exemption can be claimed upto 10 crores only.

Agniveer Corpus Fund to be created. Any amount paid in previous year or deposited any amount in his account in the said Fund, he shall be allowed a deduction u/s 80CCH.

Amendment made by finance Bill 2023 for Indirect Tax:

ITC on expenditure related to CSR will not be allowed.

A sunset clause has been inserted in section 37, 39, 44 and 52. Now returns prescribed under this section cannot be filed after 3 years from due date. I.e. GSTR 1, GSTR 3, GSTR 9 and TCS Return can’t be filed after expiry of 3 years from the due date.

Rules will be provided for calculation of interest on GST.

Penalty on e-commerce operator if they allowed sales through unregistered dealer or made interstate supplies through a dealer who is not allowed (i.e. Composition Dealer) for interstate supplies.

Clarification on non-taxability of High Sea Sales and such high sea sales will be included in exempt sale while reversing ITC for person who is making taxable and exempt sales.

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