The Rajya Sabha has given its approval to the Finance Bill, 2023, presented by the Union Finance Minister Nirmala Sitharaman. The Finance Bill 2023 has proposed some amendments to the Income Tax Act that taxpayers and investors need to look out for.
Amidst loud sloganeering by opposition parliamentarians demanding a Joint Parliamentary Committee probe into the Adani-Hindenburg issue, the Finance Bill 2023 was passed by the Lok Sabha on March 24 with several official amendments. Finance Minister Nirmala Sitharaman had proposed 64 official amendments to the Finance Bill.
Under the new tax regime, individuals earning less than Rs 7 lakh annually will be exempt from taxes. However, if someone earns even a little over this amount, say Rs. Seven Lakh and One Hundred Rupees, they will have to pay a steep tax of ₹25,010 for the additional ₹100 earned. The government has amended the bill to provide marginal relief to those earning slightly above Rs 7 lakh, but the exact threshold has not been specified yet.
Debt mutual funds may lose their long-term capital gains (LTCG) tax benefit if they invest less than 35% in equities. This means that any income or gain from the sale, redemption, or maturity of these funds will be considered short-term capital gains and taxed at the applicable tax slab of the investor, regardless of the investment’s holding period.
Previously, holding onto debt mutual funds for over three years would have resulted in a LTCG tax of 20% (plus surcharge and cess) with the indexation benefit that considers inflation before tax liability, potentially reducing the tax burden.
Additionally, credit card payments made for foreign tours may be subject to tax collection by the Reserve Bank of India (RBI). These payments will need to be captured under the Liberalised Remittance Scheme.
The Lok Sabha had passed the Appropriation bill of 45 Lakh Crore without any debate for the current fiscal year (2023-24). The second leg of the budget session started from March 13.
The current session of Parliament is anticipated to end on April 6. After the financial exercise is finished, it has been considered that the session’s duration might be reduced. According to the reports, the lower house passed the bill within 9 minutes and without any discussion.
The Appropriation Bill gives power to the government to withdraw funds from the Consolidated Fund of India for meeting the expenditure during the financial year. The Budget Papers indicate that the projected total spending for 2023–24 is Rs. 45,03,097 crore, of which the total capital expenditure is predicted to be Rs. 10,00,961 crore.
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