Proviso inserted in sec. 2(19AA)(iii)

1

❖

Proviso inserted in sec. 2(19AA)(iii)

▪ In a scheme of demerger, transfer by a demerged company will be tax neutral if the property and liabilities of the undertaking being transferred by the demerged company are transferred at book value.

▪ Ind-AS requires to record the property and liabilities at a value different from the book value of the demerged company. If in compliance to Ind-AS, different value is recorded in books, the situation would continue to be"tax neutral".

2

❖

Clause (viii) inserted in sec. 9(1)(w.e.f. 01.04.2020)

▪ Gift of the nature prescribed in sec. 56(2)(x) by a resident to a person outside India, made on or after 5.7.2019, shall be deemed to accrue or arise in India.

❖

Clause (4C) inserted in sec. 10 (w.e.f. AY 2019/20)

▪ Interest payable to non-resident, not being a company, or to a foreign company by an Indian company or business trust in respect of money borrowed from a source outside India by way of Rupee denominated bond issued during the period from 17.09.2018 to 31.03.2019 will be exempt. ➢ Press release dated 17.09.2018

3

❖

Amendment in sec. 10(12A) (w.e.f. AY 2020/21)

▪ The exemption limit of 40% is proposed to be increased to 60%, in order to enable the pensioner to have more disposable funds.

❖

Sub-clause (ix) inserted in sec. 10(15) (w.e.f.

01.09.2019)

▪ Interest income of a non-resident received from a unit located in an International Financial Services Centre for money borrowed on or after 01.09.2019 will be exempt.

4

Amendment in sec. 10(34A) (w.e.f. 05.07.2019)

▪

Income arising to a shareholder on account of

buyback of shares of unlisted shares referred to in

sec. 115QA will be exempt.

➢Provisions of sec. 115QA are proposed to be extended to all companies, including listed companies. Consequently, the amount received in the hands of recipient is made exempt.

5

❖

Clause (a) of sec. 12AA(1) substituted (w.e.f.

01.09.2019)

▪

It is proposed to amend sec. 12AA provide that

at the time of granting registration, CIT shall

also satisfy himself about the compliance of

requirements of any other law which is material

for the purpose of achieving its objects.

6

❖

Amendment of sec. 12AA(4) (w.e.f.

01.09.2019)

▪

With this amendment, the CIT is being further

empowered to cancel the registration of trust if he

finds that the trust has not complied with the

requirement of any other law as referred to in ss (1)

clause (a)(ii) and the order, direction or decree

holding that such non-compliance has occurred has

either not been disputed or has attained finality.

7

❖

Amendment in sec. 13A, first proviso,

clause (d)(w.e.f. AY 2020/21)

▪

To enjoy exemption, political parties should not

receive any donation exceeding

₹

2,000/-otherwise than by account payee cheque etc. or

by use of electronic clearing system through a

bank account.

▪

Amendment is proposed that amount received by

use of electronic clearing system through such

other electronic mode as may be prescribed will

also meet the requirements.

8

❖

2

proviso added in sec. 40(a)(i) (w.e.f. AY

2020/21)

▪ Any interest, royalty, fees for technical services or other sums chargeable under the Act, if it is payable outside India or in India to a non-resident on which tax is deductible and such tax is not deducted or, after deduction, has not been paid within the time allowed under sec. 139(1), then the deduction is not allowed.

▪ 2nd _{proviso to sec. 40(a)(ia) provides that where there is}

failure to make TDS but the assessee is not deemed to be an assessee in default under the 1st _{proviso to sec. 201(1), then, it}

shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return by the payee.

9

❖

Amendment in 2

_{proviso to sec.}

40(a)(ia)(w.e.f. AY 2020/21)

▪ The word “resident” shall be omitted.

❖

Amendment in sec. 40A (w.e.f. AY 2020/21)

▪ For the words "bank account" wherever they occur, the words "bank account or through such other electronic mode as may be prescribed" shall be substituted.

❖

Amendment in 2nd proviso to sec. 43(1) (w.e.f.

AY 2020/21)

10

❖

Clause (da) inserted in sec. 43B (w.e.f. AY

2020/21)

▪

Any sum payable as interest on any loan or

borrowing from a deposit taking NBFC or

systematically important non-deposit taking NBFC

will also now be covered under sec. 43B.

❖

Expl. 3CA inserted in sec. 43B (w.e.f. AY

2020/21)

▪

It is clarified that interest which is converted into a

loan or borrowing shall not be deemed to have been

actually paid.

11

❖

Amendment in sec. 43CA (w.e.f. AY 2020/21)

▪

Same as in case of sec. 40A.

❖

Amendment in sec. 43D(a) (w.e.f. AY 2020/21)

▪

Interest on certain categories of bad or doubtful

debts (as may be prescribed) received by public

financial institutions, scheduled banks, cooperative

banks, state financial corporations, state industrial

investment corporations and public companies like

housing finance companies etc. is chargeable to tax

in the year in which it is credited to profit and loss

account or is actually received, whichever is

earlier.

12

❖

Amendment in sec. 43D(a) (w.e.f. AY 2020/21)

▪ With a view to provide level playing field to certain category of NBFCs which are adequately regulated, similar concession is proposed to be given.

❖

Amendment in proviso to sec. 44AD(1) (w.e.f.

AY 2020/21)

13

❖

2nd proviso to sec. 50C(1) amended (w.e.f. AY

2020/21)

▪

Same as in case of sec. 40A.

❖

Proviso inserted in sec. 50CA (w.e.f. AY

2020/21)

▪

Proviso is being inserted prescribing that provisions of

sec. 50CA will not apply to transfer by such class of

persons and subject to such conditions as may be

prescribed.

14

❖

Proviso inserted in sec. 54GB(4) (w.e.f. AY

2020/21)

▪

The proviso gives concession to eligible start-up

company which acquires new asset being computer

or computer software and prescribes that the holding

period of 5 years will reduce to 3 years in such a

case.

❖

Proviso to ss. (5) amended (w.e.f. AY

2020/21)

▪

The sunset date of transfer of residential property for

investment in eligible start-up is extended from

31.03.2019 to 31.03.2021.

15

❖

Sub-clause (iii) of clause (b) of sec. 54GB(6)

amended (w.e.f. AY 2020/21)

▪ To get benefit, assessee is required to use net consideration for subscription in equity shares of an eligible company before the due date of filing return. The assessee is required to have more than 50% share capital/voting right in the eligible company. This condition has been relaxed by bringing down minimum shareholding of 50% to 25%.

❖

2nd proviso inserted in sec. 56(2)(viib) (w.e.f.

AY 2020/21)

▪ The provisions do not apply where the consideration for issue of shares is received by a venture capital undertaking from a venture capital company or a venture capital fund. By amendment, the amount received from “a specified fund” shall also be not covered by the section.

16

❖

Expl. (aa) inserted in sec. 56(2)(viib) (w.e.f. AY

2020/21)

▪ "Specified fund" means a fund in the form of a trust or a company or a LLP or a body corporate which has been granted a certificate of registration as Category –

IIAlternative Investment Fund and is regulated under Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012.

❖

2nd proviso to sec. 56(2)(x)(b) (w.e.f. AY

2020/21)

17

❖

Clause (XI) inserted in proviso to sec. 56(2)(x)

(w.e.f. AY 2020/21)

▪ Amount received from such class of persons and subject to such conditions, as may be prescribed, will also not be hit by this clause.

❖

Sec. 79 amended (w.e.f. AY 2020/21)

▪

In the case of an eligible start-up, loss incurred

shall be allowed to be carried forward, if all the

shareholders of such company who held shares

carrying voting power on the last day of the year

or years in which the loss was incurred, continue

to hold those shares on the last day of the

previous year and such loss has been incurred

during the period of 7 years beginning from the

year in which the company is incorporated.

18

▪ Ss. (2) prescribes that the provisions of ss. (1) will not apply to a company and its subsidiary and the subsidiaries of such subsidiary where NCLT has suspended the board of directors and has appointed new directors nominated by the Central Government and change in shareholding is pursuant to resolution plan approved by NCLT after affording reasonable opportunity to jurisdictional Pr. CIT.

❖

Clause (xxv) inserted in sec. 80C(2) (w.e.f. AY

2020/21)

▪ Employee of the Central Government will be entitled to deduction by having more option of tax saving under National Pension Scheme. The amount paid as a contribution to Tire II account of the pension scheme shall be eligible for deduction.

19

❖

Ss. (2) of sec. 80CCD amended (w.e.f. AY 2020/21)

▪ To provide full deduction of the enhanced contribution to Central Government employees, the limit of 10% has been increased to 14%.

❖

Sec. 80EEA inserted (w.e.f. AY 2020/21)

An individual, not eligible to claim deduction u/s 80EE, will be entitled to claim deduction of interest payable on loan taken from any financial institution for acquisition of a residential house property. Deduction shall not exceed ₹ 150,000/-. Deduction will be subject to the following conditions:–

▪ Loan is sanctioned during 01.04.2019 and 31.03.2020.

▪ Stamp duty value of residential property does not exceed ₹ 45 lakh

▪ Assessee does not own any residential house on the date of sanction of loan

20

❖

Sec. 80EEB inserted (w.e.f. AY 2020/21)

▪ Interest payable on loan taken by an individual from any financial institution for purchase of an electric vehicle will be allowed as deduction. Maximum deduction will be ₹

150,000/. Deduction will be subject to the condition that loan is sanctioned between 01.04.2019 and 31.03.2023. ▪ "Electric vehicle” means vehicle powered exclusively by

electric motor whose traction energy is supplied exclusively by traction battery installed in the vehicle and has such electric regenerative braking system, which during braking provides for the conversion of vehicle kinetic energy into electrical energy.

21

❖

Sec. 80EEB inserted (w.e.f. AY 2020/21)

▪ “Financial institution” means a banking company or any bank or any deposit taking NBFC or a systematically important non deposit taking NBFC.

❖

Proviso

inserted

after

clause

(i)

in

sec.

80IBA(2)(w.e.f. AY 2020/21)

100% tax holiday is presently available for assessees engaged in affordable housing. With a view to align the definition of"affordable housing"with the definition under GST Act, amendments are proposed to modify certain conditions regarding the housing project approved on or after 01.09.2019. Modified conditions are: –

22

❖ Proviso inserted after clause (i) in sec. 80IBA(2)(w.e.f. AY 2020/21)

▪ Carpet area of residential unit should not exceed 60 m² in metropolitan cities and 90 m² in cities other than metropolitan cities of Bangalore, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan region)

▪ stamp duty value of residential unit should not exceed ₹ 45 lakh.

Changes

▪ Earlier, only Chennai, Delhi, Kolkata and Mumbai were included in metropolitan.

▪ The carpet area for projects in 4 metropolitan was 30 m² and in other places 60 m² which has been increased to 60 and 90 respectively.

23

❖

Amendment in Expl. (i) of sec. 80JJAA(w.e.f. AY

2020/21)

▪ Same as in sec. 40A

❖

Clause (iih) in Expl. 1 to sec. 115JB(2)

substituted(w.e.f. AY 2020/21)

▪ In case of companies, their subsidiary and the subsidiary of such subsidiary where NCLT has suspended the Board of Directors and has appointed new directors nominated by the Central Government and change in shareholding is pursuant to a resolution plan approved by NCLT,for calculating book profit, the aggregate amount of unabsorbed depreciation and loss (excluding depreciation) shall also be allowed to be reduced.

24

❖

Sec. 115QA(1) amended (w.e.f. 05.07.2019)

▪ Additional Income tax of 20% on distributed income.

▪ With the amendment, listed shares will also be covered by the tax on distributed income.

➢Presently, re-purchase worth ₹ 10,000 crore is in progress. This includes ₹ 8600 crore by Infosys.

➢In the last one year, IT companies entered into buyback worth ₹ 40,725 crore.

➢Wipro bought back 14% of its shares in 3 buybacks in the last 4 years.

25

❖

Amendment in sec. 139(w.e.f. AY 2020/21)

Threshold limit for filing ROI in case of an individual or HUF or an AOP or BOI or an AJP to be seen before deduction u/s 54, 54B, 54D, 54EC, 54F, 54G, 54GA or 54GB.

▪ 7th proviso to sec. 139(1) inserted

A person who:

-➢Has deposited an amount or aggregate of amounts exceeding Rs. 1 crore in one or more current accounts with a banking company or a co-operative bank or

➢Has incurred expenditure of an amount or aggregate of the amounts exceeding Rs. 2 lakh for himself or any other person for travel to a foreign country or

➢Has incurred expenditure of an amount or aggregate of amounts

exceeding Rs. 1 lakh towards consumption of electricity or

➢Fulfils such other conditions as may be prescribed.

26

▪ Every person who is required to furnish or intimate or quote his PAN and has not been allotted PAN, shall furnish, intimate or quote his Aadhar number in lieu of PAN and such person shall be allotted PAN in such manner as may be prescribed.

▪ If a person has been allotted PAN and has intimated his Aadhar, he may furnish Aadhar in lieu of PAN.

❖

Ss. 6A and 6B inserted in sec. 139A

(w.e.f.

01.09.2019)

▪ Every person entering into such transaction as may be prescribed or receiving any document relating to the transaction shall quote his PAN or Aadhar/shall ensure that PAN or aadhar is quoted in such document.

27

❖

Proviso to sec. 139AA(2) amended (w.e.f.

01.09.2019)

▪ If a person having PAN and who is eligible to obtain Aadhar number, does not intimate his Aadhar number, his PAN shall be made in-operative after the notified date. Earlier the PAN was deemed to be invalid. Amendment to protect validity of transactions previously carried out through such PAN.

❖

Clause (iia) inserted in sec. 140A(1), clause (ba)

inserted in sec. 140A(1A)(i), clause (ia) inserted in

Expl. to Ss. (1B) to sec. 140A (w.r.e.f. 01.04.2007)

▪ While calculating self assessment tax and interest u/s 234A and 234B, relief claimed u/s 89 will be considered.

28

01.04.2007)

▪ “any relief allowable u/s 89” inserted.

❖

Amendment in sec. 194DA (w.e.f. 01.09.2019)

▪

Presently this section provides for TDS @ 1%.

Section amended to provide TDS to be made @ 5%

on the amount of income comprised in the payment.

➢

Earlier there was 1% TDS on gross amount payable,

other than the amount exempt u/s 10(10D).

➢

Will facilitate ease of matching income between ROI

and 26AS.

➢

Presently, no specific provision for deducting

premiums paid from amount received. Amendment

approves such a stand

29

❖

Clasue (aa) inserted in Expl. To sec. 194IA (w.e.f.

01.09.2019)

▪ TDS @ 1% on purchase of immovable property, even from all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to transfer of immovable property.

❖

Sec. 194M inserted (w.e.f. 01.09.2019)

▪ An individual or HUF, other than those required to make TDS u/s 194C and 194J, responsible for paying to a resident for carrying out any work including supply of labour for carrying out any work or by way of fees for professional services shall make TDS @ 5%.

▪ No TDS if aggregate payment does not exceed Rs. 50 lakh in a year.

30

Sec. 194N inserted(w.e.f. 01.09.2019)

▪ A banking company including a bank or banking institution referred to in sec. 51 of Banking Regulation Act, 1949, a co-operative society engaged in carrying on banking business or a post office, paying any sum or aggregate of sums in cash in excess of Rs. 1 crore during a previous year, to any person, from an account maintained by him, shall make TDS @ 2% of sum exceeding Rs. 1 crore.

➢Not applicable to recipient being Government, banking company, co-operative society engaged in banking or post office, such other persons or class of persons as may be notified.

31

❖

Ss. (2) to sec. 195 amended (w.e.f. 01.11.2019)

▪

Assessee will have to now apply online for order of

lower or nil TDS.

❖

Amendment in sec. 197(1) (w.e.f. 01.09.2019)

▪

For TDS u/s 194M, lower or nil TDS certificate can be

obtained.

❖

1st proviso to sec. 201(1) amended (w.e.f.

01.09.2019)

▪

Word

“resident”

substituted for

“payee”

.

❖

Amendment of sec. 201(3) (w.e.f. 01.09.2019)

▪

No order u/s 201(1) can be passed after 7 years from

the end of the FY in which TDS made or credit given.

Now with amendment, limitation further extended to

2 years from end of FY in which correction statement

is delivered u/s 200(3), whichever is later.

32

▪ Return of interest paid to resident without making TDS, by banking company, co-operative society or public company to be filed online. Presently it is in floppy, magnetic tape, CD etc.

❖Amendment in sec. 234A(1) (w.r.e.f. 01.04.2007)

▪ Relief u/s 89 to be considered while calculating interest.

❖Amendment in Expl. to sec. 234B(1) (w.r.e.f.

01.04.2007)

▪ Relief u/s 89 to be considered while calculating interest.

❖Amendment in Expl. to sec. 234C(1) (w.r.e.f.

01.04.2007)

33

❖

Amendment in sec. 239(1) (w.e.f. 01.09.2019)

▪

Claim for refund can now be made only by filing

return u/s 139.

➢

What if time allowed u/s 139 is lost and return

cannot be filed ? Can sec. 119(2)(b) come to rescue of

assessee ?

➢

Is it simplification ?

❖

Amendment of sec. 269SS, 269ST& 269T

(w.e.f. 01.09.2019)

▪

Necessary amendment made to include

“electronic

clearing system through such other electronic mode

as may be

prescribed”

.

34

❖

Sec. 269SU inserted (w.e.f. 01.11.2019)

▪ Every person carrying on business shall, if his total sales exceeded Rs. 50 crore in the immediately preceding previous year, provide facility for accepting payment through prescribed electronic mode.

❖

Sec. 270A amended (w.r.e.f. 01.04.2017)

▪ The present provisions do not contain mechanism for determining under-reporting of income and quantum of penalty in case where the person has under-reported income and furnished income for the first time u/s 148. Amendment has been made to cover such lapse.

❖

Sec. 271DB inserted (w.e.f. 01.11.2019)

▪ Penalty for not providing facility for accepting payment through prescribed electronic mode, Rs. 5,000/- for each day of default, subject to reasonable cause.

35

❖

Sub-clause (b) ofclause (ii) of proviso to sec.

276CC substituted (w.e.f. AY 2020/21)

▪ Existing provisions do not provide for taking into account TCS and SA tax for determining tax liability. Now TCS and SA tax paid before expiry of assessment year will also be considered.

▪ Threshold limit of tax increased from Rs. 3,000/- to Rs. 10,000/-.

➢Whether prospective or retrospective ?

❖

2nd proviso to sec. 285BA omitted (w.e.f.

01.09.2019)

• Value of prescribed transaction, as per present law, cannot be less than Rs. 50,000/-. With omission of 2nd _proviso,

36

Changes in Tax rates etc.

▪ In the case of a domestic

company,-➢Where its total turnover or the gross receipt in the previous year 2017-2018 does not exceed four hundred crore rupees, tax rate will be 25 % of the total income; ▪ The surcharge shall be levied at the following rates in case

of every individual or Hindu undivided family or every association of persons or body of individuals, having total income

:-Above Rs. 50 Lakhs but not above Rs.1 crore – 10% Above Rs. 1 crore but not above Rs . 2 crore - 15% Above Rs . 2 crore but not above Rs . 5 crore -25 % Above Rs . 5 crore - 37%