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News Bills
Omission of redundant provisions related to roll back of exemption
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Roll-back provisions removed from section 12A(2), eliminating retrospective exemption and reassessment protection after later registration.
The Finance Bill proposes to omit the second, third and fourth provisos to section 12A(2), which previously permitted retrospective application of sections 11 and 12 and barred reassessment under section 147 for certain prior years upon later registration; these provisos are deemed redundant after 2020 amendments requiring provisional registration before commencing activities, and the omission takes effect from 1st April, 2023.
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Treatment of donation to other trusts:
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Application of donations between trusts: inter trust transfers now count only partially as charitable application under the amendment.
The Finance Bill restricts treatment of donations from one eligible trust or institution to another by providing that amounts credited or paid to another eligible fund, trust or institution or to a trust registered under the registration provision will be treated as application for charitable or religious purposes only to the extent specified in newly inserted explanatory clauses to the income exemption and income application provisions; the measure aims to prevent layered accumulation through multi stage donations and preserves the non corpus requirement for such transfers.
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Rationalisation of the provisions of Charitable Trust and Institutions
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Corpus and loan repayment rules limited: deposits or repayments qualify only if returned within a prescribed period and conditions met.
Reinvestment into corpus or repayment of loans previously applied for charitable purposes will not be allowed as a fresh application if the original application was claimed before 01.04.2021, to prevent double deduction. Requalification is permitted only if repayment or reinvestment occurs within a limited period after application and the original application complied with statutory conditions (including prohibitions on corpus transfers, TDS and payment-mode limits, prohibition on benefit to disallowed persons, and India-location rules). Amendments add provisos to clause (23C) of section 10 and to section 11; they take effect from 1 April 2023.
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Tax deduction on benefits and perquisites clarified to cover cash or kind and to trigger withholding obligations.
Amendments clarify that the value of any benefit or perquisite arising from business or profession is chargeable and that withholding under section 194R applies whether the benefit or perquisite is provided wholly in cash, wholly in kind, or partly in cash and partly in kind. The section 28 change addresses past judicial interpretation excluding cash benefits and is effective from 1st April, 2024, while the Explanation to section 194R is stated to take effect from 1st April, 2023.
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NBFC categorisation change: tax rules now specify deposit-taking and systemically important non-deposit-taking NBFCs for interest treatment.
The proposal replaces the earlier statutory phrase referring to notified classes of non-banking financial companies with explicit reference to deposit-taking non-banking financial companies and systemically important non-deposit-taking non-banking financial companies, thereby specifying which NBFC categories are subject to the payment-basis interest deduction rule and the special interest income recognition rule. The amendment is prospective and will take effect from 1st April, 2024, applying to the assessment year 2024-2025 and subsequent years.
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Specifying time limit for bringing consideration against export proceeds into India
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Time limit for export proceeds remittance ties deduction to receipt in convertible foreign exchange or RBI approved account.
Amendments tie SEZ unit deduction eligibility to filing the return of income by the due date and to receipt in India of export proceeds in convertible foreign exchange within six months from the end of the previous year (or within an extended period allowed by the competent authority). Proceeds credited to an RBI approved separate overseas bank account will be deemed received in India. Competent authority means the Reserve Bank of India or an authority regulating foreign exchange. Assessing officers may amend assessments when export earnings are realized after the permitted period.
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Rationalization of provisions related to the valuation of residential accommodation provided to empl...
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Valuation of employee accommodation: uniform Rules based method to compute perquisite value and classify concessional housing.
The proposal consolidates valuation of employer provided residential accommodation by vesting the Rules with power to prescribe a uniform method for computing the value of rent free and concessional accommodation perquisites, treats accommodation as concessional when prescribed value exceeds rent payable by the employee, deletes several existing Explanations, and applies prospectively to assessments after implementation.
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Bringing the non-resident investors within the ambit of section 56(2)(viib) to eliminate the possibi...
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Inclusion of non-resident investors in tax on share premium to curb premium-based tax avoidance schemes.
The Finance Bill proposes removing the residency limitation in the tax on excess consideration for issue of shares so that consideration received from non-resident investors will also be chargeable where aggregate consideration exceeds the fair market value computed under the existing FMV formula for unquoted equity shares; the amendment is effective from the first day of April following enactment and applies to the corresponding assessment year and subsequent years.
News Bills
Clarification regarding advance tax while filing Updated Return
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Interest computation on updated returns clarified: interest calculated on assessed tax reduced by claimed advance tax credit, retrospective.
The amendment specifies that interest under the general interest provision shall be computed on the assessed tax reduced by the amount of advance tax credit claimed in the earlier return, if any; this clarification applies to interest computation for updated returns and is made retrospective to the commencement of the updated return regime.
News Bills
Relief from special provision for higher rate of TDS/TCS for non-filers of income-tax returns
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Specified person exclusion: amendment exempts those not required to file returns from higher TDS/TCS consequences, effective April.
The definition of specified person for higher TDS/TCS is amended to exclude any person who is not required to furnish a return for the relevant assessment year and who is notified by the Central Government in the Official Gazette, thereby relieving persons not required to file from the special higher withholding regime.
News Bills
Facilitating TDS credit for income already disclosed in the return of income of past year
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TDS credit facilitation lets taxpayers apply to amend prior assessments to claim later-deducted TDS as credit.
A provision enables an assessee who reported income in an earlier return to apply to the Assessing Officer within two years from the end of the financial year in which TDS was later deducted, for amendment of the earlier assessment or intimation to allow credit of that TDS in the relevant assessment year; rectification rules apply so far as practicable with the limitation period reckoned from the end of the financial year when TDS was deducted, and the same TDS cannot be credited in any other year.
News Bills
TDS on payment of accumulated balance due to an employee
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TDS on accumulated provident fund payments: non PAN payees taxed at the standard non PAN rate under section 206AA, not maximum.
The amendment omits the second proviso to Section 192A so that where a payee fails to furnish PAN in respect of an accumulated balance payment under the Employees' Provident Fund Scheme, tax will be deducted at the non PAN rate prescribed under section 206AA rather than at the maximum marginal rate; the exemption for payments below the monetary threshold remains unaffected and the change is effective from 1 April 2023.
News Bills
Tax treaty relief at the time of TDS under section 196A of the Act
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Tax treaty relief: lower TDS on specified non-resident fund income where residency certificate is furnished under treaty.
Amendment provides that TDS on payments to eligible non-residents for specified mutual fund units or specified company distributions shall be at the lower of the statutory rate and the rate under the applicable tax treaty, where the payee furnishes the required tax residency certificate; the change is effective from 1 April 2023.
News Bills
Excluding non-banking financial companies (NBFC) from restriction on interest deductibility
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Interest deduction limitation: proposed carve-out to exclude specified NBFCs from restrictions on interest deductibility under the Act.
The Finance Bill proposes to amend the exclusion from the interest deductibility restriction so that nothing in sub section (1) shall apply to: (i) companies engaged in banking or insurance; or (ii) such class of non banking financial companies as may be notified by the Central Government, with "non banking financial company" adopting the Act's established definition and the amendment effective from 1 April 2024.
News Bills
Amendments in consequence to new provisions of TDS
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TDS compliance: failing to ensure tax on in kind benefits, VDAs and online winnings invites penalty and prosecution.
Amendments add references to the first provisos of Section 194R and Section 194S and to subsection (2) of proposed Section 194BA into Section 271C (penalty) and Section 276B (prosecution), thereby making failure to deduct or to ensure payment of tax where benefits, virtual digital assets or online-game winnings are wholly or partly in kind subject to penalty equal to the tax not deducted or paid and to prosecution; drafting changes align language with parent TDS provisions and the amendments have staged commencements.
News Bills
Penalty for furnishing inaccurate statement of financial transaction or reportable account
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Penalty for false self-certification: reporting institutions face an additional levy and may recover amounts from account holders.
A new sub section makes a prescribed reporting financial institution liable to an additional fixed monetary penalty when an inaccuracy in its statement of specified financial transactions or reportable accounts is due to false or inaccurate information submitted by the account holder; the penalty is imposed by the income tax authority prescribed for the reporting provision, and the reporting institution may recover the amount from or retain funds of the reportable account holder.
News Bills
Provisions relating to reassessment proceedings
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Reassessment limitation period: exclusion and deeming extend notice timelines for searches conducted late in the year.
Amendments streamline reassessment by prescribing a three month deadline to furnish a return to a section 148 notice (subject to AO extension) and state that returns filed beyond that period will not be deemed returns under section 139. Section 149's limitation rules are preserved, with provisos excluding a fifteen day period from limitation computations and deeming notices arising from late year searches or requisitions to have been issued on the last day of the financial year. Section 151's specified authority list is clarified and the excluded/extended period must be counted when computing the three year threshold.
News Bills
Modification of directions related to faceless schemes and e-proceedings
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Power to amend directions for faceless and e-proceedings enables post-expiry modification by notification in Official Gazette.
The Central Government may amend or modify directions issued for faceless schemes and e-proceedings after the originally prescribed time limits, by notification in the Official Gazette, where such directions were issued before the expiry of those limitation periods; the amendment power has specified commencement dates for different provisions.
News Bills
Alignment of timeline provisions under section 153 of the Act
Show AI Summary
Assessment time limits expanded to permit fuller scrutiny, align updated return treatment and extend search linked reassessment periods.
The proposal amends section 153 to extend timeframes for completion of assessment and reassessment, align the period applicable to orders following updated returns, insert a new sub section to extend limitation periods where search under section 132 or requisition under section 132A is initiated or where seized material relates to the assessee, and to make existing timeline provisions applicable to revision orders passed by senior commissioners, with prospective commencement provided in the Bill.
News Bills
Rationalization of the provisions of the Prohibition of Benami Property Transactions Act, 1988 (the ...
Show AI Summary
Appeal filing period revised - time runs from receipt of the adjudicating authority's order at the IO or aggrieved party.
The amendments shift the start of the appeal limitation period to the date an Adjudicating Authority's order is received in the office of the Initiating Officer or the aggrieved person, and they extend the same rule to orders under section 54A. They also modify the definition of High Court to provide jurisdictional clarity for non-resident appellants or respondents by designating the High Court where the Initiating Officer's office is located when no ordinary residence, business or gainful work place falls within any High Court's territory. Effective date: 1 April 2023.

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Section 194H - Payment of commission or brokerage (Rationalisation and Simplification of taxation of Capital Gains)

24 July, 2024

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Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

As per provisions of section 194H, any person, not being an individual or a Hindu undivided family (as specified), who is responsible for paying, on or after the 1st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of 5%.

2. It is proposed that TDS under section 194H of the Act be reduced from 5% to 2%.

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

[Clause 57]

Full Text:

Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

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Acts Income Tax
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