This document summarizes proposed amendments to India's Income Tax provisions in the 2012-13 Union Budget presented by Finance Minister Pranab Mukherjee on March 16, 2012. Some key amendments include reducing the deduction for life insurance premiums from 20% to 10% of the sum assured, extending tax deductions to include preventative health checkups, and reducing the eligible age for senior citizens receiving certain tax reliefs from 65 to 60 years old. The budget also proposes tax relief for investing capital gains from residential property sales into manufacturing small and medium enterprises.
1. The document discusses various aspects related to capital gains tax in India including understatement of consideration, reference to valuation officers, transfers between partners and firms, family arrangements, computation of capital gains, and short term versus long term capital assets.
2. It explains the powers of assessing officers to refer cases to valuation officers if the stated consideration is lower than fair market value and the consequences if the valuation officer arrives at a higher value.
3. The treatment of various transfers like between partners and firms, conversion of assets, insurance claims, and retirement of partners is explained citing relevant case laws and tax law sections.
The document discusses capital gains tax in India. Some key points:
- Profits from the sale of a capital asset are taxed as capital gains and deemed as income in the year the asset is transferred.
- A capital asset is broadly defined as property including both movable and immovable assets, tangible and intangible. Certain assets like stock, personal effects, and agricultural land up to certain limits are excluded.
- Capital assets held for over 36 months are considered long-term, while those held for less than 36 months are short-term. Different tax rates apply to long-term versus short-term capital gains.
- Various transactions like distributions on partition of HUF, gifts, transfers
The budget document summarizes key changes for salaried individuals, taxation of long term capital gains (LTCG), business income, international taxation, and miscellaneous items. For salaried taxpayers, deduction limits for medical expenses and interest income were increased. LTCG will now be taxed at 10% for gains over Rs. 1 lakh. Business income rules were expanded and tax rates increased for large companies. International tax provisions now include a broader definition of permanent establishment and taxing digital businesses based on economic presence in India. Various deductions and exemptions were also introduced or modified.
- Subsidies received by businesses can be either taxable or non-taxable depending on whether they are considered capital or revenue in nature.
- The Supreme Court and various High Courts have settled that subsidies aimed at enabling businesses to run more profitably or reimburse costs are taxable revenue receipts, while subsidies for setting up new units or expanding existing ones are non-taxable capital receipts.
- The Finance Act of 2015 amended tax laws to include most subsidies as taxable income, with exceptions for individual welfare subsidies like LPG. This aimed to align tax treatment with accounting standards on classifying government grants.
To analyse and interpret the provisions of the Income-tax Act relating to computation and chargeability of Capital Gains. In this Webinar we shall look at computation of capital gains in specific cases such as Insurance compensation, Compulsory acquisition, Distribution of Assets, Slump Sale and the provisions in case of sale of Depreciable Assets. We will also look at provisions which provide for full value of consideration in certain cases. Finally, the Webinar will touch upon relevant Judicial Precedents.
The document provides an overview of capital gains in India. It defines capital assets and discusses the different types of capital assets and capital gains. It explains that capital gains are taxable if a capital asset is transferred, resulting in a gain. The summary is:
[1] Capital gains arise from the transfer of a capital asset if the sale price is higher than the cost of acquisition and improvements.
[2] Capital assets exclude personal assets and assets held as stock-in-trade.
[3] Gains are classified as short-term or long-term depending on whether the asset was held for less or more than 36 months.
The document summarizes various capital gains tax exemptions available under the Income Tax Act of India. Section 10 allows exemptions for specified assessees like local authorities or research institutions. Sections 54, 54EC, and 54F provide exemptions for individuals/HUFs if the capital gains are reinvested in purchasing a new residential house, bonds of specified institutions, or another residential house respectively. The exemptions are available if the conditions regarding timelines for purchase or construction and holding period of the new asset are met.
Objectives & Agenda :
To analyse and interpret the provisions of the Income-tax Act relating to computation and chargeability of Capital Gains. In this Webinar we shall look at various types of transfers which are exempted from capital gains, cost of acquisition in certain specified cases, capital gains on specified assets and finally, capital gains in case of non-residents. Also, the Webinar will touch upon relevant Judicial Precedents.
1. The document discusses various aspects related to capital gains tax in India including understatement of consideration, reference to valuation officers, transfers between partners and firms, family arrangements, computation of capital gains, and short term versus long term capital assets.
2. It explains the powers of assessing officers to refer cases to valuation officers if the stated consideration is lower than fair market value and the consequences if the valuation officer arrives at a higher value.
3. The treatment of various transfers like between partners and firms, conversion of assets, insurance claims, and retirement of partners is explained citing relevant case laws and tax law sections.
The document discusses capital gains tax in India. Some key points:
- Profits from the sale of a capital asset are taxed as capital gains and deemed as income in the year the asset is transferred.
- A capital asset is broadly defined as property including both movable and immovable assets, tangible and intangible. Certain assets like stock, personal effects, and agricultural land up to certain limits are excluded.
- Capital assets held for over 36 months are considered long-term, while those held for less than 36 months are short-term. Different tax rates apply to long-term versus short-term capital gains.
- Various transactions like distributions on partition of HUF, gifts, transfers
The budget document summarizes key changes for salaried individuals, taxation of long term capital gains (LTCG), business income, international taxation, and miscellaneous items. For salaried taxpayers, deduction limits for medical expenses and interest income were increased. LTCG will now be taxed at 10% for gains over Rs. 1 lakh. Business income rules were expanded and tax rates increased for large companies. International tax provisions now include a broader definition of permanent establishment and taxing digital businesses based on economic presence in India. Various deductions and exemptions were also introduced or modified.
- Subsidies received by businesses can be either taxable or non-taxable depending on whether they are considered capital or revenue in nature.
- The Supreme Court and various High Courts have settled that subsidies aimed at enabling businesses to run more profitably or reimburse costs are taxable revenue receipts, while subsidies for setting up new units or expanding existing ones are non-taxable capital receipts.
- The Finance Act of 2015 amended tax laws to include most subsidies as taxable income, with exceptions for individual welfare subsidies like LPG. This aimed to align tax treatment with accounting standards on classifying government grants.
To analyse and interpret the provisions of the Income-tax Act relating to computation and chargeability of Capital Gains. In this Webinar we shall look at computation of capital gains in specific cases such as Insurance compensation, Compulsory acquisition, Distribution of Assets, Slump Sale and the provisions in case of sale of Depreciable Assets. We will also look at provisions which provide for full value of consideration in certain cases. Finally, the Webinar will touch upon relevant Judicial Precedents.
The document provides an overview of capital gains in India. It defines capital assets and discusses the different types of capital assets and capital gains. It explains that capital gains are taxable if a capital asset is transferred, resulting in a gain. The summary is:
[1] Capital gains arise from the transfer of a capital asset if the sale price is higher than the cost of acquisition and improvements.
[2] Capital assets exclude personal assets and assets held as stock-in-trade.
[3] Gains are classified as short-term or long-term depending on whether the asset was held for less or more than 36 months.
The document summarizes various capital gains tax exemptions available under the Income Tax Act of India. Section 10 allows exemptions for specified assessees like local authorities or research institutions. Sections 54, 54EC, and 54F provide exemptions for individuals/HUFs if the capital gains are reinvested in purchasing a new residential house, bonds of specified institutions, or another residential house respectively. The exemptions are available if the conditions regarding timelines for purchase or construction and holding period of the new asset are met.
Objectives & Agenda :
To analyse and interpret the provisions of the Income-tax Act relating to computation and chargeability of Capital Gains. In this Webinar we shall look at various types of transfers which are exempted from capital gains, cost of acquisition in certain specified cases, capital gains on specified assets and finally, capital gains in case of non-residents. Also, the Webinar will touch upon relevant Judicial Precedents.
The document provides details about various exemptions available under the Indian Income Tax Act for capital gains. It discusses sections 54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GA and 54GB which provide exemption from capital gains tax if the amount of capital gains is invested in specified assets within prescribed time limits. Key conditions, timelines and consequences of not meeting the conditions are explained for each section. The document also covers capital gains tax rates and provisions for non-residents.
The document provides an overview of tax assessment for co-operative societies under the Income Tax Act of 1961. It discusses key sections such as the definition of a co-operative society (Section 2(19)), exemptions for certain co-operative societies (Section 10(27)), deductions allowed for income of co-operative societies (Section 80P), and conditions for deductions. It also provides illustrations of computing total income and summarizes some relevant judicial precedents.
SCRAPPING OF RETRO TAX PROVISIONS : A REVIVAL OF OVERSEAS INTEREST IN INDIADVSResearchFoundatio
The document summarizes the scrapping of retroactive tax provisions in India. It provides background on retroactive taxation laws introduced in 2012 in response to court rulings. It analyzes prominent cases like Vodafone and Cairn Energy that challenged the retroactive taxes under bilateral investment treaties. The Taxation Laws Amendment Act of 2021 was passed to scrap these retroactive provisions and provide tax refunds to affected companies like Cairn Energy. The act aims to improve India's reputation as an investment destination and revive interest from foreign investors.
Objectives & Agenda :
To analyse and interpret the provisions of the Income-tax Act relating to computation and chargeability of Capital Gains. In this Webinar, we will discuss the basics of Capital Gains starting from the Charging Provision. We will understand the meaning of capital asset, meaning of transfer, the types of capital gains, how to compute capital gains and how it arises in specified cases. Finally, the Webinar will touch upon relevant Judicial Precedents.
- Capital gains arise from the transfer of a capital asset that results in a profit or gain. A capital asset is property held by an assessee, excluding certain assets like stock-in-trade.
- Capital assets are classified as short-term or long-term based on the period of holding. Short-term capital gains have a holding period of 36 months or less for immovable property and 12 months or less for others.
- Capital gains are taxed in the year of transfer. Gains can also arise from conversion of a capital asset into stock-in-trade, insurance claims for damaged capital assets, transfer to related parties, and buy-backs of shares.
Capital gains can arise from the transfer of capital assets. Under the Income Tax Act, certain capital gains are fully or partially exempt from taxation if the sale proceeds are invested in specified assets within a prescribed time period. Some of the key exemptions include investments made within 2 years under Section 54 in a new residential house, Section 54B for agricultural land, Section 54D/F for shifting/reestablishing an industrial undertaking, and Section 54EC for specified bonds. Failure to invest in the new asset within the specified time period results in the earlier exempted capital gains becoming taxable in the year of transfer of the new asset.
Key Takeaways:
- Facts of the case
- Issues and Orders
- Contention of the parties
- Observations of Honourable Supreme Court
- Conclusion and way forward
This document defines key terms related to companies under the Income Tax Act such as company, Indian company, company in which public are substantially interested, domestic company, foreign company, industrial company, and investment company.
It also summarizes provisions related to Minimum Alternative Tax (MAT) under section 115JB, which specifies that the tax payable for any assessment year cannot be less than 18.5% of the company's book profit. It provides details on how book profit is computed for MAT purposes.
Finally, it outlines rules around carrying forward and set off of losses for closely held companies under section 79 when there is a change in shareholding.
This document discusses capital gains tax implications under the Indian tax system. It defines capital assets and notes that profits or gains from transferring a capital asset during the previous year are taxed under capital gains. It distinguishes between short-term capital gains from assets held less than 36 months and long-term capital gains from assets held more than 36 months, noting different tax rates and exemptions apply. The document provides details on calculating capital gains tax liability and available exemptions under sections 54, 54B, 54D, 54EC, 54F, 54G, and 54GA.
ALLOWABILITY OF OUTSTANDING INTEREST CONVERTED INTO DEBENTURES AS AN EXPENSE ...DVSResearchFoundatio
The Supreme Court ruled that the conversion of outstanding interest into debentures by the assessee company qualified for deduction under Section 43B of the Income Tax Act. The conversion was done under a rehabilitation plan agreed with institutional creditors to extinguish the interest liability. The Court observed that Section 43B was not meant to affect bona fide transactions, and debentures were different than loans/borrowings under Explanation 3C. It set aside the High Court's decision and allowed the assessee's claim for deduction, noting the conversion was an actual payment of interest rather than postponing the liability.
Objectives & Agenda :
To analyse and interpret the provisions of the Income-tax Act relating to computation of 'Profits and gains of business or profession' (PGBP). In this Webinar, we shall look at the charging section for PGBP and provisions relating to computation of PGBP, admissible deductions and allowances including Depreciation.
This document discusses capital gains tax in India. It defines capital gains as profits arising from the transfer of a capital asset. It outlines the conditions for gains to be classified as capital gains, including that the asset must be transferred. It also defines short-term and long-term capital assets based on the holding period. Several exemptions are provided under sections 54, 54B, 54D, 54EC, 54F, and 54G if the capital gains are reinvested in specified assets within certain time periods.
Capital gains tax is levied on profits arising from the transfer of a capital asset. For gains to be taxed under capital gains, there must be a capital asset that is transferred, resulting in profits. Any profits exempted under sections 54-54G are not taxed. Capital assets include all property except certain exceptions like stock-in-trade. Short term capital gains arise from assets held for 36 months or less, while long term gains are for assets held longer. Indexation of cost is used to arrive at capital gains for long term assets by factoring inflation. Profits are taxed differently based on whether the gain is short term or long term.
Deemed income refers to amounts that are treated as taxable income even though they may not meet the normal definition of income. The Income Tax Act extends the definition of income to include various receipts such as capital gains, voluntary contributions, compensation received, insurance surplus, and windfall gains.
Some key types of deemed income discussed in the document include deemed dividends from closely-held companies, income from transferred assets that is clubbed with the transferor's income, gifts exceeding certain thresholds, consideration received for shares issued by closely-held companies above fair market value, unexplained cash credits, unexplained investments/expenditures/money, and certain provident fund contributions and payments.
Every assessee earning more than the basic exemption are eligible to seek deduction from Gross Total Income by way of deductions allowed for investments or payments made, under Chapter VI-A of the Income Tax Act. Chapter VI-A helps an assessee to reduce the overall tax burden to the extent of investment and expenses made within the ambit of law and fulfilemt of prescribed conditions. In this Webinar, we shall be focusing on the provisions of Chapter VI-A which are essential for Individuals, HUF and Firms for the purpose of claiming deductions against their total income.
SEBI(LODR) Regulations, 2015- Obligations on listing of specified securities-...DVSResearchFoundatio
Key Takeaways:
- Meetings of shareholders and their voting
- Change in name of the listed entity
- Dissemination of information on website and in newspapers
1) The document discusses the taxation of capital gains in India, including the conditions required for a capital gain to be chargeable, the definitions of capital assets and capital gains, and the computation of capital gains.
2) It provides details on the types of capital assets (short term and long term), the meaning of "transfer", and the different types of capital gains (short term and long term).
3) The computation of capital gains involves subtracting the cost of acquisition and cost of improvements from the full value of consideration, with the costs indexed for inflation in the case of long term capital assets.
Key Takeaways: - Analysis of section 45(4), section 9B of the Income Tax Act...DVSResearchFoundatio
Key Takeaways:
- Analysis of section 45(4), section 9B of the Income Tax Act and Rule 8AA and Rule 8AB of Income Tax Rules
- Illustrations to understand the relevant impact
- Critical Issues concerned with the provisions
Accounting involves recording, classifying, and summarizing financial transactions to prepare financial statements. Key concepts include the business entity concept, money measurement concept, dual aspect concept, and matching concept. Accounting follows conventions like consistency, going concern, and accrual to provide an accurate representation of a company's financial position.
The document summarizes the roles and responsibilities of the Central Board of Direct Taxes (CBDT) in India. The CBDT is responsible for policymaking and administering direct tax laws through the Income Tax Department. It is headed by a Chairman and includes six other members. Key responsibilities are distributed among the members and include areas like investigations, revenue, legislation, and supervision of regional tax offices. Major decisions require the collective approval of the full CBDT.
The document provides details about various exemptions available under the Indian Income Tax Act for capital gains. It discusses sections 54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GA and 54GB which provide exemption from capital gains tax if the amount of capital gains is invested in specified assets within prescribed time limits. Key conditions, timelines and consequences of not meeting the conditions are explained for each section. The document also covers capital gains tax rates and provisions for non-residents.
The document provides an overview of tax assessment for co-operative societies under the Income Tax Act of 1961. It discusses key sections such as the definition of a co-operative society (Section 2(19)), exemptions for certain co-operative societies (Section 10(27)), deductions allowed for income of co-operative societies (Section 80P), and conditions for deductions. It also provides illustrations of computing total income and summarizes some relevant judicial precedents.
SCRAPPING OF RETRO TAX PROVISIONS : A REVIVAL OF OVERSEAS INTEREST IN INDIADVSResearchFoundatio
The document summarizes the scrapping of retroactive tax provisions in India. It provides background on retroactive taxation laws introduced in 2012 in response to court rulings. It analyzes prominent cases like Vodafone and Cairn Energy that challenged the retroactive taxes under bilateral investment treaties. The Taxation Laws Amendment Act of 2021 was passed to scrap these retroactive provisions and provide tax refunds to affected companies like Cairn Energy. The act aims to improve India's reputation as an investment destination and revive interest from foreign investors.
Objectives & Agenda :
To analyse and interpret the provisions of the Income-tax Act relating to computation and chargeability of Capital Gains. In this Webinar, we will discuss the basics of Capital Gains starting from the Charging Provision. We will understand the meaning of capital asset, meaning of transfer, the types of capital gains, how to compute capital gains and how it arises in specified cases. Finally, the Webinar will touch upon relevant Judicial Precedents.
- Capital gains arise from the transfer of a capital asset that results in a profit or gain. A capital asset is property held by an assessee, excluding certain assets like stock-in-trade.
- Capital assets are classified as short-term or long-term based on the period of holding. Short-term capital gains have a holding period of 36 months or less for immovable property and 12 months or less for others.
- Capital gains are taxed in the year of transfer. Gains can also arise from conversion of a capital asset into stock-in-trade, insurance claims for damaged capital assets, transfer to related parties, and buy-backs of shares.
Capital gains can arise from the transfer of capital assets. Under the Income Tax Act, certain capital gains are fully or partially exempt from taxation if the sale proceeds are invested in specified assets within a prescribed time period. Some of the key exemptions include investments made within 2 years under Section 54 in a new residential house, Section 54B for agricultural land, Section 54D/F for shifting/reestablishing an industrial undertaking, and Section 54EC for specified bonds. Failure to invest in the new asset within the specified time period results in the earlier exempted capital gains becoming taxable in the year of transfer of the new asset.
Key Takeaways:
- Facts of the case
- Issues and Orders
- Contention of the parties
- Observations of Honourable Supreme Court
- Conclusion and way forward
This document defines key terms related to companies under the Income Tax Act such as company, Indian company, company in which public are substantially interested, domestic company, foreign company, industrial company, and investment company.
It also summarizes provisions related to Minimum Alternative Tax (MAT) under section 115JB, which specifies that the tax payable for any assessment year cannot be less than 18.5% of the company's book profit. It provides details on how book profit is computed for MAT purposes.
Finally, it outlines rules around carrying forward and set off of losses for closely held companies under section 79 when there is a change in shareholding.
This document discusses capital gains tax implications under the Indian tax system. It defines capital assets and notes that profits or gains from transferring a capital asset during the previous year are taxed under capital gains. It distinguishes between short-term capital gains from assets held less than 36 months and long-term capital gains from assets held more than 36 months, noting different tax rates and exemptions apply. The document provides details on calculating capital gains tax liability and available exemptions under sections 54, 54B, 54D, 54EC, 54F, 54G, and 54GA.
ALLOWABILITY OF OUTSTANDING INTEREST CONVERTED INTO DEBENTURES AS AN EXPENSE ...DVSResearchFoundatio
The Supreme Court ruled that the conversion of outstanding interest into debentures by the assessee company qualified for deduction under Section 43B of the Income Tax Act. The conversion was done under a rehabilitation plan agreed with institutional creditors to extinguish the interest liability. The Court observed that Section 43B was not meant to affect bona fide transactions, and debentures were different than loans/borrowings under Explanation 3C. It set aside the High Court's decision and allowed the assessee's claim for deduction, noting the conversion was an actual payment of interest rather than postponing the liability.
Objectives & Agenda :
To analyse and interpret the provisions of the Income-tax Act relating to computation of 'Profits and gains of business or profession' (PGBP). In this Webinar, we shall look at the charging section for PGBP and provisions relating to computation of PGBP, admissible deductions and allowances including Depreciation.
This document discusses capital gains tax in India. It defines capital gains as profits arising from the transfer of a capital asset. It outlines the conditions for gains to be classified as capital gains, including that the asset must be transferred. It also defines short-term and long-term capital assets based on the holding period. Several exemptions are provided under sections 54, 54B, 54D, 54EC, 54F, and 54G if the capital gains are reinvested in specified assets within certain time periods.
Capital gains tax is levied on profits arising from the transfer of a capital asset. For gains to be taxed under capital gains, there must be a capital asset that is transferred, resulting in profits. Any profits exempted under sections 54-54G are not taxed. Capital assets include all property except certain exceptions like stock-in-trade. Short term capital gains arise from assets held for 36 months or less, while long term gains are for assets held longer. Indexation of cost is used to arrive at capital gains for long term assets by factoring inflation. Profits are taxed differently based on whether the gain is short term or long term.
Deemed income refers to amounts that are treated as taxable income even though they may not meet the normal definition of income. The Income Tax Act extends the definition of income to include various receipts such as capital gains, voluntary contributions, compensation received, insurance surplus, and windfall gains.
Some key types of deemed income discussed in the document include deemed dividends from closely-held companies, income from transferred assets that is clubbed with the transferor's income, gifts exceeding certain thresholds, consideration received for shares issued by closely-held companies above fair market value, unexplained cash credits, unexplained investments/expenditures/money, and certain provident fund contributions and payments.
Every assessee earning more than the basic exemption are eligible to seek deduction from Gross Total Income by way of deductions allowed for investments or payments made, under Chapter VI-A of the Income Tax Act. Chapter VI-A helps an assessee to reduce the overall tax burden to the extent of investment and expenses made within the ambit of law and fulfilemt of prescribed conditions. In this Webinar, we shall be focusing on the provisions of Chapter VI-A which are essential for Individuals, HUF and Firms for the purpose of claiming deductions against their total income.
SEBI(LODR) Regulations, 2015- Obligations on listing of specified securities-...DVSResearchFoundatio
Key Takeaways:
- Meetings of shareholders and their voting
- Change in name of the listed entity
- Dissemination of information on website and in newspapers
1) The document discusses the taxation of capital gains in India, including the conditions required for a capital gain to be chargeable, the definitions of capital assets and capital gains, and the computation of capital gains.
2) It provides details on the types of capital assets (short term and long term), the meaning of "transfer", and the different types of capital gains (short term and long term).
3) The computation of capital gains involves subtracting the cost of acquisition and cost of improvements from the full value of consideration, with the costs indexed for inflation in the case of long term capital assets.
Key Takeaways: - Analysis of section 45(4), section 9B of the Income Tax Act...DVSResearchFoundatio
Key Takeaways:
- Analysis of section 45(4), section 9B of the Income Tax Act and Rule 8AA and Rule 8AB of Income Tax Rules
- Illustrations to understand the relevant impact
- Critical Issues concerned with the provisions
Accounting involves recording, classifying, and summarizing financial transactions to prepare financial statements. Key concepts include the business entity concept, money measurement concept, dual aspect concept, and matching concept. Accounting follows conventions like consistency, going concern, and accrual to provide an accurate representation of a company's financial position.
The document summarizes the roles and responsibilities of the Central Board of Direct Taxes (CBDT) in India. The CBDT is responsible for policymaking and administering direct tax laws through the Income Tax Department. It is headed by a Chairman and includes six other members. Key responsibilities are distributed among the members and include areas like investigations, revenue, legislation, and supervision of regional tax offices. Major decisions require the collective approval of the full CBDT.
This document discusses topics related to income tax, including heads of income, clubbing of income, and set off and carry forward. It covers all amendments made up to the 2008 Finance Act. The author aims to upload case studies to help final year students and disclaims any responsibility for errors, though every effort was made to avoid them. Medical expenses incurred by an employer for an employee's treatment are exempt up to certain limits depending on where the treatment occurs and the employee's gross total income.
This document summarizes the Foreign Exchange Management Act of 1999 in India. The act consolidates and amends laws relating to foreign exchange to facilitate external trade and payments. It establishes rules for transactions involving foreign exchange, currencies, and securities. Some key aspects include:
- Requiring authorization for dealings in foreign exchange/securities and international payments/transfers unless permitted
- Distinguishing between current account and capital account transactions
- Granting the Reserve Bank of India regulatory powers over foreign exchange markets and transactions
The document provides guidelines for maintaining service books and leave accounts for central government employees. Some key points:
1. Service books must be maintained for all permanent and temporary employees expected to serve over 1 year. They record all career events and are kept until retirement.
2. Entries for events like promotions, suspensions, increments are made in red ink and attested. Corrections require attestation.
3. Annual verification of service is required. On transfer, the previous office records verification for the period served there. Certified copies may be provided on payment.
Managing physical records involves identifying, storing, circulating, and disposing of records properly. Records must be authenticated through careful handling or forensic examination. They must be stored securely based on their importance, with considerations for environmental controls, disaster protection, and weight. Circulation of records is tracked, often using barcodes or RFID technology. Records disposal requires authorization and documentation, and can include destruction or transfer. Electronic records require similar management but present challenges in preserving content, context, and structure without a physical form.
This document provides an overview of tax collection and recovery provisions under the Income Tax Act of India (Sections 190-234D). It discusses general principles of deduction at source, direct payment of tax, and various types of deductions including for salaries (Section 192), interest on securities (Section 193), and dividends (Section 194). The summary focuses on high-level topics covered rather than detailed legal provisions.
1) The document outlines the steps for conducting a departmental inquiry into employee misconduct, including examining complaints, preliminary investigation, drafting charge sheets, minor and major penalty proceedings, inquiry proceedings, and issuing final orders.
2) Key parts of the process include identifying the alleged misconduct, investigating the complaints, drafting specific charges, providing employees opportunities to respond to charges, conducting inquiries where employees deny charges, and imposing penalties or exoneration based on evidence.
3) Consultation with oversight agencies like the Central Vigilance Commission and Union Public Service Commission is also required at various stages of the process.
This document provides a summary of provisions related to tax collection and recovery in India. It discusses key sections of the Income Tax Act that deal with collection and recovery (sections 220-232). It outlines the legislative history of changes to various sections over time. It then discusses the concepts of an "assessee in default" and levy of interest on defaulted payments. Specific topics covered include when tax is payable, deeming a taxpayer in default, computation of interest on defaulted payments, and how interest is adjusted in cases where the tax demand amount changes over time such as due to appeals.
This document provides an overview of contract law in India. It defines key terms like offer, acceptance, consideration and agreement. It explains the essential elements of a valid contract according to Indian law, including offer and acceptance, lawful consideration, capacity of parties, free consent, lawful object and possibility of performance. It also distinguishes between different types of contracts and agreements, such as express vs implied contracts, and agreements that are enforceable by law (contracts) vs those that are not.
This document provides an introduction and definitions for key terms used in the Indian Penal Code of 1860.
1) It establishes the title and extent of operation for the Code, which applies to the whole of India except the state of Jammu and Kashmir.
2) Key terms like "public servant", "judge", and "court of justice" are defined to clarify their meaning and application throughout the Code.
3) The document also covers gender, number, and definitions for other terms to ensure consistent understanding across the Code.
The General Clauses Act, 1897 consolidates and extends the General Clauses Acts of 1868 and 1887. It provides definitions for terms used in central acts and regulations. Some key definitions include: "Act" includes a series of acts, "British India" refers to territories governed by the British pre-independence, "Central Government" refers to the government of India, "India" refers to territories that are part of India, "Regulation" refers to regulations made by the president or central government, and "State Government" refers to provincial or state governments. The act aims to provide consistent interpretation of terms across legislation.
The document provides an overview of The Indian Stamp Act of 1899 which consolidated and amended laws relating to stamps. [1] It lists the sections contained in the act related to stamp duties, instruments chargeable, valuation of instruments, penalties for non-compliance, and other administrative provisions. [2] The act established a framework for stamp duties on legal documents and financial instruments to be paid according to schedules, and penalties for documents that were improperly or not stamped. [3] It aimed to simplify and standardize stamp duty laws across various regions of India at the time.
1) The document discusses income tax rules regarding income from house property, capital gains, and exemptions.
2) Key points include definitions of gross annual value and net annual value of let out properties, computation of income/loss from house property, and tax treatment of capital gains as short-term or long-term depending on holding period.
3) Exemptions are available under certain sections for reinvesting gains from sale of residential houses, agricultural land, and other assets in similar assets within prescribed time limits.
Covers all updates and latest issues of Income TaxPraveen Kumar
The document summarizes key provisions of the Indian Income Tax Act. It discusses the different heads of income including salary, house property, capital gains, business income, and income from other sources. It also outlines some deductions available such as under sections 80C, 32, and 80IC. The document provides information on compliance requirements, advance tax due dates, and special provisions related to valuation of closing stock, recovery of previously allowed deductions, cash payments, and undertakings located in special category states.
Latest Updates And All Latest Issues Of Income Tax IndiaPraveen Kumar
Income Tax Act classifies income into four main heads: salary, house property, capital gains, and business/profession. Key points include: (1) employees can sometimes claim both HRA and interest on housing loans; (2) losses from rent properties can offset income from other heads; and (3) surplus from derivative contracts is non-speculative capital gains. Certain items like art are now considered capital assets. Various deductions and compliances like TDS, advance tax payments, and annual returns are required under the Income Tax Act.
The document summarizes key points from the Union Budget of India for 2015, including:
- No change in personal or corporate income tax rates. A surcharge of 12% will be levied on incomes over 1 crore INR.
- Measures to curb black money include prohibiting cash transactions over 20,000 INR for immovable property.
- Job creation incentives like deferring the General Anti-Avoidance Rule, tax benefits for REITs/InvITs, and incentives for manufacturing in AP and Telangana.
- Improving ease of doing business by modifying indirect transfer tax provisions and raising the threshold for transfer pricing.
- Benefits for individual taxpayers like raising
Employee Stock Option Plan(ESOP) is a right and not an obligation to purchase shares. Right to purchase shares at a future date. The price of shares is fixed today irrespective of change in market price – in the money and out of the money options. Option upon exercise converts into equity shares.
The document summarizes several proposed amendments to the Indian Income Tax law from the 2020 budget. Key points include:
1) Individuals and HUFs can now choose to be taxed at new optional slab rates but must forego many deductions. Dividend income from companies and mutual funds will now be taxable for all taxpayers.
2) The threshold for being considered a resident in India has reduced from 182 to 120 days. Any Indian citizen who is not liable to tax in another country will be deemed a resident of India.
3) Companies will no longer pay Dividend Distribution Tax but shareholders will pay tax on dividends as per their slab rate.
4) Several changes have been
The document summarizes tax credits and the carry forward and set-off of losses under Pakistan's income tax law. It discusses various tax credits available under sections 61-64 of the law for donations, investments, pension contributions, and profit on debt. It also covers rules for setting off current year losses against other income, carrying losses forward for up to 6 years, exceptions for certain losses, group relief for losses between subsidiaries and parents, and limitations.
The document provides an overview of key provisions under the Indian Income Tax Act. It discusses various heads of income like salary, house property, capital gains, and business income. It summarizes important points around deductions available for HRA, interest on housing loans, losses from house property rental, and capital gains from sale of art. The document also discusses key compliance requirements like TDS, advance tax payments, and income tax return filing due dates. It summarizes special provisions for new units in SEZs, additional depreciation, and deductions available for undertakings located in certain states.
We are excited to share our annual Clients Circular on the amendments by Finance Act 2020.
The writeup covers important amendments that impact you directly and consciously we have avoided to mention the amendments which are procedural in nature. This writeup we believe would help you in complying with the law during the new financial year now underway.
Do get back to us if you have any questions and we would be delighted to help you out.
The document summarizes major tax proposals in the Indian Budget 2019. Some key points include:
1. The corporate tax rate has been reduced to 25% for companies with annual turnover less than Rs. 400 crore.
2. Surcharge rates on individuals/HUF/AOP/BOI have been increased based on total income.
3. TDS of 2% will now be deducted on cash withdrawals exceeding Rs. 1 crore from a bank account.
4. Businesses with over Rs. 50 crore turnover must provide payment options using electronic modes like UPI, QR codes.
5. Interest deduction on loans from NBFCs will now only be allowed if
The National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) were established in 2016 as part of reforms to India's company law. NCLT exercises powers related to company law matters like insolvency resolution that were previously held by various high courts and tribunals. NCLAT hears appeals on NCLT orders. Key differences between them are that NCLT adjudicates company law cases while NCLAT hears appeals on NCLT rulings. Their establishment aimed to provide a specialized forum for corporate legal issues and reduce litigation in multiple high courts.
The document summarizes key provisions of the Income Tax Act related to the classification and taxation of different types of income, capital gains, deductions, tax compliance requirements, and some special provisions. It discusses the heads of income including salary, house property, capital gains, business income, and income from other sources. It also outlines key points related to income from these different sources and compliance requirements such as TDS, advance tax payments, and tax return filings.
While the financial sector is facing headwinds including increase in non-performing assets resulting in increased losses and shortage of liquidity, the real estate sector too has witnessed a tough time due to disruptions in labour supply, logistics and increasing finance cost on unsold inventory.
The document provides an analysis of the Union Budget of India for 2011. It includes sections on understanding the budget, the finance minister's speech, budget estimates, direct taxes, indirect taxes covering various sectors like agriculture, manufacturing, environment and infrastructure. It also discusses service tax and other proposals. The document aims to provide an overview of the key aspects of the Union Budget to internal stakeholders.
The document defines dividends and outlines the legal regime governing dividends in India according to the Companies Act of 1956. It discusses how dividends are declared based on profits, the process for declaring interim and final dividends, requirements for transferring unpaid dividends, and principles related to divisible profits. Key points include:
1) A dividend is a payment made to shareholders from current or past year profits. Companies can retain profits or pay them as dividends.
2) Dividends must be recommended by the board and declared by shareholders. They are paid from current or past profits after accounting for depreciation.
3) Unpaid dividends must be transferred to a special account within 7 days, and un
This document provides a summary of key changes to India's Income Tax laws in the Budget 2015-16. Some key points include:
- Deductions for medical insurance premiums have been increased for individuals and senior citizens. A new deduction of up to Rs. 30,000 has been introduced for medical expenditure on very senior citizens (over 80 years).
- The benefit of a deduction for additional wages has been extended to all companies rather than just corporates. The threshold has also been lowered to 50 employees.
- New rules have been introduced to facilitate taxation of Alternative Investment Funds and Real Estate Investment Trusts.
- The threshold for applicability of domestic transfer pricing has been raised to transactions exceeding Rs. 200
6 Tax Considerations for the Real Estate Sector under Recent COVID-19 Legisla...CBIZ, Inc.
The document discusses several tax provisions under recent COVID-19 legislation that commercial real estate groups should consider to help optimize their income tax obligations and position during the pandemic recovery period. Key provisions include a payroll tax holiday allowing employers to defer payroll taxes, an employee retention tax credit, allowing net operating losses to be carried back five years and offset 100% of income, suspension of excess business loss limitations, corrections to depreciation deductions, and increases to the business interest deduction limitation. The document recommends commercial real estate groups work with tax advisors to understand how these provisions could help minimize their tax liability and take advantage of opportunities under the new legislation.
Budget highlights - V. K. Subramani. - Article published in Business Advisor, dated July 25, 2014 http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/
Income Tax Amendments Applicable to AY 2020-21 (FY 2019-20)AmitJain910
This document discusses important amendments to consider while filing income tax returns for assessment year 2020-21 relating to rebates, surcharges, tax rates, deductions, depreciation, TDS provisions, capital gains exemption, and more. Key points include a reduced MAT rate of 15%, option to purchase two homes for capital gains exemption, increased standard deduction and TDS limits on rent and cash withdrawals.
This document provides details on preparing profit and loss accounts and balance sheets. It begins by defining key accounting concepts like revenue, expenses, net profit, and the difference between cash basis and accrual basis accounting. It then explains the purpose and preparation of key financial statements like the trading account, profit and loss account, and balance sheet. The trading account is used to calculate gross profit/loss, while the profit and loss account calculates net profit/loss. The balance sheet presents the financial position of a business on a given date by listing assets, liabilities, and capital. Accruals and deferrals are also discussed.
This document provides details on preparing profit and loss accounts and balance sheets. It begins by defining key accounting concepts like revenue, expenses, net profit, and the difference between cash basis and accrual basis accounting. It then explains the purpose and preparation of key financial statements like the trading account, profit and loss account, and balance sheet. The trading account is used to calculate gross profit/loss, while the profit and loss account calculates net profit/loss. The balance sheet presents the financial position of a business on a given date by listing assets, liabilities, and capital. Manufacturing accounts are also discussed for businesses that manufacture goods.
The document summarizes the tax treatment of income from salary in India. It defines salary and outlines what components are included as salary income. It states that salary income is taxable on a due or receipt basis, whichever is earlier. It provides details on the taxability of various salary allowances and perquisites. Key allowances like house rent allowance and travel allowance are partly exempt from tax up to certain limits. Most other allowances are fully taxable.
The document discusses income from house properties under the Indian Income Tax Act. It defines income from house properties as taxable if the property consists of a building or land, the taxpayer owns the property, and it is not used for business purposes. It provides details on computing income by determining gross annual value, deducting expenses like taxes and interest payments, and outlines special provisions for self-occupied properties and rental properties. The document also discusses topics like deemed ownership, treatment of vacant properties, co-owned properties, and the tax treatment of unrealized rent.
This document outlines the income tax rates in India from 1992-1993 to 2013-2014. It provides the tax rates for different income slabs for individuals, HUFs, AOPs and BOIs over these years. The tax rates varied from 0% to 50% depending on the income slab and year. Surcharge and education cess were also introduced in some years applicable above certain income thresholds.
1. Salary is remuneration received periodically for services rendered as a result of an employment contract. TDS or tax deducted at source is income tax deducted from salary payments.
2. To calculate TDS, the total gross salary is determined, exemptions are subtracted to get the taxable salary, and annual taxable income is projected. Deductions are then subtracted to get the total taxable income.
3. Based on the tax slabs, the annual tax liability is calculated. The monthly TDS amount is the annual tax divided by 12 months.
The document summarizes key aspects of the Wealth Tax Act of 1957 in India. It outlines that wealth tax is charged on the net wealth of individuals, HUFs, and companies above a certain threshold. It defines what constitutes an asset and exceptions. Some key assets include residential and commercial properties, motor vehicles, cash in hand, and jewelry. It also discusses deemed assets, asset valuation methods, tax rates, and filing of wealth tax returns.
This document summarizes key aspects of the Wealth Tax Act of 1957 in India, including:
- Who is required to file wealth tax returns and by what deadline.
- The types of assets that are included in calculating net wealth and subject to the 1% wealth tax, such as residential/commercial property, jewelry, vehicles, and cash over a certain amount.
- Exceptions and exemptions to assets included in net wealth, such as one residential property or assets held in trust.
- How different types of assets are valued for wealth tax purposes, such as through capitalizing rental income for property or independent appraisals for jewelry.
The document outlines various time limits for income tax assessments and related procedures in India. It discusses that intimal notices under section 143(1) must be sent within one year of the end of the financial year in which the return was filed. Regular assessments under section 143 must be completed within two years of the end of the relevant assessment year. If a case is referred to a transfer pricing officer, the time limit is extended by 12 months. Notice for reassessment under section 147 must generally be issued within four years, but can be issued within six years in some cases.
This document provides an overview of tax deducted at source (TDS) in India. It defines TDS and explains that it is a mechanism for collecting income tax by deducting taxes from payments made to recipients. It outlines who is required to deduct TDS, their responsibilities, applicable tax rates and payments that attract TDS. It also summarizes provisions related to tax collected at source (TCS), due dates for depositing TDS/TCS, filing returns and issuing TDS certificates.
This document discusses common TDS violations found during surveys conducted by the Income Tax Department. It outlines several types of common violations:
1) Non-deposition of taxes deducted, which is often seen in struggling businesses.
2) Failure to apply the normal deduction rates, as seen in an insurance business.
3) Failure to make any TDS deductions for a TPA (third party administrator) business.
4) Not treating non-refundable rent advances as attracting TDS under section 194I.
5) Misclassifying professional fees paid to guest lecturers as salary.
The document provides guidance on purpose, selection, operation, and procedures for conducting TDS surveys
This document discusses the service of notices under the Income Tax Act of 1961. It outlines how notices may be served either by post or as if they were a summons issued by a court. For post, service is deemed effective if addressed, prepaid and registered. It discusses who a notice can be served to depending on the recipient's status (individual, HUF, firm, company etc). It also interprets common postal remarks and outlines general principles of service, noting that mere knowledge is insufficient and the burden of proof is on the issuing authority. Finally, it discusses how the Code of Civil Procedure of 1908 has influenced certain sections and rules of the Income Tax Act regarding service of notices.
1) The document discusses the service of notices under the Income Tax Act of 1961 and how it draws from the Code of Civil Procedure of 1908.
2) It outlines the key provisions for serving a notice such as serving by post, rules for personal service, substituted service, and who notices should be addressed to depending on the type of recipient like an individual, HUF, firm, or company.
3) The Code of Civil Procedure of 1908 is the basis for rules regarding service of notices under the Income Tax Act of 1961, especially Order V relating to summons.
This document outlines income tax offences and provisions for penalties and prosecution in India. It lists various offences related to defaulting on tax payments, failing to comply with notices, concealment of income, failure to maintain proper books and records, and failure to deduct taxes. It provides the corresponding section of the Indian Income Tax Act for each offence. The document also discusses provisions related to prosecution for contravention of orders, failure to provide access to books and records during inspections, failure to pay taxes deducted, willful tax evasion, failure to provide accounts and documents, making false statements, falsifying records to evade tax, abetting false returns, and repeat offenses.
This document summarizes the various types of leave available to government servants (GS) in India. It discusses leaves that are debited to the leave account like earned leave, half-pay leave, and commuted leave as well as leaves not debited like study leave and maternity leave. It provides details on the eligibility and limits for each type of leave. Key points include that earned leave is credited at 15 days every 6 months up to a maximum of 300 days, half-pay leave is credited at 10 days every 6 months, and commuted leave can be taken instead of half-pay leave with a medical certificate. Maternity leave is allowed for up to 180 days and child care leave can be taken for up to two
The document outlines the various leave rules for government servants under the CCS (Leave) Rules, 1972. It discusses leaves that are debited to the leave account like earned leave, half-pay leave, and commuted leave as well as leaves not debited like study leave, maternity leave, and child care leave. It provides details on the eligibility and extent of various leaves. Key highlights include earned leave accrual of 15 days twice a year, maternity leave of up to 180 days, and extra ordinary leave available up to 18 months for treatment or 24 months for studies.
The document discusses various sections under which interest is payable by or to the assessee. It summarizes the key details around sections like 234A, 234B, 234C and 234D which deal with interest for defaults in filing return, payment of advance tax, deferment of advance tax and excess refunds respectively. It provides details like applicable rates of interest, period of applicability and amount on which interest is calculated for different cases under these sections. The document also briefly discusses sections like 244A and 132B(4) pertaining to interest on delayed refunds and seized/requisitioned assets.
This document discusses interest payable by and to taxpayers in various situations under the Indian Income Tax Act. It covers interest charged for late filing of returns, late payment or underpayment of advance tax, excess refunds granted, and interest paid on amounts seized during a search that are eventually refunded. The key points covered include calculation methods for different types of interest, applicable rates, and time periods over which interest applies. Case laws are also referenced related to issues like what date should be used to determine interest and whether interest can be charged without being specified in the assessment order.
The document summarizes key aspects of the Indian Evidence Act of 1872 such as its extent, interpretation of terms like "fact", "document", and "evidence". It also covers rules around oral evidence, documentary evidence, public documents, presumptions related to documents, burden of proof, estoppel, examination of witnesses, and production of documents. The Act establishes rules for evidence admissibility in courts of India, except the state of Jammu and Kashmir. It defines important terms and sets guidelines around primary and secondary evidence, oral and documentary evidence, certified copies, burden of proof, and witness examination.
The document provides an overview of the Indian Evidence Act of 1872. Some key points:
- It extends to all of India except Jammu and Kashmir. It applies to all judicial proceedings in any court, including court-martial, but not to affidavits or arbitrator proceedings.
- Proceedings before the Income Tax Authority are deemed judicial proceedings. Every income tax authority is deemed a civil court for some purposes.
- It defines terms like court, fact, evidence, and document. A court includes all judges and magistrates legally authorized to take evidence. Evidence includes oral statements and documents.
- Oral evidence must be from an eyewitness or earwitness. Documentary evidence can be primary like
1. Amendments in Income Tax
Provisions Proposed by Union
Budget 2012-13 Presented by
finance Minister Pranab
Mukherjee on 16.03.2012 in
Parliament.
Shankar Bose
Inspector of Income-tax
MSTU, Puri
2. We will discuss below the amendments in Income Tax Provisions Proposed by Union Budget 2012-13
Presented by finance Minister Pranab Mukherjee on 16.03.2012 in Parliament.
Please note The amendments discussed below are generally effective from 1 April 2013 (i.e. FY
2012-13), except as provided otherwise.
INCOME TAXs
Individuals and HUFs
Deduction in respect Deduction for life insurance premium as regards insurance policies
of payment of Life issued on or after 1 April 2012 shall be available only if premium
Insurance Premium payable does not exceed 10% of actual capital sum assured.
[section 80C] (reduced from 20 %)
Receipt of Sum Any sum received under a life insurance policy issued on or after 1
under a Life April 2012 shall be exempted only if the premium for the policy
Insurance Policy does not exceed 10% of the actual capital sum assured. (reduced
[section 10(10D)] from 20%)
Deduction in respect The deduction granted under section 80D also extended to cover
of any payment on any payment made, by any mode, on account of preventive health
account of check-up of self, spouse, dependent children or parent (however,
preventive health such payment shall not exceed in the aggregate INR 5,000)
check-up [section
80D]
Deduction in respect A deduction up to an extent of INR 10,000 in aggregate shall be
of interest on allowed to an assessee being individual and HUF in respect of any
deposits in savings income by way of the interest on deposits on saving account
accounts with§ a banking company,§ a co-operative society
[ Section 80TTA]
§ a post office
Senior Citizen
Amendment Reduction of the eligible age for senior citizens for certain tax
reliefs
For the purposes of section 80D [deduction in respect of health
insurance premia] and section 80DDB [deduction in respect of
medical treatment, etc.], age for defining a senior citizen has been
reduced from 65 years to 60 years.
Section 197A – No deduction of tax at source in certain
casesFor the purpose of this section qualifying age for an
individual resident has been reduced from sixty-five years to sixty
years, this will be effective from 1 July 2012.
Exemption for Senior Citizens from payment of advance tax
A resident senior citizen, not having any income chargeable under
the head “Profits and gains of business or profession shall not be
liable to pay advance tax. This is proposed to be effective
retrospectively from AY 2012-13.
3. Relief from Long-term Capital Gains Tax on Transfer of Residential Property if Invested in a
Manufacturing Small or Medium Enterprise [section 54GB]
Amendment • If the assessee (being individual and HUF) utilizes the net
consideration from the transfer of long term capital asset,
being a residential property (a house or a plot of land), for
subscription in the equity shares of an eligible company
• Such company within one year from the date of
subscription in equity shares by the assessee shall utilize
this amount for purchase of new asset (plant and
machinery) then, the capital gain arising from such transfer
of share shall be taxable proportionately.
• Amount to the extent not utilized by the company shall be
deposited under such specified bank or financial institution
and shall be utilized in manner notified by the Central
Government.
• Amount already utilized for the acquisition of the asset
along with the amount deposited shall be deemed to be cost
of new asset.
• Amount not utilized by the company for the purchase of the
new capital asset within one year then same shall be
chargeable to tax.
• If the equity shares of the company or the new capital asset
acquired by the company are sold or otherwise transferred
within five years from date of acquisition then capital gain
arising from transfer of residential property which was not
charged for taxation shall be deemed to be the capital gain
of the assessee along with taxability of the gain arising out
of sale of shares or new capital asset.
Corporates
Investment-linked tax benefit for specified business [section 35 AD]
Amendment • Section 35AD, which allows 100% deduction in respect of
any capital expenditure incurred to the specified
businesses is extended to business of setting up an inland
container depot or container freight station, bee keeping and
production of honey and beeswax and setting up and
operating a warehousing facility for storage of sugar.
• Quantum of deduction has been increased from 100% to
150% to certain businesses (which have commenced
operations on or after 1 April 2012), like, cold chain
facility, warehousing facility for agricultural produce,
hospitals, certain notified housing projects and the business
of production of fertilizer.
4. Extension of Sunset Clause for Tax Holiday for Power Sector [section 80-IA (4)(iv)]
Amendment The terminal date of availing deduction for the undertaking
engaged in business of generation and distribution of power,
transmission and distribution of power by laying network of
transmission and distribution lines, undertaking renovation or
modernization of existing distribution lines is extended to 31
March 2013 from 30 March 2012.
Minimum Alternate Tax [section 115 JB]
Amendment • Every assessee, (a) being a company, other than a company
to which the proviso to sub-section (2) of section 211 of the
Companies Act, 1956 is applicable, shall, for the purposes
of the said section, prepare its profits and loss account for
the relevant previous year in accordance with the provisions
of Part II of Schedule VI to the Companies Act, 1956; or
(b) being a company, to which the proviso to sub-section
(2) of section 211 of the Companies Act, 1956 is
applicable, shall, for the purposes of said section, prepare
its profit and loss account for the relevant previous year in
accordance with the provisions of that Act governing such
company (electricity, banking and insurance company,
etc.).
• Book profit shall be increased by the amount standing in
revaluation reserve relating to revalued asset on the
retirement or disposal of such asset, if not credited to the
profit and loss account.
VTPA’s Comments • As per section 115JB, every company is required to prepare
its accounts as per Schedule VI of the Companies Act,
1956.However, as per the provisions of the Companies Act,
1956, certain companies, e.g. insurance, banking or
electricity company, etc. are allowed to prepare their
profit and loss account in accordance with the provisions
specified in their regulatory Acts. In order to align the
provisions of Income-tax Act with the Companies Act,
1956, it is proposed to amend section 115JB to provide that
the companies which are not required under section 211 of
the Companies Act to prepare their profit and loss account
in accordance with the Schedule VI of the Companies Act,
1956, profit and loss account prepared in accordance with
the provisions of their regulatory Acts shall be taken as a
basis for computing the book profit under section 115JB.
• At times the amount standing in the revaluation reserve is
taken directly to general reserve on disposal of a revalued
asset. Thus, the gains attributable to revaluation of the asset
are not subject to MAT liability. In the case of ITO v.
Galaxy Saws Pvt. Ltd., (132 ITD 236) (Mum)(Trib.), it
has been held that the amount on account of revaluation of
5. Amendment • Every assessee, (a) being a company, other than a company
to which the proviso to sub-section (2) of section 211 of the
Companies Act, 1956 is applicable, shall, for the purposes
of the said section, prepare its profits and loss account for
the relevant previous year in accordance with the provisions
of Part II of Schedule VI to the Companies Act, 1956; or
(b) being a company, to which the proviso to sub-section
(2) of section 211 of the Companies Act, 1956 is
applicable, shall, for the purposes of said section, prepare
its profit and loss account for the relevant previous year in
accordance with the provisions of that Act governing such
company (electricity, banking and insurance company,
etc.).
• Book profit shall be increased by the amount standing in
revaluation reserve relating to revalued asset on the
retirement or disposal of such asset, if not credited to the
profit and loss account.
assets sold and taken to the balance sheet as revaluation
reserved cannot be added to book profits. It is, therefore,
proposed to amend section 115JB to provide that the book
profit for the purpose of section 115JB shall be increased
by the amount standing in the revaluation reserve relating to
the revalued asset which has been retired or disposed if the
same is not credited to the profit and loss account.
Dividend Distribution Tax [section 115-O]
Amendment • In case the domestic company receives during the year any
dividend from any of its subsidiary and the subsidiary has
paid dividend distribution tax, which is payable, on such
dividend, then the said amount, if it is distributed as
dividend by the domestic company being the holding
company in the same year, shall not be subject to dividend
distribution tax.
Such domestic company can now be a subsidiary of any
•
other company.
VTPA’s Comments This will remove the cascading effect of DDT in multi-tier
corporate structure. This amendment will take with effect from 1
July 2012.
Taxation of Dividend received by Indian Company from its Foreign Subsidiary [section
115BBD]
6. Amendment • Concessional rate of 15% tax on gross dividends received
by an Indian company from its foreign subsidiary (wherein
the Indian company holds 26% or above of the nominal
value of share capital) is extended for AY 2013-14.
VTPA’s Comments • This amendment aims to attract foreign subsidiary’s of
Indian companies to declare dividend so as to encourage the
flow of funds to India, as the rate of tax would be 50% of
the normal rate.
• However, it seems difficult to get the lower rate of tax if the
Indian Company is governed by the provisions of MAT.
Amalgamation and Demerger between Holding and Subsidiary [sections 2(19AA) and 47(vii)]
Amendment • Under the provisions of section 47(vii) any transfer by a
shareholder, in a scheme of amalgamation of a capital asset
being a share or shares held by him in the amalgamating
company is not regarded as a transfer if, (a) any transfer is
made in consideration of the allotment to him of any share
or shares in the amalgamated company, and (b) the
amalgamated company is an Indian company.
However, in a case where a subsidiary company amalgamates into
the holding company, it is not possible to satisfy one of the
conditions at (a) above, i.e. that the amalgamated company (the
holding company) issues shares to the shareholders of the
amalgamating company (subsidiary company), since the holding
company is itself the shareholder of the subsidiary company and
cannot issue shares to itself.
Therefore, it is proposed to amend the provisions of section 47(vii)
so as to exclude the requirement of issue of shares to the
shareholder where such shareholder itself is the amalgamated
company. However, the amalgamated company will continue to be
required to issue shares to the other shareholders of the
amalgamating company.
• Similarly, in the case of a demerger, there is a requirement
under section 2(19AA)(iv) that the resulting company has
to issue its shares to the shareholders of the demerged
company on a proportionate basis. However, it is not
possible to satisfy this condition where the demerged
company is a subsidiary company and the resulting
company is the holding company.
•Therefore, it is proposed to amend the provisions of section
2(19AA) so as to exclude the requirement of issue of shares
where resulting company itself is a shareholder of the
demerged company. The requirement of issuing shares
would still have to be met by the resulting company in case
of other shareholders of the demerged company.
VTPA’s Comments The resulting company/amalgamated company cannot issue shares
to itself and hence the welcome amendment.
7. Transfer Pricing [Sections 92 to 92F]
Amendment Extension of transfer pricing provisions to specified domestic
transactions
• The scope of transfer pricing regulations to be extended to
the transactions entered into by domestic related parties or
by resident sister undertakings for the purposes of section
10AA, 40A, 80A, 80-IA and Chapter VI-A.
• For instance, the regulations will now cover-
o Expenditure incurred by a company in respect of which the
payment has been made to its director or his relative or to a person
having substantial interest (20 % voting power) or to a sister
concern
o Related party transactions providing profit linked deductions
to an assessee / undertakings, etc.
• This amendment will be applicable only if the aggregate
amount of all such specified domestic transactions exceeds
INR 5 crores.
It will be effective from AY 2013-14.
•
VTPA’s Comments Extending the transfer pricing requirements to domestic related
party transactions will put tremendous compliance burden on the
assessees. The amendment is clearly an outcome of the Honourable
Supreme Court judgment in the case of CIT v Glaxo SmithKline
Asia (P) Ltd. (236 CTR 113)wherein it was suggested by the
Supreme Court that the Ministry of Finance should consider
appropriate provisions in law to make transfer pricing regulations
applicable to certain related party domestic transactions.
Amendment Introduction of Advance Pricing Agreement (APA) in India
• This amendment empowers CBDT to enter into an advance
pricing agreement with any person undertaking an
international transaction.
• It is proposed that the agreement will determine arm’s
length price (ALP) of the taxpayer’s prospective
international transaction or specify the manner in which
ALP is to be determined.
• It seeks to provide assurance of certainty and unanimity in
transfer pricing approach that will be followed by the tax
authorities in case of the international transactions covered
by the agreement.
• Other salient provisions are as follows:
o CBDT may use existing prescribed methodologies with
necessary adjustments / variations or any other method for
determining the ALP.
o The APA will be valid upto 5 years.
o It will be binding on the taxpayer and the CIT unless there is
8. Amendment Extension of transfer pricing provisions to specified domestic
transactions
• The scope of transfer pricing regulations to be extended to
the transactions entered into by domestic related parties or
by resident sister undertakings for the purposes of section
10AA, 40A, 80A, 80-IA and Chapter VI-A.
• For instance, the regulations will now cover-
o Expenditure incurred by a company in respect of which the
payment has been made to its director or his relative or to a person
having substantial interest (20 % voting power) or to a sister
concern
o Related party transactions providing profit linked deductions
to an assessee / undertakings, etc.
• This amendment will be applicable only if the aggregate
amount of all such specified domestic transactions exceeds
INR 5 crores.
• It will be effective from AY 2013-14.
a change in the law or facts of the case.
o Approval of the Central Government will be necessary for
CBDT to go ahead with such agreement.
o Once the taxpayer makes an application to enter into the
agreement, the proceedings will be deemed to be pending.
o The amendment will be effective from 1 July 2012.
VTPA’s Comments The government proposes to introduce unilateral APA mechanism
in India. At present, Indian income-tax law contains a parallel
mechanism for advance ruling in the form of ‘Authority for
Advance Rulings (AAR)’ which is empowered to examine a
contract of a resident taxpayer with a non-resident. The main
difference between AAR and APA programme is that under APA
programme, the revenue authorities can determine / quantify the
value of the international transaction / profits whereas AAR does
not tread this area.Although introduction of APA is a step in the
right direction, one will have to wait till CBDT prescribes a
detailed scheme providing a manner, form and various procedures
in this regard.
Amendment Terms “international transaction” and “intangible property”
clarified
• Amendment seeks to broaden the existing definition of the
term “international transaction” and make it all inclusive.
• Some of the prominent transactions that are now
specifically included in the aforesaid definition are:
o Capital financing including Guarantee,
9. Amendment Extension of transfer pricing provisions to specified domestic
transactions
• The scope of transfer pricing regulations to be extended to
the transactions entered into by domestic related parties or
by resident sister undertakings for the purposes of section
10AA, 40A, 80A, 80-IA and Chapter VI-A.
• For instance, the regulations will now cover-
o Expenditure incurred by a company in respect of which the
payment has been made to its director or his relative or to a person
having substantial interest (20 % voting power) or to a sister
concern
o Related party transactions providing profit linked deductions
to an assessee / undertakings, etc.
• This amendment will be applicable only if the aggregate
amount of all such specified domestic transactions exceeds
INR 5 crores.
• It will be effective from AY 2013-14.
o Any type of advance payments or deferred payments,
o Receivables,
o Transaction of business restructuring or reorganization with
the AE irrespective of whether it has a bearing on profit, income,
losses or assets, etc.
• It has now been clarified that the expression “intangible
property” shall include the following, among the other
items:
o Customer lists,
o Customer contracts,
o Customer relationship,
o Human capital related intangible assets, such as, trained and
organised work force, employment agreements, union contracts,
o Methods, surveys, forecasts, estimates, etc.
The amendment will take effect retrospectively from 1
•
April 2002 i.e. from AY 2002-03.
VTPA’s Comments The legislature has tried to expand the existing concise definition
of ‘international transaction’, and also explains the term ‘intangible
property’ in detail. However, specific inclusion of certain terms
such as customer relationships, human capital related intangible
assets, etc. within the ambit of ‘intangible property’ may now give
10. Amendment Extension of transfer pricing provisions to specified domestic
transactions
• The scope of transfer pricing regulations to be extended to
the transactions entered into by domestic related parties or
by resident sister undertakings for the purposes of section
10AA, 40A, 80A, 80-IA and Chapter VI-A.
• For instance, the regulations will now cover-
o Expenditure incurred by a company in respect of which the
payment has been made to its director or his relative or to a person
having substantial interest (20 % voting power) or to a sister
concern
o Related party transactions providing profit linked deductions
to an assessee / undertakings, etc.
• This amendment will be applicable only if the aggregate
amount of all such specified domestic transactions exceeds
INR 5 crores.
• It will be effective from AY 2013-14.
rise to new areas of litigation.
Amendment Proposal of upper limit and other clarifications in relation to
the tolerance range
• The Finance Bill seeks to put a ceiling of 3% in respect of
power of the Central Government to notify the tolerance
range for determination of ALP.
• This amendment will take effect from 1April 2013 and will,
accordingly, apply in relation to the AY 2013-14 and
subsequent assessment years.
• Further it is clarified by way of an Explanation that the
second proviso to the section 92C(2) as amended w.e.f. 1
October 2009 which stated that the erstwhile tolerance
range of 5% shall be applicable to any assessment or
reassessment proceedings, if pending as on 1 October 2009
before an AO.
• It is also clarified that the tolerance range does not
tantamount to a standard deduction even as per the
provision as it stood before 1 October 2009 and the same
shall be applicable retrospectively i.e. AY 2002-03
onwards.
VTPA’s Comments • As per the Finance Act, 2011 the Central Government was
to notify the tolerance level of variation between the ALP
and value of international transaction for AY 2012-13 and
subsequent years. However, till date no notification has
been issued in this regard. On the other hand, now there is
an upper limit specified for AY 2013-14 onwards. As a
corollary, there is no tolerance level of variation available
to the assessee for the AY 2012-13 as of today.
• Further, the controversy as regards whether the tolerance
11. Amendment Extension of transfer pricing provisions to specified domestic
transactions
• The scope of transfer pricing regulations to be extended to
the transactions entered into by domestic related parties or
by resident sister undertakings for the purposes of section
10AA, 40A, 80A, 80-IA and Chapter VI-A.
• For instance, the regulations will now cover-
o Expenditure incurred by a company in respect of which the
payment has been made to its director or his relative or to a person
having substantial interest (20 % voting power) or to a sister
concern
o Related party transactions providing profit linked deductions
to an assessee / undertakings, etc.
• This amendment will be applicable only if the aggregate
amount of all such specified domestic transactions exceeds
INR 5 crores.
• It will be effective from AY 2013-14.
range as it stood before the amendment on 1 October 2009
is a standard deduction available to the assessee, will now
be litigated due to the proposed retrospective amendment.
Also whether the amendment after 1 October 2009 is
prospective or not will be litigated due to the proposed
change. Both the above amendments are against the
decisions of various tribunals.
Amendment Enhancement of the TPO’s Powers
• It is proposed to empower Transfer Pricing Officer (TPO)
to determine ALP of an international transaction noticed by
him in the course of proceedings before him, even if the
said transaction was not referred to him by the AO,
provided that such international transaction was not
reported by the taxpayer as per the requirement cast upon
him under section 92E of the ITA.
• The aforesaid amendment will take effect retrospectively
from 1June 2002.
• It is also proposed to provide an explanation to effect that
due to retrospective nature of the amendment no reopening
of any proceeding would be undertaken only on account of
such an amendment.
Amendment Other salient amendments related to Transfer Pricing
• Extended due date of filing the return of income (30
November of the assessment year) now applicable even to
the non-corporate tax payers which are required to file
accountant’s report. The same will be applicable w.e.f. AY
2012-13.
• It is proposed to amend section 271AA to provide levy of a
penalty at the rate of 2% of the value of the international
12. Amendment Extension of transfer pricing provisions to specified domestic
transactions
• The scope of transfer pricing regulations to be extended to
the transactions entered into by domestic related parties or
by resident sister undertakings for the purposes of section
10AA, 40A, 80A, 80-IA and Chapter VI-A.
• For instance, the regulations will now cover-
o Expenditure incurred by a company in respect of which the
payment has been made to its director or his relative or to a person
having substantial interest (20 % voting power) or to a sister
concern
o Related party transactions providing profit linked deductions
to an assessee / undertakings, etc.
• This amendment will be applicable only if the aggregate
amount of all such specified domestic transactions exceeds
INR 5 crores.
• It will be effective from AY 2013-14.
transaction, if the taxpayer fails to report any international
transaction which is required to be reported, or maintains or
furnishes any incorrect information or documents.
This penalty would be in addition to penalties in sections 271BA
and 271G (This amendment will take effect from 1 July 2012).
Non- Residents
Indirect transfer of Assets by a Non-Resident [section 9]
13. Amendment • It is clarified that the expression ‘through’ used in section
9(1)(i) shall mean and include and shall be deemed to have
always meant and included “by means of”, “in consequence
of” or “by reason of”.
• It is clarified that an asset or a capital asset being any share
or interest in a company or entity registered or incorporated
outside India shall be deemed to be and shall always be
deemed to have been situated in India for the purpose of
section 9(1)(i) if the share or interest derives, directly or
indirectly, its value substantially from the assets located in
India.
• It is clarified that the expression ‘property’ used in section
2(14) includes and shall be deemed to have always
included any rights in or in relation to an Indian company,
including rights of management or control or any other
rights whatsoever.
• It is clarified that section 2(47) defines the expression
‘transfer’ to include and shall be deemed to have always
included disposing of or parting with an asset or any
interest therein, or creating any interest in any asset in any
manner whatsoever, directly or indirectly, absolutely or
conditionally, voluntarily or involuntarily by way of an
agreement (whether entered into in
India or outside India) or otherwise, notwithstanding that such
transfer of rights has been characterized as being effected or
dependent upon or flowing from the transfer of a share or shares of
a company registered or incorporated outside India.
VTPA’s Comments • Section 9 (1)(i) provides a set of circumstances in which
income accruing or arising, directly or indirectly, to a non-
resident is taxable in India. One of the limbs of clause (i) is
income accruing or arising directly or indirectly through the
transfer of a capital asset situate in India.
• In the case of Vodafone International Holdings B.V. v.
Union Of India & Anr (Civil Appeal No. 733 of 2012),
the Supreme Court held that the transfer of shares of a
foreign company, a special purpose vehicle, which holds
underlying assets in India, by a non-resident to another non-
resident would not be liable to tax in India. This decision
also underlines the doctrine that the situs of shares is where
the company is incorporated, where its shares can be
transferred and where the register of members is
maintained, and not the place where the underlying
economic interests of such shares lies.
• In order to overcome the above Supreme Court ruling, this
amendment is proposed with retrospective effect from AY
1962-63 to clarify that the legislative intent of section 9(1)
(i) is to widen the application as it covers incomes, which
14. Amendment • It is clarified that the expression ‘through’ used in section
9(1)(i) shall mean and include and shall be deemed to have
always meant and included “by means of”, “in consequence
of” or “by reason of”.
• It is clarified that an asset or a capital asset being any share
or interest in a company or entity registered or incorporated
outside India shall be deemed to be and shall always be
deemed to have been situated in India for the purpose of
section 9(1)(i) if the share or interest derives, directly or
indirectly, its value substantially from the assets located in
India.
• It is clarified that the expression ‘property’ used in section
2(14) includes and shall be deemed to have always
included any rights in or in relation to an Indian company,
including rights of management or control or any other
rights whatsoever.
• It is clarified that section 2(47) defines the expression
‘transfer’ to include and shall be deemed to have always
included disposing of or parting with an asset or any
interest therein, or creating any interest in any asset in any
manner whatsoever, directly or indirectly, absolutely or
conditionally, voluntarily or involuntarily by way of an
agreement (whether entered into in
India or outside India) or otherwise, notwithstanding that such
transfer of rights has been characterized as being effected or
dependent upon or flowing from the transfer of a share or shares of
a company registered or incorporated outside India.
are accruing or arising directly or indirectly. It has been
explained that the section 9 codifies source rule of taxation
wherein the state, where the actual economic nexus of
income is situated, has a right to tax the income irrespective
of the place of residence of the entity deriving the income.
It has been further explained that where the corporate
structure is created to route funds, the actual gain or income
arises only in consequence of the investment made in the
activity to which such gains are attributable and not the
mode through which such gains are realized and
internationally this principle is recognized by several
countries.
• In the Memorandum explaining the finance bill, it is
proposed to provide for validation of demands raised under
the Income-tax Act in certain cases in respect of income
accruing or arising, through or from transfer of a capital
asset situate in India, in consequence of the transfer of a
share or shares of a company registered or incorporated
outside India or in consequence of agreement or otherwise
outside India. It is proposed to provide through the
validation clause that any notice sent or purporting to have
been sent, taxes levied, demanded, assessed, imposed or
collected or recovered during any period prior to coming
15. Amendment • It is clarified that the expression ‘through’ used in section
9(1)(i) shall mean and include and shall be deemed to have
always meant and included “by means of”, “in consequence
of” or “by reason of”.
• It is clarified that an asset or a capital asset being any share
or interest in a company or entity registered or incorporated
outside India shall be deemed to be and shall always be
deemed to have been situated in India for the purpose of
section 9(1)(i) if the share or interest derives, directly or
indirectly, its value substantially from the assets located in
India.
• It is clarified that the expression ‘property’ used in section
2(14) includes and shall be deemed to have always
included any rights in or in relation to an Indian company,
including rights of management or control or any other
rights whatsoever.
• It is clarified that section 2(47) defines the expression
‘transfer’ to include and shall be deemed to have always
included disposing of or parting with an asset or any
interest therein, or creating any interest in any asset in any
manner whatsoever, directly or indirectly, absolutely or
conditionally, voluntarily or involuntarily by way of an
agreement (whether entered into in
India or outside India) or otherwise, notwithstanding that such
transfer of rights has been characterized as being effected or
dependent upon or flowing from the transfer of a share or shares of
a company registered or incorporated outside India.
into force of the validating clause shall be deemed to have
been validly made and such notice or levy of tax shall not
be called in question on the ground that the tax was not
chargeable or any ground including that it is a tax on capital
gains arising out of transactions which have taken place
outside India. The validating clause shall operate
notwithstanding anything contained in any judgment,
decree or order of any Court or Tribunal or any Authority.
This validation shall take effect from coming into force of
the Finance Act, 2012.
• The above proposed amendment is most likely to be
challenged in the Courts of law as regards the constitutional
validity of such retrospective amendment [nullifying the
effect of the Supreme Court’s decision in the case of
Vodafone International Holdings B.V. (supra)], whether
the legislature has the power under the ITA to tax income
which accrues and arises outside India, consideration is
received outside India, transaction is completed outside
India and has no nexus to India. Further, the proposed
amendment is also not clear as to how such capital gains
income is to be computed under the provisions of the ITA.
16. Royalty Income [section 9(1)(vi)]
Amendment • It is clarified that for the purpose of royalty the transfer of
all or any rights in respect of any right, property or
information includes and has always included transfer of all
or any right for use or right to use a computer software
(including granting of a licence) irrespective of the medium
through which such right is transferred.
• It is further clarified that royalty includes and has always
included consideration in respect of any right, property or
information, whether or not—
§ the possession or control of such right, property or
information is with the payer;
§ such right, property or information is used directly by the
payer;
§ the location of such right, property or information is in India.
• Further, it is clarified that the term “process” includes and
shall be deemed to have always included transmission by
satellite (including up-linking, amplification, conversion for
down-linking of any signal), cable, optic fibre or by any
other similar technology, whether or not such process is
secret.
VTPA’s Comments • Section 9(1)(vi) provides that any income payable by way
of royalty in respect of any right, property or information is
deemed to be accruing or arising in India. The term
“royalty” has been defined in Explanation 2 which means
consideration received or receivable for transfer of all or
any right in respect of certain rights, property or
information.
• Some of the judicial decisions have interpreted this
definition in the context of taxability of “shrink-wrapped”/
“off-the-shelf” software, sale of software and license
software wherein they found a distinction between “use of
copyright” and “use of a copyrighted article” and held that
use of a copyrighted article is not royalty. [Tata
Consultancy Services v State of AP (271 ITR 401 (SC),
CIT v. Samsung Electronics Co. Ltd. ( 203 Taxman 477)
(Karn)(Against), Velankani Mauritius Ltd. v. DCIT
(132 TTJ 124) (Bang.)(Trib.), Gracemac Corp. ( 42 SOT
550) (Del)(Trib.) (Against) and ADIT v. TII Team
Telecom International (P) Ltd. ( 140 TTJ 649) (Mum.)
(Trib.)].
• The Courts have also analysed whether the right, property
or information has to be used directly by the payer or is to
be located in India or control or possession of it has to be
with the payer, etc.
17. Amendment • It is clarified that for the purpose of royalty the transfer of
all or any rights in respect of any right, property or
information includes and has always included transfer of all
or any right for use or right to use a computer software
(including granting of a licence) irrespective of the medium
through which such right is transferred.
• It is further clarified that royalty includes and has always
included consideration in respect of any right, property or
information, whether or not—
§ the possession or control of such right, property or
information is with the payer;
§ such right, property or information is used directly by the
payer;
§ the location of such right, property or information is in India.
• Further, it is clarified that the term “process” includes and
shall be deemed to have always included transmission by
satellite (including up-linking, amplification, conversion for
down-linking of any signal), cable, optic fibre or by any
other similar technology, whether or not such process is
secret.
• Further in the case of Asia Satellite Telecommunication
Co. Ltd. v. DIT (332 ITR 340)(Del) it has been held that
the payment for use of transponder capacity for up-linking /
down-linking data would not constitute royalty income.
• In order to overcome the above limitations, this amendment
is proposed with retrospective effect from 1 June 1976 to
restate the legislative intent by clarifying the definition of
royalty.
• However, the above amendment to the ITA may not nullify
the provisions of the DTAA signed by India.
Tax Exempt – Sale of Crude Oil in India by a Foreign Company [section 10(48)]
18. Amendment • Any income received in India company in Indian currency
by a foreign company on account of sale of crude oil to any
person in India is exempt subject to the following
conditions:
§ The receipt of money is under an agreement or an
arrangement which is either entered into by the Central
Government or approved by it.
§ The foreign company, and the arrangement or agreement has
been notified by the Central Government having regard to the
national interest in this behalf.
§ The receipt of the money is the only activity carried out by the
foreign company in India.
VTPA’s Comments • It has been explained that in the national interest, a
mechanism has been devised to make payment to certain
foreign companies in India in Indian currency for import of
crude oil. The current provisions of the ITA would render
such payment taxable in India because payment is being
received by these foreign companies in India in Indian
currency. This would not be justified when such payment is
based on national interest and particularly when no other
activity is being carried out in India by these foreign
companies except receipt of payment in Indian currency.
• It is, therefore, proposed to insert new section 10 (48) with
retrospective effect from AY 2012-13 to provide for
exemption in respect of any income of a foreign company
received in India in Indian currency on account of sale of
crude oil to any person in India subject to certain
conditions.
Double Tax Avoidance Agreement (DTAA) [sections 90 and 90A]
19. Amendment • A non-resident shall be entitled to claim any relief under a
DTAA that India has entered into a country or specified
territory of which he is a resident, provided he obtains a tax
residency certificate (TRC) from the Government of that
country or specified territory.
• General Anti Avoidance Rule shall apply to a taxpayer,
even if some of the provisions of such rule are not
beneficial to him as compared to those provided in DTAA.
• Where any term is used in any DTAA that India has entered
into with a country or specified territory; or in any
agreement that any specified association in India has
entered into with any specified association in the specified
territory outside India and such term is not defined under
the said DTAA or agreement or the Act, but is assigned a
meaning to it in the notification issued under section 90(3) /
90A(3) then, the meaning assigned to such term shall be
deemed to have effect from the date on which the said
DTAA or agreement came into force.
VTPA’s Comments • Central Government is empowered to enter into DTAAs
with different countries and have adopted agreements
between specified associations for relief of double taxation.
The scheme of interplay of treaty and domestic legislation
ensures that a taxpayer, who is resident of one of the
contracting country to the treaty, is entitled to claim
applicability of beneficial provisions either of treaty or of
the domestic law. It has been explained that in many
instances the taxpayers who are not tax resident of a
contracting country do claim benefit under the DTAA
entered into by the Government with that country. Thereby,
even third party residents claim unintended treaty benefits.
Therefore, it is proposed to amend sections 90 and 90A to
make submission of TRC as a necessary for availing
benefits of the agreements referred to in these sections.
• This is in line with the circular no. 789 dated 13.04.2000
issued by the CBDT with reference to India-Mauritius
DTAA and the Supreme Court decision in the case of
Union Of India and Another v. Azadi Bachao Andolan
and Another (263 ITR 706) which has confirmed the
validity of the said circular. However, it has been explained
in the Memorandum explaining the finance bill that it is not
sufficient condition for availing the benefit under the
DTAA. The Memorandum tends to hint that the Assessing
Officer can go beyond the TRC and verify whether the
taxpayer is a tax resident of that country applying the
substance theory.
Interest on Long-Term Low Cost Borrowing [section 115A]
20. Amendment • Any interest paid by a specified company to a non-resident
in respect of borrowing made in foreign currency from
sources outside India between 1 July 2012 and 1 July 2015,
under an agreement, including rate of the interest payable,
approved by the Central Government, shall be taxable at the
rate of 5% (plus applicable surcharge and cess).
• The specified company shall be an Indian company
engaged in the business of -
§ construction of dam,
§ operation of Aircraft,
§ manufacture or production of fertilizers,
§ construction of port including inland port,
§ construction of road, toll road or bridge;
§ generation, distribution of transmission of power
§ construction of ships in a shipyard; or
§ developing and building an affordable housing project as is
presently referred to in section 35AD(8)(c)(vii).
VTPA’s Comments • As per section 115A of the ITA, 20% withholding tax is
prescribed while making payment of interest by the
Government or Indian concern to a non-resident. In order to
augment long-term low cost funds from abroad for the
infrastructure sector, it is proposed to provide tax incentives
for funding certain infrastructure sectors from borrowings
made abroad subject to certain conditions.
• This is a welcome amendment and would be useful in
attracting foreign lenders for the purpose of raising the
external commercial borrowings for certain infrastructure
projects as the rate of withholding tax is very competitive
as compared to one provided under DTAAs.
Taxation of a Non-Resident Entertainer and Sports Person [section 115BBA]
21. Amendment • The scope of taxation in the case of income arising to a non-
resident sportsmen or sports association under section
115BBA is extended to income arising to a non-citizen,
non-resident entertainer from performance in India.
• The rate of tax of 10% of gross receipts shall be increased
to 20%
VTPA’s Comments • It is proposed to amend section 115BBA to provide that
income arising to a non-citizen, non-resident entertainer
(the term ‘entertainer’ has not been defined; however as per
Memorandum explaining the finance bill entertainer means
theatre, radio or television artists and musicians) from
performance in India shall be taxable at the rate of 20% of
gross receipts.
• It is also proposed to increase the taxation rate, in case of
non-citizen, non-resident sportsmen and non-resident sports
association, from 10% to 20% of the gross receipts.
• Consequential amendment is proposed in section 194E to
provide for withholding of tax at the rate of 20% from
income payable to non-resident, non-citizen, entertainer, or
sportsmen or sports association or institution. This
amendment will take effect from 1 July 2012.
Withholding Tax Obligation on Payment Made to a Non-Resident [section 195]
Amendment • It is clarified that obligation to comply with section 195(1)
and to withhold tax there under applies and shall be deemed
to have always applied and extends and shall be deemed to
have always extended to all persons, resident or non-
resident, whether or not the non-resident has:-
§ a residence or place of business or business connection in
India; or
§ any other presence in any manner whatsoever in India.
• Board may, by notification , specify a class of persons or
cases, where the person responsible for paying to a non-
resident, not being a company, or to a foreign company, any
sum, whether or not chargeable under the Act, shall make
an application to the Assessing Officer to determine, by
general or special order, the appropriate proportion of sum
chargeable, and upon such determination, tax shall be
deducted under section 195(1) on that proportion of the sum
which is so chargeable.
VTPA’s Comments • As per section 195(1) of the ITA, any person responsible
for paying to a non-resident any sum, which is chargeable
to tax, is liable to withhold tax thereon. The Supreme Court
in the case of Vodafone International Holdings B.V.
22. Amendment • It is clarified that obligation to comply with section 195(1)
and to withhold tax there under applies and shall be deemed
to have always applied and extends and shall be deemed to
have always extended to all persons, resident or non-
resident, whether or not the non-resident has:-
§ a residence or place of business or business connection in
India; or
§ any other presence in any manner whatsoever in India.
• Board may, by notification , specify a class of persons or
cases, where the person responsible for paying to a non-
resident, not being a company, or to a foreign company, any
sum, whether or not chargeable under the Act, shall make
an application to the Assessing Officer to determine, by
general or special order, the appropriate proportion of sum
chargeable, and upon such determination, tax shall be
deducted under section 195(1) on that proportion of the sum
which is so chargeable.
(supra) held that section 195 would apply only if payments
made from a resident to another non-resident and not
between two non residents situated outside India. In order
to overcome this limitation, this amendment is proposed
with retrospective effect from AY 1962-63, whereby it is
clarified that any person includes a non-resident. Therefore,
a non-resident is also held responsible to withhold tax while
making any payment to another non-resident, if such
payment is liable to tax in India.
• As mentioned above, the provisions of section 195(1)
would be triggered only in the case where the remittance
made outside India is liable to tax under the Act. Further, at
present, a payer has an option to obtain a withholding tax
certificate determining the appropriate rate of tax either
from an Assessing Officer or a Chartered Accountant.
However, it is proposed that it is compulsory for certain
class of persons or cases, where the person (other than a
company) responsible for paying to a non-resident any sum,
whether or not chargeable under the Act, to make an
application to the Assessing Officer to determine tax
liability on such payment.
23. Other Amendments
General Anti-Avoidance Rule (GAAR) [sections 95 to 102 and 144BA]
Amendment • The powers to invoke GAAR are bestowed upon the
Commissioner of Income tax (CIT) and Approving Panel.
• Any arrangement entered with the main objective to gain
tax benefit and create rights and obligations; or misuse of or
abuse of the tax laws or lacks commercial substance or non-
bonafide purpose would be treated as an impermissible
avoidance arrangement.
• The avoidance arrangement includes cases of round trip
financing, accommodating party, elements that have effect
of offsetting or cancelling each other, a transaction is
conducted through one or more persons and disguises the
value, location, source, ownership or control of fund which
is subject matter of such transaction, etc.
• Certain circumstances like period of existence of
arrangement, taxes arising from arrangement, exit route,
shall not be taken into account while determining ‘lack of
commercial substance’ test for an arrangement.
• The onus is on the taxpayer to prove that the availability of
tax benefit was not the main objective of the arrangement.
• An arrangement when declared as an impermissible
avoidance arrangement by the CIT, it may be disregarded,
relocate the place of management, look through, or re-
characterize.
VTPA’s Comments • New Chapter X-A is proposed to introduce provisions in
relation to GAAR.
• The provisions in relation to GAAR are in line with the
DTC.
• At present, there are no specific regulations that have been
legislated to deal with Anti-Avoidance Regulations. The
question of substance over form has consistently arisen in
24. Amendment • The powers to invoke GAAR are bestowed upon the
Commissioner of Income tax (CIT) and Approving Panel.
• Any arrangement entered with the main objective to gain
tax benefit and create rights and obligations; or misuse of or
abuse of the tax laws or lacks commercial substance or non-
bonafide purpose would be treated as an impermissible
avoidance arrangement.
• The avoidance arrangement includes cases of round trip
financing, accommodating party, elements that have effect
of offsetting or cancelling each other, a transaction is
conducted through one or more persons and disguises the
value, location, source, ownership or control of fund which
is subject matter of such transaction, etc.
• Certain circumstances like period of existence of
arrangement, taxes arising from arrangement, exit route,
shall not be taken into account while determining ‘lack of
commercial substance’ test for an arrangement.
• The onus is on the taxpayer to prove that the availability of
tax benefit was not the main objective of the arrangement.
• An arrangement when declared as an impermissible
avoidance arrangement by the CIT, it may be disregarded,
relocate the place of management, look through, or re-
characterize.
the implementation of taxation laws. In the Indian context,
judicial decisions have varied. It has been explained by the
Memorandum explaining the provisions of finance bill that
some courts in certain circumstances had held that legal
form of transactions can be dispensed with and the real
substance of transaction can be considered while applying
the taxation laws [McDowell (154 ITR 148) (SC)/ Nat
West Bank(220 ITR 377)(AAR)], whereas others have
held that the form is to be given sanctity [Vodafone
International Holdings B.V. v. Union Of India & Anr
(Civil Appeal No. 733 of 2012), Union Of India and
Another v. Azadi Bachao Andolan and Another (263
ITR 706)].
• It has been explained that in view the aggressive tax
planning with the use of sophisticated structures, there is a
need for statutory provisions so as to codify the doctrine of
“substance over form” where the real intention of the
parties and effect of transactions and purpose of an
arrangement is taken into account for determining the tax
consequences, irrespective of the legal structure that has
been superimposed to camouflage the real intent and
purpose.
• This provision would allow Revenue Authorities to restrict
the benefits of taxation only to bona fide arrangements.
This provision would enable the Revenue Authorities to
examine the real nature of the transaction and would have
25. Amendment • The powers to invoke GAAR are bestowed upon the
Commissioner of Income tax (CIT) and Approving Panel.
• Any arrangement entered with the main objective to gain
tax benefit and create rights and obligations; or misuse of or
abuse of the tax laws or lacks commercial substance or non-
bonafide purpose would be treated as an impermissible
avoidance arrangement.
• The avoidance arrangement includes cases of round trip
financing, accommodating party, elements that have effect
of offsetting or cancelling each other, a transaction is
conducted through one or more persons and disguises the
value, location, source, ownership or control of fund which
is subject matter of such transaction, etc.
• Certain circumstances like period of existence of
arrangement, taxes arising from arrangement, exit route,
shall not be taken into account while determining ‘lack of
commercial substance’ test for an arrangement.
• The onus is on the taxpayer to prove that the availability of
tax benefit was not the main objective of the arrangement.
• An arrangement when declared as an impermissible
avoidance arrangement by the CIT, it may be disregarded,
relocate the place of management, look through, or re-
characterize.
the right to restrict tax benefits to the genuine taxpayers.
• The insertion of these provisions is consistent with the
international trend. Many countries like Singapore, Canada
and United States have already incorporated general anti
avoidance rule in their domestic laws that allow
examination of the real nature of the transaction and a
limitation of benefit to convoluted transactions.
• However, it needs to be seen how legitimate tax planning is
distinguished from tax avoidance while implementing these
provisions as there is a thin line between planning and
avoidance.
Assets Located Outside India [sections 139 and 147]
26. Amendment • Furnishing of return of income under section 139 is
mandatory for every resident (irrespective of the fact
whether the resident taxpayer has taxable income or not)
having any asset (including financial interest in any entity)
located outside India or signing authority in any account
located outside India.
• Time limit has been increased under section 149 for issue of
notice for reopening an assessment to 16 years, where the
income in relation to any asset (including financial interest
in any entity) located outside India, chargeable to tax, has
escaped assessment.
• For the purpose of section 147, income shall be deemed to
have escaped assessment where a person is found to have
any asset (including financial interest in any entity) located
outside India.
VTPA’s Comments • Mandatory reporting of assets held by a person, other than
company and firm, abroad and re-opening of income tax
return filings up to 16 years are among the steps being
proposed by the Government to tackle the menace of black
money.
• The Government has been constantly trying to strengthen
the legislative frame work to control generation of black
money in the country as well as control the flight of such
illicit fund to foreign shores.
• In pursuance of this :
§ 82 DTAAs and 17 Tax Information Exchange Agreements
(TIEA) have been finalised and information regarding bank
accounts and assets held by Indians abroad has started flowing in.
§ Dedicated exchange of information cell for speedy exchange
of tax information with treaty countries is fully functional in CBDT
§ India became the 33rd signatory of the Multilateral
Convention on Mutual Administrative Assistance in Tax Matters;
and
§ Directorate of Income Tax Criminal Investigation has been
established in CBDT.
• The Hon’ble Finance Minister in his Budget Speech has
proposed to lay on the table of the House a white paper on
Black Money in the current session of Parliament.
• Corresponding amendments are also proposed to be made to
the provisions of section 17 of the Wealth-tax Act.
• As per the Memorandum explaining the finance bill, the
amendment in relation to reporting of assets located outside
India will take effect retrospectively from AY 2012-13 and
27. Amendment • Furnishing of return of income under section 139 is
mandatory for every resident (irrespective of the fact
whether the resident taxpayer has taxable income or not)
having any asset (including financial interest in any entity)
located outside India or signing authority in any account
located outside India.
• Time limit has been increased under section 149 for issue of
notice for reopening an assessment to 16 years, where the
income in relation to any asset (including financial interest
in any entity) located outside India, chargeable to tax, has
escaped assessment.
• For the purpose of section 147, income shall be deemed to
have escaped assessment where a person is found to have
any asset (including financial interest in any entity) located
outside India.
the provisions in relation to reopening of assessment will
take effect from 1 July 2012.
Disallowance of Payment in case of Non-Deduction of Tax At Source – [section 40(a)(ia)]
Amendment • Where payer fails to deduct the whole or any part of the tax
on the payment made to a resident and he is not deemed to
be an assessee in default under section 201 (where the
payee has paid the tax on such payment), such payment will
be allowed as a deduction.
Fair Market Value to be full value of consideration actual consideration is not determinable
[section 50D]
Amendment Where consideration for the transfer of capital assets is not
attributable or determinable then for purpose of computing income
chargeable to tax as gains, the fair market value of the asset shall
be taken to be the full value of consideration.
Income From Other Sources [section 56]
28. Amendment • The term “relative” in the context of HUF shall also include
its members apart from the persons referred to in the
Explanation to clause (vi) of sub-section (2) of the said
section. This amendment will take effect retrospectively
from 1October 2009.
• Where a company, not being a company in which the public
are substantially interested, receives, in any previous year,
from any person being a resident, any consideration for
issue of shares that exceeds the face value of such shares,
the aggregate consideration received for such shares as
exceeds the fair market value of the shares shall be
chargeable to income-tax.
This shall not apply where the consideration for issue of shares is
received by a venture capital undertaking from a venture capital
company or a venture capital fund.
However, the company receiving the consideration shall be
provided an opportunity to substantiate its claim regarding the fair
market value of the shares.
VTPA’s Comments • The proposal tends to tax a capital receipt as income and
hence, it may lead to litigation.
Turnover or gross receipts for audit of accounts and presumptive taxation [section 44AD]
Audit of accounts of certain persons carrying on business or profession (section 44AB)
Amendment Tax Audit – 44AB
• For a person carrying on business, tax Audit limit has been
enhanced from INR 60 lakhs to INR 1 crore.
• For a person carrying of profession, tax Audit limit has
been enhanced from INR 15 lakhs to INR 25 lakhs.
Presumptive taxation – 44AD
• Limit of total turnover or gross receipts would be increased
from INR 60 lakhs to INR 1 crores.
• This would not be applicable to professionals and the
person engaged in commission and broking activity or
agency business.
Liability to pay advance tax in case of non-deduction of tax [sections 209, 234B and 234C]
29. Amendment A person who receives any income without deduction or collection
of tax, shall be liable to pay advance tax in respect of such income.
In such a case, he will be liable to pay interest under sections 234B
and 234C on default of payment of advance tax.
Alternate Minimum • Where the tax payable by a person other than a Company
Tax (AMT) Payable under the normal provisions is less than 18.5% of adjusted
by Persons other total income, then the said person shall be liable to pay tax
than a Company at the rate of 18.5% of such adjusted total income.
[sections 115JC to • For this purpose, the adjusted total income means total
115JF] income after adding the amount of deductions claimed
under Chapter VI-A under the heading “C- Deduction in
respect of certain incomes” (other than section 80P) and
section 10AA of the ITA.
• The said person would be required to obtain an
Accountant’s Report certifying that computation of adjusted
total income and alternate minimum tax.
• The credit for tax paid by the said person under this
provision, to the extent of difference between the tax paid
under this provision and regular income tax payable, will be
allowed as tax credit as and when the said person pays the
tax under the normal provisions. In the year of such set off
of tax credit, such tax credit would not exceed the difference
between the regular tax and tax payable under this provision
for that year.
• Such tax credit can be carried forward only for ten
assessment years.
• It is provided that the provision shall not apply to an
individual or a Hindu undivided family or an association of
persons or a body of individuals (whether incorporated or
not) or an artificial juridical person referred to in section
2(31)(vii) if the adjusted total income of such person does
not exceed INR 20 lakhs.
• All provisions of the Act shall continue to apply to the said
persons.
• Consequential amendments are made in the provisions
relating to the charging interest under sections 234A, 234B
and 234C.
Additional It is proposed to allow deduction of additional depreciation namely
Depreciation (a further sum equal to 20 per cent. of actual cost) of any new
[section 32] machinery or plant (other than ships and aircraft) acquired and
installed after 31 March 2012, to an assessee engaged in the
business of generation or generation and distribution of power.
Venture Capital • Section 10(23FB) provides that income of a SEBI regulated
Fund VCF or VCC, derived from investment in a domestic
(VCF)/Company company i.e. Venture Capital Undertaking (VCU), is
(VCC) [section exempt from taxation, provided the VCU is engaged in
10(23FB)/115U] only nine specified businesses. The working of VCF, VCC
or VCU are regulated by SEBI and RBI. In order to avoid
30. Additional It is proposed to allow deduction of additional depreciation namely
Depreciation (a further sum equal to 20 per cent. of actual cost) of any new
[section 32] machinery or plant (other than ships and aircraft) acquired and
installed after 31 March 2012, to an assessee engaged in the
business of generation or generation and distribution of power.
multiplicity of conditions in different regulations for the
same entities, the sectoral restriction on business of VCU is
removed from ITA and such VCU is to be allowed to be
governed by conditions imposed by SEBI and RBI.
• The provisions of section 115U currently allow an
opportunity of indefinite deferral of taxation in the hands of
investor. With a view to rationalize the above position and
to align it with the true intent of a pass-through status, it is
proposed to amend section 10(23FB) and section 115U to
provide that.-
§ The venture Capital undertaking shall have same meaning as
provided in relevant SEBI regulations and there would be no
sectoral restriction.
§ Income accruing to VCF/ VCC shall be taxable in the hands of
investor on accrual basis with no deferral.
§ The exemption from applicability of TDS provisions on income
credited or paid by VCF/ VCC to investors shall be withdrawn.
Appeal [section • Appeal can be filed by the person responsible for deduction
246A/253] of tax against the intimation/order passed in respect of TDS
returns.
• Department can file an appeal against the order of the
Dispute Resolution Panel (DRP) with the tribunal.
• Order under newly inserted section 144BA [for GAAR] is
made appealable to the tribunal.
Dispute Resolution Power of the DRP to enhance the variation shall include and shall
Panel [section 144C] be deemed always to have included the power to consider any
matter arising out of the assessment proceedings relating to the
draft order, notwithstanding that such matter was raised or not by
the eligible assessee.
143/153/153B It is proposed that processing of return is not necessary where a
notice for scrutiny assessment is issued under section 143(2)Time
limit for completing assessment or reassessment is increased.
Tax rates
31. Income Tax Rates
1.1. For Individuals, Hindu Undivided Families, Association of Persons and Body of
Individuals.
Existing Proposed
@
Income (INR) Rate (%) Income (INR) Rate (%) @
0 – 1,80,000 Nil 0 – 2,00,000# Nil
1,80,001 – 5,00,000 10 2,00,001 – 5,00,000 10
5,00,001 – 8,00,000 20 5,00,001 – 10,00,000 20
8,00,001 and above 30 10,00,001 and above 30
@ Education cess of 3% is leviable on the amount of income-tax.
# The basic exemption limit is INR 2,00,000 in case of every individual below the age of 60
years , INR 2,50,000 in case of resident individuals of the age of 60 years or more and INR
5,00,000 for ‘Very Senior Citizen” in case of resident individuals of age 80 years and above
1.2. For Others
Description Existing Rate (%) Proposed Rate (%)
A) Domestic company
Regular tax 32.445*@ 32.445*@
MAT 20.008 (of book profits)* 20.008 (of book profits)*
DDT 16.225* 16.225*
Dividend Received from 16.225* 16.225*
Foreign subsidiary
company
B) Foreign company
Regular tax 42.024 $# 42.024 $$#
C) Firm and LLP
Regular tax 30.90 30.90
Alternate Minimum 19.055 19.055
Tax(AMT)
* Inclusive of surcharge @ of 5 % and education cess of 3 %.
@ 30.90% where the total income is equal to or less than INR 10 million.
$ Inclusive of surcharge @ of 2% and education cess of 3%.
# 41.20% where the total income is equal to or less than INR 10 million
TDS Rates
Sr.No. Section Nature of Payment Existing Rate Proposed Rate of
of Deduction Deduction (%)
(%)
32. 1 194LLA Payment on transfer of NA 1
certain immovable
property other than
agricultural land
(applicable only if amount
exceeds : (a) INR 50 lakhs
in case such property is
situated in a specified
urban agglomeration;
or(b) INR 20 lakhs in case
such property is situated
in any other area)
(Effective from 1 October
2012)
2 194J(1)(ba) Any remuneration or NA 10
commission paid to
director of the
company(Effective from
1 July 2012)
1 194LA Compulsory acquisition 1,00,000 2,00,000
of immovable property
2 193 Interest on debenture 2,500 5,000
The above limits will be effective from July 1, 2012
TCS Rates
Sr.No. Section Nature of Goods Existing Rate ProposedRate of
of Deduction Deduction (%)
(%)
1 206C(1)(vii) Minerals, being coal or NA 1
lignite or iron ore
2 206C (1D) Bullion or jewellery (if NA 1
the sale consideration is
paid in cash exceeding
INR 2 lakhs)
The above limits will be effective from July 1, 2012
33. GLOSSARY OF TERMS
Abbreviation Meaning
AMT Alternate Minimum Tax
AO Assessing Officer
AY Assessment Year
CBDT Central Board of Direct Taxes
DDT Dividend Distribution Tax
DRP Dispute Resolution Panel
DTAA Double Tax Avoidance Agreements
FEMA Foreign Exchange Management Act
FY Financial Year
GAAR General Anti Avoidance Rule
HUF Hindu Undivided Family
ITA Income-tax Act, 1961 as amended from time-to-time
LLP Limited Liability Partnership
MAT Minimum Alternate Tax
SEBI Securities and Exchange Board of India
SEZ Special Economic Zone
TPO Transfer Pricing Officer
TRC Tax Residency Certificate
VCC Venture Capital Company
VCF Venture Capital Fund
VCU Venture Capital Undertaking