Highlights of Direct Tax Amendments in Finance Bill 2008
Amortisation of preliminary expenses Section 35(D) – Scope Extended
As per the existing provisions, once the business has commenced the benefit is available only for extension of the industrial undertaking or setting up of a new industrial units. The word ‘industrial’ is omitted now to extend the benefit to all other sectors.
Security Transaction Tax
Payments under the said tax will be allowed deductions if income arising from such transactions is included in the business income. Section 36(1) (xv) has been inserted for this purpose. Sec 88E granting rebate on such payments stands deleted.
Deduction in Chapter VI-A
(i) Sec 80IB (9): No deduction to an undertaking engaged in refining of mineral oil if it begins refining on or after 01/04/2009.
(ii) Sec 80IB (11C): Five Year Tax holiday for hospitals located outside the seven urban agglomerations and certain specified localities. Hospitals of at least 100 beds constructed / started functioning during 01/04/2008 – 31/03/2013 to be granted tax holiday.
(iii) Sec. 80ID: Extending the scope of 5 year tax holiday to new 2-star, 3-star and 4-star hotels located in districts having World Heritage Sites which have been constructed / started functioning during 01-04-2008 to 31-03-2013.
Sec. 139 – Procedural Aspects
Due date for filing of return for companies and assesses whose accounts are to be audited and partners of such firms is 30th September instead of 31st October.
Sec 142(2A)
Assessing Officer can suo moto or on an application by assessee and for any good and sufficient reasons can extend the period for furnishing the audit report directed under the said section.
Processing of Returns
The procedure of Processing of Returns under section 143(1)(a) has been reintroduced with wider scope. From 01-04-2008 all returns have to be processed wherein arithmetical mistakes and incorrect claims apparent from the information in the return, will be added back and intimation will be issued demanding the additional demand or refunding the excess taxes paid.
Amendments with regard to abated cases under Settlement Commission
Sec. 153 amended to provide minimum 1-year time to Assessing officers to pass assessment orders in cases where the proceedings before Settlement Commission got abated under sec. 245HA. This amendment is with retrospective effect from 01-06-2007.
Sec. 273AA introduced to grant power to CIT for granting immunity from penalty in a case where the proceedings before Settlement Commission got abated. Similar provisions are made for granting immunity from prosecution in sec. 278AB.
Provisions relating to Appeals
With effect from 01-10-2008, ITAT can grant maximum period of stay of 365 days only even if the delay is not attributable to the assessee.
A new section 268A was introduced directing the courts / Tribunals to dispose off the appeals filed by Department on merits.
Provisions of TDS & TCS
Sections 191 and 201 were amended to include persons who were required to deduct tax at source but did not do so, to be treated as an assessee in default. Earlier some Tribunals / Courts were taking the view that only those who deducted tax at source but did not pay it to the Government will be treated as assessee in default. This amendment is with retrospective effect from 01-06-2003.
Every Association of Persons/ Body Of Individuals will be liable for deduction of tax at source under sec. 194 C
Sec. 195(6) inserted to make persons mentioned in sec. 195(1) also to file Information returns.
As per the existing provisions, there was no need to issue TDS and TCS certificates after 01-04-2008. Since the computerization of such data is not yet ready, this deadline is extended to 01-04-2010 and till such time the deductors / collectors of tax have to issue certificates. (Sec. 203 & 206C)
Fringe Benefit tax - New Exemptions u/s 115 WB
No direct benefit in terms of marketing expenses incurred by export sector has been provided by the exemptions listed under the said Section.
Some of the exemptions include: Expenditure or payment through non-transferable pre-paid electronic meal card usable only at eating joints / outlets excluded from hospitality expenses; Providing creche facility for children of employees; Sponsor expenses of a sportsman, being an employee; Expense for organizing sports events for employees; Expenses for maintenance of guest houses; Valuation of expenses on festival celebration reduced from 50% to 20% (Sec. 115 WC).
Due date for filing of return is 30th September instead of 31st October. (Sec.115 WD).
FBT returns will be processed wherein arithmetical mistakes and incorrect claims apparent from the information in the return will be added back and intimation will be issued demanding the additional demand or refunding the excess taxes paid. Such intimation can be issued only within one year from the end of the financial year in which such return was filed. No intimation will be issued if no demand or refund is due. Provision for making Centralised Processing of Returns were also made.(Sec. 115 WE).
Banking Cash Transaction Tax
Levy withdrawn from 01-04-2009.
