JAYESH SANGHRAJKA & CO. LLP CHARTERED ACCOUNTANTS

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1 Income Tax Rates Applicable for Financial Year Status of Person Rate of Income Tax 1.Individual/HUF a. Income: Upto Rs. 2,50,000 Nil b. Income: Rs. 2,50,001 to Rs. 5,00,000 5% c. Income: Rs. 5,00,001 to Rs. 10,00,000 20% d. Income: Rs. 10,00,001 and above 30% 2. Individual (Senior Citizen i.e. more than 60 years) a. Income: Upto Rs. 3,00,000 Nil b. Income: Rs. 3,00,001 to Rs. 5,00,000 5% c. Income: Rs. 5,00,001 to Rs. 10,00,000 20% d. Income: Rs. 10,00,001 and above 30% 3. Individual (Super Senior Citizen i.e. more than 80 years) a. Income: Upto Rs. 5,00,000 Nil b. Income: Rs. 5,00,001 to Rs. 10,00,000 20% c. Income: Rs. 10,00,001 and above 30% 4. Firm/ Local Authority 30%

2 5. Domestic Company a. Turnover less than 250 crores (In FY ) 25% b. Turnover exceeds 250 crores (In FY ) 30% 6. Foreign Company 40% 7. Co operative Society a. Income: Upto Rs. 10,000 10% b. Income: Rs. 10,001 to Rs. 20,000 20% c. Income: Rs. 20,001 and above 30% NOTES: 1. The above rates are subject to surcharge as applicable. 2. Health and Education Cess at the rate of 4% is applicable on the aggregate amount of income tax and surcharge. 3. Resident Individuals and HUF having income not exceeding Rs.3,50,000 can claim rebate of Rs.2,500 or the amount of Income Tax whichever is lower. Rates of Surcharge Taxable Income Status of Assessee 50 lakhs to 1 Crore 1 Crore to 10 Crores Exceeding 10 Crores 1. Individual/ HUF 10% 15% 15% 2. Firm Nil 12% 12% 3. Domestic Company Nil 7% 12% 4. Foreign Company Nil 2% 5% 5. Co operative Society Nil 12% 12% 6. Local Authority Nil 12% 12%

3 Amendments ProposedinBudget, Definition of Accumulated Profits for the Purpose of Dividend (Section 2 (22)) Applicability : In case of Companies where Amalgamation has taken place 1. Proposed amendment expands the meaning of the accumulated profits in the case of an amalgamated company by insertion of explanation. For the purposes of dividend, accumulated profits shall also include accumulated profits of the amalgamating profits also. 2. Previously accumulated profits were not increased by the accumulated profits of amalgamating company in the case of amalgamation of two companies. 3. The following explanation increases the amount of accumulated profits of the amalgamated company and hence any amount distributed to shareholders or beneficial owner will be considered as dividend. Who will be Impacted: Companiesundertaking the Amalgamation shall be affected as the profits shall be increased by the said amount and thereby the liability may go up as far Dividend Distribution tax is concerned. 2. Expansion in the Definition of Income (Section 2(22)) 2A) Applicability: Applies to All assessee 1. When Stock in trade is converted into Capital Assets, the taxability will be in the year of conversion and fair market value of the inventory on the date of conversion will be considered as the full value of consideration. Any gains or loss arising on the same will be taxed under the head profits and gains from business and profession. 2. It is in relation to this amendment, section 2 is proposed to be amended and definition of income is widened.

4 2B) Applicability: Applies to Individuals in Employment 1. Another amendment is proposed in Section 56 (2)(xviib) wherein they have proposed to tax the amount received for termination of employment or for modification of terms relating to modification. 2. It is in relation to this amendment, section 2 is proposed to be amended and definition of income is widened. Who will be Impacted: As far as first amendment is concerned all the persons engaged in business will be impacted as it will increase the taxable business income and burden of tax liability shall increase even though the asset is not sold. 3. Holding Period of the Capital Asset converted from Stock in Trade (Section 2(42A)) 1. Holding period of the stock in trade converted into capital asset will be considered from the date of conversion i.e. Holding period of the capital asset = Date of conversion to Date of Sale. Who will be Impacted: All the assessee who sell the capital asset converted from stock in trade will be impacted as this amendment becomes relevant with regards determination of the nature of the asset i.e. Long term capital asset or Short term capital asset. 4. Expansion of the Scope of Income Deemed to Accrue or Arise in India (Section 9) Applicability: Resident and Non Resident Assessee 1. Firstly, the scope and meaning of the term business connection is expanded to cover incomes which will be deemed to accrue in India and to bring the Act in conformity with Double Taxation Avoidance Agreement. 2. The amendment proposes that if the person has an authority and habitually exercises to conclude contract for the non resident, that are in the name of non resident or for transfer of ownership or for granting right to use of the property owned or for provision for services by the non resident. Then in such case business connection shall get established. 3. Even a person who buys goods for the purpose of export was earlier not considered as business connection; however from now it is withdrawn and even such transaction shall be considered as business connection.

5 4. Secondly, it is also proposed that Significant Economic Presence in India will also be deemed to be a business connection in India and the meaning of the said term is proposed. 5. It includes any transaction including provision for download of data or software in India if aggregate payment from the transaction exceeds the prescribed limit. 6. It also covers companies who are engaged in India through digital means. 7. Thus, by this amendment ACT is being enabled to tax digital transactions and business connection is deemed to exist by way of amendment. Who will be Impacted: Any person making payment to Non Residents who are engaged in India through digital means and Non Residents who carry out their business in India through an agent who habitually exercises and concludes contract on the behalf of non resident as the income earned by such non resident will be deemed to accrue or arise in India. Thus, TDS will have to deduct as transaction is taxable as per act and in the absence of Treaty benefit provisions of Section 195 shall be attracted. 5. Extension of Exemption Benefit to Non Employee person with regards to Pension (Section 10(12A) Applicability: Non Employee investing in National Pension Scheme : It is proposed to substitute the term employee by assesse. By this, any amount received by any person from National Pension System Trust on closure of account was exempt up to 40% of the total amount payable to the person. Any person investing in the National Pension System Trust who is not engaged in employment as they will receive the benefit of the exemption. 6. Restriction of Exemption of Income of Charitable Institutions and Trusts and Other Institutions as regards Section 11 (Section 10 (23C) and Section 11) Applicability: All Institutions to whom 10 (23) applies and Charitable Institutions as covered in Section 11

6 1. It is proposed to include disallowance of cash payments in excess of Rs.10,000 as per section 40A and also disallowance of expense to the extent of 30% if TDS as per section 40(a) for computation of income of the institutions. 2. Thus, by this way even though the expenses have been incurred it will not be considered as application and to this extent taxable income shall increase. Fund or Institution established for charitable purposes approved by prescribed authority, any trust or institution wholly for public religious purposes or for charitable purposes approved by prescribed authority, university or Educational Institution solely for educational purposes and not for profit, hospital or Medical institution solely for philanthropic purposes and not for profit. Their liability shall increase because of the proposed disallowances to the application made by the assessee. 7. Omission of Exemption of Long term Capital Gains (Section10(38)) Applicability: All Assessee It is proposed to remove the exemption in relation to long term capital gains earned by transfer of listed equity shares through recognized stock exchange. Who will be Impacted: Any person having long term capital gains from transfer of listed equity shares through recognized stock exchange will now be liable to tax on the same at the rate of 10% as per Section 112A. 8. Introduction of Standard Deduction and Removal of Medical Reimbursement and Travel Allowance (Section 16 and 17) Applicability: Salaried Person 1. Standard Deduction of Rs.40,000 or salary whichever is lower to be given in the computation of income from salary.

7 2. Medical Reimbursement received upto Rs.15,000 or actual amount received whichever is lower was available as a deduction is now proposed to be omitted. 3. Apart from the Conveyance allowance which was allowed to the extent of Rs.19,200 (based on 1600 per month) shall be omitted by way of rule. However, the same shall be continued to be allowed to handicapped person. Who will be Impacted: Salaried person will be impacted and additional benefit of Rs.5,800 will be received by the person without any supporting to be submitted. 9. Expansion of scope of Profits and Gains from Business and Profession: Applicability: All Assessee Proposed to include any amount received by any person in relation to termination or modification of contract in relation to his business. People who will receive compensation in relation to the termination of contract or modifications of terms of contract will be affected as it will give rise to additional taxable income in the hands of such assessee. Even though there are judgments which have treated them as capital receipt they shall now be taxable because of proposed amendment. 10. Marked to Market Losses Deduction (Section 36 and 40A) Applicability: All Assessee 1. Amendment introduced to make income tax in accordance with provisions of ICDS. 2. Amendment u/s 36 proposes to allow deduction of marked to market loss or other expected losses computed in accordance with the provisions of ICDS notified under section 145(2). All persons incurring marked to market losses will be allowed deduction as the computation as per ICDS.

8 11. Taxation of gains or loss on change in foreign exchange rates Applicability: All Assessee 1. It provides that any gain or loss due to change in foreign exchange rates will be treated as income or loss as the case may be and such computation will be done as per the provisions of ICDS as notified u/s 145(2). 2. The provision will be applicable to foreign currency transactions including: a. Monetary items and non monetary items b. Translation of financial statements of foreign operations c. Forward exchange contracts d. Foreign currency translation reserves. All the persons dealing in foreign currency transactions will be impacted as this section leads to taxation of changes in foreign exchange rates on all the items whether capital in nature or not and will lead to increase in burden of income tax to assessee. 12. Relaxation in the provisions relating income arising out of transactions in immovable property (Section 43CA, 50C and 56) Applicability: In case of Real Estate Transactions where SDV is higher than Sale Value 1. Proposed amendment provides that no adjustment shall be made in a case where the difference is not more than 5% of the sale consideration. 2. Previously, where the stamp duty value is higher than the sale consideration, the entire difference between sale consideration and stamp duty value was taxed in the hands of buyer and seller. 3. For example: If the agreement value is 100 and stamp duty value is 105, earlier the sale consideration was taken as 105 instead of 100. However, with this provision, since the difference is 5% of sale consideration, sale consideration shall be taken as 100 only. Who will be Impacted :

9 The buyer as well as seller of immovable property shall be impacted. Apart from the person engaged in the business of Construction. 13. Insertion of new section 43CB mandating percentage completion method for construction contracts Applicability: In case of Construction Contracts 1. Proposed amendment provides that for purposes of construction contracts, revenue will have to be offered on the basis of percentage completion method only irrespective of the accounting system of the assessee. The contract revenue shall include retention money and no incidental income shall be reduced from contract costs. This is introduced to be in line with the ICDS provisions for Construction Contracts. 2. Previously, the system of accounting followed by the assessee was accepted to calculate the revenue to be recognized. 3. This section is not applicable if duration of project is less than 90 days, then project completion method shall be followed or if there are indeterminate numbers of tasks involved in the project, then revenue shall be recognized on SLM basis. 4. This provision is retrospectively applicable from AY Who will be Impacted : The construction sector shall be impacted as they will have to compulsorily follow percentage completion method to recognize the revenue. By this way taxation is preponed in this sector and it may so happen that person may recognize revenue in year 2, 3 and 4 but would have incurred loss at the end of the project in year 5 and year 6 for which he may not be allowed set off as profits are already offered in prior years. 14. Amendment to section 49 for conversion of stock in trade to capital asset Applicability: In case of conversion of stock in trade to capital asset 1. Proposed amendment provides that when the stock in trade is converted to capital asset, the fair value as on date of conversion shall be the business income and also deemed to be cost of acquisition and period of holding shall be considered from the date of conversion.

10 2. Previously, no specific treatment was provided for the above. The provisions of section 45 provides for conversion of capital asset to stock in trade and not vice versa. 3. In relation to this, amendment to the provisions of section 28 is also proposed to include Fair Market Value of asset so converted as income. Who will be Impacted : All business persons that convert stock in trade to capital asset shall be impactedas with this move taxability is preponed and will result in taxability at an early stage wherein there would not even be funds for payment of tax. 15. Amendment for restriction of scope of section 54EC Applicability: In case of sale of land or building 1. Proposed amendment provides that deduction under section 54EC shall be available only on transfer of land or building or both and not on any other long term capital asset. Also, the holding period of the bonds specified has been increased to five years. 2. Previously, deduction under section 54EC was available on transfer of any long term capital asset if the assessee purchased the bonds specified and held them for at least three years. Who will be Impacted : It shall impact people that have sold a capital asset other than land or building as no deduction shall be available to them under this section. It shall also impact person that sells land or building as the bonds specified will have to be held for a longer period. 16. Amendments in provisions of section 56 Applicability: Applies to Individuals in Employment 1. Another amendment is proposed in Section 56(2)(xviib) wherein they have proposed to tax the amount received for termination of employment or for modification of terms relating to modification. 2. It is in relation to this amendment, section 2 is proposed to be amended and definition of income is widened.

11 Who will be Impacted : The provision proposed to be introduced already existed under the provisions of Section 17(3). Thus it remains to be seen as to where Assessing Officer would tax, as both the provisions provide for taxing same thing. 17. Amendment in the provisions of section 79 for allowing the carry forward and set off of losses. Applicability: In case of companies that have approved a resolution plan by Insolvency and Bankruptcy Code, Proposed amendment provides that if there is a change in shareholding under a resolution plan approved by Insolvency and Bankruptcy Code, 2016, this provision shall not apply and assessee shall be allowed to set off the losses of previous years irrespective of the change in shareholding. 2. Previously, if there was a change in shareholding/voting power exceeding 49% of the previous shareholding/voting power, the assessee was not allowed to set off the losses of previous years. Who will be Impacted : It shall impact the companies under the Insolvency and Bankruptcy Code, 2016 as they will be allowed to set off the losses even if there is a change in share holding pattern. The same is in support of the Insolvency laws introduced by the government and through amendment in Income Tax Act; it would further help the companies under Insolvency. 18. Insertion of new section 80AC to mandate filing of return on or before due date for availing deduction Applicability: In case of assessee s claiming income based deductions under Chapter VI A 1. Proposed amendment provides that to obtain any deduction under the Chapter VI A under head C Deduction in respect of certain income, return of income will have to be filed on or before the due date of filing the return.

12 2. Previously, return of income should be filed on or before the due date of filing return to avail deduction only under section 80 IA, 80 IAB, 80 IB, 80 IC, 80 ID or 80 IE. All income based deductions under Chapter VI A are proposed to be included. Who will be Impacted : It shall impact the assessee s claiming income based deduction as they will have to file their return of income on or before the due date to avail the deduction. Thus, if return is not filed within the due date no deduction shall be allowed. 19. SECTION 80D Applicability:The proposed section is applicable to Senior citizen. : 1. For health insurance premiums paid by Senior citizen the limit has been increased to Rs.50, Earlier the said limit was Rs.30,000 which has now been proposed to increase it to Rs.50,000. The amendment has increased the benefits to all the senior citizens with respect to the expenditure on health insurance, preventive health check up and medical expenditure. Also the concept for very senior citizen has been removed for Section 80D. 20. SECTION 80DDB Applicability: This section is applicable to individuals resident in India where expenditure is incurred for himself or a dependent and HUF where expenditure is incurred for any member of HUF. : 1. The deduction under this section is available to all senior citizens upto an amount of Rs.1 lakh. 2. The fourth proviso for very senior citizens shall be omitted from this section thus extending common benefit to all senior citizens.

13 Senior citizens claiming a deduction under section shall be positively impacted. 21. SECTION 80 IAC Applicability: This section is applicable to start up companies or LLPs which involves innovation, development of products or a scalable business model with a high potential of employment generation or wealth creation. : 1. The definition of eligible business for this section has expanded the scope to businesses engaged in innovation, development or improvement of products which are generating employment and wealth creation. 2. The conditions for qualifying as a startup has been amended as follows: a. It is incorporated on or after the 1 st day of April but before the 1 st day of April b. The total turnover of business does not exceed 25 crores rupees in any of the seven previous years including the year in which it was incorporated. The eligibility for claiming deductions under this section has been extended to start ups incorporated after 1 st April 2019 but before 1 st April SECTION 80 JJAA Applicability: This deduction is applicable to assesses having income from business and having Tax audit, who gives employment to new employees. : 1. Additional deduction of amount of 30% of additional employee cost shall be allowed under this section. 2. In the explanation to clause (ii) of sub section 2 the words or footwear or leather products shall be inserted after the words manufacturing of apparel. This will increase the benefit to the assesses claiming deductions under this section undertaking the businesses in the mentioned industries.

14 3. The criteria of 150 days instead of 240 days have been extended to the mentioned businesses. 4. A proviso is proposed to be inserted wherein it is stated that if an employee is employed for 240 days or 150 days as the case may be in the succeeding year of the relevant previous year, the employee will be deemed to be employed in the succeeding year and the provisions of this section shall apply accordingly. The businesses of footwear and leather products have been provided the benefit of claiming deduction of 30% of additional employee cost even if any of the employees has been employed for at least 150 days. 23. SECTION 80 PA Applicability: This section is applicable to Producer Companies having a total turnover of less than one hundred crore rupees in any previous year. : 1. This new section has been proposed to provide deduction of 100% of profits of an eligible business in case of producer companies whose turnover is less than 100 crore rupees and the turnover includes profit from the eligible business. 2. For the purpose of this section eligible business means the marketing of agricultural produce grown by the members; or the purchase of agricultural implements, seeds, livestock, or other articles intended for agriculture for the purpose of supplying them to members; or the processing of agricultural produce to members. Companies in the business of production, marketing, processing and purchasing of agricultural products.

15 24. SECTION 80TTB Applicability: This section is applicable to senior citizens. : 1. This section is introduced for senior citizens earing income by way of interest on deposits with banks, co operative banks and post office. 2. The deduction under this section is the amount of interest earned or fifty thousand rupees whichever is less. 3. If the deposit is held on behalf of the firm, association of persons or body of individuals then the deduction shall not be allowed to any partner of the firm, any member of the association or any individual of the body. 4. Also as per the amendment in section 194A, TDS shall not be deducted on the interest earned by a senior citizen upto fifty thousand rupees. Senior citizens have been provided the benefit of claiming deduction upto fifty thousand rupees while earlier it was only ten thousand rupees. 25. SECTION 112A Applicability: To all Persons earning gains from transfer of Shares or Mutual Funds which are equity oriented. : 1. If the income of an assessee includes income by way of capital gains being gains earned on transfer of a capital asset being an equity share of a company or a unit of equity oriented mutual fund and on which STT has been duly paid then the tax on such gains shall be computed as per the provisions of this section. 2. The income tax shall be calculated at the rate of 10% on long term capital gains exceeding one lakh rupees. 3. For computing the capital gains, the cost of acquisition of the capital asset shall be deemed to be higher of Actual cost of acquisition and Lower of fair market value of such asset or full value of consideration.

16 4. If the gross total income of an assessee includes long term capital gains the deduction under chapter VI A shall not be allowed on the amount of Long term capital gains. 5. Rebate under section 87A shall not be allowed on the long term capital gains. 6. For the purposes of this section, fair market value means the highest price of capital asset quoted on the stock exchange if it is listed on the stock exchange as on 31 st January 2018 or Net asset value of the capital asset if such asset is a unit of fund and not listed on the stock exchange. Assesses trading in equity shares or mutual funds and earning capital gains in excess of one lakh rupees. 26. SECTION 115AD Applicability: This section is applicable to Foreign Institutional Investors earning income other than by way of dividends referred in section 115 O or income by way of short term or long term capital gains arising from the transfer of such securities : A proviso has been inserted stating that the income by way of long term capital gains referred to in section 112A shall be taxed at 10% on the gains exceeding one lakh rupees. Foreign Institutional Investors shall also be taxed on long term capital gains referred to in section 112A. 27. Section 115BBE Applicability: All Assesses The Section 115BBE was silent as to whether the assessee would get any deduction if AO has made additions in the total income of the assessee which is deemed to be the unexplained income.

17 The finance Bill, 2018 proposed that the Assessee will not be eligible to claim deduction even in the case where additions were made by the AO for the unexplained income. The Effective rate from the AY onwards as per section 115BBE shall be 60% + Surcharge + Cess as applicable. Who will be Impacted All assesses that offer dissatisfactory or no explanations, regarding the nature and source of income, in the opinion of AO shall be affected. 28. Section 115JB a) Relief to Foreign Companies Applicability All foreign companies offering income on presumptive basis. MAT provisions shall not applicable in case of foreign companies that opt for presumptive taxation under section 44B or 44BB or 44BBA or 44BBB of the Act. Who will be impacted The foreign companies shall make payment only on presumptive basis and MAT shall not be applicable. b) Relief to companies while calculating book profits. Applicability Companies applying for insolvency under Insolvency and Bankruptcy Code, 2016 While calculating the book profits in the case of companies that have applied for insolvency the Finance Bill provides Relief to those companies by way of deduction from book profits the amount aggregate of the following 1. Unabsorbed depreciation, and

18 2. Brought forward Losses. Earlier there was no such provision granting relief to such assesses. Who will be impacted? To end the hardship faced by the companies under Insolvency Resolution. Companies applying under Insolvency and bankruptcy code shall be relieved while computing the book profits as they will be getting deduction of unabsorbed depreciation as well as brought forward losses. 29. Section 115 JC and 115 JF Applicability IFSC (International Financial Service Centre) which derives income solely in convertible foreign exchange. What is an IFSC? An IFSC caters to customers outside the jurisdiction of the domestic economy. Such centers deal with flows of finance, financial products and services across borders. London, New York and Singapore can be counted as global financial centers. IFSC can provide Fund Raising services, Asset Management services, Wealth management and Global tax management services. The AMT as per section 115JC in case of IFSC (International Financial Service Centre) which derives its income solely in convertible foreign exchange, the rate shall be 9% against the existing rate of 18.5% as per section 115JF. Who will be impacted? Foreign Investors dealing in convertible foreign exchange at the International Financial Service Centre will be liable at reduced rate of tax. It is proposed to set up IFSC in Gujarat and is popularly called as GIFT city.

19 30. Section 115O JAYESH SANGHRAJKA & CO. LLP Applicability To Closely held companies who make advances 1. Deemed dividend covered under section 2(22)(e) was taxable in the hands of shareholders. 2. It is proposed to bring the deemed dividend under the ambit of DDT thus Companies are now liable to pay DDT on Deemed dividend also. The rate applicable hereinafter shall be 30% DDT as per section 115 O. 3. Also, since on Deemed dividend DDT is applied, for shareholders it shall become exempt as per provisions of Section 10(34). Who will be impacted The taxability of deemed dividends in the hands of shareholders had led to lots of litigation and it lead to serious problem of collection of Tax. Thereby now the burden is shifted to company for paying DDT on the Deemed 30% as per the proposed amendment. 31. Section 139A Applicability The assessee (other than an Individual) entering into a financial transaction of Rs.2,50,000/. And all the persons competent to act on behalf of person other than individual who is entering into financial transaction. 1. The above section is proposed to be amended that every entity should have to obtain a PAN as its Unique Entity Number if they enter into financial transaction of more than Rs.2,50,000/ in any financial year. 2. It may be noted that the term Financial Transaction has not been defined.

20 3. The persons who aremanaging director, director, partner, trustee, author, founder, Karta, chief executive officer, principal officer or office bearer of the persons referred to as above. Who will be impacted? Thus all the persons who are engaged in entering into Financial transaction exceeding Rs.2,50,000 shall be required to apply for PAN. The limit of Rs.2,50,000 is for the transaction amount and it does not talk about actual amount that shall be taxable. 32. Section 140 Applicability The companies applying for Insolvency as per Insolvency and Bankruptcy Code, The companies applying for insolvency resolution process shall be required to verify the Return by the insolvency professional appointed by such adjudicating authority. Who will be impacted? Since Insolvency professionals are responsible for the company, they shall be responsible for verifying the return of such companies. 33. Section 143 A) 143(1): NO Adjustment to Income u/s 143(1) based on Form 26AS, 16A Applicability Applies to all the persons 1. NO addition shall be made merely because of the difference in Form 26AS, 16 and Form 16A.

21 Who will be impacted? Everyone shall be relieved from the fact that no income adjustment shall be made by the system itself while processing the return of income under 143(1). B) 143(3A) : Introducing Scheme for making E Assessment Applicability Applies to all the persons whose case is selected for Assessment or reassessment 1. Government is empowered to frames scheme for making E assessment possible so that there can be greater efficiency, transparency and accountability 2. It is proposed to eliminate interface between assessee and Assessing Officer, make optimum use of technology and doing team based assessment with dynamic jurisdiction. Who will be impacted? Everyone whose scrutiny shall be selected shall be impacted, because in e assessment with dynamic jurisdiction, assessee does not know where his AO would be and it would also be in violation of principles of natural justice due to lack of personal hearing. 34. Section 145 Applicability: To all persons engaged in carrying out business and profession 1. Valuation Of Inventory will be done at (i) Actual cost or (ii) net realizable value whichever is lower 2. Valuation of purchased goods or sales of goods inventory will include tax according to (i) actually paid (ii) incurred expense for bringing goods and services to the place of its location and condition date of valuation. 3. Valuation of inventories (securities) if recognized and listed but they are not quoted on a recognized stock exchange it shall be valued at the actual cost initially recognized As per ICDS. 4. Valuation of Inventories other than at 3 above shall be valued at lower of cost or NRV as per ICDS.

22 Who Will be impacted Everyone who is engaged in the business and profession shall be affected since the valuation methodologies are being changed and thereby changing the period of taxability. 35. Section 194A Applicability: To Senior Citizens earning Interest income 1. NO TDS shall be deducted for interest income up to Rs.50,000 earned by senior citizen from : Deposit with Banks Deposit with Post Offices Fixed Deposits Schemes Recurring Deposit Schemes. 2. The said amendment is being introduced in line with the provisions of section 80TTB wherein it is provided that there shall be deduction of Interest income earned up to Rs.50,000 to senior citizens. Who Will be impacted Senior citizens shall be relieved to some extent, as there income shall not be reduced because of deduction of TDS. 36. Section 253 Applicability:To Chartered Accountant, Merchant Banker and Registered valuer. 1. Penalty can be levied by CIT (Appeals) or Assessing Officer on a Chartered Accountant, Merchant Banker and Registered Valuer for furnishing incorrect information in his report or certificate. 2. So, it is now being proposed that such order passed by Commissioner shall be appealable before Hon. ITAT.

23 Who Will be impacted Remedy is granted to above mentioned professionals by making the said order appealable directly before Hon. Income Tax Appellate Tribunal. 37. Section 271FA Applicability : To persons who are responsible for filing statement of Financial transaction What is statement of financial transaction? It is a specified financial transactions or any reportable account registered/recorded/maintained by them during the financial year to the income tax authority or such other prescribed authority. What is the due date for filing of statement of financial transaction or reportable account by prescribed reporting financial institution? The statement shall be furnished for each calendar year in Form No. 61B on or before 31 st May of the next year. The below table reflects the penalty that is currently levied and what is proposed in the amendment: Failure to furnish an annual information return as required under section 285BA(1) Failure to furnish annual information return within the period specified in notice u/s 285BA(5) BEFORE Rs.100 per day of default Rs.500 per day of default AFTER Rs.500 per day of default Rs.1000 per day of default Who Will be impacted Harsh liability is imposed onpeople who are liable to file Statement of Financial Transaction. With increase in penalty it is expected to have better compliance from all the persons.

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