Income Tax

Amendments
for
MAY/JUNE 2024
- BY CA. CS. VIJAY SARDA
 1 Basics of Income Tax
1) Income Chargeble at Special Rate
Sec 115 BBJ Net winnings from online games - 30% [FA 2023]

Sec 115BAC Tax Incentive for Individual & HUF

For Individual /HUF / AOP/ BOI/ AJP have an option to opt for taxation in sec 115BAC of the Act.
Condition : 1 Restriction on claiming deduction or exemption

Following Deduction can’t be Taken Without Following Deduction can be Taken

exemption/ deduction under the foll provisions: Salary:
Salary: 1. Transport Allowance granted to a divyang
1. Leave travel concession sec10(5) employee
2. House rent allowance sec10(13A) 2. Conveyance Allowance
3. Entertainment allowance & 3. Any Allowance granted to meet the cost of
employment/professional tax u/s 16; travel on tour or on transfer
4. Free food & beverage through vouchers provided to EE 4. Daily Allowance to meet ordinary daily
5. Some of the allowance mentioned in sec10(14) charges incurred by an employee on absence
HP: from his normal place of duty
1. Interest u/s 24 in respect of self-occupied or vacant 5. Standard deduction u/s 16(ia)
property referred to in Sec 23(2). (Loss from house IFOS:
property for rented house not be allowed to be set off Deduction in respect of Family Pension
under any other head & would be allowed to be c/f allowed
as per extant law)
PGBP: Deduction:
1. Additional deprecation u/s 32(1)(iia); 1. Deductions Sec 80CCD (employer
2. Deductions u/s 32AD, 33AB, 33ABA contribution on account of employee in
3. Various deduction for donation for or expenditure on notified pension scheme) & Sec 80JJAA
scientific research contained in sub-clause (ii) /(iia)/(iii) (new employment), 80CCH (CG
of sub-sec (1) /sub-sec (2AA) of sec 35; contribution towards Agnipath scheme
4. Deduction u/s 35AD or sec 35CCC; PGBP:
Deduction: 1. Depreciation is allowed.
1. Any deduction under chapter VIA
Exemptions:
1. Allowances to MPs/MLAs sec 10(17)
2. Allowance for income of minor sec10(32)
3. Exemption for SEZ unit contained in section 10AA

Slab Rates

Old (A.Y. 23-24) NEW(Default)

Sec 115 BAC(1) Sec 115BAC (1A) [FA 2023]
Total Income Rate (%)
Total Income Rate (%) Shortcut
Upto ₹ 2,50,000 Nil
Upto ₹ 3,00,000 Nil -
₹ 2.5L to 5L 5%
₹ 3L to 6L 5% 15000
₹ 5L to 7.5L 10%
₹ 6L to 9L 10% 30000
₹ 7.5L to 10L 15%
₹ 9L to 12L 15% 45000
₹ 10L to 12.5L 20%
₹ 12L to 15L 20% 60000
₹ 12.5L to 15L 25%
Above ₹ 15L 30% -
Above ₹ 15L 30%

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Rebate u/s 87A :
1) Assessee is Individual
2) He is Resident in India
3) Whose total income (From All Heads after Deduction) (Normal + Special excluding Agriculture Income
and Exempt Income) does not exceed ₹7 lakh
Rebate= ₹25000 or 100% of tax payable, whichever is lower
Rebate not available for tax computed u/s 112A [FA'23]
# Marginal relief incase of income slightly exceed 7L :
Rebate u/s 87A is subject to marginal relief from A.Y. 24-25, if net income exceed 7 Lakh but does not
exceed 727770 income tax on such income cannot exceed the amount by which net income exceed 7 lakh
# Further Points
1. Income Chargeable at Special rate
Income Rates
STCG referred to in Sec 111A (Securities) 15%
LTCG referred to in Sec 112 20%
LTCG u/s 112 A Beyond ₹1 Lakh 10%
Casual income (e.g. Lottery. Horse winnings, etc.) (Sec 115 BB) 30%

2. Surcharge : I / HUF / AOP / BOI / AJP as:

u/s 111A, 112

Income 112A, Dividend
Other
Income
1) TI[including Income u/s 111A, 112 , 112A & dividend income does not Nil Nil
Exceed 50L]
2) TI [including Income u/s 111A,112,112A& dividend income exceed 50L 10% 10%
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3) TI [including Income u/s 111A,112,112A & dividend income exceed 1cr 15% 15%
but does not exceed 2cr.]
4) TI [excluding Income u/s 111A,112,112A & dividend income exceed 2cr 15% 25%
but does not exceed 5cr.]
5) TI [excluding Income u/s 111A,112,112A & dividend income exceed 5cr] 15% 25% [FA 23]
6) TI [including Income u/s 111A,112,112A & dividend income exceed 2cr 15% 15%
but not covered by situation 4 & 5]

Space for solving Problems

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2) Sec 115BAE Tax on income of certain new manufacturing co-op societies
1. Assessee - Engaged in Manufacturing, Co.op Society in India (Resident)

2. Following are not considered as manufacturing

(i) development of computer software in any form or in any media;
(ii) mining;
(iii) conversion of marble blocks or similar items into slabs;
(iv) bottling of gas into cylinder;
(v) printing of books or production of cinematography film; or
(vi) any other business as may be notified by the Central Government in this behalf;

3. Tax Rates : Income

Out of Manufacturing Other Activity

Activity (Eg Dividend Rent)

17.16% 25.168%
(15% tax + 10% of surcharge + 4% HEC) (22% tax + 10% of surcharge + 4% HEC)
4. Option once taken cannot be withdrawn

5. Deduction u/s 115BAD cannot be taken

6. This option needs to be taken before filing ITR for A.Y. 24-25

7. If losses and unabsorbed depreciation arise because of above deduction it cannot be taken.
8. Additional conditions -
a. It must be registered on or after 1/4/2023 and should commence manufacturing or production of an
article or thing on or before 31.3.2024
b. It should not be formed by splitting up or the reconstruction of a business already in existence
(except in case of a company, business of which is formed as a result of the re-establishment,
reconstruction or revival by the person of the business of any undertaking referred to in sec 33B in
the circumstances and within the period specified therein)
c. It does not use any machinery or plant previously used for any purpose
i) Any P&M which was used outside India & is imported into India from any country outside India;
ii) No deduction on account of depreciation is allowed in Income-tax Act, 1961 in India earlier
iii) Value of Second hand P& M does not exceed 20% of the total value of P&M.
d. It should not be engaged in any business other than the business of manufacture or production of any
article or thing and research in relation to, or distribution of, such article or thing manufactured or
produced by it.
e. When AO comes across a transaction between Assessee and other persons where Profit Generated to
another persons generate more than ordinary profit then AO can club the additional income and such
income shall be taxed @30%

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 2 Income from House Property
1) Sec 24 Deductions for IOBC
Under default tax regime u/s 115BAC - There would be no deduction for Interest on borrowed capital
in respect of SOP (Self occupied property) if Assessee opted for 115BAC.
2) Setoff of HP loss with other Heads
If Assessee opts for 115BAC losses of HP cant be setoff with other heads. (SOP Loss / LOP loss)

3 Income from Salary

1) Sec 17(1) Meaning of Salary

# Salary includes :-
i)Wages;
ii) Any annuity or pension;
iii) Any gratuity;
iv) Any fees, commission, bonus
v) Any advance of salary;
vi) Any payment received by an employee in respect of any period of leave not availed of by him;
vii) Provident Fund:
- The portion of the annual accretion in any previous year to the balance at the credit of an employee
participating in RPF to the extent it is taxable and
- Transferred balance in RPF to the extent it is taxable,
viii) The contribution made by the CG or any other employer in pension scheme to the extent taxable.
ix) The contribution made by the CG in PY, to the Agniveer Corpus Fund account of an individual enrolled
in the Agnipath Scheme referred to in section 80CCH. [FA 2023]

2) Sec 10(10AA) Leave Salary

During his Employment At the Time of Retirement After the death of Employee

Totally Taxable to all Employee Exempt

Govt EE Non Govt EE

Fully Exempt Minimum of

(1) Actual received
(2) Avg. salary x10 months
(3) Maximum 25,00,000 [FA 2023]
(4) Leave Credit for 30 days

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3) Rule 3 Valuation of Perquisites
Rule 3(1) Valuation of Residential Accommodation
[FA 2023] - Notification no 72/2023

Unfurnished Furnished

Govt EE Non Govt EE

Owned Hired Hotel

Valuation for unfurnished accommodation: w.e.f. 01/9/2023
Where accommodation License Fees xxx
is provided by Union/ Less: Anything Recovered (xxx)
State Govt to their Perk xxx
employees
Population of the city (as per 2011 census) where accommodation
is provided [FA 2023]
Accommodation
owned by him Population Perk
Beyond 40 Lakh 10%
Above 15 Lakh - 40 Lakh 7.5%
Below 15 Lakh 5%
Deduction for any amount paid by the employee : The amount so
calculated shall be reduced by rent, if any, actually paid by EE
Lower of :
a) 10% of Salary or [FA 2023]
Accommodation is b) Actual amount paid.
hired/leased Deduction for any amount paid by EE : The amount so calculated shall
be reduced by rent,if any, actually paid by the employee.
Salary for such period only : Salary for this purpose should be taken
only for the period during which accommodation is occupied by EE

Upto 15 days Nil

Provided in Hotel 24% of salary or xxx
Beyond 15 days
Actual Expenses
whichever is lower
Less: Recovered (xxx)
Perk xxx

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 #. Value perquisite to be restricted to CII [FA 2023] :
Where accommodation is owned/lease

Provided to employee for more than one P.Y.

Value of perk incase of non government employee shall not exceed amount so calculated
for 1st P.Y.
Value of perk x CII for P.Y. in which value is calculated
CII for P.Y. in which accommodation was
Initial provided
Note:
First P.Y. means 23-24 or the P.Y. in which accommodation was provided to employee whichever is later.

4) Deduction u/s 16
# Available in Old + New Scheme: Standard deduction u/s 16(ia) will be:-
a. Amount of salary or
b. Rs 50000 whichever is lower [FA 2023]

4 Income from Other Sources

1) Gift received from Following is Exempt
Received by an Individual, from any person, for medical treatment or treatment of any member of his
family, for any illness related to COVID-19 subject to such conditions, as CG may Notify.
Accordingly CG has, vide Notification No. 91/2022 specified that the individual has to keep a record of the
following documents, namely:-
(a) The COVID-19 positive report of the individual/ family member,
(b) All necessary documents of medical diagnosis or treatment of the individual/ family member due to
COVID-19 or illness related to COVID-19 suffered within 6 months from the date of being determined
as a COVID-19 positive; The details of the amount so received in any financial year has to be furnished
in the prescribed form to the Income-tax Department within 9 months from the end of such F.Y.

2) Taxation of LIP
In respect of policies Any sum received under a LIP including the sum allocated by way of bonus is
issued before 1.4.2003 exempt
In respect of policies Any sum received under a LIP including the sum allocated by way of bonus is
issued between exempt. However, exemption would not be available if the premium payable for any
1.4.2003 and 31.3.2012 of the years during the term of the policy exceeds 20% of “actual capital sum
assured”.
policies issued on or Any sum received under a LIP including the sum allocated by way of bonus is
after 1.4.2012 but exempt if premium payable exceeds 10% of sum assured
before 1.4.2013
In respect of policies a) LIP of Person With disability or severe disability - exemption would not be
issued on or after available if premium exceeds 15% of sum assured”
1.4.2013 b) In case of other Person - Exemption would not be available if the premium
exceeds 10% of Sum assured.
In respect of policies Any sum received under a LIP including the sum allocated by way of bonus is
issued on or after exempt.
1.4.2023 a) LIP of Person With disability or severe disability - exemption would not be
available if premium exceeds 15% of sum assured”
b) In case of other Person - Exemption would not be available if the premium
exceeds 10% of Sum assured
Further, exemption would also not be available if Premium payable exceeds ₹ 5L.

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# Any sum is received on the death of a person is exempt irrespective of the annual premium payable on
the policy. The condition of payment of premium of 10% or 15% or 20% or ₹5,00,000 would not be
applicable.
# Aggrigate premium payable on policy issued after 1/4/2023 would be exclusive of amount of GST payable

5 Income from Capital Gain

1) Sec 2(42A) Short term capital assets
Short-term capital asset means a capital asset held by an assessee for not more than 12/24/36m immediately
Preceding date of transfer.
Notes :
1. As per Sec 50 In case of depreciable asset gain is always short term capital gain.
2. In case of Market linked debentures and units of a specified mutual fund would gains will always be Short
term .This is provided in section 50AA. [FA 2023]

2) Sec 54 Profit on sale of property used for residence

Which New Assets acquired:
1. One Residential HP purchased or constructed
2. Two RHP can be acquired provided CG does not exceed 2 crore (This benefit is available only once in life
time).
Exemption = Amount Invested or Capital gain Whichever is lower. However, the maximum deduction in
case of Sec. 54 shall be ₹ 10 crore including Deposit in CGAS.

3) Sec 54F Capital gain when investment in residential house

Exemption: Amount invested x Capital gain
Net Sale Consideration
However, the maximum deduction in case of Sec. 54F shall be ₹ 10 crore including Deposit in CGAS.

4) Sec 54F Capital gain when investment in residential house

# Cost inflation index for the year 2023-24 is 348

6 Profits and Gains from Business/ Profession

1) Sec 28 Charging Section

The value of any benefit or perquisite arising from business or the exercise of any profession, whether –
- Convertible into money or not or
- In cash or in kind or partly in cash and partly in kind.

2) Sec 37 General deductions

Explanation 3: "Expenditure which is an offence or which is prohibited by law" shall include
1. For any purpose which is an offence or which is prohibited by, any law for the time being in force,
in India or outside India; or
2. To provide any benefit or perquisite, in whatever form, to a person, whether or not carrying on a
business or exercising a profession, and acceptance of such benefit or perquisite by such person is
in violation of any law or rule or regulation or guideline, as the case may be, for the time being
in force, governing the conduct of such person; or
3. To compound an offence under any law for the time being in force, in India or outside India.
[FA 2023]

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 3) Sec 35D Amortization of certain preliminary expenses
Sec 35D : Section 35D provides for the amortisation of preliminary expenses incurred by an Indian
company or a person other than a company, resident in India for the establishment of business concerns
or the expansion of the business of existing concerns. [FA 2023] - Notification No : 54/2023
Sec 35D(2) : As per the proviso to section 35D(2)(a), the assessee has to furnish a statement containing
the particulars of expenditure in connection with -
(a) The preparation of feasibility report
(b) The preparation of project report
(c) Conducting market survey or any other survey necessary for the business of the assessee
(d) Engineering services relating to the assessee’s business.
Eligible for amortisation within prescribed period to the prescribed income tax authority in the
prescribed form and manner. Accordingly, the CBDT has, vide this notification, inserted Rule 6ABBB to
prescribe that the statement containing particulars of above specified expenditure is required to be
furnished one month prior to the due date for furnishing the return of income as specified u/s 139(1).
[FA 2023] - Notification No : 54/2023

4) Sec 43B Certain deductions to be only on actual payment.

Any sum payable by the assessee to a micro or small enterprise beyond the time-limit specified in
sec 15 of MSME Act would be allowed as deduction only in the previous year in which such sum is
actually paid.
Section 15 of the of the Micro, Small and Medium Enterprises Development Act, 2006
1. If there is written Agreement - as per the written agreement, which cannot be more than 45 days
2. When There is no Written Agreement - within 15 days in case of no agreement,
Meaning of Micro and Small Enterprise [FA 2023]
Meaning
Manufacturing enterprises and enterprises rendering services
Micro enterprise
i) Investment in Plant and machinery or AND
Turnover ≤ 5 Crore
Equipment ≤ 1 Crore
ii) Small enterprise
Investment in Plant and machinery or AND Turnover ≤ 50 Crore
Equipment ≤ 10 Crore

5) Sec 44AD Special provision for computing PGBP on presumptive basis

"Eligible business" means - Any business whose Turnover does not Exceed 2crore except
a) Comission b) Agency c) Profession d) GTA (Goods Transport Agency)
Any business, other than business referred to in section 44AE, whose total turnover/gross receipts in the
P.Y. ≤ ₹ 3cr in the relevant P.Y., if aggregate cash receipts in the relevant PY ≤ 5% of total turnover
or gross receipts.
Note: For this purpose, the receipt of amount or aggregate of amounts by a cheque drawn on a bank or by a
bank draft, which is not account payee, would be deemed to be the receipt in cash. [FA 2023]

PGBP (Presumptive Income): Higher of Income Declared or Deemed Income Deemed Income:-
6% of Turnover or Gross receipt if payment is received by way of account payee chque, draft, ECS, other
prescribe Mode(Rule 6ABBA) [UPI, BHIM Debit card, credit card, NEFT, RTGS, IMPS] during the P.Y. or
before due date of filing of return u/s 139(1) in respect of that P.Y. (or) such higher sum claimed to have been
earned by the assessee. [FA 2023] or 8% of Turnover.

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6) Sec 44ADA Special provision for computing PGBP of profession on
presumptive basis
Sec 44ADA(1) - Notwithstanding anything contained in sec 28 to 43C, in the case of an Assessee
(Individual/Firm) not LLP, being a resident in India, who is engaged in a profession referred to in sec
44AA(1) & whose total gross receipts do not exceed ₹50,00,000 in a PY, a sum equal to 50% of the total
gross receipts of the assessee in the PY on account of such profession or, as the case may be, a sum higher
than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and
gains of such profession chargeable to tax under the head "PGBP". Assessee can declare presumptive income
upto Rs. 75 Lakh in this section where the amount or aggregate of the amounts received during PY, in cash,
does not exceed 5% of the total gross receipts. Further Payment received through bearer cheque is also
considered as cash.[FA 2023]

9 Deductions
1) Sec 80CCH Deduction in respect of contribution to Agnipath Scheme
Where an individual enrolled in the Agnipath Scheme or Agniveer Corpus Fund on or after the 1st Nov, 22,
has paid or deposited any amount, he shall be allowed a deduction = 100% of amount so paid or deposited.
Where CG makes any contribution to the account of an assessee in the Agniveer Corpus Fund the assessee
shall be allowed a deduction = 100%

Explanation.—For the purposes of this section,––

(a) "Agnipath Scheme" means the scheme for enrolment in Indian Armed Forces introduced on 29th Dec, 22
of the Government of India in the Ministry of Defence;
(b) "Agniveer Corpus Fund" means a fund in which consolidated contributions of all the Agniveers and
matching contributions of CG along with interest on both these contributions are held.[FA 2023]

10 Exemptions
1) Period for which deduction is available :
The unit of an entrepreneur, which begins to manufacture or produce any article or thing or provide any
service in a SEZ on or after 1.4.2005, shall be allowed a deduction of :-
i) 100% of the profits & gains derived for a period of 5 consecutive
ii) 50% of such profits and gains for further 5 AYs.
iii) 50% of profit as is debited to the profit & loss account of the PY in respect of which the deduction is
to be allowed and credited to a reserve account (to be called the "Special Economic Zone Re-investment
Reserve Account") to be created & utilised in manner laid down u/s 10AA(2) for next 5 consecutive
years. Deduction u/s 10AA shall not exceed such total income of the assessee.
No such deduction shall be allowed to an assessee who does not furnish a return of income on or before
the due date u/s 139(1).[FA 2023]

11 TDS
1) Sec 206AB(3)
Sec 206AB(3) - "specified person" means a person who has not furnished ROI for the AY relevant to the
PY immediately preceding the financial year in which tax is required to be deducted, for which the time
limit for furnishing ROI has expired and the aggregate of TDS/TCS in his case is rupees 50000 or more in
the said previous year.
However, the specified person would not include
- A non-resident who does not have a permanent establishment in India; or
- A person who is not required to furnish the return of income for the assessment year relevant to the said
previous year and is notified by the Central Government in this behalf. [FA 2023]

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2) Sec 194BA - TDS on winning in Online Games [FA 2023]
Payer [Deductor] Person responsible for paying any sum on winnings in any online game
Payee[Deductee] Any person [R/NR]
Limit Computed in the manner as may be prescribed, at the end of FY
Rate @ 30%
Time of Deduction At the end of the F.Y. In a case where there is a withdrawal from user account during
the FY, TDS shall be deducted at the time of such withdrawal on the net winnings
comprised in such withdrawal, as well as on the remaining amount of net winnings
in the user account. [FA 2023]
Special points Where the winnings are wholly in kind or partly in cash and partly in kind but the
part in cash is not sufficient to meet the liability of deduction of tax in respect of
whole of the winnings, the person responsible for paying shall, before releasing the
winnings, ensure that tax has been paid in respect of the winnings

Accordingly, the CBDT has, vide this circular, issued the following guidelines :

Q 1. There are a large number of gamers who play with very insignificant amount and withdraw also
very small amount. Deducting tax at source u/s 194BA for each insignificant withdrawal would
increase compliance for tax deductor. Can there be relaxation to ease compliance?
Answer :
Tax may not be deducted on withdrawal on satisfaction of all of the following conditions,
namely: -
(i) Net winnings comprised in the amount withdrawn does not exceed 100 in a month;
(ii) Tax not deducted on account of this concession is deducted at a time when the net winnings
comprised in withdrawal exceeds 100 in the same month or subsequent month or if there is no such
withdrawal, at the end of the financial year; and
(iii) The deductor undertakes responsibility of paying the difference if the balance in the user account
at the time of tax deduction u/s 194BA is not sufficient to discharge the tax deduction liability.

Q 2. When the net winnings is in kind how will tax deduction u/s 194BA operate?
Answer :
> At the outset, it may be clarified that where money in user account is used to buy an item in kind and
given to user then it is net winnings in cash only and the deductor is required to deduct tax at source
u/s 194BA accordingly.
> However, there could be a situation where the winning of the game is a prize in kind. In that
situation provision of section 194BA(2) will operate.
> According to this where the net winnings are wholly in kind or partly in cash, and partly in kind but
the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the
net winnings. In these situations, the person responsible for paying, shall, before releasing the
winnings, ensure that tax has been paid in respect of the net winnings. In the above situation, the
deductor will release the net winnings in kind after the deductee provides proof of payment of such
tax (e.g., Challan details etc.).
> In the alternative as an option to remove difficulty if any the deductor may deduct the tax u/s 194BA
and pay to the Government.
Q 3. How will the valuation of winnings in kind required to be carried out?
Answer:
The valuation would be based on fair market value of the winnings in kind except in following
cases :
i) The online game intermediary has purchased the winnings before providing it to the user. In that
case the purchase price shall be the value for winnings.
ii) The online game intermediary manufactures such items given as winnings. In that case, the price
that it charges to its customers for such items shall be the value for such winnings.
It is further clarified that GST will not be included for the purposes of valuation of winnings for TDS
u/s 194BA.

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3) Sec 194A TDS on Interest other than on securities
Accordingly, the Central Government has, vide this notification, specified the Scheme “Mahila Samman Savings
Certificate, 2023”.
“Mahila Samman Savings Certificate, 2023” is a one-time scheme available for two years i.e., from 1st April, 2023 to
31st March, 2025. It offers a maximum deposit facility of upto 2 lakh in the name of women or a girl for 2 years at a
fixed interest rate of 7.5% p.a., compounded quarterly.
Consequently, no tax u/s 194A would be deductible by the post office on interest paid or credited under this scheme
since the amount of interest would not exceed 40,000. [FA 2023] - Notification No 27/2023

4) Sec 194N - TDS on Withdrawal in cash

Limit:
1. Withdrawal exceeding 1cr during PY from one or more accounts maintained by the recipient shall at the
time of payment deduct TDS @ 2% of such sum. However, if the recipient is a co-operative society, tax is
required to be deducted on any sum exceeding ₹ 3 crore. [FA 2023]

5) Sec 192A - TDS on Accumulated Balance of EPF

Other Points
Exemption from TDS :
i. Withdrawal after continuous service of 5 years
ii. In case of withdrawal before continuous service of 5 years and –
(a) Employee opts for transfer of accumulated balance to the new employer
(b) Termination is due to ill health, contraction or discontinuance of business, cessation of employment
etc. [FA 2023]
6) Sec 206C(1G) - TCS Rate
Rate of TCS in case of collection by an authorized dealer seller of an overseas tour
programme package [FA 2023] Circular No. 10/2023 :

Rate of TCS
Sr no Particulars Before 1.10.2023 On or after 1.10.2023
(i) Remittances for the purpose of No TCS upto 7 lakhs
education [other than (ii) below] or 5% of the amt or agg. of amts in excess
medical treatment; of 7 lakh
(ii) Remittances out of loan obtained from
No TCS upto 7 lakhs
any financial institution as referred
0.5% of the amt or agg. of amts in
u/s 80E, for the purpose of pursuing
excess of 7 lakh
any education
(iii) Remittances for purposes other than No TCS upto No TCS upto 7 lakhs
mentioned in (i) to (ii) 7 lakhs 5% on the 20% on the amount or
amount or aggregate of amounts
aggregate of in excess of 7 lakhs
amounts in excess
of 7 lakhs
(iv) Overseas Tour Program Package 5% without any 5% upto 7 lakhs and
threshold limit 20% above 7 lakhs
In exercise of the power to issue guidelines, the CBDT has, with the approval of Central
Government, vide this circular, issued the following guidelines for removing certain difficulties :

Q 1. Whether payment through overseas credit card would be counted in LRS?

Answer:
No TCS shall be applicable on expenditure through international credit card while being overseas till
further order.
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Q 2. Whether the threshold of 7 lakh, for TCS to become applicable on LRS, applies separately for various
purposes like education,health treatment and others? For example, if remittance of 7 lakh under LRS
is made in a financial year for education purpose and other remittances in the same financial year of 7
lakh is made for medical treatment and 7 lakh for other purposes, whether the exemption limit of 7 lakh
shall be given to each of the three separately?
Answer :
> lt is clarified that the threshold of 7 lakh for LRS is combined threshold for applicability of the TCS
on LRS irrespective of the purpose of the remittance.
> Thus, in the given example, upto 7 lakh remittance under LRS during a financial year shall not be
liable for TCS. However, subsequent 14 lakh remittance under LRS shall be liable for TCS in
accordance with the TCS rates applicable for such remittance.
> ln the example, if the remittances under LRS are made in the current financial year at different point
of time, TCS rates for the remaining 14 lakh remittances under LRS would depend on the time of
remittance as TCS rates changes from 1st October 2023.
> TCS rates would be applicable as under :
Remittances Rate of TCS
First 7 lakh remittance under LRS during No TCS
the financial year 2023-24 for education
purpose (or for that matter any purpose)
Remittances beyond 7 lakh under LRS TCS at 5% (irrespective of the purpose unless it
during the financial year 2023-24, if on is for education purpose financed by loan from a
or before 30th September 2023 financial institution when the rate is 0.5%)
Remittances beyond 7 lakh under LRS TCS at 0.5% (if it is for education purpose
during the financial year 2023-24, if on financed by loan from a financial institution),
or after 1st October 2023. 5% (if it is for education or medical treatment)
and 20% (if it is for other purposes)

Q 3. Since there are different TCS rates on LRS for the first six months and next six months of the
financial year 2023-24, whether the threshold of 7 lakh, for the TCS to become applicable on LRS,
applies separately for each six months?
Answer:
No. The threshold of 7 lakh, for the TCS to become applicable on LRS, applies for the full financial year.
lf this threshold has already been exhausted all subsequent remittances under LRS, whether in the first
half or in the second half, would be liable for TCS at applicable rate.

Q 4. Whether the threshold of 7 lakh, for TCS to become applicable on LRS, applies separately for each
remittance through different authorised dealers? lf not, how will authorised dealer know about
the earlier remittances by that remitter through some other authorised dealer?
Answer:
> lt is clarified that the threshold of 7 lakh for LRS is qua remitter and not qua authorised dealer.
> Since the facility to provide real time update of remittance under LRS by remitter is still under
development by the RBl, it is clarified that the details of earlier remittances under LRS by the
remitter during the financial year may be taken by the authorised dealer through an undertaking at
the time of remittance.
> lf the authorised dealer correctly collects the tax at source based on information given in this
undertaking, he will not be treated as "assessee in default". However, for any false information in the
undertaking, appropriate action may be taken against the remitter under the Act.
> It is further clarified that same methodology of taking undertaking from the buyer of overseas tour
program package may be followed by the seller of such package.

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Q 5. There is threshold of 7 lakh for remittance under LRS for TCS to become applicable while there is
another threshold of 7 lakh for purchase of overseas tour program package where reduced rate of
5% of TCS applies. Whether these two thresholds apply independently?
Answer:
Yes, these two thresholds apply independently. For LRS, the threshold of 7 lakh applies to make TCS
applicable. For purchase of overseas tour program package the threshold of 7 lakh applies to determine
the applicable TCS rate as 5% or 20%.

Q 6. A resident individual spends 3 lakh for purchase of overseas tour program package from a foreign
tour operator and remits money which is classified under LRS. There is no other remittance under
LRS or purchase of overseas tour program during the financial year. Whether TCS is applicable?
Answer:
ln case of purchase of overseas tour program package which is classified under LRS, TCS provision for
purchase of overseas tour program package shall apply and not TCS provisions for remittance under
LRS. Since for purchase of overseas tour program package, the threshold of 7 lakh for applicability of
TCS does not apply, TCS is applicable and tax is required to be collected by the seller. ln this case the
tax shall be required to be collected at 5% since the total amount spent on purchase of overseas tour
program package during the financial year is less than 7 lakh. The TCS should be made by the seller.

Q 7. There are different rates for remittance under LRS for medical treatment/education purposes and
for other purposes. What is the scope of remittance under LRS for medical treatment/education
purposes?
Answer :
As per the clarification by the RBl, remittance for the purposes of medical treatment shall
include :
i) Remittance for purchase of tickets of the person to be treated medically overseas (and his attendant)
for commuting between lndia and the overseas destination;
ii) His medical expense; and
iii) Other day to day expenses required for such purpose.

Education Remittance for purpose of education shall include :

i) Remittance for purchase of tickets of the person undertaking study overseas for commuting between
India and the overseas destination;
ii) The tuition and other fees to be paid to educational institute; and
iii) Other day to day expenses required for undertaking such study.

Q 8. Whether purchase of international travel ticket or hotel accommodation on standalone basis is

purchase of overseas tour program package?
Answer :
> The term 'overseas tour program package' is defined as to mean any tour package which offers visit
to a country or countries or territory or territories outside lndia and includes expenses for travel or
hotel stay or boarding or lodging or any other expenditure of similar nature or in relation thereto.
> It is clarified that purchase of only international travel ticket or purchase of only hotel
accommodation, by in itself is not covered within the definition of 'overseas tour program package'.
> To qualify as 'overseas tour program package', the package should include at least two of the
followings :
i) International travel ticket,
ii) Hotel accommodation (with or without food)/boarding/lodging,
iii) Any other expenditure of similar nature or in relation thereto.

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 14 ROI
1) Sec 139A PAN
Further, every person who has not been allotted a PAN and intends to enter into such transaction as
prescribed by the CBDT is also required to apply for PAN to the Assessing Officer. Accordingly, Rule 114BA
has been inserted to prescribe the following transactions [FA 2023]:
The CBDT has, vide this notification, amended the second proviso to Rule 114B to withdraw such relaxation
for a company or a firm. Therefore, w.e.f. 10.10.2023, second proviso to Rule 114B provides that any person,
not being a company or a firm, who does not have a PAN and who enters into any transaction specified in
Rule 114B, has to make a declaration in Form No.60 giving therein the particulars of such transaction.
However, a foreign company who does not have any income chargeable to tax in India and does not have a
PAN and enters into the following transactions, in an IFSC banking unit, has to make a declaration in Form
No. 60. [FA 2023] Notification No : 88/2023
Nature of transaction Value of transaction
Opening an account [other than a time deposit and a Basic
Savings Bank Deposit Account] with a banking company or All such transactions
a co-operative bank to which the Banking Regulation Act,
1949 applies (including any bank or banking institution
referred to in section 51 of that Act).
A time deposit with : Amount exceeding 50,000 or
i) A banking company or a cooperative bank to which the aggregating to more than 5 lakh
Banking Regulation Act, 1949 applies (including any bank during a financial year.
or banking institution referred to in sec 51 of that Act)
ii) A Post Office;
iii) A Nidhi referred to in sec 406 of the Companies Act,
2013; or
iv) A non-banking financial company which holds a
certificate of registration u/s 45-IA of the Reserve Bank
of India Act, 1934, to hold or accept deposit from public.

Meaning of IFSC banking unit : A financial institution defined u/s 3(1)(c) of the IFSC Authority Act,
2019, that is licensed or permitted by the IFSC to undertake permissible activities under the IFSC
Authority (Banking) Regulations, 2020.
The CBDT has, vide this notification, amended Rule 114BA and 114BB, to provide that a person
is not required to apply for PAN or quote PAN, in a case [FA 2023] Notification No : 88/2023 :
(a) Where the person, making the deposit or withdrawal of an amount otherwise than by way of cash
as per (i) or (ii) above, or opening a current account not being a cash credit account as per (iii) above,
is a non-resident (not being a company) or a foreign company;
(b) The transaction is entered nto with an IFSC banking unit; and
(c) Such non-resident (not being a company) or the foreign company does not have any income
chargeable to tax in India.

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2) Accordingly, Rule 114AAA specifies the manner of making permanent account
number inoperative [FA 2023]:

Sub- Rule Provision

(1) If a person, who has been allotted PAN as on 1st July, 2017 and is required to intimate his
Aadhaar number under section 139AA(2), has failed to intimate the same on or before 31st
March, 2022, the PAN of such person would become inoperative and he would be liable for
payment of fee in accordance with section 234H read with Rule 114(5A) i.e., ₹ 1,000.
(2) Where such person who has not intimated his Aadhaar number on or before 31st March,
2022,
CA VIJAY SARDA| has intimated his Aadhaar number
8956651954
under section 139AA(2) after
1.15 31st March, 2022,
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after payment of fee specified in section 234H read with Rule 114(5A), his PAN would
become operative within 30 days from the date of intimation of Aadhaar number.
(3) A person, whose PAN has become inoperative, would be liable for following further
consequences for the period commencing from the date as specified under (4) below till the
date it becomes operative –
(i) No refund of any amount of tax or part thereof, due under the provisions of the Act;
(ii) Interest would not be payable on such refund for the period, beginning with the date
specified under (4) below and ending with the date on which it becomes operative;
(iii) Where tax is deductible at source in case of such person, such tax shall be deducted at
higher rate, in accordance with provisions of section 206AA;
(iv) Where tax is collectible at source in case of such person, such tax shall be collected at
higher rate, in accordance with provisions of section 206CC:
(4) The consequences in (3) above would be effective from the date specified by the Board i.e.,
1.7.2023 [Circular No. 3/2023 dated 28th March, 2023]

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