Buyers of automobiles costing over Rs 10 lakh will have to shell out the 1 per cent tax which will be collected by the seller from now on.
This is part of the amendments moved by Finance Minister Arun Jaitley to the Finance Bill 2016 and approved by the Lok Sabha today which makes it clear about who will be liable for tax collection which was unclear in the budget.
"Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding Rs 10 lakh, shall at the time of receipt of such amount, collect from the buyer a sum equal to 1 per cent of the sale consideration as income tax," said the amendment.
Tweaking the provision relating to additional Dividend Tax, one of the amendments provides for 10 per cent levy becoming payable if the aggregate amount of receipt exceeds Rs 10 lakh.
This essentially means, tax payers whose dividend income crosses Rs 10 lakh would now have to pay an additional dividend tax besides the dividend distribution tax being paid by the company/companies declaring such dividends.
"The amount of income-tax calculated on the income by way of such dividends in aggregate exceeding Rs 10 lakh, will be at the rate of 10 per cent," it said.
On the issue of tax payable in respect of under-reported income, the House approved an amendment that said tax would be calculated on the "maximum amount" of under-reported income.
"Where no return of income has been furnished and the income has been assessed for the first time, the amount of tax calculated on the under-reported income as increased by the maximum amount not chargeable to tax as if it were the total income," the amendment said.
Previously, the Finance Bill had stated that the tax payable in respect of the under-reported income will be on total income in case of a company, firm or local authority; and at the rate of 30 per cent of the amount of under-reported income, in any other case.
A clause was added to the domestic black money
declaration window 'Income Declaration Scheme 2016' which said capital gains on an asset will be calculated on the fair market value of that asset as on the date of beginning of the one-time compliance window. Also the cost of acquisition of assets shall be deemed to be the fair market value of the asset.
The Budget 2016 has come out with an Income Declaration Scheme under which people holding domestic black money can disclose it in the one-time settlement window which will open on June 1 and close on September 30.
Another amendment to the Finance Bill relates to inclusion of Limited Liability Partnership firms as start ups. The government had earlier proposed to provide a tax holiday for three years to the start-ups, meeting the specified criterion.
"LLPs offer benefits of maintaining a separate corporate entity, while enjoying the flexibility of a partnership, including lesser compliances and no dividend distribution tax.
This should further encourage the start-up environment in the country," said Vikas Vasal, Partner - Tax, KPMG in India.
Jaitley also made minor amendments to his proposal in the Finance Bill for allowing deductions in respect of profits and gains from housing projects by stating that the said concession would be available for project on a plot of land measuring not less than 1,000 sq mt in metro cities and 2,000 sq mt in other locations.
Previously, the 2,000 sq mt condition was for municipality or cantonment board areas.
In the Budget presented on February 29, Jaitley had provided for 100 per cent deduction of the profits of an assessee developing and building affordable housing projects if the housing project is approved by competent authority.
