union budget 2017: direct tax amendments
TRANSCRIPT
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Union Budget 2017: Direct tax amendments
1. Corporate tax
The headline tax rate remains at 30 percent plus surcharge and cess as in Financial
Year (‘FY’) 2016-17.
Basic tax rate in case of domestic companies having a total turnover or gross receipts
not exceeding INR 500 mn in the FY 2015-16 is proposed to be reduced from 30
percent to 25 percent. The effective tax rate for such companies will be 27.55
percent where taxable income is less than or equal to INR 100 mn in the relevant
year and 28.84 percent where taxable income exceeds INR 100 mn in the relevant
year.
Rationalisation of provisions relating to tax credit Minimum Alternate Tax (‘MAT’) and
Alternate Minimum Tax (‘AMT’)
It has been proposed to allow carry forward of MAT credit or AMT credit for a
period of 15 Assessment Years (‘AY’) as against 10 AYs at present.
It has also further been proposed, that if the Foreign Tax Credit (‘FTC’) allowable
under MAT / AMT provisions exceeds the FTC allowable under normal provisions
of the Income-tax Act (‘ITA’), then the portion of MAT credit allowable to be
carried forward will be reduced to the extent of difference between FTC allowable
under MAT and FTC allowable under normal provisions of the ITA.
The framework for computation of book profit for Indian Accounting Standards (‘Ind
AS’) compliant companies in the year of adoption and thereafter has been
proposed. As per the amended provisions, the amount liable to tax under section
115JB of ITA shall be the book profits computed as per Ind AS adjusted for the
following items:
Sl No Items included in other
comprehensive income that
will permanently be recorded
in reserves and never be
reclassified to profit and
loss
On first time
adoption
Year on year
treatment
1 Changes in revaluation surplus
of property, plant and
equipment (‘PPE’) and
To be included in
book profits at the
time of realization /
To be included in
book profits at the
time of realization
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2. Clarification on ‘indirect transfers’
Union Budget 2017 proposes to exempt non-residents who, directly or indirectly, hold
shares or interest in Category I and Category II Foreign Portfolio Investors (‘FPIs’)
registered with the SEBI under the SEBI (FPI) Regulations, 2014, from applicability of
the ‘indirect transfer’ provisions.
The amendment will take effect retrospectively from April 1, 2012 and will
accordingly, apply in relation to assessment year 2012-13 and subsequent years.
Separately, the FM indicated in his speech that he proposes to issue a clarification
that ‘indirect transfer’ provisions shall not apply in case of redemption of shares or
interests outside India as a result of or arising out of redemption or sale of investment
in India which is chargeable to tax in India. However, this aspect does not find
mention in the fine print and may be dealt with by the issuance of a circular
subsequently.
3. Changes in deduction, exemptions and tax holidays
Rationalisation of section 10AA provisions (SEZ tax holiday)
It is proposed to rationalize the provisions of section 10AA of the ITA to clarify that
the deduction under this section shall be allowed from the total income of the
taxpayer computed without giving effect to the provisions of section 10AA of the
ITA and the deduction under this section shall in any case not exceed the total
Intangible assets (Ind AS 16
and Ind AS 38)
disposal /
retirement or
otherwise transfer
of the asset
/ disposal /
retirement or
otherwise transfer
of the asset
2 Gains and losses from
investments in equity
instruments designated at fair
value through other
comprehensive income (Ind
AS 109)
To be included in
book profits at the
time of realization /
disposal /
retirement or
otherwise transfer
of the investment
To be included in
book profits at the
time of realization
/ disposal /
retirement or
otherwise transfer
of the investment
3 Re-measurements of defined
benefit plans (Ind AS 19)
To be included in
book profits equally
over a period of
five years starting
from the year of
first time adoption
of Ind AS
To be included in
book profits every
year as the
re-measurements
gains and losses
arise
4 Any other item To be included in
book profits equally
over a period of
five years starting
from the year of
first time adoption
of Ind AS
To be included in
book profits every
year as the gains
and losses arise
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income. This explanation clearly overrides the principles laid out by the Hon’ble
Supreme Court in the recent batch of rulings led by Yokogawa ruling.
The impact would be on those enterprises which have profits in their SEZ units
and losses in their other units.
The amendment is effective AY 2018-19 onwards. However, given that the
amendment proposed as a clarification, Revenue may want to apply it to open
assessments and appeals.
Exemption of long term capital gains tax under section 10(38) of the ITA
In addition to the existing requirements of payment of Securities Transaction Tax
(‘STT’) on sale of securities as a prerequisite to avail exemption, it is now proposed to
allow exemption on long-term capital gains arising on transfer of securities only if the
STT was paid on acquisition of these securities. However, some transactions will be
notified where this condition will not apply (like initial public offer (‘IPO’), follow-on
public offer (‘FPO’), right issue, etc).
4. Capital gains tax
Fair Market Value to be full value of consideration in certain cases
It is proposed to introduce section 50CA to provide that where consideration for
transfer of shares of an unlisted company is less than the Fair Market Value (‘FMV’)
of such shares, the FMV shall be deemed to be the full value of consideration for the
purposes of computing the capital gains.
Manner of determination of FMV shall be prescribed by the CBDT.
Shifting base year from 1981 to 2001 for computation of capital gains
It is proposed to shift the base year to April 1, 2001 (in place of April 1, 1981) and
accordingly, taxpayers will now have an option to consider FMV, as on April 1, 2001,
as their cost in respect of assets acquired before April 1, 2001.
Accordingly, for the purpose of computing indexed cost of acquisition for the
abovementioned assets, 2001 shall be considered as the base year.
Period of holding for immovable property reduced
It is proposed to amend section 2(42A) of the ITA to reduce the holding period from
36 months to 24 months in case of immovable property, being land and building or
both, for the purpose of qualifying as long term capital asset.
Expansion of scope of long term bonds under section 54EC
Exemption under section 54EC of the ITA is proposed to be expanded to cover
investment of long term capital gains in any bond redeemable after three years that
shall be notified by the Central Government. This will be in addition to investments in
NHAI bonds and RECL bonds where exemption was allowed on investment up to INR
5 mn.
Tax neutral conversion of preference shares into equity shares
While the existing provisions clearly provided for tax neutral conversion of bonds
or debentures to shares, no explicit exemption was provided for conversion of
preference shares into equity shares.
It has been proposed to amend the provisions of section 47 of the ITA to provide
that the conversion of preference share of a company into equity share shall not
be regarded as ‘transfer’, and hence, shall not be subject to tax.
The cost of acquisition of the equity shares acquired on conversion shall be
deemed to be that part of the cost of the preference shares in relation to which
such equity shares are acquired.
Also, for the purpose of computing the holding period of equity shares obtained on
conversion, the holding period of preference shares will also be included.
Capital gain exemption on transfer of masala bonds
With a view to promote masala bonds as one of the preferred debt instruments, it is
proposed to amend section 47 of the ITA so as to provide that transfer of masala
bonds (issued by an Indian company), by a non-resident to another non-resident shall
not be regarded as ‘transfer’ for capital gains tax purpose.
Further, the relief in respect of exclusion of the foreign exchange fluctuation from the
computation of capital gains on redemption of masala bonds which was enacted vide
Finance Act, 2016 only to non-resident primary investors (subscribers), is now
extended to all the non-residents regardless of their mode of
acquisition. Accordingly, non-resident investors acquiring such bonds by way of
secondary purchase shall be eligible to claim benefit of above exclusion in
computation of capital gains at the time of redemption.
Cost of acquisition of shares in a tax neutral foreign demerger
Cost of acquisition of shares of Indian company referred to in section 47(vic) of the
ITA in the hands of the resulting foreign company shall be the same as it was in the
hands of demerged foreign company.
5. Changes related to income from business / profession
Increase in deduction limit in respect of provision for bad and doubtful debts
Permissible limit of deduction under section 36(1)(viia)(a) of the ITA is enhanced to
8.5 percent from the present 7.5 percent of total income (computed before making
any deduction under this clause and Chapter VI-A).
Extension of scope of section 43D to Co-operative banks
To rationalise the scope of the section 43D of the ITA, it is proposed to amend
section 43D of the ITA so as to include co-operative banks other than a primary
agricultural credit society or a primary co-operative agricultural and rural
development bank.
It is proposed to amend section 43B of the ITA to provide that any sum payable by
the taxpayer as interest on any loan or advances from a co-operative bank other
than a primary agricultural credit society or a primary co-operative agricultural and
rural development bank shall be allowed as deduction if it is actually paid on or
before the due date of furnishing the return of income of the relevant FY.
Measures for promoting digital payments in case of small unorganized businesses
Proposed to amend section 44AD of the ITA to reduce rate of deemed total income of
8 percent to 6 percent in respect of the amount of total turnover, or gross receipts,
received by way of an account payee cheque / bank draft or through electronic
clearing system through a bank account during the financial year or before the due
date specified in sub-section (1) of section 139 in respect of that financial year.
However, the existing rate of deemed total income of 8 percent referred to in section
44AD of the ITA, shall continue to apply in respect of total turnover or gross receipts
received by any other mode.
6. Proposals relevant for Start-ups
Block period for tax holiday extended for Start-ups
Considering that Start-ups may take time to be profitable, section 80-IAC of the ITA is
proposed to be amended to provide that deduction can be claimed by an eligible
start-up for any three consecutive AYs out of 7 years (as against 5 years under the
existing provisions) beginning from the year in which such Start-up is incorporated.
Set-off and carry forward for Start-ups
It is proposed to amend section 79 of the ITA to provide that where a change in
shareholding has taken place in a previous year in the case of Start-up company, loss
shall be carried forward and set off against the income of a financial year, provided
shareholders of such company who held shares in the year of loss continue to remain
shareholders in the year of set-off.
7. Changes related to withholding tax provisions
Sunset on concessional tax withholding rate for External Commercial Borrowings and
Rupee denominated bonds extended till June 30, 2020
Section 194LC is proposed to be amended to continue the benefit of concessional
withholding tax rate (ie 5 percent) on interest paid /payable on External
Commercial Borrowing (‘ECB’) and masala bonds, till June 30, 2020 (extended
from June 30, 2017).
It is also proposed to amend section 194LD to provide that the concessional
withholding tax rate of 5 percent will now be available on interest payable upto
June 30, 2020 (extended from June 30, 2017), in respect of Rupee denominated
bonds and Government securities issued to eligible investors.
Withholding tax on professional fees
It is proposed to reduce the rate of withholding from 10 percent to 2 percent in case of
payments to a payee who is engaged in solely the business of operation of a
call-centres.
Individuals / HUFs not liable to tax audit to withhold tax on rental payments
Under existing provisions of the ITA, withholding tax obligation on rental payment
arises only in case of individuals or HUF who are liable for tax audit under section
44AB of the ITA. To widen the tax base section 194-IB is proposed to be
introduced, to provide for withholding tax obligation (at the rate of 5 percent) in
case of an individual or HUF (not liable for tax audit under section 44AB) where
the rent exceeds INR 0.05 mn per month or part of month.
Further it is proposed that Tax deduction and collection Account Number (‘TAN’)
will not be required (as per section 203A of ITA) and tax would be required to be
withheld only once during the previous year.
In addition to the above it is also proposed that under section 206AA of the ITA,
maximum deduction shall not exceed the rent payable for last month of the
financial year / last month of tenancy.
8. Changes related to tax return filing and assessment (including assessment
time-lines and procedures)
Time limit for furnishing revised return
Time limit for furnishing revised return of income has been aligned to the time limit for
filing belated return. In other words, a revised return can be filed before the end of
the relevant AY or completion of the assessment, whichever is earlier.
Processing of return and issuance of refund
Section 143(1D) of the ITA shall cease to apply for returns furnished for AY 2017-
18 onwards. Accordingly, processing of returns under 143(1) of the ITA will be
made more diligently and refunds shall be processed without intentional delay.
Section 241A is proposed to be introduced for protecting interests of the Revenue
where recovery of the demand is doubtful, if the refunds are processed before
completion of the regular assessment.
Interest on refund due to deductor
It is proposed to introduce section 244A(1B) to provide that the deductor shall be
entitled to receive refund of excess taxes deducted and deposited to the government
along with simple interest on such taxes calculated at 0.5 percent from the date of
claim of refund to the date of grant of refund.
Claim of disputed Foreign Tax Credit (‘FTC’)
It is proposed to amend the ITA to provide that where FTC is not allowed for the
relevant AY on the grounds that payment of such foreign tax was in dispute, the
Assessing Officer shall rectify the assessment order, or issue an intimation under
section 143(1) of the ITA, to allow FTC if the taxpayer, within 6 months from the end
of the month in which such dispute is settled, submits evidence of discharge of the
dispute and complies with other prescribed conditions.
Rationalization of time-lines for assessment, reassessment and re-computation
Time-lines for completion of assessment, re-assessment and re-computation are
proposed to be rationalised as under:
Sl
No Order Current provision Proposed amendment
1 Section 143(3) - Non
transfer pricing cases
Within 21 months
from the end of the
AY
(i) Within 18 months
from the end of the
AY effective for AY
2018-19.
(ii) Within 12 months
from the end of the
AY effective for AY
2019-20 onwards.
2 Section 143(3) -
Transfer pricing
cases
Within 33 months
from the end of the
AY
(i) Within 30 months
from the end of the
AY effective for AY
2018-19.
(ii) Within 24 months
from the end of the
AY effective for AY
2019-20 onwards.
3 Section 147 - Non
transfer pricing cases
Within 9 months
from the end of the
financial year in
which the notice
under section 148 is
served
Within 12 months from
the end of the financial
year in which the notice
under section 148 is
served after April 1, 2019
4 Section 147 -
Transfer pricing
cases
Within 21 months
from the end of the
financial year in
which the notice
Within 24 months from
the end of the financial
year in which the notice
9. Changes in provisions relating to set-off and carry forward of losses
Restriction on inter-head set-off of losses from house property
It is proposed to provide that set-off of loss under the head ‘Income from house
property’ against any other head of income shall be restricted to INR 0.2 mn for an
AY. The unabsorbed loss shall be allowed to be carried forward for set-off in
subsequent years in accordance with the existing provisions of the ITA.
10. Changes in relation to the Authority for Advanced Rulings
Section 245 of the ITA is proposed to be amended to provide for Authority for
Advance Rulings (‘AAR’) constituted under the ITA to also adjudicate on applications
pertaining to indirect taxes (Customs, Excise and Service tax).
Section 245-O of the ITA is proposed to be amended to provide for functioning of the
AAR in the absence of a Chairman.
Qualification of Chairman expanded to cover retired Chief Justice of a High Court and
a Judge of a High Court who has completed 7 years of service.
11. Miscellaneous changes
Disallowance on non-deduction of taxes
It is proposed to amend the provisions of section 581 of the ITA to provide for
disallowance of expenses under provisions of section 40(a)(ia) of the ITA, to the
extent applicable, for the purpose of computing income from other sources.
Expansion of scope for nil / inadequate consideration for receipt of money / property
Section 56(2)(x) proposed to be introduced to cover ‘all’ taxpayers who receive any
sum of money or any property (including immovable property) for nil or inadequate
under section 148 is
served
under section 148 is
served after April 1, 2019
5 Orders of fresh
assessment pursuant
to any appellate /
revisionary orders -
Non transfer pricing
cases
9 months from the
end of the financial
year in which the
order is received
(order is passed, in
the case of revision
orders)
12 months from the end
of the financial year in
which the order is
received (order is
passed, in the case of
revision orders)
6 Orders of fresh
assessment pursuant
to any appellate /
revisionary orders -
Transfer pricing
cases
21 months from the
end of the financial
year in which the
order is received
(order is passed, in
the case of revision
orders)
24 months from the end
of the financial year in
which the order is
received (order is
passed, in the case of
revision orders)
consideration. Consequentially, sunset of April 1, 2017 is proposed in relation to
clause (vii) / (viia) of section 56(2).
Restricting cash donations
It is proposed to amend section 80G so as to provide that no deduction shall be
allowed under the section 80G in respect of donation of any sum exceeding INR
2,000 unless such sum is paid by any mode other than cash.
Clarification on terms used in the Double Taxation Avoidance Agreements
It has been clarified that the terms defined in the Double Taxation Avoidance
Agreements (‘DTAA’) shall have the same meaning, however, if any term is not
defined in the DTAA but defined in the ITA, the same would be applicable along with
the Explanations.
Additional taxation on dividend income
Existing section 115BBDA of the ITA was applicable to an individual, HUF or a firm
resident in India. It is proposed to be amended in a manner to apply to all resident
assesses except domestic company and certain funds, trusts, institutions, etc.
Taxation of income on sale of carbon credits
New section 115BBG to be inserted to provide for a tax rate of 10 percent in
respect of income derived from sale of carbon credits.
Carbon credits is an incentive given to an industrial undertaking for reduction of
the emission of GHGs (‘Green House gases’), including carbon dioxide which is
done through several ways such as by switching over to wind and solar energy,
forest regeneration, installation of energy-efficient machinery, landfill methane
capture, etc.
Limit on cash purchase in excess of INR 0.3 mn
Section 269ST proposed to be inserted in ITA to provide that no person shall
receive cash in excess of INR 0.3 mn in aggregate from a person in one day or in
respect of a single transaction or in respect of transactions relating to one event or
occasion.
Penalty equal to 100 percent of such cash receipt to be levied under new section
271DA of the ITA.
Amendments to section 234C
It is proposed that provisions of section 234C of the ITA shall not apply to
taxpayers who are taxed on presumptive basis if total tax due is paid on or before
March 31 of FY.
Further, it is proposed that provisions of section 234C of the ITA shall not apply in
case the short fall in advance tax instalment arises on account of failure in
estimation of dividend income liable to tax under section 115BBDA of the ITA.
Fee for delay in filing return of income
Section 234F is proposed to be introduced to provide for payment for late filing
fees in case where the return of income is filed after due date. Late filing fees
shall be payable as under:
o Fee of INR 5,000, if the return is furnished after the due date but on or before
December 31 of the AY;
o Fee of INR 10,000 in any other case.
Further, in case total income of the taxpayer does not exceed INR 0.5 mn, the fee
under section 234F of the ITA shall not exceed INR 1,000.
Section 140A of the ITA is proposed to be amended to provide that in case of
delay in filing of return, fee payable under section 234F shall also be taken into
account for determining computation of amount payable or refund due.
In a consequential amendment, section 271F of ITA is proposed to be deleted
with effect from AY 2018-19.
Partial exemption for pension
The existing provision of section 10(12A) of the ITA provides that payment from
National Pension System (‘NPS’) trust to an employee on closer of his account or
opting out shall be exempt up to 40 percent of total amount payable to him. In order
to provide further relief to an employee subscriber of NPS, it is proposed to amend
section 10 of the ITA so as to provide exemption to partial withdrawal not exceeding
25 percent of the contribution made by an employee in accordance with the terms
and conditions specified under Pension Fund Regulatory and Development Authority
Act, 2013 and regulations made there under.
12. Changes in individual taxation
Tax slabs
While no changes have been made to higher income-slabs for individuals, it has been
proposed to reduce the tax rate applicable for income-slab upto INR 0.5 mn. Revised
tax slabs for individuals are proposed as under:
Individuals bellow the age of 60 (resident/ non-resident)
Income slab Proposed income tax rate
Up to 250,000 Nil
250,001-500,000 5 Percent
500,001-1,000,000 20 Percent
Above 1,000,000 30 Percent
No changes proposed to slab rates for resident individuals above the age of 80
years.
Rebate under section 87A
It is proposed to amend the provisions of section 87A of the ITA to reduce the amount
of rebate from INR 5,000 to INR 2,500 Further, it has also been proposed to provide
the rebate under provisions of section 87A only to individuals whose total income
does not exceed INR 0.35 mn.
13. Transfer pricing
Scope of Specified Domestic Transaction (‘SDT’) curtailed
Existing provisions of section 92BA of the ITA provides a list of specified
transactions covered under the ambit of SDT for reporting purposes. This section
inter-alia included all payments made to ‘specified persons’ (related parties)
covered under section 40A(2)(b).
Union Budget 2017 proposes to omit the transactions with persons specified in
section 40A(2)(b) from the scope of SDT. SDT provisions will now apply only
if one of the entities involved in related party transaction enjoys specified profit-
linked deduction, thus, reducing the compliance burden on the taxpayers.
This amendment is applicable with effect from AY 2017-18 onwards.
Secondary Adjustments introduced (section 92CE)
Union Budget 2017 proposes to introduce concept of secondary adjustments in
certain cases where the primary adjustment to the transfer price has been made
under the Indian TP legislation. This concept aligns the TP provisions with the
Organization for Economic Co-operation and Development (‘OECD’) TP
guidelines and international best practices.
Though, the existing TP legislation reverses the tax effect of a non-arm’s length
intra-group transaction by making primary adjustments, however it still leaves
outstanding the actual cash benefit from those arrangements to the Associated
Enterprises (‘AEs’).
In essence, the cash benefit received by an AE benefitting from the non-arm’s
length arrangement would be deemed to be an advance from Indian AE and
would be subject to deemed interest if funds are not repatriated to India.
Resident citizens above the age of 60
Income slab Proposed income tax rate
Up to 300,000 Nil
300,001-500,000 5 Percent
500,001-1,000,000 20 Percent
Above 1,000,000 30 Percent
Memorandum to Union Budget 2017 defines secondary adjustment as an
adjustment in the books of accounts of the taxpayer and its AE to reflect
consistency between actual allocation of profits between taxpayer and AE and the
transfer price determined under primary adjustment, thus, removing imbalance
between eventual determination of transfer price and the actual transactions.
Proposed section provides that a taxpayer is required to make a secondary
adjustment, in cases where a primary adjustment has been made:
o suo-motu by taxapyer;
o by assessing officer and accepted by taxpayer;
o pursuant to an Advance pricing agreement agreed;
o pursuant to Safe Harbour rules; and
o pursuant to mutual agreement procedure or agreement under section 90 / 90A
Secondary adjustment is proposed to be made only when the taxpayer accepts
the primary adjustment made by the transfer pricing officer. Therefore, secondary
adjustments are not required to be made until the matter concludes.
Further, where primary adjustment made to transfer price, results in an increase in
the total income, or reduction in the loss of taxpayer, the differential amount
should be repatriated to India within prescribed time. If not repatriated timely,
excess money to be treated as deemed advance by taxpayer to the AE and
interest on such advance to be computed as per the computation mechanism to
be prescribed.
Provisions relating to secondary adjustment will be applicable from AY 2018-19
onwards and no secondary adjustment can be made in following cases:
o For primary adjustments made for AY 2016-17 or prior years;
o For primary adjustments where total amount of adjustment does not exceed
INR 10 mn.
Guidelines relating to time limit for repatriation of excess money to India and for
imputing interest on deemed loan are yet to be prescribed.
Limitation of interest deduction introduced (Section 94B)
Union Budget 2017 proposes to insert section 94B, in line with recommendations
of the OECD Base Erosion and Profit Shifting (‘BEPS’) Action Plan 4.
Section proposed to be applicable to an Indian Company or a permanent
establishment (‘PE’) of a foreign Company, being the borrower and pays an
interest (exceeding INR 10 mn) for any debt issued by an AE being a non-resident
or PE of a non-resident.
This section will restrict the deduction of the interest expense to the extent of 30
percent of the Earnings before Interest, Taxes, Depreciation, and Amortization
(‘EBITDA’) or interest paid / payable to AE, whichever is less.
Further, if the lender of debt is not an AE of the borrower, but an AE provides
implicit or explicit guarantee to such lender or deposits a corresponding and
matching amount of funds with the lender, such debt transaction shall be deemed
to be entered into between two AEs. This implies that while calculating the
amount of interest deductible, any interest paid on the aforesaid debt would also
be considered while computing the 30 percent limit of interest allowable as per
this section.
Disallowed expense proposed to be allowed to be carried forward for 8 AYs
immediately succeeding the AY for which the disallowance was first made and
would be allowable in the succeeding AYs to the extent of maximum allowable
interest, ie 30 percent of EBITDA.
The amendment excludes the borrowers engaged in Banking and Insurance
business, and companies with an interest expense of less than INR 10 mn. This
amendment shall be applicable with effect from AY 2018-19.
Penalty inserted for incorrect reporting by Professionals (Section 271J)
Union Budget 2017 has proposed a new section 271J relating to penalty on
qualified professionals for furnishing incorrect information in statutory report or
certificate, with effect from AY 2017-18 onwards.
Proposed section provided levy of a penalty of INR 10,000 on certain
professionals, viz merchant banker, accountant or a registered valuer, in case
they submit incorrect information in a report or certificate under any provisions of
the ITA or the rules made thereunder. [For instance, an incorrect reporting in
Form 3CEB entails a penalty on the taxpayer vide section 271AA of the ITA,
however with introduction of section 271J, penalty of INR 10,000 will be levied on
the qualified professional for furnishing incorrect information.]
The proposal seems to be intended to cast additional responsibility on the above
mentioned professionals to undertake rigorous due-diligence while issuing any
report / certificate to a taxpayer, as required under the ITA.
Further, if the person (penalised under section 271J) proves that there was
reasonable cause for such incorrect reporting, then no penalty shall be
leviable. This has been made effective vide corresponding amendment to section
273B of the ITA.
1 Computation of income chargeable to tax under the head ‘income from other sources’
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