MM TAX CLUB

Circular No. 04 of 2023 Dated: 5th April, 2023

Vide Finance Act, 2023, sub-section (lA) has been inserted in section 115BAC of the Income-tax Act, 1961 ( the Act) to provide for a new tax regime with effect from the assessment year beginning on or after the 1 st day of April, 2024. This regime applies to an individual or Hindu undivided family or association of persons [other than a cooperative society] or body of individuals, whether incorporated or not, or an artificial juridical person. Under this new regime, the income-tax in respect of the total income of the person shall be computed at the rates provided in sub-section (1 A) of section 115BAC, subject to certain conditions, including the condition that the person does not avail of specified exemptions and deductions.

The above mentioned new tax regime is the default tax regime applicable to all persons mentioned above. However, under sub-section (6) of section 115BAC of the Act, a person may exercise an option to opt out of this tax regime. A person not having income from business or profession can exercise this option every year.

            Representations have been received expressing concerns regarding tax to be deducted at source (TDS) on salary income of a person under section 192 of the Act as the deductor, being an employer, would not know if the person, being an employee, would opt out from taxation under sub-section (1 A) of section 115BAC ofthe Act or not.

            In order to avoid the genuine hardship in such cases, the Board, in exercise of powers conferred under section 119 of the Act, hereby directs that a deductor, being an employer, shall seek information from each of its employees having income under section 192 of the Act regarding their intended tax regime and each such employee shall intimate the same to the deductor, being his employer, regarding his intended tax regime for each year and upon intimation, the deductor shall compute his total income, and deduct tax at source thereon according to the option exercised.

            If intimation is not made by the employee, it shall be presumed that the employee continues to be in the default tax regime and has not exercised the option to opt out of the new tax regime. Accordingly, in such a case, the employer shall deduct tax at source, on income under section 192 of the Act, in accordance with the rates provided under sub-section (lA) of section 115BAC of the Act.

            It is also clarified that the intimation would not amount to exercising option in terms of sub-section (6) of section 115BAC of the Act and the person shall be required to do so separately in accordance with the provisions of the sub-section.

            This circular is in supersession of Circular No. Cl of2020 dated 13.04.2020 and shall be applicable for TDS during the financial year 2023-24 and subsequent years.

More than Rs. 40,700 crore sanctioned to over 1,80,630 accounts under Stand-Up India Scheme in 7 years

Stand-Up India Scheme is an important milestone in promoting entrepreneurship among SC, ST and women: Finance Minister Smt. Nirmala Sitharaman

Stand-Up India Scheme instrumental in improving standards of living for entrepreneurs, their employees and their families: MoS Finance Dr Bhagwat Kisanrao Karad

Stand up India Scheme was launched on 5th April 2016 to promote entrepreneurship at grassroot level
focusing on economic empowerment and job creation. This scheme has been extended up to the year 2025.
Recognising the challenges that energetic, enthusiastic, and aspiring SC, ST and women entrepreneurs may
face many challenges in converting their dream to reality, Stand-Up India was launched to promote
entrepreneurship amongst women, Scheduled Castes (SC) & Scheduled Tribes (ST) categories, to help them
in starting a greenfield enterprise in manufacturing, services or the trading sector and activities allied to
agriculture.
On the occasion, Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman said, “It is a matter of
pride and satisfaction for me to note that more than 1.8 lakh women and SC/ST entrepreneurs have been
sanctioned loans for more than Rs. 40,600 crore.”
“The scheme has created an eco-system which facilitates and continues to provide a supportive environment
for setting up green field enterprises through access to loans from bank branches of all Scheduled Commercial
Banks. Stand-Up India Scheme has proved to be an important milestone in promoting entrepreneurship among
SC, ST and women,” the Finance Minister said on the 7th anniversary of SUPI Scheme.
Smt. Sitharaman said that Stand-up India Scheme has touched numerous lives by ensuring access to hassle-
free affordable credit to the unserved/underserved segment of entrepreneurs. The Finance Minister said that
the scheme has provided wings to aspiring entrepreneurs to showcase their entrepreneurial acumen and the
potential entrepreneurs hold in driving economic growth and building a strong ecosystem by being job
creators is immense.
On the 7th anniversary of the Stand-Up India Scheme, Union Minister of State for Finance Dr Bhagwat
Kisanrao Karad said, "Stand-up India scheme is based on the third pillar of National Mission for Financial Inclusion namely “Funding the unfunded”. Scheme has ensured availability of seamless credit flow from branches of Schedule Commercial Banks to SC/ST and women entrepreneurs. Scheme has been instrumental in improving the standards of living for entrepreneurs, their employees and their families."
Dr Karad said, "More than 1.8 lakh entrepreneurs have benefitted from this scheme during past seven years." "It is also a matter of immense pleasure for me that more than 80% of loans given under this scheme have been provided to women," Dr Karad added.
As we celebrate the seventh anniversary of Stand Up India Scheme (SUPI), let us glance at the features and achievement of this Scheme.
 

The purpose of Stand-Up India is to:

promote entrepreneurship amongst women, SC & ST category;
Provide loans for greenfield enterprises in manufacturing, services or the trading sector and activities allied to agriculture;
facilitate bank loans between Rs.10 lakh and Rs.100 lakh to at least one Scheduled Caste/ Scheduled
Tribe borrower and at least one woman borrower per bank branch of Scheduled Commercial Banks.

Why Stand-Up India?
The Stand-Up India scheme is designed to address the challenges faced by SC, ST and women entrepreneurs in setting up enterprises, obtaining loans and other support needed from time to time for succeeding in business. The scheme therefore endeavors to create an ecosystem which facilitates and continues to provide a supportive environment to the target segments in doing business. The scheme aims to encourage all bank branches in extending loans to borrowers from SC, ST and women in setting up their own greenfield enterprise. The desiring applicants can apply under the scheme:
 

Directly at the branch or,
Through Stand-Up India Portal (www.standupmitra.in) or,
Through the Lead District Manager (LDM).
 

Who all are eligible for a loan?

SC/ST and/or women entrepreneurs, above 18 years of age;
Loans under the scheme are available for only green field projects. Green field signifies, in this context,
the first time venture of the beneficiary in manufacturing, services or the trading sector and activities allied to agriculture;
In case of non-individual enterprises, 51% of the shareholding and controlling stake should be held by either SC/ST and/or Women Entrepreneur;
Borrowers should not be in default to any bank/financial institution;
The Scheme envisages ‘up to 15%’ margin money which can be provided in convergence with eligible Central/State schemes. In any case, the borrower shall be required to bring in minimum of 10 % of the project cost as own contribution.

Amendment to section 10(26AAA) of the Income-tax Act, 1961 by the Finance Act, 2023

Following the Hon’ble Supreme Court’s decision in Writ Petition (C) No. 59/2013 with 1283/2021, certain amendments have been made in clause (26AAA) of section 10 of the Income-tax Act, 1961 by the Finance Act, 2023.

For the purposes of removal of doubts, it is hereby clarified that the term “Sikkimese” defined for the purposes of the said clause, is only for the purposes of the Income-tax Act, 1961, and not for any other purpose.

The Finance Ministry in its FY24 Budget has allocated a token Rs 10 crore for establishing attached offices for the 16th Finance Commission

The finance ministry on Monday told the Lok Sabha that it was going to constitute the 16th Finance Commission (SFC) in the current calendar year. The recommendations of the SFC will be for five years starting FY27.

Replying to a question by Ambedkar Nagar MP Ritesh Pandey, Minister of State for the Finance Ministry Pankaj Chaudhury answered in the affirmative. “The terms of reference and other modalities are governed under Article 280 of the Constitution,” Chaudhury said, without answering if the government is considering taking up the matter of the North-South divide with respect to the devolution of taxes and if the 16th Finance Commission will work in tandem with the GST council.

The Finance Ministry in its FY24 Budget has allocated a token Rs 10 crore for establishing attached offices for the 16th Finance Commission.

The Finance Commission is a constitutionally mandated body established once every five years to devise a formula for distributing net tax proceeds between the Centre and the states as well as among states and local bodies. The 15th Finance Commission headed by NK Singh was set up in November 2017 with a mandate to submit its report in two years for a period of five years. However, due to the Covid pandemic, the FFC submitted a standalone report for FY21 and another report for a period of five years ending FY26. The FFC marginally reduced the un-tied share of states in net central taxes to 41 per cent from 42 per cent, as Jammu and Kashmir was split into two Union Territories.

D K Srivastava, member of the 12th Finance Commission and chief policy adviser at the EY India, said there may be references to the target for the overall size of the Indian economy and how states can be facilitated to achieve that target. “India’s tax GDP ratio is languishing at a low level. The government might ask the commission how to uplift the overall tax-GDP ratio. The commission may also be asked how to reform the GST and whether some states would still require compensation,” he added.

CBDT Press Release dated 3^rd April, 2023

Direct Tax collections (provisional) for the Financial Year (FY) 2022-23 exceed the Union Budget Estimates by ₹2.41 lakh crore i.e. by 16.97%

Direct Tax collections (provisional) for the FY 2022-23 exceed Revised Estimates by 0.69%

Gross Direct Tax collections (provisional) for the FY 2022-23 stand at Rs. 19.68 lakh crore registering a growth of 20.33%

Net Direct Tax collections (provisional) for the FY 2022-23 stand at Rs. 16.61 lakh crore marking a growth of 17.63%

Refunds aggregating to Rs. 3,07,352 crore have been issued in FY 2022-23

The provisional figures of Direct Tax collections for the Financial Year (FY) 2022-23 show that Net collections are at Rs. 16.61 lakh crore, compared to Rs.14.12 lakh crore in the preceding Financial Year i.e. FY 2021-22, representing an increase of 17.63%.

The Budget Estimates (BE) for Direct Tax revenue in the Union Budget for FY 2022-23 were fixed at Rs.14.20 lakh crore which were revised and the Revised Estimates (RE) were fixed at Rs.16.50 lakh crore. The provisional Direct Tax collections (net of the refunds) have exceeded the BE by 16.97% and RE by 0.69 %.

The Gross collection (provisional) of Direct Taxes (before adjusting for refunds) for the FY 2022-23 stands at Rs. 19.68 lakh crore showing a growth of 20.33 % over the gross collection of Rs.16.36 lakh crore in FY 2021-22.

The gross Corporate Tax collection (provisional) in FY 2022-23 is at Rs.10,04,118 crore and has shown a growth of 16.91% over the gross corporate tax collection of Rs.8,58,849 crore of the preceding year.

The gross Personal Income Tax collection (including STT) (provisional) in FY 2022-23 is at Rs.9,60,764 crore and has shown a growth of 24.23% over the gross Personal Income Tax collection (including STT) of Rs.7,73,389 crore of the preceding year.

Refunds of Rs.3,07,352 crore have been issued in the FY 2022-23 showing an increase of 37.42 % over the refunds of Rs.2,23,658 crore issued in FY 2021-22.