Introduction: The financial year 2023-24, corresponding to the assessment year 2024-25, introduces significant amendments that impact taxability, exemptions, and deductions. These changes are pivotal for taxpayers aiming to navigate the altered fiscal landscape effectively. Understanding these amendments is crucial for optimizing tax planning and compliance.

Applicable Sec

Particulars Taxability
Sec 50AA Taxability of Debt Fund Specified Mutual fund/ Market linked Debenture (Investment of 65% or more is made in debt security or a security which has principal component in the form of debt security where returns are derived from market and classified as MLD.) Sale of Specified Mutual fund (Debt oriented fund) or Market Linked debentures will always be consider as Short Term capital Gain (STCG) irrespective of the period of holding and taxable at slab rate.

( This is applicable for all such policies issued on or after 01.04.2023)

Sec 10(10D) & Sec 56

Taxability and exemption with regard to LIP (other than ULIP)

Life insurance policies ( other than ULIP) issued on or after 01.04.2023 , exemption u/ s 10(10D) will be available ony when –

(i) premium payable for a policy doesn’t exceed Rs. 5,00,000 or 10% of capital sum assured

(ii) where more than one policy taken, then exemption shall be available for all those policies where the aggregate of the premium payable doesn’t exceed Rs. 5,00,000 or 10% of capital sum assured during the tenure of all such policies.

(however exemption will be available for any amount received on the death of person)

Any sum received (including the sum allocated by way of bonus on such policy) which is not exempt u/s 10(10D) shall be taxable under clause (xiii) of sec 56.

Calculation

Any sum received Xxxx
Less:
Aggregate of the Premium Paid during the tenure xxx

(excluding the premium already claimed u/s 80C)

Payment to supplier covered under MSME Unit within stipulated period u/s 43B(h) Clause (h) has been inserted in Sec 43B of the Income tax Act which provides that

For claiming expenditure incurred on the procurement of goods and services from “Micro enterprise” or “small enterprise” as defined under the prov. of MSMED Act, 2006 payment to the supplier covered under MSME unit should not exceed as per sec 15 of MSMED Act which is –

(i) where an agreement is made, it should not exceed the tenure of 45 days or tenure specified in the agreement whichever is lower.

(ii) in case of no agreement , not more than 15 days. 

(Micro ent- investment in Plant & Mach or equipment > 1 crore and Annual turnover > 5 crore) 

(Small ent- investment in Plant & Mach or equipment > 10 crore and Annual turnover > 50 crore) 

Turnover excludes export .

Plant & machinery exclude investments in pollution control, research and development, and the installation of safety devices

All those expenditure which falls under the said provision if not paid within the stipulated period, then it shall be disallowed at all.

Even after making the payment on or before the due date of filing of ITR, it will not be allowed on accrual basis.

All such expenditure which are disallowed will increase taxable profit of the entity.

Note: (Definition of enterprise of MSMED Act has not covered Trader of goods yet. It only includes manufacturer and service provider). (Hence , the prov. of 43B(h) cover only those supplier which are manufacturer / service provider)

Sec 10(23C) (iv)(v)(vi)(via) / Sec 11

With regard to Donation made to other Trust

New clause has been inserted in Sec 10(23C) / Sec 11 of the Act which provides that

Any amount credited or paid other than corpus donation to any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or

sub-clause (via) of clause (23C) of section 10 of the Act or other trust or institution registered under section 12AB shall be treated as application of income for charitable or religious purpose.

It shall be treated as application for charitable and religious purpose only to the extent of 85% of such amount credited or paid.
 New Taxation rate for manufacturing co-operative Society u/s 115BAE Sec 115BAE has been introduced which provides that any new RESIDENT manufacturing co-operative society set up on or after 01.04.2023 and  commences production/ manufacture on or before 31.03.2024 has the option to pay tax at concessional rate without claiming any deduction and allowances. Where the conditions provided u/s 115BAE are satisfied then such manufacturing co-operative society can pay tax @ 15% subject to surcharge @ 10%.

Note- However where the total income of the resident manufacturing co-operative society include any income which doesn’t arise from manufacture or production, it shall be taxed @ 22%.

 

Rebate u/s 87A opting for New taxation scheme u/s 115BAC

Applicability-

Individual, HUF, AOP (other than co-operative society), BOI, Artificial judicial person.

Rebate u/s 87A

(i) WHERE the total Income of the person specified u/s 115BAC is Rs. 7,00,000 or less then the assesse shall be eligible for Rebate u/s 87A of 100% of the tax payable or Rs. 25,000 whichever is lower.

(Case 1)

(ii) Further , where the Total income exceed Rs. 7,00,000 then the person opting for new taxation regime shall be entitled to a rebate of the amount by which the income tax payable on such income exceed the difference between the total income in excess of Rs. 7,00,000. ( Case 2)

Slab Rate u/s 115BAC (wef F.Y. 23-24)

Upto Rs. 3 Lakh  :   0%

3 Lakh-6 Lakh  :   5%

6 Lakh-9 Lakh :   10%

9 Lakh-12 Lakh   :    15%

12 Lakh-15 lakh :    20%

Above 15 lakh  :    30%

Case 1-

Total Income-  6,94,000

 Tax payable   –   24,400

On above Income

 Rebate u/s 87A    –     (24,400)

 Tax payable   –   0

 Case 2-

Total Income-     7,17,000 

Tax payable   –      26,700

On Rs. 7,17,000 (A)

 Income in excess of  –  17,000

Rs. 7,00,000 (B)

 Rebate (A-B)    –    9,700

 Tax payable

Tax as per (A)-    26,700

 Rebate    –  9,700 

Tax payable-  17,000

Cess @ 4%   680 

Total Tax   17,680

Increasing threshold limit for Presumptive Taxation u/s 44AD & 44ADA Sec 44AD-

An eligible assesse i.e. Individual, HUF and partnership firm who are resident except LLP engaged in eligible business except agency, commission, brokerage, profession , profit of such business under this scheme shall be deemed as – 

Profit – 8 % or higher of Turnover where Total Gross receipt/Turnover is received in Cash + Bank OR 6% or higher of Turnover/Total Gross receipt where gross receipt is through Bank only. 

Sec 44ADA

An eligible assesse i.e. Individual and partnership firm who are resident except LLP engaged in profession, then profit of such profession under this scheme shall be deemed as – 

Profit – 50 % or higher of the Total Gross receipts/Turnover

Sec 44AD- Where the receipt or the aggregate of receipt in cash doesn’t exceed 5 % of the Total Receipt or Turnover, then the person can continue to apply the presumptive taxation scheme till the threshold turnover limit of Rs. 3 crore. 

Sec 44ADA– Where the receipt or the aggregate of receipt in cash doesn’t exceed 5 % of the Total Receipt or Turnover, then the person can continue to apply the presumptive taxation scheme till the threshold turnover limit of Rs. 75 lakhs.

Limit on Capital  Gain Exemption u/s 54 & 54 F 54-  Exemption shall be available to Individual & HUF in the case of LTCG arising from the transfer of residential building is invested in the purchase of new Residential house within 1 year prior to the date of transfer or 2 years after the date of transfer or made construction within 3 years from the date of transfer. (exemption shall be available for two Residential house , in case Capital gain is Rs. 2 Crore)

54F- Ex

Exemption shall be available to Individual & HUF in the case of LTCG arising from the transfer of any capital asset other than residential building is invested in the purchase of new Residential house within 1 year prior to the date of transfer or 2 years after the date of transfer or made construction within 3 years from the date of transfer.

 

Maximum Exemption u/s 54 & 54F will be available upto the limit of Rs. 10 crore where the cost of the New House exceed Rs. 10 crore. 

Further , where the amount deposited in Capital Gain account scheme on or before the due date of filing ITR for the purpose of utilizing in the purchase/ construction of Residential house within the stipulated period shall be taken upto Rs. 10 crore only.

Conclusion: The amendments for FY 2023-24 (AY 2024-25) introduce significant changes affecting various aspects of taxation and investments. Taxpayers must acquaint themselves with these alterations to optimize their financial strategies and comply with regulatory requirements effectively.

Author Bio

Qualification: CA in Practice
Company: GEETANJALI PANDEY & CO
Location: LUCKNOW, Uttar Pradesh, India
Member Since: 26 Apr 2020 | Total Posts: 40
Practising chartered accountant with the name of the firm M/s Geetanjali Pandey & Co. since 2018. I am also a Registered Valuer for valuation of Securities and Financial assets. View Full Profile

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