Vidarbha Industries Association Taxation & Corporate Law Forum organized a session on “Analysis of Tax Proposals of Union Budget 2023-2024” on 3rd February, 2023 at VIA Auditorium, Nagpur to dissect and analyse the tax proposals and their possible impact on various stakeholders like manufacturers, service providers, traders, exporters, importers, etc.
CA Rajesh Loya informed the participants on the finer points in the Finance Bill, 2023. He elaborated the proposal for enhancing the basic exemption limit indirectly to Rs. 7 Lakh by providing Tax Rebate u/s 87A in the new tax regime. Further, the new tax regime with lower tax rate and higher tax bracket will make the scheme more popular. Introducing the proposal to extend the benefit of the standard deduction of Rs. 50,000 to salaried individuals and the deduction from family pension up to Rs. 15,000 for taxpayers under the new tax regime also will make the new tax regime more appealing. As a result, the new income tax regime will be the not only default tax regime but will also be the preferred tax regime.
Reduction in the highest surcharge rate of the new tax regime from 37% to 25% will give the benefit to the HNI by around 3%. He also highlighted the proposal of increasing the limits for audit by micro, small, and medium-sized enterprises (MSMEs) to Rs. 3 Cr and professionals to Rs. 75 Lakh. As a result, lot many taxpayers can take advantage of the presumptive scheme of taxation.
To assist MSMEs in receiving payments on time, Budget 2023 proposes to allow 43B deduction for expenditure incurred on payments made to MSMEs only when the payment is made and not otherwise, It will enable micro enterprises in receiving the payments on time. It will be a draconian provision as well as the taxpayers in businesses will be required to take utmost precaution so as to avoid the disallowance U/s 43B.
He also highlighted the proposals with regard to cooperative sector. Now, New co-operatives that begin manufacturing activities before March 31, 2024, will be eligible for a 15% tax rate, which is currently available to new manufacturing companies. Further, a higher limit of Rs. 2 lakh per member for cash deposits to and cash loans from primary agricultural cooperative societies (PACS) and primary cooperative agriculture and rural development banks (PCARDBs) will also benefit the societies and their members.
With regard to startups, the date of incorporation for income tax benefits will be extended from March 31, 2023, to March 31, 2024 which is a welcome move. Further, the benefit of carrying forward losses on shareholding changes in start-ups from seven to ten years after incorporation is also a welcome step by the Finance Ministry. He in detail elaborated the proposal of capping the deduction from capital gains on residential house investments under Sections 54 and 54F at Rs. 10 crore in order to target tax the concessions and exemptions.
Further, the proposal to limit the income tax exemption from proceeds of high-value insurance policies where the aggregate premium for life insurance policies (other than ULIP) issued on or after April 1, 2023, is more than Rs. 5 lakh will result in higher tax revenues for the Government. Now, only income from policies with aggregate premiums of up to Rs. 5 lakh will be exempt. He also highlighted the tax proposal with regard to online gaming, Agniveer Fund, Changing gold into electronic gold receipts or electronic gold receipts into gold, Taxation of income from market-linked debentures, etc.
He further taken questions from the audience on various issues that may arise as part of the deliberations.
Earlier, CA Ashok Chandak, Chairman – VIA Taxation & Corporate Law Forum welcomed theCA Rajesh Loya with floral bouquet. In his welcome address, he opined that the FM has done a great job of balancing growth with fiscal prudence by continuing the larger focus on productive capex & not on wasteful or populist measures. The budget has obviously ticked all the right boxes in its last budget targeting villages (rural), poor & middle-class, women & MSMEs where employment is large. Overall a great budget with one of the key policy overhang out of the way. It will now be back to bottom-up stock picking, more so given the mayhem past few days and India’s relative valuation to it’s own history & to the world.
CA Naresh Jakhotia, Project Coordinator made an opening remark and also moderated the Q&A Session. CA Sachin Jajodia, Convener of VIA Taxation Forum proposed a formal vote of thanks.
CA O S Bagdia, Anil Chandak, CA Jethalal Rukhiayana and many representatives from Kapilansh Dhatu Udyog, Bombay Snuff, Truform Engineers, Splashjet Inkjet, Transform Engineers, JAK Infosolutions, professionals took the advantage of the session.
