Press Information Bureau

24.07.2024

Direct Taxation

FAQs issued by CBDT on the new capital gains tax regime proposed in the Union Budget 2024-25

MANU/PIBU/0548/2024

Q1. What are the major changes brought about in the taxation of capital gains by the Finance (No.2) Bill, 2024?

Ans. The taxation of capital gains has been rationalised and simplified. There are 5 broad parameters to this rationalisation and simplification, namely:-

i. Holding period has been simplified. There are only two holding periods now, viz. 1 year and 2 year.

ii. Rates have been rationalised and made uniform for majority of assets.

iii. Indexation has been done away with for ease of computation with simultaneous reduction of rate from 20% to 12.5%.

iv. Parity between Resident and Non-resident.

v. No change in roll over benefits.

Q2. What is the date when the new taxation provisions come into force?

Ans. The new provisions for taxation of capital gains come into force from 23.7.2024 and shall apply to any transfer made on or after 23.7.2024.

Q3. How has the holding period been simplified?

Ans. Earlier there were three holding period for considering an asset to be a long- term capital asset. Now the holding period has been simplified. There are only two holding periods,- for listed securities, it is one year, for all other assets, it is two years.

Q4. Who will benefit from the change in holding period?

Ans. The holding period of all listed assets will be now one year. Therefore, for listed units of business trusts (ReITs, InVITs) holding period is reduced from 36 months to 12 months. The holding period of gold, unlisted securities (other than unlisted shares) is also reduced from 36 months to 24 months.

Q5. What about the holding period of immovable property and unlisted shares?

Ans. The holding period of immovable property and unlisted shares remains the same as earlier i.e. 24 months.

Q6. Please elaborate on change in the rate structure for STT paid capital assets?

Ans. Rate for short-term STT paid listed equity, Equity oriented mutual fund and units of business trust (Section 111A) has increased from 15 to 20%. Similarly the rate for these assets for long-term (S. 112A) has increased from 10 to 12.5%.

Q7. Is there any change in the exemption limit for long-term capital gains under section 112A which was earlier one lakh Rs.?

Ans. Yes. The exemption limit of 1 lakh for LTCG on these assets has also increased to 1.25 lakh Rs. This increased exemption limit will apply for FY 2024-25 and subsequent years.

Q8. Please elaborate on change in the rate structure for other long-term capital gains?

Ans. The rate for other long-term capital gains on all assets has been rationalized to 12.5% without indexation (Section 112). This rate was earlier 20% with indexation. This will ease in simplifying the taxation of capital gains and their easy computation.

Q9. Who will benefit by change in rate from 20% (with indexation) to 12.5% (without indexation)?

Ans. The reduction in the rate will benefit all category of assets. In most of the cases, the taxpayers will benefit substantially. But where the gain is limited vis-a vis inflation, the benefit will also be limited or absent in a few cases.

Q10. Can the taxpayer continue to avail the roll over benefits on capital gains?

Ans. Yes. The roll over benefits remains the same as earlier. There is no change in roll over benefits already available under the IT Act. Therefore, taxpayers who want to save on LTCG tax even with low rates can continue to avail the roll over benefits on fulfillment of conditions as applicable.

Q11. In which assets, can the long-term capital gains be invested for roll over benefits?

Ans. For roll over benefits, taxpayers can invest their gains in house under section 54 or section 54F or in certain bonds under section 54EC. For complete details of all roll over benefits, please refer section 54, 54B, 54D, 54EC 54F, 54G of the IT Act.

Q12. What is amount upto which roll over benefit is available?

Ans. Investment of capital gain in 54EC bonds (up to Rs. 50 lakh) and in other cases, the capital gain is exempt from tax, subject to certain specified conditions.

Q13. What is the overall rationale for changes?

Ans. Simplification of any tax structure has benefits of ease of compliance viz computation, filing, maintenance of records. This also removes the differential rates for various classes of assets.

Tags : Capital Gains FAQs Tax Regime

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Press Information Bureau

24.07.2024

Trusts and Societies

Sahara Refund Portal

MANU/PIBU/0558/2024

In an Interlocutory Application filed by the Ministry of Cooperation in WP (C) No.191/2022 (Pinak Pani Mohanty vs UoI & Ors.), the Hon'ble Supreme Court on 29.03.2023 inter alia ordered that:

"(i) Out of the total amount of Rs. 24,979.67 Crores lying in the "Sahara-SEBI Refund Account", Rs. 5000 Crores be transferred to the Central Registrar of Cooperative Societies, who, in turn, shall disburse the same against the legitimate dues of the depositors of the Sahara Group of Cooperative Societies, which shall be paid to the genuine depositors in the most transparent manner and on proper identification and on submitting proof of their deposits and proof of their claims and to be deposited in their respective bank accounts directly.

(ii) The disbursement shall be supervised and monitored by Justice R. Subhash Reddy, Former Judge of this Court with the able assistance of Shri Gaurav Agarwal, learned Advocate, who is appointed as Amicus Curiae to assist Justice R. Subhash Reddy as well as the Central Registrar of Cooperative Societies in disbursing the amount to the genuine depositors of the Sahara Group of Cooperative Societies. The manner and modalities for making the payment is to be worked out by the Central Registrar of Cooperative Societies in consultation with Justice R. Subhash Reddy, Former Judge of this Court and Shri Gaurav Agarwal, learned Advocate."

In compliance of the Hon'ble Supreme Court's Order dated 29.03.2023, an Online Portal "CRCS-Sahara refund portal" https://mocrefund.crcs.gov.in has been launched on 18.07.2023 for submission of claims by the genuine depositors of four Multi-State Cooperative Societies of Sahara Group, namely; Sahara Credit Cooperative Society Ltd., Lucknow, Saharayn Universal Multipurpose Society Ltd., Bhopal, Humara India Credit Cooperative Society Ltd., Kolkata and Stars Multipurpose Cooperative Society Ltd., Hyderabad for refund of their legitimate deposits. Entire process of disbursement is digital and paperless and is being carried out under the supervision and monitoring of Justice R. Subhash Reddy, Former Judge of Hon'ble Supreme Court with the assistance of Shri Gaurav Agrawal, Amicus Curiae.

Applications received on the Portal are being processed in transparent manner, on proper identification and on submitting proof of their identity and deposits. The payment is being deposited directly in Aadhaar seeded bank account of the genuine depositors. Presently, payment only upto Rs.10,000/- is being disbursed to each genuine depositor of the Sahara Group of Cooperative Societies against verified claims through Aadhaar seeded Bank account.

Further, in case of any deficiency found in the application of the depositor on the portal, deficiencies are being conveyed to them for re-submission of their application through the re-submission portal already launched on 15.11.2023.

An amount of Rs.362.91Crore has been released to 4,20,417 depositors of Sahara Group of Cooperative Societies as on 16.07.2024.

This was stated by the Minister of Cooperation, Shri Amit Shah in a written reply to a question in the Rajya Sabha.

Tags : Sahara Group CRCS Ministry of Cooperation

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Press Information Bureau

23.07.2024

Miscellaneous

Budget 2024-25 Introduces Enhanced Deductions and Revised Tax Slabs

MANU/PIBU/0544/2024

What is Income Tax?

Income tax is a government levy on the income earned by individuals and businesses during a financial year. "Income" encompasses various sources, defined broadly under Section 2(24) of the Income Tax Act. Here's a simplified breakdown:

• Income from Salary: This includes all payments from an employer to an employee, such as basic pay, allowances, commissions, and retirement benefits.

• Income from House Property: Rental income from residential or commercial properties is taxable.

• Income from Business or Profession: Profits from business or professional activities are taxable after deducting expenses.

• Income from Capital Gains: Profits from selling capital assets like property or jewellery are taxable. These gains can be long-term or short-term.

• Income from Other Sources: This includes income not covered by the other categories, such as savings interest, family pension, gifts, lottery winnings, and investment returns.

Background

Income Tax Day, celebrated on 24th July, marks a significant milestone in India's fiscal history. This day commemorates the introduction of income tax in India by Sir James Wilson in 1860. While this initial implementation laid the groundwork, it was the comprehensive Income-tax Act of 1922 that truly established a structured tax system in the country. This Act not only formalized various income tax authorities but also laid the foundation for a systematic administration framework.

In 1924, the Central Board of Revenue Act further strengthened this structure by constituting the Board as a statutory body responsible for administering the Income-tax Act. This period saw the appointment of Commissioners of Income-tax for each province, supported by Assistant Commissioners and Income-tax Officers.

The recruitment of Group A officers in 1946 marked another significant development, with initial training conducted in Bombay and Calcutta. The establishment of the I.R.S. (Direct Taxes) Staff College in Nagpur in 1957, later renamed the National Academy of Direct Taxes, further strengthened professional development within the department.

Technological advancements also played a crucial role, with the introduction of computerization in 1981. This initial phase focused on processing challans electronically. Finally, in 2009, the Centralized Processing Centre (CPC) was set up in Bengaluru to handle the bulk processing of e-filed and paper returns, operating efficiently in a jurisdiction-free manner.

Income Tax Day not only honours the historical development of tax administration in India but also highlights the continuous advancements and modernization efforts aimed at creating a more efficient and taxpayer-friendly system.

Importance of Income Tax

Income tax plays a crucial role in nation-building by supporting the fundamental functions of an effective state. It provides the necessary revenue to ensure security, funding essential services like healthcare, education, and infrastructure. These services are vital for the well-being of citizens and the overall development of society. Additionally, the revenue from income tax facilitates economic development by enabling investments in various sectors, promoting growth, and creating job opportunities.

Taxation also influences the balance between wealth accumulation and redistribution, shaping the social character of the state. It helps in building and sustaining state power and establishing a social contract, fostering greater accountability between the state and its citizens. By requiring individuals and businesses to contribute a portion of their earnings, taxation ensures that resources are available for public goods and services, thereby enhancing social equity and cohesion.

Through tax reforms, governments can develop more responsive and accountable governance, expanding state capacity and enhancing legitimacy. Effective tax systems can lead to the development of policies that reflect the needs and preferences of the population, strengthening the bond between the government and its people. This accountability and responsiveness can create a virtuous cycle, where improved public services lead to greater trust in the government, encouraging compliance and further strengthening the state.

Thus, income tax is not only vital for revenue generation but also for creating effective, self-sustaining states capable of meeting their citizens' needs and promoting overall societal welfare. The importance of income tax extends beyond mere financial considerations, contributing significantly to the building of a stable, equitable, and prosperous society.

Current Landscape

The landscape of personal income tax (PIT) in India has seen significant growth over recent years, reflecting the country's expanding economy and improved tax compliance. In the financial year 2020-21, gross personal income tax, including the Securities Transaction Tax (STT), stood at ₹5.75 lakh crore. This marked a substantial contribution to the national revenue, even amidst the economic challenges posed by the COVID-19 pandemic.

In the following financial year 2021-22, there was a notable increase in gross PIT collections, which rose to ₹7.10 lakh crore. This growth can be attributed to the gradual economic recovery and enhanced tax collection mechanisms. The trend continued in 2022-23, with amount reaching ₹9.67 lakh crore, demonstrating the effectiveness of ongoing tax reforms and the buoyant economic environment.

By 2023-24, the personal income tax collections, including STT, had surged to an impressive ₹12.01 lakh crore (provisional, as of April 21, 2024)). This significant increase underscores the resilience and robustness of the Indian economy, along with improved taxpayer compliance and the government's efforts to broaden the tax base. The upward trajectory of PIT collections highlights the crucial role of income tax in supporting India's economic infrastructure and public welfare programs.

Budget 2024-25: Income Tax Slab Changes

The Budget for 2024-25 introduced several changes to the income tax regime to benefit salaried employees and pensioners. The standard deduction for salaried employees was increased from ₹50,000 to ₹75,000 for those opting for the new tax regime. Similarly, the deduction on family pension for pensioners was enhanced from ₹15,000 to ₹25,000. Additionally, assessments can now be reopened beyond three years, up to five years from the end of the year of assessment, only if the escaped income is more than ₹50 lakh. The revised tax regime provides significant benefits, with salaried employees potentially seeing benefits of up to ₹17,500 in income tax.

Other Notable Initiatives

The Central Government has undertaken several steps to boost tax collection and expand the tax base by curbing tax evasion, widening/deepening the tax base, promoting voluntary compliance through the use of technology, and promoting digital transactions. Some of the steps taken by the Government are as follows:

Simplification of the Personal Income Tax

v. Finance Act, 2020: Provided an option to individual taxpayers for paying income tax at lower slab rates if they do not avail of specified exemptions and incentives.

v. Finance Act, 2023: Increased the scope and reduced the rates applicable to individuals by providing that with effect from the assessment year 2024-25, the rates under section 115BAC(1A) of the Income-tax Act, 1961, shall be the default rates.

New Form 26AS

v. Contains all information on the deduction or collection of tax at source, specified financial transactions (SFT), payment of taxes, demand and refund, etc.

v. Details of SFT data in Form 26AS make taxpayers aware of their transactions beforehand, encouraging them to disclose their true income.

Pre-filling of Income Tax Returns (ITR)

To make tax compliance easier, pre-filled ITRs have been provided to individual taxpayers. The scope includes information such as salary income, bank interest, dividends, etc.

Updated Return

Section 139(8A) of the Act: Facilitates taxpayers to update their return anytime within two years from the end of the relevant assessment year, allowing them to file an updated return by voluntarily admitting omissions or mistakes and paying an additional tax as applicable.

E-Verification Scheme

This scheme enables authorities to collect information for the accurate and comprehensive determination of a taxpayer's income to reduce tax evasion. It provides taxpayers with relevant financial information collected from various sources.

Setting Up of Dispute Resolution Committee (DRC)

For reducing litigation and giving an impetus to dispute resolution for small taxpayers, a DRC has been constituted. Taxpayers with taxable income up to ₹50 lakh and disputed income up to ₹10 lakh are eligible to approach the Committee. The procedure is conducted on a digital platform under the e-Dispute Resolution Committee Scheme, 2021.

Expansion of Scope of TDS/TCS

To bring new taxpayers into the income tax net, the scope of TDS/TCS was expanded to include huge cash withdrawals, foreign remittance, purchase of luxury cars, e-commerce participants, and the sale of goods.

Income Tax Returns

Income Tax Return (ITR) is a form that individuals are required to submit to the Income Tax Department of India. It contains information about the person's income and the taxes to be paid on it during the year. Information filed in ITR should pertain to a particular financial year, starting on 1st April and ending on 31st March of the following year.

Number of persons who filed income tax returns in the last four years:

2019-20: 6.48 crore

2020-21: 6.72 crore

2021-22: 6.94 crore

2022-23: 7.40 crore

These figures reflect a consistent increase in the number of individuals filing their income tax returns, indicating an expanding tax base and improved tax compliance.

Conclusion

As India observes Income Tax Day 2024, it is evident that the nation's tax administration has come a long way since its inception in 1860. The journey from a rudimentary tax system to a sophisticated, technology-driven framework is a testament to the country's progress. This day also serves as a reminder of the historical evolution of tax administration in India and the ongoing reforms that aim to enhance tax compliance and simplify the process for taxpayers. The substantial increase in personal income tax collections, alongside the recent changes introduced in the 2024-25 Budget, reflects the government's commitment to a fair and efficient tax system. By improving deductions, revising tax slabs, and expanding digital and procedural innovations, the government continues to strengthen its approach to taxation. Income Tax Day is not only a celebration of our fiscal heritage but also an opportunity to acknowledge the vital role that taxation plays in supporting public services and national development. As we look to the future, the progress made in tax administration and the proactive measures taken to address challenges will undoubtedly contribute to a more robust and equitable economic framework, fostering a prosperous and sustainable future for all.

Tags : Income Tax Return Commercial Properties Securities Transaction Tax

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Press Information Bureau

23.07.2024

Civil

New Pension Scheme 'Vatsalya' Announced for Minors

MANU/PIBU/0545/2024

A new pension scheme named 'Vatsalya' has been proposed for minors by Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman in the Union Budget 2024-25 tabled in Parliament today.

A contributory pension scheme, this will have contribution by parents and guardians. On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account.

The Union Minister also announced that the Committee to review the NPS has made considerable progress in its work. She expressed satisfaction that the Staff Side of the National Council of the Joint Consultative Machinery for Central Government Employees have taken a constructive approach. "A solution will be evolved which addresses the relevant issues while maintaining fiscal prudence to protect the common citizens", the Minister further informed.

Tags : Vatsalya Pension Scheme NPS Account

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Press Information Bureau

23.07.2024

Other Taxes

'Angel Tax' Abolished for all Classes of Investors

MANU/PIBU/0542/2024

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman proposed to abolish 'angel tax' for all classes of investors, while presenting the Union Budget 2024-25 in Parliament today. She added that this move is aimed to bolster the Indian start-up eco-system, boost the entrepreneurial spirit and support innovation.

The Minister also proposed to reduce the corporate tax rate on foreign companies from 40 to 35 per cent to attract foreign capital for India's development needs.

Smt. Sitharaman announced to bring out a financial sector vision and strategy document to meet financing needs of the economy and prepare the sector in terms of size, capacity and skills. She added that this would set the agenda for the upcoming five years and guide the work of the government, regulators, financial institutions and market participants.

The Minister further proposed to develop taxonomy for climate finance. This is expected to enhance the availability of capital for climate adaptation and mitigation, which can help achieve India's climate commitments and green transition.

"Our government will seek the required legislative approval for providing an efficient and flexible mode for financing leasing of aircrafts and ships, and pooled funds of private equity through a 'variable company structure'," added Smt. Sitharaman.

To facilitate foreign direct investments, nudge prioritization, and promote opportunities for using Indian Rupee as a currency for overseas investments, the Finance Minister announced that the rules and regulations for Foreign Direct Investment and Overseas Investments will be simplified.

To promote the development of diamond cutting and polishing industry which employs a large number of skilled workers, the Finance Minister proposed to provide for safe harbor rates for foreign mining companies selling raw diamonds.

Further, Smt. Sitharaman proposed a simpler tax regime for foreign shipping companies operating domestic cruises in the country. This will help in realizing the tremendous potential of cruise tourism and give a fillip to this employment generating industry in the country.

Tags : Union Budget Angel Tax Investors

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