CA Final Direct Tax (DT) Amendments Nov 2017 Syllabus

CA Final Direct Tax (DT) Amendments for Nov 2017 exam are very high in number. Budget 2016 will apply to Nov 2017 CA Final Direct tax exam, and therefore, all the changes brought by the Finance Act 2016 will be applicable from Nov 2017 DT exam. Starting from Salaries, almost every chapter in Direct Tax Paper has certain changes or Amendments. This Article on CA Final Direct Tax (DT) Amendments for Nov 2017 has been written by CA Akash Mehra. We also recommend students to go through Direct Tax Notes by FinApp.

CA Final Direct Tax Amendments Nov 2017

The following are the Important of the Amendments that were not applicable for May 2017 but are applicable for Nov 2017 CA Final exams.

1. Keyman Insurance Policy taken for a partner in a firm shall be treated as a Business Expenditure under Sec 37.

2. Rent from Let Out Buildings or Space in SEZ shall be treated as Business Income and not as HP Income.

3. In order to claim deduction under 80JJA, one of the conditions is that, employee must be employed for atleast 240 days. However, considering the seasonal nature of Apparel Businesses, this days limit has been changed to 150 days (For other businesses, 240 limit will continue to apply).

4. Companies which has exercised option under 115BA (Lower tax of 25%) can claim depreciation at the max rate of 40% only, even if rate of depreciation for that asset is over 40%.

5. Earlier it was provided that Notice under Section 143(2) shall be served by ‘Prescribed IT Authority’. This has been clarified and, the Prescribed Authority here means, Income Tax Authority not below the rank of Income Tax Officer.

6. PAN and TAN can shall now be applied with a Single Application Form (Earlier, two different forms to apply these).

7. For Calculating Deemed Profit under section 44AD, the rate of profit has been reduced to 6% for receipts through Digital Means. Note that, for cash receipts, still the old rate of 8% will apply.

For example, A Hotel in Mumbai has a total turnover of Rs.80 Lakhs. The hotel only accepted payments through Debit Card and Paytm. Now, this Hotel can show their Profit as only 6% of total sales, instead of 8%.

If a business has received both Digital and Cash Payments, then 6% will apply for Digital Receipts part and 8% for other sales.

8. Earlier, on any unexplained incomes (Black Money), the tax has to be paid at 30%. Now, this rate has been  increased to 60% under Section 115BBE.

For example, There is a credit in my Bank Account for Rs.10 Lakhs. IT Dept asked me to explain from where did the money has come from. I was unable to give a proper source. Now, i will have to pay tax at 60% on this 10 Lakhs.

Section 87A Rebate – CA Final DT Amendments Nov 2017

The Rebate under section 87A has been increased to Rs.5,000 (Earlier Rs.2,000). In order to provide further relief to resident individuals in the lower income slab, section 87A has been amended.

DDT – CA Final DT Amendments Nov 2017

Exemption under section 10(34) not to apply to dividend chargeable to tax in accordance with section 115BBDA.

A proviso has been inserted in section 10(34) to provide that the exemption available thereunder in respect of dividend received by a shareholder from a domestic company would not apply to income by way of dividend chargeable to tax under section 115BBDA.

NPS Payments – CA Final DT Amendments Nov 2017

Payment from NPS Trust to an employee on closure of his account or on his opting out of the pension scheme exempt to the extent of 40% of such payment [Section 10(12A)].

Extension of period for completion of construction – Direct Tax Amendments Nov 2017

Deduction for Interest on Capital borrowed for house construction can be claimed up to Rs. 2 Lakh. To claim this deduction, the house construction shall be completed with in 5 years (Earlier, the house construction shall  be completed with in 3 years. This was recently amended to 5 years).

Rent Arrears – CA Final DT Amendments Nov 2017

At present, section 25AA contains the special provisions on taxation of unrealised rent allowed as deduction when realised subsequently and section 25B contains the tax treatment of arrears of rent received.

However, as per the latest amendment, New section 25A(2) provides a deduction of 30% of arrears of rent or unrealised rent realised subsequently by the assessee.

Section 55 – CA Final DT Amendments Nov 2017

Non-compete fee received/receivable for not carrying on a profession chargeable under the head “Profits and gains of business or profession”.

Section 32(1)(iia) – CA Final DT Amendments Nov 2017

As per this amendment, Assessees engaged in the business of transmission of power eligible for additional depreciation.

Businesses eligible for claim of additional depreciation under section 32(1)(iia) are Manufacture or production of an article or thing and Generation, transmission or distribution of power.

Indian Railways – CA Final DT Amendments Nov 2017

Any Amount payable to Indian Railways for use of railway assets allowable as deduction in the year in which the liability to pay such sum is incurred, only if payment is made on or before the due date of filing of return.

In order to encourage timely payment of dues to Railways for use of the Railway assets, clause (g) has been inserted in section 43B to expand its scope to include any sum payable by the assessee to the Indian Railways for use of Railway assets, within its ambit.

Section 47(xix) – CA Final DT Amendments Nov 2017

Transfer of units by unit holders on consolidation of plans within a mutual fund scheme not to be regarded as transfer.

COA – CA Final DT Amendments Nov 2017

Cost of acquisition of asset, whose fair market value has been taken into account for the Income Declaration Scheme, 2016.

The person making a declaration under the Scheme would be liable to pay tax at the rate of 30% of the value of such undisclosed income as increased by surcharge at the rate of 25% of such tax. In addition, he would also be liable to pay penalty at the rate of 25% of such tax.

Therefore, the declarant would be liable to pay a total of 45% of the value of the undisclosed income declared by him. This special rate of tax, surcharge and penalty specified in the Scheme will override any rate or rates specified under the provisions of the Income-tax Act or the annual Finance Acts.

Section 50C – CA Final DT Amendments Nov 2017

Stamp duty value on the date of agreement may be adopted as full value of consideration of immovable property, being land or building or both, if whole or part of the consideration has been paid by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property.

Section 50EE – CA Final DT Amendments Nov 2017

Exemption of long-term capital gains on investment in notified units of specified fund has been specified under section 50EE.

Section 50EE CA Final Direct Tax Amendments for May 2017 and Nov 2017

Section 54GB – CA Final DT Amendments Nov 2017

The Scope of exemption under section 54GB has been expanded to cover LTCG on sale of residential property invested in shares of eligible start-up company.

Section 112(1)(c) – CA Final DT Amendments Nov 2017

Long-term capital gains on shares of private companies to be subject to concessional rate of tax@10% in the hands of non-corporate non-residents and foreign companies.

Section 112(1)(c) prescribes a concessional tax rate of 10% (without indexation benefit) for long-term capital gain arising from transfer of unlisted securities in the hands of non-corporate non-residents and foreign companies.

Download CA Final Direct Tax Amendments Complete Material