In anticipation of the upcoming General Elections pursuant to which new formed government would present the full-fledged Budget in July this year, in February, the current Government of India introduced the Interim Budget.
The Budget was preceded by an ‘The Indian Economy: A Review’ which outlined the Indian economy’s journey in the last ten years. The hon’ble finance minister stated that no spectacular announcements were expected from the vote on account. In line with the expectations set for the Interim Budget by the finance minister , there have been some minor amendments proposed to tax laws which are outlined hereunder:
■ Sunset dates for various provisions which were coming to an end on March 31, 2024, have been extended to March 31, 2025 including:
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- incorporation of eligible start-ups for claiming tax relaxations;
- investment by sovereign wealth funds/pension funds in eligible entities;
- comment of operations for Investment division of an offshore banking unit in International Financial Services Centre (IFSC);
- commencement of operations by unit in IFSC with respect exemption towards royalty or interest for a non-resident paid by an aircraft or ship leasing unit in IFSC; and
- commencement of operations by unit in IFSC for availing deduction with respect to income from the transfer of aircraft or ship leased by an IFSC unit.
■ Provisions governing Tax collection at source (TCS) have been amended to incorporate the prescribed rates in the circulars into the tax statue as under:
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- remittances under Liberalized Remittance Scheme (LRS) for education purposes
○ No TCS where aggregate amounts do not exceed INR 7 lakhs in a financial year
○ TCS @ 5% where aggregate amounts exceed INR 7 lakhs in a financial year
○ TCS @ 0.5% where aggregate amounts exceed INR 7 lakhs in a financial year and amount being remitted out is a loan availed from specified financial institution for the purpose of pursuing any education.
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- remittances under LRS for medical treatment
○ No TCS where aggregate amounts do not exceed INR 7 lakhs in a financial year.
○ TCS @ 5% where aggregate amounts exceed INR 7 lakhs in a financial year.
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- remittances under LRS for other purposes
○ No TCS where aggregate amounts do not exceed INR 7 lakhs in a financial year
○ TCS @ 20% where aggregate amounts exceed INR 7 lakhs in a financial year.
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- purchase of Overseas Tour Package
○ TCS @ 5% where aggregate amounts exceed INR 7 lakhs in a financial year
○ TCS @ 20% where aggregate amounts exceed INR 7 lakhs in a financial year.
The Budget gave some insights into the roadmap ahead for the Indian economy and the taxpayers would need to wait out for more beneficial tax reforms in the ensuing comprehensive post-election Budget by the newly elected government.