The Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman, recently announced several direct tax proposals with the aim to maintain continuity and stability of taxation, simplifying various provisions, reducing compliance burden, and providing tax relief to citizens. In her speech during the presentation of the Union Budget 2023-24, she stated the constant effort of the Income Tax Department to improve taxpayer services by making compliance easy and smooth.
Roll Out of Common IT Return Form
The finance minister announced the next-generation common IT return form for taxpayer convenience and strengthening of the grievance redressal mechanism. The taxpayers' portal received a maximum of 72 lakh returns in a day and processed over 6.5 crore returns this year, with an average processing period reduced from 93 days in the financial year 2013-14 to 16 days currently. Also, 45% of the returns were processed within 24 hours.
Presumptive Taxation for MSMEs and Professionals
The micro-enterprises with a turnover of up to Rs 2 crore and certain professionals with a turnover of up to Rs 50 lakh can avail of the benefit of presumptive taxation. The finance minister proposed to enhance the limits to Rs 3 crore and Rs 75 lakh respectively, for the taxpayers whose cash receipts are no more than 5%. She also proposed to allow a deduction for expenditure incurred on payments made to MSMEs to support them in the timely receipt of payments.
The finance minister announced a lower tax rate of 15% for new co-operatives that commence manufacturing activities by 31st March 2024, similar to the rate available to new manufacturing companies. Sugar co-operatives will also have the opportunity to claim payments made to sugarcane farmers as expenditures. The primary agricultural co-operative societies (PACS) and primary co-operative agriculture and rural development banks (PCARDBs) will have a higher limit of Rs 2 lakh per member for cash deposits and loans in cash. The threshold limit for TDS on cash withdrawal for cooperative societies is being increased to Rs 3 crore.
The date of incorporation for income tax benefits for start-ups is being extended from 31st March 2023 to 31st March 2024. The finance minister also proposed to provide the benefit of carrying forward of losses on a change of shareholding from seven years of incorporation to ten years. India is now the third largest ecosystem for start-ups globally and ranks second in innovation quality among middle-income countries.
Disposal of Small Appeals
The finance minister proposed to deploy about 100 Joint Commissioners for the disposal of small appeals to reduce the pendency of appeals and provide prompt resolution to the taxpayers.
Capital Gains on Investment in Residential House
The finance minister proposed to cap the deduction from capital gains on investment in a residential house to Rs 10 crore.
Tax Exemption for Authorities Regulating and Developing an Activity
The finance minister proposed tax exemption on the income of authorities regulating and developing activity.
Tax Exemption for Agniveers
The finance minister proposed tax exemption on payment received from the Agniveer Corpus Fund for the Agniveers.
The direct tax proposals aim to simplify and rationalize various provisions, reduce compliance burden, promote the entrepreneurial spirit, and provide tax relief to citizens. The next-generation common IT return form, presumptive taxation for MSMEs and professionals, tax concessions for co-operatives and start-ups, disposal of small appeals, tax exemption for authorities and Agniveers, and capital gains on investment in a residential house are some of the proposals given by the