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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.
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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.
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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.
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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.
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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.
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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.
Act Rules Bills
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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.
Act Rules Bills
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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.
Act Rules Bills
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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.
Act Rules Bills
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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.
Act Rules Bills
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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.
Act Rules Bills
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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.
Act Rules Bills
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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.
Act Rules Bills
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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.
Act Rules Bills
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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.
Act Rules Bills
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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.
Act Rules Bills
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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.
Act Rules Bills
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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.
Act Rules Bills
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Corpus requirement for eligible investment funds exempted where fund was wound up in previous year, amendment applies retrospectively.
The Finance Bill, 2017 inserts a proviso to clause (j) of section 9A(3) providing that the clause imposing a minimum monthly average corpus shall not apply to a fund which has been wound up in the previous year; the amendment is retrospective to 1 April 2016 and applies to assessment year 2016-17 and later years.
Act Rules Bills
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Asset-situs rule clarified: Explanation 5A exempts shares held through registered foreign portfolio investors from deemed India-situs.
Explanation 5A clarifies that the Explanation deeming foreign shares or interests as situated in India does not apply where a non-resident holds those assets by investment, directly or indirectly, through a Foreign Institutional Investor registered as a foreign portfolio investor under the applicable regulations; the amendment is described as clarificatory and given retrospective effect in the Budget proposal.

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Review of Customs duty Exemptions - Review of conditional exemption rates of BCD

24 July, 2024

Contents
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Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

(i) The BCD exemption for the goods covered under following serial numbers of the notification are being extended upto 31st March, 2026 unless specified otherwise.

S. No.

S N of 50/17-Cus

Brief Description

1.

17

Specified Planting materials, namely, oilseeds, seeds of vegetables, tubers, etc.

2.

80A

Algal oil for manufacturing of aquatic feed

3.

90

Lactose for use in manufacture of homeopathic medicines

4.

104

Specified goods used in processing of sea-food

5.

133

Gold ores and concentrates

6.

139

Bunker Fuels namely: (i). IFO 180 CST; (ii). IFO 380 CST; (iii). VLSFO (CTH 27)

7.

150

Naphtha for manufacture of Fertilisers (scope of exemption is being reduced only to Naphtha)

8.

155

Liquefied petroleum gases (LPG) received from unit in SEZ and returned by the DTA unit to the SEZ unit

9.

164

Electrical energy supplied from SEZ unit to DTA

10.

165

Electrical energy supplied from SEZ to DTA

11.

172

Specified goods used in manufacture of silicon wafers or solar wafers, for manufacture of solar cell or module

12.

183

Medical use fission Molybdenum-99 (Mo-99) for use in manufacture of radio pharmaceuticals

13.

184

Pharmaceutical Reference Standard

14.

188

Goods for manufacture of ELISA Kits

15.

191

Maltol for manufacture of deferiprone

16.

204

Anthraquinone or 2-Ethyl Anthraquinone for use in manufacture of Hydrogen peroxide

17.

237

Specified material for manufacture of EVA (Ethylene Vinyl Acetate) sheets or backsheet, which are used in the manufacture of solar photovoltaic cells or modules (Scope of materials which can be imported is being increased)

18.

253

Specified Goods for manufacture of Brushless Direct Current (BLDC) motors

19.

257

Tags, labels, stickers, belts, buttons, hangers or printed bags, imported by bonafide exporters

20.

257A

Specified goods used in manufacture of handicraft items for export when imported by bonafide exporter

21.

257B

Specified goods used in manufacture of textile or leather garments for export when imported by bonafide exporter

22.

257C

Specified goods used in manufacture of leather or synthetic footwear or other leather products for export when imported by bonafide exporter

23.

258

Security fibre, threads, Paper based Taggant, M-feature for use in manufacture of security paper by Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt Ltd, Mysore.

24.

259

Raw materials for manufacture of security fibre and security thread for supply to Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt. Ltd, Mysore for use in manufacture of security paper

25.

260

Goods for the manufacture of specified orthopedic implants (902110)

26.

261

Raw material for manufacture of Copper-T Contraceptive

(i) Alatheon

(ii) Copper Wire

27.

265

Capacitor grades polypropylene granules for manufacture of Capacitor grade plastic

28.

269

Super absorbent polymer for manufacture of adult diapers and specified goods

29.

271

Polytetrametylene ether glycol, (PT MEG) for use in manufacture of spandex yarn

30.

276

Ethylene- propylene- non-conjugated diene rubber (EPDM) for manufacture of insulated wire and cables

31.

279

New or retreated Pneumatic tyres of rubber for use in servicing, repair of maintenance of aircrafts used for operating scheduled air transport service or scheduled air cargo service etc

32.

280

New or retreated Pneumatic tyres of rubber for use in servicing, repair or maintenance of aircraft imported or procured by Aero Club of India/ for flying training purpose/ operating non-scheduled (passenger or charter) services/ AAI for flight calibration purpose

33.

290

Wood pulp for manufacture of newsprint, paper or paperboard

34.

292

Goods imported for manufacture of paper, paper boards, newsprint

35.

293A

Newsprint and uncoated paper imported for printing of newsprint

36.

296A

Lightweight coated paper imported by actual users for printing of magazines

37.

326

Hydrophilic /Hydrophobic Non- Woven, imported for use in the manufacture of Adult Diapers

38.

329

Pile fabrics for the manufacture of toys

39.

333

Moulds, tools and dies, for the manufacture of parts of electronic components or electronic equipment

40.

334

(i) Graphite Felt or Graphite pack for growing silicon ingots (ii) Thin Steel wire used in wire saw for slicing of silicon wafers

41.

345A

Simply Sawn Diamonds

42.

364A

Spent catalyst or ash containing precious metals

43.

368

Ferrous Scrap

44.

374

Magnesium Oxide (MgO) coated cold rolled steel coils for use in manufacture of cold rolled grain oriented (CRGO) steel

45.

375

Specified items for manufacture of cold rolled grain-oriented steel (CRGO) steel

46.

378

Metal parts for manufacture of electrical insulators falling under heading 8546

47.

379

Pipes and tubes for use in manufacture of boilers

48.

380

Forged steel rings for manufacture of special bearings for use in wind operated electricity generators

49.

381

Flat copper wire for use in the manufacture of photo voltaic ribbon for manufacture of solar photovoltaic cell or modules

50.

392

Dies for drawing metal, where imported after repairs from abroad

51.

403

Parts and raw materials for offshore oil exploration

52.

404

Specified items including capital goods and raw materials for off shore oil exploration

53.

415

Parts for manufacture of catalytic convertors

54.

415A

Platinum or Palladium for manufacture of Noble Metal Compounds & Noble Metal Solutions

55.

416

Ceria zirconia compounds for use in the manufacture of washcoat for catalytic converters

56.

417

Cerium compounds for use in the manufacture of washcoat for catalytic converters

57.

418

Zeolite for use in the manufacture of washcoat for catalytic converters

58.

422

Machinery, electrical equipment for use in semiconductor wafer and LCD

59.

423

Machinery, electrical equipment for use in marking and packaging of semiconductor chips

60.

426

Specified goods for the manufacture of semiconductor devices, memory card, IC, solar cell

61.

435

Capital goods for printing industry

62.

442

Bushings made of Platinum and Rhodium alloy when imported in exchange of worn out or damaged bushings exported out of India

63.

446

Parts and components for manufacture of tunnel boring machines

64.

451

Evacuated tubes with three layers of solar selective coating for use in manufacture of solar water heater

65.

462

Ball screws for use in the manufacture of CNC Lathes

66.

463

Linear Motion Guides for use in the manufacture of CNC Lathes

67.

464

CNC Systems for use in the manufacture of CNC Lathes

68.

464A

Goods for manufacture of plastic processing machineries

69.

467

Parts and components of cash dispenser or automatic bank note dispenser

70.

468

Parts for manufacture of Micro ATM, Fingerprint reader/scanner, Iris scanner, Miniaturised POS (Scope of exemption is being limited to import of raw materials only)

71.

471

All parts for use in the manufacture of LED lights

72.

472

All inputs for use in the manufacture of LED driver or MCPCB for LED lights

73.

476

Television equipment, cameras etc for taking films, imported by a foreign film unit or television team

74.

477

Filming equipment of foreign origin if imported into India after having been exported therefrom.

75.

480

Goods imported for being tested in specified test centers

76.

489B

Goods for manufacturing of Microphones

77.

504

Parts and Components of Digital Still Image Video Cameras

78.

509

Parts, components and accessories for manufacture of Digital Video Recorder

79.

510

 Parts, components and accessories for use in manufacture of reception apparatus for television

80.

511

Parts, components and accessories for manufacture of CCTV Camera

81.

512

Specified Parts, components and for use in manufacture of Lithium-ion battery and battery pack

82.

512A

Inputs, parts or sub-parts for use in the manufacturing of Printed Circuit Board Assembly

83.

515A

Open Cell for manufacture of TV Panel

84.

516

The following goods for use in the manufacture of Liquid Crystal Display (LCD) /LED TV Panel

85.

517

Magnetrons for manufacture of domestic microwave ovens

86.

519

Raw materials or parts for use in manufacture of e-Readers

87.

523A

Parts, sub-parts, inputs or raw material for use in manufacture of Lithium-ion cells

88.

527

Lithium-ion cell use in manufacture of battery or battery pack

89.

527A

Lithium-Ion Cell for use in manufacture of battery or battery pack of cellular mobile

90.

527B

Lithium-Ion Cell manufacture of battery or battery pack of EV

91.

534

Parts of gliders or simulators of aircrafts (excluding rubber tyres and tubes of gliders)

92.

535

Raw materials for manufacture of aircraft and parts of aircraft

93.

535A

Parts of aircraft for manufacture of aircraft or for manufacture of parts of aircraft by PSU under Min of Defence

94.

536

Parts, testing equipment, tools and tool-kits for maintenance, repair, and overhauling of aircraft, components or parts of aircrafts

95.

537

All goods of Heading 8802 (except 88026000-spacecraft)

96.

538

Components or parts, including engines, of aircraft of heading 8802

97.

539

(a) Satellites and payloads; (b) Ground equipment brought for testing of (a)

98.

539A

Scientific and technical instruments etc for launch vehicles and satellites

99.

540

Specified goods imported by scheduled air transporter

100.

542

Specified goods imported by Aero Club, Flying Training Institutes

101.

543

Specified goods imported by non-scheduled air transporter

102.

544

Parts (other than rubber tubes), of aircraft of heading 8802

103.

546

Parts (other than rubber tubes), of aircraft of heading 8802

104.

548

Barges or pontoons imported along with ships

105.

551

Cruise ships, Excursion ships

106.

553

Fishing vessels, Tugs and Pusher crafts, light vessels excluding vessels and floating structure imported for break up

107.

555

Vessels like warships, lifeboats excluding vessels and floating structure imported for break up

108.

567

Stainless steel tube and wire, for manufacture of Coronary stents /artificial valve

109.

569

Parts required for manufacture of Ostomy products

110.

570

Medical and surgical instruments, apparatus and appliances including spare parts and accessories thereof

111.

575

Specified Hospital Equipment for use in specified hospitals

112.

578A

Raw materials, for the manufacture of Cochlear Implants

113.

580

X-Ray Baggage Inspection Systems and parts thereof

114.

581

Portable X-ray machine / system

115.

583

Parts and cases of braille watches, for the manufacture of Braille watches

116.

591

Parts of electronic toys

117.

593

Parts of video games for the manufacture of video games

Note: Description of entries is indicative. Notification may be referred to for complete description.

(ii) The BCD exemption for the goods covered under following serial numbers of the notification no 50/2017-Customs is being extended upto 31st March 2029.

S. No.

S. No. of 50/2017Cus

Brief Description

1.

212A

Medicines/drugs/vaccines supplied free by United  Nations International Children's Emergency Fund (UNICEF), Red Cross etc

2.

213

Drugs and materials

3.

428

Specified goods imported by accredited press cameraman

4.

429

Specified goods, imported by accredited journalist

5.

549

Capital goods, raw materials and spares for repairs of ocean-going vessels

6.

550

Spare parts and consumables for repairs of ocean going vessels registered in India.

7.

577

Lifesaving medical equipment for personal use

8.

607

Life Saving drugs like Keytruda etc

9.

607A

Lifesaving drugs/medicines for personal use

10.

611

Archaeological artefacts for exhibition in a museum

11.

612

Specified raw material for sports goods

Note: Description of entries is indicative. Notification may be referred to for complete description.


Full Text:

Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

Topics

Acts Income Tax