Union Budget 2023

By: Mr. Prasanna Ravikant Bhat - 2nd February, 2023

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Tax and Compliance Reforms:
  1. Individual Income Tax:

    Tax Rates: - The Budget has proposed new tax rates and slabs under the new regime, which are:

    Income Rate of tax
    0 to Rs 3 Lakhs nil
    Rs 3 to 6 Lakhs 5%
    Rs 6 to 9 Lakhs 10%
    Rs 9 to 12 Lakhs 15%
    Rs 12 to 15 Lakhs 20%
    Above 15 Lakhs 30%

    Income rebate u/s 87A limit in new tax regime has been increased to Rs 7 Lakh from Rs.5 Lakh presently i.e.,if a taxpayer has income upto Rs.7 Lakh, there is no tax.

    The Budget has proposed to reduce the surcharge rate on income above Rs.5 crore from 37% to 25% under new tax regime.

    Standard Deduction of Rs.52,500 is now proposed to be made deductible under New Tax Regime for salaried/pension persons with income up to Rs.15 lakh.

    There are no changes in the old tax regime.

    The new tax regime will now be the default tax regime, but the assessee can still avail benefits under old tax regime on opt-out basis.

  2. Hon FM announced that simplified unified return form will be rolled out soon. 100 new Commissioners to be appointed to expedite appeals.

  3. Limit of section 44ADA presumptive taxation limit increased from Rs.50 Lakhs to Rs.75 Lakhs and for section 44AD increased from Rs.2 crores to Rs.3 crores provided 95% receipts are non-cash. There is a consequent change in the limits of section 44AB i.e., for tax audits also.

  4. Tax exemption limit increased to Rs.25 Lakh from Rs.3 Lakh on leave encashment on retirement for non-government salaried employees.

  5. New cooperatives that commence manufacturing till March, 2024 to get lower tax rate of 15%.

  6. Higher limit of Rs.3 crore for TDS on cash withdrawal for co-operative societies.

  7. The Budget also proposes to cap exemption from capital gains on reinvestment in new residential house to Rs.10 crore.

  8. The benefit of carry forward of losses on change of shareholding of start-ups is proposed to be increased from seven years of incorporation to ten years.

  9. Deductions on payments made to MSMEs to be allowed only when payment is actually made.

  10. Maximum investment limit in Senior Citizen Savings Scheme increased from Rs. 15 lakh to Rs.30 lakh.

  11. Monthly Income Scheme(MIS) limit increased to Rs.9 lakh for single accounts and Rs.15 lakh for joint accounts.

  12. One-time new saving scheme Mahila Samman Saving Certificate for women to be made available for 2 years up to 2025. Interest rate is fixed @ 7.5%. Partial withdrawal would be allowed.

  13. For business establishments required to have Permanent Account Number, the PAN will be used as a common identifier for all Digital Systems of specified government agencies.

  14. DigiLocker will now be a one-stop KYC maintenance system for individuals, allowing an individual to make changes to papers that will be reflected in all documents that are linked to the locker.

  15. Extension of period of tax benefits to funds relocating to IFSC, GIFT City till 31.03.2025.


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