New Tax Regime to be applied on default basis, however assesses to have option to opt for taxation under Old Tax Regime.
Revised applicable slab under New Regime is tabulated below:
Following deductions will be available under New Tax Regime:
i. Standard Deduction increased to INR 52500 u/s 16(ia) of the IT Act.
ii. Deduction u/s 57(iia) of the IT Act from Family Pension Income up to INR 15000; and
iii. Deduction of amount paid/deposited in the Agniveer Corpus Fund u/s 80CCH (2) of the IT Act.
Maximum rate of surcharge is proposed to be restricted to 25% as against 37%. This results the maximum effective tax rate to 39% from earlier 42.7%. Further, it is proposed that in case where the members of the AOP consists of only companies, the maximum rate of surcharge be restricted to 15%.
Threshold for rebate on the income tax payable under Section 87A of the IT Act increased to INR 7lakhs from INR 5lakhs, applicable for assesse opting taxation under New Tax Regime.
Sl. No. Country (%)
1 Hongkong 15
2 Singapore 24
3 Canada 33
4 Philippines 35
5 Thailand 35
6 USA. 37
7 INDIA 39
8 France 45
9 Germany 45
10 Australia 45
11 China. 45
12 UK 45
13 Japan 56
14 Sweden 57
• Maximum Deposit Limit enhanced for Senior Citizen Savings Scheme from 15 lakhs to 30 lakhs and for Post Office Monthly Income Scheme from 4.5 lakhs to 9 lakhs (single account) & to 15 lakhs (joint account).
• Mahila Samman Savings Certificate introduced tobe applicable till March 2025 at an interest rate of 7.5%.
i. Section 56(2)(viib) of the IT Act provides for taxation of the amount received by a taxpayer on issue of shares in excess of the fair market value from residents. It is now proposed to bring non-residents under its purview effective from the AY 2024-25.
ii. Further to widen the scope of Section 9 of the IT Act covering deemed gifts from residents to RNOR has now been proposed to curb tax avoidance. Currently, any sum of money exceeding INR 50,000 gifted by a Resident to a Non-Resident is taxed in the hands of the Non-Resident, if not within permissible Relation.
To avoid double deduction on interest under section 24 or under other provisions of Chapter-VIA, it has been proposed that the cost of acquisition of the asset or the cost of improvement thereto shall not include the deductions claimed on the amount of interest.
A threshold limit has been introduced on maximum deduction which can be claimed for cost of new asset purchased Under Sections 54 and 54F to INR 10 crores. Corresponding amendments have also been proposed to be made for amounts to be deposited under Capital Gains Account Scheme under both the sections to INR 10 crores.
The conversion of Physical Gold to Electronic Gold Receipt and vice versa is proposed not to be treated as a transfer and not to attract any capital gains.
Income from insurance policies received [other than in case of Death], having a premium above INR 5 lakhs (individually/in aggregate) in a financial year shall be taxable as ‘Income from Other Sources.
Deduction of aggregate premium paid will be allowed if not claimed before. The proposed provision shall apply for policies issued prospectively I.E. On or after 1st April, 2023. This will, however, not apply to any sum received on the death of a person and also not applicable to unit-linked insurance plans.
i. Rate of TDS on winnings from online games @30% has been proposed. Tax will be on net winnings without any threshold limit. However, for lottery and crossword puzzle games, the threshold limit of INR 10000 for TDS will continue. Games of skill and games of chance have been treated on the same plane.
ii. Restricting TDS at 20% instead of TDS at MMR on payment of accumulated balance of PF in case of failure by employee to furnish the PAN.
iii. Threshold limit of 3 crores to be applied for TDS u/s 194N, in case recipient is Cooperative Society.
iv. Amendments proposed to include cash benefits within the ambit of the benefit or perquisites chargeable to tax under the Section 28(iv) and corresponding amendment in Section 194R of the IT Act.
v. The business trust deducting TDS at 5% on interest income of NR unit holders to be eligible for certificate for deduction at lower or NIL rate.
vi. Proposed to omit clause (ix) of the proviso to section 193-exemption from TDS on payment of interest on listed debentures to a resident.
In order to reduce burden of CIT (A) and to ensure speedy disposal of cases, a new authority of Joint CIT(A) is proposed to be created. It will have powers, responsibilities and accountability similar to CIT (A).
Taxpayers are allowed for making application to the AO within 2 years from the end of subsequent FY in which TDS deducted in case of TDS credit mismatch on account of cash system followed by deductor for TDS deduction.
DTAA relief is proposed to be made available for TDS under Section 196A of the IT Act with respect to certain income of a non – residents relating to units of mutual funds.
Completion of assessment proceedings is proposed to increase from 9 months to 12 months from the end of the assessment year in which the income was first assessable. Further, in the case of an Updated Return the timeline is proposed to increase to 12 months from the end of the FY in which such return is furnished.
Penalty of INR 5,000 for a false self-certification of a statement in respect of specified financial transaction and penalty and prosecution for a person who fails to deduct or pay tax as per Section 194R, 194S and 194BA of the IT Act.
Proposes to increase TCS from 5% to 20% for certain classes of overseas tour packages and other foreign remittances (except for the purpose of education or medical treatment) to be effective from July 1, 2023. The bill proposes a new capital gains provision for market-linked debentures, taxing income from insurance policies where the premium is more than INR 5 lakhs and TDS to be deducted on interest payments on listed debentures.
The maximum amount which can be exempted has been increased from Rs.3 lakhs to Rs.25 lakhs upon retirement of non-government salaried employees.
i. Stamp duty on residential properties in urban areas priced below Rs. 1 crore reduced from 6% to 4%
ii. Stamp duty on residential properties in urban areas priced above Rs. 1 crore reduced from 7% to 5%
iii. Stamp duty on residential properties in rural areas priced below Rs. 1 crore reduced from 5% to 3%
iv. Stamp duty on residential properties in rural areas priced above Rs. 1 crore reduced from 6% to 4%
v. Circle rates cut by 10%
This SOP has been extended upto September 30, 2023
i. No LTCG benefit for debt funds with less than 35% in equities
ii. Income from debt funds to be taxed at slab rate of taxpayer
iii. Parity in taxation with bank fixed deposits
iv. Applicable prospectively from FY24
v. No indexation benefit
i. Withholding tax rates raised to 20% from 10% on payments to Non-Residents
ii. India will be able to levy the tax treaty rate of 15% on US, UK Cos
iii. It was unable to levy this rate as domestic rate was lower at 10%
iv. Non-treaty countries will also face the higher 20% withholding tax
i. Securities Transaction Tax on options sale raised to 0.0625% from 0.05%
ii. STT on futures raised to 0.0125% from 0.01%
iii. May Impact F&O volumes on exchanges
Credit card used for foreign travel will attract TCS @ 20% except education and medical purpose
Tax Relief for marginal income earner over and above Rs. 7, 00,000 in New Tax Regime
TDS on online gaming will now be effective from 1st April, 2023 instead of 1st July, 2023
THE Union Budget has sought to give opportunity to tax payers to rectify mistakes related to misreporting of income when filing Income Tax Return for a Financial Year. It has created a provision for allowing such taxpayers to file an updated return within Two years from the end of the relevant Assessment Year.
The Budget has offered tax relief to long-term investors in capital assets other than equity funds and listed stocks. The surcharge on the tax payable on long-term gains from these capital assets (property, unlisted shares, artifacts) is proposed to the capped at 15%.
Tax free run ends even Crypto gifts brought under tax net. Finally, there is some clarity on Crypto by taxing digital assets at 30%.
One percent TDS will apply on a Non-Agriculture Immovable Property of over Rs. 50 Lakh on the basis of sale price or the stamp duty value, whichever is higher.
Budget 2022 has introduced a new tax benefit/deduction for the parent/guardian of a disabled person. As per the new tax sop, if the parent/guardian of a disabled person buys a savings life insurance policy with the latter as beneficiary then the parent/guardian would be eligible to deduction from gross income before tax subject to certain conditions.
a) Belated Return: It has been proposed to prepone the due date of filing belated return of income to 31st December from the earlier time of 31st March of the next year, effectively reducing the window for filing the belated return of income by 3 month
a) (i) The transfer of residential unit takes place during the period from 12 November, 2020 to 30 June, 2021. (ii) The transfer is by way of first time allotment of the residential unit to any person. (iii) The consideration received or accruing as a result of such transfer doesn’t exceed INR 2 crore.
b) An amendment has been proposed to increase the safe harbour limit from 10% to 20% whereby, circle rate shall be deemed as sale/purchase consideration only if the variation between the agreement value and the circle rate is more than 20%. The above amendments are proposed to be effective from 1 April 2021. The proposed amendment is in line with the announcement made earlier by the honourable F.M. It will bring some relief to real estate industry.
It is mandatory for any person, i.e. individuals/HUF, who is not liable to audit, to deduct taxes for rent paid to a resident, exceeding INR 50,000 per month. If PAN is not furnished by the payee, the withholding tax rate would be 20 per cent or the rate in force, whichever is higher. It is now proposed to amend the existing Section to include the newly inserted section, providing for higher rate for TDS for the Non-filers of income-tax return. The amendment is proposed to be effective from 1July 2021.
This Section is proposed to be inserted which provides for relaxation from furnishing / filing of return of income to a senior citizen of age of 75 years in the year in which tax has been deducted by the specified bank after giving effect to the deduction allowable under Chapter VI-A of the Act and rebate under Section 87A. It may be noted that such Senior citizens need to satisfy the below requirements for applicability of the said Section: i. Resident in India ii. Aged 75 years or more during anytime during the previous year. iii. He has No income other than pension and interest income from the same specified bank in which he is receiving his pension income. iv. Furnishes a declaration to the specified bank containing particulars, in such form and verified in such manner, as may be prescribed The above amendment is proposed to be effective from 1 April 2021. This new Section applies only to senior citizens who are having income in the nature of pension, and has no other income except the income of the nature of interest, received or receivable from any account maintained by such individual in the same specified bank, in which he is receiving his pension income. That means, if the senior citizen earns interest income from any other bank/banks, this Section shall not apply. Further, if the senior citizen has refund due, he/she will have to file a return of income. The object of the government to reduce compliance burden on the specified senior citizens seems laudable, the requirements that they should be earning only interest income apart from pension income from only bank seems unpractical and unrealistic and hardly some people will be able to take benefit.
a) Tax Exemption available for the sum received under a life insurance policy, including the sum allocated by way of bonus on such policy in respect of which the premium payable for any of the years during the terms of the policy does not exceed ten percent of the actual capital sum assured.
b) The proposed exemption shall not apply with respect to any unit linked insurance policy (ULIP) issued on or after 1 February 2021, if the amount of premium payable for any of the previous years during the term of the policy exceeds INR 2,50,000
c) If premium is payable by a person for more than one ULIPs, issued on or after 1 February 2021, exemption shall be available only to those insurances policies where the aggregate amount of premium does not exceed INR 2,50,000 in any of the previous years during the term of any of the policies.
The term ´liable to tax´ has been defined by inserting a new clause. The term ´liable to tax´ in relation to a person means that there is a liability of tax on such person under the law for the time being in force of any country and shall include a case where subsequent to imposition of such tax liability, an exemption has been provided. The amendment is proposed to be effective from 1 April 2021.
It may be noted that the Income Tax Act presently does not define the term ‘liable to tax’ although the same is widely used in various provisions like determination of residential status under Double Tax Avoidance Agreements (DTAAs/Tax Treaties). Various tax treaties provide that in case a term is undefined in a tax treaty, then reference should be made under the domestic law. Hence, this amendment would impact the interpretation of various DTAAs.
According to a change in the tax statute that become effective from the assessment year beginning April1, 2021, Indians residing overseas and earnings Rs15 lakh and above from domestic sources such as fixed deposits, dividends, and rents from India will have to pay tax on what they earn outside if that global income is not taxed in any other country.
“Indians working in Middle East as well as those in Merchant Navy shall not be taxed using the New Provision. Somebody who is a citizen of India and sitting in a tax haven and not paying taxes then he has to pay tax. By issuing clarification, we have kept them (workers in the Middle East) out. Same for merchant navy because their income is also not arising out of India. The new provision was brought in because people were taking advantage of the existing one. These are the anti-abuse provisions, and not to inconvenience any genuine persons”
“What we are doing now is that the income of an NRI generated in India will be taxed here. If he’s earning something in a jurisdiction where there is no tax, why will I include that into mine that has been generated there. Indian earnings of NRIs such as rental income from property in the country is what is intended to be taxed by way of the new provision. Whereas if you have a property here and you have rent out of it, but because you are living there, you carry this rent into your income there and pay no tax there, pay no tax here. Since the property is in India, I have got a sovereign right to tax in India. I am not taxing what you’re earning in Dubai but that property which is giving you rent here, you may be an NRI, you may be living there but that is revenue being generated here for you. So, that’s the issue. ”
The Budget 2020 has given a red-eyed attention towards the NRIs, where NRIs have been badly affected due to huge changes in both terms Residential Status as well as their Tax Liability on Global Income. This budget has brought all the “Residents” and “Deemed to be Residents” under one tax regime.
The Budget has enhanced the time period to complete Non-Residential status from 184 days to 246 days outside India.
The Budget has also changed the number of years required for being resident by an individual to qualify as “Ordinarily Resident” from at least three years currently to at least Five years out of the previous 10 years. This would make the “Not Ordinarily” resident an “Ordinarily Resident” if he/she was resident individual in Five years out of the 10 previous years.
The Budget has introduced very important terms “Deemed to be Resident” and “Tax Liability” where any Individual who are Citizen of India not liable to taxed or pay tax any country or territory by reason of his domicile or residence or any other criteria of similar nature shall be Deemed to be Resident in India and their Global income will be taxed as per new tax regime.
“Terming the Budget 2020 proposal to tax NRIs in India as ”draconian”, maritime unions on Monday said they will call on Nirmala Sitharaman to express their concerns. Countries like Philippines and Ukraine compete with India for a global share of seafarers, but they do not levy high income taxes, they said.”
“Revenue Secretary Ajay Bhushan Pandey said Indians working in the Middle East, as well as those in Merchant Navy, will not be taxed using the new provision.”
“Somebody who is a citizen of India and sitting in a tax haven and not paying taxes then he has to pay tax," he said. "By issuing clarification, we have kept them (workers in the Middle East) out. Same for merchant navy because their income is also not arising out of India.”
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