Tax amendments Applicable for Assessment Year

Budget 2021 Income tax Highlights

TDS Rate chart 2021-22



 FY 2020-21 on wards 



MAT & AMT




Beneficial tax rate for domestic companies: 115BAA

1. Section 115BAA has been inserted in the Income Tax Act,1961 to give the benefit of a reduced corporate tax rate for all domestic companies. Section 115BAA states that domestic companies have the option to pay tax at a rate of 22% plus surcharge of 10% and cess of 4%. 

2. The company shall not claim deductions U/S 10A, 33AB, 35AD, 35CCC, 35CCD, Chapter VIA except for 80JJAA, additional depreciation, set off of losses in respect of above. 

3. The beneficial tax rate shall be opted for by the due date of filing returns. 

4. Such companies shall not be required to pay MAT. 

5. Set off of brought forward depreciation and MAT credit shall not be allowed. 

6. The option should be in Form 10-IC, as notified by the CBDT. The form should be submitted online under a digital signature or EVC. 





TCS






LOSS ON HOUSE PROPERTY LIMITED TO 2 LACS IN LINE WITH CAP ON SELF OCCUPIED LOSS

FY 2016-17 AY 2017-18











Income Tax Slabs for corporate tax



Presumptive tax



Cost Inflation Index for Capital Gains










Medical Insurance


Donations



80JJAA


Difference in advance tax schedule of Companies and Individuals removed
The current advance tax payment schedule for a company is 15%, 45%, 75% and 100% (cumulative) of income tax payable on the full financial year's income to be paid by 15th June, 15th September, 15th December and 15th March, respectively. 

Till last financial year, individuals liable to pay advance tax, had to pay 30%, 60% and 100% (cumulatively) of tax payable on the full fiscal's income by 15th September, 15th December and 15th March, respectively. An individual with a tax liability of Rs 10,000 or or more in a financial year is required to pay advance tax in that year as per current income tax law. Budget 2016 has replaced the separate advance tax payment schedule for individuals with the same schedule as applicable to companies. 



Computation of Advance tax





Dividend Distribution Tax Compution - From Oct 2014 till it was omitted in 2020




 Applicability of Advance Tax requirements in MAT Cases
With the introduction of section 115JB ,clarity on the issue of advance tax was brought in by by CBDT which issued circular saying that the advance tax is applicable and so also section 234B & 234 C for MAT payment for section 115JB.


Example of Advance tax default which cannot be avoided : in case estimated income keeps increasing every quarter





Tax on Receipt of Dividend


Residential Status

Due Dates for filing Returns



TDS Threshold crossed during the year

INCOME COMPUTATION DISCLOSURE STANDARDS (ICDSs)
The central government has notified ten ICDSs effective from A.Y. 2017-18.These are applicable to all assesses (other than an individual or a Hindu undivided family who are not subject to tax audit under section 44AB of the said Act) for the purposes of computation of income chargeable to income-tax under the head “Profits and gains of business or profession” or “Income from other sources”.
Proposed AmendmentThe Delhi High Court in case of Chamber of Tax Consultants & Anr Vs. Union Of India & Ors has held that certain provisions of ICDSs are ultra vires the Income-tax Act, 1961. In order to bring certainty, the following amendments are proposed to be effected with retrospective effect from A.Y. 2017-18, in the Income-tax Act in line with the ICDSs:

20 Imp changes to the Income Tax Changes in 2017 Budget

1. Reduced Tax for Lower slab:
The tax rate for income between Rs 2.5 lakh to Rs 5 lakhs has been reduced to 5% from 10%. 
However there has been NO change in tax rates for other slabs.

2. Rebate under Section 87A reduced to Rs 2,500
The income tax rebate under section 87A has been reduced from Rs 5,000 to Rs 2,500. Also the eligibility of taxable income limit has been reduced from Rs 5 lakh to Rs 3.5 lakh. HUF or NRIs are not eligible for this rebate. Due to this change Senior citizens with income between Rs 3.5 lakhs to 4 lakhs would pay more tax in FY 2017-18 as compared to FY 2016-17.

3. 10% Surcharge for Income above Rs 50 Lakhs
Budget 2017 has introduced 10% surcharge for people with taxable income of more than Rs 50 lakhs but less than Rs 1 crore. The surcharge of 15% on income above Rs 1 crore still applies.

4. NO RGESS Tax exemption from FY 2017-18
Tax exemption under section 80CCG for RGESS (Rajiv Gandhi Equity Scheme) would NOT be available from FY 2017-18 on wards. The deduction was introduced in Budget 2012 to encourage retail participation in stock market but failed to take off as desired.

5. Interest deduction on rented property capped at Rs 2 Lakh
Budget 2017 has bridged the gap between self-occupied and rented property by capping the deduction on home loan interest to Rs 2 lakh in both cases. Earlier for rented property there was NO capping. However additional loss can be carried forward for 8 years.

6. More tax deduction on NPS for self-employed
From next financial year self-employed individuals can claim deduction up to 20% of their gross income for contribution made to National Pension System (NPS). The limit was 10% earlier. This deduction is part of Section 80C and hence not very beneficial!
Additional tax deduction on investment upto Rs. 50,000 under Section 80CCD (1B) will continue to remain the same for all NPS subscribers whether salaried or self-employed.

7. Tax-exemption to partial withdrawal from NPS
Partial withdrawal up to 25% of the contribution made by an employee would be exempted from tax

8. TDS of 5% if the monthly rent paid is more than Rs 50,000
The TDS deduction has to be done on the last month of the financial year or the last month of tenancy. The TDS would be less of last month rent or 5% of total rent paid. This has been done to track high value transactions and do away with the problem of fake rent receipts.

9. Lower Taxes for Small Business:
The taxes for small business with turnover of less than Rs 50 crores has been reduced to 25%. This is significant cut in taxes from earlier 30%. However, there continues to be a 7% surcharge on tax for profit of Rs. 1 to 10 crores. And 12% surcharge on tax above Rs. 10 crore.

10. Audit Threshold Limit raised to Rs 2 crore
The limit for tax audit has been raised from Rs 1 crore to Rs 2 crore for business entities who opt for presumptive income tax scheme.

11. Change of Base year for Indexation:
For calculation of indexation in case of Long Term capital gains for all assets, the base year has been changed from April 1, 1981 to April 1, 2001. This would in most cases be beneficial for tax payers.

12. Long Term Capital Gains for Property:
Budget 2017 changed the holding period for property to 2 years (from 3 years earlier) to qualify for Long Term Capital gains. This would lead to lower taxes.

13. Long Term Capital Gains on Shares:
Long term capital gains on shares would only be available if securities transaction tax (STT) was paid while acquisition of shares. This will apply to all shares acquired after October 1, 2004. However this does not include bonus shares or shares allotted during IPO (initial public offer) or FPO (follow- on public offer). It would impact ESOPs, etc.

14. Aadhaar number must for applying for PAN Card and filing Income tax Return
Effective July 1, 2017 Aadhaar number would be compulsory to obtain a new PAN card. Also you will need to link your existing PAN Car to your Aadhaar number. You will also have to mention your Aadhaar number in the income tax return form from this year (AY 2017-18 onwards). This used to be optional field until now.

15. Penalty for Late filing of Income Tax Return
If the income tax return is filed after the due date but on or before the December 31 of the assessment year, there will be a fine of Rs 5,000. In all other cases, there would be fine of Rs 10,000. However, in case the total income is less than Rs 5 lakh, the penalty should not exceed Rs 1,000.

16. Simple Tax Return Form:
A simple one page income tax return (ITR) form would be introduced for people with income less than Rs 5 lakhs with NO income from Business.

17. NO Scrutiny for First Time ITR
There would be NO scrutiny of income tax returns for people who file ITR for the first time unless there is specific information available with the Department regarding his high value transactions.

18. Reduced Time to revise ITR
The time period to revise tax returns has been reduced to 12 months.

19. Tax Cases can be reopened for up to 10 years
The income tax department can now scrutinize income tax returns up to previous 10 years if it suspects undisclosed income or assets of more than Rs 50 lakhs. Currently this limit was 6 years.

20. Cash Donation Limit to Rs 2,000
Any donation above Rs 2,000 in cash would not be eligible for tax exemption u/s 80G. Donations have to be digital or by cheque to qualify for tax breaks.

21. Limit of Rs 2 Lakh for cash transaction
Now you cannot pay more than Rs 2 lakh in cash for any transaction. The limit has been amended in the finance bill from the earlier proposed limit of Rs 3 lakh. This limit is not only per day, but per transaction and per event. In case of violation, the person has to pay 100% of the cash used in transaction as penalty.

🌲Finance Act Changes applicable from *1/6/16*


👉Electronic Hearing under Income Tax law enabled
👉Document required to be issued by an Income Tax Authority can be issued in paper form or communicated in electronic form
👉Equalization Levy @ 6% on _online digital advertisement and incidental services_ or provision of digital advertising space
👉TCS @ 1% on luxury vehicles and cash sale of goods or provision of services
👉Exit Tax for Charitable Institutions
👉Non resident not having PAN shall not be subjected to 20% TDS
👉Jurisdiction of Assessing Officer not to questioned in serach cases after one month from notice u/s 153A
👉Non Corporate assessee also to pay advance tax , _15% by 15th June . 45% by 15th Sep, 75% by 15th Dec and 100% by 15th March_
_👉In case of presumptive Income 100% advance tax to be paid by 15th March_
👉Application for Waiver of Interest u/s 220(2A) to be disposed off with in one year
👉Interest under section 234C shall not be chargeable in case of an assessee having income under the head "Profits and gains of business or profession" for the first time,
_👉 Interest on Refund for timely filed return to be allowed from 1st April but interest on refund for belated return to be allowed from date of furnishing of return_
_👉 Interest on refund of self assessment tax to be allowed from date of filing of return or payment of tax, whichever is later._
_👉No Interest to be allowed if refund is lesser than 10% of determined tax_
👉Additional 3% Interest for Appeal Effect delayed beyond 3 months
👉In ITAT post of Sr Vice President abolished
👉Rectification period of ITAT orders limited from 4 years to 6 months
👉Monetary limit for Hearing of appeal by SMC in ITAT raised from 15 lacs to 50 lacs u/s 255(3)
👉Time Limit for completion of assessments reduced from 24 months to 21 months . Assessments to be complted by 31st December.
👉Order for appeal effect to be passed with in 3 months from the end of month in which appeal order is received
👉Limit of Rs. 5000/- for Winnings from Horse Races enhanced to Rs. 10,000/-
_👉For TDS on payment to Contractors Aggregate Annual Limit of Rs. 75000/- increased to Rs 100000/-_
👉Monetary Limit of Rs. 20,000/- for TDS on Insurance Commission u/s 194D reduced to Rs. 15000
_👉Monetary Limit for TDS on Commission u/s 194H enhanced from Rs. 5000/- to Rs. 15000/- and rate reduced from 10% to 5% to bring parity with Insurance Commission._
👉Monetary Limit for TDS on Commission on Lottery Tickets u/s 194G enhanced from Rs. 1000/- to Rs. 15000/- and rate reduced from 10% to 5% to bring parity with Insurance and other Commission
👉TDS rate on withdrawl of NSS Deposits reduced from 20% to 10% u/s 194EE
👉TDS on LIC Maturities exceeding Rs. 1,00,000/- not exempt u/s 10(10D) was charged @2% by Finance Act 2014 wef 01-10-2014 . TDS rate lowered to 1%.
👉TDS @10% for compulsory acquisition of immovable property other than agriculture land where aggregate payments during financial year exceed Rs. 2 lacs now enhanced to Rs 2.50 lacs.
_👉Form 15G/15H enabled for rental payments also_
👉The Direct Tax Dispute Resolution Scheme for immunity from post assessment interest, penalty and prosecution for cases pending before CITA on 29-02-2016 [Scheme Available up to 31st December]
👉The Income Declaration Scheme 2016. Tax, Surcharge and Penalty @ 45% of Undisclosed Income. Declaration to be filed till 30th September. Tax etc to be paid till 30th November.



Cost of Inflation Index



 CHECKLIST FOR STATUTORY COMPLIANCES
















NON COMPLIANCE OF TDS
Time Limits for Issuance of Notices, Orders under Different Sections of Income Tax Act, 1961
Income Tax Act, 1961 contains different time limits for issuance of notice, filing of application, completion of assessments, passing of penalty order under several sections.

Sl. No.
Section
Activity
Time Limit
Remarks
1
Sec 142(1)(i)
Notice requiring assessee to furnish return.
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.
If Assessee fails to repond to notice issued u/s 142(1)(i), than AO can make Best Judgemnt Assessment u/s 144.
2
Sec 142(2A)
Special Audit
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.
No Appeal can be filed against direction for audit , only WRIT PETITION and thereafter SPECIAL LEAVE PETITION.
3
Sec 143(1)
Intimation of Return
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.
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).
4
Sec 143(2)
Notice for making Scrutiny Assessment under Sec 143(3)
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.
Notice under this section can only be made, when assessee has filed ROI.
5
Sec 153
Time limit for making Assessment Order under Sec 143(3)
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.
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.
6
Sec 153
Time limit for making Assessment Order under Sec 144
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.
7
Sec 149
Time Limit for issue of notice under Sec 148
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.
8
Sec 149(3)
Time Limit for issue of notice under Sec 148 to the agent of Non Resident
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.
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.
9
Sec 150
No Time limit for issuance of notice under Sec 148
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.
10
Sec 148
Time limit for issuance of Notice under Sec 143(2) in response to Returns filed under Sec 148
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.
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.
11
Sec 153(2)
Order of assessment/ reassessment u/s 147
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.
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.
12
Sec 153(2A)
Time limit for completion of Fresh assessment where original assessment was cancelled or set aside under Sec 254(ITAT), 263 or 264(CIT)
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.
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.
13
Sec 153(3)(a)
No Time limit for completion of assessment or reassessment
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 .
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.
14
Sec 154
Rectification of Mistake
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.
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.
15
Sec 154
Rectification of Mistake
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.
If order is not passed within 6 months, then the recification application shall be deemed to be allowed in favour of assessee.
16
Sec 153B
Time limit for completion of assessment u/s 153A
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.
17
Sec 153C
Time limit for completion of assessment u/s 153A in case of other person referred u/s 153C
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.
18
Sec 153(4)
Time limit for completion of Assessment/ Reassessment which revives u/s 153A(2)
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
19
Sec 245D (4A)
Time limit for passing Order of Settlement Commission
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.
When no Order is made by Settlement within 18 months, the proceedings shall abate u/s 245HA.
20
Sec 245D(6B)
Rectification of Mistake apparent from record by Settlement Commission
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.
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.
21
Sec 245D(7)
Revival of proceedings, when Settlement becomes Void
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.
Settlement becomes Void if it has been obtained by fraud or misrepresentation of facts.
22
Sec 245HA
Abatement of Proceedings before Settlement Commission
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
Sec 245HA
Time limit to complete assessment in case Settlement abates u/s 245HA
Period from date of application of Settlement Commission till date of its abatement shall be excluded for determining period of limitation.
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.
24
Sec 273A
CIT possess the power to reduce the penalty imposed or imposable u/s 271(1) (c)
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.
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
Sec 275
Time limit for passing of Penalty Order in case of Concealment of Income
(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.
26
Sec 281B
Provisional Attachment of Property to protect interest of the Revenue
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.
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.
27
Sec 285
Submission of Statement by a Non Resident having Liason office
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.
Format and content of statement shall be as prescribed.
28
Sec 249
Time limit for filing appeal to CIT(A)
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]
29
Sec 250
Time limit for issue of Order by CIT(A)
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.
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
Sec 254
Order of Stay by ITAT
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.
31
Sec 253
Time limit for filing appeal to ITAT
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.
Other party to file Memorandum of cross Objections to the ITAT within 30 days in Form 36A.
32
Sec 254
Time limit for issuance of Order by ITAT
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.
This time limit is not mandatory, its directory for ITAT.
33
Sec 254(2)
Rectification of mistake by ITAT
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).
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.
34
Sec 260A
Appeal to High Court
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.
Needs substantial question of law; can condone the delay on sufficient cause.
35
Sec 263
Revision Order by CIT u/s 263
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.
Against order passed u/s 263 an appeal can be filed to ITAT.
36
Sec 264
Revision application u/s 264
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.
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
Sec 264
Revision Order by CIT u/s 264
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.
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.
38
Sec 92CA
Reference to Transfer Pricing Officer
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.
Determination of ALP, previous approval of CIT is required
39
Sec 92CC
Advance Pricing Agreement —Time limit if agreement becomes Void
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.
APA is binding for a period not exceeding 5 consecutive years
40
Sec 92CD
Time limit for completion of assessment in case APA is applicable for the years for which Returns were already filed
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.
41
Sec 144C
Dispute Resolution Panel
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.
42
Sec 144C
Issue of directions to AO, on receipt of Objections from eligible assessee
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.
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
Sec 144C
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.
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.

 

.
changes in income tax laws proposed in Budget 2018:

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.

7) Deduction in respect of interest income to senior citizens: Senior citizens will get higher interest income exemption limit on deposits in banks and post offices, including recurring deposits.  Currently, a deduction up to Rs. 10,000 is allowed under Section 80TTA of the Income Tax Act to an individual in respect of interest income from a savings account. Under the tax laws, a new Section 80TTB is proposed to be inserted to allow a deduction up to Rs.50,000 in respect of interest income from deposits held by senior citizens. However, no deduction under Section 80TTA shall be allowed for senior citizens. 
The government also proposed to increase the investment limit in Pradhan Mantri Vaya Vandana Yojana or PMVVY to Rs. 15 lakh from Rs. 7.5 lakh. It also proposed to extend the Pradhan Mantri Vaya Vandana (PMVVY) scheme till March 2020. Pradhan Mantri Vaya Vandana Yojana, a scheme meant for senior citizens, offers a guaranteed interest rate of 8 per cent.


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.

10) Higher income tax deduction for senior citizens for medical treatment of specified diseases:  The deduction available payment towards medical treatment of specified disease is proposed to be hiked to Rs. 1 lakh for very senior citizen (earlier Rs. 80,000) and senior citizen (earlier Rs. 60,000).
  
Important Amendment in Income Tax, in Budget 2017 FY 2017-18 

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.


Budget 2015 -  Assessment Year 2016-17 ( Financial Year 2015-16)

Direct Taxes
2.         Rates of tax
2.1       It is proposed that there will be no change in the rate of personal income-tax and the rate of tax for companies in respect of income earned in the financial year 2015-16, assessable in the assessment year 2016-17.
2.2       It is further proposed to levy a surcharge @12% on individuals, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative societies and local authorities having income exceeding ` 1 crore.  Surcharge in the case of domestic companies having income exceeding ` 1 crore and upto ` 10 crore is proposed to be levied @ 7% and surcharge @ 12% is proposed to be levied on domestic companies having income exceeding ` 10 crore.
2.3       It is further proposed that in the case of foreign companies the surcharge will continue to be levied @2% if the income exceeds ` 1 crore and is upto ` 10 crore, and @5% if the income exceeds ` 10 crore.
2.4       It is also proposed to levy a surcharge @12% as against current rate of 10% on additional income-tax payable by companies on distribution of dividends and buyback of shares, or by mutual funds and securitisation trusts on distribution of income.
2.5       The education cess on income-tax @ 2% for fulfilment of the commitment of the Government to provide and finance universalised quality based education and 1% of additional surcharge called ‘Secondary and  Higher Education Cess’ on tax and surcharge is proposed to be continued for the financial year 2015-16 for all taxpayers.

 Benefits to  taxpayers
With a view to encourage savings and to promote health care among individual taxpayers, a number of measures are proposed to be taken by way of incentives under the Income-tax Act.  The same are enumerated below:-
7.1       It is proposed to provide that investment in Sukanya Samriddhi Scheme will be eligible for deduction u/s 80C and any payment from the scheme shall not be liable to tax.
7.2       It is proposed to increase the limit of deduction u/s 80D of the Income-tax Act from ` 15,000 to ` 25,000 on health insurance premium (in case of senior citizen from ` 20,000 to ` 30,000). It is also proposed to allow deduction of expenditure of similar amount in case of a very senior citizen not eligible to take health insurance.
7.3       It is proposed to increase the limit of deduction in case of very senior citizens u/s 80DDB of the Income-tax Act on expenditure on account of specified diseases from ` 60,000 to ` 80,000.
7.4       It is proposed to increase the limit of deduction u/s 80DD of the Income-tax Act in respect of maintenance, including medical treatment of a dependant who is a person with disability, from ` 50,000 to `75,000.  It is also proposed to increase the limit of deduction from ` 1 lakh to `1.25 lakh in case of severe disability.
7.5       It is proposed to increase the limit of deduction u/s 80U of the Income-tax Act in case of a person with disability, from ` 50,000 to ` 75,000.  It is also proposed to increase the limit of deduction from ` 1 lakh to `1.25 lakh in case of severe disability.
7.6       It is proposed to increase the limit of deduction u/s 80CCC of the Income-tax Act on account of contribution to a pension fund of LIC or IRDA approved insurer from ` 1 lakh to ` 1.5 lakh.
7.7       It is proposed to increase the limit of deduction u/s 80CCD of the Income-tax Act on account of contribution by the employee to National Pension Scheme (NPS) from ` 1 lakh to ` 1.50 lakh.  It is also proposed to provide a deduction of  upto ` 50,000 over and above the limit of ` 1.50 lakh in respect of contributions made to NPS.
7.8       It is proposed to amend the provisions of section 197A of the Income-tax Act so as to provide the facility of filing self-declaration of non-deduction of tax by the recipients of taxable maturity proceeds of life insurance policy.
7.9       Under the existing provisions of the Income-tax Act, an individual buying an immovable property from a resident is required to deduct tax but is not required to obtain TAN for depositing the tax so deducted.  With a view to extend the same facility to an individual or HUF purchasing an immovable property from a non-resident, it is proposed to relax the requirement of obtaining TAN by the individual or HUF who is required to deduct tax on acquisition of immovable property from a non-resident.
7.10     It is proposed to provide that donation made to National Fund for Control of Drug Abuse (NFCDA) shall be eligible for 100% deduction under section 80G of the Income-tax Act.
7.11     Details of tax deductions referred to in para 99.
            ·       Deduction u/s 80C                                                 `1,50,000
            ·       Deduction u/s 80CCD                                               `50,000
            ·       Deduction on account of interest
                    on house property loan
                    (Self occupied property)                                        `2,00,000
            ·       Deduction u/s 80D on health  insurance premium   `25,000
            ·       Exemption of transport allowance                           `19,200
                    Total                                                                      `4,44,200
8.         F.   Stand alone proposals to maximise benefits to the economy
8.1       It is proposed to provide for chargeability of interest paid by a permanent establishment (PE) or a branch of foreign bank to its Head Office (HO) and other overseas branches under the source rule of taxation and for treating the PE or branch as a taxable entity for computation of income and for purpose of levy of TDS.
8.2       With a view to providing a uniform method of computation of period of stay in Indian for the purposes of determination of ‘resident’ status in the case of a India seafarer, whether working on a Indian-ship or foreign-ship, it is proposed to provide an enabling power to CBDT to prescribe the same in the rules.
8.3       In search cases, it is proposed to allow seized cash to be adjusted towards the assessee’s tax liability under his settlement application.
8.4       With a view to ensuring proper deduction of tax on payments made to non-residents, it is proposed to amend the provisions of section 195 of the Income-tax Act so as to provide for enabling power to the CBDT for capturing information about prescribed foreign remittances which are claimed to be not chargeable to tax


Tax Related Highlights of Union Budget 2016-17
Budget Highlights 2016 (Tax Related)

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.

42. Domestic taxpayers can declare undisclosed income or such income represented in the form of any asset by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. Declarants will have immunity from prosecution.

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.



Taxability of Gifts

Less than 50,000
As per Section 56 of Income Tax Act 1961, Gift exceeding Rs. 50,000/- is taxable in the hands of Donee and is to be indicated under the head Income from Other Sources in ITRs. But if gifts received from Donors does not exceeds Rs. 50,000/- then sum sum received is not taxable under any head of Income. 

Specified Circumstances
Also, Second Proviso to Section 56(2)(vii) of Income Tax Act, 1961 provides for certain conditions where any sum received as gift is not to be provided for tax under Income Tax Act, 1961 whether that exceeds Rs. 50,000/- or not. 
a)   from any relative; or 
(b)   on the occasion of marriage of the individual; or 
(c)    under a will or by way of inheritance; or
 (d)   in contemplation of death of the payer or donor, as the case may be; or 
(e)    from any local authority as defined in the Explanation to clause (20) of section 10; or
 (f)     from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or
 (g) from any trust or institution registered under section 12AA 




Wealth Tax

WealthTax used to be charged @ 1% of the amount by which the net wealth exceeds Rs. 15 Lakhs.


In the 2015 Budget finance minister said, “There was no point in continuing the Wealth Tax as the cost of collection was high, abolition of wealth tax will lead to tax simplification and widening of the tax base.