Changes made by Finance Act 2017 and TCS related provisions

1. Presented by: LOKESH BACHCHANI

3.  Section 206C(1) :
Specified Seller Specified Buyer Specified G/S
T.C.S. Tax Collect Specified Rate
BuyerSeller

4.  “Specified Seller” means
(i) The CG, a SG or any local authority or corporation or authority established
under a Central, State Act, or
(ii) Any Company or
(iii) Firm or
(iv) Co-operative society or
(v) Individual or
(vi) HUF who is liable to Tax audit as per Section 44AB in the Preceding F.Y.
 From the below definition, It is clear that the applicability of the provision is only for
the Individual covered under the tax audit (Sec. 44AB).
 “Specified Buyer” includes All persons Except:
(i) CG , any local authority or corporation or authority established under a Central
or State Act
(ii) SG
(iii) PSU
(iv) Club
(v) Final Consumer

5. Nature of Goods TCS Rates
Alcoholic Liquor for Human Consumption 1%
Tendu Leaves 5%
Timber 2.5%
Scrap 1%
Minerals being Coal/ Lignite/Ore 1%
Parking lot, Plaza, Mining, Quarrying 2%
Every Person being a seller shall ,
(i) At the time of debiting the amount receivable from buyer
or
(ii) At the time of receipt of such amount from the said buyer
whichever is EARLIER , collect from the buyer a sum equal to the
specified percentages as mentioned below:
TCS Rates

7. SECTION 206C (1D) :
Every person, being a seller, who receives any amount in cash as a consideration for sale of bullion or
Jewellery, or any other goods (other than Bullion or Jewellery) or providing any service, shall, at the
time of receipt of such amount in cash, collect from the buyer, a sum equal to 1% of sale consideration
as income-tax, if such consideration,—
(i) For Bullion, exceeds Rs. 2,00,000 ; or
(ii) For Jewellery, exceeds Rs. 5,00,000; ( Amendment made by Finance Act, 2017) or
(iii) For any goods, other than clauses (i) and (ii), or any service, exceeds Rs. 2,00,000
Provided that no TCS shall be collected on the amount where buyer has already deducted TDS.
Effect of Changes made by Finance Act, 2017:
 In view of the introduction of Section 269ST and 271DA, the requirement
of the collection of TCS in Section 206C (1D) and (1E) was deleted.
 Section 206CC introduced if without PAN for TCS:
 Tax@ Twice or 5% whichever is Higher
 Exempted to Non-Residents

8. Section 206C (1E):
 TCS shall not collected by the seller where the Payment has been made by the
following buyers:
(i) Government
(ii) Embassies, High Commission, Commission and Trade Representation of a foreign
State.
(iii) Institution notified under United Nations Act, 1947

9. SECTION 206C(1F) :
 “ Every person, being a Seller, who receives any amount as consideration for sale of a
Motor Vehicle of the value exceeding Rs. 10 lakhs, shall at the time of receipt of such
amount, collect from the buyer, a sum equal to 1% of the sale consideration.
Analysis:
 TCS shall be collected even the sale consideration received through cheque, cash or
any mode.
 TCS to be collected, if Value of Motor vehicle of value exceeding Rs. 10,00,000
purchased for Personal Consumption.
 Applicable on all types of motor vehicles including trucks, buses, two wheelers and
cars sold by manufacturers, exports, dealers and government.
 Where the amount received in stages or in one pay, TCS to be collected at the time of
receipt.

10. Question 1: Whether any threshold limit is available for the specified goods under section
206C (Sale of Scrap, Tendu Leaves, etc.)?
Answer: There is no threshold limit available for the sale of scrap or other goods as specified
in section 206C.
Section 206C(1F);
Question 1: Whether TCS is applicable on each sale of Motor vehicle or on aggregated
value of sale during the year?
Answer: It is applicable to each sale and not to aggregated value of sale made during the
year.

11. Slab Now Earlier
2,50,000 to 5,00,000 5% 10%
Senior Citizens :
3,00,000 to 5,00,000
5% 10%
In view of the reduction in the rate of tax in the first slab, as stated above:
1. Rebate u/s 87A [allowed to Resident Individual ] has been reduced to Rs.
2,500/- ( Earlier Rs. 5,000/-) and such rebate shall be available only if the total
income does not exceed Rs. 3.5 Lacs ( Earlier Rs. 5 Lacs).
2. In case of Individual , HUF , AOP etc. a new levy of Rate of Surcharge@10% of
the tax where the income exceeds Rs. 50 Lacs but less than Rs. 1 Crore. (Earlier
the Surcharge rate was 15% in case of income exceeds Rs. 1 Crore which will
continue in case of Income exceeds Rs. 1 Crore).

12.  Rate of Taxes , In case of Domestic Company, :
1. 25%: where Total Turnover or Gross Receipts in FY 2015-16 does not exceed Rs. 50
Crore( Earlier tax rate of for FY 2016-17 was 29% where Total Turnover or Gross receipt
did not exceed Rs. 5 Crore in FY 2014-15.)
2. 25%: Sec. 115BA
3.30%: In all other cases
Note:
1. There is no change in the rate of surcharge or Education Cess.
2. In case of Firm ( including LLP) , co-operative society , Foreign company or Local
authority there is no change in the rate of tax, Surcharge and Education cess.
3. There is no change in the rate of tax on book profit of a company u/s 115JB.
Rates of Taxes

13. 1. Section 194-J is amended to provide that in case of a payment to a person engaged in the business
of operation of call Centre, TDS rate shall be 2% (Earlier it was 10%)
2. Relief to Insurance Agents from deduction of TDS from Insurance Commission- Sec. 194D
Sec. 197A is now amended to provide that an individual/HUF can file self declaration in Form
15G/15H for non deduction. Therefore, an insurance agent who has no taxable income can now take
advantage of this amendment.

14.  Increase in obligation of individuals and HUF’s
 Any individual or HUF who is not covered by Section 194-I will have to
deduct TDS @5% at the time of credit of the rent for the last month from the
payment of rent for the use of land or building or both if such rent payment
exceeds Rs. 50,000/- pm or part deduct tax @ 5%
 Not required to obtain TAN
 New Challan cum return shall be generated by the Government for the
deposition of such deducted amount to the Govt.
 Person receiving shall have to furnish PAN NO. otherwise TDS @ 20% shall
be deducted

15. Rent of 40,000 p.m. to a
person
No deduction
Rent of 50,000 p.m. to a
person No deduction
Rent of 60,000 p.m. to a
person
Deduction @ 5%

16. Income of Political Parties- Sec. 13A
(i) A new threshold limit of receipt of donation in cash has been
introduced to Rs. 2,000/-.
(ii) Political party will have to compulsorily File ITR on or before
the due date.
Thus, even if a donation of Rs. 2000/- or more is received in cash or its ITR is
not filed in time, the political party shall lose its exemption u/s 13A.

17.  Section 71 : Set off of Losses
 Loss under any head of income (other than Capital Gain) can be set off
against any other head during the Current Period.
 Loss under HP can be set off against any other head of income in Current
Year.
 Amendment has been made that any loss under the head HP which is in
excess of Rs. 2 Lacs in any year shall be restricted to Rs. 2 Lacs.
 The balance Loss shall be carried forward for 8 AY and can be set off only
against income of HP

18. 1. Provision for Doubtful debts by Indian Banks:
 Deduction allowed upto 8.5% of GTI ( Earlier 7.5%)
2. Section 44AD:
In view to encourage the Digital Economy Sec. 44AD has been amended where a person
carrying on business in which Turnover, Gross receipt do not exceed Rs. 2 Crore has an
option to pay tax on presumptive basis by estimating its net profit @ 6% in relation to
amount of turnover or gross receipts which is received by A/c Payee Cheque or A/c
Payee draft or Electronic Clearing System through banking channel during the FY or
before the due date of filing of ROI u/s 139(1).

19. 1. Section 35AD;
-related to investment linked deduction in case of 13 specified business
- This section is now amended to provide that any capital expenditure exceeding Rs.
10,000 paid by the assessee , in a day, otherwise than bye account payee cheque, bank
draft or any electronic media will not be allowed as deduction.
2. Capital Expenditure incurred in cash more than Rs.10,000/- is not part of Actual Cost.-
Sec 43(1)
3. Deduction u/s 80G restricted if donation in cash exceeding Rs. 2000 by a person
(Earlier10,000)
4. Expenditure u/s 40A(3) / 40A(3A) disallowed in payment made in cash exceeding Rs.
10,000/- per person per day (Old 20,000)
 Note: The limit of Rs. 35,000 will remain same.

20. Section 269-ST:
As per this section, no person shall receiveRs. 2 Lacs or more –
(i) in an aggregate, from another person, in a day, or
(ii) in respect of a Single transaction or
(iii) in respect of transaction relating to one event or occasion in CASH.
The said provision has been introduced on the recommendation of Special Investigation Team.
Note:
1. By a Press note, on 05.04.2017, CBDT has clarified that this section shall not applicable to withdrawal
of Rs. 2 Lacs or more from one’s bank account.
2. This section applies to all persons whether he is an assessee or not.
Exclusions:
1. Government
2. Banks
3. Post office
4. Co-operative Bank
5. Transaction referred u/s 269SS

21.  Only cash transactions are covered. Non cash transactions are not subject to
this section .
Example : Conversion of loan into equity.
 Any sum received in contravention of provisions of sec269ST liable to penalty
U/S 271DA of sum equal to amount of receipt unless there is good and
sufficient reasons
 The order imposing the penalty U/S 271DA shall be issued by Joint CIT and not
by A.O.
 The word reasonable cause has not defined under the Act but they could
receive the same interpretation which is given to the expression ‘ Sufficient
cause’ i.e beyond the control of the assessee.
 Amount received by book entries are not receipts. The objective of the section
is to discourage cash receipts only.

22. MR. A MR. B
Invoice 1: Rs. 1,00,000
Invoice 2: Rs. 2,00,000
Invoice 3: Rs. 3,00,000
Receives Rs. 6,00,000 in
a single day for the
Invoices
1.

23. Event manager Marriage
1,90,00
0
3.
1,80,00
0
1,70,00
0
Catering Decoration Transportation

24.  Whether the provisions of section 269ST are applicable to Anonymous
Donations?
 In relation to immovable property acquired for less than Stamp Duty Value
whether both section 56 and 269ST are applicable?
Effect on TCS:
No Tax is required to be collected in relation to sale of goods or rendering of
services U/S 206C(1D).

25.  Second proviso inserted to provide that where assessee incurs any expenditure
for acquisition of asset, payment to laborer or similar payments for transport
pr installation of a capital assets in respect of which payment or aggregate of
payments made, to a person , more than Rs.10,000/- , in a day, in cash/bearer
cheque shall not form part of Actual Cost.
 Thus, Assessee will not be able to claim depreciation on such amount.
 To attract the section either the expenditure incurred before the amendment
and payment made after that or both after the amendment.

26. 1. Reduction in Holding Period:
 Capital asset in the form of Land, Building , or both shall be considered as short term capital
assets if it is held for less than 24 months ( Earlier 36 months)
 It simply means that if a land, building or both is being held by any person for 24 months or
more, then he shall be eligible benefits of Long Term Capital Gain. (Like Indexation, 20% rate of
tax , Exemptions of Sec. 54 etc.)
2. Shifting the base year:
 From the FY 2017-18, where the assessee has acquired a capital asset prior to 01-04-2001
(Earlier 01-04-1981) , then he has an option to substitute the FMV as on 01.04.2001 for the
determination of Indexed cost of acquisition and cost of improvement.
 Effect of such shifting
3. Introduction of New Exemption under Capital Gains Tax:
 By FY 2017-18 , conversion of Preference share to Equity shares shall NOT be treated as
Transfer for the levy of capital gains tax.
 Earlier there is no specific exemption.

27. Section 56(2)(vii) & 56(2)(viia):
The concept of taxation of Gift received in the form of money or property, in excess if Rs. 50,000
from Non-relative persons has been introduced some years back. These provisions operated in
restricted field. In order to widen the scope of these sections, substantive amendment are made in
this section.
Therefore , operation of the provisions of these sections are now restricted up to FY 2016-17.
Section 56(2)(x): Sec. 56(2)(vii) & 56(2)(viia) that are receipt by a person in
respect of money or property for without consideration or inadequate consideration in excess of
Rs. 50,000/- in the head of IFOS.
Earlier only individual and HUF are only covered but now all the persons are covered in the ambit
of Section 56(2)(x).

28. 1. Reduction in time limit in filing of Revised Return:
 Return can be revised before the end of the relevant A.Y. (Earlier: before the expiry of
one year from the end of the relevant A.Y.) or completion of assessment Whichever in
earlier.
 Therefore, an assessee can revise his return u/s 139(5) for A.Y. 17-18 up to
31.03.19 whereas return for the AY 2018-19 can be revised on or before 31.03.2019
2. Sec. 234F: Penalty for delay in filing of Return:
Delay in filing of return within the due dates specified in section 139(1) , then assessee shall pay a fee:
a) Rs. 5,000/- where the return is furnished up to the 31st December of the that A.Y.
b) Rs. 10,000/- in any other case
However if the Total income up to Rs. 5,00,000 then penalty shall be Rs. 1000/-.