Changes in Tax Rates

♦ Changes in Tax Rates for Domestic Companies:

  • Company whose total turnover or gross receipts in the FY 2016-17 does not exceed Rs. 250 crore rupees – 25%

♦ No change in Tax Rates for others.

♦ No change in Surcharge.

♦ It is proposed to abolish existing Education Cess of 2% and Secondary and Higher Education Cess of 1%.

♦ A new Cess “Health and Education Cess” is introduced at the rate of 4% on Income Tax plus surcharge, if any.

♦ Long term capital gain u/s 112 shall attract tax @ 10%.

Permanent Account Number (PAN)

♦ In order to use PAN as Unique Entity Number (UEN) for non-individual entities, it is proposed that every person, not being an individual, which enters into a financial transaction of an amount aggregating to two lakh and fifty thousand rupees or more in a financial year shall be required to apply to the Assessing Officer for allotment of PAN.

♦ In order to link the financial transactions with the natural persons, it is also proposed that the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer or any person competent to act on behalf of such entities shall also apply to the Assessing Officer for allotment of PAN.

[This amendment will take effect from A.Y. 2018-19]

Salaried Persons

♦ It is proposed to allow a standard deduction u/s 16 upto Rs 40,000/- or the amount of salary received, whichever is less. Consequently the present exemption in respect of Transport Allowance (except in case of differently abled persons) and reimbursement of medical expenses is proposed to be withdrawn.

♦ It is proposed that any compensation received or receivable, whether in the nature of revenue or capital, in connection with the termination or the modification of the terms and conditions of any contract relating to its employment shall be taxable under section 56 of the Act.

♦ In order to facilitate the transaction of money or property between a wholly owned subsidiary company and its holding company, it is proposed to amend the section 56 so as to exclude such transfer from its scope.

[These amendments will take effect from A.Y. 2019-20]

Business Income

♦ It is proposed to amend section 28 of the Act to provide that any compensation received or receivable, whether revenue or capital, in connection with the termination or the modification of the terms and conditions of any contract relating to its business shall be taxable as business income.

♦ It is proposed to amend the provisions of —

→ Section 28 so as to provide that any profit or gains arising from conversion of inventory into capital asset or its treatment as capital asset shall be charged to tax as business income. It is also proposed to provide that the fair market value of the inventory on the date of conversion or treatment determined in the prescribed manner, shall be deemed to be the full value of the consideration received or accruing as a result of such conversion or treatment;

→ clause (24) of section 2 so as to include such fair market value in the definition of income;

→ section 49 so as to provide that for the purposes of computation of capital gains arising on transfer of such capital assets, the fair market value on the date of conversion shall be the cost of acquisition;

→ clause (42A) of section 2 so as to provide that the period of holding of such capital asset shall be reckoned from the date of conversion or treatment.

♦ It is proposed to amend the section 44AE of the Act to provide that, in the case of heavy goods vehicle (more than 12MT gross vehicle weight), the income would deemed to be an amount equal to Rs. 1,000 per ton of gross vehicle weight or unladen weight, as the case may be, per month or part of a month for each goods vehicle or the amount claimed to be actually earned by the assessee, whichever is higher. The vehicles other than heavy goods vehicle will continue to be taxed as per the existing rates.

♦ It is proposed to insert a new clause (xviii) under section 36(1) to provide that marked to market loss or other expected loss shall be allowed, if computed in accordance with the income computation and disclosure standards under section 145(2). Consequential amendment has been made by insertion of sub section 13 of Section 40A.

♦ It is proposed to insert a new section 43AA in the Act to provide that, subject to the provisions of section 43A, any gain or loss arising on account of effects of changes in foreign exchange rates in respect of specified foreign currency transactions shall be treated as income or loss, which shall be computed in the manner provided in ICDS as notified under sub-section (2) of section 145. [This amendment will take effect from AY 2018-19]

♦ It is proposed to insert a new section 43CB in the Act to provide that profits arising from a construction contract or a contract for providing services shall be determined on the basis of percentage of completion method except for certain service contracts, and that the contract revenue shall include retention money, and contract cost shall not be reduced by incidental interest, dividend and capital gains. [This amendment will take effect from AY 2018-19]

♦ It is proposed to insert a new proviso after proviso (e) in section 43(5) to clarify that for transaction in respect of trading in agricultural commodity derivatives, the requirement of chargeability to commodity transaction tax under chapter VII of the Finance Act, 2013 shall not apply which means that the trading in agricultural commodity derivatives shall always be considered as non speculative transaction whether traded in recognized stock exchange or not.

 [These amendments will take effect from AY 2019-20]

Income Under Head Capital Gain

Taxability of Long term Capital Gain under Section 112A:

It is proposed to withdraw the exemption under clause (38) of section 10 and to introduce a new section 112A in the Act to provide that long term capital gains arising from transfer of a long term capital asset (LTCG) being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust shall be taxed at 10 % of such capital gains exceeding Rs. 1,00,000.

This concessional rate of 10 % will be applicable to such long term capital gains (LTCG), if—

→ in a case where long term capital asset is in the nature of an equity share in a company , securities transaction tax has been paid on both acquisition and transfer of such capital asset; and

→ in a case where long term capital asset is in the nature of a unit of an equity oriented fund or a unit of a business trust, securities transaction tax has been paid on transfer of such capital asset.

Indexation shall not be allowed while computing the above LTCG.

Computation capital gains in foreign currency shall not be allowed, in case of non-residents.

The cost of acquisition in respect of long term capital assets shall be the higher of

→ The actual cost of acquisition, and

→ The lower of-

a. The fair market value of such asset; and

b. The full value of consideration received or accruing as a result of the transfer of the capital asset.

Long term capital gain u/s 112A shall be excluded from Gross total income while claiming deduction under chapter VIA.

Long term capital gain u/s 112A shall be excluded from Gross total income while claiming rebate under section 87A.

♦ As in the case of domestic investors, the FIIs will also be liable to tax on such long term capital gains only in respect of amount of such gains exceeding one lakh rupees. The provisions of section 115AD are proposed to be amended accordingly.

[These amendments will take effect from lst April, 2019]

Rationalization of section 43CA, section 50C and section 56:

It is proposed to provide that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than five percent of the sale consideration. [This amendment will take effect from lst April, 2019]

Section 47 provides for certain tax neutral transfers. Section 56 also excludes income arising out of certain tax neutral transfers from its ambit. However, the transfers referred to in clause (iv) and clause (v) of section 47 have not been excluded from the scope of section 56.

In order to further facilitate the transaction of money or property between a wholly owned subsidiary company and its holding company, it is proposed to amend the section 56 so as to exclude such transfer from its scope. [This amendment will take effect from lst April, 2018]

Rationalization of the provisions of section 54EC:

In order to rationalise the provisions of section 54EC of the Act and to restrict the scope of the section only to capital gains arising from long-term capital assets, being land or building or both and to make available funds at the disposal of eligible bond issuing company for more than three years, it is proposed to amend the section 54EC so as to provide that capital gain arising from the transfer of a long-term capital asset, being land or building or both, invested in the long-term specified asset at any time within a period of six months after the date of such transfer, the capital gain shall not be charged to tax subject to certain conditions specified in this section.

It is also proposed to provide that long-term specified asset, for making any investment under the section on or after the 1st day of April, 2018, shall mean any bond, redeemable after five years and issued on or after 1st day of April, 2018 by the National Highways Authority of India or by the Rural Electrification Corporation Limited or any other bond notified by the Central Government in this behalf. [This amendment will take effect from lst April, 2019]

Deductions

♦ It is proposed to amend section 80D so as to raise this monetary limit of deduction from Rs. 30,000/- to Rs 50,000/-, in case of senior citizens. It is further proposed to provide that where an amount is paid in lump sum in the previous year to effect or to keep in force an insurance on the health of a person specified therein for more than a year, then, subject to the provisions of this section, there shall be allowed for each of the relevant previous years, a deduction equal to the appropriate fraction of the amount.

♦ It is proposed to amend the provisions of section 80DDB of the Act so as to raise this monetary limit of deduction to Rs 1,00,000/- for both senior citizens and very senior citizens.

♦ It is proposed to insert a new section 80TTB so as to allow a deduction upto Rs 50,000/- in respect of interest income from deposits held by senior citizens. However, no deduction under section 80TTA shall be allowed in these cases.

♦ Section 80P provides for 100% deduction in respect of profit of cooperative society which provides assistance to its members engaged in primary agricultural activities. It is proposed to extend similar benefit to Farm Producer Companies (FPC), having a total turnover upto Rs 100 Crore, whose gross total income includes any income from-

→ the marketing of agricultural produce grown by its members, or

→ the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or

→ the processing of the agricultural produce of its members

→ The benefit shall be available for a period of five years from the financial year 2018-19.

♦ Section 80IAC of the Act, inter alia, provides that deduction under this section shall be available to an eligible start-up for three consecutive assessment years out of seven years at the option of the assessee, if-

→ it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2019;

→ the total turnover of its business does not exceed twenty-five crore rupees in any of the previous years beginning on or after the 1st day of April, 2016 and ending on the 31st day of March, 2021; and

→ it is engaged in the eligible business which involves innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.

In order to improve the effectiveness of the scheme for promoting start ups in India, it is proposed to make following changes in the taxation regime for the start ups:—

→ The benefit would also be available to start ups incorporated on or after the 1st day of April 2019 but before the 1st day of April, 2021;

→ The requirement of the turnover not exceeding Rs 25 Crore would apply to seven previous years commencing from the date of incorporation;

→ The definition of eligible business has been expanded to provide that the benefit would be available if it is engaged in innovation, development or improvement of products or processes or services, or a scalable business model with a high potential of employment generation or wealth creation. [This amendment will take effect from 1st April, 2019]

♦ At present, under section 80JJAA of the Act, a deduction of 30% is allowed in addition to normal deduction of 100% in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year.

However, the minimum period of employment is relaxed to 150 days in the case of apparel industry. In order to encourage creation of new employment, it is proposed to extend this relaxation to footwear and leather industry.

Further, it is also proposed to rationalize this deduction of 30% by allowing the benefit for a new employee who is employed for less than the minimum period during the first year but continues to remain employed for the minimum period in subsequent year.

Mandatory filling of Return of Income for Claiming Deductions (Section 80AC)

The existing provisions contained in the section 80AC of the Act provide that no deduction would be admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE, unless the return of income by the assessee is furnished on or before the due date specified under sub-section (1) of section 139 of the Act. This burden is not cast upon assesses claiming deductions under several other similar provisions.

In view of the above, it is proposed to extend the scope of section 80AC to provide that the benefit of deduction under the entire class of deductions under the heading “C.—Deductions in respect of certain incomes” in Chapter VIA shall not be allowed unless the return of income is filed by the due date.

[This amendment will take effect from AY 2018-19]

Tax Deducted at Source (TDS)

♦ It is proposed to amend section 194A so as to raise the threshold for deduction of tax at source on interest income for senior citizens from Rs 10,000/- to Rs 50,000/-.[This amendment will take effect from lst April, 2019]

♦ Section 195 requires a person to deduct tax at the time of payment or credit to a non-resident.

Given the business exigencies of the National Technical Research Organisation (NTRO), it is proposed to amend section 10 so as to provide that the income arising to non-resident, not being a company, or a foreign company, by way of royalty from, or fees for technical services rendered in or outside India to, the NTRO will be exempt from income tax. Consequently, NTRO will not be required to deduct tax at source on such payments. [This amendment will take effect from lst April, 2018]

Dividend & Dividend Distribution Tax

♦ In order to prevent abusive arrangements it is proposed to insert a new Explanation 2A in clause (22) of section 2 of the Act to widen the scope of the term ‘accumulated profits’ so as to provide that in the case of an amalgamated company, accumulated profits, whether capitalized or not, or losses as the case may be, shall be increased by the accumulated profits of the amalgamating company, whether capitalized or not, on the date of amalgamation.

♦ It is proposed to delete the Explanation to Chapter XII-D occurring after section 115Q of the Act so as to bring deemed dividends also under the scope of dividend distribution tax under section 115-O. Further, such deemed dividend is proposed to be taxed at the rate of 30% (without grossing up) in order to prevent camouflaging dividend in various ways such as loans and advances.

♦ It is proposed that where any income is distributed by a Mutual Fund being, an equity oriented fund, the mutual fund shall be liable to pay additional income tax at the rate of 10% on income so distributed. For this purpose, equity oriented fund will have the same meaning assigned to it in the new section 112A of the Act.

[This amendment will take effect from lst April, 2018.]

Assessment

♦ It is proposed to prescribe a new scheme for the purpose of making assessments so as to impart greater transparency and accountability, by eliminating the interface between the Assessing Officer and the assessee, optimal utilization of the resources, and introduction of team-based assessment.

♦ It is proposed to insert a new proviso to clause (a) of Section 143(1) to provide that no adjustment under sub-clause (vi) of the said clause shall be made in respect of any return furnished on or after the assessment year commencing on the first day of April, 2018. (Sub-clause (vi) of the said clause provides for adjustment in respect of addition of income appearing in Form 26AS or Form16A or Form 16 which has not been included in computing the total income in the return)

Income Computation and Disclosure Standards (ICDS)

♦ At present , section 145 of the Act empowers the Central government to notify Income Computation and Disclosure Standards (ICDS). In pursuance the central government has notified ten such standards effective from 1st April 2017 relating to Assessment year 2017-18.These are applicable to all assesses (other than an individual or a Hindu undivided family who are not subject to tax audit under section 44AB of the said Act) for the purposes of computation of income chargeable to income-tax under the head “Profits and gains of business or profession” or “Income from other sources”.

In order to bring certainty in the wake of recent judicial pronouncements on the issue of applicability of ICDS, it is proposed to —

♦ amend section 36 of the Act to provide that marked to market loss or other expected loss as computed in the manner provided in income computation and disclosure standards notified under sub-section (2) of section 145, shall be allowed deduction.

♦ amend 40A of the Act to provide that no deduction or allowance in respect of marked to market loss or other expected loss shall be allowed except as allowable under newly inserted clause (xviii) of sub-section(1) of section 36.

♦ insert a new section 43AA in the Act to provide that, subject to the provisions of section 43A, any gain or loss arising on account of effects of changes in foreign exchange rates in respect of specified foreign currency transactions shall be treated as income or loss, which shall be computed in the manner provided in ICDS as notified under sub-section (2) of section 145.

♦ insert a new section 43CB in the Act to provide that profits arising from a construction contract or a contract for providing services shall be determined on the basis of percentage of completion method except for certain service contracts, and that the contract revenue shall include retention money, and contract cost shall not be reduced by incidental interest, dividend and capital gains.

♦ amend section 145A of the Act to provide that, for the purpose of determining the income chargeable under the head

“Profits and gains of business or profession,—

  • the valuation of inventory shall be made at lower of actual cost or net realizable value computed in the manner provided in income computation and disclosure standards notified under (2) of section 145.
  • the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the amount of any tax, duty, cess or fee actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation.
  • inventory being securities not listed, or listed but not quoted, on a recognised stock exchange, shall be valued at actual cost initially recognised in the manner provided in income computation and disclosure standards notified under (2) of section 145.
  • inventory being listed securities, shall be valued at lower of actual cost or net realisable value in the manner provided in income computation and disclosure standards notified under (2) of section 145 and for this purpose the comparison of actual cost and net realisable value shall be done category-wise.

♦ insert a new section 145B in the Act to provide thata.

  • interest received by an assessee on compensation or on enhanced compensation, shall be deemed to be the income of the year in which it is received.
  • the claim for escalation of price in a contract or export incentives shall be deemed to be the income of the previous year in which reasonable certainty of its realisation is achieved.
  • income referred to in sub-clause (xviii) of clause (24) of section 2 shall be deemed to be the income of the previous year in which it is received, if not charged to income tax for any earlier previous year.

Recent judicial pronouncements have raised doubts on the legitimacy of the notified ICDS. However, a large number of taxpayers have already complied with the provisions of ICDS for computing income for assessment year 2017-18. In order to regularise the compliance with the notified ICDS by a large number taxpayers so as to prevent any further inconvenience to them, it is proposed to bring the amendments retrospectively with effect from 1st April, 2017 i,e the date on which the ICDS was made effective and will, accordingly, apply in relation to assessment year 2017-18 and subsequent assessment years

Trusts

♦ In order to encourage a less cash economy and to reduce the generation and circulation of black money, it is proposed to insert a new Explanation to the section 11 to provide that for the purposes of determining the application of income under the provisions of sub-section (1) of the said section, the provisions of sub-clause (ia) of clause (a) of section 40, and of sub-sections (3) and (3A) of section 40A, shall, mutatis mutandis, apply as they apply in computing the income chargeable under the head “Profits and gains of business or profession”.

♦ It is also proposed to insert a similar proviso in clause (23C) of section 10 so as to provide similar restriction as above on the entities exempt under sub-clauses (iv), (v), (vi) or (via) of said clause in respect of application of income.

 [These amendments will take effect from lst April, 2019]

Miscellaneous

♦ It is proposed to amend section 115JB to provide that the aggregate amount of unabsorbed depreciation and loss brought forward (excluding unabsorbed depreciation) shall be allowed to be reduced from the book profit, if a company’s application for corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 has been admitted by the Adjudicating Authority.

Consequently, a company whose application has been admitted would henceforth be entitled to reduce the loss brought forward (excluding unabsorbed depreciation) and unabsorbed depreciation for the purposes of computing book profit under section 115JB. [This amendment will take effect from lst April, 2018]

♦ A clarificatory amendment is also proposed in section 115JB of the Act to provide that the provisions of section 115JB of the Act shall not be applicable and shall be deemed never to have been applicable to an assessee, being a foreign company, if- its total income comprises solely of profits and gains from business referred to in section 44B or section 44BB or section 44BBA or section 44BBB and such income has been offered to tax at the rates specified in the said sections. [This amendment will take retrospective effect from lst April, 2001]

♦ It is proposed to amend the section 115JC so as to provide for the assessee being a person which is a unit located in an International Financial Service Centre and derives its income solely in convertible foreign exchange, the rate of tax shall be 9%.

♦ Under the existing provisions of the clause (12A) of section 10 of the Act, an employee contributing to the NPS is allowed an exemption in respect of 40% of the total amount payable to him on closure of his account or on his opting out. This exemption is not available to non-employee subscribers. In order to provide a level playing field, it is proposed to amend clause (12A) of section 10 of the Act to extend the said benefit to all subscribers. [This amendment will take effect from lst April, 2019]

♦ It is proposed to extend the scope of section 80AC to provide that the benefit of deduction under the entire class of deductions under the heading “C.—Deductions in respect of certain incomes” in Chapter VIA shall not be allowed unless the return of income is filed by the due date. [This amendment will take effect from lst April, 2018]

♦ Government has now decided to discontinue the existing 8% Savings (Taxable) Bonds, 2003 with a new 7.75% GOI Savings (Taxable) Bonds, 2018. The interest received under the new bonds will continue to be taxed as in the case of the earlier once. The provisions of section 193 are proposed to be amended to allow for deduction of tax at source at the time of making payment of interest on such bonds to residents. However, no TDS will be deducted if the amount of interest is less than or equal to ten thousand rupees during the financial year. [This amendment will take effect from lst April, 2019]

♦ In order to encourage participation in trading of agricultural commodity derivatives, it is proposed to amend the provisions of clause (5) of section 43 to provide that a transaction in respect of trading of agricultural commodity derivatives, which is not chargeable to commodity transaction tax (CTT), in a registered stock exchange or registered association, will be treated as non-speculative transaction.

TAX RATES FOR A.Y. 2019-20

For Individuals:

For INDIVIDUAL OR HUF OR AOP/BOI (other than a co-operative society) whether incorporated or not or Artificial Juridical Person: (Resident as well as Non-Resident)

Upto Rs.2,50,000 Nil
Rs.2,50,001 to Rs.5,00,000 5%
Rs.5,00,001 to Rs.10,00,000 20%
Above Rs.10,00,000 30%

For Individual, being a WOMAN resident in India, and below the age of 60 years at any time during the previous year

Upto Rs.2,50,000 Nil
Rs.2,50,001 to Rs.5,00,000 5%
Rs.5,00,001 to Rs.10,00,000 20%
Above Rs.10,00,000 30%

For Individual, being a resident in India, who is of the age of 60 years or more (but less than 80 years) at any time during the previous year (SENIOR CITIZEN):

Upto Rs.3,00,000 Nil
Rs.3,00,001 to Rs.5,00,000 5%
Rs.5,00,001 to Rs.10,00,000 20%
Above Rs.10,00,000 30%

For Individual, being a resident in India, who is of the age of 80 years or more at any time during the previous year (SUPER SENIOR CITIZEN):

Upto Rs.5,00,000 Nil
Rs.5,00,001 to Rs.10,00,000 20%
Above Rs.10,00,000 30%

Surcharge:

10% where the total income > Rs. 50 Lacs but <= Rs. 1 crore.

15% where the total income > Rs. 1 crore.

Marginal Relief:

Where the total income exceeds Rs. 1 crore, then the aggregate of income tax and surcharge shall be restricted to:

(Tax on Rs. 1 crore) + (Total Income – Rs. 1 crore)

Cess:

Health & Education Cess @ 4% on Income Tax (inclusive of surcharge if applicable) shall be chargeable.

For Company:

(a) In the case of a domestic company
(i) Company whose total turnover or gross receipts in the PY 2016-17 does not exceed Rs. 50 250 Crore 25% of the total income
(ii) All Other domestic companies 30% of the total income
(b)  In the case of a foreign company 40% of the total income

Surcharge:

In the case of domestic companies,

  • 7% where the total income > Rs.1 crore but <= Rs. 10 crore.
  • 12% where the total income > Rs. 10 crore.

In the case of foreign companies,

  • 2% where the total income > Rs.1 crore but <= Rs. 10 crore.
  • 5% where the total income > Rs. 10 crore.

Marginal Relief:

Where the total income exceeds Rs. 1 crore but not exceeding Rs. 10 crore, then the aggregate of income tax and surcharge shall be restricted to:

(Tax on Rs. 1 crore) + (Total Income – Rs. 1 crore)

Where the total income exceeds Rs. 10 crore, then the aggregate of income tax and surcharge shall be restricted to:

(Tax on Rs. 10 crore) + (Total Income – Rs. 10 crore)

Cess:

Health & Education Cess @ 4% on Income Tax (inclusive of surcharge if applicable) shall be chargeable.

For Partnership Firm / LLP:

In the case of Partnership Firm/LLP 30% of the total income

Surcharge:

12%, where the total income > Rs. 1 crore.

Marginal Relief:

Where the total income exceeds Rs. 1 crore, then the aggregate of income tax and surcharge shall be restricted to:

(Tax on Rs. 1 crore) + (Total Income – Rs. 1 crore)

Cess:

Health & Education Cess @ 4% on Income Tax (inclusive of surcharge if applicable) shall be chargeable.

For Co-Operative Society:

(i) where the total income does not exceed Rs.10,000 10% of the total income;
(ii) where the total income exceeds Rs.10,000  but does not exceed Rs.20,000 Rs.1,000 plus 20% of the amount by which the total income exceeds Rs.10,000
(iii) where the total income exceeds Rs.20,000 Rs.3,000 plus 30% of the amount by which the total income exceeds Rs.20,000.

Surcharge:

12%, where the total income > Rs.1 crore.

Marginal Relief:

Where the total income exceeds Rs. 1 crore, then the aggregate of income tax and surcharge shall be restricted to:

(Tax on Rs. 1 crore) + (Total Income – Rs. 1 crore)

Cess:

Health & Education Cess @ 4% on Income Tax (inclusive of surcharge if applicable) shall be chargeable.

The above rates are prescribed by the annual Finance Acts. However, in respect of certain types of income, as mentioned below, the Income-tax Act has prescribed specific rates –

√ Section 112A has prescribed the rate of tax @ 10% in respect of long term capital gains.

√ Section 111A provides for a concessional rate of tax (i.e. 15%) on the short-term capital gains on transfer of –

◊ an equity share in a company or

◊ a unit of an equity oriented fund.

The conditions for availing the benefit of this concessional rate are –

  • the transaction of sale of such equity share or unit should be entered into on or after 1.10.2004 and
  • such transaction should be chargeable to securities transaction tax.

TDS COMPLIANCES FOR THE A.Y. 2019-20

S. No. Section Nature of Payment Thresh hold Limit Rate %
HUF/IND Others
1 192 Salaries Salary income must be more then exemption limit after deductions. Average Rate
2 193 Interest on debentures 5,000 10 10
3 194 Deemed dividend 10 10
4 194A Interest other than Int. on securities (by Bank) 10,000 10 10
4A 194A Interest other than Int. on securities (By others) 5,000 10 10
5 194B Lottery / Cross Word Puzzle 10,000 30 30
6 194BB Winnings from Horse Race 10,000 30 30
7 194C(1) Contracts 30,000/1,00,000 1 2
8 194C(2) Sub-contracts/ Advertisements 30,000/ 1,00,000 1 2
9 194D Insurance Commission  15,000 5 5
10 194EE Payments out of deposits under NSS 2,500 10
11 194F Repurchase of units by MF/UTI 1,000 20 20
12 194G Commission on sale of lottery tickets  15,000 5 5
13 194H Commission or Brokerage  15,000 5 5
14 194I Rent (Land & building) furniture & fittings) 1,80,000 10 10
Rent (P & M , Equipment 1,80,000 2 2
15   194IA TDS on transfer of immovable property other than agriculture land (w.e.f. 01.06.13) 50,00,000 1 1
16 194J Professional / Technical charges / Royalty & Non compete fees 30,000 10 10
17 194J(1) (ba) Any remuneration or commission paid to director of the company (w.e.f. 01.07.12) NIL 10 10
18 194LA Compensation on acquisition of immovable property 2,50,000 10 10

Points to be Considered:-

1. The person liable for deducting tax has to apply for TAN (tax deduction and collection account number).

2. No tax shall be deducted if the payment is made to Government, RBI, and Mutual Fund specified u/s 10(23D) or any corporation established under a Central Act. Certificate of TDS is given in Form 16A for incomes other than salary income. Whereas in case of salary income certificate is given in Form 16.

3. The tax deducted shall be treated as the tax paid by the assessee and he shall get credit of the tax deducted provided he furnishes the certificate issued to him.

4. Tax has to be deducted at the time of payment or credit in the books whichever is earlier.

5. No TDS on Goods Transport : No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages on furnishing of his Permanent Account Number, to the person paying or crediting such sum.

6. As per Section 200, the person deducting the tax is responsible

(a) to deposit the tax with the Central Government in the following manner:-

→ Within one week from the end of the month in which tax is deducted.

(b) to submit quarterly statements, in prescribed form, for the quarters ending in June, September, December and March.

(c) the statement should set forth such particulars as may be prescribed.

(d) if there is any default in furnishing the statement, a penalty of Rs. 100 per day would be attracted for the period for which the default continues.

7. As per Section 201

→ if the person liable to deduct tax fails to deduct or pay tax so deducted,

→ he or it shall be liable to pay simple interest,—

(i) at 1% for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and

(ii) at 1.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid,

→ And such interest shall be paid before furnishing a quarterly statement for each quarter.

8. As per Section 197

→ assessee can make an application to AO for deduction of tax at a lower rate or for non-deduction of tax.

→ If AO is satisfied that his application is justified he may give assessee such certificate.

→ Once the assessee furnishes the certificate, the person liable to deduct tax shall deduct tax at a lower rate or deduct no tax, as the case may be, until the certificate is cancelled by AO.

9. TDS at higher rate ie., 20%has to be made if the deductee does not provide PAN to the deductor.

10. As per Section 206 AA, it is mandatory for deductee to furnish his PAN to the deductor, otherwise TDS shall be deducted at a higher of the following rates

→ 20% or

→ The rates prescribed in the Act

11. Surcharge on Income-tax is not deductible/collectible at source in case of  individual/ HUF /Firm/ AOP / BOI/Domestic Company in respect of payment of income other than salary.

12. No Cess on payment made to resident: Education Cess is not deductible/collectible at source in case of resident Individual/HUF/Firm/ AOP/ BOI/ Domestic Company in respect of payment of income other than salary. Education Cess @ 2% plus secondary & Higher Education Cess @ 1% is deductible at source in case of non-residents and foreign company.

What is ICDS Income Tax Change?

Disclaimer:

This update is not an advertisement or any form of solicitation. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we Endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in future. Readers should obtain appropriate professional advice.

Author Bio

Qualification: CA in Practice
Company: RSSB & Associates
Location: Delhi, New Delhi, IN
Member Since: 05 Jun 2017 | Total Posts: 1

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Category : Income Tax (28372)
Type : Articles (18290)
Tags : Budget (1957) Budget 2018 (401)

3 responses to “Budget 2018 Direct Tax Proposals- Analysis”

  1. Uttam Baliyan says:

    Very informative….Thanku for sharing…

  2. rajkumar gupta says:

    All points in details are perfectly good but pl clear about the LTCG on equity share/MF / SIP effective date is 31.1.2018 OR 1.4.2018.

    Thanks

    RKG

  3. inox capitals says:

    Excellent and detailed article. Very informative! thanks for sharing rohit..

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