IFSC tax incentives expand tax-neutral transfers and exemptions to promote external borrowing and extended profit-linked deductions.
Proposed IFSC tax measures include treating transfers of specified securities by Category III AIFs with all non-resident unit-holders as not constituting transfer, empowering notification of additional securities, exempting interest payable to non-residents on borrowings by IFSC units, extending tax neutrality to dividends paid out of accumulated IFSC income, exempting distributions by mutual funds in IFSC with all non-resident unit-holders from additional tax, ensuring full access to profit-linked deductions for IFSC units by removing restrictive computation conditions, and increasing the one-hundred-per-cent deduction to any ten consecutive assessment years within a fifteen-year window.

Interest recognition rule extended to regulated NBFCs, with deductions allowed only when interest is actually paid by return-filing deadline.
The accrual-exception that taxes interest on bad or doubtful debts when credited or received is extended to include deposit-taking NBFCs and systemically important non-deposit-taking NBFCs; correspondingly, interest deductions for payments to these NBFCs are allowable only if actually paid on or before the due date for filing the return of income, aligning their tax treatment with other regulated financial institutions.

Special taxation regime for offshore funds relaxed to ease corpus and remuneration conditions for fund managers in India.
Section 9A provides a safe harbour excluding business connection and residency of an eligible investment fund solely because fund management is undertaken by an eligible fund manager in India, subject to conditions on fund residence, corpus, diversification and arm's length remuneration. Proposed amendments relax the corpus condition to require a minimum corpus of one hundred crore rupees at the end of six months from establishment or at the end of the previous year, and replace the remuneration test with an amount to be prescribed; the changes operate retrospectively from 1st April, 2019 for the relevant assessment year and thereafter.

Deduction for electric vehicle loan interest allowed subject to sanctioned-loan period and sole-ownership condition under new tax provision.
Section 80EEB permits a deduction for interest on loans taken to purchase an electric vehicle where the loan is sanctioned by a financial institution (including NBFCs) within the prescribed sanction period and where the borrower does not own any other electric vehicle at loan sanction; the same interest cannot be claimed under any other provision for the same or any other assessment year and the amendment applies from the stated commencement to the relevant assessment years.

Interest exemption for nonresident bond investors removes withholding on offshore rupee bond interest issued during the announced period.
Amendment incorporates the government press release exemption into the statute to provide that interest paid to a non-resident by a specified company in respect of monies borrowed from a source outside India by way of issue of rupee denominated bonds during the announced period is exempt from tax, and that no tax was required to be deducted at source for interest paid on such bonds; the amendment is effective from the start of the stated fiscal year and applies to the specified assessment year and subsequent assessment years.

Tax incentive for affordable housing expands interest deduction on home loans, subject to property value and ownership conditions.
A new provision permits a deduction for interest on residential house loans from financial institutions, subject to conditions: loan sanctioned within the prescribed fiscal window, stamp duty value of the property below a prescribed ceiling, and the borrower owning no residential property on sanction date. The deduction is exclusive and cannot be claimed under any other provision for the same interest. Parallel amendments amend the affordable-housing deduction by capping carpet area by urban category and imposing the same stamp duty valuation limit for qualifying housing projects approved on or after the specified date; both amendments take effect from the same fiscal commencement and apply to ensuing assessment years.

National Pension System incentives: higher tax exemption on lump sums, expanded employer deduction and Tier-II deductibility for central employees.
The Finance Bill increases the tax-exempt portion of lump-sum NPS payments on account closure or opt-out, raises the allowable employer-side deduction for Central Government contributions to employee NPS accounts, and makes Central Government employees' Tier-II NPS contributions eligible for deduction under the general savings deduction provision, with these changes operating prospectively for subsequent assessment years.

Carry-forward of startup losses: relaxed shareholder continuity test expands eligibility for loss set-off for eligible startups.
Proposed amendments permit closely held eligible start-ups to carry forward and set off pre previous year losses on satisfaction of either the existing clause (a) shareholder continuity test or the start up specific clause (b) condition; other closely held companies remain subject to clause (a) only. Amendments to section 54GB extend the rollover relief sunset for investment in eligible start-ups, reduce the required post subscription shareholding threshold to twenty five per cent, and shorten the asset transfer restriction from five years to three years, effective from the stated fiscal implementation date.

Exemption on share premium from category two AIF extended to venture capital undertakings, permitting tax-free receipt of funds.
The amendment extends the exemption from taxation of excess consideration on issue of shares so that venture capital undertakings receiving funds from Category II Alternative Investment Funds will not have the excess over fair market value charged as income, thereby aligning Category II AIF receipts with existing exemptions available to Category I AIFs and notified classes of persons.

Carry-forward of tax losses extended to companies under tribunal approved resolution plans after offering tax authorities a hearing.
Carry-forward and set-off restrictions under section 79 are removed for companies (and their subsidiaries) whose boards were suspended and replaced and whose shareholding changed pursuant to a tribunal approved resolution plan, provided the jurisdictional tax officer was given a reasonable opportunity to be heard. Corresponding amendment to the computation of book profit for minimum alternate tax permits reduction by aggregate unabsorbed depreciation and brought forward loss (excluding depreciation) for such companies.

Deeming of fair market value: exemptions where share consideration is approved by specified authorities, relieving applicability of certain tax provisions.
Proposes empowering the Board to exempt prescribed classes of transactions and persons from the deeming of fair market value for share transfers where consideration is approved by specified authorities, thereby relieving applicability of valuation deeming in both receipt-based chargeability and capital gains computation, with the amendment applying prospectively to subsequent assessment years.

Withholding tax online applications enabled to streamline Assessing Officer determinations for non-resident payments and improve monitoring.
Amendments to section 195(2) permit electronic filing by payers seeking determination of the portion of payments to non-residents chargeable to tax and authorize prescription of the form and manner of application and of the Assessing Officer's procedure for determining the taxable portion; a parallel change to section 195(7) applies to specified classes, with the reforms intended to speed processing and improve administrative monitoring.

Electronic filing requirement for statements of non-deducted tax on interest introduced, with correction mechanism and effective date.
Amendment to Section 206A requires electronic filing, in the prescribed form and manner, of statements for payments of interest to residents where tax has not been deducted at source; it also provides for correction of such statements to rectify mistakes or add, delete or update information and includes a consequential amendment reflecting an increased TDS threshold for certain payers, effective from 1st September, 2019.

Buy back tax extension: buy backs by listed companies now subject to the anti abuse levy, with shareholder exemption aligned.
The anti abuse levy under Section 115QA is proposed to be extended to companies listed on recognised stock exchanges, bringing buy backs by listed companies within the additional tax regime and addressing tax arbitrage between buy backs and dividends; simultaneously, the exemption for shareholders under clause (34A) of section 10 is extended to listed company shareholders where the company has paid the buy back tax, effective for buy backs on or after the stated commencement date.

Cancellation of registration: expanded to include noncompliance with other material laws and final adverse orders after hearing.
Cancellation of registration is broadened to require that, when granting registration, the tax authority satisfy itself about compliance with other laws material to the trust's or institution's objects. Registration may be cancelled where a trust or institution has violated such other material laws and an order or decree establishing that violation is final or undisputed; cancellation is to be by written order after affording a reasonable opportunity of being heard.

Tax-neutral demerger rules exempt Ind-AS valuation differences, allowing resulting companies to adopt Ind-AS values for transferred undertakings.
The amendment exempts resulting companies from the requirement to record property and liabilities at the demerged company's book values where the assets and liabilities are recorded at different values solely due to compliance with Indian Accounting Standards specified in the Companies (Indian Accounting Standards) Rules, 2015, thereby permitting resulting companies to adopt Ind AS values for the undertaking received.

Extension of TDS proviso: deductor relief for payments to non residents when the payee files a return and pays tax.
The law is amended to extend the first proviso to section 201 to cover payments to non residents so that where a non resident payee files a return, discloses the payment, pays tax and furnishes a certificate, the deductor will not be treated as an assessee in default; interest will accrue only until the payee's return filing date. Additionally, clause (a) of section 40 is amended to deem tax as deducted and paid on the date the payee files its return, preventing disallowance of such payments.

Advance Pricing Agreement: Assessing officer limited to modifying total income under APA when taxpayer files a modified return.
The amendment specifies that when a taxpayer files a modified return under the APA framework after a completed assessment or reassessment, the Assessing Officer shall pass an order modifying only the total income of the relevant assessment year as determined in that completed assessment or reassessment, having regard to and in accordance with the APA.

Secondary adjustment rules updated: option to pay a one-time additional tax instead of repatriating excess transfer pricing amounts.
Section 92CE requires secondary adjustment where a primary transfer-pricing adjustment arises from specified mechanisms. The amendment makes the monetary threshold and earlier-year condition alternative tests; mandates interest calculation on excess funds; limits application to agreements signed after a specified date without refunds for prior taxes; allows repatriation from non-resident associated enterprises; and offers an option to pay a one-time additional income-tax (with surcharge) in lieu of repatriation, which is final, non-creditable, non-deductible, and relieves the secondary adjustment requirement from payment date.

Concessional short-term capital gains tax extended to certain equity-oriented fund of funds, enhancing disinvestment incentives.
The proposal amends section 111A to extend the concessional rate of short-term capital gains tax to transfers of units of specified equity-oriented fund of funds set up for CPSE disinvestment, bringing short-term tax treatment into alignment with the existing concessional long-term capital gains regime under section 112A; the amendment applies prospectively to assessment years commencing after the stated effective date.