COMPANY LAW GYAN SAGAR CLASSES 9649-221-222

“Let’s Flow in the Ocean of Gyan with GSC”

COMPANY LAW GYAN SAGAR CLASSES 9649-221-222

“Let’s Flow in the Ocean of Gyan with GSC”

 DIRECT TAX
AMENDMENTS FOR JUNE/DEC22
CMA FINAL

GSC PUBLICATION
 CMA AKSHAY SEN DIRECT TAX AMENDMENTS 9649-221-222

DIRECT TAX AMENDMENTS FOR JUNE/DECMEBER

2022 EXAMS

1.BASICS
If turnover of Domestic company does not exceeds Rs Tax Rate Applicable @ 25%
400 crore in Previous year 2019-20

2.RESIDENTIAL STATUS
Section 9 : Income which are deemed to accrue or Arise in India Exception to Business

Connection in India.
In the Case of business , in respect of which all the operations are not carried out in India : -

In the Case of business other than business having business connection in India on account of

significant economic presence, of which all operations are not carried out in India, the income of

the business deemed to accrue or arise in India shall be only such part of income as is reasonably

attributable to the operations carried out in India.

Significant economic presence of a non-resident in India shall also constitute business connection

in India. Significant economic presence means

(a) in respect of any goods, services or property carried out by a non- resident with any person

in India including provision of download of data or software in India

Aggregate of payments arising from such transaction or transactions during the previous

year should exceed Rs. 2 crores.

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(b) systematic and continuous soliciting of business activities or engaging in interaction with

users in India.

The number of users should be at least 3 lakhs.

Further, the above transactions or activities shall constitute significant

economic presence in India, whether or not,—

(i) the agreement for such transactions or activities is entered in India;

(ii) the non-resident has a residence or place of business in India; or

(iii) the non-resident renders services in India:

However, where a business connection is established by reason of significant economic presence in

India, only so much of income as is attributable to the transactions or activities referred to in (a)

or (b) above shall be deemed to accrue or arise in India.

➢ This amendment talks about such business which don’t have business connection in India.

➢ Income earned by such business will also be taxable in India if they have significant

economic presence in India. (As explained above)

➢ the income of the business deemed to accrue or arise in India shall be only such part of

income as is reasonably attributable to the operations carried out in India.

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3.INCOME FROM SALARY

Taxability of Interest on Provident Fund (PF) Contribution by Employee – Section 10(11),

Section 10(12) – Applicable w.e.f. A.Y. 2022-23

• As per the existing provision, interest on the contribution made by the employees to the

statutory provident fund, recognized provident fund and the public provident fund is

exempt from tax.

• As per the Finance Act, 2021 no exemption shall be available for the interest income

accrued during the previous year in the recognized and statutory provident fund to the extent

it relates to the contribution made by the employees over Rs. 2,50,000 [if contribution to such

fund by the employer] / Rs. 5,00,000 [if no contribution to such fund by the employer] in the

previous year.

• The interest income shall be taxable under the head ‘Income from other sources’ at the slab

rate applicable to the assessee.

Case Interest not exempted (Taxable Interest)

Where employer is giving Interest on employee’s contribution (made on or after 01-04-

contribution 2021) in excess of ₹ 2,50,000 per year

Where employer is not Interest on employee’s contribution (made on or after 01-04-

giving contribution 2021) in excess of ₹ 5,00,000 per year

4.Income From House Property

NO AMENDMENTS

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5.PROFITS & GAINS FROM BUSINESS & PROFESSION

Depreciation on Goodwill
• Goodwill of a business or profession will not be considered as a depreciable asset and no

depreciation to be allowed even in respect of purchased goodwill.

• Block of assets shall not include Goodwill for purposes of depreciation.

• If Goodwill is forming part of the block of asset as on AY beginning on 1 April 2020 and

depreciation has been claimed, WDV and short-term capital gain to be computed in a manner to be

prescribed.

• Cost of acquisition for Goodwill acquired under certain modes of acquisition shall be the

purchase price of the previous owner.

• If Goodwill is purchased, such purchase price would be the cost of acquisition. However,

depreciation obtained prior to AY 2021-22 shall be reduced from the purchase price of the

Goodwill

Tax Audit [Sec. 44AB]

U/s 44AB, every person carrying on business is required to get his accounts audited, if his total

sales, turnover or gross receipts, in business exceeds ₹ 1 crore in any previous year. Similarly, in

case of a person carrying on profession he is required to get his accounts audited, if his gross

receipt in profession exceeds ₹ 50 lakhs in any previous year.

In order to reduce compliance burden on small and medium enterprises, it is amended to increase

the threshold limit for a person carrying on business from ₹ 5 crore to ₹ 10 crore in cases

where,-

a. aggregate of all receipts in cash during the previous year does not exceed 5% of such receipt;

and

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b. aggregate of all payments in cash during the previous year does not exceed 5% of such

payment.

Only resident individuals and partnership firms are allowed eligible for

presumptive taxation scheme under section 44ADA – Applicable w.e.f. A.Y.

2021-22

• Section 44ADA provides for computation of profit and gains of profession on a presumptive

basis. It applies to an assessee engaged in the specified profession u/s 44AA(1) and resident

in India. Under the presumptive taxation scheme, the assessee computes the taxable income on a

presumptive basis if gross receipts of the profession do not exceed Rs. 50 lakhs during the year.

The presumptive income shallbe 50% of total receipts of the year from such a profession.

• Upto A.Y. 2020-21, this presumptive taxation scheme was eligible to all assessee resident in

India; however, from A.Y. 21-22 this presumptive taxation scheme shall be eligible only to

resident individual and resident partnership firm in India. Thus, AOP, BOI, HUF, Company, LLP;

etc resident in India shall be ineligible to claim presumptive taxation scheme u/s 44ADA.

Payment by employer of employee’s contribution to provident fund, etc. [Sec.

36(1)(va) & 43B]

It is clarified that the provisions of Section 43B regarding allowability of certain expenditure in a

previous year only on actual payment basis on or before due date of filing of return of income for

the relevant assessment year , does not apply and would deemed never to be applied on employee’s

contribution received by employer towards any welfare fund of such employee. In effect the

extended time upto due date of return is not available for credit of employees contribution

towards any welfare fund received by employer.

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Old Provision New Provision

Amount Received by employer from employee Amount Received by employer from employee

but not deposited to the PF or any other fund but not deposited to the PF or any other fund

by due date of such act will be treated as by due date of such act will be treated as PGBP

PGBP Income of employer but it is deposited Income of employer but it is deposited by the

by the due date of Return filing it was not due date of Return filing it was not treated as

treated as PGBP Income of Employer PGBP Income of Employer

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6.INCOME FROM CAPITAL GAIN

DISSOLUTION OR RE-ORGANISATION OF FIRMS/ AOP/ BOI

SECTION 9B

Income on Receipt of Capital Asset or Stock in Trade by Specified Person from Specified

Entity

(1) Where a specified person receives during the previous year any capital asset or stock in

trade or both from a specified entity in connection with the dissolution or reconstitution of such

specified entity, then the specified entity shall be deemed to have transferred such capital

asset or stock in trade or both, as the case may be, to the specified person in the year in which

such capital asset or stock in trade or both are received by the specified person.

(2) Any profits and gains arising from such deemed transfer of capital asset or stock in trade

or both, as the case may be, by the specified entity shall be—

(i) deemed to be the income of such specified entity of the previous year in which such capital

asset or stock in trade or both were received by the specified person; and

(ii) chargeable to income-tax as income of such specified entity under the head "Profits and gains

of business or profession" or under the head "Capital gains", in accordance with the provisions

of this Act.

(3) For the purposes of this section, fair market value of the capital asset or stock in trade or

both on the date of its receipt by the specified person shall be deemed to be the full value of

the consideration received or accruing as a result of such deemed transfer of the capital asset

or stock in trade or both by the specified entity.

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(4) If any difficulty arises in giving effect to the provisions of this section and subsection (4) of

section 45, the Board may, with the approval of the Central Government, issue guidelines for the

purposes of removing the difficulty.

(5) Every guideline issued by the Board under sub-section (4) shall, as soon as may be after it is

issued, be laid before each House of Parliament, and shall be binding on the income-tax authorities

and on the assessee.

Explanation.—For the purposes of this section,—

(i) "reconstitution of the specified entity" means, where—

(a) one or more of its partners or members, as the case may be, of such specified entity ceases

to be partners or members; or

(b) one or more new partners or members, as the case may be, are admitted

in such specified entity in such circumstances that one or more of the persons who were partners

or members, as the case may be, of the specified entity, before the change, continue as partner

or partners or member or members after the change; or

(c) all the partners or members, as the case may be, of such specified entity continue with a

change in their respective share or in the shares of some of them;

(ii) "specified entity" means a firm or other association of persons or body of individuals (not

being a company or a co-operative society);

(iii) "specified person" means a person, who is a partner of a firm or member of other association

of persons or body of individuals (not being a company or a cooperative society) in any previous

year.

SECTION 45(4)

Capital Gains

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Notwithstanding anything contained in sub-section (1), where a specified person receives during

the previous year any money or capital asset or both from a specified entity in connection with

the reconstitution of such specified entity, then any profits or gains arising from such receipt

by the specified person shall be chargeable to income- tax as income of such specified entity

under the head "Capital gains" and shall be deemed to be the income of such specified entity

of the previous year in which such money or capital asset or both were received by the specified

person, and notwithstanding anything to the contrary contained in this Act, such profits or gains

shall be determined in accordance with the following formula, namely:—

A = B + C - D

Where,

A = income chargeable to income-tax under this subsection as income of the specified entity

under the head "Capital gains";

B = value of any money received by the specified person from the specified entity on the date of

such receipt;

C = the amount of fair market value of the capital asset received by the specified person from

the specified entity on the date of such receipt; and

D = the amount of balance in the capital account (represented in any manner) of the specified

person in the books of account of the specified entity at the time of its reconstitution:

Provided that if the value of "A" in the above formula is negative, its value shall be deemed

to be zero:

Provided further that the balance in the capital account of the specified person in the books of

account of the specified entity is to be calculated without taking into account the increase in

the capital account of the specified person due to revaluation of any asset or due to self-

generated goodwill or any other self-generated asset.

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Explanation 1.—For the purposes of this sub-section,—

(i) the expressions "reconstitution of the specified entity", "specified entity" and "specified

person" shall have the meanings respectively assigned to them in section 9B;

(ii) "self-generated goodwill" and "self-generated asset" mean goodwill or asset, as the case

may be, which has been acquired without incurring any cost for purchase or which has been

generated during the course of the business or profession.

Explanation 2.—For the removal of doubts, it is clarified that when a capital asset is received by a

specified person from a specified entity in connection with the reconstitution of such specified

entity, the provisions of this sub-section shall operate in addition to the provisions of section

9B and the taxation under the said provisions thereof shall be worked out independently.

Note 1: Section 9B and section 45(4) shall apply simultaneously if there is reconstitution of

a firm/ AOP/ BOI.

Note 2: On dissolution of firm/ AOP/ BOI, ONLY section 9B shall apply and section 45(4)

SHALL NOT APPLY.

➢ Now transfer of Goodwill of Profession is also taxable under the head capital gain earlier

only transfer goodwill of Business used to taxed now Business & Profession goodwill both

taxable

Computation of Capital Gain in case of Slump Sale or Slump Exchange – Section 2(42C),

Section 50B(2) – Applicable w.e.f. A.Y. 2021-22

As per section 50B(2)(ii), in relation to capital assets being an undertaking or division transferred

by way of slump sale, fair market value of the capital assets as on the date of transfer, calculated

in the prescribed manner, shall be deemed to be the full value of the consideration received or

accruing as a result of the transfer of such capital asset. Accordingly, the CBDT has prescribed

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that, for the purpose of section 50B(2)(ii), the fair market value (FMV) of capital assets would be

the higher of –

(i) FMV 1, being the fair market value of capital assets transferred by way of slump sale; and

(ii)FMV 2, being the fair market value of the consideration

(monetary and non-monetary) received or accruing as a result of transfer by way of slump sale

RULE 11UAE

Computation of Fair Market Value of Capital Assets for the Purposes of Section 5OB
of the Income-tax Act

FMV1 AMT. FMV2 AMT.

FAIR MARKET VALUE OF CAPITAL FAIR MARKET VALUE OF

ASSETS SO TRANSFERRED which shall CONSIDERATION RECEIVED OR
be determined in accordance with the ACCRUING AS A RESULT OF
following formula: TRANSFER which shall be
determined in accordance with the
following formula:

A + B + C + D- L where, E + F + G + H, where,

A= Book value of all assets (other than XXX E= Monetary consideration xxx
B, C, D) AS REDUCED BY following received or accruing as a result
amount, which relate to of transfer;

such undertaking or division -

(i) Income-tax paid less the amount (xxx) F= F.M.V. of non-monetary xxx
of income-tax refund claimed (IF (xxx) consideration
ANY) represented by property
(ii) Any amount shown as asset referred in Rule 11UA(1) i.e.,
(including unamortised amount of Jewellery, archaeological
deferred expenditure) which does collections, drawings, paintings,
sculptures or any work of art,

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not represent value of any asset. shares and securities (Quoted

or Unquoted) determined in
manner provided in Rule 11UA(1)

B= Price which “Jewellery and artistic xxx G= The price which the non- xxx
work” would fetch if sold in open monetary consideration
market on basis of valuation report represented by property [not
obtained from registered valuer covered in E above, or H
below, such as

C= F.M.V. of shares and securities as xxx machinery, furniture or any

determined in manner provided in other depreciable/ non-
Rule 11UA(1). depreciable asset.] would
fetch if sold in open market on
basis of valuation report
obtained from registered
valuer

D= Value adopted/ assessed/ xxx H= Value adopted/ assessed/ xxx

assessable by any Government assessable by any Government
Authority for purposes of payment Authority for purposes of
of stamp duty value in respect of payment of stamp duty value in
the immovable property respect of immovable
property.

L= Book value of all liabilities but not xxx

including

following amounts, which relate to

such undertaking or division -

(i) Paid-up capital in respect of

Equity Shares

(ii) Amount set apart for payment of

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dividends on Preference/Equity
shares WHERE such dividends
are not declared before the date
of transfer at a General Meeting
of the company

(iii) Reserves & surplus (by whatever

name called) even if resulting
figure is negative BUT NOT
BEING THOSE set apart
towards depreciation

(iv) Provision for taxation (other than

amount of income-tax PAID less
the amount of income-tax refund
CLAIMED to the extent of
excess over the tax payable with
reference to book profits.

(v) Provision for unascertained

liabilities

(vi) Contingent liabilities other than

arrears of dividends payable in
respect of cumulative preference
shares.

WHICHEVER IS HIGHER

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Following Transaction will not be considered as transfer

Transfer of capital asset by India Infrastructure Finance Company Ltd [Sec. 47(viiae)]

Any transfer of capital asset by India Infrastructure Finance Company Ltd to an institution

established for financing the infrastructure and development, set up under an Act of Parliament

and notified by the Central Government.

Transfer of capital asset by public sector company [Sec. 47(viiaf)]

Any transfer of capital asset, under a plan approved by the Central Government, by a public sector

company to another notified public sector company or to the Central Government or to a State

Government

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7.INCOME FROM OTHER SOURCES

Amendment in Section 56(2)(x) - Gift of Immovable Asset part

Before Notification After Notification (Temporary Amendment

for a specific time periodnot permanent)
If immovable property is transferred for If immovable property is transferred for

an inadequate consideration and the an inadequate consideration and the

difference between SDV and difference between SDV and

consideration is higher than – Rs. 50,000 consideration is higher than – Rs. 50,000

or 10% of the consideration, it shall be or 10% of the consideration, it shall be

taxable as a Gift. taxable as a Gift.

The tolerance limit is increased to 20% in

case of transfer of a residential unit (first

time allotment) during 12 November

2020 to 30 June 2021, consideration of

which is upto Rs. 2 crores

Sum received under a Life Insurance Policy [Sec. 10(10D)]

Any sum received under a life insurance policy including bonus on such policy is wholly exempt

from tax. However, exemption is not available on -

1. any sum received u/s 80DD(3) or u/s 80DDA(3); or

2. any sum received under a Keyman insurance policy; or

3. any sum received under an insurance policy issued on or after 1-4-20121 in respect of which

the premium payable for any of the years during the term of the policy exceeds 10%2 of the

actual capital sum assured.

4. Where any unit linked insurance policy (ULIP), is issued on or after 01-02-2021 and the

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premium payable for any of the previous year during the term of such policy exceeds ₹ 2,50,000

➢ Where the premium is payable, by a person, for more than one ULIP, issued on or after 01-02-

2021, the exemption shall apply only with respect to those ULIP, where the aggregate amount

of premium does not exceed the aforesaid limit in any of the previous year during the term of

any of those policies.

Notes:

a. Point (3) & (4) shall not apply to any sum received on the death of a person.

b. Actual capital sum assured shall mean the minimum amount assured under the policy on

happening of the insured event at any time during the term of the policy.

c. If the exemption u/s 10(10D) is not available in respect of ULIP due to point (4), income shall

be taxable under the head Capital Gains u/s 45(1B) and tax liability shall be computed as per

sec. 112A.

d. For calculating actual capital sum assured (for point 3), no account shall be taken for -

• the value of any premiums agreed to be returned; or

• any benefit by way of bonus or otherwise over and above the sum actually assured, which

is to be or may be received under the policy by any person.

8.CLUBBING OF INCOME

NO AMENDMENTS

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9.SETOFF & CARRY FORWARD OF LOSSES

Exception to sec. 79

Exception list of sec. 79 has been amended to provide that the provision of sec. 79 is not applicable

in case of change in shareholding take place during the previous year due to the circumstances

covered u/s 47(viiac) or 47(viiad).

47(viiac) - Any transfer of a capital asset by original fund to the resulting fund in a relocation.

47(viiad) - Transfer of capital asset (being share, unit, interest), by a shareholder or unit holder or

interest holder, held by him, in original fund in consideration for share or unit or interest in the

resultant fund in a relocation.

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10.DEDUCTIONS FROM GROSS TOTAL INCOME

Extending time limit for sanctioning of loan for affordable housing for availing

deduction u/s 80EEA

The existing provisions of sec. 80EEA provide for a deduction in respect of interest on loan

taken from any financial institution for acquisition of an affordable residential house property.

The deduction allowed is up to ₹ 1,50,000 and is subject to certain conditions. One of the

conditions is that loan has been sanctioned by the financial institution during the period from 01-

04-2019 to 31-03-2021. In order to continue promoting purchase of affordable housing, the

period of sanctioning of loan by the financial institution has been extended to 31-03-2022.

Extension of date of incorporation for eligible start up for exemption and for

investment in eligible start-up u/s 80IAC & 54GB

The existing provisions of the sec. 80-IAC, provides of 100% deduction of the profits and gains

derived from an eligible business by an eligible start-up for three consecutive assessment years

out of ten years at the option of the assessee. This is subject to the condition that the total

turnover of its business does not exceed ₹ 100 crore. The eligible start-up is required to be

incorporated on or after 01-04-2016 but before 01-04-2021.

The existing provisions of the section 54GB provide for exemption of capital gain which arises from

the transfer of a long-term capital asset, being a residential property (a house or a plot of land),

owned by the eligible assessee. The assessee is required to utilise the net consideration for

subscription in the equity shares of an eligible start-up, before the due date of furnishing of

return of income u/s 139(1). The eligible start-up is required to utilise this amount for purchase of

new asset within one year from the date of subscription in equity shares by the assessee. Further,

it has been provided that benefit is available only when the residential property is transferred on

or before 31st March, 2021.

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Now, in order to help such eligible start-up and help investment in them,-

a. the provisions of section 80-IAC has been amended to extend the outer date of

incorporation to before 1st April, 2022; and

b. the provisions of sec. 54GB has been amended to extend the outer date of transfer of

residential property from 31st March 2021 to 31st March 2022.

Section 80 IAB

Old Provision New Provision

Deduction is available if the project is Deduction is available if the project is

approved by the competent authority approved by the competent authority

after 01-06-2016, but on or before after 01-06-2016, but on or before 31-03-

31-03- 2021 2022

Amendment to sec. 80LA

Deduction is also available to a unit of International Financial Services Centre if it is registered

under the International Financial Services Centre Authority Act, 2019

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11.Return Of Income & Assessment

Due Date of Return Filing

Description Existing Due Date Amended Due Date

Due Date for filing of Belated or Revised ITR 31st March of that 31st December of that

from Assessment Year 2021-22 onwards Assessment Year## Assessment Year##

♦ Where Firm is liable for Tax Audit u/s 31st July of that 31st October of that

44AB Assessment Year Assessment Year

♦ Where Firm is liable for Transfer Pricing 31st July of that 30th November of

Audit u/s 92E Assessment Year that Assessment Year

Due Date for filing of ITR, where Tax Audit 31st July of that 31st July of that

or Transfer Pricing Audit is not required Assessment Year Assessment Year

[No Change]

Due Date for filing of ITR, where Tax Audit 31st October of 31st October of that

is required that Assessment Assessment Year

Year [No Change]

Due Date for filing of ITR, 30th November of that 30th November of that

where Transfer Pricing Assessment Year Assessment Year [No Change]

Audit is required

## Or before completion of assessment, whichever is earlier.

Fee for default in furnishing return of income – U/s 234F

Total Income (Rs.) Date of filing of ITR Late Fees (Rs.)

Up to Rs.5 Lakhs After the due date 1,000

Exceeding Rs.5 Lakhs After the due date 5,000

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Assessment
Section Old Provision New Provision

143(1) No intimation shall be sent after the No intimation shall be sent after the

expiry of 1 year from the end of the expiry of 9 months from the end of

financial year in which the return is the financial year in which the return is

made. made.

143 / 144 Assessment order must be passed Assessment order must be passed

within 12 months from the end of within 9 months from the end of

relevant AY relevant AY

143(2) Time limit for service of notice u/s 143(2) has also been reduced to three

months from the end of the financial year in which the return is furnished.

Income Escaping Assessment (New Scheme)

If any income chargeable to tax, in the case of an assessee, has escaped assessment for any

assessment year, the Assessing Officer may, subject to the provisions of sec. 148 to 153, assess or

reassess such income or recompute the loss or the depreciation allowance or any other allowance or

deduction for such assessment year.

For the purpose of assessment or reassessment or recomputation, the Assessing Officer may

assess or reassess the income in respect of any issue, which has escaped assessment, and such

issue comes to his notice subsequently in the course of the proceedings under this section,

irrespective of the fact that the provisions of sec. 148A have not been complied with.

Issue of notice where income has escaped assessment [Sec. 148]

 Notice for filing return: Before making the assessment, reassessment or recomputation u/s 147,

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and subject to the provisions of sec. 148A, the Assessing Officer shall serve on the assessee a

notice, along with a copy of the order passed, if required, u/s 148A(d), requiring him to furnish

within such period, as may be specified in such notice, a return of his income or the income of any

other person in respect of which he is assessable under this Act during the previous year

corresponding to the relevant assessment year. For filing of such return, provision relating to sec.

139 shall be applicable.

 Prior Information and approval: No notice shall be issued unless there is information with the

Assessing Officer which suggests that the income chargeable to tax has escaped assessment in

the case of the assessee for the relevant assessment year and the Assessing Officer has

obtained prior approval of the specified authority to issue such notice.

➢ The information with the Assessing Officer which suggests that the income chargeable to tax

has escaped assessment means:

a. Any information flagged in the case of the assessee for the relevant assessment year in

accordance with the risk management strategy formulated by the Board from time to time;

b. any final objection raised by the Comptroller and Auditor General of India to the effect

that the assessment in the case of the assessee for the relevant assessment year has not

been made in accordance with the provisions of this Act.

 Where,

i. a search is initiated u/s 132 or books of account, other documents or any assets are

requisitioned u/s 132A, on or after 01-04-2021, in the case of the assessee; or

ii. a survey is conducted u/s 133A, other than u/s 133A(2A) or 133A(5), on or after 01-04-2021,

in the case of the assessee; or

iii. the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or

Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or

requisitioned u/s 132 or 132A in case of any other person on or after 01-04-2021, belongs to

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the assessee; or

iv. the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or

Commissioner, that any books of account or documents, seized or requisitioned u/s 132 or 132A in

case of any other person on or after 01-04-2021, pertains or pertain to, or any information

contained therein, relate to, the assessee,

the Assessing Officer shall be deemed to have information which suggests that the income

chargeable to tax has escaped assessment in the case of the assessee for the 3 assessment years

immediately preceding the assessment year relevant to the previous year in which the search is

initiated or books of account, other documents or any assets are requisitioned or survey is

conducted in the case of the assessee or money, bullion, jewellery or other valuable article or

thing or books of account or documents are seized or requisitioned in case of any other person.

 Specified authority means the specified authority referred to in sec. 151.

Conducting inquiry, providing opportunity before issue of notice u/s 148 [Sec. 148A]

The Assessing Officer shall, before issuing any notice u/s 148:

a. conduct any enquiry, if required, with the prior approval of specified authority (as referred to

in sec. 151), with respect to the information which suggests that the income chargeable to tax

has escaped assessment;

b. provide an opportunity of being heard to the assessee, with the prior approval of specified

authority, by serving upon him a notice to show cause within such time, as may be specified in the

notice, being not less than 7 days and but not exceeding 30 days from the date on which such

notice is issued, or such time, as may be extended by him on the basis of an application in this

behalf, as to why a notice u/s 148 should not be issued on the basis of information which

suggests that income chargeable to tax has escaped assessment in his case for the relevant

assessment year and results of enquiry conducted, if any, as per (a);

c. consider the reply of assessee furnished, if any, in response to the show-cause notice

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referred to in (b);

d. decide, on the basis of material available on record including reply of the assessee, whether or

not it is a fit case to issue a notice u/s 148, by passing an order, with the prior approval of

specified authority, within 1 month from the end of the month in which the reply is received by

him, or where no such reply is furnished, within 1 month from the end of the month in which time

or extended time allowed to furnish a reply expires:

Exception

The provisions of this section shall not apply in a case where:

a. a search is initiated u/s 132 or books of account, other documents or any assets are

requisitioned u/s 132A in the case of the assessee on or after 01-04-2021; or

b. the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or

Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a

search u/s 132 or requisitioned u/s 132A, in the case of any other person on or after 01-04-

2021, belongs to the assessee; or

c. the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or

Commissioner that any books of account or documents, seized in a search u/s 132 or

requisitioned u/s 132A, in case of any other person on or after 01-04-2021, pertains or pertain

to, or any information contained therein, relate to, the assessee.

Time limit for notice [Sec. 149]

No notice u/s 148 shall be issued for the relevant assessment year:

General Within 3 years from the end of the relevant assessment year, unless the

Case case falls below

Where the Assessing Officer has in his possession books of account or other
Special Case
documents or evidence which reveal that the income chargeable to tax,

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represented in the form of asset, which has escaped assessment amounts to

or is likely to amount to ₹ 50 lakhs or more for that year, notice can be

issued beyond 3 years, but not beyond 10 years from the end of the relevant

assessment year.

Taxpoint:

 For the purposes of computing the period of limitation, the time or extended time allowed to

the assessee, as per show-cause notice issued u/s 148A or the period during which the proceeding

u/s 148A is stayed by an order or injunction of any court, shall be excluded.

 Where immediately after the exclusion of the said period, the period of limitation available to

the Assessing Officer for passing an order u/s 148A is less than 7 days, such remaining period

shall be extended to seven days and the period of limitation shall be deemed to be extended

accordingly.

 “Asset” shall include immovable property, being land or building or both, shares and securities,

loans and advances, deposits in bank account.

 No notice shall be issued without getting approval u/s 151

 As per sec. 150(1), the notice may be issued at any time for the purpose of making assessment

or reassessment in consequence of or to give effect to any findings or directions contained in an

order passed by -

o any authority in any proceedings under this Act by way of appeal, reference or revision; or a

court in any proceeding under any other law.

Exception: The provisions shall not apply in any case where any such assessment (reassessment or

recomputation) relates to an assessment year in respect of which an assessment (reassessment or

recomputation) could not have been made at the time the order which was the subject-matter of

the appeal, reference or revision, as the case may be, was made by reason of aforesaid

timelimitation.

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Sanction for issue of notice [Sec. 151]

Specified authority for the purposes of sec. 148 and 148A shall be:

Case Specified Authority

Where 3 years have not elapsed

Principal Commissioner or Principal Director or
from the end of the relevant
Commissioner or Director
assessment year

Principal Chief Commissioner or Principal Director General

Where more than 3 years have
or where there is no Principal Chief Commissioner or
elapsed from the end of the
Principal Director General, Chief Commissioner or Director
relevant assessment year
General

Faceless assessment of income escaping assessment [Sec. 151A]

The Central Government may make a scheme for the purposes of assessment, reassessment or

recomputation u/s 147 or issuance of notice u/s 148 or 148A or sanction for issue of such notice

u/s 151, so as to impart greater efficiency, transparency and accountability by—

a. eliminating the interface between the income-tax authority and the assessee or any other

person to the extent technologically feasible;

b. optimising utilisation of the resources through economies of scale and functional specialisation;

c. introducing a team-based assessment, reassessment, re-computation or issuance or sanction of

notice with dynamic jurisdiction.

Taxpoint: The Central Government may, for the purpose of giving effect to the scheme, direct

(upto 31-03-2022) that any of the provisions of this Act shall not apply or shall apply with such

exceptions, modifications and adaptations as may be specified

Rate of taxation [Sec. 152(1)]

If an assessment/reassessment is made u/s 147, then tax shall be chargeable at the rates at

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which it would have been charged had the income not escaped assessment.

When can a reassessment proceeding be dropped [Sec. 152(2)]

Where an assessment is reopened u/s 147 and the assessee -

a) has not opposed any part of the original assessment order for that year either u/s 246 to 248

or u/s 264; and

b) shows that he had been assessed on an amount or to a sum not lower than what he would be

rightly liable for even if the income alleged to have escaped assessment had been taken into

account, or the assessment or computation had been properly made. - then the proceedings u/s

147 shall be dropped.

Time limit for completion of assessment u/s 147

No order of assessment, reassessment shall be made u/s 147 after the expiry of 12 months from

the end of the financial year in which notice u/s 148 was served.

Assessment u/s 153A and 153C

Where a search is initiated u/s 132 or books of account, other documents or any assets are

requisitioned u/s 132A on or before 31-03-2021, then assessment shall be made u/s 153A and

153C.

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12.Tax Deducted at Source

TDS in respect of certain specified senior citizen [Sec. 194P]

Who is responsible to deduct tax: Specified Bank

When tax shall be deducted: In case of a specified senior citizen, the specified bank shall, after

giving effect to the deduction allowable under Chapter VI-A and rebate allowable u/s 87A,

compute the total income of such specified senior citizen for the relevant assessment year and

deduct income-tax on such total income on the basis of the rates in force (i.e. slab rates).

Taxpoint:

 Such specified senior citizen is not required to file his return of income for the assessment

year relevant to the previous year in which the tax has been deducted.

 Specified bank means notified banking company

 Specified senior citizen means an individual, being a resident in India:

a) who is of the age of 75 years or more at any time during the previous year;

b) who is having income of the nature of pension and no other income except the interest income

received or receivable from any account maintained by such individual in the same specified

bank in which he is receiving his pension income; and

c) has furnished a declaration to the specified bank containing such particulars, in such form and

verified in such manner, as may be prescribed

TDS on certain sums for purchase of goods [Sec. 194Q]

Any person (Buyer, T/O of previous year > Rs. 10 crores) who purchases goods (except for

securities and commodities from a RSE) worth more than Rs. 50 Lakhs from a resident person

(Seller) is required to deduct TDS @ 0.1% of the sum in excess of Rs. 50 Lakhs

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TDS for non-filers of ITR [Sec. 206AB]

Where tax is required to be deducted at source under aforesaid provisions, other than sec. 192,

192A, 194B, 194BB, 194LBC or 194N on any sum or income or amount paid, or payable or credited,

by a person (hereafter referred to as deductee) to a specified person, the tax shall be deducted

at the higher of the following rates, namely:—

a. at twice the rate specified in the relevant provision of the Act; or

b. at twice the rate or rates in force; or

c. at the rate of 5%.

Taxpoint

➢ Specified person means

• a person who has not filed the returns of income for both of the 2 assessment years relevant to

the 2 previous years immediately prior to the previous year in which tax is required to be

deducted, for which the time limit of filing return of income u/s 139 has expired; and

• the aggregate of TDS and TCS in his case is ₹ 50,000 or more in each of these 2 previous years.

However, specified person shall not include a non-resident who does not have a permanent

establishment in India. Permanent establishment includes a fixed place of business through

which the business of the enterprise is wholly or partly carried on.

➢ If the provisions of sec. 206AA is applicable to a specified person, in addition to the provision

of this section, the tax shall be deducted at higher of the two rates provided in this section and

in sec. 206AA.

Amendment to sec. 206AA

It is provided that where the tax is required to be deducted u/s 194Q and Permanent Account

Number (PAN) is not provided, the TDS shall be at the rate of 5% (instead of 20%).

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Special provision for TCS for non-filers of ITR [Sec. 206CCA]

Where tax is required to be collected at source under the aforesaid provisions, on any sum or

amount received by a person (hereafter referred to as collectee) from a specified person, the tax

shall be collected at the higher of the following rates:

• at twice the rate specified in the relevant provision of the Act; or

• at the rate of 5%.

Taxpoint

➢ If the provisions of sec. 206CC is applicable to a specified person, in addition to the provisions of

this section, the tax shall be collected at higher of the two rates provided in this section and in

sec. 206CC.

➢ Specified person means

a) a person who has not filed the returns of income for both of the 2 assessment years relevant to

the 2 previous years immediately prior to the previous year in which tax is required to be

collected, for which the time limit of filing return u/s 139(1) has expired and

b) aggregate of tax deducted at source and tax collected at source in his case is ₹ 50,000 or more

in each of these two previous years.

However, the specified person shall not include a non-resident who does not have a permanent

establishment in India. Permanent establishment includes a fixed place of business through which

the business of the enterprise is wholly or partly carried on.

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13.Assessment of Charitable & Religious Trust

#Section 10(23C): Income of certain Universities, Hospitals, Educational Institution Medical

Institution

1. Income of any university or educational institution or any hospital or other institution wholly or

substantially financed by the Government ( Govt grant is 51% of total receipts) which exists

solely for educational or medical purposes and not for profit, shall be fully exempt from tax.

[10(23C)(iiiab)/(iiiac)]

2. Income of any university or educational institution or any hospital or other institution which

exists solely for educational or medical purposes and not for profit and aggregate annual

receipts is upto 5 crore, (Earlier it was 1 Crore) shall be fully exempt from fax.

[10(23C)(iiiad)/(iiiae)]

Other Amendments

➢ Voluntary contributions made with a specific direction that it shall form part of the corpus

shall be invested or deposited in one or more of the forms or modes specified in sec. 11(5)

maintained specifically for such corpus.

➢ Application out of corpus shall not be considered as application for charitable or religious

purposes for the purposes of third proviso of sec. 10(23C) and sec. 11. However, when it is

invested or deposited back, into one or more of the forms or modes specified in sec. 11(5)

maintained specifically for such corpus from the income of the previous year, such amount

shall be allowed as application in the previous year in which it is deposited back to corpus to

the extent of such deposit or investment.

➢ Application from loans and borrowings shall not be considered as application for charitable

or religious purposes for the purposes of third proviso of sec. 10(23C) and sec. 11. However,

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when loan or borrowing is repaid from the income of the previous year, such repayment shall

be allowed as application in the previous year in which it is repaid to the extent of such

repayment.( Loan Taken and then such money applied for trust purpose is not treated as

Applied Income as it is not applied from Income)

➢ For the computation of income required to be applied or accumulated during the previous

year, no set off or deduction or allowance of any excess application, of any of the year

preceding the previous year, shall be allowed

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14.MINIMUM ALTERNATE TAX (MAT)

Amendment to sec. 115JB

• In case of a company, where there is an increase in book profit of the previous year due to

income of past year (or years) included in the book profit on account of an advance pricing

agreement entered into by the assessee u/s 92CC or on account of secondary adjustment

required to be made u/s 92CE, the Assessing Officer shall, on an application made to him in this

behalf by the assessee, recompute the book profit of the past year (or years) and tax payable, if

any, by the assessee during the previous year.

In this situation, the provisions of sec. 154(Rectification Of Mistake) shall apply and the period

of 4 years shall be reckoned from the end of the financial year in which the said application is

received by the Assessing Officer. This provision shall apply only if the assessee has not utilised

the credit of tax paid under this section in any subsequent assessment year u/s 115JAA.

• While computing book profit, following income (or expenses) shall not be considered if the

assessee is a foreign company and the income tax on such income is less than 15%:

a. the capital gains arising on transactions in securities; or

b. the interest, royalty or fees for technical services chargeable to tax u/s 115A to 115BBG

In the aforesaid list, dividend is also included.

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15.TAXATION OF INVESTMENT FUND

Tax on income of investment fund and its unit holders [Sec. 115UB]

OLD DEFINATION NEW DEFINATION

Investment fund means any fund established or

Now, it also covered aforesaid fund regulated

incorporated in India in the form of a trust or a under the International Financial Services Centre

company or a limited liability partnership or a Authority Act, 2019.

body corporate which has been granted a

certificate of registration as a Category I

or a Category II Alternative Investment Fund

and is regulated under the SEBI

(Alternative Investment Fund) Regulations, 2012.

16.ADVANCE TAX & INTEREST

Amendment in Section 234C

No interest u/s 234C will be charged if shortfall in tax installmet is due to following Incomes:-

✓ Capital gain Income

✓ PGBP Income of such business which are started in previous year

✓ Dividend Income excluding deemed dividend u/s 2(22)(e)

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Fee for default relating to statement or certificate [Sec. 234G]

Where:

a. the research association, university, college or other institution or company referred to in

35(1)(ii) or (iii) or (iia) fails to deliver a statement within the time prescribed u/s 35(1A); or

b. the institution or fund fails to deliver a statement within the time prescribed u/s 80G(5)(viii)

or fails to furnish a certificate u/s 80G(5)(ix) it shall be liable to pay fee @ ₹ 200 for every day

during which the failure continues.

Maximum Fee: The amount of fee shall not exceed the amount in respect of which the failure

referred to therein has occurred.

Taxpoint: Such fee shall be paid before delivering the statement or before furnishing such

certificate.

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17. Appeal, Revision & Settlement Commission

Settlement Commission
 Settlement Commission shall cease to operate after 31/01/2021

 No application for settlement shall be made after aforesaid date

 In respect of pending applications, the Central Government shall constitute one or more

Interim Boards for Settlement, as may be necessary, for the settlement of pending applications.

 Every Interim Board shall consist of 3 members, each being an officer of the rank of Chief

Commissioner, as may be nominated by the Board.

 If the Members of the Interim Board differ in opinion on any point, the point shall be decided

according to the opinion of the majority.

Dispute Resolution Committee [Sec. 245MA]

 The Central Government shall constitute Dispute Resolution Committees (one or more) for

dispute resolution in the case of such persons or class of persons, as may be specified by the

Board.

 The assessee have an option to opt (or not to opt) for dispute resolution in respect of dispute

arising from any variation in the specified order in his case and who fulfils the specified

conditions.

 The Dispute Resolution Committee, subject to such conditions, as may be prescribed, shall have

the powers to reduce or waive any penalty imposable under this Act or grant immunity from

prosecution for any offence punishable under this Act in case of a person whose dispute is

resolved under this Chapter.

OTHER AMENDMENTS

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Section 147 :- The Assessing Officer may assess or reassess or recompute an income, if any

income chargeable to tax has escaped assessment for any assessment year, after giving an

opportunity to be heard u/s 148A

Amendment to sec. 196D

Where DTAA agreement applies to the payee and if the payee has furnished a certificate

referred to sec. 90 or 90A, as the case may be, then, tax shall be deducted at the rate of 20% or

at the rate provided in such agreement for such income, whichever is lower.

Equalization Levy [Sec. 10(50)]

Any income arising from any specified service provided on or after the date on which the

provisions of Chapter VIII of the Finance Act, 2016 comes into force or arising from any e-

commerce supply or services made or provided or facilitated on or after 01-04-2020 and

chargeable to equalisation levy under that Chapter.

However, the income shall not include and shall be deemed never to have been included any income

which is chargeable to tax as royalty or fees for technical services in India under this Act read

with the agreement notified by the Central Government u/s 90 or 90A

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