Appealability of Commissioner (Appeals) penalty orders under section 271J now permitted before Appellate Tribunal, amendment effective soon
The amendment will make an order passed by a Commissioner (Appeals) under section 271J appealable before the Appellate Tribunal by modifying clause (a) of sub section (1) of section 253; the change is to take effect from 1 April, 2018.

Advance rulings structure changed: existing body shifts to appellate role for customs and barred from admitting prior appeals.
Amendments reconfigure the institutional role of the Authority for Advance Rulings so that on constitution of a new Customs Advance Rulings body the existing Authority shall cease to act as an advance-ruling body for customs and shall instead act as an appellate authority; it shall not admit appeals against its earlier advance-ruling orders after that constitution, and where the Authority hears advance-ruling applications under the Act the Revenue Member shall fill the specified bench member role.

Penalty increase for failure to furnish statement of financial transaction raises daily sanctions and strengthens reporting compliance.
Failure to furnish a statement of financial transaction or a reportable account attracts a daily continuing default penalty: an initial daily penalty for late filing and a higher daily penalty if not furnished within the period specified in a statutory notice. The Budget proposes to increase both the initial and notice triggered enhanced daily penalties to strengthen compliance with the reporting obligations and specifies an effective date for those increased penalties.

Exemption power expanded to allow notifications for a class of public bodies, reducing case-by-case approval delays.
The amendment authorises the Central Government to exempt, by notification, a class of bodies, authorities, Boards, Trusts or Commissions whose income arises from non-commercial activities and which are constituted by or under statute or by government for public regulatory or administrative purposes, replacing the requirement for separate notifications for each case and thereby streamlining approvals.

Tax deduction at source on government savings bonds to be made at payment, exempt for small annual interest amounts.
The proposal amends Section 193 to require deduction of tax at source at the time of payment of interest on the new Government Savings (Taxable) Bonds to resident payees, while preserving an exemption where the total interest in a financial year does not exceed the small-amount threshold.

Income Computation and Disclosure Standards: amendments validate ICDS computation and prescribe treatment for MTM loss, foreign exchange and contract profits.
Amendments clarify that Income Computation and Disclosure Standards govern computation of income for business and other sources, permitting marked to market and expected losses as deductions when computed under ICDS; treating foreign exchange gains and losses as income or loss computed per ICDS; applying percentage of completion for construction and service contract profits with retention money included and certain costs excluded; prescribing inventory valuation at lower of actual cost or net realisable value and inclusion of taxes and duties in valuation; and deeming certain compensation interest and price escalation claims as income in the year of receipt or when reasonably certain of realisation.

Tax on undisclosed income: deduction disallowance extended to additional income category with retrospective effect from prior year.
Section 115BBE levies a higher rate tax on income referred to in specified provisions and sub section (2) disallows any deduction, allowance, or set off of losses for income in clause (a) of sub section (1); the amendment extends that disallowance to income in clause (b) of sub section (1), and is effective retrospectively from 1 April 2017 for assessment year 2017 18 and onwards.

Capital gains reinvestment in specified bonds restricts eligible gains to land or building and lengthens bond term.
Capital gain from the transfer of a long term capital asset invested within six months in a long term specified asset shall not be charged to tax, provided the capital gain arises from long term assets consisting of land or building or both. The revised definition of long term specified asset requires investment in bonds issued on or after the prescribed date and redeemable after the extended minimum term, issued by specified entities or notified by the Central Government, with the amendment effective from the stated implementation date for the relevant assessment years.

Tax neutral transfers: exclusion of wholly owned subsidiary-holding company transfers from income scope under section 56, effective prospectively.
The amendment excludes transfers between a wholly owned subsidiary and its holding company from the scope of the income inclusion provision, so that transfers recognised as tax neutral under existing transfer provisions but previously not excluded from income treatment will now be excluded, thereby facilitating transactions of money or property between related companies and applying prospectively to transactions made on or after the effective date.

Conversion of inventory into capital asset treated as taxable business income; fair market value deemed consideration and acquisition cost.
Any profit or gain arising from conversion of inventory into, or treatment as, a capital asset shall be charged as business income, with the fair market value of the inventory on the date of conversion deemed to be the full value of consideration; that fair market value will be the cost of acquisition for computing subsequent capital gains and the period of holding of the capital asset will be reckoned from the date of conversion.

Variation threshold for stamp duty versus sale consideration: minor variations exempted from adjustment, limiting duplicate taxation.
Where taxability of immovable property transactions is determined by reference to the higher of sale consideration and stamp duty value for capital gains, business profits and other income, no upward valuation adjustment will be made if the divergence between stamp duty value and sale consideration does not exceed a prescribed small threshold of the sale consideration.

Timely filing requirement for Chapter VIA deductions: claims barred unless the income tax return is filed by the due date.
The proposal makes timely filing of the return of income a universal eligibility condition for all deductions under the heading "C. - Deductions in respect of certain incomes" in Chapter VIA, so that such deductions will not be admissible unless the return is filed by the due date prescribed under the tax law.

Extension of NPS withdrawal exemption now covers non-employee subscribers, equalising tax treatment and applying prospectively.
Amendment extends the existing 40% exemption on National Pension System withdrawals-previously limited to employee contributors-to all subscribers, thereby equalising tax treatment on account closure or opting out by making the exemption available to non employee subscribers as well; the change is prospective and applies from the specified fiscal year to subsequent assessment years.

Taxation option for domestic manufacturers limited to business income, while incomes under scheduled rates remain separately taxed, with retrospective effect.
The amendment clarifies that the concessional taxation option under Section 115BA is confined to income arising from manufacture, production, research or distribution carried on by the domestic company; amounts subject to separate scheduled rates continue to be taxed under those schedules. The clarification is given retrospective effect from 1 April 2017 and applies to assessment year 2017-18 onward.

Country-by-Country reporting deadline extended for resident and constituent entities, clarifying filing obligations and agreement scope.
Amendments extend the CbCR filing period to twelve months from the end of the reporting accounting year for parent entities and AREs resident in India and for constituent entities resident in India with non resident parents where the overseas parent has no filing obligation; AREs resident abroad will follow their jurisdictional due date. "Agreement" is defined to include specified exchange instruments and Central Government notified exchange agreements, and "reporting accounting year" is defined as the accounting year reflected in the CbCR. The changes are clarificatory and apply retrospectively.

Adjustment based on third party tax statements barred in return processing for returns furnished after commencement, altering section 143(1) treatment.
The amendment adds a proviso to sub clause (vi) of clause (a) of sub section (1) of section 143 to prohibit adjustments during processing of a return based on income appearing in third party statements (Form 26AS, Form 16A, Form 16) for any return furnished on or after the assessment year commencing 1 April 2018; the change narrows prima facie adjustment powers and applies from the 2018 2019 assessment year onward.

Long-term capital gains taxation introduced: concessional tax for listed equity and equity fund transfers after commencement.
The Finance Bill, 2018 proposes to tax long-term capital gains from listed equity shares, equity-oriented fund units, and business trust units on transfers made on or after 1 April 2018, subject to a threshold and STT conditions. Cost of acquisition for assets held on or before 31 January 2018 may be the actual cost or the fair market value as of that date under specified rules; indexation is disallowed. Gains accrued up to 31 January 2018 remain exempt by virtue of the deemed FMV-based cost rules.

Penalty approval authority expanded to include senior supervisory approval; investigating officers may initiate penalties only with prior senior approval.
The amendments expand the approval framework for penalty orders under the Act by vesting additional supervisory approval power in a higher-level officer and expressly including investigating officers with concurrent assessing jurisdiction within the approval clause, clarifying that such investigating officers may initiate penalty proceedings only with prior approval from an appropriate senior officer. They also widen authority to issue instructions for instituting criminal proceedings by adding senior oversight officers and amend the provision's marginal heading accordingly.

Prosecution for failure to furnish return: companies excluded from small-tax exemption, tightening liability effective from April 2018.
Section 276CC penalises willful failure to furnish income-tax returns. A proviso exempts persons from prosecution where tax payable after credits does not exceed a small threshold. To prevent abuse by shell companies and entities holding benami property, the proviso is proposed to be amended so that it will not apply to a company, removing the de minimis exemption for companies, with the amendment taking effect from 1 April 2018.

Commodity Transaction Tax on options in commodity futures: sale taxed payable by seller, exercise taxed payable by purchaser.
Options in commodity futures are included in the definition of taxable commodities transactions; sale of an option will attract Commodity Transaction Tax payable by the seller, and where an option is exercised the purchaser will be liable to pay tax. Valuation provisions are amended to include the value of options. These amendments take effect from 1 April 2018 and apply to the assessment year 2018-2019 and subsequent years.