Budget 2024: Dhak, dhak Viksit

Several phrases entered the lexicon as Finance Minister Nirmala Sitharaman presented the interim budget on Thursday Headlining her presentation was the vision for Viksit developed Bharat by 2047 In pursuit of this there was a fourpronged focus on Yuva Mahila Anandatta and Garib There has been a substantial increase in the average real income of people by 50 per cent liberating over 25 crore individuals from multidimensional povertyThe FM has tabled the Interim Budget Vote on Account and certain key aspects that need to be refreshed and updated in the absence of fresh proposals The reasonable tax ratesmdashcorporates at 22 per cent professionals with thresholds of Rs 75 lakh small businesses with threshold revenue of R3 crore being taxed on a presumptive basismdasheffectively is the platform on which the lsquoReform Perform and Transformrsquo is happeningDoubts put to restThe technical inclusion of the amendment in regard to travel agents requiring to collect TCS at 20 per cent on cost of overseas tours exceeding R7 lakh per person per financial year puts to rest any questions about its applicability This amendment has confirmed the tax payerrsquos apprehensionsAs per amendment in the Finance Act 2023 travel agents booking foreign tours were collecting 20 per cent TCS on every booking irrespective of the cost of the foreign tour However the CBDT clarified by circular No 10 of 2023 that TCS at 5 per cent to be collected up to R7 lakh and 20 per cent on travel exceeding R7 lakh but there was no such amendment in the ActThe said amendment has been proposed to be inserted vide Finance Bill 2024 There were further clarifications on collecting TCS by seller provided by the aforesaid circular which has now been amended in the provisions of Section 206C of the IT Act 1962Demands dueAlmost one crore assessees have faced small demands for years since the enactment of the Income Tax Act 1962 These demands created unnecessary hardships regarding their payment or adjustment against refunds of other assessment years This led to unnecessary paperwork and monotonous proceduresTo improve tax payer service it is proposed to withdraw a large number of petty nonverified nonreconciled or disputed direct tax demands up to R25000 till FY10 and R10000 for FY 201011 to 201415 The outstanding tax demands were creating a hurdle in refunds issuance to taxpayers as the Income Tax Department was not processing complete refunds for the ongoing assessment year if the taxpayers had pending demands from previous yearsWe may need more clarity in the following scenarios1 What will be the position where the taxpayer has paid due to these demands prior to the FMrsquos speech Will the refunds be extended If yes then what will be the procedure for the claim2 What happens in the case of taxpayersrsquo current refunds being adjusted against their old demands resulting in lower adjusted refunds prior to such announcements Will these taxpayers get such adjusted refunds along with interest on these adjustments3 Where current outstanding demands were higher than R25000 or R10000 and have now been reduced by adjusting refunds to less than R25000 or R10000 will this also be withdrawn or will people be required to pay What will be the scenario where such notices have been received by the assessees and there has been no revert4 Is the limit of Rs 10000 or Rs 25000 per year or in aggregateLoyal touchWe need to train our lens on the loyalty provisions The startups designated by the InterMinisterial Board of Certification can avail tax deductions on their income for a period of three out of 10 years This provision originally having a sunset clause on March 31 2024 has now been proposed to be extended by a year to March 31 2025Entities set up in Gandhinagar GIFT City registered as lsquoIFSC unitrsquo for global business activities entitled to tax deductions on their income for a period of 10 out of 15 years have now had these exemptions extended for a year up to March 31 2025 Through corporates and award shows the Gift City continues to be the magnet for global connectionFurther a corpus of Rs 1 lakh crore is being proposed to be allocated for scaling up research and significant innovation in sunrise domains which will be established with 50year interest free loan for innovation and startups programmes that combine the power of youth and technologyConfusion continuesThen there are aspects where we expected clarity but instead have some confusion There has been no clarification on non resident status Post COVID19 there are global corporates with employees under the Work from Home model This has created confusion about their residential status in India There is no clear definition of ldquofor the purpose of employmentrdquo in the provisions of Section 6 of the IT Act 1962 One expected clarification of the term ldquoemploymentrdquo which has not happenedAn increase in the number of medical cases means a nonresident may be needed to be present in India for a year or two There was some expectation of clarification of status of such individuals and for them to be considered as nonresidents similar to those during lockdown in FY 202021 where Form NR was needed to be submitted to consider the status as NonResidentOverall it appears that the ship called India is sailing towards Amrit Kaal yet it would be unrealistic to think that it will not have to weather storms and humongous waves on the way to its ultimate destinationDr Mitil Chokshi senior partner Chokshi amp Chokshi is a chartered accountant