3.Start-ups
February,2023 | 2
Content
1.TCS –Roadblock for ODI?
2.Limitation of rollover benefit
4. MMR –a conundrum
TCS –Roadblock for ODI?
Tax collection at source
• TCS on remittances made under the Liberalized Remittance Scheme (other than education and medical treatment)increased
Increased to TCS Rate for LRS in
excess of Rs. 7 lakh
5% 20%
TCS applicable?
India Outside India Company
InAugust 2022, Government has revamped the erstwhile ODI Regulations.
February,2023 | 4
Limitation of rollover benefit
Limitation of rollover benefit
With effect from AY 2024-25, deduction of long-term capital gains limited to Rs. 10crore under section 54 and 54F of the Act.
• The maximum limit of INR 100million is also applicable in case of amount deposited in the Capital Gain Account Saving Scheme.
Interest on borrowed capital claimed as a deduction under house property cannot be considered for the purpose of computing Cost of Acquisition / Improvement.
February,2023 | 6
Sell Purchase
other LTCA
Section 54 Section 54F
Any
(after considering deduction)
*Without considering interest expenses which have already been claimed as a deduction under House Property.
February,2023 | 7
Particulars Amount (in crores) Pre-amendment Post amendment (effective from AY 2024-25) Interest expenses claimed under House Property 2 2 Cost of acquisition (including interest expenses) 22 22 Capital gain on sale of asset Sale consideration 45 45 Cost of acquisition 22 20* Capital gains 23 25 Section 54F deduction 23 10 (maximum) Capital gains
NIL 15
Illustration
taxable
Startups
Relief to startups
Extension of Sunset Clause for 80-IAC Deduction
Extension of timeline for incorporation of "Eligible Startup"
Increased time limit to set-off & carry forward of losses
- From 7 years to 10years (for eligible startups in case of change in shareholding beyond 51%)
- Applicable from AY 2023-24 onwards
February,2023 | 9
Pre amendment Post amendment From To March 31,2024 April 1,2016
From To March 31,2023 April 1,2016
Angel tax – Demon in the making?
Taxation of consideration received in excess of fair market value of shares
Angel Tax Provisions
Coverage extended to Non-residents
Specified Startups (meeting below mentioned conditions)
exempt from Angel Tax Provisions
• DPIIT Recognised
• Aggregate paid-up share capital and share premium of startup after issue or proposed issue of shares < ₹25 crores
Eligible startups
2019 notification excluded eligible startups fulfilling prescribed conditions from the ambit of “angel tax” provisions.
• Has not invested in specified assets for the period of seven years from the end of the latest financial year in which shares are issued at premium:
February,2023 | 10
MMR –a conundrum
MMR – a conundrum
• Rate of maximum surcharge applicable to individual, AOP, BOI reduced from 37% to 25%for taxpayers opting for the new tax regime.
Reduced to
Effective Tax rate 42.74%
39%
(29C) "maximum marginal rate" means the rate of income-tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an individual,association of persons or,as the case may be,body of individuals as specified in the Finance Act of the relevant year;
February,2023 | 12
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