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Amendment Income Tax June/Dec 2022 (Tax Law) CS Executive | CA Inter | CMA Inte



Amendment: 1

Tax Rates for Domestic Company For May/June or Nov/Dec. 2022 Exams: PY 21-22 & AY 22-23 is Relevant Amendment: 2 If the total turnover of gross receipt of the company in P.Y.2019-20 ≤ ₹ 400 Crore = 25% of Total Income In any other case 30% of Total Income > Other Tax Rates & Provisions are same as December 2021

Also Update in Our Notes


Chapter 14 Assement Procedure and Interest (Return of Income)


Amendment 1.

Amendment 2.


Amendment 3.



Amendment 4.



Chapter 2 RESIDENTIAL STATUS


Amendment 1.



Chapter 3 Salary


Amendment 1.

1. Interest Credited on Contribution by such person/employee As per section 10(11), any payment from 1. Public Provident Fund(PPF) 2. Statuary Provident Fund (SPF) 3. Recognize Provident Fund (RPF) Accumulated balance due and becoming payable to an employee is exempt under section 10(11) & 10(12). The Finance Act 2021 provided that any interest to the extent it relates to the amount of Provident Fund contribution exceeding Rs 2,50,000 made by employees would be subject to tax [Assume, if employee contributes Rs. 4,50,000, the interest on 2,00,000 shall not exempt] . However, in cases where only the employee is making contributions to the Provident Fund, the threshold limit of Rs 2,50,000 would be enhanced to Rs 5,00,000 [Assume, if employee contributes Rs. 6,00,000 then interest on Rs. 1,00,000 shall not be exempt]. Thus, such an amendment would lead to dual accounts within the Provident Fund account i.e. the Taxable as well as the Non-Taxable component. It may be noted that interest accrued on contribution to such funds upto 31stMarch, 2021 would be exempt without any limit, even if the accrual of income is after that date. Note: Exemption of PF will be available in following Circumstances: 1. Employee has completed the service of 5 years. 2. Employee has not completed the service of 5 years but service was Terminated by reason of a) Ill health b) Discontinuation by Employee c) Reason beyond the Control of Employee. 3. Employer Transfer the accumulated balance related to employee towards a) Account of New Employer b) NPS u/s 80CCD c) Govt. Notified Account





Amendment 2.


Annual accretion to the balance at the credit of the recognised provident fund/ NPS/ approved superannuation fund which relates to the employer’s contribution and included in total income (on account of the same having exceeded ₹ 7,50,000)


Chapter 6 PGBP


Amendment 1.

1) Sec.2(11) Block of assets: Block of Assets: A “block of assets” is defined in section 2(11), as a group of assets falling within a class of assets comprising— ✓ Tangible assets, being buildings, machinery, plant or furniture; ✓ Intangible assets, being know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature, not being goodwill of a business or profession.


Amendment 2.

Sec.43(6) Written down value: While computing W.D.V. of the block of assets as on 1.4.2020 i.e., for P.Y. 2020- 21, if goodwill of a business or profession was part of the block of assets and depreciation was allowed on that to the assessee upto P.Y. 2019-20, actual cost of the goodwill as reduced by the amount of depreciation that would have been allowable to the assessee for such goodwill as if goodwill was the only asset in the block, has to be reduced. However, such amount of reduction cannot exceed the WDV.


Amendment 3.

Sec.36(1)(VA) Amount received by assessee-employer as contribution from his employees towards their welfare fund to be allowed only if such amount is credited on or before due date any sum received by the employee as contribution towards any welfare fund of such employees will be allowed only if such sum is credited by the taxpayer to the employee’s account in the relevant fund on or before the due date. As per EPF Scheme 1952, the amounts under consideration in respect of wages of the employees for any particular month shall be paid within 15 days of the close of every month.

Note - It is clarified that the provisions of section 43B shall not be applicable.


Amendment 4.




Sec.43CA: Land & Building Held as Stock in trade. Where the stamp duty value exceed 110% of the consideration received or accruing then Stamp duty value shall be Full Value of consideration for the purposes of computing PGBP.

Instead of 110% take 120% if Following Conditions are satisfied


• The Transfer of residential unit takes place during the period between 12.11.2020 and 30.6.2021 • Such transfer is by way of first time allotment ofthe residential unit to any person • The consideration received or accruing as a result of such transfer < 2 Crores


Amendment 5.



Chapter 7 Capital Gains


Amendment 1.

SECTION 2(14) CAPITAL ASSET
According to section 2(14), a capital asset means – a) Property of any kind held by an assessee, whether or not connected with his business or profession; b) Any securities held by a Foreign Institutional Investor c) Any unit linked insurance policy (ULIP) issued on or after 1.2.2021, to which exemption under section 10(10D) does not apply on account of – i. Premium payable exceeding ₹ 2,50,000 for any PY during the term of such policy; or ii. The aggregate amount of premium exceeding ₹ 2,50,000 in any PY during the term of any such ULIP(s), in a case where premium is payable by a person for more than one ULIP issued on or after 1.2.2021.

Amendment 2.

Sec.45(1B) (iii) Unit Linked Insurance Policy Receipts [Section 45(1B)]
Where any person receives, at any time during any previous year, any amount, under a ULIP issued on or after 1.2.2021, to which exemption under section 10(10D) does not apply on account of – (i) premium payable exceeding ₹ 2,50,000 for any of the previous years during the term of such policy; or (ii) the aggregate amount of premium exceeding ₹ 2,50,000 in any of the previous years during the term of any such ULIP(s), in a case where premium is payable by a person for more than one ULIP issued on or after 1.2.2021, then, any profits or gains arising from receipt of such amount by such person shall be chargeable to income-tax under the head “Capital gains” and shall be deemed to be the income of the such person for the previous year in which such amount was received. The income taxable shall be calculated in such manner as may be prescribed.

Amendment 3.


Sec.55(2) Cost of Acquisition of Goodwill:
Goodwill of a business or profession or a trademark or brand name associated with a business or profession or a right to manufacture, produce or processany article or thing, or right to carry on any business or profession, tenancy rights, stage carriage permits and loom hours COA will be NIL if Self generated.
In case of Purchased Goodwill: However, in case of a capital asset, being goodwill of a business or profession, in respect of which depreciation under section 32(1) has been obtained by the assessee in any previous year (upto P.Y.2019-20), the cost of acquisition of such goodwill would be the amount of the purchase price as reduced by the total amount of depreciation (upto P.Y.2019-20) obtained by the assessee under section 32(1).
In case of Purchase of Goodwill by Previous Owner:
However, in case of a capital asset, being goodwill of a business or profession, in respect of which depreciation under section 32(1) has been obtained by the assessee in any previous year (upto P.Y.2019-20), the cost of acquisition of such goodwill would be the amount of the purchase price for such previous owner as reduced by the total amount of depreciation (upto P.Y.2019-20) obtained by the assessee under section 32(1).

Amendment 4.

Sec.50B Slump Sale: Deemed full value of consideration [Section 50B(2)(ii)]


Fair market value of the capital assets as on the date of transfer, calculated in the prescribed manner, shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of such capital asset.
Accordingly, the CBDT has inserted Rule 11UAE to determine fair market value of the capital Assets.

Chapter 8 INCOME FROM OTHER SOURCES


Amendment 1.

1. Sec.56(2)(X) Immovable property [Land or building or both]: I. If an immovable Property is received a) Without consideration:- The Stamp duty value of such property would be taxed as the income of the recipient, if it exceeds ₹ 50,000. b) For Inadequate consideration:- If Consideration is less than the stamp duty value of the property and the difference between the stamp duty value and consideration is more than the higher of – i. ₹ 50,000 and ii. 10% of consideration The Difference between the stamp duty value and the consideration shall be chargeable to tax in the hands of the assessee as “Income from other sources”. In case immovable property, being a residential unit fulfilling the stipulated conditions mentioned below, is received for inadequate consideration from a person who holds such property as his stock-in-trade, then, only if the stamp duty value of the residential unit exceeds the sale consideration by 20% of the consideration or ₹ 50,000, whichever is higher, would the difference between the stamp duty value and the actual consideration be chargeable to tax in the hands of the recipient of immovable property. The benefit of higher threshold of 20% of consideration vis-à-vis 10% of consideration shall available, subject to the satisfaction of following conditions –
i. The residential unit is transferred during the period between 12.11.2020 and 30.6.2021; ii. Such transfer is by way of first time allotment of the residential unit and iii. The consideration paid or payable as a result of such transfer ≤ ₹ 2 crores.

Amendment 2.

2. Non-applicability of section 56(2)(x): However, any sum of money or value of property received in the following circumstances would be outside the ambit of section 56(2)(x) - (i) From any relative; or (ii) On the occasion of the marriage of the individual; or (iii) Under a will or by way of inheritance; or (iv) In contemplation of death of the payer or donor, as the case may be; or (v) From any local authority as defined in the Explanation to section 10(20);or (vi) From any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in section 10(23C); or (vii) From or by any trust or institution registered under section 12A or section 12AA or section 12AB; or (viii) By any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in Section 10(23C)(iv)/(v)/ (vi)/(via). (ix) By way of transaction not regarded as transfer under section 47(i)/(iv)/(v)/(vi)/(via)/ (viaa)/(vib)/(vic)/(vica)/(vicb)/(vid)/(vii)/(viiac)/(viiad)/(viiae)/(viiaf). (x) From an individual by a trust created or established solely for the benefit of relative of the individual. (xi) From such class of persons and subject to such conditions, as may be prescribed.

Chapter 11 DEDUCTIONS


Amendment 1.



1. Deduction in respect of interest payable on loan taken for acquisition of residential house property [Section 80EEA] (i) Eligible assessee: An individual who has taken a loan for acquisition of residential house property from any financial institution. Interest payable on such loan would qualify for deduction under this section. (ii) Conditions: The conditions to be satisfied for availing this deduction are as follows


Conditions

✓ Stamp Duty Value of House < 245 Lakhs

✓ The Individual should not own any residential house on the date of sanction of loan.

✓ Loan should be sanctioned by a Financial Institution during the Period from 1.4.2019 and 31.03.2022

✓ The Individual should not be eligible to claim deduction u/s 80EE


(iii) Quantum of deduction: The maximum deduction allowable is ₹ 1,50,000. The deduction of upto ₹ 1,50,000 under section 80EEA is over and above the deduction available under section 24(b) in respect of interest payable on loan borrowed for acquisition of a residential house property.


Chapter 12 TDS/TCS

Amendment 1.

Section 194P: Deduction of tax by a specified bank in case of specified senior citizen (1) Applicability and rate of TDS
A notified banking company shall compute total Income of specified senior citizen for the relevant assessment year, computed after giving effect to - - Deduction allowable under Chapter VI-A; and - Rebate allowable under section 87A
Exemption from filing return of income
The specified senior citizen is exempted from filing his return of income for the assessment year relevant to the previous year in which the tax has been deducted under this section.

Amendment 2.

Deduction of tax at source on purchase of goods [Section 194Q] [w.e.f1.7.2021]
Section 194Q requires any person, being a buyer who is responsible for paying any sum to any resident-seller for purchase of goods of the value or aggregate of such value exceeding ₹ 50lakhs in a previousyear, to deduct tax at source @0.1% of such sum exceeding₹ 50 lakhs.
Non-applicability of TDS under section 194Q
Tax is not required to be deducted under this section in respect of a transaction on which - (a) Tax is deductible under any of the provisions of this Act; and (b) Tax is collectible under the provisions of section 206C, other thansection 206C(1H). In case of a transaction to which both section 206C(1H) and section194Q applies, tax is required to be deducted under section 194Q.

OTHER AMENDMENTS

Section 142(1)(i): If return of income has not been furnished under section 139(1), then the Assessing officer may issue a notice requiring the assessee to furnish the return of income within the time specified in the notice. The notice under section 142(1)(i) can also be issued after 31st December of the relevant AY
As per section 143(1), the intimation for tax payable refundable shall not be sent after the expiry of 9 months from the end of the financial year in which return is filed. However, the limitation of 9 months shall not apply to issue of cheque of refund.
For Making Assessment u/s 143(3) the A.O is required to serve a notice u/s 143(2). This Notice has to be served within 3 Months from the end of the F.Y in which return is Furnished

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