Changes in Income Tax - Finance Act 2024 | By CA Rahul Satija

Summary

In this video, CA Rahul Satiya discusses the major changes in the Income Tax and Finance Act, highlighting key amendments that will affect individuals and businesses. Key changes include increased tax rates on short-term capital gains, revised long-term capital gains exemptions, and updates to tax slabs under the new tax regime. The abolition of Angel Tax, higher deductions for salaried individuals, and changes to employer contributions to NPS are also covered. Additionally, reassessment timelines have been reduced, and the 'Dispute Resolution Scheme' is reintroduced. These significant amendments will impact taxpayers, with a detailed follow-up planned for further clarity.

Takeaways

• 😀 Short-term capital gains tax on listed securities, equity-oriented mutual funds, and business trust units has been increased from 15% to 20%.
• 😀 The exemption limit for long-term capital gains on listed shares, mutual funds, and business trust units has been raised from ₹1,00,000 to ₹1,25,000, and the tax rate has increased from 10% to 12.5%.
• 😀 Tax on other long-term capital assets (like property) has been reduced from 20% to 12.5%.
• 😀 The Angel Tax, which applied to private companies issuing shares at a premium above fair market value, has been abolished.
• 😀 The standard deduction for salaried individuals has been increased from ₹50,000 to ₹75,000.
• 😀 Employer contributions to the National Pension Scheme (NPS) now offer a higher deduction, increased from 10% to 14% of salary.
• 😀 The new tax regime’s updated slabs are: No tax up to ₹3 lakh, 5% from ₹3 lakh to ₹7 lakh, 10% from ₹7 lakh to ₹10 lakh, 15% from ₹10 lakh to ₹12 lakh, 20% from ₹12 lakh to ₹15 lakh, and 30% for incomes above ₹15 lakh.
• 😀 The deduction for family pensions under Section 57 has been increased from ₹15,000 to ₹25,000.
• 😀 TDS on e-commerce operators' payments has been increased from 1% to 2%.
• 😀 The tax rate for foreign companies has been reduced from 40% to 35%.
• 😀 The Equalization Levy, a tax on digital transactions, has been completely scrapped.
• 😀 The buyback tax, previously applicable to the company, is now taxable in the hands of the individual recipient.
• 😀 The time limit for reassessments has been reduced: 3 years and 3 months for incomes below ₹50 lakh, and 5 years and 3 months for incomes above ₹50 lakh.
• 😀 The 'Vivad se Vishwas' scheme has been reintroduced to resolve tax disputes in 2024.
• 😀 No changes to tax laws for CA Final students appearing in November 2024 or CA Intermediate students in September 2024 and January 2025.

Q & A

What is the change in the tax rate for short-term capital gains from listed securities, mutual funds, and equity-oriented assets?

The tax rate for short-term capital gains from listed securities, mutual funds, and equity-oriented assets has been increased from 15% to 20% under Section 111.

How has the limit for long-term capital gains on listed shares and mutual funds been altered?

The exemption limit for long-term capital gains on listed shares, equity-oriented mutual funds, and business trust units has been increased from ₹1,00,000 to ₹1,25,000, and the tax rate has been raised from 10% to 12.5% under Section 112A.

What is the new tax rate for long-term capital gains on assets other than listed shares and mutual funds?

The tax rate for long-term capital gains on assets other than those covered under Section 112A (such as property sales) has been reduced from 20% to 12.5%.

What is the significance of the abolition of Angel Tax?

The Angel Tax, which applied to additional amounts over the Fair Market Value (FMV) of shares issued by private limited companies, has been completely abolished. This means companies no longer need to pay tax on shares issued at a premium.

How has the standard deduction for salaried individuals been changed?

The standard deduction for salaried individuals has been increased from ₹50,000 to ₹75,000, providing more tax relief.

What is the change in the deduction for employer contributions to NPS?

The deduction limit for employer contributions to the National Pension Scheme (NPS) under Section 80CCD(2) has been increased from 10% to 14% of the salary.

What are the new tax slabs under the new tax regime?

The new tax slabs are as follows: - Up to ₹3 lakh: No tax - ₹3 lakh to ₹7 lakh: 5% - ₹7 lakh to ₹10 lakh: 10% - ₹10 lakh to ₹12 lakh: 15% - ₹12 lakh to ₹15 lakh: 20% - Above ₹15 lakh: 30%

How has the deduction for family pension been modified?

The deduction for family pension under Section 57 has been increased from ₹15,000 or 1/3rd of the family pension, whichever is lower, to ₹25,000.

What change has been made regarding TDS for e-commerce operators?

The TDS on payments made by e-commerce operators to sellers has been increased from 1% to 2%.

How has the tax rate for foreign companies been revised?

The tax rate for foreign companies has been reduced from 40% to 35%, providing significant relief.

What has happened to the Equalization Levy under the new Finance Act?

The Equalization Levy, which applied a 6% levy on specified services and a 2% levy on e-commerce operators, has been completely scrapped.

What change has been made regarding buybacks and their taxation?

In the case of buybacks, the tax liability is now shifted to the individual recipient instead of being taxed in the hands of the company.

What are the key changes to the re-assessment process under Section 147?

The time limit for re-assessment has been reduced to 3 years and 3 months for incomes up to ₹50 lakh. For incomes above ₹50 lakh, the time limit has been reduced to 5 years and 3 months.

What is the new update related to the 'Vivad Se Vishwas' scheme?

The 'Vivad Se Vishwas' dispute resolution scheme has been reintroduced in 2024, providing relief to taxpayers involved in litigation.

Are there any changes for CA Final and Intermediate students regarding these amendments?

There are no significant changes for students appearing in the CA Final or Intermediate exams in November 2024 or January 2025. These amendments do not affect those exam attempts.