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Budget 2018-2019

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VIMAL TANDON & CO. CHARTERED ACCOUNTANTS, Basic exemption limit for men, women and HUF resident in India unchanged. Deductions and Exemptions. Tax Deduction at Source/ Tax Collection at Source.
BUDGET HIGHLIGHTS PRESENTATION BY
M/s Vimal Tandon & Co.
Chartered Accountants
A-107/1, Pal Mohan Plaza, 11/56,
D.B. Gupta Road, Karol Bagh,
New Delhi - 110005
Telefax – 23551056
Tel. 45032501
Mob. 9810221653, 9868171653
website - vimaltandon.com             charteredaccountantindelhi.com
e-mail. - vimaltandon@gmail.com         vtclients@gmail.com

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Budget 2018-2019

  1. 1. VIMAL TANDON & CO. CHARTERED ACCOUNTANTS BUDGET 2018-2019 HIGHLIGHTS
  2. 2. DIRECT TAXES Individual  Basic exemption limit for men, women and HUF resident in India unchanged.  Surcharge: No Change in Surcharge. - Surcharge @ 10 % on Tax for Indl/HUF having Total Income > Rs. 50 Lacs. - Surcharge @ 15 % on Tax for Indl/HUF having Total Income > Rs. 1 Crore. INDL/HUF/WOMEN SENIOR CITIZEN (60 - 79 YEARS) VERY SENIOR CITIZEN (80 YEARS ABOVE) TAX RATE 0-250000 0-300000 0-500000 NIL 250001-500000 300001-500000 - 5% 500001-1000000 500001-1000000 500001-1000000 20% 1000001 & above 1000001 & above 1000001 & above 30%
  3. 3.  Cess It is proposed to abolish existing Education Cess of 2% and Secondary Higher Education Cess of 1% leviable on the amount of income tax and surcharge, if any and a new cess by the name “Health and Education Cess” at the rate of 4% will be levied.  Rebate u/s 87A Rebate U/s 87 A continues at Rs.2,500/- for assessee having Total Income Less than Rs. 3,50,000/-.  Section (16) - Standard deduction from Salary Income Standard deduction of Rs. 40,000/- will be available to all assessee having Salary Income. Flat reduction from salary income will be given while calculating taxable salary.  Medical allowance exemption of ` 15,000/- per annum withdrawn.  Transport allowance exemption of ` 1,600/- per month withdrawn.
  4. 4.  Taxability of compensation received in connection of termination of employment. [Section 56] It is proposed to insert a new clause (xi) in sub-section (2) of the section 56 so as to provide that any compensation or other payment due to or received by any person, by whatever name called, in connection with the termination of his employment or the modification of the terms and conditions relating thereto shall be chargeable to income tax under the head “Income from other sources”.
  5. 5. Capital Gains  Section 54 EC– Capital Gain Bond • Duration of Bond taken after 01/04/2018 increased from 3 years to 5 years. • Investment U/s 54 EC Bond will be restricted to Long Term Capital Gain from Land or Building or Both and not available for any other assets.  Relaxation with respect to Stamp Duty Valuation Rate U/s 50C Section 50C provides that in case of transfer of a capital asset being land or building or both, the value adopted by the stamp valuation authority for the purpose of payment of stamp duty shall be taken as the full value of consideration for the purposes of computation of Capital gains if the same is more than the full value of consideration. It is proposed to provide that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the consideration received, the consideration so received be deemed to be the full value of the consideration. The corresponding amendment is also being proposed for business assesee under section 43CA and under the head other sources under section 56(2)(x).
  6. 6. Capital Gains  Section 112A Taxation of Long Term Capital Gain on Equity Shares & Equity Oriented Mutual Funds Long Term Capital Gain on Sale of Equity Shares & Equity MF is currently exempt u/s 10(38). The exemption is proposed to be withdrawn and the Long Term Capital Gain it will be taxable w.e.f. 1st April, 2018. Long Term Capital Gain upto Rs. 1,00,000/- will not be taxed. Such Gain will be liable for Income Tax @ 10%. No indexation benefit will be available for calculation of such Gain Concessional rate of 10% is applicable only if STT is paid on Sale & Purchase of shares and on Sale of Equity Oriented Mutual Funds.
  7. 7. Capital Gains  Section 112A Cost of Acquisition for assets purchased before 1st Feb 2018 shall deemed to be higher of a. Actual cost of acquisition and b. Lower of (i) Fair Market Value as on 31st Jan, 2018 and (ii) Sale consideration Fair Market Value to be calculated for shares as highest price quoted on stock exchange on 31st Jan 2018 and for MF unit NAV value of such scheme on 31st Jan 2018. Deductions under chapter VI-A such as 80C, 80D, 80G etc are not allowed on such Gain. Rebate U/s 87A is not allowed on such Gain.
  8. 8. Business Taxation  Amendment in Section 44AE Under the existing law, the presumptive income for plying, hiring or leasing goods carriage is equal to an amount of Rs. 7500 or amount actually earned by the assessee, whichever is higher, for every month or part of month. It is proposed to substitute the above limit for heavy goods vehicle from Rs.7500 to Rs. 1000 per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher. For other than heavy goods vehicle, the limit of Rs. 7500 shall remain same.  Amendment in Section 28  It is proposed to amend section 28 of the Act to provide that any compensation received or receivable, whether revenue or capital, in connection with the termination or the modification of the terms and conditions of any contract relating to its business shall be taxable as business income.  It is proposed to provide that the fair market value of inventory as on date of its conversion of its capital asset shall be chargeable to tax under PGBP.
  9. 9. Business Taxation  Clarification for trading in agricultural commodity derivative [Section 43] Trading in agricultural commodity derivatives shall always be considered as non speculative transaction whether traded in recognized stock exchange or not.  Taxation of foreign exchange fluctuation [Section 43AA] (w.e.f. AY 2018-19) Any gain or loss arising on account of any change in foreign exchange rates shall be treated as income or loss, as the case may be, and such gain or loss shall be computed in accordance with the income computation and disclosure standards notified under 145(2). Gain or loss arising on account of the change in foreign exchange rates shall be in respect of all foreign currency transactions including those relating to monetary items and non-monetary items or translation of financial statements of foreign operations or forward exchange contracts or foreign currency translation reserves.
  10. 10. Business Taxation  Penalty wrt failure to furnish AIR (Section 271FA). The said section provides that if a person who is required to furnish the statement of financial transaction or reportable account under sub-section (1) of section 285BA, fails to furnish such statement within the prescribed time, he shall be liable to pay penalty of The proviso to the said section further provides that in case such person fails to furnish the statement of financial transaction or reportable account within the period specified in the notice issued under sub-section (5) of section 285BA, he shall be liable to pay penalty of five hundred rupees for every day of default. It is proposed to amend the said section so as to increase the penalty from one hundred rupees to five hundred rupees and from five hundred rupees to one thousand rupees, for each day of continuing default.  Tax on Company for deemed dividend (Section 115-O) In case of deemed dividend under Section 2(22)(e), the tax was levied in the hands of recipient instead of Company. Now, it is proposed to amend this situation by inserting a proviso so as to provide that the company is liable to pay 30% (without grossing up) Dividend Distribution Tax, if the payment is in the nature of dividend under Section 2(22)(e).
  11. 11. Business Taxation  Mandatory Filling of Return of Income for claiming deductions (Section 80 AC) It is proposed to substitute the said section so as to provide that in computing the total income of an assessee of the previous year relevant to the assessment year commencing on or after the 1st day of April, 2018, deduction under any other provisions of Chapter VIA “C.—Deductions in respect of certain incomes” shall be allowed only if the return is filed within the due date specified under section 139 (1). This means that for claiming deduction under Section 80JJA, 80JJAA, 80LA, 80O, 80P, 80Q, 80QQA, 80QQB, 80R, 80RR, 80RRA, 80RRB, filling Return of Income under Section 139(1) is now mandatory. In case of belated return, deduction under above section cannot be claimed.  Prosecution In case of Non Fillers (Section 276CC) Sub-clause (b) of clause (ii) of the proviso to the said section provides that a person shall not be proceeded against under the said section for any assessment year commencing on or after the 1st day of April, 1975, if the tax payable by him on the total income determined on regular assessment as reduced by the advance tax, if any, paid and any tax deducted at source, does not exceed three thousand rupees. It is proposed to amend the provisions of the said section so as to provide that the conditions specified therein shall not be applicable in respect of a company.
  12. 12. Business Taxation  Taxation of Certain Domestic Companies (Section 115BA) Section 115BA to be amended to provide that tax @ 25% on specified domestic companies is restricted to the income from the business of manufacturing, production, research or distribution. Income arising from other than the specified business shall be taxed at applicable rate already provided in the act.
  13. 13. Domestic Companies  In case of Domestic Company whose total turnover or Gross Receipts do not exceed `250 Crore – 25%.  For Other Domestic Companies – 30%.  Surcharge: The amount of Income-Tax computed as above, shall be increased by surcharge @ 7% of such Income-Tax in the case, the company has taxable income exceeding `1 Crore but not exceeding ` 10 Crore.  Surcharge @ 12% of such Income-Tax in the case, the company has taxable income exceeding `10 Crore.  Education Cess : : It is proposed to abolish existing Education Cess of 2% and Secondary Higher Education Cess of 1% leviable on the amount of income tax and surcharge, if any and a new cess by the name “Health and Education Cess” at the rate of 4% will be levied.
  14. 14. Firms (including Limited Liability Partnership)  The income tax rate for firms remains unchanged at 30%.  Surcharge: Surcharge remains unchanged @ 12% of such Income-Tax in the case, the firm has taxable income exceeding `1 Crore.  Cess : It is proposed to abolish existing Education Cess of 2% and Secondary Higher Education Cess of 1% leviable on the amount of income tax and surcharge, if any and a new cess by the name “Health and Education Cess” at the rate of 4% will be levied.
  15. 15. Trusts  For calculating trust Income, deduction will not be allowed for following cases in line with business assessee :-  where no TDS is deducted, when transaction is liable for TDS.  where cash payment done for any expenditure to any person exceeds Rs. 10,000/- in a day.
  16. 16. Deductions and Exemptions  Deduction in respect of Mediclaim policy (Section 80 D)] A deduction of fifty thousand rupees in aggregate shall be allowed to senior citizens in respect of medical insurance or preventive health check-up or medical expenditure. Where an amount is paid in lump sum in the previous year to effect or to keep in force an insurance on the health of a person specified therein for more than a year, then, subject to the provisions of this section, there shall be allowed for each of the relevant previous years, a deduction equal to the appropriate fraction of the amount.  Deduction in respect of Medical treatment (Section 80 DDB) Deduction is available to an individual and Hindu undivided family with regard to amount paid for medical treatment of specified diseases in respect of very senior citizen upto eighty thousand rupees and in case of senior citizens sixty thousand rupees subject to other conditions. It is proposed to increase the said limit to one hundred thousand rupees.
  17. 17. Deductions and Exemptions  New Deduction for Interest Income for senior citizen (Section 80TTB) Where the gross total income of an assessee, being a senior citizen, includes any income by way of interest on deposits with a banking company to which the Banking Regulation Act, 1949, applies or a cooperative society engaged in the business of banking or a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898, a deduction of an amount up to fifty thousand rupees shall be allowed. The Senior Citizen covered under this section will not eligible for deduction under Section 80TTA ie, deduction in the respect of saving bank upto Rs. 10,000.
  18. 18.  Section 194A – TDS on Interest by Banks Limit for TDS on Interest paid by all Banks & Post Office to senior citizen is increased from Rs. 10,000/- to Rs. 50,000/-. For others limit of Rs. 10,000/- continues. For Interest paid by Companies, Firm & Prop. Concerns limit of Rs. 10,000/- continues. Tax Deduction at Source/ Tax Collection at Source
  19. 19.  Section 139A – Allotment of PAN PAN should be applied by all non individual entities, which do Financial Transaction of Rs. 2,50,000/- or more during Financial Year. Also all managing director, partner, trustee, author, founder, karta, CEO, principal officer or office bearer or any person competent to act on behalf of such entities shall also apply for PAN.  Section 143(1)(a) – Adjustment in Income Tax Intimation No Adjustment will be done w.r.t. Income shown in 26AS or 16A or 16 while processing intimation u/s 143(1)(a) for Income Tax Return filed. General
  20. 20. Several provisions are proposed to be amended to incorporate ICDS into the Act itself with retrospective effect from AY 2017-18. These are:-  Section 145A is being amended to provide that for the purpose of determining the income chargeable under the head Profits and gains of business or profession: • Valuation of inventory shall be made at lower of actual cost or NRV computed in the manner as provided in relevant ICDS. • 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 actually paid or incurred by the assessee to bring the goods or services to the place ofits location and condition as on the date of valuation. • Inventory being securities not listed, or listed but not quoted, on a recognised stock exchange, shall be valued at actual cost initially recognized in the manner as provided in relevant ICDS. • Inventory being listed securities, shall be valued at lower of actual cost or NRV in the manner as provided in relevant ICDS and for this purpose the comparison of actual cost and NRV shall be done category-wise. Income Computation and Disclosure Standards
  21. 21.  New section 145B is being inserted to provide that: • Interest received by an assessee on compensation or on enhanced compensation, shall be deemed to be the income of the year in which it is received. • 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 realization is achieved. • Income referred to in section 2(24)(xviii) [subsidy, grants, etc] shall be deemed to be the income of the previous year in which it is received, if not charged to income tax for any earlier previous year.  New clause (xvii) in Section 36 is being inserted to provide that deduction in respect of any marked to market loss or other expected loss shall be allowed, if computed in accordance with the ICDS.  Consequently section 40A is also being amended to provide that all marked to market losses or other expected losses other than those which are allowed under section 36 (xvii) shall be disallowed. Income Computation and Disclosure Standards
  22. 22.  Section 43AA to be inserted to state that any gain or loss arising on accounts of changes in foreign exchange rates in respect of foreign currency transactions shall be computed in manner provided in ICDS as notified u/s 145(2) of the Act relating to:  Monetary items and non- monetary items  Translation of financial statements of foreign operations  Forward exchange contracts  Foreign currency translation reserves  Section 43CB to be inserted, to provide that profits arising from a construction contract or a contract for providing services shall be determined on the basis of percentage of completion method in accordance with ICDS notified u/s 145(2) of the Act except for following service contracts profit shall be computed as per given method-  Service contracts of more than 90 days shall be as per project competition method  Service contracts involving determinate number of acts shall be as per straight line method  Retention money shall be the part of contract revenue and any incidental income like interest, dividend or capital gains shall not be reduced from contract costs. Income Computation and Disclosure Standards
  23. 23. BUDGET HIGHLIGHTS PRESENTATION BY :- M/s Vimal Tandon & Co. Chartered Accountants A-107/1, Pal Mohan Plaza, 11/56, D.B. Gupta Road, Karol Bagh, New Delhi - 110005 Telefax – 23551056 Tel. 45032501 Mob. 9810221653, 9868171653 website - vimaltandon.com charteredaccountantindelhi.com e-mail. - vimaltandon@gmail.com vtclients@gmail.com

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