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CA Final Direct Tax Amendments | Syllabus May 2018

CA Final Direct Tax Amendments | Syllabus May 2018

CA Final Direct Tax Amendments for May 2018 exam are very high in number. Budget 2016 will apply to May 2018 CA Final Direct tax exam, and therefore, all the changes brought by the Finance Act 2016 will be applicable from May 2018 DT exam and will also apply to Nov 2018 Exam. Starting from Salaries, almost every chapter in Direct Tax Paper has certain changes or Amendments.

CA Final DT Amendments for May 2018

CA Final DT Amendments for May 2018Part-I of Paper-7 contain topics related to Direct Taxation. Accordingly, all amendments made in the provisions of Direct Tax by the Finance Act, 2016 including various circulars and notifications issued up to 31st October, 2016 will be applicable for CA Final May, 2018 examinations. Accordingly, the applicable assessment year shall be A.Y. 2017-18 for Direct Tax Laws for CA Final May, 2018 Examination. Part-II of Paper-7 of CA Final New syllabus covers topics related to International Taxation.

You should note that CA Institute has already excluded the Wealth-tax Act, 1957 and Rules thereunder from the syllabus of CA Final Course and therefore not applicable for May 2018 examination. You may Download (Available from Feb 2018) the Supplementary Study Paper and Select Cases relevant for May 2018 and November 2018 examinations.

Section 87A Rebate –CA Final Direct Tax Amendments 

CA Final DT Amendments The Rebate under section 87A has been increased to Rs.5,000 (Earlier Rs.2,000). In order to provide further relief to resident individuals in the lower income slab, section 87A has been amended.

DDT – CA Final Direct Tax Amendments 

CA Final DT Amendments Exemption under section 10(34) not to apply to dividend chargeable to tax in accordance with section 115BBDA.

A proviso has been inserted in section 10(34) to provide that the exemption available thereunder in respect of dividend received by a shareholder from a domestic company would not apply to income by way of dividend chargeable to tax under section 115BBDA.

NPS Payments – CA Final Direct Tax Amendments 

CA Final DT Amendments Payment from NPS Trust to an employee on closure of his account or on his opting out of the pension scheme exempt to the extent of 40% of such payment [Section 10(12A)].

Extension of period for completion of construction – CA Final Direct Tax Amendments 

CA Final DT Amendments Deduction for Interest on Capital borrowed for house construction can be claimed up to Rs. 2 Lakh. To claim this deduction, the house construction shall be completed with in 5 years (Earlier, the house construction shall  be completed with in 3 years. This was recently amended to 5 years).

Rent Arrears – CA Final Direct Tax Amendments 

CA Final DT Amendments At present, section 25AA contains the special provisions on taxation of unrealised rent allowed as deduction when realised subsequently and section 25B contains the tax treatment of arrears of rent received.

However, as per the latest amendment, New section 25A(2) provides a deduction of 30% of arrears of rent or unrealised rent realised subsequently by the assessee.

Section 55 – CA Final Direct Tax Amendments 

CA Final DT Amendments Non-compete fee received/receivable for not carrying on a profession chargeable under the head “Profits and gains of business or profession”.

Section 32(1)(iia) – CA Final Direct Tax Amendments 

CA Final DT Amendments As per this amendment, Assessees engaged in the business of transmission of power eligible for additional depreciation.

Businesses eligible for claim of additional depreciation under section 32(1)(iia) are Manufacture or production of an article or thing and Generation, transmission or distribution of power.

Indian Railways – CA Final Direct Tax Amendments 

CA Final DT Amendments Any Amount payable to Indian Railways for use of railway assets allowable as deduction in the year in which the liability to pay such sum is incurred, only if payment is made on or before the due date of filing of return.

In order to encourage timely payment of dues to Railways for use of the Railway assets, clause (g) has been inserted in section 43B to expand its scope to include any sum payable by the assessee to the Indian Railways for use of Railway assets, within its ambit.

Section 47(xix) –CA Final Direct Tax Amendments 

CA Final DT Amendments Transfer of units by unit holders on consolidation of plans within a mutual fund scheme not to be regarded as transfer.

COA –  CA Final Direct Tax Amendments 

CA Final DT Amendments Cost of acquisition of asset, whose fair market value has been taken into account for the Income Declaration Scheme, 2016.

The person making a declaration under the Scheme would be liable to pay tax at the rate of 30% of the value of such undisclosed income as increased by surcharge at the rate of 25% of such tax. In addition, he would also be liable to pay penalty at the rate of 25% of such tax.

Therefore, the declarant would be liable to pay a total of 45% of the value of the undisclosed income declared by him. This special rate of tax, surcharge and penalty specified in the Scheme will override any rate or rates specified under the provisions of the Income-tax Act or the annual Finance Acts.

Section 50C – CA Final Direct Tax Amendments 

CA Final DT Amendments Stamp duty value on the date of agreement may be adopted as full value of consideration of immovable property, being land or building or both, if whole or part of the consideration has been paid by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property.

Section 50EE – CA Final Direct Tax Amendments 

CA Final DT Amendments Exemption of long-term capital gains on investment in notified units of specified fund has been specified under section 50EE.

Section 50EE CA Final Direct Tax Amendments for May 2017 and Nov 2017

Section 54GB – CA Final Direct Tax Amendments 

CA Final DT Amendments The Scope of exemption under section 54GB has been expanded to cover LTCG on sale of residential property invested in shares of eligible start-up company.

Section 112(1)(c) –  CA Final Direct Tax Amendments 

CA Final DT Amendments Long-term capital gains on shares of private companies to be subject to concessional rate of tax@10% in the hands of non-corporate non-residents and foreign companies.

Section 112(1)(c) prescribes a concessional tax rate of 10% (without indexation benefit) for long-term capital gain arising from transfer of unlisted securities in the hands of non-corporate non-residents and foreign companies.

Applicable Material for CA Final DT and IDT May 2018 Exam

Study Materials:

CA Final DT Amendments for May 2018 The Study Materials of Paper 7 and 8 for New Course would be applicable for the old course as well. The Questions from Practice Manual, amendments and case laws have been incorporated in these study materials.

Three Chapters in Module 4 on International Taxation namely,

  • Chapter 6: Overview of Model Tax Conventions,
  • Chapter 7: Application & Interpretation of Tax Treaties and
  • Chapter 8: Base Erosion and Profit Shifting

will not be applicable for Students of old Course.

You should read RTP for May 2018 which will contain Statutory updates applicable in May 2018 CA Final course examination.

Along with this CA Final DT amendments for may 2018, get latest updated other preparation material for CA Final exam

CA Final DT Amendments for May 2018The articles below will help you with everything you will need to register for the CA Final Exam with dates,syllabus,admit card and result.

CA Final Registration

CA Final New Course Registration

CA Final syllabus

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CA Final time table

ICAI CA Final Result

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