Budget 2024 Expectations: Simplifying Personal Taxation and More

The Confederation of Indian Industry (CII) has put forth its proposals for Budget 2024, with a primary focus on streamlining personal taxation. Among the suggestions are revisions to capital gains tax and extensions to tax return filing deadlines. Let’s delve into the key recommendations made by the CII.

Extended Timeline for Filing Revised Returns

One of the notable proposals from the CII involves extending the deadline for filing revised tax returns. The recommendation suggests aligning this deadline with the conclusion of the assessment year, coinciding with the extended timeframe for submitting Form 67. This adjustment aims to aid taxpayers in claiming or modifying foreign tax credits.

Aspect Recommendation
Deadline for filing revised returns Extend until the end of the assessment year
Submission of Form 67 Align with the revised return deadline

Form 67 serves as a declaration of income earned abroad and foreign tax credit details. Taxpayers can seek credit in India for taxes paid in foreign jurisdictions by submitting this form. Notably, the tax department had previously extended the deadline for Form 67 submissions with retroactive effect from April 1, 2022.

The current deadline for filing returns is July 31, with provisions for belated returns until December 31, subject to penalties. However, voluntary filing after December 31 of the assessment year is not permitted.

Share Buyback Taxation

Currently, companies face a buyback tax of 20 percent on shares repurchased through the open market route. Simultaneously, shareholders are liable to pay capital gains tax on the sold shares. The CII recommends exempting companies from the buyback tax for listed shares, while shareholders would still incur capital gains tax.

Capital Gains Taxation Rationalisation

The existing complexity in the taxation system, particularly concerning capital gains, has long been a point of contention. CII proposes a simplified approach, suggesting a 15 percent tax rate for short-term capital gains and a 10 percent rate for long-term gains from financial assets. The minimum holding period for long-term gains is proposed to be set at 12 months.

Asset Short-term Capital Gains Tax Rate Long-term Capital Gains Tax Rate Minimum Holding Period
Financial Assets 15% 10% 12 months
Non-financial Assets As per applicable slab rate 20% with indexation benefits 36 months

The proposed changes aim to bring uniformity and clarity to the taxation of various asset classes.

Perquisite Tax in Respect of Electric Cars

Electric vehicles (EVs) present a unique scenario regarding perquisite taxation. Unlike traditional motor vehicles, EVs do not fall under the cubic capacity criterion. The CII recommends defining specific criteria for perquisite taxation on electric cars provided by employers, addressing this disparity.

These recommendations from the CII aim to pave the way for a more transparent and efficient taxation framework, facilitating both taxpayers and businesses.


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