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Rashmin Sanghvi & Associates

Chartered Accountants

220, 2nd Floor, Arun Chambers,
Tardeo Road,
Mumbai - 400 034,
Maharashtra, India.

Tel. Nos.: (+91 22) 2351 1878, 2352 5694.

Fax : (+91 22) 2351 5275.

Email : [email protected]

 
Home Articles Taxation         Share :

Budget 2016Chapter O

Chapter O. Other Provisions:

34. Relaxation in claim of allowance for new plant and machinery: [S. 32AC]
 

S. 32AC of Income tax Act was amended from AY 2015-16 to provide for an allowance of 15% on investment in new plant & machinery by a company engaged in activity of manufacturing or production of any article. The allowance is available till AY 2017-18. There were certain conditions regarding the same:
 

i. The investment should be more than Rs. 25 crores, and

ii. The acquisition and installation of new plant and machinery purchased has to be in the same financial year.
 

The above conditions were difficult to be fulfilled. It is thus proposed in the finance bill that while the acquisition of new plant and machinery can be done in any financial year, it must be installed before 31.03.2017 to claim the allowance. Thus, there is no compulsion of acquiring and installing new plant & machinery in the same year to avail the benefit of 15%. This is a beneficial amendment.
 

35. Period of holding for Long Term Capital Gain from sale of unlisted shares: [S. 2(42A)]
 

For gain on sale of unlisted shares to be considered as Long Term Capital gain, the period of holding was required to be of more than 36 months. This period is reduced to 24 months.
 

36. Clarification regarding set off of losses against undisclosed income: [S. 115BBE]
 

If any undisclosed incomes are detected by the department, the income is chargeable to tax @ 30% (plus surcharge and cess). No deduction is available for any expenditure or allowance.
 

However, there was uncertainty as to whether of set-off of losses against such incomes was allowed. It has been clarified that set off of any loss shall not be allowable in respect of these incomes.
 

The amendment will come into effect from F.Y. 2016-17.
 

Does it mean that for the past, losses can be set off? The matter is being litigated. The intention is not to give any relief against undisclosed income. However if a court decision rules that losses can be set off against undisclosed incomes, one will be able to take advantage of the same. This advantage will be upto FY 15-16.
 

37. Payment of interest on refund: [S. 244A]
 

As per the current law, interest on income-tax refund is paid from the 1st April of the assessment year to the date on which refund is granted.
 

In order to ensure filing of return within the due date it is proposed to provide that in cases where the return is filed after the due date, the period for grant of interest on refund may begin from the date of filing of return.
 

Presently, interest is provided only on excess amount on account of TDS, advance tax and TCS. It is now proposed to provide interest on refund of self-assessment tax paid also. Such interest shall be computed for the period beginning from the date of payment of tax or filing of return, whichever is later, up to the date on which the refund is granted.
 

Additional interest @ 3% is proposed where a refund arises out of appeal-effect being delayed beyond the time prescribed. The Finance Minister mentioned in his budget speech that there is a renewed thrust on use of technology for accountability of tax officers. In that sense, tax officers who delay such appeal-effect orders beyond 90 days will be held accountable for the extra 3% interest proposed above. This is a welcome move and hopefully should be a starter for shifting accountability on the tax officers who are responsible for delays or unreasonable additions to income.
 

These amendments will come into effect from 1st June, 2016.
 

38. Advance tax & interest on deferment in advance tax:
 

38.1 Advance tax: [S. 211]
 

Presently, due dates for payment of advance tax are different for corporate and non-corporate assessees. It is proposed to prescribe the same advance tax payment schedule for all assesses. The revised schedule for all tax payers will be as under:
 

Due date

Current Provisions

Proposed Provisions

15th June

Nil

15%

15th September

30%

45%

15th December

60%

75%

15th March

100%

100%

 

While the proposal seems to rationalise the provisions, it may be difficult for individuals and firms to estimate their annual income by 15th June to enable them to pay the advance tax accurately.
 

Tax payers opting for the Presumptive taxation scheme for businesses now need to pay advance tax only by way of one instalment by 15th March. However professionals who opt for presumptive taxation do not have this option of paying tax only once.
 

38.2 Interest on deferment in advance tax payment: [S. 234C]
 

As per S. 234C, interest @ 1% per month is required to be paid in case of default in payment of advance tax. As it is proposed to amend the advance tax payment schedule of non-corporate assesses, it is also proposed to make consequential amendments in section 234C. Now the interest on delayed payment of advance tax for both corporate and non- corporate assesses are same.
 

Additionally, it is also proposed that interest shall not be chargeable for assesse having Business or Profession income for the first time.