5. Amendment of section 10.
In section 10 of the Income-tax Act,––
(a) after clause (6C), the following clause shall be inserted, namely:––
“(6D) any income arising to a non-resident, not being a company, or a foreign company, by way of royalty from, or fees for technical services rendered in or outside India to, the National Technical Research Organisation;”;
(b) with effect from the 1st day of April, 2019,––
(i) in clause (12A), for the word “employee”, the word “assessee” shall be substituted;
(ii) in clause (23C), after the twelfth proviso [as inserted by section 6 of the Finance Act, 2017 (7 of 2017)], the following proviso shall be inserted, namely:––
‘Provided also that for the purposes of determining the amount of application under item (a) of the third proviso, the provisions of sub-clause (ia) of clause (a) of section 40 and sub-sections (3) and (3A) of section 40A, shall, mutatis mutandis, apply as they apply in computing the income chargeable under the head “Profits and gains of business or profession”:’;
(iii) in clause (38), after the third proviso, the following proviso shall be inserted, namely:-
“Provided also that nothing contained in this clause shall apply to any income arising from the transfer of long-term capital asset, being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust, made on or after the 1st day of April, 2018.”;
(c) in clause (46), after the brackets and words “(by whatever name called)” at both the places where they occur, the words “, or a class thereof” shall be inserted;
(d) in clause (48B) [as inserted by section 6 of the Finance Act, 2017 (7 of 2017)], after the word, brackets, figures and letter “clause (48A)”, the words “or on termination of the said agreement or the arrangement, in accordance with the terms mentioned therein, as the case may be,” shall be inserted with effect from the 1st day of April, 2019.
Notes on Clauses:
Clause 5 of the Bill seeks to amend section 10 of the Income-tax Act relating to incomes not included in total income.
The said section provides that in computing the total income of a previous year of any person, certain categories of income shall not be included in total income.
It is proposed to insert a new clause (6D) in the said section so as to exempt that any income arising to a non-resident, not being a company, or a foreign company, by way of royalty from or fees for technical services rendered in or outside India to the National Technical Research Organisation.
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 (12A) of the said section provides that any payment from the National Pension System Trust to an employee on closure of his account or on 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 such closure or his opting out of the scheme shall not be included in his total income.
It is proposed to amend the said clause so as to extend the aforesaid exemption to all the assessees who have subscribed to the National Pension System Trust.
Third proviso to clause (23C) of the said section provides for exemption in respect of income of the entities referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of said clause in a case where such income is applied or accumulated during the previous year for certain purposes in accordance with the relevant provisions.
It is proposed to insert a proviso after the twelfth proviso to the said clause so as to provide that for the purposes of determining the amount of application under item (a) of the said third proviso, the provisions of sub-clause (ia) of clause (a) of section 40 and sub-sections (3) and (3A) of section 40A shall, mutatis mutandis, apply as they apply in computing the income chargeable under the head "Profits and gains of business or profession".
Clause (38) of section 10, inter alia, provides for exemption from tax on the income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust subject to certain conditions specified in the said clause.
It is proposed to amend the said clause so as to provide that the provisions of said clause shall not apply to any income arising from the transfer of long-term capital asset, being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust, made on or after the 1st day of April, 2018.
These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 and subsequent years.
Clause (46) of said section, inter alia, provides for notification in respect of exemption to specified income arising to a body or authority or Board or Trust or Commission (by whatever name called), not engaged in any commercial activity, established or constituted by or under a Central, State or Provincial Act, or constituted by the Central Government or a State Government, with the object of regulating or administering any activity for the benefit of the general public.
It is proposed to amend the said clause so as to provide such exemption to specified income arising to a class of body or authority or Board or Trust or Commission also.
This amendment will take effect from 1st April, 2018.
Clause (48B) of the said section provides that any income accruing or arising to a foreign company on account of sale of leftover stock of crude oil, if any, from a facility in India after the expiry of the agreement or arrangement as referred to under clause (48A) shall be exempt subject to such conditions as may be notified by the Central Government in this behalf.
It is proposed to amend the said clause (48B) so as to provide that any income accruing or arising to such foreign company on account of sale of leftover stock of crude oil, if any, from such facility in India on the termination of the agreement or the arrangement referred to in clause (48A) of the said section in accordance with the terms mentioned therein, shall also be exempt, subject to the conditions as may be notified by the Central Government in this behalf.
This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to assessment year 2019-2020 and subsequent years.
