Notes-01 - Notes on clauses-Income Tax - FINANCE BILL, 2016

NOTES ON CLAUSES

 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 2016-17. Further, it lays down the rates at which tax is to be deducted at source during the financial year 2016-17 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 2016-17. 

Rates of income-tax for the assessment year 2016-17 

Part I of the First Schedule to the Bill specifies the rates at which income is liable to tax for the assessment year 2016-17. These rates are the same as those specified in Part III of the First Schedule to the Finance Act, 2015, 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 2015-16.

 Rates for deduction of tax at source during the financial year 2016-17 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 2016-17 from income other than “Salaries”. The rates are the same as those specified in Part II of the First Schedule to the Finance Act, 2015 for the purposes of deduction of income tax at source during the financial year 2015-16 except that in case of payment of income by way of insurance commission to a person, other than a company, resident in India , tax shall now be deducted at source at the rate of five per cent. ,as against the earlier rate of ten per cent. 

The amount of tax so deducted shall be increased by a surcharge in the case of– 

(i) every non-resident being an individual or Hindu undivided family or 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, at the rate of fifteen per cent. of such tax, where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore rupees; 

(ii) every non-resident being a co-operative society or firm or local authority at the rate of twelve per cent. where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore rupees; 

(iii) 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; 

(iv) 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 2016-17. 

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 2016-17. 

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 ₹ 2,50,000	Nil
₹ 2,50,001 to ₹ 5,00,000	10 per cent.
₹ 5,00,001 to ₹ 10,00,000	20 per cent.
Above ₹ 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 ₹ 3,00,000	Nil
₹ 3,00,001 to ₹ 5,00,000	10 per cent.
₹ 5,00,001 to ₹ 10,00,000	20 per cent.
Above ₹ 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 ₹ 5,00,000	Nil
₹ 5,00,001 to ₹ 10,00,000	20 per cent.
Above ₹ 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 fifteen 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 assessment year 2016-17. The surcharge in cases of co-operative societies, having income above one crore rupees shall be levied at the rate of twelve 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 assessment year 2016-17. The surcharge in cases of firms, having income above one crore rupees shall be levied at the rate of twelve 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 2016-17. The surcharge in cases of local authorities, having income above one crore rupees shall be levied at the rate of twelve per cent. Marginal relief will be provided. 

Paragraph E of this Part specifies the rates of income-tax in the case of companies. In the case of domestic companies, the rate of income-tax shall be twenty-nine per cent. of the total income where the total turnover or gross receipts, of the company, of the previous year 2014-15 does not exceed five crore rupees and in all other cases the rate of income-tax shall be thirty percent of the total income. In the case of companies other than domestic companies, the rate of tax will continue to be the same as that specified for assessment year 2016-17.

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 seven per cent. In the case of domestic companies having total income above ten crore rupees, surcharge shall be levied at the rate of twelve per cent. In the case of companies other than domestic companies having 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, 115TD etc.) the surcharge will be applicable at the rate of twelve 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.

Sub-clause (a) of the said clause seeks to amend clause (14) of the aforesaid section which defines “capital asset” and item (vi) of the said clause (14) excludes from the definition of capital asset, inter alia, Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government. It is proposed to amend item (vi) of the said clause (14) so as to also exclude the deposit certificates issued under the Gold Monetisation Scheme, 2015 from the definition of capital asset.

This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years.

Sub-clause (b) of the said clause proposes to insert a new clause (23C) to define the term “hearing” so as to include communication of data and documents through electronic mode.

This amendment will take effect from 1st June, 2016.

Sub-clause (c) of the said clause proposes to amend clause (24) relating to the definition of income.

Sub-clause (xviii) of clause (24) of the aforesaid section, inter alia, provides that any assistance in the form of a subsidy or grant or cash incentives, etc., by the Central or a State Government to any assessee other than the subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset, in accordance with Explanation 10 to clause (1) of section 43, shall be included in the definition of income.

It is proposed to amend the said sub-clause (xviii) so as to provide that subsidy or grant by the Central Government for the purpose of the corpus of a trust or institution established by the Central Government or a State Government, as the case may be, shall also not form part of income.

 This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Sub-clause (d) of the said clause seeks to amend clause (37A) of the said section so as to provide that for the purposes of deduction of tax under section 194LBB, or section 194LBC the “rates in force” in relation to an assessment year or financial year shall mean the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year or rate or rates of incometax specified in an agreement entered into by the Central Government under section 90 or notified by the Central Government under section 90A, whichever is applicable.

This amendment will take effect from 1st June, 2016.

Clause 4 of the Bill seeks to amend section 6 of the Income-tax Act relating to residence in India.

Under the existing provisions contained in clause (3) of the aforesaid section, a company is said to be resident in India in any previous year, if––

(i) it is an Indian company; or

(ii) during that year, the control and management of its affairs is situated wholly in India.

It is proposed to amend clause (3) of the said section so as to provide that a company shall be said to be resident in India, in any previous year, if ––

(a) it is an Indian company; or

(b) its place of effective management, in that year, is in India.

It is also proposed to insert an Explanation to clarify the expression ‘place of effective management’ to mean a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance, made.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.

Clause 5 of the Bill seeks to amend section 9 of the Income-tax Act relating to income deemed to accrue or arise in India.

It is proposed to insert a new clause (e) in the Explanation 1 to clause (i) of sub-section (1) of the said section so as to provide that in the case of a foreign company engaged in the business of mining of diamonds, no income shall be deemed to accrue or arise in India through or from the activities which are confined to the display of uncut and unassorted diamond in any special zone notified by the Central Government in the Official Gazette in this behalf.

This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years.

Clause 6 of the Bill seeks to amend section 9A of the Incometax Act relating to certain activities not to constitute business connection in India.

Sub-section (3) of the aforesaid section provides for the conditions to be fulfilled for being an eligible investment fund.

It is proposed to amend clause (b) of the said sub-section so as to provide that the eligible investment fund also means a fund established or incorporated or registered in a country or a specified territory notified by the Central Government in this behalf. 

 It is further proposed to amend clause (k) of the said sub-section to omit reference to the fund not carrying on or controlling and managing, directly or indirectly, any business from India.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Clause 7 of the Bill seeks to amend section 10 of the Income-tax Act relating to incomes not included in total income.

Sub-clause (A) of the said clause seeks to amend clause (12) of the aforesaid section.

The said clause provides that the accumulated balance due and becoming payable to an employee participating in a recognised provident fund, is exempt from tax, subject to fulfilment of certain conditions specified in rule 8 of Part A of the Fourth Schedule.

It is proposed to amend the said clause (12) so as to provide that nothing contained in this clause shall apply in respect of any amount of accumulated balance, attributable to any contributions made on or after the 1st day of April, 2016 by an employee other than an excluded employee, exceeding forty per cent. of such accumulated balance due and payable in accordance with provisions of rule 8 of Part A of the Fourth Schedule.

It is further proposed to insert a new clause (12A) in the said section so as to provide that any payment from the National Pension System Trust to an employee on closure of account or his opting out of the pension scheme referred to in section 80CCD, to the extent it does not exceed forty per cent. of the total amount payable to him at the time of closure or his opting out of the scheme, shall be exempt from tax.

It is also proposed to amend clause (13) of the said section so as to provide that any payment in commutation of an annuity purchased out of contributions made on or after the 1st day of April, 2016, which exceeds forty per cent. of the annuity, shall be chargeable to tax. The said clause also seeks to provide that any payment from an approved superannuation fund by way of transfer to the account of the employee under a pension scheme referred to in section 80CCD notified by the Central Government shall be exempt from tax.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.

Sub-clause (B) of the said clause seeks to amend clause (15) of the said section so as to provide that the interest on deposit certificates issued under the Gold Monetisation Scheme, 2015 notified by the Central Government shall also be exempted from income-tax. 

This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years.

Sub-clause (C) of the said clause seeks to amend clause (23DA) of the said section so as to provide that the definition of the term “securitisation” for the purposes of the said clause shall also include securitisation, as defined in clause (z) of sub-section (1) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

It is further proposed to amend clause (23FC) of the said section so as to provide that any income of a business trust by way of interest received or receivable from a special purpose vehicle or the dividend referred to in sub-section (7) of section 115-O shall also not be included in total income of such business trust.

It is also proposed to amend clause (23FD) of the said section so as to provide that any distributed income from a business trust received by a unit holder which is of the same nature as dividend referred to in sub-section (7) of section 115-O shall not be included in the total income of such unit holder.

It is also proposed to amend clause (34) of the said section so as to provide that any income by way of dividend in excess of ten lakh rupees shall not be exempt from tax in the case of an individual, Hindu undivided family or a firm.

It is also proposed to amend clause (35A) of the said section so as to provide that nothing contained in the clause shall apply to any income by way of distributed income referred to in section 115TA received on or after the 1st day of June, 2016.

It is also proposed to amend clause (38) of the said section so as to provide for exemption from capital gains tax in case of income arising from transaction undertaken on a recognised stock exchange located in the International Financial Services Centre and the consideration for such transaction is paid or payable in foreign currency. It is also proposed to define the expressions International Financial Services Centre and recognised stock exchange.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Sub-clause (D) of said clause seeks to insert a new clause (48A) in the said section so as to provide for exemption in respect of any income of a foreign company on account of storage of crude oil in a facility in India and sale of crude oil therefrom to any person resident in India subject to the conditions that the storage and sale by the foreign company is pursuant to an agreement or an arrangement entered into by the Central Government or approved by the Central Government and having regard to the national interest, the foreign company and the agreement or arrangement are notified by the Central Government in this behalf.

This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-2017 and subsequent years.

Sub-clause (E) of the said clause seeks to insert a new clause (50) in the said section so as to provide that any income arising from specified services provided on or after the date on which the provisions of Chapter VIII of the Finance Act, 2016, comes into force and chargeable to equalisation levy under that Chapter shall be exempt. It is further proposed to provide an Explanation under the proposed clause (50) so as to provide that the expression “specified service” shall have the meaning assigned to it in clause (i) of section 161 of the Chapter VIII of the Finance Act, 2016.

 This amendment will take effect from 1st June, 2016.

Clause 8 of the Bill seeks to amend section 10AA of the Income-tax Act relating to special provisions in respect of newly established Units in Special Economic Zones.

The aforesaid section provides that an assessee, being an entrepreneur as referred to in clause (j) of section 2 of the Special Economic Zones Act, 2005, who begins from his unit for manufacturing or producing articles or things or providing any services during the previous year relevant to any assessment year commencing on or after the 1st day of April, 2006, is allowed deduction on the profits derived from the export of articles or things or services.

It is proposed to amend sub-section (1) of the said section 10AA so as to provide that the deduction under this section is available only for an above referred enterpreneur whose unit begins to carryout above referred activity before the 1st day of April, 2021.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 9 of the Bill seeks to amend section 17 of the Income-tax Act relating to “Salary”, “perquisite” and “profits in lieu of salary” defined.

Sub-section (2) of the aforesaid section defines “perquisite” to include, inter alia, the amount of any contribution to an approved superannuation fund by the employer in respect of the assesse, to the extent it exceeds one lakh rupees.

It is proposed to amend the said sub-section so as to increase the limit of employer’s contribution from one lakh rupees to one lakh and fifty thousand rupees.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.

Clause 10 of the Bill seeks to amend section 24 of the Income-tax Act relating to deductions from income from house property.

Clause (b) of the aforesaid section provides that interest payable on capital borrowed for acquisition or construction of a house property shall be deducted while computing income from house property. The second proviso to the said clause provides that a deduction of an amount of two lakh rupees shall be allowed where a house property referred to in sub-section (2) of section 23 (self-occupied house property) has been acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed within three years from the end of the financial year in which capital was borrowed.

It is proposed to amend the second proviso to clause (b) of the said section so as to provide that the deduction of an amount of two lakh rupees under the said proviso shall be allowed if the acquisition or construction is completed within five years from the end of the financial year in which the capital was borrowed.

This amendment will take effect from 1st April, 2017 and will, accordingly apply in relation to assessment year 2017-2018 and subsequent years.

Clause 11 of the Bill seeks to substitute sections 25A, 25AA and 25B of the Income-tax Act relating to special provisions for cases where unrealised rent allowed as deduction is realised subsequently, unrealised rent received subsequently to be charged to income tax and special provision for arrears of rent received, with a new section 25A.

 It is proposed to provide that the amount of rent received in arrears or the amount of unrealised rent realised subsequently by an assessee shall be charged to income-tax in the financial year in which such rent is received or realised, whether the assessee is the owner of the property or not in that financial year.

It is also proposed that thirty per cent. of the arrears of rent or the unrealised rent realised subsequently by the assessee shall be allowed as deduction.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 12 of the Bill seeks to amend section 28 of the Income-tax Act relating to “Profits and gains of business or profession”.

Clause (va) of the aforesaid section, inter alia, provides that any sum, whether received or receivable, in cash or kind, under an agreement for not carrying out any activity in relation to any business, is chargeable to tax as business income for business entities.

It is proposed to amend the said clause so as to provide that any sum received or receivable, in cash or kind, under an agreement, for not carrying out any activity in relation to any profession, shall also be income chargeable to income-tax under the head “Profits and gains of business or profession”.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 13 of the Bill seeks to amend section 32 of the Income-tax Act relating to depreciation.

Under the existing provisions contained in clause (iia) of subsection (1) of section 32, a sum equal to twenty per cent. of the actual cost of new machinery or plant (other than ships and aircraft) acquired and installed after the 31st day of March, 2005 by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation or generation and distribution of power, is allowed as deduction as further depreciation in the year of acquisition and instalment.

It is proposed to amend the said clause (iia) so as to provide that the deduction under the said clause shall also be allowed to the business of transmission of power.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.

Clause 14 of the Bill seeks to amend section 32AC of the Incometax Act relating to investment in new plant or machinery.

Sub-section (1A) of the aforesaid section, inter alia, allows a deduction of a sum equal to fifteen per cent. of the actual cost of new machinery or plant (other than ship or aircrafts), acquired and installed by an assessee being a company engaged in the business of manufacture or production of any article or thing during any financial year, exceeds twenty-five crore rupees, if the acquisition and installation is made during the same financial year.

It is proposed to amend the said sub-section so as to provide that the deduction under the said sub-section shall be allowed if the assets are installed on or before the 31st March, 2017.

It is further proposed to insert a new proviso in the said subsection so as to provide that where the installation of the new assets are in a year other than the year of acquisition, the deduction under the said sub-section shall be allowed in the year in which such new assets are installed.

These amendments will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-2017 and subsequent years.

Clause 15 of the Bill seeks to amend section 35 of the Incometax Act relating to expenditure on scientific research.

Sub-clause (i) of the said clause seeks to amend sub-section (1) of the aforesaid section 35.

Clause (ii) of sub-section (1) of the said section provides for weighted deduction to the extent of one hundred seventy-five per cent. of any sum paid to a scientific research association which has the object of undertaking scientific research or to a university, college or other institution to be used for scientific research.

It is proposed to amend the said clause (ii) so as to reduce the said weighted deduction from one hundred seventy-five per cent. to one hundred fifty per cent. from financial year 2017-2018 to 2019-2020. It is further proposed to reduce the said weighted deduction to one hundred per cent. from the financial year 2020- 2021 and subsequent years.

Clause (iia) of sub-section (1) of the said section provides weighted deduction in respect of contribution to a company engaged in scientific research.

It is proposed to amend the said clause (iia) so as to reduce the said weighted deduction from one hundred twenty-five per cent. to one hundred per cent. from financial year 2017-2018 and subsequent years.

Clause (iii) of sub-section (1) of the aforesaid section provides that weighted deduction shall be allowed in respect of contributions made to an approved university, college or institution to be used for research in social science or statistical research.

It is proposed to amend the said clause (iii) so as to reduce the said weighted deduction from one hundred twenty-five per cent. to one hundred per cent. from financial year 2017-2018 and subsequent years.

Sub-clause (ii) of the said clause seeks to amend sub-section (2AA) of the aforesaid section 35. 

The existing provisions contained in clause (a) of sub-section (2AA) of the said section provide for a weighted deduction to the extent of two hundred per cent. of any sum paid to a National Laboratory or a University or an Indian Institute of Technology or a specified person for the purpose of an approved scientific research programme.

It is proposed to amend the said clause (a) so as to reduce the said weighted deduction from two hundred per cent. to one hundred and fifty per cent. from financial year 2017-2018 to 2019-2020. It is further proposed to reduce the said weighted deduction to one hundred per cent. from financial year 2020-2021 and subsequent years.

Sub-clause (iii) of the said clause seeks to amend sub-section (2AB) of the aforesaid section 35.

The existing provisions contained in clause (1) of sub-section (2AB) of the said section provide for weighted deduction of two hundred per cent. of the expenditure incurred by a company or scientific research on an approved in-house research and development facility.

It is proposed to amend the said clause (1) so as to reduce the said weighted deduction from two hundred per cent. to one hundred and fifty per cent. from financial year 2017-2018 to 2019-2020. It is further proposed to reduce the said weighted deduction to one hundred per cent. from financial year 2020-2021 and subsequent years. 

These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018- 2019 and subsequent years.

Clause 16 of the Bill seeks to insert a new section 35ABA in the Income-tax Act relating to expenditure for obtaining right to use spectrum for telecommunication services.

The proposed section seeks to provide that any capital expenditure incurred and actually paid by an assessee on the acquisition of any right to use spectrum for telecommunication services shall be allowed as a deduction in equal instalments over the period starting from the year in which such payment has been made and ending in the year in which the useful life of spectrum comes to an end.

The proposed section further seeks to provide that the provisions contained in sub-sections (2) to (8) of section 35ABB, shall apply as if for the word “licence”, the word “spectrum” had been substituted.

It is also proposed to provide an Explanation to define certain expressions used for the purposes of the said section.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 17 of the Bill seeks to amend section 35AC of the Income-tax Act relating to expenditure on eligible projects or schemes.

The existing provisions of section 35AC, inter alia, provides for deduction for expenditure incurred by way of payment of any sum to a public sector company or a local authority or to an approved association or institution, etc., on certain eligible social development project or a scheme not related to business.

It is proposed to insert a new sub-section (7) in the aforesaid section so as to provide that the deduction under this section shall not apply, in respect of any assessment for the assessment year commencing on the 1st day of April, 2018.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent year.

Clause 18 of the Bill seeks to amend section 35AD of the Income-tax Act relating to deduction in respect of expenditure on specified business.

Under the existing provisions of aforesaid section, deduction in respect of expenditure of capital nature incurred, wholly or exclusively, during the year for a specified business is allowed. Sub-section (1A) of the aforesaid section provides that where the specified business is of the nature referred to in sub-clause (i) or sub-clause (ii) or sub-clause (v) or sub-clause (vii) or sub-clause (viii) of clause (c) of sub-section (8), the deduction under subsection (1) shall be allowed to an amount equal to one and onehalf times of the expenditure referred to therein.

 It is proposed to omit the said sub-section (1A).

It is further proposed to amend sub-section (2) of the said section 35AD so as to provide the deduction under this section to an assessee engaged in developing, operating and maintaining or developing, operating and maintaining the infrastructure facility.

It is also proposed to amend sub-section (8) of the said section so as to define the expression “infrastructure facility” in the said section in the light of amendment proposed to sub-section (2) of the said section. 

These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018- 2019 and subsequent years.

Clause 19 of the Bill seeks to amend section 35CCC of the Income-tax Act relating to expenditure on agricultural extension project.

The aforesaid section provides that where an assessee incurs any expenditure on agricultural extension project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then, there shall be allowed a deduction of a sum equal to one and one-half times of such expenditure. Sub-section (2) of the said section provides that where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provisions of the Income-tax Act for the same or any other assessment year.

It is proposed to amend the said section so as to reduce the deduction from one hundred fifty per cent. to one hundred per cent.

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-2019 and subsequent years.

Clause 20 of the Bill seeks to amend section 35CCD of the Income-tax Act relating to expenditure on skill development project.

The aforesaid section provides that where a company incurs any expenditure (not being expenditure in the nature of cost of any land or building) on any skill development project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then, there shall be allowed a deduction of a sum equal to one and one-half times of such expenditure. Sub-section (2) of the said section provides that where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provisions of the Income-tax Act for the same or any other assessment year.

It is proposed to amend the said section so as to reduce the deduction from one hundred fifty per cent. to one hundred per cent. from the assessment year beginning on or after the 1st day of April, 2021. 

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 21 of the Bill seeks to amend section 36 of the Income-tax Act relating to other deductions.

The existing provisions contained in clause (viia) of sub-section (1) of the aforesaid section provide for deduction in respect of any provision for bad and doubtful debts made by certain entities.

It is proposed to insert a new sub-clause (d) in clause (viia) of sub-section (1) of the aforesaid section so as to provide that any provision for bad and doubtful debts made by a non-banking financial company shall be allowed a deduction of an amount not exceeding five per cent. of the total income (computed before making any deduction under this clause and Chapter VI-A).

It is also proposed to define the expression “non-banking financial company”.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Clause 22 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”.

It is proposed to insert a new sub-clause (ib) in clause (a) of the aforesaid section so as to provide that any consideration paid or payable to a non-resident for a specified service on which equalisation levy is deductible under Chapter VIII of the Finance Act, 2016, and such levy has not been deducted, or, after deduction, has not been paid on or before the due date specified in subsection (1) of section 139.

It is further proposed that where in respect of any such consideration, the equalisation levy 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 levy has been paid.

These amendments will take effect from 1st June, 2016.

Clause 23 of the Bill seeks to amend section 43B of the Income-tax Act relating to certain deductions to be only on actual payment.

The aforesaid section, inter alia, provides that certain sum payable by the assessee shall be allowed as deduction irrespective of the previous year in which the liability to pay such sum was incurred if the same is actually paid on or before the due date of furnishing of the return of income.

It is proposed to insert a new clause in the said section so as to provide that any sum payable by the assessee to the Indian Railways for use of railway assets shall be allowed as deduction only, if it is actually paid on or before the due date of furnishing the return of income of the relevant previous year.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. 

Clause 24 of the Bill seeks to amend section 44AA of the Income-tax Act relating to maintenance of accounts by certain persons carrying on profession or business.

It is proposed to amend the sub-section (2) of the aforesaid section so as to provide that every person carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax, keep and maintain such books of account and other documents for computing his total income in accordance with the provisions of this Act.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 25 of the Bill seeks to amend section 44AB of the Income-tax Act relating to audit of accounts of certain persons carrying on business or profession.

Sub-clause (i) of the said clause seeks to amend clause (b) of the aforesaid section. The said clause provides that every person carrying on a profession is required to get his accounts audited before the specified date if his gross receipts in a previous year exceed twenty-five lakh rupees.

It is proposed to amend the said clause (b) so as to increase the threshold limit to fifty lakh rupees. 

Sub-clause (ii) of the said clause seeks to amend clause (d) of the said section so as to provide that in the case of an assessee, who is covered under the new proposed section 44ADA, the audit of books of account is required if he claims that the profits and gains from the profession are lower than the profits and gains computed in accordance with the provisions of sub-section (1) of the proposed new section and if his income exceeds the maximum amount which is not chargeable to income-tax.

Sub-clause (iii) of the said clause seeks to insert a new clause (e) in the said section so as to provide that every person carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax, keep and maintain such books of account and other documents for computing his total income in accordance with the provisions of this Act.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Clause 26 of the Bill seeks to amend section 44AD of the Income-tax Act relating to special provision for computing profits and gains of business on presumptive basis.

The existing provisions contained in the said section provides that notwithstanding anything to the contrary contained in section 28 to 43C, in the case of an assessee engaged in any business having total turnover or gross receipts not exceeding one crore rupees, a sum equal to eight per cent. of the total turnover or gross receipts, or, as the case may be, a sum higher than the aforesaid sum declared by the assessee in his return of income, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profit and gains of business or profession”.

The proposed section 44AD seeks to provide for estimating income of assessee who is engaged in any business, at a sum equal to eight per cent. of the total turnover or gross receipts, or, as the case may be, a sum higher than the aforesaid sum earned by the assessee. The scheme will apply to such residential assessee who is an individual, Hindu undivided Family or partnership firm but not Limited Liability Partnership firm, whose total gross receipts does not exceed two crores rupees. 

It is further proposed that the scheme does not apply to an assessee, who is carrying on profession as referred to in subsection (1) of section 44AA or earning income in the nature of commission or brokerage or carrying on any agency business and who has claimed deduction under any of the section 10AA, 10A, 10B, 10BA or deduction under any provisions of Chapter VI-A. Under the scheme, the assessee will be deemed to have been allowed the deduction under sections 30 to 38. Accordingly, the written down value of any asset used for the purpose of the business of the assessee will be deemed to have been calculated as if the assessee had claimed and had actually been allowed the deduction in respect of depreciation for the relevant assessment years.

It is proposed to substitute sub-sections (4) and (5) of the aforesaid section to provide that where an assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section (1), he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section (1). 

It is further proposed that an assessee to whom the provisions of sub-section (4) are applicable and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.

It is also proposed to increase the threshold limit of one crore rupees specified in the definition of “eligible business” to two crore rupees in the Explanation. 

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Clause 27 of the Bill seeks to insert a new section 44ADA in the Income-tax Act relating to special provision for computing profits and gains of profession on presumptive basis.

The proposed new section 44ADA seeks to provide that notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being a resident in India, who is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent. of the total gross receipts of the assessee in the previous year on account of such profession, or as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head “Profits and gains of business or profession”.

It is further proposed that any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1) of the proposed section, be deemed to have been already given full effect to and no further deduction under those sections shall be allowed.

It is also proposed that the written down value of any asset of profession shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. 

It is also proposed to provide that an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) of the proposed section and whose total income exceeds the maximum amount which is not chargeable to income-tax shall be required to keep and maintain such books of account and other documents under sub-section (1) of section 44AA and get them audited under section 44AB.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Clause 28 of the Bill seeks to amend section 47 of the Income-tax Act relating to transactions not regarded as transfer.

Sub-clause (A) of said clause seeks to insert a new clause (viic) in the said section so as to provide that any redemption of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015, by an assessee being an individual shall not be considered as transfer.

Sub-clause (B) of the said clause seeks to insert a new clause (ea) in clause (xiiib) of the said section so as to provide a condition in addition to the existing conditions, that the value of the total assets in books of accounts of the company in any of the three previous years preceding the previous year in which its conversion into Limited Liability Partnership takes place does not exceed five crore rupees. 

Sub-clause (C) of the said clause seeks to insert a new clause (xix) in the said section so as to provide that any transfer by a unit holder of a capital asset, being a unit or units, held by him in the consolidating plan of a mutual fund scheme, made in consideration of the allotment to him of a capital asset, being a unit or units, in the consolidated plan of that scheme of the mutual fund shall not be considered as transfer for capital gain tax purposes.

It is also proposed to define the expressions “consolidating plan”, “consolidated plan” and “mutual fund” for the purposes of the proposed clause (xix).

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent assessment years.

Clause 29 of the Bill seeks to amend section 48 of the Income-tax Act relating to mode of computation.

The aforesaid section, inter alia, provides that indexation benefit in respect of long-term capital gains as per third proviso is not available to bonds and debentures, except capital indexed bonds issued by the Government. Sovereign Gold Bond issued under the Sovereign Gold Bond Scheme, 2015, is therefore, presently, not eligible for indexation benefits. Further, it provides that the gains on account of appreciation of rupee against a foreign currency are accounted for while calculating full value of consideration.

It is proposed to amend section 48 so as to provide indexation benefits to long-term capital gains arising on transfer of the said Sovereign Gold Bond.

It is further proposed to provide that in case of an assessee being a non-resident, any gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company subscribed by him, shall be ignored for the purpose of computation of full value of consideration under the said section. 

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.

Clause 30 of the Bill seeks to amend section 50C of the Income-tax Act relating to special provision for full value of consideration in certain cases.

Sub-section (1) of the aforesaid section provides that in case of transfer of a capital asset being land or building or both, the value adopted or assessed or assessable by the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer is taken as the full value of consideration for the purpose of computation of capital gains.

It is proposed to amend the said sub-section so as to provide that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer.

It is further proposed to provide that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement of transfer. 

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.

Clause 31 of the Bill seeks to insert a new section 54EE in the Income-tax Act relating to capital gain not to be charged on investment in units of specified fund.

It is proposed to insert section 54EE so as to provide exemption from capital gains tax if the capital gains proceeds are invested by an assessee in units of specified fund, as may be notified by the Central Government in this behalf.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent assessment years.

Clause 32 of the Bill seeks to amend section 54GB in the Income tax relating to Capital gain on transfer of residential property not to be charged in certain cases.

The existing provisions of section 54GB provide that capital gains arising on account of transfer of a residential property shall not be charged to tax if such capital gains is invested in subscription of shares of a company which qualifies to be a small or medium enterprise under the Micro, Small and Medium Enterprises Act, 2006 subject to other conditions specified therein.

It is proposed to amend section 54GB so as to provide that capital gains arising on account of transfer of a residential property shall not be charged to tax if such capital gains is invested in subscription of shares of a company which qualifies to be an eligible start-up subject to other specified conditions.

The existing provision of section 54GB requires that the company should invest the proceeds in the purchase of new asset being new plant and machinery but does not include inter alia, computers or computer software.

It is proposed to amend section 54GB so as to provide that the expression “new asset” includes computers or computer software in case of technology driven start-ups so certified by the Inter- Ministerial Board of Certification notified by the Central Government in the Official Gazette.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent assessment years. 

Clause 33 of the Bill seeks to amend section 55 of the Incometax relating to meaning of “adjusted”, “cost of improvement” and “cost of acquisition”.

Sub-clause (1) of clause (b) of sub-section (1) of the aforesaid section provides that the cost of improvement in relation to a capital asset, being goodwill of a business or a right to manufacture, produce or process any article or thing or right to carry on any business, shall be taken to be nil.

Further, clause (a) of sub-section (2) of the aforesaid section provides that the cost of acquisition in relation to a capital asset, being goodwill of a business or a trademark or brand name associated with a business or a right to manufacture, produce or process any article or thing or right to carry on any business, tenancy rights, state carriage permits or loom hours, shall be taken to be the amount of the purchase price in case the asset is purchased by the assessee, and in any other case such cost shall be taken to be nil.

It is proposed to amend the said sub-clause (1) of clause (b) of sub-section (1) and clause (a) of sub-section (2) of the said section so as to include the right to carry on the profession also under its scope.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. 

Clause 34 of the Bill seeks to amend section 56 of the Income tax Act relating to income from other sources.

The aforesaid section, inter alia, provide for chargeability of income from other sources, in case any money, immovable property or other property with or without consideration is received by an assessee being an individual or an Hindu undivided family.

It is proposed to amend the said section so as to provide exemption from tax in the hands of an individual or a Hindu undivided family, on receipt of shares as a consequence of demerger or amalgamation of a company.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 35 of the Bill seeks to amend section 80 of the Income-tax Act relating to submission of return for losses.

The aforesaid section, inter alia, provides that a loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139, shall not be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A.

It is proposed to amend the said section 80 so as provide that the loss under sub-section (2) of section 73A shall also be not allowed to be carried forward and set off if such loss has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139.

This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-2017 and subsequent years.

Clause 36 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. 

Sub-section (3) of the aforesaid section provides that the whole of the amount standing to the credit of the assesse including the accrual on the amount received by the assesse or nominee is taxed in the year of such receipt on account of closure or his opting out of the pension scheme.

It is proposed to amend the sub-section so as to provide that any amount received by the nominee, on the death of the assessee, under the pension scheme referred to in clause (a) of the said sub-section, is exempt from tax.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.

Clause 37 of the Bill seeks to substitute section 80EE of the Income-tax Act relating to deduction in respect of interest on loan taken for residential house property.

The provisions contained in the existing section provides for deduction upto one lakh rupees in respect of interest payable on loan taken by an assessee being an individual from any financial institution for the purpose of acquisition of a residential property. This benefit was available during the assessment years begining on the 1st day of April, 2014 and ending on the 31st day of March, 2016. 

It is proposed to substitute the said section so as to provide a deduction for those who buy residential house property for the first time, in respect of interest on loan taken from any financial institution upto fifty thousand rupees subject to other conditions specified therein. It is proposed to extend the benefit of deduction till repayment of loan continues.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation assessment year 2017-2018 and subsequent years.

Clause 38 of the Bill seeks to amend section 80GG of the Income-tax Act relating to deductions in respect of rents paid. 

The aforesaid section provides that deduction is allowable on the expenditure incurred by an assessee in excess of ten per cent. of his total income towards payment of rent upto a maximum of two thousand rupees per month or twenty-five per cent. of his total income for the year, whichever is less, and subject to such other conditions or limitations as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations.

It is proposed to increase the maximum amount of deduction allowable under the said section to five thousand rupees per month.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.

Clause 39 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.

Clause (i) of sub-section (4) of aforesaid section, inter alia, provides that any enterprise carrying on business of developing or operating and maintaining any infrastructure facility shall be allowed deduction as specified subject to conditions specified therein.

It is proposed to amend the said section so as to provide that this section shall not apply to any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April, 2017.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. 

Clause 40 of the Bill seeks to amend section 80-IAB of the Income-tax Act relating to deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone.

Under the aforesaid section, an enterprise being a developer in a notified Special Economic Zone, who has commenced the business of developing a Special Economic Zone on or after 1st day of April, 2005 shall be allowed deduction of an amount equal to one hundred per cent. of the profits and gains derived from such business.

It is proposed to amend the said section so as to provide that this section shall not apply to any enterprise which commences the business activity on or after the 1st day of April, 2017.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 41 of the Bill seeks to insert a new section 80-IAC in the Income-tax Act relating to Special provisions in respect of specified business.

It is proposed to amend the Income-tax Act so as to provide a deduction of one hundred per cent. of the profits and gains derived by an eligible start-up from a business involving innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property. The benefit of deduction of hundred per cent. of the profit derived from such business can be availed by an eligible start-ups for three consecutive assessment years out of five years, at the option of the assessee, subject to incorporation before 1st day of April, 2019.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent assessment years.  

Clause 42 of the Bill seeks to amend section 80-IB of the Incometax Act relating to deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings.

Sub-section (9) of the aforesaid section, inter alia, provides deduction at the rate of one hundred per cent. of the profits of an undertaking located in specified areas subject to fulfilment of certain conditions.

It is proposed to amend clauses (ii), (iv) and (v) of the said subsection so as to provide that such clauses of the said section shall not apply to any enterprise which commences the business activity on or after the 1st day of April, 2017.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Clause 43 of the Bill seeks to insert a new section 80-IBA in the Income-tax Act relating to deductions in respect of profits and gains from housing project.

The proposed new section seeks to provide for hundred per cent. deduction of the profits and gains of an assessee developing and building housing projects, if the project is approved by the competent authority on or before the 31st March, 2019 subject to the conditions specified therein. The assessee is required to complete the said project within three years failing which the entire deduction claimed in previous years shall be deemed as his income.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation assessment year 2017-2018 and subsequent years.

 Clause 44 of the Bill seeks to substitute a new section for section 80JJAA of the Income-tax Act relating to deduction in respect of employment of new employees. 

The existing section provide for a deduction of thirty per cent. of additional wages paid to the new regular workmen in a factory for three years. The provisions apply to business of manufacture of goods in a factory.

It is proposed to extend the benefit to all assessees who are required to get their accounts audited under section 44AB. Further, it is also proposed to liberalise the eligibility condition relating to minimum number of persons employed and the total number of days for which they must be employed during the year.

Deduction under the proposed provisions will be available in respect of cost incurred on those employees whose total emoluments are less than or equal to twenty-five thousand rupees per month. No deduction, however, shall be allowed in respect of cost incurred on those employees for whom the entire contribution is paid by the Government under the Employees’ Pension Scheme notified in accordance with the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

This amendment will take effect from 1st April, 2017 will, accordingly, apply in relation assessment year 2017-2018 and subsequent years.

Clause 45 of the Bill seeks to amend section 87A of the Income-tax Act relating to rebate of income-tax in case of certain individuals.

The aforesaid section provides that an individual resident, whose total income does not exceed five hundred thousand rupees, is eligible for rebate in income-tax equal to hundred per cent. of such income-tax or two thousand rupees, whichever is less. 

It is proposed to increase the amount of rebate allowable under the said section from the existing two thousand rupees to five thousand rupees. 

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.

Clause 46 of the Bill seeks to amend section 92CA of the Income-tax Act relating to reference to Transfer Pricing Officer.

It is proposed to amend sub-section (3A) of the aforesaid section so as to provide that in the circumstances referred to in clause (ii) or clause (viii) of Explanation (1) to section 153, if the period of limitation available to the Transfer Pricing Officer for making an order is less than sixty days, then such remaining period shall be extended to sixty days.

This amendment will take effect from 1st June, 2016.

Clause 47 of the Bill seeks to amend section 92D of the Incometax Act relating to maintenance and keeping of information and document by persons entering into an international transaction or specified domestic transaction.

The aforesaid section provides that every person who has entered into an international transaction or specified domestic transaction shall keep and maintain such information and document in respect thereof as may be prescribed. The said section further provides that the Assessing Officer or the Commissioner (Appeals) may in the course of any proceeding require such person to furnish the information and document within the period of thirty days of it being called for or within the extended period. 

It is proposed to amend the said section so as to provide that the person being a constituent entity of an international group, referred to in section 286, shall also keep and maintain such information and document in respect of the international group as may be prescribed.

It is further proposed to amend the said section so as to provide that without prejudice to the power of the Assessing Officer or the Commissioner (Appeals) to call for the information and document, the person being a constituent entity of an international group, shall furnish the prescribed information and document to the prescribed authority referred to in section 286 in the prescribed manner on or before the date to be prescribed.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Clause 48 of the Bill seeks to amend section 112 of the Income-tax Act relating to tax on long-term capital gains.

Sub-clause (iii) of clause (c) of sub-section (1) of the aforesaid section, inter alia, provides that long-term capital gains arising from transfer of a capital asset, being unlisted securities, shall be chargeable to tax at the rate of ten per cent. 

It is proposed to amend the said sub-clause (iii) so as to provide that long-term capital gains arising from transfer of a capital asset being, shares of a company not being a company in which the public are substantially interested, shall also be chargeable to tax at the rate of ten per cent.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.

Clause 49 of the Bill seeks to insert a new section 115BA in the Income-tax Act relating to tax on income of certain domestic companies.

Sub-section (1) of the proposed new section provides that the income-tax payable in respect of the total income of a person being domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2017 shall, at the option of such person, be computed at the rate of twenty-five per cent., if the conditions contained in sub-section (2) of the said section are satisfied.

Sub-section (2) of the proposed new section provides that the conditions referred to in sub-section (1) are the following, namely:–

(a) the company has been set up and registered on or after the 1st day of March, 2016;

(b) the company is engaged in the business of manufacturing or production of any article or thing; and

(c) the total income of the company has been computed, –

(i) without any deduction under the provisions of section 10AA or clause (iia) of sub-section (1) of section 32 or section 32AC or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of subsection (1) or sub-section (2AA) or sub-section (2AB) of section 35 or section 35AC or section 35AD or section 35CCC or section 35CCD or under any provisions of Chapter VI-A under the heading “C.– Deductions in respect of certain incomes” other than the provisions of section 80JJAA;

(ii) without set off of any loss carried forward from any earlier assessment year if such loss is attributable to any of the deductions referred to in sub-clause (i); and

(iii) depreciation under section 32, other than clause (iia) of sub-section (1) of the said section is determined in the manner as may be prescribed.

Sub-section (3) of the proposed new section provides that the loss referred to in sub-clause (ii) of clause (c) of sub-section (2) shall be deemed to have been already given full effect to and no further deduction for such loss shall be allowed for any subsequent year. 

Sub-section (4) of the proposed new section provides that the option by the person referred to in sub-section (1) shall be exercised in the prescribed manner on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the relevant previous year.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation the assessment year 2017-2018 and subsequent years.

Clause 50 of the Bill seeks to insert a new section 115BBDA in the Income-tax Act relating to tax on certain dividends received from domestic companies.

The provisions of the Income-tax Act provide that dividend income shall be exempt if dividend distribution tax is paid on such income.

It is proposed to insert a new section 115BBDA in the said Act so as to provide that any income by way of dividend declared, distributed or paid by a domestic company, in excess of ten lakh rupees shall be chargeable to tax at the rate of ten per cent. in the case of an individual, Hindu undivided family or a firm who is a resident in India.

It is further proposed to provide that no deduction in respect of any expenditure or allowance or set off of loss shall be allowed in computing the income by way of dividend and to define the term dividends. 

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years. 

Clause 51 of the Bill seeks to amend section 115BBE of the Income-tax Act relating to tax on income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69D.

Sub-section (1) of the section 115BBE, inter alia, provides that the income relating to the above referred sections are taxable at the rate of thirty per cent. Sub-section (2) of the said section 115BBE provides that no deduction in respect of any expenditure or allowances in relation to income referred to in the aforesaid sections shall be allowable.

It is proposed to amend the said sub-section (2) of section 115BBE so as to provide that the set off of any loss shall also be not allowable in respect of income under the aforesaid sections.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 52 of the Bill seeks to insert a new section 115BBF in the Income-tax Act relating to tax on income from patents.

The proposed new section 115BBF seeks to provide that where the total income of an eligible assessee includes any income by way of royalty in respect of a patent developed and registered in India, the income-tax payable shall be the aggregate of the amount of income-tax calculated on the income by way of royalty in respect of such patent, at the rate of ten per cent., and the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the income referred to in the proposed sub-clause (a) of sub-section (1) of the proposed section. 

It is further proposed to provide that the assessee shall not be eligible for deduction in respect of any expenditure or allowance under any provisions of the said Act in computing his income referred to in clause (a) of sub-section (1) of the proposed section.

It is also proposed to provide an Explanation in the said section to define certain expressions used therein.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 53 of the Bill seeks to amend section 115JB of the Income-tax Act relating to special provision for payment of tax by certain companies.

Item (a) of sub-clause (I) of the said clause seeks to insert a new clause (fd) in Explanation 1 to sub-section (1) of the aforesaid section so as to provide that the book profit shall be increased by an amount or amounts of expenditure relatable to income, by way of royalty in respect of patent chargeable to tax in accordance with the provisions of section 115BBF.

It is further proposed to insert a new clause (iig) in the long line to the said Explanation 1 so as to provide that the amount of income, by way of royalty in respect of patent chargeable to tax in accordance with the provisions of section 115BBF, shall be reduced from the book profit, if any such amount is credited to the profit or loss account. 

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Item (b) of sub-clause (i) of the said clause seeks to insert an Explanation so as to provide that the provisions of the said section, shall not be applicable and shall be deemed never to have been applicable to an assessee, being a foreign company, if––

(i) the assessee is a resident of a country or a specified territory with which India has an agreement referred to in subsection (1) of section 90 or the Central Government has adopted any agreement under sub-section (1) of section 90A and the assessee does not have a permanent establishment in India in accordance with the provisions of such agreement; or

(ii) the assessee is a resident of a country with which India does not have an agreement referred to in clause (i) and the assessee is not required to seek registration under any law for the time being in force relating to companies.

 This amendment will take effect retrospectively from 1st April, 2001 and will, accordingly, apply in relation to the assessment year 2001-2002 and subsequent years.

Sub-clause (II) of the said clause seeks to insert a new subsection (7) in the said section so as to provide that in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange, the rate of tax under section 115JB shall be nine per cent. and also to define certain expressions used therein.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 54 of the Bill seeks to insert a new Chapter XII-BC in the Income-tax Act on special provisions relating to foreign company said to be resident in India.

Sub-section (1) of the proposed new section 115JH provides that where a foreign company is said to be resident in any previous year and such foreign company has not been resident in India in any of the preceding previous year, then, the provisions of the Income-tax Act relating to computation of total income, treatment of unabsorbed depreciation, set off or carry forward and set off of losses, special provisions relating to avoidance of tax and the collection and recovery shall apply with such exceptions, modifications and adaptations on fulfilment of such conditions as may be notified by the Central Government in this behalf. 

Proviso to sub-section (1) of the proposed section provides that in case determination regarding residence of foreign company has been done in the assessment proceedings relevant to any previous year, then, the provisions of the proposed new Chapter shall also apply in respect of previous years succeeding the relevant previous year which ends on or before the date on which the determination has been made.

Sub-section (2) of the proposed section provides that on failure to comply with the conditions provided in the notification issued under sub-section (1), the provisions of the Income-tax Act shall apply without any modification and the necessary rectification may be undertaken by the Assessing Officer and the period of four years shall be available for such rectification from the date of failure.

Sub-section (3) of the proposed section provides that every notification issued under the proposed new section 115JH shall be laid before each House of Parliament.

This amendment will take effect from 1st April 2017 and will, accordingly, apply to the assessment year 2017-2018 and subsequent years.

Clause 55 of the Bill seeks to amend section 115-O of the Income-tax Act relating to tax on distributed profits of domestic companies. 

Sub-clause (a) of the said clause seeks to insert a new subsection to provide that no tax on distributed profits shall be chargeable under this section in respect of any amount declared, distributed or paid by the specified domestic company by way of dividends (whether interim or otherwise) to a business trust out of its current income on or after the specified date. It is further proposed to provide that nothing contained in the proposed subsection shall apply in respect of any amount declared, distributed or paid, at any time, by the specified domestic company by way of dividends (whether interim or otherwise) out of its accumulated profits and current profits up to the specified date. It is also proposed to define the expression “specified domestic company” and “specified date” for the purposes of the proposed sub-section.

These amendments will take effect from 1st June, 2016.

Sub-clause (b) of the said clause seeks to insert a new subsection (8) in the said section so as to provide that no tax on distributed profits shall be chargeable in respect of the total income of a company being a unit of an International Financial Services Centre, deriving income solely in convertible foreign exchange, for any assessment year on any amount declared, distributed or paid by such company, by way of dividends (whether interim or otherwise) on or after the 1st April, 2017 out of its current income, either in the hands of the company or the person receiving such dividend and also to define certain expressions used therein.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 56 of the Bill seeks to amend section 115QA of the Income-tax Act relating to tax on distributed income to shareholders.

The Explanation to sub-section (1) of the aforesaid section provides for definition of certain expressions for the purposes of the said section.

It is proposed to amend clause (i) of the said Explanation to substitute the reference of section 77A of the Companies Act, 1956 with the words “any law for the time being in force relating to companies” and also to amend clause (ii) to provide that “distributed income” shall mean the consideration paid by the company on buy-back of shares as reduced by the amount, which was received  by the company for issue of such shares, determined in the manner as may be prescribed. 

These amendments will take effect from 1st June, 2016.

Clause 57 of the Bill seeks to amend section 115TA of the Income-tax Act relating to tax on distributed income to investors.

It is proposed to amend the said section so as to provide that nothing contained in this section shall apply in respect of any income distributed by the securitisation trust to its investors on or after the 1st day of June, 2016.

This amendment will take effect from 1st June, 2016.

Clause 58 of the Bill seeks to amend section 115TC of the Income-tax Act relating to securitisation trust to be assessee in default.

The Explanation to the aforesaid section defines various expressions for the purposes of section 115TA, section 115TB and also the said section 115TC.

It is proposed to amend the definition of “investor” as provided in clause (a) of the said Explanation so as to include a person who has invested in the security receipt as defined under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

It is further proposed to amend the definition of “securitisation trust” provided in clause (d) of the said Explanation so as to include a trust set up by a  securitisation company or a reconstruction company formed, in accordance with the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or in pursuance of any guidelines and directions issued by the Reserve Bank of India.

It is also proposed to provide that the expression “security receipt” shall have the same meaning as assigned to it in in clause (zg) of sub-section (1) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

These amendments will take effect from 1st June, 2016.

Clause 59 of the Bill seeks to insert a new section 115TCA in the Income-tax Act relating to tax on income from securitisation trusts.

Sub-section (1) of the proposed new section seeks to provide that any income accruing or arising to, or received by, a person, being an investor of a securitisation trust, out of investments made in the securitisation trust, shall be chargeable to income-tax in the same manner as if it were the income accruing or arising to, or received by, such person had the investments made by the securitisation trust been made directly by him.

Sub-section (2) of the proposed new section seeks to provide that the income paid or credited by the securitisation trust shall be deemed to be of the same nature and in the same proportion in the hands of the person referred to in sub-section (1), as if it had been received by, or had accrued or arisen to, the securitisation trust during the previous year. 

Sub-section (3) of the proposed new section seeks to provide that the income accruing or arising to, or received by, the securitisation trust, during a previous year, if not paid or credited to the person referred to in sub-section (1), shall be deemed to have been credited to the account of the said person on the last day of the previous year in the same proportion in which such person would have been entitled to receive the income had it been paid in the previous year.

Sub-section (4) of the proposed new section seeks to provide that the securitisation trust and the person responsible for crediting or making payment of the income on behalf of securitisation trust shall furnish, within such time, as may be prescribed, to the person who is liable to tax in respect of such income and to the prescribed income-tax authority, a statement in such form and verified in such manner, giving details of the nature of the income paid or credited during the previous year and such other relevant details, as may be prescribed.

Sub-section (5) of the proposed new section seeks to provide that any income included in the total income of the person referred to in sub-section (1) in a previous year shall not be included in the total income of such person in the previous year in which such income is actually paid to him by the securitisation trust. 

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 60 of the Bill seeks to insert a new Chapter XII-EB consisting of new sections 115TD, 115TE and 115TF in the Income-tax Act on special provisions relating to tax on accreted income of certain trusts and institutions.

Sub-section (1) of the proposed new section 115TD provides that notwithstanding anything contained in any other provision of the Act, a trust or institution registered under section 12AA in any previous year shall be liable to tax on accreted income in the event of certain eventualities mentioned in the proposed new section, as on the specified date, at the maximum marginal rate, in addition to the income-tax chargeable in respect of the total income.

Sub-section (2) of the proposed section provides that the accreted income for the purposes of sub-section (1) means the amount by which the aggregate fair market value of the total assets of the trust or the institution, as on the specified date, exceeds the total liability of such trust or institution computed in accordance with the method of valuation as may be prescribed.

It is further proposed to provide that while computing the accreted income in respect of a case referred to in clause (c) of sub-section (1), assets and liabilities, if any, related to such asset, which have been transferred to the trust, institution or other organisation as specified therein within a period of twelve months from the date of dissolution, shall be ignored.

Sub-section (3) of the proposed section provides for specific situations under which a trust or institution can be said to have converted into any form which is not eligible for grant of registration.

The additional income-tax to be charged shall be in addition to the income-tax chargeable in respect of the total income of such trust or institution whether income-tax is payable by the trust or the institution on its total income or not. It also provides that the amount of tax shall be remitted within fourteen days of the date of occurrence of events specified in various situations.

The proposed section 115TE provides for the levy of interest, in case of failure to pay tax within the time provided, at the rate of one per cent. for every month and part thereof of such failure. 

The proposed section 115TF provides that in case of failure of payment of tax, the principal officer or the trustee and the trust or the institution shall be deemed to be an assessee in default in respect of the amount of tax payable and all provisions of the Income-tax Act relating to recovery and collection of taxes shall apply to them.

This amendment will take effect from 1st June, 2016.

Clause 61 of the Bill seeks to amend section 115UA of the Income-tax Act relating to tax on income of unit holder and business trust.

It is proposed to amend sub-section (3) of the said section to provide that any distributed income from a business trust received by a unit holder which is of the same nature as dividend referred to in sub-section (7) of section 115-O shall not be included in the total income of such unit holder.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 62 of the Bill seeks to amend section 119 of the Income-tax Act relating to instructions to subordinate authorities. 

Clause (a) of sub-section (2) of the aforesaid section empowers the Board to issue directions or instructions for the purpose of proper and efficient management of the work of assessment and collection of revenue provided such directions are not prejudicial to the assessee.

It is proposed to make a reference to section 270A in the said clause (a) of sub-section (2) of section 119, so as to enable the Board to issue directions and instructions in respect of section 270A of the Income-tax Act, as well.

The proposed amendment is consequential to the insertion of a new section 270A in the Income-tax Act which provides for levy of penalty for under-reporting and misreporting of income. 

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

 Clause 63 of the Bill seeks to amend section 124 of the Income-tax Act relating to jurisdiction of Assessing Officers.

Sub-section (3) of the aforesaid section, inter alia, provides that no person shall be entitled to call in question the jurisdiction of an Assessing Officer in a case where return is filed under section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or subsection (2) of section 143 or after the completion of the assessment, whichever is earlier.

It is proposed to amend the said sub-section (3) so as to provide that in a case where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, no person shall be entitled to call in question the jurisdiction of an Assessing Officer after the expiry of one month from the date on which he was served with a notice under subsection (1) of section 153A or sub-section (2) of section 153C or after the completion of the assessment, whichever is earlier.

This amendment will take effect from 1st June, 2016.

Clause 64 of the Bill seeks to amend section 133C of the Income-tax Act relating to power to call for information by prescribed income-tax authority.

The existing provisions of the said section empowers the prescribed income-tax authority to issue notices calling for information and documents for the purpose of verification of information in its possession.

It is proposed to amend the said section so as to further provide that the information and documents so obtained by the prescribed income-tax authority may be processed and the outcome of such processing may be made available to the Assessing Officer for further necessary action, if any.

This amendment will take effect from 1st June, 2016.

Clause 65 of the Bill seeks to amend section 139 of the Incometax Act relating to return of income.

Sub-clause (i) of said clause seeks to amend sub-section (1), sub-section (4), sub-section (5) and sub-section (9) of the said section. 

Sub-section (1) of the aforesaid section provides that every person referred to therein shall file a return of income on or before the due date. The sixth proviso to the said section provides that every person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year, without giving effect to the provisions of section 10A or section 10B or section 10BA or Chapter VI-A, exceeded the maximum amount which is not chargeable to income-tax shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.

Sub-section (4) of the said section provides that any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a noticed issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

Sub-section (5) of the said section provides that if any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142 discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the completion of the assessment, whichever is earlier.

 Clause (aa) of Explanation to sub-section (9) of the said section provides that a return of income shall be regarded as defective unless the self-assessment tax together with interest, if any, payable in accordance with the provisions of section 140A, has been paid on or before the date of furnishing of the return.

It is proposed to amend the sixth proviso to sub-section (1) of the said section so as to provide that a person, who during the previous year, earns income under clause (38) of section 10 and such income exceeds the maximum amount which is not chargeable to tax in his case, shall also be liable to file return of income for the previous year in the prescribed form and verified in the prescribed manner.

It is also proposed to substitute sub-section (4) of said section so as to provide that any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

It is also proposed to substitute sub-section (5) of the said section so as to provide that if any person, having furnished a return under sub-section (1), or under sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. 

It is also proposed to omit clause (aa) of the Explanation to subsection (9) of said section to provide that a return which is otherwise valid would not be treated defective merely because self assessment tax and interest payable in accordance with the provisions of section 140A, has not been paid on or before the date of furnishing of the return.

These amendments will take effect from 1st day of April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Sub-clause (ii) of the said clause seeks to amend sub-section (3) of the said section. Sub-section (3) of the said section provides that if any person who has sustained a loss in any previous year under the head profits and gains of business or profession or under the head capital gains and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A, he may furnish, within the time allowed under sub-section (1), a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1).

It is proposed to amend sub-section (3) of the said section so as to give the reference of sub-section (2) of section 73A in the said section. 

This amendment will take effect retrospectively from 1st April, 2016.

Clause 66 of the Bill seeks to amend section 143 of the Income-tax Act relating to assessment.

Sub-clause (a) of the said clause seeks to amend clause (a) of sub-section (1) of said section.

Clause (a) of sub-section (1) of the aforesaid section provides that a return filed is to be processed and total income or loss is computed after making the adjustments on account of any arithmetical error in the return or on account of an incorrect claim, if such incorrect claim is apparent from any information in the return.

It is proposed to expand the scope of adjustments that can be made at the time of processing under sub-section (1) of the said section to further include adjustments as under:–

(i) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed is furnished beyond the due date specified under sub-section (1) of section 139;

(ii) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return;

(iii) disallowance of deduction claimed under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or

(iv) addition of income appearing in Form 26AS or Form 16A or Form 16 but not included in computing the total income in the return. 

It is further proposed to provide an opportunity to the assessee, before making any adjustment under clause (a) of sub-section (1) of section 143 to explain and rectify the same within thirty days of issuance of such intimation and the response so received be considered before making such adjustments. In case no response is received within such time, the adjustment of the amount indicated in the intimation be made.

Under the existing provision of sub-section (1D) of the said section 143, processing of a return is not necessary where a notice has been issued to the assessee under sub-section (2) of that section.

It is proposed to amend sub-section (1D) of the said section so as to provide that before making an assessment under sub-section (3) of that section, a return shall be processed under sub-section (1) of section 143.

These amendments will take effect from the 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Sub-clause (b) of the said clause seeks to substitute sub-section (2) of the said section. The existing provisions of sub-section (2) of the aforesaid section provide that, if the Assessing Officer under the circumstances specified therein shall serve on the assessee a notice requiring him to produce, or cause to be produced on a specified date, any evidence on which the assessee may rely in support of the return. 

It is proposed to substitute the said sub-section (2) so as to provide that notice under the said sub-section may be served on the assessee by the Assessing Officer or, as the case may be, the prescribed income-tax authority under the circumstances specified therein requiring him to produce or caused to be produced on a specified date before the Assessing Officer any evidence on which the assessee may rely in support of the return.

This amendment will take effect from 1st June, 2016.

Clause 67 of the Bill seeks to amend section 147 of the Income-tax Act relating to income escaping assessment.

Under the existing provisions of the aforesaid section, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment, he may assess or reassess such income or re-compute the loss or any other allowance. Explanation 2 to the said section provides certain situations which shall also be deemed to be the cases where income chargeable to tax has escaped assessment.

It is proposed to amend the said Explanation 2 so as to provide that a case shall be deemed to be a case where income chargeable to tax has escaped assessment where on the basis of information or document received from the prescribed income-tax authority it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.

This amendment will take effect from 1st June, 2016.

Clause 68 of the Bill seeks to substitute section 153 of the Income-tax Act with a new section relating to time limit for completion of assessment, reassessment and recomputation. 

It is proposed to substitute the existing section 153 to simplify the said section by retaining only those provisions that are relevant to the current provisions. The changes proposed in existing time limit are as under :–

(a) the period, for completion of assessment under section 143 or section 144 be changed from existing two years to twentyone months from the end of the assessment year in which the income was first assessable;

(b) the period for completion of assessment under section 147 be changed from existing one year to nine months from the end of the financial year in which the notice under section 148 was served;

(c) the period for completion of fresh assessment in pursuance of an order under section 254 or section 263 or section 264, setting aside or cancelling an assessment be changed from existing one year to nine months from the end of the financial year in which the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, or the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner. 

It is further proposed to provide that the period for giving effect to an order, under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, where effect can be given wholly or partly otherwise than by making a fresh assessment or reassessment shall be three months from the end of the month in which order is received or passed, as the case may be, by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. It is also proposed that in a case where it is not possible for the Assessing Officer to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such reasons in writing from the Assessing Officer, if satisfied, may allow additional period of six months to give effect to the order. However, where effect to an order is pending as on 1st June, 2016, effect to the same shall be given by the 31st March, 2017.

It is also proposed to provide that where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under sections 250, 254, 260, 262, 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under the Income-tax Act, then such assessment, reassessment or recomputation shall be made on or before the expiry of twelve months from the end of the month in which such order is received by the Principal Commissioner or Commissioner. However, for cases pending as on 1st June, 2016 action shall be taken by 31st March, 2017 or within twelve months from the end of the month in which order is received, whichever is later.

It is also proposed that where an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147, such assessment be made on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed. However, for cases pending as on 1st June, 2016, assessment of partner can be made by 31st March, 2017 or within twelve months from the end of the month in which assessment order in case of firm is passed.

These amendments will take effect from 1st day of June, 2016.

Clause 69 of the Bill seeks to substitute the section 153B of the Income-tax Act by a new section 153B relating to time limit for completion of assessment under section 153A and 153C.

It is proposed to substitute the existing section 153B to simplify the said section by retaining those provisions which are relevant to the current provisions of the Income-Tax Act. The changes proposed in existing time limit of assessment are as under– 

(i) The limitation for completion of assessment under section 153A, in respect of each assessment year falling within six assessment years referred to in clause (b) of sub-section (1) of section 153A and in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A be changed from existing two years to twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

(ii) The limitation for completion of assessment in case of other person referred to in section 153C shall be changed from existing two years to twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed or be nine months (which as per the existing provision is one year) from the end of the financial year in which the books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later.

It is also proposed to simplify section 153B by substituting certain provisions which are no more relevant with the current provisions.

This amendment will take effect from 1st June, 2016. 

Clause70 of the Bill seeks to amend section 192A of the Incometax Act relating to payment of accumulated balance due to an employee.

Under the existing provisions contained in the aforesaid section, no deduction of income-tax shall be made where the amount of income relating to accumulated balance due to an employee credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee does not exceed thirty thousand rupees. 

It is proposed to enhance the said threshold limit from thirty thousand rupees to fifty thousand rupees.

This amendment will take effect from 1st June, 2016.

Clause 71 of the Bill seeks to amend section 194BB of the Income-tax Act relating to winnings from horse race.

Under the existing provisions of the aforesaid section, any person responsible for paying to any person any income by way of winning from horse race in excess of five thousand rupees shall deduct income-tax on such payment at the rates in force.

It is proposed to enhance the said threshold limit from five thousand rupees to ten thousand rupees.

This amendment will take effect from 1st June, 2016.

Clause 72 of the Bill seeks to amend section 194C of the Incometax Act relating to payments to contractors.

The proviso to sub-section (5) of the aforesaid section provides that the person responsible for paying the sums referred to in subsection (1) of the said section shall be liable to deduct income-tax, where the aggregate of the amounts of the sums credited or paid or likely to be credited or paid during the financial year exceeds seventy-five thousand rupees. 

It is proposed to enhance the said threshold limit from seventyfive thousand rupees to one lakh rupees for the aggregate transactions during the financial year.

This amendment will take effect from 1st June, 2016.

Clause 73 of the Bill seeks to amend section 194D of the Income-tax Act relating to insurance commission.

Under the existing provisions contained in the aforesaid section, deduction of income tax at the rates in force shall be made in a case where the amount of such income, or the aggregate of the amount of the income, relating to remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business, credited or paid during the financial year to the account of, or to, the payee. However, the second proviso to the said section provides that no deduction of income-tax under that section shall be made if such amount does not exceed twenty thousand rupees.

It is proposed to reduce the said threshold limit from twenty thousand rupees to fifteen thousand rupees.

This amendment will take effect from 1st June, 2016.

Clause 74 of the Bill seeks to amend section 194DA of the Income-tax Act relating to payment in respect of life insurance policy. 

Under the existing provisions contained in the aforesaid section, 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, which is not exempt under clause (10D) of section 10, shall, at the time of payment thereof, deduct income-tax at the rate of two per cent., in case the aggregate amount of such payments exceeds one hundred thousand rupees during the financial year.

It is proposed to reduce the said rate of tax deduction from two per cent. to one per cent.

This amendment will take effect from 1st June, 2016.

Clause 75 of the Bill seeks to amend section 194EE of the Income-tax Act relating to payments in respect of deposits under National Savings Scheme, etc. 

Under the existing provisions of the aforesaid section, any payment in respect of deposits under National Savings Scheme, etc., shall be liable for tax deduction at the rate of twenty per cent. in case such amount exceeds two thousand five hundred rupees.

 It is proposed to reduce the said rate of tax deduction from twenty per cent. to ten per cent.

This amendment will take effect from 1st June, 2016.

Clause 76 of the Bill seeks to amend section 194G of the Income-tax Act relating to commission, etc., on the sale of lottery tickets.

Under the existing provisions contained in the aforesaid section, deduction of income-tax at the rate of ten per cent. shall be made in a case where, the amount of income exceeding one thousand rupees relating to stocking, distribution, purchase or sale of lottery tickets, whether by way of commission or remuneration or prize is credited to the account of the payee or at the time of payment of such income in cash or by the issue of cheque or a draft or by any other mode, whichever is earlier during the financial year.

It is proposed to reduce the said rate of tax deduction from ten per cent. to five per cent. It is further proposed to increase the said threshold limit from one thousand rupees to fifteen thousand rupees.

These amendments will take effect from 1st June, 2016.

Clause 77 of the Bill seeks to amend section 194H of the Income-tax Act relating to commission or brokerage.

Under the existing provisions contained in the aforesaid section, deduction of income-tax at the rate of ten per cent. shall be made in a case where the amount of income, of the aggregate of the amounts of income relating to commission or brokerage, credited or paid or likely to be credited or paid during the financial year, to the account of, or to, the payee exceed five thousand rupees. 

It is proposed to reduce the said rate of tax deduction from ten per cent. to five per cent. It is further proposed to increase the said threshold limit from five thousand rupees to fifteen thousand rupees.

These amendments will take effect from 1st June, 2016.

Clause 78 of the Bill seeks to omit section 194K relating to income in respect of units and section 194L relating to payment of compensation on acquisition of capital asset, of the Income-tax Act with effect from 1st June, 2016.

Clause 79 of the Bill seeks to amend section 194LA of the Income-tax Act relating to payment of compensation on acquisition of certain immovable property.

The existing provisions of the aforesaid section, inter alia, provide that no deduction shall be made in case where the amount of compensation or aggregate of such sum relating to acquisition of immovable property (other than agricultural land), credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee does not exceed two hundred thousand rupees.

It is proposed to enhance the said threshold limit from two hundred thousand rupees to two lakh and fifty thousand rupees.

This amendment will take effect from 1st June, 2016.

Clause 80 of the Bill seeks to amend section 194LBA of the Income-tax Act relating to certain income from units of a business trust.

It is proposed to amend sub-sections (1) and (2) of the said section so as to give the reference of sub-clause (a) of clause (23FC) of section 10 in the said sub-sections. The said amendment is consequential in nature.

This amendment will take effect from 1st June, 2016.

Clause 81 of the Bill seeks to amend section 194LBB of the Income-tax Act relating to income in respect of units of investment fund.

The aforesaid section provides that where any income other than that proportion of income which is of the same nature as income referred to in clause (23FBB) of section 10, is payable to a unit holder in respect of units of an investment fund specified in clause (a) of the Explanation 1 to section 115UB, the person responsible for making the payment shall, at the time of credit of such income to the account of payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent. 

It is proposed to amend the said section so as to provide that the income-tax on such payment shall be deducted––

(i) at the rate of ten per cent. in a case where the payee is a resident;

(ii) at the rates in force in a case where the payee is a nonresident (not being a company) or a foreign company.

This amendment will take effect from 1st June, 2016.

Clause 82 of the Bill seeks to insert a new section 194LBC in the Income-tax Act relating to income in respect of investment in securitisation trust.

Sub-section (1) of the proposed new section seeks to provide that where any income is payable to an investor, being a resident, in respect of an investment in a securitisation trust specified in clause (d) of the Explanation to section 115TCA, the person responsible for making the payment shall, at the time of credit of such income to the account of payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon, at the rate of–– 

(i) twenty-five per cent., if the payee is an individual or a Hindu undivided family;

(ii) thirty per cent., if the payee is any other person.

Sub-section (2) of the proposed new section seeks to provide that where any income is payable to an investor, being a nonresident (not being a company) or a foreign company, in respect of an investment in a securitisation trust specified in clause (d) of the Explanation to section 115TCA, the person responsible for making the payment shall, at the time of credit of such income to the account of payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon, at the rates in force.

It is also proposed to provide an Explanation under the proposed new section to provide that the term “investor” shall have the meaning assigned to it in clause (a) of the Explanation to section 115 TCA; and also that where any income referred to in the proposed section is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be the credit of such income to the account of the payee, and the provisions of this section shall apply accordingly.

These amendments will take effect from 1st June, 2016. 

Clause 83 of the Bill seeks to amend section 197 of the Income-tax Act relating to certificate for deduction at lower rate.

 It is proposed to amend sub-section (1) of the said section to provide that where, in the case of any income of any person or sum payable to any person, the income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment under the provisions of section 194LBB and section 194LBC the Assessing Officer is satisfied that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax, as the case may be, the Assessing Officer shall on an application made by the assessee in this behalf, give to him such certificate as may be appropriate.

This amendment will take effect from 1st June, 2016.

Clause 84 of the Bill seeks to amend section 197A of the Income-tax Act relating to no deduction to be made in certain cases.

Sub-sections (1A) and (1C) of the aforesaid section provide that no deduction of tax shall be made under the sections referred to in the said sub-sections, if the individuals referred to in the said subsections furnish to the persons responsible for paying any income of the nature referred to in specified sections, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil. 

It is proposed to amend the said sub-sections to give reference of section 194-I therein so as to provide that payments in the nature of rent may be allowed to be received without deduction of tax.

This amendment will take effect from 1st June, 2016.

Clause 85 of the Bill seeks to amend section 206AA of the Income-tax Act relating to requirement to furnish Permanent Account Number.

The aforesaid section, inter alia, provides that any person who is entitled to receive any sum or income or amount on which tax is deductible at source under Chapter XVII shall furnish his Permanent Account Number to the deductor, failing which tax shall be deducted at the rate mentioned in the relevant provisions of the Act or at the rate in force or at the rate of twenty per cent., whichever is higher.

It is proposed to substitute sub-section (7) of the said section so as to provide that the provisions of the said section shall also not apply to a non-resident, not being a company, or to a foreign company, in respect of payment of interest on long-term bonds as referred to in section 194LC and any other payment subject to such conditions as may be prescribed.

This amendment will take effect from 1st June, 2016. 

Clause 86 of the Bill seeks to amend section 206C of the Income-tax Act relating to profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc.

The aforesaid section, inter alia, provides that the seller shall collect tax at source at specified rate from the buyer at the time of sale of certain goods specified under the said section.

It is proposed to amend the aforesaid section to provide that the seller shall collect the tax at the rate of one per cent. on the sale of motor vehicle of the value exceeding ten lakh rupees in cash or by the issue of a cheque or draft or by any other mode or for sale of any other goods (other than bullion and jewellery) or providing any service in cash exceeding two hundred thousand rupees.

It is further proposed to insert a proviso under sub-section (1D) of the said section so as to provide that no tax shall be collected at source on any amount on which tax has been deducted by the payer under Chapter XVII-B of the Act.

It is also proposed to insert a new sub-section after sub-section (1D) so as to provide that nothing contained in sub-section (1D) in relation to sale of any goods (other than bullion or jewellery) or services shall apply to such classes of buyers who fulfils such conditions, as may be prescribed.

These amendments will take effect from 1st June, 2016.

Clause 87 of the Bill seeks to amend section 211 of the Income-tax Act relating to instalments of advance tax and due dates. 

As per the existing provisions of sub-section (1) of the aforesaid section, the advance tax payment schedule for a company is fifteen per cent., forty-five per cent., seventy-five per cent. and hundred per cent. of tax payable on the current income by 15th June, 15th September, 15th December and 15th March, respectively. For assessees (other than companies), the advance tax payment schedule is thirty per cent., sixty per cent. and hundred per cent. of tax payable on current income by 15th September, 15th December and 15th March, respectively.

It is proposed to amend the advance tax payment schedule for assessees (other than companies) and bring it in consonance with the existing advance tax payment schedule applicable for a company.

It is further proposed that an eligible assessee in respect of eligible business referred to in section 44AD opting for computation of profits or gains of business on presumptive basis, shall be required to pay advance tax of the whole amount in one instalment on or before the 15th March of the financial year.

These amendments will take effect from 1st June, 2016. 

Clause 88 of the Bill seeks to amend section 220 of the Income-tax Act relating to when tax payable and when assessee is deemed in default.

The aforesaid section provides for an assessee to be deemed to be in default and its consequences in case of failure on the part of the assessee to pay the amount of tax due. Sub-section (2) of the said section provides for levy of interest at the rate of one per cent. for every month or part of month for the period during which the default continues. Sub-section (2A) of the said section, inter alia, empowers the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner to reduce or waive the amount of interest paid or payable under sub-section (2) of the said section.

It is proposed to amend sub-section (2A) of the said section so as to provide that an order accepting or rejecting the application of an assessee shall be passed by the concerned Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner within a period of twelve months from the end of the month in which such application is received. It is further proposed to provide that no order shall be passed without giving the assessee an opportunity of being heard. However, in respect of the applications pending as on 1st day of June, 2016, the order shall be passed on or before 31st May, 2017. 

These amendments will take effect from 1st June, 2016.

Clause 89 seeks to amend section 234C of the Income-tax Act relating to interest for deferment of advance tax.

It is proposed to make consequential amendments in sub-section (1) of section 234C, in view of the amendments made in section 211, so as to levy interest on deferment of advance tax, in the same manner as applicable to the company, to an assessee (other than company) also. Further, with regard to an eligible assessee referred to in section 44AD, it is proposed to provide that interest shall be levied, if the advance tax paid on or before the 15th day of March is less than the tax due on the returned income.

It is also proposed to amend the said section so as to provide that nothing contained in the said sub-section (1) shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate income under the head “Profits and gains of business or profession” in cases where the income accrues or arises under the said head for the first time.

These amendments will take effect from 1st June, 2016.

Clause 90 of the Bill seeks to amend section 244A of the Income-tax Act relating to interest on refunds.

Sub-clause (A) of the said clause seeks to amend clause (a) of sub-section (1) of the said section.

The aforesaid section provides that an assessee is entitled to interest on refund arising out of excess payment of advance tax, tax deducted or collected at source, etc.

Further, it is provided that the period for which the interest is paid on excess payment of tax begins from the 1st April of the assessment year and ends on the date on which refund is granted.

It is proposed to amend the said section to provide that in cases where the return is filed after the due date, the period for grant of interest on refund shall begin from the date of filing of return. 

It is further proposed to provide that an assessee shall be eligible to interest on refund of self-assessment tax for the period beginning from the date of payment of tax or filing of return, whichever is later, to the date on which the refund is granted.

Sub-clause (B) of the said clause seeks to insert a new subsection (1A) so as to provide that that where a refund arising out of appeal effect is delayed beyond the time prescribed under subsection (5) of section 153, the assessee shall be entitled to receive, in addition to the interest payable under sub-section (1) of section 244A, an additional interest on such refund amount calculated at the rate of three per cent. per annum, for the period beginning from the date following the date of expiry of the time allowed under sub-section (5) of section 153 to the date on which the refund is granted.

Sub-clause (C) of said clause seeks to amend sub-section (2) of the said section so as to give the reference of sub-section (1A) in the said sub-section which is consequential in nature.

These amendments will take effect from 1st June, 2016.

Clause 91 of the Bill seeks to amend section 249 of the Income-tax Act relating to form of appeal and limitation. 

Clause (b) of sub-section (2) of the aforesaid section provides that an appeal before the Commissioner (Appeals) is to be made within thirty days of the receipt of the notice of demand relating to an assessment order.

It is proposed to provide that in a case where the assessee makes an application under section 270AA of the Income-tax Act seeking immunity from penalty and prosecution, then, the period beginning from the date on which such application is made to the date on which the order rejecting the application is served on the assessee shall be excluded for calculation of the aforesaid thirty days period.

This amendment will take effect from the 1st April, 2017. 

Clause 92 of the Bill seeks to amend section 252 of the Income-tax Act relating to Appellate Tribunal.

Clause (b) of sub-section (3), sub-section (4A) and sub-section (5) of the aforesaid section provide for the appointment and powers of Senior Vice-President of the Appellate Tribunal.

It is proposed to omit the reference of “Senior Vice-President” in the aforesaid provisions.

These amendments will take effect from 1st June, 2016.

Clause 93 of the Bill seeks to amend section 253 of the Income-tax Act relating to appeals to the Appellate Tribunal.

Sub-clause (A) of the said clause seeks to amend clauses (a) and (c) of sub-section (1) of the said section. 

Clause (a) and clause (c) of sub-section (1) of the aforesaid section, inter alia, provides for an appeal to the Appellate Tribunal, against an order passed under section 271of the Income-tax Act.

It is proposed to amend the said clauses of sub-section (1) of section 253 so as to provide that an assessee aggrieved by an order passed by the Commissioner (Appeals) or the Principal Commissioner or Commissioner under section 270A, may also appeal to the Appellate Tribunal against such order.

The proposed amendments are consequential to the insertion of a new section 270A in the Income-tax Act which provides for levy of penalty for under-reporting and misreporting of income.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Sub-clause (B) of the said clause seeks to omit sub-sections (2A) and (3A) and to substitute sub-section (4) of the said section. 

Sub-section (2A) of the aforesaid section provides that the Principal Commissioner or Commissioner may, if he objects to any direction issued by the Dispute Resolution Panel under sub-section (5) of section 144C in respect of any objection filed on or after the 1st day of July, 2012, by the assessee under sub-section (2) of section 144C in pursuance of which the Assessing Officer has passed an order completing the assessment or reassessment, direct the Assessing Officer to appeal to the Appellate Tribunal against the order.

Further, sub-section (3A) of the said section provides that every appeal under sub-section (2A) shall be filed within sixty days of the date on which the order sought to be appealed against is passed by the Assessing Officer in pursuance of the directions of the Dispute Resolution Panel under sub-section (5) of section 144C.

It is proposed to omit the said sub-sections (2A) and (3A) to do away with the filing of such appeal by the Assessing Officer.

It is also proposed to consequently amend sub-section (4) of the aforesaid section so as to exclude therefrom the reference relating to direction of the Dispute Resolution Panel, sub-section (2A) and the order of the Assessing Officer (in pursuance of the directions of the Dispute Resolution Panel).

These amendments will take effect from 1st June, 2016. 

Sub-clause (C) of the said section seeks to substitute the proviso to sub-section (6) of the said section so as to provide that no fee shall be payable in the case of an appeal under sub-section (2A) of the said section also, as it stood before the commencement of the Finance Act, 2016.

This amendment will take effect retrospectively from 1st July, 2012. 

Clause 94 of the Bill seeks to amend section 254 of the Income-tax Act relating to orders of Appellate Tribunal.

 Sub-section (2) of the said section provides that the Appellate Tribunal may rectify any mistake apparent from the record in its order at any time within four years from the date of the order.

It is proposed to amend the said sub-section (2) so as to provide that the Appellate Tribunal may rectify any mistake apparent from the record in its order at any time within six months from the end of the month in which the order was passed.

It is further proposed to amend sub-section (2A) of the aforesaid section, so as to omit the reference of sub-section (2A) of section 253. The proposed amendment is consequential in nature in view of omission of sub-section (2A) of section 253.

These amendments will take effect from 1st June, 2016.

Clause 95 of the Bill seeks to amend section 255 of the Income-tax Act, relating to the procedure of Appellate Tribunal.

Sub-section (3) of the aforesaid section, inter alia, provides that a single member bench may dispose of any case which pertains to an assessee whose total income as computed by the Assessing Officer does not exceed fifteen lakh rupees.

It is proposed to amend the said sub-section (3) so as to provide that a single member bench may dispose of a case where the total income as computed by the Assessing Officer does not exceed fifty lakh rupees. 

This amendment will take effect from 1st day of June, 2016.

Clause 96 of the Bill seeks to insert section 270A in the Income-tax Act relating to penalty for under-reporting and misreporting of income.

Under the existing provisions, penalty on account of concealment of particulars of income or furnishing inaccurate particulars of income is leviable under clause (c) of sub-section (1) of section 271 of the Income-tax Act. In order to rationalize the penalty provisions, it has been provided that section 271 shall not apply to and in relation to any assessment for the assessment year commencing on or after the 1st day of April, 2017.

It is proposed to insert a new section 270A for under-reporting and misreporting of income.

Sub-section (1) of the proposed new section seeks to provide that the Assessing Officer, Commissioner (Appeals) or the Principal Commissioner or Commissioner may have the power to levy penalty if a person has under reported his income.

Sub-section (2) of the proposed new section seeks to provide that a person shall be considered to have under reported his income if,–– 

(i) the income assessed is greater than the maximum amount not chargeable to tax, where no return of income is filed;

(ii) the assessed income is greater than the income determined upon processing under clause (a) of sub-section (1) of section 143, where return is filed;

(iii) the income assessed is greater than the income assessed or reassessed immediately before such reassessment;

(iv) the income assessed or reassessed has the effect of reducing the loss or converting such loss into income,

Appropriate provisions to cover minimum alternate tax and alternate minimum tax cases on the above lines are proposed to be provided. 

Sub-section (3) of the proposed section seeks to provide that the amount of under-reported income shall be, in a case where income has been assessed for the first time and the return has been furnished, the difference between the amount of income assessed and the income determined under clause (a) of subsection (1) of section 143. In a case where no returns has been furnished and income is assessed for the first time, the amount of under-reported income shall be the income assessed, in the case of a company, firm or local authority, and in any other case the difference between the amount of income assessed and the maximum amount not chargeable to tax.

It is further proposed that in a case where income is not assessed for the first time, the under-reported income is proposed to be the difference between the amount of income assessed, reassessed or recomputed in a preceding order.

Appropriate provisions for calculating the amount of underreported income in a case of applicability of provisions of section 115JB or section 115JC or in case of loss have also been provided.

Sub-section (4) of the proposed new section seeks to provide for calculation of under reported income in case where the source of any receipt, deposit or investment linked to earlier year is proposed to be provided based on the existing Explanation 2 to sub-section (1) of section 271(1). 

Sub-section (6) of the proposed new section seeks to provide that under - reported income under this section shall not include certain cases mentioned therein.

Sub-section (7) of the proposed new section seeks to provide that the rate of penalty shall be fifty per cent. of the tax payable on under - reported income.

Sub-section (8) of the proposed new section seeks to provide that the cases of under - reported income falling under misreporting of income shall be liable for penalty at the rate of two hundred per cent. of the tax payable on such misreported income.

Sub-section (9) of the proposed new section seeks to specify the cases of misreporting of income referred to in sub-section (8).

Sub-section (10) of the proposed new section seeks to provide that the tax payable on under-reported income shall be calculated as if such under-reported income was the total income in case of a company, firm or local authority, and at the rate of thirty per cent. of under-reported income in any other case based on the tax rate applicable in case of company, firm or local authority, and in other cases. 

Sub-section (11) of the proposed new section seeks to provide that no addition or disallowance of an amount shall form the basis for imposition of penalty, if such addition or disallowance has formed the basis of imposition of penalty in the case of the person for the same or any other assessment year.

Sub-section (12) of the proposed new section seeks to provide that the penalty under the said section shall be imposed by an order in writing.

These amendments will take effect from the 1st day of April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 97 of the Bill seeks to insert a new section 270AA in the Income-tax Act relating to immunity from imposition of penalty etc.

It is proposed to provide that an assessee may make an application to the Assessing Officer for grant of immunity from imposition of penalty under section 270A and initiation of proceedings under section 276C, provided he pays the tax and interest payable as per the order of assessment or reassessment within the period specified in such notice of demand and does not prefer an appeal against such assessment order. The assessee can make such application within one month from the end of the month in which the order of assessment or reassessment is received in the form and manner, as may be prescribed.

It is proposed that the Assessing Officer shall, on fulfilment of the above conditions and after the expiry of period of filing appeal as specified in sub-section (2) of section 249, grant immunity from imposition of penalty and initiation of proceedings under section 276C , where the penalty proceedings under section 270A has not been initiated on account of the circumstances of misreporting as laid in sub-section (9) of section 270A.

It is also proposed that the Assessing Officer is required to pass an order accepting or rejecting such application, as the case may be, within a period of one month from the end of the month in which such application is received. However, no order rejecting the application shall be passed by the Assessing Officer unless the assessee has been given an opportunity of being heard and the said order shall be final.

This amendment will take effect from 1st April, 2017 and will accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 98 of the Bill seeks to amend section 271 of the Income-tax Act relating to failure to furnish returns, comply with notices, concealment of income, etc. 

The provisions of the said section provides for a penalty on account of failure to comply with a notice issued under sub-section (1) of section 142 or sub-section (2) of section 143 or failure to comply with a direction issued under sub-section (2A) of section 142 or for concealment of particulars of income or furnishing inaccurate particulars of income, is leviable.

It is proposed to provide that provisions of section 271 shall not apply to and in relation to any assessment for the assessment year commencing on or after the 1st day of April, 2017.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 99 of the Bill seeks to amend section 271A of the Incometax Act relating to failure to keep, maintain or retain books of account, documents, etc.

The aforesaid section provides for penalty in case of failure to keep and maintain any such books of account and other documents as required under section 44AA or the rules made thereunder, or to retain books of account or documents for the period specified.

It is proposed to amend the said section so as to provide that section 271A shall be applicable without prejudice to the provisions of section 270A. 

The proposed amendment is consequential to the insertion of a new section 270A in the Income-tax Act which provides for levy of penalty for under-reporting and misreporting of income.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 100 of the Bill seeks to amend section 271AA of the Income-tax Act relating to penalty for failure to keep and maintain information and document, etc., in respect of certain transactions 

The aforesaid section provides that the Assessing Officer or Commissioner (Appeals) may direct that a person who has failed to keep and maintain any information and document referred to in section 92D, shall pay by way of penalty a sum equal to two per cent. of the value of each international transaction or specified domestic transaction entered into by such person.

It is proposed to amend sub-section (1) of the said section so as to give the reference of section 270A in the said section which is consequential in nature.

It is further proposed to amend the said section so as to provide that if any person being constituent entity of an international group referred to in the proposed new section 286 fails to furnish the information and document in accordance with provisions of section 92D, then, the prescribed authority referred to in the said section may direct that such person shall be liable to pay a penalty of five hundred thousand rupees.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Clause 101 of the Bill seeks to amend section 271AAB of the Income-tax Act relating to penalty where search has been initiated. 

Clause (c) of sub-section (1) of the aforesaid section provides that a penalty of a sum which shall not be less than thirty per cent. but which shall not exceed ninety per cent. of the undisclosed income of the specified previous year shall be levied in case where search has been initiated under section 132 on or after the 1st day of July, 2012, and such case is not covered under the provisions of clauses (a) and (b) of sub-section (1) of section 271AAB.

It is proposed to amend the said clause (c) so as to provide for levy of penalty on such undisclosed income at a flat rate of sixty per cent.

Sub-section (2) of the aforesaid section provides for non-levy of penalty under clause (c) of sub-section (1) of section 271, in respect of undisclosed income referred to in sub-section (1) of section 271AAB.

It is proposed to amend the said sub-section (2) so as to provide that no penalty shall be levied under section 270A also in respect of the undisclosed income referred to in sub-section (1) of section 271AAB.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. 

Clause 102 of the Bill seeks to insert a new section 271GB in the Income-tax Act relating to penalty for failure to furnish report or for furnishing inaccurate report under section 286.

The proposed new section provides that if any reporting entity referred to in section 286 fails to furnish a report referred to in subsection (2) of the said section then, the prescribed authority may direct such entity to pay by way of penalty a sum of five thousand rupees for every day for which the failure continues if the period of failure does not exceed one month and fifteen thousand rupees for every day for which failure continues beyond the period of one month.

It is further provided that where any reporting entity fails to produce the information and documents within the period allowed under sub-section (6) of section 286, the prescribed authority may direct that such entity shall pay, by way of penalty, a sum of five thousand rupees for every day during which the failure continues, beginning from the day immediately following the day on which the period for furnishing the information and document expires. It is also provided that if the failures continue after any order directing the person to pay by way of penalty any sum has been served on the entity, then the prescribed authority may direct that such entity shall pay, by way of penalty, a sum of fifty thousand rupees for every day for which such failure continues begining from the date of service of such order.

It is also provided that in case a reporting entity provides inaccurate information in the report furnished in accordance with sub-section (2) of the said section 286 and where the entity knows of the inaccuracy at the time of furnishing the report but does not inform the prescribed authority or the entity discovers the inaccuracy after the report is furnished and fails to inform the prescribed authority and furnish correct report within a period of fifteen days of such discovery or the entity furnishes inaccurate information or document in response to notice under sub-section (6) of section 286 then, the prescribed authority may direct that such person shall pay, by way of penalty, a sum of five lakh rupees.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Clause 103 of the Bill seeks to amend section 272A of the Income-tax Act relating to penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc.

Sub-section (1) of the said section provides for levy of penalty of ten thousand rupees for each failure or default to answer the questions raised by an income-tax authority under the Income-tax Act, refusal to sign any statement legally required during the proceedings under the Income-tax Act or failure to attend to give evidence or produce books or documents as required under subsection (1) of section 131 of the Income-tax Act. 

It is proposed to insert a new clause (d) in the said sub-section so as to include levy of penalty of ten thousand rupees for each default or failure to comply with a notice issued under sub-section (1) of section 142 or sub-section (2) of section 143 or failure to comply with a direction issued under sub-section (2A) of section 142.

It is also proposed to amend sub-section (3) of the aforesaid section to provide that penalty under clause (d) of sub-section (1) shall be imposed by the Income-tax authority issuing such notice or direction.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause104 of the Bill seeks to amend section 273A of the Income-tax Act relating to power to reduce or waive penalty, etc., in certain cases.

Sub-clause (i) of the said clause seeks to amend sub-section (1) of the said section.

Clause (ii) of sub-section (1) of section 273A provides for reduction or waiver of penalty imposed or imposable under clause (iii) of sub-section (1) of section 271. Explanation to the said sub-section clarifies that if the nature of income assessed over the returned income is such that it does not attract provisions of clause (c) of sub-section (1) of section 271, then, the person shall be deemed to have made full and true disclosure for the purposes of sub-section (1) of the said section 271.

Further, clause (b) of sub-section (2) of section 273A provides for condition, wherein penalty shall not be waived and reduced under sub-section (1) of section 273A.

It is proposed to make a reference of section 270A in clause (ii) and in the Explanation to sub-section (1) and in clause (b) of subsection (2) of section 273A, owing to insertion of a new section 270A which provides for levy of penalty for under-reporting or misreporting of income and ceasing of operation of section 271, for the assessment year commencing on or after 1st April, 2017.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Sub-clause (ii) of the said clause seeks to insert a new subsection (4A) in the said section so as to provide that an order accepting or rejecting application of an assessee shall be passed by the concerned Principal Commissioner or Commissioner within a period of twelve months from the end of the month in which such application is received. It is further proposed to provide that no order shall be passed without giving the assessee an opportunity of being heard. However, in respect of applications pending as on 1st day of June, 2016, the order shall be passed on or before 31st May, 2017.

This amendment will take effect from 1st June, 2016. 

Clause 105 of the Bill seeks to amend section 273AA of the Income-tax Act relating to power of Principal Commissioner or Commissioner to grant immunity from penalty.

The aforesaid section, inter alia, provide that the Principal Commissioner or the Commissioner may grant immunity from penalty, if penalty proceedings have been initiated in case of a person who has made application for settlement before the settlement commission and the proceedings for settlement had abated under the circumstances contained in section 245HA of the Act.

It is proposed to amend the said section to provide that an order accepting or rejecting the application of an assessee shall be passed by the concerned Principal Commissioner or Commissioner within a period of twelve months from the end of the month in which such application is received.

It is further proposed to provide that no order shall be passed without giving the assessee an opportunity of being heard. However, in respect of applications pending as on 1st day of June, 2016, the order shall be passed on or before 31st May, 2017.

This amendment will take effect from 1st June, 2016.

Clause 106 of the Bill seeks to amend section 273B of the Income-tax Act relating to penalty not to be imposed in certain cases. 

The aforesaid section provides that the penalties referred to in different sections enumerated in the said section 273B shall not be imposable on the person or the assessee for any failure referred to in the said sections, if he proves that there was reasonable cause for the said failure.

It is proposed to amend the said section so as to include the reference of the proposed new section 271GB.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 107 of the Bill seeks to amend section 279 of the Income-tax Act relating to prosecution to be at instance of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. 

Sub-section (1A) of the aforesaid section provides that prosecution proceeding shall not be proceeded against a person for offences under section 276C or section 277 in respect of whom penalty under clause (iii) of sub-section (1) of section 271 has been reduced or waived under section 273A.

It is proposed to amend the said sub-section so as to provide that the prosecution proceeding shall not be proceeded against a person for offences under section 276C or section 277 in respect of whom penalty under section 270A has also been reduced or waived under section 273A.

 This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 108 of the Bill seeks to amend section 281B of the Income-tax Act relating to provisional attachment to protect revenue in certain cases.

The aforesaid section provides that the Assessing Officer has the power to provisionally attach any property of the assessee during the pendency of assessment or reassessment proceedings, for a period of six months, with the prior approval of the income-tax authorities specified therein, if he is of the opinion that it is necessary to do so for the purpose of protecting the interests of the revenue. Such attachment of property is extendable by the said income-tax authorities to a maximum period of two years or sixty days after the date of assessment order, whichever is later.

Explanation to sub-section (1) of section 281B provides that proceedings under sub-section (5) of section 132 shall be deemed to be proceedings for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment. Sub-section (5) of section 132 stands omitted from 1st June, 2002. Therefore, it is proposed to omit the said Explanation. 

It is further proposed to insert new sub-sections (3) to (9) in the said section to provide that the Assessing Officer shall revoke attachment of property made under sub-section (1) in a case where the assessee furnishes a bank guarantee from a scheduled bank, for an amount not less than the fair market value of such provisionally attached property or for an amount lower than the fair market value of the property which is sufficient to protect the interests of the revenue.

It is also proposed that the Assessing Officer may, make a reference to the Valuation Officer, who may be required to submit the report of the estimate of the property to the Assessing Officer within a period of thirty days from the date of receipt of such reference.

It is also proposed to provide that an order revoking the attachment be made by the Assessing Officer within fifteen days of receipt of such guarantee, and in a case where a reference is made to the Valuation Officer, within forty-five days from the date of receipt of such guarantee.

It is also proposed that where a notice of demand specifying a sum payable is served upon the assessee and the assessee fails to pay such sum within the time specified in the notice, the Assessing Officer may invoke the bank guarantee, wholly or partly, to recover the said amount. 

If the assessee fails to renew the bank guarantee furnished under sub-section (3) or fails to furnish a fresh guarantee from a scheduled bank for an equal amount, fifteen days before the expiry of such guarantee, the Assessing Officer shall, if it is necessary to do so to protect the interest of the revenue, invoke the bank guarantee. The amount realised by invoking the bank guarantee shall be adjusted against the existing demand which is payable and the balance amount, if any, be deposited in the Personal Deposit Account of the Principal Commissioner or Commissioner in the branch of Reserve Bank of India or the State Bank of India or of its subsidiaries or any bank as may be appointed by the Reserve Bank of India as its agent under the provisions of subsection (1) of section 45 of the Reserve Bank of India Act, 1934 at the place where the office of the Principal Commissioner or Commissioner is situated.

In a case where the Assessing Officer is satisfied that the bank guarantee is not required any more to protect the interests of the revenue, he shall release that guarantee forthwith.

These amendments will take effect from 1st day of June, 2016.

Clause 109 of the Bill seeks to amend section 282A of the Income-tax Act relating to authentication of notices and other documents.

Sub-section (1) of the aforesaid section provides that where a notice or other document is required to be issued by any income-tax authority under the Act, such notice or document should be signed by that authority in manuscript.

 It is proposed to amend the said sub-section (1) so as to provide that notices and documents required to be issued by income-tax authority under the Act shall be issued by such authority either in paper form or in electronic form in accordance with such procedure as may be prescribed.

This amendment will take effect from 1st June, 2016.

Clause 110 of the Bill seeks to insert a new section 286 in the Income-tax Act relating to furnishing of report in respect of international group.

The proposed section provides for furnishing of a report in respect of an international group, if the parent entity of the group is resident in India.

Sub-section (1) of the proposed new section provides that constituent entity in India of an international group, not having a parent entity resident in India shall notify the prescribed authority regarding the parent entity of the group to which it belongs or an alternate reporting entity which shall furnish the report on behalf of the group in the prescribed manner.

Sub-section (2) of the proposed new section provides that the parent entity of an international group, which is resident in India, shall furnish a report in respect of the international group on or before due date specified under sub-section (1) of section 139 for furnishing of return of income of the relevant accounting year.

Sub-section (3) of the proposed new section provides for the details to be contained in the report to be furnished. It, inter alia, provides that the report shall contain aggregate information in respect of amount of revenues, profit and loss, taxes accrued and paid, number of employees, details of constituent entities and the country or territory in which such entities are resident or located.

Sub-section (4) of the proposed new section provides for furnishing report by entities resident in India and belonging to an international group not headed by Indian resident entity.

Sub-section (5) of the proposed new section provides for circumstances under which the constituent entities referred to in sub-section (4) shall not be required to furnish the report.

Sub-section (6) of the proposed new section provides that the prescribed authority may, by issuance of notice for the purpose of verifying the accuracy of the report furnished by any entity, require submission of information and document as specified in the notice

Sub-section (7) of the proposed new section provides that the reporting requirement under this section shall not apply to an accounting year, if the total consolidated group revenue for the accounting year preceding it, does not exceed the prescribed threshold.

Sub-section (8) of the proposed new section provides for application of the section in accordance with such guidelines and subject to such conditions as may be prescribed.

Sub-section (9) of the proposed new section, inter alia, defines various terms for the purposes of the new section.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 111 of the Bill seeks to amend section 288 of the Income-tax Act relating to appearance by authorised representative.

Clause (b) of sub-section (4) of the aforesaid section bars an authorised representative to represent an assessee before any income-tax authority or the Appellate Tribunal if he has been convicted of an offence connected with any income-tax proceedings or if a penalty has been imposed on him under the Income-tax Act other than a penalty imposed under clause (ii) of sub-section (1) of section 271. 

It is proposed to amend clause (b) of sub-section (4) of section 288 so as to provide that a person on whom a penalty has been imposed under clause (d) of sub-section (1) of section 272A of the Income-tax Act shall also not be barred to represent an assessee before any income-tax authority or the Appellate Tribunal.

The proposed amendment is consequential to the insertion of a new clause (d) in sub-section (1) of section 272A in the Income-tax Act relating to penalty for failure to comply with the notices and directions specified therein.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

Clause 112 of the Bill seeks to amend Part A of Fourth Schedule to the Income-tax Act relating to recognised provident fund.

Rule 6 of the aforesaid Schedule, inter alia, provides that contributions made by employer to the credit of an employee participating in a recognised provident fund, which are in excess of twelve per cent. of the salary of the employee, are liable to tax in the hands of the employee. 

It is proposed to amend the said rule so as to provide an upper ceiling of one lakh and fifty thousand rupees to such contribution by the employer.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.