Amendments

TAXATION AMENDMENTS
APPLICABLE FOR MAY 2017 EXAM
COMPLIED BY
CA J.S.JOHAR
08010921000
INCOME TAX 1- 21
INDIRECT TAX 22 - 31
+
FACE TO FACE CLASSES IN DELHI

(LAXMI NAGAR , KOHAT ENCLAVE , GTB NAGAR)
SATELLITE CLASSES ACROSS INDIA

(ALDINE CA CENTERS)
AMENDMENTS FOR AY 2017-2018 RELEVANT FOR MAY 2017 EXAMS
AMENDMENTS UNDER INCOME TAX FOR THE

ASSESSMENT YEAR 2017-2018
CHAPTER 1 : BASIC CONCEPTS AND DEFINITIONS
No significant amendment has taken place for IPCC level
CHAPTER 2 : RESIDENTIAL STATUS

PROVISION FOR AY 2016-2017 PROVISION FOR AY 2017-2018
Section 6(3) : Residential status of Company Section 6(3) : Residential status of Company
Company is said to be resident if Company is said to be resident if

a) it is an Indian company or a) it is an Indian company or
b) it is a foreign company having full b) it is a foreign company having its
control and management situated place of effective management
in India (POEM), in that year, in India.
For the purposes of this clause "place of effective
Control and management of a Company is in the management" (POEM) means a place where key
hands of its BOD. Therefore, control and management and commercial decisions that are
management exists where its BOD meetings take necessary for the conduct of the business of an entity
place. If all meetings are held in India then foreign as a whole, are in substance, made.
company is said to be a resident of India.
Example : ABC Ltd. Is a Swedish company having headquartered at Stockholm and not having a permanent
establishment in India. It has set up a liaison office in Mumbai in April, 2016 in compliance with RBI guidelines
to look after its day to day business operations in India, spread awareness about the companys products and
explore further opportunities. The liaison office takes decisions relating to day to day routine operations and
performs support functions that are preparatory and auxiliary in nature. The significant management and
commercial decisions are, however, in substance made by the Board of Directors at Sweden. Determine the
residential status of ABC Ltd for AY 2017-2018.
Answer
In the case of ABC Ltd. its place of effective management for PY 2016-2017 is not in India, since the significant
management and commercial decisions are, in substance, made by the Board of Directors outside India in
Sweden.
ABC Inc. has only a liaison office in India through which it looks after its routine day to day business operations
in India. The place where decisions relating to day to day routine operations are taken and support functions
that are preparatory or auxiliary in nature are performed are not relevant in determining the place of effective
management.
Hence, ABC Ltd., being a foreign company is a non-resident for AY 2017-2018, since its place of effective
management is outside India in the PY 2016-2017.
AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 1

CHAPTER 3 : INCOME TAX CALCULATION

The rate of surcharge shall be: The rate of surcharge shall be:
In case of Individual , HUF , AOP-BOI , AJP , Firm , In case of Individual, HUF, AOP-BOI and AJP the rate
Local Authority , Co-Operative Society the rate of of surcharge shall be 15 % of tax if the total
surcharge shall be 12 % of tax if the total income income is more than `100 lakhs.
is more than `100 lakhs.
In case of Firm, Local Authority, Co-Operative Society
the rate of surcharge shall continue to be 12 % of tax
if the total income is more than `100 lakhs.
Rate of tax for domestic company ----30% Rate of tax for domestic company
a)When total turnover or gross receipts
for the PY 2014-2015 < = `5 crores ----
----------------------------------------------29%
b) Other domestic companies ------30%
REBATE UNDER SECTION 87A : Maximum of REBATE UNDER SECTION 87A : Maximum of
`2,000 `5,000
NEW CONCEPT
CLARIFICATIONS REGARDING ATTAINING PRESCRIBED AGE OF 60 / 80 YEARS ON 31st MARCH

ITSELF, IN CASE OF SENIOR / VERY SENIOR CITIZENS WHOSE DATE OF BIRTH FALLS ON 1st APRIL
: CIRCULAR NO.28/2016 , DATED 27-7-2016
CBDT has clarified that a person born on 1st April would be considered to have attained a particular age on
31st March, the day preceding the anniversary of his birthday.
Illustration: Mrs. J was born on 1/4/1937 and she is a resident of India. She has earned income of
`19,70,000. Calculate her income tax liability for the AY 2017-2018 ie PY 2016-2017.
Solution: As per latest circular no 28/2016 it will be considered that Mrs. J has attained age of 80 years on
31/3/2017 and thus slab 3 will be applicable for calculation of income tax liability.
Calculation of income tax liability for AY 2017-2018 ie PY 2016-2017

First `5,00,000 NIL
`5,00,000 to `10,00,000 20% `1,00,000
Balance of `9,70,000 30% `2,91,000
Total `3,91,000
Add: surcharge NIL
Tax plus surcharge `3,91,000
ADD: Education cess on tax plus surcharge
2% for primary education `7,820
1% for secondary and higher education `3,910
Total tax rounded off u/s 288B `4,02,730

CHAPTER 4 : AGRICULTURE INCOME

NO AMENDMENT
CHAPTER 5 : INCOME FROM SALARY

EMPLOYERS CONTRIBUTION TO APPROVED EMPLOYERS CONTRIBUTION TO APPROVED

SUPERANNUATION FUND : SECTION 17(2)(vii) SUPERANNUATION FUND : SECTION 17(2)(vii)
Perquisite includes employers contribution to an Perquisite includes employers contribution to an

approved superannuation fund in excess of approved superannuation fund in excess of
`1,00,000 `1,50,000
CHAPTER 6 : INCOME FROM HOUSE PROPERTY

SECTION 24(b) DEDUCTION OF INTEREST SECTION 24(b) DEDUCTION OF INTEREST
FROM NAV FROM NAV
If Loan is borrowed on or after 1/4/1999 If Loan is borrowed on or after 1/4/1999
And property has been And property has been
Acquired Acquired
Constructed Constructed
Then deduction allowed is lower of: Then deduction allowed is lower of:
a) Actual interest payable c) Actual interest payable
b) Maximum limit of `2,00,000 pa. d) Maximum limit of `2,00,000 pa.
However limit of `2,00,000 will be applicable only However limit of `2,00,000 will be applicable only
when construction gets completed within three when construction gets completed within five
years from the end of the financial year in which years from the end of the financial year in which
loan has been taken. loan has been taken.
If not then limit applicable will be `30,000 and not If not then limit applicable will be `30,000 and not
`2,00,000 `2,00,000
CONCEPT OF RECOVERY OF UNREALIZED RENT ALL THREE SECTIONS ie SECTION 25A, SECTION
: SECTION 25A AND SECTION 25AA 25AA AND SECTION 25B HAVE BEEN REPLACED
From the amount of recovery, no deduction or BY FOLLOWING NEW SECTION
expenses were allowed to be reduced.
CONCEPT OF RECOVERY OF UNREALIZED RENT
RECOVERY OF ARREAR OF RENT : SECTION 25B AND RECOVERY OF ARREAR OF RENT :
From the amount of recovery , deduction of 30% of SECTION 25A
such amount is allowed as deduction. Further no a) When the assessee realizes unrealized then it
other deduction or expenses were allowed to be shall be chargeable to tax under the head of
reduced. House Property in the year of recovery.
b) If any assessee has let out any building and has
received arrear of rent (increased rent from back
date) from such property, which has not been
charged to income tax earlier, then such an
amount shall be chargeable to tax under the head

of House Property in the year of recovery.
c) Amount mentioned in a) and b) above will be
chargeable to tax after deducting 30% of such
amount.
d) It would be of no significance whether the
assessee is owner of the house property or not.
Example : Mr. Anand sold his residential house property in March, 2016. In June, 2016, he recovered rent of
`10.000 from Mr. Gaurav, to whom he had let out his house for two years from April 2010 to March 2012. He
could not realise two months rent of `20,000 from him and to that extent his actual rent was reduced while
computing income from house properly for AY 2012-2013.
Further, he had let out his property from April, 2012 to February, 2016 to Mr. Satish. In April, 2014, he had
increased the rent from `12,000 to `15,000 per month end the same was a subject matter of dispute. In
September, 2016, the matter was finally settled and Mr. Anand received `69,000 as arrears of rent for the
period April 2014 to February, 2016.
Would the recovery of unrealised rent and arrears of rent be taxable in the hands of Mr. Anand, and if so in
which year?
Solution : Since the unrealised rent was recovered in the PY 2016-2017, the same would be taxable in the AY
2017-2018 under section 25A, irrespective of the fact that Mr. Anand was not the owner of the house in that
year Further, the arrears of rent was also received in the PY 2016-2017, and hence the same would be taxable
in the AY 2017-2018 under section 25A, even though Mr. Anand was not the owner of the house in that year. A
deduction of 30% of unrealised rent recovered and arrears of rent would be allowed while computing income
from house property of Mr. Anand for AY 2017-2018.
Computation of income from house property of Mr. Anand for AY 2017-2018
Particulars `
(i) Unrealised rent recovered 10,000
(ii) Arrears of rent received 69,000
79,000
Less: Deduction @ 30% 23,700
Income from house property 55,300
CHAPTER 7 : INCOME FROM BUSINESS OR PROFESSION

Section 28 : Incomes taxable as PGBP Income Section 28 : Incomes taxable as PGBP Income
Any sum received in cash or in kind under an Any sum received in cash or in kind under an
agreement of not carrying out any activity in relation to agreement of not carrying out any activity in relation
any business. to any business or profession.
ADDITIONAL DEPRECIATION ON NEW PLANT OR ADDITIONAL DEPRECIATION ON NEW PLANT OR

MACHINERY : SECTION 32(1)(iia) MACHINERY : SECTION 32(1)(iia)
Additional depreciation of 20% shall be allowed to Additional depreciation of 20% shall be allowed to
assessee engaged in the manufacturing or production assessee engaged in the manufacturing or production
of any article or thing or engaged in the business of of any article or thing or engaged in the business of
generation or generation and distribution of generation or TRANSMISSION or distribution
electricity. of electricity.
INCENTIVE FOR ACQUISITION AND INCENTIVE FOR ACQUISITION AND

INSTALLATION OF NEW PLANT OR MACHINERY INSTALLATION OF NEW PLANT OR MACHINERY
BY MANUFACTURING COMPANY:SECTION 32AC BY MANUFACTURING COMPANY: SECTION 32AC
Deduction of 15% of cost of asset is allowed if assets Deduction of 15% of cost of asset is allowed even if
is acquired and installed in the previous the installation of the new assets is in
year. a year other than the year of
acquisition.
The deduction shall be allowed in the year in which
the new assets are installed.
NEW CONCEPT
INVESTMENT-LINKED TAX INCENTIVE FOR SPECIFIED BUSINESSES : SECTION 35AD : 100%

WEIGHTED DEDUCTION AVAILABLE TO THE ASSESSEE CARRYING ON THE SPECIFIED BUSINESS
In relation to a new infrastructure facility
Developing or
maintaining and operating or
developing, maintaining and operating.
Definition of 1) A road including toll road, a bridge or a rail system.
infrastructure 2) A highway project including housing or other activities being an integral part of the
facility highway project.
3) A water supply project, water treatment system, irrigation project, sanitation and
sewerage system or solid waste management system.
4) A port, airport, inland waterway, inland port or navigational channel in the sea.
Date of commencement On or after 1.4.2017
Conditions to be 1) The business should be owned by an Indian company or by a consortium of Indian
satisfied by companies or by an authority or a board or corporation or any other body established
such specified or constituted under any Central or State Act.
business 2) The entity should have entered into an agreement with the Central Government or a
State Government or a local authority or any other statutory body.
NOTE: Deduction of revenue capital expenses shall be 100%.
DEDUCTION OF EXPENSES ON THE PAYMENT DEDUCTION OF EXPENSES ON THE PAYMENT

BASIS : SECTION 43B BASIS : SECTION 43B
Expenses covered under this section are: Expenses covered under this section are:
a) Any tax, duty, cess or fees under any law in force. g) Any tax, duty, cess or fees under any law in force.
b) Any sum payable to an employee as bonus or h) Any sum payable to an employee as bonus or
commission. commission.
c) Interest on loan or borrowings from any public i) Interest on loan or borrowings from any public
financial institution or state financial corporation or financial institution or state financial corporation or
on any term loan or advance from a scheduled on any term loan or advance from a scheduled
bank. bank.
d) Interest on loan or advances from a scheduled j) Interest on loan or advances from a scheduled
bank. bank.

e) Payment of leave encashment to employee. k) Payment of leave encashment to employee.

f) Contribution by employer to any PF or l) Contribution by employer to any PF or
superannuation fund or gratuity fund or ESI or any superannuation fund or gratuity fund or ESI or any
other fund for the welfare of employees other fund for the welfare of employees
m)any sum payable by the assessee to
the Indian Railways for use of
Railway assets
Depreciation under section 32

Depreciation on OIL WELLS shall be charged at
15%
Section 36 : PROVISIONS OF BAD DEBTS: Section 36 : PROVISIONS OF BAD DEBTS:

Generally there shall be no deduction for the Generally there shall be no deduction for the
provisions of bad debts. However in the following provisions of bad debts. However in the following
cases provisions for bad debts shall be allowed: cases provisions for bad debts shall be allowed:
In case of In case of
Foreign Banks Foreign Banks
Public Financial Institutions Public Financial Institutions
State Financial Institutions State Financial Institutions
State industrial investment corporations State industrial investment corporations
Non-Banking Financial
Provision for bad debts allowed as deduction shall be
5% of the gross total income
Companies (NBFCs)
Provision for bad debts allowed as deduction shall be
5% of the gross total income
COMPULSORY AUDIT OF ACCOUNTS IN COMPULSORY AUDIT OF ACCOUNTS IN

CASE OF PROFESSIONALS COVERED CASE OF PROFESSIONALS COVERED
UNDER SECTION 44AA : SECTION 44AB UNDER SECTION 44AA : SECTION 44AB
If gross receipts for the current previous year exceeds If gross receipts for the current previous year exceeds
`25 Lakhs. `50 Lakhs.
PRESUMPTIVE TAXATION : SECTION 44AD : PRESUMPTIVE TAXATION : SECTION 44AD : ALL

ALL TYPE OF BUSINESS EXCEPT COVERED TYPE OF BUSINESS EXCEPT COVERED UNDER
UNDER SECTION 44AE SECTION 44AE
1) Assessee is engaged in any business except the 1) Assessee is engaged in any business except the
business covered under section 44AE, if his total business covered under section 44AE, if his total
receipt does not exceed `100 lakhs. receipt does not exceed `200 lakhs.
2) From these estimated incomes no deduction of 2) From these estimated incomes no deduction of
sections 30 to 38 shall be allowed to be made. But sections 30 to 38 shall be allowed to be made. But
in case of the firm, normal deduction of salary and in case of the firm, normal deduction of salary and
the interest to the partners under section 40(b) shall the interest to the partners under section 40(b)
be allowed. shall be allowed.
Now salary of partners and interest on their capital
and loan will not be allowed as deduction to the
partnership firm

NEW CONCEPTS FROM AY 2017-2018 UNDER SECTION 44AD

Payment of tax Assessee following section 44AD has to make payment of tax in one instalment on
or before 15/3/PY.
Section 44AD(4): If any person declares profit for any year as per this section and he declares profit
concept of 5 years for any of next five years not as per provisions of this section then he shall not be
eligible to claim the benefit this section for five years subsequent to the year in
which the profit has not been declared as per provisions of this section
Example: Mr. A is an eligible assessee and claims to be taxed on presumptive

basis under section 44AD for AY 2017-2018 i.e. PY 2016-2017 and offers income
of `8 lakh on the turnover of 1 Crores. For Assessment Year 2018-2019 and
Assessment Year 2019-2020 also he offers income in accordance with the
provisions of section 44AD. However, for Assessment Year 2020-2021, he offers
income of `4 lakh on turnover of 1 Crores.
In this case since he has not offered income in accordance with the provisions of
section 44AD for five consecutive assessment years, after Assessment Year 2017-
2018, he will not be eligible to claim the benefit of section 44AD for next five
assessment years i.e. from Assessment Year 2021-2022 to 2025-2026.
Section 44AD(5) : Assessee to whom section 44AD(4) are applicable and

books of accounts and whose total income exceeds the basic exemption limit
audit of books shall be required to keep and maintain such books of account and other
documents as required under section 44AA and get them audited and furnish a
report of such audit as required under section 44AB.
NEW SECTIONS FROM AY 2017-2018

SECTION 44ADA : SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS OF PROFESSION
ON PRESUMPTIVE BASIS
Nature of scheme This is a voluntary scheme. An assessee need not follow this presumptive taxation
schemes and can declare higher income in his ITR.
Eligible assessee: Resident Assessee who is
Section 44ADA(1) Engaged in a profession referred to in section 44AA
Turnover: Section Total gross receipts does not exceed `50,00,000 in a previous year
44ADA(1)
Presumed income: Sum equal to 50% of the total gross receipts of the assessee in the previous year
Section 44ADA(1)
Disallowed expenses: From this estimated incomes no deduction of any expense [Section 44ADA(2)] or
Section 44ADA(2) and depreciation [Section 44ADA(3)] shall be allowed to be made. Further in case of
(3) the partnership firm deduction of salary and the interest to the partners under
section 40(b) shall be allowed.
Section 44ADA(4): An assessee who claims that his profits and gains from the profession are lower
books of accounts than the profits and gains specified in section 44ADA(1) and whose total income
and audit of books exceeds the basic exemption limit shall be required to keep and maintain such
books of account and other documents as required under section 44AA and get
them audited and furnish a report of such audit as required under section 44AB.

TAX TREATMENT FOR SPECTRUM FEE : SECTION 35ABA
Transaction Manner of deduction

1. Acquisition of right to use spectrum
Any capital expenditure incurred for Appropriate fraction of the amount
acquisition of any right to use spectrum expenditure / total number of relevant
for telecommunication services either years
before the commencement of the
business or thereafter at any time during Meaning of relevant previous years
any previous year and for which Case Meaning
payment has actually been made (actual Where the spectrum The previous year
payment of expenditure or payable in fee is actually paid beginning with the
the prescribed manner) to obtain a right before the P.Y. in which such
to use spectrum. commencement of business
business to operate commenced and the
telecommunication subsequent P.Y. or
services P.Y.s during which
the spectrum, for
which the fee is
paid, shall be in
force.
In any other case The previous years
beginning with the
P.Y in which the
spectrum fee is
actually paid and
the subsequent P.Y
or years during
which the spectrum,
for which the tee is
paid, shall be in
force
2. Transfer of the spectrum

Case 1: Where the proceeds of the The expenditure remaining unallowed as
transfer are less than the expenditure reduced by the proceeds of transfer shall
incurred remaining unallowed be allowed in the previous year in which
the spectrum has been transferred
Case 2: Where the proceeds of the The excess amount shall be chargeable to
transfer exceed the amount of tax as profits and gains of business in the
expenditure remaining unallowed previous year in which the spectrum has
been transferred However, the excess
should not exceed the difference between
the expenditure incurred to obtain the
spectrum arid the amount of expenditure
remaining unallowed.
If the spectrum is transferred in a previous
year in which the business is no longer in
existence, the taxability would arise in the
above manner as though the business is in
existence in that previous year.

Case 3: Where the proceeds of the No deduction for such expenditure shall be
transfer are not less than the amount ofallowed in the previous year in which
expenditure incurred remainingspectrum is transferred or in respect of any
unallowed. subsequent previous year or years.
Case 4: Where a part of the spectrum is Unallowed expenses would be amortised
transferred (and the case is not coveredin the following manner
under Case 2 above) (i) subtracting the proceeds of transfer
from the expenditure remaining unallowed;
arid
(ii) dividing the remainder by the number of
relevant previous years which have not
expired at the beginning of the previous
year during which the licence is
transferred.
3. Transfer of spectrum in a scheme of amalgamation
If the amalgamating company sells or The provisions of section 35ABA will apply
transfers the spectrum to the to amalgamated company as they would
amalgamated company, being an Indian have applied to amalgamating company as
company under the scheme of if the latter has not transferred the
amalgamation spectrum.
The tax treatment in cases 1,2 & 3 given in
(2) above will not apply to the
amalgamating company.
4. Transfer of spectrum in a scheme of demerger
If the demerged company sells or The provisions of section 35A8A will apply
transfers the spectrum to the resulting to resulting company as they would have
company, being an Indian company applied to demerged company as if the
under the scheme of demerger latter has not transferred the spectrum.
The tax treatment in cases 1.2 & 3 given in
(2) above will not apply to the demerged
company.
Consequences of failure to comply with the conditions after grant deduction

Where, in a previous year, any deduction has been claimed and granted to an assessee and subsequently,
there is failure to comply with any of the provisions of this section, then
(1) the deduction shall be deemed to have been wrongly allowed;
(2) the Assessing Officer may recompute the total income of the assessee for the said previous year and make
the necessary rectification. This is notwithstanding anything contained in the Income-tax Act, 1961;
(3) the provisions under section 154 for rectification of mistake apparent from the record would apply. The
period of four years would be reckoned from the end of the previous year in which the failure to comply with the
provisions of section 154 takes place.
CHAPTER 8 : INCOME FROM CAPITAL GAINS

SECTION 2(14) : Capital asset will not include : SECTION 2(14) : Capital asset will not include
a) 6.5% Gold Bonds 1977 a) 6.5% Gold Bonds 1977
b) 7% Gold Bonds 1980 b) 7% Gold Bonds 1980
c) National Defense Gold Bonds 1980 c) National Defense Gold Bonds 1980
d) Special Bearer Bonds 1991 d) Special Bearer Bonds 1991

e) Gold Deposit Bonds issued under Gold Deposit e) Gold Deposit Bonds issued under Gold Deposit
Scheme 1999. Scheme 1999
f) Deposit certificates issued under the
Gold Monetisation Scheme, 2015
SECTION 47 : TRANSACTIONS NOT REGARDED SECTION 47 : TRANSACTIONS NOT REGARDED
AS A TRANSFER AS A TRANSFER
-- Any redemption of Sovereign Gold Bond under the
Scheme, by an individual shall not be treated as
transfer and therefore shall be exempt from tax on
capital gains.
THIRD PROVISO OF SECTION 48 THIRD PROVISO OF SECTION 48

Benefit of indexation is not available on transfer of Benefit of indexation is not available on transfer of
Bonds and Debentures. Bonds and Debentures.
However in case of Capital Indexed Bonds issued by However in following two cases system of indexation
the government system of indexation will be will be applicable
applicable. 1)Capital Indexed Bonds issued by the
government.
2)Sovereign Gold Bond issued by the
Reserve Bank of India under the
Sovereign Gold Bond Scheme, 2015
IN CASE OF SELF GENERATED ASSETS WHICH IN CASE OF SELF GENERATED ASSETS WHICH
ARE ARE
goodwill of the business goodwill of the business
tenancy rights goodwill of profession
route permits tenancy rights
loom hours route permits
patents loom hours
copyrights patents
trademarks copyrights
brand name trademarks
brand name
which are self generated , COA and COI shall be which are self generated , COA and COI shall be
taken to be NIL taken to be NIL

NEW CONCEPTS FROM AY 2017-2018
SECTION 2(42A): SHORT TERM CAPITAL ASSET (STCA) : A Capital Asset, which is not a long term
Capital Asset, is a short term Capital Asset. In other words, Asset held for 36 months or less is regarded as
short term Capital Asset.
1ST PROVISO OF 2nd PROVISO OF 3rd PROVISO OF
SECTION 2(42A) SECTION 2(42A) SECTION 2(42A)
Following assets shall be Following assets shall be Following assets shall be
treated as LTCA after 12 treated as LTCA after 36 treated as LTCA after 24
months: months: months:
1. Units of Equity Oriented 1. Mutual Funds [Listed or not] 1. Non Listed Equity Shares
Mutual Fund listed 2. Non Listed Preference
2. Listed Equity Shares 2. Non Listed Debentures Shares
3. Listed Preference Shares. 3. Non Listed Bonds
4. Listed Debentures 4. Non Listed Government
5. Listed Bonds Securities
6. Listed Government 5. Other capital assets like
Securities Land, Building, Jewellery etc.
7. Zero coupon Bonds
8. Units of UTI
COST OF ACQUISITION OF AN ASSET DECLARED UNDER THE INCOME DECLARATION SCHEME,

2016 : SECTION 49(5)
When assessee transfers such an asset which has been declared under Income Declaration scheme, 2016
then the cost of acquisition of the asset shall be deemed to be the fair market value of the asset which has
been adopted for such Income declaration scheme.
CII for the AY 2016-2017 i.e. PY 2015-2016 is 1125
SECTION 50C : FULL VALUE OF CONSIDERATION

Sale consideration u/s 50C shall be
Actual Sale price
Higher
Stamp duty value
Lower
Value determined by valuation officer
From AY 2017-2018
1) 1st Proviso of Section 50C : If date of the agreement and the date of registration are not the same
then the value determined by the stamp valuation authority on the date of agreement shall be regarded
as full value of consideration.
2) 2nd Proviso of Section 50C : 1st Proviso shall apply only when amount of consideration or its part has
been received by an account payee cheque or account payee bank draft or by use of electronic
clearing system on or before the date of the agreement for transfer.
NEW SECTION : SECTION 54EE : CAPITAL GAIN NOT TO BE CHARGED ON INVESTMENT IN UNITS OF
A SPECIFIED FUND
1) Exemption is allowed to all type of assessees.
2) Exemption is allowed from LTCG on transfer of any type of LTCA on or after 1/4/2016
3) Exemption is allowed if LTCG is invested within 6 months from the date of transfer in the long-term
specified asset.

4) Assessee should hold such specified asset for the minimum period of 3 years from the date of its
acquisition.
5) The investment in the long-term specified asset by an assessee during any financial year and during the
subsequent financial year cannot exceed `50 lakhs.
6) If Where the long term specified asset is transferred by the assessee within 3 years from the date of its
acquisition, the amount of capital gain exempted earlier, shall be deemed to be long-term capital gain of
the previous year, in which the long term specified asset is transferred. Similarly , If the assessee takes any
loan or advance on the security of such long-term specified asset, he shall be deemed to have transferred
such long-term specified asset on the date on which such loan or advance is taken.
7) Long-term specified asset means a unit or units, issued before 1/4/2019 of such fund as may be notified by
the Central Government in this behalf.
SECTION 54GB : EXEMPTION OF LONG-TERM CAPITAL GAIN TAX ON TRANSFER RESIDENTIAL

PROPERTY SHALL ALSO BE ALLOWED IF THE NET CONSIDERATION IS INVESTED IN ELIGIBLE
START UP
1) If an individual or HUF sets up a start-up company by selling a residential property and invests in the
shares of such company then LTCG arising on account of transfer of a residential property shall be exempt
from tax.
2) Exemption shall be : LTCG / Net sale consideration X amount invested in subscription of shares
3) Such investment in shares must be made before 1/4/2019
4) Individual or HUF must holds more than 50% shares of the company and such company shall utilise the
amount invested in shares to purchase new asset before due date of filing of return by the investor.
5) The company should invest the proceeds in the purchase of new asset being new plant and machinery.
Investment in computers or computer software is allowed in case of technology driven start-ups certified by
the Inter-Ministerial Board of Certification.
CHAPTER 9 : INCOME FROM OTHER SOURCES

NEW CONCEPT UNDER SECTION 56(2) : Any shares received by an individual or HUF as a consequence of
demerger or amalgamation of a company shall not attract the provisions of Gift under section 56(2)(vii). In
other words value of such shares shall not be taxable.
CHAPTER 10 : CLUBBING OF INCOME

NO AMENDMENT
CHAPTER 11 : SET OFF AND CARRY FORWARD OF LOSSES

Section 80 : Carry forward and set off of loss of specified business under section 73A
Loss of specified business can be carry forwarded for Loss of specified business can be carry forwarded for
unlimited period of time. unlimited period of time.
Section 80 : Such loss can be carry forwarded even if Section 80 : Such loss can be carry forwarded if
ITR is not filed on or before the due date (ITR filed ITR is filed on or before the due date (ITR filed
after the due date , still loss can be carry forwarded) after the due date , loss can not be carry
forwarded)

CHAPTER 12 : DEDUCTION FROM GROSS TOTAL INCOME

SECTION 80CCD : NEW PENSION SCHEME SECTION 80CCD : NEW PENSION SCHEME
Amount received from NPS by the Individual or his
nominee PROVISO TO SECTION 80CCD
(a) due to closure or his opting out of NPS or
(b) as pension received from the annuity plan
Amount received by the nominee on
purchased or taken on such closure or opting out the death of the assessee shall not be
deemed to be the income of the
then the full amount so received shall be deemed to nominee.
be the income of the individual or his nominee of
the previous year in which such amount is received However, pension received by the nominee from the
annuity plan purchased or taken on such closure or
opting out shall be taxable.
-- INTEREST ON LOAN FOR ACQUIRING

RESIDENTIAL HOUSE PROPERTY: SECTION
80EE
1) The deduction shall be allowed to an individual
only.
2) The deduction shall be allowed for the amount of
interest payable on loan taken by the individual
from any financial institution for the purpose of
acquisition of a residential House, which is to be let
out or self-occupied, provided certain conditions
are satisfied.
3) Conditions to be satisfied are:
a) The loan is sanctioned by the financial institution
during the period beginning on 1/4/2016 and
ending on 31/3/2017.
b) The amount of loan sanctioned for acquisition of
the residential house property does not exceed `
35,00,000
c) The value of the residential house property does
not exceed `50,00,000.
d) The assessee does not own any residential
house property on the date of sanction of the
loan.
4) The deduction shall not exceed `50,000.
5) The deduction under this section is over and above
the limit of `2,00,000 provided for a self-occupied
property u/s 24(b).
DEDUCTION IN RESPECT OF THE RENT PAID: DEDUCTION IN RESPECT OF THE RENT PAID:
SECTION 80GG SECTION 80GG
Amount of deduction shall be the least of the Amount of deduction shall be the least of the
following: following:
a) Rent paid LESS 10% of Adjusted GTI a) Rent paid LESS 10% of Adjusted GTI
b) 25% of the Adjusted GTI b) 25% of the Adjusted GTI
c)`2,000 per month. c)`5,000 per month.
DEDUCTION IN RESPECT OF THE EMPLOYMENT OF THE NEW WORKERS : SECTION 80JJAA

Old section has been omitted and new section has been introduced
DEDUCTION IN RESPECT OF THE EMPLOYMENT OF THE NEW WORKERS : SECTION 80JJAA

(1) Section 80JJAA(1)
a) Deduction is allowed to all type of assessee.
b) Deduction shall be allowed when assessee has to get his accounts audit u/s 44AB.
c) Deduction is allowed when GTI includes PGBP income.
d) Deduction allowed shall be an amount equal to 30% of additional employee cost incurred in business
during the PY and such deduction shall be allowed for 3 consecutive years starting from the year in
which such additional employee cost was incurred.
e) Deduction shall be allowed subject to the conditions specified in section 80JJAA(2)
(2) Essential conditions: Section 80JJAA(2) : No deduction u/s 80JJAA(1) shall be allowed
a) if the business is formed by splitting up, or reconstruction of an existing business
b) if the business is acquired by the assessee by way of transfer from any other person or as a result of
any business reorganization
c) Unless the assessee furnishes along with ITR a report of a CA giving such particulars in the report as
may be prescribed.
(3) Additional employee cost
a) New Business : In the first year of a new business, emoluments paid or payable to employees
employed during the PY shall be deemed to be the additional employee cost
b) Existing Business : in case of an existing business it means total emoluments paid or payable to
additional employees employed during the PY. However no deduction shall be allowed if
(i) there is no increase in the number of employees from the total number of employees employed as
on the last day of the preceding year
(ii) emoluments are paid in a manner otherwise than by an account payee cheque or account payee
bank draft or by use of electronic clearing system through a bank account
(4) Additional employee : means an employee who has been employed during the PY and whose
employment has the effect of increasing the total number of employees employed by the employer as on the
last day of the preceding year, but does not include
a) an employee whose total emoluments are more than `25,000 pm.
b) an employee for whom the entire contribution is paid by the Government under the Employees Pension
Scheme notified in accordance with the provisions of the Employees Provident Funds and
Miscellaneous Provisions Act, 1952
c) an employee employed for a period of less than 240 days during the PY
d) an employee who does not participate in the recognized provident fund
(5) Emoluments: means any sum paid or payable to an employee but does not include
a) any contribution paid or payable by the employer to any pension fund or provident fund or any other
fund for the benefit of the employee
b) any lump-sum payment paid or payable to an employee at the time of termination of his service or
superannuation or voluntary retirement, such as gratuity, leave encashment, voluntary retrenchment
benefits, commutation of pension and the like.
BUSINESS OF ELIGIBLE START UP : SECTION 80-IAC

(1) Eligible start up means
d) a company or LLP
e) engaged in the eligible business
f) which is incorporated between 1/4/2016 and 31/3/2019
g) having turnover which is less than or equal to 25 crores in any PY from PY 2016-2017 to PY 2020-2021
h) and holds certificate of eligible business from notified IMBC (Inter-Ministerial Board of Certification)
(2) Eligible business means a business which involves innovation, development, deployment or
commercialization of new products, processes or services driven by technology or intellectual property.

(3) 100% deduction of profit from eligible business : Section 80-IAC(1) and (2) : If assessee is eligible
start-up and GTI includes PGBP income of such business then it shall be allowed a deduction of 100% of
the Profits from such business for any 3 consecutive assessment years out of 5 years beginning from the
year in which the eligible start up is incorporated.
(4) Conditions to be satisfied to claim exemption : Section 80-IAC(3): This section applies to a start-up
which fulfils the following conditions, namely
a) it is not formed by splitting up, or the reconstruction, of a business already in existence
b) it is not formed by the sale to a new business of 2nd hand plant or machinery.
However, any machinery or plant shall not be regarded as 2nd hand plant or machinery if all the
following conditions are fulfilled, namely:
(i) such plant or machinery was never used in India
(ii) such machinery or plant is imported into India;
(iii) no depreciation has been claimed in India.
c) Further maximum of 20% of the total value of the plant or machinery can be 2nd hand plant or
machinery.
(5) Computation of profits of eligible business: For computing deduction under this section the profits of
the eligible business shall be computed as if it is the only source of income of the assesses during the PY.
(6) Audit of accounts: The deduction shall be allowed only if the accounts of the start-up have been audited
by a CA and audit report has been submitted with ITR.
(7) Inter-unit transfer of goods: If goods or services held for the purposes of the eligible business are
transferred to any other business and the consideration for the same does not correspond with the FMV of
the goods or services then PGBP income shall be calculated on the basis of such FMV.
(8) Restriction on double deduction: The deduction shall not exceed PGBP income of the eligible business.
Further, if deduction allowed under this section then no deduction shall be allowed under any other section.
DEDUCTION IN RESPECT OF PGBP INCOME HOUSING PROJECTS: SECTION 80-IBA

(1) 100% deduction of profit from housing projects: If GTI of an assessee includes PGBP income from the
business of developing and building housing projects then deduction of 100% of the PGBP income from
such business shall be allowed.
(2) Conditions to be fulfilled: Housing Project shall be a project which fulfils the following conditions, namely
a) the project is approved after 1/6/2016 but on or before 31/3/2019
b) the project is completed within a period of 3 years from the date of approval
c) the project shall be deemed to have been completed when a certificate of completion of project as a
whole is obtained.
d) The built-up area of the shops and other commercial establishments included in the housing project
does not exceed 3% of the aggregate built-up area.
e) the project is on a plot of land measuring not less than

(i) 1,000 square meters in city of Chennai, Delhi, Kolkata or Mumbai or within the distance measured
aerially of 25 kms from the municipal limits of these cities
(ii) 2,000 square meters where the project is located in any other place
f) the built-up area of the residential unit comprised in the housing project does not exceed
(i) 30 square meters in the city of Chennai, Delhi, Kolkata or Mumbai or within the distance measured
aerially of 25 kms from the municipal limits of these cities, or
(ii) 60 square meters, where the project is located in any other place
g) if residential unit in the housing project is allotted to an individual, no other residential unit in the
housing project shall be allotted to the individual or the spouse or the minor children of such individual

h) the project utilizes

(i) minimum of 90% of the floor area ratio if project is located in city of Chennai, Delhi, Kolkata or
Mumbai or within the distance measured aerially of 25 kms from the municipal limits of these cities,
or
(ii) minimum of 80% of such floor area ratio if project is located in any other place.
i) the assessee maintains separate books of account in respect of the housing project.
(3) Consequences if the project is not completed within a period of 3 years from the date of approval :
Deduction claimed and allowed during preceeding PYs shall be withdrawn and shall be deemed to be the
income taxable under PGBP of the previous year in which the period for completion so expires.
(4) Deduction under any other provisions of the Act not allowed if the same is claimed under this
section : If deduction is allowed under this section then no deduction shall be allowed under any other
section of the Act.
CHAPTER 13 : EXEMPTED INCOMES
PROVISION FOR AY 2016-2017 NEW SECTIONS HAVE BEEN INTRODUCED

SECTION 10(11A) : PAYMENT FROM SUKANYA SAMRIDDHI ACCOUNT
Interest accruing on deposits in and withdrawal from any account from this scheme would be exempt from tax.
SECTION 10(12A) : AMOUNT PAYABLE AT THE TIME OF CLOSURE OR OPTING OUT OF NATIONAL
PENSION SCHEME
Any payment from National Pension System Trust referred to in Section 80CCD , to an employee
Due to closure of the pension scheme or
his opting out of the pension scheme
shall be exempt from tax upto 40% of the total amount payable to him.
However, the full amount received by the nominee, on death of the assessee shall be exempt from tax.
SECTION 10(13) : APPROVED SUPERANNUATION FUND TRANSFERRED TO NATIONAL PENSION

SCHEME
Any payment from an approved superannuation fund which is transferred to the NPS account of the employee
shall be exempt from tax.
INCOME OF CERTAIN NATIONAL FUNDS: SECTION 10(23C)

Income of swachh bharat kosh and clean ganga fund, set up by the central government shall be exempt from
income tax
EXEMPTION IN RESPECT OF INTEREST ON DEPOSIT CERTIFICATES UNDER GOLD MONETIZATION

SCHEME, 2015 : SECTION 10(15)
The interest on Deposit Certificates issued under the Gold Monetization Scheme, 2015, shall be exempt from
income-tax.
DIVIDENDS EARNED BY INDIVIDUAL OR HUF : SECTION 115BBDA

If individual, Hindu undivided family (HUF) or a firm who is resident in India earns dividend which is more than
`10 lakh then it shall be chargeable to tax at the rate of 10%. Further no deduction of expenses shall be
allowed and no set-off of loss shall be allowed to the assessee in computing the income by way of dividends.

EXAMPLE
A Ltd., a domestic company, declared dividend of `170 lakh for the year FY 2015-2016 and distributed the
same on 10/7/2016. Mr. X, holding 10% shares in A Ltd., receives dividend of `17 lakh in July, 2016. Mr. Y.
holding 5% shares in A Ltd., receives dividend of `8.50 lakh. Discuss the tax implications in the hands of Mr. X
and Mr. Y, assuming that Mr. X and Mr. Y have not received dividend from any other domestic company during
the year.
SOLUTION:
(1) The dividend of `110 lakh declared and distributed in the PY 2016-2017 is subject to dividend distribution
tax in the hands of A Ltd.
(2) In the hands of Mr. X, dividend received upto `10 lakh would be exempt under section 10(34). `7 lakh,
being dividend received in excess of `10 lakh, would be taxable @ 10% as per section 115BBDA. Such
dividend would not be exempt under section 10(34). Therefore, tax payable by Mr. X on dividend of `7 lakh
under section 115BBDA would be `72,100 [10% of `7 lakh + cess @ 3%].
(3) In the hands of Mr. Y, the entire dividend of `8.50 lakh received would be exempt under section 10(34),
since only dividend received in excess of `10 lakh would be taxable under section 115BBDA.
CHAPTER 14 : INCOME TAX RETURN

NA FILING OF INCOME TAX RETURN (ITR) :

SECTION 139(1)
if a person earns income which is exempt under
section 10(38) and taxable income of such person
before giving such exemption exceeds basic
exemption limit, he shall also be liable to file ITR on or
before the due date.
RETURN OF DECLARING THE LOSS : SECTION RETURN OF DECLARING THE LOSS : SECTION
139(3) 139(3)
(1) It is not mandatory to file a Return of Loss, as (3) It is not mandatory to file a Return of Loss, as
there is no taxable Income. However carrying there is no taxable Income. However carrying
forward of losses is not permitted unless the forward of losses is not permitted unless the
Return of Loss is submitted on or before due date. Return of Loss is submitted on or before due date.
(2) Losses of (4) Losses of
Non speculative Business u/s 72(1) Non speculative Business u/s 72(1)
Speculative Business u/s 73(2) Speculative Business u/s 73(2)
Capital Gains u/s 74 Capital Gains u/s 74
Losses from the activity of owning and Losses from the activity of owning and
maintaining of Race Horses u/s 74A maintaining of Race Horses u/s 74A
can be carried forward only if a Return of Loss is filed loss of the specified business
on or before the due date
referred to in section 35AD
can be carried forward only if a Return of Loss is filed
on or before the due date.

BELATED INCOME TAX RETURN: SECTION BELATED INCOME TAX RETURN: SECTION
139(4) 139(4)
If ITR is not filed within the time allowed u/s 139(1), If ITR is not filed within the time allowed u/s 139(1)
then the Assessing Officer can issue a notice then assessee can file ITR even after the due date of
requiring the assessee to furnish ITR within the time that section and such ITR shall be known as belated
specified by him/her. If the Return is not furnished Return.
within time allowed u/s 139(1) or within the time Belated ITR can be filed before:
allowed under notice issued by the Assessing Officer
still assessee can file ITR and such ITR shall be
a) the end of the relevant assessment
known as belated Return. year or
Belated ITR can be filed before: b) the completion of the assessment
(i) End of one year from the end of relevant AY or whichever is earlier.
(ii) Before completion of assessment
whichever is earlier.
REVISED INCOME TAX RETURN: SECTION 139(5) REVISED INCOME TAX RETURN: SECTION 139(5)
If assessee discovers any omission or wrong If assessee discovers any omission or wrong
statement (which have been incurred due to bona- statement in a ITR filed u/s 139 (1) or u/s 139(4) he /
fide mistake) in a Return filed u/s 139 (1) or u/s 142 she may furnish a revised ITR.
(1), he/she may furnish a revised Return. ITR can be revised before:
ITR can be revised:
1. Before the end of one year from the end of the
a) the end of the relevant assessment
relevant assessment year, or year or
2. Before the completion of assessment b) the completion of the assessment
whichever is earlier. whichever is earlier.
Belated ITR can not be revised
Belated ITR can be revised
DEFECTIVE INCOME TAX RETURN : SECTION DEFECTIVE INCOME TAX RETURN : SECTION
139(9) 139(9)
A Return of Income shall be regarded as defective A Return of Income shall be regarded as defective
unless all the following conditions are fulfilled, namely: unless all the following conditions are fulfilled, namely:
(1) The annexures, statements and columns in (1) The annexures, statements and columns in
the Return of Income relating to computation the Return of Income relating to computation
of Income chargeable under each head of of Income chargeable under each head of
Income, computations of gross Total Income and Income, computations of gross Total Income and
Total Income have been duly filled in. Total Income have been duly filled in.
(2) The Tax, together with interest, if any, payable in (2) The Tax, together with interest, if any, payable in
accordance with the provisions of Section 140A, accordance with the provisions of Section 140A,
has been paid on or before the date of furnishing has been paid on or before the date of furnishing
of the Returns. of the Returns.
If self assessment tax and its interest

has not been paid before filing of ITR
then ITR is not said to be defective ITR

CHAPTER 15 : TAX DEDUCTED AT SOURCE

Section Topic Exempted Exempted
amount for AY amount for AY
2016-2017 2017-2018
(From 1/6/2016)
192A Payment of accumulated balance due to an employee 30,000 50,000
194BB Winnings from Horse Race 5,000 10,000
194C Payments to Contractors Aggregate Aggregate
annual limit annual limit
of 75,000 of 1,00,000
194LA Payment of Compensation on acquisition of certain 2,00,000 2,50,000
Immovable Property
194D Insurance commission 20,000 15,000
194G Commission on sale of lottery tickets 1,000 15,000
194H Commission or brokerage 5,000 15,000
Section Topic TDS rate for AY TDS rate for AY

2016-2017 2017-2018
(From 1-6-2016)
194DA Payment in respect of Life Insurance Policy 2% 1%
194EE Payments in respect of NSS Deposits 20% 10%
194D Insurance commission 10% 5%
194G Commission on sale of lottery tickets 10% 5%
194H Commission or brokerage 10% 5%
Section Topics
194K Income in respect of Units To be omitted w.e.f. 1/6/2016
194L Payment of compensation on acquisition of capital assets To be omitted w.e.f. 1/6/2016
Provision for AY 2016-2017 Provision for AY 2017-2018
NO TDS IN CERTAIN CASES : SECTION 197A NO TDS IN CERTAIN CASES : SECTION 197A
No TDS shall be done under Section 192A , Section No TDS shall be done under Section 192A , Section
193, Section 194A, Section 194DA ,if 193, Section 194A, Section 194DA and
a) The payee is a person other than a company or a Section 194-I if
firm a) The payee is a person other than a company or a
b) Individual furnishes declaration in Form 15G (In firm
case of senior citizen in Form 15H) b) Individual furnishes declaration in Form 15G (In
c) Such declaration states that the individual has the case of senior citizen in Form 15H)
income tax liability as NIL. c) Such declaration states that the individual has the
income tax liability as NIL.

CHAPTER 16 : ADVANCE TAX AND

INTEREST PAYABLE TO THE GOVERNMENT
For the payment of advance tax u/s 211 For the payment of advance tax u/s 211
a) By company , 4 installments were used a) By company , 4 installments are used
b) By person other than company , 3 b) By person other than company ,4
installments were used. installments are used.
INSTALLMENTS OF ADVANCE TAX: SECTION 211
Part a) for all type of assessees other than those covered in part b)
DUE DATE OF AMOUNT PAYABLE
INSTALLMENT
On or before 15/06/PY 15% of Advance Tax payable
On or before 15/09/PY 45% of Advance Tax payable as reduced by any amount already paid.
On or before 15/12/PY 75% of Advance Tax payable as reduced by any amount already paid.
On or before 15/03/PY 100% of Advance Tax payable as reduced by the amount already paid.
Part b)
An assessee doing eligible business referred u/s 44AD can pay full amount of advance tax during each
financial year on or before the 15th March.
DEFERMENT IN PAYMENT OF ADVANCE TAX: SECTION 234C (from 1/6/2016)

If any person has not paid his advance tax on the due dates as mentioned in Section 211 then such person
has to pay interest under Section 234C
(1) The rate of interest shall be 1% per month or for part of the month.
(2) The period of interest shall be three months for every installment but for the last installment the period shall
be only one month.
(3)An assessee doing eligible business referred u/s 44AD who is liable to pay
advance tax u/s section 208 has failed to pay such tax or the advance tax paid
by the assessee on its current income on or before the 15th March is less
than the tax due on the returned income, then, the assessee shall be liable to
pay simple interest 1% on the amount of the shortfall from the tax due on the
returned income.
Comments
(1) No interest shall be levied in respect of any shortfall in the payment of Advance Tax if shortfall is due to
under-estimation or failure to estimate the amount of
Capital Gains
Casual Incomes such as lottery
PGBP in cases where the income accrues for the first time.
(2) No interest under Section 234C shall be charged if it has paid at least 12% of
Advance Tax during 1st installment and has paid at least 36% of Advance Tax
during 2nd instalment.

INTEREST PAYABLE BY GOVERNMENT TO ASSESSEE: SECTION 244A

Sometimes assessee pays income tax which is higher than his tax liability. In such a case he will get refund of
excess income tax paid by him. For this purpose he shall also be entitled to get interest at the rate of 0.5% per
month or part of month. The period for calculation of interest shall be determined as follows:
If ITR has been furnished on or before the due date u/s Period : Starting from the 1/4/AY to the date on
139(1) which the refund is granted
If ITR has not been furnished on or before the due date Period : Starting from the date of furnishing of
u/s 139(1) return of income to the date on which the refund
is granted
In case of refund of advance tax, income tax, TDS or TCS no interest shall be payable if the excess
amount is less that 10% of the income tax liability.
If the proceedings resulting in the refund are delayed due to acts of assessee the period of the delay
due to acts of assessee shall be excluded from the period for which interest is payable.
The period to be excluded shall be determined Commissioner of Income Tax and his decision shall be
final.
SECTION 244A(1)(aa) : REFUND IS FOR ANY TAX PAID UNDER SECTION 140A : WEF 1/6/2016
If refund is out of any tax paid under section 140A (i.e. self-assessment tax), such interest shall be calculated
at the rate of 0.5% for every month or part of a month for the period
Starting from the date of furnishing of ITR or Payment Of Tax, whichever is later
Ending on the date on which the refund is granted

AMENDMENTS FOR FINANCIAL YEAR 2016-2017 APPLICABLE FOR MAY 2017 EXAMS
AMENDMENTS UNDER INDIRECT TAX FOR THE

FINANCIAL YEAR 2016-2017
CENTRAL EXCISE DUTY
SSI EXEMPTION OF ` 6 With effect from 1/3/2016, excise duty of 1% (without CENVAT credit) or 12.5%
CRORE WITH AN (with CENVAT credit) has been levied on articles of jewellery [excluding silver
ELIGIBILITY LIMIT OF ` 12 jewellery, other than studded with diamonds / other precious stones]
CRORE FOR JEWELLERY
MANUFACTURERS The SSI exemption for such jewellery manufacturers would be upto `6 crore in
a year with an eligibility limit of `12 crore in the preceding year. Thus, a
jewellery manufacturer will be eligible for exemption from excise duty on first
clearances upto `6 crore during a financial year, if his aggregate domestic
clearances during preceding financial year did not exceed `12 crore.
ANNUAL RETURN In place of Annual Financial Information Statement [ER-4], an Annual Return
will have to be filed by central excise assessees by 30th November of the
succeeding year
REVISING OF CENTRAL The central excise return can now be revised by the end of the calendar month
EXCISE RETURN in which the original return is filed.
INTEREST PAYABLE ON Interest payable on delayed payment of excise duty has been reduced from
DELAYED PAYMENT OF 18% to 15%
EXCISE DUTY
CUSTOM DUTY
NO significant amendment for IPCC level has taken place
CENTRAL SALES TAX
SALE OF GAS When the gas sold or purchased and transported through
THROUGH A COMMON a) a common carrier pipeline or
CARRIER PIPELINE b) any other common transport or
c) distribution system
becomes co-mingled and fungible with other gas in the pipeline or system and such
gas is introduced into the pipeline or system in one State and is taken out from the
pipeline in another State
then such sale or purchase of gas shall be deemed to be a movement of goods from
one State to another.
VALUE ADDED TAX
NO amendment has taken place
AMENDMENTS FY 2016-2017 CA JS JOHAR - 8010921000 Page 22

SERVICE TAX
KRISHI KALYAN CESS A Krishi Kalyan Cess (KKC) will be levied as service tax @ 0.5% on the value of
Section 161 of the all taxable services. Therefore, w.e.f., 1/6/2016, the effective rate of service tax
Finance Act, 2016 would be 15% [14% + 0.5% SBC + 0.5% KKC]
A point to note here is that though CEN VAT credit of KKC would be available,
SBC will not be eligible for credit.
LOTTERY DISTRIBUTOR Transactions between the State Government and the distributors or selling
OR SELLING AGENT agents is on principal to agent basis. Thus, activity carried out by a lottery
distributor or selling agent of the State Government is leviable to service tax.
EDUCATIONAL Educational services removed from negative list but exemption continues
SERVICES through mega exemption notification.
Services provided by Institutes of Language Management (ILMs) are liable to

service tax
SERVICE TAX PAYABLE Service of transportation of passengers, with or without accompanied

ON PASSENGER belongings, by a air conditioned stage carriage would become taxable with effect
TRANSPORTATION BY from 1/6/2016. Abatement of 60% is allowed and value of services will be 40%.
AN AIR CONDITIONED
STAGE CARRIAGE
[SECTION 66D]
SERVICE TAX PAYABLE 1) Services by way of transportation of goods by an aircraft or a vessel from a
ON GOODS place outside India up to the customs station of clearance in India were
TRANSPORTATION BY A covered in negative list of services under section 66D. However this has been
VESSEL FROM A PLACE omitted and thus now it has been made liable to service tax.
OUTSIDE INDIA UP TO 2) However, service tax will not be payable on such services by an aircraft as the
THE CUSTOMS STATION same have been exempted under Mega Exemption Notification.
OF CLEARANCE 3) Therefore, services by way of transportation of goods by a vessel from a place
[SECTION 66D] outside India up to the customs station of clearance in India would be liable to
service tax.
4) The domestic shipping lines registered in India will have to pay service tax
under forward charge while the services availed from foreign shipping line by
a business entity located in India will get taxed under reverse charge at the
hands of the business entity.
SERVICES PROVIDED BY Service tax is payable under reverse charge in case of services provided by an
AN ARBITRAL TRIBUNAL arbitral tribunal (including the individual arbitrators of the tribunal) to business
entity with a turnover exceeding Rs.10 lakh in the preceding financial year

SERVICES PROVIDED BY GOVERNMENT OR LOCAL AUTHORITY : Section 66D(a)
Negative List All services provided by the Central Government or State Government or Local Authority are
in the negative list.
Services provided by the Department of Posts which are
(i) Services of basic mails like post cards, inland letters, book post, registered post
(ii) Services of money order, issue of postal orders, operations of savings account, pension
payments and other similar service
Services not (1) Services provided by the Department of Posts by way of speed post, express parcel
covered in post, life insurance and agency services provided to any person other than government
Negative list (2) Services in relation to a vessel or an aircraft inside or outside the precincts ( )
and thus liable
for service tax of a port or an airport.
(3) Transport of goods and / or passengers.
(4) Any services other than those covered by clauses (1) , (2) , (3) provided to business
entity.
Taxable if turnover of preceeding year is Not Taxable if turnover of preceeding
more than `10 lakhs year is less than or equal to `10 lakhs
CBEC has clarified the following aspects pertaining to the taxation of services provided by Government to
business entities
S.No. Issue Clarification
1. Services provider : Government or a Local Such services have been exempted. However, the said
Authority exemption does not cover services of (1), (2) and (3) of
Service Receiver : Another Government or a Section 66D mentioned above
Local Authority
2. Services provider : Government or a Local Services of grant of passport, visa, driving license, birth
Authority or death certificates have been exempted.
Service Receiver : An individual doing
profession or business Further, for services provided up to a taxable value of Rs.
5000 have been exempted. However, the said
exemption does not cover services of (1), (2) and (3) of
Section 66D mentioned above. Further, in case of
continuous service, the exemption shall be applicable
where the gross amount charged for such service does
not exceed Rs. 5,000 in a financial year.
3. Service tax on tax, cess or duty Tax, cess or duty levied are not consideration for service
and hence not leviable to service tax.
4. Service tax on fines and penalties Fines and penalty chargeable by Government or a local
authority imposed for violation of a law are not leviable to
service tax.
5. Services provided in lieu of fee charged by It is clarified that any activity undertaken by Government
Government or a local authority or a local authority against a consideration constitutes a
service and the amount charged for performing such
activities is liable to service tax.

Service tax is leviable on any payment for any

permission or license granted by the Government or a
local authority.
However, services provided by the Government or a

local authority by way
(i) registration required under the law;
(ii) testing, safety check or certification relating to
protection or safety of workers, consumers or public at
large have been exempted.
6. Services in the nature of allocation of natural Services by way of allocation of natural resources to an
resources by Government or a local authority individual farmer for the purposes of agriculture have
to individual farmers been exempted. Such allocations / auctions to
categories of persons other than individual farmers
would be leviable to service tax.
7. Services in the nature of change of land use, Services provided by Government or a local authority
commercial building approval, utility services have been exempted.
provided by Government or a local authority
8. Services provided by Government, a local Such services have been exempted.

authority or a governmental authority by way of
any activity in relation to any function entrusted
to a Panchayat
9. Whether service tax is payable on the interest Where payment for service is allowed to be deferred on
charged by Government or a local authority payment of interest, such interest shall be included in the
where the payment for assignment of natural value of the taxable service.
resources is allowed to be made under
deferred payment option ?
10. When and how will the allottee of the right to CENVAT credit of the service tax on one time charges
use natural resource be entitled to take (whether paid upfront or in installments) paid in a year,
CENVAT credit of service tax paid for such may be allowed to be taken evenly over a period of 3
assignment of right? (three) years.
Service tax paid on royalty in respect of natural

resources and any periodic payments shall be available
as credit in the year in which the same is paid.
CENVAT credit may be taken even after the period of 1

year from the date of issue of such a document in case
of services provided by the Government or a local
authority or any other person by way of assignment of
right to use any natural resource.

POINT OF TAXATION
Rule 7 : In case the person is required to pay service tax under the concept of reverse charge:
POT will be
whichever is earlier. a) date of payment or
b) first day that occurs immediately after the period of 3 months from date of invoice.
However , when there is change in the rate of service tax POT date will be date of issue of invoice if
both of these conditions are satisfied :
a) service has been provided and the invoice issued before the date of such change
b) but payment has not been made as on the date of such change
Rule 7 : In case of services provided by the Government or local authority to any business entity, the
POT shall be the earlier of the dates on which
(a) any payment for service becomes due as per invoice, bill, challan or any other document issued by
the Government or local authority demanding payment
(b) payment for such services is made.
VALUATION OF TAXABLE SERVICE

In case of service provided by Government to a business entity, interest chargeable on deferred payment
to be included in the value of the taxable service [Rule 6]
Interest on delayed payment of any consideration for the provision of services or sale of property is not included
in the value of the taxable service.
A proviso has been inserted in Rule 6 : The interest chargeable on deferred payment in case of any service
provided by Government or a local authority to a business entity, where payment for such service is allowed to
be deferred on payment of interest, will be included in the value of the taxable service.
EXEMPTIONS AND ABATEMENTS

FOLLOWING SERVICES HAVE BEEN EXEMPTED :
Services provided by the Indian Institutes of Management (IIM) to their students, by way of the following
educational programmes relating to
a. two year full time residential Post Graduate Programmes in Management for the Post Graduate Diploma in
Management, to which admissions are made on the basis of Common Admission Test (CAT), conducted by
Indian Institute of Management
b. fellow programme in Management
c. five year integrated programme in Management
Services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill
Development and Entrepreneurship by way of assessments under Skill Development Initiative (SDI) Scheme.
Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya
Grameen Kaushalya Yojana under the Ministry of Rural Development by way of offering skill or vocational
training courses certified by National Council For Vocational Training.
LIMIT ENHANCED : Threshold limit of consideration charged per performance in folk or classical art forms of
music / dance / theatre raised from `1,00,000 to `1,50,000

GENERAL INSURANCE :
1) Services Under 'Niramaya' Health Insurance Scheme implemented by Trust constituted under the provisions
of the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple
Disabilities Act, 1999 , have been exempted.
2) Services of life insurance business provided by way of annuity under the National Pension System (NPS) has
been exempted.
SERVICES BY SPECIFIED BODIES EXEMPTED

1) Services by Employees State Insurance Corporation to persons governed under the Employees Insurance
Act, 1948.
2) Services provided by Employees' Provident Fund Organisation (EPFO) to persons governed under the
Employees' Provident Funds and Miscellaneous Provisions Act, 1952
3) Services provided by Insurance Regulatory and Development Authority of India (IRDA) to insurers under the
Insurance Regulatory and Development Authority of India Act, 1999
4) Services provided by Securities and Exchange Board of India (SEBI) by way of protecting the interests of
investors in securities and to promote the development of, and to regulate, the securities market.
5) Services provided by National Centre for Cold Chain Development under Ministry of Agriculture, Cooperation
and Farmer's Welfare by way of cold chain knowledge dissemination.
CHARITABLE ACTIVITIES : Yoga included in the definition of charitable activities

Services by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable activities
are exempt from service tax. The definition of charitable activities includes activities relating to advancement
of religion or spirituality. Now yoga has also been included in the defination.
Thus, services relating to advancement of yoga provided by charitable entities registered under section I2AA of
the Income-tax Act, 1961 will not be liable to service tax e.g., service tax will not be payable on fee charged for
yoga camps conducted by charitable trusts.
MERCHANT OVERTIME CHARGES : Services provided by Government by way of deputing officers after office
hours or on holidays for inspection or container stuffing or such other duties in relation to import export cargo on
payment of Merchant Overtime charges (MOT) has been exempted.
EXEMPTION IN RESPECT OF SERVICES PROVIDED BY A SENIOR ADVOCATE

The comparative position prior to and post amendment in Entry 6 has been illustrated in the following table
Services provided by Whether exempted from service tax?

Prior to amendment Post amendment

An arbitral tribunal to
(i) any person other than a business entity; or
(ii) a business entity with a turnover up to 10 lakh in the
preceding financial year.

A partnership firm of advocates or an individual advocate
other than senior advocate by way of legal services to
(i) an advocate or partnership firm of advocates providing
legal services;
(ii) any person other than a business entity; or
(iii) a business entity with a turnover up to 10 lakh in the
preceding financial year.

A senior advocate by way of legal services to an advocate or
partnership firm of advocates providing legal services. X


A senior advocate by way of legal services to a person other
than business entity, i.e. a person ordinarily carrying out any
activity relating to industry, commerce or any other business
or profession.

A senior advocate by way of legal services to a business
entity with a turnover up to 10 lakh in the preceding financial X
year.

A person represented on an arbitral tribunal to an arbitral
tribunal. X
ROPEWAY, CABLE CAR OR AERIAL TRAMWAY : Exemption to transportation of passengers by ropeway,
cable car or aerial tramway withdrawn.
ABATEMENTS
Description of taxable service % of abatement
Prior After
Transport of goods in containers by rail by any person other than Indian 70 60
Railways
Services of GTA in relation to transportation of used household goods 70 60
Other services
Transport of passengers, with or without accompanied belongings, by a Earlier the 60
stage carriage service was
exempt
Services provided by a foreman of chit fund in relation to chit Nil 30
Services by a tour operator in relation to, 90 90
(i) a tour, only for the purpose of arranging or booking
accommodation for any person
(ii) a tour other than (i) above 75 70
SERVICE TAX PROCEDURES

INTEREST TO BE PAYABLE AT A SEPARATE RATE ON SERVICE TAX COLLECTED BUT NOT PAID
[SECTION 75] : If any person has failed to pay to the credit of Central Government within the prescribed time
period, such person shall pay interest for the period of delay at the rate of minimum 10% and maximum 36%pa.
(rate to be fixed by the government between 10% and 36%). Further in the case of a service provider, whose
value of taxable services provided in the preceding financial year is up to `60 Lakhs, rate of interest shall be
reduced by 3%. Interest rates are:
Situation Rate of simple interest
Service tax collected but not paid to the central government on or before due date 24%
Other Service tax dues 15%
ONE PERSON COMPANY : Facility of quarterly payment of service tax and payment of service tax on receipt
basis extended to OPC having service turnover upto `50 lakh in the previous financial year and (b) quarterly
payment of service tax extended to HUF

SPECIAL RATES FOR PAYMENT OF SERVICE TAX : [Rule 6(7A)] LIFE INSURANCE BUSINESS
Composition rate in case of single premium annuity policies to be 1.4% of the single premium charged
KRISHI KALYAN CESS : KKC = value of services / 14 X 0.5
PROVISIONS INTRODUCED FOR FILING OF ANNUAL RETURNS [RULE 7]

1) Every assessee has to file annual service tax return in addition to half yearly return.
2) Rule 7(3A) : Every assessee will have to submit an annual return for the financial year by the 30th day of
November of the succeeding financial year. The form and manner of filing the return will be specified in the
notification by the CBEC.
3) Rule 7(3B) : Central Government may exempt an assessee or class of assessees from filing such annual
return.
4) Rule 7(4) : CBEC can extend the due date for filing of Annual Return under circumstances of special nature.
5) Rule 7B(2) : Annual return filed by the due date may be revised within 1 month from the date of its submission
6) Rule 7C(2) : Delayed filing of Annual Return to attract a late fee of Rs.100 per day for the period in default
subject to a maximum of Rs. 20,000.
REVERSE CHARGE MECHANISM

THE REVERSE CHARGE MECHANISM SHALL APPLY IN FOLLOWING CASES
% of service tax
% of service tax payable person liable
Description of services payable by to pay service tax
service provider other than service
provider
WEF Services provided or agreed to be NIL 100%
1/4/2016 provided by a selling or marketing agent
of lottery tickets to a lottery distributor or
selling agent of the State Government.
WEF Services provided or agreed to be NIL 100%
1/4/2016 provided by a firm of advocates or an Service provider is an Service receiver is any
individual advocate other than a senior Individual business entity.
advocate by way of legal services
WEF Services provided by the government or NIL 100%
1/4/2016 local authority excluding Service provider is Service receiver is any
1) renting of immovable property Govt. or local authority business entity located
2) services specified in sub-clauses (i), in taxable territory.
(ii) and (iii) of clause (a) of section
66D of Finance Act, 1994

CENVAT CREDIT
DEFINITION OF CAPITAL GOODS : [RULE 2(a)]

The scope of definition of capital goods has been widened to include:
(a) Wagons falling under sub-heading 8606 92 of the Central Excise Tariff
(b) Equipment or appliance used in an office located within a factory - It may be noted that CENVAT credit will
be allowed only on those equipment or appliance which are used in an office located within the factory and
not outside the factory.
(c) Capital goods used outside the factory of the manufacturer of the final products for pumping of water, for
captive use within the factory.
DEFINITION OF INPUTS : [RULE 2(k)]

The scope of definition of inputs has been widened to include:
(a) All goods used for pumping of water for captive use.
(b) All capital goods which have a value up to Rs.10,000 per piece.
DEFINATION OF INPUT SERVICES : [RULE 2(l)]

Services by way of sale of dutiable goods on commission basis is sales promotion and thus, an eligible input
service
RULE 3 :
1) Ship breaking units would be entitled to avail 100% credit of the CVD paid.
2) Output Service provider allowed to take CENVAT credit of the KKC on taxable services
3) SBC and KKC cannot be paid by utilizing CENVAT credit of any duty or service tax
4) Credit of KKC to be utilized only for payment of KKC
5) CENVAT credit of only NCCD to be utilised for payment of the NCCD payable on all goods.
6) CENVAT credit not to be used for payment of non CENVATabIe infrastructure cess
With effect from 1/3/2016, the Finance Act, 2016 has imposed an infrastructure cess, as a duty of excise on
motor vehicles falling under heading 8103. A ninth proviso has been inserted in rule 3(4) to provide that
CENVAT credit cannot be utilised for payment of this infrastructure cess. Further, no credit of this cess would
be available under the CENVAT Credit Rules, 2004.
RULE 4 :
1) Jewellery manufacturer (excluding manufacturer of plain silver jewellery) with turnover upto `12 crore in
preceding year eligible to avail 100% CENVAT credit on capital goods in the year of purchase. An assessee
whose aggregate value of clearances of all excisable goods for home consumption in the preceding financial
year does not exceed `4 crores (computed in accordance with SSI notification), can take 100% CENVAT
credit on capital goods in the financial year when the same are received by him.

2) CENVAT credit is allowed on jigs, fixtures, moulds, dies and tools of Chapter 82 of the Central Excise Tariff
sent to another manufacturer or job-worker for production of goods according to his specifications.
3) Earlier, under rule 4(6), the permission given by an Assistant / Deputy Commissioner to a manufacturer of the
final products for sending inputs or partially processed inputs outside his factory to a job-worker and clearance
therefrom on payment of duty was valid for a financial year. Rule 4(6) has been amended to provide that the
said permission would be valid for three financial years.
4) Service tax paid on assignment charges of a natural resource to be allowed as CENVAT credit spread evenly
over a period of 3 years.
5) In case of services provided by the Government or a local authority by way of assignment of right to use any
natural resource, CENVAT credit can be taken even after the period of 1 year from the date of issue of such
a document.
6) CENVAT credit of service tax paid in a financial year, on the one time charges payable in full upfront or in
installments, for the service of assignment of the right to use any natural resource by the Government, local
authority or any other person, will be spread evenly over a period of three years.

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TAXATION AMENDMENTS

APPLICABLE FOR MAY 2017 EXAM

FACE TO FACE CLASSES IN DELHI

SATELLITE CLASSES ACROSS INDIA

AMENDMENTS UNDER INCOME TAX FOR THE

CHAPTER 2 : RESIDENTIAL STATUS

Company is said to be resident if Company is said to be resident if

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 1

CHAPTER 3 : INCOME TAX CALCULATION

CLARIFICATIONS REGARDING ATTAINING PRESCRIBED AGE OF 60 / 80 YEARS ON 31st MARCH

Calculation of income tax liability for AY 2017-2018 ie PY 2016-2017

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 2

CHAPTER 4 : AGRICULTURE INCOME

CHAPTER 5 : INCOME FROM SALARY

EMPLOYERS CONTRIBUTION TO APPROVED EMPLOYERS CONTRIBUTION TO APPROVED

Perquisite includes employers contribution to an Perquisite includes employers contribution to an

CHAPTER 6 : INCOME FROM HOUSE PROPERTY

amount shall be chargeable to tax under the head

CHAPTER 7 : INCOME FROM BUSINESS OR PROFESSION

ADDITIONAL DEPRECIATION ON NEW PLANT OR ADDITIONAL DEPRECIATION ON NEW PLANT OR

INCENTIVE FOR ACQUISITION AND INCENTIVE FOR ACQUISITION AND

INVESTMENT-LINKED TAX INCENTIVE FOR SPECIFIED BUSINESSES : SECTION 35AD : 100%

PROVISION FOR AY 2016-2017 PROVISION FOR AY 2017-2018

DEDUCTION OF EXPENSES ON THE PAYMENT DEDUCTION OF EXPENSES ON THE PAYMENT

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 5

e) Payment of leave encashment to employee. k) Payment of leave encashment to employee.

Depreciation under section 32

Section 36 : PROVISIONS OF BAD DEBTS: Section 36 : PROVISIONS OF BAD DEBTS:

COMPULSORY AUDIT OF ACCOUNTS IN COMPULSORY AUDIT OF ACCOUNTS IN

PRESUMPTIVE TAXATION : SECTION 44AD : PRESUMPTIVE TAXATION : SECTION 44AD : ALL

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 6

NEW CONCEPTS FROM AY 2017-2018 UNDER SECTION 44AD

Example: Mr. A is an eligible assessee and claims to be taxed on presumptive

Section 44AD(5) : Assessee to whom section 44AD(4) are applicable and

NEW SECTIONS FROM AY 2017-2018

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 7

TAX TREATMENT FOR SPECTRUM FEE : SECTION 35ABA

Transaction Manner of deduction

2. Transfer of the spectrum

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 8

Consequences of failure to comply with the conditions after grant deduction

CHAPTER 8 : INCOME FROM CAPITAL GAINS

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 9

THIRD PROVISO OF SECTION 48 THIRD PROVISO OF SECTION 48

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 10

NEW CONCEPTS FROM AY 2017-2018

COST OF ACQUISITION OF AN ASSET DECLARED UNDER THE INCOME DECLARATION SCHEME,

CII for the AY 2016-2017 i.e. PY 2015-2016 is 1125

SECTION 50C : FULL VALUE OF CONSIDERATION

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 11

SECTION 54GB : EXEMPTION OF LONG-TERM CAPITAL GAIN TAX ON TRANSFER RESIDENTIAL

CHAPTER 9 : INCOME FROM OTHER SOURCES

CHAPTER 10 : CLUBBING OF INCOME

CHAPTER 11 : SET OFF AND CARRY FORWARD OF LOSSES

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 12

CHAPTER 12 : DEDUCTION FROM GROSS TOTAL INCOME

-- INTEREST ON LOAN FOR ACQUIRING

DEDUCTION IN RESPECT OF THE EMPLOYMENT OF THE NEW WORKERS : SECTION 80JJAA

DEDUCTION IN RESPECT OF THE EMPLOYMENT OF THE NEW WORKERS : SECTION 80JJAA

BUSINESS OF ELIGIBLE START UP : SECTION 80-IAC

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 14

DEDUCTION IN RESPECT OF PGBP INCOME HOUSING PROJECTS: SECTION 80-IBA

e) the project is on a plot of land measuring not less than

AMENDMENTS AY 2017-2018 CA JS JOHAR - 8010921000 Page 15