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INSERTION OF NEW SECTIONS IN INCOME TAX ACT 1961 - PROPOSED BY FINANCE BILL 2017

Budget - By: - Mr. M. GOVINDARAJAN - Dated:- 9-2-2017 - The Finance Bill, 2017 ( BILL for short) proposes to insert the following sections in the Income Tax Act, 1961- Special provision for full value of consideration for transfer of share other than quoted share Clause 26 of the Bill seeks to insert Section 50CA with effect from 01.04.2018. This is a special provision for full value of consideration for transfer of share other than quoted share. The new Section provides that where the considera .....

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ock exchange with regularly from time to time, where the quotation of such share is based on current transaction made in the ordinary course of business. Limitation on interest deduction in certain cases Section 94B - Clause 43 seeks to insert this section with effect from 01.04.2018. Section 94B(1) provides that notwithstanding anything contained in this Act, where an Indian company, or a permanent establishment of a foreign company in India, being the borrower, pays interest or similar conside .....

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her provides an implicit or explicit guarantee to such lender or deposits a corresponding and matching amount of funds with the lender, such debt shall be deemed to have been issued by an associated enterprise. Section 94B (2) provides that for the purposes of Section 94B (1) the excess interest shall mean an amount of total interest paid or payable in excess of 30% of earnings before interest, taxes, depreciation and amortization of the borrower in the previous year or interest paid or payable .....

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ion , so much of the interest expenditure as has not been so deducted, shall be carried forward to the following assessment year or assessment years, and it shall be allowed as a deduction against the profits and gains, if any, of any business or profession carried on by it and assessable for that assessment year to the extent of maximum allowable interest expenditure in accordance with Section 94B (2). No interest expenditure shall be carried forward under this sub-section for more than eight a .....

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head Profits and gains of business or profession ; permanent establishment includes a fixed place of business through which the business of the enterprise is wholly or partly carried on. Payment of rent by certain individuals or HUF Clause 63 of the Bill seeks to insert Section 194-IB with effect from 01.06.2017. Section 194-IB (1) provides that any person, being an individual or a HUF (other than those referred to in the second proviso to Section 194-I) responsible for paying to a resident any .....

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or by issue of a cheque or draft or by any other mode, whichever is earlier. Section 194-IB (3) provides that the provisions of Section 203A shall not apply to a person required deducting tax in accordance with the provisions of this Section. Section 194-IB (4) provides that in a case where the tax is required to be deducted as per the provisions of Section 206AA. Such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, .....

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ion in kind, under the agreement referred to in Section 45(5A), shall at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to 10% of such sum as income-tax thereon. Requirement to furnish PAN by collectee Clause 72 seeks to insert a new Section 206CC. This section provides the consequences for non furnishing of PAN by collectee. Section 206 CC (1) .....

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ion 206 CC (2) provides that no declaration under Section 206C (1A) shall be valid unless the person furnishes his Permanent Account Number in such declaration. In case any declaration becomes invalid, the collector shall collect the tax at source in accordance with the provisions of sub-section (1). No certificate under Section 206C (9) shall be granted unless the application made under that section contains the PAN of the applicant. The collectee shall furnish his PAN to the collector and both .....

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ixed place of business through which the business of the enterprise is wholly or partly carried on. Fee for default in furnishing return Clause 75 of the Bill seeks to insert Section 234F which will come into effect form 01.04.2018. The new Section provides for paying fee for filing the return belatedly. This Section provides that without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in .....

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Withholding of refund in certain cases Clause 76 of the bill seeks to insert Section 241A. According to this section for every assessment year commencing on or after the 1st day of April, 2017, where refund of any amount becomes due to the assessee under the provisions of Section 143 (1) and the Assessing Officer is of the opinion, having regard to the fact that a notice has been issued under Section 143(2) in respect of such return, that the grant of the refund is likely to adversely affect th .....

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ons relating to one event or occasion from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account. This provision is not applicable to- any receipt by- Government Any banking company, post office savings bank or co-operative bank; Transactions of the nature referred to in Section 269SS; Such other persons of class of persons or receipts, which the Central Government may, by notification in the Official Gazett .....

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