CHANGES MADE IN FINANCE BILL (Original) 2012: DIRECT TAXES
(As passed by Lok Sabha)
The Finance Bill 2012 was
presented by Finance Minister on 16th March, 2012. There are few
changes made in Original bill when presented & passed in Lok Sabha on 07.05.2012
and 08.05.2012 respectively. Gist of changes made in the original bill is
summarised as under:
Section 2(24)(xvi)
:
Any consideration received for issue of shares, as
exceeds the fair-market value of the shares referred to in Section 56(2)(viib),
shall be treated as 'Income'.
Section
10(23BBH):
Income
of Prasar Bharati (Broadcasting Corporation of India) shall be exempt. (W.e.f.
AY 2013-14).
Section 56(2)(viib)
The exemption from this provision is extended to companies
which belong to a class or classes of persons as may be notified by the Central
Government in this behalf.
Section
80CCG:
The deduction under this section is available if all conditions
are satisfied:
i.
The assessee
is a resident individual (may be ordinarily resident or not ordinarily
resident);
ii.
The assessee
is a new retail investor as specified in the above notified scheme;
iii.
Gross total
income does not exceed INR 10 lakhs;
iv.
Acquired
listed shares in accordance with a notified scheme;
v.
The investor
is locked-in for a period of 3 years from the date of acquisition in accordance
with the above scheme;
vi.
The assessee
satisfies any other condition as may be prescribed.
Amount
of deduction –The amount of deduction is at 50% of amount invested in equity
shares, subject to maximum INR 25,000. If any deduction is claimed by a
taxpayer under this section in any year, he shall not be entitled to any deduction
under this section for any subsequent year.
Withdrawal of
deduction – If the assessee violates
any of the conditions, the deduction originally allowed shall be deemed to be
the income of the assessee of the year in which default is committed.
Section 95
to 102/ 144BA/245N (GAAR) :
Ø
Applicable w.e.f. 01-04-2013 i.e. from AY
2013-14.
Ø
Now the onus to prove that the “Main purpose” of present
arrangement is to obtain the tax benefits would be on revenue.
Ø
An arrangement shall be “Deemed to lack
commercial substance” if
a)....
b)....
c) It involves
the location of an asset or of a transaction or of the place of residence of
any party which is without any substantial commercial purpose other than
obtaining a tax benefit (but for the provisions of this Chapter) for a party
Ø Approving
panel will also consist of an officer of the Indian Legal Service not below the
rank of Joint Secretary to the Government of India.
Ø Any
Person (Resident or non-resident) may make an application to Authority for Advance
Ruling (AAR) for determination of any arrangement as Impermissible avoidance
agreement.
Section 112:
Ø
For Non – residents & Foreign Companies.
Ø
LTCG on unlisted securities (shares, debentures
etc) will be taxable @ 10%.
Ø
Without giving effect to first proviso to
section 48 ( Capital gains calculation on foreign currency)
Ø
Without giving indexation benefits.
Section 115JB:
Ø Insurance or banking company or any company engaged in the
generation or supply of electricity (or any other class of company for which a
form of profit and loss account has been specified in or under the Act
governing such class of company), has been given an option, to prepare profit and loss account either in
accordance with the provisions of:
i.
Schedule VI
to the Companies Act; or
ii.
In accordance with the provisions of
the Act governing such companies.
Ø Provisions of MAT will not apply to companies engaged in Life
Insurance Business.
Section 115JG
:
Special provision for conversion of Indian Branch of a
foreign Bank into a subsidiary Indian Company:
Ø
Subject to fulfilment of scheme framed by RBI,
such conversion will be exempt from capital gain tax.
Ø Provisions
of the Act relating to treatment of unabsorbed depreciation, set off or carry
forward of losses, tax credit in respect of tax paid on deemed income relating
to certain companies and the computation of income in the case of the foreign
company and the Indian subsidiary company, shall apply with such exceptions,
modifications and adaptations as may be specified in that notification.
Ø In
case of non compliance of guidelines framed by RBI, normal provisions of the Act
will apply and exemption will be withdrawn by passing order u/s 154.
Section 115U:
TDS provisions will not apply in
case of income credited or paid to Venture capital fund or Venture Capital
Company.
Section 139:
Filing of Return of Income will
be mandatory for Resident Assessee, if they have financial interest
located outside India.
Section 194LAA
Proposed TDS provisions for
purchase of Immovable properties withdrawn.
Section 194LC:
Ø TDS
will be deducted on payment of interest on borrowing made by issue of Long term
Infrastructure Bonds.
Ø Every
Indian company is required to deduct Tax from payment of any interest on money
borrowed in foreign currency under a loan agreement as well as by way of
long-term infrastructure bonds.
Section 197A:
NO TDS from specified payment to
a notified institutions, association, body or class of institutions,
associations or bodies.
Section 206C:
Ø TCS
provisions will not be applicable if the goods are purchased for generation of
power.
Ø Sale
of bullion/jewellery will be subject to TCS provisions, if sale consideration
of bullion (excluding any coin/article weighing 10 grams or less) exceeds INR 2,00,000
or sale consideration of jewellery exceeds INR 5,00,000.
