SMRITI JAIN / TIMESOFINDIA.COM / Updated: Feb 3, 2023, 14:22 IST
(Part 2 of the article)
Income Tax Live: Highlights of major announcements
FM Nirmala Sitharaman has announced several new changes aimed at lowering the income tax burden and income tax outgo of the middle-class, salaried taxpayers, individual taxpayers and senior citizens. Below are the highlights of her major income tax announcements:
- New income tax regime will now be the default regime but taxpayers have an option to choose old regime
- Standard deduction of Rs 50,000 to salaried individual, and deduction from family pension up to Rs 15,000, is currently allowed only under the old regime. It is proposed to allow these two deductions under the new regime also.
- Rebate limit under the new tax regime to be increased from Rs 5 lakhs to Rs 7 lakhs. This means no income tax outgo for a taxpayer earning up to Rs 7 lakh under the new income tax regime.
- An individual with an income of 15 lakhs will only be required to pay 1.5 lakhs as tax
- 45% of filed returns processed within 24 hours, says FM
- Average Processing time of returns reduced from 93 days to 16 days, says FM
- Focus on technology based tax governance
- Presumptive taxation turnover limit increased to 75 lakh for professionals. Cash receipt no more than 5%
- Roll out a next Gen-IT return form
- A system of unified filing process to be set up to facilitate agencies to source the data from a common portal as per the choice of those filing returns
- Surcharge on income-tax under both old regime and new regime is 10 per cent if income is above Rs 50 lakh and up to Rs 1 crore, 15 per cent if income is above Rs 1 crore and up to Rs 2 crore, 25 per cent if income is above Rs 2 crore and up to Rs 5 crore, and 37 per cent if income is above Rs 5 crore. It is proposed that the for those individuals, HUF, AOP (other than co-operative), BOI and AJP under the new regime, surcharge would be same except that the surcharge rate of 37 per cent will not apply. Highest surcharge shall be 25 per cent for income above Rs 2 crore. This would reduce the maximum rate from about 42.7 per cent to about 39 per cent. No change in surcharge is proposed for those who opt to be under the old regime.
- Encashment of earned leave up to 10 months of average salary, at the time of retirement in case of an employee (other than an employee of the Central Government or State Government), is exempt under sub-clause (ii) of clause (10AA) of section 10 of the Income-tax Act (“the Act”) to the extent notified. The maximum amount which can be exempted is Rs 3 lakh at present. It is proposed to issue notification to extend this limit to Rs 25 lakh.
- TCS enhanced on foreign remittances – the rate has increased from 5 per cent to 20 per cent without the ceiling of 7 lakhs
- Sum received (except in case of death of the insured person) from an insurance policy (other than ULIP for which provision already exists as brought in the Finance Act 2021) where aggregate of premium payable for any of the years during the terms of the policy exceeds Rs 5 lakhs is now proposed to be subjected to taxed. This is proposed for policies issued on or after 1st April 2023.
- For the purpose of computing capital gains, it is now proposed that the cost of acquisition or the cost of improvement shall not include the amount of interest claimed under section 24 of the Act (under the head income from house property) or deduction under chapter VIA
- It is proposed to amend section 194B and section 194BB (income from lottery or crossword puzzle and horse racing respectively) of the Act to provide that the TDS should be deducted on the amount or “aggregate of the amount” (currently the section only states- amount) exceeding Rs. 10,000 in a financial year. Additionally, it is proposed to include “gambling or betting of any form or nature” within the scope and section 194BA is proposed to be introduced for online games.
- Currently, if the donee is a Non-resident and receives any sum of money exceeding Rs. 50,000 without consideration from a resident individual (except which is specifically excluded in the Act), the same is considered to be income deemed to accrue or arise in India (under section 9). As per the budget announced, an individual qualifying as Not ordinarily resident is also proposed to be included in the ambit.
- As per the proposed new section (50AA), the capital gains from the transfer/redemption/maturity of market linked debentures is proposed to be treated and taxed as short-term capital gains. Currently it is taxed as long-term capital gain at the rate of 10% without indexation.
- Time limit for completion of scrutiny assessment (for the Assessment year 2022-23 onwards) proposed to be extended to 12 months from the end of relevant AY as against the current limit of 9 months. This is also applicable in case of updated returns.
(Will be continued in our next post…..)