The Lok Sabha is scheduled to take up the Finance Bill on Friday, March 24, a list of business shows. A day earlier, on Thursday, it will take up all Demands for Grants for Fiscal Year 2023-24.

With this, the budgetary exercise will be completed in the Lok Sabha. The process will then move to the Rajya Sabha, which has to return the financial proposals within 14 days from the date of submission, otherwise, they will be considered approved. The Upper House can discuss, but cannot make a change in the Finance Bill, Demands for Grants and Appropriation Bill. Though it can suggest changes, those changes need to be approved by the Lok Sabha before inclusion in law.

The list of business for March 24, says: “Finance Minister Nirmala Sitharaman to move that the (Finance) Bill to give effect to the financial proposals of the Central Government for the financial year 2023-2024 be taken into consideration. Also, to move that the Bill be passed.” The Finance Bill was introduced on February 1. It contains various tax proposals and amendments in some laws.

Though all the provisions of Finance Bills are important, stakeholders will expect changes in provisions related to new TCS (Tax Collected at Source), on money being sent abroad under LRS (Liberalised Remittance Scheme), new tax provision for angel tax, and no exemption for high premium insurance policies. Also, the online gaming industry will expect some changes in the new TDS (Tax Deducted at Sources).

Tax collected at source

The revised TCS regulations maintain the 0.5 per cent rate for an amount over ₹7 lakh remitted for an education loan, and 5 per cent on an amount exceeding ₹7 lakh, intended for education and medical treatment purposes. However, the rate has been raised to 20 per cent without any threshold for overseas tour packages or any other case, which may include purchase of shares or real estate abroad.

Angel tax

Another provision concerning start-ups relates to angel tax. The Budget proposed that the extra premium received by an unlisted company in India on the sale of shares to a foreign investor will be recognised as “income from other sources” and will be taxed. Under the rule, any extra premium that the investor pays over the start-up’s fair market value (FMV) will attract 20 per cent tax. Here, the government has clarified that this will not be applicable on start-ups that are recognised by DPIIT (Department for Promotion of Industry and Internal Trade).

New provisions related to insurance premium says the maturity proceeds of a life insurance policy (other than ULIP) net of premiums paid on such policy, will be taxable as income from other sources in cases where the insurance premium paid on such policy exceeds ₹5 lakh in a financial year.

The online gaming industry till now was deducting TDS on winnings under Section 194B, which had a threshold of ₹10,000 per game, post which tax was deducted at the rate of 30 per cent. In Budget 2023, a new Section has been added under which online gaming platforms are expected to deduct 30 per cent TDS on net winnings. The computation of ‘net winnings’ will be prescribed separately. Industry says as the current Section 194B is being amended and while the amendments come into effect starting April 1, 2023, the new Section 194BA comes into effect only on July 1, 2023.

This essentially means that for a period of three months between April 1-June 30, 2023, the online gaming industry will have to comply with the amended Section 194B and undergo two different compliance framework changes within three months. This can cause a lot of confusion for users and pose a huge compliance challenge for the industry.

Also read: Budget 2023: Here are the major highlights

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