UPDATES

 1. Finance Bill cleared in Lok Sabha with 60 amendments, including taxation of mutual fund gains.

2. Angel tax deferred to 1st April 2024: No, in the original proposal as well it was to come into effect from 1st April 2024, ie For Assessment year 2024-25 (FY 2023- 24). There is no change in it. However, all concerns raised by stakeholders in implementation of this proposal would be addressed. The draft rules related to valuation shall be shared with the stakeholders for their inputs in the next month itself, viz April. Exclusions, as already provided to domestic Venture Capital Funds etc, shall also be considered for similar overseas entities.

3. Taxation on debt mutual funds: It is proposed to tax the income from debt mutual funds at an applicable rate since it is of the nature of interest income. An arbitrage is being created right now where interest income from debt mutual funds (where not more than 35% invested in shares in a domestic company) is not distributed and converted into long term capital gains of 20% (with indexation). In some cases it comes to even less than 10% due to indexation. Thus many taxpayers are able to reduce their tax liability through this arbitrage. This is sought to be addressed.

4. Changes in REIT/InvIT: Finance Bill proposed to tax distribution from business trust which has income from other sources at applicable rate. This is now proposed to be treated as return of capital i.e. reduction from cost of acquisition, till the cost at which the unit was issued. However, any amount in excess of the issue price would be taxable as income. Thus, the change would benefit the unit holders vis a vis the earlier proposal.

5. Any change to the 7L limit: No there is no change. Only marginal relief is proposed to be provided. Currently if a taxpayer has income of 7 L s/he pays no tax but if s/he has income of 7,00,100 s/he pays tax of 25,010. Thus additional income of Rs 100 leads to tax of Rs 25,010. Hence, marginal relief is proposed that the tax that one pays should not be more than the income that exceeds 7L (Rs 100 in this case).

6. LRS 20% TCS (applicability to IFSC): At present there is TCS on LRS if it is remitted out of India. Hence, when money is remitted by residents to Gift City there is no TCS. To bring parity in treatment it is proposed that TCS shall apply to all LRS even if within India.

7. The MSME ministry currently doesn't have any proposal to implement a rating system for monitoring MSMEs. In a written reply to a question on whether the government has any proposal for the MSME rating system, the minister of state in the MSME ministry Bhanu Pratap Singh Verma informed Lok Sabha.