The Malad Chamber of Tax Consultants have submitted a Pre-Budget Memorandum prior to the Union Budget 2024-2025 to the Finance Minister Nirmala Sitharaman, Finance Secretary Vivek Joshi and the Chairman of Central Board of Direct Taxes ( CBDT ), Nitin Gupta.
The memorandum contains the following proposals for revision of the existing Income Tax Laws.
I. Rates of Tax
Section 4: Charge of Income Tax
The Malad Chamber of Tax Consultants recommends revisiting the income tax rates for the fiscal year 2024-2025 to provide relief to middle-income earners and enhance compliance. Simplifying tax rates and adjusting slabs can help in broadening the tax base, improving revenue collection, and ensuring equitable taxation.
II. Revenue Generation
1. Section 44AA – Expansion of Notified Profession & Rule 6F
To bolster revenue generation, it is proposed that the list of notified professions under Rule 6F be expanded. This would include emerging professions, ensuring a broader capture of taxable income and reducing the chances of income escaping the tax net.
2. Section 44AD: Special Provision for Computing Profits and Gains of Business on Presumptive Basis
Section 44AD should be refined to adjust the turnover threshold and presumptive income rates. This will make the presumptive taxation scheme more inclusive for small businesses, encouraging them to declare their income accurately and comply with tax regulations.
3. Section 44ADA: Special Provision for Computing Profits and Gains of Profession on Presumptive Basis
For professionals, Section 44ADA needs modifications to simplify the presumptive taxation framework. By reducing administrative burdens and clarifying provisions, compliance can be improved, making it easier for professionals to adhere to tax laws.
4. Section 44AE: Special Provision for Computing Profits and Gains of Business of Plying, Hiring, or Leasing Goods Carriages
The transport sector can benefit from a review of the presumptive income provisions under Section 44AE. Adjusting these to reflect current economic conditions will enhance compliance and ensure fair taxation of businesses in this sector.
III. Make in India – Incentives to Indian Manufacturing
Section 115BAB: Determination of Tax in Certain Special Cases
To support the “Make in India” initiative, Section 115BAB suggests tax incentives for new manufacturing companies. By offering lower tax rates for these entities, investment in the manufacturing sector can be stimulated, driving economic growth and job creation.
IV. Clarificatory / Rectificatory / Harmonious Amendments
1. Section 6: Residence in India
Clarifications are needed under Section 6 to address ambiguities in determining an individual’s residential status for tax purposes. Clearer guidelines will prevent disputes and ensure consistent application of the law.
2. Section 54: Profit on Sale of Property Used for Residence
Amendments to Section 54 are recommended to provide clearer guidelines on exemptions for profits from the sale of residential property. This will help taxpayers understand their entitlements and encourage investment in real estate.
3. Section 54F: Capital Gain on Transfer of Certain Capital Assets Not to be Charged in Case of Investment in Residential House
Section 54F should be amended to streamline exemptions for capital gains reinvested in residential property. This will foster reinvestment in real estate, supporting a robust property market and potentially increasing tax revenues from related activities.
4. Section 269SS: Explanation (iii) – Requirements as to the Mode of Acceptance Payment or Repayment in Certain Cases to Counteract Evasion of Tax
Stricter rules under Section 269SS are proposed for the mode of acceptance and repayment of specified loans and deposits. This measure aims to curb tax evasion and promote transparency in financial transactions.
V. Simplification / Ease of Doing Business / Relief to Taxpayers
1. Section 54EC: Capital Gain Not to be Charged on Investment in Certain Bonds
Section 54EC suggests clearer guidelines for investments in specified bonds to provide relief to taxpayers. This will encourage informed investment decisions and promote a culture of savings and investment.
2. Section 10(23C) and Section 12A
Simplifying compliance for charitable organizations under Sections 10(23C) and 12A is essential. Proposed amendments aim to make the regulatory environment more conducive, enhancing the ability of these organizations to contribute to social causes.
3. Section 10(23C) and Section 12AA or 12AB
Further simplification of the registration and compliance processes for trusts and institutions under Sections 12AA and 12AB is recommended. This will streamline administrative procedures and reduce the burden on these entities.
4. Section 43B: Certain Deductions to be Only on Actual Payment
Section 43B proposes that certain deductions be allowed only on actual payment. This ensures better cash flow management for businesses and improves tax compliance.
5. Section 44AB: Audit of Accounts of Certain Persons Carrying on Business or Profession
Adjusting the audit thresholds under Section 44AB will ease the compliance burden on smaller businesses and professionals, fostering a more favorable business environment.
6. Section 55A: Reference to Valuation Officer
Refinements to Section 55A are suggested to ensure fairer assessments of property values for tax purposes, improving the accuracy and fairness of tax administration.
7. Section 57: Deductions
Clarifications to Section 57 regarding eligible deductions will simplify the tax filing process, making it easier for taxpayers to comply and ensuring fairer tax outcomes.
8. Section 71: Set Off of Loss from One Head Against Income from Another
Allowing broader set-offs of losses against various income heads under Section 71 will provide relief to taxpayers, promoting economic resilience and fairness in the tax system.
9. Section 80AC: Deduction Not to be Allowed Unless Return Furnished
To encourage timely tax filing, Section 80AC proposes that certain deductions be disallowed unless the return is filed on time. This promotes timely compliance and enhances tax administration efficiency.
10. Section 80D: Deduction in Respect of Health Insurance Premia
Increasing the deduction limits for health insurance premiums under Section 80D will encourage more individuals to invest in health insurance, improving public health security.
11. Section 80DDB: Deduction in Respect of Maintenance, Including Medical Treatment of a Dependent Who is a Person with Disability
Enhancing deduction limits under Section 80DDB for medical treatment of dependents with disabilities provides much-needed relief to taxpayers facing significant medical expenses.
12. Explanation (b) to Section 80U: Deduction in Case of a Person with Disability
Increasing the deduction for taxpayers with disabilities under Section 80U ensures better support and financial relief, promoting inclusivity and equity in the tax system.
13. Section 87A: Rebate of Income-Tax in Case of Certain Individuals
Increasing the rebate under Section 87A for low-income earners provides substantial relief and promotes equitable tax policies, benefiting those most in need.
14. Section 115BAC(3): Tax on Income of Individuals [and Hindu Undivided Family]
Revisions to Section 115BAC(3) aim to make the new tax regime more attractive by offering additional deductions and exemptions, encouraging more taxpayers to opt for this simplified regime.
15. Section 144B: Procedure for Assessment – Faceless Assessment
Enhancements to the faceless assessment procedure under Section 144B will improve transparency, efficiency, and fairness in tax assessments, ensuring quicker resolution of cases.
16. Section 194IC: Payment Under Specified Agreement
Clearer guidelines under Section 194IC for the taxation of payments under specified agreements will promote better compliance and understanding among taxpayers.
17. Section 194J: Fees for Professional or Technical Services
Refining the tax treatment of professional and technical service fees under Section 194J ensures equitable taxation and reduces potential disputes.
18. Section 139(5): Revision of Return of Income
Easing the process for revising income tax returns under Section 139(5) allows taxpayers to correct errors more efficiently, reducing administrative burdens and enhancing compliance.
19. Section 270A: Penalties Imposable
Rationalising penalty provisions under Section 270A ensures that penalties are fair and proportionate to the offences, encouraging better compliance and reducing litigation.
VI. Assessment Procedure / Compliances
1. Section 285BB: Annual Information Statement
Enhancements to the annual information statement under Section 285BB will ensure that taxpayers have access to comprehensive and accurate financial information, facilitating better compliance.
2. Section 206: Persons Deducting Tax to Furnish Prescribed Returns and/or Section 206CB – Processing of Statements of Tax Collected at Source
Streamlining the submission and processing of tax deduction and collection statements under Section 206 and Section 206CB will improve efficiency and accuracy in tax administration.
3. Section 44AB – Form 3CD – Clause 34 Rule 6G (2)
Simplifying compliance for businesses through changes to Form 3CD under Section 44AB will make it easier to meet audit requirements, reducing the burden on taxpayers.
4. Section 44AB – Form 3CA – Rule 6G(1)(a) / 3CB – 6G(1)(b))
Further simplification of audit forms under Section 44AB is recommended, ensuring that businesses can comply with audit regulations with minimal difficulty, promoting a conducive business environment.
You can check out the Pre-Budget Memorandum by clicking the blue button below.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
