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    News Bills
    Enlarging the scope for tax deduction on interest income under section 194A of the Act.
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    Reducing the rate of TDS on fees for technical services (other than professional services).
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    Allowing deduction for amount disallowed under section 43B, to insurance companies on payment basis.
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    Amendment for providing attribution of profit to Permanent Establishment in Safe Harbour Rules under...
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    Modification of the definition of “business trust”
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    Allowing carry forward of losses or depreciation in certain amalgamations.
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    Providing an option to the assessee for not availing deduction under section 35AD.
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    Increase in safe harbour limit of 5 per cent. under section 43CA, 50C and 56 of the Act to 10 per ce...
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    Excluding interest paid or payable to Permanent Establishment of a non-resident Bank for the purpose...
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    Amendment of section 194LD of the Act to extend the period of concessional rate of withholding tax a...
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    Amendment of section 115BAB of the Act to include generation of electricity as manufacturing.
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    Modification in conditions for offshore funds’ exemption from “business connection”.
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News Bills
Enlarging the scope for tax deduction on interest income under section 194A of the Act.
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Tax deduction on interest income: large co-operative societies must withhold tax when turnover and per payee interest exceed specified thresholds.
The amendment narrows exemptions in section 194A(3) so that a co operative society otherwise exempt under clause (v) or (viia) must deduct tax at source if it exceeds a specified turnover threshold in the preceding year and if the interest credited or paid to a payee in the financial year exceeds specified per payee thresholds, with separate thresholds for senior citizens and others.
News Bills
Reducing the rate of TDS on fees for technical services (other than professional services).
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TDS on technical services adjusted to reduce classification disputes and align withholding with work contract payments.
To reduce classification disputes and litigation, the law prescribes a reduced withholding rate specifically for fees for technical services (other than professional services), aligning its TDS incidence more closely with that applicable to payments for execution of work contracts; withholding rates for other categories of fees remain unchanged and the amendment takes effect from the commencement date specified in the measure.
News Bills
Allowing deduction for amount disallowed under section 43B, to insurance companies on payment basis.
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Deduction timing for Section 43B: insured business expenses disallowed earlier permitted when actually paid.
A proviso is proposed to Rule 5 of the First Schedule so that any sum added back under Section 43B in accordance with clause (a) of Rule 5 shall be allowed as a deduction in computing income under the rule in the previous year in which such sum is actually paid; the amendment takes effect from 1 April 2020 and applies to assessment year 2020-21 and onwards.
News Bills
Amendment for providing attribution of profit to Permanent Establishment in Safe Harbour Rules under...
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Attribution to Permanent Establishment now covered in safe harbour rules and advance pricing agreements, providing transfer pricing certainty.
Amendments expand Safe Harbour Rules to permit acceptance of declared transfer prices that address attribution of profits to a Permanent Establishment, and amend Advance Pricing Agreement provisions to allow APAs to determine or specify the manner of determining such attribution, thereby extending transfer pricing certainty to both safe harbour and APA mechanisms for future and rollback years.
News Bills
Modification of the definition of “business trust”
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Business trust definition modified: listing requirement removed so tax pass-through and regime apply to unlisted trusts.
The proposal amends clause (13A) of section 2 to remove the requirement that units be listed on a recognised stock exchange for a trust to qualify as a business trust, aligning the income tax definition with SEBI amendments that eliminated mandatory listing for InvITs; under section 115UA such trusts remain subject to taxation rules including pass through treatment for SPV interest and rent and filing and reporting obligations.
News Bills
Allowing carry forward of losses or depreciation in certain amalgamations.
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Carry forward of losses extended to statutory bank and government insurance company amalgamations under specified nationalisation schemes.
Section 72AA's allowance for carry forward of accumulated losses and unabsorbed depreciation is extended to include amalgamations of corresponding new banks under the Banking Companies (Acquisition and Transfer of Undertakings) Acts and amalgamations of Government companies arising under the General Insurance Business (Nationalisation) Act, with defined terms to be read from those enactments and the extension operating notwithstanding specified exclusions in the Act.
News Bills
Deferring TDS or tax payment in respect of income pertaining to Employee Stock Option Plan (ESOP) of...
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Deferral of TDS on ESOP perquisites allows employers to delay tax deduction until sale or employment cessation.
Amendments permit eligible start-ups to defer deduction or payment of tax on ESOP perquisites: tax must be deducted or paid within fourteen days of the earliest of (i) expiry of the prescribed post-allotment period, (ii) sale of the specified security or sweat equity share by the employee, or (iii) cessation of employment. Tax is computed using the rates applicable in the financial year when the security or share was allotted or transferred.
News Bills
Exempting non-resident from filing of Income-tax return in certain conditions.
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Non-resident return filing exemption extended to royalty and FTS when withholding tax is applied at prescribed rates.
A statutory amendment will exempt a non-resident from filing an income-tax return where the non-resident's total income consists solely of dividend or interest, or specified royalty or fees for technical services, provided that withholding tax on such income has been deducted under Chapter XVII-B at rates not lower than the rates prescribed for tax determination under section 115A(1); the amendment takes effect from the stated commencement date and applies to the relevant assessment year and subsequent years.
News Bills
Providing an option to the assessee for not availing deduction under section 35AD.
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Optional 35AD deduction safeguards right to claim depreciation where assessee forgoes the investment allowance under amended rules.
The amendment makes the 100% capital expenditure deduction under section 35AD optional and restricts the sub section (4) non allowance rule so that other deductions, including normal depreciation, are disallowed only if the section 35AD deduction has been claimed and allowed; the change applies prospectively to the assessment year beginning 1 April 2020.
News Bills
Increase in safe harbour limit of 5 per cent. under section 43CA, 50C and 56 of the Act to 10 per ce...
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Safe harbour threshold for stamp valuation adjustments increased, reducing valuation-driven recharacterisation of consideration for transfers.
Increase of the safe harbour threshold from five per cent to ten per cent for valuation comparisons where declared consideration for transfer or receipt of immovable property is lower than the stamp valuation authority's value, so that a declared consideration within the safe harbour is treated as the full value for computing capital gains or income from other sources; effective from 1st April, 2021 and applying to the relevant assessment year and subsequent years.
News Bills
Excluding interest paid or payable to Permanent Establishment of a non-resident Bank for the purpose...
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Interest limitation carve-out excludes debt from permanent establishments of foreign banks from interest disallowance under amended rules.
The amendment provides that the interest limitation will not apply to interest paid in respect of debt issued by a lender which is a permanent establishment of a non-resident engaged in banking in India, thereby carving out loans from branches of foreign banks from the section 94B restriction and avoiding application of the earnings based disallowance to such debt.
News Bills
Amendment of section 194LD of the Act to extend the period of concessional rate of withholding tax a...
Show AI Summary
Concessional withholding tax extended and applied to municipal debt, enabling foreign investor interest relief within a renewed operative window.
Amendment to section 194LD extends the concessional withholding tax regime and applies the concessional rate to interest on municipal debt securities by Foreign Institutional Investors and Qualified Foreign Investors, preserving the reduced TDS rate for eligible interest payments and changing the operative period so that interest paid within the newly prescribed window qualifies for the concession, with the amendment taking effect from the start of the specified fiscal period.
News Bills
Amendment of section 194LC of the Act to extend the period of concessional rate of withholding tax a...
Show AI Summary
Concessional TDS rates on specified foreign borrowings extended and a lower rate introduced for IFSC listed bonds.
Amendment of section 194LC extends concessional withholding for interest paid to non residents on eligible foreign currency borrowings by a specified company or business trust, maintaining the concessional rate for approved loans, long term bonds and rupee denominated bonds within prescribed limits. It also establishes a lower withholding rate for interest on long term bonds and rupee denominated bonds issued from abroad that are listed solely on a recognised IFSC stock exchange, with the amendment operating from the commencement date specified in the Finance Bill.
News Bills
Amendment of section 115BAB of the Act to include generation of electricity as manufacturing.
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Concessional tax for new manufacturers: generation of electricity treated as manufacturing allowing concessional rate subject to eligibility conditions.
The amendment clarifies that manufacturing or production for the concessional tax regime includes generation of electricity. Eligible new domestic manufacturing companies-set up on or after 1 October 2019 and commencing by 31 March 2023-that do not avail specified incentives or deductions may opt for the concessional tax provision. The change takes effect from 1 April 2020 and applies from the assessment year 2020-21 onward.
News Bills
Modification in conditions for offshore funds’ exemption from “business connection”.
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Offshore fund exemption relaxed: manager contributions initially excluded and corpus timing harmonised to reduce discrimination.
Amendments to section 9A relax two eligibility conditions for offshore funds' exemption from creating a business connection: contributions by the eligible fund manager during the first three years up to a capped amount will be excluded when calculating the aggregate participation of Indian residents, and funds established in the previous year must meet the monthly average corpus requirement within twelve months from the last day of the month of establishment or incorporation. The amendments take effect from 1 April 2020.
News Bills
Extending time limit for sanctioning of loan for affordable housing for availing deduction under sec...
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Deduction under section 80EEA extended to include additional loans, broadening affordable housing tax relief eligibility.
The proposal extends the sanctioning period for loans eligible for the interest deduction under section 80EEA for acquisition of affordable residential property, allowing additional loans to qualify subject to existing conditions, including the stamp duty threshold and cap on interest relief. The amendment takes effect from 1st April, 2021 and applies to the assessment year 2021 22 and thereafter.
News Bills
Extending time limit for approval of affordable housing project for availing deduction under section...
Show AI Summary
Extension of approval period for affordable housing projects expands eligibility for full business profit deduction under section 80-IBA.
Extension of the approval deadline under section 80-IBA permits additional affordable housing projects to meet the statutory approval-timing condition for claiming a deduction equal to one hundred per cent of profits and gains from the business of developing and building such projects; the approval deadline is extended to 31st March, 2021 and the amendment takes effect from 1st April, 2021, applying to the assessment year 2021-22 and thereafter.
News Bills
Rationalization of provisions of start-ups.
Show AI Summary
Startup deduction expanded: three-year relief selectable within first ten years and turnover eligibility substantially increased.
Amendment revises the start-up deduction so an eligible start-up may claim a three-consecutive-assessment-year deduction selectable within ten years from incorporation, and raises the turnover eligibility ceiling so the deduction applies where total business turnover does not exceed a substantially higher threshold in any previous year counted from incorporation; the change takes effect from the start of the next fiscal cycle and applies to subsequent assessment years.
News Bills
Exemption in respect of certain income of Indian Strategic Petroleum Reserves Limited.
Show AI Summary
Exemption for strategic petroleum reserve income: income exempt if replenishment occurs within three-year period under government directions.
Exemption is provided to ISPRL for income arising from arrangements for replenishment of crude oil stored in its Indian storage facilities when replenishment is carried out pursuant to directions of the Central Government, subject to the condition that the crude oil is replenished within three years from the end of the financial year in which it was first removed from storage; effective from 1 April 2020 for assessment year 2020-21 onward.
News Bills
Exemption in respect of certain income of wholly owned subsidiary of Abu Dhabi Investment Authority ...
Show AI Summary
Exemption for sovereign wealth fund investments: dividends, interest and long-term capital gains eligible if conditions satisfied.
A new exemption applies to income in the nature of dividend, interest and long-term capital gains of a specified person arising from investments, debt or equity, in Indian companies or enterprises engaged in developing, operating or maintaining infrastructure facilities or other notified businesses, provided the investment is made on or before the prescribed cut-off and held for the minimum required period. "Specified person" includes a wholly owned ADIA subsidiary resident in the UAE and sovereign wealth funds satisfying defined ownership, regulatory, benefit, vesting, commercial activity and notification conditions.

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IMPOSITION OF HEALTH CESS ON IMPORT OF CERTAIN ITEMS

3 February, 2020

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Budget 2020-21 + FINANCE BILL, 2020

 

Clause (139] of the Finance Bill, 2020 read with Fourth Schedule to the said Bill provides for levy of 'Health Cess'. Health Cess is proposed to be imposed on the import of Medical devices falling under headings 9018 to 9022, at the rate of 5% ad valorem on the import value of such goods as determined under Section 14 of the Customs Act, 1962. This Health Cess shall be a duty of Customs. Any Export Promotion scrips shall not be used for payment of said Cess. Health Cess shall not be imposed on medical devices which are exempt from BCD. Further, inputs/parts used in the manufacture of medical devices will also be exempt from Health Cess. The proceeds of Health Cess shall be used by the Union for funding of health infrastructure in the Country.

 

 

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Budget 2020-21 + FINANCE BILL, 2020

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Acts Income Tax
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