*FINANCE BILL-2024*
*A bird eye view of Some Important Proposals in Income Tax*
- No Change in Old Regime of Individual Tax
- New Tax Slab in New Tax Regime
- Treatment of Buy Back of shares
Gain / Profit on buy back of Shares (on or after 1-10-2024) to be taxable in the hands of Shareholder in place of Company – (New section 2(22)(f) and exemption u/s 10(34A) withdrawn wef 1-10- and corresponding change in section 46A
Now the Gain shall be treated as dividend in the hands of shareholder in place of Capital Gain as earlier.
No deduction for expenses shall be available against such dividend income while determining the income from other sources.
The cost of acquisition of the shares which have been bought back would generate a capital loss in the hands of the shareholder as these assets have been extinguished. Therefore when the shareholder has any other capital gain from sale of shares or otherwise subsequently, he would be entitled to claim his original cost of acquisition of all the shares
- Change in definition of Short term capital assets- from 36 months to 24 months (2(42A).
- Increase of Standard Deduction from 50K to 75K – only in case of new regime.
- W.e.f. 1-4-25, any income from letting out of a residential house or a part of the house by the owner shall not be chargeable under the head “Profits and gains of business or profession” and shall be chargeable under the head “Income from house property- Amendment in section 28
- W.e.f. 1-4-25, Change / Increase in the remuneration allowed to Partners of a partnership firm. (change in section 40(b))
- *Major Changes Capital Gains*
- Indexation benefit withdrawn from Long term capital assets wef 23-7-24
- Tax rates on LTCG 12.5% from 20% (other than Listed securities)
- Tax rates on LTCG 12.5% from 10% (for Listed securities)
- Tax rates on STCG on Listed securities 20% from 15%
- Only two holding period 12 month (Listed securities) and 24 months (all other assets)
- Exemption u/s 112A increased to 125000/- from 100000/-
- Section 194H- TDS on commission to be deducted @2% in place 5% wef 1-10-2024
- TDS rates has been reduced in various sections
- New TDS Section wef AY 25-26, u/s 194T- TDS is required to be deducted by FIRM @10% on payment of salary/ remuneration/ commission/ bonus/ interest paid to partner.
- A new Vivad se Vishwas scheme has been introduced
*Compiled by*
*CA Sohrabh Jindal*