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Union Budget 2024

Written by: CHETNAA GOYAL Posted on: 22 July, 2024

UNION BUDGET 2024: DIRECT TAX

1. INCOME TAX RATES FOR FY 2024-25

Income tax rates applicable to Individual or HUF or Association of persons, Body of individuals or an artificial juridical person will be as follows.

NEW REGIME U/s 115 BAC

AFTER BUDGET 2024 (FINANCIAL YEAR 2024-25)			BEFORE BUDGET 2024 (FINANCIAL YEAR 2023-24)
S.NO	TOTAL INCOME	TOTAL INCOME	TOTAL INCOME	TOTAL INCOME
1.	Upto Rs. 3, 00,000	NILL	Upto Rs. 3, 00,000	NILL
2.	From Rs. 3, 00,001 to Rs. 7, 00,000	5%	From Rs. 3, 00,001 to Rs. 6, 00,000	5%
3.	From Rs. 7, 00,001 to Rs. 10, 00,000	10%	From Rs. 6, 00,001 to Rs. 9, 00,000	10%
4.	From Rs. 10, 00,001 to Rs. 12, 00,000	15%	From Rs. 9, 00,001 to Rs. 12, 00,000	15%
5.	From Rs. 12, 00,001 to Rs. 15, 00,000	20%	From Rs. 12, 00,001 to Rs. 15, 00,000	20%
6.	Above Rs. 15, 00,000	30%	Above Rs. 15, 00,000	30%

OLD REGIME U/s 115 BAC

(FINANCIAL YEAR 2024-25)
S.NO	TOTAL INCOME	TOTAL INCOME
1.	Upto Rs. 2, 50,000	NILL
2.	From Rs. 2, 50,001 to Rs. 5, 00,000	5%
3.	From Rs. 5, 00,001 to Rs. 10, 00,000	20%
4.	Above Rs. 10, 00,000	30%

NOTE In case of Senior Citizen, Slab starts with Rs.3,00,000 and In case of Super Senior Citizen Slab starts with Rs.5,00,00

2. STANDARD DEDUCTION

STANDARD DEDUCTION LIMIT INCREASED TO Rs.75000 from Rs.50000
In case ITR is filed under NEW REGIME.
FOR OLD REGIME, Standard Deduction is Rs.50000

3. SURCHARGE

In case of Individual, HUF, BOI, AOP etc, surcharge shall be as follows:

1. Total Income exceeding 50 lakh rupees but not exceeding 1 crore rupees – 10%
2. Total Income exceeding one crore rupees – 15%
3. Total Income exceeding 2 Crore rupees but not exceeding 5 crore rupees – 25%
4. Total Income exceeding 5 crore rupees – 37%

Person whose income is chargeable to tax under sub-section (1A) of section115BAC of the Act, the surcharge at the rate 37% on the income or aggregate of income of such person exceeding five crore rupees shall not be applicable. In such cases the surcharge shall be restricted to 25%.

In case of an association of persons consisting of only companies as its members, the rate of surcharge on the amount of income-tax shall not exceed 15%.

In the case of co-operative societies,
If Total Income exceeds Rs.1 Crore but does not exceed Rs.10 Crore - 7%
If Total Income exceeds Rs.10 Crore -12%

In case of Firm,
If Total Income exceeds Rs.10 Crore - 12%

In case of Local Authority,
If Total Income exceeds Rs.10 Crore - 12%

In case of Company
If Total Income exceeds Rs.1 Crore but does not exceed Rs.10 Crore - 7% If Total Income exceeds Rs.10 Crore - 12%

4. CAPITAL GAINS

It Is Proposed That There Will Only Be Two Holding Periods, 12 Months and 24 Months, for Determining Whether the Capital Gains Is Short-Term Capital Gains or Long Term Capital Gains

LONG TERM CAPITAL GAIN HOLDING PERIOD

- For Listed Securities – 12 Months
- For Other Assets - 24 Months

PERIOD OF 36 MONTHS IS FINALLY ABOLISHED.

Hence holding period for bonds, debentures, and gold will reduce from 36 months to 24 months. For unlisted shares and immovable property it shall remain at 24 months.

SHORT TERM CAPITAL GAIN TAX RATE

Rate for short-term capital gain under provisions of section 111A of the Act on STT paid equity shares, units of equity oriented mutual fund and unit of a business trust is proposed to be increased to 20% from the present rate of 15%

LONG TERM CAPITAL GAIN TAX RATE

1. The rate of long-term capital gains under provisions of various sections of the Act is proposed to be 12.5% in respect of all category of assets.
2. This rate earlier was 10% for STT paid listed equity shares, units of equity-oriented fund and business trust under section 112A and for other assets it was 20% with indexation under section 112.
3. However, an exemption of gains upto 1.25 lakh (aggregate) is proposed for long-term capital gains under section 112A on STT paid equity shares, units of equity oriented fund and business trust.
4. For bonds and debentures, rate for Taxation of long-term capital gains was
5. 20% without indexation. For listed bonds and debentures, the rate shall be reduced to 12.5%.

BENEFIT OF INDEXATION IS FINALLY ABOLISHED.

5. TDS RATES:

Rationalisation of Tax Deducted at Source rates.

Section	Present Rate	Propos ed TDS Rate	Effect from
Section 194D - Payment of insurance commission (in case of person other than company)	5%	2%	1.4.2025
Section 194DA - Payment in respect of life insurance policy	5%	2%	1.10.2024
Section 194G – Commission etc on sale of lottery tickets	5%	2%	1.10.2024
Section 194H - Payment of commission or brokerage	5%	2%	1.10.2024
Section 194-IB - Payment of rent by certain individuals or HUF	5%	2%	1.10.2024
Section 194M - Payment of certain sums by certain individuals or Hindu undivided family	5%	2%	1.10.2024
Section 194-O - Payment of certain sums by e- commerce operator to e-commerce participant	1%	0.1%	1.10.2024
Section 194F relating to payments on account of repurchase of units by Mutual Fund or Unit Trust of India	Proposed to be omitted		1.10.2024

However, no change would occur with respect to sections such as TDS on salary, TDS on virtual digital assets, TDS on winnings from lottery etc/ race horses, payment on transfer of immovable property and payments to non- residents, TDS rates for TDS on contracts

6. OTHER PROVISIONS:

Parity in taxation between resident and non-resident assesses:

To bring parity of taxation between residents and non-residents, corresponding amendments to section 115AD, 115AB, 115AC, 115ACA and 115E are being made to align the rates of taxation in respect of long-term capital gains proposed under section 112A and 112 and rates of short term capital gains proposed under section 111A.

INCREASE IN LIMIT OF REMUNERATION TO WORKING PARTNERS OF A FIRM ALLOWED AS DEDUCTION

Section 40 of the Act provides for amounts that shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession

(a) On the first Rs. 3,00,000 of the Rs. 1,50,000 or @ 90 per cent of the book profit, book profit or in case of a loss - whichever is more;

(b) On the balance of the book-profit - at the rate of 60 per cent

It is now proposed to amend the limit of remuneration to working partners in a partnership firm, which is allowed as deduction as follows:

(a) On the first Rs. 6,00,000 of the Rs. 3,00,000 or @ 90 per cent of the book profit, book profit or in case of a loss - whichever is more;

(b) On the balance of the book-profit - @ 60 per cent

TCS CREDIT to be considered by employer while Deducting TDS under sub-section(1) of section 192.

Deduction on Account of Family Pension received is further increased to Rs.25000 from Rs.15000 if ITR is filed under New Regime.

Section 80CCD deals with deduction in respect of contribution to pension scheme of Central Government by Employers to the extent it does not exceed ten per cent of the salary of the employee.

It is proposed to increase the amount of employer contribution allowed as deduction to the employer, from the extent of 10% to the extent of 14% of the salary where such contribution is made by the Central Government or State Government or private Employer.

REVISION OF RATES OF SECURITIES TRANSACTION TAX:

Presently, the rate of levy of STT on sale of an option in securities is 0.0625 Per cent of the option premium, while the rate of levy of STT on sale of a future in Securities is 0.0125 per cent of the price at which such “futures” are traded. The rate of levy of STT on delivery trades in equity shares is 0.1 per cent on both purchase And sale transactions, while in the case of sale of an option in securities where Option is exercised, the rate of levy is 0.125% of the intrinsic

It is proposed to increase the said rates of securities transaction tax on sale of an option in securities from 0.0625 per cent to 0.1 per cent of the option premium, and on sale of a futures in securities from 0.0125 per cent to 0.02 per cent of the price at which such “futures” are traded. (w.e.f. – 01.10.2024)

TDS on payment of salary, remuneration, interest, bonus or commission by Partnership firm to partners

Presently there is no provision for deduction of tax at source (TDS) on payment of salary, remuneration, interest, bonus, or commission to partners by the partnership Firm. Hence, it is proposed that a new TDS section 194T may be inserted to bring Payments such as salary, remuneration, commission, bonus and interest to any Account (including capital account) of the partner of the firm under the purview of TDS for aggregate amounts more than Rs 20,000 in the financial year. Applicable TDS rate will be 10%.

Reducing time limitation for orders deeming any person to be Assessee in Default:

Section 201 and section 206C of the Act provides for the consequences when a Person does not deduct/ collect, or does not pay, or after so deducting/ collecting Fails to pay, the whole or any part of the tax, as required by or under the Act.

As per sub-section (3) of section 201 of the Act, there is a time limit of seven Years for order made under sub-section (1) of section 201 of the Act deeming aPerson to be an Assessee in default for failure to deduct the whole or any part of the Tax where the payee is a person resident in India. However, there is no time limitWhen there has been a failure to deduct the whole or any part of the tax from a non- resident.

This creates uncertainty in the case of non-residents.

Similarly for TCS, sub-section (6A) of section 206C of the Act provides the Consequences when a person does not collect the whole or part of the tax or after Collecting fails to pay the tax as required by or under this Act, he shall be deemed to Be an Assessee in default.

It is proposed to amend sub-section (3) of section 201 and insert new subsection (7A) in section 206C of the Act to provide that no order shall be made Deeming any person to be Assessee in default for failure to deduct/ collect the whole or any part of the tax from any person, at any time after the expiry of six years from The end of the financial year in which payment is made or credit is given or tax was Collectible or two years from the end of the financial year in which the correction Statement is delivered, whichever is later.

EXTENDING THE SCOPE FOR LOWER DEDUCTION / COLLECTION CERTIFICATE OF TAX AT SOURCE

Section 197 of the Act provides that payments on which tax is required to be Deducted under certain sections of Chapter XVII-B, are eligible for certificate for Deduction at lower rate.It is proposed to amend sub-section (1) of section 197 to bring section 194Q in its ambit

TIME LIMIT TO FILE CORRECTION STATEMENT IN RESPECT OF TDS/ TCS STATEMENTS

While there is a time limit for furnishing statements detailing the TDS/TCS, however, there is no time limit for furnishing correction statements. Hence such statements may be revised multiple times indefinitely and thus these provisions may be misused causing difficulty to Deductees / collected. Accordingly, in order to put certainty and finality on the filing process of TDS and TCS statements, it is proposed to amend section 200 and sub-section (3B) of section 206C to provide that no correction statement shall be delivered after the expiry of six years from the end of the financial year in which the statement referred to in sub-section (3) of section 200 and statement referred to in the proviso to sub-section (3) of section 206C are respectively delivered.

PENALTY FOR FAILURE TO FURNISH STATEMENTS

Section 271H of the Act inter alia relates to penalty for failure to file Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) returns/ statements within the due Date. Sub-section (3) of section 271H of the Act states that no penalty shall be levied if the person proves that after paying TDS/ TCS along with fees and interest to the Credit of the Central Government, the person has filed the TDS/TCS statement Before the expiry of period of one year from the time prescribed for furnishing such Statement.

While earlier the due date to file a belated return by the Assessee was one Year from the end of the assessment year, the time limit presently is 31st December of the same assessment year. Deductees/ collected face great inconvenience if the TDS/TCS statements by deductors/ collectors are not furnished in time leading to Mismatch in TDS/TCS during processing of income tax returns and raising of Infructuous demands.

To ensure better compliance, it is proposed to amend sub-section (3) of Section 271H to provide that no penalty shall be levied if the person proves that after Paying TDS/ TCS along with fees and interest to the credit of the Central Government, he has filed the TDS/TCS statement before the expiry of period of one Month from the time prescribed for furnishing such statement.

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CHETNAA GOYAL

Chetnaa Goyal one of the co-founder of TaxSmooth. An Qualified Chartered Accountant. More than 12 years of Experience in Direct Taxation. having own Taxation Practice in Delhi. Expertise in Income Tax Cases, Return filing, Tax Planning, Tax Advisory etc.