TaxTMI 
TaxTMI 
Explanatory Notes to the Provisions of the Finance Act, 2017
X X X X Extracts X X X X
X X X X Extracts X X X X
....o FEMA instead of FERA, 7.1-7.4; Tax exemption to partial withdrawal from National Pension System (NPS), 8.1-8.3; Exemption of income of Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund, 9.1-9.4; Tax incentive for the development of capital of Andhra Pradesh, 10.1-10.5; Exemption of long term capital gains tax under section 10(38) of the Income-tax Act, 11.1-11.3; Exemption of income of Foreign Company from sale of leftover stock of crude oil from strategic reserves at the expiry of agreement or arrangement, 12.1-12.3; Restriction on exemption in case of corpus donation by exempt entities to other exempt entities, 14.1-14.6 10AA Rationalisation of provisions of Section 10AA, 13.1-13.4 11 Restriction on exemption in case of corpus donation by exempt entities to other exempt entities, 14.1-14.6 12A Clarity of procedure in respect of change or modifications of object and filing of return of income in case of entities exempt under sections 11 and 12, 15.1-15.7 12AA Clarity of procedure in respect of change or modifications of object and filing of return of income in case of entities exempt under sections 11 and 12, 15.1-....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for computation of capital gains, 32.1-32.4 56 Widening scope of Income from other sources, 33.1-33.6 58 Disallowance for non-deduction of tax from payment to resident, 34.1-34.3 71 Restriction on set-off of loss from house property, 35.1-35.3 79 Carry forward and set off of loss in case of certain companies, 36.1-36.3 80CCD Rationalisation of deduction under section 80CCD for self-employed individual, 37.1-37.3 80CCG Rationalization of deduction under section 80CCG, 38.1-38.3 80G Restricting cash donations, 39.1-39.3 80-IAC Extending the period for claiming deduction by start-ups, 40.1-40.3 80-IBA Rationalisation of Provisions of Section 80-IBA to promote Affordable Housing, 41.1-41.3 87A Rationalization of rebate allowable under Section 87A, 42.1-42.3 90 Clarification with regard to interpretation of 'terms' used in an agreement entered into under section 90 and 90A, 43.1-43.5 90A Clarification with regard to interpretation of 'terms' used in an agreement entered into under section 90 and 90A, 43.1-43.5 92BA Scope of section 92BA of the Income-tax Act relating to Specified Domestic Tran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 153C Rationalisation of provisions of the Income Declaration Scheme, 2016 and consequential amendment to section 153A and 153C, 80.1-80.7 155 Enabling claim of credit for foreign tax paid in cases of dispute, 62.1-62.3 194-IB Deduction of tax at source in the case of certain Individuals and Hindu undivided family, 63.1-63.7 194-IC Special provisions for computation of capital gains in case of joint development agreement, 25.1-25.8 194J Simplification of the provisions of tax deduction at source in case Fees for professional or technical services under section 194J, 64.1-64.3 194LA Non-deduction of tax in case of exempt compensation under RFCTLAAR Act, 2013, 65.1-65.5 194LC Extension of eligible period of concessional tax rate on interest in case of External Commercial Borrowing and Extension of benefit to Rupee Denominated Bonds, 66.1-66.8 194LD Extension of eligible period of concessional tax rate under section 194LD, 67.1-67.3 197A Enabling of Filing of Form 15G/15H for commission payments specified under section 194D, 68.1-68.3 204 Definition of 'person responsible for paying' in case of payments covered under....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... deducted at source and advance tax has to be paid during financial year 2017-18; (ii) amended sections 2, 9, 9A, 10, 10AA, 11, 12A, 12AA, 13A, 23, 35AD, 36, 40A, 43, 43B, 43D, 44AA, 44AB, 44AD, 45, 47, 48, 49, 54EC, 55, 56, 58, 71, 79, 80CCD, 80CCG, 80G, 80-IAC, 80-IBA, 87A, 90, 90A, 92BA, 115BBDA, 115JAA, 115JB, 115JD, 119, 132, 132A, 133, 133A, 133C, 139, 140A, 143, 153,153A, 153B, 153C, 155, 194J, 194LA, 194LC, 194LD, 197A, 204, 206C, 211, 234C, 244A, 245A, 245N, 245-O, 245Q, 253, 271F and 273B of the Income-tax Act, 1961 ('the Income-tax Act'); (iii) inserted new sections 50CA, 92CE, 94B, 115BBG, 139AA, 194-IB, 194-IC, 206CC, 234F, 241A, 269ST, 271DA and 271J in the Income-tax Act; (v) amended sections 50 and 197 of the Finance Act, 2016. 3. Rate structure 3.1 Rates of income-tax in respect of incomes liable to tax for the assessment year 2017-18. 3.1.1 Part I of the First Schedule to the Act specifies the rates of income-tax in respect of incomes of all categories of assessees liable to tax for the assessment year 2017-18. These rates are the same as those laid down in Part III of the First Schedule to the Finance Act, 2016 as amended by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Cess. For instance, if the income of an individual below sixty years of age is Rs. 1,01,00,000 and income-tax computed is Rs. 28,55,000/-. Surcharge on the income-tax at the rate of fifteen per cent of such tax is Rs. 4,28,250/-. Thus the total income-tax inclusive of surcharge is Rs. 32,83,250/- without providing marginal relief. On providing marginal relief, the income-tax inclusive of surcharge shall be limited to Rs. 29,55,000/-. Then the education cess of two per cent is to be computed on Rs. 29,55,000/- which works out to Rs. 59,100/-. In addition, the amount of tax computed shall also be increased by an additional cess called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax which for the present case of income-tax of Rs. 29,55,000/- works out to be Rs. 29,550/-. Thus, where the amount of tax computed is Rs. 29,55,000/-, the Education Cess of two per cent is Rs. 59,100/-, the Secondary and Higher Education Cess is Rs. 29,550/-. The total cess in this case will amount to Rs. 88,650/-(i.e. Rs. 59,100/- + Rs. 29,550/-). No marginal relief shall be available in respect of such cess. 3.1.3 Co-operative Societies. Paragraph....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Authorities. Paragraph D of Part I of the First Schedule to the Act specifies the rate of income-tax as thirty per cent in the case of every local authority. The amount of income-tax so computed shall be increased by a surcharge at the rate of twelve per cent of such income-tax in case of a local authority having a total income exceeding one crore rupees. However, marginal relief shall be available so that the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. The Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed inclusive of surcharge. In addition, the amount of tax computed shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax inclusive of surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess. 3.1.6 Companies. Paragraph E of Part I of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....omputed, inclusive of surcharge in the case of every company. Also, such amount of tax and surcharge shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of the amount of tax computed, inclusive of surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess. 3.2 Rates for deduction of income-tax at source from certain incomes during the financial year 2017-18. 3.2.1 Part II of the First Schedule to the Act specifies the rates for deduction of income-tax at source during the financial year 2017-18 in every case in which tax is to be deducted at the rates in force under the provisions of sections 193, 194, 194A, 194B, 194BB, 194D, 194LBA, 194LBB, 194LBC and 195 of the Income-tax Act. The rates for deduction of income-tax at source during the financial year 2017-18 will continue to be the same as those specified in Part II of the First Schedule to the Finance Act, 2016. 3.2.2 Surcharge. The tax deducted at source in the following cases shall be increased by a surcharge, as specified under, for purposes of the Union: (i) in ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s in the above illustration, where the amount of tax deducted is Rs. 12,00,000/-, the surcharge is Rs. 24,000/-, the said Secondary and Higher Education Cess will be computed at the rate of one per cent on Rs. 12,24,000/- which works out to be Rs. 12,240/-. The total cess in this case will, therefore, amount to Rs. 36,720 (i.e. Rs. 24,480/- + Rs. 12,240/-). 3.3 Rates for deduction of income-tax at source from "Salaries", computation of "advance tax" and charging of income-tax in special cases during the financial year 2017-18. 3.3.1 Part III of the First Schedule to the Act specifies the rates for deducting income-tax at source from 'Salaries' and computing advance tax during the financial year 2017-18. These rates are also applicable for charging income-tax during the financial year 2017-18 on current incomes in cases where accelerated assessments have to be made, e.g., provisional assessment of shipping profits arising in India to non-residents, assessment of persons leaving India for good during that financial year, assessment of persons who are likely to transfer property to avoid tax, assessment of bodies formed for short duration, etc. The rates are as follows:- 3.3.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onal surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax inclusive of surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess. 3.3.3 Co-operative Societies. Paragraph B of Part III of the First Schedule to the Act specifies the rates of income-tax in the case of every co-operative society. The rates are as follows:- Income chargeable to tax Rate Up to Rs. 10,000 10% Rs. 10,001 - Rs. 20,000 20% Exceeding Rs. 20,000 30% The amount of income-tax so computed shall continue to be increased by a surcharge at the rate of twelve per cent of such income-tax in case of a co-operative society having a total income exceeding one crore rupees. However, marginal relief shall be available so that the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. Education Cess on income-tax and Secondary and Higher Education Cess on income-tax shall be le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies. Paragraph E of Part III of the First Schedule to the Act specifies the rate of income-tax in the case of a company. In case of a domestic company, the rate of income-tax is__ a) twenty five per cent of the total income, if the total turnover or gross receipts of the company in the previous year 2015-16 does not exceed fifty crore rupees; b) twenty-five per cent of the total income, at the option of the company, if it satisfies the conditions contained under section 115BA of the Income-tax Act;; c) the rate of income-tax is thirty per cent of the total income, in all other cases. The tax computed shall continue to be enhanced by a surcharge of seven per cent where such domestic company has total income exceeding one crore rupees but not exceeding ten crore rupees. Surcharge at the rate of twelve per cent shall continue to be levied if the total income of the company exceeds ten crore rupees. In the case of a company other than a domestic company, income from royalties received from Government or an Indian concern under an approved agreement, made after 31.03.1961 but before 01.04.1976, shall be taxed at fifty per cent. Similarly, income from fees for techni....
X X X X Extracts X X X X
X X X X Extracts X X X X
....olidating plan of mutual fund scheme made in consideration of the allotment of units in the consolidated plan of that mutual fund scheme. 4.2 Clause (42A) of section 2 and section 49 of the Income-tax Act have been amended so as to provide that cost of acquisition of the units in the consolidated plan of mutual fund scheme referred to in section 47(xix) shall be the cost of units in consolidating plan of mutual fund scheme and period of holding of the units of consolidated plan of mutual fund scheme shall include the period for which the units in consolidating plan of mutual fund scheme were held by the assessee. 4.3 Applicability: These amendments take effect from 1st of April, 2017 and will, accordingly, apply from assessment year 2017-18 and subsequent assessment years. 5. Clarity relating to indirect transfer provisions. 5.1 Section 9 of the Income-tax Act deals with cases of income which are deemed to accrue or arise in India. Sub-section (1) of the said section creates a legal fiction that certain incomes shall be deemed to accrue or arise in India. Clause (i) of said sub-section (1) provides a set of circumstances in which income accruing or arising, directly or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rospectively from 1st April, 2015 and will, accordingly, apply from assessment year 2015-16 and subsequent assessment years. 6. Modification in conditions of special taxation regime for off shore funds under section 9A. 6.1 Section 9A of the Income-tax Act provides for a special regime in respect of offshore funds. It provides that in the case of an eligible investment fund, the fund management activity carried out through an eligible fund manager acting on behalf of such fund shall not constitute business connection in India of the said fund. Further, an eligible investment fund shall not be said to be resident in India merely because the eligible fund manager undertaking fund management activities on its behalf is located in India. The benefit under section 9A is available subject to the conditions provided in sub-sections (3), (4) and (5) of the section. 6.2 Sub-section (3) of section 9A provides for the conditions for the eligibility of the fund. These conditions, inter alia, are related to residence of fund, corpus, size, investor broad basing, investment diversification and payment of remuneration to fund manager at arm's length. In respect of corpus of the fund,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....em (NPS). 8.1 The provisions of section 10(12A) of the Income-tax Act specify that payment from National Pension System (NPS) trust to an employee on closer of his account or opting out shall be exempt up to 40% of total amount payable to him. 8.2 In order to provide further relief to an employee subscriber of NPS, clause (12B) has been inserted in section 10 of the Income-tax Act so as to provide exemption to partial withdrawal not exceeding 25% of the contribution made by an employee in accordance with the terms and conditions specified under Pension Fund Regulatory and Development Authority Act, 2013 and regulations made there under. 8.3 Applicability: This amendment takes effect from 1st of April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent assessment years. 9. Exemption of income of Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund. 9.1 Section 10(23C) of the Income-tax Act provide exemption in respect of income of certain funds which include inter alia the Prime Minister's National Relief Fund. 9.2 The Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund, referred to i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thority Act, 2014, a new clause (37A) has been inserted in section 10 of the Income-tax Act to provide that in respect of said persons, capital gains arising from following transfer shall not be chargeable to tax under the Income-tax Act: (i) Transfer of capital asset being land or building or both, under land pooling scheme. (ii) Sale of LPOCs by the said persons received in lieu of land transferred under the scheme. (iii) Sale of reconstituted plot or land by said persons within two years from the end of the financial year in which the possession of such plot or land was handed over to the said persons. 10.3 Applicability: This amendment takes effect retrospectively, from 1st April, 2015 and will, accordingly, apply from assessment year 2015-16 and subsequent years. 10.4 Further, section 49 of the Income-tax Act has also been amended so as to provide that where reconstituted plot or land, received under land pooling scheme is transferred after the expiry of two years from the end of the financial year in which the possession of such plot or land was handed over to the said assessee, the cost of acquisition of such plot or land shall be deemed to be its stamp duty v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the Central Government in that behalf. Before amendment by the Act, the benefit of exemption was not available to sale out of the leftover stock of crude after the expiry of said agreement or the arrangement. 12.2 Given the strategic nature of the project benefitting India to augment its strategic petroleum reserves, a new clause (48B) has been inserted in section 10 of the Income-tax Act so as to provide that any income accruing or arising to a foreign company on account of sale of leftover stock of crude oil, if any, from a facility in India after the expiry of an agreement or an arrangement referred to in clause (48A) of section 10 of the Income-tax Act shall also be exempt subject to such conditions as may be notified by the Central Government in this behalf. 12.3 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent assessment years. 13. Rationalisation of provisions of Section 10AA. 13.1 Under section 10AA of the Income-tax Act, deduction is allowed, from the total income of an assessee, in respect of profits and gains from his unit operating in a Special Economic Zone (SEZ), ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. Trusts, thus, engaged in giving corpus donations without actual applications. 14.4 Therefore, a new Explanation has been inserted to section 11 of the Income-tax Act so as to provide that any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1) of section 11, being contributions with specific direction that they shall form part of the corpus of the trust or institution, shall not be treated as application of income. 14.5 A proviso has also been inserted in clause (23C) of section 10 of the Income-tax Act so as to provide similar restriction as above on the entities exempt under sub-clauses (iv), (v), (vi) or (via) of said clause in respect of any amount credited or paid out of their income. 14.6 Applicability: These amendments take effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent assessment years. 15. Clarity of procedure in respect of change or modifications of object and filing of return of income in case of entities exempt under sections 11 and 12. 15.1 The provisions of section 12A of the Income-tax Act provide for conditions for applicability of sections 11 and 12....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct. 15.6 These amendments are clarificatory in nature. 15.7 Applicability: These amendments take effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent assessment years. 16. Transparency in electoral funding. 16.1 The provisions of section 13A of the Income-tax Act provide inter alia that political parties that are registered with the Election Commission of India are exempt from paying income-tax. To avail the exemption, the political parties are required to submit a report to the Election Commission of India as mandated under sub-section (3) of section 29C of the Representation of the People Act, 1951 (43 of 1951) furnishing the details of contributions received by a political party in excess of Rs. 20,000 from any person. However, before amendment by the Act, there was no restriction of receipt of any amount of donation in cash by a political party. 16.2 Secondly, a political party is also required to file its return of income under section 139(4B) of the Income-tax Act, if its income exceeds the maximum amount not chargeable to tax (without considering the exemption under section 13A of the Income-tax Act). However, be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....come-tax Act specify inter alia that a scheduled bank (not being a bank incorporated by or under the laws of a country outside India) or a non-scheduled bank or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, can claim deduction in respect of provision for bad and doubtful debts. Before amendment by the Act, the amount of such deduction was limited to seven and one-half per cent of the total income (computed before making any deduction under that clause and Chapter VIA of the Income-tax Act) and an amount not exceeding ten per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner at the end of the previous year. 18.2 In order to strengthen the financial position of the entities specified in the sub-clause (a) of section 36(1)(viia) of the Income-tax Act, the said section has been amended so as to enhance the present limit from seven and one-half per cent to eight and one-half per cent of the amount of the total income (computed before making any deduction under that clause and Chapter VIA of the Income-tax Act). 18.3 Applicability:....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xcept in such circumstances as specified under Rule 6DD of the Income-tax Rules, 1962. However, there was no provision to disallow the capital expenditure incurred in cash. Further, section 35AD of the Income-tax Act provides inter alia for investment-linked deduction on the amount capital expenditure incurred, wholly or exclusively for the purposes of business, during the previous year for a specified business except capital expenditure incurred for acquisition of any land or goodwill or financial instrument. 20.2 In order to discourage cash transactions even for capital expenditure, section 43 of the Income-tax Act has been amended to provide that where an assessee incurs any expenditure for acquisition of any asset in respect which a payment or aggregate of payments made to a person in a day, 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, exceeds ten thousand rupees, such expenditure shall be ignored for the purposes of determination of actual cost of such asset. 20.3 Section 35AD of the Income-tax Act has also been amended to provide that any expenditure in respect of which....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent assessment years. 22. Increasing the threshold limit for maintenance of books of accounts in case of Individuals and Hindu undivided family. 22.1 Before amendment by the Act, the provisions of clause (i) and clause (ii) of sub-section (2) of section 44AA of the Income-tax Act casted an obligation on every person carrying on business or profession [other than those mentioned in sub-section (1) such as legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette] to maintain such books of accounts and documents in the previous year to enable the Assessing Officer to compute his total income in accordance with the provisions of the Income-tax Act, provided that the income and total sales or turn over or gross receipts, etc. specified in said clauses exceeds rupees one lakh twenty thousand and rupees ten lakh respectively. 22.2 In order to reduce the compliance burden, section 44AA of the Income-tax Act has been amended so as to incre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1 The provisions of section 44AD of the Income-tax Act provide inter alia for a presumptive income scheme in case of eligible assesses carrying out eligible businesses. Before amendment by the Act, under this scheme, in case of an eligible assessee engaged in eligible business having total turnover or gross receipts not exceeding two crore rupees in a previous year, a sum equal to eight per cent of the total turnover or gross receipts, or, as the case may be, a sum higher than the aforesaid sum declared by the assessee in his return of income, was deemed to be the profits and gains of such business chargeable to tax under the head "profits and gains of business or profession". 24.2 In order to promote digital transactions and to encourage small unorganized business to accept digital payments, section 44AD of the Income-tax Act has been amended to reduce the rate of deemed total income of eight per cent to six per cent in respect of the amount of such total turnover or gross receipts received by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account during the previous year or before the due date specified in sub-section (1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in such a situation, the capital gains as determined under general provisions of the Income-tax Act shall be deemed to be the income of the previous year in which such transfer took place and shall be computed as per provisions of the Income-tax Act without taking into account these provisions. 25.5 Consequential amendment to section 49 of the Income-tax Act has also been made to provide that the cost of acquisition of the share in the project being land or building or both, in the hands of the land owner shall be the amount which is deemed as full value of consideration under section 45(5A) of the Income-tax Act. 25.6 Applicability: These amendments will take effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent years. 25.7 A new section 194-IC has also been inserted in the Income-tax Act so as to provide that in case any monetary consideration is payable under the specified agreement, tax at the rate of ten per cent shall be deductible from such payment. 25.8 Applicability: This amendment will take effect from 1st April, 2017. 26. Tax neutral conversion of preference shares to equity shares. 26.1 Conversion of secur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 48 of the Income-tax Act has been amended so as to provide that the said appreciation of rupee shall be ignored for the purposes of computation of full value of consideration. 27.4 Further, with a view to facilitate transfer of Rupee Denominated Bonds from non-resident to non-resident, section 47 of the Income-tax Act has been amended so as to provide that any transfer of capital asset, being rupee denominated bond of Indian company issued outside India, by a non-resident to another non-resident shall not be regarded as transfer. 27.5 Applicability: These amendments take effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent years. 28. Cost of Acquisition of capital assets of entities in case of levy of tax on accreted income under section 115TD. 28.1 The provisions of the section 49 of the Income-tax Act provides for computation of cost with reference to certain modes of acquisition of capital asset. 28.2 The said section has been amended to provide that where the capital gain arises from the transfer of an asset, being the asset held by a trust or an institution in respect of which accreted income has been comput....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g income under the head "Capital gains". 30.3 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent assessment years. 31. Expanding the scope of long term bonds under 54EC. 31.1 Section 54EC of the Income-tax Act provides that capital gain to the extent of Rs. 50 lakhs arising from the transfer of a long term capital asset shall be exempt if the assessee invests the whole or any part of capital gains in certain specified bonds, within the specified time. Before amendment by the Act, investment in bonds issued by the National Highways Authority of India or by the Rural Electrification Corporation Limited were eligible for exemption under this section. 31.2 In order to widen the scope of the section for sectors which may raise fund by issue of bonds eligible for exemption under section 54EC of the Income-tax Act, the said section has been amended so as 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. 31.3 Applicability: This amendment takes effect from 1st April, 2018....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on or for inadequate consideration. 33.3 The definition of property for the purpose of this section includes immovable property, jewellery, shares, paintings, etc. These provisions were applicable only in case of individual or HUF and firm or company in certain cases. Therefore, receipt of sum of money or property without consideration or for inadequate consideration did not attract these provisions in cases of other assessees. 33.4 In order to prevent the practice of receiving the sum of money or the property without consideration or for inadequate consideration, a new clause (x) has been inserted in sub-section (2) of section 56 of the Income-tax Act so as to provide that receipt of the sum of money or the property by any person without consideration or for inadequate consideration in excess of Rs. 50,000 shall be chargeable to tax in the hands of the recipient under the head "Income from other sources". The scope of exceptions has also been widened by including the receipt by certain trusts or institutions and receipt by way of certain transfers not regarded as transfer under section 47 of the Income-tax Act. 33.5 Consequential amendments have also been made section 49 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-tax Act. 35.3 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly apply from assessment year 2018-19 and subsequent years. 36. Carry forward and set off of loss in case of certain companies. 36.1 Before amendment by the Act, the provisions of section 79 of the Income-tax Act provided that where a change in shareholding has taken place in a previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year unless on the last day of the previous year the shares of the company carrying not less than fifty-one per cent of the voting power were beneficially held by person who beneficially held shares of the company carrying not less than fifty-one per cent of the voting power on the last day of the year or years in which the loss was incurred. 36.2 In order to facilitate ease of doing business and to promote start up India, section 79 of the Income-tax Act has been amended to provide that where a change in shareholding has taken place in a previous year in the case of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct to fulfilment of certain conditions. 38.2 This deduction was introduced vide Finance Act, 2012. Considering the fact that only a limited number of individuals availed this deduction and also to rationalize the multiplicity of deductions available under Chapter VI-A of the Income-tax Act, section 80CCG has been amended to phase out this deduction by providing that no deduction under the said section shall be allowed from assessment year 2018-19. However, an assessee who has claimed deduction under this section for assessment year 2017-18 and earlier assessment years shall be allowed deduction under this section till the assessment year 2019-20 if he is otherwise eligible to claim the deduction as per the provisions of this section. 38.3 Applicability: This amendment takes effect from the 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent years. 39. Restricting cash donations. 39.1 Before amendment by the Act, section 80G of the Income-tax Act provided that the deduction shall not be allowed in respect of donation made of any sum exceeding Rs. 10,000, if the same was not paid by any mode other than cash. 39.2 In order to provide....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent) Act, 2016 and not the "built-up area". (ii) The restriction of 30 square meters on the size of residential units shall not apply to the place located within a distance of 25 kms from the municipal limits of the Chennai, Delhi, Kolkata or Mumbai. (iii) The condition of period of completion of project for claiming deduction under this section shall be increased from three years to five years. 41.3 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent years. 42. Rationalization of rebate allowable under Section 87A. 42.1 Before amendment by the Act, the provisions of section 87A of the Income-tax Act provided for a rebate of up to Rs. 5000 from the income-tax payable to a resident individual if his total income did not exceed Rs. 5,00,000. 42.2 In view of rationalisation of tax rates for individuals in the income slab of Rs. 2,50,000 to Rs. 5,00,000, section 87A of the Income-tax Act has been amended so as to reduce the maximum amount of rebate available under this section from Rs. 5000 to Rs. 2500. It is also provided that this rebate shall be available to only resident individua....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be assigned the meaning as provided in the Income-tax Act and explanation, if any, given to it by the Central Government. 43.5 Applicability: These amendments take effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent years. 44. Scope of section 92BA of the Income-tax Act relating to Specified Domestic Transactions (SDTs). 44.1 Before amendment by the Act, the provisions of section 92BA of the Income-tax Act provided inter alia that any expenditure in respect of which payment has been made by the assessee to certain "specified persons" under section 40A(2)(b) of the Income-tax Act were covered within the ambit of SDTs. 44.2 As a matter of compliance and reporting, taxpayers needed to obtain the chartered accountant's certificate in Form 3CEB providing the details such as list of related parties, nature and value of SDTs, method used to determine the arm's length price for SDTs, positions taken with regard to certain transactions not considered as SDTs, etc. This had considerably increased the compliance burden of the taxpayers. 44.3 In order to reduce the compliance burden of taxpayers, section 92BA of the Incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t procedure under an agreement entered into under section 90 or 90A of the Income-tax Act. 45.4 It is also provided that where as a result of primary adjustment to the transfer price, there is an increase in the total income or reduction in the loss, as the case may be, of the assessee, the excess money which is available with its associated enterprise, if not repatriated to India within the time as may be prescribed, shall be deemed to be an advance made by the assessee to such associated enterprise and the interest on such advance, shall be computed as the income of the assessee , in the manner as may be prescribed. 45.5 It is also further provided that such secondary adjustment shall not be carried out if, the amount of primary adjustment made in the case of an assessee in any previous year does not exceed one crore rupees or the primary adjustment is made in respect of an assessment year commencing on or before 1st April, 2016. 45.6 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent years. 46. Limitation of Interest deduction in certain cases. 46.1 A company is typically finance....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f disallowed interest expense to eight assessment years immediately succeeding the assessment year for which the disallowance was first made and also allow deduction against the income computed under the head ‚Profits and gains of business or profession‛ to the extent of maximum allowable interest expenditure. 46.6 In order to target only large interest payments, the said section also provides for a threshold limit of interest expenditure of one crore rupees exceeding which the provision would be applicable. 46.7 Further, banks and insurance business have also been excluded from the ambit of the said provisions keeping in view of special nature of these businesses. 46.8 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent years. 47. Rationalization of taxation of income by way of dividend. 47.1 Before amendment by the Act, the provisions contained in section 115BBDA of the Income-tax Act specified that income by way of dividend in excess of Rs. 10 lakh shall be chargeable to tax at the rate of 10% on gross basis in case of a resident individual, Hindu undivided family or f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to tax credit for Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT). 49.1 Section 115JAA of the Income-tax Act contains provisions regarding carrying forward and set off of tax credit in respect of MAT paid by companies under section 115JB of the Income-tax Act. Before amendment by the Act, the provisions specified that the tax credit can be carried forward for up to ten assessment years. 49.2 With a view to provide relief to the assessees paying MAT, section 115JAA of the Income-tax Act has been amended to provide that the tax credit determined under this section can be carried forward for up to fifteen assessment years immediately succeeding the assessment year in which such tax credit becomes allowable. 49.3 Similarly, section 115JD of the Income-tax Act has also been amended so as to allow carry forward of AMT paid under section 115JC of the Income-tax Act for up to fifteen assessment years in case of non-corporate assessees. 49.4 Sections 115JAA and 115JD of the Income-tax Act have also been amended so as to provide that the amount of tax credit in respect of MAT/AMT shall not be allowed to be carried forward to subsequent year to the extent such credit r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....year of adoption and thereafter are as under: A. MAT on Ind AS compliant financial statement (i) No further adjustments to the net profits before other comprehensive income of Ind AS compliant companies, other than those already specified under section 115JB of the Income-tax Act, shall be made. (ii) The other comprehensive income includes certain items that will permanently be recorded in reserves and hence never be reclassified to the statement of profit and loss included in the computation of book profits. These items shall be included in book profits for MAT purposes at the point of time specified below:- Sl. No. Items Point of time 1 Changes in revaluation surplus of Property, Plant or Equipment (PPE) and Intangible assets (Ind AS 16 and Ind AS 38) To be included in book profits at the time of realisation/disposal/retirement or otherwise transferred 2 Gains and losses from investments in equity instruments designated at fair value through other comprehensive income (Ind AS 109) To be included in book profits at the time of realisation/disposal/retirement or otherwise transferred 3 Re-measurements of defined benefit plans (Ind AS 19) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on/disposal/retirement or otherwise transferred 3 Re-measurements of defined benefit plans (Ind AS 19) To be included in book profits equally over a period of five years starting from the year of first time adoption of Ind AS 4 Any other item To be included in book profits equally over a period of five years starting from the year of first time adoption of Ind AS (III) All other adjustments recorded in Reserves and Surplus (excluding Capital Reserve and Securities Premium Reserve) as referred to in Division II of Schedule III of Companies Act, 2013 and which would otherwise never subsequently be reclassified to the profit and loss account, shall be included in the book profits, equally over a period of five years starting from the year of first time adoption of Ind AS subject to the following:- a) PPE and intangible assets at fair value as deemed cost An entity may use fair value in its opening Ind AS Balance Sheet as deemed cost for an item of PPE or an intangible asset as mentioned in paragraphs D5 and D7 of Ind AS 101. In such cases the treatment shall be as under- • The provisions for computation of book profits under section 115JB of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....count of transition to Ind AS shall also be ignored. C. Reference year for first time adoption adjustments In the first year of adoption of Ind AS, the companies would prepare Ind AS financial statement for reporting year with a comparative financial statement for immediately preceding year. As per Ind AS 101, a company would make all Ind AS adjustments on the opening date of the comparative financial year. The entity is also required to present equity reconciliation between previous Indian GAAP and Ind AS amounts, both on the opening date of preceding year as well as on the closing date of the preceding year. It has been provided that for the purposes of computation of book profits of the year of adoption and the adjustments, the amounts adjusted as of the opening date of the first year of adoption shall be considered. For example, companies which adopt Ind AS with effect from 1st of April, 2016 are required to prepare their financial statements for the year 2016-17 as per requirements of Ind AS. Such companies are also required to prepare an opening balance sheet as of 1st of April, 2015 and restate the financial statements for the comparative period 2015-16. In such a case....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of proceedings under sections 132 and 132A of the Income-tax Act. However, certain judicial pronouncements had created ambiguity in respect of the disclosure of 'reason to believe' or 'reason to suspect' recorded by the income-tax authority to conduct a search under section 132 or to make requisition under section 132A of the Income-tax Act. 52.4 Therefore, an Explanation has been inserted to sub-section (1) and to sub-section (1A) of section 132 and to sub-section (1) of section 132A of the Income-tax Act to declare that the 'reason to believe' or 'reason to suspect', as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal. 52.5 Applicability: These amendments take effect retrospectively from the date of enactment of the said provisions viz. to sub-section (1) of section 132 of the Income-tax Act from 1st day of April, 1962 and to sub-section (1A) of section 132 of the Income-tax Act and to sub-section (1) of section 132A from 1st day of October, 1975. 53. Power of provisional attachment and to make reference to Valuation Officer to authorised officer. 53.1 Section 132 of the Income-tax Act provides the power of search and se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ector or the Principal Commissioner or Commissioner without the prior approval of such authorities. 54.2 Considering the requirement of the work profile of the authorities working in the Investigation Directorate, the first proviso of the said section has been amended to provide that the power in respect of inquiry or proceeding under the Act, as referred to in clause (6) of the said section, may also be exercised by the Joint Director, the Deputy Director and the Assistant Director. 54.3 The second proviso of the said section has also been amended to provide that the Joint Director, the Deputy Director or the Assistant Director may exercise the powers in respect of such inquiry, without seeking prior approval of higher authorities. 54.4 Applicability: These amendments take effect from 1st April, 2017. 55. Extension of the power to survey. 55.1 Before amendment by the Act, the provisions of section 133A of the Income-tax Act empowered inter alia an income-tax authority to enter any place, at which a business or profession is carried on, or at which any books of account or other documents or any part of cash or stock or other valuable article or thing relating to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A has been inserted to the Income-tax Act to provide that every person who is eligible to obtain Aadhaar number shall, on or after the 1st day of July, 2017, quote such number - (i) in the application form for allotment of permanent account number (PAN); (ii) in the return of income furnished. 58.2 It is further provided that where such person does not have the Aadhaar number, the Enrolment ID of Aadhaar application form shall be quoted. 58.3 It is also provided that every person having PAN as on the 1st day of July 2017 and who is eligible to obtain Aadhaar number, shall, on or before a date to be notified by the Central Government in the Official Gazette, intimate his Aadhaar number to the prescribed authority in such form and manner as may be prescribed; and in case of failure to intimate the Aadhaar number by the said date, the PAN allotted to such person shall be deemed to be invalid and the provisions of the Income-tax Act shall apply as if the person has not applied for allotment of PAN. 58.5 It has also been provided that Central Government may notify the person or class of persons to whom the said provisions of the said section shall not apply. 58.6 Appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....153 of the Income-tax Act has been amended to provide that for the assessment year 2018-19, the time limit for making an assessment order under sections 143 or 144 of the Income-tax Act shall be reduced from twenty-one months to eighteen months from the end of the assessment year, and for the assessment year 2019-20 and onwards, the said time limit shall be twelve months from the end of the assessment year in which the income was first assessable. 60.3 Sub-section (2) of section 153 of the Income-tax Act has further been amended to provide that the time limit for making an order of assessment, reassessment or re-computation under section 147 of the Income-tax Act, in respect of notices served under section 148 of the Income-tax Act on or after the 1st day of April, 2019 shall be twelve months from the end of the financial year in which notice under section 148 is served. 60.4 Sub-section (3) of section 153 of the Income-tax Act has also been amended 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 of the Income-tax Act shall be twelve mo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ide that the time for furnishing of revised return shall be available up to the end of the relevant assessment year or before the completion of assessment, whichever is earlier. 60.13 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly apply from assessment year 2018-19 and subsequent years. 61. Rationalisation of the provisions in respect of time limits for completion of search assessment. 61.1 The provisions of section 153B of the Income-tax Act provide for the time limit for completion of assessment under section 153A of the Income-tax Act. 61.2 Since the time limit for completion of assessment under section 153 of the Income-tax Act has been rationalised, the time limit for completion of assessment under section 153A of the Income-tax Act is also consequentially rationalised. Sub-section (1) of section 153B of the Income-tax Act has been amended to provide that for search and seizure cases conducted in the financial year 2018-19, the time limit for making an assessment order under section 153A of the Income-tax Act shall be reduced from twenty-one months to eighteen months from the end of the financial year in which the last of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... tax credit, a new sub-section (14A) has been inserted in section 155 to provide that where credit for foreign taxes paid is not given for the relevant assessment year on the grounds that the payment of such foreign tax was in dispute, the Assessing Officer shall rectify the assessment order or an intimation under sub-section (1) of section 143, if the assessee, within six months from the end of the month in which the dispute is settled, furnishes proof of settlement of such dispute, submits evidence before the Assessing Officer that the foreign tax liability has been discharged and furnishes an undertaking that credit of such amount of foreign tax paid has not been directly or indirectly claimed or shall not be claimed for any other assessment year. 62.3 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent years. 63. Deduction of tax at source in the case of certain Individuals and Hindu undivided family. 63.1 The provisions of section 194-I of the Income-tax Act provide inter alia for deduction of tax at source at the time of credit or payment of rent to the account of the payee beyond a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....resident by way of fees for professional services or fees for technical services provided such sum paid/payable or aggregate of sum paid/payable exceeds thirty thousand rupees to a person in a financial year. 64.2 In order to promote ease of doing business, section 194J has been amended to reduce the rate of deduction of tax at source to two per cent from ten per cent in case of payments received or credited to a payee, being a person engaged only in the business of operation of call centre. 64.3 Applicability: This amendment takes effect from 1st June, 2017. 65. Non-deduction of tax in case of exempt compensation under RFCTLAAR Act, 2013. 65.1 The provisions of section 194LA of the Income-tax Act specify inter alia that any person paying compensation shall deduct tax at source at the rate of ten per cent on the compensation or enhanced compensation or consideration on account of compulsory acquisition of any immovable property (other than agricultural land) under any law for the time being in force subject to certain conditions specified therein. 65.2 The Central Government has enacted a new law, namely the Right to Fair Compensation and Transparency in Land Acquisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ber, 2014 but before the 1st July, 2017. 66.3 Representations were received requesting for extension of concessional rate of TDS under sections 194LC of the Income-tax Act to boost the economy by way of introduction of foreign capital. 66.4 Therefore, amendment to section 194LC of the Income-tax Act has been made so as to provide that the concessional rate of five per cent TDS on interest payment under this section will now be available in respect of borrowings made before the 1st July, 2020. 66.5 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent assessment years. 66.6 Further, consequent upon demand from various stakeholders for granting benefit of lower rate of TDS to rupee denominated bonds, a Press Release dated 29th October, 2015 was issued clarifying that TDS at the rate of 5 per cent would be applicable to these bonds in the same way as it is applicable for off-shore dollar denominated bonds. 66.7 In order to give effect to the above, section 194LC of the Income-tax Act has been amended to extend the benefit of this section to rupee denominated bond issued outside India before ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mendment takes effect from 1st June, 2017. 69. Definition of 'person responsible for paying' in case of payments covered under sub-section (6) of section 195. 69.1 The provisions of section 204 of the Income-tax Act provide the definition of 'person responsible for paying' which include employer, company or its principal officer or the payer. 69.2 Clause (iii) of the said section provides inter alia that in the case of credit or payment of any sum chargeable under the provisions of this Act, the 'person responsible for paying' shall be the payer himself, or, if the payer is a company, the company itself including the principal officer thereof. However, the said section did not cover person responsible for paying of any sum under sub-section (6) of section 195 of the Income-tax Act, which mandated the 'person responsible for paying' to furnish information relating to payment of any sum, whether chargeable to tax or not. 69.3 In order to bring clarity to the meaning of 'person responsible for paying' in case of payment by a resident to a non-resident in accordance with section 195(6) of the Income-tax Act, section 204 of the Income-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e for collecting such tax (hereafter referred to as collector), failing which tax shall be collected at the twice the rate mentioned in the relevant section under Chapter XVII BB or at the rate of five per cent whichever is higher. (ii) The declaration filed under sub section (1A) of section 206C shall not be valid unless the person filing the declaration furnishes his PAN in such declaration. (iii) In case any declaration becomes invalid under sub-section (2), the collector shall collect the tax at source in accordance with the provisions of sub-section (1). (iv) No certificate under sub section (9) of section 206C shall be granted unless it contains the PAN of the applicant. (v) To ensure that the collector knows about the correct PAN of the collectee mandatory quoting of PAN of the collectee by both the collector and the collectee in all correspondence, bills and vouchers exchanged between them has been provided for. (vi) The collectee shall furnish his PAN to the collector who shall indicate the same in all its correspondence, bills, vouchers and other documents which are sent to collectee. (vii) Where the PAN provided by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dvance tax is on account of under-estimation or failure in estimation of income of the nature referred to in section 115BBDA of the Income-tax Act, the interest under section 234C of the Income-tax Act shall not be levied subject to fulfilment of conditions specified therein. 72.6 Applicability: These amendments take effect from 1st April, 2017 and accordingly apply from assessment year 2017-18 and subsequent years. 73. Fee for delayed filing of return. 73.1 In view of the non-intrusive information-driven approach for improving tax compliance and effective utilization of information in tax administration, it is important that the returns are filed within the due dates specified in section 139(1) of the Income-tax Act. Further, the reduced time limits provided for making of assessment are also based on pre-requisite that returns are filed on time. 73.2 In order to ensure that return is filed within due date, a new section 234F has been inserted in the Income-tax Act to provide that a fee for delay in furnishing of return shall be levied for assessment year 2018-19 and onwards in a case where the return is not filed within the due dates specified for filing of return unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s attributable to the deductor. 74.3 Applicability: This amendment takes effect from 1st April, 2017. 75. Amendments to the structure of Authority for Advance Rulings. 75.1 Chapter XIX-B of the Income-tax Act relates to the Advance rulings under the Act. 75.2 With a view to promote ease of doing business, it has been decided by the Government to merge the Authority for Advance Ruling (AAR) for income-tax, central excise & customs duties and service tax. Accordingly, necessary amendments have been made to Chapter XIX-B to allow merger of these AARs. The said amendments are as under: (i) The definition of applicant in section 245N of the Income-tax Act has been amended to provide reference of applications for Advance Ruling made under the Customs Act, 1962, the Central Excise Act, 1944 and the Finance Act, 1994 (which makes provisions in respect of Service Tax Matters). (ii) Section 245-O of the Income-tax Act which relates to the AAR has also been amended to provide that an officer of the Indian Revenue Service qualified to be a Member of the Central Board of Direct Taxes and an officer of the Indian Customs and Central Excise Service, who is qualified ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are programmes. Black money is generally transacted in cash and large amount of unaccounted wealth is stored and used in form of cash. 77.2 In order to achieve the mission of the Government to move towards a less cash economy to reduce generation and circulation of black money, a new section 269ST has been inserted in the Income-tax Act to provide that no person shall receive an amount of two lakh rupees or more,- (a) in aggregate from a person in a day; (b) in respect of a single transaction; or (c) in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account. 77.3 It is further provided that the said restriction shall not apply to Government, any banking company, post office savings bank or co-operative bank. Further, it is provided that such other persons or class of persons or receipts may be notified by the Central Government, for reasons to be recorded in writing, on whom the restriction on cash transactions shall not apply. Transactions of the nature referred to in section 269SS of the Income-tax ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t be imposable in respect of section 271J of the Income-tax Act. 78.4 Applicability: These amendments take effect from 1st April, 2017. 79. Clarification regarding the applicability of section 112. 79.1 Section 112(1)(c) of the Income-tax Act was amended vide Finance Act, 2012, with effect from 1st April, 2013 to provide concessional rate of taxation of ten per cent for long-term capital gains arising from the transfer of unlisted securities in case of non-resident. There was an uncertainty as to whether the provisions of section 112(1)(c)(iii) of the Income-tax Act are applicable to the transfer of share of a private company. 79.2 Section 112(1)(c) of the Income-tax Act was further amended vide Finance Act, 2016 to clarify that the share of company in which public are not substantially interested shall also be chargeable to tax at the rate of ten per cent with effect from 1st April, 2017. As the concessional rate was provided with effect from 1st April, 2013, there was uncertainty about the applicability of the amendment to the intervening period. 79.3 With a view to clarify that the amendment made by Finance Act, 2016 shall also apply to the period from 1st April, ....