Article contains summary of Important Income Tax Notifications, Circulars, other amendments and updates for the Month of October 2019 at one place.
This Month update includes CBDT clarifications/updates on set off of brought forward loss due to additional depreciation & MAT credit if companies opt for 22% tax, CBDT exemption to authorised dealers & full-fledged money changer (FFMC) from TDS on cash withdrawals, Designation of Special Court (one or more first class magistrate) in the state of Karnataka for the purpose of trail of offences punishable under Chapter XXI’ (Offences & Prosecutions) of the Act, Protocol amending ‘India – Morocco DTAA’ and also includes Income-tax compliance calendar for the month of November, 2019.
1. CBDT clarifies on set off of brought forward loss due to additional depreciation & MAT credit if companies opt for 22% tax
Income Tax Circular No. 29/2019 dated 02-Oct-2019
1.1 Domestic Company wants to opt for 22% tax is not eligible to set off of brought forward loss on account of additional depreciation
- As per the provisions of newly inserted Sec 115BAA, total income of the company (opted for 22% tax) shall be computed without any deduction towards:
- SEZ u/s 10AA
- Additional depreciation @20% u/s 32(1)(iia)
- Investment allowance in respect of new plant and machinery u/s 32AD
- Accelerated capital deduction u/s 35AD
- Chapter VI-A – “C – Deductions in respect of certain incomes” i.e. 80IA, 80IB, 80IC etc… However, deduction u/s 80JJAA (in respect of employment of new employees)
- Tea development benefit u/s 33AB
- Site restoration benefit u/s 33ABA
- Scientific research benefit u/s 35
- Agricultural extension project benefit u/s 35CCC
- Skill development project u/s 35CCD
- Further, total income shall be computed without set off of any brought forward loss if such loss is related to above mentioned deductions.
- Based on the above, CBDT clarified that, a domestic company which would exercise option for 22% tax shall not be allowed to set off of any brought forward loss on account of additional depreciation for that assessment year (AY) in which option exercised and for any subsequent AY’s.
- Further, it is clarified that as there is no time line for opting 22% tax, a domestic company having brought forward losses on account of additional depreciation, can exercise option after set off of losses so accumulated.
1.2. Domestic Company wants to opt for 22% is not eligible to claim brought forward MAT credit
- CBDT clarified that MAT u/s 115JB itself not applicable, if domestic company opt for 22% tax. Accordingly, credit of MAT also not eligible to claim.
- Further, it is clarified that as there is no time line for opting 22% tax, a domestic company having brought forward MAT credit, can exercise option after utilising the accumulated credit.
- Amendment has been made only in Sec 115JB (i.e. MAT is not applicable if domestic companies opt for 22%) by way of Taxation Laws (Amendment) Ordinance, 2019 and no amendment is made u/s 115JAA (i.e. Utilising brought forward MAT credit against normal tax liability).
- In many judicial pronouncements, courts held that CBDT does not have any power to override the provisions of the Act and Rules. Further, CBDT circular is not binding on the assessee.
- Sec 115JAA deals with utilisation of brought forward MAT credit against normal tax liability and no restriction on the same by Taxation Laws (Amendment) Ordinance, 2019, in case company opt for 22% tax. Hence, companies are eligible to utilise accumulated MAT credit against normal tax liability even if they opt for 22%.
1.3. Effective Tax Rate (ETR) schedule for FY 2019-20 (AY 2020-21)
||ETR if option exercised
||If option not exercised & wants to set off of B/F loss of additional depreciation
||Effective MAT Rate
||Turnover > Rs.400 Crore during the FY 2017-18
||On balance income
||On book profit
- Income > Rs.1 crore ≤ Rs.10 crore
||Other domestic companies (in existence on or before 30-Sep-2019)
- Income > Rs.1 crore ≤ Rs.10 crore
Notification No. 80/2019-Income Tax dated 15 October 2019
- Exemption to:
- Authorised dealer, its franchise agent & sub-agent; AND
- Full-fledged money changer (FFMC) licensed by RBI and its franchise agent
- Purpose of cash withdrawal: maintaining a separate bank account from which withdrawal is made only for the purposes of
- Purchase of foreign currency from foreign tourists/non-residents visiting India/resident Indians on their return to India, in cash as per the directions/guidelines issued by RBI; OR
- Disbursement of inward remittances to the recipient beneficiaries in India in cash under Money Transfer Service Scheme (MTSS) of the RBI
- Compliance by AD/FFMC:
- Certificate to the bank stating that cash withdrawal is only for the above specified purposes & directions/guidelines issued by RBI have been complied with
- Date of Effect of Notification
This notification shall be deemed to have come into force with effect from 1 September 2019
3. Designation of Special Court in the State of Karnataka for offences punishable under Chapter XXII
Income Tax Notification No.79/2019 dated 11-Oct-2019
CBDT designated Special Court (one or more first class magistrate) in the state of Karnataka for the purpose of trail of offences punishable under Chapter XXII (Offences & Prosecutions) of the Act
The Central Government may designate one or more first class magistrate courts as Special Court in consultation with the chief Justice of the High Court for trail of offences punishable under Chapter XXII of the Income Tax Act, 1961.
Some of the offences punishable under Chapter XXII (Offences & Prosecutions) are mentioned below:
> Fails to pay TDS to the Central Government (CG) under the provisions of Chapter XVIIB
> Fails to pay TCS to the CG
> Fails to pay Dividend Distribution Tax (DDT)
> Fails to facilitate to inspect the books of account/other documents to the authorized officer u/s 132(1)(iib) – Search & Seizure
After consultation by CG with the Chief Justice of the Karnataka High Court, CBDT has notified Special Court in the below mentioned areas in the state of Karnataka:
> Dakshina Kannada Mangaluru
> Uttara Kannada Karwar
4. CBDT notified protocol amending “India – Morocco DTAA”
Income Tax Notification No. 84/2019 dated 22-Oct-2019
CBDT has notified the provisions of Protocol entered between the Republic of India and the Kingdom of Morocco for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes of income.
5. Income-tax compliance calendar for the month of November, 2019
- For deposit of TDS/TCS for the month of October, 2019
- For issue of TDS certificate in Form No.16B for tax deducted u/s 194-IA (i.e. TDS on sale of property) in the month of September, 2019
- For issue of TDS certificate in Form No.16C for tax deducted u/s 194-IB (i.e. TDS on rent) in the month of September, 2019
- Income tax return for the AY 2019-20, if the assessee is required to obtain & furnish – Form 3CEB (Transfer Pricing Report)
- Tax Audit report in Form No.3CD for the above mentioned assessees for the AY 2019-20
- Form No.67 – for the above mentioned assessees claiming foreign tax credit for the AY 2019-20
- For deposit of tax deducted u/s 194-IA on sale of property in the month of October, 2019
- For deposit of tax deducted u/s 194-IB on rent payment by individual in excess of Rs. 50K in the month of October, 2019
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This document had been written to provide updates under Income Tax in a simple manner. The author shall not be responsible for any of the decision made based on the contents of this document.