1.Exemption of income of Foreign company from storage and sale of crude oil stored as part of strategic reserves
In order to set up underground storage facility for storage of crude oil as a part of strategic reserves which entails huge financial burden, section 10 is amended to provide that any income accruing or arising to a foreign national oil companies (NOCs) and multinational companies (MNCs) on account of storage of crude oil in a facility in India and sale of crude oil therefrom to any person resident in India shall not be included in the total income, if, –
(a) such storage and sale by the foreign company is pursuant to an agreement or an arrangement entered into by the Central Government or approved by the Central Government; and
(b) having regard to the national interest, the foreign company and the agreement or arrangement are notified by the Central Government in this behalf.
Amendment effective retrospectively from AY 2016-17
2.Exemption of certain activity related to diamond trading in “Special Notified Zone”
Section 9 is amended to provide that in the case of a foreign mining companies (FMCs) engaged in the business of mining of diamonds, no income shall be deemed to accrue or arise in India to it through or from the activities which are confined to display of uncut and unasserted (without sorting or sale) diamonds in a Special Zone notified by the Central Government in the Official Gazette.
Amendment effective retrospectively from AY 2016-17
3.Extending the benefit of additional depreciation u/s 32(1)(iia) for power sector
32(1)(iia) of the Act is amended to include business of transmission of power also for additional depreciation @20%.
Amendment effective from A.Y. 17-18
4.Taxation of Income from ‘Patents’
New sec. 115BBF proposed to be inserted to provide that where the total income of an eligible assessee [a person resident in India who is the true and first inventor of the invention and whose name is entered on the patent register as patentee in accordance with Patents Act, 1970] includes any income by way of royalty in respect of patent developed and registered in India, then such royalty shall be taxable @10% + surcharge + cess on gross basis.
No expenditure or allowance in respect of such royalty income shall be allowed
Book profit shall be increased by the amount of expenditure relatable to income by way of royalty in respect of patent chargeable to tax and reduced by the amount of income by way of royalty in respect of patent chargeable to tax.
Amendment effective from A.Y. 17-18
5.Incentiveto start-ups
New section 80-IC inserted to provide 100% deduction of profits and gains derived from an eligible business of an eligible start up.
Deduction allowable for any three consecutive years out of five years beginning from the year in which eligible start up is incorporated.
Eligibility criteria for start up:-
– Incorporated on or after 01.04.2016 but before 31.03.2019
– Total turnover does not exceed Rs.25 crores in any of the previous years beginning on or after 01.04.2016 and ending on 31.03.2021
– Holds certificate of eligible business from inter-ministerial board of certification
– Not formed by splitting up, or the reconstruction, of a business already in existence
– Not formed by the transfer to a new business of machinery or plant previously used for any purpose.
Eligible business means a business which involves innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property
New section 54EE proposed to be inserted to provide exemption from capital gains tax if the long term capital gains proceeds are invested in units of such specified fund, as may be notified by the Central Government for three years failing which the exemption shall be withdrawn. The investment in the units of the specified fund shall be allowed up to Rs. 50 lakhs.
The existing provisions of section 54GB is amended to extend the benefit of exemption from tax on long term capital gains in respect of the gains arising on account of transfer of a residential property, if such capital gains are invested in subscription of shares of a company which qualifies to be an eligible start-up subject to the condition that the individual or HUF holds more than fifty per cent shares of the company and such company utilises the amount invested in shares to purchase new asset including computers or computers software.
6.Housing for all
A.Deduction for developers
New sec. 80-IBA proposed to be inserted to provide 100% deduction of profits of an assessee developing and building housing projects which fulfill the following conditions:-
project is approved by the competent authority after 01.06.2016 but before 31.03.2019 in accordance with the prescribed guidelines
project is completed within a period of 3 years from the date of first approval
the built area of shops and commercial establishments does not exceed 3% of the aggregate built up area
project is on plot of land measuring less than 1,000 sq. mt. where located in four metro cities or within the area of 25 kms of the municipal limits of these cities or 2,000 sq. mt. for other cities
the residential unit of housing projects does not exceed 30 sq. mt. for metros and 60 sq. mt. for other location
where the residential unit is allotted to an individual, no other residential unit in the housing project shall be allotted to the individual or any member of his family.
project utilizes not less than 90% of FAR for metros and 80% for other locations
other conditions are similar to that of section 80-IB(10)
B.Deduction to individuals
80EE amended to provide first home buyers availing home loans, an additional deduction of interest on loan from any financial institution up to Rs. 50,000/-.
The house property should be of a value less than Rs.50 lacs and loan amount sanctioned during the period from 01.04.2016 to 31.03.2017 should not exceed Rs.35 lacs.
Benefit of deduction is extended till the repayment of loan continues. The deduction is over and above the limit of Rs. 2 lacs provided for a self occupied property u/s 24 of the Act.
Amendment effective from A.Y. 17-18
7.Tax incentive for employment generation
Employment generation incentive u/s 80JJAA allowing deduction of 30% of additional employee cost allowable for three assessment year to an assessee covered u/s 44AB.
Deduction available to all employers in respect of cost incurred on any employee whose total emoluments are less than or equal to Rs.25,000/- per month.
Norms for minimum number of days of employment in a financial year reduced from 300 days to 240 days and the condition of 10% increase in number of employees every year is proposed to be done away with.
In the first year of new business, 30% of all emoluments paid or payable to employees shall be allowed as deduction.
No deduction shall be allowed for cost incurred on those employees for whom the entire contribution under the Employees Pension Scheme is paid by Government.