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NEW SECTIONS INSERTED IN INCOME TAX ACT 1961







Section

W.E.F

Definition

Explanation

50 CA

01/04/2018

Where The Consideration Received Or Accruing As A Result Of The Transfer By An Assessee Of A Capital Asset, Being Share Of A Company Other Than A Quoted Share, Is Less Than The Fair Market Value Of Such Share Determined In Such Manner As May Be Prescribed, The Value So Determined Shall, For The Purposes Of Section 48, Be Deemed To Be The Full Value Of Consideration Received Or Accruing As A Result Of Such Transfer

For The Purposes Of This Section, "Quoted Share" Means The Share Quoted On Any Recognized Stock Exchange With Regularity From Time To Time, Where The Quotation Of Such Share Is Based On Current Transaction Made In The Ordinary Course Of Business.".

92CE

01/04/2018

 (1) Where a primary adjustment to transfer price,-

(i) has been made suo motu by the assessee in his return of income;

(ii) made by the Assessing Officer has been accepted by the assessee;

(iii) is determined by an advance pricing agreement entered into by the assessee under section 92CC;

(iv) is made as per the safe harbour rules framed under section 92CB; or

(v) is arising as a result of resolution of an assessment by way of the mutual agreement procedure under an agreement entered into under section 90 or section 90A for avoidance of double taxation, the assessee shall make a secondary adjustment:

Provided that nothing contained in this section shall apply, if,–

(i) the amount of primary adjustment made in any previous year does not exceed one crore rupees; and

(ii) the primary adjustment is made in respect of an assessment year commencing on or before the 1st day of April, 2016. (2) Where, as a result of primary adjustment to the transfer price, there is an increase in the total income or reduction in the loss, as the case may be, of the assessee, the excess money which is available with its associated enterprise, if not repatriated to India within the time as may be prescribed, shall be deemed to be an advance made by the assessee to such associated enterprise and the interest on such advance, shall be computed in such manner as may be prescribed

194-IB

01/06/2017

(1) Any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent. of such income as income-tax thereon. (2) The income-tax referred to in sub-section (1) shall be deducted on such income at the time of credit of rent, for the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.

(4) In a case where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.

For the purposes of this section, "rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both.".

(Insertion of new section 194-IB. Payment of rent by certain individuals or Hindu undivided family.)

194-IC

01/04/2017

Notwithstanding anything contained in section 194-IA, any person responsible for paying to a resident any sum by way of consideration, not being consideration in kind, under the agreement referred to in sub-section (5A) of section 45, shall at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent. of such sum as income-tax thereon.".

Insertion of new section 194-IC. Payment under specified agreement

234F

01/04/2018

(1) Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of said section, he shall pay, by way of fee, a sum of,-

(a) five thousand rupees, if the return is furnished on or before the 31st day of December of the assessment year;

(b) ten thousand rupees in any other case: Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.

Insertion of new section 234F. Fee for default in furnishing return of income.

241A

01/04/2017

For every assessment year commencing on or after the 1st day of April, 2017, where refund of any amount becomes due to the assessee under the provisions of sub-section (1) of section 143 and the Assessing Officer is of the opinion, having regard to the fact that a notice has been issued under sub-section (2) of section 143 in respect of such return, that the grant of the refund is likely to adversely affect the revenue, he may, for reasons to be recorded in writing and with the previous approval of the Principal Commissioner or Commissioner, as the case may be, withhold the refund up to the date on which the assessment is made.".

Insertion of new section 241A. Withholding of refund in certain cases.

269ST

01/04/2017

No person shall receive an amount of three lakh rupees or more(later Provided that the provisions of this section shall not apply to- (i) any receipt by- (a) Government; (b) any banking company, post office savings bank or co-operative bank; (ii) transactions of the nature referred to in section 269SS; (iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.

Amended To two lakh rupees or more)-

(a) in aggregate from a person in a day; or

(b) in respect of a single transaction; or

(c) in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account:

For the purposes of this section,(a) "banking company" shall have the same meaning as assigned to it in clause (i) of the Explanation to section 269SS; (b) "co-operative bank" shall have the same meaning as assigned to it in clause (ii) of the Explanation to section 269SS.".

271DA

01/04/2017

 (1) If a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt: Provided that no penalty shall be imposable if such person proves that there were good and sufficient reasons for the contravention.

(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner."

Insertion of new section 271DA Penalty for failure to comply with provisions of section 269ST

271J

01/04/2017

Without prejudice to the provisions of this Act, where the Assessing Officer or the Commissioner (Appeals), in the course of any proceedings under this Act, finds that an accountant or a merchant banker or a registered valuer has furnished incorrect information in any report or certificate furnished under any provision of this Act or the rules made thereunder, the Assessing Officer or the Commissioner (Appeals) may direct that such accountant or merchant banker or registered valuer, as the case may be, shall pay, by way of penalty, a sum of ten thousand rupees for each such report or certificate.

Penalty for furnishing incorrect information in reports or certificates.

94B

01/04/2018

(1) Notwithstanding anything contained in this Act, where an Indian company, or a permanent establishment of a foreign company in India, being the borrower, pays interest or similar consideration exceeding one crore rupees which is deductible in computing income chargeable under the head "Profits and gains of business or profession" in respect of any debt issued by a non-resident, being an associated enterprise of such borrower, the interest shall not be deductible in computation of income under the said head to the extent that it arises from excess interest, as specified in sub-section (2):

Provided that where the debt is issued by a lender which is not associated but an associated enterprise either provides an implicit or explicit guarantee to such lender or deposits a corresponding

and matching amount of funds with the lender, such debt shall be deemed to have been issued by an associated enterprise.

(2) For the purposes of sub-section (1), the excess interest shall mean an amount of total interest paid or payable in excess of thirty per cent. of earnings before interest, taxes, depreciation and amortisation of the borrower in the previous year or interest paid or payable to associated enterprises for that previous year, whichever is less.

(3) Nothing contained in sub-section (1) shall apply to an Indian company or a permanent

establishment of a foreign company which is engaged in the business of banking or insurance.

(4) Where for any assessment year, the interest expenditure is not wholly deducted against

income under the head "Profits and gains of business or profession", so much of the interest expenditure as has not been so deducted, shall be carried forward to the following assessment year or assessment years, and it shall be allowed as a deduction against the profits and gains, if any, of any business or profession carried on by it and assessable for that assessment year to the extent of maximum allowable interest expenditure in accordance with sub-section (2):

Provided that no interest expenditure shall be carried forward under this sub-section for more than eight assessment years immediately succeeding the assessment year for which the excess interest expenditure was first computed.

206CC

01/04/2018

(1) Notwithstanding anything contained in any other provisions of this Act, any person

paying any sum or amount, on which tax is collectible at source under Chapter XVII-BB (herein referred to as collectee) shall furnish his Permanent Account Number to the person responsible for collecting such tax (herein referred to as collector), failing which tax shall be collected at the higher of the following rates, namely:-

(i) at twice the rate specified in the relevant provision of this Act; or

(ii) at the rate of five per cent.

(2) No declaration under sub-section (1A) of section 206C shall be valid unless the person furnishes his Permanent Account Number in such declaration.

(3) In case any declaration becomes invalid under sub-section (2), the collector shall collect the tax at source in accordance with the provisions of sub-section (1).

(4) No certificate under sub-section (9) of section 206C shall be granted unless the application made under that section contains the Permanent Account Number of the applicant.

(5) The collectee shall furnish his Permanent Account Number to the collector and both shall indicate the same in all the correspondence, bills, vouchers and other documents which are sent to each other.

(6) Where the Permanent Account Number provided to the collector is invalid or does not belong to the collectee, it shall be deemed that the collectee has not furnished his Permanent Account Number to the collector and the provisions of sub-section (1) shall apply accordingly.

(7) The provisions of this section shall not apply to a non-resident who does not have permanent establishment in India.


EXAMPLES

1. Section 50CA:-

Seller & Co. (S) acquired 10,000 shares of a private limited company at INR 50 per share. The shares were sold by S to Buyer & Co. (B) at INR 80 per share. The FMV of the shares on the date of transfer was INR 100 per share. The impact of the section 50CA and section 56(2)(x) would be as follows.

Computation of capital gains in the hands of S


Particulars

Under extant provisions (in INR)

After proposed section 50CA (in INR)

Sale consideration

800,000

1,000,000



Less : Cost of acquisition

(500,000)

(500,000)

Capital gains

 300,000

500,000


The sale consideration in the present example, pursuant to introduction of section 50CA, would tantamount to INR 1,000,000 [10,000 shares*INR 100]. The differential amount taxed on account of introduction of section 50CA in the hands of S amounts to INR 200,000. The said amount is being taxed as a result of increase in sale consideration from INR 800,000 to INR 1,000,000.

Computation of income from other sources in the hands of B


Particulars

Under extant provisions (in INR)

After proposed section 56(2)(x) (in INR)

FMV of shares (10,000 shares * INR 100)

 1,000,000

1,000,000

Less: Actual amount for acquisition of shares (10,000 shares * INR 80)

 (800,000)

(800,000)

Income from other sources

 200,000

200,000


2. DIFFERENCE BETWEEN 194I AND 194IB:-


SNO

194I

194IB

1

It Is Applicable To Those Assessees Doing Business And Are Covered In Tax Audit In Last Year

It Is Applicable To Those Assessees Doing Business And Are Covered In Tax Audit In Last Year

2

Hence Not Applicable In Personal Rent And Small Proprietorship/Partnership (Not Individual or HUF)

It Is Applicable To All Business(Even On Personal Rent).It Is Also Applicable To Salaried Individuals.

3

TDS Rate Is 10%

TDS Rate Is 5%

4

Cut Off Is 1,80,000 P.A

Cut Off Is 50,000 P.M

5

TDS Is To Be Deducted Monthly

TDS Is To Be deducted Annually In Last Month (March) Or Last Month Of Rent Agreement.

6

TAN No Required To Deduct TDS

No TAN Is Required, Simply PAN No Is Sufficient.


3. 194IC:-

This Is Regarding The Capital gain Computed With Reference To The Compensation (By Compulsory Acquisition) awarded In The First Instance or As The case May Be The TDS @10% Tax Should Be Deducted.

4. 234F:-


As On Date

For Income

Penalty

Before Due Time

Whatever Income

Nil

After Due Time But Before 31 Dec Of AY

> 5,00,000

5,000

<=5,00,000

<=1000

Else

> 5,00,000

10,000

<=5,00,000

<=1000


5. 241A:-

Suppose I Claimed For Refund Of Rs 1,00,000/ But The AO Feels  That The Grant Of The Refund Is Likely To Adversely Affect The Revenue, He May, For Reasons To Be Recorded In Writing And With The Previous Approval Of The Principal Commissioner Or Commissioner, As The Case May Be, Withhold The Refund Up To The Date On Which The Assessment Is Made.

6. 269ST:-

Rules of section 269ST to imposes the restriction of cash receipt from one party in a day:

Analysis:  The section applies to any transaction between single parties in a single day. It doesn't apply to multiple entities and/or multiple transactions.

Thus the below are not violation under this section -

  • If Mr. Ram receives Rs.2 lakhs from Mr. Shyam in a day as a part payment of Rs.10Lac transaction then there is said to be no violation.
  • If Mr. Ram receives Rs.2 Lakhs from Mr. Shyam and also Mr. Ram receives Rs.2 Lakhs from Mr. Chandar in a day but the transaction or agreements between them were different thus there is no violation.
  • Also if Mr. Ram receives Rs.2 Lakhs from Mr. Shyam on one day and Rs.1 lakhs on any other day then there is no violation.

Rules of section 269ST for restriction imposed on every single transaction :

Analysis: The restriction under this section is for single separate transaction.

Thus the below are not violation under this section –

  • If Mr. Ram bought goods from Mr. Shyam and there is a bill of Rs.5 Lakh, thus Mr. Shyam can pay only Rs.2 Lakh in cash against this bill.
  • Taking the above , if Mr. Ram buys goods for bill amount Rs.2 Lac and services for bill amount Rs.2 Lac from Mr. Shyam. Being same two party to transaction but the transactions are different thus Mr. Shyam can pay the complete Mr. 4 lakh in cash.
  • The above rule also applies to all transaction which is joint transaction with many entities involved together. Thus no separate limits will be available in respect of each payee in respect of a single transaction.

Example:

  • Ram sold goods and services to Mr. Shyam and Mr. Chandar for Rs.4 lakhs and provided a consolidated. Thus this being single transaction, even if 2 different parties are involved but the cash can be paid only up to Rs.2 Lac against this consolidated bill. Thus there wont be any provision to receive Rs.2 Lac each against one bill.

Rules of section 269ST for restriction based on single event or occasion or other transactions.

As per the provision of this section, any person can receive an amount less than Rs.2 lakhs in respect of all the transactions which are related to single event or occasion. Here under this section, event or occasion has not been defined but as per general understanding and normal definition, event and occasion may mean marriage, birthday, accident, tour or any other related events.

Example: In case marriage of Mr. Ram, Mr. Ram can receive gifts in cash of an amount less than Rs.2 Lakh from each of his friend and relative.

7. 271DA:-

PENALTY IN CASE OF CONTRAVENTION THE PROVISION OF SECTION 269ST:

As per section 271DA of Income Tax Act, if a person receives any sum in contravention any of the provisions and rules of section 269ST, he shall be liable to pay penalty of amount sum equal to the amount of such receipt received in cash.

Thus in simple terms the penalty amount would be 100% of the amount received in contravention of this section.

Example: In case Mr. Ram receives cash payment of Rs.6 Lakh then Mr. Ram needs to pay Rs.6 Lakh as penalty under this section.

Note: There would be no penalty imposed if such person provides good and sufficient reasons for the contravention.

8.  Penalty, a sum of ten thousand rupees for each such report or certificate271J:

(a) "accountant" means an accountant referred to in the Explanation below sub-section (2) of section 288;

Desc:- In this section, "accountant" means a chartered accountant as defined in clause (b)of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) who holds a valid certificate of practice under sub-section (1) of section 6 of that Act, but does not include [except for the purposes of representing the assessee under sub-section (1)]

(b) "merchant banker" means Category I merchant banker registered with the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992;

Desc:- "merchant banker" means any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as manager, consultant, adviser or rendering corporate advisory service in relation to such issue management;

(c) "registered valuer" means a person defined in clause (oaa) of section 2 of the Wealth-tax Act, 1957."

Desc:-  Registered valuer means a person registered as a valuer under section 34 AB;

34AB. (1) The  [Chief Commissioner or Director General] shall maintain a register to be called the Register of Valuers in which shall be entered the names and addresses of persons registered under sub-section (2) as valuers.

(2) Any person who possesses the qualifications prescribed in this behalf may apply to the  [Chief Commissioner or Director General] in the prescribed form  for being registered as a valuer under this section:

Provided that different qualifications may be prescribed for valuers of different classes of assets.

 (3) Every application under sub-section (2) shall be verified in the prescribed manner, shall be accompanied by such fees as may be prescribed and shall contain a declaration to the effect that the applicant will-


(i)

make an impartial and true valuation of any asset which he may be required to value;

(ii)

furnish a report of such valuation in the prescribed form;

(iii)

charge fees at a rate not exceeding the rate or rates prescribed in this behalf;

(iv)

not undertake valuation of any asset in which he has a direct or indirect interest.


(4) The report of valuation of any asset by a registered valuer shall be in the prescribed form and be verified in the prescribed manner.

9.  FOR THE PURPOSE OF TCS MANDATORY MENTIONING OF PAN NUMBER FOR THE COLLECTOR AND COLLECTEE 206CC:

Any person paying any sum or amount, on which tax is collectible at source under Chapter XVII-BB (herein referred to as collectee) shall furnish his Permanent Account Number to the person responsible for collecting such tax (herein referred to as collector), failing which tax shall be collected at the higher of the following rates, namely:-(i) at twice the rate specified in the relevant provision of this Act; or

(ii) at the rate of five per cent.

For Example:-If Purchase Value Of Goods is Rs 10000/- The Buyer Will Pay An Amount As Y= 10000/- + X (X being The value of TCS As specified In Income Tax Act,1961)To The Seller .The Seller Will Deposit The TCS At Any Of The Designated Branches Of Authorized Banks But If The Collector/ Collectee Does Not Quote The PAN Number Then The tax Will Be Collected As Y= 10000/- + 2X Or Y=10000+5% Of 10000.

(The Above Illustrations Are For Quickly Understanding The New Sections Created By Me. If I Am Wrong Please Do Let me Know)


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Category Income Tax, Other Articles by - Mukesh Kuriyal 



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