Rationalization of provisions of TDS on sale of immovable property

In order to remove inconsistency, it is proposed to amend section 194-IA of the Act to provide that in case of transfer of an immovable property (other than agricultural land), TDS is to be deducted at the rate of one per cent. of such sum paid or credited to the resident or the stamp duty value of such property, whichever is higher. In case the consideration paid for the transfer of immovable property and the stamp duty value of such property are both less than fifty lakh rupees, then no tax is to be deducted under section 194-IA.

Understanding the 2 year relief

In order to ensure that all the persons in whose case significant amount of tax has been deducted do furnish their return of income, it is proposed to reduce two years requirement to one year by amending sections 206AB and 206CCA of the Act to provide that “specified person” to mean as a person who has not filed its return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is to be deducted or collected, as the case may be, and the amount of tax collected and deducted at source is Rs. 50,000 or more in the said previous year.

Exemption of amount received for medical treatment and on account of death due to COVID-19

Clause (x) of sub-section (2) of section 56 of the Income-tax Act, 1961 (the Act) inter alia, provides that where any person receives, in any previous year, from any person or persons any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum shall be the income of the person receiving such sum. However, certain exceptions have been provided in the clause for transaction specified therein.

Taxability of virtual digital asset

Sale of Virtual Digital asset will be taxable at 30% with only permitted deduction being cost of acquisition will provide clarity on taxation of virtual assets including cryptocurrencies and NFTs.

Taxation of virtual / digital assets:

Sale of Virtual Digital asset will be taxable at 30% with only permitted deduction being cost  of acquisition will provide clarity on taxation of virtual assets including cryptocurrencies and NFTs. Taxation of virtual / digital assets:
  • Any income from transfer of any virtual digital assets shall be taxed @ 30%
  • No deduction except for cost of acquisition is allowed
  • Loss from transfer not to be set-off against any other income
  • TDS @ 1% on payment made for transfer, above a monetary threshold

Updated return

Taxpayers who have made errors while filing return (omission of income, etc.), can file updated return by payment of taxes within 2 years from the end of relevant AY. This will provide self-compliance to the assesses.

Parity between central and state government for deduction on contribution to NPS

Deduction limit u/s 80CCD(2) is increased to 14% of salary for state government employees too. Earlier, it was 10%. Now, it is brought to 14% to bring benefits of Central Government employees and State Government employees at par.

Surcharge on specified AOPs capped at 15%

In case of an association of persons consisting of only companies as its members, surcharge is capped at 15% if the income exceeds 1 crore. Earlier, such AOPs were also levied surcharge of 25% and 37%. Such AOPs are usually formed to form a consortium as required by certain works contract. In such cases, these AOPs have to suffer maximum surcharge of 37%. Therefore, this provision will reduce its burden.

Tax relief to persons with disabilities

Parents/ guardian can take insurance. Annuity and lumpsum amount received to parents or guardians attaining 60 years during lifetime of the disabled person, eligible for tax relief. • Long term capital gains to be subject to surcharge only at 15% for all assets as against graded surcharge. Currently this is available only for listed shares and units of mutual funds. 115BAB opting limit for companies increased to 31-03-2024 from 31-03-2023.

Litigation management:

If question of law in case of the assessee is identical to question of law which is pending in appeal with the jurisdictional High Court or Supreme Court, filing of further appeal in case of this assessee will be deferred till the identical case is decided by the court. This will reduce multiple litigations for the same matter.

Clarification on Health and Education Cess:

The Income Tax is not an allowable expenditure for computation of business Income. This includes surcharge. However, some courts have allowed Health and Education cess as business expenditure which is against the legislative intent. Now, it is clarified that any surcharge and cess including Health and Education cess will is not an allowable expenditure while computing business income.

No set off of any loss against Undisclosed income:

No set off of current year/brought forward loss will be allowed against undisclosed income detected through search promotions.

TDS on Income/benefits passed to agents

TDS should be deducted on income/ benefits passed to agents if aggregate value of such benefits exceed Rs. 20000 in such Financial year.

Surcharge of Co-operative societies:

Surcharge of co-operative societies is restricted to 7% if income of society is 1 Crore to 10 Crores. Above 10 Crores, surcharge will be 12%. Earlier, it was 12% if income exceeds 1 Crore. This will provide relief to societies having income of 1 Crore to 10 Crores and bring parity between societies and companies.
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