Amendment of Direct Tax Dhruv Coaching Classes Pvt. Ltd. CMA Akshay Sen Direct Tax

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1 1 Direct Tax (AMENDMENTS) Finance Act, 2017 For CMA Inter & Final (June-18 & Dec-18 Exam.) By CMA AKSHAY SEN Dhruv Coaching Classes Pvt. Ltd. A1-A2,opposite Saras Dairy,Janta Store, Jaipur Mob. No.: ,

2 2 INCOME TAX RATES INDIVIDUAL Total Income (AY 17-18) (AY 18-19) < 2.5 lakhs Nil Nil 2.5 lakhs to 5 lakhs 10% 5% 5 lakhs to 10 lakhs 20% 20% Rs. 10 lakhs and above 30% 30% Rebate u/s 87A The Tax rebate which was available for all assesses with total income upto Rs. 5 lacs, were eligible for rebate u/s 87A upto Rs.5000 on the tax payable. However, from AY (FY ), the rebate is restricted to people having total income upto Rs.3.5 lacs only. And the rebate u/s 87A has been reduced to Rs Surcharge on Total Income In FY (AY 17-18), the surcharge for individuals is applicable for those who have Total income over Rs. 1 crore at the rate of 15% of the total taxes payable. From FY (AY 18-19), the surcharge for individuals is applicable as follows: Total Income Upto Rs. 50 lacs No surcharge Total Income from Rs. 50 lacs to Rs.1 crore 10% of tax payable Total Income of Rs.1 crore and above 15% of tax payable Senior and Super Senior Citizens Senior Citizens (60 years to 80 years) and Super Senior Citizens (80 years and above) have not received any additional benefits other than beneficial 5% slab rate reduction upto Rs.5 lacs INCOME TAX RATES PARTNERSHIP FIRMS Regular Tax: (a) Rate of 30% of Total Income (b) Remuneration to partners maybe paid out of Total Income with maximum ceiling as follows, before calculating 30% in step (a) On the first Rs. 3,00,000/- of the Book Rs. 1,50,000/- 90 % of Book Profits, Profits or in case of Loss whichever is Higher On the of book profits (a) Interest upto 12% on capital allowed Surcharge as follows: Total Income up to Rs.1 crore Nil Total income > Rs. 1 crore 12% No changes made in Finance Act, 2017 for Rates for Partnership Firms INCOME TAX RATES CORPORATES/COMPANIES (I) INCOME TAX RATES Domestic Companies (a) Regular rates Total Income Existing Rates (AY 17-18) Rates (AY 18-19) Turnover upto Rs. 50 crores(turnover in FY 15-16) 30% 25% Turnover greater than Rs.50 crores 30% 30%

3 3 (b) Surcharge Total income upto Rs. 1 crore Nil Total income from Rs. 1 crore to Rs.10 crores 7% Total income greater than Rs.10 crores 12% Foreign Companies (a) Regular Rates Tax at the rate of 40% of Total Income - However, where Royalties of FTS received from services rendered to the Govt., that will be 50% (b) Surcharge Total income upto Rs. 1 crore Nil Total income from Rs. 1 crore to Rs.10 crores 2% Total income greater than Rs.10 crores 5% (II) MAT u/s 115 JB MAT rate is 18.5% of book profits of the company Period of carry forward of MAT Credit was allowed for upto 10 years. This has now been increased to 15 years in Finance Act, 2017 INCOME FROM HOUSE PROPERTY (a) Restriction on set-off of loss from House Property against other heads of income Earlier Excess of loss from house property after adjusting interest paid against rental incomes is allowed to be set-off against any other head of income without limits. Any remaining house property loss, after setting off current year, maybe carried forward and set-off against only income from house property in the following years. The excess can still be set-off against other heads of income in that year, however, it is limited to a ceiling of Rs.2,00,000 only Now If there is still any loss from house property beyond Rs.2,00,000; it may be carried forward to the next year. However, it can only be set-off against income from house property in the subsequent years. It may be carried forward for 8 subsequent years before it lapses, if not set-off. Carry forward and set-off provisions remain the same b)house Rent Allowance If Rent paid > INR 1,00,000 per year (>INR 8333 per month) - Landlord Name and PAN is mandatory in submission to employer. c)interest paid on house property loan If interest paid on house property loan is to be claimed by an employee, he/she must submit Lender Name and PAN of Lender to the employer includes Banks, NBFCs, Housing Finance Cos.

4 4 d)tds on Rent Paid If Rent paid is greater than Rs.50,000/- per month TDS to be deducted by 5% and paid to the Government. TAN not required. e)benefit for Real Estate Companies or House Developers No notional rent to be taxed on house property inventory which is less than 12 months old, from the end of the year in which the property is completed. Therefore, if property is completed on 1 st July, 2017, then no notional rent is taxable for 12 months from end of FY in which property is completed. End of FY 31 st March, Therefore, 12 months from end of FY is 31 st March, PROFIT & GAINS FROM BUSINESS AND PROFESSION 1. Sec. 35: This Section provided for weighted deduction in respect of contribution made to specified institutions. This weighted deduction is modified from AY as follows: 2. Sec. 35AD: Under the existing provisions of Sec. 35AD, deduction in respect of expenditure of capital nature incurred, wholly or exclusively, during the year for a specified business is allowed. Subsection (1A) of Sec. 35AD provides that weighted deduction of 150% is available for certain specified businesses. This weighted deduction of 150% under sub-section (IA) is withdrawn by Finance Act, 2016, w.e.f Also, Finance Act, 2016 has extended. the benefit u/s. 35AD to infrastructure facility business, if it is owned by company, consortium of companies, authority, board, corporation or any other body established under the Central or State Act, and has an agreement with Central Government or State Government or Statutory Body. 3. Sec. 36(1)(viia): The existing provisions of Sec. 36(1)(viia) provides for deduction in respect of provision for bad and doubtful debts, to the eligible assessees engaged in banking business. The amount of such deduction is limited to 7.5% of the gross total income (computed before making any deduction under this clause and Chapter Vl-A) and an amount not exceeding 10% of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner at the end of the previous year. The existing provisions are amended to increase the deduction in respect of provision for bad and doubtful debts from 7.5% of total income to 8.5% of total income. 4. Sec. 40A(3): Under the existing provisions of the Act, expenditure incurred in cash exceeding monetary threshold of. 20,000 is not allowable as per sec. 40A(3) except in specified circumstances as referred to in Rule 6DD of the Income-tax Rules, The existing provisions are amended to reduce the threshold of cash payment from. 20,000 to. 10,000. Further, electronic clearing system through a bank account is also included as an accepted mode of payment under the section. 5. Sec. 43(1): actual cost of an asset for the purpose of claiming depreciation. The existing provisions are amended to exclude, a payment or aggregate of payments made to a person, in a day in excess of

5 5 Rs. 10,000, by a mode otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system, from the actual cost of the asset acquired. 6. Sec. 44AA: The existing provisions of sec. 44AA(2) of the Act cast an obligation on every person carrying on business or profession other than those mentioned in sec. 44AA(1) (specified profession) to maintain books of account. The existing provisions are amended to increase the monetary limits of income and total sales or turn over or gross receipts, etc., specified in said clauses for maintenance of books of accounts from. 1,20,000 to. 2,50,000 and from. 10,00,000to. 25,00,000, respectively. The new monetary limits are applicable in the case of Individuals and Hindu undivided family carrying on business or profession. 7. Sec. 44AB: provides for audit of accounts of the assessee by an accountant in certain cas es. The existing provisions are amended to provide that in case of an assessee declaring profits and gains for the previous year in accordance with the provisions of Sec. 44AD(1) need not comply with provision of Sec. 44AB if the total sales, total turnover or gross receipts does not exceed. 2 Crores. 8. Sec. 44AD: provides for presumptive income scheme in case of an eligible assesses carrying out eligible businesses. Under presumptive scheme a sum equal to 8% of the total turnover or gross receipts is deemed to be the profits and gains of such business. The existing provisions are amended to reduce the existing rate of deemed total income from 8% to 6% in respect of the amount of total turnover or gross receipts received by an account payee cheque or account payee bank draft or use of electronic clearing system during the previous year and received on or before the due date specified in Sec. 139(1). 9. Extending the benefit of additional depreciation for power sector [Section 32(1)(iia)] [W.e.f.AY ]:- An assessee engaged in the business of generation or transmission or distribution of power shall be allowed additional depreciation at the rate of 20% of actual cost of new machinery or plant acquired and installed in a previous year. 10. Deduction in respect of provision for bad and doubtful debt in the case of Non-Banking Financial companies [Section 36] [W.e.f. A.Y ]:- Section 36(1)(viia) of the Act, in computing the profits of a public financial institutions, State financial corporations and State industrial investment corporations or Non-Banking Financial Companies (NBFCs) a deduction, limited to an amount not exceeding 5% of the gross total income, computed, before making any deduction under the aforesaid clause and Chapter VI-A, is allowed in respect of any provision for bad and doubtful debt. 11.Expenses incurred by the assessee towards specified services shall be disallowed if the equalization levy has not been deducted and paid [Section 40(a)(ib)] [W.e.f ] "Any consideration paid or payable to a non-resident for a specified service on which equalisation levy is deductible under the provisions of Chapter VIII of the Finance Act, 2016 shall not be allowed as deduction if such levy has not been deducted or after deduction, has not been paid on or before the due date specified in section 139(1). However, where in respect of any such consideration, the equalisation levy has been deducted in any subsequent year or has been deducted during the previous year but paid after the due date specified in section 139(1), such sum shall be allowed as a deduction in computing the income of the previous year in which such levy has been paid."

6 6 12. Maintenance of accounts by certain persons [Section 44AA(2)(iv)] [W.e.f. A.Y ] The assessee shall have to maintain accounts where the provisions of section 44AD(4) are applicable in his case and his income exceeds [basic exemption limit] the maximum amount which is not chargeable to income-tax in any previous year. [Claiming lower income than the income prescribed u/s 44AD & during the year income BEL ] (a) Tax Audit Limits[44 AB] Tax audit is applicable to the following classes of Assessee s if the turnover exceeds the limits as specified below: Category Limit of turnover/gross receipts Professionals Exceeding Rs. 50 Lakhs during the year Business Assesses Exceeding Rs. 1 Crore during the year If profits are lesser than the presumptive taxation prescribed rates, tax audit will be required. (b) Presumptive Taxation i) Small tax payers/small businesses (Sec 44AD) For businesses and non-professionals, the following rates are applicable Turnover upto Rs. 200 Lakhs Deemed Profit is as follows: Tax as % of revenue When the rate is applicable 6% of gross receipts Received by cheque or electronic or banking channels or net banking 8% of gross receipts Other than those covered by above ii)small Professionals (44ADA) Gross Receipt upto Rs. 50 Lakhs - Deemed Profit is 50% of Gross Receipts Why is Presumptive Taxation is beneficial? Exemption from the need to maintain books of account Exempted from advance tax and allowed to pay their entire tax before due date of filing his return of income POINTS TO REMEMBER 1. The Partnership Firms were previously eligible to claim deduction of Partners Remuneration and Interest paid to partners out of the Deemed Profit declared under this section, however w.e.f. A.Y , this has been omitted 2. Where an Assessee takes the benefit of the presumptive taxation provisions, he must do the same for the next 5 Assessment Years also. If, in any of the 5 next AYs, the Assessee fails to use these provisions, he will be denied the benefit of these provisions for a period of 5 years, from the year he fails to use these provisions as mandated. For example, an eligible assessee claims to be taxed on presumptive basis under section 44AD for Assessment Year and offers income of 8 lakh on the turnover of 1 crore. For Assessment Year and Assessment Year also he offers income in accordance with the provisions of section 44AD. However, for Assessment Year , he offers income of 4 lakh on turnover of 1 crore. In this case since he has not offered income in accordance with the provisions of section 44AD for five consecutive assessment years, after Assessment Year , he will not be eligible to claim the benefit of section 44AD for next five assessment years i.e. from A.Y to DEPRECIATION The Finance Act 2017 is silent on Depreciation, however vide CBDT Notification issued on 7 th March, 2017 a cap was placed on depreciation. W.e.f. FY (AY 18-19), the changed depreciation rates are as follows:

7 7 Asset Deprecation rate FY Deprecation rate FY Computer, Laptops, Software etc. 60% 40% Renewable energy devices 80% 40% Air pollution control equipments 100% 40% MAINTENANCE OF BOOKS OF ACCOUNTS FOR INDIVIDUALS & HUF Earlier Now Profit from such profession or business exceeds Profit from such profession or business ` 1,20,000 exceeds ` 2,50,000 The total sales or turn- over or gross receipts The total sales or turn- over or gross receipts thereof is in excess of ` 10,00,000 thereof is in excess of ` 25,00,000 INCOME FROM CAPITAL GAIN TAX ON CAPITAL GAIN FROM SALE OF EQUITIES (i) Short Term Capital Gain on Sale of Equities & Equity Oriented Mutual Funds: 15 % on a Recognised Stock Exchange in India (ii) Long Term Capital Gain on Sale of of Equities & Equity Oriented Mutual Funds: NIL (No tax) If traded on a Recognized Stock Exchange in India To claim exemption u/s 10 (38) for shares acquired after , it will be mandatory that the STT must have been paid at the time of Purchase. Private placements and purchase of shares out of the index/market will be affected by this. HOLDING PERIOD OF A LONG TERM CAPITAL ASSET Shares of Unlisted companies if sold after 2 years, shall be treated as Long Term This has been changed from what was earlier 36 months i.e. 3 years. Now the holding period has been reduced to 2 years for it to become a Long Term Capital Asset BASE PERIOD FOR INDEXATION HAS BEEN CHANGED FROM 1981 TO 2001 Base Year has been changed from 1981 to 2001 These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year and subsequent years. INCOME FROM OTHER SOURCES Dividend income Taxation Under the existing provisions of section 115BBDA, income by way of dividend in excess of Rs. 10 lakh is chargeable to tax at the rate of 10% on gross basis in case of a resident individual, Hindu undivided family or firm. With a view to ensure horizontal equity among all categories of tax payers deriving income from dividend, it is proposed to amend section 115BBDA so as to provide that the provisions of said section shall be applicable to all resident assessees except domestic company and certain funds, trusts, institutions, etc. Now expanded to all persons except companies, certain funds and trusts. Scope of income from other sources widened Receipt of cash or property by any person from any other person without consideration or inadequate consideration in excess of INR 50,000 to be taxed. Existing exceptions continue.

8 8 Nature of Expenditure CAPITAL Purchase of Fixed Assets (a) in aggregate from a person in a day; (b) in respect of a single transaction; or (c) in respect of transactions relating to one event or occasion from a person RESTRICTION ON CASH TRANSACTIONS Existing New Limit If Violated - implication Limit No Limit Rs.10,000/- per day per asset The expenditure shall not be included in the cost of asset. No Depreciation benefit. REVENUE Expenditure on No Limit Rs.10,000/- per No deduction shall be allowed in Specified Business day per asset respect of such expenditure. REVENUE General Rs. 20,000/- Rs.10,000/- per No deduction shall be allowed in Expenditure per day to a day per asset respect of such expenditure. person Any Payment received: No Limit Rs.2,00,000/- Penalty u/s 271DA equal to the (Revised amount of such payment received fro by a person. m Rs.300,000/- while finalising the Act) DEDUCTIONS Section Nature of tax planning Limit Notes 24(b) Interest on Housing Loan Upto Rs. 2 lacs (Self Occupied) No change 80C Investments in Life Rs.1.50 lacs No change Insurance Premium, PF, PPF, NSC, ULIP, housing loan repayment, Tax benefit mutual funds 80CCD Investment in pension Upto Rs.0.50 lacs For individuals other than employee - limit of investment in NPS increased to scheme 20% of GTI 80D Mediclaim Insurance Very Senior Citizen: New limit for Very senior Rs.30,000 citizen introduced. No other Sr. Citizen : Rs. changes 30,000/- Others : Rs. 25,000/- 80EE Continued Deduction from previous year - for Interest on Loan taken for se Property Residential Hou Rs.50,000/- Conditions:- 1. First time House Purchase 2. Home Loan sanctioned in House Cost upto Rs. 50 Lakhs or Less 4. Loan Amount upto 35 Lakhs or Less 5. When the deduction is allowed for Interest under this section, deduction shall not be allowed in respect of such

9 9 80GG Rent Paid Lower of Following: 1. Rs. 60,000 p.a % of Total Income; 3. Rent Paid 10% of Total Income 80JJA Deduction in respect of Employment of new employees 30% of Additional Employee Cost (Conditions of Additional Employee Cost are separately discussed) interest under any other provision of this act. Lower Limit increased from Rs. 24,000/- p.a. to Rs. 60,000/- p.a. Conditions:- 1. Section 44AB should be applicable; 2. Gross Total Income includes Profits & Gains of Business; 3. Accountant Report is submitted in Prescribed Format. No Deduction in Following cases:- 1. The business is formed by splitting up, or the reconstruction, of an existing business; 2. The business is acquired by the assessee by way of transfer from any other person or as a result of any business reorganization; Sec. 80-IAC: The provisions of this section, provide that an eligible start-up engaged in eligible business shall be allowed a deduction equal to 100% of the profits and gains derived from eligible business for three consecutive assessment years of 7 years [3/7] beginning from the year in which the eligible start-up is incorporated. CARRY FORWARD AND SET-OFF OF LOSSES FOR START UPS 1. Sec. 71: This section relates to set-off of loss from one head against income from another. Subsection 3A has been inserted to Sec. 71 to provide that setoff of loss under the head Income from House Property against any other head of income shall be restricted to two lakh rupees for any assessment year. The portion of unabsorbed losses, if any, shall be carried forward to subsequent years for set off. AS PER FINANCE ACT, Carry forward and set off of loss under section 73A of the Income-tax Act to be allowed only if the return of such loss is filed as per section 139(3) before the due date specified under section 139(1) [Section 80] [W.r.e.f. A.Y ] In accordance with the scheme of the Act, any specified business referred to in section 35AD to be allowed if the return is filed within the specified time i.e. by the due date of filing of the return of the income as provided in section 80 for other losses determined under the Act. 2. Sec 115BBE- Income relating to sec 68 to 69D is taxable at the rate of 60% SURCHARGE- 25%, EDU CESS-3%]and further provides that no dedution is allowed. SET OFF OF ANY LOSS SHALL NOT BE ALLOWABLE IN RESPECT OF INCOME U/S 68 TO 69D.

10 10 TAX DEDUCTED AT SOURCE 1. Sec. 194-IB: any person, being an individual or a Hindu Undivided Family (other than those referred to in the Sec. 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall be liable to deduct 5%. 2. Sec. 194-IC: Finance Act, 2017 inserted a new section 45(5A) which provides that in case of an assessee being individual or Hindu Undivided Family, who enters into a specified agreement for development of a project, the capital gains shall be chargeable to income-tax as income of the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority. Consequently, Sec. 194-IC has been inserted to provide that person responsible for paying to resident any consideration (not being consideration in kind) under specified agreement, shall deduct at the time of credit or payment, whichever is earlier. However, where the payee has not furnished PAN, tax shall be 3. Sec. 194J: Deduction of tax at source on payment made to assessee engaged in business of call centre: When aggregate of sum paid/payable exceeds 30,000 to a person in a financial year. Then 2%. This is effective from Sec. 194LA: Non-deduction of tax on compensation or enhanced compensation in certain cases: The existing provision of Sec. 194LA of the Act, provides that any person paying any compensation or enhanced compensation or consideration on account of compulsory acquisition of any immovable property (other than agricultural land) under any law for the time being in force, shall deduct tax at source at the rate of 10%. A proviso has been inserted to provide that, tax need not be deducted at source where the payment is made in respect of any award or agreement which has been exempted u/s. 96 of Rights to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, (RFCTLARR Act ). The provision of Sec. 194LA has been amended to provide that no deduction shall be made under this section where such payment is made in respect of any award or agreement which has been exempted from levy of income-tax u/s. 96 of RFCTLARR Act ASSESSMENT PROCEDURES Sec. 139(5): The provisions of sec. 139(5) are amended to provide that the return filed u/s. 139(1) / 139(4) can be revised on or before the end of the relevant assessment year or before completion of assessment, whichever is earlier. Sec. 234F - Fee for delayed filing of return: A new section has been inserted to provide for levy of fee on delayed filing of return thereby, any person who is required to furnish a return of income, fails to do so within the time prescribed u/s. 139(1), shall pay fee as follows: (i) where the return is furnished on or before 31st December of the relevant assessment year Rs. 5,000; or (ii) in any other case Rs. 10,000. However, if the total income of the person does not exceed Rs. 5,00,000, the fees payable u/s. 234F shall not exceed Rs Sec.153: Sec. 153 specifies time limit for completion of assessment, reassessment and recomputation in the cases mentioned therein. The time limit specified in Sec. 153 is amended as follows:

11 11 1. Order of assessment u/s. 143 or Order of reassessment u/s Order of fresh assessment: Section 153(3) Within 12 months(earlier 9 months) from the end of financial year in which: a)order u/s 254 is received by principle chief commissioner or chief commissioner or principle commissioner or commissioner OR b)order u/s 263,264 is passed by the principle commissioner or commissioner AMENDMENT RELATING TO ADVANCE TAX Sec. 211 & Sec. 234C: Liability for payment of Advance tax by an assessee opting for presumptive taxation u/s. 44ADA: Sec. 211 of the Act provides for installments of advance tax and due dates for depositing the same. The said section further provides that an eligible assessee engaged in an eligible business referred to in Sec. 44AD and opts for payment of tax on presumptive basis is liable to pay advance tax in a single installment on or before the 15th of March every financial year. Sec. 234C to provide that an eligible assessee opting for presumptive taxation u/s. 44ADA, if failed to pay advance tax on or before 15th March of the previous year, shall be liable to pay interest u/s. for one month. Sec. 244A - Interest on Refund due: The existing provisions of sec. 244A of the Act provides that an assessee is entitled to receive interest on refund arising out of excess payment of advance tax, tax deducted or collected at source, etc. A new sub-section (1B) has been inserted to provide that where any amount of refund becomes due to the deductor in respect of any amount paid to the credit of the Central Government under Chapter XVII-B, such person shall be entitled to receive, in addition to the refund due, simple interest on such refund, calculated at the rate of 0.5% for every month or part of a month comprised in the period, from the date on which: c) claim for refund is made in the prescribed form or d) tax is paid, in case of refund arising on account of giving effect to an order of appeal u/s. 250 or 254 or 260 or 262, to the date on which refund is granted. UNEXPLAINED INCOME INCREASE IN TAXES AND PENALTIES Increase in rate of tax & surcharge on income from unexplained sources from 30% to 60% + 25% surcharge on income Assessee is now permitted to disclose the same in the return of income. if self-declared then tax will be at 77.25%, including surcharge. However, if it is not declared and is detected by the AO, then the tax will including surcharge. PENALTY PROVISIONS SECTION 270A Under reporting of Income Penalty leviable at 50% in the following scenarios a) Income assessed > Income declared in returns which are processed u/s 143(1)(a)

12 12 b) Income assessed > Maximum amount not chargeable to tax if no return filed c) Income reassessed > Income assessed or reassessed d) MAT/AMT Income assessed > Income declared in returns e) MAT/AMT Income assessed > Maximum amount not chargeable to tax, if no return filed f) MAT Income reassessed > Income assessed or reassessed g) Income assessed / reassessed leads to reduction of loss/converting loss to income Heavy 200% in cases of misreporting of income OTHER PENALTIES Section Nature of Default Penalty Leviable 271AAB Search has been initiated and undisclosed income found - 30% of undisclosed assessee admits income and specified the manner in which income such income is derived 271AAB 271A 271B 271BA 271H Where search has been initiated and undisclosed income found - assessee does not admit income or specify the manner in which such income is derived Failure to keep, maintain, or retain books of account, documents, etc., as required under section 44AA Failure to keep, maintain, or retain books of account, documents, etc. Failure to furnish a report from an accountant as required by section 92E Failure to deliver/cause to be delivered a statement within the time prescribed in section 200(3) / 206C(3), or Furnishes incorrect information in the statement 271 I As per section 195(6) of the Act, any person responsible for paying to a non-resident or to a foreign company, any sum (whether or not chargeable to tax), -shall furnish the information relating to such payment in Form 15CA and 15CB. -penalty shall be levied in case of any failure 60% of Undisclosed Income Rs.25,000 Rs.25,000 Rs.1,00,000 Not less than Rs. 10,000 but not more than Rs. 1,00,000 Rs. 1,00, A(1) Refusal or failure to: answer questions, sign statement, Rs.10,000 for each summons & notices u/s 143(2) etc compliance failure or default 272AA(1) Failure to comply with section 133B (collection of information) Not exceeding Rs B Failure to quote PAN in specified transactions Rs.10, BB Failure to : Rs. 10,000 for each (1) / (1A) -obtain TAN failure/default -quote TAN wherever required (as per Sec 203A) COMPULSORY QUOTING OF PAN Quoting of PAN will be compulsory in the following cases: Sale or purchase by any person of goods or services of any nature other than immovable properties, shares, motor vehicle in excess of Rs 2 Lacs per transaction, irrespective of mode of payment. Hotel/Restaurant bills in excess of Rs 50,000/-paid by cash (increased from Rs 25,000/-) Sale or purchase of immovable property exceeding Rs 10 lacs (increased from Rs 5 Lacs) Purchase or Sale of unlisted shares Rs 1 Lac (increased from Rs 50000/-).

13 13 CMA FINAL ASSESSMENT OF TRUST a. Sec. 115JAA: Tax credit determined under this section can be carried forward up to 15 assessment year immediately succeeding the assessment year in which such tax credit becomes allowable. b. Where a company is entitled to Foreign Tax Credit (FTC) u/s. 90/90A/91 and it is allowed against tax payable u/s. 115JB then, if such FTC exceeds FTC admissible against tax payable under the normal provisions of the Act, such excess FTC shall be ignored in computing the amount of MAT credit available for the company. TRANSFER PRICING Sec. 92BA: The existing provisions of sec. 92BA of the Act, provide that any expenditure in respect of which payment has been made by the assessee to certain specified persons u/s. 40A(2)(b) are covered within the ambit of specified domestic transactions. The existing provisions are amended to provide that expenditure in respect of which payment has been made by the assessee to a person referred to in u/s. 40A(2)(b) are to be excluded from the scope of sec. 92BA of the Act. Sec. 92CE: Secondary adjustment in certain cases: An adjustment, resulting in an increase in the total income or reduction in the loss of an assessee, made to the transfer price in accordance with the arm s length principles is called a primary adjustment. A secondary adjustment is required to be made where a primary adjustment exceeds Rs. 1 Crore and it: ii. has been made suo motu by the assessee in his return of income ; or iii. is made by the Assessing Officer and has been accepted by the assessee; or iv. is determined by an advance pricing agreement entered into by the assessee u/s. 92CC; or v. is made as per the safe harbour rules framed u/s. 92CB; or vi. is arising as a result of resolution of an assessment by way of the mutual agreement procedure under an agreement entered into u/s. 90 or 90A for avoidance of double taxation. Sec. 94B - Limitation of Interest deduction in certain cases: Any expenditure by way of excess interest or of similar nature incurred by an Indian company or a permanent establishment of a foreign company in India, in respect of any form of debt issued by an associated enterprise, shall not be deductible in computation of income under the head Profits and Gains of Business or Profession. Excess interest shall mean an amount of: (a) Total interest paid or payable in excess of 30% of the borrower s earnings before interest, taxes, depreciation and amortization (EBITDA) in the previous year; or (b) Actual interest paid or payable to associated enterprises for that previous year, whichever is less. The disallowed interest expense under this section can be carried forward upto 8 assessment years immediately succeeding the assessment year for which the disallowance was first made and claimed as deduction against the income computed under the head Profits and gains of business or profession to the extent of maximum allowable interest expenditure for that year. For any query and further notes kindly contact Dhruv Coaching Classes &