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Statutory Provisions

Home Acts & Rules Bill Bills FINANCE BILL, 2015 Chapters List Chapter III DIRECT TAXES - Income-tax This

Clause 42 - Amendment of section 194A. - FINANCE BILL, 2015

FINANCE BILL, 2015
Chapter III
DIRECT TAXES - Income-tax
  • Contents

Amendment of section 194A.

42. In section 194A of the Income-tax Act, in sub-section (3), with effect from the 1st day of June, 2015,-

(a) in clause (i), after the proviso, the following proviso shall be inserted, namely:-

“Provided further that the amount referred to in the first proviso shall be computed with reference to the income credited or paid by the banking company or the co-operative society or the public company, as the case may be, where such banking company or the co-operative society or the public company has adopted core banking solutions;”;

(b) in clause (v), for the words “paid by a co-operative society to a member thereof or”, the words and brackets “paid by a co-operative society (other than a co-operative bank) to a member thereof or to such income credited or paid by a co-operative society” shall be substituted;

(c) after clause (v), the following Explanation shall be inserted, namely:- ‘Explanation.-For the purposes of this clause, “co-operative bank” shall have the same as meaning assigned to it in Part V of the Banking Regulation Act, 1949;’ (10 of 1949).;

(d) for clause (ix), the following clauses shall be substituted, namely:-

“(ix) to such income credited by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal;

(ixa) to such income paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income paid during the financial year does not exceed fifty thousand rupees;”;

(e) in Explanation 1 below clause (xi), for the word “excluding”, the word “including” shall be substituted.

 



 

Notes on Clauses:

Clause 42 of the Bill seeks to amend section 194A of the Income-tax Act relating to interest other than interest on securities.

Under the existing provisions contained in the proviso to clause (i) of sub-section (3) of the aforesaid section, income credited or paid in respect of time deposits with a banking company or cooperative society or deposits with a public company, as the case may be, shall be computed with reference to the branch of the banking company or co-operative society or public company, as the case may be.

It is proposed to insert a proviso after the existing proviso to the said clause (i) of sub-section (3) of the aforesaid section so as to provide that the amount referred to in the first proviso shall be computed with reference to the income credited or paid by the banking company or the co-operative society or the public company, as the case may be, where such banking company or the co-operative society or the public company has adopted core banking solutions.

The existing provisions of clause (v) of sub-section (3) of the aforesaid section provide that the provisions of sub-section (1) of the aforesaid section shall not apply to income credited or paid by a co-operative society to a member thereof or to any other cooperative society.

It is proposed to amend the said sub-clause so as to provide that the provisions of sub-section (1) of section 194A shall not apply to income credited or paid by a co-operative society (other than a co-operative bank) to a member thereof or to such income credited or paid by a co-operative society to any other co-operative society.

It is further proposed to provide an Explanation below clause (v) of sub-section (3) of aforesaid section 194A to define the expression “co-operative bank”.

The existing provisions of clause (ix) of sub-section (3) of section 194A provides that the provisions of sub-section (1) of section 194A shall not apply to income credited or paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income paid during the financial year does not exceed fifty thousand rupees.

It is proposed to substitute the aforesaid clause so as to provide that the provisions of sub-section (1) of section 194A shall not apply to income credited by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal.

It is also proposed to insert a new clause (ixa) in sub-section (3) of section 194A to provide that the provisions of sub-section (1) of section 194A shall not apply to income paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income paid during the financial year does not exceed fifty thousand rupees.

Explanation 1 to sub-section (3) of the aforesaid section defines the expression ‘time deposits’ for the purposes of clauses (i), (vii) and (viia) of the said sub-section (3) as deposits (excluding recurring deposits) repayable on the expiry of fixed periods. It is proposed to amend the said definition of ‘time deposits’ so as to provide that for the purposes of said clauses the expression ‘time deposits’ shall not exclude but include recurring deposits.

These amendments will take effect from 1st June, 2015.

 
 
 
 

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