Budget Highlights: Tax Proposals in Finance Bill 2024

Budget Highlights: Tax Proposals in Finance Bill 2024

Important Direct Tax Proposals:

• Change in Tax Rates:
  • Changes in 3 slabs ranging from ₹3 lakhs to ₹12 lakhs result in a tax benefit of ₹10,000.
• Standard Deduction:
  • Increased from ₹50,000 to ₹75,000 in the new tax regime. Not available for those opting for the old regime. Tax benefit: ₹7,500.
• Family Pension Deduction:
  • Increased from ₹15,000 to ₹25,000 in the new tax regime.
• NPS Contribution Deduction:
  • Enhanced from 10% to 14% for private employees under the new tax regime.
• Foreign Companies Tax Rate:
  • Reduced from 40% to 35%.

Condition of Salaried Employee

• Uniform Long Term Capital Gain (LTCG) Tax Rate:
  • Set at 12.5% for:
    • STT paid equity shares and units of equity-oriented funds
    • Units purchased in foreign currency
    • Bonds or GDRs purchased in foreign currency
    • Securities of FIIs
• Removal of Indexation Benefit:
  • Indexation for long-term capital gains removed.
• LTCG Exemption Increase:
  • Increased from ₹1 lakh to ₹1.25 lakhs for STT paid equity shares and units of equity-oriented funds.
• Period of Holding Changes:
  • Reduced from 36 to 24 months for gold, listed debentures, listed bonds, and all units of mutual funds.
  • Unlisted shares and immovable property continue to qualify as long-term capital assets after 24 months.
• Capital Gain Treatment for Unlisted Bonds and Debentures:
  • Treated as short-term capital gain regardless of holding period.
• Short Term Capital Gain Tax Rate:
  • Increased to 20% for STT paid equity shares or units of equity-oriented funds.
• Capital Gain Exemption for Gifts:
  • Limited to Individual/HUF.
• Fair Value Excess for Private Companies:
  • Amount received in excess of fair value no longer taxable.
• TDS Rate on Commission:
  • Reduced from 5% to 2% effective 01-10-24.
• TDS Rate on Rent:
  • Reduced from 5% to 2% under section 194-IB.
• Lower TDS Deduction:
  • Allowed for buyers and sellers at 0.1% under sections 194Q/206C(1H).
• Consideration of Other TDS/TCS:
  • For determining TDS on salary income, ensuring TDS on salary is not less than tax deductible without considering other incomes.
• TCS on Foreign Remittances:
  • Can be claimed by the parent for a child’s expenses.
• TCS on Luxury Goods:
  • 1% for items above ₹10 lakhs. Motor vehicles already covered.
• TDS on Salary and Interest to Partners:
  • Above ₹20,000 at 10% under section 194T.

• TDS on Immovable Property:
  • Applied on aggregate limit for sales above ₹50 lakhs, even with multiple buyers.
• Interest on Late TCS Payment:
  • Increased from 1% to 1.5%.
• Penalty Exemption for Delayed TDS Return:
  • Limited to one month from due date.
• Correction of TDS/TCS Returns:
  • Not allowed after 6 years.
• Employer NPS Contribution Deduction:
  • Increased from 10% to 14%.
• Deduction Disallowance:
  • Settlements for law infractions not deductible.
• Partners’ Salary Allowance:
  • Slabs changed; first slab up to ₹6 lakhs with deduction allowed to the extent of ₹3 lakhs or 90%, and remaining profits at 60%.
• Vivaad se Vishwas Scheme:
  • For disputes filed post 31-01-20: settle by paying only tax amount.
  • For pre 31-01-20: settle by paying tax plus 10%.
• Block Assessment for Search Cases:
  • Income assessed at 60% without interest and penalty, except in specified circumstances under section 158BFA.
• Search Cases Limit:
  • Reduced to 6 years.
• Re-opening of Previous Years:
  • Limited to 5 years; requires approval from Additional/Joint Commissioner.
• Reassessment Provisions Revamped:
  • Re-opening with approval from Additional/Joint Commissioner.
• Return Filing Period for Notice u/s 148:
  • Increased to 3 months; deemed return u/s 139 if filed within 3 months.
• Employer Contribution Deduction:
  • Increased to 14% under section 80CCD.
• ITAT Appeals:
  • Allowed for penalties under section 158BFA in search cases.
• ITAT Appeal Period:
  • Within 2 months from end of month in which appeal is communicated to assess/PCIT.
• Trusts and Section 10(23C) Regime:
  • Merged with section 11; no approval application for section 10(23C).
• PCIT Condonation of Delay:
  • Allowed if reasonable cause for delay in section 12A application.
• Section 80G Registration:
  • Rationalized timelines.
• 12A/80G Registration Applications:
  • Decided within 6 months from end of quarter in which application is filed.
• Merger of Charitable Trusts:
  • No exit tax for merger with similar trusts registered under sections 12AB/10(23C).
• Income from Letting Residential Houses:
  • Not taxed under Profits and Gains of Business or Profession.
• Foreign Assets Non-Disclosure Penalty:
  • Up to ₹20 lakhs not imposed.
• Aadhaar Enrolment ID for PAN Linking:
  • Abolished; Aadhaar number must be intimated.
• Commissioner Appeal Power:
  • Can set aside ex parte assessments; completion within one year from end of financial year.
• Belated Return Assessment:
  • Limit of 12 months from end of FY in which return is filed.
• Withholding of Refund:
  • Allowed even if not prejudicial to revenue interest.
• Withholding of Refund for Reassessment:
  • Allowed up to 60 days; interest on delayed refund accordingly.
• Buyback of Shares:
  • Treated as dividend; taxable under Income from Other Sources. 10% TDS applies on income from buyback.
• Presumptive Taxation for Non-Resident Cruise Operators:
  • Introduced at 20%; leasing company rental income exempt if both are subsidiaries of the same holding foreign company.
• Equalization Levy:
  • 2% on e-commerce supplies abolished.
• TPO Authority:
  • To deal with specified domestic transactions not referred by AO, earlier only international transactions.

Important GST Proposals:

1. ITC Availment Extension:
   • For FY 2017-18 to 2020-21, extended to 30-11-21. No refund for already reversed ITC.
2. Waiver of Interest and Penalty:
   • For periods 2017-18 to 2019-20 before issue of order under sections 73/74.
3. ITC on Cancelled to Revoked Period:
   • Available if returns filed within 30 days of revocation, subject to section 16(4) time limit.
4. ENA, Rectified Spirit:
   • Brought outside GST.
5. ITC Blocked for Payment u/s 74:
   • Restricted to demand till FY 2023-24.
6. Section 73, 74 Operation:
   • Until 31-03-2024; new section 74A for uniform SCN period of 42 months with higher penalty.
7. No Refund for Export Duty Goods:
   • Whether export made under LUT or on payment of tax.
8. IGST Payment Refund Stopped:
   • Except for notified persons and goods/services.
9. Conditional Waiver of Interest and Penalty:
   • For cases FY 2017-18 to 2019-20 under new section 28A.
10. Pre-Deposit Rate for GSTAT Appeals:
    • Reduced from 20% to 10%; maximum pre-deposit before first appellate authority and GSTAT also reduced.
11. Mandatory Monthly TDS Returns:
    • Introduced irrespective of tax liability.
12. Summons Attendance:
    • Can be attended by authorized persons.

 

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