Major direct tax proposals in Finance Bill, 2017

Major direct tax proposals in Finance Bill, 2017 Member firm

Individual, HUF, BOI, AOP, AJP Tax Rates There is no change in the basic exemption limit for individuals/hufs. It is proposed to reduce the existing rate of taxation for income between Rs2.5 lacs and Rs.5 lacs to 5%. It is also proposed to introduce surcharge at 10% for individuals having taxable income above Rs.50 lacs but not exceeding Rs.1 crore. In order to make MSME companies more viable, income tax for companies with annual turnover up to Rs. 50 crores is reduced to 25%. Income Tax Rate Chart for Individual, HUF, BOI, AOP, AJP Income Existing Rate Proposed Rate Individual less than 60 years, HUF, BOI, AOP, AJP Upto Rs.2.5 lacs Nil Nil Rs.2.5 lacs to Rs.5 lacs 10% 5% Individual 60 years to 80 years Upto Rs.3 lacs Nil Nil Rs.3 lacs to Rs.5 lacs 10% 5% Individuals 80 years Upto Rs.5 lacs Nil Nil All Individuals, HUF, BOI, AOP, AJP Rs.5 lacs to Rs.10 lacs 20% 20% More than Rs.10 lacs 30% 30% Surcharge of 10% is proposed for individuals / HUFs having taxable income between Rs.50 lacs and Rs.1 crore.. Surcharge will continue to be levied at 15% for individuals/hufs having total income above Rs.1 crore. Currently, under section 87A rebate (deduction from income tax) of up to Rs.5,000 is available to resident individuals whose total income does not does exceed Rs.5 lacs. It is proposed to reduce the rebate to Rs.2,500 and the threshold limit to Rs.3.5 lacs. Income Tax Rate Chart for Domestic Companies Existing Proposed Turnover Tax Rate Turnover Tax Rate Less than Rs. 5 crores in PY 2014-15 29% Less than Rs.50 25% crores in PY 2015-16 Specified few companies 25% Others 30% Others 30% 7% surcharge if the income is more than Rs.1 crore but less than Rs.10 crore and 12% surcharge if the income is more than Rs.10 crores Education cess will continue to be levied at the rate of 3% of income tax (including surcharge) Page 2

Individual Taxation Increase in the rate of deduction for contributions by self-employed individuals to NPS [Section 80CCD] Currently, an individual who is an employee avails upto 20% of salary as a deduction for contribution to NPS comprising of contribution of 10% by employer and 10% by self. However, a self-employed individual can claim deduction only upto 10% of the gross total income in the absence of employer s share. It is now proposed to enhance the deduction for self-employed individuals to 20% of the gross total income. However, this comes within the overall cap for deduction that remains at Rs.1.5 lacs. Tax exemption to partial withdrawal from NPS [Section 10(12A)] Under the existing provisions, 40% of amount payable to the employee can be claimed as exempt at time of closing of account or opting out of NPS. It is now proposed to exempt partial withdrawal from NPS, not exceeding 25% of the contribution made by an employee in accordance with the terms and conditions prescribed under the Pension Fund Regulatory and Development Authority Act, 2013. Increasing threshold limit for maintenance of books of accounts in case of Individuals/HUF It is proposed to amend the provisions of Sec. 44AA to increase monetary limits of income and total sales or turn over or gross receipts, etc. for maintenance of books of accounts from Rs.1,20,000 to Rs. 2,50,000 and from Rs. 10 lakhs to Rs. 25 lakhs, respectively in the case of Individuals and HUF carrying on business or profession. Amendment will take effect from April 1, 2018. Deduction of tax at source on rental payments [Section 194-IB] Currently, individuals and HUF not liable to tax audit are outside the purview of deducting tax at source on payment of rent for the use of any land or building or both. It is proposed to introduce tax withholding at 5% by individuals / HUF (other than those liable for tax audit) on rent payable to a resident for an amount exceeding Rs.50,000 per month or part of a month. The proposed tax deduction shall be carried out when the tenant pays the rent for the last month of the previous year or the last month of tenancy. Thus tax shall be deducted only once in the year. There is no requirement to obtain a TAN for this purpose. In case of non-availability of PAN of deductee, tax is required to be deducted under existing Sec.206AA, in such case such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be. This amendment will take effect from 1st June, 2017. Page 3

Beneficial presumptive income in case of digital receipts [Section 44AD] The provisions of section 44AD provides for a presumptive income scheme in case of eligible assesses carrying out eligible businesses, and having total turnover or gross receipts not exceeding Rs.2 crores in a previous year. In case of such eligible assesses, a sum of 8% of the total turnover or gross receipts, or a higher sum declared by the assessee, is deemed to be the profits and gains of such business. In order to promote digital transactions, it is proposed to reduce the presumptive rate of deemed total income of 8% to 6% of total turnover or gross receipts, in case the amount is received by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account before the due date for filing return of income for the year. This amendment is proposed to be effective retrospectively from assessment year 2017-18. Exclusion of certain specified person from requirement of audit of accounts u/s 44AB In order to reduce compliance burden of the small tax payers and facilitate the ease of doing business, it is proposed to amend Sec. 44AB to exclude the eligible person, who declares profits for the previous year in accordance with the provisions of Sec. 44AD(1) and his total sales, total turnover or gross receipts, as the case may be, in business does not exceed Rs. 2 crore in such previous year, from requirement of audit of books of accounts u/s 44AB. Amendment will take effect from April 1, 2017. Restricting cash donations [Section 80G] Currently, deduction is not allowed in respect of donations made in cash of an amount exceeding Rs.10,000. It is proposed to reduce the limit of Rs.10,000 to Rs.2,000. Restriction on set-off of loss from House property [Section 71] It is proposed that the set-off of losses from house property against any other income shall be restricted up to Rs.2 lacs for any assessment year. Amendment in Sec. 115BBDA: Taxation of Income by way of Dividend Under the existing provisions, income by way of dividend in excess of Rs. 10 lakhs is chargeable to tax at the rate of 10% on gross basis in case of a resident individual, HUF or firm. With a view to ensure horizontal equity among all categories of tax payers, It is proposed to amend section 115BBDA so as to provide that the provisions of said section shall be applicable to all resident assesses except domestic company and certain funds, trusts, institutions, etc. This amendment will be effective from F.Y. 2017-18. Page 4

Corporate Tax Relaxation of 51% shareholding limit for carry forward of Losses in case of certain companies: (Sec.79) As per the existing provision of Sec.79, in case of closely held companies, for being eligible to carry forward the losses, the 51% of voting power should remain with same persons. The limit of 51% is proposed to be relaxed in case of eligible start-ups, and they will be eligible to carry forward the losses of 7 years from their incorporation if all the shareholders carrying voting power on the last day of the year in which loss incurred continue to hold those shares on the last day of the previous year in which change in shareholding takes place. This amendment will be effective from F.Y. 2017-18. MAT provisions proposed to be modified in line with Ind AS [Section 115JB] Pursuant to applicability of Indian Accounting Standards [Ind AS] to specified companies from financial year 2016-17, the Minimum Alternate Tax [MAT] provisions are proposed to be amended retrospectively from assessment year 2017-18. The main features of this proposed framework are divided under 3 broad categories as under: 1. MAT on Ind AS compliant financial statement 2. MAT on first time adoption a. Property, Plant or Equipment (PPE) and intangible assets at fair value as deemed cost b. Investments in subsidiaries, joint ventures and associates at fair value as deemed cost c. Cumulative translation differences 3. Reference year for first time adoption adjustments Extension of eligible period of concessional tax rate on interest in case of External Commercial Borrowing and Extension of benefit to Rupee Denominated Bonds The existing provisions of section 194LC of the Act provide that the interest payable to a non-resident by a specified company on borrowings made by it in foreign currency from sources outside India under a loan agreement or by way of issue of any long-term bond including long-term infrastructure bond shall be eligible for concessional TDS of 5%. The cut-off date of such concessional TDS rate was 01.07.2017. The same is proposed to be extended till 01.07.2020. Further interest payable on monies borrowed from a source outside India by way of issue of rupee denominated bonds is also proposed to be covered under concessional TDS rate of 5%. Extension in the period for claiming deduction by Start-ups Under the existing provisions of section 80-IAC, 100% deduction of the profits and gains derived from eligible business for 3 consecutive assessment years out of 5 years beginning from the year in which such eligible start-up is incorporated is available to an eligible Startup. Page 5

It is proposed to provide that deduction under section 80-IAC can be claimed by an eligible start-up for any 3 consecutive assessment years out of 7 years beginning from the year in which such eligible start-up is incorporated. This amendment will be effective from F.Y. 2017-18. Computation of tax deduction for SEZ units [Section 10AA] Under the existing provisions of section 10AA, deduction is allowed, in respect of profits and gains of an SEZ unit, subject to fulfilment of certain conditions. In the context of section 10A (which contains similar provisions), 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. It is proposed that, the amount of deduction under section 10AA is allowed from the total income of the assessee computed in accordance with the provisions of the Act, before giving effect to the provisions of section 10AA, and the deduction under section 10AA shall not exceed the said total income. Carry forward of MAT credit and AMT credit [Section 115JAA and section 115JD] Currently, the tax credit for Minimum Alternate Tax ( MAT ) and Alternate Minimum Tax ( AMT ) can be carried forward and set off for a period of ten assessment years. It is proposed that the tax credit for MAT and AMT can be carried forward for a period of fifteen assessment years. Tax neutral conversion of preference shares to equity shares [Section 49(2AE) and 47(xb)] Currently, conversion of securities from one form to another is regarded as taxable transfer. Tax neutrality on conversion of bond or debenture into shares of a company is provided, however no neutrality is provided for conversion of preference share into equity share of that company. It is proposed that the conversion of preference share into equity share will not be regarded as a taxable transfer. Consequential amendments are also proposed in respect of cost of acquisition and period of holding. Page 6

Capital Gains Shifting of Base Year from 1981 to 2001 for computation of capital gains: Existing Provision: Under the existing provisions of section 55, for computation of capital gains, an assessee shall be allowed deduction for cost of acquisition of the asset and also cost of improvement, if any. However, for computing capital gains in respect of an 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. New Provision: With a view to minimise the genuine hardship in determining FMV as on 01.04.1981, 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. Cost of improvement shall include only those capital expenses which are incurred after 01.04.2001. This amendment will be effective from F.Y. 2017-18. Amendment in Sec.2(42A): Period of Holding for qualifying as Long Term Capital Asset in case of Immovable Property Period of holding has been reduced from the existing 36 months to 24 months in case of immovable property, being land or building or both, to qualify as long term capital asset. This amendment will be effective from F.Y. 2017-18. Investment in long term bonds for long term capital gains [Section 54EC] Currently, gains arising on transfer of a long-term capital asset shall be exempt to the extent of Rs.50 lacs if the assessee invests the whole or any part of capital gains in certain specified bonds, within the specified time. At present, investment in bond issued by the National Highways Authority of India or by the Rural Electrification Corporation Limited is eligible for exemption under this section. It is now proposed to provide that 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. Page 7

No exemption for Long term capital gain of listed equity shares [Section 10(38)] Currently, income arising from transfer of a long term capital asset, being equity shares of a company or a unit of an equity oriented fund is exempt from tax if the transaction of sale is undertaken on or after 01 October 2004 and is chargeable to securities transaction tax. It is proposed that the aforesaid exemption will be available to equity shares acquired on or after 01 October 2004 only if on such acquisition securities transaction tax was chargeable. Certain exceptions in this regard such as acquisition of shares in IPO, FPO, bonus, right issue, etc., for which condition of chargeability of securities transaction tax on acquisition is not applicable, would be notified. Retrospective applicability of concessional LTCG rate of 10% on private company s shares It is proposed to amend Sec 50 of the Finance Act, 2016 so as to provide that the effective date of amendment made to Sec 112(1)(c)(iii) vide Finance Act,2016 shall be April 1, 2013 instead of April 1, 2017. Finance Act, 2016 had 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 concessional rate of 10% with effect from 1st April, 2017. This amendment will take effect, retrospectively from 1st April, 2013 Consideration for transfer of shares other than quoted shares [Section 50CA] Currently, income chargeable under the head Capital gains is computed by taking into account the amount of full value of consideration received or accrued on transfer of a capital asset. To ensure that the full value of consideration is not understated, there are certain provisions for deeming full value of consideration such as stamp duty value as full value of consideration for transfer of immovable property. It is proposed to insert a new section to provide that where consideration for transfer of share of a company (other than quoted share) is less than the fair market value of such share determined in accordance with the prescribed manner, the fair market value shall be deemed to be the full value of consideration under the head Capital gains. Page 8

Other Direct Tax Proposals Disallowance in relation to revenue expenditure [Section 40A (3)] Under the existing provision of section 40A(3), any expenditure, in respect of which payment is made, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, to a person in a day in excess of Rs.20,000, is not allowed as deduction. It is proposed to reduce the threshold of payment, made otherwise than by an account payee cheque drawn on a bank or account payee bank draft, to a person in a day to Rs. 10,000 for the purpose of disallowance of expenditure. It is further proposed to include use of electronic clearing system through a bank account as a permitted mode of payment. Similarly, the threshold in section 40A (3A) is also reduced from Rs.20,000 to Rs.10,000. Restriction on cash transactions [Sections 206C, Section 269ST and Section 271DA] Receipt of an amount in excess of Rs. 3 lacs otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account is not permitted in the following cases: received from one person in a single day; received in respect of a single transaction; or received in respect of transactions relating to one event or occasion from a person The above restriction will not apply to the amount received from Government or any banking company, post office savings bank or a co-operative bank, transactions referred to in section 269SS or transactions as may be notified. If the person receives any sum in contravention of the above provision, then penalty of 100% of the amount received will be levied. Penalty will not be imposed if there were good and sufficient reasons for contravention. Consequent to the aforesaid provision, TCS @ 1% of sale consideration on cash sale of jewellery exceeding Rs.5 lacs is proposed to be omitted. It is further proposed that in respect of sale of a motor vehicle exceeding Rs.10 lacs, TCS @ 1% of the sale consideration may not be required to be collected if the buyer is a Government, an Embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign state, local authority, public sector company engaged in the business of carrying passengers. Time limit for filing revised return [Section 139] Currently, a return of income can be revised before the expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier. It is proposed that the time limit for furnishing the revised return will be available only upto the end of the relevant assessment year or before the completion of assessment, whichever is earlier. Page 9

Fee for late filing of return [Sections 140A, Section 234F and Section 271F] It is proposed to levy a fee where the return is not filed within the due date as prescribed. The proposed fee structure is as under: Total Income Date of filing return of income Fees Upto Rs. 5 lacs Any time after the due date Rs.1,000 Above Rs.5 lacs On or before 31 December of the assessment year Rs.5,000 On or after 1 January of the assessment year Rs.10,000 The above fee will be payable before furnishing the return. Further, consequent to the insertion of said section, penalty for failure to furnish return of income will be omitted. Disallowance in relation to capital expenditure incurred in cash [section 43(1) and section 35AD] Currently, unlike provisions for disallowance of revenue expenditure incurred in cash, there is no specific provision for disallowance in relation to capital expenditure incurred in cash. In order to discourage cash transactions for capital expenditure, it is proposed that any payment for acquisition of an asset, otherwise than by an account payee cheque drawn on a bank or account payee bank draft or use of electronic clearing system through a bank account, exceeding Rs.10,000 to a person in a day, shall not be considered as part of the actual cost of the asset and consequently no depreciation will be available in relation to such asset. Moreover, such capital expenditure will also not be considered for any investment linked deduction, available for specified businesses, under section 35AD. Amendment to Sec. 211 & 234C relating to advance tax It is proposed to amend the said clause 211(1)(b) to provide that the assesse 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 instalment on or before March 15. It is also proposed to make consequential amendments in sub-section (1) of Sec. 234C to provide that in respect of an assessee referred to in Sec. 44ADA, interest under the said section 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 fulfilment of conditions specified therein. Amendment will take effect from April 1, 2017. Page 10

Special Provision for computation of capital gains in case of joint development agreement Existing Provision: Under the existing provisions of section 45, capital gain is chargeable to tax in the year in which transfer takes place except in certain cases. The definition of transfer, inter alia, includes any arrangement or transaction where any rights are handed over in execution of part performance of contract, even though the legal title has not been transferred. In such a scenario, execution of Joint Development Agreement 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. New Provision: With a view to minimise the genuine hardship which the owner of land may face in paying capital gains tax in the year of transfer, it is proposed to insert a new sub-section (5A) in section 45. 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. The Sale consideration in such case will be the stamp duty value of owner s share in the project on the date of issuing of said certificate of completion as increased by any monetary consideration received by the owner. However benefit of this proposed regime shall not apply to an assessee who transfers his share in the project to any other person on or before the date of issue of said certificate of completion. In such a situation, capital gain shall be computed as per provisions of the Act without taking into account this proposed provisions and deemed to be the income of such year of transfer. The cost of acquisition of the share in the project in the hands of the land owner shall be the amount which is deemed as full value of consideration under the said proposed provision. (Amendment in Sec.49 proposed) Further in case any monetary consideration is payable under that joint development agreement, tax at the rate of 10% shall be deductible from such payment. (Proposed Insertion of Sec.194-IC) This amendment will be effective from F.Y. 2017-18. Extends expense disallowance u/s 40(a)(ia) due to TDS failure to income from other sources computation It is proposed to amend Sec 58 (which provides for amounts which are not deductible in computing the income under the head "Income from other sources") so as to provide that provisions of section 40(a)(ia) shall, so far as they may be, apply in computing income Page 11

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". Notional Taxability under House Property head in case of Builders/ real estate developers With a smart move, the government has proposed to tax the unsold House Properties, held as Stock in Trade by real estate developers. Where the House Properties consisting of any building and land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not let during the whole or any part of the previous year, the annual value of such property or part of the property, for the period upto one 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, shall be taken to be nil. (Amendment in Sec.23) Meaning thereby after expiry of one year from the end of the F.Y. in which the Completion certificate is obtained, the Annual Value of such House Property will be taxable under the head Income from House Property. This amendment will be effective from F.Y. 2017-18. Clarity on applicability of indirect transfer provisions [Section 9] The indirect transfer provisions are proposed to be amended to clarify that they shall not apply to any asset or capital asset being investment held by non-resident, directly or indirectly, in a Foreign Institutional Investor registered as Category-I or Category II under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014 made under the Securities and Exchange Board of India Act, 1992. The proposed amendment is clarificatory in nature and is applicable retrospectively with effect from assessment year 2012-13. Rationalization of transfer pricing regulations for domestic transaction [Section 92BA] Definition of specified domestic transaction is proposed to be relaxed to exclude expenditure in respect of which payment has been made or to be made to the persons referred to in section 40A(2)(b). Hence, such transactions will not be subject to transfer pricing provisions which are applicable to the domestic transactions and this will reduce the compliance burden of the taxpayers. Extension of anti-abuse provisions to tax receipt of sum of money or property without consideration or for inadequate consideration [Section 56(2)(x)] Currently, anti-abuse provisions to tax receipt of sum of money or immovable property or specified movable property without consideration or for inadequate consideration, where the value of such receipt exceeds Rs.50,000, as income from other sources are attracted only in instances where the recipients are individuals or Hindu undivided family. Page 12

Further, these anti-abuse provisions also provide for taxability of receipt of shares of a closely held companies by firm or a company without consideration or for inadequate consideration, where the fair market value of shares exceeds Rs.50,000. It is now proposed to extend the aforesaid anti-abuse provisions to all the categories of assesses. However, in this regard, certain exceptions have also been specifically provided. Consequentially, it is further proposed that once the recipient is liable to tax in the aforesaid manner, the value which has been subjected to tax will be available as cost in the hands of such recipient. TDS on payments to call centre [Section 194J] Section 194J provides for TDS @ 10% on payments to a resident towards fees for professional or technical services. It is proposed that TDS @ 2% will apply in respect of payments to persons engaged only in the business of operation of call centre. Self-declaration for no TDS on insurance commission [Section 197A] Currently, section 197A permits nil TDS if recipient of certain payments furnishes a selfdeclaration in Form 15G / 15H. However, payments towards insurance commission beyond threshold limit as specified is not covered under this section. It is proposed to extend the benefit of nil TDS on the insurance commission as well, if the recipient furnishes such self-declaration. Strengthening of PAN quoting mechanism in the TCS regime It is proposed to insert a new section to make furnishing of PAN compulsory in context of Section 206A for tax collected at source. In light of the new Section, PAN has been made compulsory for both the collectee and the collector in respect of all compliances required to be made under Sec 206A as also in all correspondence, bills and vouchers exchanged between the collector and the collectee. A penalty clause has been inserted to provide that, where no PAN is quoted by the collectee, tax shall be collected at twice the rate or 5% whichever is higher. This amendment will take effect from 1st April, 2017. Clarification of person responsible for paying [Section 204] It is clarified that for furnishing of information under section 195(6) relating to payment of any sum to a non-resident, whether or not chargeable under the provisions of the Act, the person responsible for paying shall be the payer himself or in case of a company, the company itself including the principal officer thereof. This amendment is proposed with retrospective effect from 1 April 2017. Page 13

Interest on refunds to deductor [Section 244A] It is proposed to grant interest on refund to the deductor @ 0.5% per month or part of a month from the date on which claim for refund is made till the date on which refund is granted. If refund is granted on giving effect to the appellate orders, interest will be granted from the date of payment of tax till the date on which refund is granted. Interest will not be granted if the delay in the proceedings resulting in the refund is attributable to the deductor. Withholding of refund [Section 241A] It is proposed to insert a new section which authorizes the AO to withhold refund due to the assessee upto the date on which the assessment is made, if notice is issued and he is of the opinion that grant of refund may adversely affect the revenue. However, the AO will be required to record reasons in writing and obtain prior approval of the Principal Commissioner or Commissioner for the same. The above provision will apply from assessment year 2017-18. Disallowance for non-deduction of tax from payment to resident [Section 58] With a view to improve compliance of provision relating to TDS, it is proposed that 30% of any sum payable to a resident, on which tax is deductible at source and such tax has not been deducted or after deduction has not been paid within the specified time, shall not be allowed as deduction while computing income from other sources. Restriction on exemption in case of corpus donation by exempt entities [Section 11 and Section 10(23C)] Currently, voluntary contributions made by a trust to any other trust or institution, except those made out of accumulated income, is considered as application of income. It is proposed that any amount credited or paid by a trust or institution, being contributions with specific direction that they shall form part of the corpus of another trust or institution shall not be treated as application of income in the hands of the donee trust or institution. Modifications of object clause of entities registered under section 12AA [Section 12A] It is proposed that where a registered trust or an institution has adopted or undertaken modifications of the objects which do not confirm to the conditions of registration, the said trust or institution is required to obtain fresh registration by making an application within thirty days from the date of such adoption or modifications of the objects. It is further clarified that the said trust or institution is required to file their return of income within the due date as prescribed for filing the return of income. Page 14

Assessments/Re-assessments time-limit reduced It is proposed to amend Sec 153(1) to provide that for AY 2018-19, the time limit for making an assessment order u/s 143 or 144 shall be reduced from existing twenty-one months to eighteen months from the end of the AY, and for AY 2019-20 and onwards, the said time limit shall be twelve months from the end of the AY in which the income was first assessable. It is further proposed to amend Sec 153(2) to provide that the time limit for making an order of assessment, reassessment or re-computation u/s 147, in respect of notices served u/s 148 on or after the 1st day of April, 2019 shall be twelve months (instead of one year as per existing provision) from the end of the financial year in which notice u/s 148 is served. Similarly, it is proposed to amend Sec 153(3) to provide that the time limit for making an order of fresh assessment in pursuance of an order passed or received in the financial year 2019-20 and onwards under sections 254 or 263 or 264 shall be twelve months from the end of the financial year in which order u/s 254 is received or order u/s 263 or 264 is passed by the authority referred therein. It is to be noted that similar amendments have been proposed u/s 153B relating to time limits for completion of search assessment and Sec 153C (relating to assessment on other person ). These amendments will take effect from 1st April, 2017. Likewise, it is proposed to amend Sec 153(5) to provide that where an order under section 250 or 254 or 260 or 262 or 263 or 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the time limit relating to fresh assessment provided in sub-section (3) shall apply to the order giving effect to such order. Further, it is proposed to amend Sec 153(9) to provide that where a notice u/s 142(1)/143(2)/148 has been issued prior to the 1st day of June, 2016 and the assessment or reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of section 153 as it stood immediately before its substitution by the Finance Act, 2016.These amendments will take effect retrospectively from 1st June, 2016. 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. These amendments will take effect from 1st April, 2017. Page 15