Section 40(a)(ia) is amended via Finance (No. 2) Act, 2014 to restrict the amount of disallowance for non-deduction of tax to 30% of expenditure. The proviso is also amended to the effect that 30% of such sum shall be allowed as a deduction in computing the income of the previous year in which tax has been paid.
Corporates are currently involved in various areas of social responsibility / community development as part of nation building. Further, the concept of Corporate Social Responsibility Costs has been introduced under Companies Act, 2013. The expenditure is mandatory in its nature and as such it is a statutory levy. Accordingly it deserves tax deduction.
specified under the relevant legislation of the fund. The employees contribution credited to the employees account in the relevant fund after the due date specified under section 36(1)(va) are disallowed to the employer. Further, any payments made by the employer after the due date is also NOT allowed as a deduction in the year of payment.
Expenses incurred for raising capital are being treated as capital in nature and no deduction is allowed in tax assessment. Section 35D provides for deduction in respect of some of the expenses, over a period of five years, subject to conditions and limits. Raising capital is necessary activity for carrying out the business activity.
The Ministry of Finance has clarified that foreign company not having a permanent establishment in India will be exempt from MAT. An appropriate amendment has been made in the Act in section 115JB in this regard vide the Finance Act, 2016.
It is suggested that for setting off of MAT credit, a fresh period of 10 years be allowed after the completion of period of exemption under section 10A to 10C and deduction under section 80-IA to 80-IE under normal provisions of the Act provided it is the exclusive business of the assessee.
The computation of book profit under section 115JB is a complicated and vexed issue with diverse interpretations possible on various issues. These issues need to be clarified to reduce litigation before the appellate authorities, which is one of the aims of the Government.
MAT-Ind AS Committee placed its report dated 17 June 2017 providing recommendations on proposed amendments to the provisions of the Section 115JB of the Act in respect of Ind AS Compliant Companies.
As per the provisions of Section 115-O of the Act, the domestic holding company will not have to pay DDT on dividends paid to its shareholders to the extent it has received dividends from its subsidiary company on which DDT has been paid by the subsidiary.
In view of the concerns faced by foreign investors after introduction of section 115QA, suitable amendments may be carried out in the Income-tax Act, 1961 so that foreign investors do not have to pay tax when their holding results in losses only due to foreign exchange fluctuation.
