Finance Minister Nirmala Sitharaman's Union Budget for 2024, presented on Tuesday in the Lok Sabha, introduces several significant changes affecting the corporate sector. This budget marks the first for Modi 3.0 and includes new measures aimed at reshaping India's tax landscape. Here’s a summary of the key announcements relevant to businesses in India:
Tax on Rental Income: Rental income from properties used for business purposes will now be taxed as 'income from house property.' Developers renting out unsold flats will no longer be able to offset expenses related to such rental income against their business profits.
End of Tax Concessions for New Manufacturing Plants: The tax incentives offered to companies establishing new manufacturing plants before March 31, 2024, will be withdrawn. Previously, these companies enjoyed a 15% tax rate under the sunset clause.
Return of Vivad se Vishwas Scheme: The Vivad se Vishwas scheme, designed to settle tax disputes, is being revived. Details on the rollout date of this updated scheme will be announced soon.
Reduced TDS Rates: The budget proposes a reduction in Tax Deducted at Source (TDS) rates for certain payments. Insurance commissions and brokerage payments will now attract a 2% TDS rate, down from 5%. E-tailors will face a minimal 0.1% TDS rate.
Gifts as Asset Transfers: Gifts given to employees by employers will be classified as a transfer of assets. This change will benefit employers by aligning gift-related gains with capital gains tax.
Shorter Tax Assessment Period: The timeframe for reopening tax assessments has been reduced from 11 years to 6 years and 3 months, specifically for cases where the escaped income exceeds Rs 50 lakh.
Removal of Angel Tax: The tax on shares of unlisted companies sold at prices exceeding their fair value, known as angel tax, will be abolished starting April 1, 2024. This move aims to attract more domestic and foreign investment.
No Immediate Jail Risk for Tax Deductors: Tax deductors will not face rigorous imprisonment if TDS is filed and deposited by the due date. Prosecution provisions will not apply in these cases.
Penalties for Late TDS Filings: A penalty will be imposed on taxpayers who delay filing TDS/TCS returns beyond a month. This change ensures timely updates of TDS in authorities' e-records, enabling taxpayers to claim TDS credits.
Appeals on Tax Matters: Taxpayers facing significant tax effects-- Rs 60 lakh, Rs 2 crore, or over Rs 5 crore—will have the right to appeal to tax tribunals, high courts, or the Supreme Court.
These changes are set to impact various sectors of India Inc, aiming to streamline tax processes and enhance compliance.
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SUMMARY OF THE UNION BUDGET 2024-2025 Submitted by Finance Minster Nirmala Sitharaman