Finance Bill 2023: From angel tax to new debt MF rules, know what all changes from April 1

Investments in debt mutual funds will be taxed by the government as short-term capital gains if the investment is made in less than 35 percent of equities. Debt mutual funds are currently treated as long-term investments if kept for more than three years and are taxed at a rate of either 10 percent without indexation or 20 percent with indexation benefits.

The STT on the sale of options was increased to Rs 2,100 on a turnover of Rs 1 crore from a previously applicable rate of Rs 1,700. The government hiked STT on futures contracts from 0.01 percent to 0.0125 percent and from 0.017 percent to 0.021 percent on options.

Start-ups haven't seen much relief from the proposed change to the angel tax regime, which was revealed in the Union Budget 2023 that foreign investors will be brought under the ambit of angel tax. This move is expected to restrict foreign funding to start-ups.

The fund received by Indian unlisted companies on the sale of shares will now be taxed under “income from other sources”.

The phrase ‘angel tax’ is essentially used to describe the tax that must be paid on the funds raised by unlisted companies through the issuance of shares in off-market transactions, if they exceed the fair market value of the company.

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There are other changes that were introduced by Finance Minister Nirmala Sitharaman while presenting the bill in the Lok Sabha which may also impact the personal finances of the individual taxpayers.

All credit card payments for foreign tours will be brought under the Liberalised Remittance Scheme (LSR). The move comes as a step to ensure that credit card payments for foreign tours do not escape tax collection at source (TCS).