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LATEST AMENDMENTS FOR A.Y. 2019-20 BY FINANCE ACT, 2018
Applicable for May, 2019 and November, 2019 Attempt

[I.] BASIC CONCEPTS:

(1.) Tax Rates for A.Y. 2019-20 for Individuals / HUFs / AOPs / BOIs / Artificial Juridical Person (AJP): No
changes have been made.

(2.) Surcharge: No changes have been made.

(3.) Education Cess: shall now be replaced by ‗Health and Education Cess @ 4% of [Tax (+) Surcharge].

(4.) Rebate u/s 87A: shall be up to ` 2,500/-, but shall not be available on tax on LTCG u/s 112A.

(5.) Tax Rates for Companies:

[A.] For Domestic Company (Indian Company): The tax rate for Domestic Companies for A.Y. 2019-20 shall be as
follows:

If Turnover or Gross Receipts or Sales in the P.Y. 2016-17 was up to ` 250 25% of Total Income (New)
Crore
In any other case 30% of Total Income

[B.] For Foreign Company: The tax rate shall be 40% of NTI. (No changes have been made)

(6.) Section 2(22)(e): Deemed Dividend: Private Company giving loan to its substantial shareholder (holding >
10% shares of such company beneficially) is deemed as dividend in the hands of shareholder to the extent of
accumulated profits of the company. Now, if there is an amalgamation of such company, then the
accumulated profits of the amalgamated company shall include the accumulated profits of the amalgamating
company also.

(7.) Section 2(24)(xiia): Income: the definition of income shall now include ‗the FMV of inventory referred to
in Section 28(via)‘. In other words, if stock in trade of the business of the assessee is converted into capital
asset, then the difference between ‗FMV of such inventory as on the date of its conversion into capital asset‘
and ‗the cost of such inventory‘, shall be deemed to be the income.
(8.) Section 2(24)(xiib): Income: the definition of income shall now include ‗the compensation referred to in
section 56(2)(xi).‘ In other words, any compensation received by a person for termination of his employment
shall be deemed to be his income.

(9.) Section 9(1)(i):

(a.) Explanation 2(a): Meaning of P.E. (‘Commissionaire Arrangement’ to constitute PE in India):
Permanent Establishment (PE) of a Non-Resident shall include ‗an Agent who has and habitually exercises in
India, an authority to conclude contracts on behalf of the non-resident or habitually concludes contracts or

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habitually plays the principal role leading to conclusion of contracts by that non-resident and the contracts
are—
(i) in the name of the non-resident; or
(ii) for the transfer of ownership of, or for the granting of the right to use, property owned by that non-resident
or that non-resident has right to use; or
(iii) for the provision of services by the non-resident.
(This is done in accordance with the BEPS Action Plan 7 of OECD)

(b.) New Explanation 2A: ‘Significant Economic Activity in India’ to constitute Business Connection in
India: For the removal of doubts, it is hereby clarified that the significant economic presence of a non-resident
in India shall constitute ‗Business Connection‘ in India and ‗Significant Economic presence‘ for this purpose
shall mean—
(a) transaction in respect of any goods, services or property carried out by a non-resident in India including
provision of download of data or software in India, if the aggregate of payments arising from such transaction
or transactions during the previous year exceeds such amount as may be prescribed; or
(b) systematic and continuous soliciting of business activities or engaging in interaction with such number of
users as may be prescribed, in India through digital means:

Provided that the transactions or activities shall constitute significant economic presence in India, whether or
not the non-resident has a residence or place of business in India or renders services in India:

Provided further that only so much of income as is attributable to the transactions or activities referred to in
clause (a) or clause (b) shall be deemed to accrue or arise in India.’.

(This is done in accordance with the BEPS Action Plan 1 of OECD on ‗Digital Economy‘)

[II.] SPECIAL RATES OF TAX:

(1.) Section 115AD: Tax Rates for FII: LTCG on transfer of Securities covered by Section 10(38) were exempt for FIIs
also. Now, due to omission of Section 10(38), such LTCGs shall now be taxable. If LTCG on transfer of Securities is
covered by Section 112A, then such LTCG exceeding ` 1 Lakh shall be taxable @ 10% and if such LTCG on transfer of
Securities is not covered by Section 112A, then shall be taxable @ 10% only (but without any exclusion of first ` 1 Lakh)

(2.) Section 115BA: (w.r.e.f. 01-04-2016): Tax Rate applicable to a Domestic Company engaged in only manufacturing
business on incomes other than incomes covered by Section 111A (Special STCG) and Section 112 (LTCG) is 25%. Now,
with retrospective effect from 01-04-2016, the language is slightly changed. Instead of ―incomes other than those covered
by Section 111A (Special STCG) and Section 112 (LTCG)‖, it shall be substituted with ―income other than those which
are covered by other provisions of Chapter – XII‖.

[III.] SPECIAL PROVISIONS FOR STOCK MARKET TRANSACTION:

(1.) Section 10(38): deleted and replaced by Section 112A.

(2.) SECTION 112A: w.e.f. A.Y. 2019-20: Long Term Capital Gain arising on transfer of an asset being:

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(a.) Equity Shares of a Company (only Equity Shares and not Preference Shares), or
(b.) Units of an Equity Oriented Fund, or
(c.) Unit of a Business Trust

exceeding ` 1 Lakh will be taxable @ 10%, provided the following conditions are satisfied:

(1.) Such transfer takes place on / after 01-04-2018 and

(2.) (a.) If the Long Term asset is Equity Share in a Company, then Securities Transaction Tax (STT) has been
paid both at the time of acquisition as well as at the time of transfer of such shares;
(b.) If the Long Term asset is Units of Equity Oriented Fund or Unit of a Business Trust, then STT has been
paid at the time of transfer

Note: This condition of STT shall not apply to a case where the transfer takes place on a Recognized Stock
Exchange located in an ‗International Financial Service Center (IFSC)‘ and the consideration for such
transfer is received or receivable in foreign currency. – Sec. 112A(3)

Section 112A(4): The condition for Equity shares that even acquisition transaction has also been subjected to
‗Securities Transaction Tax (S.T.T.)‘, does not apply in those situations where STT could not have been paid like
shares acquired in an IPO (Initial Public Offer) or FPO (Follow on Public Offer), Bonus issue, Right issue by a
listed company or acquisition by Non-Residents in accordance with FDI policy of Govt. or any other transfer as
may be notified by Govt. / CBDT [For the list of such transfers notified by CBDT, refer to Notification F. No.
43/2017/F. No. 370142/09/2017-TPL, dated 05.06.2017].

(this condition does not apply to units, it‘s only for Equity shares)

Notes:

1. For the purpose of Section 112A, the LTCG shall be computed without claiming the benefit of the First Proviso
(computing LTCG in foreign currency) and Second Proviso (Indexation Benefit) to Section 48– Section 112A(5).
2. For the purpose of Section 112A, the LTCG shall be computed without claiming the benefit of deductions under
Chapter VIA of the Act – Section 112A(7).
3. The Rebate u/s 87A shall not be allowed on the amount of tax computed on LTCG u/s 112A -- Section 112A(8).
4. In case if assessee has any other income also, in addition to such LTCG referred to in Section 112A, then other
incomes shall be charged to tax as per normal rates applicable to that assessee and LTCG referred to in Section
112A shall be charged to tax at a flat rate of 10%. The total tax shall then be increased by applicable rate of
Surcharge and Health & Education Cess.
5. In case of Resident Individuals / HUF (only Resident), if other incomes other than such LTCG referred to in
Section 112A, is less than the Basic Exemption limit, then unexhausted basic exemption limit shall be adjusted
against such LTCG u/s 112A (exceeding ` 1 Lakh) and only balance of such LTCG shall be charged to tax at
special rate of 10%.
6. „Equity Oriented Fund‟ means:
(a.) that Fund under a scheme of a Mutual Fund, where the investible funds are invested in Equity Shares of
companies to the extent of more than 65 % of the total funds;
(b.) If the given fund invests in the Units of another fund, which is traded on a Recognized Stock Exchange, then
it will be called as an Equity Oriented Fund, if such fund invests a minimum 90% of the total proceeds of
such fund in the Units of such other fund and such other fund invests a minimum 90% of its total proceeds in
the Equity Shares of domestic companies listed on a Recognized Stock Exchange.
The above mentioned calculation of the percentage of shareholding shall be computed with reference to
the annual average of the monthly averages of the opening and closing figures. – Explanation to Section
112A

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7. Section 112A(6): Grandfathering of the Cost of Acquisition: [Read with Section 55(2)(ac)]: For the purpose of
calculating LTCG u/s 112A, the Cost of Acquisition of the Long Term asset acquired on / before 31-01-2018
shall be higher of:
(a.) The actual Cost of Acquisition; and
(b.) The lower of:
(i.) The FMV as on 31-01-2018; or
(ii.) The actual Sale Consideration received or accruing as a result of such transfer.

Note: FMV as on 31-01-2018 means:

(i.) In a case where the capital asset is listed on any Recognised Stock Exchange (RSE): the highest price
of such capital asset on such RSE as on 31-01-2018. However, if there was no trading in such capital
asset on a RSE on 31-01-2018, then FMV would mean the highest price of such capital asset on such
RSE on a date immediately preceding 31-01-2018 when such asset was traded on such RSE.
(ii.) In case where such capital asset is a Unit and is not listed on a RSE, then FMV would mean the Net
Asset Value (NAV) of such Unit as on 31-01-2018.
(iii.) In case where such capital asset is an Equity Share of a Company which is-

 not listed on a RSE as on 31-01-2018, but is listed on the date of transfer; or

 listed on a RSE as on 31-01-2018 and such Equity Share became property of the assessee in
consideration of a share which is not listed on a RSE as on 31-01-2018 by way of transaction not
regarded as transfer under Section 47,

FMV as on 31-01-2018 would mean an amount which bears to the cost of acquisition the same proportion as
Cost Inflation Index for the financial year 2017-18 bears to the Cost Inflation Index for the first year in which
the asset was held by the assessee or for the year beginning on the first day of April, 2001, whichever is later.

[IV.] EXEMPT INCOMES: SECTION 10:

(1.) Section 10(6D): any income arising to a non-resident (not being a company), or a foreign company, by way of
royalty from, or fees for technical services rendered in or outside India to, the National Technical Research
Organisation shall be exempt.
(2.) Section 10(12A): Exemption for withdrawal from National Pension System (NPS) was allowed only to an
assessee being an ―employee‖, now this exemption shall be available to all the subscribers. The word ―employee‖
used in Sec. 10(12A) shall be substituted by ―assessee‖. (Exemption u/s 10(12A) is available at the time of
closure of his NPS account or at the time of opting out of the scheme and exemption shall be an amount equal to
40% of the amount payable to such person at the time of closure of his account or at the time of opting out of the
scheme).
(3.) Section 10(23C): 13th Proviso to Section 10(23C): (according to clause (a) of the third proviso to Section
10(23C), the given Fund / Institution / University, etc is required to apply its income wholly and exclusively to
the objects for which it is established). For the purpose of determining the amount of application of income of a
Fund / Institution / University / Educational institution / Hospital / Medical Institution, referred to in Section
10(23C), the provisions of Section 40(a)(ia) and the provisions of Section 40A(3) / (3A) shall apply as applicable
for computing income under the head PGBP.
(4.) Section 10(38): will no more be available for transfer of the capital asset on / after 01/04/2018. – Fourth Proviso
to Section 10(38) (Such LTCG will now be taxable @ 10% as per Section 112A for an amount exceeding ` 1
Lakh)
(5.) Section 10(48B): According to Section 10(48A), any income accruing or arising to a Foreign Company from
storage of crude oil in a facility in India and sale of crude oil there from to any person resident in India in Indian
currency shall be exempt, if such storage and sale is pursuant to agreement / arrangement entered into or
approved by the GoI. Section 10(48B) provides that the income from sale of leftover stock of crude oil after
expiry of the agreement will also be exempt. However, Section 10(48B) provides exemption from sale of crude
oil after expiry of the agreement. It does not clarify the position of exemption, in a case where the sale is after

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termination of the agreement instead of sale after expiry of the agreement. Now, Section 10(48B) has been
amended to provide that the income from sale of crude oil from the leftover stock after termination of agreement /
arrangement will also be exempt.

[V.] DDT:
(1.) Proviso to Section 115-O(1): DDT was not applicable on deemed dividend referred to in Section 2(22)(e), but shall
now be applicable and that too @ 30% as compared to 15% on other dividends.
(2.) Proviso to Section 115-O(1B): grossing up principle given in Section 115-O(1B) shall not apply to deemed
dividends referred to in Section 2(22)(e).
(3.) Accordingly, such deemed dividends referred to in Section 2(22)(e), will now be fully exempt u/s 10(34). The
provisions of Section 115BBDA (taxing dividends exceeding ` 10 Lakhs @ 10% in the hands of specified resident
assessee) will not apply to such deemed dividends referred to in Section 2(22)(e).

[VI.] IDT:
(1.) Section 115R: Income distribution from Equity Oriented Fund were not subjected to Income Distribution Tax (IDT)
earlier, they shall now be subjected to IDT @ 10% (+) compulsory SC @ 12% (+) HEC @ 4%. (subject to Grossing up
principle)

[VII.] TDS:
(1.) Section 193: No TDS on interest on 7.5% Savings (Taxable) Bonds, 2018, apart from interest on 8% Savings
(Taxable) Bonds, 2003.
(2.) Section 194A: The threshold limit for TDS on Interest other than interest on Securities is ` 10,000 in a year if the
payer is a Bank or is ` 5,000 in a year in case of any other payer. Out of these two limits, the limit of ` 10,000 (in case
where payer is a bank) has been increased from ` 10,000 to ` 50,000, but only if the payee is a resident senior citizen. The
other limit of ` 5,000 (for other payers, other than a bank) will continue to remain same.

[VIII.] MINUMUM ALTERNATE TAX (MAT):

(1.) Explanation 1 to Section 115JB: While calculating Book Profit for the purpose of MAT, certain items are to be
subtracted. One of the items to be subtracted is: “Lower of (a.) b/f Loss (excluding unabsorbed depreciation or (b.) b/f
unabsorbed depreciation” . Now, w.e.f. A.Y. 2019-20: For a Company against whom an application for Corporate
Insolvency Resolution process has been admitted by the Adjudicating Authority u/s 7 / 9 / 10 of Insolvency and
Bankruptcy Code, 2016: the aggregate amount of „b/f Unabsorbed Depreciation‟ and „b/f Losses‟, both shall be
allowed to be subtracted as against only the lower of the two for other companies.

(2.) Explanation 4A to Section 115JB: (introduced by Finance Act, 2018), w.r.e.f. A.Y. 2001-02, the provisions of this
Section shall not be applicable and shall be deemed to have never been applicable to Foreign Company if the total
income of the Foreign Company comprises solely of Profits and Gains from business referred to in Section 44B / 44BB
/ 44BBA / 44BBB and such income has been offered to tax at the rates specified in those Sections.

[IX.] ALTERNATE MINUMUM TAX (AMT):

(1.) Section 115JC(4): The rate of AMT for a Unit located in an International Financial Service Centre (IFSC) deriving
income solely in convertible foreign currency shall be 9 % instead of 18.5%.

[XI.] PUBLIC CHARITABLE AND RELIGIOUS TRUSTS:

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(1.) Explanation 3 (New) to Section 11: While determining the amount of application of income u/s 11(1), the provisions
of Section 40(a)(ia) [disallowance of 30% of the amount paid without compliance of TDS provisions] and the provisions
of Section 40A(3) / (3A) [disallowance of cash expenditure exceeding ` 10,000 in one single day to one single person]
shall be applicable.

[XII.] ASSESSMENT PROCEDURE:

(1.) Section 139A: Permanent Account Number (PANo.): Apart from existing 4 persons, two more persons required to
apply for PANo. w.e.f. A.Y. 2019-20 as follows:
v.) a person being other than an individual, which enters into a financial transaction of an amount aggregating to two
lakh fifty thousand rupees or more in a financial year; or
vi.) a person who is the managing director, director, partner, trustee, author, founder, karta, chief executive officer,
principal officer or office bearer of the person referred to in clause (v) or any person competent to act on behalf of the
person referred to in clause (v).

(2.) Section 140: Verification of Return of Income (ROI):

If an application of a Company for Corporate Insolvency Resolution Process has been admitted by the Adjudicating
Authority u/s 7 / 9 / 10 of the Insolvency and Bankruptcy Code (IBC), 2016, then RoI of such Company can be verified
by the Insolvency Professional appointed by such Adjudicating Authority.

(3.) Section 143(1)(a): Summary Assessment: (Primary Adjustment): As per Section 143(1)(a), six prima facie
adjustments can be made by AO the returned income. Out of these six adjustments, the last adjustment given in clause (vi)
of Section 143(1)(a) i.e. ―Addition of income appearing in Form 26AS or Form 16A or Form 16, which has not been
included in computing the total income in the RoI‖ shall no more be made for RoI of A.Y. 2018-19 and onwards --
Proviso 3 to Section 143(1)(a)

(4.) Section 143(3A): E-Assessment: For the purpose of making assessment of total income or loss of the assessee u/s
143(3), Central Govt., may make a scheme by notification in the official gazette, so as to impart greater efficiency,
transparency and accountability by-
(a) eliminating the interface between the Assessing Officer and the assessee in the course of proceedings to the
extent technologically feasible;
(b) optimising utilisation of the resources through economies of scale and functional specialisation;
(c) introducing a team-based assessment with dynamic jurisdiction.

Section 143(3B): The Central Govt. for the purpose of giving effect to the scheme made u/s 143(3A), may by
notification in the official gazette, direct that any of the provisions of this Act relating to assessment of total income /
loss shall not apply or shall apply with such exceptions / modifications / adaptations as may be specified in the
notification.
Proviso: No such direction shall be issued after 31/03/2020.

Section 143(3C): Every notification under sub-section (3A) / (3B) shall be laid before each House of Parliament.

(5.) Section 145A: Method of Accounting in certain cases: (Revised w.e.f. A.Y. 2019-20):
For the purpose of determining the income chargeable under the head "Profits and gains of business or
profession",—

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(i) the valuation of inventory shall be made at lower of actual cost or net realisable value computed in accordance
with the with the ICDS notified u/s 145(2);
(ii) the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the
amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to
bring the goods or services to the place of its location and condition as on the date of valuation;
(iii) the inventory being securities not listed on a recognised stock exchange, or listed but not quoted on a
recognised stock exchange with regularity from time to time, shall be valued at actual cost initially recognised
in accordance with the with the ICDS notified u/s 145(2);
(iv) the inventory being securities other than those referred to in clause (iii), shall be valued at lower of actual cost
or net realisable value in accordance with the ICDS notified u/s 145(2):
Provided that the inventory being securities held by a scheduled bank or public financial institution shall be valued in
accordance with the with the ICDS notified u/s 145(2) after taking into account the extant guidelines issued by the
Reserve Bank of India in this regard
Provided further that the comparison of actual cost and net realisable value of securities shall be made category-wise.
Explanation 1.—For the purposes of this section, any tax, duty, cess or fee (by whatever name called) under any law
for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such
payment.

(6.) Section 145B: (w.e.f. A.Y. 2019-20): Taxability of certain Income:

(1) Notwithstanding anything to the contrary contained in Section 145, the interest received by an assessee on any
compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the previous year
in which it is received.
(2) Any claim for escalation of price in a contract or export incentives shall be deemed to be the income of the previous
year in which reasonable certainty of its realisation is achieved.
(3) The income referred to in sub-clause (xviii) of clause (24) of Section 2 (i.e. Govt. Subsidy) shall be deemed to be the
income of the previous year in which it is received, if not charged to income-tax in any earlier previous year.]

(7.) Section 153(1): Time limit to complete Assessment u/s 143(3) / 144: shall now be 12 months from the end of the
relevant Assessment Year, as compared to 18 months for A.Y. 2018-19.

(8.) Section 153B: Time limit to complete Assessment / Reassessment of Search cases u/s 153A: shall be 21 months if
the Search is initiated up to 31-03-2018 18 months in case where Search was initiated on / after 01/04/2018 and 12
months in case where Search was initiated on / after 01/04/2019.

(9.) Section 153C: Time limit to complete Assessment / Reassessment of other person:
(a.) 18 months from the end of the Financial Year, in which the Search was concluded u/s. 132 or Requisition was
made u/s. 132A, (21 months if the Search is initiated up to 31-03-2018 18 months in case where Search was
initiated on / after 01/04/2018 and 12 months in case where Search was initiated on / after 01/04/2019)
OR
(b.) 12 months from the end of the Financial Year, in which the A.O. having jurisdiction over such other person,
receives the Books of accounts, documents or assets belonging to such other person, (9 months if the Search is
initiated up to 31-03-2018 12 months in case where Search was initiated on / after 01/04/2018)

[XIII.] APPEALS AND REVISION:

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(1.) Section 253(1): Appealable Orders before ITAT: An order of Penalty u/s 271J imposed by CIT(A) can also be
appealed against at ITAT.

[XIV.] AUTHORITY FOR ADVANCE RULING (AAR):

(1.) Section 245-O: Constitution of AAR: Member of AAR:

(a.) Section 245-O(1): “Revenue member from the Indian Customs and Central Excise Service who is or is qualified to be
a member of CBEC”; shall no more be a member of AAR as this clause is to be deleted from the date of appointment of
the Customs Authority for Advance Rulings under Section 28EA of the Customs Act, 1962.

(b.) Section 245-O(1A): On and from the date of appointment of ―the Customs Authority for Advance
Rulings‖, the Authority (AAR) shall act as an Appellate Authority, for the purpose of Chapter V of the
Customs Act, 1962:
Provided that the Authority (AAR) shall not admit any appeal against any ruling or order passed earlier by it
in the capacity of the Authority for Advance Rulings in relation to any matter under Chapter V of the
Customs Act, 1962 after the date of such appointment of the Customs Authority for Advance Rulings.

[XV.] PENALTIES:
(1.) Section 271FA: Penalty for failure to furnish Statement of Financial transactions (SFT): SFT if to be furnished
by prescribed persons by 31st May of the next financial year, failing which the penalty of ` 100 per day of default was
leviable. This Penalty has been raised from ` 100 per day to ` 500 per day of default.
If this statement was not furnished even after expiry of the time given in a notice u/s 285BA(5) to furnish the
statement, then the Penalty u/s 271FA was ` 500 per day of delay after expiry of the time limit given in the notice. This
Penalty has been raised from ` 500 per day to ` 1,000 per day of default.

[XVI.] OFFENCES AND PROSECUTION:

(1.) Proviso to Section 276CC: No Prosecution u/s 276CC (for failure to furnish RoI), if the tax on total assessed
income reduced by Advance Tax and TDS does not exceed ` 3,000. W.e.f. A.Y. 2019-20, this proviso shall not
apply to Companies.

[XVII.] MISCELLANEOUS PROVISIONS:

(1.) Section 286(2): Due Date to furnish CbC Report: [w.r.e.f. A.Y. 2017-18]: The time limit to furnish CbC
Report by a Parent Entity of n International Group was „on / before the due date of furnishing Return of Income
as given in Section 139(1)‟. This time limit has retrospectively [w.r.e.f. A.Y. 2017-18] been changed to: „within
12 months from the end of the said reporting accounting year‟.

(2.) Section 286(3): Contents of the Report: [w.r.e.f. A.Y. 2017-18]: Section 286(3) specifies the 4 details to be
furnished in the report which is to be furnished u/s 286(2). Now with retrospective effect from A.Y. 2017-18,
the provisions of Section 286(3) shall be applicable not only for the report u/s 286(2), but shall apply for the
report u/s 286(4) [Report to be furnished by Alternate Reporting Entity] also.

(3.) Section 286(4): Exceptional circumstances where instead of Parent Entity, the report to be furnished by
Constituent Entity resident in India: [w.r.e.f. A.Y. 2017-18]: Normally, the report u/s 286(2) is required to be
furnished by the Parent Entity of the International Group. However, in the following 2 exceptional

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circumstances, such report is required to be furnished by the Constituent Entity of the International Group
resident in India:
 If the Parent Entity of the Group is resident of a country / territory with which India does not have
an agreement providing for exchange of the report of the nature referred to in Section 286(2); or
 there has been a systematic failure of the country / territory (and the said failure has been intimated
by the prescribed Income Tax Authority to such Constituent Entity)
Now with retrospective effect from A.Y. 2017-18, one more exceptional circumstance has been added to the above list,
making it three in total:

 w.r.e.f. A.Y. 2017-18: where the parent entity is not obligated to file the report of the nature referred to in
sub-section (2)

(4.) Section 286(5): Exception to Section 286(4): According to Section 286(4), the report given in Section
286(2) which is required to be furnished by Parent Entity shall be furnished by Constituent Entity resident in
India in 3 exceptional circumstances. However, this requirement shall not apply to the Constituent Entity
resident in India, in a case where the Alternate Reporting Entity has already furnished such report to the
tax authority of the country / territory in which such Entity is resident on or before the due date given in Section
139(1) w.r.e.f. A.Y. 2017-18: on or before the date specified by that country / territory.

[XVIII.] INCOME FROM SALARY:

(1.) Section 16(ia): Standard Deduction: While calculating income from Salary, assessee will be allowed Standard
Deduction, which shall be lower of either ` 40,000 or the amount of Salary. (As per Press release issued by CBDT dated
05-04-2018, Standard deduction will be allowed from Pension from former employer also apart from Salary from current
employer) (Standard deduction was allowable earlier also u/s 16(i), but was deleted from A.Y. 2006-07, it has now been
once again reintroduced)

(2.) Section 17(2): Due to introduction of Standard Deduction, exemption in respect of Transport Allowance (` 1,600 per
month) (except in case of differently-abled persons of ` 3,200 per month) and exemption in respect of reimbursement of
Medical expenses of ` 15,000 shall be discontinued.

(3.) Section 10(10): The maximum limit of Exemption u/s 10(10) with regards to Gratuity has been increased from ` 10
Lakhs to ` 20 Lakhs w.e.f. 29-03-2017.

[XIX.] PROFITS AND GAINS OF BUSINESS AND PROFESSION:

(1.) Section 28(ii)(e): Amount received by any person, at the time of or in connection with termination / modification of
any contract relating to his business, will be taxable under the head PGBP.

(2.) Section 28(via): The FMV of inventory as on the date on which it is converted into or treated as a capital asset
(determined in a prescribed manner) shall be taxable as PGBP income.

(3.) Section 36(1)(xviii): Marked to Market Loss: (w.r.e.f. A.Y. 2017-18): While computing PGBP income, assessee
will be allowed a deduction of Marked to Market Loss or any other expected loss in accordance with the ICDS u/s 145(2).

(4.) Section 40A(13): (w.r.e.f. A.Y. 2017-18): No other deduction or allowance shall be allowed in respect of Marked to
Market Loss or any other expected loss except as allowable u/s 36(1)(xviii).

(5.) Section 43(5): Speculative Transactions: Speculative Transaction is defined in Section 43(5) with five exceptions
given in first proviso. The fifth exception is „a transaction of trading in Commodity Derivatives, which are subjected to
CTT‟. However, CTT is not applicable in case of „transaction of derivatives of agricultural commodities‟ and accordingly

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trading in agricultural commodities would unintentionally be considered as a Speculative Transaction, which does not
represent the true intention of Govt. To remove this anomaly, Second Proviso to Section 43(5) has been introduced, which
states that „for the purposes of clause (e) of the first proviso, in respect of trading in agricultural commodity derivatives,
the requirement of chargeability of commodity transaction tax (CTT) under Chapter VII of the Finance Act, 2013,
shall not apply‘.

(6.) Section 43AA(1): (w.r.e.f. A.Y. 2017-18): Gain / Loss due to change in the Forex Rates: Subject to the provisions
of Section 43A, any gain / loss arising on account of any change in foreign exchange rates shall be treated as income or
loss as the case may be, and such gain / loss shall be computed in accordance with the ICDS notified u/s 145(2).

Section 43AA(2): For the purpose of Section 43AA(1), gain / loss arising on account of effects of change in foreign
exchange rates, shall be in respect of all foreign currency transactions, including those relating to-
(i) Monetary items and non-monetary items;
(ii) Translation of financial statements of foreign operations;
(iii) Forward exchange contracts;
(iv) Foreign currency translation reserves.

(7.) Section 43CA:

(a.) Proviso to Section 43CA(1): If the Stamp Duty Value (SDV) of the Land / Building / both, does not exceed
105% of the consideration received, then the consideration received as a result of transfer shall be deemed to be
the full value of consideration. (In simple words, 5% variation will be allowed in the SDV) (For e.g.: if the actual
consideration received for the Land / Building / both held as stock in trade is ` 100 Lakhs and the SDV is up to `
105 Lakhs, then for calculating PGBP income, the consideration to be taken into account shall be ` 100 Lakhs.
However, if the SDV is ` 106 Lakhs, then ` 106 Lakhs will be taken to be the full value of consideration)
(b.) Section 43CA(4): For the purpose of Section 43CA(1), instead of SDV as on the date of Registration, one could
take into account the SDV as on the date of agreement, provided the amount of consideration or a part thereof has
been received by any mode other than by cash w.e.f. A.Y. 2019-20 by way of Account Payee Cheque / Account
Payee Draft / ECS through a Bank, on or before the date of such agreement. Now, Section 43CA has been
made in lines with the provisions of Section 50C and Section 56(2)(vii)(b).

(8.) Section 43CB: (w.r.e.f. A.Y. 2017-18): Income from Construction Contract / Contract for providing Services:

(a.) Section 43CB(1): The profits and gains arising from a Construction Contract or a Contract for providing
Services, shall be determined on the basis of percentage completion method in accordance with the ICDS notified
u/s 145(2).
(b.) Proviso to Section 43CB(1): Profits and gains arising from a contract for providing services—
(i) With duration of not more than 90 days, shall be determined on the basis of project completion method;
(ii) Involving indeterminate number of acts over a specific period of time shall be determined on the basis of
straight line method.
(c.) Section 43CB(2): For the purpose of Percentage Completion Method / Project Completion Method / Straight Line
Method—
(i) The Contract Revenue shall include Retention Money;
(ii) The Contract Costs shall not be reduced by any incidental income in the nature of Interest / Dividend /
Capital Gain.

(9.) Section 44AE(2): Income from Business of Carriage of goods: Up till now the income from the business of
carriage of goods was to be computed @ ` 7,500 per month per goods vehicle, irrespective of the type of vehicle, whether
heavy or light. Now, w.e.f. A.Y. 2019-20, the income computation shall be made differently for a light goods vehicle and
differently for a heavy goods vehicle, as follows:

[A.] For Heavy goods Vehicle (i.e. for a vehicle whose un-laden weight is > 12,000 Kgs.): The income shall be the
higher of the following two:

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(a.) ` 1,000 per Ton per month a part of a month for a period during which such goods vehicle was owned by the assessee;
or
(b.) the income claimed to have been actually earned from such vehicle.

[B.] For Light goods Vehicle (i.e. for a vehicle whose un-laden weight is up to 12,000 Kgs.): The income shall be the
higher of the following two:
(a.) ` 7,500 per month or a part of a month for a period during which such goods vehicle was owned by the assessee; or
(b.) the income claimed to have been actually earned from such vehicle.

Explanation: ―Heavy Goods Vehicle‖ means any Goods Carriage, the gross vehicle weight of which exceeds 12,000 kgs.

[XX.] CAPITAL GAINS:

(1.) Section 47: Transactions not regarded as Transfer: There were 33 transactions which are not regarded as transfer.
One more transaction has been introduced, as follows:
(a.) Section 47(viiab): (w.e.f. A.Y. 2019-20): Transfer of:
(a) Bond or GDR referred to in Section 115AC; or
(b) Rupee Denominated Bond; or
(c) Derivative,
made by a Non-Resident on a Recognised Stock exchange located in any International Financial Services
Centre (IFSC), if the consideration for such transfer is paid or payable in foreign currency.

(2.) Explanation to Section 2(42A): Calculation of PoH:

(a.) PoH in case of Conversion of Stock in Trade into Capital Asset: (w.e.f. A.Y. 2019-20): When Stock in Trade is
converted into Capital Asset, the period of holding of such asset shall be calculated from the date of its conversion.—
Explanation 1(i)(b) to Section 2(42A)

(3.) Cost of Acquisition of a Capital Asset in certain cases:

(a.) Section 49(9): w.e.f. A.Y. 2019-20: Where Stock-in-Trade is converted into a Capital Asset [i.e. a transaction
referred to in Section 28(via)], the Cost of Acquisition of such Capital Asset shall be same the FMV of such Stock-in-
Trade as on the date of its conversion.

(4.) Cost Inflation Index (CII) Numbers: For A.Y. 20219-20 (P.Y. 2018-19), the CII no. notified by Central Govt. is 280.

(5.)Section 50C: Sale Consideration on transfer of an Immovable Property: will be deemed to be the higher of the
following two: (a.) Actual sale Consideration or (b.) the Stamp Duty Value (SDV) of such Immovable Property.

w.e.f. A.Y. 2019-20, third proviso to Section 50C has been introduced, allowing for a difference of 5% of the actual sale
consideration. Accordingly, the SDV is to be ignored, if the SDV is not more than 105% of the actual sale consideration.

If the Stamp Duty Value assessed or assessable does not exceed 105% of the Actual Sale Consideration, then the
Actual Sale Consideration only will be deemed to be the full value of sale consideration – Third Proviso to Section
50C(1) (w.e.f. A.Y. 2019-20)

[For e.g.: If the Actual Sale Consideration is ` 100 Lakhs and the SDV is ` 104 Lakhs, then the Sale Consideration to
be taken into account for computation of Capital Gain will be ` 100 Lakhs only, as the SDV does not exceed 105% of `
100 Lakhs]

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(6.) Section 54EC:

(a.) Up to A.Y. 2018-19, exemption u/s 54EC was allowable on transfer of any long term asset, but now w.e.f. A.Y.
2019-20, this exemption will be available only on transfer on Long Term Land / Building / both.

(b.) Apart from the Bonds of NHAI and RECL, the bonds of Indian Railway Finance Corporation Limited (IRFCL)
and the bonds of Power Finance Corporation limited (PFCL) will also be eligible for exemption u/s 54EC w.e.f. A.Y.
2018-19. – as per Central Govt. Notification

(c.) Lock-in-period of 3 years has been increased to 5 years for these bonds if these bonds are issued on / after 01-04-
2018 – w.e.f. A.Y. 2019-20. (If these bonds are issued up to 31-03-2018, then the lock-in period of 3 years shall
continue to be applicable).

(7.) Section 10(38): deleted now w.e.f. A.Y. 2019-20. Now such LTCGs will be taxable @ 10% on the amount of such
LTCG > ` 1 Lakh as per Section 112A.

(8.) Section 112A: (w.e.f. A.Y. 2019-20): Long Term Capital Gain on transfer of Equity shares of Company or Units of
Equity oriented fund or Units of Business Trust, if Securities Transaction Tax (STT) has been paid at the time of
transfer of any of these three assets and STT was paid at the time of acquisition also of equity shares of a company,
then such LTCG exceeding ` 1 Lakh will be taxable @ 10%, without claiming Indexation benefit, without availing
deduction under Chapter VI-A, without availing Rebate u/s 87A against such tax, but after availing the benefit of
unexhausted Basic exemption Limit in case of assessee being Resident Individual / HUF . (The condition of STT will
not apply in case of these assets transferred through a Recognised Stock Exchange, located in an IFSC, provided the
sale consideration is received in foreign currency)

[XXI.] INCOME FROM OTHER SOURCES (IFOS):

(1.) Taxability of Gift Transactions: The provisions of:

Section 56(2)(x)(a) / (b) / (c): Introduction of two more exceptions to the applicability of clause (x):

Receipt of Money / Immovable Property / Movable Property, as referred to in Section 56(2)(x) (a) / (b) / (c), will not
be taxable in following 2 more cases:

(a.) received by an Indian Subsidiary Co. from Holding Co. referred to in Section 47(iv);
(b.) received by an Indian Holding Company from Subsidiary Co. referred to in Section 47(v)

(2.) Section 56(2)(x)(b): Receipt of an Immovable Property by any person was taxable (subject to exceptions) in two
circumstances:

(a.) If such immovable Property is received without any consideration and the SDV of such property exceeds ` 50,000,
then the entire SDV would be taxable; or
(b.) If such immovable Property is received for a consideration which is less than its SDV and the difference between the
Actual Consideration and the SDV exceeds ` 50,000, then entire such difference would be taxable. An amendment has
been made here to provide for a 5% difference between SDV and the actual consideration. Now w.e.f. A.Y. 2019-20, this
clause would read as follows: If an immovable property is received for a consideration which is less than the stamp duty
value of such property and the difference between the two, exceeds higher of the following two: (i.) ` 50,000/- and (ii.)
(w.e.f. A.Y. 2019-20) exceeds 5% of the consideration, then the excess of stamp duty value of such property over such
consideration shall be taxed as the income of the recipient.

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(3.) Section 56(2)(xi): (w.e.f. A.Y. 2019-20): Any Compensation / other payment, by whatever name called
due or received by any person in connection with termination of his employment or the modification of the
terms and conditions of his employment will be taxable as IFOS.

[XXII.] DEDUCTIONS UNDER CHAPTER VI-A:

(1.) Section 80AC: Up to A.Y. 2017-18: Deductions u/s 80-IA / 80-IAB / 80-IB / 80-IC / 80-ID / 80-IE are available only
if claimed in the Return of Income and only if such RoI has been filed within the due date of filing RoI given in Section
139(1). This restriction was applicable only to 6 Sections of Chapter VIA. But now the scope has been expanded and few
more Sections have been brought under the net. The restriction shall now apply to all the 10 Sections of Heading „C‟ of
Chapter VIA.
W.r.e.f. A.Y. 2018-19 (introduced by Finance Act, 2018, but w.r.e.f. A.Y. 2018-19): Deductions under Chapter VIA –
Heading “C” (i.e. Deductions u/s 80-IA / 80-IAB / 80-IAC / 80-IB / 80-IBA / 80-IC / 80-ID / 80-IE / 80JJA / 80JJAA)
are available only if claimed in the Return of Income and only if such RoI has been filed within the due date of filing
RoI given in Section 139(1) – Section 80AC.

(2.) Section 80D:

(a.) Deduction for Health Insurance premium: The deduction allowed u/s 80D on account of payment of Health
insurance Premium is either (a.) Actual Premium paid; or (b.) ` 25,000, whichever is lower. If the person for whom the
premium is paid, is a resident senior citizen, then instead of ` 25,000, the limit as above was to be ` 30,000. Now w.e.f.
A.Y. 2019-20, the limit of ` 30,000 for resident senior citizen has been increased to ` 50,000.

(b.) Deduction for Medical Expenditure: Apart from deduction for Health Insurance Premium and Preventive health
Check up, deduction u/s 80D is also allowed to Individuals or HUFs for incurring Medical Expenditure on the health of a
family member who is resident very senior citizen and there is no health insurance policy for such person in force. This
deduction was available up to ` 30,000. Two amendments have been made here: (1.) The word ―very‖ has been deleted.
Which means this deduction will be allowed, if the medical expenditures have been incurred for a person who is resident
senior citizen (> 60 years) instead of only for resident very senior citizen (> 80 years), (2.) The limit of ` 30,000 has been
increased to ` 50,000.

(c.) Deduction in case of a lump sum payment of Mediclaim Premium: [Section 80D(4A)]: If the payment for Health
Insurance Premium has been made in lump sum covering a period of more than one year, then deduction for the same will
be allowed proportionately spread over the number of years covered by such policy (subject to the maximum amount
allowable during each such year). (For e.g: Total premium paid is ` 1,20,000 for three years‘ period from 01-01-2019 to
31-12-2021, then deduction u/s 80D will be ` 1,20,000 ÷ 4 years i.e. F.Y. 2018-19, 2019-20, 2020-21 and 2021-22 = `
30,000 p.a. restricted to the limits given in Section 80D)

(3.) Section 80DDB: Deduction in respect of Medical Treatment of certain specified Disease / Ailment: The amount
of deduction allowed under this Section is lower of the following two:
 Actual Expenditure incurred on medical treatment of certain specified disease; or
 ` 40,000

If the assessee is a resident senior citizen, then instead of ` 40,000 the limit would be ` 60,000 and if assessee is a
resident very senior citizen, then the limit was ` 80,000. This limit of ` 60,000 has been increased to ` 1,00,000. The
fourth proviso (which specified the limit for resident very senior citizen of ` 80,000 has been deleted, which means for
resident senior citizen and resident senior citizen, both, the limit will now be ` 1,00,000.

(4.) Section 80-IAC: Deduction for an Eligible Start Up Business:

(a.) Meaning of “Eligible Business” changed: means a business which involves innovation / development / deployment /
commercialisation of new products / processes / services driven by technology or intellectual property. W.e.f. A.Y. 2019-20:

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"Eligible Business" means a business carried out by an eligible start-up engaged in innovation, development
or improvement of products or processes or services or a scalable business model with a high potential of
employment generation or wealth creation.

(b.) Conditions for claiming deduction u/s 80-IAC relaxed:

 One of the conditions to claim deduction u/s 80-IAC is that the assessee should be either a Company or an LLP
incorporated between 01-04-2016 to 31-03-2019. The deadline of 31-03-2019 has been extended by 2 years and
accordingly it shall be 31-03-2021 instead of 31-03-2019.
 Another condition to claim deduction was that the total turnover of business does not exceed ` 25 Crores in any of
the years from 01-04-2016 to 31-03-2021 (5 years‘ period). This condition is slightly changed w.e.f. A.Y. 2019-20 and
now the total turnover of business does not exceed ` 25 Crores in any of the years in which deduction u/s 80-IAC has
been claimed.

(5.) Section 80JJAA: Deduction for in respect of additional employment:

(a.) is available to a person to whom the provisions of Section 44AB (compulsory tax Audit) applies. The deduction is
available @ 30% of the additional employee cost. However, the deduction is available only if the additional employee was
employed for at least 240 days during the year. Instead of 240 days, the condition was relaxed to 150 days for employee
working in Apparel manufacturing business. The scope of this relaxation has been further expanded w.e.f. A.Y. 2019-20
and this relaxed time limit of 150 days shall also apply to an employee working in manufacturing Footwear / Leather
products apart from apparel manufacturing business.

(b.) w.e.f. A.Y. 2019-20: where an employee is employed during the previous year for a period of less than 240 days or
150 days, as the case may be, but is employed for a period of 240 days or 150 days, in the immediately succeeding year,
then he shall be deemed to have been employed in the succeeding year and the provisions of this section shall apply
accordingly – Second Proviso to explanation to Section 80JJAA(2)

(6.) New Section 80PA: (w.e.f. A.Y. 2019-20): Deduction for a Producer Company:

(a.) Eligible Assessee: ‗Producer Company‘ (as defined in Section 581A of the Companies Act, 1956), having a
Turnover of less than ` 100 crores in any previous Year
(b.) Quantum of Deduction: 100% of Profits and Gains attributable to ‗Eligible Business‘
(c.) Period of deduction: A.Y. 2019-20 to A.Y. 2024-25
(d.) Eligible Business: means:
 The marketing of agricultural produce grown by the members; or
 The purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for
the purpose of supplying them to the members; or
 The processing of the agricultural produce of the members.
(e.) No Double Deduction: According to Section 80PA(2), if assessee is also eligible for deduction under any other
provision of Chapter VI-A, then deduction u/s 80PA(1), shall be restricted to the amount of profits and gains
derived from the eligible business reduced by the deduction under such other provision of Chapter VI-A.
(f.) Note: A Producer Company is a body corporate having an object that is one or all of the followings:
production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary
produce of the Members or import of goods or services for their benefit and registered as a „Producer
Company‟ under the Companies Act, 1956.

(7.) New Section 80TTB: (w.e.f. A.Y. 2019-20): Deduction Resident Senior Citizen in respect of interest on deposits in
any Bank Account:

Eligible Assessee: An Individual who is Resident Senior Citizen

Quantum of Deduction: Lower of the following two:
(a.) Actual amount of Interest on deposits with any Bank (including Co-Operative Bank and Post Office Bank)

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or
(b.) ` 50,000/-

Notes:
(i.) If the interest is derived from a deposit held by or on behalf of any Firm / AoP / BoI, then no deduction u/s 80TTB
will be allowed in respect of such interest to the Partner / Member of such Firm / AoP / BoI. – Section 80TTB(2)
(ii.) An Individual eligible for a deduction under this Section, will not be allowed a deduction u/s 80TTA (This is
basically to avoid double deduction)

(8.) Section 80TTA: Consequential amendment in Section 80TTA, due to introduction of Section 80TTB: The
deduction u/s 80TTA shall not be available to an assessee referred to in Section 80TTB.

[XXIII.] SET OFF AND CARRY FORWARD OF LOSSES:

(1.) Third Proviso to Section 79: According to Section 79, a Private Company can claim set off of its losses, only if
certain percentage of shareholding as on the last date of the year in which the loss was incurred is continued as on the last
date of the year in which the loss was set off. However, this condition is relaxed in three situations given in first and the
second proviso to Section 79, namely change in the shareholding (a.) due to death of the shareholder, (b.) due to gift to
relative and (c.) change in the shareholding of Indian Subsidiary Company due to amalgamation / demerger of foreign
Holding Company.

Now, w.e.f. A.Y. 2019-20, one more exception has been introduced to Section 79, by virtue of Third Proviso to
Section 79. According to this third proviso to Section 79: Change in the shareholding pursuant to a resolution plan
approved under the Insolvency and Bankruptcy Code (IBC), 2016 (After giving a reasonable opportunity of being
heard to the jurisdictional PCIT / CIT) – Third Proviso to Section 79.

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