MM TAX CLUB

Scheme to provide one-month wage to all persons newly entering the workforce in all formal sectors expected to benefit 210 lakh youth

scheme to incentivize additional employment in the manufacturing sector linked to the employment of first-time employees expected to benefit 30 lakh youth

employer-focused scheme covering additional employment in all sectors expected to incentivize additional employment of 50 lakh persons

The Government will implement 3 schemes for ‘Employment Linked Incentive’, as part of the Prime Minister’s package. These will be based on enrolment in the EPFO, and focus on recognition of first-time employees, and support to employees and employers. This was announced by Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman while presenting the Union Budget 2024-25 in Parliament today. The three schemes to be implemented are as below:  

Scheme A: First Timers

The Union Finance Minister said that this scheme will provide one-month wage to all persons newly entering the workforce in all formal sectors. The direct benefit transfer of one-month salary in 3 instalments to first-time employees, as registered in the EPFO, will be up to ` 15,000. The eligibility limit will be a salary of ` 1 lakh per month. “The scheme is expected to benefit 210 lakh youth”, she said.

Scheme B: Job Creation in manufacturing

The Union Finance Minister stated that this scheme will incentivize additional employment in the manufacturing sector, linked to the employment of first-time employees. An incentive will be provided at specified scale directly both to the employee and the employer with respect to their EPFO contribution in the first 4 years of employment. Smt. Nirmala Sitharaman stated that the scheme is expected to benefit 30 lakh youth entering employment and their employers.

Scheme C: Support to employers

This employer-focused scheme will cover additional employment in all sectors, said the Union Finance Minister. All additional employment within a salary of ` 1 lakh per month will be counted. The Government will reimburse to employers up to ` 3,000 per month for 2 years towards their EPFO contribution for each additional employee. “The scheme is expected to incentivize additional employment of 50 lakh persons”, she added. 

Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman in her Budget speech today said that GST has decreased the tax incidence on common man, reduced compliance burden and logistics cost for trade and industry. While presenting the Union Budget 2024-25 in Parliament today, the Minister termed GST as a success of vast proportions.

In order to facilitate trade, several amendments have been made to the GST Laws. As part of this, Extra Neutral Alcohol used in manufacture of liquor will be kept out of the purview of the central tax. Similar amendments are also proposed in IGST and UTGST Act. Further, newly added Section 11A will empower the government to regularize non-levy or short levy of central tax due to any general practice prevalent in trade.

The time limit to avail input tax credit has been relaxed by inserting two new subsections to Section 16 of CGST. The amended Act will also provide a common time limit for issuance of demand notices and orders. Also, the time limit for tax payers to avail the benefit of reduced penalty, by paying demanded tax along with interest is increased from 30 days to 60 days.

In order to further facilitate trade, the maximum amount of pre-deposit for filing appeal with the Appellate Authority is being reduced from Rs.25 crore of central tax to Rs 20 crore of central tax. The amount of pre-deposit for filing appeal with the Appellate Tribunal is being reduced from 20% with a maximum amount of Rs. 50 crore of central tax to 10 % with a maximum of Rs. 20 crore of central tax. Besides, the time limit for filing appeals before the Appellate Tribunal is being modified with effect from 1^st August, 2024 to avoid the appeals from getting time barred, on account of Appellate Tribunal not coming into operation.

Apart from these, several other changes such as empowering government to notify GST Appellate Tribunal to handle anti-profiteering cases have been brought to ease trade.

Pointing out the success of GST, Finance Minister also said that to multiply the benefits of GST, the tax structure have been further simplified and rationalized and expanded to remaining sectors.

COMPREHENSIVE REVIEW OF THE INCOME-TAX ACT, 1961 IN SIX MONTHS

ALL SERVICES UNDER GST, CUSTOMS AND INCOME TAX TO BE DIGITALIZED AND MADE PAPER-LESS IN TWO YEARS

VIVAD SE VISHWAS SCHEME, 2024 TO RESOLVE PENDING APPEALS ON INCOME-TAX DISPUTE
 

While presenting the Union Budget 2024-2025 in Parliament today, the Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman said the Budget with its focus on the nine identified priorities expedites the journey towards the goal of Viksit Bharat.

Emphasizing that it has been a consistent endeavour of the government to simplify taxation, improve tax payer services and reduce litigation, the Finance Minister observed that it has been appreciated by the tax payers. 58 per cent of corporate tax came from the simplified tax regime in financial year 2022-23 and more than two-thirds have availed the new personal income tax regime in the last fiscal year as per available data, she highlighted.

Pursuing the agenda of simplifying taxation, the Union Finance Minister outlined a number of measures in her Budget speech. Announcing a comprehensive review of the Income-tax Act, 1961 in six months to make it concise and lucid, the Smt. Nirmala Sitharaman said, “This will provide tax certainty to the tax payers reducing disputes and litigation.”

In another measure to reduce tax-uncertainty and disputes, a thorough simplification of reassessment has been proposed. Outlining the proposal, the Finance Minister said that an assessment hereinafter can be reopened beyond three years from the end of the assessment year only if the escaped income is ₹ 50 lakh or more, up to a maximum period of five years from the end of the assessment year. The Finance Minister announced that in search cases, a time limit of six years before the year of search, as against the existing time limit of ten years.

Initiating tax simplification process for Charities and of TDS in the Finance Bill, Smt. Nirmala Sitharaman proposed that the two tax exemption regimes for charities are to be merged into one. The 5 per cent TDS rate on many payments is being merged into the 2 per cent TDS rate and the 20 per cent TDS rate on repurchase of units by mutual funds or UTI is being withdrawn. TDS rate on e-commerce operators is proposed to be reduced from one to 0.1 per cent. Moreover, credit of TCS is proposed to be given in the TDS to be deducted on salary. Further, decriminalization of delay for payment of TDS up to the due date of filing statement for the same, the Union Minister added.

Highlighting the digitalization of all the major tax payer services under GST and most services under Customs and Income tax, Smt Nirmala Sitharaman announced that all the remaining services including rectification and order giving effect to appellate orders will also be digitalized and made paper-less over the next two years.

Acknowledging the good results visible at various appellate fora, the Union Finance Minister emphasized that litigation and appeals will continue to receive highest attention of the government. Pursuing this objective, Vivad se Vishwas Scheme, 2024 for resolution of certain income tax disputes pending in appeal has been announced in the Budget speech. Further, it has been proposed to increase monetary limits for filing appeals related to direct taxes, excise and service tax in the Tax Tribunals, High Courts and Supreme Court to ₹ 60 lakh, ₹ 2 crore and ₹ 5 crore respectively. Focusing on reducing litigation and ensure certainty in international taxation, the scope of safe harbor rules will be expanded along with streamlining the transfer pricing assessment procedure, the Finance Minister added.

Speaking on deepening the tax base, Smt. Sitharaman announced two key measures. First, Security Transactions Tax on futures and options of securities is proposed to be increased to 0.02 per cent and 0.1 per cent respectively. Second, taxing of income received on buy back of shares has been proposed as a measure of equity, the Minister added.

Elaborating on the implication of these proposals, Smt Sitharaman concluded that revenue of about ₹ 37,000 crore – ₹ 29,000 crore in direct taxes and ₹ 8,000 crore in indirect taxes – will be forgone while revenue of about ₹ 30,000 crore rupees will be additionally mobilized. Thus, the total revenue forgone is about ₹ 7,000 crore annually.

Simplification and Rationalization of the Capital Gains Tax was one of the key focus areas of the Union Budget 2024-25, presented by the Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman in the Parliament today.

As proposed by Smt. Sitharaman, short term gains on certain financial assets shall henceforth attract a tax rate of 20 per cent, while that on all other financial assets and all
non-financial assets shall continue to attract the applicable tax rate.

Finance Minister proposed that the long term gains on all financial and non-financial assets will attract a tax rate of 12.5 per cent. For the benefit of the lower and middle-income classes, she proposed to increase the limit of exemption of capital gains on certain financial assets from ₹ 1lakh to ₹ 1.25 lakh per year.

She stated that the listed financial assets held for more than a year will be classified as long term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term.

Finance Minister added that the unlisted bonds and debentures, debt mutual funds and market linked debentures, irrespective of holding period, will attract tax on capital gains at applicable rates.

CORPORATE TAX RATE ON FOREIGN COMPANIES REDUCED TO 35 PER CENT

FINANCIAL SECTOR VISION AND STRATEGY DOCUMENT WILL BE ROLLED OUT

TAXONOMY FOR CLIMATE FINANCE TO BE DEVELOPED

RULES AND REGULATIONS FOR FOREIGN DIRECT INVESTMENT AND OVERSEAS INVESTMENTS WILL BE SIMPLIFIED

SIMPLER TAX REGIME FOR FOREIGN SHIPPING COMPANIES OPERATING DOMESTIC CRUISES

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman proposed to abolish ‘angel tax’ for all classes of investors, while presenting the Union Budget 2024-25 in Parliament today. She added that this move is aimed to bolster the Indian start-up eco-system, boost the entrepreneurial spirit and support innovation.

The Minister also proposed to reduce the corporate tax rate on foreign companies from 40 to 35 per cent to attract foreign capital for India’s development needs.

Smt. Sitharaman announced to bring out a financial sector vision and strategy document to meet financing needs of the economy and prepare the sector in terms of size, capacity and skills. She added that this would set the agenda for the upcoming five years and guide the work of the government, regulators, financial institutions and market participants.

The Minister further proposed to develop taxonomy for climate finance. This is expected to enhance the availability of capital for climate adaptation and mitigation, which can help achieve India’s climate commitments and green transition.

“Our government will seek the required legislative approval for providing an efficient and flexible mode for financing leasing of aircrafts and ships, and pooled funds of private equity through a ‘variable company structure’,” added Smt. Sitharaman.

To facilitate foreign direct investments, nudge prioritization, and promote opportunities for using Indian Rupee as a currency for overseas investments, the Finance Minister announced that the rules and regulations for Foreign Direct Investment and Overseas Investments will be simplified.

To promote the development of diamond cutting and polishing industry which employs a large number of skilled workers, the Finance Minister proposed to provide for safe harbor rates for foreign mining companies selling raw diamonds.

Further, Smt. Sitharaman proposed a simpler tax regime for foreign shipping companies operating domestic cruises in the country. This will help in realizing the tremendous potential of cruise tourism and give a fillip to this employment generating industry in the country.