DT Amendments Part-2

IMPORTANT DIRECT TAX AMMENDMENTS BY FINANCE BILL 2013 PART-II

1.       Definition of the term ‘Capital Asset’

The new definition states that agricultural land will be exempt from the definition of the term capital asset ,if the land is not within the specified distance measured aerially (shortest aerial distance(.

The specified distance will be;

(i)                  2 km, if the population of the municipality or cantonment board is less than 1 lakh but more than 10000

(ii)                6 km, if the population of the municipality or cantonment board is 1lakh to 10 lakh.

(iii)               8 km, if the population of the municipality or cantonment board is more than 10 lakh.

Also, definition of the term population has been amended to mean population according to the last preceding census of which the relevant figures have been published before the first day of the previous year.

Similar amendment is proposed for the definition of the term 'urban land' in Wealth Tax.

2.       Return filed without self assessment tax

This amendment will take effect from 1^st of June 2013. According to the amendment, any return of income shall be treated as defective unless the tax together with interest, if any, payable in accordance with the provisions of sec.140A has been paid on or before the date of furnishing of the return.

3.       Keyman Insurance

The amendment states that a keyman insurance policy which has been assigned to any person during its term with or without any consideration shall continue to be treated as a keyman insurance policy.

This amendment will be effective from 1^st April 2014 and accordingly apply in relation to AY 2014-15 & subsequent assessment years.

4.       Taxability of immovable property received for inadequate consideration.

If an immovable property is received for a value less than the stamp duty by Rs.50,000 or more, then such difference in value shall be chargeable in the hands of the individual or HUF as income from other sources.

If there is a difference in the date of agreement and date of registration, stamp duty value as on the date of agreement may be adopted , provided that, the amount of consideration, or a part thereof has been paid by any mode other than cash on or before the date of agreement fixing the amount of consideration for the transfer of such immovable property.

5.       Direction for special audit.

The relevant section has been amended to include; if at any stage of the proceedings before him, the assessing officer, having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the chief commissioner, direct the assessee to get his accounts audited by an accountant & to furnish a report of such audit.

By this amendment, the scope of the section has increased. The amendment will be effective from 1^st June 2013.

6.       Application of seized assets u/s 132B.

The section is proposed to be amended so as to clarify that the existing liability, against which the seized assets can be adjusted, does not include advance tax liability of the assessee, payable in accordance with the provisions of part C of chapter XVII of the Act.

7.       Tax residency certificate.

The amendment is proposed to clarify that the tax residency certificate is a necessary but not sufficient condition for claiming benefits under the DTAA as referred to in sec 90&90A of the Act.

This amendment will take effect retrospectively from 1^st April 2013, and hence apply in relation to AY 2013-14 & subsequent assessment years.

8.       Contributions for claiming deductions u/s 80GGB and 80GGC

To discourage cash payments bi the contributors, it is proposed to amend the provisions of sec 80GGB&80GGC so as to provide that no deduction will be available in the said sections if such sum is contributed by way of cash.

9.       Clarification of the phrase ‘Tax Due’ for the purpose of recovery in certain cases.

In view of the interpretations of some courts that tax due does not include interest, penalty etc., it is clarified that , for the purposes of sec.179 tax due includes penalty, interest or any other sum payable under the Act.