What are the major amendments to the Finance Bill 2023 passed in Lok Sabha?

The Finance Bill 2023 has been passed by the Lok Sabha on March 24th with several amendments introduced by Union Finance Minister Nirmala Sitharaman.

She presented the bill amid slogans from opposition MPs demanding a JPC inquiry into the Adani Group issue. The Finance Bill was initially tabled in Parliament on February 1st along with Budget proposals.

The Finance Minister introduced 64 official amendments to the bill and stated that a committee would be established under the Finance Secretary to address the pension system’s needs and maintain fiscal prudence.

Sitharaman also announced that the RBI would investigate issues related to credit card payments for foreign tours that are not captured under the Liberalised Remittances Scheme (LRS).

The Finance Minister adds that there have been concerns about the need to enhance the national pension system for government employees. She added that credit card payments for international travel were not included under LRS and did not trigger source tax collection. FM Sitharaman requested the RBI to look into this matter so that credit card payments for international travel would fall under LRS and be subject to tax collection at the source.

Several amendments were made to The Finance Bill 2023, including the taxation of mutual funds with less than 35 per cent AUM in domestic equity as short-term capital gains without indexation benefit. Offshore banking units operating in GIFT City will receive enhanced tax benefits and 100 per cent deduction on income for ten years. The tax on royalty or technical fee earned by foreign (non-resident) companies has been increased from 10 per cent to 20 per cent.

There was no change in tax on non-par savings insurance products, and REITs/InviTs taxation remained the same despite representation. Income from REITs will be taxed as ‘income from other sources’ rather than capital gains. The securities transaction tax (STT) on the sale of options has been increased to ₹2,100 on a turnover of ₹1 crore, a 23.5 per cent increase from the earlier levy of ₹1,700. On the sale of futures contracts, STT has been raised to ₹12,500 on ₹1 crore of turnover from ₹10,000 earlier, indicating a 25 per cent hike.