Direct Tax Amendments for CA IPCE May 2017 Exams

Basic Concepts
Rates of Taxes:

In the case of a domestic company:

(i) Where the total turnover or gross receipt in the previous year 2014-15 does not exceed Rs. 5 crore - 29% of the total income

(ii) In case of other domestic companies - 30% of the total income

Surcharge:

The rates of surcharge applicable for P.Y.2016-17 are as follows:

(i) Individual / HUF / AOP / BOI / Artificial juridical person

Where the total income exceeds Rs. 1 crore, surcharge is payable at the rate of 15% of income-tax.

(ii) Co-operative societies/Local Authorities/Firms/LLPs

Where the total income exceeds Rs. 1 crore, surcharge is payable at the rate of 12% of income-tax.

(iii) Domestic company:

(a) In case of a domestic company, whose total income >Rs. 1 crore but is ≤ Rs. 10 crore:

Where the total income exceeds Rs. 1 crore but does not exceed Rs. 10 crore, surcharge is payable at the rate of 7% of income-tax.

(b) In case of a domestic company, whose total income is >Rs.10 crore:

Where the total income exceeds Rs. 10 crore, surcharge is payable at the rate of 12% of income-tax.

Rebate of up to Rs.5,000 for resident individuals having total income of up to Rs.5 lakh [Section 87A]

To provide further relief to resident individuals in the lower income slab, section 87A has been amended to increase the maximum amount of rebate available under this provision from existing Rs. 2,000 to Rs. 5,000 from A.Y.2017-18.

Previous year for undisclosed sources of income:

There are many occasions when the Assessing Officer detects cash credits, unexplained investments, unexplained expenditure, unexplained money, etc, the source for which is not satisfactorily explained by the assessee to the Assessing Officer.

-These would attract 30% Tax Rate.

-No basic exemption or allowance or expenditure shall be allowed to the assessee under any provision of the Income-tax Act, 1961 in computing such deemed income.

-Set-off of losses not permissible against unexplained income, investments, money etc. chargeable under sections 68/69/69A/69B/69C/69D [Section 115BBE] 

Residential & Scope of Total Income

No income deemed to accrue or arise in India to a foreign mining company (FMC) through or from the activities which are confined to display of uncut and unassorted diamonds in a Special Notified Zone Effective from: A.Y. 2016-17

In order to facilitate the FMCs to undertake activity of display of uncut diamond (without any sorting or sale) in the SNZ, clause (e) has been inserted in Explanation 1 to section 9(1)(i) to provide that in the case of a foreign company engaged in the business of mining of diamonds, no income shall be deemed to accrue or arise in India to it through or from the activities which are confined to display of uncut and unassorted diamonds in any special zone notified by the Central Government in the Official Gazette in this behalf.

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