Amendment # 1: Meaning of Capital Asset [Sec 2(14)]:
Capital Asset means ‘Property of any kind…………..’; An Explanation is inserted below section 2(14) (with retrospective effect from April 1, 1962) to clarify that “property” includes any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever.
Amendment # 2: CIT to include DIT [Sec 2(16)]:
Section 2(16) has been amended (with retrospective effect from April 1, 1988) to include Director of Income-tax in the definition of Commissioner of Income-tax.
Amendment # 3: Purchase consideration is to be paid only to outside shareholders: [Amendment in definition of ‘Demerger’. Similar amendment is also made w.r.t ‘Amalgamation also.’] [Sec 2(19AA)]:
In case of demerger, the resulting company should issue shares (in the resulting company), in consideration of demerger, to the shareholders of the demerged company on a proportionate basis. However amendment has excluded the requirements of issue of shares where resulting company itself is a shareholder of the demerged company. The requirement of issuing shares will still have to be met by the resulting company in case of other shareholders of the demerged company.
Amendment # 4: Definition of income includes excess amount received over FMV in certain cases:[Sec 2(24) read with Sec 56(2)]:
Any consideration received for issue of share, as exceeds the fair market value of the shares referred to in section 56(2)(viib), shall be treated as “income”.
Amendment # 4A: Amendment to definition of “transfer” [Sec. 2(47)] Transfer includes –
- disposing of or parting with an asset or any interest therein, or
- creating any interest in any asset in any manner whatsoever.
Amendment # 5: Income through the transfer of the capital asset situated in India [Sec 9(1)(i)]
Sec 9(1)(i) defines deemed income to accrue or arise in India. Explanations 4 and 5 have been inserted in section 9(1)(i) with retrospective effect from April 1, 1962. The amended provisions provide that –
- The expression ‘through’ shall mean and include and shall be deemed to have always meant and included “by means of”, “in consequence of” or “by reason of”.
- An asset or a capital asset (being any share or interest in a company or entity registered or incorporated outside India) shall be deemed to be and shall always be deemed to have been situated in India if the share or interest derives, directly or indirectly, its value substantially from the assets located in India.
Amendment # 6: Royalty income deemed to accrue or arise in India [Sec. 9(1)(vi)] [Software is treated as ‘Royalty now’:
Explanation 4 – Explanation 4 has been inserted to clarify that the transfer of all or any rights in respect of any right, property or information includes transfer of all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred.
Explanation 5 – Explanation 5 has been inserted to clarify that the royalty includes consideration in respect of any right, property or information, whether or not –
- the possession or control of such right, property or information is with the payer;
- such right, property or information is used directly by the payer;
- the location of such right, property or information is in India.
Explanation 6 – Explanation 6 has been inserted to clarify that the expression “process” includes transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar technology, whether or not such process is secret.
Amendment # 7: [Premium on Life Insurance Policies shall be up to 10% of ‘sum assured’ to claim exemption w.r.t maturity proceeds [Sec. 10(10D)]:
Under section 10(10D), any sum received under a life insurance policy (including the sum allocated by way of bonus on such policy) is exempt from tax. This exemption is available only if the premium payable for any of the year does not exceed 10% per cent of the actual capital sum assured (applicable for policies issued on or after April, 2012).
Amendment # 8: Income of Prasar Bharati is now exempted [Sec. 10(23BBH)]
Amendment # 9: Certain trusts registered U/S 10(23C) will not be treated as charitable for a previous year if they receive sums exceeding Rs 25 lakhs during the said previous year:
Section 10(23C)(iv)/(v) has been amended (with retrospective effect from the assessment year 2009-10) to provide that no exempt will be available for a previous year, to a trust or institution (pursuing advancement of any other object of public utility) whose receipts from commercial activities exceed Rs 25,00,000 from AY 2012-13 onwards. [Sec 10(23C)(iv) = Funds of national importance etc,; Sec 10(23C)(v) = Public Charitable & Religious or Public charitable purposes approved by CCIT / DGIT]. Sec 13 has been suitably amended for this purpose.
Amendment # 10: [Sectoral Restriction is not applicable for Venture Capital Undertakings now] [Earlier they are allowed to invest in only 9 specified sectors] [Sec 10(23FB)]
Sectoral restriction on business of VCU is removed from the Income-tax Act and after the amendment (which is applicable from the assessment year 2013-14) such VCU will be allowed to be governed by conditions imposed by SEBI and RBI.
Amendment # 11: Exemption in respect of Income received by certain foreign companies in Indian currency for import of crude oil [Sec. 10(48)]
Where the approved foreign company receives income in India in Indian currency on account of sale of crude oil, to any person in India, then such income is exempted. Provided further the foreign company should have been approved for this purpose and also it is not engaged in any other activity.
Amendment # 12: Additional depreciation to power sector [See. 32(1)(iia)]
Section 32(1)(iia) has been so amended with effect from the assessment year 2013-14 to enable an assessee engaged in the business of generation or generation and distribution of power for additional depreciation at the rate of 20 per cent of actual cost of new machinery or plant acquired and installed in a previous year. Also, it may be noted that this additional depreciation is not allowed where the entity opts to claim depreciation on SLM basis with regard to the tangible block of assets.
Amendment # 13: Section 35 (2AB):
The sunset clause has been extended from 31st March 2012 to 31st March 2017. [200% weighted deduction is available to approved in house research facilities till 31st March 2017.]
Amendment # 14: [ICDs / Bee Keeping / Warehousing facility for sugar are also now eligible for deduction U/S 35AD; Also, the deduction in relation to some sectors have been extended to 150% of the qualifying expenditure] [Section 35AD]:
The investment-link incentive under section 35AD has been extended to cover the following new businesses
- Setting-up and operating an inland container depot or a container freight station (as notified or approved under the Customs Act.)
- Bee-keeping and production of honey and bees wax.
- Setting-up and operating a warehousing facility for storage of sugar.
Weighted deduction will be available at the rate of 150% of the qualifying expenditure in the case of following businesses if operation is started on or after April 1, 2012
- Setting-up and operating a cold chain facility.
- Setting-up and operating a warehousing facility for storage of agricultural produce.
- Building and operating, anywhere in India, any hospital with at least 100 beds for patients.
- Developing and building a housing project under a scheme for affordable housing framed by the Central Government or a State Government and notified by the Board.
- Production of fertilizers in India.
Also, it is clarified that where the assessee builds a two star or above category of hotels and subsequently, while continuing to own the hotel, transfers the operations of the hotel, the assessee shall continue to be eligible for deduction U/S 35AD.
Amendment # 15: Weighted deduction for expenditure incurred on agricultural extension project [Sec. 35CCC]
Any expenditure on notified agricultural extension project, is eligible for weighted deduction of 150 per cent of such expenditure.
Amendment # 16: Weighted deduction for expenditure for skill development [Sec. 35CCD]
A company incurs any expenditure (not being expenditure in the nature of cost of any land or building) on any notified skill development project, then such company can claim a weighted deduction of 150 per cent of such expenditure.
Amendment # 17: Disallowance of business expenditure on account of non-deduction of tax on payment to resident payee [Sec 40(a)(ia)]:
For the purpose of section 40(a)(ia) even if payer has not deducted TDS, it shall be deemed that the payer has deducted and paid the tax on such amount if resident recipient considers such income and files the return by paying tax on the same and furnishes a certificate in prescribed form from CA. In such case payer can claim deduction in respect of expenditure.
Amendment # 18: Transfer price provision
s to apply to transactions covered by
section 40A (2) if exceed Rs 5 Crores in a year and disallowance is not attracted
U/S 40A(2) so long as the transactions were at Arm’s Length Price:
ª Disallowance under section 40A(2), on account of any expenditure being excessive or unreasonable having regard to the fair market value, shall not be made in respect of a specified domestic transaction (referred to in Section 92BA), if such transaction is at arm’s length price [as defined in section 92F(ii)].
ª Meaning of related persons under section 40A(2) has been modified to include transactions between companies having the same holding (or controlling) company. For instance, Y Ltd. owns 20 per cent equity shares capital in X Ltd. Y Ltd. also owns 20 per cent equity share capital in Z Ltd. Any payment by X Ltd. to Z Ltd. will be subject to the scrutiny of section 40A(2) if Z Ltd. carries on a business or profession. If Z Ltd. does not carry on a business or profession, the amended provisions are not applicable.
Amendment # 19: Threshold limit raised to Rs 1 crore for business assesses and raised to Rs 25 lakhs in the case of professional assesses for tax audit purposes: [Sec 44AB]
Nature of the business
From the assessment year 2013-14
In the case of a business
Rs. 1 crore
In the case of a profession
Rs. 25 lakh
And it is clarified that due date is extended to 30th Nov of the Relevant Assessment Year in all the cases subject to Transfer Pricing Provisions. [i.e Due date is 30th Nov of RAY for corporate and Non-Corporate Assesses.
Amendment # 20: Presumptive basis [Sec. 44AD] is not applicable for ‘Professional Assesses.’
Section 44AD has been amended with retrospective effect from the assessment year 2011-12 to clarify that this presumptive scheme is not applicable to the following persons –
ª A person carrying on profession as referred to in section 44AA(1);
ª A person earning income in the nature of the commission or brokerage; or
ª A person carrying on any agency business.
The following professions are specified by section 44AA(1) – legal, medical, engineering, architectural, accountancy, technical consultancy, or interior decoration or any other notified professions (i.e, authorized representative, film artist, company secretary and information technology).
Amendment # 21: Purchase consideration to be given only to Outside Share holders in the case of amalgamation. [Similar amendment is made w.r.t demerger also] [Sec 47(vii)]:
It shall not be necessary for the amalgamated company to issue shares to the shareholders of the amalgamating company to the extent the amalgamated company itself is a shareholder in the amalgamating company. A similar amendment has been made to the definition of demerger given under section 2(19AA).
Amendment # 22: Cost of acquisition in the case of conversion of firm/sole proprietary concern into company [Sec. 49(1)]
In case of conversion of sole proprietorship/firm into a company which is not regarded as a transfer, the cost of acquisition of asset in the hands of the company would be the same as that in the hands of the sole proprietary concern or the firm, as the case may be.
Amendment # 23: Fair market value to be full value of consideration in certain cases [Sec. 50D]
This section provides that where in the case of a transfer, consideration for the transfer of a capital asset(s) is not determinable, then for purpose of computing capital gains U/S 45, the fair market value of the asset shall be taken to be the full market value of consideration.
Amendment # 24: Capital gains tax from sale of agricultural land by a Hindu undivided family [Sec. 54B]
Benefit of Sec 54B has been extended to HUFs also.
Amendment # 25: Capital gain on transfer of resident house property [Sec. 54GB] and floating a company by an individual / HUF:
Section 54GB gives exemption from long-term capital gains tax to an individual or a HUF on sale of a residential property (house or plot of land) in case of re-investment of sale consideration in the equity of a new start-up SME company in the manufacturing sector which is utilized by the company for the purchase of new plant and machinery. The transfer should take place during April 1, 2012 and March 31, 2017.
Which new asset the taxpayer should acquire? - Before the due date of furnishing of return of income under section 139(1), the assessee will have to utilize the net sale consideration for subscription in equity shares in an “eligible company”. The “eligible company” should utilize this amount for the purchase of a “new asset” within one year from the date of subscription in equity shares. If, however, the company does not utilize this amount for the purchase of a “new asset” before the due date of furnishing of return of income by the assessee (i.e., transferor of residential property), it shall be deposited by the company in capital gain deposit account. In such a case, exemption would be available on the basis of amount deposited in the deposit account.
How much is exempt? -
Amount of exemption is as follows (it cannot, however, exceed the amount of capital gain) –
Investment in “new asset” by the eligible company / Net sale consideration x Capital gain
Net sale consideration is sale consideration minus expenditure on transfer incurred by the transferor.
What is “eligible company”?
It means a company which satisfies the following conditions –
- It is incorporated on or after April 1 (of the previous year in which residential property is transferred) but on or before the due date of submission of return of income under section 139(1) by the assessee (i.e. transferor of residential property).
- It is engaged in the business of manufacture of any article or thing.
- The assessee (i.e, transferor of residential property) has more than 50 per cent share capital (or voting right) after subscription in shares by the assessee.
- The company qualifies to be a SME (i.e. Small or medium enterprise under the Micro, Small and Medium Enterprises Act, 2006) (i.e., where the investment in plant and machinery is more than Rs. 25 lakh but not more than Rs. 10 crore).
What is new asset? - It means new plant and machinery but does not include the following –
- Any plant or machinery which is used in India or outside India by any person before its installation by the eligible company.
- Any plant or machinery which is installed in Office Premises / Residential Accommodation / Guest house.
- Any office appliance.
- Computers software.
- Any vehicle.
- Any plant or machinery which is allowed 100 per cent deduction (by depreciation or otherwise) in any previous year.
Amendment # 26: Reference to Valuation Officer [Sec. 55A] even in cases where in the opinion of the AO, the FMV claimed by the assessee as on 1st April 1981 is higher vis-à-vis the actual FMV:
where the Assessing Officer is of the opinion that the value taken by the assessee as on April 1, 1981 is higher than the fair market value of the asset as on that date, the Assessing Officer would be enabled to make a reference to the Valuation Officer for determining the fair market value of the property.
Amendment # 27: Any sum or property received by an HUF from its members is treated as received from relative and hence exempted: [Sec. 56(2)(vii)]
As per amended sec 56(2)(vii) any sum or property received without consideration or inadequate consideration by an HUF from its members will not be chargeable to tax.
Amendment # 28: Share premium in excess of the fair market value to be treated as income [Sec. 56(2)(viib)]
Where the company (not being a company in which the public are substantially interested) receives from a resident person consideration for issue of shares at premium which exceeds fair market value, such excess shall be chargeable U/s 56(2)(viib) under the head “Income from other sources”.
Amendment # 29: Source of funds is to be explained if amount is received as share capital / share premium etc [Sec 68]
As per amended Sec 68, the nature and source of any sum credited, as share capital, share premium, etc., in the books of a closely held company shall be treated as explained only if the source of funds is also explained by the recipient assessee-company in the hands of the resident shareholder. However, the amended provisions will not apply if the shareholder is a well regulated entity, i.e., a Venture Capital Fund, Venture Capital Company registered with the SEBI as referred to in section 10(23FB).
Amendment # 30: Inter unit transfers shall be at Arm’s Length Price [Sec 80A]
A new section 92 BA has been inserted to extend transfer pricing provisions if the aggregate of transactions between related parties in any previous year exceeds 5 cores from A.Y 2013-14 (including the transactions between related parties U/s 10A, 10AA, 10B, 10BA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE). After the amendment, deduction under the aforesaid sections shall be computed having regard to Arm’s Length Price.
Amendment # 31: [Life Insurance Premium not to exceed 10% of sum assured] [Sec 80C]
As per amended sec 80C, insurance premium on the life of the tax payer, spouse and any child is restricted to 10 per cent of actual sum assured (earlier it was 20%).
Amendment # 32: Deduction in respect of investment made under any equity saving scheme [Sec. 80CCG]
If the Resident Individual whose gross total income does not exceed Rs. 10 lakh, acquired listed shares of a notified scheme with locking a period of 3 years, then 50 per cent of amount invested in equity shares would get the deduction U/s 80 CCG up to a maximum of 25,000. No other deduction shall be eligible for the same under any other section.
Amendment # 33:
Sec 80-D: Health Insurance Premium: [Payment should be made in any mode other than cash. However, health check up can be effected through cash]:
Deduction available to Individual or HUF
ª In the case of individuals:
i. Health Insurance policies;
ii. Contributions made to Central Government Health Schemes;
iii. Preventive Health Check up
ª In the case of HUFs:
Health Insurance Policies
Individual can take policies on family members i.e self/spouse/dependent children / parents; HUF can take policy on any member of the family. Contributions to health insurance plans of GIC / IRDA / Central Govt Health Scheme are eligible for deduction.
General deduction is Rs.15,000 in respect of self / spouse / dependent children [Rs.20,000 if any member is a senior citizen] and additional deduction of Rs.15,000 if the same is in respect of parents [Rs 20,000 if parent is a senior citizen]. While counting these limits, where the sum is paid on account of preventive health check up, the deduction for such amount is for a maximum of Rs 5,000/-. Senior Citizen means an Individual resident in India who is of the age 60 years or more at any time during the relevant previous year.
Qualifying age for senior citizens has been reduced from 65 years to 60 years for the purpose of section 80D (and also for the purpose of section 80DDB and 197A).
Amendment # 34: [Eligible Age of Senior citizens reduced to 60 years from the existing age of 65 Years] [Sec 80DDB]:
From the assessment year 2013-14, the qualifying age for senior citizens has been reduced from 65 years to 60 years for the purpose of section 80DDB (and also for the purpose of section 80D and 197A).
Amendment # 35: 80G & 80GGA: [Sums exceeding Rs 10,000/- cannot be paid in cash]
Amended Sections 80G and 80GGA specify that any payment exceeding Rs. 10,000 shall only be allowed as a deduction if such sum is paid by any mode other than cash.
Amendment #36: [Power Sectors can commence operations by 31st March 2013][Sec 80-IA]
Amendment #37: Deduction is respect of interest on deposits in savings account up to Rs 10,000/- [See. 80 TTA]
An individual or a HUF receives any interest on deposits from a Savings Bank account with bank or co-operative society, post office, then deduction up to Rs. 10,000 in aggregate is allowable U/s 80 TTA. This is in addition to exemption U/s 10(15)(i) [up to Rs. 3,500 (in an individual account) and Rs. 7,000 (in a joint account).]
Amendment # 38: Section 90 and 90A
ª [Notification issued by the Central Government assigning a meaning to term used in DTAA (Sec 90 cases) / Agreement (Sec 90A cases) to have effect from the date when the DTAA came into force]
ª TRC (Tax Residence Certificate) is a necessary but not a sufficient condition for claiming the benefits of DTAA (Sec 90 cases) or the agreement (Sec 90A cases.)
ª If General Anti Avoidance Rules (GAAR) are invoked, then the benefits of (DTAA) Sec 90 and Sec 90A are not available.
Amendment # 39: Section 92 [Specified Domestic Transactions are also covered under the scope of TP provisions now]
Section 92 has been amended so as to provide that any allowance for an expenditure or interest or allocation of any cost or expense or any income in relation to the specified domestic transaction shall be computed having regard to the arm’s length price.
Amendment # 40: [Sec 92B]
Definition of international transaction [Sec 92B] has been amended to cover within its ambit certain transactions like business restructuring etc, even though they do not have any bearing on profits or losses of current year or impact on profit and loss is not determinable under normal computational provisions.
Amendment # 41: Introduction of Sec 92BA [Specified Domestic Transactions]
Newly inserted sec 92BA provides meaning of “specified domestic transaction” with reference to which income is computed U/S 92 having regard to arm’s length price. Accordingly if the aggregate of the below transactions entered into by the assesse in a previous year exceeds Rs. 5 Crore, then TP provisions are applicable even in such cases.
a. Any expenditure in respect of which payment has been made or is to be made to a person referred to in section 40A(2)(b);
b. Any transaction referred to in section 80A;
c. Any transfer of goods or services referred to in section 80-IA (8);
d. Any business transacted between the assessee and other person as referred to in section 80-IA (10);
e. Any transaction, referred to in any other section under Chapter VI-A or section10AA, to which provisions of section 80-IA (8) / (10) are applicable; or
f. Any other transaction as may be prescribed.
Amendment # 42: Determination of arm’s length price (ALP) [Sec. 92C] [Maximum Permissible deviation can be up to 3%]
Section 92C(2) have been amended, so as to provide an upper ceiling of 3 per cent in respect of the Central Government’s power to notify the tolerance range for determination of arms length price.
Amendment # 43: Examination by the Transfer Pricing Officer of International transactions not reported by the Assessee [Sec 92CA]
section 92CA has been amended (with retrospective effect from June 1, 2002) to empower TPO to determine ALP of an international transaction noticed by him in the course of proceedings before him, even if the said transaction was not referred to him by the Assessing Officer, provided that such international transaction was not reported by the taxpayer as per the requirement cast upon him under section 92E. However, this retrospective amendment will not empower the Assessing Officer either to assess or reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year, proceedings for which have been completed before July 1, 2012.
Amendment # 44: Advance pricing agreement (APA) [Sec. 92CC and 92CD]:
APA provisions have been introduced by virtue of which the assessee can determine in advance the Arm’s Length Transfer Price in consultation with the CBDT for the proposed transactions. This agreement, once entered, is having effect up to a period not exceeding 5 Years.
Amendment # 45: General anti-avoidance rules (GAAR) [Sec. 95 to 102] [These provisions are proposed to be applicable from 1st April 2014. Later on, the same has been extended to 1st April 2016.]
Once these provisions are introduced, the revenue has a power to see the substance over the form and can disregard the tax structure entered into by the assessee.
The revenue authorities check whether the arrangement creates ‘Rights and Obligations to parties’ which are not normally not created between parties dealing at Arm’s Length; Whether it results in misuse of tax laws; Whether the transaction lacks commercial substance or deemed to lack commercial substance; etc,. and whether the transactions are carried out in a manner, which is not normally employed for bonafide purposes. If the revenue authorities come to a conclusion that these arrangements are not permissible keeping in view the above yardsticks, then they may disregard the legal form and can look at the substance of the transactions.
Amendment # 46: [The tax rate has been increased from 10% to 15%] [Sec 111A]
The proviso section 111A has now been amended (with retrospective effect from the assessment year 2009-10) to increase the tax rate to 15 per cent.
Amendment # 47: Unlisted Securities eligible for 10% tax rate in certain cases:
[Now concessional tax rate of 10% is applicable in the cases of transfer of unlisted securities transferred by a non-resident / foreign company.] Once this tax rate is applicable, indexation benefit is not applicable.
Amendment # 48: Interest covered by sec 194LC taxable at 5%. [Sec 115A]
Any interest received by a non-resident/foreign company from a specified company (i.e., an Indian company) in respect of money borrowed during July 1, 2012 and June 30, 2015 shall be taxable at the rate of 5 per cent (+SC+EC+SHEC). Applicable if such interest covered by Sec 194LC.
Amendment # 49: Taxation of a non-resident entertainer, sports person [Sec. 115BBA]
Tax rate increased to 20%. Scope now includes non-Indian citizen being non-resident entertainer (such as theatre, radio or television artists and musicians) from performance in India.
Amendment # 50: Tax on dividends from foreign companies [Sec. 115BBD]
Gross dividends received by an Indian company from a specified foreign company taxable at the rate of 15% (+SC+EC+SHEC), extended to AY 2013-14.
Amendment # 51: Tax on Income referred to in section 68 to 69D [Sec. 115BBE]
Undisclosed income referred to in section 68 to 69D shall be taxable at the rate of 30 per cent (+SC+EC+SHEC).
Amendment # 52: Minimum alternate tax [Sec. 115JB] :
ª MAT provisions will not be applicable to life insurance business of a company.
ª Book profit as specified U/s 115JB, in the case of any insurance or banking company or any company engaged in the generation or supply of electricity, shall be calculated on the basis of profit and loss account prepared in accordance with the provisions of their regulatory Acts.
ª Book profit shall be increased by the amount standing in the revaluation reserve in relation to the revalued asset which has been retired or disposed, if the same is not credited to the profit and loss account
Amendment # 53: Alternate Minimum Tax (AMT) on all persons other than companies [Sec. 115JC to 115JF]
Discussed already in the portion ‘Certain Important tax rates’.
Amendment # 54: Special provisions relating to conversion of Indian branch of a foreign bank into a subsidiary Indian company [Sec. 115JG]
Capital Gain on conversion of an Indian branch of a foreign bank into an Indian subsidiary company in accordance with scheme framed by RBI shall not be chargeable tax. If any default is committed later, the benefit of exemption will be taken back by recomputing of income U/S 154(7) within 4 years.
Section 115JG has been inserted with effect from the assessment year 2013-14. Special provisions are provided under this section –
a. Where a foreign company is engaged in the business of banking in India through its branch situated in India; and
b. Such branch is converted into a subsidiary Indian company.
Then capital gains on conversion is exempted if the scheme is in accordance with guidelines framed by RBI in this regard.
Amendment # 55: Removal of the cascading effect of dividend distribution tax (DDT) [Sec. 115-O] [Relief from DDT extended to multi level structures also.]
Any company receives, during the year, any dividend from any subsidiary and such subsidiary has paid DDT as payable on such dividend, then dividend distributed by the holding company in the same year, to that extent, shall not be subject to DDT under section 115-O. Applicable even if the holding company is subsidiary of another company. However, the same amount of dividend shall not taken into account for reduction more than once.
Amendment # 56: Amendment to section 115U [Income from VCF / VCC to be taxable on accrual basis]
Income accruing to Venture Capital Fund (VCF) or Venture Capital Company (VCC) shall be taxable in the hands of investor on accrual basis with no deferral.
Amendment # 57: Daily tonnage income of shipping company [Sec. 115VG]
The rates of daily tonnage income specified under section 115VG have been revised with effect from the assessment year 2013-14 as follows –
Qualifying ship having net tonnage
Amount of daily tonnage income (from assessment year 2013-14)
Up to 1,000
Rs. 70 for each 100 tons
Exceeding 1,000 but not more than 10,000
Rs. 700 plus Rs. 53 for each 100 tons exceeding 1,000 tons
Exceeding 10,000 but not more than 25,000
Rs. 5,470 plus Rs. 42 for each 100 tons exceeding 10,000 tons
Rs. 11,770 plus Rs. 29 for each 100 tons exceeding 25,000 tons
Amendment # 58: [Section 139]:
Mandatory filing of return of income by resident in India having any asset located outside India or signing authority in any account located outside India.
Due date for submission of return of income in case of a person (corporate or otherwise) having international transactions is Nov 30 of the Relevant Assessment Year.
Amendment # 59: [Section 140A]:
While computing self-assessment tax AMT credit U/s 115JD will also be taken into account.
Amendment # 60: [Section 143]:
Where a scrutiny notice has been issued to the assessee U/s 143(2), processing of a return filed U/s 143(1) shall not be necessary.
Amendment # 61: [Section 144C]:
ª [Powers of DRP now extended to new issues arising during the course of proceedings before it but which have not been raised in the draft assessment order.]
ª DRP provisions not applicable in case GAAR is invoked;
Amendment # 61: [Notice can be issued up to 16 years in certain cases] [Section 147]
4 years limit for issue of notice U/S 148 shall not be applicable in respect of any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year. In such cases, notice can be issued up to 16 years from the end of the Relevant Assessment Year.
Scope of ‘Income Deemed to have Escaped Assessment’ has been extended to cover the following also.
ª Cases where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E;
ª Cases where a person in found to have any asset (including financial interest in any entity) located outside India.
Amendment # 62: Other related amendments to Sec 149
Where the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment, notice u/s 148 can be issued up to 16 years from the end of the Relevant Assessment Year.
In case of a person treated as the agent of a non-resident, notice U/S 148 can be issued up to 6 years (earlier it was 2 years) from the end of the RAY.
Amendment # 63: [Sec 153]
The existing period and the new extended period for exemption of pending proceedings and subsequent proceedings under these provisions are given below-
Proceedings under section
Amended time limit
Increased from 21 months to 24 months from the end of the AY.
143 and 92 CA
Increased from 33 months to 36 months from the end of the AY.
Increased from 9 months to 12 months from the end of the year in which notice is served.
148 and 92CA
Increased from 21 months to 24 months from the end of the year in which notice is served.
250 or 254 or 263
Increased from 9 months to 12 months from the end of the financial year in which order is received.
250 or 254 or 263 and 92CA
Increased from 21 months to 24 months from the end of the financial year in which order is received.
Amendment # 64: Notification of a class of search cases where compulsory reopening of past six years is not required [Sec. 153A and 153C]
153A and 153C have been amended to empower the Central Government to notify cases (or class of cases) in which case AO shall not issue notice for initiation of proceedings for the preceding 6 assessment years. This would result in initiating assessment proceedings only for the assessment year relevant to the previous year in which search or requisition has been made.
Amendment # 65: Extension of Time limit by 3 months [Sec 153B]
Time limit for completion of assessment U/S 153A has been increased from 21 months to 24 months from the end of the financial year in which last of the authorizations for search U/S 132 was executed or requisition U/S 132A was made. Where the matter has been referred to TPO, the time limit is increased from 33 months to 36 months from the end of the financial year in which last of search authorizations U/S 132 was executed or requisition U/S 132A was made.
Amendment # 66: Rectification of intimation received after processing of TDS statement [Sec. 154]
Sec 200A provides for processing of TDS statements. After processing of TDS statements, an intimation is generated specifying the amount payable or refundable. Such intimation generated after processing of TDS statement shall be –
- Subject to rectification under section 154;
- Appealable under section 246A; and
- Deemed as notice of demand under section 156.
Amendment # 67: TDS from interest on debentures [Sec. 193] [No TDS on interest paid to Individual / HUF if the sums does not exceed Rs 5,000/- and paid through A/C Payee Cheque]
No TDS on any interest payable to an individual or a HUF, who is resident in India, on any debentures issued by a company in which the public are substantially interested, if –
a) The amount of interest or, as the case may be, the aggregate amount of such interest paid or likely to be paid on such debenture during the financial year by the company to such individual or HUF does not exceed Rs 5,000; and
b) Such interest is paid by the company by an account payee cheque.
Amendment # 68: TDS on payments to non-resident sport persons, sport associations or entertainer [Sec. 194E] [Rate hiked to 20% and Scope extended to Entertainers]
Rate has been increased to 20%. The scope is enhanced to cover payment/credit to a Non-Resident Entertainer (such as theater, radio or television artists and musicians) being non-Indian citizen from performance in India.
Amendment # 69: TDS on remuneration to a director [Sec. 194J]
Any remuneration or fees or commission by whatever name called, other than those on which tax is deductible U/S192, to a director of a company is liable for TDS @ 10%. Threshold limit of Rs 30,000/- is not available to these category of payments.
Amendment # 70: Amendment to section 194LA
Threshold limit in the case of compensation on acquisition of certain immovable property has been increased from 1,00,000 to Rs 2,00,000.
Amendment # 71: Tax deduction by an Indian specified company from interest to a non-resident/foreign company [Sec. 194LC]
Specified Company (i.e, an Indian company) is responsible for tax deduction U/S 194LC in respect of interest paid or payable to a non-resident / foreign company. This section is applicable if interest is paid or payable at approved rate. Interest should pertain to money borrowed (during July 1, 2012 June 30, 2015) in foreign currency from a source outside India –
a) Under a loan agreement; or
b) By way of issue of long-term infrastructure bonds,
as approved by the Central Government.
Tax is deductible at the rate of 5 per cent of interest.
Amendment # 72: Amendment to section 195 [Where payer is non-resident, he is also liable to comply with TDS provisions]
Tax will be deductible even if non-resident deductor does not have any place of business, residence, business connection (or any other presence) in India.
Sec 195(7) has been introduced which provides that the Board may, by notification in the Official Gazette, specify a class of persons or cases, where the person responsible for paying to a non-resident/foreign company, any sum (whether or not chargeable under the provisions of the Act), shall make an application to the Assessing Officer to determine, by general or special order, the appropriate proportion of sum chargeable to tax in India. Upon such determination, tax shall be deducted under section 195 on that proportion of the sum which is so chargeable.
Amendment # 73: Amendment to section197A
Section 197A has been amended with effect from July 1, 2012 as follows –
ª Age of senior citizen - The qualifying age for senior citizens has been reduced form 65 years to 60 years for the purpose of section 197A (and also for the purpose of section 80D and 80DDB). [i.e Therefore, a resident citizen of 60 years or more (i.e Resident Senior Citizens) can submit form 15H for receiving certain sums without TDS.]
ª No TDS from specified payment to notified institutions / associations - Sub-section (1F) has been inserted to provide that tax will not be deducted at source from a specified payment to a notified institution, association or body or class of institutions, associations or bodies.
Amendment # 74: Amendment to section 201 [Resident Payer is not treated as ‘Assessee in Default’ in certain cases]
This section is so amended to provide that the payer who fails to deduct the whole or any part of the tax on the payment made to a resident payee shall not be deemed to be an assessee - in-default in respect of such tax, if the following conditions are satisfied –
ª The resident recipient has furnished his return of income under section 139;
ª The resident recipient has taken into account the above income in such return of income;
ª The resident recipient has paid the tax due on the income declared in such return of income, and
ª The payer furnishes a certificate to this effect from a chartered accountant in a prescribed form. [Form No 26A vide Rule No 31ACB is notified for this purpose.] [IT (Eleventh Amendment Rules, 2012]
Amendment # 75: Interest for non-deduction U/s 201(1A):
The new provision lays down that where the payer fails to deduct the whole or any part of the tax on the payment made to a resident and the prescribed conditions are satisfied, the interest U/s 201(1A) (i) shall be payable from the date on which such tax was deductible to the date of furnishing the return of income by such resident payee.
Amendment # 76: “Person responsible for paying” in case of payment by Central Government or Government of a State [Sec. 204] [Amendment in relation to TDS provisions]
In the case of payment made by Central Government or by a State Government, Drawing and Disbursing Officer or any other person (by whatever name called) responsible for making payment shall be the “person responsible for paying.”
Amendment # 77: Amendments relating to TCS [206C]
TCS on Minerals
TCS at 1% to be collected by seller from buyer on Minerals, being coal or lignite or iron ore [W.E.F 1st July 2012]
TCS on sale of jewellery / bullion
With effect from July 1, 2012, sale of bullion/jewellery will be subject to TCS provisions, if the following conditions are satisfied –
- Sale consideration of bullion (excluding any coin/article weighing 10 grams or less) exceeds Rs. 2,00,000 or sale consideration of jewellery exceeds Rs. 5,00,000.
- Out of sale consideration any amount is received in cash.
If the above conditions are satisfied, the seller will collect tax at the rate of 1 % of sale consideration. Tax will be collected at the time of receipt of any amount in cash. This rule will be applicable irrespective of the fact whether the buyer is a manufacturer, trader or the purchase is for personal use.
Interest under section 206C(7) for non-collection of tax -
In case of default in collecting tax U/S 206C interest shall be payable from the date on which such tax was collectible to the date of furnishing of return of income of buyer/lessee/licensee.
Goods utilized for power generation – Not subject to tax collection [Sec. 206C(1A)] -
For goods utilized for power generation TCS is not applicable if declaration (in Form 27C) is given to seller.
Amendment # 78: Exemption for senior citizens from payment of advance tax [Sec. 207]
A resident individual being senior citizen and who does not derived any income chargeable under the head Business or Profession need not pay any advance tax.
Amendment # 79: Amendment to section 209
Hitherto, TDS /TCS receivable is also eligible for deduction while estimating the advance tax liability. This section is so amended as to provide that TDS / TCS actually deducted or collected only shall be eligible for reduction while estimating the advance tax liability.
Amendment # 80: Amendment to section 220
Section 220 has been amended (with effect from July 1, 2012) to provide that when interest is charged under section 201(1A) on the amount specified in the intimation issued under section 200A(1), then no interest will be charged for the same amount for the same period under section 220(2).
Amendment # 81: Amendment to section 234A, 234B and 234C
AMT credit u/s 115JD would be considered at the time of calculating interest u/s 234A, B, C.
Amendment # 82: Charging of interest on recovery of refund granted earlier
Section 234D was inserted by the Finance Act, 2003 with effect from June 1, 2003. Under this section interest is recovered on refund granted earlier.
Where any refund has been granted to the assessee under section 143(1) and, subsequently, or regular assessment, no refund (or lesser amount of refund) is found due to the assessee, then the assessee shall be liable to pay simple interest at the rate of one-half per cent on the excess amount so refunded for the period starting from the date of refund to the date of such regular assessment.
It is clarified that this provision is applicable to any proceeding which is completed on or after June 1, 2003, irrespective of the assessment year to which it pertains.
Amendment # 83:
Fee for delay in furnishing of TDS/TCS quarterly statement [Sec 200(3); Sec 206C(3)]; ‘Fees” is attracted @ Rs 200/- per day of default. [Sec 234E]
If a person fails to deliver *(or cause to be delivered) a quarterly TDS/TCS return within the time prescribed in section 200(3) or the proviso to section 206C(3), he shall be liable to pay, by way of fee, a sum of Rs. 200 for everyday during which the failure continues. This fees will be in addition to other consequences under the Act. The fees shall not exceed TDS/TCS amount. It will not be possible to submit belated quarterly TDS/TCS returns without payment of fees under section 234E.
Amendment # 84:
Related person for the purpose of making an application before Settlement Commissioner [Sec. 245C]
Under the amended provisions a person shall be deemed to have a substantial interest in a business or profession if such person is a beneficial owner of not less than 20 per cent of shares or of 20% in profits on the date of search. [Earlier the words used were ‘At any time during the previous year’. Now, the same had been substituted with ‘on the date of search’.]
Amendment # 85: AAR:
The minimum fees an application is raised from Rs 2,500/- to Rs 10,000/-. In deserving cases, the revenue can collect even beyond Rs 10,000/- fees before filing an application.
Advance Ruling can be sought by any ‘Resident / Non-Resident’ to determine whether an arrangement which is proposed to be undertaken by him / it, is an impermissible agreement. [i.e Whether the arrangement will invite GAAR provisions.]
Amendment # 86: Amendment to section 246A [Appeals to CIT(A)]
[Processing of E-TDS returns: This can be appealed with the CIT(A);
DRP’s orders & GAAR orders-No appeal with CIT(A) but the appeal lies with the ITAT;
On the other hand, APA can be challenged with the CIT(A);
Penalty during the course of search order passed U/S 271AAB (New penalty which ranges from 10% to 90% of undisclosed income) can be challenged with the CIT(A)]
Amendment # 87: Amendment to section 253 and 254
Assessees aggrieved by the orders of AO U/S 153A or U/S 153C in pursuance of directions of the DRP can appeal to the ITAT. Similarly, an order passed U/S 154 in respect of such order can also be appealed to the ITAT. [Consequently Sec 246A has been amended that these search orders passed in pursuance of directions of DRP cannot be appealed with the CIT]
Sec 253(1)(e): [GAAR orders can be appealed to the ITAT. These orders cannot be appealed with CIT(A).]
As per the existing provisions, the department cannot file an appeal against orders passed by DRP. Now the department can also file an appeal to ITAT against the orders of DRP.
The Assessing Officer can also file an appeal before the ITAT against an order passed in pursuance of directions of the DRP. This appeal can be filed within 60 days of the date on which the order sought to be appealed against is passed by the Assessing Officer in pursuance of the directions of DRP. Cross objections can be filed within 30 days.
Amendment # 88: Amendment to section 271(1)(c):
In addition to international transaction, Specified domestic transaction is also included for concealment penalty.
Amendment # 89:
Penalty for failure to keep and maintain information and document pertaining to international/certain domestic transactions [Sec.271AA]
Section 271AA has been substituted by a new section with effect from July 1, 2012. It provides levy of a penalty at the rate of 2 per cent of the value of the international transaction, if the taxpayer –
- fails to maintain prescribed documents or information;
- fails to report any international transaction which is required to be reported; or
- maintains or furnishes any incorrect information or documents.
This penalty would be in addition to penalties under section 271BA and 271G.
Provisions of section 271AA, 271BA and 271G will also be applicable to “specified domestic transactions” with effect from April 1, 2013.
Amendment # 90: Penalty where search has been initiated on or after July 1, 2012 [Sec. 271AAB]
Up to 1st July 2012, penalty U/S 271AAA will be levied @ 10% of undisclosed income during the course of search w.r.t ‘Specified Previous Year.’ After that date, penalty shall be levied U/S 271AAB which reads as under.
There is some “undisclosed income” and it pertains to a “specified previous year”. In such a case, the assessee shall pay a penalty under section 271AAB in addition to tax as follows –
Diff penalties ranging from 10% of undisclosed income to 90% of undisclosed income can be levied.
Penalty @ 10% undisclosed income: If the assessee admits undisclosed income, substantiates the same and pays the tax along with interest.
Penalty @ 20% undisclosed income: If the assessee does not admit undisclosed income but pays tax and int;
Penalty @ 30% to 90% undisclosed income: In any other case. [i.e He does not admit as well as he has not paid tax+ int]
Amendment # 91: [Section 271G]
Penalty of 2% of value of international transaction has been extended to Specified Domestic Transactions also in cases where there is a failure to furnish information or documents required U/S 92D.
Amendment # 92: Penalty for failure to furnish quarterly TDS/TCS returns [Sec. 271H]
Following cases are covered under this section.
Case 1: If a person fails to submit quarterly TDS/TCS return on or before the due date.
Case 2: If a person furnishes incorrect information in these quarterly returns.
If there is reasonable for the above said failure then these penalties will not be levied. If these are levied, one can approach the CIT U/S 273A and get these waived after complying with necessary conditions.
Special relaxation for Case # 1: No penalty shall be levied for delay in furnishing of TDS/TCS quarterly return if such return is submitted within one year of the due date after payment of tax deducted/collected along with applicable interest and fee.
Penalty leviable under this section:
A person has to pay a penalty of not less than Rs. 10,000. It may be extended to Rs. 1,00,000. Penalty U/s 271H will be in addition to fees payable U/s 234E.
Amendment # 93:
[Sec 280A, 280B, 280C and 280D]: Expediting prosecution proceedings under the Act [Special Courts can try IT cases and Cr.Pc cases simultaneously]
To strengthen the prosecution mechanism, new sections 280A, 280B, 280C and 280D have been inserted with effect from July 1, 2012.
ª Under these sections the Central Government may constitute Special Courts for trial of offences punishable under the Act.
ª While trying an offence under the Act, a Special Court shall also try an offence with which the accused may, under the Code of Criminal Procedure, 1973, be charged at the same trial.
ª Notwithstanding anything contained in the Code of Criminal Procedure, the Special Court shall try an offence under the Act punishable with imprisonment not exceeding 2 years or with fine or with both as a summons case.
Amendment # 94:
Amendment to the existing sections w.r.t offences and prosecutions:
The provisions of section 276C, 276CC, 277, 277A and section 278 provide that in a case where the amount of tax, penalty or interest which would have been evaded by a person exceeds Rs. 1 lakh, he shall be punishable with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine. In case the amount which would have been evaded by a person does not exceed Rs. 1 lakh, he shall be punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 3 years and with fine.
The threshold of Rs. 1 lakh (which was introduced in 1976) has been increased to Rs. 25 lakhs. Summons trials apply to offences where the minimum term of imprisonment does not exceed 2 years. It is, therefore, provided that where the amount which would have been evaded does not exceed Rs. 25 lakh, the person shall be punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 2 years and with fine. These amendments will take effect from the July 1, 2012.
Amendment # 95:
Authorization or requisition and subsequent assessment in search cases [Sec. 292CC] [Mere mention of more than one person need not be referring to AOP, and assessment can be done on each such person individually.]
A new section 292CC has been inserted with retrospective effect from April 1, 1976. It provides that –
a. It shall not be necessary to issue an authorization under section 132 or make a requisition under section 132A separately in the name of each person.
b. Where an authorization under section 132 has been issued or a requisition under section 132A has been made mentioning therein the name of more than one person, the mention of such names of more than one person on such authorization or requisition shall not be deemed to construe that it was issued in the name of an association of persons or body of individuals consisting of such person.
c. Notwithstanding that an authorization under section 132 has been issued or a requisition under section 132A has been made mentioning therein the name of more than one person, the assessment or reassessment shall be made separately in the name of the each of the persons mentioned in such authorization or requisition.
Amendment # 96: Validation of demand, etc., under the Income-tax Act in certain cases
Section 119 of the Finance Bill, 2012 seeks to provide for validation of demand, etc., under Income-tax Act in certain cases in respect of income accruing or arising through or from the transfer of a capital asset situated in India in consequence of transfer of a share (or shares) in a company incorporated outside India or in consequence of any agreement (or otherwise) outside India.
Amendment # 97: Amendments to Wealth-tax Act
Exemption of residential house allotted to employees by a company:
It does not include a residential house allotted by a company to an employee or an officer or a whole Time Director, if the gross annual salary of such an employee / officer, etc, is less than Rs 10 lakhs (earlier 5 lakhs).
Reassessment in relation to any asset located outside India:
The time-limit been increased to 16 years.
Cases where net wealth chargeable to tax has escaped assessment:
Explanation to section 17(1A) gives a deeming list where net wealth chargeable to tax has escaped assessment. Where a person is found to have any asset (including financial interest in any entity) located outside India, it shall be deemed to be a case where net wealth chargeable to tax has escaped assessment. This amended version will be applicable with effect from July 1, 2012.
Extension of time for completion of assessment and reassessments [Sec. 17A]
Time limit for completion of assessments and reassessments shall, respectively, be increased by 3 months.
End of Amendments Vide Finance Act, 2012