Key Takeaways from Budget
- Income-tax Act provision, and customs duty rate expected to be simplified and overhauled within next 6 months
- Existing income dispute can be settled under proposed Direct Tax Vivad se Vishwas scheme 2024
- Removal of specified equalization levy and provision of angel tax.
- Rationalization and reduction of TDS rates
- Capital gains tax regime overhauled
- GST amnesty scheme introduced
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Key Direct Tax Proposals relating to Capital Gains
- Assets would be classified as long-term capital assets based on the following period of Holding: – Listed REIT and INVIT units – > 12 months.
Bonds, Debentures and Gold – > 24 months
Listed shares / Equity Share – > 12 months
Unlisted shares and immovable property – > 24 months
- Long Term capital gains tax rate shall be 12.5%
- Short term capital gains tax rate shall be 20% (except for capital gains arising on sale of immovable property, Bonds and Debentures, and unlisted shares/ units, which would be taxable at respective slab rates);
- No indexation shall be available for LTCG.
- Indian shareholder are liable to tax on long term capital gains @ 12.5% percent tax (without indexation) – Reduction from current rate of 20% .
- Tax rates on long term capital gains to Non-resident shareholders increased 10 to 12.5 percent
- Only transfer of assets under a gift, will or irrevocable trust by individuals and HUFs will be exempt from tax;
Key Direct Tax Proposals relating to TDS rationalization
- TDS / TCS rates have been rationalized as under (respective applicable date to be kept in mind) : –
- Interest for delay in deposit of TCS increased to 1.5 pm
- No penalty where TDS/ TCS returns are filed within 1 month of prescribed due date
- TDS @10% for resident shareholders and Section 195 for non-resident ;
- Cost of acquisition Timeline for filing correction/ revision of TDS / TCS returns prescribed to 6 years from the end of relevant FY in which the said statement was required to be filed
- No prosecution proceedings shall be initiated where the tax deducted are deposited before due date of filing TDS return for the respective quarter
Other Key Direct Tax Proposals
- Any payment for settlement to dispute that constitutes violation of specified laws would not be allowed as deduction.
- Equalization levy of 2% on e-commerce operators not applicable from 1 August 2024
- Existing income tax dispute, pending as on July 22, 2024, including those with DRP, can be settled under Direct Tax Vivad se Vishwas scheme 2024
- Buyback of shares
- Entire consideration paid on Buyback of shares would be treated as dividend in the hands of shareholders
- Cost of acquisition of the bought-back shares considered a capital loss and can be carried forward and offset against future capital gains.
- Abolition of angel tax
- Angel tax on the company issuing shares above fair value, completely abolished from April 1, 2024
Key Direct Tax Proposals relating to Foreign Companies and Non – Resident
- Corporate tax rate for foreign companies reduced from 40% to 35% ;
- Non-filing of annual statement by a liaison office operating in India to attract penalty up to INR 100,000
- Scope of Safe harbour rules would be expanded
- TPO authorized examine SDT which may not have been referred to them by AO/ cases where Form 3CEB is not filed.
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Key proposals relating to Personal Taxes
- Standard deduction enhanced from INR 50,000 to INR 75,000.
- Income slabs for employees opting for the new tax regime are as under: –
Earlier Slabs under the New Scheme : –
Proposed Slabs under the New Scheme : –
- Employee can now submit the TCS deducted on their payments which would be set off by employer against TDS due on their salary
- No penalty for non-filing of ITR / non-disclosure of specific foreign assets where the aggregate value is less than INR 20 lakh
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