Updates relating to Business and Capital gains
No deduction for employee’s contribution if not deposited before the due date:
The deduction under Section 36(va) for contribution received by the employers from his employees towards any welfare fund shall be allowed only if such sum is credited by the employer to the employee’s account in the relevant fund on or before the due date prescribed under the relevant Act.
LLPs are not eligible for presumptive taxation scheme under Section 44ADA
Section 44ADA allows specified professionals to calculate and pay tax on a presumptive basis. The amendment proposes to specify an exclusive list of the assessees who are eligible for the presumptive taxation scheme prescribed under Section 44ADA. Now only an Individual, HUF or a Partnership Firm, not being an LLP, shall be eligible to opt for a presumptive taxation scheme under Section 44ADA.
Increase in threshold limit for tax audit to promote digital transactions
If at least 95% of the business receipts and payments are made through electronic modes, the threshold limit for the tax audit is proposed to be increased from Rs. 5 crores to Rs. 10 crores with effect from the assessment year 2021-22.
Revision in the safe-harbour limit in respect of the transfer of immovable property below SDV
Where an immovable property is transferred for consideration below its stamp duty value, it gives rise to tax implications in the hands of the seller and the buyer. As per Section 43CA, the stamp duty value of the property is deemed as sale consideration in the hands of the seller. Whereas, as per section 56(2)(x), the difference between stamp duty value and the actual consideration of the property is chargeable to tax under the head other sources in the hands of the buyer. However, both these provisions do not apply if the variation between the actual consideration and stamp duty value is up to 10% (‘Safe HarbourLimit’).
To boost the demand in the real-estate sector and to enable the real-estate developers to liquidate their unsold inventory at a lower rate to home buyers, the safe harbourlimit is proposed to increase from existing 10% to 20% in case of transfer of residential property during the period from 12-11-2020 to 30-06-2021 by way of first-time allotment to any person. Further, the consideration received or accruing as a result of such transfer should not exceed Rs. 2 crores.
No changes have been made in Section 50C.
Transfer of capital asset to partner/member on the dissolution of the firm/AOP/BOI taxable as capital gains.
It has been proposed that where a partner/member receives any money or other asset at the time of dissolution or reconstitution of the firm/AOP/BOI which is more than the balance appearing in the capital account (without considering revaluation), the profits or gains arising from such receipt shall be chargeable under the head ‘capital gains’ as income of such firm, AOP or BOI of the previous year in which such money or other asset was received by the specified person.
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