Budget 2024 Expectations: The Confederation of Indian Industry (CII) has unveiled its set of suggestions for Budget 2024, specializing in simplifying private taxation. The proposals embody ideas concerning capital good points tax and the timeframe for submitting tax returns, amongst different key points.
Here are among the suggestions made by CII;
Extended timeline for submitting revised returns: The CII suggests extending the deadline for submitting revised returns till the conclusion of the evaluation yr, aligning it with the prolonged timeframe for submitting Form 67. This adjustment goals to facilitate taxpayers in claiming or modifying overseas tax credit.
Form 67 serves as a declaration of earnings earned in another country and particulars of overseas tax credit. Taxpayers who’ve paid taxes in a overseas jurisdiction can search credit score in India by submitting this way. Notably, in August 2022, the tax division prolonged the deadline for submitting Form 67, with retroactive impact from April 1, 2022.
The deadline for submitting a return is July 31 in an evaluation yr. A belated return will be filed till December 31, three months earlier than the top of the evaluation yr, however a penalty is relevant. It’s essential to acknowledge that voluntary submitting of returns will not be permitted after December 31 of the evaluation yr. If the Income Tax division later selects your return for scrutiny, they may notify you of the required actions. Returns will be revised inside three months earlier than the top of the evaluation yr.
Share Buyback Taxation: Currently, underneath the open market route, the corporate incurs a buyback tax of 20 % on the bought shares, whereas concurrently, the shareholder is liable to pay capital good points tax on the offered shares.
A share buyback entails an organization repurchasing its shares from shareholders at a premium. This will be executed by way of both a young supply or an open market supply.
According to the CII report, for listed shares present process buybacks by way of the open market route, the advice is to exempt corporations from the buyback tax. Subsequently, shareholders would nonetheless be obligated to pay capital good points tax.
Capital Gains Taxation Rationalisation: Calls for simplifying the prevailing intricate taxation system have endured for a substantial time. Two main points contribute to this complexity: various tax charges and holding durations (the cutoff interval distinguishing short- from lengthy-time period good points) throughout totally different asset courses. Additionally, sure belongings profit from indexation, whereas others don’t, additional contributing to the intricacies of the present system.
CII’s Proposal
The CII has proposed a 15 % tax charge for brief-time period capital good points and a ten % charge for lengthy-time period capital good points arising from the sale of economic belongings, together with fairness shares, choice shares, fairness mutual funds, debt mutual funds, REITs, InvITs, bonds, and so forth. Additionally, it recommends establishing a minimal holding interval of 12 months for qualifying for lengthy-time period capital good points.
Regarding non-monetary belongings like immovable property, the CII suggests taxing quick-time period capital good points on the relevant slab charge and setting the lengthy-time period capital good points tax at 20 %, together with indexation advantages. The proposed holding interval cutoff for distinguishing short- and lengthy-time period good points is 36 months. In sensible phrases, if such an asset is offered after being held for 36 months or extra, any capital good points needs to be handled as lengthy-time period.
The lengthy-time period capital good points tax and indexation advantages for debt funds have been eliminated in 2023. CII’s advice, in impact, is to convey again the capital good points tax advantages and put them on par with fairness funds.
Perquisite (Perk) Tax In Respect Of Electric Cars: A perk refers to any extra profit, whether or not financial or non-financial, that an worker receives alongside their wage from the employer. In the case of a motor automotive offered by the employer, the taxation of this perk is contingent on particular components, significantly whether or not the engine’s cubic capability (cc) falls throughout the vary of as much as 1,600 cc or past.
As this criterion doesn’t apply to electrical autos (EVs), an alternate metric have to be launched for figuring out perquisite taxation.
The CII proposes amending the earnings tax guidelines to explicitly outline the factors for perquisite taxation on electrical autos offered by employers to their staff.
