Finance Act-2021-Amendments in Business or Profession related Sections of Income Tax Act, 1961 i.e.  Section 32(1)-Depreciation of buildings, machinery, plant or furniture, Section 43CA-Special Provisions For Full Value Of Consideration For Transfer of Assets Other Than Capital Assets In Certain Cases, Section 44AB- Tax Audit and Section  44ADA- Presumptive Tax Scheme for Professionals.

S. No Section Existing Provisions Amended Provisions
1. 32(1) Depreciation was allowed on the following assets owned, wholly or partly, by the assessee and used for the purposes of the business or profession. :

– 1. Tangible Assets buildings, machinery, plant or furniture,

2. Intangible assets know how, patents, copyrights, trademarks licenses, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998

The new the section 32(1) has been amended to provide that the deprecation on goodwill shall not be allowed for business and profession.

Now the amended section read as under Depreciation is allowed on the following: –

1. Tangible Assets buildings , machinery, plant or furniture,

2. Intangible assets know-how, patents, copyrights, trademarks licenses, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998 not being good-will of business and profession

owned, wholly or partly, by the assesee and used for the purpose of business and profession.

2. 43CA Where the Stamp duty value does not exceed 110% of the consideration received (or accruing as a result of transfer), the consideration so received (or accruing as result of transfer), shall be deemed to be the full value of consideration. In other words, section 43CA shall be applicable only in those cases where stamp duty value is more than 110 % of the actual consideration. New provision to sub-section (1) has been inserted: –

Provided further that in case of transfer of an asset being a residential unit, the stamp duty value does not exceed 120% (instead of 110%) of the consideration received or accruing as a result of transfer, the consideration so received or accruing shall be deemed to be the sale consideration subject to the fulfilment of the following conditions:

1. Transfer of such residential unit takes place during the period beginning from 12th November 2020 to 30th June 2021

2. Such transfer is by way of first allotment of the residential unit to any person.

3. The consideration received or accruing as result of transfer is less than Rs 2 crores.

The amendment is applicable only if the residential unit is transferred subject to the fulfillment of the above conditions.

3. 44AB Every person carrying on the business shall, if the total sales, turnover of gross receipts, as the case may be, in business exceed Rs 1 crores in any of the previous year shall get its account audited.

Provided that in case of a person whose

a. Aggregate of the amounts received for the sales, turnover or the gross receipts during the previous year in cash does not exceed 5% of the total sales, turnover of the gross receipts and

b. Aggregate of all payments made including amount incurred for expenditure in cash during the previous year does not exceed 5% of the said payment

Then the limit for audit is Rs 5 crores instead of Rs 1 crores.

Every person carrying on the business shall, if the total sales, turnover of gross receipts, as the case may be, in business exceed Rs 1 crores in any of the previous year shall get its account audited.

Provided that in case of a person whose

a. Aggregate of the amounts received for the sales, turnover or the gross receipts during the previous year in cash does not exceed 5% of the total sales, turnover of the gross receipts and

b. Aggregate of all payments made including amount incurred for expenditure in cash during the previous year does not exceed 5% of the said payment

Then the limit for audit is Rs 10 crores (previously Rs 5 crores) instead of Rs 1 crores.

A new provision has been inserted Provided further that for the payment or receipt as case may be by a cheque drawn on the bank or by a bank draft, which is not account payee, shall be deemed to be payment or receipt in cash.

4. 44ADA Section was applicable to assessee engaged in the profession whose total gross receipts do not exceed Rs 50 lakhs in a previous year. The section has been amended to provided that the section applies to assesssee being an individual or a partnership firm other than Limited Liability partnership firm whose total gross receipts does not exceed Rs 50 lakhs during the previous year.

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