Finance Bill' 2017 : A Crisp Analysis of Income Tax Provisions
-
Upload
chandan-goyal -
Category
Economy & Finance
-
view
81 -
download
0
Transcript of Finance Bill' 2017 : A Crisp Analysis of Income Tax Provisions
A Crisp Analysis of Income Tax Provisions
Finance Bill’2017
Blue Consulting Pvt. Ltd.
Doing common things, Uncommonly well. GST I F&A Outsourcing I Internal Audit I Consulting
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
Index
2
1. TaxIncen+ves 3-5
2. Interna+onalTaxa+on 6-12
3. Discouragementtocashtransac+ons 13-15
4. SomeImportantChanges 16-28
5. Proceduralchanges 29-33
6. PersonalTaxa+on 34-35
7. Aboutus 36-38 28
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
1. Tax Incentives
3
Title Section Changes proposed Effective from
CorporateTaxrates § Corporatetax fordomes+ccompanieswhosetotalturnoverdoesnotexceed
INR50crore(INR500million)hasbeenreducedfrom30%to25%.
§ Rate of tax for large companies with a turnover of over 50 Cr remains
unchangedat30%.
§ Rateofcorporatetaxremainsunchangedat40%forForeignCompanies.
§ Cess - Educa+on cess and Secondary & Higher Educa+on cess remains
unchangedat2%and1%respec+vely.
§ There is no change in the tax rate for MAT(Minimum Alternate Tax) and
DDT(DividendDistribu+onTax).
§ Surchargeremainsame:
§ Foreigncompanies:2%ontotalincomeexceedingRs.1crbutlessthanor
equaltoRs.10crand5%fortotalincomeexceedingRs.10cr.
§ Domes+ccompanies:7%ontotal incomeexceeding1crbutlessthanor
equaltoRs.10crand12%fortotalincomeexceedingRs.10cr.
Assessment
Year2018-19
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [1. Tax Incentives]
4
Title Section Changes proposed Effective from
Incen=vesfor
promo=ng
Investmentin
ImmovableProperty
2(42A) § Aspercurrentprovisions,animmovablepropertyisconsideredasalong-term
assetifitisheldfortheperiodofmorethan36months.
§ Inordertopromotetheinvestmentinrealestatesector,theperiodofholding
hasbeenreducedto24monthsfrom36monthsforanimmovablepropertyto
qualifyasalong-termcapitalasset.
§ Accordingly, the benefits of concessional rate of tax and indexa+on can be
availedifanimmovablepropertyisheldforaminimumperiodof24months.
As ses sment
Year2018-19
Set-offandcarry
forwardoflossin
caseofchangein
shareholding
79 § Aspertheexis+ngprovisions,acloselyheldcompanyisnotallowedtocarry
forwardandset-offlossesofearlieryearsifitsshareholdingchangesbymore
than50%.
§ Inordertofacilitateeaseofdoingbusinessandtopromotethestart-upsin
India,lossesincurredbyaneligiblestart-upcanbecarriedforwardandset-off
againsttheincomeofthepreviousyear,ifalltheshareholdersofsuch
company(asexistedintheyearofloss)con+nuetoholdthesharesonthelast
dayofthepreviousyear.
A s ses sment
Year2018-19
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [1. Tax Incentives]
Title Section Changes proposed Effective from
Extendingtheperiod
forclaimingdeduc=on
bystart-ups
80-IAC § Undertheexis+ngprovisions,aneligiblestart-up isallowedadeduc+onofan
amountequalto100%oftheprofitsandgainsderivedfromaneligiblebusiness
for3 consecu+veassessmentyearsoutof5yearsbeginning fromtheyear in
whichsucheligiblestart-upisincorporated.
§ Consideringthatstart-upsmaynotderiveprofitsfromtheeligiblebusinessesin
theini+alyearsandwithaviewtomakededuc+onsmeaningful,theperiodfor
claiming deduc+ons has been extended to any 3 consecu+ve years out of 7
yearsbeginningfromtheyearinwhichsucheligiblestart-upisincorporated.
§ This would enable such start-ups to obtain benefits as envisaged by the
Government.
As ses sment
Year2018-19
5
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
2. International Taxation
6
Title Section Changes proposed Effective from
Clarityrela=ngto
Indirecttransfer
provisions
9 § Undertheexis+ngprovisions,anassetorcapitalasset,beinganyshareina
companyregisteredorincorporatedoutsideIndiashallbedeemedtobe
situatedinIndia,ifthesharederivesitsvaluesubstan+allyfromtheassets
locatedinIndia.
§ Itisnowclarifiedthattheprovisionsshallnotapplytoanyassetorcapital
assetheldbynon-resident,directlyorindirectlyinaForeignPor_olio
Investors(FPI)registeredasCategory-IorCategory-II.
§ Theearlierprovisionsareamendedastheyresultedinmul+pletaxa+onas
investorsinFPIsareheldliabletopaytaxonredeemingtheirunitsinFPI.
§ Noexemp+onhasbeenprovidedtoCategory-IIIFPI’s.
Retrospec+vely
from
Assessment
Year2012-13
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
…contd. [2. International Taxation]
7
Title Section Changes proposed Effective from
Provisionof
“Secondary
Adjustment”
introducedinTransfer
Pricing
92CE § InordertoalignthetransferpricingprovisionsinlinewithOECDtransferpricing
guidelinesandinterna+onalbestprac+ces,theassesseeshallberequiredto
carryout“SecondaryAdjustment”wheretheprimaryadjustmenttotransfer
price.
§ Inten+onistoremovetheimbalancebetweencashaccountandactualprofitof
theassesseonaccountof“PrimaryAdjustments”.
§ “Secondaryadjustment”willbemadeonlyinrespectoffollowing“Primary
Adjustments”:
§ voluntaryadjustmentinreturnofincome;or
§ acceptanceofadjustmentproposedbyAO;or
§ determina+oninanAPA;or
§ adop+onofsafeharbourrule;or
§ resolu+onunderMutualAgreementProcedure
§ TheSecondaryAdjustmentwouldbedeemedasadvancetoAEifsuchamountis
notreceivedwithinprescribed+melimitandinterestwouldbeapplicableina
mannertobeprescribed.
§ NoSecondaryAdjustmentifPrimaryAdjustmentdoesnotexceedINR1Cr.
Asses sment
Year2018-19
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
…contd. [2. International Taxation]
8
Title Section Changes proposed Effective from
Interestdeduc=on
restrictedto30%of
EBIDTA
94B § Undertheini+a+veoftheG-20countries,theOrganiza+onforEconomicCo-
opera+onandDevelopment(OECD)initsBaseErosionandProfitShihing(BEPS)
projecthadtakenuptheissueofbaseerosionandprofitshihingbywayofexcess
interestdeduc+onsbytheMNEsinAc+onPlan4.
§ Inlinewithrecommenda+onsofAc+onPlan4,anewsec+onhasbeeninserted
whichrestrictstheclaimofinterestexpensestoassociatedenterprise(AE)tothe
extentofminimumoffollowing:
§ 30%ofitsearningsbeforeinterest,taxes,deprecia+onandamor+za+on
(EBITDA)OR
§ interestpaidorpayabletoassociatedenterprise
§ ThisprovisionisapplicabletoanIndiancompany,oraPermanentEstablishment
(PE)ofaforeigncompanyinIndia,beingtheborrower,whopaysinterestor
similarconsidera+oninrespectofanydebtissuedbyanon-residentAE.
§ Therestric+onisapplicableonlywhereinterestorsimilarconsidera+ontoitsAE
exceedsINR1crore(10million).
....contd.
As ses sment
Year2018-19
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
…contd. [2. International Taxation]
9
Title Section Changes proposed Effective from
....contd.(Interest
deduc+onrestrictedto
30%ofEBIDTA)
94B § Debtshallbedeemedtobetreatedas issuedbyanAEwhere itprovidesan
implicitorexplicitguaranteetoanon-AE lenderordepositsacorresponding
andmatchingamountoffundswiththenon-AElender.
§ Therestric+onwillnotapplytoanIndiancompanyorPEofaforeigncompany
whichisengagedinthebusinessofbankingorinsurance § Disallowedinterestexpenseshallbecarriedforwardupto8assessmentyears
immediately succeeding the assessment year for which the disallowance is
firstmade.
§ Deduc+oninsubsequentassessmentyearwillbesubjecttosamerestric+ons.
§ The term ̳debt‘ has been defined to mean any loan, financial instrument,
finance lease, financial deriva+ve, or any arrangement that gives rise to
interest, discounts or other finance charges that are deduc+ble in the
computa+on of income chargeable under the head “Profits and gains of
businessorprofession”.‖
A s ses sment
Year2018-19
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
…contd. [2. International Taxation]
10
Title Section Changes proposed Effective from
Computa=onof
MAT/AMTcreditin
caseofforeigntax
credit
115JAA
and
115JD
§ AnewRule128wasinsertedin2016toprovidethemechanismforgrantof
ForeignTaxCredit(FTC).
§ TheRuleprovidesthatthecreditofforeigntaxcanalsobeallowedagainst
MAT/AMT.
§ Aspersubrule7ofRule128,iftheamountofFTCavailableexceedstheMAT/
AMTliability,suchexcessamountofFTCamountshallbeignoredandwillnot
becarriedforward.
§ Now,byamendingtheSec+on115JAAand115JD,thescopeofunduebenefit
throughpossiblecarriedforwardhasbeencompletelyrestricted.
Assessment
Year2018-19
MinimumAlternate
Tax(MAT)provisions
amendedtobeinline
withIndAS
Amendment
toSec+on
115JB
§ Since,theGovernmenthasno+fiedIndASforcertaincompanies,thebook
profitofsuchcompaniesasperIndASfinancialstatementswillbedifferent
fromthebookprofitsaspertheexis+ngIndianGAAP.
§ Basedontherecommenda+onsofLohiaCommioee,amendmentshavebeen
madeinSec+on115Bforthecomputa+onofMATliabilityforIndAScompliant
companiesintheyearofadop+onandthereaher.
Assessment
Year2017-18
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
…contd. [2. International Taxation]
11
Title Section Changes proposed Effective from
Enablingclaimof
creditforforeigntax
paidincasesof
dispute
155 § Currently,theIncomeTaxAct,1961doesnotcontainanyprovisionforthe
amendmentofassessmentorderifthedisputeofforeigntaxpaidbythe
assesseegotseoledaherthein+ma+onorassessment.
§ However,Rule128(4)relatedtoForeignTaxCreditalreadycontainsthe
provisionwhichallowsthecreditofdisputedFTCsubjecttocertaincondi+ons.
§ Now,anenablingprovisionhasbeenmadeinIncomeTaxAct,1961by
amendingtheSec+on155andaddingasubsec+on14Awhichprovidesa
mechanismfortherec+fica+onoftheassessmentorder.
§ AsperSub-sec+on(14A),AOwillamendtheorderofassessmentorin+ma+on
iftheassesseefurnishesfollowingdocumentswithin6monthsfromtheendof
themonthinwhichthedisputeisseoled:
o Proofforpaymentofforeigntaxliability
o Proofofseolementofdispute
o Anundertakingthatcreditofsuchforeigntaxhasnotbeenclaimed.
Assessment
Year2018-19
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
…contd. [2. International Taxation]
12
Title Section Changes proposed Effective from
ConcessionalTDS
rateunderSec=on
194LC
194LC § Undertheexis+ngprovisions,ifborrowingsinforeigncurrencyismadeundera
loanagreemententeredintobetween01-07-2012and01-07-2017orbywayof
long-termbondsissuedbetween01-10-2014and01-07-2017,taxisdeductedat
therateof5%inrespectofinterestpayabletonon-residents.
§ The eligible period for the applicability of concessional rate of TDS has been
extended=ll1stJuly,2020from1stJuly,2017.
§ Thebenefitofconcessionalrateshallnowbeextendedtorupeedenominated
bondsissuedoutsideIndiabefore01.07.2020.Thisamendmentwilltakeeffect
retrospec+velyfrom01.04.2016.
Assessment
Year2018-19
Extensionofeligible
periodof
concessionaltaxrate
underSec=on194LD
194LD § Undertheexis+ngprovisions,alowerTDSrateof@5%isapplicableinthecase
of interest payable to FIIs and QFIs on their investments in Government
securi+es.
§ SuchbenefitoflowerTDSiscurrentlyavailableifsuchinterestispayableonor
aher1stJune,2013butbefore1stJuly,2017.
§ The eligible period for the applicability of concessional rate of TDS has been
extended=ll1stJuly,2020from1stJuly,2017.
Assessment
Year2018-19
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
3. Discouragement of cash transactions
Title Section Changes proposed Effective from
Measuresto
discouragecash
transac=ons
40A(3) § Under the exis+ng provisions, expenditure incurred in cash beyond the
monetarylimitofRs.20,000toapersoninasingledayisdisallowed.
§ In order to further dis-incen+vise cash transac+on, exis+ng threshold limit of
cashpayment to aperson in a singledayhasbeen reduced tohalf, fromRs.
20,000toRs.10,000.
Asses sment
Year2018-19
Limitspecifiedfor
Capitalexpenditurein
cash
43&
35AD
§ Currently, there is no provision in theAct to disallow the capital expenditure
incurredincash.
§ Therefore, to discourage cash payments for capital expenditure, any cash
paymentsaboveRs.10,000shallnotbeconsideredtodetermineactualcostof
assetunderSec+on43(1).
§ Further,no deduc=ons shall be available under Sec+on 35AD for any capital
expenditureincashinexcessofRs.10,000.
A s ses sment
Year2018-19
13
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [3. Discouragement of cash transactions]
Title Section Changes proposed Effective from
Taxincen=vefor
digitalpayments
44AD § Aspertheexis+ngprovisionsunderthepresump+veincomeschemeincaseof
eligiblebusiness,asumequalto8%ofthetotalturnoverorgrossreceiptsshall
bedeemedtobetheprofitsandgainsofsuchbusinesses.
§ In order to promote digital transac+ons and to encourage small unorganised
businesstoacceptdigitalpayments,thepresump+veincomeu/s44ADshallbe
deemedtobe6%ofthegrossreceipts.
§ However, this lower rate of 6% shall be applicable only in respect of total
turnoverorgrossreceiptsreceivedthroughpresceribedbankingchannel.
§ Theexis+ngrateof8%forthepresump+veincomeshallcon+nuetoapplyifthe
paymentisreceivedsbyanyothermode.
§ Payment received during the previous year or before the due date of return
filinginrespectofthatpreviousyearwillbeeligibleforthereducedrate.
1st April’2017
(Assessment
Year2018-19)
14
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [3. Discouragement of cash transactions]
Title Section Changes proposed Effective from
Restric=ngcash
dona=ons
80G § Aspertheexis+ngprovisions,nodeduc+onisallowedforthecashdona+onsin
excessofRs.10,000.
§ To move towards a cash less economy and reduce the genera+on and
circula+onofcash,thethresholdlimitfortheavailmentofdeduc+onhasnow
beenreducedtoRs.2,000fromRs.10,000.
A s ses sment
Year2018-19
Transac=onsincash
aboveRs.3.lakhis
prohibited
269ST
&
271DA
§ InordertoachievethemissionoftheGovernmenttomovetowardsacashless
economyandtoreducethegenera+onandcircula+onofblackmoney,anew
Sec+on269SThasbeeninserted.
§ AsperSec+on269ST,receiptsofcashinexcessofRs.3lakhisprohibited,ifit
isreceivedfromapersoninasingleday:
‒ inrespectofasingletransac+onor
‒ Inrespectofoneeventoroccasion
§ Acorrespodingpenalprovisionhasbeenintroducedthroughinser+onofanew
Sec+on271DAfornon-complianceofthelimitofRs.3lacs.Itprovidesthelevy
ofapenaltyequivalenttotheamountofsuchreceipt.
§ However,thisrestric+onshallnotapplytoGovernment,anybankingCompany,
postofficesavingsbankoranyotherno+fiedperson.
1st April’2017
(Assessment
Year2018-19)
15
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
4. Other important changes
Title Section Changes proposed Effective from
Exemp=onoflong
termcapitalgainstax
10(38) § Under the exis+ng provisions, income arising from a transfer of long term
capitalasset,beingequityshareofacompanyoraunitofanequityoriented
fund, is exempt from tax if the sale transac+on is undertaken on or aher
01.10.2014andischargeabletoSecuri+esTransac+onTax(STT).
§ Such exemp+on provided under sec+on 10(38) is being misused by certain
persons for declaring their unaccounted income as exempt long-term capital
gainsbyenteringintoshamtransac+ons.
§ With the view to prevent this abuse, such exemp+on for income arising on
transferofequityshareacquiredonoraher01.10.2004shallbeavailableonlyif
theacquisi+onofsharesischargeabletoSTT.
§ However, thisexemp+onshall con+nue ingenuinecaseswhere theSTTcould
nothavebeenpaidlikeacquisi+onofsharesinIPO,FPO,bonusorrightissueby
alistedcompany,acquisi+onbynon-residentinaccordancewithFDIpolicyetc.
A s ses sment
Year2018-19
16
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
Ra=onaliza=onof
provisionsofSec=on
10AA
10AA § Under the exis+ng provisions of Sec+on 10AA, deduc+on is allowed from the
total income of an assessee in respect of profits and gains from his unit
opera+nginSEZ.
§ In various cases, courts have taken a view that the deduc+on under Sec+on
10AA is allowed from the total income of the undertaking and not from the
totalincomeoftheassessee.
§ In order to remove this ambiguity, it is clarified that the deduc=on shall be
allowedfromthetotalincomeoftheassesseeandthededuc+onu/s10AAin
nocaseshallexceedthesaidtotalincome.
§ This clarifica+on will reduce the carry forward losses of non-exempted
undertakingsofanassesseetotheextentsamecanbesetoffagainsttheprofits
ofaneligibleundertakingu/s10AA.
As ses sment
Year2018-19
17
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
Nono=onalincomefor
housepropertyheldas
stock-in-trade
23 § As per the exis+ng provisions, the assessee is liable to pay tax on deemed
annualvalueofhousepropertylyingvacant.
§ However, excep+on is given in those cases where property is either self-
occupiedorusedforthepurposeofbusinessorprofession.
§ Suchconceptofdeemedannual value is applicableeven forhouseproperty
heldasstock-in-trade.
§ Thisprovisionwascrea+ngprac+caldifficul+esfortherealestatedevelopers
astheyareforcedtopaytaxonno+onalincomeforunsoldflats.
§ In order to provide relief to the real estate developers, who are holding
residen+al property as stock-in-trade, the annual value of such house
propertyshallbedeemedtobeNILforaperiodofupto1yearfromtheend
ofthefinancialyearinwhichthecer=ficateofcomple=onofconstruc=onis
obtained.
Asses sment
Year2018-19
18
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
Increaseinthreshold
limitofauditfor
assesseesop=ngfor
presump=vetaxa=on
44AB § TheFinanceAct,2016hasincreasedthethresholdlimitforpresump+vetaxa+on
schemefromRs.1croretoRs.2crores.
§ However,thethresholdlimitforthetaxauditu/s44ABwasnotincreasedtoRs.
2croresforthetaxpayersop+ngforthepresump+vescheme.
§ Inordertoreducethecomplianceburdenofthesmalltaxpayersandfacilitate
the ease of doing business, an eligible person op+ng for presump+ve income
scheme,shallnotberequiredtogethisaccountsauditedifthetotalturnoveror
thegrossreceiptsoftherelevantpreviousyeardoesnotexceedRs.2crores.
As ses sment
Year2017-18
Nocapitalgainson
conversionof
preferencesharesto
equity
47 § Conversionofbondordebentureofacompanyintoshareordebentureofthat
company are outside the scope of ‘transfer’ under the current provisions of
Sec+on47.
§ However, there is no clarity on similar tax neutrality for conversion of
preferenceshareofacompanyintoitsequityshare.
§ Amendments to Sec+on 47 have beenmade to clarify that the conversion of
preferencesharesintoequityshallnotberegardedastransfer.
A s ses sment
Year2018-19
19
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
Shi_ingofbaseyear
ofCostInfla=onIndex
from1981to2001for
thecomputa=onof
CapitalGain
48&55 § Undertheexis+ngprovisions,forthecomputa+onofcapitalgainsinrespectof
anassetacquiredbefore01.04.1981,theassesseeisallowedanop+onof:
§ eithertakingthefairmarketvalueoftheassetason01.04.1981
§ ortheactualcostoftheassetascostofacquisi+on.
§ Now,thebaseyearhasbeenshi_edfrom1981to2001i.e.,2001-2002shallbe
takenasthebaseyearandtheGovernmentshallno+fytherevisedCost
Infla+onIndexstar+ngfromtheyear2001-2002.
§ Itwillremovethedifficul+esduetothenon-availabilityofrelevantinforma+on
forthecomputa+onofthefairmarketvalue(FMV)ofsuchassetason
01.04.1981.
§ Further,itmayresultinsignificantsavinginlongtermcapitalgainliabilityas
indexedcostofacquisi+onisgoingtoincrease.
As ses sment
Year2018-19
Expandingthescopeof
long-termbonds
54EC § Theexis+ngSec+on54ECallowsexemp+ons to theextentofRs. 50 lakhs in
respectoflong-termcapitalgaininvestedinbondsissuedbyNHAIorRECL.
§ To expand the scope of long-term bonds, the investment in any bond
redeemableaher3yearswhichhavebeenno+fiedbytheCentralGovernment
inthisbehalfshallalsobeeligibleforexemp+onunderSec+on54EC.
As ses sment
Year2018-19
20
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
Gi_staxableinhands
ofeveryperson,not
onlyIndividualorHUF
56 § Sec+on 56(2)(vii) provides for the taxability of any sum of money or any
property received without considera+on or for inadequate considera+on in
excessofthespecifiedlimitofRs.50,000.
§ Theexis+ngprovisionsofSec+on56(2)(vii)areapplicabletoanIndividualand
HUFonly.
§ Thescopeofthisprovisioniswidenedbyintroducinganewclause56(2)(x)so
astocoveralltaxpayerswithinitsambit.
1st April’2017
(Assessment
Year2018-19)
Clarifica=onwith
regardto
interpreta=onof
‘terms’usedinDTAA
90&90A § In its final report, the Income-tax simplifica+on commioeehas suggested to
bring inmoreclarity intheAct inrespectof interpreta+onof 'terms'usedin
an agreement entered under sec+on 90 or 90A to reduce the avoidable
li+ga+onrelatedtotaxa+onofnon-residents.
§ Governmenthasacceptedtherecommenda+onandhasinsertedExplana+on
4inSec+on90&90Awhichclarifiesthatany‘term’usedinanagreement(i.e.
DTAA), entered into under Sec+on 90 and 90A of the Act, but not defined
under the said agreement, the said term is proposed to be assigned the
meaningasdefined intheActandanyexplana+ongivento itbytheCentral
Government.
Contd…
Asses sment
Year2018-19
21
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
…Contd.(Clarifica+on
withregardto
interpreta+onof
‘terms’usedinDTAA)
90&90A § Inthisconnec+on,itshouldbeobservedthatasperAr+cle2ofDTAAentered
intobyGovernmentofIndiawithGovernmentofothercountries,itisagreed
that the competent authori+es of the Contrac+ng States shall no+fy each
other of any significant changes which have been made in their respec+ve
taxa+onlawsandofanyofficialpublishedmaterialconcerningtheapplica+on
oftheConven+on.
§ Further, Ar+cle 3 ofDTAA states that any termnot otherwise defined shall,
unlessthecontextotherwiserequires,havethemeaningwhich ithasunder
thelawsofthatContrac+ngStaterela+ngtothetaxeswhicharethesubjectof
thisConven+on.
§ The phrase 'unless the context otherwise requires' is absent under the
proposedamendmenttotheAct.
§ Though,theinten+onoftheGovernmentistosimplifytheprovisiontoavoid
possible li+ga+onsbut its actual applica+onmayhave theadverseeffecton
theDTAA’s.
A s ses sment
Year2018-19
22
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
Domes=cTransfer
Pricingprovisionsnot
applicableintax
neutraltransac=ons
92BA § The exis+ng provisions of sec+on 92BA provide that any expenditure in
respectofwhichpaymentismadebytheassesseetopersonsspecifiedunder
sec+on 40A(2)(b) are covered within the ambit of Specified Domes+c
Transac+ons(SDT).
§ Inordertoreducethecomplianceburdenoftaxpayers,ithasbeenproposed
thatthesetransac+onsshallbeexcludedfromthescopeofsec=on92BA.
§ Inotherwords,SDTwillnotbeapplicablewheretransac+onsaretaxneutral
between taxable en++es and itwill apply only to those companies that are
claiminganytaxholidayorinvestmentlinkeddeduc+ons.
§ The Assessing Officer can s+ll disallow unreasonable or excessive payments
underSec+on40A(2)(b).
A s ses sment
Year2017-18
23
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
Clarifica=onregarding
theapplicabilityof
Sec=on112
112 § Undertheexis+ngprovisions,concessionalrateof10%isprovidedforlong-
termcapitalgainsarising fromthetransferofunlistedsecuri+es incaseof
non-resident.
§ The ambiguity as to applicability of this provision to share of a private
companywasclarifiedbytheFinanceAct,2016,w.e.f.01-04-2017.
§ As the concessional rate in sec+on112(1)(c)wasprovidedw.e.f. 1stApril,
2013, therewas uncertainty about the applicability of the amendment to
theinterveningperiod.
§ With a view to resolve the above uncertainty, it is proposed that the
effec+vedateofamendmentmadetosec+on112(1)(c)(iii)videFinanceAct,
2016shallbew.r.e.f.01-04-2013insteadofw.e.f.01-04-2017.
A p p l i c a b l e
retrospec+vely
f r o m
A s s e s s m e n t
Year2013-14
24
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
Incomefromtransfer
ofcarboncreditstobe
taxedat10%
115BBG § Presently, department has been trea+ng the income on transfer of carbon
creditsasbusinessincomesubjecttotaxattherateof30%.
§ However,divergentdecisionshavebeengivenbythecourtsontheissueasto
whether the income receivedor receivable on transfer of carbon credit is a
revenueorcapitalreceipt.
§ To stop any further li+ga+on, a new sec+on 115BBG has been inserted to
providethatanyincomefromtransferofcarboncreditshallbetaxableatthe
concessionalrateof10%(plusapplicablesurchargeandcess).
§ Noexpenditureorallowanceshallbeallowedfromsuchincome.
As ses sment
Year2018-19
Ra=onaliza=onof
taxa=onofincomeby
wayofdividend
115BBDA § Under the exis+ng provisions, dividend income in excess of Rs. 10 lakh is
chargeabletotaxatherateof10%incaseofanassesseebeinganindividual,
HUF,firmwhoareresidentinIndia.
§ The provisions of this Sec+on shall now be applicable to all the resident
assesseesexceptdomes+ccompanyandcertainfunds,trusts,ins+tu+ons,etc.
Contd…
Asses sment
Year2018-19
25
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
…Contd
(Ra+onaliza+onof
taxa+onofincomeby
wayofdividend)
115BBDA § Therefore, AOP, BOI and other ar+ficial juridical persons including Private
Trusts are also liable to pay tax @10% if they receive dividend income
exceedingRs.10lakhs.
As ses sment
Year2018-19
MAT/AMTcarry
forward=melimit
increased
115JAA
(2A)
§ Undertheexis+ngprovisions,taxcreditinrespectofMinimumAlternateTax
(MAT)/AlternateMinimumTax(AMT)canbecarriedforwarduptothetenth
assessmentyears.
§ Withaviewtoproviderelieftotheassessee’spayingMAT/AMT,itisproposed
toprovideMAT/AMTcreditdeterminedcanbecarriedforwarduptofi_eenth
assessmentyears.
Asses sment
Year2018-19
26
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
Exemp=onfromTDS
oninsurance
commission
194D § Asperthecurrentprovisions,anypaymentofinsurancecommissionaboveRs.
15,000shallbesubjecttoTDS@5%u/s194D.
§ Further,noop+on isallowed to theagent toavoid thededuc+onofTDSby
submizngtheForm15G/HunderSec+on197A.
§ Therefore,inordertoreducethecomplianceburdenincaseofIndividualsand
HUFs,sec+on197Ahasbeenamendedsoas toallowtheagent tofileForm
No.15G/15Htoreceivetheinsurancecommissionwithoutdeduc=onofTax
atSource(TDS).
June01,2017
LowerTDSfrom
paymenttocallcentre
194J § Undertheexis+ngprovisions,feeforprofessionalservicesorfeefortechnical
servicespaidtocallcentresaresubjecttoTDS@10%u/s194J.
§ Toreducethecomplianceburdenandtopromotetheeaseofdoingbusiness,
suchTDSratehasbeenreducedfrom10%to2%.
June01,2017
27
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [4. Other important changes]
Title Section Changes proposed Effective from
FurnishingofPANin
TCS
206CC § AnewSec+on206CChasbeeninsertedintheIncomeAct,1961strengthening
themechanismofcollec+onoftaxatsource.
§ Anypersonpayinganysumoramount,onwhichtax iscollectableatsource
shallfurnishhisPANtothepersonresponsibleforthecollec+onoftax.
§ Incaseoffailure inthefurnishingofPAN,taxshallbecollectedattwicethe
ratemen=onedintherelevantSec=onor@5%,whicheverishigher.
§ The requirement to furnishPAN shall not apply to anon-residentwhodoes
nothaveapermanentestablishmentinIndia.
1st April’2017
(Assessment
Year2018-19)
Interestonrefunddue
todeductor
244A § Asperexis+ngprovisions,interestispayableontherefundamountduetoan
assesseeanaccountofexcesspaymentofadvancetax,TDS,TCSetc.
§ Currently,nointerestispaidtothedeductorifexcessTDShasbeenaccidently
deductedanddeposited.
§ Hence,[email protected]%permonth.
§ Thesimpleinterestshallbecalculatedfortheperiodbeginningfromthedate
onwhichclaimismadeandendingonthedateonwhichrefundisgranted.
§ Incaseofanappeal,theinterestshallbepayablebeginningfromthedateon
whichtaxispaidandendingonthedateonwhichrefundisgranted.
1st April’2017
(Assessment
Year2018-19)
28
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
5. Procedural changes
29
Title Section Changes proposed Effective from
Unquotedshares
taxableatFair
Marketvalue
New
Sec+on
50CA
§ Presently,ifapersonbuystheunquotedsharesforlessthantheFairMarket
Value(FMV),thedifferen+alamount(ifgreaterthanRs.50,000)istaxableinhis
handsunderthehead“IncomefromOtherSources”.
§ NewSec+on50CAhasbeeninsertedtoprovidethattheFMVofunquotedshares
shalldeemedtobethefullvalueofconsidera+onforthepurposeofcompu+ng
capitalgains,incasewheretheconsidera+ondeclaredforthetransferofsuch
sharesislessthantheFMVoftheshares.
§ Thedifferen+alamountwillbetaxableinthehandsofsellerunderthehead
“IncomefromCapitalGains”.Thiswillleadtoasitua=onofdoubletaxa=onon
thesameamount,onceinthehandsofbuyerandtheninthehandsofseller.
Assessment
Year2018-19
Restric=ononset-off
oflossfromHouse
Property
71 § Presently,lossfromanyletouthousepropertycanbesetoffagainstother
headsofincomewithoutanylimit.However,thereisrestric+onofRs.2lactoset
offthelossfromselfoccupiedhouseproperty.
§ ThisanomalyhasbeenfixedinthisFinanceBillbyrestric+ngthesetoffofloss
fromhouseproperty(includingletout)duringthecurrentyeartoRs.2lacsonly.
§ Theunabsorbedlossshallbeallowedtobecarriedforwardforset-offagainst
theIncomefromHousePropertyfor8assessmentyears.
Assessment
Year2018-19
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
…contd. [5. Procedural changes]
30
Title Section Changes proposed Effective from
Shorteningof=me
forfilingrevised
return
139(5)
§ Undertheexis+ngprovisions,the+melimitforfilingtherevisedreturnwas2
yearsfromtheendofthepreviousyear.
§ The+melimitforfilinghasnowbeenreducedfrom2yearsto1yearfromthe
endofthepreviousyear.
Assessment
Year2018-19
Processingofreturn
withintheprescribed
=meandenable
withholdingofrefund
incertaincases
143(1D)
and
241A
§ Undertheexis+ngprovisions,processingofareturnisnotnecessarywherea
no+cehasbeenissuedtotheassesseein+ma+ngselec+onofcaseforscru+ny
assessment.
§ ThisprovisionallowstheAssessingOfficertowithholdtheprocessingofreturn,
whererefundisdue,+lltheverylastdateofthecomple+onofscru+ny
assessment.
§ Sec+on143(1D)hasbeensubs+tutedtorestricttheapplicabilityoftheabove
provisionsforanyreturnfiledfortheassessmentyearstar+ngfrom1st
April’2017.
Contd…
Assessment
Year2017-18
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
…contd. [5. Procedural changes]
31
Title Section Changes proposed Effective from
…contd.(Processing
ofreturnwithinthe
prescribed+meand
enablewithholdingof
refundincertain
cases)
143(1D)
and
241A
§ Itmeans,AOisnowliabletoprocessthereturnwithinoneyearfromtheendof
FinancialYearinwhichreturnhasbeenfiled.
§ However,toaddresstheconcernofrecoveryindoub_ulcases,anewSec+on
241AshallcomeintoforceauthorizingtheAOtowithholdthepaymentof
refundamount,ifsuchgrantofrefundmayadverselyaffecttherecoveryof
revenue.
Assessment
Year2017-18
Reduc=onofthe=me
limitforcomple=on
ofassessment
153 § Undertheexis+ngprovisions,the+melimitformakingassessmentunderSec+on
143or144,fortheassessmentyear2017-18orbefore,was21monthsfromthe
endoftheassessmentyearinwhichtheincomewasfirstassessable.
§ The+melimithasnowbeenreducedto–
§ ForAssessmentYear2018-19:18monthsfromtheendoftheassessment
Year.
§ ForAssessmentYear2019-20onwards:12monthsfromtheendofthe
assessmentyear
Assessment
Y e a r
2 0 1 8 - 1 9 /
Assessment
Year2019-20
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
…contd. [5. Procedural changes]
32
Title Section Changes proposed Effective from
Feefordelayedfiling
ofreturn
234F § AspertheprovisionsofnewSec+on234F,thefeefordelayinfurnishingof
returnshallbeleviedinacasewherethereturnisnotfiledwithintheduedates
specifiedforfilingofreturn.
§ Feeshallbeleviedasfollows:
§ Rs.5000/-,ifthereturnisfurnishedahertheduedatebutonorbeforethe
31stdayofDecemberoftheassessmentyear;
§ Rs.10000/-inanyothercase
§ However,inacasewherethetotalincomedoesnotexceedfivelakhrupees,the
feeamountshallnotexceedRs.1000/-
Assessment
Year2018-19
Amendmentstothe
structureofAuthority
forAdvanceRulings
245N,
245O,
245Q
§ Withaviewtopromoteeaseofdoingbusiness,theAuthorityforAdvance
Ruling(AAR)forIncome-Tax,CentralExcise,CustomsDutyandServiceTaxhave
beenmerged.
§ Accordingly,necessaryamendmentshavebeenmadeinthedefini+onof
applicantinSec+on245NoftheAct.
§ Similarly,amendmentshasbeenproposedtoSec+on245Q,245Otoallow
mergeroftheseAARs.
1stApril’2017
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
…contd. [5. Procedural changes]
33
Title Section Changes proposed Effective from
Penaltyon
professionalsfor
furnishingincorrect
informa=onin
statutoryreportor
cer=ficate
271J § Currently,therearenopenalprovisionsforthelevyofpenaltyforfurnishingof
incorrectinforma+onbythepersonwhoisresponsibleforcer+fyingthesameor
issuingareportthereon.
§ Inordertoensurethatthepersonfurnishingreportorcer+ficateundertakes
duediligencebeforemakingsuchcer+fica+on,anewSec+on271Jhasbeen
insertedtolevypenaltyonanaccountantoramerchantbanker,whofurnishes
incorrectinforma+oninareportorcer+ficate.
§ TheamountofpenaltyshallbeRs.10,000foreachsuchinaccuratereportor
cer+ficatesofurnished.
1st April’2017
(Assessment
Year2018-19)
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
6. Personal Taxation
34
Title Section Changes proposed Effective from
Individualand
otherstaxrates
§ Nochangeinthebasicexemp+onlimitofindividuals.
§ Rateof tax for assesseeswhose total incomeexceedsRs. 250,000butdoesnot
exceedRs.500,000hasbeenreducedto5%from10%.
§ FollowingarethenewratesofIncomeTaxforIndividuals(HUF,AOP,BOI)-
§ Surcharge–Surcharge@10%shallbeleviedonindividualshavingtaxableincome
betweenRs.50lakhsandRs.1crore.Thesurcharge onincomeexceedingRs.1
croreshallcon+nuetobelevied@15%.
§ Cess–Educa+on Cess and Secondary & Higher Educa+on Cess remains
unchanged.
Assessment
Year2018-19
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [6. Personal Taxation]
35
Title Section Changes proposed Effective from
Deduc=onofTDSon
rentpaymentin
caseofcertain
IndividualsandHUF
194-IB § AsperthenewlyinsertedSec+on194-IB,everyIndividualandHUF(notliableto
Tax Audit) paying amonthly rent of Rs. 50,000 ormore shall nowbe liable to
deductTDS@5%.
§ TomakeiteasiertodeductanddeposittheTDS,theIndividualorHUFwouldbe
requiredtodeducttheTDSonlyonceinayear,onthelastmonthpayment.
§ Further,thepersondeduc+ngtheTDSwouldnotberequiredtoobtainTAN.
June01,2017
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
7. About us
36
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting
...contd. [7. About us]
37
Services GST
Consulting services
Consulting services
Finance & Accounts
outsourcing
Internal Audit
For more information about our GST Consulting Services, click here. ︎
www.blueconsulting.co.in
Blue Consulting Pvt. Ltd. GST I F&A Outsourcing I Internal Audit I Consulting 38
Disclaimer This publication is intended as a service to clients and to provide clients with the details of the important budget proposals on direct taxes. It has been prepared for general guidance on matters of interest only, and does not constitute professional advice. No person should act upon the information contained in this publication without obtaining specific professional advice. Due care has been taken while compiling the information ,however no representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication.