JULY 24, 2024

By Salil Arora, Advocate, Chief Consulting Officer, Amicus Rarus

"The Old order changeth, yielding place to new, And God fulfils himself in many ways Lest one good custom should corrupt the world"

------ Alfred Tennyson

THE old tax regime of income tax is fast becoming memorabilia fit to be consigned to antiques. The new regime has been attempted to become popular by tinkering of tax slabs. Gold which was sought to be taxed more and more till recently to factor in smuggling now after few years finds a reduction in tax structure to discourage smuggling and to encourage legal business in gold and precious metals.

Filing of appeal limits for the department has seen exponential growth in recent years from Rs 1 crore to Rs 2 crores and now Rs 5 crores. The indexation is again relevant only for computation of dearness allowance and not for capital gain.

Securities Transaction Tax (STT) raised to curb future and options trading and thereby speculation. Angel tax of 2012 abolished after 12 years of its existence.

CHEER FACTORS

Direct Tax

- Standard Deduction for salaried under new tax regime increased from Rs 50,000 to Rs 75,000

- Revised tax slabs under new tax regime as follows:

- Corporate tax rate on foreign companies reduced from 40% to 35%

- Abolition of Angel tax for all classes of investors

- Limit of exemption of capital gains on certain financial assets increased to Rs.1.25 lakh per year

- Assessment can be reopened beyond three years only if the escaped income is Rs 50 lakh or more, up to a maximum period of five years. In search cases, existing time limit of ten years has been reduced to six years

- Monetary limits for filing appeals related to direct taxes, excise and service tax in the Tax Tribunals, High Courts and Supreme Court increased to Rs 60 lakh, Rs 2 crore and Rs 5 crore respectively

- Surcharge on the income or aggregate of income (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 reduced from 37% to 25% (The rich people can celebrate and spend more in marriages)

- Holding period for bonds, debentures and gold for long term gains reduced from 36 months to 24 months

- sections to an asset or assets (other than immovable property) where the aggregate value of such asset or assets does not exceed twenty lakh rupees

- New section 55A in the PBPT Act, 1988, to be inserted to empower the Initiating Officer to grant immunity to such person from penalty and prosecution for any offence under section 53 on condition of his making a full and true disclosure of the whole circumstances relating to the benami transactions

Customse

- Duty on gold and silver reduced to 6% and on platinum to 6.4% (U-turn from 2019-20 budget wherein the duty was increased to curb smuggling)

- BCD on mobile phones, chargers reduced to 15%

- Duty on 25 critical minerals (lithium, copper, cobalt etc) fully exempted

- More capital goods for manufacturing of solar cells and panels exempted

- GST Compensation Cess exempted with effect from 1st July, 2017 on imports in SEZ by SEZ units or developers for authorized operations

- BCD reduced to 2.5% on Graphite, Silicon Quartz & Silicon Dioxide

- BCD on shrimp and fish feed reduced to 5% (feasting time for the seafood lovers)

GST

- Time limit for the taxpayers to avail the benefit of reduced penalty, by paying the tax demanded along with interest increased from 30 days to 60 days

- Maximum amount of pre-deposit for filing appeal with the Appellate Authority reduced from Rs. 25 crore of central tax to Rs. 20 crore of central tax and amount of pre-deposit for filing appeal with the Appellate Tribunal reduced from 20% with a maximum amount of Rs. 50 crore of central tax to additional 10 % with a maximum of Rs. 20 crore of central tax

- Section 70 of the CGST Act amended to provide for appearance by an authorized representative on behalf of a summoned person (Some more work for lawyers and lesser fear for the summoned person)

General

- Provision of Rs 1.48 lakh crore for education, employment and skilling

- Promotion of water supply, sewage treatment and solid waste management projects and services in 100 large cities through bankable projects

- New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops will be released for cultivation by farmers

- First-time employees will get one month's wage (up to 15,000) in three installments as registered in EPFO

- Financial support for loans up to Rs 10 lakh for higher education in domestic institutions

- The limit of Mudra loans will be enhanced to Rs.20 lakh from the current Rs.10 lakh for those entrepreneurs who have availed and successfully repaid previous loans

- Lower stamp duties for properties purchased by women (to be implemented by state government)

- Internship opportunities in 500 top companies to 1 crore youth in 5 years

- Amendment to provisos to sections 42 and 43 of the Black Money Act to exclude applicability of

TEAR FACTOR

Income Tax

- Short term gains on financial assets to attract 20% tax rate (hold your shares longer)

- Long term gains on all financial and non-financial assets to attract a tax rate of 12.5%. Indexation removed for calculation of any long-term capital gains which is presently available for property, gold and other unlisted assets (A pinch for old property owners)

- STT on sale of an option in securities increased from 0.0625% to 0.1% of the option premium, and on sale of a futures in securities increased from 0.0125% to 0.02% of the price at which such "futures" are traded

- Settlement amounts incurred due to an infraction of law not allowed as business expenses

Customs

- BCD on Ammonium Nitrate increased from 7.5% to 10%

- BCD on PCBA of specified telecom equipment increased from 10% to 15%

- BCD on Lab chemicals classified under HSN 9802 00 00 increased from 10% to 150%

FEAR FACTOR

Income Tax

- Angel Tax was introduced in 2012 with the objective that profit and loss shown by unlisted companies does not remain out of the ambit of taxation. The logic stands reversed now and a channel which existed for shareholders to make their black money white may not be re-opened, though for start-ups such abolition is justified

- Reference of liabilities under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 to be inserted in the sub-section (1A) of the section 230 of the Act, for the purposes of obtaining a tax clearance certificate

- Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 to be included in 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

Overall, a budget that marks a significant change from the past and promises to do more by recasting Income Tax Act, 1961 and bringing in more digitalisation in revenue records in rural and urban areas. Delivering her seventh consecutive budget and becoming the first finance minister in India's history to do so, the Hon'ble Finance Minister was successful in fulfilling the political and economic compulsions. Truly, women's empowerment in contemporary India has begun with the Hon'ble Finance Minister being the leading light.

(The views expressed are personal views of the author. No AI tool has been used for authorship.)