Union Finance Minister Nirmala Sitharaman speaks in the Lok Sabha during the Budget Session of Parliament in New Delhi on March 24, 2023. Photo Credit: PTI
The Finance Bill 2023 was passed without discussion in the Lok Sabha and the house was adjourned to meet again on March 27.
Making amendments to the Finance Bill, Nirmala Sitharaman said, “It has been represented that payments for foreign visits through credit cards are not being taken under the Liberalized Remittance Scheme (LRS) and they are evading tax collection at source.” The Reserve Bank of India is being requested to look into bringing credit card payments for foreign visits under the purview of LRS and taking into account tax collection thereon at source.
Prohibition on royalty and technical service charges may increase the cost of technology imports
The rate of withholding of royalty and fees for technical services paid to non-residents has been increased from 10% to 20%. Gauri Puri, partner, Shardul Amarchand Mangaldas & Co., said, “This could increase the cost of importing technology in cases where Indian companies are earning more than withholding tax and are not getting the benefit of any bilateral tax treaty.” Is.’
GST Appellate Tribunals to be set up across the country
The Finance Bill has paved the way for setting up of GST Appellate Tribunals across the country, with a principal bench in New Delhi and several state benches. The tribunal will be headed by a former Supreme Court judge or a retired chief justice of a high court.
Read also: GST Appellate Tribunal can be headed by a former Supreme Court judge
Mr. Jasani clarified that the measure will only have the intended effect of curbing excessive F&O trades in flat or range-bound markets, as when markets are volatile, traders would expect the higher tax to be offset by higher payoffs. “In the past, such taxes had a temporary minimization effect on F&O volumes. For a more effective curb on volumes, SEBI or the stock exchanges may have to link the volumes and open interest in the futures and options market with the income or assets of the participants,” the HDFC Securities official said.
Increase in STT to discourage excessive trading in F&O
“While the proposed increase in STT will increase the revenue of the government to some extent, the main idea behind it may be to discourage excessive trading in the F&O segment where a large number of retail traders lose money as per SEBI recently study,” said Deepak Jasani, head of retail research at HDFC Securities. Hindu, “An incidental effect of this could be the shifting of F&O trades to SGX, GIFT and other venues which do not attract such taxes for the participants who have access to them,” he added.
Government. Budget proposal changes tax distribution from business trusts as income from other sources
In a move that will assuage unit holders of REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts), the government has changed the budget proposal to tax distributions from business trusts as income from other sources. “So far as the issue price of the units is concerned, it is now proposed to be treated as return of capital by netting off the cost of acquisition of the units. Any amount received in excess of the issue price shall be taxable as income, The ministry explained.
Stakeholders’ concerns on Angel Tax provisions for startup investments to be addressed
While there has been no change in the budget’s angel tax provisions for investment in startups, the finance ministry has said that the implementation of the proposal will address all concerns raised by stakeholders. “The draft rules relating to valuation will be shared with the stakeholders in April itself for their inputs, and the exclusions currently provided to domestic Venture Capital Funds etc. will also be considered,” the ministry assured.
This will affect all mutual funds that offer schemes with nomenclature such as conservative hybrid funds, which invest primarily in debt but have equity exposure of up to 35% in their portfolio.
“An arbitrage is now being created where interest income from debt mutual funds (where not more than 35% is invested in shares in the domestic company) is not distributed and long-term capital gains of 20% (with indexation) is converted into In some cases it goes down to less than 10% due to indexation. Thus many taxpayers are able to reduce their tax liability through this arbitration,” the finance ministry explained.
tax on debt mutual funds
Income from debt mutual funds investing up to 35% in equity shares of domestic companies will be taxable at the applicable rate as income from equity in such funds does not include interest income.
Securities transaction tax on F&O contracts increased from April 1
The government is increasing the Securities Transaction Tax (STT) on futures and options contracts in the stock market from April 1, 2023 and changes to this effect were brought in the Finance Bill passed by the Lok Sabha today. Options contracts will now attract an STT of 0.017% to 0.021% and futures will attract a levy of 0.01% to 0.0125%.