Top 10 Income Tax Amendments applicable from April 2023

Last updated: 10 April 2023

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From April 2023, several significant changes to UK income tax rules came into effect. These include amendments to Tax Deducted at Source (TDS) on interest from listed debentures and a revised treatment of housing loan interest for capital gains. The article also covers increased TCS on overseas tour packages, changes in how market-linked debenture gains are taxed, and a substantial rise in the leave encashment exemption limit for non-government employees. Furthermore, new rules apply to deemed gifts received by residents and taxation of life insurance policies with premiums over £5 lakh. The new tax regime is now the default option and has been expanded to include more entity types, with standard deduction and family pension benefits now applicable.

1. TDS on payment of interest on listed debentures to a resident

Section 193 of the Act provides for TDS on payment of any income to a resident by way of interest on securities.

2. Interest on housing Loan not treated As cost of improvement

Interest on housing loan claimed as deduction while computing taxable income shall not be included in cost of acquisition/improvement for purposes of capital gains.

3. Capital gains deduction on residential property

The maximum deduction that can be claimed by the assessee under Section 54 and 54F to rupees ten crore in place of all available long-term gain.

UK Income Tax Changes April 2023: Top 10 Amendments

4. Foreign remittances for overseas tour packages

TCS increased from 5% to 20% for the purchase of overseas tour programmes without any threshold.

5. Taxation of capital gains in case of market-linked debenture

Long-term capital gains arising from market-linked debentures are currently taxed at a concessional rate of 10%. It is proposed to tax such gains as short-term capital gains at normal rates.

6. Leave encashment

The exemption limit for leave encashment received on retirement by non-government salaried employees increased to INR 25 lakh from the current INR 3 lakh.

7. Deemed Gift

Now if NR Received money exceeding INR 50,000 received without consideration by a person resident in India is deemed to be income accruing or arising in India.

8. Life insurance Policies

Now, it is proposed to tax income received from life insurance policies issued on or after 1 April 2023 if the aggregate annual premium exceeds INR 5 lakh, except if received on death of the assured.

9. Change in new Tax Regime

Standard Deduction Rs 50000, Family pension and Agniveer corpus Fund is now allowable for Computation of income under New Tax regime.
Section 115BAC applicable Now applicable also on association of persons [other than a co- operative society], or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2.
Slab Rate for new tax regime.

Slab Rates