Amendments made in the Finance Bill, 2023

[CS Swati Dodhi]

Quick highlights from the Amendments made in the Finance Bill, 2023 As on 24.03.2023 - Amendments moved by Govt. in Lok Sabha.

Capital Gains-

The most significant amendment was withdrawal of the benefit of Indexation on Long term capital gains on Debt Mutual funds for investments made on or after April 1, 2023. From April 1, 2023 Debt Mutual fund schemes will be taxed at Income tax rates applicable to an Individuals Income tax slab.

Debt mutual funds held for more than 3 Years will no longer enjoy indexation benefit and won't  be eligible for 20% tax rate. Investment in mutual funds [ where not more than 35% is invested in equity shares of Indian company] will now be deemed to be short term capital gains.

1. Special provision for computation of capital gains in case of Market Linked Debenture - Section 50AA introduced to include specified mutual fund with not more than 35% of investment in equity shares of domestic company.

2. Section 48 amended to allow declining of cost of acquisition of a unit of business trust along with any sum received by the unit holder which is not income as per Section 10(23FC) or 10(23FCA) or 56(2)(xii) or 115UA(2).

3. Original fund definition u/s 47(viiad) amended to include an investment vehicle owned by Abu Dhabi Investment Authority or the Govt. of Abu Dhabi.

4. Exemption to transfer of interest in a joint venture held by a PSU in exchange for shares of a foreign company introduced by a new clause (xx) inserted in Section 47.

IFSC - 

1. New Section 10(4H) inserted with effect from Apr 1, 2024 granting exemption [for 10 years beginning from the year of commencement of operations] on income of a non-resident or IFSC Unit gaining on capital gains on transfer of equity shares of domestic company which is a unit of as engaged in leasing business of aircraft commencing operations prior to Mar 31, 2026.

2. Surcharge on advance tax calculated on income of specified fund located in IFSC which is covered under Section 115AD(1)(a) deleted.

3. Exemption on dividend income of an IFSC unit as engaged in aircraft leasing where dividend is also from IFSC unit engaged in aircraft leasing - New Section 10(34B) introduced with effect from Apr 1, 2024.

4. Section 10(23FE) reach expanded to include any sum referred to in Section 56(2)(xii) with effect from Apr 1, 2024.

5. Section 56(2)(xii) revised to provide that a 'specified sum' received by the unit holder from the business trust is subject to tax in the hands of the unit holders.

6. Tax holiday for AY commencing on or after AY 2023-24 - Section 80LA amended to provide 100% Tax holiday.

7. Amendment to Tonnage Taxation provisions to allow IFSC units to opt for tonnage taxation after Section 80LA deduction ends.

TDS/TCS-

1.TDS @ 9% on interest income covered u/s 194LC subjected to TDS with effect from Jul 1, 2023 - Scope of interest income expanded to cover interest from any long-term bond or Indian rupee denominated bond listed on stock exchange located in IFSC.

2.Section 194B on online gaming deleted w.e.f. Apr 1, 2023 instead of Jul 1, 2023 and Section 194BA (TDS on Online Gaming) effective from Apr 1, 2023 instead of Jul 1, 2023.

3.TCS rate u/s 206CC and 206CCA not to exceed 20%.

Others-

1.New personal tax regime - Relief provided where income exceeds Rs.7 Lacs but tax on income exceeding Rs.7 Lacs is more than the net income.

2.Tax non-resident on royalty or FTS at 20% - Section 115A amended.

3.New exemption to Sikkimese Individual - Section 10(26AAA) amended retrospectively with effect from Apr 1, 1990 .

4.Section 10 by new clause (46B) exempting the income of National Credit Guarantee Trustee Company Limited and Credit Guarantee Fund Trust for Micro and Small Enterprises.