Union Budget 2023-24 ? Direct and Indirect Taxation

Union Budget 2023-24 – Direct and Indirect Taxation

News: Here, we will discuss about the reforms proposed in Direct and Indirect Taxation in the recently released Union Budget.

Reforms proposed in Direct Taxation:

Personal Income Tax
 There are five major announcements relating to the personal income tax. The rebate limit in the new tax regime has been increased to ₹7 lakh which means that persons in the new tax regime with income up to ₹7 lakh will not have to pay any tax.
 The tax structure in the new personal tax regime has been changed by reducing the number of slabs to five and increasing the tax exemption limit to ₹ 3 lakh.

MSME’s
 The limits for presumptive taxation have been increased for micro enterprises and certain professionals as long as the amount received in cash does not exceed 5% of the total gross receipts/turnover. The deduction for payments made to MSMEs will only be allowed when payment is actually made to support their timely receipt of payments.

Online Gaming
 Taxability on online gaming will be clarified with TDS and taxability on net winnings at the time of withdrawal or at the end of the financial year.

Start-ups
 The date for start-ups to receive income tax benefits has been extended to 31.3.2024. The carry forward of losses for start-ups has been increased from 7 years of incorporation to 10 years.

Co-operatives
 New manufacturing co-operatives that start manufacturing before 31.3.2024 will have a lower tax rate of 15%.
 The limit for cash deposits and loans by Primary Agricultural Co-operative Societies and Primary Cooperative Agriculture and Rural Development Banks has been increased to 2 lakh rupees per member.
 Tax Deduction at Source (TDS) on cash withdrawals for co-operative societies has been increased to 3 crore rupees.

Gold
 Conversion of gold into electronic gold receipt and vice versa will not be treated as capital gains.

Common-IT Return Form
 To improve taxpayer services, the government rolled out a proposal for next-generation Common IT Return Form for taxpayer convenience, along with plans to strengthen the grievance redressal mechanism.

Who is exempted from Income Tax?
 Income of authorities, boards and commissions set up by Union or State laws for housing, town and village development, and regulation, will be exempt from income tax.
 Agniveer Fund has been given Exempt-ExemptExempt (EEE) status. Payments received by Agniveers enrolled in Agneepath Scheme, 2022 will be exempt from taxes. Deduction in total income will be allowed for contributions to the Agniveer Seva Nidhi account by the Agniveer or the Central Government.

Reforms proposed in Indirect Taxation:
Custom Duties
 The number of basic customs duty rates for goods other than textiles and agriculture has been decreased to 13 from 21.
 National Calamity Contingent Duty (NCCD) on specified cigarettes revised upwards by about 16%
 Increased Duties on Articles made from gold and platinum and Import duties on silver dore, bars, and articles

Exception from Duties
 Compressed biogas contained in blended compressed natural gas.
 Testing agencies that import vehicles, automobile parts/components, sub-systems, and tires for testing and/or certification purposes.
 Also, the deadline for the customs duty on specified machinery for lithium-ion cell manufacturing for EV batteries has been extended to 31.03.2024.
 Denatured ethyl alcohol used in the chemical industry.

Changes in CGST Act
 The minimum amount of tax for starting a prosecution under GST will be raised from 1 crore to 2 crore.
 The compounding amount for tax will be reduced from 50-150% to 25-100% of the tax amount.
 Certain offences will be decriminalised.
 The filing of returns or statements will be limited to a maximum of three years from the due date.
 Unregistered suppliers and composition taxpayers will be allowed to make intra-state supply of goods through E-Commerce Operators (ECOs).

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