Union Budget 2024 25 Impact on Tax

1. Union Budget 2024 Fuelling India's transformation Tax highlights • Proposal to comprehensively review the Income Tax Act in a period of 6 months to make it concise and easy to understand • No change in the corporate tax rate for domestic companies; the base corporate tax rate for foreign companies reduced from 40 percent to 35 percent • Tax slabs to be revised for individuals opting for the new regime; overall savings of INR 17,500 expected and a standard deduction to be increased to INR 75,000 • An equalisation levy of 2 percent to be withdrawn from 1 August 2024 • Consideration on buy-back of shares to be taxable in the hands of shareholders from 1 October 2024 • Streamlining the holding period for classification of assets as long-term or short-term capital gains and new capital gains tax rate prescribed from 23 July 2024 • TDS rates for specified payments to be rationalised; prosecution relaxed for TDS defaults if payment is made within the specified timeline © 2024 Deloitte Touche Tohmatsu India LLP.

2. • Attempt to reduce disputes backlog – Direct Tax Vivad se Vishwas Scheme, 2024 proposed; rationalisation of reassessment proceedings; limit for filing appeals to be increased • Scope of safe harbour rules to be expanded and transfer pricing assessment procedure to be streamlined • Securities Transaction Tax on the sale of options and futures to be increased to 0.1 percent and 0.02 percent, respectively • Deduction to employer for a contribution towards the pension scheme increased to 14 percent of the employee’s salary Key highlights under the GST law • A common time limit proposed for issuing demand notices and orders from FY25 onwards, irrespective of fraud or otherwise • Amendments related to the obligation to appear for summons to facilitate the appearance by an authorised representative • Amnesty Scheme provisions notified to provide for a conditional waiver of interest and penalty in respect of demands pertaining to FY18 to FY20; no refund of interest and penalty already paid • Enabling provisions to empower the government to regularise non-levy or short levy of GST, due to general trade practice • ITC of GST paid under reverse charge can be claimed based on the year in which the recipient issues the self-invoice; proposed amendments to provide the timeline to issue such self-invoices • Retrospective amendment proposed to extend the time limit for claiming ITC for FY18 to FY21 to returns filed by 30 November 2021 • Restrictions on ITC for recipients removed in case tax is paid by supplier towards demands in cases of fraud, etc., from FY25 onwards • Refund, with respect to goods subject to export duty, restricted irrespective of whether the said goods are exported with or without payment of taxes • The time limit for filing appeals before the Appellate Tribunal modified to avoid the appeals from getting time barred, on account of the Appellate Tribunal not coming into operation • The maximum amount of pre-deposit for appeals reduced before Appellant Authority/Appellant Tribunal © 2024 Deloitte Touche Tohmatsu India LLP.

3. Key highlights under the Customs law • Customs duty structure will be revamped in the next six months to ease trade, remove inverted duty structure and reduce disputes • The central government will be empowered to specify certain manufacturing and other operations in relation to a class of goods that shall not be permitted in a warehouse under the MOOWR scheme • Exemption from GST compensation cess granted with retrospective effect from 1 July 2017 for goods imported by a unit or developer into a SEZ for authorised operations • Acceptance of different types of proof of origin provided in trade agreements will be enabled to align with new trade agreements that provide for self-certification • As a trade facilitation measure, the period of repair of aircraft/ships under the MRO scheme extended from 6 months to 1 year • Time limit for re-importing goods without payment of duty for repairs under warranty extended from 3 years to 5 years • Basic Customs duty reduced to 15 percent on mobile phones, PCBA for mobiles and mobile chargers • To support the energy transition, list of exempt capital goods will be used in manufacturing solar panels and cells expanded • A review undertaken with respect to 188 conditional exemptions/ concessional rates out of which: - 30 exemptions/concessional rates extended up to 31 March 2029 - 126 exemptions/concessional rates continued up to 31 March 2026 - 28 exemptions/concessional rates lapsed on their end dates of 30 September 2024 - 4 exemptions for which end dates removed © 2024 Deloitte Touche Tohmatsu India LLP.