Budget 2023: Wins & Key Highlights For Investors

Budget 2023 Is Here! 

We all know the budget changes relating to income tax on our salaries, but did you get a chance to follow its impact on your investments/finances? Don’t worry, in this blog, we have broken down the most important aspects of the Budget 2023 and its impacts on your finances.

Here is the main breakdown of the budgetary allocations, for your reference…

Budget Update #1: Tax Regime

Let’s first address the elephant in the room- the update that most of us look forward to every year - The Income Tax Slabs!

In the table shared below, you can have a look at the tweaks made in the income tax slabs under the New Tax Regime:

What Does This Mean?

If you’re in the income slab of up to Rs. 7 lakhs you’re exempted from paying tax in the new tax regime. Are you wondering why it doesn’t show in the tax slab and how it works?

Well, it’s quite simple, if you’re in the Rs. 7 Lakh slab then your tax payable comes to Rs. 25,000. So, how come the Budget mentions that you’re exempt from paying this amount? You can claim this Rs. 25,000 as a refund in the form of a Tax Rebate. This rebate is only applicable for people with income of up to Rs. 7 Lakhs.

It is a great step towards boosting the confidence of taxpayers and resulting in great relief for them.

Budget Update #2: MLDs

Our honourable finance minister has announced a change in the taxation of Market Linked Debentures (MLD) and has brought it under a new Section 50AA. 

Over the last 5 years, Market Linked Debentures gained popularity due to the tax benefit. They attracted long-term capital gains (LTCG) when sold in the market after 12 months of holding. This made the post-tax spreads very attractive, making it a favourable option for investors. 

However, from 1st April 2023, these market-linked debentures will now attract short-term capital gains (STCG) and thus will be taxed at the marginal rate in the hands of the investors irrespective of the holding period.

What Does This Mean?

For investors who have opted for short-term MLDs  i.e. MLDs with less than 12 months of tenure, there is no change. Such instruments have always been taxed at a marginal tax rate and hence there is no change in the tax implication for them.

However, this comes as a blow to investors who hold long-term MLDs as they won’t be able to enjoy the tax benefit offered earlier. However, you can still sell them before March 2023 and still get the tax advantage.

Budget Update #3: Savings Scheme For Senior Citizens

The maximum deposit limit for Senior Citizen Savings Scheme will be enhanced from Rs. 15 lakhs to Rs. 30 lakhs. The current interest rate on this scheme is 8%, higher than most bank deposit rates

What Does This Mean?

This is done to incentivise senior citizens and encourage them to save more and secure their financial future. However, it’s advisable to not merely rely on these pensions and retirement funds. We strongly recommend broadening your portfolio horizon with alternative asset-backed investments.

Budget update #4: Government’s Boost To Startups

Strengthening the fast-growing startup ecosystem, the government proposed to increase the benefit of carrying forward losses for startups to 10 years. Following this ease in norms, it is hoping to encourage budding entrepreneurs in the country and create a much stronger ecosystem. 

What Does This Mean?

Both startups and angel investors will benefit from this positive outlook and government support towards entrepreneurship. 

At Grip, we offer startup equity investments from high-growth companies at a minimum investment of Rs. 2 lakhs making it accessible for retail investors to capitalise on this opportunity.

Budget update #5: Govt’s Boost To EVs

Rs. 5,172 Cr has been allocated for the scheme that promotes faster adoption & manufacturing of EVs.

Moreover, to promote green mobility, the government has removed the customs duty on the import of capital goods and machinery used in the manufacturing of lithium-ion cells.

What Does This Mean?

This will mark a step to fast-track the adoption of sustainable mobility and help India attain its goal of going 100% electric by 2030. For EV startups and investors, this comes as a positive growth sentiment.

EV by far has been the most attractive sector for investors and uber growth further boosts investor confidence. Want to invest in this fast-growing sector? Explore live EV deals on Grip, giving returns up to 20% IRR.

Budget Update #6: TCS On Foreign Investments

Under the Budget 2023, the government has increased the tax collected at source for certain remittances.

Under the provision of Section 206C, investors are required to pay TCS on foreign remittances through the Liberalised Remittance Scheme.

What Does This Mean?

For any payment under LRS, so far 5% of the amount or the aggregate of the amounts in excess of Rs. 7 lakhs attracted the TCS provision. Here, the rate has been increased to 20%. Also, the threshold limit of Rs. 7 lakhs has been removed.

This provision would pose challenges for people intending to invest in overseas stocks, as it will increase their immediate outlay.

Budget Update #7: Taxation On Insurance

The government will now levy tax on insurance plans issued on or after April 1, 2023, whose yearly premium is above Rs 5 lakh.

Till now, these insurance policies were added to the tax-free basket of investments. However, the new rules will not be implied on unit-linked insurance plans (ULIPs).

What Does This Mean?

Under the new proposal, the tax exemption provided to the amount received on the death of a person insured will not be affected. It will also not affect insurance policies issued till March 31, 2023. This is being executed to prevent high net-worth individuals (HNIs) from taking undue advantage of the exemption.

Conclusion: It’s A Good Year To Start Diversifying

Given the relaxations and startup sector boost, it definitely is a good year to invest in new-age alternatives for better diversification. 

Grip brings a plethora of investment opportunities including asset leasing, inventory financing, and startup equity from fast-growing sectors like EVs, for investors to make the most of these and earn attractive returns from it. Additionally, these options offer attractive tax benefits. Check them out today!

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Happy Investing!

Disclaimer: This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip Invest Technologies Private Limited ("Grip", formerly known as Grip Invest Advisors Private Limited) is not registered with SEBI in any capacity and does not advise, encourage, or discourage its users to invest or not invest in any securities. Grip is solely an execution-only platform and does not guarantee or assure any return on investments made by you in any opportunities sourced by Grip and accepts no liability for consequences of any actions taken based on the information provided. Your investment is solely based on your judgement. Investments in debt securities are subject to risks. Read all the offer related documents carefully.