Deductibility of interest: interest on co-operative bank borrowings allowed only on actual payment, with specified exclusions.
Interest on loans or advances from co-operative banks will be allowable as a deduction only if actually paid on or before the due date of filing the return for the relevant previous year; exclusions apply to primary agricultural credit societies and primary co-operative agricultural and rural development banks, and statutory definitions for those terms are incorporated to define scope and application prospectively.

Actual cost adjustment for assets subject to investment-linked deduction reduces cost by allowable depreciation, altering basis for deemed income.
The proviso to Explanation 13 provides that where a capital asset in respect of which deduction or part of deduction was allowed under section 35AD is deemed to be the assessee's income under sub section (7B), the asset's actual cost shall be the actual cost reduced by an amount equal to depreciation calculated at the rate in force that would have been allowable had the asset been used for business since acquisition.

Restriction on cash payments for capital expenditure conditions recognition of actual cost and depreciation claims on payment mode compliance.
Amendment adds a proviso to section 43(1) that excludes from the actual cost for depreciation any expenditure on acquisition of an asset where payments to a person in a day exceed a specified cash threshold unless made by account-payee cheque, account-payee bank draft or electronic clearing system through a bank account, thereby conditioning depreciation eligibility on permitted modes of payment.

Restriction on deduction for specified domestic transactions removes arm's length deduction and subjects payments to disallowance rules.
The Finance Bill 2017 amends section 40A to withdraw automatic deductibility for payments under specified domestic transactions made at Arm's Length Price; such payments are now subject to the disallowance rules of section 40A(2). The amendment also alters the proviso to clause (a) of sub section (2) consequential to the transfer pricing provision, aligning domestic specified transaction treatment with the transfer pricing framework and applying retrospectively as provided in the Bill.

Restriction on cash payments: non banked payments above the prescribed limit are nondeductible and may be taxable.
Amendment lowers the cash payment threshold for deductibility from twenty thousand rupees to ten thousand rupees per person per day and requires payments above that limit to be made by account payee cheque, account payee bank draft, or electronic clearing through a bank account; amounts paid otherwise will be disallowed as deductions or deemed to be profits and gains of business or profession. Consequential changes to related sub provisions are also proposed, effective 1 April 2018 for the relevant assessment year.

Provision for bad and doubtful debts limit increased, expanding allowable bank deduction for relevant assessment years.
The amendment raises the deduction ceiling for provision for bad and doubtful debts under section 36(1)(viia)(a) from seven and one-half per cent to eight and one-half per cent of total income (computed before deductions under the clause and Chapter VIA), while retaining the separate ten per cent cap linked to aggregate average advances of rural branches; it applies to specified scheduled, non-scheduled and cooperative banks and takes effect from 1 April 2018 for assessment year 2018-19 onward.

Cash payment restriction on deductions: disallows deduction where daily payments to a person exceed the permitted cash threshold unless paid by account payee or electronic system.
The amendment disallows capital-expenditure deductions for specified business where payments (or aggregate payments to a person in a day) are made otherwise than by account payee cheque, account payee bank draft, or electronic clearing system through a bank and exceed the prescribed cash threshold, expanding the existing exclusion alongside acquisitions such as land, goodwill, and financial instruments.

Relief from notional rental income: annual value treated nil for builder stock in trade unsold after one year post completion.
The annual value of a building and land held as stock-in-trade by a builder or developer shall be taken as nil where the property or any part is not let, for the period up to one year from the end of the financial year in which the certificate of completion is obtained from the competent authority, thereby excluding notional rental income for that post-completion period.

Cash donation limits for political parties restrict non-bank payments; mandatory tax return filing required for exemption.
Eligibility for political party tax exemption is conditioned on banning donations above a prescribed cash threshold except when received by bank cheque, bank draft, electronic clearing or by electoral bond, and on timely furnishing of the income-tax return for the previous year; electoral bond contributions are excluded from the standard donation-reporting requirement and a statutory definition of electoral bond is introduced.

Filing requirement for tax exemption: timely income-tax return now mandatory to claim exemptions under sections 11 and 12.
A new clause (c) in subsection (1) of section 12A makes timely filing of the return of income referred to in subsection (4A) of section 139 a condition for claiming exemptions under sections 11 and 12; the amendment applies prospectively from the stated commencement and to the specified assessment year and subsequent years.

Registration requirement for trusts: amended objects not conforming to original registration must seek fresh 12AA registration within thirty days.
Where a trust or institution registered under section 12AA or earlier section 12A adopts or modifies its objects so they no longer conform to registration conditions, it must apply for registration in the prescribed form and manner within thirty days of such adoption or modification and be registered under section 12AA to qualify for sections 11 and 12 exemptions.

Corpus-directed contributions are not treated as application of income under income-tax law, limiting trust deductions.
A new explanation excludes from application-of-income treatment any amount credited or paid out of a trust's income when the contribution is made with a specific direction that it shall form part of the recipient trust's corpus, clarifying that such corpus-directed transfers will not count as application of income for charitable or religious purposes while preserving existing rules for accumulated-income transfers.

SEZ deduction under section 10AA limited to the assessee's computed total income, preventing deduction beyond taxable income.
The amendment inserts an Explanation specifying that the SEZ-unit deduction is to be allowed from the assessee's total income computed under the Income-tax Act before giving effect to that special deduction, and that the deduction shall not exceed such total income; the change is made to address a judicial ruling on the stage of deduction.

Exemption for foreign company income from sale of leftover crude oil after agreement expiry, subject to notified conditions.
A new clause excludes from total income any income of a foreign company arising from sale of leftover crude oil at an Indian facility after expiry of a government approved storage and sale agreement, subject to conditions to be notified by the Central Government; the amendment is prospective and applies from the designated assessment year.

Capital gains exemption restriction applies where securities transaction tax not paid on equity share transfers, affecting post acquisition transactions.
Amendment to clause 38 of section 10 denies exemption for income from transfer of a long-term capital asset being an equity share where the acquisition (unless notified otherwise) was entered into on or after 1 October 2004 and the transaction is not chargeable to Securities Transaction Tax under the Finance (No.2) Act, 2004; the change is proposed in the Finance Bill, 2017 and applies retrospectively from 1 October 2004.

Exemption from capital gains for transfer of land under specified land pooling scheme, applied retrospectively to relevant assessment years.
A new exemption excludes from total income capital gains arising to an individual or Hindu undivided family on transfer of land under the Andhra Pradesh Capital City Land Pooling Scheme, provided the assessee was the owner of the specified capital asset as of the statutory cut-off date; the amendment clarifies the term "specified capital asset" and applies retrospectively to the relevant assessment years.

Voluntary contributions to corpus not treated as application of income for registered trusts, altering donor tax treatment.
The amendment provides that any amount credited or paid out of income as a voluntary contribution with a specific direction that it shall form part of the corpus of a trust or institution registered under the charitable-registration framework shall not be treated as an application of income for purposes of the entity's objects.

Exemption for Chief Minister's Relief Fund under income-tax law applied retrospectively to earlier assessment years.
An amendment inserts a new sub-clause to extend income-tax exclusion to the Chief Minister's Relief Fund and the Lieutenant Governor's Relief Fund, aligning their tax treatment with other recognised relief funds and applying the exclusion retrospectively to the assessment years beginning from when deduction provisions for payments to those funds first became operative.

Partial NPS withdrawal exemption allows tax-free withdrawals under PFRDA-regulated conditions for eligible employees.
An amendment adds a tax exemption for employee partial withdrawals from the National Pension System Trust, excluding from total income those withdrawals that do not exceed twenty-five per cent of the employee's contributions, provided the withdrawal complies with terms and conditions under the Pension Fund Regulatory and Development Authority Act, 2013 and its regulations; the amendment is effective from 1 April 2018 for the stated assessment year and subsequent years.

Exempted income definition clarified: correct reference for 'person resident outside India' aligns NRE interest exemption retrospectively.
The proviso to clause (ii) of clause (4) of section 10 is amended to correct the cross reference for the expression "person resident outside India", replacing an outdated citation with the definition as enacted under the Foreign Exchange framework; the amendment is clarificatory and operates retrospectively to the date the clause was first brought into effect.