Amendments of the Income-Tax Act New Finance Act Circular 1-2024

Amendments of the Income-Tax Act New Finance Act Circular 1-2024

Income tax Act 1961 has been amended many time based on the reuirement of the era. Now, Finance Act 2023 has been provided some special amendmend which has been circulated by CBDT vide Circular 1/2024 which is reproduced below –

F. No. 370142/38/2023
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)
Dated :  23.01.2024

CIRCULAR INCOME-TAX ACT Finance Act, 2023 ─ Explanatory Notes to the Provisions of the Finance Act, 2023 CIRCULAR NO. 1/2024, DATED the 23rd of January, 2024 AMENDMENTS OF THE INCOME-TAX ACT, 1961 CARRIED OUT THROUGH FINANCE ACT, 2023 

Section of Income-tax Act, 1961Particulars
2Definitions
9Income deemed to accrue or arise in India
10Incomes not included in total income
10AASpecial Provisions in respect of newly established units in Special Economic Zones
11Income from property held for charitable or religious purposes.
12AConditions for applicability of sections 11 and 12
12ABProcedure for fresh registration
13Section 11 not to apply in certain cases
17“Salary”, “perquisite” and “profits in lieu of salary” defined
28Profits and gains of business or profession
35DAmortization of certain preliminary expenses
43BCertain deductions to be only on actual payment
43DSpecial provision in case of income of public financial institutions, public companies etc.
112Tax on long-term capital gains
115ATax on dividends, royalty and technical service fees in the case of foreign companies
115BACTax on income of individuals and Hindu Undivided Family
115BADTax on income of certain resident co-operative societies
115BAETax on income of certain new manufacturing cooperative societies
115BBTax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever.
115BBJTax on winnings from online games.
115JCSpecial provisions for payment of tax by certain persons other than a company
115JDTax credit for alternate minimum tax
115TDTax on accreted income
115UATax on income of unit holder and business trust.
115VPMethod and time of opting for tonnage tax scheme
116Income-tax authorities.
119Instructions to subordinate authorities
131Power regarding discovery, production of evidence, etc.
132Search and seizure
133Power to call for information.
134Power to inspect registers of companies.
135AFaceless collection of information.
140BTax on updated return
142Inquiry before assessment
148Issue of notice where income has escaped assessmenT
149Time limit for notice
151Sanction for issue of notice.
153Time limit for completion of assessment, reassessment and recomputation
154Rectification of mistake.
158AProcedure when assessee claims identical question of law is pending before High Court or Supreme Court.
158ABProcedure where an identical question of law is pending before High Courts or Supreme Court.
170AEffect of order of tribunal or court in respect of business reorganisation
177Association dissolved or business discontinued.
189Firm dissolved or business discontinued.
192APayment of accumulated balance due to an employee
193Interest on securities
194BWinnings from lottery or crossword puzzle,etc.
194BAWinnings from online games
194BBWinnings from horse race.
194LCIncome by way of interest from Indian company
194NPayment of certain amounts in cash.
194RDeduction of tax on benefit or perquisite in respect of business or profession
196AIncome in respect of units of non-residents.
197Certificate for deduction at lower rate
206ABSpecial provision for deduction of tax at source for non-filers of income-tax return
206CProfits and gains from the business of tradingin alcoholic liquor, forest produce, scrap, etc.
206CCRequirement to furnish Permanent Account number by collectee
206CCASpecial provision for collection of tax at source for non-filers of income-tax return
241AWithholding of refund in certain cases.
244AInterest on refunds.
245Set off and withholding of refunds in certain cases
245DProcedure on receipt of an application under section 245C
245MADispute Resolution Committee
245RProcedure on receipt of application
246Appealable orders before Joint Commissioner (Appeals)
249Form of appeal and limitation.
250Procedure in appeal
251Powers of the Joint Commissioner (Appeals) or the Commissioner (Appeals).
253Appeals to the Appellate Tribunal
264Revision of other orders
267Amendment of assessment on appeal.
269SSMode of taking or accepting certain loans, deposits and specified sum.
269TMode of repayment of certain loans or deposits.
271Failure to furnish returns, comply with notices, concealment of income, etc.
271AFailure to keep, maintain or retain books of account, documents, etc.
271AACPenalty in respect of certain income.
271AADPenalty for false entry, etc., in books of account.
271CPenalty for failure to deduct tax at source
271FAAPenalty for furnishing inaccurate statement of financial transaction or reportable account.
271JPenalty for furnishing incorrect information in reports or certificates.
274Procedure.
275Failure to comply with the provisions of sub-sections (1) and (3) of section 178.
276BFailure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B.
279Prosecution to be at instance of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner
287Publication of information respecting assesses in certain cases
295Power to make rules.
44ABAudit of accounts of certain persons carrying on business or profession
44ADSpecial provision for computing profits and gains of business on presumptive basis
44ADASpecial provision for computing profits and gains of profession on presumptive basis
44BBSpecial provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils
44BBBSpecial provision for computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain turnkey power projects
45Capital Gains
47Transactions not regarded as transfer
48Mode of computation
49Cost with reference to certain modes of acquisition
50AASpecial provision for computation of capital gains in case of Market Linked Debenture
54Profit on sale of property used for residence
54EACapital gain on transfer of long-term capital assets not to be charged in the case of investment in specified securities.
54EBCapital gain on transfer of long-term capital assets not to be charged in certain cases.
54ECCapital gain not to be charged on investment in certain bonds.
54EDCapital gain on transfer of certain listed securities or unit not to be charged in certain cases.
54FCapital gain on transfer of certain capital assets not to be charged in case of investment in residential house
55Meaning of ‘adjusted’, ‘cost of improvement’ and ‘cost of acquisition’
56Income from other sources
72AProvisions relating to carry forward and set-off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger, etc.
72AACarry forward and set off of accumulated loss and unabsorbed depreciation allowance in scheme of amalgamation in certain cases.
79Carry forward and set off of losses in case of certain companies
80CDeduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures etc.
80CCCDeduction in respect of contribution to certain pension funds
80CCDDeduction in respect of contribution to pension scheme of Central Government
80CCHDeduction in respect of contribution to Agnipath Scheme
80GDeduction in respect of donations to certain funds, charitable institutions, etc.
80-IACSpecial provision in respect of specified business
80LADeductions in respect of certain incomes of Offshore Banking Units and International Financial Services Centre
87Rebate to be allowed in computing income-tax
87ARebate of income-tax in case of certain individuals
88Rebate on life insurance premia, contribution to provident fund, etc. (omitted)
92BAMeaning of specified domestic transaction
92DMaintenance, keeping and furnishing of information and document by certain persons
94BLimitation on interest deduction in certain cases
111ATax on short-term capital gains in certain cases

1. Introduction 

1.1 The Finance Act, 2023 (hereafter referred to as ‘the FA 2023’) as passed by the Parliament, received the assent of the President on 31st March, 2023 and has been enacted as Act No. 8 of 2023. 

1.2 This circular explains substance of the provisions of the FA 2023 relating to direct taxes.

 2. Changes made by the FA 2023

 2.1 The FA 2023 has,-

 (i) specified the existing rates of income-tax for the assessment year 2023-24 and the rates of income-tax on the basis of which tax has to be deducted at source and advance tax has to be paid during financial year 2023-24; and (ii) amended certain sections of the Income-tax Act, 1961 (‘the Act’). 

3. Rate structure 

3.1 Rates of income-tax in respect of incomes liable to tax for the assessment year 2023- 24. 3.1.1 Part I of First Schedule to the FA 2023 specifies the rates of income-tax in respect of incomes of all categories of assessees liable to tax for the assessment year 2023-24. These rates are the same as those laid down in Part III of the First Schedule to the Finance Act, 2022 for the purposes of computation of “advance tax”, deduction of tax at source from “Salaries” and charging of tax payable in certain cases during the financial year 2022-23. Main features of the rates specified in the said Part I are as follows: 

3.1.2 Individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person. Paragraph A of Part I of the First Schedule specifies the rates of income-tax in the case of every individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company) as under: 

Income chargeable to tax                                Rate of income-tax for AY 2023-24
Individual (other than senior and very senior citizen), HUF, association of persons, body of individuals and artificial juridical person.Individual, resident in India who is of the age of sixty years or more but less than eighty years. (senior citizen)Individual, resident in India who is of the age of eighty years or more (very senior citizen)
Up to Rs. 2,50,000              Nil              Nil              Nil
Rs. 2,50,001 – Rs. 3,00,000             
             5%
Rs. 3,00,001 – Rs. 5,00,000              5%
Rs. 5,00,001 – Rs. 10,00,000            20%            20%            20%
Exceeding Rs. 10,00,000            30%            30%            30%

 For individuals or HUFs opting for the concessional taxation regime under section 115BAC of the Act, the rates as specified in the said section are as under: 

The amount of income-tax so computed, including in the case of an individual or an HUF exercising option under section 115BAC, or as computed under the provisions of section 111A or section 112 or section 112A of the Act but not having any income under section 115AD of the Act, shall be increased by a surcharge,-

(i) having a total income (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent of such income- tax; and 9

 (ii) having a total income (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent of such income-tax; 

(iii) having a total income (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent of such incometax; 

(iv) having a total income (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding five crore rupees, at the rate of thirty-seven per cent of such income-tax; 

(v) having a total income (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding two crore rupees, but is not covered under clause (iii) or (iv) above, at the rate of fifteen per cent of such income tax. Where total income includes any income by way of dividend or income chargeable under sections 111A, 112 and 112A of the Act, the surcharge on the amount of income-tax computed in respect of that part of income shall not exceed fifteen percent. However, surcharge shall be at the rates provided in (i) to (v) above for all category of income without excluding dividend or capital gains in case the income is taxable under sections 115A, 115AB, 115AC, 115ACA and 115E. 

In the case of individual or Hindu undivided family or every association of persons (except in a case of an association of persons consisting of only companies as its members) or body of individuals (whether incorporated or not) or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act having income under section 115AD of the Act, the amount of income-tax so computed, shall be increased by a surcharge,-

 (i) having a total income exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent of such income-tax; and 

(ii) having a total income exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent of such income-tax; 10 

(iii) having a total income [excluding the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but not exceeding five crore rupees, at the rate of twentyfive per cent of such income-tax; 

(iv) having a total income [excluding the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding five crore rupees, at the rate of thirty-seven per cent of such income-tax; 

(v) having a total income [including the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but is not covered in sub-clauses (iii) and (iv), at the rate of fifteen per cent of such income-tax: Where the total income includes any income by way of dividend or income chargeable under clause (b) of sub-section (1) of section 115AD of the Act, the rate of surcharge on the income-tax calculated on that part of income shall not exceed fifteen per cent. In the case of an association of persons consisting of only companies as its members, the surcharge shall be calculated –

 (i) at the rate of ten per cent of such income-tax, where the total income exceeds fifty lakh rupees but does not exceed one crore rupees; (ii) at the rate of fifteen per cent of such income-tax, where the total income exceeds one crore rupees;

for detailed Circyular in pdf form, please click here

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