In the series Sansad TV Perspective, we bring you an analysis of the discussion featured on the insightful programme ‘Perspective’ on Sansad TV, on various important topics affecting India and also the world. This analysis will help you immensely for the IAS exam, especially the mains exam, where a well-rounded understanding of topics is a prerequisite for writing answers that fetch good marks.
In this article, we feature the discussion on the topic: ‘Finance Bill 2023’.
Anchor: Vishal Dahiya
- Meena Chaturvedi, Ex Executive Director, Pension Fund Regulatory Development Authority
- Subhomoy Bhattacharjee, Consulting Editor, The Business Standard
- Prof. Charan Singh, CEO, EGROW Foundation
Context: Lok Sabha passed the Finance Bill 2023
Highlights of the discussion:
- Key Amendments
- Panel to improve National Pension Scheme
- On March 24th Lok Sabha passed the Finance Bill 2023 which gives effect to the financial proposals of the Union government for the financial year 2023-24.
- Finance Minister Nirmala Sitharaman introduced 64 official amendments to the Finance Bill which was tabled in Parliament on 1st February along with the Budget proposals.
- The amendments include changes pertaining to the GST Tribunal, a hike in the securities transaction tax, changes to the taxation on Real Estate Investment Trusts and Infrastructure Investment Trusts, levy of Tax Collected at Source on all Liberalised Remittance Schemes within India and tax on gains arising from multiple mutual fund categories.
- Finance minister also proposed setting up a committee to improve the national pension scheme.
- Capital gains arising from debt-based mutual funds (where investment in equity shares of domestic companies is not more than 35 percent of the total proceeds of the mutual fund) acquired on or after April 1, 2023, will now be subject to short-term capital gain.
- The amendments proposed have removed long-term capital gains treatment with indexation benefits for debt mutual funds.
- This is significant as the tax treatment change could benefit bank deposits, which have been growing more slowly than credit demand over the past 12 months, leading to higher funding costs for the banks.
- Additionally, the tax on royalty or technical fee earned by foreign companies has been increased from 10% to 20%.
- This will impact non-residents of the countries with whom India does not have a tax treaty. Non-residents of the countries with whom India doesn’t have a tax treaty will now be required to pay a higher rate of 20 per cent on income from Royalty and FTS.
- Other amendments include the formation of a committee to address the pension system’s needs, and a proposal for marginal relief to limit the tax on income that exceeds Rs. 7 lakh.
- The Finance bill also has the provision of enhanced tax benefits to offshore banking units operating in GIFT City, which will receive a 100% deduction on income for 10 years.
- The Bill also suggests that Tax Collection at Source apply to all Liberalised Remittance Scheme (LRS) payments made via credit cards for international travel. (TCS).
- Earlier, TCS was collectible only if LRS is made out of India.
- Furthermore, the Union government has raised the Securities Transaction Tax (STT) on futures and options contracts in the stock market by 25% from April 1, 2023.
Read more on Increase in Securities Transaction Tax
Panel to improve pension scheme:
- Finance minister proposed setting up a committee to look into the issues related to pension for government employees and evolve an approach to address the needs of employees while maintaining fiscal prudence.
- The committee will be headed by the finance secretary.
- The new approach to the NPS will be designed for adoption by both central and state governments.
- The decision came in the backdrop of several non-BJP states deciding to revert to the DA-linked old pension scheme (OPS) and also employee organisations in some other states raising demand for the same.
- Earlier in March , the Union government informed Parliament that it is not considering any proposal to restore the OPS in respect of the central government employees recruited after January 1, 2004.
- According to the PFRDA (Pension Fund Regulatory and Development Authority), 26 state governments, with the exception of Tamil Nadu and West Bengal, have notified and implemented NPS for their employees.
Read more on the Old Pension Scheme Controversy
Read more on Union Budget 2023-24
Read all the previous Sansad TV Perspective articles in the link.
Sansad TV Perspective: Finance Bill 2023:- Download PDF Here
|Finance Bill||Difference between Finance Bill and Money Bill|
|Securities and Exchange Board of India (SEBI)||Atal Pension Yojana|
|Liberalised Remittance Scheme [LRS]||Malimath Committee|