A. TAX UPDATES
1) Applicability of Section 56(2)(viib) in case of start-ups
On February 06, 2018: CBDT: An instruction issued stating that, in cases of start-up Companies (as per the DIPP definition), no coercive measure would be taken by the Assessing Officer to recover the outstanding demand for additions made under section 56(2)(viib) of the Income-tax Act, 1961 and also requires expeditious disposal of pending appeals by Commissioner (Appeals).
2) FATCA and CRS – New reporting mechanism
On April 05, 2018: CBDT: A notification issued summarising the updated procedure for registration and submission of Statement of Reportable Account for the purpose of Foreign Account Tax Compliance Act (FATCA) and Common Reporting System (CRS) reporting.
3) Notification on person allowed to issue Valuation report
On May 24, 2018: CBDT: A notification issued wherein the definition of ‘accountant’ has been deleted from Rule 11U of the Income-tax Rules, 1962 (‘the Rules’), and also reference to the word ‘accountant’ has been removed from Rule 11UA(2)(b) of the Rules, which provides the manner for determining the fair market value and the persons to provide the certificate. Accordingly, the CBDT has made it mandatory to obtain a valuation certificate from a Merchant Banker for the purposes of Section 56(2)(x), 56(2)(viib) and Section 50CA of the Income-tax Act, 1961 (‘the Act’).
4) Angel tax exemption notification
On May 24, 2018: CBDT: A notification issued in supersession of its earlier notification, stating that the provisions of Section 56(2)(viib) (i.e. taxability of income from other sources) of the Act, shall not be applicable in case of start-ups. This notification shall be deemed to have come into force retrospectively from April 11, 2018.
5) Overseas investment by AIFs/ VCFs
On July 03, 2018: SEBI: A circular issued increasing the limit for overseas investment by AIFs/ VCFs from US$ 500 mn to US$ 750 mn and prescribing certain disclosures.
B) REGULATORY UPDATES
Conduct of e-assessment proceedings in scrutiny cases
On February 12, 2018: CBDT: CBDT has directed to conduct the pending scrutiny assessments through ‘EProceeding’ facility available in E-filing website:
- Exceptions: (a) search cases; and (b) if the assessee has objected for e-assessment;
- Procedural aspects: notice for enquiries u/s 142(1), other communications and orders to be issued electronically, digitally signed and uploaded in the e-filing a/c of the assessee;
- Online submissions may be filed till the office hours on stipulated date;
- ‘E-Proceeding’ portal shall be automatically closed 7 days before time barring date or upon completion of proceedings;
- Third party enquiries, examination of witness etc. to be conducted manually;
Case records and note sheet to be maintained electronically