Finance Bill, 2023Direct Tax Proposals Finance Bill, 2023 : Direct Tax Proposals at a Glance

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The Tax Publishers Finance Bill, 2023--Direct Tax Proposals Finance Bill, 2023 : Direct Tax Proposals at a Glance CA. Manoj Gupta The Finance Bill, 2023 proposes many amendments to the Income Tax Act. The learned author takes a summary view of the important proposed amendments. 1. Change in tax rates No change is proposed in tax rates except certain relaxations to taxpayers opting for new tax regime under Section 115BAC [Which is now Default tax regime to say]. Surcharge in case of assessees filing ITR or defaulted so to file under new tax regime shall not exceed 25%. If such assessees are salaried then tax will be deducted as per new scheme only because new scheme is the default scheme. When the new tax regime was introduced a question arose that whether tax under Section 192 is to deducted at normal rates or as per rates provided in Section 115BAC. In view of Section 2(9) of the Finance Act, 2020 the tax was to be deducted at regular rates and not as per Section 115BAC. But CBDT vide Circular No. C1 of 2020, dated 13-4-2020 : (a) Clarified that an employee, having income other than the income under the head 'profit and gains of business or profession' and intending to opt for the concessional rate under Section 115BAC of the Act, may intimate the deductor, being his employer, of such intention for each previous year and upon such intimation, the deductor shall compute his total income, and make TDS thereon in accordance with the provisions of Section 115BAC of the Act. If such intimation is not made by the employee, the employer shall make TDS without considering the provision of Section 115BAC of the Act. (b) It was also clarified that the intimation so made to the deductor shall be only for the purposes of TDS during the previous year and cannot be modified during that year. However, the intimation would not amount to exercising option in terms of sub-section (5) of Section 115BAC of the Act and the person shall be required to do so along with the return to be furnished under sub-section (1) of Section 139 of the Act for that previous year. Thus, option at the time of filing of return of income under sub-section (1) of Section 139 of the Act could be different from the intimation made by such employee to the employer for that previous year. (c) Clarified further that, in case of a person who has income under the head 'profit and gains of business or profession' also, the option for taxation under Section 115BAC of the Act once exercised for a previous year al the time of filing of return of income under sub-section (1) of Section 139 of the Act cannot be changed for subsequent previous years except in certain circumstances. Accordingly, the above clarification was to apply to such person with a modification that the intimation to the employer in his case for subsequent previous years must not deviate from the option under Section 115BAC of the Act once exercised in a previous year. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Finance Bill, 2023--Direct Tax Proposals

Finance Bill, 2023 : Direct Tax Proposals at a Glance

CA. Manoj Gupta

The Finance Bill, 2023 proposes many amendments to the Income Tax Act. The learned author takes a summary view of the important proposed amendments.

1. Change in tax rates

No change is proposed in tax rates except certain relaxations to taxpayers opting for new tax regime under Section 115BAC [Which is now Default tax regime to say]. Surcharge in case of assessees filing ITR or defaulted so to file under new tax regime shall not exceed 25%. If such assessees are salaried then tax will be deducted as per new scheme only because new scheme is the default scheme.

When the new tax regime was introduced a question arose that whether tax under Section 192 is to deducted at normal rates or as per rates provided in Section 115BAC. In view of Section 2(9) of the Finance Act, 2020 the tax was to be deducted at regular rates and not as per Section 115BAC.

But CBDT vide Circular No. C1 of 2020, dated 13-4-2020 :

(a) Clarified that an employee, having income other than the income under the head 'profit and gains of business or profession' and intending to opt for the concessional rate under Section 115BAC of the Act, may intimate the deductor, being his employer, of such intention for each previous year and upon such intimation, the deductor shall compute his total income, and make TDS thereon in accordance with the provisions of Section 115BAC of the Act. If such intimation is not made by the employee, the employer shall make TDS without considering the provision of Section 115BAC of the Act.

(b) It was also clarified that the intimation so made to the deductor shall be only for the purposes of TDS during the previous year and cannot be modified during that year. However, the intimation would not amount to exercising option in terms of sub-section (5) of Section 115BAC of the Act and the person shall be required to do so along with the return to be furnished under sub-section (1) of Section 139 of the Act for that previous year. Thus, option at the time of filing of return of income under sub-section (1) of Section 139 of the Act could be different from the intimation made by such employee to the employer for that previous year.

(c) Clarified further that, in case of a person who has income under the head 'profit and gains of business or profession' also, the option for taxation under Section 115BAC of the Act once exercised for a previous year al the time of filing of return of income under sub-section (1) of Section 139 of the Act cannot be changed for subsequent previous years except in certain circumstances.

Accordingly, the above clarification was to apply to such person with a modification that the intimation to the employer in his case for subsequent previous years must not deviate from the option under Section 115BAC of the Act once exercised in a previous year.