Under the newly proposed Union Budget 2023 the Union Ministry has proposed certain major amendments for investors.
No Exemption in Certain Cases of Insurance Policy Premium
It is proposed to provide that where aggregate premium for life insurance policies is above 50,0000 income (other than ULIP) which is on or after 1st April, 2023 is above from only those policies with aggregate premium up to ` 5 lakh shall be exempted. But this will not affect the tax exemption provided to the amount received on the insurance received on death of a person. It will also not affect insurance policies issued till 31st March, 2023. Deduction shall be allowed only if such amount is not claimed as deduction earlier.
Market Linked Debenture proposed to be taxed in Short-Term Capital Gains Rates
The income from market linked debentures is proposed to be taxed as short-term capital gains at the applicable rates.it is one of the major changes brought in relation to the short-term capital gains. For that a new section is proposed to insert as Section 50AA in the act.
After section 50A the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2024, namely Notwithstanding anything contained in clause (42A) of section 2 or section 48, where the capital asset is a Market Linked Debenture, the full value of consideration received or accruing as a result of the transfer or redemption or maturity of such debenture as reduced by the cost of acquisition of the debenture; and the expenditure incurred wholly and exclusively in connection with such transfer or redemption or maturity, shall be deemed to be the capital gains arising from the transfer of a short-term capital asset.
“Market Linked Debenture” means a security by whatever name called, which has an underlying principle component in the form of a debt security and where the returns are linked to the market returns on other underlying securities or indices, and includes any security classified or regulated as a market linked debenture by the Securities and Exchange Board of India.’.
But no deduction shall be allowed in computing the income chargeable under the head “Capital gains” in respect of any sum paid on account of securities transaction tax.
Real Estate Investment Trust
Keeping in mind the business structure, the special taxation regime under section 115UA, it proposes a pass-through status to business trust in respect of interest income, dividend income received by the business trust from a special purpose vehicle in case of both REIT and rental income in case of REIT. And the income is taxable in the hands of the unit holders unless specifically exempted.
Exemption Removed from TDS on Payment of Interest on listed Debentures to a Resident
The budget 2023 proposes to remove the exemption from Tax Deducted at Source (TDS) on payment of interest on listed debentures to a resident. As a result Section 193 of the Income Tax Act is omitted.in Section 193 TDS is defined as the tax deduction protocol where the tax will be deducted instantly during a payment transaction. The TDS Section 193 has been implemented over the interest on securities. Considering the individual is transferring an amount in the form of interest on securities. It also provides exemption from TDS in respect of payment interest on certain securities. It shall take effect from 1st April 2023.
TCS Rate in certain Remittance Increased
The rate of TCS for foreign remittances for education and for medical treatment is proposed to continue to be 5 per cent for remittances in excess of ` 7 lakh. Similarly, the rate of TCS on foreign remittances for the purpose of education through loan from financial institutions is proposed to continue to be 0.5 per cent in excess of `7 lakh. However, for foreign remittances for other purposes under LRS and purchase of overseas tour programs, it is proposed to increase the rates of TCS from 5 per cent to 20 per cent.
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