Budget-Special-Edition-2017-e-Journal

Union Budget - 2017Budget Special Edition Pages 1-33 2017 For Private circulation only BySBS and Company LLPChartered Accountants

\"UNION BUDGET 2017 AND IMPACT ON CAPITAL MARKET\"

SBS Wiki www.sbsandco.com/wiki CONTENTSINDUSTRY ANALYSIS..........................................................................................................................1AN OVERVIEW OF INDIA UNION BUDGET, 2017-18...................................................................................................1DIRECT TAX ......................................................................................................................................8BUDGET 2017 PROPOSALS UNDER DIRECT TAXES....................................................................................................8INDIRECT TAX .................................................................................................................................22BUDGET 2017 PROPOSALS UNDER INDIRECT TAXES................................................................................................22

SBS Wiki www.sbsandco.com/wikiINDUSTRY ANALYSISAN OVERVIEW OF INDIA UNION BUDGET 2017-18ROAD MAP & PRIORITIES: • The expectations included burning issues like inflation and price rise, corruption in day to day transactions and crony capitalism. There was also expectation for a major change in the way the country’s natural resources were allocated, processed and deployed. • After the demonetisation, the preliminary analysis of data received in respect of deposits made by people in old currency presents a revealing picture. Between 8th November and 30th December 2016, deposits between Rs. 2 lakh and Rs. 80 lakh were made in about Rs. 1.09 crore accounts with an average deposit size of Rs. 5.03 lakh. Deposits of more than 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs. 3.31 crores. The data mining will help us immensely in expanding the tax net as well as increasing the revenues, which was one of the objectives of demonetisation.Agenda for the next year is: “Transform, Energise and Clean India”, that is, “TEC India”. The Budgetproposal under ten distinct themes to foster this broad agenda of TEC India seeks to: ØTransform the quality of governance and quality of life of our people; ØEnergise various sections of society, especially the youth and the vulnerable, and enable them to unleash their true potential; and ØClean the country from the evils of corruption, black money, and non-transparent political funding. • Farmers: committed to double the income in 5 years; • Rural Population: providing employment & basic infrastructure; • Youth: energising them through education, skills and jobs; • The Poor and the Underprivileged: strengthening the systems of social security, health care and affordable housing; • Infrastructure: for efficiency, productivity and quality of life; • Financial Sector: growth & stability by stronger institutions; • Digital Economy: for speed, accountability and transparency; • Public Service: effective governance and efficient service delivery through people’s participation;1 |Page

SBS Wiki www.sbsandco.com/wiki AN OVERCVoImEWpanOieFs AINctDIA UNION BUDGET, 2017-18• Prudent fiscal Management: to ensure optimal deployment of resources and preserve fiscal stability; and• Tax Administration: honoring the honest.FARMERS:• Target for agricultural credit in 2017-18 has been fixed at a record level of Rs. 10 lakh crores.• New mini labs in Krishi Vigyan Kendras (KVKs) and ensure 100% coverageof all 648 KVKs in the country for soil sample testing.• As announced by the Honorable Prime Minister, the Long Term Irrigation Fund already set up in NABARD to be augmented by 100% to take the total corpus of this Fund to Rs. 40,000 crores.• Dedicated Micro Irrigation Fund in NABARD to achieve ‘per drop more crop’ with an initial corpus of Rs. 5,000 crores.• Coverage of National Agricultural Market (e-NAM) to be expanded from 250 markets to 585 APMCs. Assistance up to Rs. 75 lakhs will be provided to every e-NAM.• Dairy Processing and Infrastructure Development Fund to be set up in NABARD with a corpus of Rs. 2000 crores and will be increased to Rs. 8000crores over 3 years.PROMOTING AFFORDABLE HOUSING AND REAL ESTATE SECTOR:• Affordable housing granted ‘Infrastructure’ status.• Under the scheme for profit-linked income tax deduction for promotion of affordable housing, carpet area instead of built up area of 30 and 60 Sq.mtr. will be counted.• The 30 Sq.mtr. limit will apply only in case of municipal limits of 4 metropolitan cities while for the rest of the country including in the peripheral areas of metros, limit of 60 Sq.mtr. will apply, the scheme was to be completed in 5 years after the commencement.• For builders for whom constructed buildings are stock-in-trade on unsold inventory, tax on notional rental income only after one year from the end of the year in which completion certificate is received.• Reduction in the holding period for computing long term capital gains from transfer of immovable property from 3 years to 2 years. Also, the base year for indexation is proposed to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property. This move will significantly reduce the capital gain tax liability while encouraging the mobility of assets.2 |Page

SBS Wiki www.sbsandco.com/wiki AN OVERCVoImEWpanOieFs AINctDIA UNION BUDGET, 2017-18• For Joint Development Agreement signed for development of property, the liability to pay capital gain tax will arise in the year the project is completed.• The new capital for the State of Andhra Pradesh is being constructed by innovative land-pooling mechanism without use of the Land Acquisition Act. Propose to exempt from capital gain tax, persons holding land on 02.06.2014, the date on which the state of Andhra Pradesh was reorganised, and whose land is being pooled for creation of capital city under the Government Scheme.INFRASTRUCTURE:• For 2017-18, the total capital and development expenditure of Railways has been pegged at Rs.1,31,000 crores. This includes Rs.55,000 crores provided by the Government.• For passenger safety, a Rashtriya Rail Sanraksha Kosh will be created with a corpus of Rs.1 lakh crores over a period of 5 years.• Unmanned level crossings on Broad Gauge lines will be eliminated by 2020.• In the next 3 years, the throughput is proposed to be enhanced by 10%. This will be done through modernisation and upgradation of identified corridors.• Railway lines of 3,500 kms will be commissioned in 2017-18. During 2017-18, at least 25 stations are expected to be awarded for station redevelopment.• 500 stations will be made differently abled friendly by providing lifts and escalators.• It is proposed to feed about 7,000 stations with solar power in the medium term.• SMS based ‘Clean My Coach Service’ has been started.• ‘Coach Mitra’, a single window interface, to register all coach related complaints and requirements to be launched.• By 2019, all coaches of Indian Railways will be fitted with bio toilets.• Tariffs of Railways would be fixed, taking into consideration costs, quality of service and competition from other forms of transport.• A new Metro Rail Policy will be announced with focus on innovative models of implementation and financing, as well as standardisation and indigenisation of hardware and software.• A new Metro Rail Act will be enacted by rationalising the existing laws. This will facilitate greater private participation and investment in construction and operation.3 |Page

SBS Wiki www.sbsandco.com/wiki AN OVERCVoImEWpanOieFs AINctDIA UNION BUDGET, 2017-18• As part of accounting reforms, accrual based financial statements will be rolled out by March, 2019 by Railways.• In the road sector, Budget allocation for highways increased from Rs.57,976 crores in BE 2016-17 to Rs.64,900 crores in 2017-18.• 2,000 kms of coastal connectivity roads have been identified for construction and development.• Total length of roads, including those under PMGSY, built from 2014-15 till the current year is about 1,40,000 kms which is significantly higher than previous three years.• Select airports in Tier 2 cities will be taken up for operation and maintenance in the PPP mode.• By the end of 2017-18, high speed broadband connectivity on optical fiber will be available in more than 1,50,000 gram panchayats, under Bharat Net. A DigiGaon initiative will be launched to providetele-medicine, education and skills through digital technology.• Proposed to set up strategic crude oil reserves at 2 more locations, namely, Chandikhole in Odisha and Bikaner in Rajasthan. This will take our strategic reserve capacity to 15.33 MMT.• Second phase of Solar Park development to be taken up for additional 20,000 MW capacities.• For creating an eco-system to make India a global hub for electronics, manufacturing a provision of Rs.745 crores in 2017-18 in incentive schemes like M-SIPS and EDF.• A new and restructured Central scheme with a focus on export infrastructure, namely, Trade Infrastructure for Export Scheme (TIES) will be launched in 2017-18.TECHNOLOGY AND START UPS:• Deduction under section 10AA of the Income-tax Act, 1961 (Act) for SEZ units to be given from gross total income.• Interplay between MAT and IND-AS clarified.• 100% deduction of profits for any 3 consecutive years out of 7 years allowed for start-ups.• Amendment in provisions for carry forward of losses for start-ups.• Secondary adjustment introduced in cases where a primary TP adjustment exceeds INR 10MN• Provisions relating to SDT rationalised.4 |Page

SBS Wiki www.sbsandco.com/wiki AN OVERCVoImEWpanOieFs AINctDIA UNION BUDGET, 2017-18DIGITAL ECONOMY:• 125 lakh people have adopted the BHIM app so far. The Government will launch two new schemes to promote the usage of BHIM; these are, Referral Bonus Scheme for individuals and a Cashback Scheme for merchants.• Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly.• A Mission will be set up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards.• A proposal to mandate all Government receipts through digital means, beyond a prescribed limit, is under consideration.• Banks have targeted to introduce additional 10 lakh new POS terminals by March 2017. They will be encouraged to introduce 20 lakh Aadhar based POS by September 2017.• Proposed to create a Payments Regulatory Board in the Reserve Bank of India by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems.AUTOMOBILE SECTOR:• Increased allocation of funds for rural and infrastructure sector should help augment demand post demonetisation.• In contrast with industry expectations, no specific direct tax incentives provided in the budget for auto sector.• Repeal of R&D cess is a welcome move which shall simplify Indirect tax structure as well as reduce tax costs.• Reduction in duties on some auto components should benefit the auto OEMs.• Industry was expecting several schemes such as scrap page scheme for older vehicles or greater incentives to promote usage of electric/hybrid vehicles- no announcements were made in this regard.LOGISTICS SECTOR:• For transportation sector as a whole, including rail, roads, shipping, provision of Rs.2,41,387 crores has been made in 2017-18.• Introduction of various measures to curb the flow of cash transactions and promote digital economy.5 |Page

SBS Wiki www.sbsandco.com/wiki AN OVERCVoImEWpanOieFs AINctDIA UNION BUDGET, 2017-18• Quoting of PAN mechanism strengthened in respect of transactions subject to tax collection at source.• The Finance Minister announced that the Centre and States appear to have managed consensus on key issues in the GST implementation.• Just prior to the Budget 2017, with effect from 22 January 2017, inbound ocean freight on CIF basis was made liable to service tax in the hands of the person-in-charge of the vessel.FINANCIAL SERVICES:• Category I and II FPIs registered under the SEBI FPI Regulations, 2014 to be exempt from indirect transfer provisions. Further, a clarification proposed to be issued on the non-applicability of indirect transfer provisions on redemption of shares/ interest outside India triggered as a result of redemption/ sale of investment in India, which is chargeable to Indian tax.• Condition of minimum fund size in year of winding up done away with under the fund manager regime prescribed under section 9A of the IT Act, 1961.• Rationalisation of the treatment of interest on loans and deposits as exempt turnover by all banks/ NBFCs, under both the available Cenvat Credit Schemes (i.e. proportionate reversal and 50% ad hoc reversal scheme).OTHER MEASURES IN THE FINANCIAL SECTOR:• Foreign Investment Promotion Board to be abolished in 2017-18 and further liberalisation of FDI policy is under consideration.• An expert committee will be constituted to study and promote creation of an operational and legal framework to integrate spot market and derivatives market in the agricultural sector, for commodities trading.• Bill relating to curtail the menace of illicit deposit schemes will be introduced. A bill relating to resolution of financial firms will be introduced in the current Budget Session of Parliament. This will contribute to stability and resilience of our financial system.• A Computer Emergency Response Team for our Financial Sector (CERT-Fin) will be established.• Government will put in place a revised mechanism and procedure to ensure time bound listing of identified CPSEs on stock exchanges. The shares of Railway PSEs like IRCTC, IRFC and IRCON will be listed in stock exchanges.• Propose to create an integrated public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oil and gas companies.6 |Page

SBS Wiki www.sbsandco.com/wiki AN OVERCVoImEWpanOieFs AINctDIA UNION BUDGET, 2017-18• A new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18.• In line with the ‘Indradhanush’ roadmap, Rs.10,000 crores for recapitalisation of Banks provided in 2017-18.• Lending target under Pradhan Mantri Mudra Yojana to be set at Rs. 2.44 lakh crores. Priority will be given to Dalits, Tribals, Backward Classes and Women.• The Commodities and securities derivative markets will be further integrated by integrating the participants, brokers, and operational frameworks.• The process of registration of financial market intermediaries like mutual funds, brokers, portfolio managers, etc., will be made fully online by SEBI. This will improve ease of doing business.• A common application form for registration, opening of bank and demat accounts, and issue of PAN will be introduced for Foreign Portfolio Investors (FPIs). SEBI, RBI and CBDT will jointly put in place the necessary systems and procedures. This will greatly enhance operational flexibility and ease of access to Indian capital markets.• Steps will be taken for linking of individual demat accounts with Aadhar.• Presently institutions such as banks and insurance companies are categorised as Qualified Institutional Buyers (QIBs) by SEBI. They are eligible for participation in IPOs with specifically earmarked allocations. It is now proposed to allow systemically important NBFCs regulated by RBI and above a certain net worth, to be categorised as QIBs. This will strengthen the IPO market and channelize more investments.• Listing and trading of Security Receipts issued by a securitisation company or a reconstruction company under the SARFAESI Act will be permitted in SEBI registered stock exchanges. This will enhance capital flows in to the securitisation industry and will particularly be helpful to deal with bank NPAs. This article is contributed by CA Ram Prasad, Partner of SBS and Company LLP, Chartered Accountants. The author can be reached at [email protected] |Page

SBS Wiki www.sbsandco.com/wikiDIRECT TAXBUDGET 2017 PROPOSALS UNDER DIRECT TAXES Rebate U/s 87A has been reduced to Rs. 2500/- It is Person Change available if total income of erexsciedeednRtRsien.md3i,av5ir0dk,us0a0l0d/o-esn’tIndividual( Less than 60 years of Tax rate would be @5% on Incomeage)/ HUF/ AOP/ BOI/ AJP in the range of more than Rs. 2,50,000/- up to Rs. 5,00,000/-. Tax rate has been reducedResident Individual (Age of 60 or Tax rate would be @5% on Income from 10% to 5%more) in the range of more than Rs. 3,00,000/- up to Rs. 5,00,000/-.Resident Individual (Age of 80 or No changemore)Domestic Company The rate of tax would be 25% of the total income if the turnover or gross receipts of previous year 2015-16 does not exceed Rs. 50 CroreSurcharge:- In case of every INDIVIDUAL or HUF or AOP or BOI or AJP having total income exceeding Rs.50,00,000/- but not exceeding Rs. 1 Crore is liable to surcharge @10%. Surcharge @15% will apply if totalincome exceeds Rs. 1 Crore.Income Exempt from Tax:ØAny amount received form NPS on partial withdrawal made out of his account to the extent of 25% of the amount of the contribution made by him;ØAny income received by any person on behalf of CM Relief Fund or Lieutenant Governor’s Relief Fund; (W R E F 01-04-1998).ØNo Capital Gains on transfer of the land or building by an individual or HUF who was owner as on the 02-06-2014 under AP Capital City Land Pooling Scheme. It covers the sale of land or building owned by the assesse as on 02-06-2014 or sale of land pooling ownership certificate issued under the scheme or sale of reconstituted plot or land received in lieu of land or building originally transferred; ( W E F AY 2015-16).ØIt is proposed to restrict the exemption from long term capital gains in case of transfer of listed shares by providing that the exemption, subject to notification of certain exceptions, shall be available if security transaction tax has been paid at the time of acquisition of such shares where they have been acquired after 1st October, 2004.8 |Page

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXES Old Provision New ProvisionUnder the existing provisions of Sec 10(38), LTCG It is proposed to restrict, LTCG exemptions ontax is exempted on transfer of equity shares and transfer of listed shares, by providing thatequity oriented mutual fund, provided sale has exemption will be available if STT is paid at thetaken place on or after 01-10-2004 and the time of acquisition of such shares, where theytransaction is subjected to STT are acquired after 01-10-2004. Under the new provisions, STT has been exempted in genuine cases, where STT could not have been paid like acquisition of shares in IPO, FPO, Bonus issue, right issue, acquisition by Nonresident in accordance to FDI policy of the government etc.,ØAny income accruing or arising to a foreign company on account of sale left over stock of crude oil from the facility in India;ØDeduction under section 10AA shall be allowed from the total income of the assesse and deduction under section 10AA in no case exceed total income;ØAny modifications of the objects which are not in conformity of conditions of registration be informed to the Principal Commissioner or Commissioner within 30 days of modification by the person in receipt of income of trust or institution registered U/s 12AA; (Fresh registration required).ØContributions received by way of electoral bond are excluded from maintenance of details of contribution in case of political parties;House Property:-ØAny building or land appurtenant thereto is held as stock in trade which is not let during the whole of or any part of previous year for a period up to one year from the end of financial year in which certificate of completion of construction is obtained shall be NIL.Business or Profession:-ØIn relation to deduction U/s 35AD any payment or aggregate payments made to a person in a day exceeding Rs. 10,000/- should be made only through A/c payee cheque, A/c payee draft or electronic clearing system;ØDeduction for Provisions for Bad and Doubtful debts U/s 36(1)(viia) be allowed @8.5% of the total income; ØNo disallowance of expenditure be made U/s 40A(2) in respect Specified Domestic Transaction if it is at ALP for an assessment year commencing on or before 01-04-2016;9 |Page

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXESØNo payment in relation to expenditure in excess of Rs. 10,000/- be made otherwise than A/c payee cheque or A/c payee draft or electronic clearing system;ØAny payment in respect of expenditure incurred for acquisition of any asset or part thereof in excess of Rs. 10,000/- should be made only A/c payee cheque or A/c payee draft or electronic clearing system. Else such expenditure be excluded from actual cost U/s 43(1);ØActual cost of the asset in relation which the provisions of section 35AD(7B) applies be computed considering the actual cost of the asset to the assesse reduced by the amount of depreciation allowable at the rates had the asset been used for business since its acquisition;ØInterest payable to Primary Agriculture Credit Society or a Primary Co-Operative Agricultural and Rural Development bank excluded from operation of provisions of section 43B;ØIndividual or HUF is required to maintain books of accounts if income from business or profession, other than referred U/s 44AA(1), exceeds Rs. 2,50,000/- or total sales, turnover, gross receipts exceeds Rs. 25,00,000/-;ØTax Audit is not required in case of assesse who declared profits and gains in a previous year as per section 44AD(1) and his total turnover, sales, gross receipts in business does not exceed Rs. 2 Crores;ØPresumptive income U/s 44AD @6% in respect of amount of total turnover or gross receipts which is received by A/c payee cheque or A/c payee draft or electronic clearing system during the previous year or before the due date specified U/S 139(1); ( W E F AY 2017-18)Capital Gains:-ØIncome from transfer of a capital asset being land or building or both under Joint Development Agreement of an individual or HUF be taxable in the year in which certificate of completion certificate for the whole of project or part of project is issued by the competent authority and the stamp duty value of his share on the date of issue of said certificate and any amount received in cash shall deemed to be full value consideration;ØNormal provisions will apply in case where individual or HUF transfer his share in the project before issue of completion certificate by competent authority;ØCost of acquisition of capital asset being share in the project shall be the amount of deemed full value consideration;ØPeriod of holding is reduced from 36 months to 24 months in case of immovable property, being land or building or both to treat it as short term capital asset;ØAny transfer of rupee denominated bonds of an Indian Company issued outside India between to non-residents made outside India is not subject to tax;10 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXESØConversion of preference shares of company into equity shares of that company is not subject to tax;ØAny gains arising on account of rupee appreciation at the time of redemption of Rupee denominated bond of Indian Company held by him is not subject to tax;ØBase year for cost inflation index for calculating long term capital gains changed from 1981 to 2001. Further, the date for FMV of capital assets acquired before 1st April, 1981 would be changed to 1st April, 2001.ØTransfer of Reconstituted plot or land referred to in section 10(37A) received by the assesse after two years from the end of the financial year in which possession was handed to the assesse the cost of acquisition of such asset shall be stamp duty value on the last day of the second financial year;ØWhere consideration received or accruing as a result of transfer of unlisted share of a company is less than the FMV of such share then such FMV shall deemed to be the full value consideration; - New Sec 50CAØNew bonds will be notified by the Central Government for the purpose of Section 54EC;ØLong term capital gain from transfer of unlisted securities/shares in companies in which public are not substantially interested in the hands of non-resident shall be chargeable @10% from AY 2013-14;ØCost of acquisition of an asset held by a trust, which is subject to the provisions of section 115TD, shall be FMV of the asset which has been taken into account for computation of accreted income; ( W E F 01-06-16)Income from Other Sources:-ØThe existing provisions of 56(2)(vii) related to gift of money, moveable property , immovable property are applicable only to individual or HUF. Amendment made to apply the existing provisions up to 31-03-2017.ØThe existing provisions of section 56(2)(viia) covers firm and company in which public are not substantially interested receives shares of a company in which public are not substantially interested for less than FMV w.e.f 01-06-2010. Amendment made to apply the existing provisions up to 31-03-2017;ØW E F 01-04-2017 any person who receives gift of money, immovable property, movable property is subject to provisions of section 56(2)(vii);ØProvisions of section 40(a)(ia) and (iia) shall apply to income under the head other sources;11 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXESLoss Provisions:-ØLoss under the head house property can be set off against income of the assesse under any other head of income to the extent of Rs. 2,00,000/-. Unabsorbed loss can be carried forward;Øwhere a change in shareholding has taken place in a previous year in the case of a company, not being a company in which the public are substantially interested and being an eligible start-up as referred to in section 80 -IAC of this Act, loss shall be carried forward and set off against the income of the previous year, if all the shareholders of such company which held shares carrying voting power on the last day of the year or years in which the loss was incurred, being the loss incurred during the period of seven years beginning from the year in which such company is incorporated, continue to hold those shares on the last day of such previous yearChapter VI-A:-ØIndividual can contribute 20% of his gross total income of the previous year to NPS;ØNo deduction will be allowed U/s 80CCG on or after 01-04-2018.The existing investment in respect of which deduction claimed on or before 01-04-2017 shall continue to claim the deduction up to 01-04-2019 if eligible;ØNo cash donations in excess of Rs. 2,000/-;ØDeduction U/s 80IAC can be claimed by eligible start-ups for any 3 consecutive years out of 7 years(instead of existing provisions of 5 years) beginning from the year in which it was incorporated;ØFor claiming deduction U/S 80-IBA the size of residential area shall be measured taking into account the carpet area instead of built up area and period of completion of the project is 5 years. Besides the restriction of 30 sq.mt on the size the residential unit shall not apply to the place located within 25 kms from municipal limits of metros;Other relevant amendments:-ØRevised return can be filed before the end of the relevant assessment year or before the completion of assessment, whichever is earlier;ØFees for delay in furnishing the return for the AY 2018-19 and onwards (U/s 234F). Rs. 5000/- shall be payable if return is filed after the due date but before 31st December of the assessment year and Rs. 10,000/- in any other case. If the total income of the person does not exceed Rs. 5,00,000/- the fee payable shall be Rs. 1,000/-;ØSelf-assessment taxto include the fees for delay in filing the return of income; ØWhile determining tax payable or refundable U/S 143(1) the fee payable U/s 234F shall also be considered;12 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXESØTime limit for completion of assessment U/s 143(2)/144 shall be 18 months from the end of relevant assessment year for the AY 2018-19 and 12 months for the AY 2019-20;ØTime limit for completion of assessment U/s 147 in respect of notices served U/s 148 on or after 01-04-2019 shall be 12 months from the end of the financial year in which notice U/s 148 is served;ØTime limit for making an order of fresh assessment in pursuance of order under section 254 or 263 or 264 passed or received in FY 2019-20 and onwards shall be 12 months from the end of FY in which order U/S 254 is received or order U/s 263 or 264 passed by the authority;ØThe time limit relating fresh assessment shall apply in case where order U/s 250 or 254 or 260 or 262 or 263 or 264 requires verification of issue by way of submission of any document by the assessee or any other person or where opportunity of being heard is given to the assessee;ØWhere notice U/s 142(1) or 143(2) or 148 has been issued prior to 01-06-2016 and assessment or reassessment has not been completed by such date subject to explanation 1 shall be completed within the time limit mentioned U/s 153 as stood before the amendment by FA 2016; ( W E F 01- 06-2016).ØNotice and assessment or reassessment U/s 153A can be made for the assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond 6 assessment years but not beyond 10 assessment years subject to the conditions the AO has in possession of books which reveal escapement of income of Rs. 50,00,000/- or more in one year or in aggregate and other conditions. This amendment will be applicable for search initiated or requisition is made on or after 01-04-2017;ØThe assessment of other person referred to in U/s 153C shall also amended in line with the provisions of 153A;ØTime limit for completion of assessment in search and seizure cases U/S 153A conducted in FY 2018-19 is 18 months. In case of those conducted in FY 2019-20 is 12 months.ØThe time limit for making assessment or reassessment of other person referred U/s 153C for search and seizure cases in FY 2018-19 shall be of 18 months from the end of financial year in which last authorization for search U/s 132 or requisition U/S 132A was executed or 12 months from the end of financial year in which books of accounts, assets etc are hand over to the concerned AO, whichever is later;ØThe reason to believe which form basis for initiation of search and seizure cases or proceedings U/S 132A shall not be disclosed to any person or to any tax authority; ( W R E F 01-04-1962/ 01-10- 1975).13 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXESØThe authorizing officer would be, in the interest of revenue, authorized to provisionally attach assessee property with the prior approval of Principal Director General /Director General/Principal Director/Director in writing during course of search or seizure or within 60 days from the date on which last authorization for search was executed. In this regard the authorized officer make a reference to valuation officer for estimation of FMV of the property;ØThe power to call information U/S 133 extended to Joint Director, Deputy Director and the Assistant director;ØPower of survey U/S 133A extended to include any place, at which the activity of charity is carried on; ( W E F 01-04-2017).ØCBDT empowered to make a scheme for centralized issuance of notice calling for information and documents for the purpose of verification and making outcome thereof available to the AO for the necessary action; ( W E F 01-04-2017).ØThe time limit for completion of assessment where reference has been made to TPO reduced to 30 months for AY 2018-19 and 24 months for AY 2019-20 ( W E F 01-06-2016)ØProvisions of section 271F are not applicable from AY 2018-19;ØFurnishing incorrect information in report or certificate under any provisions of the Act or rules made there under by an accountant or merchant banker or registered valuer the AO or CIT(A) may direct payment of Rs. 10,000/- for each report or certificate by way of penalty; (W E F 01-04- 2017).ØProfessional declaring income in accordance with the provisions of section 44ADA are required to pay advance tax in one installment on or before 15th March; (W E F AY 2017-18).ØInterest U/s 234C will be levied if the advance tax paid on or before 15th March is less than tax on returned income; (W E F AY 2017-18).ØNo interest U/s 234C if short fall in payment of advance tax on account of under estimation or failure in estimation of income U/s 115BBDA (dividend received from domestic companies by resident individual/HUF/Firm exceeding Rs. 10 lakhs); (W E F AY 2017-18).ØNo person shall receive in cash an amount of Rs. 3,00,000/- or more from a person in a day or in respect of a single transaction or in respect of transaction relating to one event or occasion from a person; (W E F 01-04-2017)- Sec 269ST.ØPenalty for violation of provisions of section 269ST will attract penalty to the extent of amount of such receipt;ØCorpus donations out of current year income to other institutions or trust registered under 12AA or 10(23C) (iv),(v),(vi) (via) shall not be treated as application of income;14 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXESØProvisions of section 115BBDA relating to taxation of dividends in the hands of recipient applicable to all residents except domestic company and certain funds, trust, institutions;MAT Provisions:ØFair value adjustments included in other comprehensive income (which are never re-classified to P & L account) to be considered in computing MAT liability in the year of realization. Where items are re-classified to P & L account, the same need to be considered while computing book profit in the year of re-classification.ØAdjustment recorded in reserves and surplus (excluding Capital Reserves and Securities Premium Reserve) which would never be reclassified to P&L account shall be included in computing book profits equally over a period 5 years from the first year of adoption subject to some exceptions.ØWhere foreign tax credit (FTC) claimed against MAT liability exceeds the FTC that would have been allowable while computing income under other provisions of the Act, such excess FTC shall be ignored while computing MAT credit to be carried forward.ØPeriod for carry forward of MAT/AMT credit has been increased to 15 years from the existing 10 years.Income from transfer of carbon credits:In order to bring clarity on the issue of taxation of income from transfer of carbon credits and toencourage measures to protect the environment, it is proposed to insert a new section 115BBG toprovide that where the total income of the assessee includesany income from transfer of carbon credit,such income shall be taxable at theoncessional rate of ten per cent (plus applicable surcharge and cess)on the gross amount of such income. No c expenditure or allowance in respect of such income shall beallowed under the Act.This amendment will take effect from assessment year 2018-19and subsequent years.TDS Provisions:-ØIndividual or HUF, who are not subject to tax audit, is required to deduct tax @5% on rental income in relation to land or building or both to resident exceeding Rs. 50,000/- pm or part of the month. The deductor is required to deduct tax only once in the previous year. No requirement of TAN for this section; (W E F 01-06-2017)- Sec 194-IB.ØAny person responsible for paying to a resident any sum by way of monetary consideration under JDA shall deduct tax @10 %;( W E F 01-06-2017)- Sec 194-IC.ØTDS U/s 194J @ 2% in case of payee engaged only in the business of operation of call center; (W E F 01-06-2017).15 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXESØConcessional rate of TDS U/S 194LC made available in respect of borrowings made before 1st July, 2020. This benefit is available in respect of rupee denominated bond issued outside India before 1st July, 2020 with retrospective effect from AY 2016-17;ØSelf-declaration U/s 197 available in relation of insurance commission covered U/S 194D by individual/ HUF if estimated total income is nil; (W E F 01-06-2017).ØThe person paying any sum or amount on which TCS provisions are applicable shall provide his PAN. Failure to do so will attract TCS twice the applicable rate or 5% whichever is higher;ØAny award or agreement which has been exempted from income tax under Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013 is not subject to TDS U/s 194 LA;ØNo tax collection at source in relation to sale consideration on cash sale of jewelry exceeding Rs. 5,00,000/-;ØInterest on refund due to deductor will be allowed @0.5% for every month or part thereof from the date on which claim refund is made or in case of an order passed in appeal;ØWhere the credit for foreign taxes paid is not given for AY on the ground that payment of such foreign tax was dispute the AO shall rectify the assessment order or intimation U/S 143(1) assessee submits evidence within 6 months from the end of month in which dispute is settled;International Tax and Transfer Pricing provisions:ØIndirect transfer provisions to not apply on transfer of investment made by a non-resident in shares or interest in a company or entity registered or incorporated outside India, provided the transfer is made in a FII registered as Category-I or Category-II FPI under the SEBI (FPI) Regulations, 2014 made under the SEBI Act, 1992.ØIn line with recommendations of OECD BEPS Action Plan 4, interest expenses claimed by an Indian company (other than banking or insurance company) or a PE of a foreign company in India to its borrowings from associated enterprises shall be restricted to 30% of its EBITDA or interest paid or payable to associated enterprise, whichever is less. o Debt shall be deemed to be treated as issued by an associated enterprise where it provides an implicit or explicit guarantee to the lender or deposits a corresponding and matching amount of funds with the lender. o The provisions allow for carry forward of disallowed interest expense to eight assessment years immediately succeeding the assessment year for which the disallowance was first made and deduction against the income computed under the PGBP head to the extent of maximum allowable interest expenditure. o The provision will be applicable to interest expenditure exceeding INR 10m in relation to borrowings from associated enterprises.16 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXESØThe meaning of “terms” used in DTAA would be as per the definition under the agreement. Where the term is not defined in the agreement, but is defined in the Indian tax laws, it shall be assigned the meaning as per the definition in the Act or any explanation issued by the Central Government.ØAn assessee may claim foreign tax credit of the taxes paid in a foreign country that was disputed - credit for which was not given initially in the relevant assessment year - provided the assessee, within six months from the end of the month in which the dispute is settled, furnishes proof of settlement of such dispute, submits evidence before the Assessing Officer that the foreign tax liability has been discharged and furnishes an undertaking that credit of such amount of foreign tax paid has not been directly or indirectly claimed or shall not be claimed for any other assessment year.ØOn the transfer of shares of an Indian company by a demerged foreign company to a resulting foreign company, the cost of acquisition of such shares in the hands of the resulting foreign company shall be the same as it was in the hands of demerged foreign company. Such a transfer is exempt from capital gains as it is not regarded as a transfer under the existing provision of Section 47(vic).ØThe capital gain exemption provided to subscribers of RDBs issued by Indian corporates on gains arising on account of appreciation of rupee against the foreign company at the time of redemption of RDB would be extended to secondary holders as well. Moreover, transfer of a RDB of an Indian company issued outside India, by a non-resident to another non-resident will be exempt from capital gains tax.ØThe concessional rate of withholding tax under Section 194LC in respect of interest payments on borrowings made in foreign currency from a non-resident (ECB) would be applicable to borrowings made before 1 July 2020. Further with effect from assessment year 2016-17, the concessional rate of withholding under Section 194LC would also be applicable to RDBs issued outside India before 1 July 2020.ØThe time period of interest payments eligible for concessional rate of withholding of 5% under Section 194LD is extended till 30 June 2020.ØWith a view to promote ease of doing business, with effect from 1stApril 2017, the Authority for Advance Rulings for income-tax, central excise, customs duty and service tax would be merged.ØEasing the compliance burden of Taxpayers with respect to domestic TP regulations. o The existing domestic TP provisions apply to payments towards any expenditure, made by the Taxpayer to certain specified persons as well as to entities that enjoy specified profit-linked deductions. o In order to reduce the compliance burden of Taxpayers, scope of domestic TP will now be restricted only to related party transactions where one of the entities involved enjoys specified profit-linked deduction. o This proposal is effective from the financial year starting from 01 April 2016.17 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXESØIntroduction of the concept of secondary TP adjustment.o Secondary adjustment will now be applicable where a primary adjustment to the transfer price [a] Has been made voluntarily by the Taxpayer in the tax return [b] Made by the assessing officer and has been accepted by the Taxpayer [c] is determined by an APA entered into by the Taxpayer [d] is made as per the safe harbor rules; or [e] is arising as a result of MAP resolution for avoidance of double taxation,o Primary adjustment to the tax return if not repatriated to India within the time as may be prescribed, shall now be deemed to be an advance made by the Taxpayer to such affiliate and the interest on such advance, shall be computed as the income of the Taxpayer.o A secondary adjustment would be required whenever a primary adjustment in excess of INR 10 million.o This proposal is effective from the financial year starting from 01st April, 2017.18 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXES Budget 2017- Few Important Provisions and its effective date/periodS. No. Amendment Remarks WEF1 Sec 23 House Property held as SIT for one year AY 2018-192 Sec 36(1) (viia) Provision for Bad and Doubtful debts AY 2018-193 Sec 32 Disallowance of depreciation in relation to expenditure incurred in cash > 10K AY 2018-194 Sec 35AD Capex >10K in cash AY 2018-195 Sec 40A(3) Exp>10K in cash AY 2018-196 Sec 40A(2)(b) Application of TP regulations AY 2017-187 Sec 43B Interest on loan AY 2018-198 Sec 43D Income in relation to bad and doubtful debts AY 2018-199 44AD Presumptive income in relation to turnover received other than cash AY 2018-1910 44AA Increase in limits for person other than notified profession/ carrying business AY 2018-1911 Sec 44AB Presumptive income U/S 44AD (1) – not required to get books audited AY 2017-1812 Sec 10(37A) Exemption for transfer of land under land pooling scheme of APCRDA AY 2015-1613 Sec 49 Cost of acquisition of reconstituted plot or land received under land pooling scheme AY 2018-1914 Sec 45(5A) JDA agreement – Land Owner AY 2018-1915 Sec 49 Cost of acquisition of share in the project – JDA AY 2018-1916 Sec 55 Base year for cost of acquisition AY 2018-1917 Sec 54EC Investment in any bond redeemable after 3 years AY 2018-1919 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXES18 Sec 50CA Full value consideration of Unquoted shares AY 2018-1919 Sec 10(38) Exemption of Long term capital gain- STT payment AY 2018-1920 Sec 49/2(42A) Conversion of Preference Shares in to equity AY 2018-1921 Sec 47(vic) Transfer of shares of Indian Company by AY 2018-19 demerged foreign company22 Sec 115BBG Income transfer of Carbon Credits AY 2018-1923 Sec 115BBDA Dividend > 10 Lakhs chargeable in case of all residents AY 2018-1924 Sec 56(2)(vii) Gift provisions- All persons subject to exceptions AY 2018-1925 Sec 58 Applicability of TDS provisions to Income from other sources AY 2018-1926 Sec 11/10(23C) Corpus donations from current year income AY 2018-1927 139(5) Time limit for filing revised return AY 2018-1928 Sec 234C No interest on income referred to in Section 115BBDA AY 2017-1829 Sec 211 Advance tax payment by assessee covered U/S 44ADA AY 2017-1830 Sec 143(1D) Processing of return U/S 143(1) AY 2017-1831 Sec 241A Withholding of refund AY 2017-1832 Sec 194J Payment to Call centers 01-06-201733 Sec 194D Self-declaration 01-06-201734 Sec 269ST Cash receipt 3 lakhs or more AY 2018-1935 Sec 271DA Penalty for Section 269ST AY 2018-1936 Sec 194-IB TDS on rental income by non-tax audit assessee (Ind/HUF) 01-06-201720 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETCo2m0p1an7iePs RAcOt POSALS UNDER DIRECT TAXES37 Sec 194-IC TDS – JDA AY 2018-1938 Sec 194LC TDS applicability AY 2018-1939 Sec 194LD Interest to FII AY 2018-1940 Sec 79 Carryforward of Business loss AY 2018-1941 Sec 71(3A) Set off loss from House Property AY 2018-1942 Sec 80CCD Contribution to NPS- Self employed AY 2018-1943 Sec 10(2A) Withdrawal from NPS AY 2018-1944 Sec 12A/12AA Change in objects/ Mandatory filing of return AY 2018-1945 Sec 204 Person responsible AY 2018-1946 Sec 87A Rebate for Resident Individual AY 2018-1947 Sec 112 Concessional rate of tax in case transfer of unlisted shares by NR AY 2013-1448 Sec 271J Penalty for furnishing incorrection information AY 2018-1949 Sec 234F Fee for delay in filing return AY 2018-1950 Sec 244A Refund to deductor AY 2018-1921 | P a g e

SBS Wiki www.sbsandco.com/wikiINDIRECT TAXBUDGET 2017 PROPOSALS UNDER INDIRECT TAXES BUDGET 2017 PROPOSALS UNDER SERVICE TAXAMENDMENTS IN FINANCE ACT, 1994:I. NEGATIVE LIST— PROCESS AMOUNTING TO MANUFACTURE OMITTED: Clause (f) of section 66D (Negative List) of Finance Act, 1994 covers services provided by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption. These are not subject to service tax as such activities come under the purview of Central Excise. It is proposed to omit this entry from the Negative list. However, the said services continue to be out of tax net as they are exempted by way of exemption under clause (i) of entry 30 of Notification 25/2012-ST. {The amended provision will be effective from the date of President’s assent to Finance Bill, 2017}II. SECTION 104 – SPECIAL PROVISION FOR EXEMPTION IN CERTAIN CASES RELATING TO LONG TERM LEASE OF INDUSTRIAL PLOTS:The said section provides exemption from service tax leviable on one time upfront amount (premium, salami, cost, price, development charge or by whatever name called) in respect of taxable services provided or agreed to be provided by a state government industrial development corporation or undertaking to industrial units by way of grant of long term lease of thirty years or more of industrial plots. The exemption shall be applicable for the service tax levied or collected from 01.07.2012 to 21.09.2016. In cases where service tax is collected and paid to Government, the same can be claimed as refund by service providers by way of an application which shall be filed within six months from the date on which the Finance Bill, 2017 receives the assent of the President. For the period post 21.09.2016, already Notification No 41/2016-ST dated 22.09.2016 has been issued granting the same exemption. {The amended provision will be effective from the date of President’s assent to Finance Bill, 2017}III. SECTION 105 – SPECIAL PROVISION IN RELATION TO EXEMPTION IN CERTAIN CASES RELATING TO LIFE INSURANCE SERVICES PROVIDED TO MEMBERS OF ARMED FORCES UNION: The said section provides exemption from service tax leviable in respect of taxable services provided or agreed to be provided by the Army, Naval and Air Force Group Insurance Funds by way of life insurance to members of the Army, Navy and Air Force respectively under the Group Insurance schemes of Central Government. The exemption shall be applicable from 10.09.2014 to 01.02.2016 and can be claimed by way of refund, if service tax was remitted. Service tax paid by the services provider can be claimed as refund within 6 months from the date of assent of the subject Finance Bill.With effect from 02.02.2017, exemption is granted for the said services by way of insertion of entry 26D under Notification 25/2012-ST. {This provision will be effective from the date of President’s assent to Finance Bill, 2017}22 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETC2o0m1pa7niPesRAOctPOSALS UNDER INDIRECT TAXESIV. CLAUSE 128 OF BILL VALIDATES THE LEVY OF SERVICE TAX ON SERVICES OF BUILDERS:The levy of service tax on services provided by builders has been struck down by Delhi High Court in the case of Suresh Kumar Bansal & Ors vs. UOI, 2016-TIOL-1077-HC-DEL-ST. In order to overcome the validity of the said judgment, the said clause of the Bill proposes the following; a. Rule 2A of the Service Tax(Determination of Value) Rules, 2006 is amended retrospectively to facilitate the deduction of land value from the gross amount charged for works contract which includes value of goods or undivided share of land. Where a presumptive (abated) valuation option is exercised with respect to such works contracts, the taxable value shall be determined in the following manner;Period Taxable Value (%age of gross Condition01.07.2010 to 30.06.2012 amount charged) 25%01.07.2012 to 28.02.2013 25%01.03.2013 to 07.05.2013 30% For units having more than 200008.05.2013 to 31.03.2016 sft of carpet area and more than 25% one crore in value 30% Others 25% For units having more than 2000 sft of carpet area or more than one crore in value OthersFrom 01.04.2016 onwards 30%b. Notwithstanding anything contained in any judgment, decree, order of any court, tribunal any action taken or anything done or purported to have been taken or done at any time during the period from July, 2010 onwards shall be deemed to be and deemed always to have been validly and effectively taken as if amendment to the valuation rules has been inforce at all material times.c. For the purpose of the proposed retrospective amendment, the Central Government shall have and shall be deemed to have the power to make rules with retrospective effect as if the Central Government had the power to make rules under section 94 of the Finance Act, 1994, retrospectively, at all material timesd. It has been clarified that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable has this section of Finance Bill, 2017 has come into force. {This provision will be effective from the date of President’s assent to Finance Bill, 2017}23 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETC2o0m1pa7niPesRAOctPOSALS UNDER INDIRECT TAXESV. REPEAL OF RESEARCH AND DEVELOPMENT CESS ACT, 1986: It is proposed vide clause 139 to 142 to repeal Research and Development Cess Act, 1986 with effect from the enactment of Finance Bill, 2017. Consequently, it is clarified that the exemption under service tax vide Notification 14/2012-ST to the extent of R&D Cess paid on import of technology would be withdrawn. With effect from the said date, full service tax is required to be paid on services involving import of technology.AMENDMENTS IN MEGA EXEMPTION NOTIFICATION:VI. EXEMPTION EXTENDED TO ALL TYPES OF POST GRADUATE PROGRAMS OF IIMS: Sl.No 9B of Notification 25/2012-ST provides exemption only to the residential post graduate programs conducted by IIMs. It is proposed to omit the word ‘residential’ appearing before the phrase ‘post graduate programs’ of the said exemption. As a result of the amendment, the exemption is made applicable to all types of post graduate programs of IIMs whether residential or non-residential.{The amended provision is effective from 02.02.2017.}VII. EXEMPTION ON VIABILITY GAP FUNDING PAYABLE BY GOVERNMENT TO SELECTED AIRLINE OPERATORS: Entry 23A is inserted to exempt the services provided to the Government by way of transport of passengers, with or without accompanied belongings, by air, embarking from or terminating at a Regional Connectivity Scheme Airport, against consideration in the form of Viability Gap Funding (VGF). The exemption is valid upto one year from the date of commencement of operations of Regional Connectivity Scheme Airport. {This provision is effective from 02.02.2017.} AMENDMENTS IN CENVAT CREDIT AND OTHER COMMON PROVISIONSAMENDMENTS IN CENVAT CREDIT RULES, 2004:VIII. CLARIFIED THAT BANKS, NBFCS, FIS REQUIRED TO REVERSE CENVAT CREDIT UNDER RULE 6 ON INTEREST/DISCOUNT: Clause (e) of Explanation I to sub-rule (3D) of Rule 6 of CENVAT Credit Rules, 2004 clarifies that for the purpose reversal of CENVAT Credit on exempted goods and exempted services, the value of exempted services shall not include interest or discount earned by way of extending deposits, loans or advances. A proviso is proposed to be inserted now which provided that the said exclusion of interest or discount is not applicable to banking company, financial institution, NBFCs. This implies that these institutions have to consider their interest or discount earned on loans, advances deposits as value of exempted services and accordingly reversal of common credit on proportionate basis as required under sub-rule (3) shall be undertaken{The amended provision is effective from 02.02.2017.}IX. TIME LIMIT PRESCRIBED TO TRANSFER CENVAT CREDIT UPON RE-LOCATION, SALE, MERGER, AMALGAMATION: Rule 10 provides for transfer of CENVAT Credit lying unutilised on account of change in site or change in ownership on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture with a specific provision for transfer of liabilities of such factory. The transfer of CENVAT Credit is allowed only if the stock of inputs as such or in process or the capital goods is also transferred and duly accounted for to the satisfaction of deputy or assistant commissioner. It is proposed to insert sub-rule (4) which specifies the transfer of CENVAT Credit shall be allowed within a time period of three months from the date of receipt of application by Deputy241| P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETC2o0m1pa7niPesRAOctPOSALS UNDER INDIRECT TAXES Commissioner or Assistant Commissioner. If sufficient cause is being shown and for reasons to be recorded in writing, the specified time limit can further be extended to a period not exceeding six months by Principal Commissioner or Commissioner.{The amended provision is effective from 02.02.2017.}AMENDMENTS RELATING TO ADVANCE RULING & SETTLEMENT COMMISSION:X. SUBSTITUTION OF ADVANCE RULING AUTHORITY: Section 28F of the Customs Act, 1962, Section 23A of the Central Excise Act, 1944 and Section 96A of Finance Act, 1994 is proposed to be amended to provide that the Advance Ruling Authority constituted under Section 245-O of the IT Act, 1961 shall be the Authority for Advance Rulings (Central Excise, Customs and Service Tax) for issuing advance rulings under Customs Act, 1962. The proposed amendment shall be effective from the date of President’s assent to the Finance Bill 2017. Pending applications and proceedings as on the date of such assent shall get transferred to the advance ruling authority under IT Act, 1961. It further provides that member of Indian Revenue Service (Customs and Central Excise) who is qualified to be a member of the CBEC, shall be the revenue member of the authority for the purposes of Indirect tax laws.XI. INCREASE IN APPLICATION FEE FOR SEEKING ADVANCE RULING: Suitable amendments are proposed under the Customs, Excise and Service Tax laws; in order to increase the application fee for seeking advance ruling from Rs. 2500/- to Rs. 10,000/- on the lines of fee payable for advance ruling under Income Tax Act, 1961. {This provision will be effective from the date of President’s assent to Finance Bill, 2017}XII. TIME LIMIT FOR PRONOUNCING THE ADVANCE RULING IS EXTENDED: The authority for advance ruling has to pronounce the advance ruling within 90 days of the receipt of application. Suitable amendments are proposed under the Customs, Excise and Service Tax laws;in order to increase the time limit for pronouncing advance ruling to six months which is in lines of Income Tax Act, 1962. {This provision will be effective from the date of President’s assent to Finance Bill, 2017}XIII. RECTIFICATION POWERS TO SETTLEMENT COMMISSION: Suitable amendments are proposed under the Customs, Excise and Service Tax laws; wherein power has been conferred to the Settlement Commission at any time within three months from the date of passing of settlement order to amend such order to rectify any error apparent on the face of the record, either suo motu or such error is brought to notice by applicant or jurisdictional officers. {This provision will be effective from the date of President’s assent to Finance Bill, 2017} BUDGET 2017 PROPOSALS UNDER CUSTOMS LAWAMENDMENTS IN CUSTOMS ACT, 1962:XIV. THE DEFINITION OF ‘CUSTOMS STATION’ IS WIDENED: In terms of clause 13 of section 2 of the Customs Act, 1962, customs station is defined to mean any customs port, customs airport or land customs station. This definition has been extended to international courier terminal and foreign post office.{This provision will be effective from the date of President’s assent to Finance Bill, 2017}25 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETC2o0m1pa7niPesRAOctPOSALS UNDER INDIRECT TAXESXV. RATIONALISATION OF DOCUMENTS REQUIREMENT FOR SELF-ASSESSMENT: Section 17 of the Customs Act, 1962 provides for the requirement on importer or exporter to submit any contract, broker's note, insurance policy, catalogue or other document to the proper officer for the purpose of verification of self-assessment. In order to rationalise the requirement of documents, amendment is proposed in this section to require the importer or exporter to submit any document or information that has been called for by the proper officer for verification of self-assessment.{This provision will be effective from the date of President’s assent to Finance Bill, 2017}XVI. CONDITION OF UNJUST ENRICHMENT RELAXED FOR REFUND IN CERTAIN CASES: Section 27 deals with refund of customs duty paid. It is proposed to amend this section in order to provide that the principle of unjust enrichment is not applicable to the case of importer paying duty in excess before an order permitting clearance of goods for home consumption is passed. Such excess duty payment must be clearly evident from self-assessed bill of entry or re-assessed bill of entry as the case may be.{This provision will be effective from the date of President’s assent to Finance Bill, 2017}XVII. REQUIREMENT TO SUBMIT PASSENGER AND CREW ARRIVAL MANIFEST AND PASSENGER NAME RECORD INFORMATION: It is proposed to insert section 30A which requires the person-in-charge of a conveyance that enters from outside India to submit to the proper officer, a passenger and crew arrival manifest and the passenger name record information of arriving passengers. Such information shall be submitted before arrival of conveyance being aircraft or vessel and in case where the conveyance is vehicle, upon arrival of vehicle. Where there is a delay in submitting the said information without any reasonable cause, the person-in-charge of the conveyance shall be liable to a penalty not exceeding fifty thousand rupees. {This provision will be effective from the date of President’s assent to Finance Bill, 2017}XVIII. REQUIREMENT TO SUBMIT PASSENGER AND CREW DEPARTURE MANIFEST AND PASSENGER NAME RECORD INFORMATION: It is proposed to insert section 41 which require the person-in- charge of a conveyance that departs from a place in India to a place outside India, to submit to the proper officer, a passenger and crew departure manifest and the passenger name record information of departing passengers. Such information shall be submitted in such manner and within such time as may be prescribed. Where there is a delay in submitting the said information without any reasonable cause, the person-in-charge of the conveyance shall be liable to a penalty not exceeding fifty thousand rupees. {This provision will be effective from the date of President’s assent to Finance Bill, 2017}XIX. POWER CONFERRED ON BOARD TO MAKE REGULATIONS FOR ARRIVAL/DEPARTURE MANIFEST: Section 157 is proposed to be amended in order to confer power on board to make regulations to prescribe the form, the particulars, the manner and time of delivering the passenger and crew manifest for arrival and departure and the passenger name record information and the penalty for delay in delivering such information under sections 30A and 41A.{This provision will be effective from the date of President’s assent to Finance Bill, 2017}XX. TIME-LIMIT PRESCRIBED FOR PRESENTATION OF BILL OF ENTRY FOR IMPORTS: Sub-section (3) of section 46 provides for presentation of bill of entry by importer of goods at any time after the delivery of import manifest or import report as the case may be. It is proposed to amend this sub-26 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETC2o0m1pa7niPesRAOctPOSALS UNDER INDIRECT TAXESsection in order to make it mandatory for the importer to submit bill of entry before the end of nextworking day following the day on which the vessel, aircraft or vehicle arrives at the Customs station atwhich such goods are to be cleared for home consumption or warehousing. In case of delay inpresenting of bill of entry, the importer is liable to pay late presentation charges as may beprescribed.{This provision will be effective from the date of President’s assent to Finance Bill, 2017}XXI. MANNER OF PAYMENT OF DUTY AND INTEREST THEREON IN CASE OF SELF-ASSESSED/RE- ASSESSED BILLS OF ENTRY: In terms of sub-section 2 of section 47, importer is required to pay customs duty within two working days from the date on which bill of entry is returned for payment of duty. It is now proposed to amend this sub-section in order to require the importer to pay the import duty on the date of presentation of bill of entry in case of self-assessment. In case of assessment, re- assessment, provisional assessment, import duty shall be paid within one working day from the date on which bill of entry is returned for payment. In cases where assessment is deferred for want of information, import duty shall be payable upon such date as may specified by rules made in this behalf.{This provision will be effective from the date of President’s assent to Finance Bill, 2017}XXII.STORAGE FACILITY UNDER SECTION 49 EXTENDED TO IMPORTED GOODS ENTERED FOR WAREHOUSING: Section 49 provides that in case of imported goods entered for home consumption whether dutiable or not, the Assistant/Deputy Commissioner is satisfied upon application by importer that the goods cannot be cleared within a reasonable time, permit them to be stored in a public warehouse for a period not exceeding thirty days. It is now proposed to amend this section to extend this storage facility even in case of import goods entered for warehousing if they cannot be cleared for deposit in warehouse within a reasonable period of time.{This provision will be effective from the date of President’s assent to Finance Bill, 2017}XXIII.TREATMENT OF LABEL OR DECLARATION AS BILL OF ENTRY FOR IMPORT BY POST IS WITHDRAWN: Section 82 provides that in case of goods imported or exported by post, any label or declaration accompanying goods which contains description, quantity and value thereof shall be deemed to be an entry for import or export. It is proposed to omit this section. Correspondingly, clause (a) of section 84 is also amended to provide the form and manner in which a bill of entry may be made in respect of goods imported or to be exported by post.{This provision will be effective from the date of President’s assent to Finance Bill, 2017}AMENDMENTS IN CUSTOMS TARIFF ACT, 1975:XXIV.WITHDRAWAL OF EXEMPTION TO SPECIFIED CATEGORIES FROM THE SCOPE OF ANTI-SUBSIDY INVESTIGATIONS: clause (c) of sub-section(3) of section 9 of Customs Tariff Act, 1975 provides for that anti-subsidy duty shall be levied if the subsidy is conferred on limited number of persons engaged in manufacture, producing or exporting the articles. This duty cannot be levied if subsidy is extended for three purposes viz. research activities conducted by or on behalf of persons engaged in manufacture, production or export; assistance to disadvantaged regions within the territory of exporting country; and assistance to promote adaptation of existing facilities to new environmental requirements. It is proposed to amend this clause to enable the Central Government to levy this duty even if subsidy is extended for the above stated purposes also.27 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETC2o0m1pa7niPesRAOctPOSALS UNDER INDIRECT TAXES(THE TARIFF AND EXEMPTION RELATED CHANGES ARE GIVEN IN ANNEXURE— I) BUDGET 2017 PROPOSALS UNDER CENTRAL EXCISE LAWAMENDMENTS IN CENTRAL EXCISE ACT, 1944:The amendments proposed under Central Excise Act, 1944 are related to Authority for Advance Rulingand Settlement Commission which are explained under point nos. X, XI, XII, XIII.AMENDMENTS IN CENTRAL EXCISE RULES, 2002:XXV. TIME LIMIT SPECIFIED FOR DISPOSAL OF APPLICATION FOR REMISSION OF DUTY: Rule 21 of the Central Excise Rules, 2002 is proposed to be amended in order to provide that Principal Commissioner or Commissioner shall decide the remission of duty within three months from the date of receipt of application. If sufficient cause is being shown and for reasons to be recorded in writing, the specified time limit can further be extended for a further period not exceeding six months. {The amended provision is effective from 02.02.2017.}XXVI.TIME LIMIT SPECIFIED FOR DISPOSAL OF APPLICATION FOR REMISSION OF DUTY: Rule 21 of the Central Excise Rules, 2002 is proposed to be amended inorder to provide that Principal Commissioner or Commissioner shall decide the remission of duty with in three months from the date of receipt of application. If sufficient cause is being shown and for reasons to be recorded in writing, the specified time limit can further be extended for a further period not exceeding six months. {The amended provision is effective from 02.02.2017.}AMENDMENTS IN CENTRAL EXCISE TARIFF ACT, 1985:XXVII.RATE OF DUTY REDUCED RETROSPECTIVELY FOR SPECIFIED MOTOR VEHICLES: Clause 119 of the Bill proposes to specify the tariff rate of excise duty as 12.5% instead of 27% retrospectively with effect from 01.01.2017 on motor vehicles for transport of more than 13 passengers falling under tariff items 87029021, 87029029 of the First Schedule to Central Excise Tariff Act, 1985.(THE TARIFF AND EXEMPTION RELATED CHANGES ARE GIVEN IN ANNEXURE— II) ANNEXURE— I TARIFF AND EXEMPTED RELATED CHANGES IN CUSTOMS LAWXXVIII. AMENDMENTS AFFECTING RATES OF BCD [CLAUSE 109(A) OF THE FINANCE BILL, 2017]:Sl.No Commodity Rate of Duty From To1 Cashew nut, roasted, salted or roasted and salted 30% 45%2 RO membrane element for household type filters 7.5% 10%{The amendments involving increase in the duty rates will come into effect immediately owing to adeclaration under the Provisional Collection of Taxes Act, 1931}28 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETC2o0m1pa7niPesRAOctPOSALS UNDER INDIRECT TAXESXXIX. OTHER PROPOSALS INVOLVING CHANGES IN BCD, CVD, SAD AND EXPORT DUTY RATES:Sl.No Commodity BCD/Excise/CV duty/SAD/Export Duty From ToA. ORES AND CONCENTRATES1 Other aluminium ores, including laterites Export Duty – Nil Export Duty – 15%B. MINERAL FUELS AND MINERAL OILS2. Liquefied Natural Gas BCD – 5% BCD – 2.5%C. CHEMICALS & PETROCHEMICALS3 o-Xylene BCD – 2.5% BCD – Nil4 Medium Quality Terephthalic Acid (MTA) & Qualified Terephthalic Acid(QTA) BCD – 7.5% BCD – 5%5 2-Ethyl Anthraquinone [29146990] for use in manufacture of hydrogen peroxide, subject to actual user condition BCD – 7.5% BCD – 2.5%6 Clay 2 Powder (Alumax) for use in ceramic substrate for catalytic convertors, subject to actual user condition BCD – 7.5% BCD – 5%7 Vinyl Polyethylene Glycol (VPEG) for use in manufacture of Poly Carboxylate Ether, subject to actual user condition BCD – 10% BCD – 7.5%D. TEXTILES8 Nylon mono filament yarn for use in BCD – 5% monofilament long line system for Tuna fishing, subject to certain specified conditions BCD – 7.5%E. FINISHED LEATHER, FOOTWEAR AND OTHER LEATHER PRODUCTS9 Vegetable tanning extracts, namely Wattle extract and Myrobalan fruit extract BCD – 7.5% BCD – 2.5%10 Limit of duty free import of eligible items for 3% of FOB value of 5% of FOB value of manufacture of leather footwear or synthetic said goods exported said goods exported footwear or other leather products for use in d u r i n g t h e d u r i n g t h e preceding financial preceding financial the manufacture of said goods for export year year29 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETC2o0m1pa7niPesRAOctPOSALS UNDER INDIRECT TAXESF. METALS11 Co-polymer coated MS tapes / stainless steel tapes for manufacture of telecommunication grade optical fibres or optical fibre cables, BCD – Nil BCD – 10% subject to actual user condition BCD – Nil12 Nickel BCD – 2.5%13 MgO coated cold rolled steel coils [7225 19 90] for use in manufacture of CRGO steel, subject to actual user condition BCD – 10% BCD – 5%14 Hot Rolled Coils [7208], when imported for use in manufacture of welded tubes and pipes falling under heading 7305 or 7306, subject to actual user condition BCD – 12.5% BCD – 10%G. CAPITAL GOODS15 Ball screws, linear motion guides and CNC Ball screws and liner systems for use in manufacture of all CNC machine tools, subject to actual user condition motion guides BCD – BCD – 2.5% 7.5% CNC systems BCD – 10%H. ELECTRONICS / HARDWARE16 Populated Printed Circuit Boards (PCBs) for the manufacture of mobile phones, subject to actual user condition SAD – Nil SAD – 2%I. RENEWABLE ENERGY17 Solar tempered glass for use in the manufacture of solar cells/panels/modules subject to actual user condition BCD – 5% BCD – Nil18 Parts/raw materials for manufacture of solar CVD – 6% tempered glass for use in solar photovoltaic BCD – 5% CVD – Nil cells/modules, solar power generating SAD – Nil equipment or systems, flat plate solar collector, solar photovoltaic module and panel for water pumping and other applications, CVD – 12.5% subject to actual user condition19 Resin and catalyst for manufacture of cast BCD – 7.5% components for Wind Operated Energy CVD – 12.5% Generators [WOEG], subject to actual user SAD – 4% condition30 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETC2o0m1pa7niPesRAOctPOSALS UNDER INDIRECT TAXES20. All items of machinery required for fuel cell BCD – 10%/ 7.5% BCD – 5% based power generating systems to be set up CVD – 12.5% CVD – 6% in the country or for demonstration purposes, subject to certain specified conditions21 All items of machinery required for balance of BCD – 10%/ 7.5% BCD – 5% systems operating on biogas/ bio-methane/ CVD – 12.5% CVD – 6% hydrogen, subject to certain specified conditionsJ MISCELLANEOUS22 Membrane Sheet and Tricot / Spacer for use in manufacture of RO membrane element for household type filters, subject to actual user CVD – 12.5% CVD – 6% condition23 All parts for manufacture of LED lights or fixtures, including LED lamps, subject to actual Applicable BCD, CVD BCD – 5% CVD – 6% user condition24 All inputs for use in the manufacture of LED Driver and MCPCB for LED lights or fixtures, including LED lamps, subject to actual user Applicable BCD 5% condition25 De-minimis customs duties exemption limit for Duty payable not CIF value not goods imported through parcels, packets and exc e e d i n g R s . 1 0 0 exceedingRs.1000 letters per Consignment per Consignment26 Miniaturized POS card reader for m-POS (not Applicable BCD, BCD – Nil including mobile phones, or tablet computers), CVD, SAD CVD – Nil micro ATM as per standards version 1.5.1, Finger SAD – Nil Print Reader / Scanner or Iris Scanner27 Parts and components for manufacture of BCD – Nil miniaturized POS card reader for m-POS (not CVD – Nil including mobile phones, or tablet computers), SAD – Nil micro ATM as per standards version 1.5.1, Finger Print Reader / Scanner or Iris Scanner, subject to actual user condition28 Silver medallion, silver coins having silver content not below 99.9%, semi- manufactured form of silver and articles of silver CVD – Nil CVD – 12.5%29 Goods imported for petroleum and coal bed methane operations by availing of the benefit of notification No.12/2012-Customs, dated 17.03.2012 [S. No.357A] no longer required for the said purpose are being allowed to be disposed of on payment of applicable customs duties or excise duty, on the depreciated value calculated as per straight line method (subject to depreciated value not being less than 30% of the original value) of such goods.31 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETC2o0m1pa7niPesRAOctPOSALS UNDER INDIRECT TAXES ANNEXURE— II TARIFF AND EXEMPTED RELATED CHANGES IN EXCISE LAWXXX. PROPOSALS INVOLVING CHANGES IN EXCISE DUTY RATES:Sl.No Commodity From ToRENEWABLE ENERGY Nil 6%1 Solar tempered glass for use in solar photovoltaic 6% cells/modules, solar power generating equipment or systems, flat plate solar collector, solar photovoltaic Nil module and panel for water pumping and other 6% applications, subject to actual user condition 6% 6%2 Parts/raw materials for manufacture of solar 6% tempered glass for use in solar photovoltaic cells/modules, solar power generating equipment or systems, flat plate solar collector, solar photovoltaic 12.5% module and panel for water pumping and other applications, subject to actual user condition module and panel for water pumping and other applications, subject to actual user condition3 Resin and catalyst for manufacture of cast 12.5% components for Wind Operated Energy Generators [WOEG], subject to actual user condition4 All items of machinery required for fuel cell based 12.5% power generating systems to be set up in the country or for demonstration purposes5 All items of machinery required for balance of 12.5% systems operating on biogas/ bio-methane/ by- product hydrogenMISCELLANEOUS 12.5% Applicable duty6 Membrane Sheet and Tricot / Spacer for use in manufacture of RO membrane element for household type filters, subject to actual user condition7 All parts for manufacture of LED lights or fixtures, including LED lamps, subject to actual user condition8 Miniaturized POS card reader for m-POS (not Applicable duty Nil including mobile phones, or tablet computers), micro ATM as per standards version 1.5.1, Finger Print Reader / Scanner or Iris Scanner32 | P a g e

SBS Wiki www.sbsandco.com/wiki BUDGETC2o0m1pa7niPesRAOctPOSALS UNDER INDIRECT TAXES9 Parts and components for manufacture of Applicable duty Nil miniaturized POS card reader for m-POS (not including mobile phones, or tablet computers), micro ATM as per standards version 1.5.1, Finger Print Reader / Scanner or Iris Scanner, subject to actual user condition10 a. Waste and scrap of precious metals or metals clad Nil Nil, subject to the with precious metals arising in course of condition that no manufacture of goods falling in Chapter 71 credit of duty paid on inputs or b. Strips, wires, sheets, plates and foils of silver 12.5% input services or capital goods has c. Articles of silver jewellery, other than those 12.5% been availed by studded with diamond, ruby, emerald or sapphire manufacturer of such goods 6% 6% d. Silver coin of purity 99.9% and above, bearing a brand name when manufactured from silver on which appropriate duty of customs or excise has been paid33 | P a g e

TECHNICAL SESSION ON \"BUDGET PROPOSALS FOR 2017-18 – DIRECT TAXES AND INDIRECT TAXES\" BY CA SURESH BABU S & CA MANINDAR K

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