8. Total income and tax liability

548. Conditions and restrictions 549. Option 550. Case studies 551. Tax on certain resident co-operative societies 552. Conditions and restrictions under section 115BAD 553. Tax rate 554. Option

35 Tax planning

565. Tax planning 566. Tax planning with reference to setting up of a new business 567. Tax planning with reference to financial management decisions 568. Tax planning with reference to specific managerial decisions 569. Tax planning in respect of employees’ remuneration 570. Tax planning in respect of non-residents 571. Tax planning in respect of amalgamation or demerger of companies or business restructuring

PAGE

1472 1474 1475 1478 1478 1479 1479

1480 1482 1484 1485 1489 1491

1496

36 Miscellaneous

572. Introduction of Tonnage Tax 573. Securities Transaction Tax 574. Tax clearance certificate

1497 1500 1502 575. Equalisation levy 1504 577. Provisions pertaining to successor entity subsequent to business reorganization 1508 578. Commodities transaction tax 1509 580. Facility for electronic communication 1510 581. Introduction of Document Identification Number 1510 582. Power to withdraw approvals 1510 583. Restriction on cash transactions 1510

ANNEXURES

1. Tax rates 2. Rates of depreciation 3. The Eleventh Schedule, Thirteenth Schedule, Fourteenth Schedule/

Investment ceiling in the case of small scale industrial undertaking 4. Notified backward districts 5. Case Studies 1514 1538

1545 1552 1554

Para 420E.2 Income-tax - Tax deduction or collection at source 1238

- Such other person or class of persons notified by the Central Government in consultation with

RBI†. ■ Tax deducted under section 194N, not to be treated as deemed receipt - Tax deducted (under section 194N) shall not be deemed to be income received (for the purpose of section 198) for computing income of recipient. 420E.2 Applicable from July 1, 2020 - Section 194N has been substituted by a new section with effect from July 1, 2020. The new section provides different tax rates for different persons. Threshold limit and TDS rates (under the old and new TDS regime) are given in the table below –

Time of payment Threshold limit for payment in cash (to be calculated for a financial TDS rate year) During September 1, Exceeding Rs. 1 crore. 2% 2019 and June 30, 2020 On or after July 1, 2020 ❑ Case 1 - It covers a defaulter who has not submitted return in past [see Note]. In this case, threshold limit is as follows –a. exceeding Rs. 20 lakh but not exceeding Rs. 1 crore 2% b. exceeding Rs. 1 crore 5% ❑ Case 2 - It covers any case other than Case 1. Threshold limit is exceeding Rs. 1 crore 2%

Note - The recipient has not filed the returns of income for all of the three assessment years relevant to the three previous years, for which the time-limit to file return of income under section 139(1) has expired, immediately preceding the previous year in which the payment is made in cash. The exclusion earlier provided under the old version of section 194N shall be continued in the new version. The Central Government may, however, notify recipients to whom provisions of section 194N shall not apply or apply at such reduced rate as may be specified.

TDS on payment by e-commerce operator to e-commerce participants [Sec. 194-O]

420F. Section 194-O has been inserted with effect from October 1, 2020. Provisions of this section are given below –

†The Central Government has specified the following persons for this purpose –

Persons specified by the Central TDS provisions of section 194N are not applicable only if these

Government (these persons can conditions are satisfied –withdraw cash without TDS under section 194N) 1. Cash Replenishment Agencies (CRA’s) These persons maintain a separate bank account from which cash and franchise agents of White Label withdrawal is made only for the purposes of replenishing cash in ATM

Automated Teller Machine Operators operated by such WLATMO’s and the WLATMO have furnished a (WLATMO’s) monthly certificate to the bank certifying that cash withdrawal has been reconciled with the amount of cash deposited in the ATMs. 2. The commission agent/trader, If these persons have certified to the banking company/co-operative operating under Agriculture Produce society/post office that cash withdrawal (in excess of Rs. 1 crore in the

Market Committee (APMC) and previous year) is for the purpose of making payments to the farmers on registered under any law relating to account of purchase of agriculture produce.

APM of the concerned State 3. An authorised foreign exchange If cash withdrawal is made only for the purpose of purchase of foreign dealer (and its franchise agent/ currency from foreign tourists or non-residents visiting India or from sub-agent). resident Indians on their return to India, in cash as per the RBI directions 4. Full-Fledged Money Changer or guidelines. Moreover, these persons are not subject to TDS provisions (FFMC) licensed by RBI (and its of section 194N if cash withdrawal is made by these persons for the franchise agent). purpose of disbursement of inward remittances to the recipient beneficiaries in India in cash under Money Transfer Service Scheme (MTSS) of RBI.