5 Things Budget 2023-24 Brings In For Investors

1. No Exemption on proceeds of insurance policies with premiums more than Rs. 5 Lakhs

In order to curb misuse, it is proposed to tax income from insurance policies (other than ULIP for which provisions already exists) having premium or aggregate of premium above Rs 5,00,000 in a year. Income is proposed to be exempt if received on the death of the insured person. This income shall be taxable under the head “income from other sources”. Deduction shall be allowed for premium paid, if such premium has not been claimed as deduction earlier. The proposed provision shall apply for policies issued on or after 1st April, 2023.

2. Market Linked Debentures Taxable At Short-Term Capital Gain Rate

In order to tax the capital gains arising from the transfer or redemption or maturity of these securities as short-term capital gains at the applicable rates, it is proposed to insert a new section 50AA in the Act to treat the full value of the consideration received or accruing as a result of the transfer or redemption or maturity of the “Market Linked Debentures” as reduced by the cost of acquisition of the debenture and the expenditure incurred wholly or exclusively in connection with transfer or redemption of such debenture, as capital gains arising from the transfer of a short term capital asset.

3. Real Estate Investment Trust (REIT)

Keeping in mind the business structure, the special taxation regime under section 115UA, inter-alia, provides a pass-through status to business trusts in respect of interest income, dividend income received by the business trust from a special purpose vehicle in case of both REIT and InvIT and rental income in case of REIT. The income is taxable in the hands of the unit holders unless specifically exempted.

4. Removal of exemption from TDS on payment of interest on listed debentures to a resident

Section 193 provides for TDS on payment of any income to a resident by way of interest on securities.

The proviso to section 193 provides exemption from TDS in respect of payment of interest on certain securities. Clause (ix) of the proviso to the section provides that no tax is to be deducted in the case of any interest payable on any security issued by a company, where such security is in dematerialized form and is listed on a recognized stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 (32 of 1956) and the rules made thereunder.

It is seen that there is under reporting of interest income by the recipient due to the TDS exemption. Hence, it is proposed to omit clause (ix) of the proviso to section 193.

The amendment will take effect from 1st April, 2023.

5. Rate of TCS of certain remittances increased

The rate of TCS for foreign remittances for education and for medical treatment is proposed to continue to be 5 per cent for remittances in excess of ` 7 lakh. Similarly, the rate of TCS on foreign remittances for the purpose of education through loan from financial institutions is proposed to continue to be 0.5 per cent in excess of Rs.7 lakh. However, for foreign remittances for other purposes under LRS and purchase of overseas tour program, it is proposed to increase the rates of TCS from 5 per cent to 20 per cent.