Faceless assessment process: centralised NaFAC-driven electronic workflow directing assessment, verification, technical review and dispute procedures. The amendment centralises faceless assessment through a National Faceless Assessment Centre which assigns cases to Assessment Units and routes all notices, responses, verification requests and technical referrals electronically to Verification, Technical and Review Units; communications are authenticated by digital signature, electronic verification code or portal login and all internal exchanges occur via NaFAC with automated allocation and real time alerting.
Faceless procedures expanded for transfer pricing, dispute resolution and tribunal appeals, after allowing stabilization and consultation. Introduction of faceless procedures under specified direct tax sections (92CA, 144C, 253, 255) is deferred to allow IT system stabilization and Ministry of Law & Justice consultation; appellate procedures must align with tribunal procedure and non-assessment functions will follow phased faceless assessment workflows.
Prosecution for failure to pay tax collected at source extended to mirror prosecution provisions for tax deducted at source. The proposal brings offences for failure to pay tax collected at source into the same prosecution provisions that apply to failures to pay tax deducted at source by expressly including the statutory provision for non-payment of tax collected at source within those prosecution sections, on the basis of the similar nature of the offences; the amendment is to take effect from the stated commencement date.
Sunset clause on historic prosecutions: prohibits initiation of fresh prosecutions under section 276AB from April 2022. Amendments propose a sunset clause in section 276AB to bar initiation of fresh prosecutions after 1 April 2022 for offences connected with transfers of immovable property made in the period when Chapter XX-C had been rendered inapplicable, while permitting continuation of prosecutions already initiated; additionally, section 276B is to be amended to substitute its cross-reference with an explicit reference to the proviso to the withholding provision to remove ambiguity created by prior amendments.
Source of funds requirement for credited sums now requires creditor's explanation, with regulated venture funds exempted. Amendment requires that any sum credited in an assessee's books-whether as loan, borrowing or other liability-will be treated as explained only if the source of funds is satisfactorily explained in the hands of the creditor or entry-provider; exception excludes regulated venture capital entities from this additional onus, and the change applies from the stated operative date to the listed assessment year and thereafter.
Withholding tax refund procedure now allows the payer to seek refund from the Assessing Officer, with appellate review. A new provision allows a person who deducted and bore tax under an agreement, where no deduction was required, to apply to the Assessing Officer for refund; the Assessing Officer may examine the underlying agreement, and the applicant may appeal the Assessing Officer's order to the Commissioner (Appeals). The previous route under section 248 will not apply for payments on or after the appointed date, effecting a procedural shift to assessment stage review.
Exemption withdrawal for foreign technical-assistance remuneration; such income will be taxable from the assessment year beginning April next year. The article sets out the phase-out of exemptions under clauses (8), (8A), (8B) and (9) of section 10 for remuneration, fees and related foreign-source income connected to cooperative or agency technical assistance programmes, describing existing eligibility rules (foreign citizenship/non-ordinary residency, nonresident status, prescribed-authority approvals) and explaining the policy rationale of tax simplification and protecting India's treaty taxing rights; the clauses are proposed to be inapplicable to income for the previous year relevant to the assessment year beginning on or after 1 April 2023.
Concessional tax on foreign dividends removed, aligning tax treatment of foreign and domestic corporate dividends going forward. Withdrawal of the concessional regime under Section 115BBD ends the special tax rate for dividends received by an Indian company from a specified foreign company, aligning their treatment with domestic dividends by making Section 115BBD inapplicable for assessment years beginning on or after the first day of April, 2023 so that such dividends are taxed in the shareholder's hands at applicable rates plus surcharge and cess.
Taxation of virtual digital assets: new flat tax and mandatory withholding reshape transfers and gifting rules. A dedicated tax regime segregates income from transfer of virtual digital assets under section 115BBH, taxing such income at a dedicated rate without deductions except cost of acquisition and disallowing set-off or carry forward of related losses. Section 194S mandates tax deduction at source on payments for transfer to residents with rules for in-kind consideration, specified person exemptions, treatment of suspense accounts as payee credits, and Board-issued guidelines; the definition of virtual digital asset (including NFTs) and gift taxation are adjusted with notification powers for the Central Government.
Bonus and dividend stripping rules extended to securities and pooled investment units, widening anti avoidance coverage. Section 94's anti avoidance provisions will be amended to apply sub section (8) on bonus stripping to securities and to expand dividend stripping rules to units of pooled investment vehicles by revising the Explanation to redefine "unit" to include business trust units such as InvITs, REITs and AIFs, thereby closing existing scope gaps and applying the provisions from the specified assessment year forward.
Expanded reporting obligations now require producers and specified activity persons to report aggregate payments to tax authorities. Section 285B is expanded to require producers of cinematograph films and persons engaged in specified activities to furnish Form 52A statements reporting particulars of aggregate payments above the prescribed threshold made to or due from each person engaged, with timing governed by the end of the financial year or completion of the work.
TDS on business perquisites: providers must deduct tax at source before delivering benefits or perquisites. A new section 194R mandates that the person responsible for providing any benefit or perquisite arising from business or profession to a resident must deduct tax at source on the value or aggregate value of such benefit or perquisite before providing it; where benefits are wholly in kind or partly in cash with insufficient cash to meet the deduction, tax must be ensured paid before release. Exemptions apply below a specified annual value threshold and for individuals or HUFs below specified turnover limits in the preceding year, with a stated effective date.
TDS on immovable property: deduction based on higher of consideration or stamp duty value, with threshold exemption. The amendment requires TDS on transfer of immovable property to be deducted on the higher of the consideration payable or the stamp duty value of the property, ensuring consistency with valuation rules for income and capital gains; if both values are below the prescribed monetary threshold, no TDS is required, and "stamp duty value" carries the meaning assigned in the Act's Explanation.
Specified person rule shortened to increase TDS/TCS coverage and prompt taxpayers to furnish returns under revised criteria. Amendments reduce the non-filing window for the specified person from two years to one year for higher TDS/TCS applicability, substitute 'furnishing' for 'filing' to reflect electronic returns, correct deductor/collectee terminology, exclude specified withholding provisions and certain simplified individual/HUF regimes from section 206AB, and amend cross-references in section 194-IB; effective from April 1, 2022.
Change in shareholding rule: majority voting power retention after strategic disinvestment preserves carry forward of losses, subject to condition. Amendment creates a conditional exemption from the change in shareholding bar on carry forward and set off of losses for an erstwhile public sector company where the ultimate holding company, immediately after strategic disinvestment, continues to hold, directly or through subsidiaries, an aggregate majority of the voting power; failure to maintain that majority in a subsequent year triggers application of the change in shareholding rule for that and later years.
Exemption for COVID-19 medical and death payments: employer payments fully exempt; third-party payments exempt subject to cap and time limit. Amendments exclude COVID 19 related medical and death payments from taxable income: employer payments for an employee's or family member's COVID 19 medical treatment will not be treated as a perquisite; gratuitous receipts for COVID 19 medical expenditure received from any person, and ex gratia or other payments to family members on death from the deceased's employer (without limit) or from others up to a capped aggregate within a prescribed period, will not be income, subject to conditions and the statutory definition of family. These changes are retrospective to 1 April 2020.
Disability deduction extended to allow lifetime annuity or lump-sum payments when subscriber reaches senior age and payments cease. Amendment permits deduction under Section 80DD where annuity or lump-sum payments are made to a disabled dependant during the lifetime of the subscriber provided the subscriber has attained senior age and payments or deposits have been discontinued; amounts so received by the dependant before death are not to be treated as the assessee's income under the prior deeming provision.
NPS deduction limit for state government contributions increased, providing retrospective tax relief to state government employees. Amendment increases the statutory deduction under section 80CCD for State Government employer contributions to National Pension System accounts to align with the higher employer contribution threshold, effective retrospectively from April 1, 2020, and applicable to the relevant assessment year onward to prevent additional tax liability on contributions exceeding the prior lower limit.
IFSC tax exemptions expanded to cover offshore derivatives, ship lease income and portfolio income managed via IFSC accounts. Amendments broaden tax exemptions and deductions for IFSC operations: extend section 10(4E) to non resident income from transfers of offshore derivatives with Offshore Banking Units; expand section 10(4F) to exempt royalty or interest on ship leases paid by qualifying IFSC units and define "ship"; insert section 10(4G) to exempt non resident income from portfolios managed by portfolio managers in IFSC Offshore Banking Unit accounts where income accrues outside India; include regulated Alternative Investment Funds in the section 56 specified funds explanation; and allow section 80LA deductions for transfers of ships leased by IFSC units, subject to commencement conditions.
Alternate Minimum Tax parity: co operative societies' AMT rate aligned with companies, lowering their AMT burden from the prior higher rate. The Finance Bill proposes amending section 115JC(4) to reduce the alternate minimum tax rate applicable to co operative societies to the company rate and consequentially amending the definition of alternate minimum tax in clause (b) of section 115JF, effective from 1st April, 2023 for the assessment year 2023 24 onwards.
Temporary import time limits extended for aircraft, vessels and warranty exports, enabling longer duty-free re-import and repair periods. The notifications extend temporal reliefs and adjust tariffs: aircraft and vessels imported for maintenance, repair and overhaul may remain imported for ... Summary
Temporary import time limits extended for aircraft, vessels and warranty exports, enabling longer duty-free re-import and repair periods.
The notifications extend temporal reliefs and adjust tariffs: aircraft and vessels imported for maintenance, repair and overhaul may remain imported for one year (further extendable by one year), warranty exports qualify for duty free re import for five years (further extendable by two years), and the India-UAE CEPA tariff notification is amended to revise duty rates on precious metals; changes effective 24 July 2024.
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