Significant Economic Presence(SEP):
Concept of “Significant Economic Presence” (SEP) was introduced, in Finance Bill tabled on 1st Feb, 2018 which states that the transactions or activities shall constitute SEP in India, whether or not the non-resident has a residence or place of business in India or renders services in India. The amendment at the enactment stage further provides that transactions or activities shall constitute SEP in India, whether or not the agreement for such transaction or activities is entered into in India.
Liberalization of conditions for availing tax holiday for Start-ups:
Turnover cap of INR 25 crore for an eligible start-up to claim profit-linked tax holiday deduction shall apply only to the tax year for which deduction is claimed. The amendment at the enactment stage removes the anomaly by providing that turnover cap shall apply only to the year for which deduction is claimed, such that breach in a particular year shall not disqualify the taxpayer for other years.
Conversion of Inventory into Capital Asset
For the purpose of calculating the Depreciation allowance in relation to Capital asset referred in section 28(via)[i.e. Inventory converted into capital asset],Fair Market Value on the date of conversion of stock- in- trade into Capital Asset shall be the actual cost.
Valuation of securities held by Bank or RBI:
The securities held by a scheduled bank or public financial institution shall be valued in accordance with the Income Computation and Disclosure Standards (ICDS) notified under Section 145 after taking into account the extant guidelines issued by the Reserve Bank of India (RBI).
Obligation of obtaining Permanent Account Number (PAN) for non-individual entities and related individuals entering into a financial transaction:
The Finance Bill tabled on 1st February, 2018 proposed amendment to Section 139A to provide that every person not being an individual, which enters into a financial transaction of an amount aggregating to two lakh fifty thousand rupees or more in a financial year and who has not been allotted a PAN shall within such time as may be prescribed apply to Assessing Officer (AO) for the allotment of a PAN. At the enactment stage the scope of this provision is restricted to only non-individual resident persons.
Insertion of new Proviso to Section 48:
The Third proviso has been inserted into section 48 to provide that the indexation benefit and benefit of exchange rate to be adopted for reconverting gains into Indian currency shall not be applicable to capital gains arising from the transfer of equity share or equity oriented mutual fund or unit of a business trust referred in newly inserted section 112A.
Withdrawal of Section 54EC exemption if the bonds are redeemed within 5 years:
Lock-in period for investment in specified bonds for claiming exemption from LTCG arising from land or building or both extended from three years to five years.
Taxation of Long Term Capital Gain (LTCG):
In the era of new LTCG Taxation regime, the Finance Bill tabled on 1st February, 2018 provided for computation of the „Fair market value‟ in case of shares which were listed on 31st January, 2018.It is now proposed to provide for the determination of a „fair market value‟ in case where shares were not listed as on 31st January 2018 but are listed on the date of transfer and which become the property of the taxpayer in consideration of share which is not listed on such exchange as on the 31st January, 2018 by way of transaction not regarded as transfer under Section 47 of the Act. In the aforesaid case, the taxpayer will be allowed to consider the benefit of indexation of cost of acquisition of such unlisted equity shares for the purpose of determination of capital gains under Section 112A.
Fund of Funds:
Units of equity-oriented funds investing in other equity-oriented funds (fund of funds) shall turn long-term if held for a period exceeding 12 months. Due date for filing Country-by-Country (CbC) report by an Indian constituent entity, where the non-resident parent entity has no obligation to file CbC report in the home jurisdiction shall be prescribed.
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