Salient Features of the Finance Act, 2023

A. Providing Tax Relief Under New Personal Tax Regime

• New Tax Regime is Default Regime.

• New Tax Rates under New Regime.

• Section 87A Rebate till ` 7 lakh under New Regime.

• Standard Deduction of ` 50,000 available under New Regime.

• Surcharge for HNIs reduced to 25% from 37%.

• Leave Encashment increased to ` 25 lakh.

B. Socio-Economic Welfare Measures

• Promoting timely payments to Micro and Small Enterprises.

• Increasing threshold limit for Co-operatives to withdraw cash without TDS.

• Penalty for cash loan/transactions against primary co-operatives.

• Relief to start-ups in carrying forward and setting off of losses.

• Extension of date of incorporation for eligible start up for exemption.

• Conversion of Gold to Electronic Gold Receipt and vice versa.

• 15 per cent concessional tax to promote new manufacturing co-operative society.

C. Ease of Compliance

• Increasing threshold limits for presumpting taxation schemes.

D. Widening and Deepening of Tax Base and Anti Avoidance

• TDS and Taxability on Net Winnings from Online Games.

• Increasing rate of TCS of certain remittances.

• Limiting the roll over benefit claimed under section 54 and section 54F.

• Preventing permanent deferral of taxes through undervaluation of inventory.

• Rationalisation of exempt income under life insurance policies.

• Alignment of provisions of section 45(5A) with the TDS provisions of section 194-IC.

• Prevention of double deduction claimed on interest on borrowed capital for acquiring, renewing or reconstructing a property.

• Defining the cost of acquisition in case of certain assets for computing capital gains.

E. Improving Compliance and Tax Administration

• Introduction of the authority of Joint Commissioner (Appeals).

• Rationalisation of Appeals to the Appellate Tribunal.

• Assistance to authorised officer during search and seizure.

• Rationalisation of the provisions of the Prohibition of Benami Property Transaction Act, 1988 (the PBPT Act).

• Alignment of timeline provisions under section 153 of the Act.

• Provisions relating to re-assessment proceedings.

F. Rationalisation

• Facilitating TDS credit for income already disclosed in the return of income of past year.

• Clarification regarding advance tax while filing Updated Return.

• Bringing the non-resident investors within the ambit of section 56(2)(viib) to eliminate the possibility of tax avoidance.

• Providing clarity on benefits and perquisites in cash.

• Rationalisation of the provisions of Charitable Trust and Institutions.

• Set-off and withholding of refunds in certain cases.