The 2023 Union Budget of India was presented by the Minister of Finance of India on February 1, 2023. The Finance Bill covers tax reforms for individuals, businesses, investors and other groups, the key proposals of which are outlined below:

For Individuals

The new tax regime shall apply by default – and in this regime:

• salaried employees shall get a Standard Deduction;
• for a taxable income of upto Rs. 700,000 - a tax rebate of upto Rs. 25,000;
  
• the minimum tax exemption shall be for an income of Rs. 300,000;
• the revised tax bands shall be:
  Up to 3 Lakhs NIL; 3-6 Lakhs 5% tax; 6-9 Lakhs 10%; 9-12 Lakhs 15%; 12-15 Lakhs 20%; and >15 Lakhs – 30%;
• the surcharge for individuals with income above Rs. 5 crores will be only 25%.

None of these benefits are available if one elects to stay under the old tax regime

For Businesses

• presumptive taxation based on 6%/8% of business receipts will be available even for cases where turnover is between Rs. 2 crores and Rs. 3 crores – provided cash receipts do not exceed 5%.
• presumptive taxation based on 50% of professional receipts will be available even for cases where receipts are between Rs. 50 Lakhs and Rs. 75 Lakhs – provided cash receipts do not exceed 5%.
• any payment made to a Micro/Small Enterprise shall now be allowed only in the year when paid and not on an accrual basis, subject to certain additional conditions.
• if shares are issued to a Non Resident at a premium, the Premium may be taxable unless it is justified by way of a Valuation. Earlier shares allotted to Non Residents are exempt from this provision.

For Eligible Start Ups

• an exemption will be available for eligible registered Start Ups incorporated before 1st April 2024 (extended
  by one year).

For Investors

• income received from a REIT/ InViT in the form of repayment of debt shall now be taxable as Income from Other Sources on receipt itself. Only amounts received on redemption of units will be reduced from cost.
• any gain on transfer or redemption of a Market Linked Debenture shall now be specifically taxable as a Short Term Capital Gain.
• TDS shall now be done on interest on listed securities which are held in dematerialized form.
  
• where capital gains exemption is sought by reinvesting in the purchase of a residential house under section 54 or 54F, the reinvestment tax benefit shall be capped by assuming the cost of the new house as not more than Rs. 10 crores.
• for any insurance policy purchased after 1.4.2023 where the premium paid in any year exceeds Rs. 5 Lakhs, the gain will always be taxable as Income from Other Sources.

For Public Trusts

• if sums are donated to another Trust only 85% of such sum shall be treated as application of income.
  
• if corpus is replenished or loans are repaid, the same shall be allowed as a deduction only if it done within a period of 5 years.

On Tax Administration

• a single form for all assessments expected.
• very few cases will be selected for tax scrutiny.
• smaller cases will be taken up by a new set of Appellate Officers for quick redress.
• PAN will be treated as a unified Business Identifier.
• a uniform filing process on a common portal expected.

On GST

• no change in GST rates.
• ITC in respect of CSR expenditure cannot be claimed
• no need to obtain registration if entire income is exempted supply – even if registration threshold limits are crossed.
• a tax return can only be filed within three years from the due date of furnishing the said return.

Please find Rajendra & Co.'s full summary on the Finance Bill 2023 here.