Personal Taxation:
- Change in New Tax Regime:
The slab and rate of tax for new tax regime (Section 115BAC) which was introduced couple of years has been revised as stated below:
| Total Income | Rate of Tax |
| Upto Rs. 3 Lakhs | Nil |
| From Rs. 3 lakhs to Rs.6 lakhs | 5% |
| From Rs. 6 lakhs to Rs.9 lakhs | 10% |
| From Rs. 9 lakhs to Rs.12 lakhs | 15% |
| From Rs. 12 lakhs to Rs.15 lakhs | 20% |
| Above 15 Lakhs | 30% |
The impact of this change in slabs and rate of tax will result in reduction of Income tax.
- The new tax regime will become the default tax regime, which means, if the tax payer wants to opt for the old regime, he/she has to choose the option.
- The highest Surcharge has been reduced from 37% to 25%
- Rebate u/s 87A has been now extended to tax payers having income of upto Rs. 7 Lakhs. No tax will be payable for any individual having income upto Rs.7 lakhs.
- Income from Life Insurance Policies are exempt income. This benefit was removed for ULIPs with premium of more than Rs.2.5 lakhs from FY 2021. Now, the exemption has been removed for all insurance policies where the premium is more than Rs. 5 lakhs. Essentially, it means Income from Life insurance, where the premium is more than Rs. 5 lakhs per annum will be taxable henceforth (not applicable in the case of death).
Cooperative Society:
- A new manufacturing co-operative society set up on/after 01st April 2023, and commences manufacturing or production on or before 31st March 2024 may opt to pay tax at a concessional rate of 15% for assessment year 2024-25 onwards. Surcharge would be at 10% on such tax. If opted, cannot avail of any specified incentive or deductions.
- The limit for application of Section 194N, which is TDS on Cash withdrawal has been increased from Rs.1 Crore to Rs.3 crores for Cooperative Societies.
- Similarly, limits for loans by way of cash has been enhanced from Rs.20,000 to Rs. 2 lakhs for cooperative societies (for purposes of section 269SS / 269T). Cooperative societies can now deposit/withdrawal loans in cash upto Rs. 2 lakhs.
MSME:
To give a boost to the MSME, payments made to MSME registered entities will be allowed as expenditure only if it is paid within the due date as specified in the agreement / MSMED Act. Essentially it means that business entities will be required to pay the dues to MSMEs within a maximum of 45 days. If not, the payment will be not be allowed as business expenditure for the purpose of computing income tax.
Start-ups:
- Losses incurred by eligible Start ups upto first seven years are available to be carried forward and set off irrespective of change in share holdings. This has been now extended to losses of startups upto first 10 years.
- Time limit to incorporate startup for eligibility of 80-IAC deduction has been extended till 1st April 2024.
Presumptive Taxation:
- The limit for presumptive tax available for small business and professionals are currently Rs.2 crores for small business and Rs.50 lakhs for certain professions. The limit has been enhanced to Rs. 3 crores for business and Rs.75 lakhs for professionals. However this comes with an additional condition that cash receipts cannot exceed 5% of total revenue or gross receipts.
Capital Gain Exemption:
- Currently, if an residential property is sold and the sale proceeds are reinvested in another house, there will not be capital gains to the extend of reinvestment made. Now, the limit of reinvestment to avail capital gain exemption has been capped at Rs.10 crores of reinvestment. This will impact tax payers selling large size properties.
Valuation of inventories:
- For the purpose of ascertaining the correct valuation of inventories, the Income Tax Assessing officer can now get the inventories valued by a Cost Accountant for the purposes of assessment.
Joint Commissioner (Appeals)
To reduce the burden of long pending appeals, one more layer of appeal has been introduced at the level of Joint Commissioner (Appeals).
Other changes:
- Conversion of Gold to Electronic Gold Receipt will not attract capital gains.
- TCS rate for Overseas tour package and few other cases increased from 5% to 20%.
- Few changes introduced in assessment, reassessment, and appeal procedures.