Union Budget 2024 Expectations: Tax changes that businesses and taxpayers can expect from FM Nirmala Sitharaman

Budget 2024 Expectations: Although the interim Budget 2024 is not expected to bring about substantial changes to the tax laws, given that the elections are just around the corner, but certain procedural changes that would assist the ease of doing business, or that would correct unintended legislative hindrances can still be expected.

Talking about Business to Business (B2B) purchase and sale of goods that attract deduction of tax at source (TDS) and collection of tax at source (TCS) simultaneously, S Sriram, Partner at Lakshmikumaran & Sridharan Attorneys (LKS), says, "The exemptions provided from applicability of both TDS and TCS on the same transactions, though Circulars and clarifications, are not exhaustive. The practical difficulties multiply further, where the transactions are concluded through electronic platform."

In this regard, he says, business houses, more particularly, MSMEs who want to certain relaxations from compliance requirements, would welcome any clarification that can be brought about by the interim budget. "TDS and TCS on sale of goods, more particularly on those carried out through electronic platform, are measures to collect information relating to businesses rather than for collecting tax in advance. Any relaxation in their applicability would not in any manner adversely affect the tax policies," he opines.

The Partner at LKS informs that sunset clauses for availing beneficial rate of taxation for newly set up companies under S. 115BAB are fast approaching. He says that that though most of the establishments have hurdled themselves to meet the deadline of commencing commercial production before 31st March, 2024, and adds, "Considering the larger economic benefit the scheme can have, the due date can be extended to assist those businesses which might need some more time to avail themselves of the benefits of regime."

Referring to income tax slabs pertaining to the individual taxpayer, he says it is not uncommon in interim budgets to grant certain benefits to common man, by expanding the slab rates or granting a standard deduction, keeping in view the raising living costs. He hopes that interim budget too, in line with the interim budgets of 2009 and 2019, will pass on certain benefits to small tax payers. "Possibly, the individuals opting to be taxed under the new regime, can expect certain deductions to be extended to them. Given the rising medical and housing costs, the limits for deduction of medical insurances premia and housing loan repayment, might be expanded," he opines. 

Talking about the recent changes relating to non-resident tax payers, pertaining to furnishing of electronic Tax Residence Certificate, obligation to file tax returns in India, etc., has increased the cost of compliance in relation to transactions undertaken with non-residents. "Some relaxation on procedural issues like obligation of obtaining PAN, authorization of persons to sign on behalf of the non-resident, etc., can definitely improve the collaboration of non-residents to with Indian businesses," he sums up saying.