Key Takeaways From The Finance Bill That Would Come In Effect From April 1, 2023

On Friday, 24 March, 2023 passed a Finance Bill with key amendments. A total of 64 official amendments were proposed in the Bill. Among them, major blow was on non equity schemes, securities transaction tax, Angel tax provisions and Liberalised Remittance Scheme. The new rules will be made effective from April 1, 2023.

Abolishment of long term capital gain tax benefit on debt funds
Mutual funds with less than or equal to 35% invested in equity shares will be taxed at the investors' income tax slab and has to be treated as short-term capital gains. This is similar to how bank deposits are taxed in India. Even the debt mutual fund investments will not get indexation benefit.

SST on hiked by nearly 25%
The securities transaction tax (STT) imposed on the sale of future and option contracts has been increased by nearly 25 per cent. On the sale of options, the SST has been hiked to Rs 2,100 on the turnover of Rs 1 crore as opposed to the earlier applicable fee of Rs 1,700.

Angel Tax
The provisions for angel tax will come into effect for start-ups.

Changes to Liberalised Remittance Scheme (LRS)
Payments for foreign tours through credit cards was not being captured under the Liberalised Remittance Scheme (LRS) and they escape tax collection at source. Tax collection at source will be applied to all LRS, even if they are in India. The Reserve Bank of India (RBI) will now look into such payments which escape the tax.

Increase in tax on royalty or technical fee earned by a foreign resident
The tax on royalty or technical fees earned by foreign companies has been raised from 10% to 20%.

Tax deduction benefit on offshore banking units in GIFT City
Income earned through offshore banking units operating in Gujarat International Finance Tec-City (GIFT City) will now get a 100% tax deduction for ten years.

Preponing of TDS on online gaming apps
The date of application of tax deducted at source for online gaming companies is preponed to April 1, 2023 from the earlier date of July 1, 2023. The companies are liable to pay 18% GST on their gross revenue.

Pension to be reviewed
A committee under the Finance Secretary would be set up, to look into the issue of pensions and evolve an approach to address the needs of employees, employees while ensuring fiscal prudence.

"The approach will be designed for adoption by both central and state governments," finance minister Nirmala Sitharaman said while making this announcement.