st February 2023 saw Union Budget 2023 by Nirmala Sitharaman and it brought quite a lot of benefits for the middle class and salaried people.
Budget 2023 adopted the Saptarishi theme focusing on the seven key priorities:
- Inclusive Development
- Reaching the Last Mile
- Infrastructure and Investment
- Unleashing the Potential
- Green Growth
- Youth Power
- Financial Sector
Major Highlight of Budget 2023
Apparently, the most talked about change is the change in the tax rate for individual taxpayers. The government introduced new tax regime slabs and new tax rates. But, is the grass all green for individual taxpayers? What were the other major highlights of Union Budget 2023? Let’s check them out!
Changes In Income Tax In Union Budget 2023
Following are the noteworthy highlights of Budget 2023 for Income Tax
1.Change in Income Tax Rates (New Tax Regime)
In the new tax regime u/s 115 BAC, tax rates and tax slabs have changed. The following are the old and new tax slabs and rates:
|
Union Budget 2023 |
As Per Old Section 115 BAC |
||
|
New Income Slab |
New Regime Tax Slab |
Old Income Slab |
Old Regime Tax Slab |
|
Nil – 3 lakhs |
0% |
Nil – 2.50 lakhs |
0% |
|
3 lakhs – 6 lakhs |
5% |
2.50 lakhs – 5 lakhs |
5% |
|
6 lakhs – 9 lakhs |
10% |
5 lakhs – 7.50 lakhs |
10% |
|
9 lakhs – 12 lakhs |
15% |
7.50 lakhs – 10 lakhs |
15% |
|
12 lakhs – 15 lakhs |
20% |
10 lakhs – 12.50 lakhs |
20% |
|
Above 15 lakhs |
30% |
12.50 lakhs – 15 lakhs |
25% |
|
|
|
Above 15 lakhs |
30% |
Tax slabs have been reduced to 5 from 6. Further, the rebate in this regime has been increased from Rs. 5 lakhs to Rs. 7 lakhs. But it is to be remembered that the taxpayers cannot avail of deductions under this regime. Further, this regime has been made the default regime for the taxpayers. The primary benefit of this regime is to increase the disposable income in the hands of the taxpayers.
2. No Change in Income Tax Rates (Old Tax Regime)
The government has not brought any change to the old tax regime. Also, the rebate is unchanged and the limit is still Rs. 5 lakhs. However, after claiming deductions, taxpayers can avoid tax liabilities. The primary benefit of this regime is to increase the savings of the taxpayers. Thus, the tax rates for the old regime will continue as under:
|
Old Income Slab |
Old Regime Tax Slab |
|
Nil – 2.50 lakhs |
0% |
|
2.50 lakhs – 5 lakhs |
5% |
|
5 lakhs – 10 lakhs |
20% |
|
Above 10 lakhs |
30% |
It is to be noted that if the income exceeded Rs. 5 crores, then a surcharge @37% was levied. This has been reduced to 25% for both tax regimes.
3.Opting for New and Old Tax Regimes
The new regime is now the default tax regime. If the taxpayer has income under the head “Profits and Gains of Business or Profession”, then such taxpayer can opt for the old tax regime only once during income tax return filing. Once he opts out of the old regime and opts for the new regime, he will have to continue in the new regime for the rest of his life. However, for other taxpayers not having income under the head “Profits and Gains of Business or Profession”, they can opt for old or new regimes each year.
4.Deduction Related Changes
- Standard Deduction for Salaried Class: Standard deduction benefit of Rs. 50,000 was earlier available only to the taxpayers in the old tax regime. This benefit has now been extended to the new tax regime as well.
- Leave Encashment: Leave encashment is eligible for tax exemption as earlier. The existing limit of Rs. 3 lakhs has been increased to Rs. 25 lakhs in case of leave encashment on retirement for non-government salaried employees.
5.Payment Linked Deduction
- Section 43B states certain expenses for which deduction can be claimed only after the payment has been done.
- Expenses associated with MSMEs have been added here.
- Now expenses, where the vendors are MSMEs, can be claimed as a deduction only after payment has been made to the same.
6.Presumptive Taxation
Section 44AD and 44ADA allow taxpayers to declare their income on a presumptive basis.
- Existing Provisions: The turnover limit for opting for Section 44AD (for businesses) and 44ADA (for specified professions) is Rs. 2 crores and Rs. 50 lakhs respectively.
- New Provisions After Budget 2023: If the cash receipts of the taxpayers are not more than 5%, then the turnover limit for opting for Section 44AD and 44ADA will be Rs. 3 crore and Rs. 75 lakhs respectively.
7.Changes Related to TDS / TCS
- TDS on Online Game Winnings: TDS will be applicable on winnings from online games without any threshold benefit of Rs. 10,000.
- EPF Withdrawals: TDS rate on EPF withdrawal in case of persons not having PAN registration has been reduced from 30% to 20%.
- Interest on Debentures: TDS exemption on interest payment on listed debentures is proposed to be withdrawn.
- TCS on Foreign Remittances: TCS rate on foreign remittances for purposes in the Liberalised Remittance Scheme (other than education and medical treatment) has been increased from 5% to 20%.
8.Co-operative Societies Related Changes
- TDS on Cash Withdrawal: Co-operative societies are now allowed to withdraw cash up to Rs. 3 crores without attracting any TDS implications.
- Concessional Tax Rates: Co-operative societies have been allowed to pay tax at a concessional rate if it is formed on or after 01-04-2023 and commences production or manufacturing by 31-03-2024. However, such cooperative societies should not be availing of specified deductions.
9.Benefits for Startups
Startup incorporation is gaining momentum and the government has further extended benefits for the startups under income tax.
- The Budget 2023 proposed to extend the income tax benefits for registered startups from 31-03-2023 to 31-03-2024.
Changes In GST Law In Union Budget 2023
1. One of the major changes in the GST law in Budget 2023 was the decriminalisation of certain offences. For this, Sections 132 and 138 of the CGST Act were amended. Following are the major changes in relation to the same:
- The minimum threshold limit of tax amount for initiating prosecution has been increased from the existing Rs. 1 crore to Rs. 2 crores. However, in case of an offence relating to the issue of an invoice without actually supplying goods or services or both, the limit will remain at Rs. 1 crore only.
- The range for compounding amount has been reduced from ‘50% – 150%’ to ‘25%-100%’.
- The following offences have been decriminalised:
- obstruction or preventing any officer in the discharge of his duties [Section 132(1)(g)];
- deliberate tempering of material evidence [Section 132(1)(j)];
- failure to supply the information [Section 132(1)(k)].
2. Unregistered suppliers and composition taxpayers can make the intra-state supply of goods through e-commerce operators subject to certain conditions.
3. GST return filing u/s 37, 39, 44 and 52 of the CGST Act have to be filed within a maximum of 3 years from the due date for filing such return.
4. ITC in relation to goods and services that are used for activities relating to Corporate Social Responsibility (CSR) [as per section 135 of the Companies Act, 2013] cannot be availed of by taxpayers.
Changes In Customs & Excise In Union Budget 2023
The government has changed the customs rate for multiple products. Apart from that, the government has also changed excise tax rates for multiple products.
Other Significant Changes in Union Budget 2023
Apart from the above significant changes in taxes in Budget 2023, the following are major changes that we witnessed in Budget 2023
- The Corpus for Credit Guarantee Scheme for MSMEs has been expanded to introduce an additional collateral-free guaranteed credit of Rs. 2 lakh crore.
- A one-time new small savings scheme is introduced for women whereby deposits of up to Rs. 2 lakhs can be made for a period of 2 years. This scheme carries a fixed interest rate of 7.50% per annum.
- The maximum deposit limit for the Monthly Income Account Scheme has been enhanced from Rs. 4.50 lakhs to Rs. 9 lakhs for single accounts and from Rs. 9 lakhs to Rs. 15 lakhs in case of joint accounts.
- The maximum limit for Senior Citizens Savings Scheme has been increased from the existing Rs. 15 lakhs to Rs. 30 lakhs.
eAuditor Office Analysis of Union Budget 2023
Union Budget 2023 fulfilled the long-pending desire of middle-class taxpayers of increasing the slab rate and reducing the tax rates. However, the government has done that only for the new tax regime where most of the deductions have been disallowed. When it comes to the old tax regime, the government has not made any changes. Further, it is also not the default regime now. This can create difficulties for business-class taxpayers as they can opt for the old regime only once. Once they opt out, they will have to compulsorily continue in the new regime. In case you need a detailed analysis of Budget 2023 and its implication on you or your business, feel free to contact the eAuditor Office
