• Rationalisation of provisions for transaction in immovable property
Currently income from capital gains (Section 50C of Income Tax Act), business profits (Section 43CA) and other sources (Section 56) arising out of transactions in an immovable property, is taxed on the basis of the sale consideration or stamp duty value, whichever is higher. Where the consideration is less than the stamp duty, the differential is taxed as income both in the hands of the purchaser and the seller. It is proposed that no adjustments shall be made in cases where variation between stamp duty value and sale consideration is not more than 5% of sale consideration. This amendment is proposed in order to minimise hardship in case of genuine transactions in the real estate sector, where variation can occur in respect of similar properties in the same area because of a variety of factors. The proposed amendment will take effect from April 1, 2019 and will accordingly apply from AY 2019-20 onwards.
• Taxability of compensation in connection with termination of employment
The Finance Bill has proposed to amend Section 56 of Income Tax Act to provide that any compensation or other payment due or received in connection with the termination of his employment or the modification of the terms and conditions relating thereto to be made taxable. This amendment has been proposed in order to widen the scope of taxation concerning compensation and reduce base erosion and revenue loss. The proposed amendment will take effect from April 1, 2019 and will accordingly apply from AY 2019-20 onwards.
• Deemed dividend distributed by a domestic company
At present, dividend distributed by a domestic company is subject to dividend distribution tax (DDT) payable by such company. However, advances or loans to specified persons are considered as deemed dividend under Section 2(22)(e) and taxed in the hands of the recipient at the applicable marginal rate. It is proposed to levy DDT on such deemed dividend at the rate of 30% plus applicable surcharge and cess (though without grossing up).
• E-assessment for greater transparency
To roll out e-assessment so as to impart greater transparency and accountability, it is proposed to amend the Act to empower the central government to notify a new scheme for scrutiny assessments to achieve the desired purpose. The proposed amendment would enable the assessment to be carried out without any personal interface between the taxpayer and the revenue authorities.