Budget at a glance

Sharing herewith the main highlights of the Union Budget - 2018 presented by the Hon'ble Finance Minister.

1. RJSP & ASSOCIATES
CHARTERED ACCOUNTANTS

FCA Ruchika Jain
[email protected]
+91 - 98 11 55 3406
C-123, II Floor, Preet Vihar, Delhi – 110092
+ 91 - 49 40 6882

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BUDGET 2018- AT A GLANCE RJSP & Associates

1. No change in tax rate for individual, HUF and firms.
2. For domestic companies having total turnover or gross receipts not
exceeding INR 250 crores in F.Y. 2016-17 shall be liable to pay tax
@ 25% as against present ceiling of INR 50 crore in F.Y. 2015-16.
3. Education cess is being increased from 3 to 4 % to be known as
Education and Health cess.
4. PAN mandatory for all non-individual entities with financial
transaction > INR 2.5 lacs during a financial year. All directors,
partners, members of such entities also to obtain PAN.
5. Dividend distribution tax (DDT) made applicable on deemed
dividend taxable u/s 2(22). Deemed dividend to be taxed @ 30%
(without grossing up) to prevent camouflaging dividend in various
ways such as loans and advances.
6. Scope of the term of ‘Accumulated Profits’ contained u/s 2(22) on
deemed dividend widened to provide that in the case of an
amalgamated company, accumulated profits, whether capitalised or
not, or losses as the case may be, shall be increased by the
accumulated profits of the amalgamating company, whether
capitalized or not, on the date of amalgamation.
7. Exemption u/s 10(38) of long term capital gain on equity shares/
equity oriented mutual fund/ unit of business trust withdrawn.
8. New section 112A introduced providing for 10% tax without
indexation on LTCG on equity shares/ equity oriented mutual fund/
unit of business trust > INR 1,00,000 provided STT has been paid.
LTCG upto 31.01.2018 shall be grandfathered.
9. Dividend distribution tax (DDT) @ 10% on dividend pay-outs to unit
holders in an equity-oriented fund.
10. In order to maintain tax parity between the domestic investors and
Foreign Institutional Investors (FIIs), tax on long term capital gains
> INR 1,00,000 equally applicable to FIIs as well. Provisions of
section 115AD have been amended accordingly.
11. The scope of term ‘Business Connection’ under section 9 has been
expanded to include ‘significant economic presence’.
12. Section 28 of the Act has been amended to provide that any
compensation received or receivable, whether revenue or capital,
in connection with the termination or the modification of the
terms and conditions of any contract relating to its business shall
be taxable as business income.

FCA Ruchika Jain

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BUDGET 2018- AT A GLANCE RJSP & Associates

13. Similar, amendment has also been made u/s 56 to provide for
taxability of any compensation received or receivable, whether
revenue or capital, in connection with the termination or the
modification of the terms and conditions of any contract relating to
its business shall be taxable as business income relating to its
employment shall be taxable as income from other sources.
14. Monetary limit of deduction u/s 80D raised from INR 30,000 to INR
50,000 in respect of health insurance premium, preventive health
check-up of a senior citizen or medical expenditure in respect of
very senior citizen.
15. Deduction upto INR 50,000 under new section 80TTB in respect of
interest income on deposits held by senior citizen allowed.
However no deduction u/s 80TTA shall be allowed in such cases.
Further, threshold for TDS on interest income u/s 194A raised from
INR 10,000 to INR 50,000 for senior citizens.
16. Enhanced deduction of INR 1,00,000 u/s 80DDB to senior citizens
for medical treatment of specified diseases.

17. Standard deduction of INR 40,000 on salary income. Exemption in
respect of transport allowance (except in case of differently abled
persons) INR 1,600 p.m. and reimbursement of medical expenses
INR 15,000 withdrawn
18. Expansion of scope of deduction u/s 80IAC for start-ups providing
for benefit of deduction to start-ups incorporated upto 01.04.2021
(instead of earlier date specified being 01.04.2019); turnover
criteria and definition of eligible business for start-up deduction
rationalised.
19. Assessments to be made e-assessments across the country u/s 143
(3A). Detailed scheme of assessment to be notified.
20. Provision of section 40(ia) and 40A(3) and 40A(3A) made
applicable to Charitable Trust. Section 10 (23C) and Section
11(1)(a) amended to provide that expenditure incurred without
deduction of tax and in cash exceeding the specified limits will not
be eligible as application of income.
21. Agriculture Commodity Derivates income /loss also not to be
considered as speculative under section 43(5).


FCA Ruchika Jain

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BUDGET 2018- AT A GLANCE RJSP & Associates

22. Provision of Section 43CA, 50C and Section 56(2)(10) amended to
provide that no adjustment is to be made where variation between
stamp duty value and sale consideration does not exceed 5% of sale
consideration.
23. Conversion of stock in trade to capital asset to be charged as
business income in the year of conversion on Fair Market value on
the date of conversion.
24. 54EC benefit of investment in Bonds to be restricted to Capital gain
on land and building only. Further period of holding being
increased from 3 years to 5 years.
25. All companies irrespective of income to file return and in case it is
not filed, such companies will be liable for prosecution for non-
filing irrespective of the fact whether it has any tax liability or not.
26. No adjustment under section 143(1) while processing on account
of mismatch with 26AS and 16A.
27. Provisions of section 80JJA rationalised by reducing the minimum
employment from 240 days to 150 days. The scope of section has
been expanded to include footwear and leather industry in
addition to apparel industry.

28. Provisions of MAT u/s 115JB and carry forward and set off losses
u/s 79 rationalised for facilitating insolvency resolution.
29. Penalty for non-filing financial return as required under section
285BA being increased to INR 500 per day from INR 100 per day.
30. Amendments made in Income Tax Act to bring parity with ICDS:
• Section 36 amended to allow marked to market loss
computed as per ICDS.
• New section 43AA inserted to allow gain or loss in foreign
exchange as per ICDS.
• New section 43CB inserted to provide that income from
construction contract to be computed on Percentage
Completion Method as per ICDS.
• Section 145A amended to provide for valuation of
inventory including securities (listed or non-listed) as per
ICDS.
• New section 145B inserted to provide interest on
compensation or enhanced compensation, claim for
escalation of price, subsidy and incentives to be taxed in
the year of receipt only.

FCA Ruchika Jain