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INDIVIDUAL TAXATION

INDIVIDUAL TAXATION. No Change in Income Tax Slabs and Surcharge The Education cess of 3% replaced by a “Health and Education cess ” of 4% The maximum marginal rate of tax to rise to 35.88% to 35.535%. STANDARD DEDUCTION REINTRODUCED U/S 16.

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INDIVIDUAL TAXATION

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  1. Keyur Patel & Co.

  2. INDIVIDUAL TAXATION No Change in Income Tax Slabs and Surcharge The Education cess of 3% replaced by a “Health and Education cess ” of 4% The maximum marginal rate of tax to rise to 35.88% to 35.535% Keyur Patel & Co.

  3. STANDARD DEDUCTION REINTRODUCED U/S 16 Flat deduction of Rs.40000/- or Salary whichever is lower is deducted from salary income The withdrawal of transport allowance Rs. 1600 PM i.e 19200/- PA and Medical reimbursement of Rs. 15000/- u/s 17(2) Thus, Rs. 40000/- Minus 34200/- (19200+15000) =5800 benefit Pensioners get this benefit. No Medical bills required to be produced. Where CTC planning not done professionally. Keyur Patel & Co.

  4. SECTION 80D MEDICAL INSURANCE & HEALTH CHECKUP Individual /HUF entitled for resident senior citizen or very senior citizen increased from Rs.30,000/- to Rs.50,000/-. Medical premium or Preventive health check up or medical expenses for resident senior citizen or very senior citizen. When single premium is paid for multiple Financial year pro-rata deduction will be allowable. No distinction between senior/very senior citizen. Keyur Patel & Co.

  5. SECTION 80DDB: MEDICAL EXPENDITURE FOR SPECIFIED DISEASE Individual and HUF Medical treatment expenditure incurred for specified disease for senior citizen. For members below the age of 60 Yeas remains Rs.40000/- as it is. Specified disease From A.Y. 2019-20 the monetary limit is extended to Rs. 100000/- for senior citizen from Rs.80,000/- and Rs.60,000/-. No distinction between senior/very senior citizen. Keyur Patel & Co.

  6. SECTION 80TTA/80TTB :DEDUCTION FOR INTEREST FOR SENIOR CITIZEN Up to 10000/- interest on saving account with bank or co-operative bank u/s 80TTA From A.Y. 2019-20 80TTA not applicable to senior citizen u/s 80TTB is applicable to senior citizen Rs. 50000/- interest income on deposit are deductible for senior citizen including Savings account interest. Deposit includes bank or co-operative bank or post office NO TDS for senior citizen up to Rs. 50000 u/s 194A Keyur Patel & Co.

  7. NPS SECTION 10(12A) Existing provision allow 40% of NPS balance tax free for an employee on exit from the scheme. From A.Y.2019-20 the scope of employee word replaced by word assesses. Thus, it is extended to all assessee whether under employment or not. Keyur Patel & Co.

  8. INTEREST ON SECURITIES U/S 193 W.E.F. 1st April ,2018 Tax deduction at source on 7.75% GOI Savings (Taxable) Bonds, 2018 This new bonds will be liable for TDS for payment exceeding Rs. 10,000/- Keyur Patel & Co.

  9. ROYALTY AND FTS PAYMENT BY NTRO TO A NON RESIDENT TO BE TAX EXEMPT U/S 195 AND 10(6D) W.e.f A.Y. 2018-19 and subsequent assessment years. Payment made by National Technical Research Organization (NTRO): Lead by PM Payment made to non-resident, not being a company, or a foreign company For Royalty/FTS for services rendered in or outside India No TDS for above. Keyur Patel & Co.

  10. SCOPE EXPANDED U/S28(II)(E):TERMINATION QUA BUSINESS U/s 28 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 business , shall be taxable as business income. W.e.f 1st April ,2019 A.Y.2019-20. Keyur Patel & Co.

  11. UNDER SECTION 56(ii)(xi) /2(24)(xviib) ADDED U/s 56(ii)(xi): 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 relating to its employment shall be taxable w.e.f 1stApril,2019 A.Y.2019-20. The person was appointed and ask to join in June appointment done in March. The employee was given compensation for change in decision made by employer may not be covered however if both dates are after 1st April 2018 then taxable. Keyur Patel & Co.

  12. RATIONALIZATION OF SECTION 43CA, SECTION50C AND SECTION56 Difference in Jantri/Sales Consideration arising out of transactions in immovable property, whichever is higher is adopted. The difference is taxed as income both in the hands of the purchaser and the seller. From AY 2019-20onwards The proposal is difference up to five percent of the sale consideration and the Jantri price will not have above said effect or Rs 50 K whichever is higher. Keyur Patel & Co.

  13. RATIONALIZATION OF SECTION 43CA, SECTION 50C AND SECTION 56 Keyur Patel & Co.

  14. PRESUMPTIVE INCOME U/S44AE GOODS CARRIAGE : LESS THAN 10TRUCKS Present:-An amount equal to seven thousand five hundred rupees per month or part of a month for each goods carriage or the amount claimed to be actually earned by the assesses, whichever is higher irrespective of capacity.  Goods carriage u/s 44AE Keyur Patel & Co.

  15. 54EC : CAPITAL GAIN BONDS Change from “any other capital assets” to “land or building or both”. Now not eligible for Sale of Shares or Bonds etc. However assets sold till 31st March 2018, are eligible for the same. The bond holding period after 1stApril,2018 will be 5 years. The holding period up to 31st March,2018 was 3 years. NHAI or REC or any other bonds notified by the central government. Keyur Patel & Co.

  16. CONVERSION OF STOCK-IN-TRADE INTO CAPITAL ASSET U/S 2(24)(xiia),2(42A),28,49(9) W.E.F A.Y. 2019-20: Section: 2(24)(xiia), 2(42A),28,49(9) On the date of conversion from stock in trade into capital assets will be taxable as business income. The BI will be difference the cost and FMV on the date of conversion(FMV-Rs5000 lessRs400Cost) On the date of sale of Capital Asset : Capital Gain : Sale price less FMV on the date of conversion i.e.SP:Rs7000 less Rs.5000FMV Period of holding for Sale of capital asset will be reckoned from the date of conversion of capital asset. Keyur Patel & Co.

  17. CONVERSION OF STOCK-IN-TRADE INTO CAPITAL ASSET Keyur Patel & Co.

  18. LTCG SALE OF EQUITY SHARES, MF U/S 10(38) & 112A Section 10(38) exemption withdrawn New section 112A added LTCG on from transfer of long term capital asset(LTCA) being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust shall be taxed at 10 percent of such capital gains exceeding one lakh rupees. The rate of 10percent will be applicable to such LTCG, if— i) in a case where LTCA is in the nature of an equity share in a company, securities transaction tax(STT) has been paid on both acquisition and transfer of such capital asset; and ii) in a case where LTCA is in the nature of a unit of an equity oriented fund or a unit of a business trust, STT has been paid on transfer of such capital asset. Keyur Patel & Co.

  19. U/S 112A FOR COMPUTATION OF LTCG The first and second provision to section 48, The indexation benefit in respect of cost of acquisitions and cost of improvement while computation of LTCG is withdrawn. Capital gains in foreign currency in the case of anon- resident, will not be allowed. The new scheme of computation of LTCG under:- The cost of acquisitions in respect of the LTCA 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. Keyur Patel & Co.

  20. FMV : FAIR MARKET VALUE (SHARES/UNITS OF MF) 1.In a case where the capital asset is listed on any recognized stock exchange, the highest price of the capital asset quoted on such exchange on the 31st day of January, 2018. 1.A However, where there is no trading in such asset on such exchange on the 31st day of January, 2018 , the highest price of such asset on such exchange on a date immediately preceding the 31st day of January, 2018 when such asset was traded on such exchange shall be the fair market value; 2. In a case where the capital asset is a unit and is not listed on recognized stock exchange, the net asset value of such asset as on the 31st day of January, 2018. Keyur Patel & Co.

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  22. BASIC THREE SCENARIO 1.If Sales consideration is higher than FMV (31stJan.,2018), the gain will be restricted FMV on 31stJan,2018 2. Sales consideration is lower than FMV than LTCG restricted to sales consideration(If you get less than 1stFebruary Value-No LTCG) 3. Long term capital loss will be available only in case where your sales consideration is less than original acquisition cost (FMV-1stFebruary will be ignored for Long Term Loss). Keyur Patel & Co.

  23. EQUITY ORIENTED FUNDS CLAUSE (23D) OF SECTION 10 Clause (23D) of section10 a) In a case where the fund invests in the units of another fund which is traded on a recognized stock exchange,- (I) A minimum of 90 percent of the total proceeds of such funds is invested in the units of such other fund ; and (II) such other fund also invests a minimum of 90 per cent of its total proceeds in the equity shares of domestic companies listed on recognized stock exchange ; and b) in any other case, a minimum of 65 per cent of the total proceeds of such fund is invested in the equity shares of domestic companies listed on recognized stock exchange. Keyur Patel & Co.

  24. DDT IN CASE OF AN EQUITY ORIENTED FUND U/S 115R W.ef.1st April, 2018. Equity oriented fund will have the same meaning assigned to it in the new section 112A of the Act. Any income distributed by equity oriented mutual fund shall liable for DDT at the rate of 10%. Keyur Patel & Co.

  25. BENEFIT OF CHAPTER VIA AND SECTION 87A The benefit of deduction under chapter VIA shall be allowed from the gross total income as reduced by such capital gains. Similarly, the rebate under section 87A shall be allowed from the income tax on the total income as reduced by tax payable on such capital gains. Keyur Patel & Co.

  26. EXEMPTION 10(23C) AND 12AA TRUST/INSTITUTION The concept for trust/institution assessment is Income (commercial parlance ) , Expenditure and Application of funds. The introduction of disallowance for non deduction of TDS u/s 40(a)(ia) for payment to anyone. The cash payment exceeding Rs. 10K u/s 40(A)(3) and 40(A) (3A) w.e.f. A.Y. 2019-20. The above section mutatis mutandis as per business income also apply for application/expenditure of income/funds. Keyur Patel & Co.

  27. CORPORATE TAXATION 25% tax rate for domestic company which has turnover or gross receipt less than Rs. 250 crores in FY 2016-17 earlier Rs.50 crore for FY 2015-16 up to AY 2018-19 Thus, 99% companies are covered because of turnover limit. Domestic company not include LLPs and foreign companies. DDT at the rate of 20.56% (dividend distribution tax) 2(22)(e) deemed dividend will be liable for tax at rate 34.94%. No change in MAT rate. Keyur Patel & Co.

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  30. DDT IN CASE OF DEEMED DIVIDEND 115Q & 115-O Deemed dividend under sub-clause (e) of clause (22) of section of 2 the Act is taxed in the hands of therecipient From 1stApril, 2018: W.E.0F AY 2018-19:DeemedDividend: U/s 115Q of the Act deemed dividends is brought in purview of DDT U/s115-O. Deemed dividend is to be taxed at the rate of30 per cent (Net basis) E.g. Loan given as on 1stMay, 2018 Rs.10 lakhs: DDT Rs3.00lakhs: The above shall apply to transactions referred to in sub- clause (e) of clause (22) of section 2 of the Act undertaken on or after 1st April,2018 Deemed dividend will be payable by company as DDT. Keyur Patel & Co.

  31. U/S 115AD LTCG FOR FII The withdrawal u/s 10(38) FIIs will be liable for tax at the rate of 10% above Rs. 1 lakhs. Applicable to Equity shares/MF Mutatis mutandis as per LTCG of income/funds w.e.f. 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. Keyur Patel & Co.

  32. FACILITATING INSOLVENCY RESOLUTION MAT:115JB W.E.F. A.Y.2018-19 If a company’s application for corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 has been admitted by the Adjudicating Authority. Will be entitled to reduce the loss brought forward (including unabsorbed depreciation) and unabsorbed depreciation for the purposes of computing book profit under section 115JB. Thus 115JB relaxed to allow both Loss and Unabsorbed depreciation allowed to lessen the burden of tax. Keyur Patel & Co.

  33. U/S 79 :C/F AND SET OFF OF LOSSES • The condition of 51 % holding and 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 is waived for the company seeking insolvency resolution under Insolvency and Bankruptcy Code, 2016. • The matter relating to above shall be heard by jurisdictional Principal Commissioner or Commissioner. • From AY 2018-19 and subsequent assessment years. the Return shall be filed by an insolvency professional appointed u/s140. Keyur Patel & Co.

  34. Permanent Account Number(PAN) u/s 139A(1)(v)- Entiry (Vi) –Directors Etc w.e.f. 1stApril,2018 PAN as Unique Entity Number (UEN) for non-individual entities 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. Keyur Patel & Co.

  35. Permanent Account Number(PAN) u/s139A(1)(v)- Entiry (Vi) –Directors Etc In order to link the non-individual entities with the natural persons, it is also AY 2019-20 that the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer or any person competent to act on behalf of such entities shall also apply to the Assessing Officer for allotment of PAN. W.e.f.1st April, 2018. Keyur Patel & Co.

  36. PRIMA-FACIE ADJUSTMENTS DURING PROCESSING OF ROI U/S 143(1)(A)(VI) W.e.f.A.Y.2018-19 onwards, U/s 143(1) used for processing return on the basis return filed u/s 139 or response to notice U/s142(1). U/s 143(1) (a) (vi) provides for adjustment in respect of 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 return. Now adjustment u/s 143(1)(a)(vi) will not be done Adjustment u/s 143(1)(a)(i) to(v)will continue. Keyur Patel & Co.

  37. E-SCRUTINY PROPOSAL BEFORE PARLIAMENT At present: Section 143 of the Act provides for the procedure for assessment. Sub-section (3) of the said section empowers the Assessing Officer to make, by an order in writing, an assessment of total income or loss of the assesses, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment New scheme : Purpose: Greater transparency and accountability Eliminating the interface between the Assessing Officer and the assesses Optimal utilization of the resources and introduction of team- based assessment. AY 2019-20 new amendment will be put before parliament . The same shall be drafted before31stMarch,2020 (Continue) Keyur Patel & Co.

  38. U/S 276CC: PROSECUTION FOR NON-FURNISHING OF RETURN Section 276CC of the Act provides for a fine and/or prosecution for non filing of a return. Section276CC(ii)(b) provides that if tax payable is less than Rs. 3000/- after taking care of advance tax or TDS no prosecution will be done. The exception provided from 1stApril, 2018 in case of company assesses is removed. Hence, in case of company the prosecution can be launched even if tax payable is less than Rs.3000. Keyur Patel & Co.

  39. PROACTIVE ACTIONS REQUIRE FOR BETTER PROFESSIONAL SERVICE Accounting Status till 31/12/2018 Keyur Patel & Co.

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  41. Button Points • Opening balance (Audited BSPL/ Final uploaded Computation) • All Bank Accounts including OD/Home Loan/CC Etc. have been accounted for? Verification of Bank Reconciliation Statement as on 31/12/2018…. • Previous Year ITR and Computation verification • Comparison with figures as on 31/12/2018, 31/12/2017, 31/3/2018 with each income and expense head columnar form which can be generated easy from Tally. • Cash book analysis for Section 40(A)(3) Cash payment Limit Rs.10000 should be checked. • Other income Details of Rent, Interest Etc and comparable amount as on 31/12/2018 • Verification of Expense head other than for Goods to ensure that TDS Liability have been Discharged Properly Or Not??? (compare With TDS Return) • Transportation and other expense head where reverse charge is applicable under GST Law • 26AS with income ledgers and verification of Advance Tax paid till 15/12/2018. • Provident Fund, Professional Tax, ESI other statutory dues should be verified with challans and ensure that proper entries have been passed in the system???? • Balance under duties and taxes with Electronic Credit Ledger and reconcile it if not the same. • Final print Trial Balance get it verified from atleast 1 Senior Person and Proprietor/ Tax Partner • Call and arrange meeting with assessee for next 3 months plan and his approximate tax liability for the AY 2019-20, advise for • Advance Tax Liability for last installment • 80C Investment, 80D • Non-compliance shall be converted in compliance mode to avoid huge interest and other penal consequences. • Analysis of graphical position pre-GST, Post GST, and change in business scenario • Suggest on revising pricing of product/service if there is major variance between projection and actual figures. Keyur Patel & Co.

  42. GST If Registered Keyur Patel & Co.

  43. Action Required • GSTR 3B vs GSTR 1 Reconciliation Up to 31/12/2018 • Credit vs GSTR 2A Reconciliation up to 31/12/2018 • Verification of GST Credit Ledger and supporting evidence • Bifurcation of eligible credit for Revenue And capital in nature • Ensure Credit Blocked As per Section 17(5) & 17(6) have not been taken. If taken reverse it. • Scrutinize Other income and ensure whether other income liable for GST? If liability not discharged pay along with interest now. (eg. Advertisement Agency +Commercial Rent Received) • Credit Note And Debit Note Should Be checked and effect in GST Returns have been given properly or not • What is refund Status till 31/12/2018 (Export And SEZ) • Anti- proffering clause is applicable? Analyze on sample basis • Notices received if any from the department and pending for compliance. Keyur Patel & Co.

  44. THANK YOU E-MAIL : dipak@cakpc.com M. +91 9016547327 Web : www.cakpc.com

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