Amendments (DT)
AY 19-20
CA Final Nov 2019
Amendments – A.Y. 19 - 20
Important From Exam Point of View
Tax Rates | CESS now revised to 4 % Companies in PY 16-17 turnover less than 250 cr, tax rate will be 25 % |
Expl. 3 to 11 | Charitable Trust – compliance for application 40(a)(ia) TDS compliance 40A(3) Cash expense / outflow limit 10,000 apply. 40A(3A) Cash Payment of Business liabilities where expense is claimed before in excess of 10,000 |
Salaries | Conveyance allowance withdrawn Medical reimbursement exemption -15,000 withdrawn Standard deduction of 40,000. Withdrawal from NPS Withdrawal from NPS up to 40% exempt in case of all assessee Previously only withdrawal by employees were exempt u/s 10(12A) |
56 | Some of the transaction of 47 outside perview of taxation of 56(2)(x) |
80JJAA | employment of new employees Apparel / footwear / leather products Employed in PY for less than 150 days Other business 240 days But employed in subsequent year for specified days and then they shall be deemed to have been employed in subsequent year. |
115BBE | Income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D is taxed @ 60 % without any expenditure / allowance / set off. Special surcharge of 25% is imposed by finance act on tax on 115BBE income. |
193 | TDS on interest of securities 7.75 % savings taxable bonds (2018) are covered where amount is more than 10,000. |
271FA | Penalty for failure to furnish statement of financial transaction or reportable account. Penalty 500 per day – late submission Penalty 1000 per day - late submission after issue of notice |
276CC | Failure to furnish returns of income. Offence for tax payable by such person not being a company. |
80IAC Eligible Start-up’s | Rationalizing provisions exempting profits of eligible Start-ups Any 3 consecutive years out of 7 years from incorporation is 100 % deduction of income. Eligible business = Involvement in innovation, development, improvement of production or processes or services, or a scalable business model with a high potential of employment generation or wealth creation Eligibility criteria widened Changes in Eligibility criteria Incorporation on or before March 31, 2021 (instead of 2019) Turnover < 25 crores for year of deduction. |
Procedure of Assessment | |
139(1) | Filing of return within timelines u/s 139(1) must for claim of deductions u/s 80HH to 80RRB Section 80JJAA, 80-IAC, 80PA |
139A | PAN to be obtained (v) By a resident, other than an individual, which enters into a financial transaction of an amount aggregating to two lakh fifty thousand rupees or more in a financial year; or (vi) who is the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of the person referred to in clause (v) or any person competent to act on behalf of the person referred to in clause (v),] |
143(1) | 143(1)(a) No adjustment needed for additions appearing in form 26AC, 16, 16A |
143(3A) | Government may notify scheme for making assessment to import greater efficiency, transparency and accountability. To eliminate interference between AO and Assessee. To have team based assessment with dynamic jurisdiction. |
Business Income | |
28(via) 2(42A) 49(9) | Conversion of stock in trade to capital asset will be taxable. FMV on the date of conversion will be regarded as income. “the fair market value of inventory as on the date on which it is converted into, or treated as, a capital asset determined in the prescribed manner” Holding period of asset for capital gains will begin after the date of conversion. FMV on date of conversion will be cost for capital gains. |
28(iie) 56(xi) | Where there is any compensation for termination / modification of terms and condition of business contract will be taxable as business income. Any compensation for termination of employment is taxable is IFOS. |
43(5) | Commodity derivatives carried out in a recognised association will not be speculative even if CTT is not paid. 43(5) "speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips: Provided that for the purposes of this clause— (a) a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him; or (b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; or (c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; [or] (d) an eligible transaction in respect of trading in derivatives referred to in clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised stock exchange; [or] (e) an eligible transaction in respect of trading in commodity derivatives carried out in a recognised association, which is chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013 (17 of 2013), shall not be deemed to be a speculative transaction. Provided further that for the purposes of clause (e) of the first proviso, in respect of trading in agricultural commodity derivatives, the requirement of chargeability of commodity transaction tax under Chapter VII of the Finance Act, 2013 (17 of 2013) shall not apply. |
43CA | SDV on the date of agreement will be taken for if payment at time of agreement is made either in part or full by banking means. |
44AE | Presumptive income Heavy goods vehicle (weight > 12 ton) = Rs. 1000 pm /p ton / p vehicle of gross weight of vehicle (un-laden) Others – 7500 pm / p vehicle |
Capital Gains | |
10(38) 112A | LTCG on sale of listed shares Now it is taxable @ 10 % (subject to basic limit of 100,000) No indexation to be allowed VIA deductions are not to be allowed against specified income. Cost of shares to be computed as Higher of Actual cost Lower of FMV as on 31/01/2018 Full value of consideration |
47(viiab) | Transfer of Capital asset being Bonds / GDR of 115AC / rupee denominated bonds or derivatives by NR in IFSC is not regarded as transfer. |
54EC | Is eligible only for transfer of Land and Building or Both. Holding period of bonds increased from 3 years to 5 years. |
43CA 50C 56 | Stamp duty value is considered for Immovable property transaction as fair value for Business income, capital gains and other sources. However marginal relief is provided now. If SDV is less than 105 % of actual consideration then actual consideration will be taken for computation. Tolerance Level (5 %) |
ICDS Related | |
145A | Method of accounting in certain cases For the purpose of determining the income chargeable under the head "Profits and gains of business or profession",— (i) the valuation of inventory shall be made at lower of actual cost or net realisable value computed in accordance with the income computation and disclosure standards notified under sub-section (2) of section 145; (ii) the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation; (iii) the inventory being securities not listed on a recognised stock exchange, or listed but not quoted on a recognised stock exchange with regularity from time to time, shall be valued at actual cost initially recognised in accordance with the income computation and disclosure standards notified under sub-section (2) of section 145; (iv) the inventory being securities other than those referred to in clause (iii), shall be valued at lower of actual cost or net realisable value in accordance with the income computation and disclosure standards notified under sub-section (2) of section 145: Provided that the inventory being securities held by a scheduled bank or public financial institution shall be valued in accordance with the income computation and disclosure standards notified under sub-section (2) of section 145 after taking into account the extant guidelines issued by the Reserve Bank of India in this regard: |
145B | Taxability of certain income. 145B. (1) Notwithstanding anything to the contrary contained in section 145, the interest received by an assessee on any compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the previous year in which it is received. (2) Any claim for escalation of price in a contract or export incentives shall be deemed to be the income of the previous year in which reasonable certainty of its realisation is achieved. (3) The income referred to in sub-clause (xviii) of clause (24) of section 2 (government grants) shall be deemed to be the income of the previous year in which it is received, if not charged to income-tax in any earlier previous year. |
36(1) 40A | Marked to Market loss allowed as computed in accordance with ICDS. If it is not computed as per ICDS then it shall not be allowed. Only MTM forex loss on forward / option / currency swap contracts of underlying exposure allowed. MTM loss on commodity forwards, interest rate swaps, etc. are not allowable as per Section 40A in absence of explicit provision in ICDS. |
43CB | Construction contract / service contracts income to be computed as per ICDS. Contract for services Not more than 90 days then project completion method can be followed. If it involved indeterminate act then follow FIFO basis. % completion method Contract revenue to include retention money Contract cost not to be reduced by incidental income / interest / dividend |
43AA | Exchange loss to be allowed when it is in relation to ICDS notified. |
Producer Company | |
80PA | Where the gross total income of an assessee, being a Producer Company having a total turnover of less than one hundred crore rupees in any previous year, includes any profits and gains derived from eligible business 100% deduction is given. (similar to co-operative society computation) eligible business" means—
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Senior Citizen | |
80D | Mediclaim limit for senior citizen 50,000 If the multiple year premium is paid then take it as Premium / number of years. |
80DDB | amount for the medical treatment of such disease or ailment as may be specified for senior citizen limit 100,000 non senior citizen limit 40,000 Deduction shall be reduced by the amount of re-imbursements by insurer or employer as the case may be. |
80TTB | Senior citizen specified Income Deduction limit 50,000 interest on deposits with (a) a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act); (b) a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or (c) a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898), No deduction if deposit are held on behalf of firm or AOP. |
194A | Interest TDS - Senior citizen TDS limit – 50,000 |
International taxation | |
9 | Scope widened to include Dependent Agent who has / habitually exercises authority to conclude contracts on behalf of NR habitually play principle role leading to conclusion of contracts by NR In the name of NR for transfer of ownership or right to use of property owned / leased by NR for provision of services by NR habitually maintains stock of goods / merchandise for regular delivery habitually secures orders mainly / wholly for NR / group company In lines with BEPS Action Plan 7 |
9 | Significant Economic Presence Transactions w.r.t. goods, services or property carried by NR in India Incl. provision of data download / software in India Revenue threshold to be prescribed Systematic and continuous soliciting of business activities or engaging in interaction with prescribed number of users in India through digital means Specially applicable to digital economy transactions Not applicable to transactions subject to Equalisation levy Exempt under Sec. 10(50) |
Country By Country Reporting | Due date for filing CbCR extended to 12 months from end of Accounting Year of Reporting entity. Delinked with due date u/s 139(1) Filing u/s. 286(4) to be completed within 12 months from the end of Accounting Year of Group Parent |
Corporate Taxation | |
115JB | Where some of specified NR / Foreign company is disclosing their income as per presumptive basis of specified provisions of business income then MAT provisions do not apply to them. 44B – NR / foreign company Shipping 44BB – NR / foreign company oil exploration 44BBA – NR /foreign company aircrafts 44BBB – foreign company Turnkey power project |
115JF | Alternate minimum tax for Unit located in IFSC @ 9 % |
115JC | MAT for Unit located in IFSC @ 9 % |
115BA | Corporate tax @ 25 % subject to other provisions of the act without specified deductions or exemptions. (streamlining of provision) |
Company under insolvency | |
115JB | Where company against whom application of corporate insolvency is passed then for the purpose of MAT Aggregate of Accumulated Losses and depreciation shall be allowed as deduction. |
79 | Change in shareholding pattern will not disentitle the Pvt company to set off losses if the change is due to plan approved under Insolvency and Bankruptcy code 2016 |
140 | Where company is under insolvency and bankruptcy code then insolvency professional appointed by such authority shall sign the return of income. |
Dividend Tax | |
115O 2(22) 115BBDA | Dividend tax 2(22)(a)(b)(c)(d) - @ 15 % (grossing up required) 2(22)(e) - @ 30 % (loan to specified shareholder) (No grossing up) If loan is treated as dividend then it will be exempt in hands of shareholder. To be taxed in the hands of company instead of shareholder Exempt in the hands of shareholder (No 10% HNI Dividend Tax of 115BBDA w.r.t 2(22)(e) dividend) Distribution by amalgamated company be considered as dividends to the extent of accumulated profit of – Amalgamating company (at the time of amalgamation) + Amalgamated company (at the time of distribution) |
115R | Income distributed / dividend tax (no grossing up) Money Market Mutual Fund to Indl or HUF – 25 % Money Market Mutual Fund to others– 30 % Equity oriented fund to any person – 10 % Any other fund to Indl or HUF – 25 % Any other fund to others – 30 % |
115BBDA | HNI dividend taxation provisions do not apply to Domestic company and Charitable Trust. These provisions also do not apply to dividend referred to in 2(22)(e) |
List of Video Class Related to Amendments and Important discussion. | |
Chapter ID | Video ID |
F06 (Business) | Part B – Video 31 (based on recent development) Part B – Video 32 (based on recent development) |
F07 (Dividend Tax) | Part B – All videos (amendments) |
F08 (Firms) | Part B – Video 21 (based on recent development) |
F09-D (IFSC) | Part D – Video 31 |
F10 (Charitable Trust) | Part B – Video 27 |
F12 (Producer Co.) | Video 11 (amendments) |
F14 Capital Gains | Part A – Video 08A and 08B (amendments) Part A – Video 35A and 35B (amendments) |
F53 | Part B – All videos (corporate taxation, dividend tax etc) All the questions are important since they are based on recent amendment and legal updates. |
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