New Initiatives

Surana Maloo & Co.

E x e c u t i v e

S u m m a r y

Modi government’s first two budgets - one in 2014, just months after he took office, followed by a full budget in 2015 have failed to excite economic commentators hoping for a bold new wave of reforms.

India has sustained over 7 per cent growth in 2015-16, earning the economy the tag of being one of the world’s fastest growing large economies. However, predictions of weak global growth, the slowdown of the Chinese economy and the continued uncertainty in global crude oil prices, have put an additional burden on the Indian economy. Amidst this backdrop, Mr. Jaitely presented Finance Bill, 2016, as part of the Union Budget 2016-17, to Parliament on 29 February, 2016 and it was not a disappointment for the nation. Hon’ble finance minister substantiated on last year’s announcement of phased reductions in the corporate tax rate over the next few years and a structured plan to phase-out the exemptions. Further various measures to move towards a litigation free environment will build the tax payers’ confidence to a great level. The proposals were complimented by important incremental steps towards ensuring the success of the ‘Make in India’ and other flagship campaigns such as ‘Startup India’ by introducing specific benefits for such entities. The Budget Analysis summarizes the significant Direct Tax amendments proposed by Hon’ble Finance Minister.

Table of Contents

New Initiatives

New tax incidence

House property

Profits & Gains from business and profession

Capital Gain & IFOS

Deductions and Exemptions

TDS & TCS

Penalties

Procedural Amendments

Others

2 0 1 6

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Corporate Tax rate proposals:

 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.

 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.

Tax incentives for start-ups

 Section 80IAC inserted

 100 % profit linked deduction

 Any 3 consecutive years of 5 years from incorporation

 Should fall under the definition of ‘eligible business’

 Fulfills condition as prescribed in the section

 Startup incorporated after 01/04/2016 before 01/04/2019

 Total turnover does not exceed ` 25 crores in any PY from 01/04/2016 to 31/03/2021

Non-applicability of Minimum Alternate Tax (MAT) to foreign companies

 MAT not applicable to foreign companies not having permanent establishment in India

 Retrospective amendment from AY 2001-02 and onwards

The Income Declaration Scheme, 2016

 Voluntary income disclosure gateway to be opened from 01/06/2016 to 30/09/2016

 Applicable in respect of undisclosed income of any FY up to 2015-16

 Tax to be paid:

i). Basic tax @ 30% on declared income

ii). Surcharge @ 25% on tax payable (in name of Krishi Kalyan cess)

iii). Penalty @ 25% on tax payable

 Exempt from wealth-tax in respect of assets specified in declaration

 No scrutiny or enquiry under Income Tax and Wealth tax

 Immunity from:

i) Prosecution

ii) Benami Transactions (Prohibition) Act, 1988

 Misrepresentation or suppression of facts – Declaration to be considered void

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

 Non-eligibility of following cases:

 Notices issued u/s 142(1) or 143(2) or 148 or 153A or 153C

 Search or survey cases

 Information is received under an agreement with foreign countries regarding such income

 Cases covered under the Black Money Act, 2015,

 Persons notified under Special Court Act, 1992,

 Cases covered under Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Unlawful Activities (Prevention) Act, 1967, the Prevention of Corruption Act, 1988

Moving to litigation free environment – Introduction of The Direct Tax Dispute Resolution Scheme, 2016

 Applicable to "tax arrears" i.e. amount of tax, interest or penalty determined under the Income-tax Act or the Wealth-tax Act

 Appeal is pending before the CIT(Appeals) or the Commissioner of Wealth-tax (Appeals) as on 29/02/2016

 Appeal pending under against an assessment order or a penalty order

 Pay tax + interest (upto date of assessment)

 If disputed tax > ` 25 lacs - 25% of minimum penalty leviable to be paid

 Appeal against a penalty order - 25% of minimum penalty leviable to be paid

 Appeal deemed to be withdrawn

 Withdraw any writ petition or any appeal filed against such specified tax

 Violation of any condition under scheme – declaration to be considered void

 Immunity from prosecution proceedings

 Non-eligibility of following cases:

 Cases where prosecution has been initiated before 29.02.2016.

 Search or survey cases

 Cases relating to undisclosed foreign income and assets.

 Cases based on information received under Double Taxation Avoidance Agreement under section 90 or 90A of the IT Act where the declaration is in respect of tax arrears.

 Person notified under Special Courts Act, 1992.

 Cases covered under Narcotic Drugs and Psychotropic Substances Act, Indian Penal Code, Prevention of Corruption Act or Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974

 Designated authority to pass order for declaration within 60 days

 Payment to be made within 30days of passing order

 Mattered covered above shall not be subject to reopening proceedings

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Tax proposals of other concerns:

 Surcharge to be raised from 12% to 15% on persons, other than companies, firms and cooperative societies having income above ` 1 crore.

Taxation on dividend income

 Applicability: Individual, HUF & Firm (resident)

 Dividend income > ` 10 lacs only

 Taxability – only on the incremental amount in excess of ` 10,00,000/-

 Example – total dividend ` 15,00,000 – then taxable only ` 5,00,000/-

 Rate of tax: 10 % on dividend income exceeding ` 10 lacs only

Cessation or conversion of charitable trust to non- charitable trust – ‘Exit tax’

 New chapter XII-EB inserted

 Tax @ MMR on accreted income

 Accreted income = total assets – total liabilities (as on specified date)

 To be paid within 14 days from prescribed date

 Non-payment: simple interest @ 1% per month or part thereof

 w.e.f. 01/06/2016

Income from patents

 New section 115BBF inserted

 Applicable to gross royalty in respect of a patent developed and registered in India

 Taxable @ 10% + surcharge + cess

 Eligible Assessee:

 Person resident in India

 True and first inventor of the invention

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Additional deduction – interest on home loan (Section 80EE)

 Applicable on to ‘first-home buyers’

 Additional deduction upto ` 50,000

 Value of house property < ` 50 lacs

 Amount of loans not more than ` 35 lacs

 Loan sanctioned during 01/04/2016 to 31/03/2017

 Benefit extended till the repayment of loan continues

 Over and above the limit of ` 2,00,000 for a self-

occupied property u/s 24 of the act Amendment to provisions related to ‘Income from House property’

 Time period for acquisition or construction of self- occupied house property for claiming deduction of interest increased from 3 years to 5 years (Section 24 (b))

 Amount of rent received in arrears or the amount of unrealized rent realized – taxable in the financial year of receipt or realization irrespective of ownership

 Deduction of 30% allowable on arrears or unrealized rent received

 Existing provisions u/s 25A, 25AA & 25B submerged as section 25A

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Presumptive taxation for professionals

 New section 44ADA inserted

 Total gross receipts does not exceed ` 50 lacs

 Presumptive income – 50% of gross receipts

 Applicability: Individual, HUF, Firm but not LLP

Threshold limit for audit of professionals

 Threshold limit increased from ` 25 lacs to ` 50 lacs (section 44AB)

Presumptive taxation for business (section 44AD)

 Threshold limit increased from ` 1crore to ` 2 crores

 Advance tax to be paid by 15th March of the PY

 If eligible Assessee declares profit for any previous year in accordance with section 44AD and he declared profit under normal provisions in any of the subsequent 5 years, he shall not be eligible to claim the benefit u/s 44AD for next 5 years.

 Illustration:

Allowability of provision for doubtful debts extended to NBFCs

 Limited to amount not exceeding 5% of the gross total income computed before aforesaid deduction (Section 36)

Rationalizations of scope u/s 32AC(1A)

 Existing condition: acquisition and installation has to be done in the same previous year

 Proposed: Acquisition or installation can be in different years; installation to be done before 31/03/2017

 w.r.e.f. 01/04/2016

Extension of scope of section 43B

 Payments made to Indian Railways for use of Railway assets brought within ambit of section 43B

Taxation of Non-compete fees and exclusivity rights in case of Profession

 Non-compete fee received/receivable in relation to any profession brought under the definition of income u/s 28(va)

 NO Capital gain from receipts for transfer of right to carry on any profession

 Provide the 'cost of acquisition' and 'cost of improvement' on capital receipts arising out of transfer of right to carry on any profession shall also

AY 17-18 Section 44AD

AY 18-19 Section 44AD

AY 19-20 Section 44AD

AY 20-21 Normal return

AY 21-22 to

AY 25-26 Section 44AD benefit cannot be availed

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Phasing out of deduction in business & Profession

 Applicable from AY 18-19 – Table 2

* AY – Assessment year | PY – Previous year

Additional depreciation @ 20% under section 32(1)(iia)

 Existing benefit limited to assessees engaged in the business of generation and distribution of power

 Extended to assessee engaged in the business of transmission of power also be taken as 'nil' for computing Capital Gain.

Sr. No. Section Existing Proposed

1 32 r.w. Rule 5 Accelerated depreciation on speci- fied assets

Highest rate of depreciation restricted to Applicable to all assets 40%

(w.e.f. PY 2017-18) 2 35(1)(i) Weighted deduction @ 175% 150% (PY 2017-18 to 2019-20)

100 % (PY 2020-21 onwards) 3 35(1)(iia) Weighted deduction @ 125% 100% (PY 2017-18 onwards) 4 35(1)(iii) Weighted deduction @ 125% 100% (PY 2017-18 onwards) 5 35(2AA) Weighted deduction @ 200% 150% (PY 2017-18 to 2019-20)

100 % (PY 2020-21 onwards) 6 35(2AB) Weighted deduction @ 200% 150% (PY 2017-18 to 2019-20)

100 % (PY 2020-21 onwards)

7 35AD Weighted deduction @ 150%

(specified business) 100% (PY 2017-18 onwards)

8 35CCC Weighted deduction @ 150%

(notified agriculture extension pro-

vision) 100% (PY 2017-18 onwards)

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Capital Gains exemption - Fund related to Startup India

 Section 54EE inserted

 LTCG to be invested in units of specified funds as may be notified by CG

 Lock-in period: 3 years

 Investment shall not exceed ` 50 lacs Section 54GB amended

 Applicability: Individual and HUF

 Sale of residential property

 Investment in shares of eligible startup

 Shareholding should be more than 50%

 Company (start-up) shall utilize the proceeds for purchase of new assets on or before due date of filing of return by the investor

 Expression "new asset" to also include computers or computer software in case of certified technology driven start-ups

Rupee Denominated Bond

 Relief benefit to non-resident investors from risk of currency fluctuation

 Capital gains arising on redemption of Rupee Denominated Bond to be exempt (Section 48)

Sovereign Gold Bond Scheme, 2015

 Redemption of Sovereign Gold Bond – not to be regarded as transfer (only for individuals)

 Indexation benefit extended to Long term Capital gains arising on transfer of Sovereign Gold Bonds – applicable to all Assessees

Gold Monetization Scheme, 2015

 Excluded from definition of capital asset u/s 2(14) – no capital gains

 Interest on deposit certificates issued under the scheme – exempt u/s 10(15)

w.r.e.f. 01/04/2016

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Definition of the term ‘unlisted securities’

 Section 112(1)(c) LTCG from transfer of a capital asset being shares of a company not being a company in which the public are substantially interested –Taxable at 10% (Without Indexation)

 Private company shares also covered. (Unlisted Securities)

 Applicable to Non-Resident (Not being a company) or foreign company

Rationalization of Section 50C

 Date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same

 The stamp duty value on date of the agreement to be considered for computation.

 Payment ought to be made before the date of agreement via banking channels.

Conversion of a Company into LLP

 Additional condition- the total assets of the company in any of the three previous years preceding the PY in which the conversion takes place- not to exceed 5 Crores^.

 In reference to section 47 that is transactions not regarded as transfer for computing capital gain.

Rationalization of section 56 (IFOS)

 Shares received by an individual or HUF as a consequence of demerger or amalgamation of a company shall not attract the provisions of section 56 (2)(vii)

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Phasing out of deductions and exemptions

 Applicable from AY 17-18 – Table 1

* AY – Assessment year | PY – Previous year

Income of Foreign company from storage and sale of crude oil stored as part of strategic reserves

 Amendment to section 10(48A)

 Income exempt: storage of crude oil in a facility in India and sale of crude oil therefrom to any person resident in India subject to conditions prescribed

 w.r.e.f. 01/04/2016

Activity related to diamond trading in "Special Notified Zone"

 Amendment to section 9

 Applicable to Foreign Mining Companies

 No income deemed to accrue or arise in India from the activities confined to display of uncut and unassorted dia- monds in a Special Zone notified by the CG

 w.r.e.f. 01/04/2016

Sr. No. Section Existing Proposed

1 10AA (SEZ) No sunset clause Sunset w.e.f. 01/04/2020

2 35AC No deduction from PY 2017-18

3 35CCD Weighted deduction 150% Deduction @ 100% from PY 2020-21 4 80IA, 80IAB, 80IB

(9) 100 % profit linked deduction No deduction on activity commenced from PY 2017-18

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Promoting Affordable housing – tax benefits

 New section 80IBA inserted

 100% profit linked deduction

 Project to be approved after 01/06/2016, but on or before 31/03/2019

 Project to be completed within 3 years of first approval

 Specified conditions:

Tax incentive for employment generation – Section 80JJAA

 30% deduction additional wages paid to new regular workmen in a such business for 3 years

 Extended to all sectors

 Minimum working days reduced from 300 to 240 days

 Condition of 10% increase in number of employees every year is proposed to be done away

 1st year of business – 30 % of emoluments of

Relief to small taxpayers - Deduction u/s 80GG

 Rent paid for residential accommodation

 No HRA received from employer

 Earlier - ` 24,000 per annum

 Proposed - ` 60,000 per annum

Relief to small taxpayers - Rebate u/s 87A

 Applicability: Resident Individual (Income not exceeding ` 5 lacs)

 Amount of rebate increased from ` 2,000 to ` 5,000

Tax incentives to International Financial Services Centre (IFSCs)

 Section 10(38) - exemption from tax on capital gains to the income arising from transaction undertaken in foreign currency on a recognised stock exchange located in IFSC (No STT to be paid)

 Section 115JB - unit located in IFSC and deriving its income solely in convertible foreign exchange, MAT shall be chargeable @ 9%

 Section 115-O – No DDT on dividend declared, distributed by a company being a unit located in IFSC, deriving income solely in convertible foreign exchange

 Section 113A – No STT / CTT on transaction undertaken in foreign currency on a recognised stock exchange / recognized association located in IFSC

Metro cities Other cities

Plot of land not less than 1000 sq mts.

Size of the residential unit not more than 30 sq mts.

Located within 25 km from the municipal limits

Plot of land not less than 2000 sq mts.

Size of the residential unit not more than 60 sq mts.

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Amendment pertaining to TDS (w.e.f. 01/06/2016)

Increase in threshold limit of deduction of tax at source on various payments mentioned in the relevant sections of the Act

Revision in rates of deduction of tax at source on various payments mentioned in the relevant sections of the Act

Section Head Existing Proposed

192A Payment of accumulated balance due to an em-

ployee 30,000 50,000

194BB Winnings from Horse Race 5,000 10,000

194C Payments to Contractors Aggregate annual limit

of 75,000 Aggregate annual limit of 1,00,000

194LA Payment of Compensation on acquisition of cer-

tain Immovable Property 2,00,000 2,50,000

194D Insurance commission 20,000 15,000

194G Commission on sale of lottery tickets 1,000 15,000

194H Commission or brokerage 5,000 15,000

Section Heads Existing Rate Proposed Rate

194DA

Payment in respect of Life Insurance Policy

2%

1%

194EE

Payments in respect of NSS Deposits

20%

10%

194D

Insurance commission

Rate in force (10%)

5%

194G

Commission on sale of lottery tickets

10%

5%

194H

Commission or brokerage

10%

5%

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Certain non-operational provisions to be omitted

Form 15G/15H for rental payments

 Self Declaration under Form 15G and 15H for rental payments

 W.e.f. 01/06/2016 Widened base of TCS

 Sale of motor vehicle > ` 10 lacs - TCS @ 1%

 Sale in cash of goods (other than gold / bullion) or services provided > ` 2 lacs – TCS @ 1%

 No TCS if TDS is deducted by payer on purchase of goods or receipt of services

 w.e.f. from 01/06/2016

Exemption from furnishing of PAN u/s 206AA to certain NR

 Furnishing of PAN not mandatory to a non-resident, not being a company, or to a foreign company, in respect of any other payment, other than interest on bonds, subject to prescribed conditions

 w.e.f. 01/06/2016

Section Heads Proposal

194K

Income in respect of Units To be omitted w.e.f 01.06.2016 194L

Payment of Compensation on acquisition of Capital Asset To be omitted w.e.f 01.06.2016

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Rationalisation of penalty provisions

 Sectiojn 271(1)(c)- scrapped and deleted w.e.f. 1/04/2017

 Insertion of new section 270A - seeks to provide that the Assessing Officer, Commissioner (Appeals) or the Principal Commissioner or Commissioner may levy penalty if a person has under reported or misreported income.

 Quantum –

 In case of under reporting income – 50% of the tax effect

 In case of misreporting of income – 200% of the tax effect

Incidence of under reporting of income Incidence misreporting of income (a) the income assessed is greater than the income determined

in the return processed under clause (a) of sub-section (1) of section 143;

(b) the income assessed is greater than the maximum amount not chargeable to tax, where no return of income has been fur- nished;

(c) the income reassessed is greater than the income assessed or reassessed immediately before such re-assessment;

(d) the amount of deemed total income assessed or reassessed as per the provisions of section 115JB or 115JC, as the case may be, is greater than the deemed total income determined in the return processed under clause (a) of sub-section (1) of section 143;

(e) the amount of deemed total income assessed as per the pro- visions of section 115JB or 115JC is greater than the maximum amount not chargeable to tax, where no return of income has been filed;

(f) the income assessed or reassessed has the effect of reducing the loss or converting such loss into income.

(i) misrepresentation or suppression of facts;

(ii) non-recording of investments in books of account;

(iii) claiming of expenditure not substantiated by evidence;

(iv) recording of false entry in books of account;

(v) failure to record any receipt in books of account having a bearing on total income;

(vi) failure to report any international transaction or deemed international transaction under Chapter X.

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

 Exceptions to section 270A

 where the assessee offers an explanation and the income-tax authority is satisfied that the explanation is bona fide and all the material facts have been disclosed;

 where such under-reported income is determined on the basis of an estimate, if the accounts are correct and complete but the method employed is such that the income cannot properly be deducted therefrom;

 where the assessee has, on his own, estimated a lower amount of addition or disallowance on the issue and has included such amount in the computation of his income and disclosed all the facts material to the addition or disallowance;

 where the assessee had maintained information and documents as prescribed under section 92D, declared the international transaction under Chapter X and disclosed all the material facts relating to the transaction;

 where the undisclosed income is on account of a search operation and penalty is leviable under section 271AAB.

Amendment in section 271AAB

 In section 271AAB(1)(c) – instead of range of 30% to 90% - flat 60% penalty proposed.

Amendment in section 272A

 One new situation covered – to include levy of penalty of 10000 rupees for each default or failure to comply with a notice issued under sub-section (1) of section 142 or sub-section (2) of section 143 or failure to comply with a direction issued under sub-section (2A) of section 142.

Immunity from penalty and prosecution in certain cases by inserting new section 270AA

 Proposed to provide that an assessee may make an application to the Assessing Officer for grant of immunity from imposition of penalty under section 270A and initiation of proceedings under section 276C, provided

 he pays the tax and interest payable as per the order of assessment or reassessment within the period specified in such notice of demand and

 does not prefer an appeal against such assessment order

 The assessee can make such application within one month from the end of the month in which the order of assessment or reassessment is received in the form and manner, as may be prescribed.

 The AO may grant immunity on fulfillment of certain conditions

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Stay of demand

 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).

 CBDT has revised Instruction No.1914 dated 21/03/1996 on 29/02/2016 for stay of demand at the first appeal stage.

Time limit for disposing applications u/s 273A, 273AA or 220(2A)

 Order of acceptance or rejection to be passed within a period of 12 months from the end of the month in which application is received

 No order rejecting the application of the Assessee shall be passed without giving the Assessee an opportunity of being heard

 w.e.f. 01/06/2016

 Pending applications as on 01/06/2016 – time limit upto 31/05/2017

E-assessments

 Section 282A - notices and documents may be issued in electronic form

 Section 2(23C) – ‘Hearing’ to include communication of data and documents through electronic mode

 w.e.f. 01/06/2016

Filing of Return –Amendment in Section 139

 139(4)-Belated Return- Time limit reduced up to end of the Assessment year only

 139(5)-Revised Return- Now even the late return filed u/s 139(4) can also be revised.

 139(9)-Defective return- Return will not be considered defective merely because the self-assessment tax was not paid.

Processing under section 143(1) be mandated before assessment

Time limit for assessment, reassessment and recomputation- Changed

 All the Time limit for assessment, reassessment and recomputation (u/s143(3), 144, 147, 153A , 153C, 254, 263 and 264)- Now preponed for 3 Months i.e. from March to December

Provision for bank guarantee under section 281B

 Now the AO has option to take bank guarantee as an alternate to provisionally attachment of the property – a welcome move

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Amendment in Sec 244A

Amendment in section 124 - Assumption of jurisdiction of Assessing Officer

 proposed to amend sub-section (3) of section 124 to specifically provide that cases where search is initiated under section 132 or books of accounts, other documents or any assets are requisitioned under section 132A, no person shall be entitled to call into question the jurisdiction of an Assessing Officer after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub-section (2) of section 153C or after the completion of the assessment, whichever is earlier.

Amendment in section 244A

 Interest at the rate of 9% p.a against normal rate of 6% p.a for delay in giving effect to Appellate order beyond 90 days.

Refund Arising out of Advance Tax and TDS Time period for entitlement of interest 244A If return filed in time

If return not filed in time

From 1^St Day of Assessment year From the Date of filing of Return

Refund Arising out of Self Assessment Tax From Date of Payment of Self Assessment Tax or filing of return w.e.later

House property

Business &

Profession

Capital Gain &

IFOS

Deductions &

Exemptions TDS & TCS

Penalties

Procedural Amendments

New Initiatives

New tax incidence

Amendment in rule 8D for section 14A

 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.

Buy back of shares

 Scope of buyback increased

 apply to any buy back of unlisted shares of company in accordance with the ‘Provisions of the law relating to the Companies’ instead of ‘section 77A of the Companies Act, 1956’

 Rules to determine amount to be prescribed later

 w.e.f. 01/06/2016

REITs or Invits

 No DDT on distributions made by SPV to the business trust

 Business trust should hold 100% of the share capital

 Applicable only when dividends paid out of current income after the date when the business trust acquires the shareholding

 w.e.f. 01/06/2016

Central Government subsidy or grant or cash

assistance, etc. towards corpus of fund established for specific purposes

 Excluded from definition section 2(24) - subsidy or grant by the Central Government for the purpose of the corpus of a trust or institution established by the Central Government or State government

Section 115BBE: Clarification of set off losses against deemed undisclosed income

 Losses shall not be allowed to be set-off against income u/s 68, 69, 69A,69B, 69C and 69D

Carry forward and set off of such loss under section 73A

 Amendment section 80, loss as per section 73A (specified business u/s 35AD) of the Act shall not be ALLOWED to be carried forward and set off in pursuance of a belated return filed.

Moving towards a pensioned society

 Withdrawal up to 40% of the corpus at the time of retirement- exempted in case of National Pension Scheme (NPS). Annuity fund -to legal heir -not taxable.

 Superannuation funds and recognized PFs, including EPF, the same norm of 40% of corpus - tax free in respect of corpus created out of contributions made on or from 1.4.2016.

Disclaimer

This document is intended for private circulation and knowledge sharing purpose only. All efforts have been made to ensure the accuracy of information in this publication. The information contained in this document is published for the knowledge of the recipient but is not to be relied upon as authoritative or taken in substitution for the exercise of judgment by any recipient. The publication is a service to our clients to provide an overview of the Direct Tax Proposals and shall not be construed as professional advice or an authoritative opinion. Whilst due care has been taken in the preparation of this publication and information contained herein, we will not be responsible for any errors that may have crept in inadvertently and do not accept any liability whatsoever, for any direct or consequential loss howsoever arising from any use of this publication or its contents or otherwise arising in connection herewith.

Reader's feedback / observation are welcomed and would be appreciated.

vidhansurana@suranamaloo.com, sunilmaloo@suranamaloo.com

CA Vidhan SURANA CA Sunil MALOO

Surana Maloo & Co. | Chartered Accountants

2nd Floor, Aakashganga Complex Parimal Under Bridge,

Paldi, Ahmedabad - 380007 Gujarat (India)

+91-79-26651777/8