Budget 2023- New Section 50AA, Section 194BA & Section 80CCH

Newly section insert by finance Act 2023,

1) Insertion of new section 50AA: Special provision for computation of capital gains in case of Market Linked Debenture.,

2) Insertion of new section 194BA: TDS on Winnings from online games,

3) Insertion of new section 80CCH: Deduction in respect of contribution to Agnipath Scheme

As per finance Act 2023,  It is proposed to insert some sections as mentioned below

1) Section 50AA: Special provision for computation of capital gains in case of Market Linked Debenture.

Applicability: After section 50A the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2024, namely

It is proposed to insert a new section 50AA in the Income-tax Act to treat the full value of the consideration received or accruing as a result of the transfer or redemption or maturity of the “Market Linked Debentures” as reduced by the cost of acquisition of the debenture and the expenditure incurred wholly or exclusively in connection with transfer or redemption of such debenture, as capital gains arising from the transfer of a short term capital asset.

It is further proposed to define the expression ‘Market linked Debenture’ to mean a security by whatever name called, which has an underlying principal component in the form

Implication: The full value of consideration received or accruing as a result of the transfer or redemption or maturity of such debenture as reduced by

(i) the cost of acquisition of the debenture; and

(ii) the expenditure incurred wholly and exclusively in connection with such transfer or redemption or maturity, shall be deemed to be the capital gains arising from the transfer of a short-term capital asset:

Provided that no deduction shall be allowed in computing the income chargeable under the head “Capital gains” in respect of any sum paid on account of securities transaction tax under the provisions of Chapter VII of the Finance (No. 2) Act, 2004.

Explanation– For the purposes of this section “Market Linked Debenture” means a security by whatever name called, which has an underlying principal component in the form of a debt security and where the returns are linked to the market returns on other underlying securities or indices, and includes any security classified or regulated as a market linked debenture by the Securities and Exchange Board of India.’.

2) Section 194BA: TDS on Winnings from online games.

Applicability: This section shall be will be with effect from the 1st day of July, 2023, further more prescribed clarification is sought pending with the law makers.

Definition to be covered for the purposes of this section

(a) “computer resource”, “internet” and “online game” shall have the meanings respectively assigned to them in section 115BBJ;

(b) “online gaming intermediary” means an intermediary that offers one or more online games;

(c) “user” means any person who accesses or avails any computer resource of an online gaming intermediary;

(d) “user account” means account of a user registered with an online gaming intermediary

Implication of the sections

(1) Notwithstanding anything contained in any other provisions of this Act, any person responsible for paying to any person any income by way of winnings from any online game during the financial year shall deduct income-tax on the net winnings in his user account, computed in the manner as may be prescribed, at the end of the financial year at the rates in force:

Provided that in a case where there is a withdrawal from user account during the financial year, the income-tax shall be deducted at the time of such withdrawal on the net winnings comprised in such withdrawal, as well as on the remaining amount of net winnings in the user account, computed in the manner as may be prescribed, at the end of the financial year

(2) In a case where the net winnings are wholly in kind or partly in cash, and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the net winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the net winnings.

(3) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the previous approval of the Central Government, issue guidelines for the purposes of removing the difficulty.

(4) Every guideline issued by the Board under sub-section (3) shall, as soon as may be after it is issued, be laid before each House of Parliament, and shall be binding on the income tax authorities and on the person liable to deduct income-tax

3) Section 80CCH: Deduction in respect of contribution to Agnipath Scheme

It is proposed to insert a new section 80CCH to provide that where an assessee, being an individual enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after 1st November, 2022, has in the previous year, paid or deposited any amount in his account in the said Fund, he shall be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited in accordance with the said Scheme; and where the Central Government makes any contribution to the account in the Agniveer Corpus Fund, the assessee shall be allowed a deduction in the computation of his total income of the whole of the amount so contributed. It is further proposed to define the expressions “Agnipath Scheme” and “Agniveer Corpus Fund” for the purposes of the said section.

This amendment will take effect from 1st April, 2023 and will, accordingly, apply in relation to the assessment year 2023-2024 and subsequent assessment years.

(1) Where an assessee, being an individual enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after the 1st day of November, 2022, has in the previous year paid or deposited any amount in his account in the said Fund, he shall be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited.

(2) Where the Central Government makes any contribution to the account of an assessee in the Agniveer Corpus Fund referred to in sub-section (1), the assessee shall be allowed a deduction in the computation of his total income of the whole of the amount so contributed.

Explanation.—For the purposes of this section,––

(a) “Agnipath Scheme” means the scheme for enrolment in Indian Armed Forces introduced vide letter No.1(23)2022/D(Pay/Services), dated the 29th December, 2022 of the Government of India in the Ministry of Defence;

(b) “Agniveer Corpus Fund” means a fund in which consolidated contributions of all the Agniveers and matching contributions of the Central Government along with interest on both these contributions are held.’.