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Specified Mutual Fund definition revised: funds must invest over sixty five percent in debt/money market, effective April 2026.
The amendment redefines Specified Mutual Fund under section 50AA to mean (a) a mutual fund investing more than sixty five percent of its proceeds in debt and money market instruments, or (b) a fund investing sixty five percent or more of its proceeds in units of such a fund. The change clarifies treatment of ETFs, gold funds and Fund of Funds previously affected by the thirty five percent equity threshold and is proposed to be effective from 1 April 2026 for AY 2026 27 onwards.
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TDS rate rationalisation reduces multiple withholding rates to simplified lower bands, retaining specific exceptions for certain payments.
Rationalisation of TDS rates streamlines withholding provisions by lowering multiple prior rates for specified non-salary payments, proposing omission of the provision on mutual fund unit repurchases, and preserving existing withholding regimes for salaries, virtual digital assets, lotteries, immovable property transfers, non-resident payments and contractor payments; implementation is phased on different effective dates to promote administrative simplification and improved taxpayer compliance without changing substantive chargeability.
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TDS on insurance commission reduced for non-corporate payees, affecting deduction at credit or payment from the effective date.
The Finance Bill amends withholding tax treatment for remuneration or reward for soliciting or procuring insurance business by reducing the TDS rate applicable to resident non-corporate payees; payers must continue to deduct tax at source when such income is credited or paid under existing triggering rules and modes, with the reduced rate taking effect from the prescribed effective date stated in the amendment.
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TDS on life insurance payouts reduced by amendment, lowering withholding obligation on qualifying policy payments for residents.
Section 194DA requires persons paying sums under life insurance policies to deduct tax at source on the income component of such payments, excluding amounts exempt under clause (10D) of section 10. The Finance (No.2) Bill, 2024 proposes a reduction in the withholding rate under Section 194DA, with the amendment to take effect from the first day of October under Clause 54, thereby lowering the deductor's TDS obligation on qualifying life insurance payouts to residents.
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TDS on lottery commissions reduced under section 194G, easing withholding obligations for payers from October onward.
Payers of commission, remuneration or prizes on sale or distribution of lottery tickets must deduct tax at source at the statutory withholding rate at the time of credit or payment, whichever is earlier. The Finance Bill amendment (Clause 56) lowers that withholding rate, with the reduction effective from the commencement date specified in the Bill.
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TDS on commission and brokerage reduced, altering withholding obligations and the timing of deduction for non individual payors.
Section 194H imposes TDS on persons other than individuals and HUFs for commission or brokerage (excluding insurance commission), requiring deduction at the time of credit or payment. The Finance Bill proposes a reduction in the TDS rate under section 194H, with the amendment to take effect from the stated commencement date, thereby modifying deductor withholding obligations for subsequent payments.
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TDS on rent reduced for individuals and HUFs, lowering withholding obligations for specified high-value rent payments.
Section 194-IB presently obliges individuals and Hindu undivided families (except those excluded by the second proviso to section 194-I) paying rent above the monthly threshold to deduct tax at source; the Finance Bill amends the provision to reduce the TDS rate from five percent to two percent, with the amendment operative from 1 October 2024.
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TDS on payments for work, commission and professional fees reduced to a lower withholding rate, effective from October.
Section 194M requires individuals and Hindu undivided families (except those already required to deduct under related contractor, commission or professional service provisions) to deduct tax at the earlier of credit or payment on sums for carrying out work (including supply of labour), commission or brokerage (excluding insurance commission), and fees for professional services. The Finance Bill proposes to reduce the prescribed withholding rate under Section 194M, with the amendment effective from 1 October 2024 as Clause 60.
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TDS on e-commerce transactions reduced to align with offline parity under the Finance Bill amendment.
Section 194-O obliges an e-commerce operator to deduct tax at source on the gross amount of sales or services when that amount is credited to an e-commerce participant's account or paid, whichever is earlier. The Finance Bill proposes reducing the operator's TDS rate to achieve parity with lower rates applicable to comparable offline provisions, with an effective date specified in the Bill.
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TDS on mutual fund unit repurchase proposed to be omitted under section 194F, simplifying taxation of capital gains.
Proposal deletes section 194F, removing the TDS obligation on payments for repurchase of units by mutual funds and UTI as part of capital gains tax rationalisation; the amendment takes effect from the first day of October under the Finance (No.2) Bill, 2024 (Clause 55).
News Bills
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Tax credit for collected or deducted tax: salaried employees may use such credits to reduce salary TDS, easing compliance.
Amendment modifies the rule for computing tax to be deducted from salary so that any tax deducted or collected under the statutory collection-at-source and related withholding regimes is taken into account when determining salary tax deduction, thereby reducing cash-flow impacts on employees and the need to claim refunds; effective from 1 October 2024.
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Interest on TCS increased to align with TDS parity, raising monthly simple interest for late remittance to government account.
The Bill amends section 206C(7) to increase the simple interest rate for failure to remit tax collected at source from one percent to one and one-half percent per month or part thereof, calculated from the date of collection until actual payment to the Government; the amendment is prospective and effective from 1 April 2025.
News Bills
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Remuneration limit for working partners raised, permitting higher deductible partner compensation starting in the next assessment year.
The Finance Bill raises the allowable deduction threshold for remuneration to working partners under section 40(b)(v), preserving the two-tier structure that gives a more favourable limit on the initial portion of book-profit and a lower ceiling on the balance. The amendment takes effect from 1 April 2025 and applies to assessment year 2025-26 and subsequent years, with deductions permitted only where remuneration is authorised by and accords with the partnership deed.
News Bills
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TCS credit for minor's income: parents may claim tax collected where the minor's income is clubbed with the parent.
Proposal empowers the Board to notify rules permitting allocation of tax collected at source to persons other than the collectee, addressing cases where tax is collected in a minor's name. Credit of a minor's TCS is allowed only when the minor's income is included in the parent's total income under the income clubbing rule, thereby conditioning credit on that inclusion and providing safeguards against misuse.
News Bills
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Taxation of buy-back proceeds treated as deemed dividend, with capital loss carry-forward to offset future gains.
Sums paid by a domestic company for purchase of its own shares are proposed to be treated as deemed dividend taxable in the hands of recipient shareholders at applicable rates with no expense deductions; concurrently, the extinguished shares will generate a capital loss (consideration deemed nil less cost of acquisition) which may be carried forward and set off against future capital gains on remaining or subsequently sold shares, preserving the shareholder's original cost of acquisition for later capital gains computation.
News Bills
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Securities Transaction Tax increase expands levy on options and futures, broadening the taxable derivative market from the Bill's commencement.
The Finance (No.2) Act, 2004 is amended to increase Securities Transaction Tax rates: the levy on sale of an option in securities is increased to a higher rate of the option premium and the levy on sale of a futures in securities is increased to a higher rate of the traded futures price. Recognised stock exchanges, specified funds, insurers and lead merchant bankers remain responsible for collecting STT and remitting it to the Central Government within the prescribed monthly timeline. The amendment responds to the growth of derivative trading and is set to commence on the Bill's stated future effective date.
News Bills
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Income from house property: rental receipts must be reported under that head, not as business income, tightening tax base.
Amendment clarifies that income from letting out a residential house or part thereof shall be chargeable under Income from House Property and not under Profits and Gains of Business or Profession, to prevent misclassification of rental receipts and tighten the tax base.
News Bills
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Gift transfers of capital assets now exempt only when made by individuals or Hindu undivided families, narrowing the prior exclusion.
The amendment restricts the exclusion from capital gains chargeability for transfers by gift, will or irrevocable trust so that it applies only where the transferor is an individual or a Hindu undivided family, thereby preventing use of gift transfers by companies to avoid capital gains tax and aligning the non-recognition rule with fair market value anti-avoidance provisions; the substitution applies prospectively to the announced assessment year and subsequent years.
News Bills
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TDS on partner payments introduced: firms must deduct on salary, remuneration, interest and commissions paid to partners.
A new provision imposes TDS on partnership firms for payments to partners - salary, remuneration, commission, bonus and interest - including amounts credited to capital accounts, where aggregate payments to a partner in a financial year exceed a specified threshold; the applicable rate is ten percent and the provision takes effect from the commencement of the stated financial year.
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Tax collection at source on luxury goods expanded to cover notified high-value goods, enhancing tracking and widening the tax base.
Amendment expands the Tax Collection at Source provision that applies to high-value motor vehicle sales to include other notified high-value luxury goods; sellers must collect TCS from buyers on notified goods exceeding the prescribed value threshold at the rate specified by law, to enhance tracking of luxury expenditure and to widen and deepen the tax base, effective from 1 January 2025.

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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

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Acts Income Tax