Indian Union Budget 2018 Tax Proposals
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Indian Union Budget 2018 Tax Proposals
Proposals- Direct Taxation
No change in Income Tax Slab rates.
Education Cess - Education cess applicable on the
Tax amount at the rate of 3% has now been
increased to 4%.
Section 80TTB – Exemption for interest amount
received on deposits made in the banks and Post
office by any senior citizen is to be increased from
INR 10,000 to INR 50,000 under section 80TTB.
Proposals- Direct Taxation
Medical reimbursement – Exemption of the sum
paid by the employer to the employee as a
medical reimbursement allowed up to INR
15,000 has been removed.
Section 80DDB – Deduction of amount incurred
on medical expenditure for Specified Disease
under section 80DDB has been increased to INR
100,000 for senior citizens and super senior
citizens.
Proposals- Direct Taxation
Standard Deduction for Salaried class persons–
Standard deduction of INR 40000 for the salaried
employees has been introduced.
Medical Insurance – Limit prescribed under
section 80D for premium paid on Medical or
Health insurance for senior citizen has been
increased from INR 30,000 to INR 50,000.
Proposals- Direct Taxation
Limit for lower income tax rate (25%) for
companies with annual turnover upto INR 50
crore has been increased to INR 250 crore.
Education Cess - Education cess applicable on
the Tax amount at the rate of 3% has now been
renamed to Health and Education Cees and
increased to 4%.
Proposals- Direct Taxation
Section 112A has been introduced to tax the Long
term capital gains (“LTCG”) exceeding INR
100,000 on listed securities at the rate 10%
without allowing benefit of indexation.
All gains under section 112A on LTCG on sale of
listed securities upto 31st January, 2018 to be
grandfathered.
There is no change in tax on Short Term Capital
Gains (“STCG”) and it shall remain taxable at
the rate of 15%.Proposals- Direct Taxation
For the purpose of section 112A, the cost of
acquisition for listed securities would be higher
of :-
a. the actual cost of acquisition of such asset;
b. the lower of –
(I) the fair market value of such asset as on
31st January, 2018; and
(II) the full value of consideration received
or accruing as a result of the transfer of the
capital asset.Proposals- Direct Taxation
Dividend distribution tax on dividend payouts
to unit holders of equity oriented mutual fund
to be taxed at the rate of 10 per cent.
Transfer of certain capital asset subject to certain
conditions by the non resident on a recognized
stock exchange located in any International
Financial Services Centre (“IFSC”) should not be
regarded as transfer under section 47 of the Act.Proposals- Direct Taxation
Changes have been carried out in presumption
taxation specified in section 44AE of the Act
applicable in case of goods carriage. Now, the
presumptive income in case of heavy goods
vehicle would be higher of one thousand rupees
per month or part of month or actual amount
declared calculated on vehicle’s weight basis.
E-assessment to be rolled out across country to
ease tax compliances.Proposals- Direct Taxation
The benefit incentivizing the start ups as given
in section 80-IAC of the Act is now made
available to startups incorporated on or after
the 1st day of April 2019 but before the 1st day
of April, 2021 subject to certain conditions
specified in the Act.
In order to promote job creation, deduction of
30% of the emoluments paid to eligible to new
employees given in section 80-JJAA has been
amended to include footwear and leather
industry also.Proposals- Direct Taxation Amendment in section 286 of the Act- Country-by-Country Reporting Date for filing CbCR is extended to one year from the end of the reporting year from the date of filing return of income. The following slide contains a table analyzing the provision
Proposals- Direct Taxation
Amendment in Section 286
Particulars Before Amendment After Amendment
Where the Parent entity or the alternate CbCR in Form 3CEAD shall require to be To be filed CbCR in Form 3CEAD shall require to be filed
reporting entity is resident in India on or before the due date for filing of Return of within 12 months from end of the reporting year. For
income. For FY 2017-18; the date would be 30th FY 2017-18; the date would be 31st March 2019
November 2018
Constituent entity (CE) resident in India No such provision The CE resident in India shall file CbCR (in Form
of Parent entity not resident in India 3CEAD) in India if the parent entity is not required
to file in its own country. The due date for furnishing
CbCR shall be within 12 months from end of the
reporting year. For FY 2017-18; the date would be
31st March 2019
The due date for furnishing CbCR by No such provision Due date as specified by that respective country or
Alternate Reporting Entity territory
Definition of Agreement (Section 286) Agreement would mean:- Agreement would mean :-
a. an agreement referred to in sub-section (1) of a. an agreement referred to in sub-section (1) of
section 90 or sub-section (1) of section 90A, or section 90 or sub-section (1) of section 90A, and
b. Any other agreement as may be notified by the b.also an agreement for exchange of the CbCR report
CG referred to in sub-section (2) and sub-section (4) as may be
notified by the Central Government
Reporting accounting year (section 286) Reporting accounting year means:- Reporting accounting year means:-
The accounting year in respect of which the financial The accounting year in respect of which the financial
and operational results are required to be reflected in and operational results are required to be reflected in
the report referred to in sub-section (2) the report referred to in sub-section (2) and sub-
section (4)(no DTAA or systematic failure section
286(4))Proposals- Direct Taxation
In order to minimize hardship in case of
genuine transactions in the real estate sector it is
proposed to provide that no adjustments shall
be made in a case where the variation between
stamp duty value and the sale consideration is
not more than five percent of the sale
consideration or Rs. 50,000 whichever is
higher.Proposals- Direct Taxation
Section 115JB dealing with the Minimum Alternative
Tax (‘MAT’) has been amended to provide that the
aggregate amount of unabsorbed depreciation and
brought forward losses shall be reduced from the
book profit, if a company in admitted under the
Insolvency and Bankruptcy Code 2016 (‘IBC’)
Carry forward of losses will be allowed for companies
undergoing IBC if the ownership is changed due to
restructuring and rehabilitation. However, the
Principal Commissioner or the Commissioner has the
right of being heardProposals- Direct Taxation
Digital Permanent Establishment (‘PE’) under Base
Erosion and Profit Shifting (‘BEPS’) Action Plan 1
introduced. India will need to amend its DTAAs with
several countries accordingly.
Dependent Agency PE amended in Indian tax law in
accordance with BEPS 7 recommendation to construe
an agent, of a non-resident as PE, habitually
concluding the contract or playing the principal role
leading to conclusion of contracts by the non-
residents.About Us Ashok Maheshwary & Associates LLP is an accounting firm in India with International presence. Our core practice areas include: Audits, Joint Ventures & Restructuring, International Tax, Dispute Resolution, Transaction Advisory, Mergers & Acquisitions, Entry Strategy for Foreign Investors and Transfer Pricing Study & Documentation. We are a full service firm providing overall support starting from business advisory through entry strategies in India, transaction advisory, transactional support to handling regular compliances, audits and attestations. Member of reputed international alliances, Leading Edge Alliance, the second largest global association of accounting firms in the world (#9 in worldwide ranking of networks, associations and alliances), TPA Global Group, an independent and specialist provider of expert transfer pricing, tax valuation and customs services to provide transfer pricing and valuation services to their clients globally.
Recognition and Awards Consistently ranked as a Tier 3 firm in India in World Tax Guide 2017 & 2018, International Tax Review's directory to the leading tax advisory practices, including law firms, around the world. Consistently ranked as a Tier 2 firm for Transfer Pricing services in India in World Transfer Pricing Guide 2017 & 2018. Published by International Tax Review, World Transfer Pricing Guide is the comprehensive guide to the world’s leading Transfer Pricing firms in each jurisdiction. Nominated by International Tax review for Asia Tax Award 2016 in “National Transfer Pricing Firm” and “Best Newcomer Asia” categories.
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