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

Particulars Before Amendment After Amendment

Where the Parent entity or the alternate reporting entity is resident in India

CbCR in Form 3CEAD shall require to be To be filed on or before the due date for filing of Return of income. For FY 2017-18; the date would be 30th November 2018

CbCR in Form 3CEAD shall require to be filed within 12 months from end of the reporting year. For FY 2017-18; the date would be 31st March 2019

Constituent entity (CE) resident in India of Parent entity not resident in India

No such provision The CE resident in India shall file CbCR (in Form 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 Alternate Reporting Entity

No such provision Due date as specified by that respective country or territory

Definition of Agreement (Section 286) Agreement would mean:- a. an agreement referred to in sub-section (1) of section 90 or sub-section (1) of section 90A, or

b. Any other agreement as may be notified by the CG

Agreement would mean :- a. an agreement referred to in sub-section (1) of section 90 or sub-section (1) of section 90A, and b.also an agreement for exchange of the CbCR report 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:- The accounting year in respect of which the financial and operational results are required to be reflected in the report referred to in sub-section (2)

Reporting accounting year means:- The accounting year in respect of which the financial and operational results are required to be reflected in the report referred to in sub-section (2) and sub-section (4)(no DTAA or systematic failure section 286(4))

Amendment in Section 286

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 heard

Proposals- 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

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International Tax Review's directory to the leading tax advisory practices,

including law firms, around the world.

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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

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