Finance Bill 2023 approved in Lok Sabha with 64 amendments

The Finance Bill 2023 that gives effect to tax proposals for fiscal year starting April 1 was passed without a discussion

Finance bill 2023 approved in Lok Sabha

Lok Sabha on Friday passed the Finance Bill 2023 with 64 official amendments, including the one that seeks withdrawal of long-term tax benefits on certain categories of debt mutual funds and another for setting up the GST Appelate Tribunal.

The Finance Bill 2023 that gives effect to tax proposals for fiscal year starting April 1 was passed without a discussion amidst ruckus by opposition members demanding a JPC (Joint Parliamentary Committee) probe into the allegations against the Adani group of companies.

While moving the bill for passage and consideration, finance minister Nirmala Sitharaman also announced the setting up of a committee under finance secretary to look into pension issues of government employees.
She also said the Reserve Bank of India will look into the payments made through credit cards for foreign tours which escape tax at source.

Sitharman introduced 64 official amendments to the Finance Bill which was tabled in Parliament on February 1 along with the Budget proposals.
The Budget was passed on Thursday. At that time too, no discussion could take place because of the protest.

Following amendments, 20 new sections have been added to the Bill.
The Finance Bill will now be sent to the Rajya Sabha.

Reacting on amendments on the taxation proposal, Punit Shah, Partner, Dhruva Advisors said, “The amendment of taxing only the upside over and above the cost of the units, where no redemption is involved, is a welcome move. However, it would have been more appropriate to tax such gain as capital gain rather than ordinary income”

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The amendment to treat gains on debt mutual fund as short term gains will substantially diminish the attractiveness of such products. The rationale of treating the debt mutual funds at par with MLDs is not very clear” he adds.

Sandeep Bagla, CEO Trust Mutual Funds commenting on the amendments said that in the last 1-2 years, MF have seen outflows from debt schemes, in spite of the tax benefit.

“The only segment that saw inflows was the the spate of target maturity funds which were passively holding Gsecs, mimicking FDs but with tax benefits. Investors may be reluctant to redeem even after completion of 3 years now as incremental income from these investments may remain tax efficient. Few investors may remain invested wanting to defer tax as tax is payable only at redemption. Incremental inflows will come into funds who are able to manage their portfolios actively and generate inflation beating returns for investors. There is likely to be no impact in the short term but could impact the ability of mutual funds to attract debt flows in the long term,”