Direct Tax Amendments | CA Final | November 2023

CA Final November, 2023 Examinations

Paper-7: Direct Tax Laws and International Taxation

The significant notifications/circulars issued up to 30th April 2023 are relevant for November 2023. Further, amendments which were applicable for May 2023 examinations are also relevant for November 2023 examinations.

The October 2021 edition of the Study Material is based on the provisions of Income-tax law, as amended by the Finance Act, 2021. The relevant assessment year for November 2023 examination is A.Y. 2023-24.

Key Highlights of Amendments

Amendment Details

Part I: Direct Tax Laws

Chapter 23: Miscellaneous Provisions

A. Circular clarifying treatment of Co-operative Societies w.r.t. section 269ST

Background: Section 269ST of the Income Tax Act, 1961 provides that no person receives an amount of Rs. 2,00,000 or more except by account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account or through such other prescribed electronic mode, –

(a) in aggregate from a person in a day; or

(b) in respect of a single transaction; or

(c) in respect of transactions relating to one event or occasion from a person.

Clarification: CBDT has vide Circular No. 25/2022 dated 30.12.2022, clarified that in respect of Co-operative Societies, a dealership/distributorship contract by itself may not constitute an event or occasion for the purposes of clause (c) of section 269ST. In fact, the receipt related to such dealership/distributorship contract by the Co-operative Society on any day in a previous year, which is within ‘the prescribed limit’ and complies with clause (a) as well as clause (b) of section 269ST, may not be aggregated across multiple days for purposes of clause (c) of section 269ST for that previous year.

B. Interest income required to be reported in Statement of Financial Transaction (SFT) without any threshold limit

Background: Section 285BA and Rule 114E of the Income Tax Act, 1961 require specified reporting persons to furnish Statement of Financial Transaction (SFT). For the purposes of prefilling the return of income, CBDT had issued Notification to include reporting of information relating to interest income along with mentioning the Format, Procedure and Guidelines for submission of SFT for such interest income. Also, Guidelines for Preparation of SFT annexed thereto mentioned that

“The information is to be reported for all account/deposit holders where cumulative interest exceeds Rs. 5,000/person in the financial year”.

Notification: The CBDT has, vide Notification No. 1/2023 dated 05.01.2023, modified the said Guidelines mentioning that

“The information is to be reported for all account/deposit holders where any interest exceeds zero per account in the financial year excluding Jan Dhan Accounts”.

Accordingly, the limit specified vide earlier Notification with respect to interest has been abolished.

For official notification of amendments, please visit https://resource.cdn.icai.org/74470bos60409.pdf.