Key Highlights of Proposed Amendments in Income Tax Act, 1961

1. Compiled By;
ASIJA AND ASSOCIATES LLP
Chartered Accountants
34/5, Gokhle Marg, Lucknow, India

2. CHANGE IN TAX RATES
INCOME NOT CHARGEABLE TO TAX
TAXATION OF CHARITABLE ENTITIES
INCOME FROM SALARY
PROFIT AND GAINS FROM BUSINESS AND PROFESSION
CAPITAL GAINS
INCOME FROM OTHER SOURCES

3. DEDUCTIONS UNDER CHAPTER VI
CORPORATE TAXATION
INTERNATIONAL TAXATION
RE-ALIGNMENT OF INCOME TAX LAW W.R.T BANKRUPTCY CODE
ASSESSMENT
TAX DEDUCTION AT SOURCE
OTHER AMENDMENTS

4. CHANGES IN TAX RATES
Health &
Education
Cess
Earlier an education cess
of 2% along with 1%
secondary and higher
education cess was
imposed on TDS on Non-
Resident and Foreign
Companies
The budget proposes
Health and Education cess
@4% in place of education
cess and secondary and
higher education cesson
TDS on Non-Resident and
Foreign Companies From
FY 2018-19.
Rate of
Corporate
Taxation
In case of domestic
companies where the
gross receipts of Previous
Year 2016-17 does not
exceed 250 Crore.
The rate of Income Tax
shall be 25%

5. INCOME WHICH DO NOT FORM PART OF TOTAL
INCOME
• Exemption w.r.t. National Pension Scheme is
extended to all the assessees who have
subscribed to the National Pension System Trust.
• Till now it was available to an employee only.
Section10(12A) w.e.f.
01/04/2019 (AY 2019-20)
• Exemption to organisation not engaged in any
commercial activity, established by
Government
• It is proposed to extend the exemption to
specified income arising to a class of body or
authority or Board or Trust or Commission also
Section 10(46) w.e.f.
01/04/2018

6. TAXATION ON CHARITABLE ENTITIES
• For determining the amount of application
under Section 10(23C) and Section 11(1) The
provisions of Section 40(a)(ia), Section
40A(3) and Section 40A(3A) shall, mutatis
mutandis apply as they apply for PGBP.
Section 10(23C) & 11(1) w.e.f.
01/04/2019 (AY 2019-20)

7. INCOME CHARGEABLE UNDER SALARY
• A deduction of ₹. 40,000 or the amount of the
salary, whichever is less, shall be allowed for
computing the income chargeable under the
head salary.
Section 16 w.e.f.
01/04/2019 (AY 2019-20)
• Expenditure incurred by employee on medical
treatment shall now chargeable to tax as
perquisite, exemption of ₹ 15000.00 is omitted.
Section 17 (2) w.e.f.
01/04/2019 (AY 2019-20)

8. PROFIT AND GAINS FROM BUSINESS AND PROFESSION
• It is proposed to insert a new sub-clause (xiia) in
the Section 2(24) to include the fair market value
of inventory referred to in Section 28(via) in the
definition of Income.
Section 2(24) w.e.f. 01/04/2019
(AY 2019-20)
• Any compensation in connection with the
termination / modification of the T & C, of any
contract relating to business shall be chargeable to
tax under PGBP.
Section 28(ii)(e) w.e.f 01/04/2019
(AY 2019-20)
• 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
shall be chargeable to tax under PGBP
Section 28(vi)(a) w.e.f
01/04/2019 (AY 2019-20)

9. • New Clause 36(1)(xviii)
• A Deduction shall be allowed to the assessee w.r.t
marked to market loss or other expected loss, if
computed in accordance with ICDS notified u/s 145(2) of
the Act.
Section 36 w.e.f. 01/04/2017
(AY 2017-18)
• New Sub-Section 40A(13)
• No deduction shall be allowed w.r.t marked to
market loss or other expected loss, if not
computed in accordance with ICDS.
Section 40A w.e.f. 01/04/2017
(AY 2017-18)
• Subject to the provisions of section 43A, any gain
or loss arising on account of any change in foreign
exchange rates shall be treated as income or loss.
The same shall be computed in accordance with
the ICDS notified u/s 145(2).
Section 43AA w.e.f. 01/04/2017
(AY 2017-18)
PROFIT AND GAINS FROM BUSINESS AND PROFESSION

10. • Actual Sale consideration shall be treated as Full
Value of Consideration for transfer of asset, other
than capital asset, if stamp duty value is more than
sale consideration by 5% of the sale consideration.Section 43CA w.e.f. 01/04/2019
(AY 2019-20)
• Deemed income for
Each heavy goods vehicle ₹1,000.00 per ton of
gross vehicle weight or unladen weight.
For other than heavy goods vehicle, it shall be an
amount equal to ₹ 7,500.00
• OR The amount claimed to be actually earned by
the assessee, whichever is higher.
Section 44AE w.e.f. 01/04/2019
(AY 2019-20)
PROFIT AND GAINS FROM BUSINESS AND PROFESSION

11. • The exemption from tax on LTCG shall not apply
to any income arising from the transfer of long-
term capital asset, being an equity share in a
company or a unit of an equity oriented fund or
a unit of a business trust, made on or after the
01/04/2018.
Section 10(38) w.e.f.
01/04/2019 (AY 2019-20)
• As per newly inserted Section, the Long
term capital gains arising from equity
share in a company or a unit of an equity
oriented fund or a unit of a business trust
shall be taxed at 10% of such capital
gains exceeding ₹1,00,000.
Section 112A w.e.f.
01/04/2019 (AY 2019-20)
CAPITAL GAINS

12. CAPITAL GAINS
• Any transfer of a capital asset, being
 Bond or Global Depository Receipt referred to in Section
115AC(1) or
 Rupee denominated bond of an Indian company or derivative,
made by a NR on a recognised stock exchange located in any
IFSC and where the consideration for such transaction is paid or
payable in foreign currency.
• shall not be regarded as transfer
Section 47 w.e.f.
01/04/2019 (AY 2019-20)
• Where the capital gain arises from the transfer
of a capital asset referred to in section 28(via),
the cost of acquisition of such asset shall be
deemed to be the fair market value which has
been taken into account for the purposes of the
said clause.
Section 49(9) w.e.f.
01/04/2019 (AY 2019-20)

13. CAPITAL GAINS
• Where the value adopted or assessed or assessable by the
stamp valuation authority does not exceed 105% of the
consideration, the consideration so received or accruing
as a result of the transfer shall, be deemed to be the full
value of the consideration.
Section 50C w.e.f.
01/04/2019 (AY 2019-20)
• Benefit of Section 54EC has been restricted to LTCG
arising from transfer of long term capital asset “being
land or building or both”
• Redemption period of “Long-term specified asset”, has
increased from 3 years to 5 years w.r.t those bonds
which are issued on or after 1st day of April, 2018 by
the NHAI or REC or any other bond notified by the
Central Government in this behalf.
Section 54EC w.e.f.
01/04/2019 (AY 2019-20)

14. INCOME FROM OTHER SOURCES
•If stamp value of immovable property exceeds the consideration for
immovable property, then the stamp duty value as exceeds such
consideration, if the amount of such excess is more than ₹ 50000.00
or the amount equal to 5% of the consideration, whichever is higher,
shall be charged to tax under the head “Income from other sources”.
Section 56(2) w.e.f.
01/04/2019 (AY 2019-20)
•Transfer of capital asset between holding company and its wholly
owned Indian subsidiary company and between subsidiary company
and its Indian holding company, which are not regarded as transfer
under clause (iv) (v) of section 47 are excluded.
Section 56(2) w.e.f.
01/04/2019 (AY 2019-20)
•Any compensation or other payment in connection with the
termination of employment or the modification of the terms and
conditions relating thereto shall be chargeable to income-tax under
the head "Income from other sources"
Section 56(2) w.e.f.
01/04/2019 (AY 2019-20)

15. • Benefit of deduction under the heading “C.—
Deductions in respect of certain incomes” in
Chapter VIA not allowed unless the return of
income is filed by the due date.
Section 80AC w.e.f.
01/04/2018 (AY 2018-19)
• An amount of ₹50,000 instead of ₹30,000 shall be allowed as
deduction u/s 80D in respect of all senior citizens.
• Where a lumpsum payment has been paid for more than a year
deduction shall be allowed for each year equal to the appropriate
fraction of the amount.
Section 80D w.e.f.
01/04/2019 (AY 2019-20)
• Deduction amounting to ₹1,00,000 instead of
₹60,000 shall be allowed for all senior
citizens, the Concept of Very Senior Citizens
is omitted
Section 80DDB w.e.f.
01/04/2019 (AY 2019-20)
DEDUCTIONS UNDER CHAPTER VI

16. •The benefit of minimum number of working days has been proposed
to be extended to footwear and leather manufacturers.
•Further Deduction shall be allowed to a new employee who is
employed for less than the minimum period of 240/150 days during
the previous but continues to remain employed for the minimum
period in succeeding year.
Section 80JJAA w.e.f.
01/04/2019 (AY 2019-20)
•100% Deduction shall be allowed to Producer Companies, with
respect to the “eligible Business”
 Having a total turnover less than ₹100 Crores, in any previous
year.
 The benefit shall be available from AY 2019 – 20 till AY 2024-2025
Section 80PA w.e.f.
01/04/2019 (AY 2019-20)
• A deduction amounting to ₹50000 shall be allowed to senior citizens
w.r.t interest on deposits held with - A Banking Company, a Co-Operative
Society engaged in Banking Business or a Post Office
• No deduction under Section 80TTA shall be allowed in these cases.
• No deduction shall be allowed to any partner of a firm, member of an
association, or any individual if the said deposits are held on behalf of any
firm/ AOP/ BOI.
Section 80TTB w.e.f.
01/04/2019 (AY 2019-20)
DEDUCTIONS UNDER CHAPTER VI

17. DEDUCTIONS UNDER CHAPTER VI
Earlier
Incorpo01.04.2016 but
before ration on or after
01.04.2019
Total Turnover does not
exceed ₹25 cr. in any of
FY beginning from
01.04.2016 to
31.03.2021
Business shall be related
to new products,
processes or services
driven by technology or
intellectual property
Now
Incorporation on or after
01.04.2019 but before
01.04.2021
Total Turnover does not
exceed ₹25 cr. in any of
7 FYs commencing
from Date of
Incorporation.
Business shall be
related to products,
processes or services or
a scalable business,
with high employment
& wealth prospects
Measures to
Promote Start-ups
u/s 80-IAC
(Amendment w.e.f.
01.04.2018)
“Eligible Start-up”
mean a company or
LLP engaged in
eligible business
which fulfils the
following conditions
:-

18. CORPORATE TAXATION
•It is proposed to insert Explanation 2A to the said clause to provide
that in the case of an amalgamated company, accumulated profits or
loss in the hands of the amalgamated company shall be increased by
the accumulated profits of the amalgamating company, whether
capitalised or not, on the date of amalgamation.
Section 2(22) w.e.f.
01/04/2018 (AY 2018-19)
•It is proposed to insert proviso to sub-section (1) of the section 115-O
so as to provide for levy of tax @ 30% on distributed profits in the
nature of deemed divided as specified in section 2(22)(e)
•It is further proposed to insert a proviso to Section 115-O(1B), so as
to exclude the amount of dividend u/s 2(22)(e) from the applicability
of grossing up provisions of the said sub-section.
Section 115-O w.e.f.
01/04/2018 (AY 2018-19)
•It is proposed to delete the Explanation occurring after section 115Q
of the Act. Consequent to the term dividend shall have the meaning
assigned to it u/s 2(22) and there shall be no exception to deemed
dividend as specified u/s 2(22)(e)
Section 115-Q w.e.f.
01/04/2018 (AY 2018-19

19. CORPORATE TAXATION
• Where any income is distributed to
• (i) any person being an individual/HUF by a
money market mutual fund or a liquid fund,
the fund shall pay additional income tax @
25% on the income so distributed.
• (ii) any person by an equity oriented fund, the
fund shall pay additional income tax @ 30% on
the income so distributed;
• (iii) any person by an equity oriented fund, the
fund shall pay additional income tax @ 10%
on the income so distributed.
Section 115R(2)(i) to (iii)
w.e.f. 01/04/2018 (AY
2018-19)

20. ASSESSMENT
• No adjustment under sub-clause (vi) of Section
143(1) shall be made in respect of any return
furnished on or after the assessment year
commencing on the first day of April, 2018.Section 143(1) w.e.f.
01/04/2018
• The new scheme for purpose of making e-Assessment shall:
Eliminate the interface between the AO and the assesses in
the course of proceedings to the extent technologically
feasible
Optimizing utilization of the resources through economies
of scale and functional specialisation
introducing a team-based assessment with dynamic
jurisdiction.
Section 143(3A) w.e.f.
01/04/2018

21. ASSESSMENT
• By notification Central Government shall direct that
any of the provisions of this Act relating to
assessment of total income or loss
• Shall not apply OR
• Shall apply with such exceptions, modifications and
adaptations as may be specified in the notification
• However no such direction shall be issued after
31/3/2020
Section 143(3B) w.e.f.
01/04/2018
• Section 143(3C) provides that every notification issued
under 143(3A) and 143(3B) shall be laid before each
house of Parliament.
Section 143(3C) w.e.f.
01/04/2018

22. INTERNATIONAL TAXATION
• “Business connection” shall include business activity
carried through a person who, acting on behalf of the NR,
has an authority to conclude contracts on behalf of the NR.
• Also the significant economic presence of a NR in India shall
constitute “Business Connection” of the NR.
Section 9(1)(i) w.e.f.
01/04/2019 (AY 2019-20)
• Income arising to a non-resident, not being a company, or a
foreign company, by way of royalty or from fees for technical
services rendered in or outside India to the National
Technical Research Organisation is exempt.
Section 10(6D) w.e.f.
01/04/2018 (AY 2018-19)
• income accruing or arising to such foreign company on
account of sale of leftover stock of crude oil, if any, from
such facility in India or on the termination of the agreement
or the arrangement referred to in clause (48A) of the said
section in accordance with the terms mentioned therein,
shall also be exempt
Section 10(48B) w.e.f.
01/04/2019 (AY 2019-20)

23. INTERNATIONAL TAXATION
Earlier
Report to be furnished on or
before due date specified under
sub-section (1) of section 139
No clause related to time limit
for furnishing the report in sub
section (4)
No condition for filing of report
by entity in case where country
or territory, of which the parent
entity is resident.
Now
Within a period of twelve
months from the end of the
said reporting accounting year
Report of the nature referred to
in sub-section (2) shall be
furnished within the period
specified in sub-section (2)
Additional condition for filing of
report by entity in case where
country or territory, of which the
parent entity is resident, is not
obligated to file the report of the
nature referred to in sub-section (2)
Reporting in
respect of
international
group
(Amendment
w.e.f.
01.04.2017)

24. INTERNATIONAL TAX
Earlier
In sub section (5) due date to
furnished the report is on or
before the date specified in
the said sub-section
Agreement means as referred
in section 90(1) or section
90A(1) or as may be notified
by central government
No reference to sub-section (4)
in clause (j) of sub-section (9)
Now
Due date for furnishing the
report, would be the due date
specified by that country or
territory of which such entity
is resident
Agreement as notified by the
Central Government for
exchange of the report
referred to in sub-section (2)
and subsection (4) is added
in definition
Clause (j) of sub-section (9) is
amended so as to make
reference to the report
referred to in sub-section (4).
Reporting in
respect of
international
group
(Amendment
w.e.f.
01.04.2017)

25. RE-ALIGNMENT OF INCOME TAX LAW W.R.T BANKRUPTCY
CODE
•Benefit of set off and carry forward losses shall not be available to a
company where a change in the shareholding takes place in a
previous year pursuant to a resolution plan approved under the
Insolvency and Bankruptcy Code, 2016, after affording a reasonable
opportunity of being heard to the jurisdictional Principal
Commissioner or Commissioner
Section 79 w.e.f.
01/04/2018 (AY 2018-19)
•In case of a company, against whom an application for corporate
insolvency resolution process has been admitted by the Adjudicating
Authority under section 7 or section 9 or section 10 of the Insolvency
and Bankruptcy Code, 2016, the aggregate amount of unabsorbed
depreciation and loss brought forward shall be allowed to be reduced
from the book profit and the loss shall not include depreciation.
Section 115JB w.e.f.
01/04/2018 (AY 2018-19)
•where in respect of a company an application has been admitted by
the Adjudicating Authority under section 7 or section 9 or section 10
of the Insolvency and Bankruptcy Code, 2016, the return shall be
verified by the insolvency professional appointed by such
Adjudicating Authority.
Section 140 w.e.f.
01/04/2018

26. TAX DEDUCTION AT SOURCE
• The person responsible for paying to the resident any
interest on 7.75% Savings (Taxable) Bonds, 2018,
shall deduct income tax, if the interest payable on
such bonds exceeds ₹10,000 during the FY.
Section 193 w.e.f.
01/04/2018
• In case of payee being a senior citizen, the threshold
limit for deduction of TDS on interest income has
been raised from ₹10,000 to ₹50,000.Section 194A w.e.f.
01/04/2018

27. • Expanding Assessee Base – Through PAN
Every person, not being an individual, who enters into a financial
transaction aggregating to ₹ 2,50,000.00 or more in a FY
The managing director, director, partner, trustee, author, founder,
karta, chief executive officer, principal officer or office bearer of such
person or any person competent to act on behalf of such person
• shall apply to the AO for allotment of PAN.
Section 139A(1) w.e.f.
01/04/2018
Authority for Advance Rulings shall cease to act as an authority for
the purpose of Chapter V of the Customs Act,1962 on and from the
date of appointment of the Customs Authority for Advance Ruling
u/s 28EA of the Custom Act, 1962.
Section 245-O w.e.f.
01/04/2018
An order passed by CIT (Appeals) or AO under
section 271J appealable before the Appellate
Tribunal.Section 253 w.e.f.
01/04/2018
OTHER AMENDMENTS

28. • The penalty for failure to furnish statement u/s
285BA has been increased from `.100/- per day to
`.500/- per day of default.
• Where despite of notice issued u/s 285BA(5), the
person fails to furnish statement u/s 285BA the
penalty has been increased from `.500/- per day to
`.1,000/- per day of default
Section 271FA w.e.f.
01/04/2018
• The proviso of Section 276CC which provides that a
person shall processed under this section if “tax
payable by him” does not exceed Rs.3000.
• The said section has been amended to exclude
companies from availing the benefit of this proviso,
with an intent of prosecuting shell companies.
Section 276CC w.e.f.
01/04/2018
OTHER AMENDMENTS

29. For a detailed discussion and professional advisory pertaining to the
applicability and compliance of the said provision of law by your entity
Fix an Appointment with our Direct Tax Vertical
Email @ incometax@asija.in
CA Vasudha Jain
Asso. Director
(vasudha.jain@asija.in)
CA Ashish Kapoor
Partner In Charge
(ashish.kapoor@asija.in)
Asija & Associates LLP
Chartered Accountants
Ph. no. : 0522- 4004652, 2205072

30. Disclaimer
This presentation has been prepared by us to provide some key highlights of the amendments proposed in
Finance Bill 2018, presented in parliament.
For detailed insight and for better understanding of the various amendments proposed in Income Tax Act 1961,
the said presentation should be read along with Finance Bill 2018 and related provision of Income Tax Act,
1961.
The analysis and views contained in this presentation are personal in nature, are meant only for information
and do not constitute a professional advise to act. Neither our firm nor any partner or employee or article of our
firm shall responsible for any decision taken on the basis of the said presentation and without obtaining our
professional guidance or consultation on the matter for which reliance was made on this presentation.
The said document has been compiled and disseminated by us for Lucknow CA Tax Practitioner Association.
The same is not being circulated with remotest intent of advertising or soliciting work in the public domain.