- January 23, 2024
- Posted by: CA Sudha G. Bhushan
- Category: Finance & accounting, Income tax
Summary-The Central Board of Direct Taxes (‘CBDT’) has issued an explanation circular outlining major amendments to the Income-tax Act, 1961 (‘the Act’) and other statutes made through the Finance Act, 2023 (‘FA 2023’). This important circular gives information about the revised tax regulations. It describes changes to the tax structure, rates, deductions, exemptions, compliance, and administration, all with the goal of simplifying the tax system, reducing the tax burden, promoting digital transactions, and improving compliance and transparency. The FA 2023’s provisions for direct taxes, enacted as Act No. 8 of 2023, are extensively outlined in this circular, offering critical information for stakeholders navigating the changed tax landscape.
Name– Circular Explaining the Provisions of The Finance Act 2023
Date-23rd January 2024
Circular Number– 01 of 2024
Link– https://incometaxindia.gov.in/communications/circular/circular-1-2024.pdf
Brief of Provisions-The Finance Act 2023 introduces comprehensive and multifaceted changes to tax law, categorized into three main areas: tax rates and slabs, deductions and exemptions, and tax compliance and administration. A new optional tax regime allows individuals and Hindu Undivided Families (HUFs) to pay lower tax rates from AY 2024-25 onwards, provided they forgo certain deductions and exemptions, with surcharges and cess rates unchanged at 10%, 15%, 25%, and 37% for incomes exceeding Rs. 50 lakhs, Rs. 1 crore, Rs. 2 crores, and Rs. 5 crores, respectively, plus a 4% health and education cess. Taxpayers opting for the new regime will lose benefits like standard deductions, HRA, and interest on housing loans but retain others such as employer contributions to provident funds and gratuity. The faceless assessment and appeal system aims to eliminate physical interactions between taxpayers and authorities, promoting transparency and uniformity. Expanded TDS and TCS provisions cover more transactions, such as e-commerce and foreign remittances, to ensure timely tax collection and reporting. Penalty and prosecution provisions focus on wilful defaults, reducing litigation. Amendments to the settlement commission and advance ruling authority streamline their functions and expand their jurisdiction. These changes reflect the government’s effort to align the tax system with evolving economic and administrative requirements, aiming for a more efficient, equitable, and transparent tax regime.
For a detailed description of the amendments please click on https://incometaxindia.gov.in/communications/circular/circular-1-2024.pdf