Accumulated Profits

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This is the first post in the our new blog series on the Budget 2018. This is a two-part piece on the amendments proposed under this Budget to the Income Tax Act; published here is Part I. We hope you enjoy reading this as much as we have enjoyed putting this together.

On 1st February, 2018, the Finance Minister Mr. Arun Jaitley presented the last full-year Union Budget before the 2019 Lok Sabha elections. It was delivered against a backdrop of economic slowdown caused by demonetisation in November, 2016 and the implementation of Goods and Services Tax (GST) legislations. The Budget focuses on strengthening agriculture and the rural economy, providing social security benefits and infrastructure creation.

The Finance Minister stated that the Indian economy is reviving and predicted that its Gross Domestic Product will rise to 7-7.5% in 2018-19, and that India is expected to become one of the world’s fastest and largest economies.

In the paragraphs below, we present a snapshot of some of the proposed amendments to the Income Tax Act, 1961 (IT Act) presented in this Budget:Continue Reading First Impressions of the Budget 2018: Income Tax Act – Part I

The Income Tax Act, 1961 (IT Act) contains several provisions to prevent tax evasion. One such provision seeks to tax loans and advances made to shareholders by a closely held company as deemed dividends in the hands of the shareholders. This is intended to prevent tax evasion in situations where closely held companies distribute accumulated profit as loans or advances which are not chargeable to tax under the IT Act, instead of distributing it as dividends which is chargeable to tax under the IT Act. However, the said provision of deemed dividend is attracted subject to the satisfaction of the following conditions:
Continue Reading Supreme Court Rules: Deemed Dividends Are Taxable Only in the Hands of Shareholders