Budget 2024 -Clause by Clause Analysis

Union Budget 2024 -Clause by Clause Analysis

The Indian tax regime undergoes frequent updates to align with the evolving economic landscape and government policies. This article delves into the specifics of the tax rates, deductions, and surcharges applicable for the assessment years (AY) 2024-25 and 2025-26. Key provisions include the revised tax slabs under Section 115BAC, tax rates for various entities, surcharges, TDS rates, and changes in deductions for employees and employers. Understanding these changes is crucial for taxpayers to plan their finances effectively and comply with the latest regulations.

1. Clauses 2, 37 & the First Schedule

A. Tax rates under section 115BAC— For assessment year 2024-25,

Total Income (Rs)	Rate
Up to 3,00,000	Nil
From 3,00,001 to 6,00,000	5%
From 6,00,001 to 9,00,000	10%
From 9,00,001 to 12,00,000	15%
From 12,00,001 to 15,00,000	20%
Above 15,00,000	30%

B. Tax rates under Part I of the First Schedule applicable for the assessment year 2024-25

i. Individual, HUF, association of persons, body of individuals, artificial juridical person.

Total Income (Rs)	Rate	Being above 60 years	Being above 80 years
Up to 2,50,000	Nil	Up to 3,00,000	Up to 5,00,000
From 2,50,001 to 5,00,000	5%	From 3,00,001 to 5,00,000	No slab
From 5,00,001 to 10,00,000	20%	From 5,00,001 to 10,00,000	From 5,00,001 to 10,00,000
Above 10,00,000	30%	Above 10,00,000	Above 10,00,000

ii. Co-operative Societies

Total Income (Rs)	Rate
Up to 10,000	10%
From 10,001 to 20,000	20%
Above 20,000	30%

iii. Firms –Tax Slabs for Domestic Company for AY 2024-25

i. For the AY 2024-25, a Partnership Firm (including LLP) is taxable at 30%.

iv. Companies Tax Slabs for Domestic Company for AY 2024-25

Condition	Income Tax Rate (excluding surcharge and cess)
Total Turnover or Gross Receipts during the previous year 2020-21 does not exceed ₹ 400 crores	25%
If opted for Section 115BA	25%
If opted for Section 115BAA	22%
If opted for Section 115BAB	15%
Any other Domestic Company	30%

v. Surcharge on income-tax for AY 2024-25

Surcharge rate from April 1, 2023 under new tax regime
Income range	Surcharge rate
Up to Rs 50 lakh	Nil
More than Rs 50 lakh but up to Rs 1 crore	10%
More than Rs 1 crore but up to Rs 2 crore	15%
More than Rs 2 crore	25%

for person whose income is chargeable to tax under sub-section (1A) of section 115BAC of the Act, the surcharge at the rate of 37% on the income or aggregate of income of such person (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding five crore rupees is not applicable. In such cases the surcharge is restricted to 25%.

vi. Education Cess— For assessment year 2024-25, “Health and Education Cess” is to be levied at the rate of 4% on the amount of income-tax so computed, inclusive of surcharge wherever applicable, in all cases

C. TDS for the FY 2024-25 AY 2025-26

Sl.No.	Income	For transfers taking place before 23rd day of July, 2024 / Rate of TDS	For transfers taking place on or after 23rd day of July, 2024 / Rate of TDS
(1)	long term capital gains referred to in section 115E	10%	12.5%
(2)	long term capital gains referred to in sub clause (iii) of clause (c) of subsection (1) of section 112	10%	The clause is not applicable for transfers on or after 23rd July, 2024
(3)	long term capital gains referred to in section 112A exceeding one lakh twenty five thousand rupees	10%	12.5%
(4)	long term capital gains [not being long term capital gains referred to in clauses (33) and (36) of section 10]	20%	12.5%
(5)	Short term capital referred to in section 111A	15%	20%

D. With effect from assessment year 2025-26, it is proposed that the following rates provided under the proposed clause (ii) of sub-section (1A) of section 115BAC

i. Individual, HUF, association of persons, body of individuals, artificial juridical person.

Sl. No.	Total income	Rate of tax
(1)	(2)	(3)
1.	Up to Rs. 3,00,000	Nil
2.	From Rs. 3,00,001 to Rs. 7,00,000	5%
3.	From Rs. 7,00,001 to Rs. 10,00,000	10%
4.	From Rs. 10,00,001 to Rs. 12,00,000	15%
5.	From Rs. 12,00,001 to Rs. 15,00,000	20%
6.	Above Rs. 15,00,000	30%

E. Tax rates under Part III of the First Schedule applicable for the assessment year 2025-26

i. Individual, HUF, association of persons, body of individuals, artificial juridical person.

Total Income (Rs)	Rate	Being above 60 years	Being above 80 years
Up to 2,50,000	Nil	Up to 3,00,000	Up to 5,00,000
From 2,50,001 to 5,00,000	5%	From 3,00,001 to 5,00,000	No slab
From 5,00,001 to 10,00,000	20%	From 5,00,001 to 10,00,000	From 5,00,001 to 10,00,000
Above 10,00,000	30%	Above 10,00,000	Above 10,00,000

ii. Co-operative Societies

Total Income (Rs)	Rate
Up to 10,000	10%
From 10,001 to 20,000	20%
Above 20,000	30%

iii. Firms –Tax Slabs for Domestic Company for AY 2024-25

For the AY 2025-26, a Partnership Firm (including LLP) is taxable at 30%.; Surcharge at the rate of 12% of such income-tax

iv. Companies Tax Slabs for Domestic Company for AY 2025-26

Condition	Income Tax Rate (excluding surcharge and cess)
Total Turnover or Gross Receipts during the previous year 2020-21 does not exceed ₹ 400 crores	25%
If opted for Section 115BA	25%
If opted for Section 115BAA	22%
If opted for Section 115BAB	15%
Any other Domestic Company	30%

v. Surcharge at the rate of 12% of such income-tax

vi. Surcharge on income-tax for AY 2025-26

Surcharge rate from April 1, 2023 under new tax regime
Income range	Surcharge rate
Up to Rs 50 lakh	Nil
More than Rs 50 lakh but up to Rs 1 crore	10%
More than Rs 1 crore but up to Rs 2 crore	15%
More than Rs 2 crore	25%

for person whose income is chargeable to tax under sub-section (1A) of section 115BAC of the Act, the surcharge at the rate of 37% on the income or aggregate of income of such person (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding five crore rupees is not applicable. In such cases the surcharge is restricted to 25%.

vii. Education Cess— For assessment year 2025-26, “Health and Education Cess” is to be levied at the rate of 4% on the amount of income-tax so computed, inclusive of surcharge wherever applicable, in all cases

2. Clauses 10 & 24

A. Increase in Standard Deduction and deduction from family pension for taxpayers in tax regime

i. In a case where income-tax is computed under clause (ii) of sub-section (1A) of section 115BAC of the Act, the provisions of the clause (ia) of section 16 shall have effect as if for the words “fifty thousand rupees”, the words “Seventy five thousand rupees” had been substituted. – with effect from the 1st day of April, 2025

ii. A deduction of a sum equal to thirty-three and one-third per cent of such income or “twenty five thousand rupees” , whichever is less, shall be made before computing the income chargeable under the head “Income from other sources” under the amended provision of clause (iia) of section 57.

3. Clauses 12 & 25 – with effect from the 1st day of April, 2025

A. Increase in amount allowed as deduction to non-government employers and their employees for employer contribution to a Pension Scheme referred in section 80CCD

i. Under clause (iva) of sub-section (1) of section 36, the amount of employer contribution allowed as deduction to the employer, shall be increased from the present extent of 10% to the extent of 14% of the salary of the employee in the previous year.

ii. Similarly under Sub-section (2) of section 80CCD, the employee shall be allowed as a deduction an amount not exceeding 14% of the employee’s salary. This is being increased only in the case where the employee’s salary is chargeable to tax under sub-section (1A) of section 115BAC of the Act.

4. Clauses 4 & 28

A. Tax incentives to International Financial Services Centre

i. To extend the relaxation in place for VCFs registered with SEBI, to those VCFs which are regulated by IFSCA. It is therefore, proposed to amend the definition of VCF in the Explanation to clause (23FB) of section 10, to include VCFs in IFSC.

ii. The provisions of this section 94B that puts in place a restriction on deduction of interest expense in respect of any debt issued by a non-resident, being an associated enterprise of the borrower shall not apply to finance companies, located in IFSC, as defined in clause (e) of sub-regulation (1) of regulation 2 of the IFSCA (Finance Company) Regulations, 2021 made under the IFSCA Act, 2019, which satisfy such conditions and carry on such activities as may be prescribed.

5. Clause 23

A. Amendment of Section 56 of the Act

i. The Government has decided to sun-set the provisions of clause (viib) of sub-section (2) of section 56 of the Act that provides that any consideration received for issue of shares to any Resident Person in excess of the FMV such shares to the extent of the aggregate consideration exceeding such fair market value shall be chargeable to income tax under the head “Income from other sources” in the hands of the Company (not being one where public are substantially interested). Consequent to said decision, amendment to clause (viib) of sub-section (2) of section 56 of the Act is being carried out to provide that the provisions of this clause shall not apply from the assessment year 2025-26.

6. Clauses 4, 16 & 17 with effect from the 1st day of April, 2025

A. Promotion of domestic cruise ship operations by non-residents

i. Provisions of section 44B relating to presumptive taxation for shipping business of non-residents, shall therefore, no longer apply to cruise-ship business

ii. A presumptive taxation regime is being put in place for a non-resident, engaged in the business of operation of cruise ships, along with exemption to income of a foreign company from lease rentals, if such foreign company and the non-resident cruise ship operator have the same holding company.

iii. A new section 44BBC is inserted, which deems twenty per cent of the aggregate amount received/ receivable by, or paid/ payable to, the non-resident cruise-ship operator, on account of the carriage of passengers, as profits and gains of such cruise-ship operator from this business. Applicability of this section, will be subject to prescribed conditions.

iv. Under new clause (15B) in section 10, the lease rentals paid by a company which opts for presumptive regime under section 44BBC (‘the first company’), shall be exempt in the hands of the recipient company, if such company is a foreign company and such recipient company and the first company are subsidiaries of the same holding company.

7. Clauses 32, 43, 49, 76 & 85 -with effect from the 1st day of September, 2024.

A. Introduction of block assessment provisions in cases of search under section 132 and requisition under section 132A

i. Amending the provisions of Chapter XIV-B of the Act

ii. Effective on or after the 1st day of September, 2024

iii. Applies to a case where search is initiated under section 132, or books of account, other documents or any assets are requisitioned under section 132A.

iv. The ‘block period’ shall consist of previous years relevant to six assessment years preceding the previous year in which the search was initiated under section 132 or any requisition was made under section 132A and shall include the period starting from the 1st of April of the previous year in which search was initiated or requisition was made and ending on the date of the execution of the last of the authorisations for such search or date of such requisition.

v. Regular assessments for the block period shall abate.

vi. There will be one consolidated assessment for the block period.

vii. The Assessing Officer shall assess the ‘total income’ of the assessee, including the undisclosed income

viii. The undisclosed income falling within the block period, forming part of the total income, shall be computed in accordance with the provisions of this Act, on the basis of evidence found as a result of search or survey in consequence of such search or requisition of books of account or other documents and such other materials or information as are either available with the Assessing Officer or come to his notice by any means during the course of proceedings under the said Chapter.

ix. The assessment in respect of any other person shall be governed by the provisions of section 158BD, which provides that where the Assessing Officer is satisfied that any undisclosed income belongs to or pertains to or relates to any person, other than the person with respect to whom search was made

x. The tax shall be charged at sixty per cent for the block period, as per section 113 of the Act. The proviso to section 113 has been amended to provide that the tax chargeable under this section shall be increased by a surcharge, if any, which may be levied by any Central Act.

xi. Penalty on the undisclosed income of the block period as determined by the Assessing officer shall be levied at fifty per cent of the tax payable on such income.

xii. The time-limit for completion of block assessment of the searched assessee shall be twelve months from the end of the month in which the last of the authorisations for search under section 132, or requisition under section 132A, was executed or made.

xiii. The time-limit for completion of block assessment of any other person shall be twelve months from the end of the month in which the notice under section 158BC in pursuance of section 158BD, was issued to such other person.

xiv. evidence found as a result of search or requisition relates to any international transaction or specified domestic transaction referred to in section 92CA, in the PY in which the survey was executed shall be assesses under normal provisions and not according to block of AY as above discussed

xv. The previous approval of the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director are pre-requisites

xvi. The provisions of section 144C of the Act shall not apply to any proceeding under the said Chapter.

8. Clauses 44, 45, 46 & 47- with effect from the 1st day of September, 2024.

A. Rationalisation of provisions relating to assessment and reassessment under the Act

i. to substitute section 148 of the Act so as to provide that before making the assessment, reassessment or recomputation under section 147 and subject to the provisions of section 148A, the Assessing Officer shall issue a notice to the assessee, along with a copy of the order passed under sub-section (3) of section 148A determining it to be a fit case, requiring him to furnish within such period as may be specified, not exceeding a period of three months from the end of the month in which such notice is issued, a return of his income or the income of any other person in respect of whom he is assessable under this Act.

ii. No notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year.

iii. Notice beyond the period of three years and three months from the end of the relevant assessment year can be taken only in a few specific cases

iv. the income escaping assessment amounts to or is likely to amount to fifty lakh rupees or more, notice under section 148A can be issued beyond the period of three years but not beyond the period of five years from the end of the relevant assessment year;

v. Under the new amended Section 151, specified authority for the purposes of sections 148 and 148A shall be the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director.

vi. But before the 1st day of September, 2024, the provisions of section 147 to 151 shall apply as they stood immediately before the commencement of the Finance (No. 2) Act, 2024.

vii. Prior to the 1st day of September, 2024, the assessment, reassessment or recomputation in such case shall be governed as per the provisions of sections 147 to 151, as they stood prior to their amendment by Finance (No. 2) Act, 2024.

9. Clause 83

A. Rationalisation of provisions relating to period of limitation for imposing penalties

i. effect from the 1st day of October, 2024

ii. To amend section 275 of the Act to omit the reference to the date of receipt of order by the Principal Chief Commissioner or Chief Commissioner.

iii. For the purposes of calculation of the number of days for imposition of penalties as a consequence of the orders referred to in the said section.

10. Clause 72 & 73

A. Amendment in provisions relating to set off and withholding of refunds

i. For the phrase “is of the opinion that the grant of refund is likely to adversely affect the revenue”, the phrase “he may, for reasons to be recorded in writing and with the previous approval of the Principal Commissioner of Income-tax or Commissioner of Income-tax” is proposed to be retained.

ii. Further, the period of withholding the refund ‘is proposed to be extended up to sixty days from the date on which such assessment or reassessment is made.

iii. Non-payment of additional interest up to the date till which such refund is withheld under the provisions of sub-section (2) of section 245 of the Act. Vide amendment to section 244A of the Act

iv. With effect from the 1st day of October, 2024.

11. Clause 78

A. Rationalisation of the time-limit for filing appeals to the Income Tax Appellate Tribunal

i. it is proposed to amend clause (a) of subsection (1) of section 253 to include the reference of section 158BFA therein

ii. proposed to amend sub-section (3) of section 253 to provide that the appeal before the ITAT may be filed within two months from the end of the month in which the order sought to be appealed against is communicated to the assessee or to the Principal Commissioner or Commissioner, as the case may be.

iii. Will take effect from the 1st day of October, 2024.

12. Clauses 4, 6 & 9

A. Rationalisation of the provisions of Charitable Trusts and Institutions

i. Merger of trusts under first regime with second regime

ii. it is proposed that the first regime be sunset and trusts, funds or institutions be transited to the second regime in a gradual manner

iii. Applications seeking approval or provisional approval under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10, and filed on or after 1st October, 2024, shall not be considered.

iv. Applications filed under these sub-clauses before 1st October, 2024, and which are pending would be processed and considered under the extant provisions of the first regime itself.

v. Approved trusts, funds or institutions would continue to get the benefit of exemption, as per the provisions of sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10, till the validity of the said approval.

vi. They would be eligible to apply for registration, subsequently, under the second regime. Amendments have accordingly been proposed in section 12A.

vii. Certain eligible modes of investment, under the first regime (viz. those specified in clause (b) of third proviso to clause (23C) of section 10) shall be protected in the second regime, by way of amendment in section 13.

viii. These amendments will take effect from the 1st day of October, 2024.

13. Clause 6

A. Condonation of delay in filing application for registration by trusts or institutions

i. It is proposed that the Principal Commissioner/ Commissioner may be enabled to condone the delay in filing application by trusts or institutions and treat such application as filed within time. The delay may be condoned if he considers that there is a reasonable cause for the same.

ii. These amendments will take effect from the 1st day of October, 2024.

14. Clause 26

A. Rationalisation of timelines for funds or institutions to file applications seeking approval under section 80G

i. The first proviso to sub-section (5) of section 80G provides timelines for filing application for approval, for funds or institutions referred to in sub-clause (iv) of clause (a) of sub-section (2) of section 80G.

ii. At times funds or institutions are unable to file application within specified timelines.

iii. A situation of unintended permanent exit of fund or institution from section 80G approval may also arise.

iv. It is proposed to amend the first and second provisos to rationalise the timelines for filing applications for approval. 4.

v. These amendments will take effect from the 1st day of October, 2024.

Clauses 7 & 26

A. Rationalisation of timelines for disposing applications made by trusts or funds or institutions, seeking registration for exemption under section 12AB or approval under section 80G

i. where provisionally registered/ approved trusts or funds or institutions apply for registration/ approval or where registered/ approved trusts or funds or institutions apply for further registration/ approval under section 12AB or section 80G, as the case may be, the order granting registration/rejecting application shall be passed before expiry of the period of six months from the end of the quarter in which the application was received.

ii. These amendments will take effect from the 1st day of October, 2024.

16. Clause 8

A. Merger of trusts under the exemption regime with other trusts

i. It is proposed that conditions under which the said merger of a trust or institution which is approved / registered under the first or second regime, as the case may be merges with another approved / registered entity under either regime, shall not attract provisions of Chapter XII-EB, may be prescribed, to provide greater clarity and certainty to taxpayers. A new section 12AC is proposed to be inserted for this purpose.

ii. These amendments will take effect from the 1st day of April, 2025.

17. Clause 5

A. Inclusion of reference of clause (23EA), clause (23ED) and clause (46B) of section 10 in sub-section (7) of section 11 to apply to make its registration under section 12AB operative.

i. Sub-section (7) of section 11 of the Act lays down that registration under section 12AB shall become inoperative, if the trust or institution is approved / notified under clause (23C), (23EC), (46) or (46A) of section 10.

ii. Such trust or institution has a one-time option to apply to make its registration under section 12AB operative. Thus, a trust or institution may choose the provisions under which it seeks to claim exemption.

iii. It is proposed to amend sub-section (7) of section 11 of the Act to include reference of clause (23EA), clause (23ED) and clause (46B) of section 10 of the Act, to enable trusts under the second regime to claim exemption under the above-noted specific clauses of section 10.

iv. These amendments will take effect from the 1st day of April, 2025.

18. Clauses 3, 20, 21, 29, 30, 31, 33, 34, 35, 36, 38, 63 & 64

A. Rationalisation and Simplification of taxation of Capital Gains

i. Firstly, it is proposed that there will only be two holding periods, 12 months and 24 months, for determining whether the capital gains is short-term capital gains or long term capital gains.

ii. Firstly, it is proposed that there will only be two holding periods, 12 months and 24 months, for determining whether the capital gains is short-term capital gains or long term capital gains.

iii. Amendment is proposed in clause (42A) of section 2 of the Act.

iv. Thus units of listed business trust will now be at par with listed equity shares at 12 months instead of earlier 36 months.

v. The holding period for bonds, debentures, and gold will reduce from 36 months to 24 months.

vi. For unlisted shares and immovable property it shall remain at 24 months.

vii. The rate for short-term capital gain under provisions of section 111A of the Act on STT paid equity shares, units of equity oriented mutual fund and unit of a business trust is proposed to be increased to 20% from the present rate of 15%.

viii. Other short-term capital gains shall continue to be taxed at applicable rate.

ix. The rate of long-term capital gains under provisions of various sections of the Act is proposed to be 12.5% in respect of all category of assets.

x. However, an exemption of gains upto 1.25 lakh (aggregate) is proposed for long-term capital gains under section 112A on STT paid equity shares, units of equity oriented fund and business trust, thus, increasing the previously available exemption which was upto 1 lakh of income from long term capital gains on such assets.

xi. For listed bonds and debentures, the rate shall be reduced to 12.5%.

xii. Unlisted debentures and unlisted bonds are of the nature of debt instruments and therefore any capital gains on them should be taxed at applicable rate, whether short-term or long-term.

xiii. Unlisted debentures and unlisted bonds are proposed to be brought to tax at applicable rates by including them under provisions of section 50AA of the Act.

xiv. This amendment in section 50AA shall come into effect from the 23rd day of July, 2024.

xv. With rationalisation of rate to 12.5%, indexation available under second proviso to section 48 is proposed to be removed for calculation of any long-term capital gains which is presently available for property, gold and other unlisted assets.

xvi. Parity in taxation between resident and non-resident assesses: To bring parity of taxation between residents and non-residents, corresponding amendments to section 115AD, 115AB, 115AC, 115ACA and 115E are being made to align the rates of taxation in respect of long-term capital gains proposed under section 112A and 112 and rates of short term capital gains proposed under section 111A.

xvii. With effect from the 23rd of July, 2024.

19. Clause 21

A. Amendment to definition of Specified Mutual Fund under section 50AA

i. It is thus proposed to amend the definition of “Specified Mutual Fund” under clause (ii) of Explanation of section 50AA to provide that a specified mutual fund shall mean a mutual fund:

i. (a) a Mutual Fund by whatever name called, which invests more than sixty five per cent of its total proceeds in debt and money market instruments; or

ii. (b) a fund which invests sixty five per cent or more of its total proceeds in units of a fund referred to in sub-clause (a).

ii. effect from 1st day of April, 2026

20. Clause 54, 56, 57, 59 ,60 ,61 &55

A. Rationalisation of TDS rates is proposed as below

Section	Present TDS Rate	Proposed TDS Rate	With effect from
Section 194D Payment of insurance commission (in case of person other than company)	5%	2%	1.4.2025
Section 194DA Payment in respect of life insurance policy	5%	2%	1.10.2024
Section 194G – Commission etc on sale of lottery tickets	5%	2%	1.10.2024
Section 194H Payment of commission or brokerage	5%	2%	1.10.2024
Section 194IB  Payment of rent by certain individuals or HUF	5%	2%	1.10.2024
Section 194M Payment of certain sums by certain individuals or Hindu undivided family	5%	2%	1.10.2024
Section 194 O Payment of certain sums by e commerce operator to e commerce participant	1%	0.1%	1.10.2024
Section 194F relating to payments on account of repurchase of units by Mutual Fund or Unit Trust of India	Proposed to be omitted		1.10.2024

21. Clause 50

A. Ease in claiming credit for TCS collected/TDS deducted by salaried employees

i. it is proposed that sub-section (2B) of section 192 may be amended to expand the scope of the said sub-section to include any tax deducted or collected under the provisions of Chapter XVII-B or Chapter XVII-BB, as the case may be, to be taken into account for the purposes of making the deduction under sub-section (1) of section 192.

ii. The amendments will take effect from the 1st day of October, 2024.

22. Clause 70

A. Alignment of interest rates for late payment to Government account of TCS

i. To amend sub-section (7) of section 206C, to specify that simple interest for non-payment of tax collected at source to Government account, is to be increased from one per cent to one and one-half per cent for every month or part thereof on the amount of such tax from the date on which such tax was collected to the date on which such tax is actually paid.

ii. With effect from the 1st day of April, 2025.

23. Clause 14

A. Increase in limit of remuneration to working partners of a firm allowed as deduction

i. Section 40 of the Act provides for amounts that shall not be deducted in computing the income chargeable under the head “Profits and gains of business or profession”.

ii. Sub-clause (v) of clause (b) of the said section provides for disallowance of any payment of remuneration to any partner who is working partner which is authorized by and is in accordance with the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as the amount of such payment to all partners during the previous year exceeds the aggregate amount computed as per the limits prescribed

iii. amendments to sub-clause (v) of clause (b) of section 40 of the Act

iv. It is proposed that on the first Rs 6,00,000 of the book-profit or in case of a loss, the limit of remuneration is increased to Rs 3,00,000 or at the rate of 90 per cent of the book-profit, whichever is more as follows:

(a) on the first Rs. 6,00,000 of the book profit or in case of a loss	Rs. 3,00,000  or at the rate of 90 per cent of the book profit,  whichever is more;
(b) on the balance of the book profit	at the rate of 60 per cent :

v. effect from the 1st day of April, 2025

24. Clause 70

A. Claiming credit for TCS of minor in the hands of parent

i. To introduce a provision in section 206C of the Act, to allow the Board to notify the rules for cases where credit of tax collected are given to person other than collectee.

ii. However, to ensure that this provision is not misused, credit of TCS of the minor shall only be allowed where the income of the minor is being clubbed with the parent as under sub-section (1A) of section 64 of the Act

iii. will take effect from the 1st day of January, 2025

25. Clauses 3, 4, 18, 24, 39 & 52

A. WIDENING AND DEEPENING OF TAX BASE AND ANTI-AVOIDANCE – Tax on distributed income of domestic company for buy-back of shares

i. Both dividend as well as buy-back are methods for the company to distribute accumulated reserves and thus ought to be treated similarly.

ii. In addition, there is extinguishment of rights for the shareholders who are tendering their shares in the buy-back by domestic company, to the extent of shares bought back by such company from shareholders.

iii. The cost of acquisition of such shares also needs to be accounted for in some manner.

iv. The sum paid by a domestic company for purchase of its own shares shall be treated as dividend in the hands of shareholders, who received payment from such buy-back of shares and shall be charged to income-tax at applicable rates.

v. No deduction for expenses shall be available against such dividend income while determining the income from other sources.

vi. The cost of acquisition of the shares which have been bought back would generate a capital loss in the hands of the shareholder as these assets have been extinguished.

vii. When the shareholder has any other capital gain from sale of shares or otherwise subsequently, he would be entitled to claim his original cost of acquisition of all the shares (i.e. the shares earlier bought back plus shares finally sold).

viii. will take effect from the 1st day of October, 2024

26. Clause 155

A. Revision of rates of securities transaction tax by amendment to the Finance (No.2) Act, 2004

i. To increase the said rates of securities transaction tax on sale of an option in securities from 0.0625 per cent to 0.1 per cent of the option premium, and on sale of a futures in securities from 0.0125 per cent to 0.02 per cent of the price at which such “futures” are traded.

ii. This amendment is proposed to be made effective from the 1st day of October, 2024.

27. Clause 11

A. Reporting of income from letting out of house property under ‘Income from House Property’

i. to amend the section 28 of the Act so as to clarify that any income from letting out of a residential house or a part of the house by the owner shall not be chargeable under the head “Profits and gains of business or profession” and shall be chargeable under the head “Income from house property”.

ii. will take effect from the 1st day of April, 2025

28. Clause 19

A. Amendment of section 47

i. A gift is given out of natural love and affection and

ii. Accordingly it is proposed to substitute clause (iii) of section 47 and its proviso, to provide that nothing contained in section 45 shall apply to transfer of a capital asset, under a gift or will or an irrevocable trust, by an individual or a Hindu undivided family.

iii. This amendment is proposed to be made effective from the 1st day of April, 2025

29. Clause 62

A. TDS on payment of salary, remuneration, interest, bonus or commission by partnership firm to partners

i. Proposed that a new TDS section 194T may be inserted to bring payments such as salary, remuneration, commission, bonus and interest to any account (including capital account) of the partner of the firm under the purview of TDS for aggregate amounts more than Rs 20,000 in the financial year.

ii. Applicable TDS rate will be 10%.

iii. The provisions of section 194T of the Act will take effect from the 1st day of April, 2025.

30. Clause 70

A. TCS under sub-section (1F) of section 206C on notified goods 

i. It is proposed to amend sub-section (1F) of section 206C to also levy TCS on any other goods of value exceeding ten lakh rupees, as may be notified by the Central Government in this behalf.

ii. Such goods would be in the nature of luxury goods.

iii. The amendment will take effect from the 1st day of January, 2025.

31. Clause 58

A. Amendment of provisions of TDS on sale of immovable property

i. any person responsible for paying to a resident any sum by way of consideration for transfer of any immovable property shall, at the time of credit or payment of such sum to the resident, deduct an amount equal to one per cent. of such sum or the stamp duty value of such property, whichever is higher, as income-tax thereon if the consideration is in excess of Rs 50 lakhs.

ii. it is proposed to amend sub-section (2) of section 194-IA of the Act to clarify that where there is more than one transferor or transferee in respect of an immovable property, then such consideration shall be the aggregate of the amounts paid or payable by all the transferees to the transferor or all the transferors for transfer of such immovable property.

iii. Will take effect from the 1st day of October, 2024.

32. Clause 51

A. Tax Deduction at source on Floating Rate Savings (Taxable) Bonds (FRSB) 2020

 i. The provisions of section 193 of the Act are proposed to be amended to allow for deduction of tax at source at the time of payment of interest exceeding ten thousand rupees on ––

i. the Floating Rate Savings Bonds (FRSB) 2020 (Taxable) and

ii. Any security of the Central Government or State Government, as the Central Government may, by notification in the Official Gazette, specify in this behalf.

ii. The amendments will take effect from the 1st day of October, 2024.

33. Clause 87

A. Preventing misuse of deductions of expenses claimed by life insurance business

i. In order to ensure that provisions are not misused to claim deduction for expenses which are otherwise not admissible under the provisions of section 37 of the Act, it is proposed to amend Rule 2 of the First Schedule of the Act to provide that any expenditure which is not admissible under the provisions of section 37 in computing the profits and gains of a business shall be included to (i.e. added back to) the profits and gains of the life insurance business.

ii. The amendment will take effect from the 1st day of April, 2025 and will accordingly apply from assessment year 2025-2026 onwards.

34. Clause 66

A. Inclusion of taxes withheld outside India for purposes of calculating total income

i. In order to address this issue, it is proposed to amend section 198, to provide that all sums deducted in accordance with the provisions of Chapter XVII-B and income tax paid outside India by way of deduction, in respect of which an assessee is allowed a credit against the tax payable under the Act, are for the purpose of computing the income of the assessee, deemed to be income received.

ii. The amendment will take effect from the 1st day of April, 2025.

35. Clause 53

A. Excluding sums paid under section 194J from section 194C (Payments to Contractors)

i. It is proposed to explicitly state that any sum referred to in subsection (1) of section 194J does not constitute “work” for the purposes of TDS under section 194C.

ii. The amendment will take effect from 1st day of October 2024.

36. Clause 13

A. Disallowance of settlement amounts being paid to settle contraventions

i. Settlement amounts are incurred due to an infraction of law and relate to contraventions etc and, therefore, should not be allowed as business expenses.

ii. Accordingly, it is proposed to amend the Explanation 3 to subsection (1) of section 37 of the Act to clarify that “expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law” under Explanation 1 shall include any expenditure incurred by an assessee to settle proceedings initiated in relation to a contravention under any law for the time being in force, as may be notified by the Central Government in the Official Gazette in this behalf.

iii. The amendment is proposed to be made effective from the 1st day of April, 2025 and will accordingly apply from assessment year 2025-2026 onwards.

37. Clause 22

A. Amendment of Section 55 of the Act

i. As provided by sub-section (4) of Section 112A of the Act, the Central Government notified some cases of acquisitions to be given the benefits of section 112A where STT could not have been paid at the time of acquisition.

ii. Due to the notification, the condition of payment of STT was relaxed for transactions of acquisition which are not chargeable to STT other than some exceptional situations defined.

iii. As a consequence, the payment of STT at the acquisition is not required for unlisted equity shares.

vi. It is therefore proposed to amend sub-clause (iii) of clause (a) of the Explanation to clause (ac) of sub-section (2) of section 55 of the Act, to specifically provide that in a case where the capital asset is an equity share in a company which is not listed on a recognised stock exchange as on the 31st day of January, 2018, or which became the property of the assessee in consideration of share which is not listed on such exchange as on the 31st day of January, 2018 by way of transaction not regarded as transfer under section 47, but listed on such exchange subsequent to the date of transfer, where such transfer is in respect of sale of unlisted equity shares under an offer for sale to the public included in an initial public offer, “fair market value” would mean an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the financial year 2017-18 bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the first day of April, 2001, whichever is later.

v. This amendment is proposed to be deemed to have been inserted with effect from the 1st day of April, 2018 and shall accordingly apply retrospectively from assessment year 2018-19 onwards.

v. The formula for Cost of acquisition remains in the Sub clause (iii) of clause (a) of Explanation to Section 55(2)(ac)

i. Higher of (a) and (b), where:

a. (a) Actual cost of acquisition

b. (b) lower of:

i. (i) Fair Market Value (FMV) of shares as of 31st January 2018; and

ii. (ii) Full value of Consideration received upon sale.

38. Clauses 4 & 157

A. Amendment of provisions related to Equalisation Levy Chapter

VIII of the Finance Act 2020

i. It is proposed that this equalisation levy at the rate of 2% shall not be applicable to consideration received or receivable for e-commerce supply or services, on or after the 1st day of August, 2024.

ii. Any service which was liable to equalisation levy was exempt in sub-section (50) of section 10 subject to certain conditions.

iii. Consequently as the 2% levy is being made inapplicable, it is proposed that income arising from ecommerce supply or services made or provided or facilitated on or after the 1st day of April, 2020 but before the 1st day of August, 2024 only, shall fall in the ambit of clause (50) of section 10 of the Act.

iv. These amendments will take effect from the 1st day of August, 2024.

39. Clause 156

A. Amendments in section 42 and 43 of the Black Money Act, 2015 relating to penalty for failure to disclose foreign income and asset in the ITR

i. proposed to amend the provisos to sections 42 and 43 of the Black Money Act to provide that the provisions of the said sections shall not apply in respect of an asset or assets (other than immovable property) where the aggregate value of such asset or assets does not exceed twenty lakh rupees.

ii. This amendment will take effect from the 1st day of October, 2024.

40. Clause 84

A. Amendments proposed in section 276B of the Act for rationalisation of provisions

i. proposed to amend section 276B of the Act to provide for exemption from prosecution to a person covered under clause (a) of the said section, if the payment of tax deducted in respect of a quarter has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement of such quarter under sub-section (3) of section 200 of the Act.

ii. This amendment will take effect from the 1st day of October, 2024.

41. Clauses 69 & 70

A. Reducing time limitation for orders deeming any person to be assessee in default

i. proposed to amend sub-section (3) of section 201 and insert new subsection (7A) in section 206C of the Act to provide that no order shall be made deeming any person to be assessee in default for failure to deduct/ collect the whole or any part of the tax from any person, at any time

i. After the expiry of six years from the end of the financial year in which payment is made or credit is given or tax was collectible or

ii. two years from the end of the financial year in which the correction statement is delivered,

iii. Whichever is later.

ii. The amendments will take effect from the 1st day of April, 2025.

42. Clause 68

A. Widening ambit of section 200A of the Act for processing of statements other than those filed by deductor

i. proposed to widen the ambit of section 200A of the Act to state that in respect of statements which have been made by any other person, not being a deductor, the Board may make a scheme for processing of such statements

ii. The amendment will take effect from the 1st day of April, 2025.

43. Clauses 65 & 70

A. Extending the scope for lower deduction / collection certificate of tax at source

i. to facilitate ease of doing business and to provide an option to seek a lower deduction certificate so as to reduce compliance burden on the assessee, it is proposed:

i. to amend sub-section (1) of section 197 to bring section 194Q in its ambit

ii. To amend sub-section (9) of the section 206C to bring subsection (1H) of section 206C in its ambit.

ii. The amendments will take effect from the 1st day of October, 2024.

44. Clause 70

A. Notification of certain persons or class of persons as exempt from TCS

i. therefore proposed to provide that no collection of tax shall be made or that collection of tax shall be made at such lower rate in respect of specified transaction, from such person or class of persons, including institution, association or body or class of institutions, associations or bodies, as may be notified by the Central Government in the Official Gazette, in this behalf.

ii. The amendment will take effect from 1st day of October 2024.

45. Clauses 67 & 70

A. Time limit to file correction statement in respect of TDS/ TCS statements

i. Accordingly, in order to put 62 certainty and finality on the filing process of TDS and TCS statements, it is proposed to amend section 200 and sub-section (3B) of section 206C to provide that no correction statement shall be delivered after the expiry of six years from the end of the financial year in which the statement referred to in sub-section (3) of section 200 and statement referred to in the proviso to sub-section (3) of section 206C are respectively delivered.

ii. The amendments will take effect from the 1st day of April, 2025.

46. Clause 81

A. Penalty for failure to furnish statements

i. proposed to amend sub-section (3) of section 271H to provide that no penalty shall be levied if the person proves that after paying TDS/ TCS along with fees and interest to the credit of the Central Government, he has filed the TDS/TCS statement before  the expiry of period of one month from the time prescribed for  furnishing such statement.

ii. This amendment will take effect from the 1st day of April, 2025.

47. Clauses 80, 82 & 86

A. Submission of statement by liaison office of non-resident in India

i. It is proposed that failure to furnish statement may attract a penalty of one thousand rupees for every day for which the failure continues, if the period of failure does not exceed three months; and one lakh rupees in any other case.

ii. A new section 271GC is proposed to be inserted in this regard.

iii. However, this penalty shall not be leviable if the assessee proves that there was reasonable cause for the said failure.

iv. It is proposed to amend section 273B to provide for this.

v. These amendments will take effect from the 1st day of April, 2025.

48. Clause 27

A. Determination of Arm’s Length Price in respect of specified domestic transactions in proceedings before Transfer Pricing Officer

i. It is proposed to amend sub-sections (2A) and (2B) of section 92CA to enable the TPO to deal with SDTs which have not been referred to him by the AO and/or in whose respect audit report under section 92CE has not been filed.

ii. These amendments will take effect from the 1st day of April, 2025 and will, accordingly, apply in relation to the assessment year 2025-26 and subsequent assessment years.

49. Clause 42

A. Discontinuation of the provisions allowing quoting of Aadhaar Enrolment ID in place of Aadhaar number

i. It is proposed that proviso to sub-section (1) of section 139AA shall not apply from the 1st day of October, 2024. It is further proposed that every person who has been allotted permanent account number on the basis of Enrolment ID of Aadhaar application form, shall intimate his Aadhaar number on or before a notified date.

ii. This amendment will take effect from the 1st day of October, 2024.

50. Clauses 74 & 75

A. Amendments in sections 245Q and 245R related to Advance Rulings

i. It is proposed to amend section 245Q to allow application for withdrawal by the 31st of October, 2024 for the transferred applications before BAR (from AAR) in cases where order under sub-section (2) of section 245R has not been passed.

ii. It is further proposed to provide that on receipt of an application under the proviso to sub-section (4) of section 245Q, the Board for Advance Rulings may, by an order, reject the application referred to in sub-section (1) thereof as withdrawn on or before the 31st day of December, 2024.

iii. This amendment will take effect from the 1st day of October, 2024.

51. Clause 77

A. Powers of the Commissioner (Appeals)

i. It is proposed that the cases where assessment order was passed as best judgement case under section 144 of the Act, Commissioner (Appeals) shall be empowered to set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment.

ii. Further, it is proposed to make consequential amendment in section 153(3) of the Act in order to provide the time limit for disposal of cases which are set aside by the Commissioner (Appeals).

iii. This amendment will take effect from the 1st day of October, 2024.

iv. It will be applicable to appellate orders passed by the Commissioner (Appeals) on or after 01.10.2024.

52. Clauses 79 & 82

A. Amendment of section 271FAA to comply with the Automatic Exchange of Information (AEOI) framework

i. it is proposed to make the following amendments in section 271FAA to clarify that penalty under the said section shall be attracted in any of the following circumstances–

i. (i) Furnishing inaccurate information in the statement shall be liable;

ii. (ii) failure to comply with due diligence requirement in the statement;

ii. Further, in section 273B, it is proposed to add the reference of section 271FAA in order to provide that no penalty shall be imposable for any failure referred to in the said section, if the assessee proves that there was reasonable cause for such failure.

iii. This amendment will take effect from the 1st day of October, 2024.

53. Clause 71

A. Amendment to include the reference of Black Money Act, 2015 for the purposes of obtaining a tax clearance certificate

i. It is proposed to insert the reference of liabilities under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in the sub-section (1A) of the section 230 of the Act, for the purposes of obtaining a tax clearance certificate.

ii. This amendment will take effect from the 1st day of October, 2024.

54. Clause 41 & 48

A. Rationalisation of provisions related to time-limit for completion of assessment, reassessment and recomputation

i. it is proposed to insert a new sub-section (1B) so that order of assessment of cases where return of income is furnished in consequence of an order under section 119(2)(b) may be completed within twelve months from the end of the financial year in which such return is furnished.

ii. It is proposed to insert the reference of section 250 in this subsection in order to provide the time-limit for disposal of cases which are proposed to be set aside by the Commissioner (Appeals).

iii. it is proposed to amend sub-section (8) of the said section to provide the timeline for passing of order in the case of revived assessment or reassessment proceedings as a consequence of annulment of block assessments under Chapter XIV-B of the Act

iv. it is proposed to amend the provision of Explanation 1(xii) of the said section by inserting a 6th proviso so as to provide that the date of limitation in such cases falls at the end of the month, after taking into account the exclusion provided in the Explanation.

v. Consequential amendment is proposed in the said section to provide that where any return of income is furnished in pursuance of an order under clause (b) of sub-section (2) of section 119, the provisions of this section 139 shall apply.

vi. These amendments will take effect from the 1st day of October, 2024.

55. Clause 26

A. Amendment of Section 80G

i. it is proposed to amend sub-clause (iiihg) of clause (a) of subsection (2) of Section 80G of the Act to provide that in computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, any sums paid by the assessee in the previous year as donations to the National Sports Development Fund set up by the Central Government.

ii. This amendment will take effect from the 1st day of April, 2025 and will accordingly apply to assessment year 2025-26 and subsequent assessment years.

56. Clause 15

A. Removing reference to National Housing Board in Section 43D of the Act

i. It is proposed to remove reference to National Housing Bank by omitting clause (b) of section 43D of the Act and clause (a) and (b) of Explanation to section 43D of the Act.

ii. The amendment will take effect from the 1st day of April, 2025 and shall accordingly apply in relation to assessment year 20252026 and subsequent assessment years.

57. Clause 40

A. Adjusting liability under Black Money Act, 2015 against seized assets

i. It is proposed to insert the reference of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in the section 132B of the Income-tax Act, 1961 so as to recover the existing liabilities under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, out of seized assets.

ii. This amendment will take effect from the 1st day of October, 2024.

58. Clause 154 – Amendments to the Prohibition of Benami Property Transactions Act, 1988

A. (A) Amendment of Section 24 of the Prohibition of Benami Property Transactions Act, 1988

i. It is proposed to insert sub-section (2A) to provide a maximum time limit of three months from the end of the month in which notice is issued under sub-section (1) for the benamidar or the beneficial owner to file their explanations or submissions

ii. It is proposed to insert sub-section (2A) to provide a maximum time limit of three months from the end of the month in which notice is issued under sub-section (1) for the benamidar or the beneficial owner to file their explanations or submissions

iii. It is proposed to amend the said sub-section (5) of said section 24 to increase the said period to one month from the end of the month in which the order under sub-clause (i) of clause (a), or under sub-clause (i) of clause (b) of sub-section (4) of the said section 24 of the PBPT Act, 1988, has been passed.

iv. These amendments will take effect from the 1st day of October, 2024.

B. Insertion of Section 55A in the Prohibition of Benami Property Transactions Act, 1988

i. It is thus proposed to insert a new section 55A in the PBPT Act, 1988, to provide that the Initiating Officer may, with a view to obtaining the evidence of the benamidar or any other person as referred to in section 53, other than the beneficial owner, tender to such person immunity from penalty for any offence under section 53, with the previous sanction of the competent authority as referred to in section 55, on condition of his making a full and true disclosure of the whole circumstances relating to the benami transaction.

ii. A tender of immunity made to, and accepted by, the person concerned, shall, to the extent to which the immunity extends, render him immune from prosecution for any offence in respect of which the tender was made and from the imposition of any penalty under section 53 of the Act.

iii. Further, it is also proposed to provide that if it appears to the Initiating Officer that any person to whom immunity has been tendered under this section has not complied with the condition on which the tender was made or is wilfully concealing anything or is giving false evidence, the Initiating Officer may record a finding to that effect, and thereupon, with the previous sanction of the competent authority as referred to in section 55, the immunity shall be deemed to have been withdrawn, and any such person may be tried for the offence in respect of which the tender of immunity was made or for any other offence of which he appears to have been guilty in connection with the same matter and shall also become liable to the imposition of any penalty under this Act to which he would have otherwise been liable.

iv. This amendment will take effect from the 1st day of October, 2024.