Key Impact of Budget with Relevance to Investments


Key Impact of Budget with Relevance to Investments 

Union Budget 2023

 
Key Impact
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Inputs From: Vanita Ojha, Investment Consultant

  • Highest surcharge rate capped at 25% as compared to 37% for individuals, etc under new tax regime. Hence the maximum tax rate under new regime would be 39% vs 42.7% of old regime. One needs to assess whether the tax is saved more in old or new regime. This is only applicable for individuals, etc with more than Rs 2 crore total income.
  • Any income from Market Linked debentures (MLD’s) would be taxed as short term capital gains as per applicable tax rate. Which means that while we are checking with tax advisors on date of applicability however prima facie the same is applicable from 1st of April 2023. Also, it looks like it will be taxed at maximum marginal rate. 
  • Maturity proceeds will be taxable for High Value Life insurance (Non-ULIP) issued after 1st April 2023 if the aggregated premium is above INR 5 lacs. Which means Traditional insurance products (moneyback pla,endowments etc) become unfavourable from tax perspective. 
  • REIT/InVIT- Change in taxation for income from a business trust in the form of repayment of debt. Earlier such repayment of debt which was not taxed is now made taxable as ‘income from other sources. Impacts the post tax return from REITs/InvIT’s. Especially Embassy REIt likely to be impacted as it had ~44% of their distribution as return of capital which will now be taxed. In PG InvIT, ~6% of the distribution was repayment of SPV debt. In Indigrid InvIT, ~15% of the distribution was repayment of capital.
  •  Under Section 54 and 54F (purchase of residential property), maximum deduction claim is restricted to INR 10 crore. 

  • In LRS (except for education and medical treatment), the TCS is now 20% from earlier applicable 5%. Earlier TCS was charged if amount of LRS was more than 7 lacs but Now applicable on any amount. This is applicable from 1 July 2023. 
  • Any income received by way of interest on listed debentures will now be subject to TDS. Earlier there was a specific exemption under which TDS was exempted on payment of interest on listed dentures to a resident. This exemption has now been withdrawn.

 

 

 

 

 

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