With an effort to decode and simplify the amendments of Finance Bill, 2017, we bring to you a summary of the amendments vide a series of editions beginning from today. 

Ease of Doing Business

1. Section 197A : Enabling of filing of Form 15G/15H for commission payments specified u/s 194D

Amendment : In order to reduce compliance burden in the case of Individuals and HUFs, it is proposed to amend Sec. 197A so as to make them eligible for filing self-declaration in form.No.15G/15H for non-deduction of TDS in respect insurance commission referred to in Sec. 194D. Amendment will take effect from June 1, 2017. 

2. Section 194LA : Non-deduction of tax in case of exempt compensation under RFCTLAAR Act, 2013

Amendment : It is proposed to amend Sec. 194LA to provide that no deduction shall be made under this section where such payment is made in respect of any award or agreement which has been exempted from levy of income-tax u/s 96 (except those made u/s 46) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Amendment will take effect from April 1, 2017

CBDT issues Circular No. 36/2016 dated 25.10.2016 regarding taxability of compensation received by land owners towards land acquired under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (‘RFCTLARR’).

3. Section 92BA : Specified Domestic Transactions

Amendment : As per clause (i) of Sec 92BA, any expenditure in respect of which payment has been made by the assessee to certain "specified persons" u/s 40A(2)(b) are covered within the ambit of specified domestic transactions (SDT). As a matter of compliance and reporting, taxpayers need to obtain CA’s certificate in Form 3CEB providing various details such as list of related parties, nature and value of SDTs, method used to determine ALP, etc., which considerably increased the compliance burden of the taxpayers. In order to reduce taxpayers’ compliance burden, it is proposed to omit clause (i) of Sec 92BA. Accordingly, Sec 92BA will apply only when one of the related entities of the assessee enjoys a profit linked deductions. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to AY 2017- 18 and onwards.

4. Section 115BBG : Income from transfer of Carbon credits

Amendments : It is proposed to insert a new Sec. 115BBG to provide that where the total income of the assessee includes any income from transfer of carbon credit, such income shall be taxable at the concessional rate of 10% (plus applicable surcharge and cess) on the gross amount of such income. No expenditure or allowance in respect of such income shall be allowed under the Act. Amendment will take effect from April 1, 2018.

5. Section 244A : Interest on refund u/s 244A to deductor

Amendment : It is proposed to insert a new sub-section (1B) to Sec. 244A to provide that where refund of any amount becomes due to the deductor, such person shall be entitled to receive, in addition to the refund, simple interest on such refund, calculated @ 0.5% for every month or part of a month comprised in the period, from the date on which claim for refund is made in the prescribed form or in case of an order passed in appeal, from the date on which the tax is paid, to the date on which refund is granted. It is also proposed to provide that the interest shall not be allowed for the period for which the delay in the proceedings resulting in the refund is attributable to the deductor. Amendment will take effect from April 1, 2017.

6. Section 155 : Amendment to Sec. 155 for enabling allowance of FTC claim in cases of dispute

Amendment : It is proposed to insert sub-section (14A) in Sec. 155 (which deals with provide for procedure for amendment of assessment order in case of certain specified errors) to provide that where credit for foreign taxes paid is not given for the relevant AY on the grounds that the payment of such foreign tax was in dispute, the AO shall rectify the assessment order or an intimation u/s 143(1), if the assessee, within 6 months from the end of the month in which the dispute is settled, furnishes proof of settlement of such dispute, submits evidence before the AO that the foreign tax liability has been discharged and furnishes an undertaking that credit of such amount of foreign tax paid has not been directly or indirectly claimed or shall not be claimed for any other assessment year. Amendment will take effect from April 1, 2018. 

7. Section 153 : Assessments/Re-assessments time-limit reduced

Amendment : It is proposed to amend Sec 153(1) to provide that for AY 2018-19, the time limit for making an assessment order u/s 143 or 144 shall be reduced from existing twenty-one months to eighteen months from the end of the AY, and for AY 2019-20 and onwards, the said time limit shall be twelve months from the end of the AY in which the income was first assessable.

It is further proposed to amend Sec 153(2) to provide that the time limit for making an order of assessment, reassessment or re-computation u/s 147, in respect of notices served u/s 148 on or after the 1st day of April, 2019 shall be twelve months (instead of one year as per existing provision) from the end of the financial year in which notice u/s 148 is served.

Similarly, it is proposed to amend Sec 153(3) to provide that the time limit for making an order of fresh assessment in pursuance of an order passed or received in the financial year 2019-20 and onwards under sections 254 or 263 or 264 shall be twelve months from the end of the financial year in which order u/s 254 is received or order u/s 263 or 264 is passed by the authority referred therein. It is to be noted that similar amendments have been proposed u/s 153B relating to time limits for completion of search assessment and Sec 153C (relating to assessment on ‘other person’). These amendments will take effect from 1st April, 2017. 

Anti - Abuse Measures

8. Section 10(38) : LTCG u/s 10(38) exemption available only if share purchase suffered STT

Amendment : With a view to prevent abuse on account of declaring unaccounted income as exempt longterm capital gains by entering into sham transactions, it is proposed to amend Sec 10(38) to provide that exemption under this section for income arising on transfer of equity share acquired or on after 1st day of October, 2004 shall be available only if the acquisition of share is chargeable to STT. However, to protect the exemption for genuine cases where the STT could not have been paid like acquisition of share in IPO, FPO, bonus or right issue by a listed company acquisition by non-resident in accordance with FDI policy of the Government etc., it is also proposed to notify transfers for which the condition of chargeability to STT on acquisition shall not be applicable. This amendment will take effect from 1st April, 2018. 

9. Section 56(2)(vii) : Scope of taxation of gifts as income from other sources expanded for all taxpayers

Amendment : In order to prevent the practice of receiving the sum of money or the property without consideration or for inadequate consideration, it is proposed to insert a new clause (x) in subsection (2) of section 56 so as to provide that receipt of the sum of money or the property by any person without consideration or for inadequate consideration in excess of Rs. 50,000 shall be chargeable to tax in the hands of the recipient under the head "Income from other sources". It is also proposed to widen the scope of existing exceptions by including the receipt by certain trusts or institutions and receipt by way of certain transfers not regarded as transfer under section 47. Consequential amendment is also proposed in section 49 for determination of cost of acquisition. These amendments will take effect from 1st April, 2017 and the said receipt of sum of money or property on or after 1st April, 2017 shall be chargeable to tax in accordance with the provisions of proposed Sec 56(2)(x).