During the year of the Central Election, Our present government has come up with an Interim Budget for FY 2024-25. All the financial schemes or Plans proposed in the Interim Budget are temporary until the final budget is presented by the new Government post elections.
The Hon’ble Finance minister has presented the Interim budget on 1st Feb, 2024. The Interim Budget 2024 was focused on youth and women empowerment, while maintaining fiscal consolidation and continuing capex. The Budget came up with certain amendments and reliefs under Direct and Indirect Taxes as well.
This article contains gist of amendments proposed and reliefs granted in Direct and Indirect Taxes in Interim Budget, 2024.
1. Income Tax
1.1 Removal of Tax Demands upto INR 25,000 and INR 10,000
- From FY 2022-23 onwards, it has been seen in most of the cases that Income Tax Portal has is now showing outstanding demands of earlier years (much prior to the years when Income tax return was started filing online).
- Assessee has no information or documents for such years and the refund claimed in ITR of FY 2022-23 is getting automatically adjusted to such outstanding demands.
- Considering the genuine hardship to the taxpayers, the Budget has proposed to withdraw all direct tax demands upto INR 25000 till 2009-10 and upto INR 10,000 for year 2010-11 to 2014-15.
- Demands from 2015-16 onwards will be handled as per regular provisions.
- As per hon’ble Finance Minister, this move is expected to benefit an estimated 1 Crore taxpayers who are still facing issues in getting Income tax refunds due to these tax demands.
1.2 Amendment in TCS Rates for remittance under Liberalised Remittance Scheme (LRS)
The Finance Bill, 2024 has proposed following amendment in Section 206C of Income Tax Act:
- Change in TCS Rate of remittance made under LRS for less than INR 7 Lacs
| Purpose of Remittance | Amount of remittance | Existing TCS Rate | Proposed TCS Rate | Date of Applicability |
| Remittance under LRSOther than Medical or Educational Purpose | Less than INR 7 Lacs | 20% | NIL | Retrospectively from 1st July, 2023 |
| Remittance for Overseas Tour program package | Less than INR 7 Lacs | 20% | 5% | Retrospectively from 1st July, 2023 |
| Remittance for Education or Medical Treatment purpose | Less than INR 7 Lacs | NIL | NIL | No Change |
- Change in TCS Rate of remittance made under LRS of INR 7 Lacs or more
| Purpose of Remittance | Amount of remittance | Existing TCS Rate | Proposed TCS Rate | Date of Applicability |
| Remittance under LRSOther than Medical or Educational Purpose | Less than INR 7 Lacs | 20% | 20% | No change |
| Remittance for Overseas Tour program package | Less than INR 7 Lacs | 20% | 20% | No Change |
| Remittance for Education or Medical Treatment purpose | Less than INR 7 Lacs | 5% | 5% | No Change |
1.3 Extension of Sunset dates for Tax Holidays
The Budget has proposed to extend following Sunset Dates:
| Section | Nature of Entity | Existing sunset date for Incorporation | Proposed Sunset date for Incorporation |
| 80-IAC | incorporation of new eligible start-ups | 1st April, 2024 | 1st April, 2025 |
| 80-IA | Investing in eligible infrastructure entities by notified Sovereign Wealth Fund and provident funds | 31st March, 2024 | 31st March, 2025 |
| 10(4D), 10(4F) and 10(23FE) | Investment division of an IFSC Banking Unit as a specified fund. Exemption for income on royalty or interest for a nonresident paid by an aircraft or ship leasing unit in IFSC, if such unit commences operations by 31 March 2025.Deduction for income from the transfer of aircraft or ship leased by an IFSC unit if such unit commences operations by 31 March 2025. | 31st March, 2024 | 31st March, 2025 |
1.4 Extension of deadline for introducing faceless schemes
Further, the deadline to issue directions for introduction of faceless schemes for transfer pricing matters, international taxation matters before the Dispute Resolution Panel and appeals before tax tribunals has been extended from 31 March 2024 to 31 March 2025.
2. Goods and Service Tax
2.1 Mandatory applicability of provisions of Input Service Distributor
- 52nd GST Council meeting recommended to make provisions of Input Service Distributors mandatory.
- In line with such recommendation, Union Budget, 2024 has proposed to amend provisions of Section 2(61) and Section 20 of Central Goods and Service Tax Act, 2017 to make provisions of ISD mandatory.
- Now any office which receives tax invoices for input services for or on behalf of distinct persons then such office shall be required to be registered as Input Service Distributor and shall distribute the input tax credit in respect of such invoices.
- Further, as per proposed amendment, provisions of ISD also shall apply to common input services liable to reverse charge.
- Amendments shall come into effect from date to notified post enactment of the Finance Bill, 2024. However, 52nd GST Council meeting mentioned that the amendments would be made applicable prospectively
2.2 Penalty procedure for non-registration of Machinery under Section 148 of CGST Act
- Vide Notification No. 30/2023 – Central Tax dated July 31, 2023, the CBIC notified list of persons, e.g., manufactures of Tobacco, Pan masala etc. who are required to furnish details of machineries, filing special monthly returns and penal provisions for failure to register or comply.
- Provisions of registration of machinery were notified earlier. Now, budget has proposed to introduce Section 122A to CGST Act to prescribe Penalty for failure to register certain machines used in manufacture of goods as per special procedure.
- As per Section 122A, any person who fails to comply with any special procedure relating to registration of machines shall be liable to pay following amount of penalty, in addition to any penalty that is paid or is payable by him under Chapter XV or any other provisions of this Chapter, INR 1,00,000 for every machine not so registered.
- Further, In addition to the above mentioned penalty, every unregistered machine shall be liable for seizure and confiscation.
- However, such machinery shall not be confiscated where:
- the imposed penalty is paid, and
- the registration of such machine is made as per GST law within 3 days of the receipt of communication of the order of penalty.
