Filing for AY 2024-25 is coming soon
Keep calm and sign up for early access to our super filing platform

10 New Changes Applicable to Income Tax: A Comprehensive Guide

The Indian government is constantly making changes and reforms to its laws, and these changes have a significant impact on individuals and organizations when it comes to income tax. As of October 1st, several new changes have come into effect that taxpayers should be aware of. In this comprehensive guide, we will explore the top 10 new changes applicable to income tax, providing you with all the necessary information to navigate these updates effectively.

Table of Contents

  1. 28% GST on Online Gaming, Casinos, Betting
  2. 5% GST on Ocean Freight Imports Exempted
  3. Consent Based Sharing of Information Furnished by Taxable Person
  4. Extension of Composition Levy to E-commerce Goods Suppliers
  5. Zero-rated Supplies Not Permitted with Payment of IGST
  6. Blocked Input Tax Credit on CSR Activities
  7. Non-payment to Suppliers Within 180 Days
  8. Tax Collection at Source (TCS) Rules
  9. Submission of Aadhaar and PAN for Small Savings Schemes
  10. Birth Certificates as Single Document for Aadhaar and Government Jobs

Let's dive into each of these changes in detail.

1. 28% GST on Online Gaming, Casinos, Betting {#section-1}

From October 1st, 2023, specific activities such as online gaming, casinos, and betting will be subject to a 28% Goods and Services Tax (GST) rate. The taxation for different activities within this category varies:

  • Casinos: Tax will be calculated based on the face value of the chips purchased.
  • Horse Racing: The tax will be levied on bets placed with bookmakers or totalisators.
  • Online Gaming: Online gaming platforms will also be subject to the 28% GST rate.

For more information on the 28% GST on online gaming, casinos, and horse racing, refer to the official announcement by CBIC.

2. 5% GST on Ocean Freight Imports Exempted {#section-2}

Starting October 1st, 2023, payments made for goods imported through ocean freight will be exempted from the 5% integrated GST (IGST). The Finance Ministry has notified changes to the IGST Act, allowing importers to avoid the 5% GST under the Reverse Charge Mechanism. This exemption aligns with the Supreme Court's ruling in the case of Mohit Minerals, which stated that the Indian importer's liability to pay IGST on the composite supply should not include a separate levy for services provided by the shipping line.

 

3. Consent Based Sharing of Information Furnished by Taxable Person {#section-3}

To enhance transparency and streamline the sharing of information, a new section 158A and Rule 163 have been inserted in the CGST Act. These provisions prescribe the manner and conditions for sharing information furnished by registered persons, including their application for registration, GSTR 1, GSTR 3B, GSTR 9, E-invoice, and E-waybill. The information will be shared on the common portal with an account aggregator, as defined in the Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016. However, consent from both the supplier and recipient is required for sharing the information.

4. Extension of Composition Levy to E-commerce Goods Suppliers {#section-4}

The composition scheme, which was previously unavailable to registered individuals involved in goods supply via e-commerce platforms, has now been extended to encompass them. However, registered individuals providing services through e-commerce operators will still face limitations. The amendment has removed the term 'goods' from Section 10(2)(b) and Section 10(2A)(c) of the CGST Act, while the term 'services' prevails. This change allows a broader range of taxpayers to benefit from the composition scheme.

5. Zero-rated Supplies Not Permitted with Payment of IGST {#section-5}

The default option for exports is now supplying under Letter of Undertaking (LUT) without tax payment and claiming a refund of accumulated Input Tax Credit (ITC). However, certain goods and services are exempted from this provision. The latest notification, No.01/2023-IGST, permits tax payment for all exports of goods and services, except for specific goods such as cigarettes, pan masala, and other tobacco-related products. Suppliers of these goods and services can claim a refund of the tax paid.

6. Blocked Input Tax Credit on CSR Activities {#section-6}

To address the confusion surrounding the eligibility of Input Tax Credit (ITC) on Corporate Social Responsibility (CSR) activities, the government has introduced an amendment in Section 17(5) of the CGST Act, 2017. The amendment states that ITC on goods and services received by companies for undertaking CSR activities under Section 135 of the Companies Act, 2013, is not allowed. This means that ITC will not be available on goods or services received by taxable persons for activities related to fulfilling CSR obligations.

 

7. Non-payment to Suppliers Within 180 Days {#section-7}

Section 16 of the CGST Act, 2017, has been amended to hold recipients accountable for non-payment to suppliers within 180 days from the date of the invoice. In such cases, the recipient will be required to pay an amount equal to the Input Tax Credit (ITC) availed, along with interest payable under Section 50 of the CGST Act, 2017. This amendment aligns the language of the law with the return filing system and ensures timely payment to suppliers.

8. Tax Collection at Source (TCS) Rules {#section-8}

The government has implemented new rules for tax collection at source (TCS) from October 1st. These rules apply to various financial transactions, including overseas expenses, and will impact individuals planning trips abroad, investing in foreign stocks, mutual funds, crypto, and pursuing higher international education. The Finance Bill 2023 raised the TCS from 5% to 20% for remittance under the Liberalised Remittance Scheme (LRS) and overseas tour packages. Additionally, the threshold of ₹7 lakh for TCS on LRS has been removed.

9. Submission of Aadhaar and PAN for Small Savings Schemes {#section-9}

Individuals investing in small savings schemes such as the Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS), and National Savings Certificate must submit their Permanent Account Number (PAN) and Aadhaar card documents by September 30, 2023. Failure to provide these documents may result in the suspension of the accounts from October 1st until the necessary documents are submitted, as per the government's notification.

10. Birth Certificates as Single Document for Aadhaar and Government Jobs {#section-10}

The Registration of Births and Deaths (Amendment) Act, 2023, will come into force on October 1st, allowing the use of a birth certificate as a single document for various purposes. This includes admission to educational institutions, issuance of a driving license, preparation of voter lists, obtaining an Aadhaar number, registering marriages, or applying for government jobs. This change simplifies the documentation process for individuals, making it more convenient and efficient.

Conclusion

These 10 new changes applicable to income tax have been introduced to streamline the tax system and promote transparency. It is crucial for taxpayers to stay updated and understand the implications of these changes to ensure compliance. By being aware of these changes, individuals and organizations can navigate the income tax landscape more effectively and make informed financial decisions. Remember to consult with a tax professional or refer to the official government sources for any specific queries or concerns.

 

author

The Tax Heaven

Mr.Vishwas Agarwal✍📊, a seasoned Chartered Accountant 📈💼 and the co-founder & CEO of THE TAX HEAVEN, brings 10 years of expertise in financial management and taxation. Specializing in ITR filing 📑🗃, GST returns 📈💼, and income tax advisory. He offers astute financial guidance and compliance solutions to individuals and businesses alike. Their passion for simplifying complex financial concepts into actionable insights empowers readers with valuable knowledge for informed decision-making. Through insightful blog content, he aims to demystify financial complexities, offering practical advice and tips to navigate the intricate world of finance and taxation.

Frequently Asked Questions

Income Tax Budget 2024: In the new income tax regime, the highest tax rate of 30% applies to income exceeding Rs 15 lakh, unlike the previous tax regime where it applied to income over Rs 10 lakh.

Individuals with a taxable income of up to Rs 7 lakh will not have to pay any taxes if they choose the new tax regime for the current fiscal year 2023-24. The highest surcharge rate has been reduced from 37% to 25% under the new tax regime. There have been no changes made to the old tax regime for fiscal years 2023-24 and 2024-25.

New tax regime FY 2023-24   
(After budget)

New tax regime FY 2022-23   
(Before budget)

Income up to Rs 3 lakh

Nil

Up to Rs 2.5 lakh

Nil

Rs 3 lakh to Rs 6 lakh

5%

Rs 2.5 lakh to Rs 5 lakh

5%

Rs 6 lakh to Rs 9 lakh

10%

Rs 5 lakh to Rs 7.5 lakh

10%

Rs 9 lakh to Rs 12 lakh

15%

Rs 7.5 lakh to Rs 10 lakh

15%

Rs 12 lakh to Rs 15 lakh

20%

Rs 10 lakh to Rs 12.5 lakh

20%

Income above Rs 15 lakh

30%

Rs 12.5 lakh to Rs 15 lakh

25%

 

 

Income above Rs 15 lakh

30%

In the 2024 interim budget, there were no changes made to the taxation for the fiscal year 2024-25. Finance Minister Nirmala Sitharaman decided to keep the current tax rates for both direct and indirect taxes, meaning that the adjustments made for the fiscal year 2023-24 will remain in effect.

The income tax exemption limit is up to Rs 2,50,000 for individuals, Hindu Undivided Families (HUF) below 60 years of age, and Non-Resident Indians (NRIs). Surcharge and cess will be applicable as mentioned earlier.

Subscribe to the exclusive updates!