Parliament Okays Budget For FY-24 Amid Ruckus

New Delhi- Parliamentary approval for the Budget for 2023-24 was on Monday completed after Lok Sabha passed the Finance Bill with a fresh amendment and Rajya Sabha gave its nod to all the three related legislations without any debate amid continuing din over the Adani issue.

First Rajya Sabha approved the Rs 45 lakh-crore spending proposed in the Budget, followed by the nod to the Finance Bill that contains tax proposals. It also approved the Appropriation Bill and Demands for Grants, besides Budget for Union Territory of Jammu and Kashmir.

The nod to the Finance Bill included a fresh amendment moved by finance minister Nirmala Sitharaman that sought to correct the rate of STT (securities transaction tax) to be levied on trading of options and futures in the derivative market.

After the Lok Sabha cleared the Finance Bill, which has 64 official amendments, the finance ministry on Friday issued a statement saying that there was a typographical error in the amendments with respect to the change in STT on options trading.

The error, the finance ministry said, will be rectified in accordance with the extant procedure of the government of India.

As per the amendments, the STT on options has been increased from 0.017 per cent to 0.021 per cent.

The amended Finance Bill was then presented to Lok Sabha, which too approved it amid a ruckus that opposition parties created demanding a probe into allegations against Adani.

Soon after Lok Sabha reassembled at 4 pm, members of opposition parties wearing black clothes started raising slogans demanding a Joint Parliamentary Committee (JPC) probe in Adani issue.

Congress members were in the well raising placards and shouting slogans. Papers were laid and committee reports were tabled amid din.

Rama Devi who was in the Chair asked finance minister Nirmala Sitharaman to move the amendment to the Finance Bill as recommended by Rajya Sabha. The amendment was passed by the voice vote amid ruckus, thus completing the Budgetary exercise.

In the Finance Bill 2023, passed by the Lok Sabha on Friday, the Securities Transaction Tax on options is proposed to be increased to 0.0625 per cent from 0.05 per cent and on futures contracts to 0.0125 from 0.01 per cent.

After the Lok Sabha cleared the Finance Bill, which has 64 official amendments, the finance ministry issued a statement saying that there was a typographical error in the amendments with respect to the change in STT on options trading.

The error, the finance ministry said, will be rectified in accordance with the extent procedure of the government of India.

As per the amendments, the STT on options has been increased from 0.017 per cent to 0.021 per cent.

“In case of STT, the rate is proposed to be changed from 0.05 per cent to 0.0625 per cent. There was a typographical error which is being corrected,” the ministry said.

In percentage terms, STT on sale of futures has been hiked from 0.01 per cent to 0.0125 per cent and in case of options it has been hiked from 0.05 per cent to 0.062 per cent.

Traders in the futures segment will now have to pay an STT of Rs 1,250 on Rs 1 crore of turnover against the earlier levy of Rs 1,000. The new rules will come into effect from the new financial year 2023-24.

Under the new tax regime with effect from April 1, if a taxpayer has an annual income of Rs 7 lakh s/he pays no tax. But if s/he has income of Rs 7,00,100 s/he pays tax of Rs 25,010. Thus an additional income of Rs 100 leads to a tax of Rs 25,010.

The amendment provides that the tax payable should not be more than the income that exceeds Rs 7 lakh. This means, an individual having income up to Rs 7,27,700 could stand to benefit from this marginal relief.

Other amendments include raising the tax rate on royalty and fee for technical services from 10 per cent to 20 per cent.

From April 1, investments in debt mutual funds will be taxed as short-term capital gains, stripping investors of the long-term tax benefits that made such investments popular.

Currently, investors in debt funds pay income tax on capital gains according to the income tax slab for a holding period of three years. After three years these funds pay either 20 per cent with indexation benefits or 10 per cent without indexation.

After the amendment, such gains from transfer of units of specified mutual funds will be treated as short term and taxed at slab rates.

This is in addition to taxation of market linked debenture proposed in the original bill.

Specified mutual funds have been defined to include funds where not more than 35 per cent of proceeds is invested in shares of domestic companies. This may include debt mutual funds and gold ETFs where investment in domestic companies is less than 35 per cent of proceeds of the fund.

The move will bring taxation of such mutual funds on par with bank deposits which are taxed at slab rates.

The current Parliament session is scheduled to end on April 6. There is speculation that the duration of the session may be curtailed after completion of the budgetary exercise.

Unlike the past, the Parliament this time did not discuss the demands for grants of the identified ministries. The Business Advisory Committee had approved discussions on the ministries of railway, rural development, health and family welfare, panchayati raj, tribal affairs and, tourism and culture.

According to the Budget papers, the total expenditure in 2023-24 is estimated at Rs 45,03,097 crore, of which total capital expenditure has been pegged at Rs 10,00,961 crore.

During the current financial year ending March 31, 2023, the total expenditure has been estimated at Rs 41,87,232 crore, which is more than the outlay of 2021-22 by Rs 3,93,431 crore.

Besides other things, the Budget 2023-24 reflects the continuing commitment of the Union government to boost economic growth by investing in infrastructure development and increasing capital expenditure by 37.4 per cent over revised estimate of 2022-23.

Effective capital expenditure has been estimated at Rs 13,70,949 crore in 2023-24 showing an increase of 30.1 per cent over the revised estimate of 2022-23.

With regard to fiscal deficit, the Budget proposed to bring it down to 5.9 per cent of the GDP from 6.4 per cent likely in the current financial year.

To finance the fiscal deficit in 2023-24, the government plans the net market borrowings at Rs 11.8 lakh crore from dated securities.