Highlights of GST and Inc Tax in Budget 2023

Budget is the roadmap to invest revenue ,shows sources of revenue for the year and allocation of expenses in different sector of the economy. Budget 2023 focuses to facilitate ample opportunity for citizens, youths to fulfil their aspirations, strengthen macro economic stability and provide impetus to growth and job creation.

with a view to achieve the above ,mentioning proposals presented in Budget relating to GST and Income Tax

Amendment proposals in Income Tax for the F Y 2023

1. New subsection (1A) is proposed to be added in section 115BAC of the Income Tax Act to prescribe tax rates in respect of total income of person, individual, or Hindu undivided family or association of person. The tax rates under New tax regime are as under:-

SI No	Total Income	Rate of Tax
1	Up to Rs. 3,00,000	NIL
2	From Rs 3,00,001 to Rs 6,00,000	5%
3	From Rs6,00,001 to Rs 9,00,000	10%
4	From Rs 9,00,001 to Rs 12,00,000	15%
5	From Rs 12,00,001 to Rs 15,00,000	20%
6	Above Rs 15,00,000	30%

• Below mentioned deductions are also proposed to be allowed under the new Tax regime

1. Proposal to amend tax exemption under 87A from Rs5 ,00,00 to 7,00,000, as a result individuals earning up to Rs 7,00,000 will have to pay no tax, If one has income from capital gain than tax has to be paid even if income is less than Rs 7,00,000 subject to conditions.
2. Proposal to reduce the highest surcharge rate from 37% to 25%, it will result in reduction of maximum rate to 39% for person earning more than5 crore.
3. Standard deduction of Rs 50,000 will be available for FY 23-24 under new scheme also.
4. Contribution made under Agni veer corpus by both employer & employee will be available as deduction under Sec80CCH.
5. New Tax scheme will be default tax scheme, if one want to opt for old tax scheme to apply before filing the tax return, one has to do this every year, in case of individual having business income has the option to opt for old scheme only once. i.e. if one has opted for old scheme in 1 st year and in second year opts for new scheme ,than will not be able to opt for old scheme again( applicable for individual having business income).
6. Exemption limit for leave encashment in case of non- govt employees increased from 3 lakh to 25 lakh.
7. Maturity proceeds of all life insurance policies that are issued after 1st April,2023 and have annual premium of more than 5 lakh will be taxable at the time of maturity, if individual has more than one life insurance policy which is issued after 1st april2023 & if aggregate premium amount on such policies is more than 5 lakh, than will be taxable at maturity.
8. Earlier if one does EPF withdrawal before 5 years and does not have PAN No, than Tds deduction used to be @30%, now proposed to reduce it to 20%.
9. TDS to be deducted on listed securities.
10. Presumptive Tax limit changed.

Under presumptive taxation, small business and professionals are not required to maintain their books of account and get their accounts audited. Providing relief from tedious tax filing exercises. A micro unit or professional opting for presumptive taxation can declare income at a prescribed rate

Category	Limit FY .2022-23	Limit now FY 2023-24
Sec 44AD	Rs 2 Crore	Rs 3 Crore
Sec 44ADA	Rs 50 Lakh	Rs75 Lakh

This is subject to condition that receipt in cash should not not exceed 5%of Gross Total receipts( if not collected thru crossed cheque , will be treated as cash receipt).

11.Earlier deduction was available under Sec 80 G, under Jawahar Lal Nehru Memorial Fund, Indira Gandhi Memorial Trust, Rajiv Gandhi Foundation, all these deductions are proposed to be withdrawn from FY 2023-24.

12.Gold converted into Electronic Gold receipt by Vault owner or Electronic Gold receipt converted back to Gold will not be treated as transfer, period of holding for Gold receipt will be from the time Gold was purchased and for Electronic Gold receipt, the time it is being converted to electronic receipt.

13.Income of notified news agencies ie. PTI, UTI are proposed to be taxable from FY 2023-24.

14. Proposed Amendment in 43B, favoring , Micro and small Industries, in order to promote timely payments to micro & small industries deduction s will be allowed to recipients only when payment actually done, if no agreement payment must be done within 15 days, if agreement is their than 45 days. If payment not done on time expense will be disallowed and will be allowed only once payment done.

15. MSME suppliers unable to execute contracts during the covid pandemic will get 95% of their forfeited amount back by Govt and Govt undertaking they were working for.

16. Cooperative societies want to do manufacturing activities on or after April 2023 will be taxable @ 15% ,provided commenced production by March 2024.

17.Tds limit as per Sec194 R on cash withdrawal for cooperative societies increased to Rs 3 Crore.

18.No penalty under Sec269 SS or269 ST where a loan is accepted or repaid by a primary agricultural society or primary co-operative agricultural & rural development bank to its members.

19. Cash deposit limit increased to Rs 2 lakh per member, cash deposit and loan by primary agricultural co-operative society and Primary co-operative agricultural and rural development bank.

20. Date of incorporation for Start up’s for income tax benefit increased up to 31 st March 2024, time limit to set off & carry forward of losses 10 years from date of incorporation with condition shareholders who hold 51% shareholding must continue to hold the shares in the year such loss is to carried forward.

21. Amendment proposed in Section 54 & 54 F of capital gain exemption , capping of Rs 10 crore on further investment under section 54 ( long term capital gain on sale or transfer of residential properties), Sec 54 F deals with long term capital gain on sale or transfer other than residential property.,

22. Limit of Rs 10,000 clarified, on winning from lotteries, cross word puzzles, card games, people used to claim Rs10000 limit on every transaction, but Rs 10,000 is maximum limit under the section. i.e. income above Rs10,000 will be taxable, . Online games separated, Section 150 BA will be applicable on income from online games, where tax of 30% will be imposed with no exemption limit.

23.Sec10(46A) to be introduced income of development authorities such as Noida development authority, Chandigarh dev authority etc. will be exempt from tax , as they are involved in development work.

24.TCS of 20% is proposed on all transfer out of India instead of 5%, 20% will not be applicable for transfer as education fees or health expense.

25.Govt may roll out common IT Return forms& strengthen grievance redressal mechanisms.

Will Govt discontinue the Old Tax Regime

May be. Govt want more money in circulation for growth so can do so from next year, as no change was done in old tax regime & even new tax scheme was made the default scheme with good incentives . One has to opt for the Old tax scheme every year if wants to and in case of person having business income he can opt out of new scheme only once, i.e. if opted for old scheme in 1st year & opted for new scheme in 2 nd year than cannot opt for old scheme ever i.e. will remain in new scheme.

Which Tax Regime is better

Before selecting the scheme one has to do calculation work as which scheme is better, if one has lot of deductions, house loan than old scheme may be beneficial.

Tax slabs under Old scheme

SI	Total Income	Rate of Tax
1	Up to 2.5 Lakh	NIL
2	2,50,001 to 5,00,000	5%
3	5,00,001 to10,00,000	20%
4	Above 10 Lakh	30%

Standard deduction, deduction under 80C to 80U, Rebate up to Rs 5 lakh, HRA allowance deduction, educational allowance deduction etc., Interest on home loan will be allowed.

Calculator is designed in excel by Fin Tax Pro, can download it, will assist in determining which regime to select:-

fintaxpro.in/calculator

Proposed GST updates

1. Composite dealer to be allowed to sell goods within the state thru e- commerce operator.
2. Language correction under section 16(2) of CGST Act. This section deals with reversal of Input Tax credit along with interest if supplier is not paid with in 180 days of date of Invoice. Earlier the wordings were on non- payment ITC claimed shall be added to output tax liability of recipient, now replaced by words it shall be paid by recipient of goods along with interest. ( Taxable value and interest on it) . can avail the input tax credit when paid .
3. Section 17(2) and Sec17(3) provides restriction on availing of proportionate ITC on exempted supplies. Input of taxable supply or zero rated supply can be claimed, but of exempted supplies and non – taxable supplies can not claim. If from a custom bounded ware house goods were removed for home consumption before their clearance although goods were for export and one can claim input tax credit as regarded as zero rated supplies, but since goods were removed for home consumption before their clearance will be treated as exempt goods and no ITC can be claimed on them. Sec17(5) deals with Goods purchased for CSR activities(as per Sec 135 of Companies Act2013) by companies ( Companies having net profit of 5 crore or more, or turn over of Rs 1000 crore or more are suppose to do corporate social responsibility by contributing 2% of net profit for doing CSR activities). Companies will not be able to claim input tax benefit on purchases done for CSR activities.
4. Person not liable for registration Section 23(1) substituted over riding Section 22(1)( prescribes limit for registration for goods & services state wise)and Section 24, (deals with compulsory registration by casual taxable person, for interstate supply, RCM and in other condition), . Sec 23 deals with no need to take registration in case of non taxable supplies or exempt supplies, To avoid contradiction among sec 23, sec 22(1), sec 23(1) introduced which over rides Sec 22(1) & Sec 24 and as per Sec23(1) person not liable to take registration who does exempt supplies, non taxable supplies, interstate supply and agriculturist doing cultivation of producing agricultural produce and suppling produce.
5. A registered person shall not be allowed to furnish the detail of outward supplies under sub section(1) for tax period after the expiry of period of three years of specified time period fixed under these return ,(i.e. must be within 3 years of the due date fixed) These apply for GSTR1, GSTR 3B, GSTR 9, GSTR 8, (Sec 37, Sec 39,Sec 44, Sec 52), Govt has kept with them power to do extension of time limit subject to certain condition and restriction for a registered person or a class of person.
6. Section 56, deals with interest on delayed refund of more than 60 days from receipt of application, till date of refund received, amendment done to prescribe manner and computation,
7. Penal provision on E- commerce operator Section 122(1B) (a) allowing suppling of goods or services or both thru it by unregistered person, composition supplier other than exempted from registration by notification issued. (b) allowing interstate supply of goods and services or both by unregistered or composition supplier. (c)fails to supply correct detail in return of any supply thru it by exempted person. penalty is Rs 10,000 or Tax payable which ever is more.
8. Sec 132 deals with punishment and decriminalization of offences in GST sub section (1) of sec132 amended to decriminalize offences offences specified in section (g),(j),(k) of the said subsection. (g) obstructs or prevents any officer in doing discharge of his duty. (j) deliberately tampers or destroy important documents or evidence. (k) fails to supply information or wrong information which one is supposed to provide. Launching prosecution for offences under said Act increased to 2 crore from 1 crore except for fake invoice( issue of invoice without supply of goods and services).
9. Sharing of Tax payer’s information collected at the time of registration, thru GSTR 1, GSTR 3B, GSTR 9, E invoice, E way bill etc and from common portal for better governance in prescribe manner and condition, no legal action can be taken, implied permission, consent based sharing of information
10. Compounding of offences Any offence under this Act may either before or after the institution of prosecution be compounded by the commissioner on payment by the person accused of the offence, to the Central Govt or State Govt as the case may be, of such compounding amount in such manner as may be prescribed. Persons were excluded from compounding of offence:- (a) Issue of invoice without supply of goods and services or Both i.e. fake invoice Existing compounding Rs 20,000 or 50% to 150% of tax amount involved . Proposed compounding Rs 20,000 or 25% to 100% of tax amount involved. compounding can be taken once only, no compounding for fake invoice and no need of compounding for offences (g),(h),(k) under Sec 132(1).
11. Retrospective amendment of Schedule III as below mention activities are neither supply of goods nor supply of services (a)Supply of goods from place outside the taxable territory to another place outside the taxable territory. i.e. registered in Delhi but supplying goods from South Korea to US. (b) High sea sales, supply before the goods enter the custom boundaries. (c) Custom bonded ware house, supply before clearance of goods for home consumption. No GST applicable from 1 st July 2017, no refund if already paid GST from 1.07.2017 to 31.01.2019, incase supply from ware house for home consumption before clearance must reverse and to be shown under exempt goods.
12. Sec2(16) deals with OIDR Services ( over the internet minimum human interference) Provision widened to levy GST on number of OIDR services received by unregistered person.
13. Section 12(8) of IGST Act pertaining to dispute of place of supply, proviso to subsection 8 of section12 omitted to specify place of supply, transportation of goods by mail or courier. Earlier when courier has to be sent to Germany from Delhi, place of supply used to be Germany and treated as interstate sale and IGST to be applicable, but difficulty was how recipient will take credit, now the proviso omitted, now transaction will be considered as Intra, means CGST & Delhi SGST, but they have issued a circular184 dt 27th Dec 2022 and stated where goods are supplied out of India, will be treated as IGST transaction, state code 96 to be mentioned & foreign country to be mentioned and recipient will get the benefit of input tax credit , but as proviso is omitted confusion again how to treat such transactions, wait & watch.
14. Sec54(6) of CGST Act, is being amended so as to remove the reference to the provisionally accepted input tax credit to align the same with the present scheme of availment of self assessed input tax credit as per sec41(1) of CGST.