BUDGET HIGHLIGHTS

Tax Proposals in Finance Bill 2024

Important Direct Tax Proposals

 1.    Change in Tax Rates in the new regime. There is change in 3 slabs ranging from 3 lacs to 12 lacs resulting in tax benefit of Rs. 10000/-.

 2.    For the new tax regime standard deduction increased from 50 thousands to 75 thousands. It is not available, opting for the old regime. Tax benefit 7500/-.

 3.    For new tax regime, family pension deduction increased from 15000 to 25000

 4.    For the new pension scheme, deduction of private employees contribution to NPS was enhanced from 10% to 14%, under the new tax regime.

 5.    Foreign Companies tax Rate reduced from 40% to 35%.

 6.    Long Term Capital gain tax rate to be uniform at 12.5% including

•  i. STT paid equity shares and units of equity oriented fund
•  ii. Units purchased in foreign currency
•  iii. Bonds or GDRs purchased in foreign currency
•  iv. Securities of FIIs

7.    Benefit of Indexation for Long term capital gains removed.

 8.    Exemption for long term capital gain of 1 lakh being increased to 1.25 lacs for STT paid equity shares, units of equity oriented funds


 9.    Period of Holding for Long term capital gain for gold, listed debentures, listed bonds, all units of mutual funds reduced from 36 to 24 months. Period of holding for unlisted shares, immovable property shall continue to be 24 months for qualifying as long term capital asset. Period of holding of 36 months being abolished and only two periods of holding of 12 months and 24 months shall continue.

 10.    Capital gain on Unlisted bonds, Unlisted Debentures, units of debt fund shall be treated as short term capital gain only even if period of holding is more than 24 months.

 11.    Short Term capital gain tax rate on STT paid equity shares or units of equity oriented fund shall be @ 20% instead of 15%

 12.    Capital gain exemption for gift, will or irrevocable trust limited to Individual/HUF.

 13.     Amount received by a private company in excess of fair value shall no longer be taxable.

 14.     TDS rate of Commission changed from 5% to 2% w.e.f. 01-10-24

 15.     TDS Rate on rent u/s 194-IB rate reduced from 5% to 2%

 16.     Lower deduction of TDS u/s 194Q/206C(1H) for buyer and seller from 01.1%  allowed

 17. TDS/TCS under other heads of Income also to be considered for determination of TDS on salary income which does not bring TDS on salary below the tax that would otherwise become deductible without considering other particulars.

 18.      TCS on foreign remittances of a child can be claimed by the parent.

 19.     TCS on all luxury goods above 10 lacs @1%. Motor Vehicles were already covered.

 20.    TDS u/s 194T on Salary, Interest to partners above 20 thousands @ 10%.

 21.    TDS on sale of immovable property above 50 lacs to be applied on aggregate limit even if there are more than one buyer.

 22.    Interest on late payment of TCS increased from 1% to 1.5%.

 23.    Exemption from Penalty for delayed filing of TDS return limited from one year to one month from due date of filing returns

 24.    TDS/TCS returns cannot be corrected after 6 years .

 25.    Deduction for Employer contribution in NPS increased from 10% to 14%.

 26.    Settlements amounts paid for infraction of law not to be allowed as deduction.

 27.    Partners’ Salary allowance slabs  changed from first 3 lacs profits to 6 lacs and on first slab deduction shall be allowed to the extent of 3 lacs or 90% whichever is higher and on balance book profits @ 60%.

 28.     Vivaad se Vishwas Scheme:

•  i.    For appeals filed after 31-01-20, dispute may be settled on payment of tax amount only. Where dispute relates to Interest /penalty/fee only, only 25% of disputed interest/penalty/fee to be paid for appeals filed after 31-01-2020.
•  ii.    For appeals filed before 31-01-20, dispute may be settled on payment of tax+ 10%. Where dispute relates to Interest /penalty/fee only, only 30% of disputed interest/penalty/fee to be paid for appeals filed before 31-01-2020.

 29.    Scheme of Block Assessment for search cases is introduced. Block period income to be assessed @ 60%, without interest and penalty except in specified circumstances u/s 158BFA where appeal can be filed before ITAT against such order. Block assessment to be completed within 12 months from the end of month in the last authorization is executed.

30.     Search cases limit reduced to 6 years.

 

 31.     Re-opening of previous years limited to 5 years. Reassessment provisions revamped.

 32.    Re-opening to be done with approval of the Additional/Joint Commissioner.

33.    Period of return filing in response to notice u/s 148 increased to 3 months and if return is filed within 3 months, it shall be deemed to be return u/s 139

34.    Employer contribution deduction increased from 10% to 14% and deduction for private employees u/s 80CCD also increased from 10% to 14%.

35.    Appeal to ITAT to be allowed for penalty u/s 158BFA in search cases.

36.    Appeal to ITAT within 2 months from end of month in which appeal is communicated to assess/PCIT instead of 60 days from date of receipt of order.

37.     For trusts, section 10(23C) regime to be merged to section 11 and no application for approval  u/s 10(23C) shall be entertained.

38.    PCIT is empowered to condone delay in filing 12A, if he considers there was reasonable cause for delay in filing application.

39.     80G Registration timelines to be rationalized.

40. 12A/80G registration applications of renewal of registration, abstention of final registration, modification of objects and new trusts not having availed exemption before, to be decided within 6 months from end of quarter in which application is filed instead of 6 months from the end of month in which registration application is filed.

41.     Merger of charitable trusts with trusts having same/similar objects and registered u/s 12AB/12AB or approved u/s 10(23C)  shall not invite exit tax.

42.     Income from letting residential houses by owner cannot be taxed under Profits and gains of business or professions.

43.    Penalty for non-disclosure of foreign assets (except immovable property) up to 20 lacs not to be imposed.

44.    Option to quote Aadhaar Enrolment ID instead of Aadhaar number for PAN linking abolished and persons who have obtained PAN on the basis of enrolment ID shall intimate their Aadhaar Number.

45.    Commissioner appeal empowered to set aside ex parte assessments. Such assessments to be completed within one year from end of financial year in which order is passed

46.     Limit for assessment of belated return return u/s 119(2)(b) shall be 12 months from end of FY in which return is filed.

47.    Withholding of refund allowed even if grant of refund is not prejudicial to interest of revenue

48.    Withholding of refund allowed up to 60 days from date on which assessment/ reassessment is made causing the withholding of refund and interest on delayed refund shall be allowed accordingly.

49.    Buy back of shares shall be treated as dividend in the hands of shareholders and shall be taxable under head Income from other sources and no deduction shall be allowed in respect of original purchase of shares. Exemption on buy back of shares being abolished. Value of consideration on buy back of shares shall be taken as NIL resulting in capital loss equal to the amount invested in shares which shall be set off and carried forward against capital loss only. 20% Tax on the amount distributed on buy back of shares was also abolished. 10% TDS shall apply on income distributed by buy back of shares.

50.    Presumptive taxation @ 20% from carriage of passengers for non residents engaged in operating cruise ships , being introduced. Where foreign company is operating a cruise ship and another foreign company leases ships on rentals, rental income of the leasing company shall be exempt if both companies are subsidiaries of the same holding foreign company.

51.    Equalization levy @ 2% on e-commerce supplies being abolished.

52.    TPO authorized to deal with specified domestic transactions also not referred by AO. Earlier TPO could deal only with international transactions.

Important GST Proposals:
1.    Section 16(5) inserted for FY 2017-18 to 20-21 to extend date availment of ITC to 30-11-21. ITC already reversed or payments already made shall not be refunded.

2.    Waiver of Interest and penalty against SCN u/s 73/74, for periods 17-18 to 19-20 before issue of Order.

3.    ITC on period between cancellation to revocation will be available if returns filed within 30 days of revocation, subject to tile limit u/s 16(4)

4.    ENA, Rectified spirit brought outside GST.

5.    ITC Blocked for payment u/s 74 restricted to demand till 23-24

6.    Section 73,74 shall operate till 31-03-24 only. New section 74A to be inserted in place to provide uniform period of SCN for demand up to 42 months with higher penalty. Period of Issue of order allowed within 12 months from date of issuance of SCN, which is further extendable by 6 months.

7.    No refund  to be allowed for goods subject to export duty whether export is made under LUT or on payment of tax.

8.    Refund on payment IGST payment to be stopped barring notified persons and notified class of goods/services.

9.    Conditional waiver of Interest and penalty for cases for FY 17-18 to 19-20 by inserting new section 28A

10.     Additional Pre-deposit rate for appeal to GSTAT reduced from 20% to 10%. Maximum pre-deposit before first appellate authority also reduced from 50 Crores  to 40 Crores. Also maximum pre-deposit before GSTAT reduced from 100 Crores to 40 Crores

11.    Mandatory filing of monthly TDS returns irrespective of tax liability being introduced.

12.     Summons can be attended by authorized persons also.

CA RAJ CHAWLA