There is no change in income tax rates, surcharge and educational cess. To provide relief to small and marginal tax payers, personal income tax exemption limit is being raised from Rs. 2 lakh to Rs. 2.5 lakh. For senior citizens, the exemption limit will be Rs. 3 lakh. Further, the investment limit under Section 80C of the Income-tax Act is being raised from Rs. 1 lakh to Rs. 1.5 lakh. Deduction limit for interest on housing loan (for self-occupied house property) goes up from Rs. 1.5 lakh to Rs. 2 lakh.
Free baggage allowance is proposed to be increased to Rs. 45000; it is Rs. 35000 at present.
To incentivise small entrepreneurs in the manufacturing sector, it is proposed to provide investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs. 25 crore in any year in new plant and machinery. This benefit will be available for three
years i.e. for investments upto 31.03.2017. The scheme announced last year, to provide investment allowance to manufacturing companies investing more than Rs. 100 crore in plant and machinery will continue till March, 2015.
Investment linked deduction is being extended to two new sectors, namely, slurry pipelines for the transportation of iron ore, and semi-conductor wafer fabrication manufacturing units. Ten-year tax holiday is being proposed to the undertakings which begin generation, distribution and transmission of power by 31.03.2017. This long-term measure will help the investors to plan their investments better.
On Direct Tax Code (DTC), the Government will consider the comments received from takeholders. It will review the DTC in its present shape and take a view in the whole matter.
With a view to transition towards Goods and Services Tax (GST) changes in service tax have been kept at the minimum. The focus is on widening the tax base and enhancing compliance. It is proposed to prune the negative list and exemptions. Services by air-conditioned contract carriages and technical testing of newly developed drugs on human participants are being brought under service tax. Services provided by the Employees’ State Insurance Corporation for the period prior to 1st July 2012 will now be exempt from service tax. Service tax on loading, unloading, storage, warehousing and transportation of cotton, whether ginned or baled, will also be exempt from service tax.
The Budget has a number of proposals for tax facilitation and dispute resolution. For income tax facilitation, 60 new Aykar Seva Kendras will be opened in 2014-15. Indirect tax facilitation measures include opening 24×7 customs clearance facility in 13 more airports in respect of all export goods and in 14 more sea ports in respect of specified import and export goods. It is also proposed to implement an ‘Indian Customs Single Window Project’ to facilitate trade.
Notes on clauses for Amendment related to Income Tax in Finance Bill
Income-tax
Clause 2, read with the First Schedule to the Bill, specifies the rates at which income-tax is to be levied on income chargeable to tax for the assessment year 2014-15. Further, it lays down the rates at which tax is to be deducted at source during the financial year 2014-15 from income other than “Salaries” subject to such deductions under the Income-tax Act; and the rates at which “advance tax” is to be paid, tax is to be deducted at source from, or paid on, income chargeable under the head “Salaries” and tax is to be calculated and charged in special cases for the financial year 2014-15.
Rates of income-tax for the assessment year 2014-15
Part I of the First Schedule to the Bill specifies the rates at which income is liable to tax for the assessment year 2014-15. These rates are the same as those specified in Part III of the First Schedule to the Finance Act, 2013, for the purposes of deduction of tax at source from “Salaries”, computation of “advance tax” and charging of income-tax in special cases during the financial year 2013-14.
Rates for deduction of tax at source during the financial year 2014-15 from income other than “Salaries”
Part II of the First Schedule to the Bill specifies the rates at which income-tax is to be deducted at source during the financial year 2014-15 from income other than “Salaries”. The rates are the same, as those specified in Part II of the First Schedule to the Finance Act, 2013 for the purposes of deduction of income-tax at source during the financial year 2013-14.
The amount of tax so deducted shall be increased by a surcharge in the case of––
(i) every non-resident (other than a company) at the rate of ten per cent. where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore rupees;
(ii) every company other than a domestic company at the rate of two per cent. where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore rupees but does not exceed ten crore rupees;
(iii) every company other than a domestic company at the rate of five per cent. where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds ten crore rupees.
Rates for deduction of tax at source from “Salaries”, computation of “advance tax” and charging of income-tax in special cases during the financial year 2014-15
Part III of the First Schedule to the Bill specifies the rates at which income-tax is to be deducted at source from, or paid on, income under the head “Salaries” and also the rates at which “advance tax” is to be paid and income-tax is to be calculated or charged in special cases for the financial year 2014-15.
Paragraph A of this Part specifies the rates of income-tax as under:–
(i) in the case of every individual [other than those specifically mentioned in sub-paras (ii) and (iii)] or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, not being a case to which any other Paragraph of this Part applies:–
Up to Rs.2,50,000 - Nil
Rs. 2,50,001 to Rs. 5,00,000 - 10 per cent.
Rs. 5,00,001 to Rs. 10,00,000 - 20 per cent.
Above Rs. 10,00,000 - 30 per cent.;
(ii) in the case of every individual, being a resident in India, who is of the age of sixty years or more but less than the age of eighty years at any time during the previous year :–
Up to Rs.3,00,000 - Nil
Rs. 3,00,001 to Rs. 5,00,000 - 10 per cent.
Rs. 5,00,001 to Rs. 10,00,000 - 20 per cent.
Above Rs. 10,00,000 - 30 per cent.;
(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year :–
Up to Rs.5,00,000 - Nil
Rs. 5,00,001 to Rs. 10,00,000 - 20 per cent.
Above Rs. 10,00,000 - 30 per cent.
The surcharge in cases of persons referred to in this paragraph, having income above one crore rupees, shall be levied at the rate of ten per cent. Marginal relief will be provided.
Paragraph B of this Part specifies the rates of income-tax in the case of every co-operative society. In such cases, the rates of tax will continue to be the same as those specified for the assessment year 2014-15. The surcharge in cases of co-operative societies, having income above one crore rupees shall be levied at the rate of ten per cent. Marginal relief will be provided.
Paragraph C of this Part specifies the rate of income-tax in the case of every firm. In such cases, the rate of tax will continue to be the same as that specified for the assessment year 2014-15. The surcharge in cases of firms, having income above one crore rupees shall be levied at the rate of ten per cent. Marginal relief will be provided.
Paragraph D of this Part specifies the rate of income-tax in the case of every local authority. In such cases, the rate of tax will continue to be the same as that specified for the assessment year 2014-15. The surcharge in cases of local authorities, having income above one crore rupees shall be levied at the rate of ten per cent. Marginal relief will be provided.
Paragraph E of this Part specifies the rates of income-tax in the case of companies. In both the cases of domestic companies and companies other than domestic companies, the rate of tax will continue to be the same as that specified for the assessment year 2014-15.
Surcharge in the case of domestic companies having total income above one crore rupees but not above ten crore rupees shall be levied at the rate of five per cent. In the case of domestic companies having total income above ten crore rupees, surcharge shall be levied at the rate of ten per cent. In the case of companies other than domestic companies having total income above one crore rupees but not above ten crore rupees,surcharge shall be levied at the rate of two per cent. In the case of companies other than domestic companies having total income above ten crore rupees surcharge shall be levied at the rate of five per cent. Marginal relief will be provided.
In all other cases (including sections 115JB, 115-O, 115QA, 115R, 115TA, etc.) the surcharge will be applicable at the rate of ten per cent.
“Education Cess” at the rate of two per cent. and “Secondary and Higher Education Cess” at the rate of one per cent. shall continue to be levied in all cases covered under Part III of the First Schedule. In the cases covered under Part II of the First Schedule, there will be no levy of the Education Cess and Secondary and Higher Education Cess on tax deducted or collected at source in the case of domestic company and any other person who is resident in India. Both the cesses would continue to apply on tax deducted at source in the case of salary payments. These would also continue to be levied in the cases of persons not resident in India and companies other than domestic company.
Clause 3 of the Bill seeks to amend section 2 of the Income-tax Act relating to definitions.
It is proposed to amend the said section so as to insert a new clause (13A) to define “business trust” to mean a trust registered as an Infrastructure Investment Trust or a Real Estate Investment Trust, the units of which are required to be listed on a recognised stock exchange, in accordance with the regulations made under the Securities Exchange Board of India Act, 1992 and notified by the Central Government in this behalf.
This amendment will take effect from 1st October, 2014.
The existing provisions of clause (14) of section 2 defines the term “capital asset”. The term is defined to include property of any kind held by an assessee whether or not connected with his business or profession but does not include any stock-in-trade or personal assets as provided in the definition.
It is further proposed to amend the said clause (14) so as to provide that the term “capital asset” shall include any security held by a Foreign Institutional Investor which has invested in such security in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
It is also proposed to amend section 2 so as to substitute the definitions of clause (15A), clause (16) and clause (21) relating to “Chief Commissioner”, “Commissioner” and “Director General” or “Director”. It is further proposed to insert clauses (34A), (34B), (34C) and (34D) so as to define the terms “Principal Chief Commissioner of Income-tax”, “Principal Commissioner of Income-tax”, “Principal Director General of Income-tax” and “Principal Director of Income-tax” to mean a person appointed to be an income-tax authority under section 117 of the Act.
These amendments will take effect retrospectively from 1st June, 2013.
The existing provisions contained in clause (24) of section 2 defines the term “income”. It is proposed to amend the said clause (24) so as to include any sum of money referred to in clause (ix) of sub-section (2) of section 56 in the definition of income.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
The existing provisions contained in clause (42A) of section 2 provide that short-term capital asset means a capital asset held by an assessee for not more than thirty-six months immediately preceding the date of its transfer. However, in the case of a share held in a company or any other security listed in a recognised stock exchange in India or a unit of the Unit Trust of India or a unit of a Mutual Fund or a zero coupon bond, the period of holding for qualifying it as short-term capital asset is twelve months.
It is proposed to amend the aforesaid clause so as to provide that in case of a share held in a company which is not listed in a recognised stock exchange, the period of holding for the purpose of its qualification as a short-term capital asset, shall not be more than thirty- six months and for that purpose the words “a share held in a company or any other security listed in a recognised stock exchange in India” shall be substituted with the words “a security (other than a unit) listed in a recognised stock exchange in India”. Further, in the case of a unit corresponding period of holding of twelve months, shall be limited to a unit of an equity oriented fund.
It is further proposed to insert an Explanation to define the expression “equity oriented fund”.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
It is also proposed to provide in clause (42A) of section 2 that in the case of capital asset being units of a business trust, allotted pursuant to transfer of share or shares as referred to in clause (xvii) of section 47, there shall be included the period for which such share or shares were held by the assessee.
This amendment will take effect from 1st October, 2014.
Clause 4 of the Bill seeks to make consequential amendments in the Income-tax Act in view of the amendments made in section 2 of the said Act relating to definitions of the expressions “Chief Commissioner”, “Commissioner” and “Director General or Director”.
These amendments will take effect retrospectively from 1st June, 2013.
Clause 5 of the Bill seeks to amend section 10 of the Income-tax Act relating to incomes not included in total income.
Under the existing provisions contained in clause ( 23C) of the aforesaid section, exemption is provided in respect of income of university or other educational institutions, hospital or any other institution mentioned therein, if such university or other educational institution, hospital or any other institution are wholly or substantially financed by the Government.
It is proposed to amend the aforesaid clause so as to insert an Explanation to provide that any university or other educational institution, hospital or other institution referred therein, shall be considered as being substantially financed by the Government for any previous year, if the Government grant to such university or other educational institution, hospital or other institution exceeds such percentage of the total receipts including any voluntary contributions as may be prescribed, of such university or other educational institution, hospital or other institution, as the case may be, during the relevant previous year.
It is further proposed to amend the said clause to provide that where the fund or institution referred to in sub- clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub- clause (vi) or any hospital or other medical institution referred to in sub-clause (via), has been notified by the Central Government or approved by the prescribed authority and the notification or the approval is in force for any previous year, then nothing contained in any other provision of this section [other than clause (1) thereof] shall operate to exclude any income received on behalf of such fund or trust or institution or university or other educational institution or hospital or other medical institution, as the case may be, from the total income of the person in receipt thereof for that previous year.
It is also proposed to provide that income for the purposes of application shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of income under clause (23C) of section 10 or section 11 in any previous year.
It is proposed to insert a new clause (23FC) in section 10 so as to provide that any income of a business trust by way of interest received or receivable from a special purpose vehicle would not be included in the total income of the trust. It is further proposed to define the term “special purpose vehicle” to mean an Indian company in which the business trust holds controlling interest and any specific percentage of shareholding or interest, as may be required by the regulations under which such trust is granted registration.
It is proposed to insert a new clause (23FD) in section 10 so as to provide that any distributed income, referred to in section 115UA, received by a unit holder from the business trust, not being that proportion of the income which is of the same nature as the income referred to in clause (23FC) of this section, shall not be included in the total income of such unit holder.
It is proposed to amend clause (38) of section 10 so as to provide that the provisions of the said clause shall also be applicable to units of a business trust as it is applicable to units of an equity oriented fund. It is also proposed to provide that the provisions of this clause shall not apply in respect of any income arising from transfer of any units of a business trust which were acquired in consideration of a transfer referred to in clause (xvii) of section 47.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 6 of the Bill seeks to amend section 10AA of the Income-tax Act, relating to special provision in respect of newly established Units in Special Economic Zones.
The existing provisions contained in aforesaid section 10AA, inter alia, provide for a deduction in respect of the profits and gains derived from the export of articles or things or from providing services.
It is proposed to amend the said section 10AA by inserting a new sub-section (10) so as to provide that where deduction under section 10AA has been availed by any specified business for any assessment year, no deduction under section 35AD shall be allowed in relation to such specified business for the same or any other assessment year.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 7 of the Bill seeks to amend section 11 of the Income-tax Act relating to income from property held for charitable or religious purposes.
The existing provisions of the aforesaid section contain a primary condition that for grant of exemption in respect of income derived from property held under trust, such income should be applied for the charitable purposes in India, and where such income cannot be so applied during the previous year, it has to be accumulated in the prescribed modes.
It is proposed to insert sub-sections (6) and (7) in the said section so as to provide that––
(i) where any income is required to be applied or accumulated or set apart for application, then, for such purposes the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of income under this section in any previous year, and
(ii) where a trust or an institution has been granted registration under clause (b) of sub-section (1) of section 12AA or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No.
2) Act, 1996] and the said registration is in force for any previous year, then, nothing contained in section 10 [other than clause (1) and clause (23C) thereof] shall operate to exclude any income derived from the property held under trust from the total income of the person in receipt thereof for that previous year.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 8 of the Bill seeks to amend section 12A of the Income-tax Act relating to conditions for applicability of sections 11 and 12.
Under the existing provisions of aforesaid section 12A, conditions to be fulfilled by a trust or an institution before it can claim exemption have been provided under sections 11 and 12 of the Act. It is provided that before any benefit of exemption is claimed, the trust or institution should apply for registration under section 12AA and only after such registration has been granted such trust or institution shall be eligible to claim the benefit of such exemption. In case of trusts or institutions which apply for registration after the 1st day of June, 2007, the registration shall be effective only for the assessment years following the financial year in which application has been made.
It is proposed to amend the said section so as to provide that once a registration under section 12AA is granted to a charitable organisation in a financial year, then, such registration would also entitle the entity for the benefits of sections 11 and 12 in cases for prior years where the assessment proceedings are pending before the Assessing Officer on the date of registration, if the objects and the activities are the same which have been considered by the Commissioner while granting registration.
No action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding first assessment year for which the registration applies, merely for the reason that such trust or institution has not obtained registration under section 12AA for the said assessment year.
Further, the above benefits would not be available where the registration to the trust or institution has been refused or cancelled by the Commissioner at any time.
These amendments will take effect from 1st October, 2014.
Clause 9 of the Bill seeks to amend section 12AA of the Income-tax Act relating to procedure for registration.
Under the existing provisions contained in sub-section (3) of the aforesaid section, where a trust or an institution has been granted registration and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, then he shall pass an order in writing, cancelling the registration of such trust or institution.
It is proposed to insert a new sub- section (4) in section 12AA so as to provide that where a trust or an institution has been granted registration and subsequently it is noticed that the activities of the trust or the institution are being carried out in a manner that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of the income of such trust or institution due to operation of sub-section (1) of section 13, then the Commissioner or Principal Commissioner may by order in writing cancel the registration of such trust or institution. However, the registration shall not be cancelled under the said sub-section, if the aforesaid trust or institution proves that there was a reasonable cause for the activities to be carried out in the said manner.
This amendment will take effect from 1st October, 2014.
Clause 10 of the Bill seeks to amend section 24 of the Income-tax Act relating to deductions from income from house property.
The existing provisions contained in section 24 provide that income chargeable under the head “income from house property” shall be computed after making a deduction of a sum equal to thirty per cent. of the annual value and where the property is acquired with borrowed capital, the amount of any interest payable on such capital. The second proviso to clause (b) of the said section, inter alia, provides that in case of a self-occupied property where the acquisition or construction of the property is completed within three years from the end of financial year in which the capital is borrowed, the amount of deduction under that clause shall not exceed one lakh fifty thousand rupees.
It is proposed to amend the second proviso to clause (b) of section 24, so as to increase the limit of deduction on account of interest in respect of property referred to in sub-section (2) of section 23 to two lakh rupees.
This amendment will take effect from 1st April, 2015 and, will accordingly apply, in relation to the assessment year 2015-16 and subsequent years.
Clause 11 of the Bill seeks to amend section 32AC of the Income-tax Act relating to Investment in new plant or machinery.
The existing provisions contained in sub-section (1) of aforesaid section provide that where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset after the 31st day of March, 2013 but before the 1st day of April, 2015 and the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees, then, there shall be allowed a deduction,—
(a) for the assessment year commencing on the 1st April, 2014, of a sum equal to fifteen per cent. of the actual cost of new assets acquired and installed after the 31st March, 2013 but before the 1st April, 2014, if the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees; and
(b) for the assessment year commencing on the 1st April, 2015, of a sum equal to fifteen per cent. of the actual cost of new assets acquired and installed after the 31st March, 2013 but before the 1st April, 2015, as reduced by the amount of deduction allowed, if any, under clause (a).
It is proposed to insert a new sub-section (1A) in section 32AC so as to provide that where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset and the amount of actual cost of the new assets acquired and installed during any previous year exceeds twenty-five crore rupees, then, there shall be allowed a deduction of a sum equal to fifteen per cent. of the actual cost of such new assets for the assessment year relevant to that previous year.
It is further proposed to insert a proviso so as to provide that no deduction under sub-section (1A) shall be allowed for the assessment year beginning on the 1st day of April, 2015 to the assessee who is eligible to claim deduction under sub-section
(1) of the said section for the said assessment year.
It is also proposed to insert a new sub-section (1B) in the said section 32AC so as to provide that no deduction under sub-section (1A) shall be allowed for any assessment year commencing on or after the 1st day of April, 2018.
Sub-section (2) of the aforesaid section provides that if any new asset acquired and installed by the assessee is sold or otherwise transferred, except in connection with the amalgamation or demerger, within a period of five years from the date of its installation, the amount of deduction allowed under sub-section (1) in respect of such new asset shall be deemed to be the income of the assessee chargeable under the head “Profits and gains of business or profession” of the previous year in which such new asset is sold or otherwise transferred, in addition to taxability of gains, arising on account of transfer of such new asset.
It is proposed to amend sub-section (2) of section 32AC to make a reference to sub-section (1A) so as to bring the assessee under the said newly inserted sub-section into the purview of said sub-section (2).
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 12 of the Bill seeks to amend section 35AD of the Income-tax Act relating to deduction in respect of expenditure on specified business.
The existing provisions contained in section 35AD, inter alia, provide a deduction in respect of any expenditure of capital nature incurred, other than expenditure incurred on the acquisition of any land or goodwill or financial instrument, wholly and exclusively for the purposes of any specified business carried on by the assessee during the previous year in which such expenditure is incurred. The said section also provides that deduction under the provisions of Chapter VI-A under the heading “C.––Deductions in respect of certain incomes” shall not be available to any specified business which has claimed deduction under the said section.
It is proposed to amend sub-section (3) of the aforesaid section so as to provide that no deduction shall be allowed to the specified business under section 10AA for any assessment year if such specified business has claimed any deduction under section 35AD.
It is further proposed to insert new clauses (ai) and (aj) in sub-section (5) of the aforesaid section to specify that the date of commencement of operation shall be on or after the 1st April, 2014 where the specified business is in the nature of laying and operating a slurry pipeline for the transportation of iron ore or in the nature of setting up and operating a semi-conductor wafer fabrication manufacturing unit and which is notified by the Board in accordance with such guidelines as may be prescribed.
It is also proposed to insert a new sub -section (7A) in section 35AD so as to provide that any asset in respect of which a deduction is claimed and allowed under this section shall be used only for the specified business, for a period of eight years beginning with the previous year in which such asset is acquired or constructed.
It is also proposed to insert a new sub-section (7B) in the aforesaid section so as to provide that where any asset, in respect of which a deduction is claimed and allowed under this section is used for a purpose other than the specified business during the period specified in sub-section (7A) otherwise than by way of a mode referred to in clause (vii) of section 28, the total amount of deduction so claimed and allowed in one or more previous years, as reduced by the amount of depreciation allowable in accordance with the provisions of section 32 as if no deduction under said section 35AD was allowed, shall be deemed to be the income of the assessee chargeable under the head “Profits and gains of business or profession” of the previous year in which the asset is so used.
It is also proposed to insert a new sub-section (7C) in the aforesaid section so as to provide that nothing contained in sub- section (7B) shall apply to a company which has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985, during the period specified in sub-section (7A).
It is also proposed to amend sub-section (8) of section 35AD so as to include the following businesses as specified business for the purposes of deduction under this section,–
(i) laying and operating a slurry pipeline for the transportation of iron ore;
(ii) setting up and operating a semi-conductor wafer fabrication manufacturing unit notified by the Board in accordance with the prescribed guidelines.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years.
Clause 13 of the Bill seeks to amend section 37 of the Income-tax Act relating to general expenditure.
The existing provisions contained in sub-section (1) of the aforesaid section provide that any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession”.
It is proposed to insert a new Explanation in sub-section (1) of section 37 so as to clarify that for the purposes of sub-section (1) of the said section, any expenditure incurred by an assessee on the activities relating to corporate social
responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 14 of the Bill seeks to amend section 40 of the Income-tax Act relating to amounts not deductible.
The provisions of section 40 specify the amounts which shall not be deducted in computing the income chargeable under the head “Profits and gains of business or profession”.
The existing provisions contained in sub-clause (i) of clause
(a) of aforesaid section provide that payment of any sum by way of interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act which are payable outside India or in India to a non-resident, not being a company or a foreign company on which tax is deductible under Chapter XVII-B, shall be disallowed in case of non-deduction of tax or non -payment of tax after deduction during the previous year, or in the subsequent year before the expiry of time prescribed under sub-section (1) of section 200.
It is proposed to amend sub-clause (i) of clause (a) of aforesaid section to provide that disallowance under the said sub-clause will be attracted, if, after deduction of tax during the previous year, the same has not been paid on or before the due date of filing of return of income specified in sub-section (1) of section 139.
The existing proviso to the aforesaid sub -clause provides that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.
It is proposed to substitute the said proviso so as to provide that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.
The existing provisions contained in sub-clause (ia) of clause
(a) of the aforesaid section provide that payment of any sum by way of interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident on which tax is deductible under Chapter XVII-B, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work) on which tax is deductible under Chapter XVII- B, shall be disallowed in case of non -deduction of tax or after deduction if the same is not paid on or before the due date of filing of return of income specified in sub-section (1) of section 139.
It is further proposed to amend sub-clause (ia) of clause (a) of aforesaid section to provide that disallowance under the said sub-clause shall be restricted to thirty per cent. and the provisions of this section shall be applicable to all expenditure, which is payable to a resident, on which tax is deductible under the sub-heading “B.-Deduction at source” of Chapter XVII.
The existing provisions contained in first proviso of sub-clause (ia) of clause (a) of aforesaid section provide that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.
It is also proposed to amend first proviso of sub-clause (ia) of clause (a) of aforesaid section to provide that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, thirty per cent. of such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 15 of the Bill seeks to amend section 43 of the Income-tax Act relating to definitions of certain terms relevant to income from profits and gains of business or profession.
The existing provisions contained in clause (5) of section 43 define the term speculative transaction. The proviso to the said clause (5) excludes certain category of transactions as speculative transactions. Clause (e) of the said proviso provides that eligible transaction in respect of trading in commodity derivatives carried out in a recognised association shall not be considered to be a speculative transaction.
It is proposed to amend clause (e) of the said proviso so as to provide that eligible transaction in respect of trading in commodity derivatives carried out in a recognised association which is chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013 shall not be considered to be a speculative transaction.
This amendment will take effect retrospectively from 1st April, 2014 and, will accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.
Clause 16 of the Bill seeks to amend section 44AE of the Income-tax Act, relating to special provision for computing profits and gains of business of plying, hiring or leasing goods carriages.
Under the existing provisions contained in sub-section (1) of the aforesaid section, in the case of an assessee, who owns not more than ten goods carriages and who is engaged in the business of plying, hiring or leasing such goods carriages, the income of such business chargeable to tax under the head “Profits and gains of business or profession” is deemed to be the aggregate of the profits and gains from all the goods carriages owned by him in the previous year. Sub -section (2) of the aforesaid section inter alia provides that in the case of heavy goods vehicles, the profits and gains from each such goods carriages shall be deemed to be an amount equal to five thousand rupees, and four thousand five hundred rupees in the case of vehicles other than heavy goods vehicles, for every month or part of a month during which the vehicles are owned by the assessee or an amount higher than the aforesaid amount as declared by him in his return of income.
It is proposed to substitute the said sub- section (2) so as to provide that for the purposes of sub-section (1) amount of profit and gains for all types of goods carriages shall be seven thousand five hundred rupees per month or part of a month for each goods carriage or the amount claimed to be actually earned by the assessee, whichever is higher.
It is further proposed to make consequential amendment in the Explanation to said section to omit the reference to heavy goods vehicle.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 17 of the Bill seeks to amend section 45 of the Income-tax Act relating to capital gains.
The existing provisions contained in section 45 provide for charging of any profits or gains arising from transfer of a capital asset. Sub -section (5) provides for taxation of capital gains arising from transfer by way of compulsory acquisition, where the compensation is enhanced or further enhanced by a court, Tribunal or other authority. Clause (b) of the said sub-section provides that where the amount of compensation is enhanced by any court, Tribunal or other authority, it shall be deemed to be income chargeable of the previous year in which amount is received by the assessee.
It is proposed to insert a proviso to said clause (b) of sub -section (5) of the aforesaid section, so as to provide that any amount of compensation received in pursuance of an interim order of a court, Tribunal or other authority shall be deemed to be income chargeable under the head “Capital gains” of the previous year in which the final order of such court, Tribunal or other authority is made.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 18 of the Bill seeks to amend section 47 of the Income-tax Act relating to transactions not regarded as transfer.
The existing provision contained in section 47 provides that certain transactions shall not be considered as transfer for the purpose of charging capital gains.
It is proposed to insert a new clause (viib) in the said section so as to provide that any transfer of a capital asset, being a Government Security carrying a periodic payment of interest, made outside India through an intermediary dealing in settlement of securities, by a non-resident to another non-resident shall not be considered as transfer for the purpose of charging capital gains. It is also proposed to define the term “Government Security”.
It is further proposed to amend the said section by inserting a new clause (vii) so as to provide that any transfer of a capital asset, being share of a special purpose vehicle, to a business trust in exchange of units allotted by that trust to the transferor shall not be regarded as transfer for the purposes of section 45. The special purpose vehicle will have the same meaning as provided in Explanation to clause (23FC) of section 10.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 19 of the Bill seeks to amend section 48 of the Income-tax Act relating to mode of computation.
The existing provisions contained in section 48 prescribe the mode of computation of income chargeable under the head capital gains. Clause (v) of the Explanation to the said section defines the term “Cost Inflation Index” in relation to the previous year, means Index as may be prescribed having regard to seventy-five per cent. of average rise in the Consumer Price Index for urban non-manual employees for the immediately preceding previous year to such previous year.
It is proposed to amend the said clause so as to provide that “Cost Inflation Index” in relation to the previous year, means Index as may be prescribed having regard to seventy-five per cent. of average rise in the Consumer Price Index (Urban) for the immediately preceding previous year to such previous year.
This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.
Clause 20 of the Bill seeks to amend section 49 of the Income-tax Act relating to cost with reference to certain modes of acquisition.
The existing provisions of the aforesaid section provide for the ways of determining cost with reference to certain modes of acquisition.
It is proposed to amend section 49 so as to provide that where the capital asset, being a unit of a business trust, became the property of the assessee in consideration of a transfer referred to in clause (xvii) of section 47, the cost of acquisition of the asset shall be deemed to be the cost of acquisition to him of the share referred to in the said clause.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 21 of the Bill seeks to amend section 51 of the Income-tax Act relating to advance money received.
The existing provisions contained in section 51 provide that where any capital asset was on any previous occasion the subject of negotiations for its transfer, any advance or other money received and retained by the assessee in respect of such negotiations shall be deducted from the cost for which the asset was acquired or the written down value or the fair market value, as the case may be, in computing the cost of acquisition.
It is proposed to insert a proviso in the said section, so as to provide that where any sum of money received as an advance or otherwise in the course of the negotiations for transfer of a capital asset has been included in the total income of the assessee for any previous year in accordance with the provisions of clause (ix) of sub-section (2) of section 56, then, such sum shall not be deducted from the cost for which the asset was acquired or the written down value or the fair market value, as the case may be, in computing the cost of acquisition.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 22 of the Bill seeks to amend section 54 of the Income-tax Act relating to profit on sale of property used for residence.
The existing provisions contained in sub-section (1) of section 54 provide that where capital gain arises from the transfer of a long- term capital asset, being a residential house, and the assessee within a period of one year before or two years after the date of transfer purchases, or within a period of three years after the date of transfer constructs, a residential house then the amount of capital gains to the extent invested in the new residential house is exempted.
It is proposed to amend the aforesaid sub-section so as to provide that the exemption is available, if the investment is made in purchase or construction of one residential house situated in India.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent years.
Clause 23 of the Bill seeks to amend section 54EC of the Income-tax Act relating to capital gain not to be charged on investment in certain bonds.
The existing provisions contained in sub-section (1) of section 54EC provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has within a period of six months invested the whole or part of capital gains in the long-term specified asset, the proportionate capital gains so invested in the long-term specified asset out of total capital gain shall not be charged to tax. The proviso to the said sub-section provides that the investment made in the long-term specified asset during any financial year shall not exceed fifty lakh rupees.
It is proposed to insert a proviso below first proviso in said sub-section (1) so as to provide that the investment made by an assessee in the long-term specified asset, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent years.
Clause 24 of the Bill seeks to amend section 54F of the Income-tax Act relating to capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.
The existing provisions contained in sub-section (1) of section 54F provide that where capital gain arises from transfer of a long-term capital asset, not being a residential house, and the assessee within a period of one year before or two years after the date of transfer purchases, or within a period of three years after the date of transfer constructs, a residential house then the portion of capital gains in the ratio of cost of new asset to the net consideration received on transfer is exempted.
It is proposed to amend the aforesaid sub-section so as to provide that the exemption is available if the investment is made in purchase or construction of one residential house situated in India.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent years.
Clause 25 of the Bill seeks to amend section 56 of the Income-tax Act relating to income from other sources.
It is proposed to insert a new clause (ix) in sub-section (2) of the aforesaid section so as to provide that where any sum of money, received as an advance or otherwise in the course of the negotiations for transfer of a capital asset, is forfeited and the negotiations do not result in transfer of such capital asset, then, such sum shall be chargeable to income-tax under the head “income from other sources”.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 26 of the Bill seeks to amend section 73 of the Income-tax Act relating to losses in speculation business.
The existing provisions of section 73 provide that losses incurred in respect of a speculation business cannot be set off or carried forward and set off except against the profits of any other speculation business. Explanation to section 73 provides that in case of a company deriving its income mainly under the head business (other than a company whose principal business is business of banking or granting of loans and advances), and where any part of its business consists of purchase or sale of shares such business shall be deemed to be speculation business for the purpose of this section.
It is proposed to amend the said Explanation to section 73 so as to provide that the provisions of the said Explanation shall also not be applicable to a company the principal business of which is the business of trading in shares.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent years.
Clause 27 of the Bill seeks to amend section 80C of the Income-tax Act relating to deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc.
The existing provisions of sub-section (1) of section 80C provide that in computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of the said section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in sub-section (2), as does not exceed one lakh rupees.
It is proposed to amend sub-section (1) so as to raise the limit of deduction from one lakh rupees to one hundred and fifty thousand rupees.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 28 of the Bill seeks to amend section 80CCD of the Income-tax Act relating to deduction in respect of contribution to pension scheme of Central Government.
The existing provisions contained in sub-section (1) of section 80CCD, inter alia, provide that in the case of an individual, employed by the Central Government or any other employer on or after 1st January, 2004, who has in the previous year paid or deposited any amount in his account under a pension scheme notified or as may be notified by the Central Government, a deduction of such amount not exceeding ten per cent. of salary is allowed. This is subject to a limit of one lakh rupees provided under section 80CCE.
It is proposed to amend sub-section (1) of the said section so as to provide that an individual employed by the Central Government on or after 1st January, 2004 or, being an individual employed by any other employer shall be allowed a deduction of the amount deposited by him in his account under a pension scheme notified or as may be notified by the Central Government to the extent it does not exceed ten per cent. of his salary.
It is further proposed to insert new sub-section (1A) so as to provide that the amount of deductions under sub-section (1) shall not exceed one hundred thousand rupees.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 29 of the Bill seeks to amend section 80CCE of the Income-tax Act relating to limit on deductions under sections 80C, 80CCC and 80CCD.
The existing provisions contained in the aforesaid section provide that the aggregate amount of deduction under section 80C, section 80CCC and section 80CCD shall not exceed one lakh rupees.
It is proposed to amend section 80CCE so as to raise the limit of deduction from one lakh rupees to one hundred and fifty thousand rupees.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 30 of the Bill seeks to amend section 80-IA of the Income-tax Act relating to deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.
The existing provisions contained in clause (iv) of sub-section (4) of section 80-IA provide that a deduction shall be allowed to an undertaking which,– (a) is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on 1st April, 1993 and ending on 31st March, 2014;
(b) starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on 1st April, 1999 and ending on 31st March, 2014;
(c) undertakes substantial renovation and modernisation of the existing network of transmission or distribution lines at any time during the period beginning on 1st April, 2004 and ending on 31st March, 2014.
It is proposed to amend sub-clauses (a), (b) and (c) of clause (iv) of the said sub-section so as to extend the time limit from 31st March, 2014 to 31st March, 2017.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 31 of the Bill seeks to amend section 92B of the Income-tax Act relating to meaning of international transaction.
The existing provisions of section 92B provide for the meaning of “international transaction” for the purposes of applicability of transfer pricing regime. Sub-section (1) defines International transaction as a transaction between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property or provision of services or lending or borrowing of money or any transaction having a bearing on profits, income, losses or assets of such enterprises.
Sub-section (2) of the said section provides for deeming of a transaction between an enterprise and unrelated third party as a transaction between two associated enterprises subject to the condition that there exists a prior agreement in relation to the relevant transaction between the third party and associated enterprise or the terms of the relevant transaction are determined in substance between such third party and the associated enterprise.
It is proposed to amend the said sub-section (2) so as to provide that the relevant transaction shall be deemed to be an international transaction, where the enterprise or the associated enterprise or both of them are non-residents irrespective of whether such other person is a non-resident or not.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 32 of the Bill seeks to amend section 92CC of the Income-tax Act relating to advance pricing agreement.
The existing provisions of section 92CC empowers the Board to enter into an advance pricing agreement, with the approval of the Central Government, with any person for determining arm’s length price or specifying the manner in which arm’s length price is to be determined in relation to an international transaction which is to be entered into by such person. The agreement entered into is valid for a period, not exceeding five previous years, as may be mentioned in the agreement. Once the advance pricing agreement is entered into, the arm’s length price of the international transaction, which is the subject matter of the same, is determined in accordance with such agreement. Sub-section
(9) of the said section empowers the Board to prescribe the scheme specifying therein the manner, form, procedure and any other matter generally in respect of advance pricing agreement.
It is proposed to insert a new sub- section (9A) in section 92CC to provide that an advance pricing agreement may, subject to such conditions, procedure and manner as may be prescribed, provide for determining the arm’s length price or specify the manner in which arm’s length price shall be determined in relation to an international transaction entered into by the person during any period not exceeding four previous years preceding the first of the previous year for which the agreement applies in case of future transactions. It is further provided that where such agreement provides for determination in respect of past transactions, the arm’s length price of such transactions shall be determined in accordance with the agreement.
This amendment will take effect from 1st October, 2014.
Clause 33 of the Bill seeks to amend section 111A of the Income-tax Act relating to tax on short-term capital gains in certain cases.
The provisions of sub-section (1) of section 111A provide for the levy of tax at concessional rate of fifteen per cent. in certain cases.
It is proposed to amend the said sub-section so as to provide that the concessional rate of tax shall apply to the transfer of a unit of a business trust as they apply in case of a unit of an equity oriented fund. It is further proposed that the provisions of this sub- section shall not apply in respect of any income arising from transfer of units of a business trust which were acquired by the assessee in consideration of a transfer referred to in clause (xvii) of section 47.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 34 of the Bill seeks to amend section 112 of the Income-tax Act relating to tax on long-term capital gains.
The existing provisions contained in section 112 provide for tax payable in the case of income arising from the transfer of a long -term capital asset. The proviso to sub- section (1) provides that where the tax payable in respect of any income arising from transfer of a long-term capital asset, being listed securities or unit or zero coupon bond exceeds ten per cent. of the amount of capital gains without indexation adjustment, such excess shall be ignored.
It is proposed to amend the aforesaid proviso so as to provide that where the tax payable in respect of any income arising from
transfer of a long-term capital asset being listed securities (other than a unit) or zero coupon bond exceeds ten per cent. of the amount of capital gains without indexation adjustment, such excess shall be ignored.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 35 of the Bill seeks to amend section 115A of the Income-tax Act, relating to tax on dividends, royalty and technical service fees in the case of foreign companies.
The existing provisions of sub-section (1) of section 115A provide the rates at which income-tax shall be payable, where a total income of non-resident (not being a company) or a foreign company, includes any income by way of dividends (other than dividends referred to in section 115 -O); or interest received from Government or an Indian concern or monies borrowed or debt incurred by the Government or the Indian concern in foreign currency; or interest received from an infrastructure debt fund referred to in clause (47) of section 10; or income received in respect of units, purchased in foreign currency, of a Mutual Fund specified under clause (23D) of section 10 or the Unit Trust of India.
It is proposed to amend clause (a) of sub -section (1) of section 115A to insert a new sub-clause (iiac) so as to provide that where the total income of a non-resident (not being a company) or a foreign company includes distributed income being interest referred to in sub -section (2) of section194LBA such income shall be taxable at the rate of five per cent.
It is further proposed to make consequential amendments in item (BA) and item (D) of clause (a) of sub-section (1) of section 115A.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 36 of the Bill seeks to amend section 115BBC of the Income -tax Act relating to anonymous donations to be taxed in certain cases.
The existing provisions of section 115BBC of the Income-tax Act provide for computation of income-tax payable by an assessee, being a person in receipt of income on behalf of any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or any hospital; or other institution referred to in sub-clause (iiiae) or sub- clause (via) or any fund or institution referred to in sub-clause (v) of clause (23C) of section 10 or any trust or institution referred to in section 11, where such income includes any income by way of anonymous donation.
It is proposed to amend clause (ii) of the said section to provide that the income-tax payable shall be the aggregate of-
(i) the amount of income-tax calculated at the rate of thirty per cent. on the aggregate of anonymous donations received in excess of the higher of the following, namely:–
(A) five per cent. of the total donations received by the assessee; or
(B) one lakh rupees; and
(ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the aggregate of the anonymous donations received in excess of the amount referred to in sub-clause (A) or sub-clause (B) of clause (i), as the case may be.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 37 of the Bill seeks to amend section 115BBD of the Income -tax Act relating to tax on certain dividends received from foreign companies.
The existing provisions of the aforesaid section provide that where the total income of an assessee, being an Indian company, for the previous year relevant to the assessment year beginning on the 1st day of April, 2012 or beginning on the 1st day of April, 2013 or beginning on the 1st day of April, 2014, includes any income by way of dividends declared, distributed or paid by a specified foreign company, the income-tax payable shall be the aggregate of the amount of income-tax calculated on the income by way of such dividends at the rate of fifteen per cent. and the amount of income -tax with which the assessee would have been chargeable had its total income been reduced by the amount of aforesaid income by way of dividends. It is further provided that no deductions in respect of any expenditure or allowance shall be allowed for computing its income by way of dividend.
It is proposed to amend section 115BBD to provide that the provisions of taxation of foreign dividends shall continue to apply to foreign dividends received during the financial year 2014-15 and subsequent years.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 38 of the Bill seeks to amend section 115JC of the Income -tax Act relating to the provisions for payment of tax by certain persons other than a company.
The existing provisions of section 115JC provide that the total income shall be increased by deductions claimed under Part C of Chapter VI-A and deductions claimed under section 10AA to arrive at adjusted total income.
It is proposed to insert a new clause (iii) in sub- section (2) so that the total income shall be increased by the deduction claimed under section 35AD as reduced by the amount of depreciation allowable in accordance with the provisions of section 32 to arrive at adjusted total income.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 39 of the Bill seeks to amend section 115JEE of the Income -tax Act relating to application of the Chapter XII-BA to certain persons.
The existing provisions of sub -section (1) of section 115JEE provide that the Chapter shall be applicable to any person who has claimed a deduction under Part C of Chapter VI-A or claimed a deduction under section 10AA. Further the present provisions of sub-section (2) of section 115JEE provide that the Chapter shall not be applicable to an individual or an Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, if the adjusted total income does not exceed twenty lakh rupees.
It is proposed to insert a new clause (c) in sub-section (1) so as to apply the Chapter to a person who has claimed deduction under section 35AD.
It is further proposed to insert a new sub-section (3) in section 115JEE so as to provide that notwithstanding anything contained
in sub-section (1) or sub-section (2), the credit for tax paid under section 115JC shall be allowed in accordance with the provisions of section 115JD.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 40 of the Bill seeks to amend section 115 -O of the Income-tax Act relating to tax on distributed profits of domestic companies.
Sub-section (1) of the said section provides that any amount declared, distributed or paid by a domestic company by way of dividends shall be charged to additional income-tax at the rate of fifteen per cent.
It is proposed to amend the aforesaid section so as to provide that for the purposes of determining the tax on distributed profits payable in accordance with the said section, any amount by way of dividends referred to in sub- section (1 ) as reduced by the amount referred to in sub-section (1A) of the said section [referred to as net distributed profits], shall be increased to such amount as would, after reduction of the tax on such increased amount at the rate specified in sub-section (1), be equal to the net distributed profits.
This amendment will take effect from 1st October, 2014.
Clause 41 of the Bill seeks to amend section 115R of the Income-tax Act relating to tax on distributed income to unit holders.
Sub-section (2) of aforesaid section provides that any amount of income distributed by the specified company or a Mutual Fund to its unit holder shall be charged to additional income-tax at the rate of twenty-five per cent., where the income is distributed to any person being an individual or a Hindu undivided family, and at the rate of thirty per cent. on income distributed to any person other than an individual or a Hindu undivided family. It is further provided that an additional tax at the rate of five per cent. shall be levied in case of income distributed by a Mutual Fund under an Infrastructure Debt Fund Scheme to a person who is non-resident.
It is proposed to amend the said section to provide that for the purposes of determining the additional income-tax payable in accordance with said sub-section (2), the amount of distributed income, referred to therein, shall be increased to such amount as would, after reduction of the additional income-tax on such increased amount at the rate specified in sub-section (2), be equal to the amount of income distributed by the Mutual Fund.
This amendment will take effect from 1st October, 2014.
The existing provisions contained in sub-section (3A) of section 115R provide that the person responsible for making payment of the income distributed by the Unit Trust of India or a Mutual Fund and the Unit Trust of India or the Mutual Fund, as the case may be, shall on or before the 15th September in each year, furnish to the prescribed income-tax authority, a statement in the prescribed form and verified in the prescribed manner, giving the details of the amount of income distributed to unit holders during the previous year, the tax paid thereon and such other relevant details as may be prescribed.
It is proposed to omit sub-section (3A) of the aforesaid section 115R.
This amendment will take effect from 1st April, 2015.
Clause 42 of the Bill seeks to amend section 115TA of the Income-tax Act relating to tax on distributed income to investors.
The existing provisions contained in sub-section (3) of section 115TA provides that the person responsible for making payment of the income distributed by the securitisation trust shall, on or before the 15th September in each year, furnish to the prescribed income-tax authority, a statement in the prescribed form and verified in the prescribed manner, giving the details of the amount of income distributed to investors during the previous year, the tax paid thereon and such other relevant details as may be prescribed.
It is proposed to omit sub-section (3) of the aforesaid section 115TA.
This amendment will take effect from 1st April, 2015.
Clause 43 of the Bill seeks to insert a new Chapter XII-FA in the Income-tax Act which deals with “Special Provisions Relating to Business Trusts”.
The said Chapter proposes–
(a) to provide that the distributed income in the hands of the unit holders will be of the same nature and in the same proportion as the income in the hands of the trust;
(b) to provide that the total income of the trust other than capital gain would be taxed in the hands of the trust at the maximum margin rate and capital gain would be taxed in accordance with sections 111A and 112;
(c) to provide that any distributed income or part thereof received by a unit holder from the business trust is of the same nature as the income referred to in clause (23FC) of section 10, then, such distributed income or part thereof shall be deemed to be the income of such unit holder and shall be charged to tax as income of the previous year;
(d) to provide that the person responsible for making payment of income or any part thereof distributed on behalf of a business trust to a unit holder, shall provide a statement to the unit holder and the prescribed authority in such time and in the form and manner as may be prescribed.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 44 of the Bill seeks to amend section 116 of the Income-tax Act relating to income-tax authorities.
Section 116 specifies the income-tax authorities.
It is proposed to include Principal Chief Commissioners of Income-tax, Principal Commissioners of Income- tax, Principal Directors General of Income-tax and Principal Directors of Income-tax as income-tax authorities under the said section 116.
These amendments will take effect retrospectively from 1st June, 2013.
Clause 45 of the Bill seeks to amend section 133A of the Income-tax Act relating to power of survey.
The existing provision contained in section 133A empowers the income-tax authority to enter a premises in which business or profession is carried out for the purposes of survey.
It is proposed to amend section 133A so as to insert sub-section (2A) after sub-section (2) so as to provide that without prejudice to the provisions of sub-section (1), an income-tax authority acting under this sub-section may for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions under sub-heading B of Chapter
XVII or under sub-heading BB of Chapter XVII, as the case may be, enter, after sunrise and before sunset, any office, or any other place where business or profession is carried on, within the limits of the area assigned to him, or any place in respect of which he is authorised for the purposes of this section by such income-tax authority who is assigned the area within which such place is situated, where books of account or documents are kept and require the deductor or the collector or any other person who may at that time and place be attending in any manner to such work,-
(i) to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place, and
(ii) to furnish such information as he may require in relation to such matter.
Under the existing provisions of clause (b) of the proviso to clause (ia) of sub-section (3) of the aforesaid section 133A, an income- tax authority acting under the section may retain in his custody any such books of account or other documents only for a period of ten days (exclusive holidays) without obtaining the approval of the Chief Commissioner or Director General therefor, as the case may be.
It is proposed to substitute the aforesaid clause (b) of the proviso to clause (ia) in sub-section (3) of aforesaid section 133A so as to provide that an income-tax authority under the said section shall not retain in his custody any such books of account or other documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner or Principal Director or Director therefor, as the case may be.
It is also proposed to insert a new proviso in sub- section (3) so as to provide that no action under clause (ia) or clause (ii) shall be taken by an income-tax authority acting under sub-section (2A).
These amendments will take effect from 1st October, 2014.
Clause 46 of the Bill seeks to insert a new section 133C in the Income-tax Act relating to power to call for information by prescribed income-tax authority.
It is proposed to insert a new section 133C so as to provide that for the purposes of verification of information in its possession relating to any person, prescribed income-tax authority, may, issue a notice to such person requiring him, on or before a date to be specified, to furnish information or documents, verified in the manner specified therein which may be useful for, or relevant to, any enquiry or proceeding under this Act.
This amendment will take effect from 1st October, 2014.
Clause 47 of the Bill seeks to amend section 139 of the Income-tax Act relating to return of income.
The existing provisions contained in sub-section ( 4C) of section 139, inter alia, provide for filing return of income by certain entities whose income is exempt under section 10 of the Act.
It is proposed to amend sub- section ( 4C) of section 139 so as to provide that Mutual Fund referred to in clause ( 23D) of section 10 and securitisation trust referred to in clause (23DA) of section 10 and Venture Capital Company or Venture Capital Fund referred to in clause (23FB) of section 10 shall, if the total income in respect of which such fund, trust or company is assessable, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of the Act, so far as may be, apply as if it
were a return required to be furnished under sub-section (1) of the said section 139.
It is also proposed to insert a new sub-section (4E) in section 139 so as to provide for filing of return of income by business trust which is not required to furnish return of income or loss under any other provision of the section.
These amendments will take effect from 1st April, 2015.
Clause 48 of the Bill seeks to amend section 140 of the Income-tax Act relating to return by whom to be signed.
Section 140 of the Act relates to return by whom to be signed and verified. It is proposed to amend section 140 of the Act, so as to dispense with the condition of signing the income-tax return and accordingly to omit the statutory requirement of signing such return. With this amendment, only the condition of verifying of the income-tax return will apply.
This amendment will take effect from 1st October, 2014.
Clause 49 of the Bill seeks to substitute section 142A of the Income-tax Act relating to estimate by Valuation Officer in certain cases.
Under the existing provisions contained in the said section, the Assessing Officer may, for the purpose of making an assessment or reassessment, require the Valuation Officer to make an estimate of the value of any investment, any bullion, jewellery or fair market value of any property. On receipt of the report of the Valuation Officer, the Assessing Officer may after giving the assessee an opportunity of being heard take into account such report for the purposes of assessment or reassessment.
It is proposed to substitute the said section 142A so as to provide that the Assessing Officer may, for the purposes of assessment or reassessment, make a reference to a Valuation Officer to estimate the value, including fair market value, of any asset, property or investment and submit a copy of report to him.
Sub-section (2) seeks to provide that the Assessing Officer may make a reference under sub-section (1) whether or not he is satisfied about the correctness or completeness of the accounts of the assessee.
Sub-section (3) seeks to provide that the Valuation Officer, on a reference made under sub-section (1), shall, for the purpose of estimating the value of the asset, property or investment, have all the powers that he has under section 38A of the Wealth-tax Act.
Sub-section (4) seeks to provide that the Valuation Officer shall, estimate the value of the asset, property or investment after taking into account the evidence produced by the assessee and any other evidence in his possession gathered, after giving an opportunity of being heard to the assessee.
Sub-section (5) seeks to provide that the Valuation Officer may estimate the value of the asset, property or investment to the best of his judgment, if the assessee does not co-operate or comply with his direction.
Sub-section (6) seeks to provide that the Valuation Officer shall send a copy of the report of the estimate made under sub-section (4) or sub-section (5) to the Assessing Officer and the assessee, within a period of six months from the end of the month in which a reference is made under sub-section (1).
Sub-section (7) seeks to provide that the Assessing Officer on receipt of the report from the Valuation Officer may, after giving the assessee an opportunity of being heard, take into account such report in making the assessment or reassessment.
Explanation occuring after the proposed sub-section (7) seeks to provide that the “Valuation Officer” shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act.
This amendment will take effect from 1st October, 2014.
Clause 50 of the Bill seeks to amend section 145 of the Income-tax Act relating to method of accounting.
The existing provisions contained in sub-section (1) of the said section provide that Income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” shall, subject to the provisions of sub -section (2) of the said section, be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. The existing provisions contained in sub-section (2) of the said section provide that the Central Government may notify in the Official Gazette from time to time, the accounting standards to be followed by any class of assessees or in respect of any class of income. The existing provision of sub-section (3) of the said section provides that where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) or accounting standards as notified under sub -section (2), have not been regularly followed by the assessee, the Assessing Officer may make an assessment in the manner provided in section 144.
It is proposed to amend sub-section (2) of section 145 to provide that the Central Government may notify in the Official Gazette from time to time income computation and disclosure standards to be followed by any class of assessees or in respect of any class of income.
It is also proposed to amend sub- section (3) of the aforesaid section to provide that where the Assessing Officer is not satisfied with the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1), has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2), the Assessing Officer may make an assessment in the manner provided in section 144.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
Clause 51 of the Bill seeks to amend section 153 of the Income-tax Act relating to time limit for completion of assessments and reassessments.
The existing provisions contained in Explanation 1 to section 153 provide that certain periods specified therein are to be excluded while computing the period of limitation for the purposes of the said section.
It is proposed to insert a new clause (iv) in Explanation 1 so as to provide that the period commencing from the date on which the Assessing Officer makes a reference to Valuation Officer under sub-section (1) of section 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer shall be excluded in computing the period of limitation for the purposes of section 153.
This amendment will take effect from 1st October, 2014.
Clause 52 of the Bill seeks to amend section 153B of the Income-tax Act relating to time limit for completion of assessment under section 153A.
The existing provisions contained in the Explanation to section 153B provide that certain periods specified therein are to be excluded while computing the period of limitation laid down in the said section for completion of assessment under section 153A.
It is proposed to insert a new clause (iia) in the aforesaid Explanation so as to provide that the period commencing from the date on which the Assessing Officer makes a reference to Valuation Officer under sub-section (1) of section 142A of the Income-tax Act and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer shall be excluded in computing the period of limitation for the purposes of section 153B.
This amendment will take effect from 1st October, 2014.
Clause 53 of the Bill seeks to amend section 153C of the Income-tax Act relating to assessment of income of any other person.
The existing provisions contained in sub-section (1) of the aforesaid section provide that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person, other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A.
It is proposed to amend the said sub-section so as to provide that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person, other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, such Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section
(1) of section 153A.
This amendment will take effect from 1st October, 2014.
Clause 54 of the Bill seeks to amend section 194A of the Income-tax Act relating to deduction of tax at source on interest other than “interest on securities”.
It is proposed to insert a new clause (xi) in sub-section (3) of section 194A so as to exempt from deduction of tax at source, the interest income payable by special purpose vehicle to a business trust.
This amendment will take effect from 1st October, 2014.
Clause 55 of the Bill seeks to insert a new section 194DA in the Income-tax Act relating to payment in respect of life insurance policy.
It is proposed to insert a new section 194DA so as to provide that any person responsible for paying to a resident any sum under a life insurance policy, including the sum allocated by way of bonus on such policy, other than the amount not includible in the total income under clause (10D) of section 10, shall, at the time of payment thereof, deduct income-tax thereon at the rate of two per cent.
It is further proposed to provide that no deduction shall be made where the amount of such payment or, as the case may be, the aggregate amount of such payments to the payee during the financial year is less than one hundred thousand rupees.
This amendment will take effect from 1st October, 2014.
Clause 56 of the Bill seeks to insert a new section 194LBA in the Income-tax Act which relates to certain income from business trust.
The said new section proposes to provide for deduction of tax at the rate of five per cent. in case of non-resident unit holders and at the rate of ten per cent. in case of resident unit holders of business trust on that portion of distributed income of the trust which is taxable in the hands of unit holder.
This amendment will take effect from 1st October, 2014.
Clause 57 of the Bill seeks to amend section 194LC of the Income-tax Act relating to income by way of interest from Indian company.
Under the existing provisions of the aforesaid section, the beneficial provision of lower rate of withholding tax is available on payment made by an Indian company subject to the conditions provided therein.
It is proposed to amend the said section to provide for the benefit of reduced withholding tax on interest income in case of external commercial borrowings by business trust, subject to the same conditions provided in the section.
The existing provisions contained in sub-section (2) of section 194LC specify the interest eligible for lower withholding tax rate of five per cent. It shall be the interest income payable by the specified company on borrowings made by it in foreign currency from sources outside India by way of long-term infrastructure bonds or under a loan agreement subject to approval by the Central Government. The sub-section further provides that the borrowing should be made at any time on or after the 1st day of July, 2012 but before the 1st day of July, 2015.
It is proposed to amend sub-section (2) of the aforesaid section to provide that the borrowings can be made before 1st July, 2017 instead of currently provided cut-off date of 1st July, 2015. It is further proposed to provide that the benefit of the section would be available to all long-term bonds including long-term infrastructure bonds.
These amendments will take effect from 1st October, 2014.
Clause 58 of the Bill seeks to amend section 200 of the Income-tax Act relating to duty of person deducting tax.
The existing provisions contained in sub-section (3) of the aforesaid section provide that any person deducting any sum on or after 1st April, 2005 in accordance with the foregoing provisions of Chapter XVII or, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed.
It is proposed to insert a proviso to the aforesaid sub-section so as to provide that the person who delivered statement under the aforesaid sub-section may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified by the authority.
This amendment will take effect from 1st October, 2014.
Clause 59 of the Bill seeks to amend section 200A of the Income-tax Act relating to processing of statements of tax deducted at source.
The existing provisions contained in sub-section (1) of the aforesaid section provide that where a statement of tax deduction at source has been made by a person deducting any sum under section 200, such statement shall be processed in the manner provided in the said sub-section.
It is proposed to amend sub-section (1) of the aforesaid section so as to include the correction statement in addition to the statement of tax deduction at source.
This amendment will take effect from 1st October, 2014.
Clause 60 of the Bill seeks to amend section 201 of the Income-tax Act relating to consequences of failure to deduct or pay.
The existing provisions contained in sub-section (3) of section 201 provide that no order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of two years from the end of the financial year in a case where the statement referred to in section 200 has been filed, and in any other case six years from the end of the financial year in which payment is made or credit is given.
It is proposed to substitute sub-section (3) of section 201 so as to provide that no order shall be made under sub-section (1) of the said section deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given.
This amendment will take effect from 1st October, 2014.
Clause 61 of the Bill seeks to amend section 206AA of the Income- tax Act relating to requirement to furnish Permanent Account Number.
Under the existing provisions contained in sub-section (7) of the aforesaid section it is provided that section 206AA shall not apply in respect of payment of interest on long-term infrastructure bonds referred to in section 194LC of the Act.
It is proposed to amend sub-section (7) to provide that section 206AA shall not apply in respect of payment of interest on long-term bonds referred to in section 194LC of the Act.
This amendment will take effect from 1st October, 2014.
Clause 62 of the Bill seeks to amend section 220 of the Income-tax Act relating to when tax payable and when assesee deemed in default.
The existing provision contained in sub-section (1) of the aforesaid section provides that any amount specified as payable
in a notice of demand under section 156 shall be paid within thirty days of the service of notice at the place and to the person mentioned in the notice.
It is proposed to insert a new sub-section in the said section so as to provide that where any notice of demand has been served upon an assessee and any appeal or other proceeding, as the case may be, is filed or initiated in respect of the amount specified in the said notice of demand, then, such demand shall be deemed to be valid till the disposal of the appeal by the last appellate authority or disposal of the proceedings, as the case may be, and any such notice of demand shall have the effect as specified in section 3 of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964.
The first proviso to sub-section (2) of the said section provides that where as a result of an order under section 154, or section 155, or section 250, or section 254, or section 260, or section 262, or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under this section had been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded.
It is proposed to insert second proviso in the said section so as to provide that where as a result of an order under sections specified in the first proviso, the amount on which interest was payable under this section had been reduced and subsequently as a result of an order under said sections or section 263, the amount on which interest was payable under this section is increased, the assessee shall be liable to pay interest under sub-section (2) from the day immediately following the end of the period mentioned in the first notice of demand, referred to in sub-section (1) and ending with the day on which the amount is paid.
These amendments will take effect from the 1st October, 2014.
Clause 63 of the Bill seeks to amend section 269SS of the Income-tax Act relating to mode of taking or accepting certain loans and deposits.
The existing provisions of the aforesaid section provide that no person shall take from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft, if the amount of such loan or deposit or aggregate of such loans or deposits is twenty thousand rupees or more.
It is proposed to amend the aforesaid section so as to provide that no person shall take or accept from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account if, the amount of such loan or deposit or the aggregate amount of such loans or deposits is twenty thousand rupees or more.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent years.
Clause 64 of the Bill seeks to amend section 269T of the Income-tax Act relating to mode of repayment of certain loans and deposits.
The existing provisions of the aforesaid section provide that no loan or deposit shall be repaid otherwise than by an account payee cheque or account payee bank draft, if the amount of such loan or deposit together with interest or the aggregate amount of such loans or deposits together with interest, if any payable thereon, is twenty thousand rupees or more.
It is proposed to amend section 269T so as to provide that no person shall repay any loan or deposit made with it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit or by use of electronic clearing system through a bank account if, the amount of the loan or deposit together with interest or the aggregate amount of such loans or deposits together with interest, if any payable thereon, is twenty thousand rupees or more.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent years.
Clause 65 of the Bill seeks to amend section 271FA of the Income-tax Act relating to penalty for failure to furnish annual information return.
The existing provisions of section 271FA provides for penalty for failure to furnish an annual information return.
It is proposed to amend the said section so as to provide for penalty for failure to furnish statement of financial transaction or reportable account.
This amendment will take effect from 1st April, 2015.
Clause 66 of the Bill seeks to insert a new section 271FAA in the Income-tax Act to provide for penalty for furnishing inaccurate statement of financial transaction or reportable account.
It is proposed to insert a new section 271FAA so as to provide that if a person referred to in clause (k) of sub-section (1) of section 285BA, who is required to furnish a statement of financial transaction or reportable account, provides inaccurate information in the statement and where (a) the inaccuracy is due to a failure to comply with the due diligence requirement prescribed under sub-section (7) of section 285BA or is deliberate on the part of that person; or (b) the person knows of the inaccuracy at the time of furnishing the statement of financial transaction or reportable account, but does not inform the prescribed income-tax authority or such other authority or agency; or (c) the person discovers the inaccuracy after the statement of financial transaction or reportable account is furnished and fails to inform and furnish correct information within the time specified under sub-section (6) of section 285BA, then, the prescribed income-tax authority may direct that such person shall pay, by way of penalty, a sum of fifty thousand rupees.
This amendment will take effect from 1st April, 2015.
Clause 67 of the Bill seeks to amend section 271G of the Income-tax Act relating to levy of penalty for failure to furnish information or document under section 92D of the Act.
Under the existing provisions of section 271G, if any person who has entered into an international transaction or specified domestic transactions fails to furnish any such document or information as required by sub-section (3) of section 92D, then, such person shall be liable to a penalty of a sum equal to two per cent. of the value of international transaction or specified domestic transaction for each failure. The said section provides that the above penalty may be levied by the Assessing Officer or the Commissioner (Appeals).
It is proposed to amend section 271G to include Transfer Pricing Officer as referred to in section 92CA, as an authority competent to levy the penalty under the section 271G in addition to the Assessing Officer and the Commissioner (Appeals).
This amendment will take effect from 1st October, 2014.
Clause 68 of the Bill seeks to amend section 271H of the Income-tax Act relating to penalty for failure to furnish statements, etc.
The existing provisions contained in sub-section (1) of section 271H provide the circumstances in which the person shall be liable to pay penalty.
It is proposed to amend sub-section (1) of section 271H so as to provide that the penalty levied under section 271H shall be levied by the Assessing Officer.
This amendment will take effect from 1st October, 2014.
Clause 69 of the Bill seeks to amend section 276D of the Income-tax Act which relates to failure to produce accounts and documents.
The existing provisions of section 276D provide that if a person wilfully fails to produce accounts and documents as required in any notice issued under sub-section (1) of section 142 or wilfully fails to comply with a direction issued to him under sub-section (2A) of section 142, he shall be punishable with rigorous imprisonment for a term which may extend to one year or with fine equal to a sum calculated at a rate which shall not be less than four rupees or more than ten rupees for every day during which the default continues, or with both.
It is proposed to amend section 276D, so as to provide that if a person wilfully fails to produce accounts and documents as required in any notice issued under sub-section (1) of section 142 or wilfully fails to comply with a direction issued to him under sub-section (2A) of section 142, he shall be punishable with rigorous imprisonment for a term which may extend to one year and with fine.
This amendment will take effect from 1st October, 2014.
Clause 70 of the Bill seeks to amend section 281B of the Income- tax Act relating to provisional attachment to protect revenue in certain cases.
The exiting provisions of sub- section (1) of the aforesaid section provide that the Assessing Officer, during the pendency of any proceeding for assessment or reassessment, in order to protect the interests of revenue may, with the previous approval of the Chief Commissioner or Commissioner, attach provisionally any property belonging to the assessee in the manner provided in the Second Schedule. Sub-section (2) of the said section provides that the provisional attachment shall cease to have effect after the expiry of six months provided that the Chief Commissioner or Commissioner may extend the period upto a total period of two years.
It is proposed to amend sub-section (2) of the said section so as to provide that the provisional attachment shall cease to have effect after the expiry of six months provided that the Chief Commissioner or Commissioner may extend the period up to a total period of two years or sixty days after the date of assessment or reassessment, whichever is later.
This amendment will take effect from 1st October, 2014.
Clause 71 of the Bill seeks to substitute section 285BA of the Income-tax Act relating to obligation to furnish annual information return with a new section.
The existing provisions of section 285BA provide for filing of an annual information return by specified persons in respect of specified financial transactions which is registered or recorded by them and which is relevant and required for the purposes of the Act to the prescribed income-tax authority.
It is proposed to amend the said section so as to provide for furnishing of statement of information by a prescribed reporting financial institution in respect of any specified financial transaction or reportable account to the prescribed income-tax authority. It is further proposed that the statement of information shall be furnished for such period, within such time, in the form and manner as may be prescribed.
It is also proposed to provide that where any person, who has furnished a statement of information under sub- section (1), or in pursuance of a notice issued under sub-section (5), comes to know or discovers any inaccuracy in the information provided in the statement, then, he shall, within a period of ten days, inform the income-tax authority or other authority or agency referred to in sub-section (1) the inaccuracy in such statement and furnish the correct information in the manner as may be prescribed.
It is also proposed that the Central Government may, by rules, specify,––
(a)
the persons referred to in sub-section (1) to be registered with the prescribed income-tax authority;
(b)
the nature of information and the manner in which such information shall be maintained by the persons referred to in clause (a); and
(c)
the due diligence to be carried out by the persons for the purpose of identification of any reportable account referred to in sub-section (1).
This amendment will take effect from 1st April, 2015.
Source : Finance Bill Budget 2014-15
