W.e.f from 1st April, 2016, A company is said to be a resident in India in any previous year, if—
- it is an Indian company; or
- its place of effective management, in that year, is in India.
Explanation.—For the purposes of this clause “place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance made.’
Tax on Dividend Income
Dividend shall be taxable @ 10% if total income of individual, HUF, firm being resident in India exceeds Rs 10 Lakh by way of dividend declared, distributed or paid by a domestic company.
Above dividend included deemed dividend defined u/s 2(22) but exclude clause (e) of Section 2(22) of income tax act,1961
Individual, HUF, firm being resident in India comes under the purview of section 115BBDA shall be excluded for section 10(34) which is related to exemption of dividend income.
SEZ Exemption gate closed
Earlier, Export Profit of any unit setup in SEZ on or after the 1st day of April, 2006 shall be exempt from tax
Now, the benefit is available to unit setup in SEZ between 1st April, 2006, but before the 1st April, 2021.
Section 17(2) – Value of Perquisite
Broaden the base for exempt perquisite
Earlier, Value of Perquisite not include in taxable salary if any employee income under the head “Salaries” exclusive of the value of all perquisites not provided for by way of monetary payment, does not exceed Rs. 1,00,000/-.
Now, it is increase to Rs. 1,50,000/-
Section 24 (b)
Deduction from Income from House Property
Earlier, Deduction of Interest upto Rs. 2 Lakh allowed if the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital within 3 years from end of F.Y in which home loan taken.
Now, the period of 3 years increase to 5 years.
Unrealised rent recovered
Earlier, arrear rent received shall be deemed to be income chargeable under the head “Income from house property” without allowing 30% deduction as specified under section 24(a) in the F.Y. in which such rent is received or realised.
Now, 30% adhoc deduction is available. Hence, only 70% of arrear rent received shall be taxable.
Earlier, Consideration received for “Not to carry profession activity” is not taxable under the head “Profit & Gain from business and profession”
Now, the same transaction also covers under section 28(va)(a) of Income Tax Act,1961
Refine Additional Depreciation
Existing provision: –
(iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation or generation and distribution of power, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii)
Now, the same has been substitute to “in the business of generation, transmission or distribution”
15% extra deduction on installing new assets gate close on 31st March,2017
Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new assets and the amount of actual cost of such new assets acquired and installed during any previous year exceeds twenty-five crore rupees, then, there shall be allowed a deduction of a sum equal to fifteen per cent of the actual cost of such new assets for the assessment year relevant to that previous year:
Now, deduction allowed only when assets acquired during any previous year exceeds twenty-five crore rupees and such assets are installed on or before the 31st day of March, 2017.
If assets acquired & installed in different year, then deduction shall be allowed in the year in which the new assets are installed.”;
Expenditure on scientific research.
In respect of expenditure on scientific research, the following deductions shall be allowed—
Scientific research association or to a university, college or other institution to be used for scientific research
|175%||Payment made before 1st April, 2020 – 150%
Payment made on or after 1st April 2020 – 100%
scientific research company
social science or statistical research association or a university, college or other institution
National Laboratory or a University or an IIT or a specified person with a specific direction that the said sum shall be used for scientific research undertaken under a programme approved
|200%||Payment made before 1st April, 2020 – 150%
Payment made on or after 1st April 2020 – 100%
Bio-technology or in any business of manufacture or production of any article or thing, (not being an article or thing specified in the list of the Eleventh Schedule) incurs any expenditure on scientific research on in-house research and development facility approved
No deduction shall be allowed in respect of the expenditure incurred after the 31st day of March, 2017.
|Payment made before 1st April, 2020 – 150%
Payment made on or after 1st April 2020 – 100%
Now Available after 31st March, 2017 also
No deduction allowed under this section from AY 2018-19 onwards
No 150% deduction allowed to below specified business from AY 2018-19 onwards, namely :—
(i) setting up and operating a cold chain facility;
(ii) setting up and operating a warehousing facility for storage of agricultural produce;
(v) building and operating, anywhere in India, a hospital with at least one hundred beds for patients;
(vii) developing and building a housing project under a scheme for affordable housing framed by the Central Government or a State Government, as the case may be, and notified by the Board in this behalf in accordance with the guidelines as may be prescribed48;
(viii) production of fertilizer in India;
Any company developing or operating and maintaining or developing, operating and maintaining, a new ‘infrastructure facility’ in agreement with Central Government, State Government, local authority, or any other statutory body
“Infrastructure facility” means—
(i) a road including toll road, a bridge or a rail system;
(ii) a highway project including housing or other activities being an integral part of the highway project;
(iii) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system;
(iv) a port, airport, inland waterway, inland port or navigational channel in the sea;’
Expenditure on agricultural extension project.
any expenditure on agricultural extension notified project shall be allowed a deduction of a sum equal to 150% of such expenditure.
Now omitted from AY 2018-19 onwards
Expenditure on skill development project.
Company incurs any expenditure (not being expenditure in the nature of cost of any land or building) on any skill development notified project shall be allowed a deduction of a sum equal to one and one-half times of such expenditure.
Now it is reduced to 100% from AY 2017-18 onwards
Deduction on account of Provisions on bad & doubtful debts
Earlier, deduction not available to non-banking financial company
Now, deduction shall be available maximum 5% of total income of non-banking financial company.
w.e.f 1st June 2016
“(ib) any consideration paid or payable to a non-resident for a specified service on which equalisation levy is deductible under the provisions of Chapter VIII of the Finance Act, 2016, and such levy has not been deducted or after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139:
Provided that where in respect of any such consideration, the equalisation levy has been deducted in any subsequent year or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such levy has been paid;”.
New deduction on payment basis introduced-
Clause (g) any sum payable by the assessee to the Indian Railways for the use of railway assets
A Killing Amendment for declaring income on presumptive basis
Where assessee declares presumptive profit @ 8% of turnover &
Subsequently, If he declares profit on actual basis (not on presumptive basis) for any of the next five assessment years
Then, he shall not be eligible to claim the benefit of declaring “profit on presumptive basis” again for next five assessment years subsequent to the assessment year in which the profit was declared on actual basis (not on presumptive basis)
Further, such assessee required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB if his total income exceeds the maximum amount which is not chargeable to income-tax.
Hence if assessee not declare profit on presumptive basis & income is more than Rs 2,50,000/- then he is require to maintain books of accounts & get audited by CA for each assessment year.
However, one relaxation is given. The limit for availing benefit of section 44AD increase to Rs. 2 crore from earlier limit Rs.1 crore.
Earlier, deduction on account of salary and interest paid to its partners available in addition against 8% presumptive profit. Now, such deduction is not available.
A professional accounts need to be audited when gross receipts exceeds Rs 50 lakhs annually (earlier limit was Rs.25 Lakhs)
A Professional who claims that his profits and gains from the profession are lower than 50% of Total Gross Receipts and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (1) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.
New Clause e inserted
If assessee carrying business not declare profit on presumptive basis & income is more than Rs 2,50,000/- then he is require to maintain books of accounts & get audited for each assessment year.
A bitter pill for professional
Now, professional need to declare 50% profit of total gross receipts otherwise he shall require to keep and maintain such books of account and other documents as required under sub-section (1) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.
more updates coming soon…