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Amendment to [ Section-43 ] w.e.f. Assessment Year 2019-2020 under Income Tax Act.

The following amendments have been made to section 43 —

“Actual cost” when inventory is converted into capital asset - When inventory is converted into capital asset, “actual cost” of such asset for the purpose of section 43(1) shall be the fair market value on the date of conversion which is taken into consideration for the purpose of section 28(via) [applicable from the assessment year 2019-20].

Tax treatment of transactions in respect of trading in agricultural commodity derivatives [Sec. 43(5)] - Section 43(5) defines speculative transaction. The proviso to section 43(5), however, stipulates certain transactions to be non-speculative nature, even though the contracts are settled otherwise than by the actual delivery or transfer of the commodity or scraps. Clause (e) of the said proviso provides that trading in commodity derivatives carried out in a recognized stock exchange, which is chargeable to commodity transaction tax, is a non-speculative transaction.

Commodity transaction tax (CTT) was introduced vide Finance Act, 2013 to bring transactions relating to non-agricultural commodity derivatives under the tax net while keeping the agricultural commodity derivatives exempt from CTT. Since no CTT is paid, the benefit of clause (e) of the proviso to section 43(5) is not available to transaction in respect of trading of agricultural commodity derivatives and, accordingly, such transactions are held to be speculative transactions.

• Amendment - In order to encourage participation in trading of agricultural commodity derivatives, section 43(5) has been amended (with effect from the assessment year 2019-20) to provide that a transaction in respect of trading of agricultural commodity derivatives, which is not chargeable to CTT, in a registered stock exchange or registered association, will be treated as non-speculative transaction.

Amendment at a Glance for A.Y. 2019-20
Amendment to [Sec.-2(24)] Amendment to [Sec.-2(42A)] Amendment to [Sec.-9]
Amendment to [Sec.-16 & 17] Amendment to [Sec.-28] Amendment to [Sec.-36 & 40A]
Amendment to [Sec.-43] Amendment to [Sec.-43CA] Amendment to [Sec.-44AE]
Amendment to [Sec.-49] Amendment to [Sec.-56(2)(x)] Amendment to [Sec.-79]
Amendment to [Sec.-80AC] Amendment to [Sec.-80D] Amendment to [Sec.-80DDB]
Amendment to [Sec.-80IAC] Amendment to [Sec.-80JJAA] Amendment to [Sec.-80PA]
Amendment to [Sec.-80TTA] Amendment to [Sec.-80TTB] Amendment to [Sec.-115AD]
Amendment to [Sec.-115BA] Amendment to [Sec.-115BBE] Amendment to [Sec.-115JB]
Amendment to [Sec.-115O & 115Q] Amendment to [Sec.-115R & 115T] Amendment to [Sec.-139A]
Amendment to [Sec.-140] Amendment to [Sec.-143] Amendment to [Sec.-145A & 145B]
Amendment to [Sec.-193] Amendment to [Sec.-194A] Amendment to [Sec.-145O & 245Q]
Amendment to [Sec.-271FA] Amendment to [Sec.-276CC] Amendment to [Sec.-286]
 
 
 
 
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