- Assistance Central/ State Government of any
other authority in the form of subsidy/ grant/ cash incentive/ duty
drawback/ waiver/ concession/ reimbursement [other than those which are
reduced from the cost of asset as per Explanation 10 to section 43(1) of
the Income-tax Act, 1961 (the Act)], are now included under the definition
of 'income' under section 2(24) of the Act.
- In case of shares acquired by a
non-resident on redemption of Global Depository Receipts, the period of
holding would be considered from the date on which a request for such
redemption is made. Furthermore, the cost of acquisition of such shares
shall be the price of such shares as prevailing on any recognised stock
exchange on the date on which a request for redemption is made.
- The words, 'at any time', have been
deleted from the residency test for companies. Thus, the apprehensions
regarding a foreign company being considered as 'resident' in India, even
if one meeting is held in India, have been addressed.
- The conditions as proposed in clauses (e)
to (g) under section 9A(3) of the Act, to qualify as an eligible
investment fund (in the context of fund management activity not
constituting business connection in India), will not apply to investment
funds set up by the Government/ Central Bank of a foreign state or a
sovereign fund, or such other fund as may be notified. Furthermore, the
Board will prescribe guidelines in relation to the manner in which
provisions of above proposed section 9A should be applied.
- Additional depreciation @ 35% and
Additional Investment Allowance (under section 32AD of the Act) extended
to manufacturing undertaking set up in notified backward areas of Bihar
and West Bengal (in addition to Andhra Pradesh and Telangana) subject to
fulfilment of conditions prescribed therein.
- The condition of acquisition of asset ‘for
extension of existing business or profession’ to disallow
interest on borrowed capital under section 36(1)(iii) of the Act has been
omitted. The disallowance will apply to all qualifying assets, and not
merely to those that are acquired for extension of existing business or
profession.
- Amount taken into income computation on the
basis of Income Computation and Disclosure Standards without recording the
same in the books of accounts, are proposed to be allowed as bad debts in
the year in which they become irrecoverable without actual write off in
the books of accounts.
- It has been clarified that the additional
deduction of INR 50,000 in respect of employee's contribution to pension
fund would be available, irrespective of whether deduction upto 10% of
salary (within an overall limit of INR 1,50,000), is claimed or not.
- Income of a foreign company in respect of
capital gains on transactions in securities (as defined under Securities
Contract Regulation Act), interest, royalty and fees for technical
services (as well as corresponding expenses) to be excluded while
computing income under minimum alternate tax (MAT) provisions, if tax
payable thereon is less than 18.5%.
- The following are proposed to be excluded
from chargeability to MAT:
- notional gain/ loss resulting from transfer of shares of SPV to a business trust in exchange of units allotted by that trust
- notional gain/ loss resulting from any change in carrying amount of said units; and
- actual gains/ loss from transfer of said units as recorded in profit and loss account - Furthermore, a new clause is proposed to be
inserted to compute the book gain/ loss from transfer of said units which
shall be subject to MAT. The amount of gain/ loss from transfer of said
units is proposed to be computed by taking into account the cost of shares
exchanged with units or the carrying amount of the shares at time of
exchange, where such shares are carried at a value other than the cost
through profit and loss account.
- Beneficial owner holding an asset outside
India or having signing authority for any account located outside India or
a beneficiary of such asset, being resident other than not ordinarily
resident, is required to file a return of income in India. However, filing
of return shall not be mandatory for the beneficiary, if income from such
asset is includible in the income of the beneficial owner of such an
asset.
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