On 24 March 2023, the lower house of Parliament (Lok Sabha) passed the Finance Bill 2023 which implements tax proposals for the next fiscal year. The Bill received 64 official amendment proposals, among which one intends to remove extended tax advantages for certain types of debt mutual funds, and another suggests creating a GST.
Key Changes in the Finance Bill 2023 are following:
- The Finance Bill for 2023 contains various modifications, including changes to the tax treatment of mutual funds with less than 35% of their assets under management in domestic equity, which will now be subject to short-term capital gains tax. Additionally, offshore banking units operating in GIFT City will be eligible for improved tax benefits, with a full deduction on their income for a period of 10 years.
- The Withholding Tax Rate on Royalties and Fees for foreign companies on their earnings from royalties or technical fees has been raised from 10% to 20%.
- An increase has been made to the Securities Transaction Tax (STT) rates for futures contracts, from 0.01% to 0.0125%, and for options contracts, from 0.017% to 0.021%.
