Lastly, the Budget 2023 brought forth the proposal of increasing the limit of tax exemption on leave encashment on the retirement of non-government employees.
In the Budget 2023 announcement, the FM of India said the limit of ₹3 Lakhs was set in 2002 when the highest basic pay was ₹30,000. To keep the limit in line with the increase in government salaries, the FM proposed that the limit be increased to ₹25 Lakhs.
While the above announcements have an impact on personal income tax, there are more announcements that affect other tax fields. Here are Budget 2023 highlights about proposed changes regarding direct taxes:
The benefit of presumptive taxation limit for micro-enterprises and certain professionals will be enhanced to ₹3 Crores and ₹75 Lakhs, respectively
New co-operatives that commence manufacturing activities till 31st March 2024 can get the benefits of a lower tax rate, i.e., 15%
The limit for TDS on cash withdrawal will be increased to ₹3 Crores for co-operative societies
The date of incorporation of new startups to avail income tax benefits will be extended to 31st March 2024
Agniveer Corpus Fund will be provided with an EEE status
The relaxation period for startups to carry forward or set off losses will be extended to 10 years from 7 years
Increase tax collection at source to 20% from 5% on foreign remittances for the purchase of overseas tour program and other purposes (other than medical treatment and education financing)
Deduction from capital gains on investment in residential house u/s 54 and 54F will be capped at ₹10 crore
Maturity proceeds of life insurance policies issued on or after 1st April 2023 with an aggregate premium of above ₹5 lakh will be taxable
With respect to the above proposals, India will forgo a net tax revenue of ₹35,000 crore. With these tax cuts, the rise in disposable income is sure to usher in a sunny future for economic growth.