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FINANCE BILL, 2018 PROVISIONS RELATING TO DIRECT TAXES

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..... income-tax in respect of income liable to tax for the assessment year 2018-19. In respect of income of all categories of assessees liable to tax for the assessment year 2018-19, the rates of income-tax have been specified in Part I of the First Schedule to the Bill. These are the same as those laid down in Part III of the First Schedule to the Finance Act, 2017 for the purposes of computation of advance tax , deduction of tax at source from Salaries and charging of tax payable in certain cases. (1) Surcharge on income-tax The amount of income-tax shall be increased by a surcharge for the purposes of the Union,- (a) in the case of every individual or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act,- (i) at the rate of ten per cent. of such tax, where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds fifty lakh rupees but does not exceed one crore rupees, and (ii) at the rate of fifteen per cent. of such tax, where the income or the aggregate of inc .....

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..... shall continue to be levied at the rate of two per cent. and one per cent., respectively, on the amount of tax computed, inclusive of surcharge, in all cases. No marginal relief shall be available in respect of such cesses. II. Rates for deduction of income-tax at source during the financial year 2018-19 from certain incomes other than Salaries . The rates for deduction of income-tax at source during the financial year 2018-19 from certain incomes other than Salaries have been specified in Part II of the First Schedule to the Bill. The rates for all the categories of persons will remain the same as those specified in Part II of the First Schedule to the Finance Act, 2017, for the purposes of deduction of income-tax at source during the financial year 2017-18. However, in case of long-term capital gain referred to in section 112A of the Act, tax shall now be deducted at source at the rate of 10 per cent.. (1) Surcharge- The amount of tax so deducted, in the case of a non-resident person (other than a company), shall be increased by a surcharge,- (a) in case of an individual, Hindu undivided family, association of person, body of individual or artificial juridi .....

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..... nancial year, assessment of persons who are likely to transfer property to avoid tax, assessment of bodies formed for a short duration, etc. The salient features of the rates specified in the said Part III are indicated in the following paragraphs- A. Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person. Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:- (i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part III applies) are as under:- Upto ₹ 2,50,000 Nil. ₹ 2,50,001 to ₹ 5,00,000 5 per cent.. ₹ 5,00,001 to ₹ 10,00,000 20 per cent.. Above ₹ 10,00,000 30 per cent.. .....

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..... in case of a co-operative society having a total income exceeding one crore rupees. However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. C. Firms In the case of firms, the rate of income-tax has been specified in Paragraph C of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for financial year 2017-18. The amount of income-tax shall be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of a firm having a total income exceeding one crore rupees. However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. D. Local authorities The rate of income-tax in the case of every local authority has been specified in Paragraph D of Part III of the First Schedule to the Bill. This rate w .....

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..... e rupees. In other cases (including sections 115-O, 115QA, 115R, 115TA or 115TD), the surcharge shall be levied at the rate of twelve per cent.. For financial year 2018-19, additional surcharge called the Health and Education Cess on income-tax shall be levied at the rate of four per cent. on the amount of tax computed, inclusive of surcharge (wherever applicable), in all cases. No marginal relief shall be available in respect of such cess. [Clause 2 First Schedule] B. WIDENING AND DEEPENING OF TAX BASE Entities to apply for Permanent Account Number in certain cases Section 139A inter-alia provides that every person specified therein and who has not been allotted a permanent account number shall apply to the Assessing Officer for allotment of a Permanent Account Number (PAN). In order to use PAN as Unique Entity Number (UEN) for non-individual entities, it is proposed that every person, not being an individual, which enters into a financial transaction of an amount aggregating to two lakh and fifty thousand rupees or more in a financial year shall be required to apply to the Assessing Officer for allotment of PAN. In order to link the financial .....

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..... ate of amalgamation. This amendment will take effect from 1st April, 2018 and will accordingly apply in relation to assessment year 2018-19 and subsequent assessment years. [Clause 3] Application of Dividend Distribution Tax to Deemed Dividend At present dividend distributed by a domestic company is subject to dividend distribution tax payable by such company. However, deemed dividend under sub-clause (e) of clause (22) of section of 2 the Act is taxed in the hands of the recipient at the applicable marginal rate. The taxability of deemed dividend in the hands of recipient has posed serious problem of the collection of the tax liability and has also been the subject matter of extensive litigation. With a view to bringing clarity and certainty in the taxation of deemed dividends, it is proposed to delete the Explanation to Chapter XII-D occurring after section 115Q of the Act so as to bring deemed dividends also under the scope of dividend distribution tax under section 115-O. Further, such deemed dividend is proposed to be taxed at the rate of 30 per cent. (without grossing up) in order to prevent camouflaging dividend in various ways such as loans and advances .....

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..... r of long term capital asset, being a unit of equity oriented fund or a unit of business trust, shall not apply if the transfer is undertaken on recognized stock exchange located in any International Financial Services Centre( IFSC) and the consideration of such transfer is received or receivable in foreign currency. Further, the new provision of section 112A also proposes to provide the following:- i) The long term capital gains will be computed without giving effect to the first and second provisos to section 48, i.e. inflation indexation in respect of cost of acquisitions and cost of improvement, if any, and the benefit of computation of capital gains in foreign currency in the case of a non-resident, will not be allowed. ii) The cost of acquisitions in respect of the long term capital asset acquired by the assessee before the 1st day of February, 2018 , shall be deemed to be the higher of a) the actual cost of acquisition of such asset; and b) the lower of (I) the fair market value of such asset; and (II) the full value of consideration received or accruing as a result of the transfer of the capital asset. (iii) equity oriented fund has been define .....

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..... aid section. With a view to providing a level playing field between growth oriented funds and dividend paying funds, in the wake of new capital gains tax regime for unit holders of equity oriented funds, it is proposed to amend the said section to provide that where any income is distributed by a Mutual Fund being, an equity oriented fund, the mutual fund shall be liable to pay additional incometax at the rate of ten per cent on income so distributed. For this purpose, equity oriented fund will have the same meaning assigned to it in the new section 112A of the Act. This amendment will take effect from 1st April, 2018. [Clause 40, 41 214] Taxation of long-term capital gains in the case of Foreign Institutional Investor The existing provisions of section 115AD of the Act inter alia, provide that where the total income of a Foreign Institutional Investor (FII) includes income by way of long-term capital gains arising from the transfer of certain securities, such capital gains shall be chargeable to tax at the rate of ten per cent. However, long term capital gains arising from transfer of long term capital asset being being equity shares of a company or a unit o .....

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..... a) of said clause in respect of application of income. These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent years. [Clause 5 6] Aligning the scope of business connection with modified PE Rule as per Multilateral Instrument (MLI). Under the existing provisions of Explanation 2 to clause (i) of sub-section (1) of section 9, business connection includes business activities carried on by non-resident through dependent agents. The scope of business connection under the Act is similar to the provisions relating to Dependent Agent Permanent Establishment (DAPE) in India s Double Taxation Avoidance Agreements (DTAAs). In terms of the DAPE rules in tax treaties, if any person acting on behalf of the non-resident, is habitually authorised to conclude contracts for the non-resident, then such agent would constitute a PE in the source country. However, in many cases, with a view to avoid establishing a permanent establishment (hereafter referred to as 'PE') under Article 5(5) of the DTAA, the person acting on the behalf of the non-resident, negotiates the contract but does .....

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..... the domestic law. However, sub-section (2) of section 90 of the Act provides that the provisions of the domestic law would prevail over corresponding provisions in the DTAAs, to the extent they are beneficial. Since, in the instant situations, the provisions of the domestic law being narrower in scope are more beneficial than the provisions in the DTAAs, as modified by MLI, such wider provisions in the DTAAs are ineffective. In view of the above, it is proposed to amend the provision of section 9 of the Act so as to align them with the provisions in the DTAA as modified by MLI so as to make the provisions in the treaty effective. Accordingly, clause (i) of sub-section (1) of section 9 is being proposed to be amended to provide that business connection shall also include any business activities carried through a person who, acting on behalf of the non-resident, habitually concludes contracts or habitually plays the principal role leading to conclusion of contracts by the non-resident . It is further proposed that the contracts should be- (i) in the name of the non-resident; or (ii) for the transfer of the ownership of, or for the granting of the right to use, property o .....

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..... ountry without having any physical presence in that country resulting in avoidance of taxation in the source country. Therefore, the existing nexus rule based on physical presence do not hold good anymore for taxation of business profits in source country. As a result, the rights of the source country to tax business profits that are derived from its economy is unfairly and unreasonably eroded. OECD under its BEPS Action Plan 1 addressed the tax challenges in a digital economy wherein it has discussed several options to tackle the direct tax challenges arising in digital businesses. One such option is a new nexus rule based on significant economic presence . As per the Action Plan 1 Report, a non-resident enterprise would create a taxable presence in a country if it has a significance economic presence in that country on the basis of factors that have a purposeful and sustained interaction with the economy by the aid of technology and other automated tools. It further recommended that revenue factor may be used in combination with the aforesaid factors to determine 'significance economic presence'. The scope of existing provisions of clause (i) of sub-section (1) of .....

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..... s. This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to assessment year 2019-20 and subsequent assessment years. [Clause 4] Taxability of compensation in connection to business or employment Under the existing provisions of the Act, certain types of compensation receipts are taxable as business income under section 28. However, the existing provisions of clause (ii) of section 28 is restrictive in its scope as far as taxation of compensation is concerned; a large segment of compensation receipts in connection with business and employment is out of the purview of taxation leading to base erosion and revenue loss. Therefore, it is proposed to amend section 28 of the Act to provide that any compensation received or receivable, whether revenue or capital, in connection with the termination or the modification of the terms and conditions of any contract relating to its business shall be taxable as business income. It is further proposed that any compensation received or receivable, whether in the nature of revenue or capital, in connection with the termination or the modification of the terms and conditions of any contract .....

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..... umstances like health, fixed source of income and higher cost of incidental expenses relating to employment. These changes are discussed in the following paragraphs. Deductions available to senior citizens in respect of health insurance premium and medical treatment Section 80D, inter-alia, provides that a deduction upto ₹ 30,000/- shall be allowed to an assessee, being an individual or a Hindu undivided family, in respect of payments towards annual premium on health insurance policy, or preventive health check-up, of a senior citizen, or medical expenditure in respect of very senior citzen. It is proposed to amend section 80D so as to raise this monetary limit of deduction from ₹ 30,000/- to ₹ 50,000/-. In case of single premium health insurance policies having cover of more than one year, it is proposed that the deduction shall be allowed on proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit. . These amendments will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. [Clause 24] .....

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..... Section 80P provides for 100 percent deduction in respect of profit of cooperative society which provide assistance to its members engaged in primary agricultural activities. It is proposed to extend similar benefit to Farm Producer Companies (FPC), having a total turnover upto ₹ 100 Crore, whose gross total income includes any income from- (i) the marketing of agricultural produce grown by its members, or (ii) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (iii) the processing of the agricultural produce of its members The benefit shall be available for a period of five years from the financial year 2018-19. This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. [Clause 28] Meassures to promote start-ups Section 80-IAC of the Act, inter alia, provides that deduction under this section shall be available to an eligible start-up for three consecutive assessment years out of seven years at the option of the assessee, if- (i) it is inco .....

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..... um tax at the rate of 18.50 percent. of adjusted total income in the case of a non-corporate person. In order to promote the development of world class financial infrastructure in India, it is further proposed to amend the section 115JC so as to provide that in case of a unit located in an International Financial Service Center, the alternate minimum tax under section 115JC shall be charged at the rate of 9 percent. Consequential amendment in section 115JF is also proposed to be made. This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. [Clause 17, 36 37] Incentive for employment generation At present, under section 80-JJAA of the Act, a deduction of 30% is allowed in addition to normal deduction of 100% in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year. However, the minimum period of employment is relaxed to 150 days in the case of apparel industry. In order to encourage creation of new employment, it is proposed to extend this relaxation to footwear and leather industry. .....

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..... person resident in India shall be exempt, if- (i) storage and sale is pursuant to an agreement or an arrangement entered into or approved, by the Central Government; and (ii) having regard to the national interest, the foreign company and the agreement or arrangement are notified by the CentralGovernment. Further clause (48B) of section 10 provides that any income accruing or arising to a foreign company on account of sale of leftover stock of crude oil after the expiry of the agreement or arrangement shall be exempt subject to such conditions as may be notified by the Central Government. The benefit of exemption is presently not available on sale out of the leftover stock of crude in case of termination of the said agreement or the arrangement. Given the strategic nature of the project benefitting India to augment its strategic petroleum reserves, it is proposed to amend clause (48B) of section 10 to provide that the benefit of tax exemption in respect of income from left over stock will be available even if the agreement or the arrangement is terminated in accordance with the terms mentioned therein. This amendment will take effect from 1st of April, 2019 and w .....

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..... that the provisions of section 115JB of the Act shall not be applicable and shall be deemed never to have been applicable to an assessee, being a foreign company, if- its total income comprises solely of profits and gains from business referred to in section 44B or section 44BB or section 44BBA or section 44BBB and such income has been offered to tax at the rates specified in the said sections. This amendment will take effect, retrospectively from 1st April, 2001 and will, accordingly, apply in relation to the assessment year 2001-02 and subsequent assessment years. [Clause 35] Benefit of carry forward and set off of losses Section 79 of Act provides that carry forward and set off of losses in a closely held company shall be allowed only if there is a continuity in the beneficial owner of the shares carrying not less than 51 percent. of the voting power, on the last day of the year or years in which the loss was incurred. In general, the case of a company seeking insolvency resolution under Insolvency and Bankruptcy Code, 2016, involves change in the beneficial owners of shares beyond the permissible limit under section 79. This acts as a hurdle for restructur .....

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..... on (3C) in the said section, to provide that every notification issued under the sub-section (3A) and sub-section (3B), shall be laid before each House of Parliament, as soon as may be. These amendments will take effect from 1st April, 2018. [Clause 44] G. RATIONALISATION MEASURES Rationalisation of the provisions relating to Commodity Transaction Tax The existing clause (7) of section 116 of the Finance Act, 2013 provides the definition of taxable commodities transaction to mean a transaction of sale of commodity derivatives in respect of commodities, other than agricultural commodities, traded in recognised association. In order to align the definition of taxable commodities transaction with instruments allowed for transaction in commodity derivatives, it is proposed to amend the clause (7) of section 116 so as to include options in commodity futures in the definition of taxable commodities transactions . The existing section 117 of the Finance Act, 2013 provides the rate at which a commodities transaction tax in respect of every commodities transaction, being sale of commodity derivative shall be chargeable and such tax shall be payable by the .....

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..... ) and Imposition of Tax Act, 2015 provides for the procedure for imposing penalty. Sub-section (4) of the said section provides that an order imposing a penalty shall be made with the approval of the Joint Commissioner, in the circumstances specified therein. The Assistant Director or the Deputy Director, investigating a case of undisclosed foreign income or asset, can also be assigned the concurrent jurisdiction of the Assessing Officer and, therefore, can also initiate penalty. However, the said authorities shall require approval of the superior officers of the rank of Joint Director or Additional Director for imposition of penalty. Accordingly, it is proposed to amend the said sub-section so as to provide that the Joint Director shall also be vested with the power to approve an order imposing a penalty. It is also proposed to amend clause (b) of the said sub-section so as to include reference to the Assistant Director and Deputy Director therein. Section 55 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 provides for institution of proceedings for an offence under that Act. Sub-section (1) of the said section provides tha .....

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..... S) of the Organisation for Economic Co-operation and Development (OECD) and others, following amendments are proposed to be made so as to improve the effectiveness and reduce the compliance burden of such reporting:- (i) the time allowed for furnishing the Country-by-Country Report (CbCR), in the case of parent entity or Alternative Reporting Entity (ARE), resident in India, is proposed to be extended to twelve months from the end of reporting accounting year; (ii) constituent entity resident in India, having a non-resident parent, shall also furnish CbCR in case its parent entity outside India has no obligation to file the report of the nature referred to in sub-section (2) in the latter s country or territory; (iii) the time allowed for furnishing the CbCR, in the case of constituent entity resident in India, having a non-resident parent,shall be twelve months from the end of reporting accounting year; (iv) the due date for furnishing of CbCR by the the ARE of an international group, the parent entity of which is outside India,with the tax authority of the country or territory of which it is resident, will be the due date specified by that country or territory; .....

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..... field, it is proposed to amend clause (12A) of section 10 of the Act to extend the said benefit to all subscribers. This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. [Clause 5] Deductions in respect of certain incomes not to be allowed unless return is filed by the due date The existing provisions contained in the section 80AC of the Act provide that no deduction would be admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE, unless the return of income by the assessee is furnished on or before the due date specified under sub-section (1) of section 139 of the Act. This burden is not cast upon assesses claiming deductions under several other similar provisions. In view of the above, it is proposed to extend the scope of section 80AC to provide that the benefit of deduction under the entire class of deductions under the heading C.-Deductions in respect of certain incomes in Chapter VIA shall not be allowed unless the return of income is filed by the due date. This amendment will take ef .....

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..... 49 so as to provide that for the purposes of computation of capital gains arising on transfer of such capital assets,the fair market value on the date of conversion shall be the cost of acquisition; (iv) clause (42A) of section 2 so as to provide that the period of holding of such capital asset shall be reckoned from the dateof conversion or treatment. These amendments will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. [Clause 3, 9 18] Tax neutral transfers Section 47 provides for certain tax neutral transfers. Section 56 also excludes income arising out of certain tax neutral transfers from its ambit. However, the transfers referred to in clause (iv) and clause (v) of section 47 have not been excluded from the scope of section 56. In order to further facilitate the transaction of money or property between a wholly owned subsidiary company and its holding company, it is proposed to amend the section 56 so as to exclude such transfer from its scope. This amendment will take effect, from 1st April, 2018 and shall accordingly, apply in relation to the transaction m .....

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..... deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed to the assessee under any provision of the Act in computing his income referred to in clause (a) of sub-section (1). In order to rationalize the provisions of section 115BBE, it is proposed to amend the said sub-section (2) so as to also include income referred to in clause (b) of sub-section (1). This amendment will take effect retrospectively from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. [Clause 34] Amendments in relation to notified Income Computation and Disclosure Standards. At present, section 145 of the Act empowers the Central government to notify Income Computation and Disclosure Standards (ICDS). In pursuance the central government has notified ten such standards effective from 1st April 2017 relating to Assessment year 2017-18. These are applicable to all assesses (other than an individual or a Hindu undivided family who are not subject to tax audit under section 44AB of the said Act) for the purposes of computation of income chargeable to income-tax under the head Profits and gains of bu .....

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..... ) inventory being listed securities, shall be valued at lower of actual cost or net realisable value in the manner providedin income computation and disclosure standards notified under (2) of section 145 and for this purpose the comparison of actual cost and net realisable value shall be done category-wise. (vi) insert a new section 145B in the Act to provide that- (a) interest received by an assessee on compensation or on enhanced compensation, shall be deemed to be the income of the year in which it is received. (b) the 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. (c) income referred to in sub-clause (xviii) of clause (24) of section 2 shall be deemed to be the income of the previous year in which it is received, if not charged to income tax for any earlier previous year. Recent judicial pronouncements have raised doubts on the legitimacy of the notified ICDS. However, a large number of taxpayers have already complied with the provisions of ICDS for computing income for assessment year 2017-18. In order to regularise the compliance .....

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..... . Accordingly, it is proposed to amend the said clause so as to enable the Central Government to also exempt, by notification, a class of such body or authority or Board or Trust or Commission (by whatever name called). This amendment will take effect from 1st April, 2018. [Clause 5] Penalty for failure to furnish statement of financial transaction or reportable account Section 271FA of the Act provides that if a person who is required to furnish the statement of financial transaction or reportable account under sub-section (1) of section 285BA, fails to furnish such statement within the prescribed time, he shall be liable to pay penalty of one hundred rupees for every day of default. The proviso to the said section further provides that in case such person fails to furnish the statement of financial transaction or reportable account within the period specified in the notice issued under sub-section (5) of section 285BA, he shall be liable to pay penalty of five hundred rupees for every day of default. In order to ensure compliance of the reporting obligations under section 285BA, it is proposed to amend the section 271FA so as to increase the penalty levia .....

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..... duty of Customs leviable on goods specified in the Second Schedule to the Customs Tariff Act, 1975. (c) Clause nos. in square brackets [ ] indicate the relevant clause of the Finance Bill, 2018. Amendments carried out through the Finance Bill, 2018 come into effect on the date of its enactment, unless otherwise specified. I. AMENDMENTS IN THE CUSTOMS ACT, 1962: S.No. Amendment Clause of the Finance Bill, 2018 1. Reference to import manifest and export manifest, wherever they occur in the Customs Act, to include Arrival Manifest and Departure Manifest respectively. [54] 2. Section 1 is being amended so as to expand the scope of the Customs Act to any offence or contravention committed thereunder outside India by any person. [55] 3. Section 2 is being amended so as to: (a) substitute the definition of assessment in sub-section (2); (b) to extend the limit of Indian Customs Waters into the sea from the existing Contiguous zone of India to the Exclusive Ec .....

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..... 7. A new section 25A is being inserted, so as to empower the Central Government to exempt goods imported for repair, further processing or manufacture [ Inward Processing of Goods ] from payment of whole or any part of duty of customs, leviable thereon subject to certain conditions. [60] 8. A new section 25B is being inserted so as to empower Central Government to exempt goods re-imported after export for repair, further processing or manufacture [ Outward Processing of Goods ] from payment of whole or any part of duty of customs, leviable thereon subject to certain conditions. [60] 9. Section 28 is being amended so as to: (a) insert a proviso in clause (a) of sub-section (1) to provide pre-notice consultation in cases not involving collusion, willful mis-statement, suppression before issue of demand notice. The manner of pre-notice consultation shall be provided in the regulations; (b) insert a new sub-section (7A) to provide for issuance of supplementary show cause notice in circumstances and in such manner as may be prescribed through regulati .....

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..... bstitute the existing definition of advance ruling so as to cover subjects beyond mere determination of duty; (c) include a definition of appellate authority ; (d) substitute the definition of applicant in order to make it broad based; (e) define authority as Customs Authority for Advance Ruling as referred to in section 28EA; (f) substitute Appellate Authority in place of authority in clause (f) and (g). [62] 11. A new section 28EA relating to Customs Authority for Advance Rulings is being inserted, which empowers the Board to appoint officers of the rank of Principal Commissioner of Customs or Commissioner of Customs as Customs Authority for Advance Rulings by way of notification. Till such appointment by the Board, existing Authority shall continue to pronounce Advance Rulings. [63] 12. Section 28F is being amended so as to substitute the word Authority with the words Appellate Authority and to provide that on appointment of Customs Authority for Advance Rulings, the applications and pro .....

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..... [68] 17. Section 28L is being amended so as to substitute the word Authority with the words Authority or Appellate Authority [69] 18. Section 28M is being substituted so as to, - (a) provide that the procedure to be followed by the Authority shall be as prescribed. (b) provide that Appellate Authority shall, subject to provisions of this chapter, have power to regulate its own procedure in all matters arising out of the exercise of its powers under this act. [70] 19. Section 30 is being amended so as to: (a) include export goods in addition to imported goods as part of the information provided in the manifest; (b) provide for prescribing the manner of delivery of manifest through regulations. [71] 20. Section 41 is being amended so as to: (a) include imported goods in addition to export goods as part of the information provided in the manifest; (b) provide penalty provisions for late filing of manifest; .....

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..... proper officer. [77] 26. To insert Chapter VIIA on payments through electronic cash ledger with governing provisions in Section 51A to have a provision for advance deposit which would enable payment of duties, taxes, fee, interest, and penalty through electronic cash ledger. It is also proposed to issue regulations in this regard. [78] 27. Section 54 is being amended so as to empower the Board to make regulations providing manner of presenting a bill of transshipment and declaration for transshipment. [79] 28. Section 60 is being amended so as to have a provision for clearance of goods by Customs Automated System in addition to existing clearance by the proper officer. [80] 29. Section 68 is being amended so as to have a provision for clearance of goods by Customs Automated System in addition to existing clearance by the proper officer. [81] 30. Section 69 is being amended so as to have a provision for clearance .....

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..... he Principal Commissioner of Customs or Commissioner of Customs may, for reasons to be recorded in writing, extend the six months period by a period not exceeding six months and inform the person from whom such goods have been seized before the expiry of the time mentioned in the said sub-section; (b) insert second proviso to sub-section (2) providing that where any order for provisional release of the seized goods has been passed under Section 110A, the aforesaid period of six months, mentioned in sub-section (2), shall not apply. [90] 39. Section 122 is being amended so as to substitute the existing clauses (b) and (c) to empower the Board to fix monetary limits for adjudication of cases by officers below the rank of Joint Commissioner by way of notification. [91] 40. Section 124 is being amended so as to insert a second proviso to provide for issuance of supplementary show cause notice under such circumstances and in such manner as may be prescribed through regulations.; [92] 41. Section 125 of the Customs Act .....

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..... g inserted so as to: (a) authorize the Central Government to enter into an agreement or any other arrangement with the Government of any country or with such competent authorities of that country, as it deems fit, for facilitation of trade, enforcing the provisions of Customs Act and exchange of information for trade facilitation, effective risk analysis, verification of compliance and prevention, combating and investigation of offences under the provisions of this Act or under the corresponding laws in force in that country; (b) authorize the Central Government to provide by a notification that the application of this section in relation to a contracting state with which reciprocal agreement or arrangements have been made, shall be subject to such conditions, exceptions or qualifications as are specified in the said notification.; (c) utilize the information received under sub-section (1) as evidence in investigations and proceedings under this Act subject to provisions of sub-section (2).; (d) where the Central Government has entered into a multilateral agreement for exchange of information or documents for purposes of verification of compliance in identif .....

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..... n the basis of the modes of transport of goods. [98] II. AMENDMENTS IN THE CUSTOMS TARIFF ACT, 1975 S.No. Amendment Clause of the Finance Bill, 2018 1. Section 3 is being amended so as to: (a) amend sub-section (7) to include reference to sub-section (8A); (b) insert a new sub-section (8A) to provide for value of goods when they are sold within the warehousing period for calculation of integrated tax; (c) amend the sub-section (9) to include reference to sub-section (10A); (d) insert a new sub-section (10A) to provide for value of goods when they are sold within the warehousing period for calculation of goods and services tax compensation cess. [100] III. AMENDMENTS IN THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975 AMENDMENTS A Amendments affecting rates of BCD [to be effective from 02.02.2018]* [Clause 101(a) of the Finance Bill, 2018] Rate of Duty S.No. .....

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..... Parts of footwear 10% 15% Jewellery 11 7117 Imitation Jewellery 15% 20% Electronics / Hardware 12 8517 12 Cellular mobile phones 15% 20% 13 90 90, 99 99, 3926 90 91, 3926 90 99, 4016 99 90, 7318 15 00, 7326 90 99, 8504, 8506, 8507, 8517 70 90, 8518, 8538 90 00, 8544 19, 8544 42, 8544 49 Specified parts and accessories including lithium ion battery of cellular mobile phones 7.5%/10% 15% 14 8517 62 90 Smart watches / wearable devices 10% 20% 15 8529 10 99 8529 90 90 LCD/LED/OLED panels and other parts of LCD/LED/OLED TVs 7.5%/10% 15% Furniture .....

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..... ar hunting or shooting requisites 10% 20% 28 9508 Roundabouts, swings, shooting galleries and other fairground amusements; travelling circuses, traveling menageries and travelling theatres 10% 20% Miscellaneous items 29 3406 Candles, tapers and the like 10% 25% 30 4823 90 90 Kites 10% 20% 31 9004 10 Sunglasses 10% 20% 32 9611 Date, sealing or numbering stamps, and the like 10% 20% 33 9613 Cigarette lighters and other lighters, whether or not mechanical or electrical, and parts thereof other than flints and wicks. 10% 20% 34 9616 Scent spr .....

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..... 2 Electrodes of a kind used for furnaces [ Clause 102 (b) of the Finance Bill, 2018]* [Introduction of 20% Tariff rate of Export Duty on Electrodes of a kind used for furnaces (8545 11 00). The effective rate of Export duty on such electrodes will, however, remain Nil] -- 20% *Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. V. OTHER PROPOSALS INVOLVING CHANGES IN BASIC CUSTOMS DUTY RATES S.No. Heading, sub-heading tariff item Commodity From To Food processing 1 0801 31 00 Cashew nuts in shell [Raw cashew] 5% 2.5% 2 2009 11 00 2009 12 00 2009 19 00 Orange fruit juice 30% 35% 3 2009 81 00, 2009 90 00 Cranberry Juice 10% 50% 4 .....

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..... 71 Diamonds including lab grown diamonds-semi processed, half-cut or broken; non-industrial diamonds including lab-grown diamonds (other than rough diamonds), including cut and polished diamonds 2.5% 5% Medical Devices 16 Any Chapter Raw materials, parts or accessories for the manufacture of Cochlear Implants 2.5% Nil Rationalization in Customs duty rates Edible oils of vegetable origin 17 1508, 1509, 1510,1512, 1513, 1515 Crude edible vegetable oils like Ground nut oil, Olive oil, Cotton seed oil, Safflower seed oil, Saffola oil, Coconut oil, Palm Kernel/Babassu oil, Linseed oil, Maize corn oil, Castor oil, Sesame oil, other fixed vegetable fats and oils. 12.5% 30% 18 1508, 1509, 1510,1512, 1513, 1515, 1516 20, 1517 10 21, 90 10, 00 11, 1518 00 21, 1518 00 31 Refined .....

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..... 3% of aggregate duties of customs 5 7108 Gold (including gold plated with platinum), unwrought or in semi-manufactured form, or in powder form -- 3% of aggregate duties of customs 6 Any Chapter Specified goods hitherto exempt from Education Cess and Secondary and Higher Education Cess on imported goods -- Nil VII. Levy of the Road and Infrastructure Cess [Clause 109 of the Finance Bill, 2018] S.No. Heading, sub-heading tariff item Description From To 1 2710 Levy of Road and Infrastructure Cess on imported motor spirit commonly known as petrol and high speed diesel oil [clause 109 of Finance Bill, 2018] -- ₹ 8 per litre 2 2710 Exemption from additional duty of customs leviable under section 3(1) of the Customs Tariff Act, 1975 in lieu of the pro .....

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..... er litre ₹ 5.66 per litre (iii) Unbranded diesel ₹ 8.33 per litre ₹ 6.33 per litre (iv) Branded diesel ₹ 10.69 per litre ₹ 8.69 per litre 4. Road and Infrastructure Cess on (i) 5% ethanol blended petrol, (ii) 10% ethanol blended petrol and (iii) bio-diesel, up to 20% by volume, subject to the condition that appropriate excise duties have been paid on petrol or diesel and appropriate GST has been paid on ethanol or bio-diesel used for making such blends -- Nil 5. Road and Infrastructure Cess on petrol and diesel manufactured in and cleared from 4 specified refineries located in the North-East -- ₹ 4 per litre SERVICE TAX A. Retrospective exemptions Clause .....

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..... s in the following Acts: - i. The Central Boards of Revenue Act, 1963 (54 of 1963) ii. The Customs Act, 1962 (52 of 1962) iii. The Central Goods and Services Tax Act, 2017 (12 of 2017) [157 and 218] C. REPEAL OF CERTAIN ENACTMENTS 1. Additional duty of Customs on Motor Spirit commonly known as Petrol is being abolished by repealing section 103 of the Finance Act (No.2), 1998 [106] 2. Additional duty of Excise on Motor Spirit commonly known as Petrol is being abolished by repealing section 111 of the Finance Act (No.2), 1998 [106] 3. Additional duty of Customs on High Speed Diesel oil is being abolished by repealing section 116 of the Finance Act, 1999 [106] 4. Additional duty of Excise on High Speed Diesel oil is being abolished by repealing section 133 of the Finance Act, 1999 [106] 5. Education .....

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