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Budget 2023 - Impact on Investment Options

Below are some of the important points on how the budget will impact your investments.

a. Mahila Samman Savings Certificate: The government has suggested launching the Mahila Samman Savings Certificate, a one-time new small savings programme, for risk-averse investors. For a two-year tenure and a fixed interest rate of 7.5 percent, it will provide deposit facilities up to Rs. 2 lakh in the names of women or girls with the option of partial withdrawal. The programme is open until March 2025.

b. Monthly Income Scheme: The government has also proposed raising the maximum deposit limit for the Monthly Income Account scheme from Rs. 4.5 lakh to Rs. 9 lakh for single accounts and from ₹9 lakh to ₹15 lakh for joint accounts.

c. Senior Citizen Savings Scheme: The upper investment limit for the Senior Citizen Savings Scheme (SCSS) has been increased from ₹15 lakh to ₹30 lakh.

d. Change in Tax Slabs

e. MLDs - Changes in Income tax rates

MLD = Market Linked Debenture. A bond with coupon linkage to the market (eg: to Nifty). MLDs are a popular investment option amongst HNIs as MLD returns come under 10% long-term capital gains tax after 1 year of holding. But Budget 2023 has proposed to change this to short-term capital gains tax rate (slab rate), regardless of the holding period after 1st April 2023.

f. Income from traditional insurance policies where the premium is over Rs 5 lakh will no more be exempt from taxes

It has been proposed that in cases where the aggregate premium for life insurance policies — other than unit-linked insurance plans (ULIPs) — issued on or after April 1, 2023, is above Rs 5 lakh, income will not be exempt.

“You could have one insurance policy or multiple policies where the aggregate premium exceeds Rs 5 lakh in a year, the sum received will now become taxable,” said Archit Gupta, CEO, ClearTax.

However, the taxation proposal will be applicable only to those policies, which are issued on or after April 1, 2023. “The aggregation will take place only for those policies, which you bought from next financial year,” he said.

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Source: Livemint, Valuresearch, Financial Express, Moneycontrol

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