TaxTMI 
TaxTMI 
Explanatory Notes to the Provisions of the Finance Act, 2018
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....ess connection" with modified PE Rule as per Multilateral Instrument (MLI), 5.1-5.5; "Business connection" to include "Significant Economic presence", 6.1-6.9 10 Royalty and FTS payment by NTRO to a non-resident to be tax-exempt, 7.1-7.4; Extending the benefit of tax-free withdrawal from NPS to non-employee subscribers, 8.1-8.3; Tax deduction at source and manner of payment in respect of certain exempt entities, 11.1-11.5; New regime for taxation of long-term capital gains on sale of equity shares etc., 29.1-29.13; Exemption to specified income of class of body, authority, Board, Trust or Commission in certain cases, 9.1-9.4; Exemption of income of Foreign Company from sale of leftover stock of crude oil on termination of agreement or arrangement, 10.1-10.4 11 Tax deduction at source and manner of payment in respect of certain exempt entities, 11.1-11.5 16 Standard deduction on salary income, 12.1-12.4 17 Standard deduction on salary income, 12.1-12.4 28 Taxability of compensation in connection to business or employment, 13.1-13.3; Rationalisation of provision relating to conversion of stock-in-trade into Capital Asset, 14.1-14.4 36 Amendments in....
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....s on sale of equity shares etc., 29.1-29.13 115AD Taxation of long-term capital gains in the case of Foreign Institutional Investor, 30.1-30.3 115BA Rationalisation of provision of section 115 BA relating to certain domestic companies 31.1-31.4 115BBE Rationalisation of the provisions of section 115BBE, 32.1-32.4 115JB Relief from liability of Minimum Alternate Tax (MAT] for certain companies, 33.1-33.6 115JC Measures to promote International Financial Services Centre (IFSC], 18.1-18.6 115JF Measures to promote International Financial Services Centre (IFSC], 18.1-18.6 115-O Application of Dividend Distribution Tax to Deemed Dividend, 34.1-34.4 115Q Application of Dividend Distribution Tax to Deemed Dividend, 34.1-34.4 115R Dividend distribution tax on dividend pay-outs to unit holders in an equity oriented fund, 35.1-35.4 115T Dividend distribution tax on dividend pay-outs to unit holders in an equity oriented fund, 35.1-35.4 139A Entities to apply for Permanent Account Number in certain cases, 36.1-36.5 140 Benefit of carry forward and set off of losses for facilitating insolvency resolution, 21.1-21.6 143 ....
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.... 2. Changes made by the Act 2.1 The Act has (i) specified the rates of income-tax for the assessment year 2019-20 and the rates of income-tax on the basis of which tax has to be deducted at source and advance tax has to be paid during financial year 2018-19; (ii) amended sections 2, 9, 10, 11, 16, 17, 28, 36, 40A, 43, 43CA, 44AE, 47, 48, 49, 50C, 54EC, 55, 56, 79, 80AC, 80D, 80DDB, 80IAC, 80JJAA, 80TTA, 115AD, 115BA, 115BBE, 115JB, 115JC, 115JF, 115-O, 115Q, 115R, 115T, 139A, 140, 143, 145A, 193, 194A, 245-0, 245Q, 253, 271FA, 276CC, 286 of the Income-tax Act, 1961 ('the Income-tax Act'); (iii) inserted new sections 43AA, 43CB, 80PA, 80TTB, 112A, 145B in the Income-tax Act; (iv) amended section 97 of the Finance (No.2) Act, 2004; (v) amended sections 116, 117, 118, 128 of the Finance Act, 2013; (vi) amended sections 46, 55 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. 3. Rate structure 3.1 Rates of income-tax in respect of income liable to tax for the assessment year 2018-19. 3.1.1 In respect of income of al....
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....ore rupees by more than the amount of income that exceeds one crore rupees. 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. 3.1.3 Co-operative Societies. In the case of every co-operative society, the rates of income-tax have been specified in Paragraph B of Part I of the First Schedule to the Act. 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 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....
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....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 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. In the case of a company, the rate of income-tax has been specified in Paragraph E of Part I of the First Schedule to the Act. 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) thirty per cent of the tota....
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....r 2018-19. 3.2.1 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 2018-19 have been specified in Part II of the First Schedule to the Act. The rates for deduction of income-tax at source during the financial year 2018-19 will continue to be the same as those specified in Part II of the First Schedule to the Finance Act, 2017. However, in case of a non-resident, not of being a company, or a foreign company, tax shall be deducted at source at the rate of ten per cent on income by way of long-term capital gain referred to in section 112A of the Income-tax Act. 3.2.2 Surcharge. The tax deducted at source in the following cases shall be increased by a surcharge, as specified below, for purposes of the Union: (i) In case of an individual, Hindu undivided family, association of person, body of individual or artificial juridical person, where the income or aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds- (a) fift....
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....tax during the financial year 2018-19. These rates are also applicable for charging income-tax during the financial year 2018-19 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:- 3.3.2 Individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person, Paragraph A of Part Ill of the First Schedule specifies the rates of income-tax in the case of every individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company). The basic exemption limits, rates of tax and slabs of income for various categories remain the same as in financial year 2017-18. The rates of tax during the financial year 2018-19 are as follows:- Income chargeable to tax Rate of income- tax Individual (oth....
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.... 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 amount of income-tax as increased by the applicable surcharge, shall be further increased by an additional surcharge called 'Health and Education Cess' at the rate of four per cent of such income-tax inclusive of surcharge. No marginal relief shall be available in respect of the Health and Education Cess. 3.3.4 Firms. In the case of every firm, the rate of income-tax of thirty per cent has been specified in Paragraph C of Part III of the First Schedule to the Act. 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 firm 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 a....
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.... In the case of a company other than a domestic company, 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, fees for technical services received by such company from Government or Indian concern under an approved agreement made after 29.02.1964 but before 01.04.1976 shall be taxed at fifty per cent. On the balance of the total income of such company, the tax rate shall be forty per cent. The tax computed shall continue to be enhanced by a surcharge of two per cent where such company has total income exceeding one crore rupees but not exceeding ten crore rupees. Surcharge at the rate of five per cent shall continue to be levied if the total income of such company exceeds ten crore rupees. However, marginal relief shall be allowed in the case of every company to ensure that,- (i) 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; (ii) ....
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....any up to the date of distribution or payment or liquidation, subject to certain conditions. 4.3 Instances have come to light whereby companies are resorting to abusive arrangements in order to escape liability of paying tax on distributed profits. Under such arrangements, companies with large accumulated profits adopt the amalgamation route to reduce capital and circumvent the provisions of sub-clause (d) of clause (22) of section 2 of the Income-tax Act. 4.4 With a view to prevent such abusive arrangements and similar other abusive arrangements, a new Explanation 2A has been inserted in clause (22) of section 2 of the Income-tax Act to widen the scope of the term 'accumulated profits' so as to provide that in the case of an amalgamated company, accumulated profits, whether capitalised or not, or losses as the case may be, shall be increased by the accumulated profits, whether capitalised or not, of the amalgamating company on the date of amalgamation. 4.5 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent assessment years. 5. Aligning the scope of "busin....
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....he provisions of the domestic law would prevail over corresponding provisions in the DTAAs to the extent they are beneficial. Since, in the instant situations, the provisions of the domestic law being narrower in scope were more beneficial than the provisions in the DTAAs, as modified by MLL such wider provisions in the DTAAs were ineffective. 5.4 In view of the above, the provisions of section 9 of the Income-tax Act have been amended so as to align them with the provisions in the DTAA, as modified by MLI, so as to make the provisions in the treaty effective. Accordingly, clause (i) of sub-section (1) of section 9 of the Income-tax Act has been amended to provide that "business connection" shall also include any business activities carried through a person who, acting on behalf of the non-resident, habitually concludes contracts or habitually plays the principal role leading to conclusion of contracts by the non-resident. It is further amended that the contracts should be - (i) in the name of the non-resident; or (ii) for the transfer of the ownership of, or for the granting of the right to use, property owned by that non-resident or that the non-resident has ....
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....nce in that country resulting in avoidance of taxation in the source country. Therefore, the existing nexus rules based on physical presence do not hold good anymore for taxation of business profits in source country. As a result, the rights of the source country to tax business profits that are derived from its economy are unfairly and unreasonably eroded. 6.4 OECD under its BEPS Action Plan 1 addressed the tax challenges in a digital economy wherein it has discussed several options to tackle the direct tax challenges arising in digital businesses. One such option is a new nexus rule based on "Significant Economic Presence". As per the Action Plan 1 Report, a non-resident enterprise would create a taxable presence in a country if it has a significant economic presence in that country on the basis of factors that have a purposeful and sustained interaction with the economy by the aid of technology and other automated tools. It further recommended that revenue factor may be used in combination with the aforesaid factors to determine 'significant economic presence'. 6.5 Before amendment by the Act, the scope of existing provisions of clause (i) o....
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.... border business profits will continue to be taxed as per the existing treaty rules. 6.9 Applicability: This amendment takes effect from 1^st April, 2019 and will, accordingly, apply in relation to assessment year 2019-20 and subsequent assessment years. 7. Royalty and FTS payment by NTRO to a non-resident to be tax-exempt 7.1 Section 195 of the Income-tax Act requires a person to deduct tax at the time of payment or credit to a non-resident. 7.2 Given the strategic nature and business exigencies of the National Technical Research Organisation (NTRO), a new clause (6D) has been inserted in section 10 of the Income-tax Act so as to provide that the income arising to non-resident, not being a company, or a foreign company, by way of royalty from, or fees for technical services rendered in or outside India to, the NTRO, will be exempt from income tax. 7.3 Consequently, NTRO will not be required to deduct tax at source on such payments. 7.4 Applicability: This amendment takes effect from 1st April, 2018 and accordingly applies in relation to assessment year 2018-19 and subsequent assessment years, 8.....
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....f storage of crude oil in a facility in India and sale of crude oil therefrom to any person resident in India shall be exempt, if (i) storage and sale is pursuant to an agreement or an arrangement entered into or approved, by the Central Government; and (ii) having regard to the national interest, the foreign company and the agreement or arrangement are notified by the Central Government. 10.2 Before amendment by the Act, clause (48B) of the said section provided that any income accruing or arising to a foreign company on account of sale of leftover stock of crude oil after the expiry of the agreement or arrangement shall be exempt subject to such conditions as may be notified by the Central Government. However, the benefit of exemption was not available on sale out of the leftover stock of crude in case of termination of the said agreement or arrangement. 10.3 Given the strategic nature of the project benefitting India in augmenting its strategic petroleum reserves, clause (48B) of section 10 of the Income-tax Act has been amended to provide that the benefit of tax exemption in respect of income from leftover stock will be available in cases where the agree....
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....ection 16 of the Income-tax Act inter alia provides for certain deductions in computing income chargeable under the head "Salaries" . 12.2 In order to provide relief to salaried taxpayers, section 16 of the Income-tax Act has been amended so as to allow a standard deduction up to Rs. 40,000 or the amount of salary received, whichever is less. 12.3 Consequently, section 17 of the Income-tax Act has also been amended to withdraw the exemption in respect of reimbursement of certain medical expenses. Further, the exemption in respect of Transport Allowance (except in case of differently abled persons) under the Income-tax Rules, 1962 has also been withdrawn vide notification no. 17/2018 dated 06.04.2018. 12.4 Applicability: These amendments take effect from '1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. 13. Taxability of compensation in connection to business or employment 13.1 Before amendment by the Act, the provisions of section 28 of the Income-tax Act provided that certain types of compensation receipts shall be taxable under the....
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....ruing as a result of such conversion or treatment. 14.3 Consequentially, the following amendments have been made in the provisions of the Income-tax Act- (i) clause (24) of section 2 has been amended to include said fair market value in the definition of "income' , (ii) clause (42A) of section 2 has been amended to provide that the period of holding of such capital asset shall be reckoned from the date of conversion or treatment; (iii) section 43 has been amended to provide that where the converted capital asset is used for the business or profession of the assessee, the said fair market value shall deemed as its actual cost; (iv) section 49 has been amended to provide that for the purposes of computation of capital gains arising on transfer of such capital assets, the said fair market value shall be deemed as its cost of acquisition. 14.4 Applicability: These amendments take effect from 1^st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. 15. Tax treatment of transactions in respect of trading in agricultural commodity derivatives 15.1 &nb....
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....e Income-tax Act have been amended to provide that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than five per cent of the sale consideration. 16.4 Applicability: These amendments take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. 17. Presumptive income under section 44AE in case of goods carriage 17.1 Section 44AE of the Income-tax Act provides that in respect of an assessee who owns not more than ten goods carriages at any time during the previous year and who is engaged in the business of plying, hiring or leasing such goods carriages, the income of such business chargeable to tax under the head "Profits and gains of business or profession" shall be deemed to be the aggregate of the profits and gains from all the goods carriages owned by him in the previous year, computed in accordance with the provisions of the said section. 17,2 Before amendment by the Act, sub-section (2) of the said section provided that the profits and gains shall be deemed to be an amount equal to ....
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....n has been amended so as to provide that transactions in the following assets, undertaken by a non-resident on a recognised stock exchange located in any International Financial Services Centre, shall not be regarded as transfer, if the consideration is paid or payable in foreign currency:- (i) bond or Global Depository Receipt, as referred to in sub-section (1) of section 115AC of the Income-tax Act; or (ii) rupee denominated bond of an Indian company; or (iii) derivative. 18.3 Before amendment by the Act, section 115JC of the Income-tax Act provided for alternate minimum tax at the rate of 18.5% of adjusted total income in the case of all non-corporate persons. 18.4 In order to promote the development of world class financial infrastructure in India, section 115JC of the Income-tax Act has also been amended to provide that in case of a unit located in an International Financial Service Centre, the alternate minimum tax under section 115JC shall be charged at the rate of 9%. 18.5 Consequential amendment has also been made to section 115JF of the Income-tax Act. 18.6 Applicability: These amendments tak....
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....e Income-tax Act provides for certain tax neutral transfers. Clause (x) of sub-section (2) of Section 56 of the Income-tax Act also excludes income arising out of certain tax neutral transfers from its ambit. However, before amendment by the Act, transfers referred to in clause (iv) and clause (v) of section 47 were not excluded from the scope of clause (x) of sub-section (2) of section 56. 20.2 In order to further facilitate the transaction of money or property between a wholly-owned subsidiary company and its holding company, section 56 has been amended to exclude such transfer from the scope of clause (x) of sub-section (2) of section 56. 20.3 Applicability: This amendment will take effect, from 1^st April, 2018 and shall accordingly, apply in relation to the transaction made on or after 1^st April, 2018. 21. Benefit of carry forward and set off of losses for facilitating insolvency resolution 21.1 Section 79 of the Income-tax Act provides inter alia that carry forward and set off of losses in a closely held company shall be allowed only if there is a continuity in the beneficial owner of the shares carrying not less than fifty one per cent of....
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....mended to provide that the benefit of deduction under the entire class of deductions under the heading "C.-Deductions in respect of certain incomes" in Chapter VIA of the Income-tax Act shall not be allowed unless the return of income is filed on or before the due date. 22.3 Applicability: This amendment take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent assessment years. 23. Deductions available to senior citizens in respect of health insurance premium and medical treatment 23.1 Before amendment by the Act, section 80D of the Income-tax Act provided inter alia that a deduction up to Rs. 30,000 shall be allowed to an assessee, being an individual or a Hindu undivided family, in respect of payments towards annual premium on health insurance policy, or preventive health check-up, of a senior citizen, or medical expenditure in respect of very senior citizen. 23.2 In order to provide relief to cover the higher cost of medical expenses, section 80D of the Income-tax act has been amended and the monetary limit of the said deduction has been raised to Rs. 50,000....
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....chnology or intellectual property. 25.2 In order to improve the effectiveness of the scheme for promoting start-ups in India, section 80-IAC of the Income-tax Act has been amended so as to make following changes in the taxation regime for the start-ups:- (i) The benefit would also be available to start ups incorporated on or after the 1st day of April 2019 but before the 1st day of April, 2021; (ii) The requirement of the turnover not exceeding Rs. 25 Crore shall apply to the previous year relevant to the assessment year for which deduction under section 80-IAC is claimed; (iii) The definition of eligible business has been expanded to provide that the benefit would be available if it is engaged in innovation, development or improvement of products or processes or services, or a scalable business model with a high potential of employment generation or wealth creation. 25.3 Applicability: These amendments take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent assessment years. 26. Incentive for employment generation 26.1 Section 80JJAA of t....
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....ax Act provides for a deduction of up to Rs. 10,000 in respect of interest income from savings account. 28.2 In order to provide relief to senior citizens, a new section 80TTB has been inserted in the Income-tax Act so as to allow a deduction of up to Rs. 50,000 in respect of interest income from deposits held by senior citizens. Consequentially, it has been provided that deduction under section 80TTA shall not be allowed in these cases. 28.3 Applicability: This amendment takes effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. 28.4 Consequential amendment has also been made in section 194A of the Income-tax Act so as to raise the threshold for deduction of tax at source on interest income for senior citizens from Rs. 10,000 to Rs. 50,000. 28.5 Applicability: This amendment takes effect, from 1st April, 2018. 29. New regime for taxation of long-term capital gains on sale of equity shares etc. 29.1 Before amendment by the Act, long term capital gains arising from transfer of long term capital assets, being equity shares of a company or an unit of equity oriente....
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.... (i) The benefit of deduction under chapter VIA shall be allowed from the gross total income as reduced by such capital gains. (ii) Similarly, the rebate under section 87A shall be allowed from the income tax on the total income as reduced by tax payable on such capital gains. (iii) "equity oriented fund" has been defined to mean a fund set up under a scheme of a mutual fund specified under clause (23D) of section 10 and,- (a) In a case where the fund invests in the units of another fund which is traded on a recognised stock exchange, - (I) A minimum of 90 per cent of the total proceeds of such funds is invested in the units of such other fund; and (II) such other fund also invests a minimum of 90 per cent of its total proceeds in the equity shares of domestic companies listed on a recognised stock exchange; and (b) in any other case, a minimum of 65 per cent of the total proceeds of such fund is invested in the equity shares of domestic companies listed on a recognised stock exchange. 29.7 Consequential amendment has been made to section 48 of the Income-tax Act to provide that the provisi....
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....rded as transfer under section 47 of the Income-tax Act. 29.10 Consequential amendment has also been made in clause (42A) of section 2 of the Income-tax Act so as to define 'equity oriented fund' as the fund referred to in clause (a) of Explanation to section 112A of the Income-tax Act. 29.11 Applicability: These amendments take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. 29.12 Further, consequential amendment has been made in section 97 of the Finance (No.2) Act, 2004 so as to define t equity oriented fund' as the fund referred to in clause (a) of Explanation to section 112A of the Income-tax Act. 29.13 Applicability: This amendment takes effect from 1st April, 2018. 30. Taxation of long-term capital gains in the case of Foreign Institutional Investor 30.1 The provisions of section 115AD of the Income-tax Act inter alia provide that where the total income of a Foreign Institutional Investor (FII) includes income by way of long-term capital gains arising from the transfer of certain securities,....
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.... provisions of section 115BBE 32.1 Section 115BBE of the Income-tax Act provides for tax on income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69D at a higher rate of sixty per cent. 32.2 Before amendment by the Act, sub-section (2) of the said section provided that no deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed to the assessee under any provision of the Income-tax Act in computing his income referred to in clause (a) of sub-section (1). 32.3 In order to rationalize the provisions of section 115BBE, an amendment has been made in sub-section (2) of section 115BBE so as to also include reference of income referred to in clause (b) of sub-section (1) of section 115BBE in sub-section (2) of the said section. 32.4 Applicability: This amendment takes effect retrospectively from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. 33. Relief from liability of Minimum Alternate Tax (MAT) for certain companies 33.1 Section 115JB of the Income-ta....
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.... (22) of section of 2 the Income-tax Act was taxed in the hands of the recipient at the applicable marginal rate. The taxability of deemed dividend in the hands of recipient has posed serious problem of the collection of the tax liability and has also been the subject matter of extensive litigation. 34.2 With a view to bringing clarity and certainty in the taxation of deemed dividends, the Explanation to Chapter XII-D of the Income-tax Act, occurring after section 115Q, has been deleted so as to bring deemed dividends also under the scope of dividend distribution tax under section 115-O of the Income-tax Act. 34.3 Further, section 115-O of the Income-tax Act has also been amended to provide that such deemed dividend will be taxed at the rate of thirty per cent (without grossing up) in order to prevent camouflaging dividend in various ways such as loans and advances. 34.4 Applicability: This amendment relating to imposition of dividend distribution tax on deemed dividend will apply to transactions referred to in sub-clause (e) of clause (22) of section 2 of the Income-tax Act undertaken on or after 1st April, 2018. 35. Divi....
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....rtner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer or any person competent to act on behalf of such entities shall also apply to the Assessing Officer for allotment of PAN. 36.4 In order to enable issuance of e-PAN for ease of doing business, it is also provided that requirement of issuing PAN in a laminated card shall no longer be mandatory. 36.5 Applicability: This amendment takes effect from 1st April, 2018. 37. Rationalisation of prima-facie adjustments during processing of return of income 37.1 Sub-section (1) of the section 143 of the Income-tax Act provides for processing of return of income made under section 139, or in response to a notice under sub-section (1) of section 142. 37.2 Clause (a) of the said sub-section provides that at the time of processing of return, the total income or loss shall be computed after making the adjustments specified in sub-clauses (i) to (vi) thereof. Sub-clause (vi) of the said clause provides for adjustment in respect of addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in com....
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....Central Government has notified ten such Standards effective from 1st April, 2017 relating to Assessment Year 2017-18. These are applicable to all assesses (other than an individual or a Hindu undivided family who are not subject to tax audit under section 44AB of the Income-tax Act) for the purposes of computation of income chargeable to income-tax under the head "Profits and gains of business or profession" or "Income from other sources". 39.2 In order to bring certainty in the wake of recent judicial pronouncements on the issue of applicability of ICDS - (i) Section 36 of the Income-tax Act has been amended to provide that marked-to-market loss or other expected loss, as computed in the manner provided in the ICDS notified under sub-section (2) of section 145, shall be allowed deduction. (ii) Section 40A of the Income-tax Act has been amended to provide that no deduction or allowance in respect of marked-to-market loss or other expected loss shall be allowed except as allowable under newly inserted clause (xviii) of sub-section (1) of section 36. (iii) A new section 43AA has been inserted in the Income-tax Act to provide that, subject to the provisi....
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.... compensation, shall be deemed to be the income of the year in which it is received; (b) the claim for escalation of price in a contract or export incentives shall be deemed to be the income of the previous year in which reasonable certainty of its realisation is achieved; (c) income referred to in sub-clause (xviii) of clause (24) of section 2 shall be deemed to be the income of the previous year in which it is received, if not charged to income tax for any earlier previous year; 39.3 Applicability: Recent judicial pronouncements have raised doubts on the legitimacy of the notified ICDS. However, a large number of taxpayers have already complied with the provisions of ICDS for computing income for assessment year 2017-18. In order to regularise the compliance with the notified ICDS by a large number taxpayers so as to prevent any further inconvenience to them, these amendments take effect retrospectively with effect from 1st April, 2017 i.e. the date on which the ICDS was made effective and will, accordingly, apply in relation to assessment year 2017-18 and subsequent assessment years. 40. Tax deduction at source on 7.75% GOI Savings (Taxable) Bonds, 2018 ....
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....Member shall be the Member referred to in sub-clause (i) of clause (c) of sub-section (3) of the said section. 41.5 Applicability: These amendments take effect from 1st April, 2018. 42. Appeal against penalty imposed by Commissioner (Appeals) under section 271 J 42.1 Section 253 of the Income-tax Act provides inter alia that any assessee aggrieved by any of the orders mentioned in sub-section (1) of the said section may appeal to the Appellate Tribunal against such order. 42.2 Clause (a) of the said sub-section has been amended so as to also make an order passed by a Commissioner (Appeals) under section 27 IJ appealable before the Appellate Tribunal. 42.3 Applicability: This amendment takes effect from 1st April, 2018. 43. Penalty for failure to furnish statement of financial transaction or reportable account 43.1 Before amendment by the Act, section 271 FA of the Income-tax Act provided that if a person who is required to furnish the statement of financial transaction or reportable account under sub-section (1) of section 285BA, fails to furnish such statement within the prescribed time, he shall be liable to pay penalty of ....
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....oject of the Organisation for Economic Co-operation and Development (OECD), and to improve the effectiveness and reduce the compliance burden of such reporting, section 286 of the Income-tax Act has been amended in the following manner:- (i) the time allowed for furnishing the Country-by-Country Report (CbCR), in the case of parent entity or Alternative Reporting Entity (ARE), resident in India, is extended to twelve months from the end of reporting accounting year; (ii) constituent entity resident in India, having a non-resident parent, shall also furnish CbCR in case its parent entity outside India has no obligation to file the report of the nature referred to in sub-section (2) in the latter's country or territory; (iii) the time allowed for furnishing the CbCR under sub-section (4) of the said section, in the case of constituent entity resident in India, having a non-resident parent, shall be separately prescribed; (iv) the due date for furnishing of CbCR by the ARE of an international group, the parent entity of which is outside India, with the tax authority of the country or territory of which it is resident, will be the due....
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....e and payable by the purchaser. 46.6 Before amendment by the Act, section 118 of the Finance Act, 2013 provided the value of taxable commodities transactions, being commodity derivative and chargeable under section 117 of the Finance Act, 2013. 46.7 The provisions of section 118 of the Finance Act, 2013 have been amended so as to include the value of taxable commodities transaction, being option on commodities, chargeable under section 117 of the Finance Act, 2013, in the said section. 46.8 Further, the provisions of section 128 of the Finance Act, 2013 have been amended so as to provide that the provisions of section 119 of the Income-tax Act shall apply, so far as may be, in relation to the commodities transaction tax, as they apply in relation to income-tax. 46.9 Applicability: These amendments take effect from 1st April, 2018. 47. Rationalisation of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 47.1 Section 46 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 ('the Black Money Act') provides for the procedure fo....