Disclaimer
The information contained in this booklet is intended to provide only general information and not for the advice on
any particular matter. Subscribers and readers should seek appropriate professional advice before acting on the basis
of any information contained herein. A R A J & Associates, its partners, employees expressly disclaim any and all
liability to any person, whether a subscriber or not, in respect of anything and of the consequences of anything
done or omitted to be done by any such person in reliance upon the contents of this booklet.
No part of this booklet may be reproduced or copied in any form or by any means graphic, electronic or mechanicalincluding printing, photocopying, recording, taping, or information retrieval systems or reproduced on any disc, tapeperforated media or other information storage device, etc., without the written permission of the publishers Thisproduct can be exported only by the Publishers. Breach of this condition is liable for legal action. All disputes aresubject to Delhi jurisdiction only.
BUDGET HIGHLIGHTS FEB-2017 2
BUDGET HIGHLIGHTS FEB-2017 3ARAJ & Associates
Proposed Amendments in Finance Bill
• Income Tax Slab rates applicable for Individual, HUF, AOP, BOI and Artificial Juridical Person for the AY 2018-19 are:
Taxable Income Individual Senior Citizen (above 60
years)
Super Senior Citizen
(above 80 years)
Upto ₹ 2,50,000 Nil Nil Nil
₹ 2,50,001 to ₹ 3,00,000 5% Nil Nil
₹ 3,00,001 to ₹ 5,00,000 5% 5% Nil
₹ 5,00,001 to ₹ 10,00,000 20% 20% 20%
Above 10,00,000 30% 30% 30%
Slab Rates:
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 4
Surcharge:Taxable Income Percentage of
Surcharge on
Tax
Upto ₹ 5,00,000 Nil
₹ 50,00,001 to ₹ 1
Cr
10%
Above ₹ 1 Cr 15%
In addition to above, an education cess equivalent to
2% and secondary and higher education cess at the
rate of 1% of the tax shall also be chargeable on the
total income of the assessee.
EC and SHEC
Income Tax slab rate applicable to Companies
Gross Turnover ≤ ₹ 50 Cr - 25 % of Taxable Income
Gross Turnover > ₹ 50 Cr - 30 % of Taxable Income
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 5
Relief for the New House Buyers
In order to promote affordable housing projects and to achieve dream of housing for all,
lawmakers have made following amendments: (Sec – 80IBA, w.e.f AY 2018-19)
Certain residential projects consisting of residential units with carpet area (earlier built up area) upto 30
sq. m (for projects in metropolitan cities) and upto 60 sq. m (for projects in other cities) are eligible for
100% deduction in respect of the profits and gains derived from such projects;
Period of construction of project has been increased from 3 years to 5 years.
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 6
• The holding period of immovable property for computing Long Term Capital Gain has been reduced to 2 Years as
against 3 Years. (Sec-2(42A) w.e.f AY 2018-19)
• In order to provide relief to Individuals/HUF’s who have pooled their land for formation of new capital city of
Andhra Pradesh, Lawmakers have exempted the compensation received by landowners in lieu of land transferred
under land pooling scheme notified under the provisions of Andhra Pradesh Capital Region Development authority Act,
2014. Further the cost of acquisition of reconstituted plot which was handed over to the assessee shall be deemed be
its stamp duty value on the last day of the Second Financial Year after the end of financial year in which the possession
of such asset was handed over to the assessee. (Sec 10(37A), Sec 49, w.r.e.f AY 2015-16)
• Conversion of preference share into equity share shall not be regarded as transfer as per section 47 of the Act.
Therefore such transaction shall not be subject to capital gain tax. (Sec 2(42A),47,49, w.e.f AY 2018-19)
ARAJ & Associates
Capital Gain Tax
BUDGET HIGHLIGHTS FEB-2017 7
• Currently in the joint development agreement the owner was liable under Capital Gain Tax in the year in which the possession
of the property was handed over to the developer. However it is now proposed that the capital gain shall be taxable in the year
of completion/part completion of the project (completion certificate is received). Further the sale consideration shall be the
stamp value of the property transferred along with any cash consideration received. Further the cash consideration shall be liable
for tax deduction at source @ 10%. (sec 45(5A), 49, 194IC w.e.f. AY 2018-19)
•Currently the base year for computation of Capital Gain on property purchased before 1981 was to be taken as 1981 and the
benefit of indexation was provided by applying Cost inflation indexation of the FMV as on 01.04.1981. However it is now
proposed to change the base year from 1981 to 2001. Hence for computing Indexed value, Fair Market Value of property shall be
taken as on 01.04.2001. (Sec 55, 48 w.e.f AY 2018-19)
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 8
• Currently exemption from capital gain on transfer of long term assets was provided for assessee who invests in the
specified bonds such as NHAI and RECI. However the scope has now been widened by covering all investments in any
bonds redeemable after three years as shall be notified by the Central Government. (Sec 54EC, w.e.f. AY 2018-19)
• Tax @10% (plus surcharge and cess) shall be applicable on profits earned from sale of carbon Credits. Also an assessee
shall not be allowed to claim expenses or allowance against such income. (Sec 115BBG, w.e.f. AY 2018-19)
• Long Term capital gain on sale of listed equity shares shall be exempt from income tax only if STT was paid at the
time of acquisition of such shares. However in certain cases such as IPO, FPO, bonus or right issue, long term capital gain
shall be exempt even if STT is not paid at the time of acquisition of such shares. (Sec 10(38), AY 2018-19)
• The consideration for sale of unquoted shares of Indian company shall be deemed to be the FMV of the shares when the
actual consideration paid for such shares is less the FMV. (Sec 50CA, w.e.f AY 2018-19)
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 9
• Previous year losses are not allowed to be carried forward, if share holding pattern of a company (where public are not
substantially interested) changes by more than 51 %. Now, it has been proposed that in case of eligible start-ups, the
loss incurred during the period of seven years from the date of incorporation shall be carried forward and be
adjusted with the future profit in case all the share holders as on last day of the previous year in which the loss
was incurred held the same number of shares with voting rights. (Sec 79, w.e.f. AY 2018-19)
• Presently 100% deduction was provided with respect to profit earned by eligible startup for consecutive three years out
of the 5 years. Now it has been proposed to extend the block of 5 years to seven years. (Sec 80IAC, w.e.f. AY 2018-19)
ARAJ & Associates
Incentive for Start ups
BUDGET HIGHLIGHTS FEB-2017 10
• MAT credit/AMT credit shall be Carried forward upto 15 Assessment Years from existing 10 Assessment Year.
(Sec 115JAA/115JB, w.e.f. AY 2018-19)
• It is not mandatory to maintain books of accounts in case of assessee whose turnover is less than Rs. 25 lakh and
income is below 2.5 lakhs. (Sec 44AA, w.e.f. AY 2018-19)
• Amount exceeding Rs. 10,000 paid in cash shall not be allowed as business expenditure. Presently the limit is Rs.
20000. Presently Income Tax Act does not restricts cash payment for incurring capital expenditure, however now
it has been proposed that if any capital asset exceeding Rs. 10000 is acquired in cash, then the assessee shall not be
eligible to avail depreciation on such capital asset. (40A(3), 32, 35AD & 43 w.e.f AY 2018-19)
• An assessee is not required to get its Books of accounts audited if its total turnover during the previous financial
year does not exceed Rs. 2 crore and the assessee declares a minimum profit of 8% of the total turnover. (44AB,
w.e.f AY 2018-19)ARAJ & Associates
Profit and Gain from Business & Profession
BUDGET HIGHLIGHTS FEB-2017 11
• Presently income earned on NPA account is taxable on cash basis only for Scheduled Bank, PFI, SFC, SIIC, HFC
etc, however this benefit was not available to cooperative bank. Now same has been extended to co-operative
banks other than a primary agricultural credit society or a primary co-operative agricultural and rural development
bank. Now income earned by such cooperative bank shall be taxable on actual receipt basis. (Sec 43D/43B,
w.e.f AY 2018-19)
• Presently scheduled banks, non scheduled banks and cooperative banks are allowed to claim deduction with
respect to bad and doubtful debt for an amount not exceeding 7.5 % of the total income or 10 % of the
aggregate advances, however now this threshold limit has been increased from 7.5 % to 8.5% of total income.
(Sec 36(1)(viia), w.e.f AY 2018-19)
ARAJ & Associates
Banking Industry
BUDGET HIGHLIGHTS FEB-2017 12
• New section has been introduced where no person shall receive an amount of three lakhs or more in otherwise
than by an account payee cheque/account payee bank draft/electronic clearing system through bank from a single
person /in respect of a single transaction/transaction relating to one event. If any person makes the cash payment
in excess of Rs. 3,00,000/-, he shall be liable to penalty equivalent to the amount paid in cash. (Sec 269ST, 271DA,
w.e.f 01.04.2017)
• It is proposed that no Political party shall received donation exceeding Rs. 2000 otherwise than by an account
payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank
account or through electoral bonds and shall furnish return of Income before the due date for claiming exemption.
(Sec 13A, w.e.f. 01.04.2017)
• Presently presumptive tax @ 8 % was applicable for traders whose gross turnover does not exceed Rs. 2 Crore.
However it has been proposed to reduce the said rate to 6 % with respect to payments received in mode other than
cash. However for the cash receipt rate of 8 % shall be applicable. (Sec 44AD, w.e.f. AY 2018-19)
ARAJ & Associates
Promotion of cashless transactions
BUDGET HIGHLIGHTS FEB-2017 13
• Deduction under 80G with respect to donation shall not be available if amount exceeding Rs. 2000 is paid in
cash. (Sec 80G, w.e.f. AY 2018-19)
• Exemption on partial withdrawal not exceeding 25% of the contribution made by an employee in accordance with
terms and conditions is exempt for employee who has subscribed NPS.
• Deduction for amount deposited in National Pension Systems Trust (NPS) shall be increased to 20 % in case of
individual other than employee, earlier only employee was covered. (Sec 80CCD, w.e.f AY 2018-19)
• The existing rebate of Rs. 5000 for person whose income was below 5 lakh shall be reduced to Rs. 2500 for person
whose income is below Rs. 350000. (Sec 87A, w.e.f AY 2018-19)
• It has been clarified that the deduction u/s 10AA shall be allowed from total income of the assessee and not total
income of the undertaking. (Sec 10AA, w.e.f AY 2018-19)
• Deduction u/s 80CCG has been removed.
ARAJ & Associates
Deductions
BUDGET HIGHLIGHTS FEB-2017 14
• Provision of collection of tax at source (TCS) of sale of jewellery exceeding Rs. 500000 in cash has been omitted in
the budget. (Sec 206C, w.e.f 01.04.2017)
• Insurance agents can file declaration in Form 15G/15H for non deduction of tax at source on insurance commission
income if his total income is below taxable limit. (Sec 194D, w.e.f. 01.06.2017)
• Payments received in respect of any award or agreement which has been exempted from levy of income tax under
section 96 of (except those made under section 46) of RFCTLAARR Act shall not be subject to deduction of TDS.
(Sec 194LA, w.e.f. 01.04.2017)
• TDS rate have been reduced from 10% to 2% u/s 194J in case of payment made to person who is engaged in the
business of operation of call centre. (Sec 194J, w.e.f 01.06.2017)
ARAJ & Associates
TDS/TCS and Advance Tax
BUDGET HIGHLIGHTS FEB-2017 15
• Exemption from TCS have been provided in case of sale of motor vehicle exceeding Rs. 10 lakh in case of buyers such
as the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the
trade representation of a foreign State, local authority as defined in explanation to clause (20) of Section 10 and a public
sector company which is engaged in the business of carrying passengers. (Sec 206C, w.e.f. 01.04.2017)
• Professionals shall be liable to pay advance tax in single instalment i.e. on or before 15th March, if they are opting to pay
tax under presumptive taxation scheme. However they shall be liable to pay interest u/s 234C on short payment of advance
tax. Further if the advance tax liability has been short paid due to wrong estimation of dividend income as specified under
section 115BBDA, then such income shall be excluded for the purpose of computation of interest on short payment of
advance tax. (Sec 211, w.e.f. AY 2018-19)
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 16
• Every assessee being Individual and HUF other than assessees who were subject to tax audit u/s 44AB shall be liable to
deduct tax at source at the rate of 5%, if the rent paid exceeds Rs. 50,000/- per month. However no separate TAN shall be
required by such assessee and they will be required to make single tax payment in the last month of the previous year or the
month in which property is vacated. It has also been provided that TDS payable shall not exceed the total rent payable for the
last month. (Sec 194IB, 2013A, w.e.f 01.06.2016)
• Any person paying any sum or amount, on which tax is collectable at source shall furnish his PAN to the person responsible
for collecting such tax, failing which tax shall be collected at the twice the rate mentioned in the relevant section under
Chapter XVII BB or at the rate of five per cent, whichever is higher. (206CC)
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 17
• Currently Real Estate Developers were liable to pay income tax on notional rent on House property held in stock in trade
even if such property remains vacant. However now the real estate developers have 1 year time period from the end of
the previous year in which the completion certificate was obtained after which they shall be liable to pay income tax on
notional rent. (Sec 23, w.e.f AY 2018-19)
• It has been proposed that setoff of loss under the head “Income from House property’’ shall be restricted to Rs.
200000 from other head of Income. However unabsorbed loss shall be allowed to be carried forward for setoff in
subsequent years. (Sec 71, w.e.f AY 2018-19)
ARAJ & Associates
House Property
BUDGET HIGHLIGHTS FEB-2017 18
• Benefit of concessional rate of TDS @ 5 % on Interest paid to non resident in lieu of borrowings in foreign currency or long term
infrastructure bond has been extended till 1st July 2020. Further similar benefit was granted on interest paid to FIIs and QFIs on their
investments in Government securities and rupee denominated corporate bonds. (Sec 194LC, 194LD, w.e.f. AY 2018-19)
• It is proposed to exempt income of Foreign company from sale of leftover stock of crude oil from strategic reserves at the expiry of
agreement or arrangement. (Sec 10(48A, w.e.f. AY 2018-19)
• Transfer of Rupee Denominated Bonds from Non Resident to non Resident shall not be regarded as transfer hence no capital gain tax
should be levied. Further any currency gain on such transfer due to change in the currency rates shall be ignored. (Sec 47, 48, w.e.f AY
2018-19)
• Presently the assessee is subject to Domestic Transfer Pricing provision with respect to ‘Related Party Transaction’ covered under
section 40A(2)(b). However now this provision has been omitted in Finance Bill, 2017. (Sec 92BA, w.e.f 01.04.2017)
ARAJ & Associates
International Taxation
BUDGET HIGHLIGHTS FEB-2017 19
• Presently there is no capital gain on transfer of share of Indian company by demerged foreign company to a resulting
foreign company. It has been proposed that the cost of holding of the resulting company shall be the cost of that of the
demerged company. (Sec 49, w.e.f AY 2018-19)
• In case of dispute of Foreign Tax Credit, the Assessing Officer shall rectify the assessment order or an intimation giving the
credit of the foreign tax, if the assessee within six months from the end of the month in which the dispute is settled, furnishes
proof of such settlement. (Sec 155, w.e.f AY 2018-19)
• It has been decided to merge the Authority for Advance Ruling (AAR) for income-tax, central excise, customs duty and service
tax.
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 20
• Now, the power in respect of inquiry proceedings under the act as referred u/s 133(6) may also be exercised by the Joint
Director, the deputy Director and the assistant director. (Sec 133, w.e.f AY 2017-18)
• Department official can now conduct survey at any place where business or profession is carried on or where books of
accounts or other documents or any part of cash or stock or other valuable article or thing relating to the business or
profession are kept and shall include any place, at which an activity for charitable purpose is carried on. (Sec 133A,
w.e.f. AY 2017-18
• In cases where tangible evidence(s) are found during a search or seizure operation (including 132A cases) and the same is
represented in the form of undisclosed investment in any asset, department can issue notice for an assessment year or
years beyond the sixth assessment year upto the tenth assessment year, if the escaped amount exceeds Rs. 50 lakh in one
year or in aggregate in the relevant four assessment year. (Sec 153A, w.e.f AY 2018-19)
ARAJ & Associates
Assessments
BUDGET HIGHLIGHTS FEB-2017 21
• Presently income tax return filed by the assessee who is subject to scrutiny assessment is not required to be processed
before the issuance of assessment order. However, now this condition has been omitted meaning thereby that department
has to now process returns and issue refunds even if the case of assessee is selected for scrutiny assessment. However in
order to save interest of the revenue, power is given to the assessing officer with prior approval of principal officer and
reasons recorded in writing to withhold the refund amount if he is of the view that it may adversely affect the recovery of
revenue.(Sec 143(1D), 241A, w.e.f AY 2017-18)
• Reason to believe to conduct search etc is not required to be disclosed to any person or any authority or the appellate
tribunal.(Sec 132, 132A, w.r.e.f date of insertion of the section)
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 22
Other Amendments
• Presently Resident individual, HUF and firm have to pay income tax @ 10% on dividend income in excess of ₹ 10 lakhs.
However it is proposed to enlarge the coverage of tax on such dividend income to cover all the resident assessees except
domestic company, certain funds, trusts and institution. (Sec 115BBDA, w.e.f. AY 2018-19)
• Any person referred in clause (23AAA), (23EC), (23ED), (23EE) and (29A) of section 10 shall be required to mandatorily
furnish return of Income. (Sec 139, w.e.f. AY 2018-19)
• For AY 2018-19 onwards if Return of Income is filed after due date but before 31st December, a penalty of Rs. 5,000 shall
be charged and beyond 31st December penalty of Rs. 10,000. However in case where the total income does not exceed Rs.
5,00,000 the penalty amount shall be restricted to Rs. 1000. (Sec 234F, w.e.f. AY 2018-19)
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 23
• Penalty of Rs 10,000 is proposed on accountant, merchant banker and registered valuer if he furnishes incorrect information
in a report or certificate under any provisions of the act. (Sec 271J, 273B, w.e.f AY 2017-18)
• Trust or institution which has obtained registration u/s 12AA has subsequently adopted or undertaken modification of the
object which do not confirm to the condition of registration, it shall be required to obtain fresh registration by making
application within a period of 30 days from the date of change. Further it has been made mandatory to file the Return of
Income as per time allowed u/s 139 of the Act. (Sec 12A, 12AA, w.e.f AY 2018-19)
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 24
Section Existing Time Limit Amended Time Limit
144/143(2) 21 months from the end of
assessment year
A. Y. 2018-19: 18 months from the
end of assessment year
A Y 2019-20 onwards: 12 months
from the end of assessment year
147 9 months from the end of financial
year in which notice u/s 148 is issued
In respect of notices Served after
01.04.2019, 12 months from the end
of F Y in which notice is served.
Fresh assessment (253/254/264) 9 months from the end of financial
year in which order u/s 253/254/264
is received
In respect of orders received after
01.04.2019, 12 months from the end
of F Y in which order is received.
Assessment/verification other than
above, in pursuance of order u/s
250/254/260/262/263/264
9 months from the end of financial
year in which order
u/s250/254/260/262/263/264 is
received
In respect of orders received after
01.04.2019, 12 months from the end
of F Y in which order is received.
153-time limits for completion of assessment, reassessment and re-
computation and reducing the time for filing revised return
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 25
Section Existing Time Limit Amended Time Limit
Notices issued before 01.06.2016 and
assessment not completed before
01.06.2016 due to exclusion of time
limit as referred in explanation 1
(142A/129/158A/245C/245Q
/144BA etc.)
The limit was expired due to sub
section 9 introduced by Finance Act,
2016.
It is proposed to remove the effect of
sub section 9 by providing that in
respect of notice issued on or before
01.06.2016 and assessment not
completed before 01.06.2016 due to
exclusion of time limit as referred in
explanation 1 (142A/129/158A
/245C/245Q /144BA etc.)
139(5) Revised Return 1 year from the end of assessment
year.
Upto end of relevanty assessment
year or before completion of
assessment, which ever is earlier.
153B 153A
29 months from the end of the
financial year in which the last of the
authorisations for search under
section 132 or for requisition under
section 132A was executed.
153A
Search conducted in 2018-19: 18
months from the end of the financial
year in which the last of the
authorisations for search under
section 132 or for requisition under
section 132A was executed.
Search conducted in 2019-20
onwards: 12 months.ARAJ & Associates
BUDGET HIGHLIGHTS FEB-2017 26
Section Existing Time Limit Amended Time Limit
153C
Time limit for assessment of person
on whom search is conducted or 9
months from the end of the financial
year in which books of accounts or
documents or assets seized or
requisitioned are handed over under
section 153C to the Assessing Officer
having jurisdiction over such other
persons, whichever is later.
153C (w.e.f 01.04.2017)
Time limit for assessment of person
on whom search is conducted or 12
months from the end of the financial
year in which books of accounts or
documents or assets seized or
requisitioned are handed over under
section 153C to the Assessing Officer
having jurisdiction over such other
persons, whichever is later.
New Explanation to section 153B Where a proceeding before the
Settlement Commission abates under
section 245HA, the period of
limitation available under this section
for assessment or reassessment shall
after the exclusion of the period
under sub-section (4) of section
245HA shall not be less than one
year; and where such period of
limitation is less than one year, it shall
be deemed to have been extended to
one year.
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 27
Section Existing Time Limit Amended Time Limit
153B(3): Notices issued before
01.06.2016 and assessment not
completed before 01.06.2016 due to
exclusion of time limit as referred in
explanation 1
(142A/129/158A/245C/245Q
/144BA etc.)
The limit was expired due to sub
section (3) introduced by Finance Act,
2016.
It is proposed to remove the effect of
sub section (3) by providing that in
respect of notice issued on or before
01.06.2016 and assessment not
completed before 01.06.2016 due to
exclusion of time limit as referred in
explanation 1 (142A/129/158A
/245C/245Q /144BA etc.)
ARAJ & AssociatesBUDGET HIGHLIGHTS FEB-2017 28
BUDGET HIGHLIGHTS FEB-2017 29ARAJ & Associates
1) Negative List of Services- Process amounting to manufacture omitted
BUDGET HIGHLIGHTS FEB-2017 30
• Legislature has proposed to omit the services provided by way of carrying out any process amounting
to manufacture or production of goods excluding alcoholic liquor for human consumption” from the
negative list of services.
• However, such services shall remain exempt from service tax as this activity is covered under Mega
Exemption cation No. 25/2012-ST dated 20.06.2012.
• Consequential amendments is also made in the definition by omitting the definition of “process
amounting to manufacture” and by incorporating the definition of “process amounting to
manufacture” in the aforesaid exemption notification.
ARAJ & Associates
2) Authority of advance ruling
BUDGET HIGHLIGHTS FEB-2017 31
• Authority for advance ruling for customs, central excise and service tax has been merged with
Authority for advance ruling constituted under section 245-O of the Income-tax Act, 1961.
• Section 245P of the Income-tax Act, 1961 provides that no proceeding before, or pronouncement of
advance ruling by the Authority for Advance Ruling would be invalidated on the ground merely due
to any vacancy or defect in the constitution of the Authority. In view of the same, Section 96B
relating to vacancies not to invalidate proceedings is being omitted.
• Application fee for seeking advance ruling has been increased from Rs. 2500/- to Rs. 10000/-
• Time limit for pronouncement of advance ruling has also been extended from 90 days to a more
realistic time limit of six months.
• A new section has been inserted in the finance act so as to transfer all the pending application before
the authority be transferred to the merged authority.
ARAJ & Associates
3) No Service tax on upfront amount received against long term lease
4) Exemption to insurance services provided by Defense insurance funds
BUDGET HIGHLIGHTS FEB-2017 32
• A blanket exemption has been provided to the upfront amount received by the State Government industrial
development corporation or undertaking industrial units by way of grant of long term lease of thirty years or
more of industrial plots from 01.06.2007 to 21.09.2016.
• State Government industrial development corporation or undertaking industrial units have been allowed to claim
refund of the service tax which has been paid to the government within the period of six months from the date
on which finance bill, 2017 receives the assent of the President.
ARAJ & Associates
• Legislature has proposed to exempt Army, Naval and Air Force Group Insurance Funds by way of life insurance
to the members of the Army, Navy and Air Force formed under the Group Insurance Schemes of the Central
Government from 10.09.2004 to
• Such defense insurance funds have been allowed to claim refund of the service tax which has been paid to the
government within the period of six months from the date on which finance bill, 2017 receives the assent of the
President.
5) Service Tax (Determination of Value) Rules, 2006
BUDGET HIGHLIGHTS FEB-2017 33
• Rule 2A of valuation rules has been amended so as to clarify that value of service shall not include the value of
material and value of land or undivided share of land transferred in provision of service. This amendment was
made in light of the judgment of Hon’ble Delhi High Court delivered in the case of Suresh Kumar Bansal,
wherein it was held that in the absence of valuation mechanism, legislature cannot collect service tax on sale of
residential and commercial units.
• The aforesaid amendment has been made applicable with retrospective effect so as to nullify the effect of
judgment and empower the service tax department to levy and collect tax on such services.
• Further a new sub rule is inserted in the aforesaid rules to provide abated rate of tax for builders which was
earlier available to the builders/developers vide Notification No. 26/2012-ST dated 20.06.2012.
• Aforesaid amendments will not change the liability of builders/developers as the sole purpose of aforesaid
amendment was to nullify the effect of judgment of high court.
• However, the aforesaid amendment has left a big room for litigation as while making aforesaidamendment, lawmakers failed to amend consequent amendment in the definition of works contractwhich does not covers services provided by builders/developers within its scope.
ARAJ & Associates
5) Exemption
BUDGET HIGHLIGHTS FEB-2017 34
• The scope of services provided by IIM has been extending deleting the term “residential”. Now all the two year
full time Post Graduate Programmes (PGP) in Management for the Post Graduate Diploma in Management
(PGDM), to which admissions are made on the basis of the Common Admission Test (CAT), conducted by IIM
shall be exempt from payment of service tax.
• Under the Regional Connectivity Scheme (RCS), exemption from service tax is being provided in respect of the
amount of viability gap funding (VGF) payable to the airline operator for the services of transport of passengers,
with or without accompanied belongings, by air, embarking from or terminating in a Regional Connectivity
Scheme (RCS) airport, for a period of one year from the date of commencement of operations of the Regional
Connectivity Scheme (RCS) as notified by Ministry of Civil Aviation
ARAJ & Associates
6) Cenvat Credit Rules
BUDGET HIGHLIGHTS FEB-2017 35
• An amendment has been made in Rule 6 of CENVAT Credit Rules, 2004 by inserting a proviso in Explanation to
Rule 6(3D). It has been clarified that the value of service provided by banks and financial institutions including
NBFCs by way of extending deposits, loans or advances against consideration in the form of interest or discount
shall be considered for the purpose of computation of eligible CENVAT Credit.
• In order to speed up the process of transfer of CENVAT Credit, the legislature has specified the time limit of 3
months in which Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise shall
allow/reject the assessee’s application. However, this time limit of 3 months can further be exceeded for 6 months
Principal Commissioner of Central Excise or Commissioner of Central Excise,, if there is a sufficient cause for
the same and reasons for the same are recorded in writing.
ARAJ & Associates
BUDGET HIGHLIGHTS FEB-2017 36
For any query please contact:
A R A J & Associates
Chartered Accountants
A2B/16A, Ekta Appt.,
Paschim Vihar,
New Delhi-110063
011-45564490, +91 9899795588
www.arajassociates.com
Top Related