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 provisions 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.
- 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
|
|
Exceeding
25,000
|
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
|
|
143
|
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.
|
|
148
|
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
Sec
253(1)(d):
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).]
Sec
253(2A):
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
|
