Budget - 2017 7 th Feb 2017 Rajendra Prasad Talluri B.Com; FCA; Grad CWA TRP & CO Chartered Accountants
Budget 2017 Direct Tax Proposals Sections focussing upon TRP & Co. Real Estate 5 Rationalization of provisions 25 Measure to stimulate Growth 6 Ease of Business 26 Digital Economy 7 Anti abuse 16 Grand Total 85 1
Some of the welcome proposals in Budget 2017 1) Taxation of JDAs: [Sec 45(5A)] [Clause 22 of the Fin Bill, 2017] 2) Certainty in taxation w.r.t Indirect Transfers [Sec 9] [Clause 4 of the Fin Bill, 2017] 3) Clarification of Methodology of computing deduction under section 10AA [Clause 7 of the Fin Bill, 2017] 4) Capital Gains Exemption for Individuals / HUFs who were the owners of land / building / both etc,. As on 2 nd June 2014 in AP [Sec 10(37A)] [Clause 6 of the Fin Bill, 2017]: 5) Cap on Cash Donations [Rs 2000/-] to a Political party & 80G institutions [Sec 139(4B) (Clause 11 of the Fin Bill, 2017) and Sec 80G (Clause 35)] 6) Political Parties are also required to file returns within due date: [Sec 139(4B)] [Clause 11 of the Fin Bill, 2017] 7) SDT Provisions rationalized [Sec 92BA] [Clause 41 of the Fin Bill, 2017] TRP & Co. 8) Allowing foreign tax credit even for MAT Adjustment; Secondary Adjustments in TP cases which are not litigated, etc,. 2
Key judgements nullified / Clarified by the Finance Bill, 2017 JDAs to be taxed on completion of the project but not at early stages Carbon credits are taxed at 10% without allowing any allowance [ACIT Vs A.Ram Reddy] [2012] [23 Taxmann.com 59] [Hyd - Tribunal] 10AA is to be computed for the assessee before giving effect to Sec 10AA CIT Vs My Home Power Ltd [2014] [46 Taxmann.com 314] [AP HC] + Rental income for unsold flats need not offered for tax for one year. CIT Vs Yokogawa India Ltd [Civil Appeal No 8498 of 2013; 337328 of 2016][SC] Disallowance of capital expenditure when incurred in cash exceeding Rs 10K, etc,. TRP & Co. Delhi Hc Judgement Delhi Hotels Ltd s Vs ACIT lead to this amendment. [37 Taxmann.com 251] [2013] [CIT Vs Mark Auto Industries Limited [2013] [40 Taxmann.com 482] [P&H] [Judgement in the context of Sec 40(a)(i)]
How to claim the benefit of Sec 10AA [Before Amendment] Particulars Sec 10AA Sec 80-IA Total Year 1 Profits [Rs in lakhs] 15 (10) Less: Deduction at Chapter III level (15) - GTI Less: Deduction at Chapter VI-A level Total Income Year 2 Profits [Rs in lakhs] 18 20 38 Less: Deduction at Chapter III level (18) - (18) GTI 20 Less: Deduction at Chapter VI-A level after set off as per 80- IA(5) Total Income 10 Nil Nil Nil (10) TRP & Co. 4
How to claim the benefit of Sec 10AA [After Amendment] Particulars Sec 10AA Sec 80-IA Total Year 1 Profits [Rs in lakhs] 15 (10) Less: Deduction at Chapter III level - - GTI 5 Less: Deduction at Chapter VI-A level [Towards 10AA] Total Income Year 2 Profits [Rs in lakhs] 18 20 38 Less: Deduction at Chapter III level - - - GTI 38 Less: Deduction at Chapter VI-A level [Sec 10AA] (18) Less: Deduction at Chapter VI-A level [Sec 10AA] (20) Total Income 5 Nil Nil TRP & Co. 5
Thank You DRAFT TRP & Co. Rajendra Prasad Talluri rpdynamic@gmail.com 9963 250 500 98495 79 413
Hyderabad Branch of SIRC of ICAI 07 th February, 2017 PVSS Prasad, FCA pvsatya.prasad@gmail.com
Highlights of Finance Bill 2017 1. Rates of Income Tax 18. Discouraging Cash transactions 2. Incentives for immovable property 19. Sec 92BA relating to SDT 3. Consolidation plans of mutual fund 20. Co-operative Banks 4. Conversion Preference into Equity Shares 21. Maintenance of books of accounts 5. Indirect transfer provisions 22. Requirement of audit u/s 44AB 6. Tax-exemption- NPS 23. Digital payments 7. Exemption of LTCG tax 24. Capital gains in JDA 8. Exempt income of Relief Fund 25. Capital Gains- Base year 9. Corpus donations 26. Foreign Company Demerger 10. Development of capital of AP 27. Sec 115TD 11. Rationalisation of sec 10AA 28. Income from Other Sources 12. Sections 11 & 12 29. FMV in few cases 13. Electoral Funding 30. Long term bonds Sec 54EC 14. H/P as stock-in-trade 31. Disallowance for non-deduction of tax 15. Sections 32 & 35AD 32. Set off of HP loss 16. Sec 35AD(7B) 33. C/f & Set off of loss in companies 17. Prov. for bad and doubtful debts 36. Sec. 80 CCD
37. Sec 80CCG 55. Processing of return 38. Cash Donations 56. TDS for individual & HUF 39. Sec 80-IBA 57. Sec. 194J 40. Secondary Adjustments Sec 92CE 58. Exempt compensation- RFCTLAAR Act 2013 41. Interest deduction- limitation 59. Rupee Denominated Bonds & ECB 42. Taxation of dividend 60. Sec 194 LD 43. Taxation of carbon credits 61. Form 15G/H u/s 194D 44. MAT & AMT 62. TCS specified buyers 45. Penalty in case of TDS & TCS 63. Restrictions on cash transactions 46. Reason to conduct search 64. PAN in TCS regime 47. Reference to Valuation Officer 65. Sec 211 & 234C 50. Power to survey 66. Interest on refund 51. Sec 133C 67. AAR 52. Exempt entities filing return 68. Sec 253 Amendment 53. Time limit for assessment etc 69. Sec 112- Clarification 54. Fee for delay in return filing
Rates of Income Tax [Clause 2 & First Schedule],[Clause 38] Slab rate: Income Slab Upto Rs 2,50,000/- Tax Rate Nil Rs 2,50,001/- upto Rs 5,00,000/- 5% Rs 5,00,001/- upto Rs 10,00,000/- 20% Rs 10,00,001/- and above 30% Surcharge @ 10% taxable income is between 50 Lakhs to 1 Crore Surcharge @ 15% shall continue to be applicable if taxable income exceeds 1 Crore The Education cess and Secondary and Higher education cess shall continue to be levied @ 2% and 1% respectively. Marginal relief will continue to be allowed in cases where taxable income is more than Rs. 1Cr. Additional marginal relief is proposed to be allowed in cases where taxable income is more than Rs. 50 Lakhs in parity with the proposed additional surcharge for such cases. 4
Rates of Income Tax [Clause 2 & First Schedule], [Clause 38] Slab rate for domestic company: Income Slab Total Income upto 1 Crore Tax Rate Tax rate as applicable^+ Nil Surcharge Rs 1,00,00,001/- upto Rs 10,00,00,000/- Tax rate as applicable^+ 7% surcharge * Above Rs 10,00,00,000/- Tax rate as applicable^+ 12% surcharge ** Current Tax Rate 30% ^ For companies with total turnover/ gross receipts of PY 2015-16 does not exceed Rs 50 crores, income tax rate is 25%, all other cases it is 30% * For companies other than domestic companies it is 2%. ** For companies other than domestic companies it is 5%. Rebate u/s 87A Resident Individual Existing Rs.5000/- if Total Income < 5 Lakhs Proposed Rs.2500/- if Total Income < 3.50 Lakhs w.e.f. 1 st April, 2018 5
Incentives for promoting investment in immovable property [Clause 3] Holding period for an asset to qualify as long term asset is 36 months subject to certain exceptions like holding period of 24 months has been specified for unlisted shares Proposed: To amend sec 2(42A) of the Act, to reduce the holding period to 24 months for an asset to qualify as long term capital asset. Asset being immovable property, i.e. land or building or both w.e.f. 1 st April, 2018 6
Consolidation of plans within a scheme of mutual fund[clause 3 & 25] sec 47 tax neutrality to the transfer of units in a consolidating plan of mutual fund scheme made in consideration of the allotment of units in the consolidated plan of that mutual fund scheme. Proposed: To amend sec 2(42A) and sec 49, cost of acquisition of the units in the consolidated scheme in sec 47(xix) shall be the cost of units in the consolidating scheme and period of holding of the units of the consolidated scheme shall include the period for which the units in consolidating scheme were held by the assessee. w.e.f. 1 st April, 2017 7
Tax Neutral Conversion of Preference Shares into Equity Shares [Clause 3,23 & 25] Sec 47 provides for tax neutrality to the conversion of bond/debenture of a company to share/debenture of that company Proposed: To amend sec 47 to provide conversion of preference shares of a company into its equity share. This conversion shall not be regarded as transfer. To amend sec 2(42A) & 49 in respect of cost of acquisition and period of holding w.e.f. 1 st April, 2018 8
Clarity relating to Indirect transfer provisions [Clause 4] The Finance Act, 2012 included insertion of Explanation 5 in sec 9(1)(i) w.r.e.f. 1st April, 1962. The Explanation 5 clarified that an asset or capital asset, being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India. CBDT issued Circular No 41 of 2016 clarifying the scope of indirect transfer provisions. Proposed: To amend the sec to clarify that Explanation 5 shall not apply to any asset or capital asset being investment held by non-resident, directly or indirectly, in a Foreign Institutional Investor as referred to in sec 115AD(a), and registered as Category- I or II under SEBI (FPI) Regulations, 2014. The proposed amendment is clarificatory in nature. w.r.e.f. 1 st April, 2012 9
Tax-exemption to partial withdrawal from National Pension System (NPS) [Clause 6] sec 10(12A) provides that payment from National Pension System (NPS) trust to an employee on closure of his account or opting out shall be exempt up to 40% of total amount payable to him. Proposed: To amend the sec 10 so as to provide the above exemption to partial withdrawal not exceeding 25% of the contribution made by an employee. w.e.f. 1 st April, 2018 10
Exemption of LTCG tax u/s 10(38) [Clause 6] Proposed: To amend Sec 10(38) to provide that exemption under this sec for income arising on transfer of equity share acquired or on after 01.10.2004 shall be available only if the acquisition of share is chargeable to STT. Cases where STT could not have been paid like acquisition of share in IPO, FPO, bonus or right issue by a listed company acquisition by non-resident in accordance with FDI policy of the Government etc., it is also proposed to notify transfers for which the condition of chargeability to STT on acquisition shall not be applicable. Case Law Impacted : UdayPunj [2012] 23 taxmann.com 148 (Delhi) Ramesh Kumar Jain (HUF) vs DCIT [2013] 36 taxmann.com 524 (Jodhpur - Trib.) w.e.f. 1st April, 2018 11
Exemption of income of Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund [Clause 6] sec 10(23C) provides exemption in respect of income of certain funds which, inter-alia, include, the Prime Minister's National Relief Fund. The Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund, referred at sec 80G(2)(a)(iiihf), which is of the same nature at the level of state or the Union Territory as is the Prime Minister's National Relief Fund at the national level, is not exempted under the said clause. Therefore these funds are required to obtain registration u/s 12A in order to avail exemption of its income u/s 11 & 12 of the Act. Proposed: to amend said clause so as to provide the benefit of exemption to the Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund also. w.e.r.f. 1 st April, 1998 12
Charitable trusts: Corpus donations not be treated as application of income [Clause 6 & 8] Proposed to insert a new Explanation to sec 11 of the Act to provide that any amount credited or paid out of contributions [which is considered as Trust s income u/s Sec. 11(1)(a)/(b)], being with specific direction that they shall form part of the corpus of the trust or institution, shall not be treated as application of income. It is also proposed to insert a proviso in Sec 10(23C) so as to provide similar restriction as above on the entities exempt under sub-clauses (iv), (v), (vi) or (via) of said clause in respect of any amount credited or paid out of their income. Case Law Overruled: Tewari Charitable Trust vs DIT [2014] 49 taxmann.com 45 (Mumbai - Trib.) w.e.f 01 st April, 2018 13
Tax Incentive for the development of capital of Andhra Pradesh [Clause 6 & 25] No provision exists to provide exemption from tax on transfer of land under the land pooling scheme and on transfer of Land Pooling Ownership Certificates (LPOCs) or reconstituted plot/land. Proposed: To insert a new clause (37A) in sec 10 to provide relief to an individual or HUF who was the owner of such land as on 02.06.2014 and transferred such land under the land pooling scheme notified under the provisions of Andhra Pradesh Capital Region Development Authority Act, 2014. Capital gains shall not be chargeable to tax in the following cases: Gains arising from transfer of capital asset under land pooling scheme Sale of LPOCs and sale of reconstituted plot/land by said person (Cont..) w.r.e.f. 1 st April, 2015 14
Tax Incentive for the development of capital of Andhra Pradesh [Clause 6 & 25] (Cont..) Proposed: To amend sec 49, to provide that the cost of acquisition of reconstituted plot/land upon transfer after expiry of 2 years from the end of the FY in which possession was handed to assessee, shall be deemed to be its stamp duty value as on the last day of the 2 nd FY from the year end in which of the possession was handed over w.e.f. 1 st April, 2018 15
Rationalisation of provisions of sec 10AA [Clause7] sec 10AA, deduction is allowed from the total income of an assessee, in respect of profits and gains from his Unit operating in SEZ, subject to fulfilment of certain conditions. However, courts have taken a view that the deduction is to be allowed from the total income of the undertaking and not from the total income of the assessee. Proposed: To amend sec 10AA deduction shall be allowed from the total income of the assessee before giving effect to the provisions of the sec 10AA and the deduction under sec 10AA in no case shall exceed the said total income. Case Law Overruled - Yokogawa India Ltd. [2017] 77 taxmann.com 41 (SC) w.e.f. 1 st April, 2018 16
Clarity of procedure in respect of change or modifications of object in case of entities exempt under secs 11 and 12 Clause 9 & 10 It has been proposed that the registration of trust will have to be done afresh if the objects of the trust are modified by the assessee and where the objects which do not conform to the conditions of registration. The application for fresh registration needs to be made within a period of thirty days from the date of such adoption or modifications of the objects. It is also proposed to clarify that the trust s return needs to be filed within time limits specified in Sec 139(4A). Case Law Confirmed : BCCI [2012] 22 taxmann.com 29 (Mumbai) w.e.f. 1 st April, 2018 17
Transparency in Electoral Funding [Clause 11] sec 13A provide exemption to political parties registered with Election Commission of India (ECI). To avail exemption the political parties are required to submit report to ECI furnishing details of contributions received in excess of Rs.20,000 from any person. No restriction of receipt of any amount of donation in cash by a political party. Proposed: To amend sec 13A to provide for additional conditions for availing the benefit: (i) No donations of Rs.2000/- or more is received otherwise than by an account payee cheque/ bank draft/ electronic clearing system/ electoral bonds (ii) Political party furnishes a return of income for the previous year in accordance with the provisions of 139(4B) on/before the due date. It is also proposed to amend that the political parties shall not be required to furnish the name and address of the donors who contribute by way of electoral bond. Case Law Confirmed : Common Cause [TS-5053-SC-1996-O] w.e.f. 1 st April, 2018 18
No Notional income for house property held as stock-in-trade [Clause 12] Proposed to amend the Sec. 23 (dealing with determination of ALV) to provide exemption to property held as stock in trade from provisions requiring the treatment of second house as deemed to be let out property. The benefit would be available for the period up to 1 year from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority. Case Law: DLF LTD - [TS-5387-ITAT-2016(DELHI)-O] VikasKeshavGarud [2016] 71 taxmann.com 214 (Pune - Trib.) Sharan Hospitality P. Ltd. [TS-511-ITAT-2016(Mum)] w.e.f. 1 st April, 2018 19
Disallowance of depreciation under sec 32 and capital expenditure under sec 35AD on cash payment [Clause 13 & 16] Sec 40A(3) and Rule 6DD provides circumstances under which revenue expenditure incurred in cash exceeding certain monetary threshold is allowed/not allowed. Sec 35AD provides for investment linked deduction on the amount capital expenditure incurred for business, during the previous year for specified business except capital expenditure incurred for acquisition of any land/ goodwill/ financial instrument. Proposed: Sec.43 amended expenditure for acquisition of any asset for which payment is made otherwise than through banking channel, exceeds Rs 10,000/-, such expenditure shall be ignored for purpose of determination of actual cost of such asset. Sec. 35AD amended expenditure for which payment is made otherwise than through banking channel, exceeds Rs 10,000/-, no deduction shall be allowed in respect of such expenditure. w.e.f. 1 st April, 2018 20
Actual cost of asset in case of withdrawal of deduction in terms of Sub-sec (7B) of sec 35AD [Clause 16] Existing : sec 35AD(7B) provides that where any asset on which benefit of sec 35AD is claimed and allowed, is used for a purpose other than specified business, the benefit of deduction already granted under sec 35AD shall be deemed to be the income of the assessee. Proposed : To amend Sec 43, to provide that, where the asset in respect of which Sec 35AD deduction is deemed to be the income of the assessee, for the reason that the asset has been used for a purpose other than for the specified business, then the actual cost of the asset shall be the actual cost, as reduced by an amount equal to the amount of depreciation calculated at the rate that would have been allowable had the asset been used for the purposes of business since the date of its acquisition. w.e.f. 1 st April, 2018 21
Increase in deduction limit in respect of provision for bad and doubtful debts [Clause 14] Sec 36(1)(viia)(a) provides that a scheduled/ non-scheduled bank/ co-operative bank etc, can claim deduction (i.e. upto 7.5% of total income), in respect of provision for bad & doubtful debts. Proposed: It is proposed to increase the limit to 8.5%. w.e.f. 1 st April, 2018 22
Measures to discourage cash transactions [Clause 15] Sec 40A(3) of the Act, provides that any expenditure for which payment is made in a day, otherwise than by an account payee cheque/ bank draft, exceeds Rs. 20,000/-, shall not be allowed as a deduction. Sec 40A(3A) also provides for deeming a payment as PGBP if the expenditure is incurred in a particular year but the payment is made in any subsequent year of a sum exceeding Rs. 20,000/- otherwise than by an account payee cheque/ bank draft. Proposed: To amend sec 40A: To disallow cash payments above Rs. 10,000/- to a person in a single day, Deeming a payment as profits if the cash payment is made in any subsequent year of a sum exceeding Rs. 10,000/- to a person in a single day; w.e.f. 1 st April, 2018 23
Sec 92BA relating to Specified Domestic Transactions [Clause 15 & 41] Any expenditure for which assessee made the payment to certain "specified persons" under sec 40A(2)(b) are covered within the ambit of specified domestic transactions. Form 3CEB is to be filed providing such details. Proposed: To amend sec 92BA: To provide that expenditure incurred related to a person referred in sec 40A(2)(b) are to be excluded. Accordingly it is also proposed to make a consequential amendment in Sec.40A(2)(b). w.e.f. 1 st April, 2017 24
Extension of scope of sec 43D to Co-operative Banks [ Clause 17 & 18] It is proposed to amend Sec. 43D so as to include co-operative banks other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. This is with a view to provide a level playing field to co-operative banks vis-àvis scheduled banks and to rationalize the scope of the Sec. 43D Further amendment is made to sec 43B of the Act to provide that any sum payable by the assessee as interest on any loan or advances from a cooperative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank shall be allowed as deduction if it is actually paid on or before the due date of furnishing the return of income of the relevant previous year. Case Law Confirmed: Shri MahilaSewaSahakari Bank Ltd. [2016] 72 taxmann.com 117 (Gujarat) The Urban Co-operative Bank Ltd [TS-13-SC-2015] Shri YashwantSahakari Bank Ltd. [TS-352-ITAT- 2014(PUN)] w.e.f. 1 st April, 2017 25
Maintenance of books of accounts in case of individuals and HUF [Clause 19] Sec 44AA(2)(i) and (ii) requires every person carrying on business or profession [other than those mentioned in sub-sec (1)] to maintain such books of accounts and documents, provided that the income and total sales or turnover or gross receipts, etc specified in said clauses exceeds Rs. 120,000 and Rs. 10,00,000/- respectively in the case of Individuals and Hindu undivided family carrying on business or profession. Proposed: To amend the sec 44AA to increase the limits to Rs. 250,000/- and Rs. 25,00,000/- respectively in the case of Individuals and Hindu undivided family carrying on business or profession. w.e.f. 1 st April, 2018 26
Requirement of audit u/s 44AB [Clause 20] Sec 44AB requires that every person carrying on the business is required to get his accounts audited if the total sales, turnover or gross receipts in the previous year exceeds Rs 1 crore. As per sec 44AD, the threshold limit for applicability of presumptive taxation in case of eligible business was increased to Rs 2 crores in Finance Act, 2016. Proposed: To amend the sec 44AB to exclude the eligible person declaring profits u/s 44AD(1), where his total sales, total turnover or gross receipts, in business does not exceed Rs 2 crores in previous year, from requirement of audit of books of accounts under sec 44AB. w.e.f. 1 st April, 2017 27
Measures for promoting digital payments in case of small unorganized businesses [Clause 21] U/s. 44AD - Presumptive Taxation Turnover < 2 Crores Presumptive Income = 8% of Such Turnover or Gross Receipts Proposed: U/s. 44AD - Presumptive Taxation Turnover < 2 Crores Presumptive Income = 6% of Such Turnover or Gross Receipts Condition If the total turnover or gross receipts received by an account payee cheque or account payee bank draft or use of ECS through a bank account during the previous year or before the due date specified under sec 139(1) in respect of that previous year. If amount received by any other mode 8% would apply w.e.f. 1 st April, 2017 28
Special provisions for computation of capital gains in case of Joint Development Agreement (JDA) [Clause 22, 25 & 64] sec 45, capital gain is chargeable to tax in the year in which transfer takes place except in certain cases. In case of execution of JDA between the owner of immovable property and the developer triggers the capital gains tax liability in the hands of the owner in the year in which the possession of immovable property is handed over to the developer for development of a project. Proposed: New Sec.45(5A) inserted to provide that in case of an assessee being individual/huf, 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. 29
Special provisions for computation of capital gains in case of Joint Development Agreement (JDA) [Clause 22, 25 & 64] Case Law: Chaturbhuj Kapadia [TS-1-HC-2003(BOM)] Jasbir Singh Sarkaria [2007] 164 Taxman 108 (AAR - NewDelhi) C S Atwal [2015] 59 taxmann.com 359 (Punjab & Haryana) B.V. Kodre (HUF) [TS-595-ITAT-2011(PUN)] K. Radhika [2011] 13 taxmann.com 92 (Hyderabad) DnyaneshwarMulik[TS-2-ITAT-2005(PUN)] Charanjit Singh Atwal [TS-353-ITAT-2013(CHANDI)] A.Ram Reddy] [TS-6729-ITAT-2012(HYD)- O]; Krishna Kumar D Shah (HUF) [TS-5927-ITAT-2012(HYD)-O]; Mrs.DurdanaKhatoon [TS-5384-ITAT-2013(HYD)-O] Potla Nageswara Rao v. DCIT [2014] 50 taxmann.com 137 (Andhra Pradesh) 30
Special provisions for computation of capital gains in case of Joint Development Agreement (JDA) [Clause 22, 25 & 64] To amend sec 49 that the cost of acquisition of the share in the project being land/building/both, in the hands of the land owner shall be the amount which is deemed as full value of consideration under the said proposed provision. Notwithstanding anything contained in sec 194-IA of the Act, any person responsible for paying to a resident any sum by way of consideration, not being consideration in kind, under the agreement referred in sec 45(5A), shall at the time of credit or at the time of payment in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to 10%. w.e.f. 1 st April, 2017 31
Shifting base year from 1981 to 2001 for computation of capital gains[clause 24 & 28] U/s. 55 for asset acquired before 01.04.1981, the assessee has been allowed an option of either to take the fair market value of the asset as on 01.04.1981 or the actual cost of the asset as cost of acquisition. The assessee is also allowed to claim deduction for cost of improvement incurred after 01.04.1981, if any. Proposed: To amend sec 55, cost of acquisition of an asset acquired before 01.04.2001 shall be allowed to be taken as fair market value as on 1st April,2001 and the cost of improvement shall include only those capital expenses which are incurred after 01.04.2001. To amend sec 48 so as to align the provisions relating to cost inflation index to the proposed base year. w.e.f. 1 st April, 2018 32
Cost of acquisition in Tax neutral demerger of a foreign company [Clause 25] sec 47(vic) transfer of shares of an Indian company by a demerged foreign company to a resulting foreign company is not regarded as transfer. Proposed: To amend sec 49 the cost of acquisition of the shares of Indian company referred to in sec 47(vic) in the hands of the resulting foreign company shall be the same as it was in the hands of demerged foreign company. w.e.f. 1 st April, 2018 33
Cost of Acquisition of capital assets of entities in case of levy of tax on accreted income under sec 115TD [Clause 25] Existing : sec 49 of the Act provides for computation of cost with reference to certain modes of acquisition of capital asset. Proposed : To amend sec 49 (computation of cost for capital gain calculation) to provide that in case of an asset held by a trust, in respect of which accreted income has been computed, the Cost of Acquisition of such an asset shall be deemed to be the fair market value of the asset which has been taken into account for computation of accreted income as on the specified date referred to in sub-sec (2) of sec 115TD. w.r.e.f. 1 st June, 2016 34
Income from other sources [Clause 25 & 29] Proposed: To insert a new clause (x) in sec 56(2) to provide that receipt of the sum of money or the property by any person without consideration or for inadequate consideration in excess of Rs. 50,000/- shall be chargeable to tax in the hands of the recipient under the head "Income from other sources". It is also proposed to widen the scope of existing exceptions by including the receipt by certain trusts or institutions and receipt by way of certain transfers not regarded as transfer under sec 47. The receipt of sum of money or property on or after 1st April, 2017 shall be chargeable to tax in accordance with the provisions of proposed Sec 56(2)(x). w.e.f. 1st April, 2017 35
FMV to be full value of consideration in certain cases [Clause 26] Proposed: To insert a new Sec 50CA to provide that where consideration for transfer of share of a company (other than quoted share) is less than the Fair Market Value (FMV) of such share determined in accordance with the prescribed manner, the FMV shall be deemed to be the full value of consideration for the purposes of computing income under the head "Capital gains". Case Law : DCIT vs. Dr RajanPai [TS-5468-ITAT-2016(BANGALORE)-O] w.e.f. 1st April, 2018 36
Expanding the scope of long term bonds under 54EC [Clause 27] sec 54EC capital gain to the extent of Rs. 50 lakhs arising from the transfer of a longterm capital asset shall be exempt if the assessee invests the whole or any part of capital gains in bonds issued by the National Highways Authority of India or by the Rural Electrification Corporation Limited is eligible for exemption. Proposed: To amend sec 54EC investment in any bond redeemable after three years which has been notified by the Central Government in this behalf shall also be eligible for exemption. w.e.f 01 st April, 2018 37
Disallowance for non-deduction of tax from payment to resident [Clause 30] Existing : Existing provisions of sec 58 of the Act, specify the amounts which are not deductible in computing the income under the head "Income from other sources" which include certain disallowances made in computation of income under the head "Profits and gains of business or profession". These disallowances include disallowances such as disallowance of cash expenditure, disallowance for non-deduction of tax from payment to non-resident and residents, etc Proposed : To amend the said sec so as to provide that provisions of sec 40(a)(ia) shall, so far as they may be, apply in computing income chargeable under the head "income from other sources" as they apply in computing income chargeable under the head "Profit and gains of business or Profession". w.e.f. 1 st April, 2018 38
Restriction on set-off of loss from House property [Clause 31] sec 71 of the Act relates to set-off of loss from one head against income from another. Proposed: To insert sub-sec (3A) in sec 71 to provide that set-off 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. However, the unabsorbed loss shall be allowed to be carried forward for set-off in subsequent years. w.e.f. 1 st April, 2018 39
Carry forward and set off of loss in case of certain companies [Clause 32] As per Sec 79, prior period losses cannot be c/f and set off against the income of the FY if there is a change in the shareholding of a private company. Except in the case where on the last day of FY at least min. of 51% of shares with voting rights were beneficially held by a person, who also held them in the year in which the loss was incurred. Proposed: To amend sec 79, to include private company, being an eligible start-up as referred in sec 80- IAC, loss shall be c/f and set off, if all shareholders of such company which held shares in the years in which the loss was incurred (being period of 7 years beginning from year of incorporation of company), continue to hold those shares on the last day of such FY. w.e.f 1 st April, 2018 40
Rationalisation of deduction under sec 80CCD for self-employed individual [Clause 33] sec 80CCD provides that employee or other individuals shall be allowed a deduction for amount deposited in National Pension System trusts (NPS). The deduction allowed under sec : 80CCD(1) cannot exceed 10% of salary in case of an employee or 10% of gross total income in case of other individuals. 80CCD(2) further allows deduction to an employee in respect of contribution made by his employer to an extent of 10% of salary. Thus, in case of an employee, the deduction allowed under sec 80CCD adds up to 20%, whereas in case of other individuals, the total deduction under sec 80CCD is limited to 10% of gross total income. Proposed: To amend sec 80CCD so as to increase the upper limit of ten per cent of gross total income to twenty per cent in case of individual other than employee. w.e.f. 1 st April, 2018 41
Rationalization of deduction under sec 80CCG [Clause 34] Existing : Under the existing provisions of sec 80CCG, deduction for three consecutive assessment years is allowed upto Rs. 25,000 to a resident individual for investment made in listed equity shares or listed units of an equity oriented fund subject to fulfillment of certain conditions. Proposed : No deduction under sec 80CCG shall be allowed from assessment year 2018-19. However, an assessee who has claimed deduction under this sec for assessment year 2017-18 and earlier assessment years shall be allowed deduction under this sec till the assessment year 2019-20 if he is otherwise eligible to claim the deduction as per the provisions of this sec. w.e.f. 1 st April, 2018 42
Restricting cash donations [Clause 35] U/s. 80G of the Act, provides that the deduction is not allowed in respect of donation made of any sum exceeding Rs.10,000, if the same is not paid by any mode other than cash. Proposed: U/s. 80G of the Act, will provide that no deduction shall be allowed in respect of donation of any sum exceeding Rs.2,000, unless such sum is paid by any mode other than cash. w.e.f. 1 st April, 2018 43
Rationalisation of Provisions of sec 80-IBA to promote Affordable Housing [Clause 37] sec 80-IBA provides for 100% deduction in respect of the profits and gains derived from developing and building certain housing projects subject to specified conditions. The conditions specified, inter alia, include the limit of 30 square meters for the built-up area of residential unit in respect of project located in the Chennai, Delhi, Kolkata and Mumbai or within 25 kms from the municipal limits of these four cities. Further, it is also provided that in order to be eligible to claim deductions, the project shall be completed within a period of 3 years. Proposed: In order to promote the development of affordable housing sector, it is proposed to amend sec 80- IBA so as to provide the following relaxations: (i) The size of residential unit shall be measured by taking into account the "carpet area" as defined in Real Estate(Regulation and Development) Act, 2016 and not the "built-up area". (ii) The restriction of 30 square meters on the size of residential units shall not apply to the place located within a distance of 25 kms from the municipal limits of the Chennai, Delhi, Kolkata or Mumbai. (iii) The condition of period of completion of project for claiming deduction under this sec shall be increased from existing three years to five years. 44 w.e.f. 1 st April, 2018
Secondary adjustments in certain cases. [Clause 42] New sec 92CE Inserted - Secondary adjustment The Finance bill proposes that, secondary adjustments would be required to be made in case where primary adjustment is made suo-moto by the taxpayer in his return of income; or made by tax authorities and accepted by the taxpayer; or determined in an APA or MAP; or made as per safe harbour rules, and which results in increase in taxable income or reduction of loss and corresponding amounts are not repatriated to India by the AE within the prescribed time frame. The original transfer pricing adjustment would be treated as loan advanced by the Indian taxpayer to the AE and would now require a secondary adjustment for interest on such loan, till such time as the amount corresponding to the original adjustment is repatriated back to India. Secondary Adjustment not required if primary adjustment does not exceed 1 Crore and the same is made in respect of an AY commencing on or before 1st April,2016. Case Law Overruled : PMP Auto Components P. Ltd. [TS-263-ITAT- 2014(Mum)-TP] w.e.f. 1 st April, 2018 45
Limitation of Interest deduction in certain cases. [Clause 43] The way a company is capitalized often has a significant impact on the amount of profit it reports for tax purposes as the tax legislations of countries typically allow a deduction for interest paid or payable in arriving at the profit for tax purposes while the dividend paid on equity contribution is not deductible. Therefore, the higher the level of debt in a company, and thus the amount of interest it pays, the lower will be its taxable profit. Proposed : New sec 94B Inserted in line with recommendation of BEPS Action Plan 4 Restricting Interest paid to non-resident AE to 30% of EBITDA (earnings before interest, taxes, depreciation and amortization). Provisions would trigger only when interest expenditure exceeds Rs. 1 Cr and excludes banks and insurance companies from its ambit and would apply to Indian company and Indian PE of foreign entity. w.e.f. 1 st April, 2018 46
Rationalization of taxation of income by way of dividend [Clause 44] U/s. 115BBDA of the Act, provides that 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. Proposed: U/s. 115BBDA of the Act, will provide that the provisions of said sec shall be applicable to all resident assessees except domestic company and certain funds, trusts, institutions, etc. w.e.f. 1 st April, 2018 47
Taxation of Carbon Credits [Clause 45] Income-tax Department has been treating the income on transfer of carbon credits as business income which is subject to tax at the rate of 30% Proposed: New Sec. 115BBG Inserted to provide that where the total income of the assessee includes any income from transfer of carbon credit, such income shall be taxable at the concessional rate of 10% (plus applicable surcharge and cess) on the gross amount of such income. No expenditure or allowance in respect of such income shall be allowed under the Act. Case Law Overruled: SubhashKabini Power Corporation Limited [TS-236-HC-2016(KAR)] My Home Power Ltd. [TS-820-ITAT-2012(HYD)] Indur Green Power Private Limited [TS-447-ITAT- 2015(HYD)] Case Law Confirmed: Kalpataru Power Transmission Ltd [TS-141-ITAT-2016(Ahd)] w.e.f. 1 st April, 2018 48
Rationalisation of Provisions relating to tax credit for Minimum Alternate Tax and Alternate Minimum Tax [Clause 46 & 48] sec 115JAA provide that the carrying forward and set off of tax credit in respect of Minimum Alternate Tax (MAT) paid by companies under sec 115JB. Currently, the tax credit can be carried forward upto tenth assessment years. Proposed: To amend sec 115JAA tax credit can be c/f up to 15 AY immediately succeeding the AYs in which such tax credit becomes allowable. Further, similar amendment is proposed in sec 115JD so as to allow c/f of AMT paid under sec 115JC upto 15 AY in case of non corporate assessee. To amend sec 115JAA and sec 115JD the amount of tax credit in respect of MAT/ AMT shall not be allowed to be c/f to subsequent year to the extent such credit relates to the difference between the amount of FTC allowed against MAT/ AMT and FTC allowable against the tax computed under regular provisions of Act other than the provisions relating to MAT/AMT. w.e.f. 1 st April, 2018 49
Board to issue directions for penalty in failure to deduct or collect tax at source [Clause 49] Sec 119(2)(a) empowers the Board to issue orders to be followed by subordinate authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties. Proposed: To insert reference of secs 271C and 271CA in the said clause, so as to empower the Board to issue directions or instructions in respect of the said secs also. w.e.f. 1 st April, 2017 50
Reason to believe to conduct a search, etc. not to be disclosed [Clause 50 & 51] sec 132(1) and (1A) where authority has reason to believe or reason to suspect - It may authorize an authority specified therein to carry out search & seizure. sec 132A(1) Specified IT authority based on 'reason to believe' can authorise other IT authority mentioned therein to requisition from some other officer or authority to deliver books of account, documents or assets of the assessee to the income-tax authority so authorised. Proposed : Explanation Inserted to Sec.132(1) and (1A) and to Sec.132A(1) to declare that the 'reason to believe' or 'reason to suspect', as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal. Case Law Confirmed - Case Law Overruled - Spacewood Furnishers Pvt. Ltd.[[2015] 57 taxmann.com 292 (SC) Shri Parma Ram Bhakar[TS-515-ITAT-2013(JODH)] Ess Dee Aluminium Ltd and Etc [TS-625-SC-2016] Harbhajan Singh Chadha And Others[TS-39-HC-2015(ALL)] 51 w.e.f. sec 132(1) from 1 st April, 1962 and to sec 132(1A) and of sec 132A(1) from 1 st October, 1975.
Power of provisional attachment and to make reference to Valuation Officer to authorised officer [Clause 50] Existing : sec 132 of the Act provides the power of search and seizure subject to fulfilment of conditions specified therein. Proposed : To insert 132(9A) and 132(9B) for search and seizure operations, where AO, would be authorized to provisionally attach assessee s property with prior approval of Principal Director General/ Director General/ Principal Director/ Director. Also sec 132(9D) has been proposed to be inserted for valuation of the property disclosed in a search and seizure operation. The authorized officer can refer to Valuation officer to provide a valuation report. w.e.f. 1 st April, 2017 52
Extension of the power to survey [Clause 53] Existing : sec 133A empower an income-tax authority to enter any place, at which a business or profession is carried on, or at which any books of account or other documents or any part of cash or stock or other valuable article or thing relating to the business or profession are kept, for the purposes of conducting a survey. Proposed : To amend sub-sec (1) to include any place, at which an activity for charitable purpose is carried on. w.e.f. 1 st April, 2017. 53
Legislative framework to enable centralised issuance of notice and processing of information under sec 133C [Clause 54] Existing : sec 133C of the Act empowers the prescribed income-tax authority to issue notice calling for information and documents for the purpose of verification of information in its possession. Proposed : To amend sec 133C to empower the Central Board of Direct Taxes to make a scheme for centralized issuance of notice calling for information and documents for the purpose of verification of information in its possession, processing of such documents and making the outcome thereof available to the Assessing Officer for necessary action, if any. w.e.f. 1 st April, 2017. 54
Mandatory furnishing of return by certain exempt entities[clause 55] sec 139(4C) mandate filing of return by certain entities which are exempt from the levy of income-tax. Proposed: In order to verify that certain entities which enjoy exemption under sec 10 actually carry out the activities for which the exemption has been provided, it is proposed to provide that (a) any person as referred to in clause (23AAA) (b) Investor Protection Fund referred to in clause (23EC) or clause (23ED) (c) Core Settlement Guarantee Fund referred to in clause (23EE) and (d) any Board or Authority referred to in clause (29A) of sec 10 shall also be mandatorily required to furnish a return of income. w.e.f 01 st April, 2018 55
Time limits for completion of assessment, reassessment & recomputation and for filing revised return [Clause 55,58 & 78] S.No. Particulars Existing Proposed 1 File a revised return 2 years from end of FY or completion of assessment 2 Completion of assessment u/s 143 & 144 3 Completion of reassessment u/s 147 for notices served on or after 01.04.2019 4 Completion of fresh assessment of ITAT order or revision of order by CIT, setting aside or cancelling an assessment in respect of orders passed or received in FY 2019-20 onwards 5 Order giving effect to the order u/s 250/254/260/262/263/264 (Proviso to section 153(5) inserted) w.e.f. 1 st April, 2017 1 year from end of FY or completion of assessment 21 months 18 months- order of FY 2017-18 12 months- orders from FY 2018-19 9 months 12 months 9 months 12 months 12 months (w.r.e.f. 01.06.2016) 56
Fee for delayed filing of return [Clause 56, 57, 75 & 85] Sec 271F provides penalty of Rs 5,000 for delay in furnishing of return beyond 12 months from the end of the FY. Proposed: New sec 234F, a fee shall be levied if the return is not filed within the time limit u/s 139(1). Sec 140A is also amended accordingly. The proposed fee structure: Total income of the tax payer Fee for delay in filing of return Upto 31 st Dec of relevant FY After 31 st Dec of relevant FY Upto Rs 5 lacs Rs 1,000 Rs 1,000 Rs 5 lacs & above Rs 5,000 Rs 10,000 w.e.f. 1st April, 2018 57
Processing of return within the prescribed time and enable withholding of refund in certain cases [Clause 57 & 76] sec 143(1D) processing of a return shall not be necessary, where a notice has been issued to the assessee U/s. 143(2). Finance Act, 2016 provides that with effect from assessment year 2017-18, processing under sec 143(1) is to be done before passing of assessment order. Proposed: To amend sec 143(1D) shall cease to apply in respect of returns furnished for assessment year 2017-18 and onwards. A new sec 241A for the returns furnished for AY commencing on or after 1st April, 2017, where refund u/s.143(1) and at the AO s discretion he may, for the reasons recorded in writing and with the previous approval of the Pr.CIT/CIT, withhold the refund upto the date on which the assessment is made. w.e.f. 1 st April, 2017 58
Deduction of tax at source in the case of certain Individuals and Hindu undivided family[clause 63] sec 194I TDS at the time of credit or payment of rent to the account of the payee beyond a threshold limit. An Individual/HUF who is liable for tax audit under sec 44AB for any financial year immediately preceding the financial year in which such income by way of rent is credited or paid shall require TDS. Proposed: A new sec 194-IB inserted that Individuals/HUF (other than covered U/s. 44AB), responsible for paying to a resident any income by way of rent exceeding Rs.50,000 for a month or part of month during the previous year, shall deduct an amount equal to 5% of such income as income-tax thereon. Further proposed that tax shall be deducted on such income at the time of credit of rent, for the last month of the PY or the last month of tenancy if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier. Provisions of section 203A are relaxed. Section 206AA is amended to restrict higher withholding to a maximum of the rent payable for the last month of 59 the FY. w.e.f. 1 st June, 2017
Simplification of the provisions of tax deduction at source in case Fees for professional or technical services under sec 194J[Clause 65] It is proposed to amend Sec.194J to reduce the rate of TDS to 2% from existing 10% in case of payments received or credited to a payee, being a person engaged only in the business of operation of call center. w.e.f. 1 st June, 2017 60
Non-deduction of tax in case of exempt compensation under RFCTLAAR Act, 2013 [Clause 66] sec 194LA any person paying compensation shall TDS at the rate of 10% on the compensation or enhanced compensation or consideration on account of compulsory acquisition of any immovable property (other than agricultural land). sec 96 of the RFCTLARR Act, 2013 provides that income-tax shall not be levied on award or agreement made subject to limitations mentioned in sec 46 of the said Act. Proposed: To amend Sec. 194LA - no deduction shall be made under this sec where such payment is made in respect of any award or agreement which has been exempted from levy of income-tax u/s 96 (except those made u/s 46) of the RFCTLARR Act, 2013. w.e.f. 1 st April, 2017 61
Extension of eligible period of concessional tax rate on interest in case of ECB and Extension of benefit to Rupee Denominated Bonds[Clause 67] Sec 194LC provides concessional withholding of 5% in case of interest payable to a nonresident by an Indian company or a business trust on borrowings made by it in foreign currency. Also, sec 194LD of provides for lower withholding tax @ 5% in case of interest payable before 01.07.2017 to FII and Qualified Financial Investors on their investments in Government securities and rupee denominated bonds of Indian Company. Proposed: To amend Sec. 194LC - Concessional TDS rate of 5% on interest payment will now be available in respect of borrowings made before the July 1, 2020. W.e.f. 1 st April, 2018. To extend the benefit of Sec. 194LC to rupee denominated bond issued outside India for the period before the July 1, 2020. W.r.e.f. 1 st April, 2016 62
Extension of eligible period of concessional tax rate under sec 194LD[Clause 68] U/s. 194LD of the Act, provide for lower TDS at the rate of 5% in the case of interest payable at any time on or after 1st June, 2013 due before the 1st July, 2017 to FIIs and QFIs on their investments in Government securities and rupee denominated corporate bonds provided that the rate of interest does not exceed the rate notified by the Central Government in this behalf. Proposed: U/s. 194LD of the Act, will provide that the concessional rate of 5% TDS on interest will now be available on interest payable before the 1st July, 2020. w.e.f. 1 st April, 2018 63
Enabling of Filing of Form 15G/15H for commission payments specified under sec 194D[Clause 69] sec 194D TDS at the rate of 5% for payments in the nature of insurance commission beyond a threshold limit of Rs. 15,000 per financial year. sec 197A provide that tax shall not be deducted, if the recipient of certain payments on which tax is deductible furnishes to the payer a self- declaration in prescribed Form.No.15G/15H declaring that the tax on his estimated total income of the relevant previous year would be nil. Proposed: In the case of Individuals and HUFs, it is proposed to amend sec 197A so as to make them eligible for filing self-declaration in Form.No.15G/15H for non-deduction of tax at source in respect insurance commission referred to in sec 194D. w.e.f. 1 st June, 2017 64
Exemption from tax collection at source 206C(1F) in case of certain specified buyers [Clause 71] sec 206(1F) seller who receives consideration for sale of a motor vehicle exceeding Rs.10,00,000 shall collect 1% of the sale consideration as tax from the buyer. Proposed: To amend sec 206C following class of buyers are exempted such as (A) the Central Government, a State Government and an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or (B) a local authority as defined in Explanation to clause (20) of sec 10; or (C) a public sector company which is engaged in the business of carrying passengers. ; w.e.f. 1 st April, 2017 65
Restriction on cash transactions[clause 71, 83 & 84] A new sec 269ST in the Act is inserted will provide that no person shall receive an amount of three lakh rupees or more, (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, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account. Provided that the provisions of this sec shall not apply to (i) any receipt by (a) Government; (b) any banking company, post office savings bank or co-operative bank; (ii) transactions of the nature referred to in sec 269SS; (iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify. (Contd..) 66
Restriction on cash transactions[clause 71, 83 & 84] (Contd.) A new sec 271DA in the Act is inserted will provide that (1) If a person receives any sum in contravention of the provisions of sec 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt. Provided that no penalty shall be imposable if such person proves that there were good and sufficient reasons for the contravention. (2) Any penalty imposable under sub-sec (1) shall be imposed by the Joint Commissioner.. U/s. 206C of the act, will provide to omit the provision relating to TCS at the rate of 1% of sale consideration on cash sale of jewellery exceeding Rs. 5,00,000. w.e.f. 1 st April, 2017 67
Strengthening of PAN quoting mechanism in the TCS regime [Clause 72] Existing : Statutory provisions for TDS at higher rate of 20% or the applicable rate whichever is higher, in case of non-quoting of PAN is provided under sec 206AA of the Act and it exist since April, 2010. Proposed : To insert a new sec 206CC to provide that, where no PAN is quoted by the collectee, tax shall be collected at twice the rate or 5% whichever is higher. w.e.f. 1 st April, 2017 68
Rationalisation of sec 211 and sec 234C relating to advance tax [Clause 73& 74] It is thus proposed to amend the said clause 211(1)(b) to provide that the assessee who declares profits and gains in accordance with presumptive taxation regime provided u/s 44ADA shall also be liable to pay advance tax in one installment on or before March 15. It is also proposed to make consequential amendments in sub-sec (1) of Sec. 234C to provide that in respect of an assessee referred to in Sec. 44ADA, interest under the said sec shall be levied, if the advance tax paid on or before March 15, is less than the tax due on the returned income. It is proposed to provide that that if shortfall in payment of advance tax is on account of under-estimation or failure in estimation of income of the nature referred to in Sec. 115BBDA, interest u/s 234C shall not be levied subject to fulfillment of conditions specified therein. w.e.f. April 1, 2017. 69
Interest on refund due to deductor [Clause 77] sec 244A an assessee is entitled to receive interest on refund arising out of excess payment of advance tax, tax deducted or collected at source, etc. Proposed: New Sec. 244A (1B) Inserted - where refund of any amount becomes due to the deductor, such person shall be entitled to receive, in addition to the refund, simple interest on such refund, @ 0.5% for every month or part of a month comprised in the period, from the date on which claim for refund is made or in case of an order passed in appeal, from the date on which the tax is paid, to the date on which refund is granted. No Interest if delay in the proceedings resulting in the refund is attributable to the deductor. Case Law Confirmed : Sunflag Iron And Steel Co Ltd [TS-5160-HC-2016(BOMBAY)-O] Tata Chemicals Ltd [TS-147-SC-2014] w.e.f. 1 st April, 2017 70
Structure of Authority for Advanced Rulings [Clause 79,80 & 81] Merging of the AAR for IT, Central Excise, Customs Duty and Service Tax. Relevant amendments in chapter XIX-B were made. Proposed: To amend definition of applicant u/s 245N and sec 245Q which relates to application for advance ruling. To amend the qualifications for appointment as revenue member/chairman of the AAR. w.e.f. 1 st April, 2017 71
Amendment of Sec 253 [Clause 82] Sec 253(1)(f) provide that an order passed by the prescribed authority sec 10(23C)(vi) or (via) shall be appealable before the Appellate Tribunal. Proposed: To provide that the orders passed by the prescribed authority under sec 10(23C)(iv) and (v) shall also be appealable before the Appellate Tribunal. w.e.f. 1 st April, 2017 72
Penalty of Rs 10,000 on professionals for furnishing incorrect information in statutory report or certificate [Clause 86 & 87] Penalty of Rs 10,000 on professionals for furnishing incorrect information in statutory report or certificate It is proposed to insert a new Sec 271J so as to provide that if an accountant or a merchant banker or a registered valuer, furnishes incorrect information in a report or certificate under any provisions of the Act or the rules made thereunder, the AO or the CIT (Appeals) may direct him to pay a sum of Rs. 10,000 for each such report or certificate by way of penalty. However, immunity from penalty shall be available u/s 273B, if the person proves that there was reasonable cause for the failure. w.e.f. 1 st April, 2017 73
Clarification regarding the applicability of sec 112 [Clause150] sec 112(1)(c) provide concessional rate of taxation of 10% for long-term capital gains arising from the transfer of unlisted securities in case of non-resident. Finance Act, 2016 amended sec 112(1)(c) to clarify that the share of company in which public are not substantially interested shall also be chargeable to tax at the rate of 10% with effect from 1st April, 2017. Proposed: To amend sec 50 of the Finance Act, 2016, the effective date of amendment made to sec 112(1)(c)(iii) vide Finance Act,2016 shall be 01-04-2013 instead of 01-04-2017. w.r.e.f. 1 st April, 2013 74
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