TCS
Residential Status
Cost of Inflation Index
Sl. No.
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Section
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Activity
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Time Limit
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Remarks
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1
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Sec 142(1)(i)
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Notice requiring assessee to furnish return.
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If assessee has not furnished ROI within time
prescribed under Sec 139(1), then AO MAY issue notice requiring assessee to
furnish return within time prescribed in notice. This notice can also be
issued after the end of relevant Assessmeny Year.
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If Assessee fails to repond to notice issued u/s
142(1)(i), than AO can make Best Judgemnt Assessment u/s 144.
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2
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Sec 142(2A)
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Special Audit
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At any Stage of proceedings pending before AO,
notice for SPECIAL AUDIT can be issued, but not after completion of
proceedings. Aggregate time period of furnishing report post extension, if
any granted by AO shall not exceed 180 days from the original date of
direction received by the assessee. AO to consider nature and complexity of
the accounts, volume of accounts, doubts about correctness of accounts,
multiplicity of transactions in the accounts or specialised nature of business
activity of the assessee and interest of the Revenue.
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No Appeal can be filed against direction for
audit , only WRIT PETITION and thereafter SPECIAL LEAVE PETITION.
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3
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Sec 143(1)
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Intimation of Return
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No intimation shall be sent to assessee under
Sub-Section 143(1) after the expiry of 1 year from the end of financial year
in which return is made.
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Acknowledgement (ITR V) shall be deemed as
Intimation in case where no sum is payable, refundable and where no
adjustment has been made u/s 143(1).
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4
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Sec 143(2)
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Notice for making Scrutiny Assessment under Sec
143(3)
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No notice under Section 143(2) shall be served on
the assessee after the expiry of 6 months from the end of financial year in
which return is furnished.
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Notice under this section can only be made, when assessee
has filed ROI.
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5
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Sec 153
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Time limit for making Assessment Order under Sec
143(3)
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No order of assessment/ reassessment under
section 143(3) shall be made after the expiry of 2 years from the end of
relevant Assessment Year.
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Where a reference has been made to Transfer
Pricing Officer to determine Arm’s Length Price, then 3 years from the end of
relevant Assessment Year.
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6
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Sec 153
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Time limit for making Assessment Order under Sec
144
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No order of assessment/ reassessment under
section 144 shall be made after the expiry of 2 years from the end of
relevant Assessment Year.
No SCN is required to be issued, where a notice under Sec 142(1)(i) has already been issued to the assessee and the same has not been complied with. |
Where a reference has been made to Transfer
Pricing Officer to determine Arm’s Length Price, then 3 years from the end of
relevant Assessment Year.
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7
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Sec 149
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Time Limit for issue of notice under Sec 148
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No notice under Section 148 shall be issued for
the relevant Assessment Year:
(a) If 4 years have lapsed from the end of relevant assessment year, unless the case falls under following two categories; (b) If 4 years, but not more than 6 years, have elapsed from the end of relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rs. 1 Lac or more for that year; (c) If 4 years, but not more than 16 years, have elapsed from the end of relevant assessment year unless the income in relation toi any asset (including financial interest in any entity) located outside India, chargeable to tax, has escapsed assessment. |
Mere signing of of notice cannot tantamount to
issuance of notice as contemplated under Sec 149. The date of issue would be
the date on which notice was handed over to the proper officer for the
purpose of effecting service on the assessee.
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8
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Sec 149(3)
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Time Limit for issue of notice under Sec 148 to
the agent of Non Resident
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No notice under Sec 148 shall be issued on agent
of Non Resident after the expiry of 6 years from the end of relevant
assessment year.
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AO appoint can appoint a person in India as the
agent of Non Resident by passing an Order under Sec 163(1). Appeal lies to
CIT(A) against such Order.
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9
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Sec 150
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No Time limit for issuance of notice under Sec
148
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Notice under Sec 148 can be issued at any time
for the purpose of making assessment or reassessment under Sec 147 in
consequence of or in order to give effect to the finding or direction
contained in an order of Supreme Court passed under Sec 262.
But to give effect of retrospective amendments through Finance Acts, Notices under Sec 148 can be issued within the time limits prescribed under Sec 149(1). Sec 150 shall not apply in such cases. |
Notice under Sec 148 can be issued at any time
for the purpose of making assessment or reassessment under Sec 147 in
consequence of or in order to give effect to the finding or direction
contained in an order passed under Sec 250, 254, 263, 264.
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10
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Sec 148
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Time limit for issuance of Notice under Sec
143(2) in response to Returns filed under Sec 148
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In response to returns filed under Sec 148
notice, the notice under Sec 143(2) must be served within 6 months from the
end of financial year in which return was filed, otherwise assessment/
assessment under Sec 147 shallbe void.
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If assessee demands the reasons recorded by AO
for issue of notice, AO is bound to supply in writing, otherwise AO cannot
proceed for assessment.
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11
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Sec 153(2)
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Order of assessment/ reassessment u/s 147
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No order of assessment/ reassessment u/s 147
shall be made after the expiry of 1 year from the end of financial year in
which notice u/s 148 was served on the assessee.
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Where a reference has been made to Transfer
Pricing Officer to determine Arm’s Length Price, then 2 years from the end of
the financial year in which notice u/s 148 was served.
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12
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Sec 153(2A)
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Time limit for completion of Fresh assessment
where original assessment was cancelled or set aside under Sec 254(ITAT), 263
or 264(CIT)
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Where an assessment is cancelled or set aside by
an order under section 254, 263 or 264 and a direction is given to the AO in
such Order to make a fresh assessment, then such fresh assessment shall not
be made after the expiry of 1 year from the end of financial year in which
order u/s 254 received by CIT or Order u/s 263 or 264 is passed by the CIT.
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Where a reference has been made to Transfer
Pricing Officer to determine Arm’s Length Price, then 2 years from the end of
financial year in which order u/s 254 is received by the CIT or u/s 263 or
264 was passed by the CIT.
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13
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Sec 153(3)(a)
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No Time limit for completion of assessment or
reassessment
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In case assessment is not cancelled/set aside but
a direction is given u/s 250, 254, 263 or 264 as a result of which income of
any assessment year escapes assessment, then there is no time limit for
making assessment/ reassessment .
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Also applicable , where in case of a firm, an
assessment is made on the partner of the firm in consequence of an assessment
or reassessment made on the firm u/s 147.
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14
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Sec 154
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Rectification of Mistake
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No order of rectification shall be passed after
expiry of 4 years from the end of the financial year in which the order
sought to be amended was passed.
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Income Tax Authority referred to in Sec 116 may
amend any order passed by it, any intimation or deemed intimation u/s 143(1)
or amend any intimation passed u/s 200A.
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15
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Sec 154
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Rectification of Mistake
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Where an application for rectification is made by
the assessee to Income Tax Authority, then authority shall pass an order
within 6 months from the end of the month in which application is received by
it.
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If order is not passed within 6 months, then the
recification application shall be deemed to be allowed in favour of assessee.
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16
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Sec 153B
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Time limit for completion of assessment u/s 153A
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AO shall make an order of assessment/
reassessment, as follows:
(a) in respect of each assessment year falling within 6 assessment years referred to in clause (b) of Sec 153A, within a period of 2 years from the end of the financial year in which search was completed. (b) in respect of the assessment year relevant to the previous year in which search is conducted under Sec 132, within a period of 2 years from the end of the financial year in which search was completed. |
Where a reference has been made to Transfer
Pricing Officer to determine Arm’s Length Price, then 3 years from the end of
financial year in which search was completed.
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17
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Sec 153C
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Time limit for completion of assessment u/s 153A
in case of other person referred u/s 153C
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AO shall make an order of assessment/
reassessment, as follows:
(a) (i) in respect of each assessment year falling within 6 assessment years referred to in clause (b) of Sec 153A, within a period of 2 years from the end of the financial year in which search was completed; (ii) 1 year from the end of the financial year in which books of accounts, assets are handled over u/s 153C to the AO having jurisdiction over such other person; which ever is later. (b) (i) in respect of the assessment year relevant to the previous year in which search is conducted under Sec 132, within a period of 2 years from the end of the financial year in which search was completed. (ii) 1 year from the end of the financial year in which books of accounts, assets are handled over u/s 153C to the AO having jurisdiction over such other person; which ever is later. |
Where a reference has been made to Transfer
Pricing Officer to determine Arm’s Length Price, then the said period gets
extended by 1 year under both cases.
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18
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Sec 153(4)
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Time limit for completion of Assessment/
Reassessment which revives u/s 153A(2)
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Notwithstanding the time limits for making
assessments/ reassessments under Sec 143(3)/ 144/147 given in Sec 153 and
notwithstanding the time limits given in Sec 153B, the order of assessment or
reassessment relating to any AY, which stands revived u/s 153A(2) shall be
made;
(a) within 1 year from the end of the month of such revival, or (b) within the time period specified in Sec 153; (c) within the time period specified in Sec 153B; whichever is later. |
Revival takes place on the date of receipt of
order of annulment by CIT
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19
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Sec 245D (4A)
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Time limit for passing Order of Settlement
Commission
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The Settlement Commission shall pass an order of
Settlement u/s 245D(4), within 18 months from the end of month in which
application was made.
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When no Order is made by Settlement within 18
months, the proceedings shall abate u/s 245HA.
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20
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Sec 245D(6B)
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Rectification of Mistake apparent from record by
Settlement Commission
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The Settlement Commission MAY at any time within
a period of 6 months from the date of the Order, with a view to rectify any
mistake apparent from the record, amend any order passed by it.
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Where an amendment has the effect of modifying
the liability of applicant, no such amendment order shall be passed unless
opportunity of being heard is given to the applicant anf Commissioner.
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21
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Sec 245D(7)
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Revival of proceedings, when Settlement becomes
Void
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If Settlement becomes void, the Income Tax
proceedings in respect of matters covered by settlement shall be deemed to
have been revived and Income Tax Authority can complete such proceedings at any
time before the expiry of 2 years from the end of financial year in which the
settlement became Void.
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Settlement becomes Void if it has been obtained
by fraud or misrepresentation of facts.
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22
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Sec 245HA
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Abatement of Proceedings before Settlement Commission
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Proceedings before Settlement Commission shall
abate:
(i) Where an application made under Sec 245C has been rejected u/s 245D(1)—(To be rejected within 7 days maxi). (ii) Where an application made under Sec 245C has been declared as invalid u/s 245D(2C)—(To be declared as invalid maxi within 45 days of receipt of application). (iii) In respect of any other application–when Settlement Order was not passed within the time specified u/s 245D(4A)—(To be passed within 18 months from the end of the month in which settlement application was received). |
The application shall abate on:
(i) On the date the application was rejected; (ii) On the last date of the month in which application declared invalid; (iii) On the date on which prescribed time expires, respectively. |
23
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Sec 245HA
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Time limit to complete assessment in case
Settlement abates u/s 245HA
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Period from date of application of Settlement
Commission till date of its abatement shall be excluded for determining
period of limitation.
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After excluding the period from date of
application of Settlement Commission till date of its abatement, if period of
limitation available to AO u/s 149 and 153 becomes less then 1 year, then it
shall be deemed to have been extended to 1 year.
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24
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Sec 273A
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CIT possess the power to reduce the penalty
imposed or imposable u/s 271(1) (c)
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There is no time limit for making an application
u/s 273A and also, there is no time limit for passing an order u/s 273A.
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CIT can exercise power u/s 273A even of assessee
has challenged the penalty order in any appellate proceedings or before any
court.
CIT can reduce/ waive penalty even if paid, through refund. |
25
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Sec 275
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Time limit for passing of Penalty Order in case
of Concealment of Income
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(A) Where an appeal has been filed against the
assessment order to CIT(A) or ITAT;
(i) Where order is passed by the CIT(A) and no appeal is made to ITAT—1 year from the end of financial year in which order of CIT(A) is received by the CIT. (ii) Where Order is passed by the ITAT—6 months from the end of the month in which order of ITAT is received by the CIT. (B) Where Revision application has been made u/s 264—6 months from the end of the month in which revision order u/s 264 is passed. (C) Where no appeal has been filed against the assessment order and no application made for revision u/s 264, later of; (i) End of the financial year in which assessment proceedings are completed; or (ii) 6 months from the end of the month in which penalty proceedings are initiated. |
Penalty order for other than Concealment of
Income can be passed within 6 months from the end of the month in which
penalty proceedings were initiated.
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26
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Sec 281B
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Provisional Attachment of Property to protect
interest of the Revenue
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AO can provisonally attach by an order in
writing, property belonging to the assessee but with the prior approval of
CCIT or CIT for a period of 6 months. However, CCIT, CIT, DG, D for reasons
to be recorded in writing extend the aforesaid period further as he thinks
fit.
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But the total period of extension shall not in
any case exceed 2 years or 60 days after the date of order of assessment /
reassessment, whichever is later.
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27
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Sec 285
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Submission of Statement by a Non Resident having
Liason office
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Every person being Non resident having a liason
office in India set up in accordance with the guidelines issued by the RBI
under FEMA,1999 shall, in respect of its activities in a financial year,
prepare and deliver to the respective AO, within 60 days from the end of such
financial year.
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Format and content of statement shall be as
prescribed.
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28
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Sec 249
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Time limit for filing appeal to CIT(A)
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The appeal shall be furnished within 30 days of
the following date:
(a) Where appeal is u/s 248, the date of payment of tax. (b) Where the appeal relates to any assessment or penalty, the date of service of notice of demand relating to the assessment or penalty. (c) In any other case, the date on which the order sought to be appealed is served. |
Condonation of delay possible, otherwise remedy
available is Sec 264[CIT]
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29
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Sec 250
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Time limit for issue of Order by CIT(A)
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Where it is possible CIT(A), MAY hear and decide
the appeal withina period of 1 year from the end of financial in which such
appeal is filed before him under Sec 246A.
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This is not mandatory, its directory for CIT(A).
CIT(A) cannot set aside assessment & ask AO to make fresh assessment im its direction. |
30
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Sec 254
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Order of Stay by ITAT
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ITAT may after considering the merits of the application
made by the assessee, pass an order of stay in any proceedings relating to an
appeal filed under Sec 253, for a period not exceeding 180 days from the date
of such order and the Appellate Tribunal shall dispose of the appeal within
the said period os stay specified in that order.
Provided that when appeal is not so disposed off in within said period, ITAT may on an application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay. However, the aggregate period of stay shall not exceed 365 days. |
If appeal is not disposed within time allowed,
maxi period of 365 days then the order of stay shall stand vacated after the
expiry of such period, even if delay in disposing of the appeal is not
attributabe to the assessee.
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31
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Sec 253
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Time limit for filing appeal to ITAT
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The appeal to ITAT shall be filed within 60 days
of the date on which the order sought to be appealed against is communicated
to the assessee or to the CIT, as the case may be.
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Other party to file Memorandum of cross
Objections to the ITAT within 30 days in Form 36A.
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32
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Sec 254
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Time limit for issuance of Order by ITAT
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Where it is possible ITAT, MAY hear and decide
the appeal within a period of 4 years from the end of financial in which such
appeal is filed before him under Sec 253.
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This time limit is not mandatory, its directory
for ITAT.
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33
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Sec 254(2)
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Rectification of mistake by ITAT
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The ITAT may, at any time within 4 years from the
date of the order, with a view to rectify any mistake apparent from the
record, amend any order passed by it u/s 254(1).
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If application for rectification is made within 4
years, then rectification order can be passed u/s 254(2), even after 4 years
but to the advantage of the assessee.
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34
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Sec 260A
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Appeal to High Court
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The CIT or the assessee aggrieved by an order
passed by the Appellate Tribunal may file an appeal to the High Court, within
120 days from the date on which the order appealed against is received by the
CIT or the assessee.
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Needs substantial question of law; can condone
the delay on sufficient cause.
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35
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Sec 263
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Revision Order by CIT u/s 263
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The Order u/s 263 shall not be passed after the
expiry of 2 years from the end of the financial year in which order sought to
be revised was passed. However, an order this secton can be passed at any
time to give effect to the findings or directions contained in an order of
the Supreme Court.
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Against order passed u/s 263 an appeal can be
filed to ITAT.
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36
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Sec 264
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Revision application u/s 264
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CIT cannot on his own motion revise any order if
the order has been made more than 1 year previously, but where an application
is made by the assessee, the application shall filed within 1 year from the
date on which the order was communicated to him.
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CIT shall not revise the order:
(i) Where an appeal against the order lies to the CIT(A) but has not been made and; (a) The time within which such as appeal may be made has not expired; (b) The assessee has not waived his right of appeal. (ii) Where the order has been made the subject of an appeal to the CIT(A). |
37
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Sec 264
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Revision Order by CIT u/s 264
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On receipt of revision application by the
assessee u/s 264, an order shall be passed by the CIT within 1 year from the
end of financial year in which such application u/s 264 is made by the
assesee. No appeal is possible against such order, only remedy available is
WRIT PETITION or SLP.
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In case of application, if revision order is not
passed u/s 264 within 1 year from the end of financial year in which such
application u/s 264 is made by the assesee, then it shall be deemed that the
reliefs claimed by the assessee in the application have been allowed.
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38
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Sec 92CA
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Reference to Transfer Pricing Officer
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Where a reference has been made under sub-section
(1) of Sec 92CA to the Transfer Pricing Officer, an order under Sub-section
(3) may be made at any time before 60 days prior to the date on which the
period of limitation referred to in Sec 153 or 153B expires.
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Determination of ALP, previous approval of CIT is
required
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39
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Sec 92CC
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Advance Pricing Agreement —Time limit if
agreement becomes Void
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Agreement becomes void if obtained through fraud
or misrepresentation of facts. If period of limitation after excluding the
period from date of agreement till date of declaring it Void, is less then 60
days then the remaning period shall be extended to 60 days accordingly.
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APA is binding for a period not exceeding 5
consecutive years
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40
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Sec 92CD
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Time limit for completion of assessment in case
APA is applicable for the years for which Returns were already filed
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Notwithstanding anything contained in Sec 153 or
153B or Sec 144C(DRP);
(a) The order of assessment, reassessment or recomputation of total income u/ss (3) of Sec 92CD shall be passed within a period of 1 year from the end of the financial year in which the modified return u/ss (1) is furnished; (b) The period of limitation as provided in Sec 153 or 153B or Sec 144C(DRP) for completion of pending assessment or reassessment proceedings referred to in sub-sec (4) shall be extended by a period of 12 months. |
The APA is final, no appeal is possible to CIT(A).
CIT cannot reopen under Sec 263, also AO cannot reopen under Sec 147.
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41
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Sec 144C
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Dispute Resolution Panel
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Notwithstanding anything contained in Sec 153 or
153B, AO shall pass the assessment order u/ss (3) within 1 month from the end
of the month in which,-
(a) The acceptance is received; or (b) The period of filing of objecions u/ss (2) expires—(Within 30 days of receipt of draft order). |
AO to forward of the proposed order od assessment
to the eligible assessee if he proposes to make any variation in the income
or loss returned which is prejudicial to the interest of the such assessee.
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42
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Sec 144C
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Issue of directions to AO, on receipt of
Objections from eligible assessee
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No direction shall be issued after 9 months from
the end of the month in which the draft order is forwarded to the eligible
assessee.
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No direction unles opportunity of being heard is
given to the assessee and AO, where such directions are prejudicial to the
interest of assessee or revenue, respectively.
|
43
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Sec 144C
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Time limit for completion of assessment on
receipt of Directions from DRP
|
Upon receipt of directions, AO shall in
confirmity of such directions, complete the assessment without providing any
further opportunity of being heard to the assessee, within 1 month from the
end of the month in which such direction is received.
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Appeal against such order lies to ITAT
|
Amendments made by Finance
Act 2020 to be effective from April 1, 2021 i.e. the assessment
year 2021-22
1. Section 6:
Residential Status
Residential Status –
determined by the number of days of his stay in India
– The exception
provided in Explanation 1(b) to section 6(1), for Indian citizens and persons
of India origin visiting India in that year has been decreased to 120
days, only in cases where the total income of such visiting
individuals during the financial year from sources, other than foreign sources,
exceeds INR 15 lakhs.
– The term ‘income
from foreign sources’ has been defined to mean income which accrues
or arises outside India (except income derived from a business controlled in or
a profession set up in India).
Residential Status – Provision of ‘Deemed Resident’ applicable if total
income exceeds INR 15 lakhs
– The amendment to
clause (1A), introduced by the Finance Bill, 2020 targeted individuals who do
not spend considerable amount of time in any country so as to be treated as tax
residents of such foreign countries.
– This created a lot
of misapprehension in the non-resident Indian (NRI) community, especially for
Indians who are bonafide employed in other countries or carry on business
there, etc.; and who are not subject to tax in those countries as per the
domestic tax law of those countries, will be taxed in India on the income that
they have earned outside India.
– Hence, to avoid such
misapprehension, the CBDT issued a Press Release dated 2 February 2020, clarifying that in
case of an Indian citizen who becomes deemed resident of India, income earned
outside India by him shall not be taxed in India unless it is derived from an
Indian business or profession.
– The scope of clause
(1A) has been now limited through the Finance Act, 2020, and shall only be
applicable to such Indian citizens who meet the threshold*. Accordingly, all Indian citizens who fail to
meet the threshold, but are not subject to tax in any other jurisdiction, will
not be considered as Indian tax resident
(*Threshold: an individual, being a citizen of India, having
total income, other than the income from foreign sources, exceeding fifteen
lakh rupees during the previous year)
Deemed resident to be treated as ‘Not Ordinarily Resident’
– The proposed
relaxation to the Resident but Not Ordinarily Resident (RNOR’) under the
Finance Bill have been removed through the Finance Act, 2020, that is:
The Finance Bill proposed to streamline the test for RNORs by
providing that an individual or an HUF shall qualify as an RNOR, if such
individual or manager of the HUF has been a non-resident in India for seven out
of the ten previous years preceding that year
– The Finance Act,
2020, now adds two categories to the test for RNOR in section 6(6).
– The below persons
shall also be treated as RNOR:
·
Indian citizens/
persons of Indian origin who meet the threshold and have been in India for a
period of more than 120 days but less than 182 days i.e. those Indian citizens
/ persons of Indian origin who fulfil the conditions mentioned above in
Explanation 1(b) to section 6(1) and
·
Indian citizens who
fulfil the conditions mentioned above in Explanation (1A) to section 6(1).
– The above amendments
mean that even where an Indian citizen qualifies as a tax resident under
section 6(1) of the Act but owing to the amendment as mentioned above to
Explanation 1(b) and Explanation (1A) to section 6(1), he will still not be
taxed on a worldwide basis (unless as per section 5 of the Act, such foreign
income is derived from a business controlled in or a profession set up in
India), even if he does exceed the threshold.
-The day count and
total income criteria has to be examined every financial year
– The same shall be
applicable from AY 2021-22
2. Section 43CA:
Special provision for full value of
consideration for transfer of assets other than capital assets in
certain cases
Earlier, 5% variation
in the value of consideration received or accruing as a result of transfer of
an asset (other than capital asset) being land or building or both was allowed.
Now, this variation rate is increased to 10%. It means, if the value adopted or assessed or
assessable by the authority for the purpose of payment of stamp duty does not
exceed one hundred and ten per cent of the consideration received or accruing
as a result of the transfer, the consideration so received or accruing as a
result of the transfer shall, for the purposes of computing profits and gains
from transfer of such asset, be deemed to be the full value of the
consideration.
Consequently, even
section 50C and section 56(2)(x)(B), are amended on a similar basis, and
provides for a ten percent tolerance limit.
The above amendments
are effective from AY 2021-2022.
3. Section 44AB:
Audit of accounts of certain persons carrying on business
or profession
A new proviso to
section 44AB(a) has been added, whereby the threshold limit for a person
carrying on business who is required to get his accounts audited, has been
increased from one crore rupees as provided in section 44AB(a) to five crore
rupees, only in cases where both the below conditions are satisfied:
·
aggregate of all
receipts including sales, turnover or gross receipts, in cash during the
previous year does not exceed five per cent of such receipt; and
·
aggregate of all
payments made including amount incurred for expenditure, in cash during the
previous year does not exceed five per cent of such payment
– Further, to enable
pre-filling of returns in case of persons having income from business or
profession, it is required that the tax audit report may be furnished by the
said assessees at least one month prior to the due date of filing of return of
income.
It means, as the due
date for furnishing return of income U/s 139(1) is made as 31st October of
relevant assessment year, the due date for submission of audit report under
this section will be 30th September of relevant of assessment
year.
4. Section 50C:
Special provision for full value of consideration in certain
cases.
Earlier, 5% variation
in the value of consideration received or accruing as a result of transfer of
capital asset, being land or building or both, was allowed. Now, this variation
rate is increased to 10%. It
means, if the value adopted or assessed or assessable by the authority for the
purpose of payment of stamp duty does not exceed one hundred and ten per cent
of the consideration received or accruing as a result of the transfer, the
consideration so received or accruing as a result of the transfer shall, for
the purposes of computing profits and gains from transfer of such asset, be
deemed to be the full value of the consideration.
Consequently, even
section 43CA and section 56(2)(x)(B), are amended on a similar basis, and
provides for a ten percent tolerance limit.
The above amendments
are effective from AY 2021-2022.
5. Section 55:
Meaning of “adjusted”, “cost of improvement” and “cost of
acquisition”.
The following proviso
is inserted-
In case of capital
assets being land or building or both, the fair market value [FMV] of such
asset as on the 1st day of April, 2001 shall not exceed the
stamp duty value, wherever available, of such asset as on 1st day of April,
2001.
6. Section 57: Deduction
As all the dividends
are made taxable in the hands of recipient, the deductions from such income are
brought in by inserting the following proviso.
No expenses are
allowed as deduction except the interest expenses incurred to earn the income in the nature of Dividend or
income in respect of units of MF specified under clause (23D) of section 10 or
income in respect of units from a specified company defined in the explanation
to clause(35) of section 10.
And such
deduction shall not exceed 20% of the dividend income, or income in respect of such units
included in the total income for that year.
7. Section 80EEA:
Deduction in respect of interest on loan taken for certain house
property.
The benefit of
deduction given under this section relating to the interest paid on the
specified housing loans was allowed only to the loan availed on or before
31.03.2020. But now through this amendment, this benefit is
extended to the loans sanctioned before 01.04.2021.
8. Section 80GGA:
Deduction in respect of certain donations for scientific research
or rural development.
Earlier the donation
could have been paid by cash upto Rs. 10000/-. But now through this amendment
the limit is fixed to Rs. 2000/-. It means, any donations referred in Sec.
80GGA paid by cash exceeding Rs. 2000/- will not be allowed as deduction.
9. Section 80M:
Deduction in respect of certain inter-corporate dividends.
This section was
omitted by the Finance Act, 2003 w.e.f 01.04.2004. But now again brought into
effect as the taxability of dividend is shifted from payer to the receiver.
As the dividend income
is made taxable in the hands of recipient, this section aims to provide
deduction to the companies receiving dividend from another company.
As per this section,
Where the gross total income of a domestic company in any previous year
includes any income by way of dividends from any other domestic company, there
shall in accordance with and subject to the provisions of this section, be
allowed in computing the total income of such domestic company, a deduction of
an amount equal to so much of income by way of dividends received from such
other domestic company as does not exceed the amount of dividend distributed by
the first mentioned domestic company on or before the due date.
10. Section 115BAA:
Tax on income of certain domestic companies.
This section is
amended so as to provide deduction U/s 80M: Deduction in respect of certain
inter-corporate dividends to
the domestic Companies opting to pay tax @ 22%, without claiming any deductions
as per this section.
It means, now the
companies opting to pay tax under this section can claim deduction U/s. 80M.
11. Section 115BAB:
Tax on income of new manufacturing domestic companies.
This section is
amended so as to provide deduction U/s 80M: Deduction in respect of certain
inter-corporate dividends to
the domestic Companies opting to pay tax @ 15%, without claiming any deductions
as per this section.
It means, now the
companies opting to pay tax under this section can claim deduction U/s.80M.
12. Section 115BAC:
Alternative Tax Rates Slab for Individuals and HUF
> If an individual
and HUF exercises an option to not to claim various exemptions or deductions
provided otherwise under the Act, the applicable slabs and tax rates will be as
under
|
Sl.No. |
Total Income(Rs.) |
Rate of Tax |
|
1 |
Upto 2,50,000 |
Nil |
|
2 |
From 2,50,001 to
5,00,000 |
5 % |
|
3 |
From 5,00,001 to
7,50,000 |
10% |
|
4 |
From 7,50,001 to
10,00,000 |
15% |
|
5 |
From 10,00,001 to
12,50,000 |
20% |
|
6 |
From 12,50,001 to
15,00,000 |
25% |
|
7 |
Above 15,00,000 |
30% |
> Any individual or
HUF who exercises such option shall not be eligible to claim various exemptions
or deductions available under the Act including the following:-
(i) Standard deduction
of Rs.50,000
(ii) Leave Travel
Allowance under Section 10(5)
(iii) House Rent
Allowance under Section 10(13A)
(iv) Certain
allowances under Section 10(14) as will be prescribed
(v) Deduction of
interest up to Rs.2,00,000/- allowable under Section 24(b) in respect of self
occupied property.
(vi) Deduction of
1/3rd of family pension allowable under Section 57(iia)
(vii) All deductions
allowed under Chapter VI-A (except the deduction under Section 80 CCD(2) and
Section 80 JJAA ) including of Rs. 1,50,000/- under Section 80C in respect of
contribution to provident fund, life insurance premium and deduction of
Rs.50,000/- as contribution to NPS under Section 80CCD (1B).
(viii) Allowance for
Minor Child Income allowable under Section 10(32) on clubbing of minor income
In addition to the
above, the following deductions/exemptions allowed while computing income of
business or profession shall also not be available.
(ix) Exemption for SEZ
Unit under Section 10AA
(x) Additional initial
depreciation in respect of plant and machinery under Section 32(1)(iia)
(xi) Investment
allowance in respect of new plant and machinery in notified backward areas
under Section 32AD
(xii)
Tea/Coffee/Rubber development benefit under Section 33AB
(xiii) Site
restoration benefit under Section 33ABA
(xiv) Various
deductions for donation for expenditure on scientific research or social
sciences research under section 35(1)(ii), section 35(1)(iia), section
35(1)(iiia) or under section 34(2AA)
(xv) Accelerated
capital deduction for specified businesses under Section 35AD
(xvi) Expenditure on
agricultural extension project under Section 35CCC
> Further, such
individual or HUF who exercises such option- Shall not be allowed to set off
any loss or depreciation carried forward from an earlier assessment year if
such loss or depreciation is attributable to any other deductions referred
hereinabove.
> No set off of any
loss under the head “Income from House Property”
shall be allowed against income under any other head.
> Carried forward
loss or depreciation shall be deemed to have given full effect to and no
further adjustment in respect of such carried forward loss or depreciation
shall be available meaning thereby that such loss or depreciation carried
forward shall lapse.
> If the option to
pay tax under section 115BAC is exercised in respect of assessment year 2021-2022, then the written down value of the block of asset shall
be increased by the amount of depreciation carried forward which is not available for set-off due to
the restrictions contained in the proposed newly inserted section 115BAC.
> To claim benefit
by paying the tax at the applicable rates under this section, assessee having business income has to opt on or before the due date U/s
139(1) for furnishing return of income for any previous year relevant to
assessment year on or after 01.04.2021 and such option once exercised shall
apply to subsequent assessment years.
> To claim benefit
by paying the tax at the applicable rates under this section, assessee not having business
income has to opt along with the return
of income to be furnished
U/s 139(1) for a previous year relevant to assessment year.
> However if an
assessee having business income exercises this option in a previous year and
subsequently he can withdraw only once for a previous year other that the year
in which it was exercised and thereafter, the person shall never be eligible to
exercise option under this section except where such person ceases to have any
business income in which case, he can opt the benefit available to person not
having business income.
13. Section 115BAD:
Tax on income of certain resident co-operative societies.
> If a person being
a co-operative society resident in India, exercises not to claim the exemptions
and deductions provided otherwise under the act, then such person can pay tax
at the rate of 22%.
> To claim benefit
by paying the tax at the applicable rates under this section, assessee has to
opt on or before the due date specified U/s 139(1) for furnishing return of
income for any previous year relevant to assessment year on or after 01.04.2021
and such option once exercised shall apply to subsequent assessment years.
> Option once
exercised for any previous year, it cannot be subsequently withdrawn for the
same of any other previous years.
> The income of the
person shall be computed without giving effect of any of the following
deductions/ exemptions – Sec 10AA, clause (iia) of sub-section (1) of section
32 or section 32AD or section 33AB or section 33ABA of sub-clause (ii) of
sub-clause (iia) of sub-clause (iii) of sub-section (1) or sub-section (2AA) of
section 35 or section 35AD or section 35CCC or under any of the provisions of
Chapter VI-A other than the provisions of Section 80JJAA.
> Shall not be
allowed to set off any loss or depreciation carried forward from an earlier
assessment year if such loss or depreciation is attributable to any other
deductions referred hereinabove.
> Carried forward
loss or depreciation shall be deemed to have given full effect to and no
further adjustment in respect of such carried forward loss or depreciation
shall be available meaning thereby that such loss or depreciation carried
forward shall lapse.
> If the option to
pay tax under section 115BAD is exercised in respect of assessment year 2021-2022, then the written down value of the block of asset shall
be increased by the amount of depreciation carried forward which is not available for set-off due to
the restrictions contained in the proposed newly inserted section 115BAD.
14. Section 115BBDA:
Tax on certain dividends received from domestic companies.
As per this section,
the dividend received by the specified assessee exceeding Rs.10,00,000/-, such
dividend received in excess Rs.10,00,000/- will be taxed at the rate of 10%.
This provision will be applicable till AY 2020-21. From AY 2021-22, this section
will be inactive.
15. Section 115JC:
Special provisions for payment of tax by certain persons other
than a company. [Alternate Minimum Tax]
– If an assessee opts
to tax under Sec.115BAC or Sec.115BAD, then Alternate Minimum Tax is not
applicable to such assessee.
16. Section 115JD:
Tax credit for alternate minimum tax.
– If any assessee opts
to pay tax under Sec.115BAC or Sec.115BAD and if any brought forward Alternate
Minimum Tax [AMT] credit exists, such credit will lapse as it is not allowed to
carry forward further.
17. Section 115-O:
Dividend Distribution Tax
DDT is removed from AY
2021-22. It means, the companies are not required to pay tax on the dividend
distributed by them. It will be taxed in the hands of recipient i.e.,
Shareholders.
18. Section 115-R:
Tax on income distributed to unit holders
Tax on distributed
income to unit holders is removed from AY 2021-22. It means, the specified
company/mutual fund is not required to pay tax on the income distributed by
them. It will be taxed in the hands of recipient i.e., Unit holders.
19. Section 139:
Due date for filing of ITR is amended as under-
a. Date of filing
Audit Report delinked from date of filing return.
b. For audit cases due
date is changed as 31st Oct of relevant
Assessment Year.
c. Earlier, the due
date for filing ITR of only the Working partner was that of same for audit cases. But now, it is amended
and made as due date for filing of ITR of partners (i.e., both the sleeping and
working partner) will be that of
audit cases (i.e. 31st Oct of relevant Assessment year).
20. Section 194:
TDS on Dividends
> The Company
distributing dividend has to deduct TDS as under-
– On dividend
distributed in any Mode i.e., either in cash or cheque, etc.
– If such dividend
paid is more than Rs.5000/- (earlier it was 2500/-)
– The rate of TDS is
10%
21. Section 194A
TDS on interest other than interest on securities:
> Keeping other
things same as mentioned already in the section, Applicability for Individual
and HUF (payer) is changed as under –
If an Individual or
HUF is having business turnover more than Rs. 1,00,00,000/- in the financial
year immediately preceding the financial year in which such amount liable for
tds is paid or credited &
If an Individual or
HUF is having professional receipts more than Rs. 50,00,000/- in the financial
year immediately preceding the financial year in which such amount liable for
tds is paid or credited, is required to deduct TDS.
> The scope of
section 194A to deduct tax at source in respect of payment of interest is being
widened in respect of the Cooperative Societies.
– If the total sales,
gross receipt or turnover of the Cooperative Society exceeds Rs. 50 crore
during the financial year immediately preceding the financial year and the
amount of interest to be credited or paid during the financial year is more
than Rs. 40,000 in the case of such cooperative society, the cooperative
society shall be required to deduct tax at the rate of 10% in case the amount
of interest credited or paid or likely to be credited or paid during the
financial year.
-However, in the case
of the senior citizen, the tax shall be required to be deducted at source in
case this amount is more than Rs. 50,000/-
22. TDS U/s 194C, 194H, 194I, 194J
> Keeping other
things same as mentioned already in the section, Applicability for Individual
and HUF (payers) is changed as under –
– If an Individual or
HUF is having business turnover more than Rs. 1,00,00,000/- in the financial
year immediately preceding the financial year in which such amount liable for
tds is paid or credited &
– If an Individual or
HUF is having professional receipts more than Rs. 50,00,000/- in the financial
year immediately preceding the financial year in which such amount liable for
tds is paid or credited,
is required to deduct
TDS.
23. Section 194K:[newly inserted]
TDS in respect of units
– Any person
responsible for paying to a resident any income in respect of Units,
– Shall deduct TDS at
the rate of 10%
– If any sum
paid is more than Rs. 5000/-
24. 194-O:[newly inserted]
Payment of certain sums by e-commerce operator to the e-commerce
participant.
– an E-commerce
operator shall be required to deduct TDS at the rate of 1% at the time of
credit of amount of sale or service or both to the account of the E-commerce participant
or at the time of payment thereof to such participant by any mode, whichever is
earlier.
– The rate of TDS is
1%
– The amount shall
include the payment directly made by the purchaser of the goods or services to
the E-commerce participant.
– However, this
provision shall not be applicable for E-commerce participant if the E-commerce
participant happens to be an individual or HUF and the gross amount of sales or
services or both of such individual or HUF through such E-commerce operator
during the year does not exceed Rs.5 lakhs and such E-commerce participant furnishes a PAN or aadhar
Number.
– In case the
E-commerce participant does not furnish PAN or Aadhar Number to the e-commerce
operator, TDS shall be deducted at the rate of 5% under section 206AA of the Act
25. Section 197:
Certificate for deduction at lower rate
For TDS under 194-O,
lower deduction certificate can be obtained by the assessee.
26. Section 271AAD:[newly inserted]
Penalty for false or omitted entries found in books of accounts
– If it is found
during any proceeding under the Act that in the books of accounts maintained by
any person, there is a (i) false entry or (ii) any entry relevant for
computation of total income of such person has been omitted to evade tax
liability, then such person shall be liable to pay by way of penalty, a sum
which is equal to the aggregate amounts of such false entries or omitted entry.
– Further, penalty
will be levied of the aggregate amounts of such false entries or omitted entry
on any other person who causes the assessee in making the false entry or omits
or causes to omit an entry.
– The term ‘false
entry’ has been defined in an inclusive manner to include use or intention to
use:
(a) Forged or
falsified documents such as a false invoice, or a false piece of documentary
evidence, or
(b) invoice for supply
or receipt of goods or services or both issued by or received by the assessee
in respect of which no actual goods or services have been provided or received;
or
(c) Invoice issued for
supply of goods or services or both issued by or received from a non-existent
person.
1) Rs. 40,000 standard deduction introduced: This additional deduction has been proposed in place of existing deductions of Rs. 19,200 for transport allowance and Rs. 15,000 for medical reimbursement. This will benefit 2.5 crore salaried employees. Pensioners, who normally do not enjoy any allowance for transport and medical expenses, will also benefit from it. After the introduction of standard deduction, the salaried class will enjoy a flat deduction of Rs.40,000 from their taxable income. Standard deduction was earlier available for salaried individuals previously, till it was abolished with effect from assessment year 2006-07. The benefits arising from standard deduction depends on the tax bracket a salaried individual falls in.
2) Higher cess: The finance minister also raised cess on income tax to 4 per cent from 3 per cent for individual taxpayers on the amount of income tax payable.
3) Introduction of long-term capital gains tax on equity investments: A new 10 per cent tax (cess extra) will be applicable on capital gains exceeding Rs. 1,00,000 upon sale of equity share or units of equity oriented funds. However, for the benefit of tax payers, the gains till January 31, 2018, are being grandfathered. This means that only gains over January 31, 2018, prices will be taxed. In some relief, the benefit of indexation will be allowed in unlisted shares for computing long-term capital gains tax that were unlisted as on January 31, 2018.
4) Tax on dividend income from equity mutual funds: A tax at the rate of 10 per cent will be levied on dividend distributed by equity-oriented mutual funds.
5) More income tax benefits on single premium health insurance policies: Health insurers typically provide some discount if you pay premium for a few years upfront. But earlier, an individual could claim deduction only up to Rs. 25,000. Under the proposed changes in Budget 2018, in case of single premium health insurance policies having cover of more than one year, deduction will be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified limit. For example, your insurer is offering a 10 per cent discount on health insurance premium if you pay Rs. 40,000 for the two-year cover. Under the proposed changes, the individual can claim Rs. 20,000 in both years.
6) Income tax benefit on NPS withdrawal: The government has proposed an extension to the benefit of tax-free withdrawal from NPS (National Pension System) to non-employee subscribers. Currently, an employee contributing to the NPS is allowed an exemption in respect of 40 per cent of the total amount payable to him or her on closure of account or on opting out. This exemption is currently not available to non-employee subscribers. The extension of tax-free withdrawal to non-employee subscribers will be available from financial year 2018-19.
8) Higher TDS or tax deducted limit for senior citizens: The threshold for deduction of tax at source on interest income for senior citizens is proposed to be hiked from Rs. 10,000 to Rs.50,000.
9) Higher deduction limit under Section 80D of the Income Tax Act for senior citizens: In Budget 2018, the government proposes to increase the deduction for senior citizens on payment of health insurance premiums. The limit is set to go up from Rs. 30,000 Rs. 50,000. For individuals below 60 years of age, the deduction under Section 80D continues to be Rs.25,000. But if their parents are senior citizens, above 60 years, they can claim an additional deduction of up to Rs. 50,000-taking the total deduction to Rs. 75,000 (Rs. 25,000 + Rs. 50,000), higher than the current limit of Rs. 55,000.
1) Deemed sale value for sale of unquoted shares introduced. To be taxed at fair value. Sec 50CA
2) In absence of PAN,the rate of TCS will be twice of the extent rate or 5%, whichever is higher. Sec.206CC.
3) New Section 269ST introduced whereby Rs three lakh in cash cannot be received on a single day or inrespect of single transaction.
4) If Return not filed as per Sec. 139 (1), concept of late fee introduced. Rs. 5000 for delay up to 31st Dec. and Rs. 10000 thereafter. Late fee to be paid before filing the Return. Sec 234F
5) CA issuing wrong certificate would be penalised with Rs. 10000
6) Capital gain on shares will be exempt only if STT was paid while purchasing the shares.
7) HP loss can be setoff against other head of income only to the extent of 200000 in same year. Balance loss can be c/f to 8 A.Ys.
8) Indl and HUF to deduct tds even if unaudited @ 5% if rent is paid 50000
9) Tds in 194J amended, now 2 percent tds instead of 10
10) The scope of section 56 will be widened and will also cover any kind of gifts in cash or kind or for no consideration with few exemptions and exception
11) MAT book profit calculation aslo ammended
12) Disallowance of expenditure from income from other sources if tds is not deducted
13) Self employed can also claim 20% contribution to NPS as deduction.
Direct Taxes
1. Raise the ceiling of tax rebate under section 87A from `2000 to `5000 to lessen tax burden on individuals with income upto 5 lakhs.
2. Increase the limit of deduction of rent paid under section 80GG from `24000 per annum to `60000, to provide relief to those who live in rented houses.
3. Increase the turnover limit under Presumptive taxation scheme under section 44AD of the Income Tax Act to 2 crores to bring big relief to a large number of assessees in the MSME category.
4. Extend the presumptive taxation scheme with profit deemed to be 50%, to professionals with gross receipts up to `50 lakh.
5. Accelerated depreciation wherever provided in IT Act will be limited to maximum 40 percent from 1.4.2017.
6. Benefit of deductions for Research would be limited to 150% from 1.4.2017 and 100 percent from 1.4.2020.
7. Benefit of section 10AA to new SEZ units will be available to those units which commence activity before 31.3.2020.
8. The weighted deduction under section 35CCD for skill development will continue up to 1.4.2020.
9. New manufacturing companies incorporated on or after 1.3.2016 to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.
10. Lower the corporate tax rate for the next financial year for relatively small enterprises i.e companies with turnover not exceeding ` 5 crore (in the financial year ending March 2015), to 29% plus surcharge and cess.
11. 100% deduction of profits for 3 out of 5 years for startups setup during April, 2016 to March, 2019. MAT will apply in such cases.
12. 10% rate of tax on income from worldwide exploitation of patents developed and registered in India by a resident.
13. Complete pass through of income-tax to securitization trusts including trusts of ARCs. Securitisation trusts required to deduct tax at source.
14. Period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from 3 to 2 years.
15. Non-banking financial companies shall be eligible for deduction to the extent of 5% of its income in respect of provision for bad and doubtful debts.
16. Determination of residency of foreign company on the basis of Place of Effective Management (POEM) is proposed to be deferred by one year.
17. Commitment to implement General Anti Avoidance Rules (GAAR) from 1.4.2017.
21. Withdrawal up to 40% of the corpus at the time of retirement to be tax exempt in the case of National Pension Scheme (NPS). Annuity fund which goes to legal heir will not be taxable.
22. In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made on or from 1.4.2016.
23. Limit for contribution of employer in recognized Provident and Superannuation Fund of ` 1.5 lakh per annum for taking tax benefit. Exemption from service tax for Annuity services provided by NPS and Services provided by EPFO to employees.
25. 100% deduction for profits to an undertaking in housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019 and completed in three years. MAT to apply.
26. Deduction for additional interest of `50,000 per annum for loans up to `35 lakh sanctioned in 2016-17 for first time home buyers, where house cost does not exceed ` 50 lakh.
27. Distribution made out of income of SPV to the REITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax, in respect of dividend distributed after the specified date.
30. Additional tax at the rate of 10% of gross amount of dividend will be payable by the recipients receiving dividend in excess of ` 10 lakh per annum.
31. Surcharge to be raised from 12% to 15% on persons, other than companies, firms and cooperative societies having income above ` 1 crore.
32. Tax to be deducted at source at the rate of 1 % on purchase of luxury cars exceeding value of ` ten lakh and purchase of goods and services in cash exceeding ` two lakh.
33. Securities Transaction tax in case of ‘Options’ is proposed to be increased from .017% to .05%.
34. Equalization levy of 6% of gross amount for payment made to nonresidents exceeding ` 1 lakh a year in case of B2B transactions.
44. New Dispute Resolution Scheme to be introduced. No penalty in respect of cases with disputed tax up to ` 10 lakh. Cases with disputed tax exceeding ` 10 lakh to be subjected to 25% of the minimum of the imposable penalty. Any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty and tax interest on quantum addition.
47. Penalty rates to be 50% of tax in case of underreporting of income and 200% of tax where there is misreporting of facts.
48. Disallowance will be limited to 1% of the average monthly value of investments yielding exempt income, but not exceeding the actual expenditure claimed under rule 8D of Section 14A of Income Tax Act.
49. Time limit of one year for disposing petitions of the tax payers seeking waiver of interest and penalty.
50. Mandatory for the assessing officer to grant stay of demand once the assesse pays 15% of the disputed demand, while the appeal is pending before Commissioner of Income-tax (Appeals).
51. Deduction under Section 80JJAA of the Income Tax Act will be available to all assesses who are subject to statutory audit under the Act.
Specified Circumstances
