Category: Income Tax

Linking of Pan- Aadhar By Last Data 31st March 2023

10 Major changes in Union Budget 2023 related to Income Tax

Today Union Budget 2023 is announced by the honorable Finance Minister Nirmala Sitharaman. The budget contains many points however we are going to discuss the proposed major changes in Direct taxes (Income Tax):

1. Increase Income rebate to 7 lacs from 5 lacs in new tax regime.

Slab rate as per new tax regime:

Let’s understand this with some examples:

Example: Mr. ABC have income of  7lacs in FY 2023-24. Now Mr. ABC is required to pay Income Tax under FY 2023-24?

Answer: No, As per new tax regime, Now person having income upto 7 lacs can claim rebate and not liable to pay Income tax.

Example: Mr. ABC have Gross total income of  7.5lacs in FY 2023-24. Now Mr. ABC is required to pay Income Tax under FY 2023-24?

Answer: Yes, As per new tax regime, Now person having income above 7 lacs are liable to pay Income tax as per new tax regime or old tax regime.

Total tax liable to be pay by Mr. ABC is Rs. 30,000 + ed. cess.

2. Leave Encashment

Limit extend to 25 lacs from 3 lacs in case of Encashment of leaves earned upto 10 months of average salary at the time of retirement in case of an employee other than Central Government or State Government.

3. Standard Deduction

Standard deduction of Rs. 50,000 is propose to be continue in Financial Year 2023-24. Deduction from family pension up to Rs. 15,000 is propose to be continue in Financial Year 2023-24.

4. Higher surcharge rate reduced to 25% from 37% in new tax regime.

5. For Co-operative societies, Higher limit of Rs. 3 crore for TDS on cash withdrawal to be provided.

7. EPF Non PAN cases- TDS rate is reduced from 30% to 20% on taxable portion of EPF withdrawal in Non PAN cases.

8. Income tax benefits to Startups- 

• In case of change in shareholing in start-ups, Carry Forward of Losses can be done  for 10 years. Earlier it was 07 years.
• For Startups- Date of Incorporation benefits extended from 31-03-2023 to 31-03-2024.

9. Capital Gains

Section 54 and 54F- Capping of 10 crores is provided in case of claiming deduction from capital gains on investment in residential house.

10. TDS on Online Gaming

TDS Threshold limit of 10,000 on Online gaming is removed. Now, tax is required to be pay even if earning is less than 10,000 from gaming.

Income Tax returns due dates for FY 2021-22 and Penalties etc.

Difference between Financial Year (FY) and Assessment Year (AY)

You must understand that the return you are filing currently is for the income you earned in FY 2021-22,i.e. for the income earned between 1 April 2021 and 31 March 2022. The assessment year will be the year in which you file your returns and declare the income for tax assessment. For the income earned during the FY ( here FY 2021-22), the assessment year would be the immediate next year, i.e. 1st April 2022 to 31st March 2023. Hence, the assessment year would be AY 2022-23.
So, the last date to file ITR for FY 2021-22 is discussed below.

Income tax filing due dates for FY 2021-22 (AY 2022-23)

What happens if you miss the return filing deadline?

Interest: If you file your return after the due date, you will have to pay interest under Section 234A @ 1% per month or part month on the unpaid tax amount.
Late fee: A late fee of Rs. 5000 under Section 234F will need to be paid. It shall be reduced to Rs 1,000 if the total income is less than Rs 5 lakh.
Loss Adjustment: If you have incurred losses from the stock market, mutual funds, properties, or any of your businesses, then you can carry them forward and adjust them with next year’s income. This helps in significantly lowering your tax liability. Loss adjustment is permitted only if you declare the losses in your ITR and file it with the income tax department before the deadline.
Belated Return: If you miss the ITR filing due date, you can file a return after the due date, called a belated return. But still, you will have to pay the late fee, interest and will also not be allowed to carry forward the losses for future adjustment. The income tax department has also specified the due date of filing the belated return which is 31st December of the assessment year (unless extended by the government). For this year, you may file the belated return latest by 31 December 2022.

I-T dept allows taxpayers more time to claim credit for taxes paid abroad

The income tax department on Friday said taxpayers can claim credit for taxes paid outside India before the end of the assessment year if the I-T return is filed within the stipulated deadline.

The income tax department on Friday said taxpayers can claim credit for taxes paid outside India before the end of the assessment year if the I-T return is filed within the stipulated deadline.

So far, Foreign Tax Credit (FTC) could have been claimed only if Form- 67 along with necessary documents were filed within the due date for filing the original return, thereby restricting the ability to claim credit for taxes paid outside India.

The Central Board of Direct Taxes (CBDT) has amended tax Rules providing relief to taxpayers in claiming Foreign Tax Credit (FTC).

In a tweet, the income tax department said “the Statement in Form No. 67 can now be furnished on or before the end of the relevant Asstt Year”.

The amendment operates retrospectively, so this benefit is available to all FTC claims filed during the current financial year, it added.

Nangia Andersen LLP Partner- Direct Taxation, Sachin Garg said the amendment has provided much-needed relief to taxpayers who can now claim FTC by furnishing Form- 67 along with necessary documents before the end of the assessment year if the return is filed within the original due date or date of filing belated tax return.

“The FTC can now be claimed even when filing an updated return of income, provided Form 67 is furnished before filing such return. This will certainly augment ease of doing business in India and prevent taxpayers from losing FTC permanently if Form 67 is not filed within the due date of filing return of income,” Garg said.

AKM Global Head of Tax Markets Yeeshu Sehgal said this relaxation in filing Form-67 till the end of the assessment year instead of before the due date of filing the return is a relief to the taxpayers as they can claim FTC after filing the return as well.

“This will also lead to reduction in tax disputes pertaining to FTCs since there have been divergent interpretations on the allowability of FTC in case of belated and non-filing of Form 67 at present as tax rules do not mention any consequences for non-filing of such form,” Sehgal added.