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Statutory Provisions

Home Acts & Rules Bill Bills FINANCE BILL, 2013 Chapters List Chapter III - Part I DIRECT TAXES - Income-tax This

Clause 7 - Amendment of Section 40 - FINANCE BILL, 2013

FINANCE BILL, 2013
Chapter III - Part I
DIRECT TAXES - Income-tax
  • Contents

Amendment of Section 40

 7. In section 40 of the Income-tax Act, in clause (a), after sub-clause (iia), the following sub-clause shall be inserted with effect from the 1st day of April, 2014, namely:—

     “(iib) any amount—

          (A) paid by way of royalty, licence fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called, which is levied exclusively on; or

          (B) which is appropriated, directly or indirectly, from, a State Government undertaking by the State Government.

      Explanation.—For the purposes of this sub-clause, a State Government undertaking includes—

           (i) a corporation established by or under any Act of the State Government;

           (ii) a company in which more than fifty per cent. of the paid-up equity share capital is held by the State Government;

           (iii) a company in which more than fifty per cent. of the paid-up equity share capital is held by the entity referred to in clause (i) or clause (ii) (whether singly or taken together);

           (iv) a company or corporation in which the State Government has the right to appoint the majority of the directors or to control the management or policy decisions, directly or indirectly, including by virtue of its shareholding or management rights or shareholders agreements or voting agreements or in any other manner;

           (v) an authority, a board or an institution or a body established or constituted by or under any Act of the State Government or owned or controlled by the State Government;”.

 



 

Notes on Clauses:

Clause 7 of the Bill seeks to amend section 40 of the Incometax 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”.

     It is proposed to insert a new sub-clause (iib) in clause (a) of  the aforesaid section so as to provide that any amount paid by way of royalty, licence fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called which is levied exclusively on or any amount which is appropriated, whether directly or indirectly, from a State Government undertaking, by the State Government, shall not be allowed as deduction in computing the income chargeable under the head “Profits and gains of business or profession”.

     It is further proposed to define the expression “State Government undertaking” used in the proposed new subclause (iib).

     This amendment will take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

 
 
 
 

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