Union Budget 2024-25: Key Direct Tax Proposals

[Section 28]

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 36]

Deduction in respect of contribution to pension scheme of Central Government

[Section 80CCD]

– Similarly, section 80CCD(2) provides that any contribution by the Central Government or the State Government or any other employer to the account of an assessee referred to in section 80CCD(1), shall be allowed as a deduction to the assessee in the computation of their total income, if it does not exceed 14% of their salary in previous year, where such contribution is made by the Central Government or the State Government and 10% of salary in previous year where such contribution is made by any other employer.

– A proviso is inserted to section 80CCD(2) to provide that where the contribution has been made by any other employer (not being Central Government or State Government), the employee shall be allowed as a deduction an amount not exceeding 14% of the employee’s salary. This limit is increased from existing 10% only in the case where the employee’s income is chargeable to tax under section 115BAC(1A).

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 37]

• Expenditure for any purpose which is an offence or prohibited by any law, whether enacted in or outside India.
• Expenditure to provide any benefit or perquisite, in any form, to a person, whether or not they carry on a business or profession, if the acceptance of such benefit or perquisite by that person violates any law, rule, regulation, or guideline governing their conduct.
• Expenditure incurred to compound (settle) an offence under any law in force, whether in or outside India.

– The amendment to this section further clarifies that this also includes any expenditure incurred by an assessee to settle proceedings related to any contravention of the law, as may be notified by the Central Government.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 40]

– Section 40(b)(v) addresses the disallowance of remuneration paid to working partners. The proposed amendment to this section increases the allowable limit of remuneration to working partners as a deduction. The old and new limits are:

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 43D]

– Section 43D(b) of the Act states that in the case of a public company involved in housing finance, the income by way of interest in relation to such categories of bad or doubtful debts as may be prescribed having regard to the guidelines issued by the National Housing Bank (NHB) in relation to such debts shall be chargeable to tax in the previous year in which it is credited by the public company to its profit and loss account for that year or, as the case may be, in which it is actually received by that company, whichever is earlier. Explanation to the said section also contains references to NHB.

– The amendment seeks to:

• omit references to public companies involved in housing finance from the marginal heading and the body of the section
• Omit clause (b) of section 43D, which pertains to the taxation of interest income for public companies involved in housing finance based on guidelines issued by the NHB
• Omit clauses (a) and (b) of the Explanation to section 43D, with reference to NHB

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 44B]

Special Provision for computing profits and gains of the business of operation of cruise ships in the case of non- residents [Insertion of new

Section 44BBC]

– The amendment excludes non-resident operators of cruise ships from the scope of section 44B. The section will now apply only to non-residents engaged in the operation of ships other than cruise ships.

– A new section 44BBC is introduced to provide a presumptive taxation regime specifically for non-residents engaged in the operation of cruise ships. The key points include:

• Presumptive Income Calculation:

– 20% of the aggregate of amounts received or receivable from the carriage of passengers will be deemed as the profits and gains of the cruise ship operation business

– This includes amounts paid or payable to the assessee or on their behalf.

• Conditions: The application of this section is subject to certain conditions to be prescribed
• Exemption for Lease Rentals: Any income of a foreign company from lease rentals, by whatever name called, of cruise ships, received from a specified company which operates such ship or ships in India, where such foreign company and the specified company are subsidiaries of the same holding company, and such in-come is received or accrues or arises in India, the same will be exempt under section 10(15B) from tax. This exemption is available until the assessment year 2030-31.

– ‘specified company’ means any company, other than a domestic company which operates cruise ships in India and opts to pay tax in accordance with the provisions of section 44BBC

– ‘holding company’, in relation to a foreign company or a specified company, means a company of which such companies are subsidiary companies

(Cont…)

– The above amendments will take effect from 1 April 2025 and will apply from AY 2025-2026.

– The second proviso to the said section provides that where long-term capital gain arises from the transfer of a long-term capital asset, for the words ‘cost of acquisition’ and ‘cost of any improvement’ of any long term capital asset, the words ‘indexed cost of acquisition’ and ‘indexed cost of any improvement’ had to be substituted.

– The amendment to section 48, modifies the second proviso, limiting its applicability to cases where long-term capital gain arises from the transfer which takes place before 23 July 2024, of a long-term capital asset, other than capital gain arising to a non-resident from the transfer of shares in, or debentures of, an Indian company referred to in the first proviso.

– The amendment is effective from 23 July 2024.

– Irrespective of the rationale behind this amendment, is it not essential to perceive the tax-payer’s troubles, as we are a highly taxed country, when all direct and indirect taxes are concerned?

– It is necessary that the tax policy be reasonable and equitable.

[Sections 2(22)(f), 10(34A), 46A, 57, 115QA, 194]

– The said section provides that where a shareholder or a holder of other specified securities receives any consideration from any company for purchase of its own shares or other specified securities held by such shareholder or holder of other specified securities, then, subject to the provisions of section 48, the difference between the cost of acquisition and the value of consideration received by the shareholder or the holder of other specified securities, as the case may be, shall be deemed to be the capital gains arising to such shareholder or the holder of other specified securities, as the case may be, in the year in which such shares or other specified securities were purchased by the company.

– The amendment introduces a new tax treatment for income received from the buy-back of shares by domestic companies, effective from 1 October 2024. There is a consequential amendment to section 2(22) to treat such distribution on buy-back as dividend income under section 2(22)(f).

– A proviso is added in section 46A which provides that where the shareholder receives any consideration of the nature referred to in section 2(22)(f) from any company, in respect of any buy-back of shares, that takes place on or after 1 October 2024, then the value of consideration received by the shareholder shall be deemed to be nil.

– The shareholders will report a capital loss based on the original cost of acquisition, which can be carried forward to offset future capital gains.

– The amendment also ensures no deductions under section 57 are allowed against such dividend income.

– Section 2(22) provides the definition of dividend which, inter alia, does not include any pay-ment made by a company on purchase of its own shares from a shareholder in accordance with the provisions of section 77A of the Companies Act, 1956.

– The amendment to section 2(22) inserts sub-clause (f) and redefines ‘dividend’ to include payments made by a company for the purchase of its own shares from shareholders, aligning with section 68 of the Companies Act, 2013. It also omits the previous exclusion related to section 77A of the Companies Act, 1956. This change is effective from 1 October 2024, and it ensures that such buy-back payments are taxed as dividend income.

[Sections 2(22)(f), 10(34A), 46A, 57, 115QA, 194]

(Cont…)

– A proviso is inserted to section 10(34A), which removes the exemption for income arising from the buy-back of shares by a company for transactions occurring on or after 1 October 2024. This means that income from such buy-backs will no longer be exempt from tax for shareholders, aligning with the broader changes to treat buy-back payments as taxable dividends. Consequential amendment is proposed in section 115QA.

– Consequential amendment is also proposed in section 194 of the Act to provide for tax with-holding at the rate of 10% on such consideration paid by the company.

– The above amendments will take effect from 1 October 2024 and will accordingly apply to any buy-back of shares that takes place on or after this date.

– It remains to be seen what would be the effect on foreign companies who would be covered by the various Double Taxation Avoidance Agreements, wherein the dividends may be taxed at a lower rate.

[Section 47]

– The amendment to section 47(iii), effective from 1 April 2025, specifies that the transfer of a capital asset under a gift, will, or irrevocable trust will only be exempt from capital gains tax if made by an individual or a Hindu undivided family (HUF).

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

– The amendment ensures that such transactions involving individuals and HUFs remain non-taxable, while those by companies do not receive the same exemption.

– In summary, the amendment narrows down the scope of the exemption.

[Section 50AA]

– Section 50AA originally applied to Market Linked Debentures and Specified Mutual Funds, classifying the gains from these instruments as short-term capital gains regardless of the holding period.

– The section now includes not only Market Linked Debentures and units of Specified Mutual Funds acquired on or after 1 April 2023, but also unlisted bonds and unlisted debentures that are transferred, redeemed, or matured on or after 23 July 2024.

– The definition of Specified Mutual Funds has been up-dated to include funds that invest more than 65% of their total proceeds in debt and money market instruments, or in units of such funds.

– The full value of consideration received from the transfer, redemption, or maturity of these instruments, reduced by the cost of acquisition and expenditure incurred wholly and exclusively in connection with such transfer, redemption, or maturity, is deemed to be short-term capital gains.

– The amendment is effective from 23 July 2024, for the expanded scope.

– The updated definition of Specified Mutual Funds will be effective from 1 April 2026, and applicable from the assessment year 2026-27 onwards.

[Section 55]

– For assets covered under section 112A and acquired before 1 February 2018, the cost of acquisition is determined by the higher of:

a) Actual cost of acquisition.

b) Lower of:

– FMV of shares as of 31 January 2018;

– Full value of consideration received on sale.

– If the shares were unlisted on 31 January 2018, but listed at the time of transfer, FMV is proportionate to the Cost Inflation Index (CII) for 2017-18 relative to the first year the asset was held by the assessee or 1 April 2001, whichever is later.

– The amendment specifies that for unlisted equity shares as of 31 January 2018, or shares received in consideration for unlisted shares via non- transfer transactions (section 47), and later listed after an Offer-For-Sale (OFS) in an Initial Public Offering (IPO), the fair market value (FMV) is calculated proportionately using the CII for 2017-18 relative to the first year the asset was held by the assessee or 1 April 2001, whichever is later.

– This amendment is retrospective, effective from 1 April 2018, and applies from the assessment year 2018-19 onwards.

– The amendment clarifies that for unlisted equity shares sold under an OFS in an IPO, the FMV for calculating capital gains will use a specific formula involving the CII, even if the shares were unlisted at the time of transfer but listed afterward. The change is retrospective from 1 April 2018.

– The definition of short-term capital asset has been amended to reduce the holding period to not more than 24 months for all capital assets (12 months for certain specified assets) held by a taxpayer.

– Gains on unlisted debentures, unlisted bonds, market linked debentures and units of specified mutual funds deemed as short-term capital gains, irrespective of the holding period.

– The amendment is effective from 23 July 2024.

– The amendment is effective from 23 July 2024.

[Section 56]

– The applicability of Angel tax was initially limited to investments received from residents of India. The Finance Act, 2023 extended its applicability to investments made by non-resident investors as well.

– It is now proposed to insert a sunset clause and abolish angel tax from the financial year FY 2024-25. This means that from the assessment year 2025-26 onwards, companies will not be taxed on the excess consideration received for issuing shares.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

– Elimination of angel tax will increase capital availability with companies and simplify investment structures. It is a positive step towards creating a conducive environment for companies especially startups in India. However, this amendment is prospective in nature and angel tax provisions will continue to apply for past investments.

– The amendment introduces a new sub-section (9A), which specifies that if a return of income is furnished following an order under section 119(2)(b), then all provisions of section 139 will apply to such return of income.

– The amendment will take effect from 1 October 2024.

[Section 148]

Procedure before issuance of notice under section 148

[Section 148A]

Changes made in the new Section 148

– In earlier section 148, a further period could be allowed by the AO on the basis of an application made in this regard by the assessee for filing of return of his income or the income of any other person, this has been omitted in substituted section.

– The AO does not have to obtain prior approval of the specified authority to issue such notice.

– The second proviso of section 148 (1) that required no approval to be taken by the AO, in case of an order passed under section 148A(d) is omitted.

– Further, the information with the AO which suggests that income chargeable to tax has es-caped assessment, is now amended to include ‘(vi) any information in the case of the assessee emanating from survey conducted under section 133A, other than under sub-section (2A) of the said section, on or after the 1st day of September 2024.’

Changes made in section 148A

– The process of conducting enquiry as provided in clause (a) of old section has been omitted

– In both these sections, the reference to proceedings under section 132 and 132A have been omitted, as there is an insertion of new Chapter XIV-B which deals with ‘Special Procedure for Assessment of Search Cases’

– The amendments to both the sections will be effective from 1 September 2024.

[Section 149]

– In cases where the AO has in his possession books of accounts or other documents or evidence related to any asset or expenditure or transaction or entries which show that the in-come chargeable to tax, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more, the time limit has been changed from three years but not more than ten years to three years and three months but not more than five years and three months.

– The amended section now has inserted a time limit for issue of show cause notice under sec-tion 148A(1). The time limit is three years from the end of the assessment year, except in other cases noted above, where the time limit is three years but not more than five years has elapsed from the end of the assessment year.

– This amendment will take effect from 1 September 2024

[Section 151]

– The same has now been substituted with the Additional Commissioner or the Additional Di-rector or the Joint Commissioner or the Joint Director, as the case may be.

– This amendment will take effect from effective from 1 September 2024

– Section 152(3): Where a search has been initiated under section 132 or requisition is made under section 132A, or a survey is conducted under section 133A [other than un-der sub-section (2A) of the said section], on or after 1 April 2021 but before 1 September 2024, the provisions of sections 147 to 151 shall apply as they stood immediately before the commencement of the Finance (No.2) Act, 2024.

– Section 152(4): Where a notice under section 148 has been issued or an order under section 148A(d) has been passed, prior to 1 September 2024, the assessment, reassessment or re-computation in such case shall be governed as per the provisions of sections 147 to 151, as they stood immediately before the commencement of the Finance (No. 2) Act, 2024.

– This amendment will take effect from 1 September 2024.

[Section 153]

– In case of a return which is furnished in consequence of an order under section 119(2)(b), an order of assessment under section 143 or section 144 may be made at any time before the expiry of twelve months from the end of the financial year in which such return is furnished.

– Further, now, a time limit has been prescribed in case of an order passed by the Commissioner of Income Tax (Appeals) or Joint Commissioner of Income Tax (Appeals) under section 250, then the time limit for passing an order of fresh assessment may be made at any time before the expiry of nine months from the end of the financial year in which the order under section 250 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income Tax.

– Section 153(8) has been amended to provide that the order of assessment or reassessment relating to any assessment year, which stands revived under section 158BA(5), shall be made within a period of one year from the end of the month of such revival or within the period specified in the said section

– Explanation 1(xii) to the said section, has been amended to give effect to the new Chapter XIV-B inserted in case of assessment of search cases, that the period commencing from the date on which a search is initiated and ending on the date on which the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing seized are handed over to the Assessing Officer having jurisdiction over the assessee is excluded while computing the period of limitation.

– A sixth proviso to Explnation1 has been inserted, to provide that where after exclusion of the period referred to in clause (xii), the period of limitation for making an order of assessment, reassessment or recomputation, as the case may be, ends before the end of the month, such period shall be extended to the end of such month.

– This amendment will take effect from 1 October 2024.

[Section 244A]

– The Proviso provided for interest to be paid from the period beginning from the date on which such refund is withheld by the AO in accordance with and subject to provisions of section 245(2) ‘and ending with the date on which such assessment or reassessment is made’ will now be substituted with the words ‘“with the date up to which such refund is withheld”.

– This amendment will take effect from 1 October 2024

– Chapter XIV-B has been introduced substituting the erstwhile provisions of Chapter XIV-B which also dealt with assessment of search cases.

– This new Chapter now deals exclusively for the procedure of assessment, in respect of where search is initiated under section 132 or books of accounts or documents are requisitioned un-der section 132B on or after 1 September 2024.

– This new Chapter deals with reassessment of all search cases, etc.

– The key points to be considered under this new Chapter are:

• Section 158B: Defines key terms used in the chapter such as Block period, undisclosed income
• All pending assessments at the initiation of the search or making requisition shall abate and the assessments carried out under this Chapter
• Similarly, all references made to the Transfer Pricing Officer under section 92CA or order has been passed under section 92CA(3), such assessment shall be deemed to abate
• Section 158BA: 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

(Cont…)

• Section 158BB: This section explains how to compute the total income for the block period. It includes all disclosed and assessed income, as well as undisclosed in-come discovered during the search. Tax is charged on the total income after certain reductions, and any losses within the block period are ignored, that is, the undisclosed income as per section 113 of the Act, at the rate of 60%, plus any surcharge if applicable
• Till block assessment is complete, no further assessment/reassessment proceed-ing shall take place in respect of the period covered in the block
• Section 158BC: This section outlines the procedure for block assess-ment which requires the AO to issue a notice with prior approvals to the assessee for filing re-turn of income
• Section 158BD: This section provides that if undisclosed income be-longs to another person, the assessing officer will transfer the case to the officer having juris-diction over that person, who will then proceed with the assessment
• Section 158E: This section sets a 12-month deadline for completing block assessments from the end of the month in which the last search or requisition authorization was executed. This period can be extended by 12 months if there is a reference under section 92CA. It also lists various exclusions from this limitation period, such as time taken for handing over seized items or periods when court stays are in effect
• Section 158BF: This section provides that no interest under sections 234A, 234B, or 234C or penalties under section 270A shall be imposed on undisclosed income assessed for the block period
• Section 158BFA: This section sets out various interest and penal-ties.

– Interest at 1.5% per month on undisclosed income is leviable if the return for the block period is not furnished timely following a search

– Penalty on the undisclosed income of the block period as determined by the AO shall be levied at 50% of the tax payable on such income. No such penalty shall be levied if the assessee offers undisclosed income in the return furnished in pursuance of search and pays the tax along with such return

– Section 158BG: This section states that block period assessments must be made by officers of at least the rank of Deputy Commissioner or Assistant Director, with prior approval from higher authorities

[Section 92CA (2A) and (2B)]

– Section 92CA(2A) states that if, during the course of proceedings before the TPO, an international transaction comes to the notice, which has not been referred to him by the AO, the TPO can proceed to determine the ALP in its respect as well.

– Further, section 92CA(2B) states that the TPO can compute the ALP of those international transactions, details of which have not been furnished in the audit report under section 92E.

– Sections 92CA(2A) and (2B) have been amended to extend its applicability to also include Specified Domestic Transactions (SDTs) within its scope.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 94B]

– Section 94B(3), which provides for non-applicability of this section to banking or insurance companies, has been now amended to include reference of a Finance Company located in any International Financial Services Centre.

– Section 94B(5) has been consequently amended to define a ‘Finance Company’ and ‘International Financial Services Centre’.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 192]

– Sub-section (2B) has been substituted to consider not only the tax deducted at source (TDS) on other sources of income but also any tax collected at source (TCS) under the provisions of Chapter XVII-BB.

– This amendment is effective from 1 October 2024.

[Section 193]

– The proviso to said section excludes interest payable on any security of the Central Government or State Government from tax deduction requirements, except for interest on 8% Savings (Taxable) Bonds, 2003, and 7.75% Savings (Taxable) Bonds, 2018, where tax is deducted if the interest exceeds INR 10,000 in a financial year.

– The proviso is proposed to be amended to allow for deduction of tax at source at the time of payment of interest exceeding INR 10,000 on:

• the Floating Rate Savings Bonds (FRSB) 2020 (Taxable) and
• any security of the Central Government or State Government, as the Central Gov-ernment may, by notification in the Official Gazette,

– The amendment will be effective from 1 October 2024.

[Section 194]

– Currently, the section mandates that the principal officer of an Indian company, or a company with prescribed arrangements for declaring and paying dividends in India, must deduct a 10% income tax from dividends paid to resident shareholders, covering dividends defined under section 2(22)(a) to (e).

– The section is amended to extend this requirement to also include dividends defined under 2(22)(f), that is, buyback of shares.

– The amendment will be effective from 1 October 2024.

[Section 194C]

– Clause (iv) of the Explanation of section 194C defines ‘work’ to specify which all activities would attract TDS under section 194C.

– The said Explanation is amended to exclude any sum referred to in section 194J(1) from the definition of ‘work’.

– The amendment will be effective from 1 October 2024.

[Section 194IA]

– A proviso is inserted to section 194IA(2) which states that, in cases with multiple transferors or transferees, the consideration will be the aggregate amount paid by all transferees to all transferors.

– The amendment will be effective from 1 October 2024.

[Section 194T]

– Under the new section, firms must deduct 10% income tax on sums paid to partners as salary, remuneration, commission, bonus, or interest, whether credited to the partner’s account (including the capital account) or paid, whichever is earlier.

– However, no deduction is required if the total amount paid or credited to a partner does not exceed Rs. 20,000 in a financial year.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

– Thus, the payment to the partner is not in the nature of salary, etc., this may lead to controversy.

[Section 196B]

– The amendment specifies different rates for different types of income and time periods due to changes in capital gains taxation

• 10% for income from units as specified in section 115AB(1)(i);
• 10% for long-term capital gains from the transfer of such units before 23 July 2024; and
• 12.5% for long-term capital gains from the transfer of such units on or after 23 July 2024.

– The amendment will be effective from 23 July 2024.

[Sections 196C]

– The amendment specifies different rates for different types of income and time periods due to changes in capital gains taxation:

• 10% for interest or dividends in respect of bonds or Global Depository Receipts re-ferred to in section 115AC;
• 10% for long-term capital gains on transfers before 23 July 2024; and
• 12.5% for long-term capital gains on transfers on or after 23 July 2024.

– The amendment is effective from 23 July 2024.

[Section 197]

– The amendment now includes section 194Q, which pertains to TDS on the purchase of goods, where the Assessee can make an application for lower rate of TDS.

– The amendment will be effective from 1 October 2024.

[Section 198]

– The amendment states that even foreign taxes deducted, for which a credit is allowed against Indian tax, shall be deemed to be income received for computation purposes.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 200]

– The amendment now limits the time for submitting any correction statements to six years from the end of the financial year in which the statement un-der section 200(3) is required to be delivered.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 200A]

– The amendment expands the scope of this section wherein the Board would make a scheme for processing of statements also made by any other person, not being a deductor.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 201]

– As per section 201(3), there is a time limit of seven years for order made under section 201(1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax where the payee is a person resident in India. However, there is no time limit when there has been a failure to deduct the whole or any part of the tax from a non- resident.

– Section 201(3) is amended to provide that no order shall be made deeming any person to be an assessee in default for failure to deduct the whole or any part of the tax from any person, at any time after the expiry of six years from the end of the financial year in which payment is made or credit is given, whichever is later.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 206C]

– The key amendments include:

• Expansion of Tax Collection: Starting 1 January 2025, sellers must collect 1% in-come tax from buyers on sales exceeding Rs. 10 lakhs, including motor vehicles and other goods specified by the Central Government.
• Correction Statement Deadline: Effective 1 April 2025, correction statements can-not be submitted after six years from the end of the financial year when the statement was initially required.
• Credit Eligibility: From 1 January 2025, the amendment clarifies that credit for tax collected can be given to the person responsible for collection or any other eligible per-son.
• Interest on Late Payment: From 1 April 2025, interest rates on late tax payments are adjusted: 1% per month from the due date until collection, and 1.5% per month from col-lection until payment.
• Default Orders: No order deeming a person in default for failing to collect tax can be made after six years from the end of the financial year when tax was collectible, or two years from the end of the financial year when the correction statement was submitted, whichever is later.
• Inclusion of Additional Sub-sections: From 1 October 2024, sub- sections 1 and 1C will include sub-section 1H, and a new sub-section 12 will allow the Central Government to exempt certain transactions or persons from tax collection.

– These amendments aim to broaden the scope of tax collection and streamline administrative processes.

Payment of insurance commission (in case of person other than company)

5%

2%

01-04-2025

Payment in respect of life insurance policy

Commission, etc. on sale of lottery tickets

Payment of commission or brokerage

Payment of rent by certain individuals or HUF

%

Payment of certain sums by certain individuals or Hindu undivided family

5%

2%

01-10-2024

Payment of certain sums by e-commerce operator to e-commerce participant

1%

0.1%

01-10-2024

[Section 144C]

– The amendment states that:

• Persons referred to in section 158BA(1) or section 158BD are not to be considered as ‘eligible assesses’ for the purposes of this section, and;
• The provisions of section 144C do not apply to proceedings under Chapter XIV-B, which pertains to special provisions for assessment in cases of search and seizure

– This amendment will be effective from 1 September 2024.

[Section 245Q/ 245R]

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

– This amendment will be effective from 1 October 2024.

[Section 246A]

Powers of the Joint Commissioner (Appeals) or the Commissioner (Appeals). [Section [Section 251]

Appeals to the Appellate Tribunal [Section 253]

– Section 251 which deals with the powers of the CIT(A) and JCIT(A) has been amended to include in case of an appeal against an order of assessment made under section 144 (best judgement assessment), he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment.

– Section 253 which deals with the orders appealable before the ITAT is amended to include an order passed by CIT(A) under section 158BFA. This is consequential to insertion of new Chapter XIV-B in respect of search assessments.

– Section 253(3) states that the time limit to file an appeal be-fore the ITAT should be within sixty days of the date on 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, is now amended to make the time limit for filing appeal as two months from the end of the month instead of sixty days as stated above.

[Section 132B]

– Section 132B(1) of this section has been amended to expand the scope of recoverable tax liabilities to also include those arising from the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

– The amendment is effective from 23 July 2024.

[Section 139AA]

– Section 139AA(1) is amended such that the provision allowing the quoting of the Aadhaar Enrolment ID in place of the Aadhaar number in PAN applications and income tax returns will no longer apply.

– Further, it requires individuals who were allotted a PAN based on an Aadhaar Enrolment ID before 1 October 2024, to provide their Aadhaar number to the specified authority by a date to be notified by the Central Government.

– The amendment will take effect from 1 October 2024.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 245]

– The Amendment omits the words ‘is of the opinion….revenue’ and inserts ‘sixty days’ as shown above

– This amendment will be effective from 1 October 2024.

[Section 230]

– This certificate must state that the individual has no liabilities under:

• Income-tax Act, 1961
• Wealth-tax Act, 1957
• Gift-tax Act, 1958
• Expenditure-tax Act, 1987

– Alternatively, the individual must make satisfactory arrangements for the payment of any liabilities under these Acts.

– The certificate is required only if the income-tax authority deems it necessary based on certain circumstances.

– Proviso to Sub-section (1A):

• Income-tax authorities must record reasons for requiring the certificate.
• They must obtain prior approval from the Principal Chief Commissioner or Chief Commissioner of Income-tax before mandating the certificate.

– Amendment:

– Inclusion of New Act:

• The amendment adds the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, to the list of Acts under section 230(1A).
• This ensures that liabilities under the Black Money Act must also be cleared or satisfactory arrangements for payment must be made before obtaining the tax clearance certificate.

– The amendment will be effective from 1 October 2024.

[Section 285]

– It is proposed to amend the time limit of sixty days from the end of such financial year with the words such period as may be prescribed.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 271FAA]

Penalty for failure to furnish report or for furnishing inaccurate report under section 285 [New Section 271GC]

• provides inaccurate information in the statement or fails to furnish correct information within the period specified; or
• fails to comply with the due diligence requirement.

– then, the prescribed income-tax authority may direct that such person shall pay, by way of penalty, a sum of fifty thousand rupees

– This provision will be effective from 1 October 2024.

– New Section 271GC is inserted which provides that if any person who is required to furnish statement under section 285, fails to do so within the period prescribed under that section, the AO may direct that such person shall pay, by way of penalty, a sum of:

• one thousand rupees for every day for which the failure continues, if the period of failure does not exceed three months; or
• one lakh rupees in any other case.

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 271H]

– The above amendment will take effect from 1 April 2025 and will apply from AY 2025-2026.

[Section 273B]

– It is proposed to insert section 271FAA after the section 271FA which is effective from 1 October 2024 and to insert the section 271GC after the section 271GB which is effective from 1 April 2025.

[Section 275]

– It is proposed to amend the section by omitting the words “Principal Chief Commissioner or Chief Commissioner”

– This amendment will be effective from 1 October 2024.

[Section 276B]

– It is proposed to insert the proviso, providing that this section shall not apply if the payment referred to in clause (a) has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement for such payment section 200(3) of the Act.

– The amendment will be effective from 1 October 2024

[Section 276CCC]

– This amendment will be effective from 1 September 2024.

– Recognizing the success of the previous Vivad Se Vishwas Act, 2020, the Finance Bill, 2024, proposes to introduce the Vivad Se Vishwas Scheme, 2024 with the following objectives:

• To reduce the backlog of cases at CIT(A);
• To provide a mechanism for the settlement of disputed issues

– The key features include:

• All appeals that are pending as of 22 July 2024, are eligible for the new scheme.
• The first deadline for payment of disputed amounts at a reduced rate is 31 December 2024.
• The scheme offers taxpayers the opportunity to settle disputed tax, interest, or penalties at rates lower than the prescribed ones.

– Further, section 43 of the Black Money Act provides power to AO to levy penalty of Rs 10 Lakhs where a taxpayer being an ordinary resident of India fails to disclose the details or furnishes inaccurate details of assets (including financial interest in any entity) located outside India in the return of income.

– The provisos to section 42 and section 43 also provided for relaxation from application of penalty if the person holds one or more bank accounts having an aggregate balance not exceeding an amount equivalent to INR 5 lakhs at any time during the previous year.

– Both the provisos to section 42 and section 43 are amended whereby the penal provisions for contravention of section 42 and section 43 as mentioned above 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.

– The amendments will be effective from 1 October 2024.

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