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Taxation of royalties and technical service fees: non resident receipts taxed as business profits if effectively connected to a permanent establishment.
Clause 59 charges royalties and fees for technical services received by non residents as Profits and gains of business or profession when receipts from the Government or an Indian concern arise under an agreement, the assessee carries on business in India through a permanent establishment or fixed place of profession, and the rights, property or contract are effectively connected with that presence; deductions are limited to expenses wholly and exclusively for the Indian establishment and books of account and audit are required.
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Presumptive taxation for goods carriages simplifies reporting for small fleet owners while limiting deductions and requiring records.
Clause 58 establishes a presumptive basis for computing profits from plying, hiring or leasing goods carriages by applying prescribed per-vehicle rates, permitting declaration of higher actual income, allowing specified partner salary and interest deductions for firms, requiring books and audit where declared income is lower than the presumptive amount, disallowing other deductions against presumptive income, and treating written down value as if depreciation were claimed and allowed.
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Presumptive taxation for professionals deems a portion of gross receipts as taxable income, simplifying compliance but restricting deductions.
Clause 58 institutes a presumptive taxation scheme for specified resident professionals, prescribing turnover-based eligibility and deeming taxable income at a fixed proportion of gross receipts or actual profit, whichever is higher. Eligible taxpayers are generally relieved from routine accounting and audit obligations, but must maintain books and undergo audit if they claim profits lower than the presumptive amount. Deductions or losses are not permitted against the presumptive income, and depreciation is to be treated as if claimed and allowed. Certain entity types are excluded from the scheme.
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Presumptive taxation scheme differentiates rates by transaction mode and imposes a five-year lock-in to simplify compliance.
Clause 58 permits computation of presumptive income for eligible small businesses and professions with turnover-based eligibility, distinguishes presumptive rates by mode of receipt, allows actual profit to be claimed if higher, mandates books and audit where actual profits are lower and total income exceeds the basic exemption, and imposes a five-year lock-in for continued application of the scheme.
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Revenue recognition requires percentage-of-completion for construction and service contracts, with completion or straight-line service options.
Clause 57 mandates the percentage of completion method for construction and service contracts, with a project completion alternative for short-term services and a straight-line option for recurring service arrangements. Contract revenue includes retention money, and contract costs must not be reduced by incidental income such as interest, dividends, or capital gains. The provision references notified accounting standards and aims to align revenue recognition with international practices while imposing compliance and disclosure obligations.
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Taxation of interest income: interest on bad or doubtful debts is taxable when credited or received, whichever is earlier.
Clause 56 makes interest income on bad or doubtful debts of specified financial institutions taxable in the year it is credited to the profit and loss account or actually received, whichever is earlier, defines specified institutions to include public financial institutions, scheduled and certain cooperative banks, State Financial Corporations, State Industrial Investment Corporations and notified NBFCs, and links the classification of bad or doubtful debts to categories prescribed under Reserve Bank of India guidelines.
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Insurance business taxation uses a new dedicated schedule, changing computation and overriding conflicting provisions sector.
A distinct, self contained computation regime requires insurers, including mutual insurance companies and co operative societies, to compute profits and gains using a designated industry specific schedule; this regime expressly overrides general provisions to provide a uniform, tailored method that aligns tax accounting with insurance operations and streamlines compliance and administration.
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Deductions for trade associations enable relief for member contribution shortfalls under a new statutory provision and prioritize loss carryforward.
Clause 50 permits a special deduction for specified trade, professional or similar associations when member-derived income is less than expenditure for members' common interests. The deduction is capped at fifty percent of total income before deduction and is available only after applying carry forward and set off provisions. Income includes subscriptions but excludes specified service remuneration; expenditure excludes capital and other deductible expenses. Eligibility is narrowed by exclusions in Schedule III and by restrictions on income distribution to members, and substantiation through accurate records is required.
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Full value of consideration deemed as stamp duty value where declared consideration is lower, affecting business income taxation.
Clause 53 deems the stamp duty value to be the full value of consideration for transfers of land or buildings when stamp duty value exceeds declared consideration, subject to exceptions where the stamp duty value falls within a prescribed margin above consideration, allowance for stamp duty value as of the agreement date when agreement and registration dates differ, conditions tied to receipt of consideration through prescribed banking or electronic modes before the agreement date, and reference to statutory value-determination rules.
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Cost of acquisition rules align transferee basis with transferor cost, including improvements and transfer expenditures to ensure tax consistency.
Special provisions set the transferee's cost of acquisition equal to the transferor's cost, include improvements and expenditures wholly and exclusively incurred in connection with the transfer, and require recordkeeping; Clause 40 expressly excludes assets under section 67(6), while Section 43C similarly treats improvements and transfer expenditures with an explicit reference to gift-tax and a historical temporal application.
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Actual payment requirement for tax deductions: only payments made qualify, with specific rules protecting small suppliers.
Specified deductions are allowable only in the year when actual payment is made, irrespective of accounting method or liability year. Deductible items include taxes, employer welfare fund contributions, leave payments, interest to defined financial entities, payments for asset use, and delayed payments to micro and small enterprises. Payments made after the year-end but before return filing remain deductible; conversions of interest into loans are not treated as payment. Employer contributions are eligible while employee receipts are excluded, and a deduction already claimed in the liability year cannot be claimed again when paid.
Act Rules Bills
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Taxation of foreign exchange fluctuation standardizes treatment of gains and losses under updated income computation standards.
Taxation of foreign exchange fluctuation treats gains or losses from changes in foreign exchange rates on foreign currency transactions as taxable income or loss, to be computed under the income computation and disclosure standards referenced in clause 276(2), and applies to monetary and non monetary items, translation of foreign operations' financial statements, forward exchange contracts, and foreign currency translation reserves.
Act Rules Bills
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Foreign exchange fluctuation capitalisation changes asset cost computation, requiring exchange rate variations to be added to or deducted from acquisition cost.
Clause 42 requires capitalization of foreign exchange fluctuations into the cost of assets: an overriding rule mandates accounting for exchange rate variations; the variation is computed as the amount paid in domestic currency less the liability at acquisition; that variation is added to or deducted from the asset's actual cost; where contracts with authorised dealers exist, the contract exchange rate governs measurement, and foreign exchange law is incorporated for definitions and consistency.
Act Rules Bills
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Amortisation of expenditure allows staged tax deduction for mineral prospecting expenses with carry-forward and anti-double-deduction safeguards.
Clause 51 establishes a regime permitting amortisation of qualifying prospecting and mine-development expenses for Indian companies and resident individuals by allowing an annual deduction of one-tenth of the specified expenditure over ten tax years from the year of commercial production. It limits eligible expenditure to amounts incurred in the year of commercial production and the four preceding years, excludes acquisition costs of mineral sites and depreciable capital assets, bars double claims under other provisions, permits carry-forward within the ten-year ceiling, and requires audited accounts for non-corporate claimants.
Act Rules Bills
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Deductions for oil exploration clarify eligibility, government agreements and transfer treatment under new tax clause.
Clause 54 establishes a tax framework for prospecting for mineral oils by permitting deductions for pre commercial production expenses and depletion of mineral oil, defining specified oil exploration business and including petroleum and natural gas as mineral oil, and requiring agreements with the Central Government to be laid before Parliament. It prescribes deduction interplay with other allowances and specifies tax treatment on business transfers, cessation during transfer year, and applicability on amalgamation or demerger.
Act Rules Bills
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Written down value reforms standardize WDV computation and clarify depreciation and block asset adjustments under the new tax provision.
Clause 41 prescribes a standardized method for computing the written down value of depreciable assets: assets acquired in the tax year are valued at actual cost; earlier-acquired assets at cost less depreciation allowed; blocks of assets by the formula [(A-D)+B-C]-E; carried-forward depreciation is deemed allowed; adjustments are required for years where total income was not computed; mixed agriculture-business income is treated as business for depreciation; and the term "sold" is referenced to the Act for consistency.
Act Rules Bills
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Computation of actual cost updated to exclude subsidies and non-banking payments, tightening asset valuation for tax purposes.
Clause 39 redefines actual cost for depreciation by reducing asset cost for amounts met by others, GST credits, additional duties and subsidies; excluding certain non-banking payments; providing a formula for indirect subsidy apportionment; specifying treatment in amalgamation, demerger and asset conversion; empowering assessing officers with supervisory approval to determine cost in avoidance cases; and defining special acquisition modes for transfer clarity.
Act Rules Bills
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Modernizing business income definitions clarifies taxable profit scope and aligns terms with contemporary financial instruments.
Clause 66 revises key definitions for computing income under Profits and Gains of Business or Profession, broadening terms like agreement, specifying classifications for banking and housing finance companies, updating the scope of plant, refining fees for technical services, and narrowing the definition of speculative transactions with exceptions for bona fide hedging and specified derivatives; these updates modernise earlier Section 43 concepts to align with electronic payment modes, contemporary derivatives, and non cash considerations to reduce ambiguity in tax assessments.
Act Rules Bills
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Deemed business income: expanded scope taxes benefits from remission, asset disposals and successors' receipts under new Clause 38.
Clause 38 deems specified sums as profits and gains of business or profession where deductions or allowances were earlier claimed, covering cessation or remission of trading liabilities, excess proceeds on disposal of assets over written down value, sale of research capital assets, recovery of bad debts, and withdrawals from special reserves; it conditions taxability on prior allowance, permits loss set off for ceased businesses, defines key terms and extends liability to successors and post cessation situations.
Act Rules Bills
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Non-deductibility of excessive payments: reinforces banking-mode payment rules and limits unreasonable related-party deductions.
Clause 36 empowers disallowance of deductions for payments deemed excessive or unreasonable to specified persons by reference to fair market value and business need, treats related disallowed deductions as income where previously claimed, and conditions deductibility on payments above prescribed thresholds being made through specified banking or online channels while providing limited exceptions for business expediency.

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CUSTOMS DUTY EXEMPTIONS / CONCESSIONS BEING ALLOWED TO LAPSE

24 July, 2024

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

Certain BCD exemptions entries under S No. 50/2017-Customs dated 30.6.2017 and other notifications are being allowed to lapse with effect from 30.9.2024.

(a) The following entries of notification no. 50/2017-Customs dated 30.6.2017 are being allowed to lapse with effect from 30.9.2024:

S. No.

S N of 50/2017 Customs

Description

1.

478

Wireless apparatus, accessories and parts as specified in List 29 imported by a licensed amateur radio operator

2.

353

Foreign currency coins when imported into India by a Scheduled Bank

3.

387

 Zinc metal recovered by toll smelting or toll processing from zinc concentrates exported from India for such processes

4.

441

Spinnerettes made inter alia of Gold, Platinum and Rhodium or any one or more of these metals, when imported in exchange of worn-out or damaged spinnerettes exported out of India

5.

238

Organic/inorganic Coating material for manufacture of electrical steel

6.

254

Catalyst for manufacture of cast components of Wind Operated Electricity Generator

7.

255

Resin for manufacture of cast components of Wind Operated Electricity Generator

8.

277A

Calendared plastic sheet for manufacturing of Smart Card under chapter heading 8523

9.

339

Concessional rate on import of Toughened glass with low iron content and transmissivity of minimum 91% and above, for use in manufacture of solar thermal collectors or heaters

10.

421

Specified goods required for basic telephone service, cellular mobile telephone service, internet service or closed users’ group 64 KBPS domestic data network via INSAT satellite system service and parts, for manufacture of the goods

11.

479

Mono or Bi polar Membrane electrolysers and parts thereof including secondary brine purification components, jumper switches, filtering elements for hydrogen filters for caustic soda or potash units; Membrane and parts thereof or other parts for caustic soda or potash units;

12.

475

Specified goods including scramblers, descramblers, encoders, decoders, jammers, network firewalls, network sniffers, scanners and monitoring systems, probes for data monitoring and SMS/MMS monitoring systems

13.

482

Newspaper page transmission and reception facsimile system or equipment; and Telephoto transmission and reception system or equipment

14.

495

Batteries for electrically operated vehicles, including two and three wheeled electric motor vehicles.

15.

497

Active Energy Controller (AEC) for use in manufacture of Renewable Power System (RPS) inverters

16.

579

Survey (DGPS) instruments, 3D modeling software for ore body simulation cum mine planning and exploration (geophysics and geochemistry) equipment required for surveying and prospecting of minerals

17.

419

Aluminium Oxide for manufacture of washcoat of catalytic converter

18.

420

Clay 2 powder for use in ceramic substrate for catalytic convertor

19.

340

Solar tempered glass or solar tempered (anti-reflective coated) glass for use in manufacture of solar cells/panels/modules

20.

565

Specified goods for use in the manufacture of Flexible Medical Video Endoscope [heading 9018]

21.

566

 Specific input goods for manufacture of syringes, needles, catheters and cannulae

22.

568

Parts and components for manufacture of blood pressure monitors and blood glucose monitoring system (Glucometers)

Note: Description of entries is indicative. Notification may be referred to for complete description.

(b) The following notifications are being allowed to lapse with effect from 30.9.2024:

S. No

Notification No.

Description

1.

97/99-Customs dated 21 July 1999

Exempts BCD and additional duty under Sections 3(1), 3(3) and 3(5) on standard gold bars imported by a RBI authorised bank

2.

30/2004-Customs dated 28 January 2004

Provides full exemption from BCD to second-hand computers/accessories and peripherals received as donation by schools, charitable institutions.

3.

102/2007-Customs dated 14 September 2017

Provides exemption from Special Additional Duty (SAD) levied vide section 3(5) of CTA on to all goods imported for subsequent sale when IGST, CGST, SGST or UTGST paid by importer.

4.

45/2005-Customs dated 16 May 2005

Provides exemption from Special Additional Duty levied under Section 3(5) of CTA on goods cleared from SEZ to DTA.

5.

151/94-Customs dated 13 July 1994

Provides exemption to imports of duty-paid fuel and lubricating oil on aircrafts taken during the outward flight; goods imports by United Arab Airlines; aircraft engines, spares imported by Indian Airlines and Air India International. Re-import entries will operate from re-import notification 45/2017-Cus

6.

26-Customs dated 19th February 1962

Provides exemption from import duty under the Sea Customs Act on catering cabin equipment, food and drink on re-importation by aircrafts of the Indian Airlines Corporation from foreign flights

Note: Description of entries is indicative. Notification may be referred to for complete description.


Full Text:

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

Topics

Acts Income Tax