Lq budget 2017

UNION BUDGET 2017
ANALYSIS
1
LEGAL QUOTIENT
CONSULTANTS

Amendment of Section 92BA - Scope of SDT reduced
Existing provisions also cover ‘any expenditure for which payment is to be made to “specified person” under section
40A(2)(b)’ under the ambit of specified domestic transaction.
In order to reduce the compliance burden on taxpayers, this coverage will be excluded from the purview of SDT.
Consequential amendments proposed in section 40A(2)(b) accordingly. SDT now applicable only where one of the parties to
SDT is claiming profit-linked deductions.
Effective from April 1, 2017 i.e. applicable from AY 2018-19.
Insertion of Section 92CE - Secondary Adjustment in certain cases
To align the transfer pricing provisions with OECD TP guidelines and international best practices, concept of secondary
adjustment introduced:
 Assesse required to make secondary adjustment where primary adjustment has been made through any of the following
means: by assesse suo-moto in ROI or by AO and accepted by assesse or determined as per APA/ MAP or made as per
safe harbour rules.
 Secondary Adjustment: adjustment in the books of accounts of the assesse and its AE to reflect the actual allocation of
profits consistent with transfer price, thereby removing the imbalance between cash account and actual profit of the
assesse.
 If as a result of primary adjustment, there is an increase in income or reduction in loss, the excess money available with
AE, if not repatriated to India within prescribed time, shall be deemed as advance made by the assesse to AE and interest
on such advance shall be computed as income of the assesse.
 Provisions not to apply in cases where amount of primary adjustment does not exceed Rs. 1 crore and primary adjustment
is made for AY commencing on or before April 1, 2016 (FY 2014-15).
TRANSFER PRICING PROPOSALS

Insertion of Section 94B - Thin Capitalization Rules: Limitation of interest deduction in certain cases
To align with the recommendations of OECD BEPS Action Plan 4 to counter cross-border shifting of profits through excessive
interest payments and to protect country’s tax base, new section 94B has been introduced:
 Provisions shall be applicable to an Indian company or permanent establishment of a foreign company in India, being the
borrowers, paying interest or other similar consideration to its non-resident AE for which deduction is claimed for
computing income under PGBP.
 Interest expense deduction shall be restricted to 30% of EBITDA of borroweror interest paid / payable to AE, whichever is
less.
 In case debt is issued by non-AE lender, but AE provides guarantee or deposits equivalent to debt amount with such non-
AE lender, such debt shall be deemed to have been issued by AE.
 Interest expenditure not deducted in relevant FY, shall be carried forward and set-off as per prescribed limits for
subsequent 8 AYs subject to the 30% limit.
 Provisions shall not be applicable to taxpayers engaged in the business of insurance or banking.
 Provisions shall be applicable only if interest expenditure exceeds Rs. 1 crore.
 Debt defined: loan, financial instrument, finance lease, financial derivative or any arrangement giving rise to interest,
discount or other finance charges that are deductible for computing income under PGBP.
Effective fromApril 1, 2018 i.e. applicable fromAY 2018-19

OTHER DIRECT TAX PROPOSALS
Slab Rate for Individual, HUF, AOP & BOI
 Tax rate reduced to 5% from 10% for the slab
 Rs. 2,50,001 to Rs. 5,00,000 : For every individual (whose age is less than 60 years), HUF, AOP & BOI
 Rs. 3,00,001 to Rs. 5,00,000 : In case of resident individuals whose age is 60 year or above but less than 80 years
 10% surcharge levied as against Nil earlier, if total income exceeds Rs. 50 lakh but does not exceed Rs.1 crore
 No change in Education Cess: 3% and surcharge of 15% in case of income exceeding Rs. Crore
 Tax rebate reduced to Rs. 2,500 from Rs. 5,000, if Total income is less than Rs. 3,50,000
Flat benefit of Rs.12,500 to all Assesse earning taxable income exceeding Rs. 5,00,000 on account of change in 1st slab rate.
Tax Rate for Co-operative Societies, Firms and Local Authorities
 No Change in tax rates
 No change in Surcharge : 12% if total income exceeds Rs. 1 crore
 No change in Education Cess : 3%
Tax Rate for Companies
Domestic Company
 No change in the tax rate of 30% (if turnover or gross receipts in the previous year 2015-16 exceeds Rs. 50 crore).
 No change in surcharge : 7%- if total income is between Rs. 1 crore and Rs. 10 crore; 12%- if total income exceeds Rs. 10
crore
 No change in Education Cess: 3%
 Tax rate reduced to 25% if turnover or gross receipts in the previous year 2015-16 does not exceed Rs. 50 crore
Foreign Company
 No Change in tax rate -40%
 No change in surcharge: 2% - if total income is between 1 crore and 10 crore; 5% - if total income exceeds Rs.10 crore.
 No change in Education Cess: 3%

Nature Existing Provisions Proposed
Section 2(42A): Period of
holding for long term assets
(Effective date: AY 2018-
19)
Section 2(42A) provides long term
capital asset as the capital
asset held by Assesse for more
than 36 months.
In case of immovable property, being land
and building, the period of 36 months has been
reduced to 24 months.
This should be a boost to Real Estate
transactions
Provision of Section 55:
Base year for computation of
capital gain.
( Effective date: AY 2018-19)
For computing capital gains in
respect of an asset acquired before
01.04.1981, the Assesse has been
allowed an option of either to take
the fair market value of the asset as
on 01.04.1981 or the actual cost
of the asset as cost of
acquisition.
Base year for computation of capital gain is
proposed to be amended as 01.04.2001.
Consequential amendment is also proposed
in section 48 and Cost Inflation Index
on1.4.2001 would be the base year for
indexation purposes.
This should be a boost to Real Estate
transactions
Section 54EC (Effective date :
AY 2018-19)
Investment in bond issued by NHAI
and REC is eligible for exemption
under this section.
Investment in any bond redeemable after three
years which has been notified by the Central
Government in this behalf shall also be eligible
for exemption.
Govt hopes to mop up funds for other
infrastructure development projects through this
route
Section 23 : Determining
the annual value of house
property held as stock in
trade.
(Effective date: AY 2018-
19)
If the property is not let out during
the year, the annual value of any
property shall be deemed to be the
sum for which the
property might reasonably be
expected to let from year to year.
If the property is not let during the year, annual
value of the property shall be taken as nil for a
period of one year from the end of financial year
in which the certificate of completion of
property is received.
This provision is introduced to afford real
estate players an opportunity to liquidate
their inventory within a specified time and not
suffer tax on notional income.

Special provisions for computation of capital gains in case of Joint Development Agreement (Effective
from April 1, 2018)
 New sub-section (5A) in section 45 inserted in the Act.
 Where an individual/ HUF enters into a specified agreement for development of a project, capital gains shall be chargeable
in the year in which the certificate of completion for the whole or part of the project is issued by the competent authority.
 Full value of consideration shall be the stamp duty value of his share, being land or building or both, as on the date of
certificate of completion as increased by any consideration received in cash.
 However, the above benefit shall not not apply to an assesse who transfers his share in the project to any other person on
or before the date of issue of said certificate of completion
 It is proposed to amend section 49 that cost of acquisition in the hands of the transferee shall be the amount which is
deemed as full value of consideration under the said proposed provision.
This is a welcome amendment for the real estate sector considering that tax had to be paid even though the transferor did
not receive any money on transfer date.
Tax deducted at source in case of joint development agreement (Effective from April 1, 2017)
New section 194-IC inserted in the Act to provide that
 In case any monetary consideration is payable under the specified agreement
 TDS at the rate of 10% shall be deductible from such payment
Nature Existing Provision Proposed
Section 80-
IBA to
promote
Affordable
Housing
(Effective
date: AY
2018-19)
100 % deduction in respect
of the profits and gains
derived from developing
and building certain
housing projects subject to
certain conditions.
Conditions are proposed to be relaxed as under:
 Size of residential unit shall be based on “carpet area”not on “built-up area”
Project on plot of land measuring at least 1,000 sq. mtrs and restriction of
size of 30 sq. mtrs residential unit applies in Chennai, Delhi, Kolkata and
Mumbai;
 For other places, plot of land should measure at least 2,000 sq. mtrs and
restriction in size of residential unit is 60 sq. mtrs
 Period of completion of project increasedfromexisting three years to five
years.
More real estate players would be able to avail the tax holiday benefit and is a
step in the direction of Government’s commitment to make available
affordable housing to all.

Extending the period for claiming deduction by START UPS
Existing Provisions
As per section 80-IAC, an eligible start up is allowed 100% deduction of profits & gains for 3 consecutive assessment years
out of 5 years after incorporation.
Amended Provisions
 In order to promote start ups in India, such eligibility is now allowed for 3 consecutive assessment years out of 7 years
after incorporation.
 Condition of no change in 51% shareholding in case of start-ups relaxed for carry forward of business losses, subject to
promoters continuing to hold shares
Effective Date : A.Y. 2018-19
Rationalization of Provisions relating to tax credit for MAT & AMT (Minimum Alternate Tax, Alternate Minimum
Tax)
Existing Provisions
Section 115JA provides for carry forward of tax credit upto 10 assessment years immediately succeeding the assessment
year in which tax credit becomes allowable in respect of MAT.
Amended Provisions
Tax credit can now be carried forward to 15 assessment years immediately succeeding the assessment year in which tax
credit becomes allowable. Similar amendment is proposed in section 115JD to allow carry forward of AMT paid under section
115JC upto 15 assessment years in case of non corporate assesses.
Effective Date : A.Y. 2018-19
Extension of scope of section 43D to Cooperative Banks
New Inclusion
Co-operative Banks(other than a primary agricultural society or a primary co-operative agriculture and rural development
bank) has been added to the ambit of the provisions of section 43D which allows an entity to record its interest income on
bad and doubtful debts on receipt basis.
Effective Date: A.Y. 2018-19

Extension of eligible period of concessional tax rate in case of ECB and Extension of benefit to RDB
Existing Provisions
Under section 194LC ,TDS is to be deducted at the concessional rate of 5% on payment of interest to a non resident by a
company on borrowings made by it in foreign currency from outside India under a loan agreement or by way of issue of long
term infrastructure bond before the 1st July, 2017.
Amended Provisions
Same benefit is extended u/s 194LC to rupee denominated bonds issued outside India before the 1st July, 2020.
Concessional TDS on interest payment will now be available in respect of borrowings made before the 1st July, 2020.
Effective Date : Retrospectively from April 1, 2016, for AY 2016-17 and subsequent years.
Extension of eligible period of concessional tax rate under section 194 LD (Income by way of Interest on certain
bonds and Government Securities)
Existing Provisions
Section 194LD provides for lower TDS @ 5% in case of interest payable at any time on or after 1st June, 2013 but before the
1st July, 2017to FIIs and QFIs on their investment in Government securities.
Amended Provisions
TDS on interest will now be available on interest payable before the 1st July, 2020.
Effective Date : From April 1, 2018, for AY 2018-19 and subsequent years.
Increase in Deduction limit in respect of Provision for bad and doubtful debts
Existing Provisions
As per section 36(1)(viia), a bank can claim deduction for provision for bad and doubtful debts. Amount of deduction - 7.5%
of the total income.
Amended Provisions
The present limit has been enhanced to 8.5%.
Effective Date : AY 2018-19.

Restricting cash donation
Existing Provisions
As per section 80G, deduction is not allowed in respect of donations made of sum exceeding Rs.10,000, if paid in cash.
Amended Provisions
No deduction is allowed under 80G in respect of donation of any sum exceeding Rs.2,000 unless such sum is paid any mode
other than cash
Effective Date :AY 2018-19 and onwards
Measures to discourage cash transaction
Existing Provisions
Section 40A(3) provides that any expenditure in respect of which payment made to a person in a day, otherwise than by an
account payee cheque drawn on bank or account payee bank draft, exceeds Rs.20,000 shall not be allowed as a deduction.
Section 40A(3)is applicable to revenue expenditure only.
Amended Provisions
Section 40A(3)is amended to provide:
Any payment in cash above Rs.10,000 to a person in a day shall not be allowed as deduction from the business income.
Section 43 also amended to disregard capital expenditure in cash exceeding Rs. 10,000, as cost of the asset for
depreciation/ other purposes
Effective Date : AY 2018-19 and onwards
Disallowance of capital expenditure u/s 35 AD on cash payment
Existing Provisions
There is no provision to disallow the expenditure incurred in cash.
Section 35AD provides investment linked deduction on the amount of capital expenditure incurred fora specified business
(with some exceptions).
Amended Provisions
Section 35AD has been amended to disallow expenditure incurred in cash exceeding Rs 10,000.
Effective Date : AY 2018-19 and onwards

Measures for promoting digital payments in case of small unorganized businesses
Existing Provisions
As per section 44AD, a sum equal to 8% of gross receipt (in any mode of payment) declared by the assesse in his ROI is
deemed to be business income.
Amended Provisions
8% is reduced to 6% in respect of gross receipts only if such income is received by otherwise than by cash during previous
year or before the due date specified in section 139(1)
Effective Date :Assessment Year commencing April 1, 2017
Measures to discourage cash transaction
Existing Provisions
Section 269ST to be inserted in the Act to provide that no person shall receive an amount of Rs. 300,000 or more in cash,
(a) in aggregate from a person in a day;
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion from a person,
This restriction shall not apply to Government, any banking company, post office savings bank or co-operative bank.
Transactions of the nature referred to in section 269SS are proposed to be excluded from the scope of the said section
Section 271DA inserted to provide for levy of penalty on a person who receives a sum in contravention of the provisions of
the proposed section 269ST. The penalty is proposed to be a sum equal to the amount of such receipt.
Section 206C is also amended to omit the provision relating to tax collection at source at the rate of 1% of sale consideration
on cash sale of jewellery exceeding Rs. 500,000.
Effective Date : Assessment Year commencing April 1,2017
This is a good measure to curb hoarding of unaccounted wealth, move towards less cash economy and reduce generation
and circulation of black money.

Restriction on political parties
Existing Provisions
Registered Political parties are exempted from payment of income tax (Sec.13A) if they have submit a report to Election
Commission of India furnishing details of contributions received by them in excess of Rs. 20,000 from any person.
Political parties are required to file return of income u/s 139(4B) of the Act, if its income exceeds the maximum amount not
chargeable to tax (without considering exemption u/s 13A). However, filing of the return is not a condition precedent for
availing the exemption.
Amended Provisions
To avail the benefits u/s 13A, following has been proposed to discourage the cash transactions and bring transparency in
source of funding to political parties:
A. No cash donations in excess of Rs. 2,000 (otherwise than by an account payee cheque / electronic clearing system).
B. Political party has to furnish return of income for the previous year on or before due date u/s 139(4B). (This is a
condition precedent now)
C. To address the concern of anonymity of the donors, mechanism of contribution by way of electoral bonds will be
implemented

Indirect Transfer Provision
 Section 9 of the Act deals with cases of income which are deemed to accrue or arise in India.
 Sub-section (1)of the said section creates a legal fiction that certain incomes shall be deemed to accrue or arise in India.
 Clause (i) provides that all income accruing or arising, whether directly or indirectly, through or from any business
connection in India, or through or from any property in India, or through or from any asset or source of income in India,
or through the transfer of a capital asset situated in India shall be deemed to accrue or arise in India.
 Finance Act, 2012 clarified through insertion of Explanation 5 that an asset or capital asset, being any share or interest in
a company or entity registered or incorporated outside India shall be deemed to be situated in India, if the share or
interest derives, directly or indirectly, its value substantially from the assets located in India.
 Therefore, in order to address concerns of stakeholders regarding multiple taxation arising out of above provisions, it is
proposed to amend the said section, clarifying that Explanation 5 shall not apply to any asset or capital asset mentioned
therein being investment held by non-resident, directly or indirectly, in a Foreign Institutional Investor registered as
Category-I or Category II Foreign Portfolio Investor.
 Effective retrospectively from AY 2012-13.
Enabling claim of credit for foreign tax paid in cases of dispute
 Section 155 of the Act provides for procedure for amendment of assessment order in case of certain specified errors.
 It is proposed to insert sub-section(14A)in section 155.
 Where credit for foreign taxes paid not given due to payment of such taxes paid being in dispute, Assessing Officer shall
rectify the assessment order or an intimation undersection143(1), if the assesse, within six months from the end of the
month in which the dispute is settled:
 furnishes proof of settlement of such dispute
 submits evidence of discharge of foreign tax liability and
 furnishes an undertaking that credit of such amount of foreign tax paid not been claimed directly or indirectly or shall not
be claimed for any other assessment year.

Section Existing Provision Proposed Adjustment
Amendment in
Section 153(1) in
respect of time
limit for making
an assessment
order under
section 143 and
144
21 months from the end of the relevant AY For AY 2018-19 18 months
For AY 2019-20 and onwards 12 months
Amendment in
Section 153(2) in
respect of time
limit for making
an order of
assessment,
reassessment or
re-computation
under section 147
9 months from the end of the financial year in
which the notice under section 148 was issued
for assessment, re-assessment and re-
computation under section 147
12 months from the end of the financial year in
which the notice under section 148 is served in
respect of notices served on or after April 1,
2019
Amendment in
Section 153(3) in
respect of time
limit for making
an order for fresh
assessment, in
pursuance of
order under
section 254, 263
or 264
Fresh assessment order in pursuance of an
order under section 254 or section 263 or
section 264, setting aside or cancelling an
assessment, may be made at any time before
the expiry of nine months from the end of the
financial year in which the order under section
254 is received/ passed.
Fresh assessment order in pursuance of an
order under section 254 or section 263 or
section 264, setting aside or cancelling an
assessment, may be made at any time before
the expiry of twelvemonths from the end of the
financial year in which
the order under section 254 is received/ passed.
Amendment in
Section 139(5)
Revised return to be filed before the expiry of
1 year from the end of the relevant assessment
year or before the completion of assessment,
whichever is earlier.
Revised return to be filed before the expiry of
the relevant assessment year or before the
completion of assessment, whichever is earlier.

MAT - Ind AS compliant financial statement
Adjustment specified under existing section 115JB shall be made in the Net profits before ‘other comprehensive income’ of
Ind AS compliant companies;
Further, the following other comprehensive income shall be included in computation of book profits at the point of time as
specified below:
Items Point of time
 Revaluation surplus of Property, Plant or Equipment or
Intangible Assets (under Ind-AS 16 and Ind-AS 38)
 Gains and losses from investments in equity instruments
designated at fair value (Ind AS 109)
At the time of realisation/ disposal/ retirement or otherwise
transfer of the asset
 Re-measurement of defined benefit plans (Ind AS 19)
 Any other item
As re-measurements gains and losses arises, every year

MAT - First time adoption of Ind-AS
Adjustments recorded in other comprehensive income shall be included in book profits as specified hereunder:
Items Treatment
Items to be reclassified subsequently to Statement of Profit and Loss Include in book profits in the year of
reclassification to the Statement of profit and
loss;
Items recorded as
other comprehensive
income and not to be
reclassified to
Statement of Profit
and Loss
 Revaluation surplus of PPE and Intangible
assets (Ind AS 16 and Ind AS 38)
 Gains and losses from investments in equity
instruments designated at fair value (Ind AS
109)
Included in book profits at the time of
realisation/ disposal/ retirement or otherwise
transfer of the asset
 Re-measurement of defined benefit plans (Ind
AS 19)
 Any other item
Include in book profits equally over five years
starting from the year of first time adoption of
Ind- AS
Items recorded in
Reserves and Surplus
(excluding Capital
Reserve and Securities
Premium Reserve) and
not to be reclassified
to the profit and loss
account.
 Adjustment in value of PPE to fair value as
deemed cost
 Adjustment in value of investment in
subsidiary, Joint Ventures etc
Depreciation and gain/ loss on disposal of
assets shall be recomputed ignoring such
adjustment
 Cumulative translation reserves on account of
foreign operations
Gain or loss after the date of transition -
Include in book profits in respective year;
Gain or loss upto the date of transition -
Include in book profits at the time of disposal
of foreign operation.

Exemption of long term capital gain u/s 10(38)
Existing Provisions
Section 10(38) exempts income arising from sale of equity shares or a units of an equity oriented fund which is chargeable
to Securities Transaction Tax (‘STT’)
.
Amended Provisions
Exemption only if the acquisition of shares/ units is also chargeable to STT, except a few exceptions viz. IPO, FPO, bonus or
right issue, acquisition by non-resident as per FDI policy, to be notified.
Insertion of section 50CA
Where consideration for transfer of shares of a company (other than quoted shares) is less than the Fair Market Value(FMV),
then FMV shall be deemed to be the full value of consideration.
Difference between consideration for transfer and FMV was already taxed in the hands of buyer under section 56. Hence,
there will be double taxation.
Widening scope of Income from Other Sources
New clause (x) inserted u/s 56(2)
Receipt of the sum of money or property without consideration or for inadequate consideration in excess of Rs 50,000, by
any person shall be chargeable to tax
It is proposed to widen the exceptions by including the receipt by certain trusts or institutions and receipt by way of certain
transfers not regarded as transfer under section 47. Under the existing provisions, receipt of any property including shares
by individuals/ HUF for inadequate consideration was taxed in their hands. Similarly, only receipt of shares of closely held
companies by such companies/ firms for inadequate consideration was taxed in their hands. Now all types of assets
received by any person for inadequate consideration is sought to be taxed.
The provision is significantly enlarged and all gift/ transactions where consideration is inadequate, in respect of any nature
of asset, is sought to be taxed in the hands of recipient with certain exceptions viz. those between relatives.
Effective Date: 1st April, 2017

Insertion of section 271J - Penalty on Professionals
Particulars
On whom to apply: A Chartered Accountant/ Merchant Banker/ Registered Valuer
When: Furnishes incorrect information in a report or certificate under any provisions of the Act or
the rules made thereunder
By whom: The Assessing Officer or the Commissioner (Appeals)
Penalty Payable: Rupees 10,000
Penalty when not imposable: If the person proves that there was a reasonable cause
Effective date: April 1, 2017
Insertion of section 234F
Fee for delayed filing of return
Circumstances Fee Payable
If the return is furnished after the due date but on or before the 31st December of the
assessment year;
Rs. 5,000
In any other case; Rs. 10,000
If total income does not exceed Rs. 500,000 Rs. 1,000

Rationalization of National Pension System
Section Existing Provision Proposed Amendment
Deduction under
section 80CCD-
Deposit in National
Pension System
(NPS) Trust
Salaried subscribers:
 Employee’s Contribution: 10%of Salary; and
 Employer’s Contribution: upto10% of Salary
Other Individual subscribers:
 10% of GTI.
Permit deduction for Other individuals
Subscribers upto 20% of GTI.
Partial withdrawal
from NPS Trust –
Section 10(12B)
Completely opt out of NPS
40% of the withdrawal amount is exempt
(Section 10(12A)
Exempt if employee subscriber withdraws not
exceeding 25% of the contribution made.
Rationalization of Advance Tax payment
Section Existing Provision Proposed Amendment
Instalment of
advance tax and due
date
Assessee declaring income from eligible
business under section 44AD is liable to pay
advance tax in one go on or before 15th March
of every financial year.
Now, assesse engaged in eligible profession under
section 44ADA can also pay advance tax in one go
on or before 15th March of every financial year

Amendment to the Structure of AAR
 Advance Ruling means written opinion or authoritative decision by an Authority empowered to render it with regard to the
tax consequences of a transaction or proposed transaction or an assessment in regard thereto.
 Such authority is empowered to issue rulings in respect to income-tax matters, which are binding both on the Income-tax
Department and the applicant.
 However, in order to promote ease of doing business, it is decided to merge the Authority for Advance Ruling (AAR) for
income-tax, Central Excise, Customs duty and Service tax.
 Necessary amendments made to Chapter XIX-B to allow merger of these AARs.
Timely processing of return
 The Assessing Officer shall be required to process return filed for AY 2017-18 and thereafter under section 143(1), even if
notice under section 143(2) has been issued.
 However, he may withhold the refund after obtaining approval from Commission of Income Tax if he is of the opinion that
granting of refund adversely affect the recovery of the revenue.

Introduction of PAN Mechanism in TCS regime
• The person responsible for collection of tax shall obtain PAN from the Collectee
• In case the Collectee does not furnish PAN, the Collector shall collect tax twice the applicable rateor5%, whichever is
higher.
Conversion of preference shares into equity shares
Existing provision
• Conversion of debentures into equity shares are not treated as transfer for the propose of Capital Gains - Section 47
• However, conversion of preference shares into equity shares are not covered under section 47
Amendment
Conversion of preference shares into equity shares shall not to be regarded as transfer.
Set-off of loss from House Property
Existing provision
Loss under House property can beset off against any income under any other head of the income
Amendment
• Loss under House property can beset off against any income under any other head of the income only upto Rs 2 Lakh;
• Balance loss can be carried forward as per section 71B
Taxability of income on transfer of Carbon credit
Income from transfer of carbon credit shall be taxable at the rate of 10% on gross receipt

194-I - TDS on Rent
( New Section
inserted - 194-IB )
Effective from June
1, 2017)
An Individual or a HUF who is liable for tax audit
under section 44AB for any financial year
immediately preceding the financial year in which
such income by way of rent is credited or paid shall
be required to deduction of tax at source under
this section.
• New section 194-IB :- Individual or HUF
(other than those covered under 44AB),
responsible for paying to a resident any
income by way of rent exceeding Rs. 50,000
for a month or part of the month during the
previous year, shall deduct TDS at the rate
5%.
• Tax shall be deducted on such income (total
rent paid to the landlord during the year) at
the time of credit/ payment of rent, for the
last month of the previous year or the last
month of tenancy.
• TAN is not required to be obtained and
deductor shall be liable to deduct tax only
once in a previous year. Deduction not to
exceed the last month’s rent in case PAN of
landlord not available.
This provision would capture instances of
under reporting of rental income by landlords
as well as ensure that genuine HRA exemptions
are claimed
Section :- 194LA
(Effective Date : 1st
April, 2017)
Any person paying compensation shall deduct TDS at
the rate of10% on the compensation or enhanced
compensation or consideration on account of
compulsory acquisition of any immovable property
(other than agricultural land) under any law for the
time being in force subject to certain conditions
specified therein.
No deduction shall be made under this section
where such payment is made in respect of any
award or agreement which has been exempted
from levy of income-tax under
section96(except those made undersection
46)of RFCTLARR Act.
Section 194J
(Effective date:- 1st
June 2017)
TDS is required to be deducted at the rate of 10% of
any sum payable or paid (whichever is earlier) to a
resident by way of fees for professional services or
fees for technical services.
In case of payments received or credited to a
payee, being person engaged only in the
business of operation of call center, the rate of
TDS has been reduced to 2% from 10%.

Section Present Proposed
Section 44AA Maintenance of
books of accounts in case of
Individual and HUF
Effective Date : - 1st April,
2018
As per section 44AA, certain persons carrying
on business or profession has to maintain
such books of accounts and documents,
provided that the income and total sales or
turnover or gross receipts, etc. specified in
said clauses exceeds Rs. 1.2 lacs and Rs. 10
lacs, respectively.
Monetary limits of income and total sales or
turnover or gross receipts, etc .specified in
said clauses for maintenance of books of
accounts increased from Rs.1.2 lacs to Rs.
2.5 lacs and from Rs. 10 lacs to Rs. 25 lacs,
respectively.
Tax Audit under section
44AB
The existing provision of section 44AB of the
Act provides that the person carrying on
business is required to get its accounts
audited if the total sales, turnover or gross
receipts exceeds one crore rupees in a
previous year. (Tax Audit)
Tax Audit would not apply in respect of a
person assessed under 44AD with total
sales, turnover or gross receipts less than Rs.
2 crores.
Section 112(1)(c)
Finance act, 2016 amended section 112(1)(c)
to clarify that the share of company in which
public are not substantially interested shall
also be chargeable to tax at the rate of ten per
cent with effect from 1st April, 2017.
Effective date of amendment made to
section 112(1)(c)(iii) vide Finance
Act,2016shall be 01-04-2013 instead of 01-
04-2017
Section 10AA
The amount of deduction referred to in
section 10AA shall be allowed from the total
income of the Assessee computed in
accordance with the provisions of the Act
before giving effect to the provisions of the
section 10AA.
It is proposed to clarify that the amount of
deduction referred to in section 10AA shall be
allowed from the total income of the assesse
computed in accordance with the provisions
of the Act before giving effect to the
provisions of the section 10AA and the
deduction under section 10AA in no case
shall exceed the said total income.

Section:- 197A
(Amendment) (Effective
date: 1st June 2017)
TDS is not required to be deducted, if the
recipient of certain payments on which tax is
deductible furnishes to the payer a self-
declaration in prescribed form no. 15G/15H
declaring that the tax on his estimated total
income of the relevant previous year would be nil.
Insurance commission payment as referred
in section 194D is now being covered
within the ambit of section 197A.
115BBDA - Tax on
Dividend received from
Domestic Company
(Effective from April 1,
2018)
Dividend in excess of Rs. 10 lacs is chargeable to
tax at the rate of 10%.:- Section Applicable to
resident individual, HUF or firm.
Provision extended to all resident
assesses except domestic company and
certain funds, trusts, Institution.

24
LEGAL QUOTIENT CONSULTANTS
Transfer Pricing | International Taxation
ABOUT US
We are a Delhi based consulting firm founded by Big4 alumnus and are focused to offer services
in the field of Transfer Pricing. We aim to provide supreme, effective and unparalleled solutions
for the Assessees who are involved in International/ Specified Domestic Transactions (“SDT”) as
per the provisions of Income Tax laws in India. We assist our clients in the computation of Arm’s
Length Price(ALP) and preparation of reports/documentations (Transfer pricing study and form
3CEB).
We are a group of professionals, combining unmatched experience in issues / cases related
to Transfer Pricing across various industries namely manufacturing, ITES, Software development,
hospitality, tours and travel, consumer goods, heavy engineering goods etc;
Our services include:
•Transfer Pricing compliance and Documentation;
•Structuring the Business Model of the company (Transfer Pricing);
•Transfer Pricing Advisory as per the Global Arrangements;
•Representation before the Tax Authorities/Dispute Resolution Panel;
•Advance Pricing Agreement (“APA”)/ Mutual Agreement Procedure;
•Transfer Pricing risk evaluation;
•Safe Harbour Rules / Thin Capitalization; and
•FIN 48 Assistance (“USA Compliance”)

Legal Quotient Consultants
Add: B-19, Shakti Nagar Extn., Ashok Vihar Phase – 3, Delhi – 110052
Ph: 011- 65909030 | +91-9873681488 | +91-989909930 | +91-9999934558
Email: info@LQconsultants.com
Web: www.LQconsultants.com

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