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Highlights of Finance Bill 2012

Highlights of Finance Bill 2012. 2(14 ) (from the 1-4-1962). Capital asset - Explanation inserted for removal of doubts and clarify that “property” includes and shall be deemed to have always included any rights in or in relation to an Indian company,

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Highlights of Finance Bill 2012

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  1. Highlights of Finance Bill 2012

  2. 2(14) (from the 1-4-1962) • Capital asset - Explanation inserted for removal of doubts and clarify that “property” includes and • shall be deemed to have always included any rights in or in relation to an Indian company, • including rights of management or control or any other rights whatsoever Courtesy : Apex Court decision in Vodafone case

  3. 2(47) (from the 1-4-1962) • ‘Explanation 2 inserted to clarify that “transfer” includes and shall be deemed to have always included • disposing of or parting with an asset or any interest therein • creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, • by way of an agreement (whether entered into in India or outside India) or otherwise • Notwithstanding that such transfer of rights has been • characterized as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India. Courtesy : Apex Court decision in Vodafone case

  4. Section 9 (1)(i) (from the 1-4-1962) • ‘Explanation 4.—For the removal of doubts, it is hereby clarified that the expression “through” shall mean and include and shall be deemed to have always meant and included “by means of”, “in consequence of” or “by reason of” Courtesy : Apex Court decision in Vodafone case

  5. Section 9 (1)(i) (from the 1-4-1962) • Explanation 5.— inserted to clarify that an asset or a capital asset : • being any share or interest in a company or entity registered or incorporated outside India shall • be deemed to be and shall always be deemed to have been situated in India, if the share or • interest derives, directly or indirectly, its value substantially from the assets located in India. • Courtesy : Apex Court decision in Vodafone case

  6. Section 9 (1)(vi)-Royalty (from the 1-4-1976) • Explanation 4 inserted to clarify that the payment transfer of all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred, is Royalty. • Courtesy : Conflicting HC decisions on taxation of Royalty- Favorable Karnataka HC Decision.

  7. Section 9 (1)(vi)-Royalty(from the 1-4-1976) • Explanation 5.—inserted to clarify that the royalty includes payments in respect of any right, property or information, whether or not— • (a) the possession or control of such right, property or information is with the payer; • (b) such right, property or information is used directly by the payer; • (c) the location of such right, property or information is in India.

  8. Royalty 9 (1)(vi)-(from the 1-4-1976) • Explanation 6. inserted to clarify that the expression “process” • includes and shall be deemed to have always included transmission by satellite (including • up-linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar technology, whether or not such process is secret. • Courtesy : Conflicting HC decisions on taxation of Royalty on fee paid for transponders etc

  9. 10(10D) • On any insurance policy issued after 1-4-2003, If premium payable exceeds 20% of actual capital sum assured, the maturity amount from such policy was taxable. • For policies issued after 1-4-2012, if premium payable exceeds 10% of actual capital sum assured, the maturity amount from such policy would be taxable.

  10. 10(23C) • In case of charitable trust carrying on trade, business etc for advancement of any other object of general public utility • Tax will be levied on such activity whether of not the approval granted to it is withdrawn or rescinded • This with retrospective effect from 1-4-2009

  11. 10(48) • Income of a foreign company, received in Indian currency within India, by sale of crude oil to any person in India, is exempted from tax ,subject to Govt approvals and if it doesn’t have any other income in India

  12. Section 13 • 13(8) introduced to say that exemptions u/s 11 & 12 shall not apply to income of a trust from the activity of trade, business etc for advancement of any other object of general public utility.

  13. Section 32 • Additional 20% depreciation allowed for the new plant and machinery is now extended to the assessee engaged in the business of generation or generation and distribution of power.

  14. Section 35(2AB) • The 200% deduction for Research expenditure incurred by assessee in BT business or in business of manufacture or production of article or thing, which had to end with AY 2012-13 is now extended for another 5 AYs

  15. 40(a)(ia) • Though assessee has not deducted tax , if the resident payee has filed return of income and for that reason the is not deemed to be an assessee in default under 201(1) , it shall be deemed that the assessee has deducted and paid the tax and no disallowance u/s 40(a)(ia) can be made.

  16. 40A(2)(a) • Disallowance cannot be made in respect of specified domestic transaction referred in section 92 BA ( New section introduced for applying TP guidelines for certain domestic transactions)

  17. 40A(2)(b) • The disallowance which was applicable till now, for the payment made to any relative of such director, partner or member is now extended to any other company in which assessee company has substantial interest.

  18. 44AB • Monetary limit raised to 1 crore for business and 25 lakhs for profession • Instead of present uniform due date for submitting audit report, i.e. 30th September the assessee gets time till due date for filing the return.

  19. 44AD • The section applies to cases with turnover up to 1 crore • With retrospective effect from AY 2011-12 the section is not applicable for : • Profession referred in section 44AA • Commission or brokerage income • Any agency business

  20. Section 49 • The substitution of Cost to previous owner is made applicable with retrospectively from 1-4-1999 , to the • Cases of conversion of proprietary concern to company • Cases of conversion of firm to a company • Conversion of Pvt company to LLP Firm

  21. New section 50D • In cases where sale consideration is not ascertainable or cannot be determined the FMV , shall be deemed to be the full value of the consideration

  22. 54B • The exemption of CG in respect of transfer of agricultural land , which was till now applicable to individual is extended to HUF also

  23. New section 54GB ( only gist) • Deduction in respect of transfer of house or land • If invested in shares of a new small or medium company incorporated from 1st April of PY of transfer till date of filing of return • Shall be exempted if such eligible company purchases new asset for its business within one year from the date of subscription by the assessee. • There are other conditions also

  24. 55A • In present section reference to VO can be made only if the value determined by the registered valuer is less than FMV. • From 1-7-2012, the section amended to permit reference to VO in such cases even if value determined by the registered valuer is more than FMV • This amendment enables referencing of cases to determining cost of acquisition also.

  25. Section 56 • For exempting any sum of money or immovable property received from a relative, the term relative was defined only with reference to individual. • Now the term “relative” with reference to HUF is also defined to mean any of its member. w.r.t.from 1-10-2009

  26. Section 56(2) • Extended to Pvt Ltd company, when it receives any consideration for issue of shares, if such consideration is in excess of FMV of such shares.

  27. Section 68 • Shall be applicable for share application money, share capital etc credited in the books of Pvt Ltd companies unless, the said share holder offers satisfactory explanation about the source of that investment

  28. 80C • As regards insurance premium the deduction shall now be restricted to 10% of the Capital Sum assured

  29. 80D • Benefit extended to premium paid, even by cash, for preventive health check-up policy up to Rs 5000 • Person crossing 60 years made as senior citizen even for the purpose of 80D & 80DDB

  30. 80G & GGA • No deduction for donations above Rs 10,000 if they are made by cash

  31. 80TTA • Deduction for SB interest earned up to Rs 10000 from Bank or post office

  32. Section 90 • Sub-section 2A inserted to state that, even where there is DTAA, Chapter X-A (A detailed General Anti Avoidance Rule introduced) shall apply though that chapter is not favorable to him. • Sub-section 4 introduced to make production of certificate of residence mandatory for claiming any relief under DTAA

  33. Section 92 • Transfer pricing regulations made applicable even for Specified domestic transactions specified in section 92BA

  34. Section 92BA- Specified domestic transactions in excess of 5 crores • any payment made to a related person u/s 40A(2()(b) • any transaction referred to in section 80A • any transfer of goods or services referred to in 80-IA(8) • any business transacted between the assessee and other person as referred to in 80-IA(10) • any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which 80-IA(8) or 80-IA(10) apply • any other transaction as may be prescribed

  35. 92CA • New sub section (2B)- If assessee has not furnished TP report u/s 92E , if any transaction comes to notice of TPO he shall deem it as international transaction. ( with retrospective effect from 1-6-2002. • New sub section (2C)- The AO cannot assess or reassess such transaction based on such report of TPO ,if the assessment for any AY is completed before 1-7-2012.

  36. Section 92CC- Advance Pricing Agreement • New section introduced to provide for Advance Pricing Agreement between the CG and any assessee will be effective for 5 consecutive years. • On entering of agreement, such person shall furnish modified return within 3 months and that shall be considered for pending or completed assessments • In that case the time barring date for assessment shall be extended by 12 months

  37. 115BBA • Tax rate increased to 20% • Made applicable even for a NR entertainer

  38. 115BBD • The dividend income of an Indian company from any specified foreign shall be taxed at 15% for AY 2012-13 . Same is extended even for AY 2013-14 .

  39. 115 BBE • Additions made u/s 68,69,69A to D shall be taxed at 30% • No deductions from any additions made under above sections

  40. 115JC • Alternate Minimum Tax now extended to all other Non –Company entities if adjusted total income exceed 20 lakhs

  41. 139 • Return filing made compulsory for a resident if he has any: • Asset located outside India or • signing authority in any account located outside India

  42. 143 • Processing u/s 143(1) shall not be required once 143(2) notice is issued. • Third proviso introduced to say that 10(23C) shall not be allowed by an AO to a trust in respect of trading/business income, whether or not approval is withdrawn.

  43. 144BA • New section - reference to CIT, when AO notices impermissible avoidance arrangement in assessment proceedings • CIT, before invoking chapter XA shall issue notice to asessee and him time up to 60 days to file objections • If no objections filed, he will issue suitable directions to AO • If objected by assessee and CIT is not satisfied he shall refer the case to Approving Panel, which after hearing assessee and AO shall issue suitable directions within 6 months • The AO shall complete the assessment with the approval of CIT

  44. 144C • Extension of TB date in DRP reference cases is now made applicable for search assessments also w.r.e 1-10-2009 • DRP provisions shall not apply to assessments completed with approval of CIT u/s 144BA

  45. 147 • The restriction in first proviso about reopening of cases concluded scrutiny shall not apply where any to income in relation to any asset (including financial interest in any entity) located outside India has escaped assessment • where the assessee has failed to furnish TP report or he is found to have any asset (including financial interest in any entity) located outside India, it is deemed that income has escaped assessment. • Explanation -4 introduced in section 147 to say that the amendments made by Finance Act 2012 shall be applicable for AY 2012-13 and all earlier AYs

  46. 149 • If assessee is found to have any asset (including financial interest in any entity) located outside India, it is deemed that income has escaped assessment the reassessment notice can be issued even up to 16 years.

  47. 153 • From AY 2010-11 onwards and reassessment cases, the time barring date extended up to 31st March • In cases where reference is made calling for information under DTAA, the time is presntly extended by another 6 months, now it is increased to 12 months

  48. 153A • CG empowered to specify the class or classes of cases in which the AO shall not be required to issue notice for search assessment.

  49. 154 • 200 A intimation can also be amended

  50. 156 • 200A intimation is deemed to be demand notice

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