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66% of Taxpayers Opt for New ITR Regime This Season: CBDT Chairman

editor — Fri, 26 Jul 2024 06:09:45 +0000

CBDT Chairman Ravi Agrawal announced on Wednesday that approximately 66% of taxpayers, out of over 4 crore filers, have chosen the new income tax return (ITR) filing regime for the current season. In an interview with PTI following the Budget announcement, Agrawal highlighted the government’s focus on “simplification” in tax processes, including ITR filing and interactions with the Income Tax Department.

Agrawal emphasized that simplifying tax procedures aims to enhance compliance, noting that the number of ITR filings this year has already surpassed last year’s figures. The milestone of 4 crore ITRs was reached on July 22 this year, compared to July 25 last year.

The CBDT Chairman reported strong adoption of the new tax regime, with 66% of filings under this system as of now. He anticipates further growth in the uptake of the new regime.

The total number of ITRs filed last season reached 7.5 crore by the deadline on July 31. The current ITR filing season for the assessment year 2024-25 will also conclude on July 31 for taxpayers whose accounts are not subject to audit.

Agrawal noted that the new regime’s introduction includes automatic reporting of more transactions to taxpayers, which is expected to increase compliance. The government is also incentivizing the new regime by adjusting tax slabs, offering taxpayers additional benefits.

Regarding the potential phase-out of the old tax regime, Agrawal indicated that the process is still in transition. A decision will be made based on the relative acceptability of the new regime among taxpayers.

Finance Minister Nirmala Sitharaman’s recent Budget proposals included raising the standard deduction for salaried individuals to Rs 75,000 from Rs 25,000 and revising the tax rate structure under the new regime. These changes could result in savings of up to Rs 17,500 for salaried employees opting for the new system.

Source: ThePrint

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Interest Cost and Stamp Duty Excluded from LTCG Base Price, Says Revenue Secretary

editor — Fri, 26 Jul 2024 05:56:45 +0000

On Wednesday, Revenue Secretary Sanjay Malhotra clarified that interest costs and stamp duty paid during the purchase of immovable property will not be considered when calculating long-term capital gains (LTCG). The recent Budget proposes a revised LTCG taxation framework for real estate, which will now feature a lower tax rate but exclude indexation benefits.

Malhotra explained that the base price for LTCG calculation will continue to be the amount paid to the seller, excluding any interest paid on loans used to acquire the property. Additionally, stamp duty payments will also not be factored into the base price for capital gain calculations, maintaining consistency with current provisions.

Regarding the review of the Income Tax Act of 1961, Malhotra highlighted that the aim is to simplify and streamline the Act to make it more user-friendly and concise. While drawing on previous work, the review will involve consultations with various stakeholders, and a revised IT law may be proposed in the next budget.

In relation to ongoing litigation concerning Angel Tax, Malhotra indicated that these issues could potentially be resolved under the new Direct Tax Vivad se Vishwas scheme.

Source: BusinessLine

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CBDT Announces Launch of ‘Vivad se Vishwas’ Scheme on December 31, 2024

editor — Fri, 26 Jul 2024 05:35:19 +0000

The ‘Vivad se Vishwas’ scheme, designed for settling pending direct tax appeals, will be officially launched this year, according to CBDT Chairman Ravi Agrawal. The scheme’s notification and relevant FAQs will be released soon.

In a recent interview with PTI, Agrawal highlighted the significant number of income tax appeals pending in various forums and expressed optimism that many taxpayers will take advantage of the new scheme.

The initial ‘Vivad se Vishwas’ scheme, introduced in 2020 for direct taxes or income tax matters, was notably successful. It generated approximately Rs 75,000 crore in revenue and saw around 100,000 taxpayers participating.

The new scheme is set to start on December 31, 2024. Agrawal emphasized that taxpayers will need to opt-in by this date. Detailed notifications, including FAQs, will be issued shortly.

Finance Minister Nirmala Sitharaman mentioned the introduction of this scheme during her Budget speech, aimed at settling outstanding appeals. The final deadline for participating in the scheme will also be announced in due course.

Source: Business Standard

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No Reconsideration for LTCG Tax Changes on Property Sales: Government Stance

editor — Fri, 26 Jul 2024 05:23:04 +0000

The government has no plans to reconsider the recent changes to the Long Term Capital Gains (LTCG) tax on property sales, despite concerns over the removal of the indexation benefit, according to a report by news agency ANI.

“There will be no rethink on the LTCG provisions made in the budget as they are beneficial for taxpayers,” sources told ANI.

The Union Budget 2024-25 announced a significant change in LTCG taxation, simplifying the tax structure across asset classes and removing the indexation benefit for capital gains on property sales. This change has raised concerns about increased tax liabilities for property owners and the potential for more black money in property transactions.

The Central Board of Direct Taxes (CBDT) addressed these concerns via a clarification on the social media platform X. The Income Tax Department dismissed claims that the new budget proposal would lead to significantly higher taxes on real estate profits. It highlighted that the proposed flat tax rate of 12.5% without indexation could be more favorable in many cases than the previous 20% rate with indexation benefits.

According to the Income Tax Department, real estate returns typically range from 12-16% annually, higher than the 4-5% inflation rate used for indexation. Therefore, the new tax regime could result in substantial tax savings for many taxpayers.

The department provided examples showing the benefits of the new tax regime for properties sold after different holding periods. For instance, properties held for five years with a 1.7 times price appreciation, for 10 years with a 2.4 times appreciation, or purchased in 2009-10 and appreciated by 4.9 times or more would benefit from the new tax rate. However, if the annual return on property is less than 9-11%, the previous 20% tax rate with indexation may be more advantageous.

The Income Tax Department also emphasized that the new tax structure simplifies compliance, tax computation, filing, and record-keeping, and eliminates differential tax rates across asset classes.

Source: Livemint

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CBDT Notifies Income Tax Exemptions for Various Organizations under Section 10(46) | July 2024

editor — Fri, 26 Jul 2024 04:25:47 +0000

The CBDT has issued Notifications Nos. 94 and 95 on July 24, 2024, granting income tax exemptions under section 10(46) of the Income-tax Act, 1961 (“the IT Act”). The exemptions apply to the ‘Punjab Skill Development Mission Society, Chandigarh,’ ‘Himachal Pradesh State Load Despatch Centre, Shimla,’ and ‘Society for Applied Microwave Electronics Engineering & Research (SAMEER), Mumbai.’

The notifications are available at: CBDT Notifications Nos. 94 to 96.

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Key Highlights of the Union Budget 2024-25

editor — Tue, 23 Jul 2024 08:52:45 +0000

Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman presented the Union Budget for 2024-25 in Parliament today. Here are the key highlights:

Part-A

Budget Estimates 2024-25:

Total Receipts (excluding borrowings): ₹32.07 lakh crore
Total Expenditure: ₹48.21 lakh crore
Net Tax Receipt: ₹25.83 lakh crore
Fiscal Deficit: 4.9% of GDP, with a target to reduce it below 4.5% next year
Inflation: Low and stable, approaching the 4% target; Core inflation (excluding food and fuel) at 3.1%

Budget Focus Areas: Employment, Skilling, MSMEs, and the Middle Class

Prime Minister’s Five Schemes for Employment and Skilling:

Scheme A - First Timers: Up to ₹15,000 in three installments to first-time employees registered with EPFO.
Scheme B - Job Creation in Manufacturing: Direct incentives for both employees and employers in the first four years of employment.
Scheme C - Support to Employers: Reimbursement of up to ₹3,000 per month for two years towards EPFO contributions for additional employees.
New Skilling Scheme: Skill development for 20 lakh youth over five years and upgrading 1,000 Industrial Training Institutes.
New Internship Scheme: 1 crore youth to be provided internships in 500 top companies over five years.

Nine Budget Priorities in Pursuit of ‘Viksit Bharat’:

Agricultural Productivity and Resilience: ₹1.52 lakh crore allocated; introduction of high-yield, climate-resilient crop varieties; certification for natural farming.
Employment & Skilling: Implementation of employment-linked incentives and establishment of hostels and crèches for working women.
Inclusive Human Resource Development and Social Justice: Development of industrial nodes, financial support for Andhra Pradesh, and women-led development initiatives.
Manufacturing & Services: Credit guarantees for MSMEs, enhanced Mudra loans, and support for e-commerce export hubs.
Urban Development: Investment of ₹10 lakh crore in urban housing, development of street markets, and transit-oriented development plans.
Energy Security: Policies for energy transition, pumped storage projects, and advancements in nuclear energy.
Infrastructure: ₹11.11 lakh crore for capital expenditure, support for state infrastructure investments, and comprehensive tourism development.
Innovation, Research & Development: Operationalization of Anusandhan National Research Fund and expansion of the space economy.
Next Generation Reforms: Digitalization of land records, integration of e-shram portal, and introduction of NPS-Vatsalya for minor contributions.

Part-B

Indirect Taxes:

GST: Simplification and rationalization of the tax structure to extend GST to additional sectors.

Sector-Specific Customs Duty Proposals:

Medicines and Medical Equipment: Full exemption for certain cancer drugs and changes in customs duty on x-ray equipment.
Mobile Phones and Related Parts: Reduction in basic customs duty on mobile phones and components.
Precious Metals: Reduction in customs duties on gold, silver, and platinum.
Other Metals: Removal of customs duties on various metals and concessional duties on copper scrap.
Electronics: Exemption on copper for resistor manufacturing.
Chemicals and Petrochemicals: Increased customs duty on ammonium nitrate.
Plastics: Increased customs duty on PVC flex banners.
Telecommunication Equipment: Increased customs duty on certain telecom equipment.

Trade Facilitation:

Direct Taxes:

Continued efforts to simplify taxes, improve services, and reduce litigation.
Simplification of Reassessment: Adjustments in the time limits for reopening assessments.
Capital Gains: Revised tax rates and increased exemption limits.
Taxpayer Services: Digitalization of customs and income tax services.
Litigation and Appeals: Introduction of the 'Vivad Se Vishwas Scheme, 2024' and increased monetary limits for appeals.
Employment and Investment: Abolition of angel tax and simplified tax regimes for foreign companies and cruise tourism.
Deepening Tax Base: Increased Security Transactions Tax and taxation on share buybacks.

Social Security Benefits:

Finance Bill Proposals:

For more details, you can access the full press release here.

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Real Estate Budget 2024: Key Expectations for Industry Status, GST Reforms, and Affordable Housing

editor — Tue, 23 Jul 2024 07:30:28 +0000

Real estate developers in Noida and Greater Noida are looking to the upcoming Budget, presented by Finance Minister Nirmala Sitharaman on July 23, as an opportunity to address longstanding sector concerns. They are advocating for the sector to be granted ‘industry status’ to facilitate easier access to funding and seek relief from current GST challenges, including the 28% tax on cement.

Key expectations from the Budget include:

Industry Status: Developers are calling for the real estate sector to be recognized as an industry, which would provide access to lower-cost financing and other benefits. They believe this status will help spur investment and economic growth.
GST Reforms: There is significant concern over the high GST rate on cement, which is currently set at 28%. Developers argue that reducing this rate would lower building costs and improve affordability for homebuyers. Additionally, they seek GST input credits for residential real estate to stabilize costs and enable developers to pass savings onto buyers.
Tax Incentives: The industry body CREDAI suggests that tax reforms, including lower income taxes for both corporations and individuals, along with targeted incentives, could boost investment. They also advocate for an expansion of the SWAMIH stress fund to support the sector.
Affordable Housing Support: Experts propose increasing the home loan interest exemption to Rs 8 lakhs annually and adjusting Section 80C to cover housing loan principal deductions or raising its limit to Rs 5 lakhs. They also recommend raising the affordability cap for housing in metro areas from Rs 45 lakh to Rs 75 lakh.
Regulatory Improvements: Developers emphasize the need for a streamlined approvals process and enhanced transparency through a robust regulatory framework. They suggest innovative financing mechanisms, such as green bonds for sustainable development, to align economic growth with environmental goals.
Foreign Investment: To stimulate growth and innovation in the luxury market, easing FDI regulations and simplifying GST are seen as crucial steps. Simplifying GST procedures and reducing input costs for materials like steel, cement, and fuel are also high on the agenda.

The real estate sector is hopeful that these budgetary measures will address its critical issues and boost the industry’s contribution to economic growth.

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CBDT Revamps Income Tax Portal with Taxnet 2.0; Goa GST Amendment Bill: Key Changes and Implications

editor — Tue, 23 Jul 2024 07:16:33 +0000

In a bid to address persistent issues with the income tax portal, the Central Board of Direct Taxes (CBDT) has announced a major overhaul of its digital infrastructure through the launch of Taxnet 2.0. This update aims to significantly improve the taxpayer experience by addressing current glitches and enhancing system efficiency.

Goa GST Amendment Bill: Key Changes and Implications

The Goa state cabinet has approved a bill for introduction in the upcoming monsoon session of the Goa legislative assembly, seeking amendments to The Goa Goods and Services Tax Act, 2017. If passed, the bill will introduce penalties and provisions for the confiscation of unregistered machines used in manufacturing notified goods.

Key proposed amendments include:

Mandatory ISD Registration: The bill will amend the Goa GST Act to mandate the registration of Input Service Distributors (ISDs) for the distribution of input tax credit (ITC) related to common input services procured by Head Offices (HOs) and distributed to branch offices (BOs).
Revised Tax Procedures: The amendments, following recommendations from the 50th and 52nd GST Council meetings, will update sections 2(61) and 20 of the CGST Act, 2017. These changes aim to enforce a mandatory procedure for the distribution of ITC by ISDs and address ITC distribution for services.
Penalties for Non-Registration: The bill proposes the insertion of a new section, 122A, into the Goa GST Act. This section will provide for penalties and the confiscation of unregistered machines used in the production of notified goods if not registered as per the special procedure outlined under section 148 of the Act.

The proposed changes reflect a broader effort to streamline GST procedures and enhance compliance within the state.

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Income Tax Portal Issues: Rebate Denied for Short-Term Capital Gains – What You Need to Know

editor — Sat, 20 Jul 2024 05:11:02 +0000

Recent updates to the income tax portal have led to a situation where taxpayers with short-term capital gains are being denied a rebate of up to Rs 25,000 under the new tax regime. This development appears to contradict the provisions of the Income Tax Act, 1961.

The rebate, which was designed to aid low-income earners by reducing their tax burden, allows individuals with taxable income below Rs 7 lakh to claim up to Rs 25,000 under Section 87A. However, the updated tax-filing utility now prevents those with short-term capital gains from receiving this rebate, creating an issue for many taxpayers.

Experts in tax law have pointed out that the discrepancy stems from a misinterpretation of what constitutes “total taxable income.” According to the previous guidelines, individuals such as Rajesh*, with a total income of Rs 7 lakh that includes both salary and short-term capital gains, were eligible for the full rebate. The new utility, however, only applies the rebate to salary income and excludes short-term capital gains.

In contrast, taxpayers like Surbhi*, whose total income exceeds Rs 7 lakh but includes a salary income below this threshold, are mistakenly receiving a partial rebate. This error is attributed to a faulty interpretation of the updated system.

The change is causing concern that many taxpayers might face issues or receive notices later in the year. The Income Tax Act has not been amended to specifically exclude rebates for those with special rate incomes, such as short-term capital gains.

A tax expert noted that while the rebate was available before the update, the new restriction on short-term capital gains seems to be an incorrect application of the law. Short-term capital gains are taxed at a concessional rate of 15 percent, which differs from the standard tax slab rates.

The situation is further complicated by technical issues with the income tax portal, potentially causing additional challenges for taxpayers trying to file their returns.

Source: Moneycontrol

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Indian Chamber of Commerce Urges Overhaul of Income Tax Act 1961 and Customs Duties Review

editor — Sat, 20 Jul 2024 04:56:51 +0000

The Indian Chamber of Commerce (ICC) has urged the central government to form a commission to thoroughly review and simplify the Income Tax Act 1961.

“This Act is outdated. The annual Budget amendments have made it increasingly complex and difficult to comprehend. These changes have created numerous anomalies, resulting in a surge of legal cases,” the chamber explained.

Additionally, the ICC suggested a restructuring of customs duties in key sectors such as steel, solar, aluminium, and lithium-ion batteries to enhance domestic manufacturing.

Finance Minister Nirmala Sitharaman is set to present the annual budget on July 23.

The ICC President stressed the need for a “comprehensive rationalization” of customs duties, asserting that this move has the potential to transform India into a global manufacturing hub.

He pointed out that current levies on raw materials unfairly disadvantage domestic players, particularly downstream businesses.

He proposed addressing the inverted duty structure by reducing the tax on liquefied petroleum gas (LPG) from 5 percent to 2.5 percent.

“To support domestic manufacturing, we must increase duties on polymers such as PVC, PET, PP, and polyesters to 10 percent,” he stated, emphasizing the goal of achieving self-sufficiency in the petrochemical sector.

Regarding the aluminium foil sector, the president highlighted that the domestic industry has been facing significant losses due to an anti-dumping duty on raw materials, while finished goods from China are not subject to any import duties.

Source: The Telegraph India

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