circular no. 1/2024 circular explaining the provisions of the finance act 2023

1 CIRCULAR NO. 1/2024 F. No. 370142/38/2023 Government of India Ministry of Finance Department of Revenue (Central Board of Direct Taxes) **** Dated the 23rd of January, 2024 EXPLANATORY CIRCULAR CIRCULAR EXPLAINING THE PROVISIONS OF THE FINANCE ACT, 2023 2 CIRCULAR INCOME-TAX ACT Finance Act, 2023 ─ Explanatory Notes to the Provisions of the Finance Act, 2023 CIRCULAR NO. 1/2024, DATED the 23rd of January, 2024 AMENDMENTS OF THE INCOME-TAX ACT, 1961 CARRIED OUT THROUGH FINANCE ACT, 2023 Section of Income-tax Act, 1961 Particulars 2 Definitions 9 Income deemed to accrue or arise in India 10 Incomes not included in total income 10AA Special Provisions in respect of newly established units in Special Economic Zones 11 Income from property held for charitable or religious purposes. 12A Conditions for applicability of sections 11 and 12 12AB Procedure for fresh registration 13 Section 11 not to apply in certain cases 17 "Salary", "perquisite" and "profits in lieu of salary" defined 28 Profits and gains of business or profession 35D Amortization of certain preliminary expenses 43B Certain deductions to be only on actual payment 43D Special provision in case of income of public financial institutions, public companies etc. 44AB Audit of accounts of certain persons carrying on business or profession 44AD Special provision for computing profits and gains of business on presumptive basis 44ADA Special provision for computing profits and gains of profession on presumptive basis 44BB Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils. 44BBB Special provision for computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain turnkey power projects 45 Capital Gains 47 Transactions not regarded as transfer 48 Mode of computation 49 Cost with reference to certain modes of acquisition 50AA Special provision for computation of capital gains in case of Market Linked Debenture 54 Profit on sale of property used for residence 3 54EA Capital gain on transfer of long-term capital assets not to be charged in the case of investment in specified securities. 54EB Capital gain on transfer of long-term capital assets not to be charged in certain cases. 54EC Capital gain not to be charged on investment in certain bonds. 54ED Capital gain on transfer of certain listed securities or unit not to be charged in certain cases. 54F Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house 55 Meaning of ‘adjusted’, ‘cost of improvement’ and ‘cost of acquisition’ 56 Income from other sources 72A Provisions relating to carry forward and set-off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger, etc. 72AA Carry forward and set off of accumulated loss and unabsorbed depreciation allowance in scheme of amalgamation in certain cases. 79 Carry forward and set off of losses in case of certain companies 80C Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures etc. 80CCC Deduction in respect of contribution to certain pension funds 80CCD Deduction in respect of contribution to pension scheme of Central Government 80CCH Deduction in respect of contribution to Agnipath Scheme 80G Deduction in respect of donations to certain funds, charitable institutions, etc. 80-IAC Special provision in respect of specified business 80LA Deductions in respect of certain incomes of Offshore Banking Units and International Financial Services Centre 87 Rebate to be allowed in computing income-tax 87A Rebate of income-tax in case of certain individuals 88 Rebate on life insurance premia, contribution to provident fund, etc. (omitted) 92BA Meaning of specified domestic transaction 92D Maintenance, keeping and furnishing of information and document by certain persons 94B Limitation on interest deduction in certain cases 111A Tax on short-term capital gains in certain cases 4 112 Tax on long-term capital gains 115A Tax on dividends, royalty and technical service fees in the case of foreign companies 115BAC Tax on income of individuals and Hindu Undivided Family 115BAD Tax on income of certain resident co-operative societies 115BAE Tax on income of certain new manufacturing cooperative societies 115BB Tax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever. 115BBJ Tax on winnings from online games. 115JC Special provisions for payment of tax by certain persons other than a company 115JD Tax credit for alternate minimum tax 115TD Tax on accreted income 115UA Tax on income of unit holder and business trust. 115VP Method and time of opting for tonnage tax scheme 116 Income-tax authorities. 119 Instructions to subordinate authorities 131 Power regarding discovery, production of evidence, etc. 132 Search and seizure 133 Power to call for information. 134 Power to inspect registers of companies. 135A Faceless collection of information. 140B Tax on updated return 142 Inquiry before assessment 148 Issue of notice where income has escaped assessment 149 Time limit for notice 151 Sanction for issue of notice. 153 Time limit for completion of assessment, reassessment and recomputation 154 Rectification of mistake. 155 Other amendments 158A Procedure when assessee claims identical question of law is pending before High Court or Supreme Court. 158AB Procedure where an identical question of law is pending before High Courts or Supreme Court. 170A Effect of order of tribunal or court in respect of business reorganisation 5 177 Association dissolved or business discontinued. 189 Firm dissolved or business discontinued. 192A Payment of accumulated balance due to an employee 193 Interest on securities 194B Winnings from lottery or crossword puzzle,etc. 194BA Winnings from online games 194BB Winnings from horse race. 194LC Income by way of interest from Indian company 194N Payment of certain amounts in cash. 194R Deduction of tax on benefit or perquisite in respect of business or profession 196A Income in respect of units of non-residents. 197 Certificate for deduction at lower rate 206AB Special provision for deduction of tax at source for non-filers of income-tax return 206C Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc. 206CC Requirement to furnish Permanent Account number by collectee 206CCA Special provision for collection of tax at source for non-filers of income-tax return 241A Withholding of refund in certain cases. 244A Interest on refunds. 245 Set off and withholding of refunds in certain cases 245D Procedure on receipt of an application under section 245C 245MA Dispute Resolution Committee 245R Procedure on receipt of application 246 Appealable orders before Joint Commissioner (Appeals) 249 Form of appeal and limitation. 250 Procedure in appeal 251 Powers of the Joint Commissioner (Appeals) or the Commissioner (Appeals). 253 Appeals to the Appellate Tribunal 264 Revision of other orders 267 Amendment of assessment on appeal. 269SS Mode of taking or accepting certain loans, deposits and specified sum. 269T Mode of repayment of certain loans or deposits. 271 Failure to furnish returns, comply with notices, concealment of income, etc. 271A Failure to keep, maintain or retain books of account, documents, etc. 271AAC Penalty in respect of certain income. 271AAD Penalty for false entry, etc., in books of account. 6 271C Penalty for failure to deduct tax at source 271FAA Penalty for furnishing inaccurate statement of financial transaction or reportable account. 271J Penalty for furnishing incorrect information in reports or certificates. 274 Procedure. 275 Bar of limitation for imposing penalties. 276A Failure to comply with the provisions of sub-sections (1) and (3) of section 178. 276B Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B. 279 Prosecution to be at instance of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. 287 Publication of information respecting assesses in certain cases 295 Power to make rules. AMENDMENTS TO THE FINANCE (NO. 2) ACT, 2004 CARRIED OUT THROUGH FINANCE ACT, 2023 Revision of rates of Securities Transaction Tax by amendments in Finance (No. 2) Act, 2004- Chapter of Finance (No. 2) Act, 2004 Particulars Chapter VII Securities Transaction Tax