taxbykk.

com 1 Income Tax Amendment FA 2017

INCOME TAX
Amendment
(FA 2017)
for
2018 attempt

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CS K K Agrawal

CS K.K. Agrawal
Never Say Die
Faculty of Direct Tax and Indirect Tax
+ 15 years experience
Online classes available at taxbykk.com

ICAI and ICSI Faculty

 taxbykk.com 2 Income Tax Amendment FA 2017

RATE OF TAX FOR PY 2017-18 (AY 2018-19)

Slab rate : Individual / HUF (Resident / non resident)
Income Rate of Tax (Method 1) Amount of Tax (Meth-
od 2)
Upto ₹ 2,50,000 Nil Nil
₹ 2,50,001 to 5% of (Income – 2,50,000) 5% of Income – 12,500
5,00,000 10% of (Income – 2,50,000) 10% of Income – 25,000
₹ 5 , 0 0 , 0 0 1 t o 20% of (Income – 5,00,000) + 20% of Income – 87,500
10,00,000 12,500
Exceeds ₹ 30% of (Income – 10,00,000) + 3 0 % o f I n c o m e –
10,00,000 1,12,500 1,87,500
Tax Concession
1. Resident senior citizen (60 years): An individual who is resident in India and who
has attained the age of 60 years at any time during the relevant previous year is called
senior citizen. Tax concession: No tax upto a income of ₹ 3,00,000. Tax concession
₹ 2,500.
2. Resident super senior citizen (80 years): An individual who is resident in India and
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who has attained the age of 80 years at any time during the relevant previous year is
called super senior citizen. Tax concession: No tax upto a income of ₹ 5,00,000. Tax
concession ₹ 12,500.
P1 : Compute tax liability on normal income if assessee is (a) Individual (b) Resident
woman (c) Resident senior citizen. Normal Income : ₹ 3,00,000; ₹ 3,50,000; 4,30,000;
5,00,000; 6,00,000; 10,00,000; 14,00,000.
Soln:
Normal Individual (R / NR)CS KResident
K AgrawalSenior Citi- Resident Super Se-
Income Tax zen (Tax – ₹ 2,500) nior Citizen (Tax –
₹ 12,500)
₹ 3,00,000 2,500 nil nil
₹ 3,50,000 5,000 2,500 nil
₹ 4,30,000 9,000 6,500 nil
₹ 5,00,000 12,500 10,000 nil
₹ 6,00,000 32,500 30,000 20,000
₹ 10,00,000 1,12,500 1,10,000 1,00,000
₹ 14,00,000 2,32,500 2,30,000 2,20,000
 taxbykk.com 3 Income Tax Amendment FA 2017
Section 87A, Tax Rebate
Conditions
1. Assessee is resident individual.
2. His total income is upto ₹ 5,00,000.
Amount of rebate
100% of tax or ₹ 2,500 ₹ 5,000 whichever is lower. This rebate is not applicable to super
senior citizens.
Note 1 : Rebate u/s 87A is not available to non resident individual or to HUF / AOP /
BOI / AJP.
Note 2 : Rebate u/s 87A is available also from tax on special income and lottery income.
Illustation
Normal Resident Resident Senior Resident Super Non Resi-
Income Individual Citizen Senior Citizen dent Ind /
Tax – Rebate u/s (Tax – (Tax – ₹ 12,500) HUF
87A ₹ 2,500) – Rebate – Rebate u/s 87A (R/NR)
u/s 87A
₹ 3,00,000 2,500 – 2,500 = 2,500 – 2,500 – 0 2,500 – 2,500 – 2,500
Nil = Nil
taxbykk.com 0 = Nil
₹ 3,50,000 5,000 – 2,500 = 5,000 – 2,500 – 5,000 – 5,000 – 5,000
2,500 2,500 = Nil 0 = Nil
₹ 4,30,000 9,000 – 2,500 = 9,000 – 2,500 – 9,000 – 9,000 – 9,000
6,500 2,500 = 4,000 0 = 4,000
₹ 5,00,000 12,500 – 2,500 12,500 – 2,500 – 12,500 – 12,500 12,500
= 10,000 2,500 = 7,500 – 0 = Nil
₹ 6,00,000 32,500 30,000 20,000 32,500
₹ 10,00,000 1,12,500 1,10,000 1,00,000 1,12,500
₹ 14,00,000 2,32,500 CS K K 2,30,000
Agrawal 2,20,000 2,32,500

Surcharge

Do- Foreign Firm Ind / HUF/ Local Co-op-

mestic Com- / LLP AOP / BOI Author- erative
Com- pany / AJP ity society
pany
• Total Income
Nil
exceeds ₹ 50 NA NA NA NA NA
10%
Lakhs
• Total Income
7% 2% 12% 15% 12% 12%
exceeds ₹ 1 Cr
• Total Income
12% 5% 12% 15% 12% 12%
exceeds ₹ 10 Cr.
 taxbykk.com 4 Income Tax Amendment FA 2017

INCOME FROM HOUSE PROPERTY

section 23(5). no notional income for house property held
as stock in trade
Where the property consisting of any building or land appurtenant thereto is held as
stock-in-trade and
the property or any part of the property is not let during the whole or any part of the
previous year,
the annual value of such property or part of the property,
for the period up to one year from the end of the financial year in which the certificate
of completion of construction of the property is obtained from the competent authority,
shall be taken to be nil.
FY 1 FY 2 FY 3
Completion certificate Not let out Not let out
Annual value = ER 0 Annual Value = ER

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CS K K Agrawal
 taxbykk.com 5 Income Tax Amendment FA 2017

PROFTS AND GAINS FROM

BUSINESS OR PROFESSION
section 40a(3). cash expenditure

Payment to AY 2017-18 AY 2018-19

Transport contractors 35,000 35,000
Others 20,000 10,000

AY 2017-18 or earlier years AY 2018-19

Expenditure incurred in Payment should be made through banking channel
excess of ₹ 10,000 for which otherwise such payment shall be treated as business
deduction is claimed income of the year in which payment is made

Section 43(1). if payment in excess of ₹ 10,000 is made in cash

then such payment shall not be part of actual cost
Provided further that where the assessee incurs any expenditure for acquisition of any
asset or part thereof in respect of which a payment or aggregate of payments made to
a person in a day, otherwise than by an account payee cheque drawn on a bank or an
account payee bank draft or use of electronic clearing system through a bank account,
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exceeds ₹ 10,000, such expenditure shall be ignored for the purposes of determination
of actual cost.

Section 43B. deduction on actual payment

Sum payable by the assessee as interest on any loan or advances from co-operative bank
(other than a primary agricultural credit society or a primary co-operative agricultural and
rural development bank) shall be allowed as deduction if it is actually paid on or before
the due date of furnishing of return of income of the relevant previous year.
CS K K Agrawal
Section 44aa. compulsory maintenance of books of
accounts
1. Existing Business : Profits exceed ₹ 1,20,000 (AY 2018-19 Ind / HUF : 1,50,000) or
total sales or gross receipts exceed ₹ 10,00,000 (AY 2018-19 Ind / HUF : 25,00,000)
in any of the 3 years immediately preceding the previous year.
Maintain such books of account and other documents as may enable the assessing
officer to compute his taxable income in accordance with the Act.
2. New Business : Profit or total sales are likely to exceed the above said limit.
Maintain such books of account and other documents as may enable the assessing
officer to compute his taxable income in accordance with the Act.
Note : Specified profession is compulsory required to maintain his accounts. There
is no change
 taxbykk.com 6 Income Tax Amendment FA 2017
Section 44aB. compulsory tax audit
With effect from AY 2017-18 the eligible person who declares profits for the previous
year in accordance with the provisions of S 44AD and his total sales does not exceed
₹ 2 Crore then such person is not required to get his accounts audited.
The limit of ₹ 1 Crore for other business assessee remains ₹ 1 Crore only.

Section 44Ad. Increase in threshold limit for presumptive

taxation scheme for persons having income from business.

w.e.f AY 2017-18 • Turnover is received by an account payee cheque / draft / use

of electronic clearing system through a bank account
Deemed income • The above payment is received during the previous year or
= 6% if before the due date of submission of return of income as specified
in section 139(1).

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CS K K Agrawal
 taxbykk.com 7 Income Tax Amendment FA 2017

CAPITAL GAIN

Cost Inflation Index

2001-02 100 2010-11 167 What is the cost of acquisition if the
2002-03 105 2011-12 184 asset is acquired before 1-4-2001:
2003-04 109 2012-13 200 Assessee as per his choice can opt either
2004-05 113 2013-14 220 Cost of acquisition or Fair Market Value as
2005-06 117 2014-15 240 on 1-4-2001. Assessee shall make a choice
2006-07 122 2015-16 254 in such a manner that he pays minimum
2007-08 129 2016-17 264 tax. In this case it shall opt for higher value.
2008-09 137 2017-18 272
2009-10 148

Section 2(42A). Short term capital asset (STCA)

Period of
A Nature of asset
holding
Listed shares, Units of Equity oriented fund, Govt. securi-
1 12 months
ties, Listed debentures, Notified zero coupon bond
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2 Unlisted equity shares or unlisted preference shares 24 months
36 months
3. Land or building or both
24 months
Other assets like gold, sovereign gold bonds, painting,
4 36 months
drawings etc
In case of conversion of preference shares into equity shares, the period of
B holding of equity shares shall include the period for which the preference
shares were held by the assessee
CS K K Agrawal
Period of holding of consolidated plan of mutual fund scheme shall include
C the period for which the units in consolidated plan of mutual fund scheme
were held by the assessee.
 taxbykk.com 8 Income Tax Amendment FA 2017
Section 10(38). exemption of long term capital gain
Exemptions of LTCG arising on transfer of equity shares is subjected to following
conditions. If all the 3 conditions are satisfied then only exemption is available.
Exemption u/s 10(38) not available if all the following conditions are satisfied:
1. The equity shares are acquired on or after the 1-10-2004. However there is transaction
of units of mutual fund then exemption u/s 10(38) is available. If equity shares are
acquired before 1-10-2004 then also exemption u/s 10(38) is available.
2. At the time of acquiring such equity shares it was not subjected to securities transaction
tax. It means shares are acquired from source other than stock exchange. It may be
bonus shares, right shares, shares acquired in amalgamation, demerger etc or he may
have acquired equity shares through private parties. However if at the of acquisition
of equity shares it was subjected to STT then exemption u/s 10(38) is available.
3. Such equity shares are not in negative list as notified by the Central Government
in this behalf. But if in negative list then exemption not available even if other 2
conditions are satisfied.

Example 1 : Purchase and sale of transaction of equity shares

Acquired from BSE Bonus shares Promoter BSE
Date of purchase 1-10-2003 1-10-2006
taxbykk.com 1-10-2007 1-10-2005
STT NA NA NA Applicable
Date of sale 15-10-2017 15-10-2017 15-10-2017 15-10-2017
STT A A A A
Exemption u/s A NA NA A
10(38)

Example 2 : Purchase and sale of transaction of units of mutual fund. It is exempt as

conditions are not applicable to units of mutual fund.
CS K K Agrawal
 taxbykk.com 9 Income Tax Amendment FA 2017

OTHER SOURCES
section 56(2)(x). Gift / buy or sell specified asset
Donor / Seller Donee / Buyer
Individual / HUF
Cash Any person
Any person
Individual / HUF
Land or Building Any person
Any person
Individual / HUF
JAD PB SAS Any person
Any person

Section Type of assets Recipient

56(2)(v)
Cash exceeding ₹ 25,000 Individual / HUF
1-9-2004 to 1-4-2006
56(2)(vi)
Cash exceeding ₹ 50,000 Individual / HUF
1-4-2006 to 1-4-2009
56(2)(vii) Cash / Land or building / JAD
Individual / HUF
1-9-2009 to 1-4-2017 PB SAS exceeding ₹ 50,000
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56(2)(viia) Firm / Closely held

Shares in a closely held company
1-4-2010 to 1-4-2017 company

56(2)(x) Cash / Land or building / JAD

Any person
1-4-2017 onwards PB SAS exceeding ₹ 50,000
section 58(1A). restriction on deduction where tax is not
deducted at source CS K K Agrawal
S 40(a)(ia) = 58(1A). Payment made
S 40(a)(ia). Payment made to resident
to resident without deducting tax at
without deducting tax at source not al-
source not allowed as deduction under
lowed as deduction under the head PGBP
the head Other Sources
 taxbykk.com 10 Income Tax Amendment FA 2017

SET OFF AND CARRY FORWARD AND

SET OFF OF LOSSES
loss from house property
S 70 Same Head Any amount can be set off.
S 71(3A) Inter Head Maximum ₹ 2,00,000 can be set off.
S 71B Carry forward Any amount of loss can be carried forward for
maximum 8 AY’s
Set off of brought Any amount can be set off but only with Income
forward loss from House Property.

Example
House 1 10,00,000 Salary 12,00,000
House 2 (15,00,000) Less : House Property loss (2,00,000)
House Property (5,00,000) Salary 10,00,000
C.f. House Property loss (3,00,000)

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CS K K Agrawal
 taxbykk.com 11 Income Tax Amendment FA 2017

DEDUCTIONS U/S 80C TO 80U

Section 80CCD. DEDUCTION FOR SELF EMPLOYED PERSON
Employee Self employed
Employer’s contribution 10% of SAS Not Applicable
Self contribution 10% of SAS (Max 1,50,000. 10% of Gross Total
Additional ₹ 50,000) Income
20% of Gross Total
Income
Section 80CCG. deduction in respect of specified equity
investment scheme
Deduction u/s 80CCG will not be allowed from AY 2018-19. However if the assessee
had claimed deduction in the earlier years then he can claim deduction till AY 2019-20.

DEDUCTION U/S 80g

Restriction on cash donation. Where any donation exceeding ₹ 2,000 is paid in cash then
deduction u/s 80G is not allowed.
Earlier AY from AY 2018-19
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₹ 10,000 ₹ 2,000

CS K K Agrawal
 taxbykk.com 12 Income Tax Amendment FA 2017

tax deducted at source

Section 194-IB. Payment of Rent by certain individual / HUF
1. Tax Deducter: An individual or a HUF whose books of accounts are not required to
be audited u/s 44AB in the immediately preceding the financial year. (Even if TAN
is not available tax is required to be deducted).
2. When to deduct tax at source: Whole of the rent of that previous year is deducted
on the last month of the previous year at the time of credit of rent or at the time of
payment whichever is earlier.
3. Rate of TDS: 5% of the rent paid or credited however if PAN is not furnished then
20%.
Note : The total amount of TDS cannot exceed the rent of last month.
4. When tax is not required to be deducted at source: upto ₹ 50,000 p.m. for each
month to each co-owner.
P1 : Rent paid by Mr. X a salaried class ₹ 60,000 p.m. He pays rent on 7th of every
month. Compute the amount of TDS. PAN is furnished.
Ans : Total Rent paid : 60,000 x 12 = 7,20,000. TDS to be deducted in the month of
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March is is 5% of 7,20,000= 36,000.
P2 : Rent paid by Mr. X a salaried class ₹ 60,000 p.m. He pays rent on 7th of every
month. Compute the amount of TDS. PAN is not furnished.
Ans : Total Rent paid : 60,000 x 12 = 7,20,000. TDS to be deducted in the month of
March is is 20% of 7,20,000= 1,44,000 limited to ₹ 60,000.
P3 : Rent paid by Mr. X a salaried class ₹ 40,000 p.m. But w.e.f. 1-12 rent is increased
to ₹ 60,000 p.m. He pays rent on 7th of every month. Compute the amount of TDS.
PAN is furnished. CS K K Agrawal
Ans : No TDS for first 8 month since rent do not exceeds ₹ 50,000 p.m. Total Rent
paid : 60,000 x 4 = 2,40,000. TDS to be deducted in the month of March is is 5% of
2,40,000 = 12,000.

Section 194-J. Payment to call centre

In the case of a payee, engaged only in the business of operation of call centre the rate
of TDS shall be 2%.

Section 197A. self declaration extended to section 194D

w.e.f. 1-6-2017 no tax shall be deducted u/s 194D if the recipient of insurance commission
submits Form No. 15G / 15H to the payer.
 taxbykk.com 13 Income Tax Amendment FA 2017

ADVANCE TAX
Section 211. Due date of payment of advance tax
All Assessee 44AD / 44ADA*
• By 15th June 15% Nil
• By 15th September 45% Nil
• By 15th December 75% Nil
• By 15th March 100% 100%

* Inserted w.e.f 1-4-2017. Professional income

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CS K K Agrawal
 taxbykk.com 14 Income Tax Amendment FA 2017

RETURN OF INCOME
Section 139(5). revised return
Return can be revised on or before the relevant AY or before the completion of assessment
whichever date is earlier.
section 234F. fees for late filing of return

Total Income is upto ₹ 5,00,000 : Fees ₹ 1,000

Total Income exceeds ₹ 5,00,000 : Fees ₹ 5,000 if return is furnished after due date but
on or before 31-12 otherwise ₹ 10,000

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CS K K Agrawal