The Budget proposes a slew of amendments that would cost a charitable trust dearly for even the slightest slip — such as a few days’ delay in filing a renewal application. Tax exemption could be lost if there is a delay in filing the I-T return.
Tightening of controls will make an already difficult existence for trusts even more challenging, state experts.

The Central Board of Direct Taxes (CBDT) will soon come out with a scheme on the Budget announcement of reducing pendency of appeals related to TDS default issues, board chairperson Nitin Gupta said.

In her Budget speech on Wednesday, Union Finance Minister Nirmala Sitharaman said she proposes to deploy about 100 joint commissioners of the Income Tax department for disposal of small appeals and to reduce the pendency of appeals at the commissioner level.

India will provide grandfathering to past investments by non-residents in startups and the proposed changes to the angel tax provision were prospective said Central Board of Direct Taxes (CBDT) chairman Nitin Gupta in an interview to ET. He said past investments will be grandfathered unless there was some incriminating information.

"The provision would apply prospectively," he said.

The government has proposed to amend the so-called angel tax provision or the Section 56(2) (viib) of the income tax act in the budget. The provision states that any premium paid by an investor in excess of the fair market value (FMV) of the shares of an unlisted company is taxable in the hands of the company at a rate of 20% or above.

The Budget proposals specify that the cost of acquisition or the cost of improvement of an intangible asset or any other right, shall be nil.
This provision was introduced as courts in many cases have ruled against the I-T department that the capital gains computation mechanism would fail where the cost of acquisition of any asset cannot be determined. Earlier, the I-T Act was amended to provide that the cost of acquisition of goodwill would be nil. “This now covers intangibles like brands, trademarks and commercial rights,” said Girish Vanvari, founder of Transaction Square.

Budget 2023 has made the new income tax regime as the default option for income taxpayers. Hence, unless an individual specifies that he/she is opting for the old income tax regime, then revised new income tax regime will be applicable

Now the question that many taxpayers will ask is: will the benefit of switching between old and new income tax regime continue?

Yes, an individual can switch between the new tax regime and the old tax regime in every financial year. However, the facility to switch between the new and old tax regimes is available only for those individuals having salaried income and does not have business income.

Foreign portfolio investors (FPIs), who are enjoying a concessional tax rate of 5% on the interest income of rupee-denominated bonds, could be staring at a higher tax outgo after June 30, 2023.

FPIs enjoy a lower TDS rate or withholding tax of 5% on the overall interest earned on such bonds issued by Indian firms and government securities since 2013 under Section 194LD of the Income Tax Act.

Investor returns in real estate investment trusts (REITs) could be hit after the Budget proposed to tax the repayment of debt in the hands of unit holders of REITs and InvITs as income from other sources, tax experts have said.The government said that distribution of debt repayment is not taxable for REITs and InvITs as well as the unit holder and hence, it results in dual non-taxation.

A day after the Budget announcement of a revamped personal income tax regime, Revenue Secretary Sanjay Malhotra on Thursday said the government would eventually like to move to a simple and exemption-free tax structure with lower rates.According to an analysis by the Revenue Department, an individual earning Rs 15 lakh in a year will have to claim deductions of at least Rs 3.75 lakh under the old tax regime, otherwise the new revamped tax regime with lower rates proposed in 2023-24 will be more beneficial.

Credit and finance for MSMEs: Addressing the delayed payment crisis faced by micro and small enterprises — among the biggest challenges to their growth — the budget 2023-24 proposed to amend section 43B of the Income Tax act with a new clause (h) in order to include payments made to such enterprises. The section will provide for any sum paid by the assessee (buyer) to MSEs beyond the 45-day time limit (specified in section 15 of the MSME Development Act) will be allowed as deduction only when the payment is actually made to MSEs.

Finance Minister Nirmala Sitharaman announced incentives for the startup ecosystem in the country and extended the benefit of carry forward of losses from the current 7 years to 10 years from the date of incorporation of the firm. Also, the time period on income tax benefit to companies registered as startups increased further by another year. Sitharaman also acknowledged that India has the third largest ecosystem of startups globally.

In a positive move for taxpayers, the government has increased the limit for leave encashment from Rs 3 lakh to Rs 25 lakh, Finance Minister Nirmala Sitharaman announced while announcing Budget proposals for the financial year 2023-24

“The limit of Rs 3 lakh for tax exemption on leave encashment on the retirement of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was Rs 30,000 per month. In line with the increase in government salaries, I am proposing to increase this limit to Rs 25 lakh,” the FM said.

The government on Wednesday imposed a limit of ?10 crore for deduction on long-term capital gain tax for reinvestment in residential properties under Section 54 and 54F of the Income Tax Act.

These two sections deal with reinvestment of proceeds from sale of long-term assets (housing or other capital assets) to buy residential properties.

"For better targeting of tax concessions and exemptions, I propose to cap deduction from capital gains on investment in residential houses under sections 54 and 54F to ?10 crore," Finance Minister Nirmala Sitharaman said in her budget speech.

After presenting the Union Budget 2023, Finance Minister Nirmala Sitharaman said that the new taxation regime, while offering greater incentives for the middle class, is not aimed at compelling people to move from the old regime to the new tax regime. “This country has been waiting for the direct taxation to be simplified, to become easy in terms of compliance. Therefore the new tax regime that we brought 2-3 years ago, has now got greater incentives and attractions so that people can unhesitatingly move from the old to the new. We are not compelling anyone. But the new one is now attractive as it gives greater rebates,” said Sitharaman during a press conference.

Ease of doing business for MSMEs: Among tax benefits for MSMEs announced in the budget, finance minister Nirmala Sitharaman on Wednesday enhanced the turnover limits to be eligible for presumptive taxation. Now micro enterprises with a turnover up to Rs 3 crore from earlier Rs 2 crore and certain professionals with a turnover up to Rs 75 lakh from earlier Rs 50 lakh will be eligible to be taxed presumptively provided their cash receipts are not more than 5 per cent of total receipts.

An individual will have to pay tax on the maturity amount of life insurance policies where the aggregate annual premium exceeds Rs 5 lakh, according to a Budget proposal presented on Wednesday. Finance Minister Nirmala Sitharaman in the Union Budget proposed "to provide that where aggregate of premium for life insurance policies (other than ULIP) issued on or after April 1, 2023, is above Rs 5 lakh, income from only those policies with aggregate premium up to Rs 5 lakh shall be exempt".

This will not affect the tax exemption provided to the amount received on the death of a person insured. It will also not affect insurance policies issued till March 31, 2023, she said.

Nidhi Manchanda, Certified Financial Planner, Head of Training, Research & Development at Fintoo, said that one of the major setbacks that are given in the finance bill is related to the taxability of the maturity proceeds of a life insurance policy.

There may be some individuals who are not obligated to file their income tax return (ITR). However, these individuals cannot be classified as non-filers. As a result, Union Budget 2023 has proposed changing the definition of "specified person" in sections 206AB and 206CCA of the Income tax Act, 1961, to exclude a person who is not required to submit a return of income for the assessment year relevant to the said previous year.

In a bid to lessen litigation in tax disputes, Finance Minister Nirmala Sitharaman on Wednesday proposed a case management system where the Income Tax department would defer filing a lawsuit if an identical question of law is pending adjudication in high courts or the Supreme Court. Presenting the Union Budget for 2023-24 in the Lok Sabha, Sitharaman said a lot of time and resources are consumed in filing appeals involving identical legal issues pertaining to income tax.

"Taking forward our policy of sound litigation management, I propose to provide that if a question of law in the case of an assessee is identical to a question of law which is pending in appeal before the jurisdictional high court or the Supreme Court, the filing of a further appeal in the case of this assessee by the department shall be deferred till such a question of law is decided by the jurisdictional high court or the Supreme Court," the minister said in her budget speech.

Budget 2023 has proposed taxing winnings from online games at a flat 30%. According to the current income tax laws, these winnings are taxed as per the income tax slab applicable to the income of the individual concerned.

According to the Budget 2023 memorandum, “(viii) to amend section 115BB of the Act to exclude income from winnings from online games from the purview of the said section from the assessment year 2024-25, since it is proposed to introduce section 115BBJ to tax winnings from online games from that assessment year;
(ix) to insert a new section 115BBJ in the Act with regard to tax on winnings from online games to provide that where the total income of an assessee includes any income by way of winnings from any online game, the income-tax payable shall be the aggregate of—
• The amount of income-tax calculated on net winnings from such online games during the previous year, computed in the prescribed manner, at the rate of thirty percent;

Seeking to widen the tax base, the government on Wednesday proposed to tax income distributed by business trusts like REITs and InVITs in the form of debt repayments at the hands of unitholders.

"It is proposed to tax distributed income by business trusts in the hands of a unit holder (other than dividend, interest or rent which is already taxable) on which tax is currently avoided both in the hands of unit holder as well as in the hands of business trust," Finance Minister Nirmala Sitharaman said in her Budget speech on Wednesday.

Budget 2023 has revised the income tax slabs in the new income tax regime for the financial year 2023-24. Here's a comparison of tax saving at different income levels under the new and old income tax regimes for salaried individuals.

The following calculations are based on the assumptions:
a) Section 80C benefit of Rs 1.5 lakh was taken in the old tax regime.
b) Standard deduction benefit of Rs 50,000 is taken in the old tax regime and revised new tax regime.