Budget 2023-2024 : The Speech of Nirmala Sitharaman, Minister of Finance Part 2 Anx1

  

Budget 2023-2024 : The Speech of  Nirmala Sitharaman,  Minister of Finance on   February 1, 2023 in the parliament.

 

Hon’ble Speaker, I present the Budget for 2023-24. This is the first Budget in Amrit  Kaal.  I will, now, move to Part B.

                                              PART B 

Indirect Taxes 

118. My indirect tax proposals aim to promote exports, boost domestic  manufacturing, enhance domestic value addition, encourage green energy  and mobility. 

119. A simplified tax structure with fewer tax rates helps in reducing  compliance burden and improving tax administration. I propose to reduce  the number of basic customs duty rates on goods, other than textiles and  agriculture, from 21 to 13. As a result, there are minor changes in the basic  custom duties, cesses and surcharges on some items including toys,  bicycles, automobiles and naphtha. 

Green Mobility 

120. To avoid cascading of taxes on blended compressed natural gas, I  propose to exempt excise duty on GST-paid compressed bio gas contained  in it. To further provide impetus to green mobility, customs duty exemption  is being extended to import of capital goods and machinery required for  manufacture of lithium-ion cells for batteries used in electric vehicles. 

Electronics 

121. As a result of various initiatives of the Government, including the  Phased Manufacturing programme, mobile phone production in India has  increased from 5.8 crore units valued at about Rs  18,900 crore in 2014-15 to  31 crore units valued at over Rs  2,75,000 crore in the last financial year. To  further deepen domestic value addition in manufacture of mobile phones, I  propose to provide relief in customs duty on import of certain parts and  inputs like camera lens and continue the concessional duty on lithium-ion  cells for batteries for another year.

122. Similarly, to promote value addition in manufacture of televisions, I  propose to reduce the basic customs duty on parts of open cells of TV  panels to 2.5 per cent. 

Electrical 

123. To rectify inversion of duty structure and encourage manufacturing  of electric kitchen chimneys, the basic customs duty on electric kitchen  chimney is being increased from 7.5 per cent to 15 per cent and that on  heat coils for these is proposed to be reduced from 20 per cent to 15 per  cent. 

Chemicals and Petrochemicals 

124. Denatured ethyl alcohol is used in chemical industry.   I propose to exempt basic customs duty on it. This will also support the  Ethanol Blending Programme and facilitate our endeavour for energy  transition. Basic customs duty is also being reduced on acid grade fluorspar  from 5 per cent to 2.5 per cent to make the domestic fluorochemicals  industry competitive. Further, the basic customs duty on crude glycerin for  use in manufacture of epicholorhydrin is proposed to be reduced from 7.5  per cent to 2.5 per cent. 

Marine products 

125. In the last financial year, marine products recorded the highest  export growth benefitting farmers in the coastal states of the country. To  further enhance the export competitiveness of marine products,  particularly shrimps, duty is being reduced on key inputs for domestic  manufacture of shrimp feed. 

Lab Grown Diamonds 

126. India is a global leader in cutting and polishing of natural diamonds,  contributing about three-fourths of the global turnover by value. With the  depletion in deposits of natural diamonds, the industry is moving towards  Lab Grown Diamonds (LGDs) and it holds huge promise. To seize this opportunity, I propose to reduce basic customs duty on seeds used in their  manufacture. 

Precious Metals 

127. Customs Duties on dore and bars of gold and platinum were  increased earlier this fiscal. I now propose to increase the duties on articles  made therefrom to enhance the duty differential. I also propose to increase  the import duty on silver dore, bars and articles to align them with that on  gold and platinum. 

Metals 

128. To facilitate availability of raw materials for the steel sector,  exemption from Basic Customs Duty on raw materials for manufacture of  CRGO Steel, ferrous scrap and nickel cathode is being continued. 

129. Similarly, the concessional BCD of 2.5 per cent on copper scrap is  also being continued to ensure the availability of raw materials for  secondary copper producers who are mainly in the MSME sector. 

Compounded Rubber 

130. The basic customs duty rate on compounded rubber is being  increased from 10 per cent to ‘25 per cent or Rs  30/kg whichever is lower’, at  par with that on natural rubber other than latex, to curb circumvention of  duty. 

Cigarettes 

131. National Calamity Contingent Duty (NCCD) on specified cigarettes  was last revised three years ago. This is proposed to be revised upwards by  about 16 per cent.

Direct Taxes 

132. I now come to my direct tax proposals. These proposals aim to  maintain continuity and stability of taxation, further simplify and rationalise  various provisions to reduce the compliance burden, promote the  entrepreneurial spirit and provide tax relief to citizens. 

133. It has been the constant endeavour of the Income Tax Department  to improve Tax Payers Services by making compliance easy and smooth. Our  tax payers’ portal received a maximum of 72 lakh returns in a day;  processed more than 6.5 crore returns this year; average processing period  reduced from 93 days in financial year 13-14 to 16 days now;  and 45 per cent of the returns were processed within 24 hours. We intend  to further improve this, roll out a next-generation Common IT Return Form  for tax payer convenience, and also plan to strengthen the grievance  redressal mechanism. 

MSMEs and Professionals 

134. MSMEs are growth engines of our economy. Micro enterprises with  turnover up to Rs  2 crore and certain professionals with turnover of up to  Rs  50 lakh can avail the benefit of presumptive taxation. I propose to provide  enhanced limits of Rs  3 crore and Rs  75 lakh respectively, to the tax payers  whose cash receipts are no more than 5 per cent. Moreover, to support  MSMEs in timely receipt of payments, I propose to allow deduction for  expenditure incurred on payments made to them only when payment is  actually made. 

Cooperation 

135. Cooperation is a value to be cherished. In realizing our Prime  Minister’s goal of “Sahkar se Samriddhi”, and his resolve to “connect the  spirit of cooperation with the spirit of Amrit Kaal”, in addition to the  measures proposed in Part A, I have a slew of proposals for the co-operative  sector.

136. First, new co-operatives that commence manufacturing activities till  31.3.2024 shall get the benefit of a lower tax rate of 15 per cent, as is  presently available to new manufacturing companies. 

137. Secondly, I propose to provide an opportunity to sugar co-operatives  to claim payments made to sugarcane farmers for the period prior to  assessment year 2016-17 as expenditure. This is expected to provide them  with a relief of almost Rs  10,000 crore. 

138. Thirdly, I am providing a higher limit of Rs  2 lakh per member for cash  deposits to and loans in cash by Primary Agricultural Co-operative Societies  (PACS) and Primary Co-operative Agriculture and Rural Development Banks  (PCARDBs). 

139. Similarly, a higher limit of Rs  3 crore for TDS on cash withdrawal is  being provided to co-operative societies. 

Start-Ups  

140. Entrepreneurship is vital for a country’s economic development. We  have taken a number of measures for start-ups and they have borne results.  India is now the third largest ecosystem for start-ups globally, and ranks  second in innovation quality among middle-income countries. I propose to  extend the date of incorporation for income tax benefits to start-ups from  31.03.23 to 31.3.24. I further propose to provide the benefit of carry  forward of losses on change of shareholding of start-ups from seven years  of incorporation to ten years. 

Appeals 

141. To reduce the pendency of appeals at Commissioner level, I propose  to deploy about 100 Joint Commissioners for disposal of small appeals. We  shall also be more selective in taking up cases for scrutiny of returns already  received this year.

Better targeting of tax concessions 

142. For better targeting of tax concessions and exemptions,   I propose to cap deduction from capital gains on investment in residential  house under sections 54 and 54F to Rs  10 crore. Another proposal with  similar intent is to limit income tax exemption from proceeds of insurance  policies with very high value. 

Rationalisation 

143. There are a number of proposals relating to rationalisation and  simplification. Income of authorities, boards and commissions set up by  statutes of the Union or State for the purpose of housing, development of  cities, towns and villages, and regulating, or regulating and developing an  activity or matter, is proposed to be exempted from income tax. Other  major measures in this direction are: 

∙ Removing the minimum threshold of Rs  10,000/- for TDS and  clarifying taxability relating to online gaming; 

∙ Not treating conversion of gold into electronic gold receipt and vice  versa as capital gain; 

∙ Reducing the TDS rate from 30 per cent to 20 per cent on taxable  portion of EPF withdrawal in non-PAN cases; and 

∙ Taxation on income from Market Linked Debentures. 

Others 

144. Other major proposals in the Finance Bill relate to the following: 

∙ Extension of period of tax benefits to funds relocating to IFSC, GIFT  City till 31.03.2025; 

∙ Decriminalisation under section 276A of the Income Tax Act;  ∙ Allowing carry forward of losses on strategic disinvestment including  that of IDBI Bank; and 

∙ Providing EEE status to Agniveer Fund.

Personal Income Tax 

145. Now, I come to what everyone is waiting for -- personal income tax. I  have five major announcements to make in this regard. These primarily  benefit our hard-working middle class. 

146. The first one concerns rebate. Currently, those with income up to  Rs  5 lakh do not pay any income tax in both old and new tax regimes. I  propose to increase the rebate limit to Rs  7 lakh in the new tax regime. Thus,  persons in the new tax regime, with income up to Rs  7 lakh will not have to  pay any tax. 

147. The second proposal relates to middle-class individuals.   I had introduced, in the year 2020, the new personal income tax regime  with six income slabs starting from Rs. 2.5 lakh. I propose to change the tax  structure in this regime by reducing the number of slabs to five and  increasing the tax exemption limit to Rs  3 lakh. The new tax rates are: 

 

Income	Tax
Rs.0-3 lakh	Nil
Rs.3-6 lakh	5 per cent
Rs.6-9 lakh	10 per cent
Rs.9-12 lakh	15 per cent
Rs. 12-15 lakh	20 per cent
Above  Rs.15 lakh	30 per cent

 

 

 

 

 

148. This will provide major relief to all tax payers in the new regime. An  individual with an annual income of Rs  9 lakh will be required to pay only  Rs  45,000/-. This is only 5 per cent of his or her income. It is a reduction of 25  per cent on what he or she is required to pay now, ie, Rs  60,000/-. Similarly,  an individual with an income of Rs  15 lakh would be required to pay only  Rs  1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent  from the existing liability of Rs  1,87,500/. 

149. My third proposal is for the salaried class and the pensioners  including family pensioners, for whom I propose to extend the benefit of standard deduction to the new tax regime. Each salaried person with an  income of Rs  15.5 lakh or more will thus stand to benefit by Rs  52,500. 

150. My fourth announcement in personal income tax is regarding the  highest tax rate which in our country is 42.74 per cent. This is among the  highest in the world. I propose to reduce the highest surcharge rate from 37  per cent to 25 per cent in the new tax regime. This would result in reduction  of the maximum tax rate to 39 per cent. 

151. Lastly, the limit of Rs  3 lakh for tax exemption on leave encashment  on retirement of non-government salaried employees was last fixed in the  year 2002, when the highest basic pay in the government was Rs  30,000/-  pm. In line with the increase in government salaries, I am proposing to  increase this limit to Rs  25 lakh. 

152. We are also making the new income tax regime as the default tax  regime. However, citizens will continue to have the option to avail the  benefit of the old tax regime. 

153. Apart from these, I am also making some other changes as given in  the annexure. 

154. As a result of these proposals, revenue of about Rs  38,000 crore –  Rs  37,000 crore in direct taxes and Rs  1,000 crore in indirect taxes – will be  forgone while revenue of about Rs  3,000 crore will be additionally mobilized.  Thus, the total revenue forgone is about Rs  35,000 crore annually. 

155. Mr. Speaker Sir, with these words, I commend the Budget to this  august House. 

*****

 

Annexure to Part B of the Budget Speech 2023-24 

Amendments relating to Direct Taxes

A. PROVIDING TAX RELIEF UNDER NEW PERSONAL TAX REGIME

A.1 The new tax regime for Individual and HUF, introduced by the  Finance Act 2020, is now proposed to be the default regime. 

A.2 This regime would also become the default regime for AOP (other  than co-operative), BOI and AJP. 

A.3 Any individual, HUF, AOP (other than co-operative), BOI or AJP not  willing to be taxed under this new regime can opt to be taxed  under the old regime. For those person having income under the  head “profit and gains of business or profession” and having opted  for old regime can revoke that option only once and after that  they will continue to be taxed under the new regime. For those  not having income under the head “profit and gains of business or  profession”, option for old regime may be exercised in each year. 

A.4 Substantial relief is proposed under the new regime with new slabs  and tax rates as under: 

Total Income (Rs )	Rate (per cent)
Upto 3,00,000	Nil
From 3,00,001 to 6,00,000	5
From 6,00,001 to 9,00,000	10
From 9,00,001 to 12,00,000	15
From 12,00,001 to 15,00,000	20
Above 15,00,000	30

 

 

 

A.5 Resident individual with total income up to Rs  5,00,000 do not pay  any tax due to rebate under both old and new regime. It is  proposed to increase the rebate for the resident individual under  the new regime so that they do not pay tax if their total income is  up to Rs  7,00,000. 

A.6 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. 

 A.7 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. 

A.8 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.

B. SOCIO-ECONOMIC WELFARE MEASURES

B.1 Promoting timely payments to Micro and Small Enterprises

In order to promote timely payments to micro and small  enterprises, it is proposed to include payments made to such  enterprises within the ambit of section 43B of the Act. Thus,  deduction for such payments would be allowed only when actually  paid. It will be allowed on accrual basis only if the payment is  within the time mandated under the Micro, Small and Medium  Enterprises Development Act. 

B.2 Agnipath Scheme, 2022 

The payment received from the Agniveer Corpus Fund by the  Agniveers enrolled in Agnipath Scheme, 2022 is proposed to be  exempt from taxes. Deduction in the computation of total income  is proposed to be allowed to the Agniveer on the contribution made by him or the Central Government to his Seva Nidhi  account. 

B.3 Relief to sugar co-operatives from past demand 

It is proposed that for sugar co-operatives, for years prior to A.Y.  2016-17, if any deduction claimed for expenditure made on  purchase of sugar has been disallowed, an application may be  made to the Assessing Officer, who shall recompute the income of  the relevant previous year after allowing such deduction up to the  price fixed or approved by the Government for such previous year.

B.4 Increasing threshold limit for Co-operatives to withdraw cash  without TDS 

It is proposed to enable co-operatives to withdraw cash up to Rs  3  crore in a year without being subjected to TDS on such  withdrawal. 

B.5 Penalty for cash loan/transactions against primary co-operatives  It is proposed to amend section 269SS of the Act to provide that  where a deposit is accepted by a primary agricultural credit  society or a primary co-operative agricultural and rural  development bank from its member or a loan is taken from a  primary agricultural credit society or a primary co-operative  agricultural and rural development bank by its member in cash, no  penal consequence would arise, if the amount of such loan or  deposit in cash is less than Rs  2 lakh. Further, section 269T of the  Act is proposed to be amended to provide that where a deposit is  repaid by a primary agricultural credit society or a primary co operative agricultural and rural development bank to its member  or such loan is repaid to a primary agricultural credit society or a  primary co-operative agricultural and rural development bank by  its member in cash, no penal consequence shall arise, if the  amount of such loan or deposit in cash is less than Rs  2 lakh. 

B.6 Relief to start-ups in carrying forward and setting off of losses  The condition of continuity of at least 51 per cent shareholding for  setting off of carried forward losses is relaxed for an eligible start  up if all the shareholders of the company continue to hold those  shares. At present this relaxation applies for losses incurred during  the period of 7 years from incorporation of such start-up. It is proposed to increase this period to 10 years.

B.7 Extension of date of incorporation for eligible start up for  exemption 

Certain start-ups are eligible for some tax benefit if they are  incorporated before 1st April, 2023. The period of incorporation of  such eligible start-ups is proposed to be extended by one year to  before 1st April, 2024. 

B.8 Gold to Electronic Gold Receipt 

The conversion of physical gold to Electronic Gold Receipt and vice  versa is proposed not to be treated as a transfer and not to attract  any capital gains. This would promote investments in electronic  equivalent of gold. 

B.9 Incentives to IFSC 

Relocation of funds to IFSC has certain tax exemptions, if the  relocation is before 31.03.2023. This date is proposed to be  extended to 31.03.2025. Further, any distributed income from the  offshore derivative instruments entered into with an offshore  banking unit is also proposed to be exempted subject to certain  conditions. 

B.10 Exemption to development authorities etc. 

It is proposed to provide exemption to any income arising to a  body or authority or board or trust or commission, (not being a  company) which has been established or constituted by or under  a Central or State Act with the purposes of satisfying the need for  housing or for planning, development or improvement of cities,  towns and villages or for regulating any activity or matter,  irrespective of whether it is carrying out commercial activity. 

B.11 Facilitating certain strategic disinvestments 

To facilitate certain strategic disinvestments, it is proposed to  allow carry forward of accumulated losses and unabsorbed  depreciation allowance in the case of amalgamation of one or  more banking company with any other banking institution or a  company subsequent to a strategic disinvestment, if such  amalgamation takes place within 5 years of strategic  disinvestment. It is also proposed to modify the definition of  ‘strategic disinvestment’. B.12 15 per cent concessional tax to promote new manufacturing co operative society 

In order to promote the growth of manufacturing in co-operative  sector, a new co-operative society formed on or after 01.04.2023,  which commences manufacturing or production by 31.03.2024  and do not avail of any specified incentive or deduction, is  proposed to be allowed an option to pay tax at a concessional rate  of 15 per cent similar to what is available to new manufacturing  companies.

C. EASE OF COMPLIANCE

C.1 Ease in claiming deduction on amortization of preliminary  expenditure

At present for claiming amortization of certain preliminary  expenses, the activity is to be carried out either by the assessee or  by a concern approved by the Board. In order to ease the process  of claiming amortization of these expenses it is proposed to  remove the condition of activity in connection with these  expenses to be carried out by a concern approved by the Board.  Format for reporting of such expenses by the assessee shall be  prescribed. 

C.2 Increasing threshold limits for presumptive taxation schemes

In order to ease compliance and to promote non-cash  transactions, it is proposed to increase the threshold limits for  presumptive scheme of taxation for eligible businesses from Rs  2  crore to Rs  3 crore and for specified professions from Rs  50 lakh to  Rs  75 lakh. The increased limit will apply only in case the amount or  aggregate of the amounts received during the year, in cash, does  not exceed five per cent of the total gross receipts/turnover. 

C.3 Extending the scope for deduction of tax at source at lower or nil  rate 

It is proposed to allow a taxpayer to obtain certificate of  deduction of tax at source to lower or nil rate on sums on which  tax is required to be deducted under section 194LBA of the Act by  Business Trusts.

D. WIDENING & DEEPENING OF TAX BASE AND ANTI AVOIDANCE

D.1 It is proposed to extend the deemed income accrual provision  relating to sums of money exceeding fifty thousand rupees,  received from residents without consideration to a not ordinarily  resident with effect from 1st April, 2023. 

D.2 It is proposed to omit the provision to allow tax exemption to  news agencies set up in India solely for collection and distribution  of news from the financial year 2023-24. 

D.3 It is proposed to tax distributed income by business trusts in the  hands of a unit holder (other than dividend, interest or rent which  is already taxable) on which tax is currently avoided both in the  hands of unit holder as well as in the hands of business trust. 

D.4 It is proposed to withdraw the exemption from TDS currently  available on interest payment on listed debentures. 

D.5 With respect to presumptive schemes for non-residents, it is  proposed to disallow carried forward and set off of loss computed  as per books of account with presumptive income. 

D.6 For online games, it is proposed to provide for TDS and taxability  on net winnings at the time of withdrawal or at the end of the  financial year. Moreover, TDS would be without the threshold of  Rs  10,000. For lottery, crossword puzzles games, etc threshold limit  Rs  10,000 for TDS shall continue but shall apply to aggregate  winnings during a financial year. 

D.7 The rate of TCS for foreign remittances for education and for  medical treatment is proposed to continue to be 5 per cent for  remittances in excess of Rs  7 lakh. Similarly, the rate of TCS on  foreign remittances for the purpose of education through loan  from financial institutions is proposed to continue to be 0.5 per  cent in excess of Rs 7 lakh. However, for foreign remittances for  other purposes under LRS and purchase of overseas tour program,  it is proposed to increase the rates of TCS from 5 per cent to 20  per cent. 

D.8 Tax on capital gains can be avoided by investing proceeds of such  gains in residential property. This is proposed to be capped at Rs  10  crore.

 

 

 

D.9 The income from market linked debentures is proposed to be  taxed as short-term capital gains at the applicable rates. 

D.10 It is proposed to provide for some provisions to minimise risk to  revenue due to undervaluation of inventory. 

D.11 It is proposed to provide that where aggregate of premium for life  insurance policies (other than ULIP) issued on or after 1st April,  2023 is above Rs  5 lakh, income from only those policies with  aggregate premium up to Rs  5 lakh shall be exempt. This will not  affect the tax exemption provided to the amount received on the  death of person insured. It will also not affect insurance policies  issued till 31st March, 2023. 

D.12 It is proposed to amend provisions for computing capital gains in  case of joint development of property to include the amount  received through cheque etc. as consideration. 

D.13 While interest paid on borrowed capital for acquiring or improving  a property can, subject to certain conditions, be claimed as  deduction from income, it can also be included in the cost of  acquisition or improvement on transfer, thereby reducing capital  gains. It is proposed to provide that the cost of acquisition or  improvement shall not include the amount of interest claimed  earlier as deduction. 

D.14 There are certain assets like intangible assets or rights for which  no consideration has been paid for acquisition and the transfer of  which may result in generation of income. Their cost of acquisition  is proposed to be defined to be NIL.

E. IMPROVING COMPLIANCE AND TAX ADMINISTRATION

E.1 With respect to rectification of orders by the Interim Board of  Settlement, it is proposed to provide that where the time-limit for  amending an order by it or for making an application to it expires  on or after 01.02.2021 but before 01.02.2022, such time-limit shall  stand extended to 30.09.2023. 

E.2 To expedite the disposal of certain appeals pending with  Commissioner (Appeals), it is proposed to introduce a new  authority in the rank of Joint Commissioner/ Additional  Commissioner [JCIT(Appeals)], for appeals against certain orders passed by or with the approval of an authority below the rank of  Joint Commissioner. Certain related and consequential  amendments are also proposed in this regard. 

E.3 It is proposed to reduce the minimum time period required to be  provided by the transfer pricing officer to assessee for production  of documents and information from 30 days to 10 days. 

E.4 It is proposed to provide for appeal against penalty orders passed  by Commissioner (Appeals) under certain sections of the Act  before the Appellate Tribunal. It is also proposed to provide that  an order under section 263 of the Act passed by the Principal  Chief Commissioner or Chief Commissioner and any rectification  order for the same shall also be appealable before the Appellate  Tribunal. Further, it is proposed to enable filing of memorandum  of cross-objections in all classes of cases against which appeal can  be made to the Appellate Tribunal. 

E.5 It is proposed to amend section 132 of the Act, dealing with  search and seizure, to allow the authorised officer to take  assistance of specific domain experts like digital forensic  professionals, valuers and services of other professionals like  locksmiths, carpenters etc. during the course of search and also to  aid in accurate estimation of undisclosed income held in the form  of property by the assessee. 

E.6 Section 170A of the Act, inserted vide Finance Act, 2022 is  proposed to be substituted to clarify that a modified return shall  be furnished by an entity to whom the order of the business  reorganisation applies, and to introduce provisions for assessment  or reassessment in cases where such modified return is furnished. 

E.7 It is proposed that an order of assessment may be passed within a  period of 12 months from the end of the relevant assessment year  or the financial year in which updated return is filed, as the case  may be. It is also proposed that in cases where search under  section 132 of the Act or requisition under section 132A of the Act  has been made, the period of limitation of pending assessments  shall be extended by twelve months. 

E.8 It is proposed to make amendments to empower the Central  Government to make modifications in the already notified schemes regarding e-Verification, Dispute Resolution, Advance  Rulings, Appeal and Penalty, at any time to enable better  implementation of such schemes. 

E.9 It is proposed to limit the time for furnishing of a return for  reassessment. Further, it is also proposed to provide that in cases  where search related information is available after 15th March of  any financial year, an additional period of fifteen days shall be  allowed for issuance of notice, for assessment/reassessments etc,  under section 148 of the Act. It is also proposed to clarify that the  specified authority for granting approval shall be Principal Chief  Commissioner or Principal Director General or Chief Commissioner  or Director General. 

E.10 It is proposed to provide a penalty of Rs  5,000 if there is any  inaccuracy in the statement of financial transactions submitted by  a prescribed reporting financial institution due to false or  inaccurate information submitted by the account holder. 

E.11 It is proposed to amend section 271C and section 276B of the Act  to provide for penalty and prosecution where default in TDS  relates to transaction in kind. 

E.12. It is proposed to amend the time period for filing of appeal against  the order of the Adjudicating authority under Benami Act within a  period of 45 days from the date when such order is received by  the Initiating Officer or the aggrieved person. The definition of  ‘High Court’ is also proposed to be modified to allow  determination of jurisdiction for filing appeal in the case of non residents.

F. RATIONALISATION

F.1 The restriction on interest deductibility on interest payment to  overseas associated enterprise does not apply to those in the  business of banking and insurance. It is proposed to extend this  benefit to non-banking financial companies, as may be notified. 

F.2 TDS on payment of certain income to a non-resident is currently at  the rate of 20 per cent, but the tax rate in treaties may be lower. It  is proposed to allow the benefit of tax treaty at the time of TDS on  such income under section 196A of the Act.

F.3 At present the TDS rate on withdrawal of taxable component from  Employees’ Provident Fund Scheme in non-PAN cases is 30 per  cent. It is proposed to reduce it to 20 per cent, as in other non PAN cases. 

F.4 Sometimes, tax for income of an earlier year is deducted later,  while tax thereon has already been paid in the earlier year.  Amendment is proposed to facilitate such taxpayers to claim  credit of this TDS in the earlier year. 

F.5 Higher TDS/TCS rate applies, if the recipient is a non-filer i.e. who  has not furnished his return of income of preceding previous year  and has aggregate of TDS and TCS of Rs  50,000 or more. It is  proposed to exclude a person who is not required to furnish the  return of income for such previous year and who is notified by the  Central Government in the Official Gazette in this behalf. 

F.6 It is proposed to clarify that the amount of advance tax paid is  reduced only once for computing the interest payable u/s 234B in  the case of an updated return. 

F.7 It is proposed to extend taxability of the consideration (share  application money/ share premium) for shares exceeding the face  value of such shares to all investors including non-residents. 

F.8 It is proposed to enable prescription of a uniform methodology for  computing the value of perquisite with respect to accommodation  provided by employers to their employees. 

F.9 It is proposed to provide a time limit for an SEZ unit to bring the  proceeds from exports of goods or services into India. The filing of  income-tax return is also proposed to be made mandatory for  claiming deduction on export income. 

F.10 Due to changes in classification of non-banking financial  companies by the Reserve Bank of India, it is proposed to make  necessary amendments to align such classifications in the Act with  the same. 

F.11 It is proposed to clarify that for taxability under section 28 of the  Act as well for tax deduction at source under section 194R of the  Act, the benefit could also be in cash. 

F.12 It is proposed to make amendments relating to exemption provided to charitable trusts and institution to

∙ provide clarity on tax treatment on replenishment of corpus  and on repayment of loans/borrowings; 

∙ treat only 85 per cent of donation made to another trust as  application; 

∙ omit the redundant provisions related to rolling back of  exemption; 

∙ combine provisional and regular registration in some cases;  ∙ modify the scope of specified violation; 

∙ provide for payment of tax on assets if a trust does not apply  for exemption after getting provisional exemption and for re exemption after expiry of exemption; 

∙ align of time for furnishing of certain forms; 

∙ clarify that the time provided for furnishing return of income  for claiming exemption shall not include the time provided for  furnishing updated return. 

F.13 It is proposed to omit certain name-based funds from section 80G  of the Act, which provides for deduction of donation to such funds  from the income of the donor. 

F.14 It is proposed to provide that where refund is due to a person,  such refund shall be set off against existing demand, and if  proceedings for assessment or reassessment are pending in such  case, the refund due will be withheld by the Assessing Officer till  the date of assessment or reassessment.

G. OTHERS

G.1 It is proposed to omit section 88 and some of the clauses of  section 10 of the Act which are no longer in force. 

G.2 It is proposed to extend tax exemption to Specified Undertaking of  Unit Trust of India (SUUTI) till 30th September, 2023. It is also  proposed to enable the Central Government to notify the date of  vacation of office of administrator of SUUTI. 

G.3 It is proposed to decriminalize certain acts of omission of  liquidators under section 276A of the Act with effect from 1st April, 2023.