Khandelwal Jain & Co.

For Private Circulation Only

INTERIM BUDGET 2024-2025

Overview of Significant Proposals

Khandelwal Jain & Co.

H.O. : 6-B&C, PIL Court, 6th Floor, 111, Maharshi Karve Road,
Churchgate, Mumbai – 400 020.
Tel. : 4311 5000 Fax : (91-22) 4311 5050
Email : kjco@kjco.net

R.O. : 12-B, Baldota Bhavan, 5th Floor, 117, Maharshi Karve Road,
Churchgate, Mumbai – 400 020
Tel. : 4311 6000 Fax : (91-22) 4311 6060
Email : mumbai@kjco.net

This is a brief note on the Interim Budget 2024-2025 giving salient features of the
significant proposals. We hope you will find it useful.

-: 1 :-
 Khandelwal Jain & Co.

Branches :

AURANGABAD

First Floor, City Pride Building,

Mondha Naka Signal,
Jalna Road,
Aurangabad – 431 001.
TeI. Nos. (91-240) 6600368, 6600369
E-mail: aurangabad@kjco.net

NEW DELHI

G 8 & 9, Hans Bhavan, Ground Floor,

1, Bahadur Shah Zafar Marg,
Near I.T.O. Office,
New Delhi – 110 002.
Tel. Nos.: (91-11) 23370091 / 0892 / 8795
Fax No. : (91-11) 23378794
E-mail: de1hi@kjco.net

-: 2 :-
 Khandelwal Jain & Co.

I. DIRECT TAX PROPOSALS :

A. INCOME TAX:

1. Rates of Income Tax for Assessment Year 2025-2026:

a) No Change is proposed in the basic rates of income tax in respect of all

categories of assessees.

b) There is no change in rates of surcharge.

c) Health & Education Cess @ 4% on the amount of income tax & surcharge
(wherever applicable) will continue.
1. Certain benefits of Section 10 of the Income Tax Act (the Act) is
extended to 2025, which are as follows:
a) Extension of date of commencement of operation of Investment
Division of Offshore Banking Unit for exemption under section
10(4D):
Under the existing provision, Investment Division of Offshore Banking
Unit is eligible for benefit of exemptions under section 10(4D), if it
commences its operation on or before 31st March, 2024.
The Bill proposes to extend the period of commencement of operation of
Investment division of offshore banking unit on or before 31st March, 2024
to 31st March, 2025 for the purpose of claiming deduction under section.
10(4D).

b) Extension of date of commencement of operation of Investment

Division of Offshore Banking Unit having certificate of registration as
a Category-I Foreign Portfolio Investor under SEBI Regulations, 2019
[Sec. 10(4D)]:
Under the existing explanation to section 10(4D), Specified fund inter alia
includes Investment Division of an Offshore Banking Unit which has been
granted a certificate of registration as a Category-I foreign portfolio
investor under the Securities and Exchange Board of India (Foreign
Portfolio Investors) Regulations, 2019 made under the Securities and
Exchange Board of India Act, 1992 (15 of 1992) and which has
commenced its operations on or before the 31st day of March, 2024.
The Bill proposes to extend the period of commencement of operation of
Investment division of Offshore Banking Unit having certificate of

-: 3 :-
 Khandelwal Jain & Co.

registration as a Category-I Foreign Portfolio Investor under the SEBI

Regulations, 2019, on or before 31st March, 2024 to 31st March, 2025
under the explanation to section 10(4D).

c) Extension of date of commencement of operation of IFSC unit under

section 10(4F):

Under the existing provision, any income of a non-resident by way of

royalty or interest, on account of lease of an aircraft or a ship is eligible for
deduction under section 10(4F) if such income is paid by the unit of IFSC
which has commenced its operations on or before the 31st day of March,
2024.

The Bill proposes to extend the period of commencement of operation of

unit of IFSC on or before 31st March, 2024 to 31st March, 2025 for the
purpose of claiming deduction under section. 10(4F).

d) Extension of Investment date under section 10(23FE):

Under the existing provision, for claiming the deduction under section
10(23FE), the specified person shall make the investment on or after the
1st day of April, 2020 but on or before the 31st day of March, 2024 in
prescribed investment.

The Bill proposes to extend the period of investment made by the specified
person on or before 31st March, 2024 to 31st March, 2025 for the purpose
of claiming deduction under section. 10(23FE).

2. Extension of date of incorporation of eligible startups for profit linked

exemption [Sec. 80-IAC]:

Under the existing provisions, an eligible startup incorporated before 01st

April, 2024 shall be entitled for deduction of 100% of profits and gains
derived from eligible business for 3 consecutive assessment years out of
10 years beginning from the year of incorporation, at the option of the
assessee.

The Bill proposes to extend the period of incorporation of eligible start-ups

from 01st April, 2024 to 01st April, 2025 for the purpose of claiming
deduction under section. 80-IAC.

-: 4 :-
 Khandelwal Jain & Co.

3. Extension of date of commencement of operation of IFSC Unit [Sec.

80-LA]:

Under the existing provision, scheduled bank having an offshore banking

unit in SEZ, a foreign bank having an offshore banking unit in SEZ and
unit of IFSC is eligible for claiming deduction under section 80LA on the
income of transfer of an aircraft or ship which was leased by a unit of IFSC
which is setting up in SEZ and commenced its operation on or before 31st
March, 2024.

The bill proposes to extend the period of unit of IFSC which is setting up
in SEZ and commenced its operation on or before 31st March, 2024 to 31st
March, 2025.

4. Extension of direction issue date [Sec. 92CA, Sec. 144C, Sec. 253 &
Sec. 255]:

Under the existing provision, the Central Government may make a scheme,
by notification in the Official Gazette:-

A) For the purposes of determination of the Arm's Length Price (ALP)

under section 92CA;
B) For the purposes of issuance of directions by the Dispute Resolution
Panel (DRP) under section 144C;
C) For the purposes of filing appeal before Appellate Tribunal under
section 253 and
D) For the purposes of disposal of appeals by the Appellate Tribunal
under section 255.

so as to impart greater efficiency, transparency and accountability. The

Central Government may, for the purpose of giving effect to the scheme,
direct that any of the provisions of this Act shall not apply or shall apply
with such exceptions, modifications and adaptations. Provided that no such
direction shall be issued after the 31st day of March, 2024.

The bill proposes to extend the time period of issue of direction on or

before 31st March, 2024 to 31st March, 2025.

-: 5 :-
 Khandelwal Jain & Co.

5. Rationalisation of Tax Collected at Source (TCS) by authorised dealer

for remitting amount under Liberalised Remittance Scheme (LRS),
seller of an overseas tour program package and in other cases in line
with CBDT Circular No. 10 of 2023 dated 30th June, 2023 [Section
206C(1G)]:

Particulars As per Finance As per CBDT Effective

Act, 2023 Circular No. from
10 of 2023
dated 30th
June, 2023
TCS on remittance for Upto Rs. 7 Lakh Upto Rs. 7 Lakh Not Applicable
Education and Medical – No TCS – No TCS
Treatment
Above Rs. 7 Above Rs. 7 Not Applicable
Lakh - 5% Lakh - 5%
TCS on remittance for Other TCS @ 20% Upto Rs. 7 Lakh 1st July 2023
than Education and Medical Flat – No TCS
Treatment purposes
Above Rs. 7 Not Applicable
Lakh - 20%
Overseas tour program TCS @ 20% Upto Rs. 7 Lakh 1st October,
package Flat – 5% TCS 2023
Above Rs. 7 Not Applicable
Lakh - 20%

Note:
This is not an amendment in rate of TCS. Aforesaid proposal is to align it in line
with Circular No. 10 of 2023 dated 30th June, 2023.

-: 6 :-

II. INDIRECT TAX PROPOSALS:
A. GOODS & SERVICE TAX
Prior to Budget 2024
(61) “Input Service Distributor”
(ISD) means an office of the supplier
of goods or services or both which
receives tax invoices issued under
section 31 towards the receipt of input
services and issues a prescribed
document for the purposes of
distributing the credit of central tax,
State tax, integrated tax or Union
territory tax paid on the said services
to a supplier of taxable goods or
services or both having the same
Permanent Account Number as that
of the said office;
Khandelwal Jain & Co.
After Budget 2024 Our Comments
Amendment of section 2. 1. Definition of “Input Service
Distributor” is substituted by FA,
In the Central Goods and Services Tax Act, 2024 to give effect to discussion by
2017 (hereinafter referred to as the Central GST council in its 50th Meeting so
Goods and Services Tax Act), in section 2, as to clarify that
for clause (61), the following clause shall be
substituted, namely: – i. Obtaining ISD Registration is
going to be mandatory and not
‘(61) “Input Service Distributor” means an optional, once the provisions of
office of the supplier of goods or services or FA, 2024 are made effective i.e.
both which receives tax invoices towards the such input tax credit needs to
receipt of input services, including invoices be distributed and cannot be
in respect of services liable to tax under sub- cross charged.
section (3) or sub-section (4) of section 9, for
or on behalf of distinct persons referred to in ii. the invoice for input services
section 25, and liable to distribute the input received by an Input Service
tax credit in respect of such invoices in the Distributor also includes
manner provided in section 20;”. invoices for input services
received for and on behalf of
their other registrations
referred to as ‘distinct persons’
under section 25 of the CGST
Act, 2017.
-: 7 :-
 Khandelwal Jain & Co.

Prior to Budget 2024 After Budget 2024 Our Comments

iii. ISD is liable to distribute such

credit in the manner and within
the timeline as prescribed and
subject to such restriction and
condition under section 20 of
the CGST Act, 2017.

2. Registered person with multiple

GSTINs will need to make
certain changes in their books of
account to record inward of such
Input tax credit, manner of
distribution thereof and also
ensure that such distributor of
Input tax credit is done in timely
manner by filing return in Form
– GSTR-06.

3. Amendment will make

clarification issued vide Circular
No. 199/11/2023 – GST dated
17.07.2023 clarifying that it is not
mandatory for HO to distribute
the Input tax credit by following
ISD route.

-: 8 :-

Prior to Budget 2024
20. (1) The Input Service Distributor
shall distribute the credit of central
tax as central tax or integrated tax and
integrated tax as integrated tax or
central tax, by way of issue of a
document containing the amount of
input tax credit being distributed in
such manner as may be prescribed.
(2) The Input Service Distributor may
distribute the credit subject to the
following conditions, namely: –
(a) the credit can be distributed to
the recipients of credit against a
document containing such
details as may be prescribed;
(b) the amount of the credit
distributed shall not exceed the
amount of credit available for
distribution;
Khandelwal Jain & Co.
After Budget 2024 Our Comments
Substitution of section 20. 1. Sub-section (1) of section 20 is
proposed to be amended to bring
For section 20 of the Central Goods and it in line with change in definition
Services Tax Act, the following section shall of ISD under section 2(61) of
be substituted, namely: – CGST Act, 2017 proposed by FA,
2024.
“20. (1) Any office of the supplier of goods
or services or both which receives tax 2. Earlier sub-section (2) of section
invoices towards the receipt of input 20 contained certain conditions
services, including invoices in respect of subject to which Input Service
services liable to tax under sub-section (3) or Distributor distribute the Input
sub-section (4) of section 9, for or on behalf tax credit. The amended sub -
of distinct persons referred to in section 25, section (2) does not contain any
shall be required to be registered as Input such restrictions and conditions.
Service Distributor under clause (viii) of It merely states that Input Service
section 24 and shall distribute the input tax Distributor may distribute such
credit in respect of such invoices. input tax credit to its other
registrations in such manner,
within such time and subject to
such restrictions and conditions
as may be prescribed.
-: 9 :-

Prior to Budget 2024
(c) the credit of tax paid on input
services attributable to a
recipient of credit shall be
distributed only to that recipient;
(d) the credit of tax paid on input
services attributable to more than
one recipient of credit shall be
distributed amongst such
recipients to whom the input
service is attributable and such
distribution shall be pro rata on
the basis of the turnover in a
State or turnover in a Union
territory of such recipient, during
the relevant period, to the
aggregate of the turnover of all
such recipients to whom such
input service is attributable and
which are operational in the
current year, during the said
relevant period;
Khandelwal Jain & Co.
After Budget 2024 Our Comments
(2) The Input Service Distributor shall 3. Sub-section (3) is newly inserted
distribute the credit of central tax or so as to provide that credit of
integrated tax charged on invoices received “central tax” may be distributed
by him, including the credit of central or as Central tax or Integrated tax or
integrated tax in respect of services subject to “Integrated tax” as Integrated tax
levy of tax under sub-section (3) or sub- or Central tax depending on
section (4) of section 9 paid by a distinct whether the distinct person is
person registered in the same State as the said registered in the same state on
Input Service Distributor, in such manner, another state.
within such time and subject to such
restrictions and conditions as may be
prescribed.
(3) The credit of central tax shall be
distributed as central tax or integrated tax and
integrated tax as integrated tax or central tax,
by way of issue of a document containing the
amount of input tax credit, in such manner as
may be prescribed.”.
-: 10 :-
 Khandelwal Jain & Co.

Prior to Budget 2024 After Budget 2024 Our Comments

(e) the credit of tax paid on input
services attributable to all
recipients of credit shall be
distributed amongst such
recipients and such distribution
shall be pro rata on the basis of
the turnover in a State or
turnover in a Union territory of
such recipient, during the
relevant period, to the aggregate
of the turnover of all recipients
and which are operational in the
current year, during the said
relevant period.
None Section 122A: Penalty for failure to 1. In terms of Section 148 of the
register certain machines used in Act, 2017 Vide NN 04/2024 dated
manufacture of goods as per special 05.01.2024 – Central tax, Central
procedure. government has notified that a
registered person engaged in
manufacture of Pan Masala
 A new Section 122A has been proposed (21069020) and unmanufactured
to be inserted which will be an Tobacco (2403) of different
overriding section. It imposes penalty on headings Specified the said
the person who is required to comply notification is required furnish
with the special procedure relating to filing to the details of packing
registration of machines under section machine being used for filing and
148 of the CGST Act, for contravention packing of packages in Form GST-
SRN-1 on common portal

-: 11 :-

Prior to Budget 2024 After Budget 2024
of the said special procedure. The
amount of penalty shall be one lakh
rupees for every machine not so
registered. The said penalty shall be in
addition to any other penalty under
Chapter XV or any other provisions of
Chapter XV of the CGST Act.
 In addition to the aforesaid penalty,
every machine shall be liable for seizure
and confiscation. However, no
confiscation shall be done if the
following conditions are satisfied:
(a) the penalty so imposed is paid, and
(b) the registration of such machine is
made in accordance with the special
procedure within three days of the
receipt of communication of the order of
penalty.
-: 12 :-
Khandelwal Jain & Co.
Our Comments
alongwith certificate of Chartered
Engineer within timelines
prescribed and monthly statement.
Section 122A is proposed to be
inserted in CGST Act, 2017 by FA,
2024 so as to provide that failure to
furnish such details of machines
will make such registered person
liable to penalty of Rs. 1 lakh per
machine not registered in addition
to penalty leviable under section 73
or 74 or any other provision of the
CGST Act, 2017. Such machines
not registered are liable to seizure
and confiscation.
However, if a Registered Person
pays the penalty and registers
details of such machine on portal
within 3 days of Communication of
the order of penalty, such machines
cannot be seized or confiscated by
the department.
 Khandelwal Jain & Co.

III. MISCELLANEOUS PROPOSALS:

1. It is proposed to increase capital expenditure by 11.1% to Rs. 11.11 lakh

crore for 2024-25, which would be 3.4% of GDP.

2. Three major economic railway corridor programmes under are PM Gati

Shakti: Energy, Mineral and Cement Corridors; Port Connectivity
Corridors and High Traffic Density Corridors.

3. Electronic National Agriculture Market has integrated 1361 Mandis, and is

providing services to 1.8 crore farmers with trading volume of 3 lakh crore
for value addition in the agricultural sector and boost farmers' income.

4. Proposal of withdrawal of tax demand of:

Sr. Particular Amount

No. (Rs.)
1. Tax Demand outstanding from FY 1962-63 to FY 2009-10 25,000/-
2. Tax Demand outstanding from FY 2010-11 to FY 2014-15 10,000/-

It should be noted that reference has been made in Finance Minister Speech
but no reference has been stated in Chapter III – Direct Tax Proposal of
Finance Bill – 2024.

5. 10 million households will be enabled to obtain up to 300 units of free

electricity every month, through roof-top solarisation.

6. Coal gasification and liquefaction capacity of 100 MT will be set up by

2030. This will also help in reducing imports of natural gas, methanol, and
ammonia.

7. Ayushman Bharat cover will be extended to all Anganwadi and Asha

workers.

8. 40,000 normal rail bogies will be converted to Vande Bharat to enhance

the safety, convenience, and comfort of passengers.

-: 13 :-
 Khandelwal Jain & Co.

9. Key rail infrastructure projects including Metro Rail and Namo Bharat will
be expanded to more cities.

10. Corpus of Rs. 1 lakh Crore will be established with a 50 years of interest-
free loan. The Corpus will provide long-term financing or refinancing with
long tenors and low or nil interest rates to encourage the private sector to
scale up research and innovation significantly in sunrise domains.

11. Under PM Awas Yojana, 2 crore more houses will be taken up in the next
five years to meet the requirement arising from the increase in the number
of families.

-: 14 :-
 Khandelwal Jain & Co.

KHANDELWAL JAIN & CO.

H.O.: 6-B, Pil Court, 6th Floor, 111, M. K. Road, Churchgate, Mumbai – 400 020.
Tel.: (91-22) 4311 5000 Fax: 4311 5050
Email : kjco@kjco.net

R.O.: 12-B, Baldota Bhavan, 5th Floor, 117, M. K. Road, Churchgate, Mumbai –
400 020.
Tel.: (91-22) 4311 6000 Fax: 4311 6060
Email : mumbai@kjco.net

BRANCHES :

Aurangabad : First Floor, City Pride Building, Mondha Naka Signal, Jalna Road,
Aurangabad – 431 001.
TeI.: (91-240) 233 1967, 235 3372 Fax: 235 4844.
E-mail: aurangabad@kjco.net

New Delhi : G 8 & 9, Hans Bhavan, Ground Floor, 1, Bahadur Shah Zafar Marg,
Near I.T.O. Office,, New Delhi – 110 002.
Tel.: (91-11) 2337 0091 / 0892 / 8795 Fax: 2337 8794
E-mail: de1hi@kjco.net

-: 15 :-