IGST on sale of warehoused imported goods treated as inter State supply; supplier must discharge IGST before ex bond clearance.
Sale or transfer of imported goods remaining in a customs bonded warehouse is a supply and, if made before goods cross the customs frontier, is an inter State supply subject to IGST. The seller is liable to pay IGST on value determined under IGST/CGST valuation provisions; customs duties remain deferred while goods are in bond and become payable on ex bonding, with the ex bonder liable for deferred customs duties. IGST paid on the in bond sale may be available as input tax credit to the purchaser. (AI Summary)

Deemed dividend concept challenged as ineffective; taxing it at company level raises litigation and constitutional concerns.
The article contends that deemed dividend under section 2(22)(e) should be discontinued because loans, advances or deposits from closely held companies to substantial shareholders are capital-account, refundable transactions, not income, and current deemed-dividend rules create complex compliance burdens and litigation. The Finance Bill 2018's proposal to tax such deemed dividends at company level via amendments to section 115-O and omission of the post-115Q explanation is criticized as unlikely to resolve disputes over beneficial ownership, stake computation, accumulated surplus adjustments, and constitutional validity; the author urges repeal of the deemed-dividend provision. (AI Summary)

Retrenchment compensation: compromise payments treated as retrenchment compensation may be exempt, subject to forthcoming amendment.
Section 10(10B) exempts compensation payable under the Industrial Disputes Act or related instruments when paid at the time of retrenchment, and includes deeming provisions for closure or transfer that interrupt service or worsen terms. A tribunal held that a settlement payment incorporated into an industrial tribunal order is compensation under the Act and, applying precedent treating compensation in lieu of reinstatement as retrenchment compensation, such compromise payments can qualify for exemption if they effectively terminate employment as retrenchment. (AI Summary)

GST exclusion for alcoholic beverages creates input-taxation and licence-fee conflicts, prompting state-union fiscal disputes over taxation policy.
GST excludes alcoholic beverages from levy, yet inputs and input services for the sector remain taxable and the industry cannot claim input tax credit because final supplies are outside GST. Multiple mandatory state permits, licences and fees-essential for business continuity-ordinarily attract GST, prompting States to reclassify or rename such levies to preserve revenues and avoid GST, thereby creating fiscal tension between Union GST policy and State excise regulation and motivating GST Council action or legislative amendment. (AI Summary)

Taxation of compensation may reclassify capital receipts as taxable income and raises constitutional validity concerns.
Proposed amendments treat compensation for termination or modification of employment terms as taxable under Income from Other Sources, and compensation linked to business contracts as taxable as business income, regardless of being revenue or capital in nature, aiming to curb base erosion by widening the tax base; this raises constitutional questions about reclassifying capital receipts as income. (AI Summary)

Road and infrastructure cess introduced to fund specified infrastructure projects, levied additionally on petrol and diesel.
The Finance Bill, 2018 establishes a Road and Infrastructure Cess as an additional customs duty on imports and an additional excise duty on domestically produced motor spirit and high speed diesel, collectible alongside other duties and governed by customs and excise procedural provisions. Proceeds are deemed cess under the amended Central Road Fund Act, renamed the Central and Road Infrastructure Fund, and are to finance national highways, state and rural roads, specified infrastructure projects in Schedule II, and related railway safety and infrastructure works, with allocation, administration and monitoring governed by centralised rules and a Committee headed by the Finance Minister. (AI Summary)

Customs duty adjustments and retrospective service tax exemptions alter duties, advance ruling timelines, refund recovery and audit procedures.
Budget 2018 renames the Central Board to Central Board of Indirect Taxes and Customs, repeals certain additional duties and education cesses, revises customs duties to correct duty inversion and protect domestic industry, tightens refund recovery with interest where appellate modification reduces refunds, expands audit powers including audits at auditee premises, narrows advance ruling to pre-import/export questions and shortens ruling timeframe to three months, mandates pre-consultation notices for certain Customs proceedings, and provides three specified retrospective service tax exemptions with a six-month refund claim window. (AI Summary)

Standard deduction reinstated; enhanced senior citizen deductions expand interest and medical reliefs under revised tax rules.
Budget proposals restore a standard deduction for salary income, remove transport allowance and medical reimbursement exemptions, and set slab-based rates for non-seniors. For senior and very senior residents, the proposals increase section 80D health insurance and check-up limits, raise section 80DDB deductions for specified disease treatment, introduce section 80TTB for higher interest deduction (displacing 80TTA), amend section 194A TDS thresholds, and apply the standard deduction. Surcharge bands are increased and a Health and Education Cess replaces the prior education cess. (AI Summary)

Social Welfare Surcharge on imported goods established as an additional customs duty to fund education, health and social security.
A Social Welfare Surcharge is imposed as an additional customs duty on imported goods specified in the First Schedule to the Customs Tariff Act to finance education, health and social security. It is calculated on the aggregate of duties, taxes and cesses levied by the Central Government, excludes certain trade remedy duties and the surcharge itself from the base, and is additional to other customs duties. Existing Customs Act provisions on assessment, refunds, exemptions, appeals and penalties apply to its levy and collection. (AI Summary)

SEBI penalty powers expanded to permit direct levy for specified contraventions and direct settlement proceeds to the Consolidated Fund.
Amendments expand SEBI's power to levy penalties directly, after prescribed inquiry, for specified contraventions including failures to furnish information, comply with listing or reporting obligations, and for exchanges or clearing corporations conducting business contrary to SEBI rules; they recalibrate penalty quantum with specified minimums and maximums, require consideration of disproportionate gains, investor loss and repetitiveness when adjudging penalties, mandate that settlement amounts (excluding disgorgement and legal costs) be credited to the Consolidated Fund, and provide for continuance of proceedings against legal representatives after death with liability limits tied to the estate. (AI Summary)

Proceeds of crime definition and attachment rules revised to permit continued retention during investigation and cross agency information sharing.
Proposed Finance Bill amendments modify the Prevention of Money Laundering Act by widening the definition of proceeds of crime, excluding High Court stay periods when computing provisional attachment duration, permitting retention or freezing of property during investigation for up to ninety days or pending related criminal proceedings, enabling the Special Court to consider restoration claims during trial, extending summons powers to the Joint Director, requiring presentation of arrested persons to a Special Court or magistrate within twenty-four hours, formalising information-sharing with other agencies, and adding a Companies Act fraud offence to the Schedule. (AI Summary)

Corporate tax reform expands reduced rate, extends startup benefits and adjusts MAT carryforward period and registration fees for private companies.
The budget reduces the corporate tax rate for a broad class of companies to enhance competitiveness and investment while retaining Minimum Alternate Tax but extending MAT credit carryforward. It broadens startup tax benefit eligibility by extending the incorporation window, raising the turnover threshold for benefit applicability, and enlarging the definition of qualifying businesses to include innovation-driven or scalable models. Administrative measures waive or reduce private company registration fees, limit charges largely to stamp duty, and promote incorporation via the SPICe form. (AI Summary)

Agricultural income exemption remains despite exports; GST treatment follows zero rating rules with LUT or tax and refund.
Agricultural income from cultivation is exempt from income tax whether sold domestically or exported; separate SEZ export exceptions apply. GST treatment depends on product taxability: taxable agricultural goods can be exported as zero rated supplies either under a Letter of Undertaking without payment of tax or by paying tax and claiming refund. Persons procuring from farmers are merchant exporters whose income is taxable and who may use the same LUT or tax and refund mechanisms; farmers sourcing from other farms and exporting are treated as merchant exporters. (AI Summary)

Standard deduction introduced; drafting omits transport allowance change, creating inconsistency with explanatory memorandum and speech.
The Bill inserts a standard deduction in computing income from salaries and omits the proviso clause that exempts employer-paid medical reimbursement; the explanatory memorandum and Budget speech say both transport allowance (with an exception for differently-abled persons) and medical reimbursement exemptions will be withdrawn, creating an apparent drafting inconsistency between the Bill's text and the explanatory materials. (AI Summary)

Taxation of converted inventory: fair market value on conversion treated as business income and sets acquisition cost.
Conversion of inventory into a capital asset results in the fair market value on the date of conversion being treated as business income and deemed the full value of consideration; that fair market value is also to be the cost of acquisition for subsequent capital gains computation, and the period of holding for capital gains purposes is reckoned from the date of conversion. (AI Summary)

Limitation on LTCG reinvestment: deduction confined to gains from land or buildings and bond lock ins lengthened.
The amendment confines the tax-exempt reinvestment under the notified bond provision to capital gains from long term assets that are land or building and extends the minimum redeemable period for bonds issued on or after 1st April, 2018 from three years to five years; bonds issued before that date remain redeemable after three years and the six month reinvestment window continues to apply, raising transitional drafting concerns for reinvestments made before the statutory cut off. (AI Summary)

Penalty for failure to furnish statement of financial transactions increased; higher daily fines strengthen compliance obligations for reporting.
The amendment increases daily monetary penalties for failure to furnish statements of financial transactions and reportable accounts, raising both the baseline penalty for delay and the higher penalty applicable after issuance of a notice to file, with effect from the commencement of the next fiscal year, to strengthen compliance with reporting obligations. (AI Summary)

Appealability of penalties under Section 271J: amendment makes Commissioner (Appeals) orders appealable to higher forum, with effect concerns.
The Finance Bill, 2018 inserts a reference to section 271J so that orders passed by Commissioner (Appeals) under the penalty for furnishing incorrect information become appealable to the Appellate Tribunal; the Bill makes this amendment effective from 1 April 2018, while it is argued the remedial change should operate from 1 April 2017, the original effective date of the penalty provision. (AI Summary)

Taxation of long-term capital gains: exemption for STT-subject equity transfers withdrawn and a new taxable regime introduced.
The Finance Bill proposes withdrawal of the STT-linked exemption for long-term capital gains on equity shares, equity-oriented fund units and business trust units for transfers made on or after 1 April 2018, and introduces a new taxable regime for such gains applicable to all assessees including FIIs; taxpayers seeking the pre-withdrawal exemption should ensure sale and delivery settle before the 31 March 2018 year-end cut-off. (AI Summary)

Conversion of inventory to capital asset taxed as business income based on fair market value on conversion date.
Proposed amendments include the fair market value of inventory converted into or treated as a capital asset within the definition of income and fix the conversion date as date of acquisition for capital gains reckoning; the author contends taxing fair market value on internal reclassification is unjustified, proposing instead that income be computed on actual sale using book value at conversion while capital gains rules apply on disposal. (AI Summary)