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Home Acts & Rules Bill Bills FINANCE BILL, 2021 Chapters List Notes Notes Notes on clauses This
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NOTES - NOTES ON CLAUSES - FINANCE BILL, 2021

FINANCE BILL, 2021
Notes Notes
Notes on clauses
  • Contents

NOTES ON CLAUSES

Clause 2 read with the First Schedule to the Bill, seeks to specify the rates at which income-tax is to be levied on income chargeable to tax for the assessment year 2021-2022.

Further, it lays down the rates at which tax is to be deducted at source during the financial year 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” or deducted under section 194P of the Income-tax Act and tax is to be calculated and charged in special cases for the financial year 2021-2022.

Clause 3 of the Bill seeks to amend section 2 of the Income-tax Act relating to definitions.

Clause (11) of the said section, inter alia, defines “block of assets” to mean a group of assets falling within a class of assets comprising tangible assets, being buildings, machinery, plant or furniture and intangible assets, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature.

It is proposed to amend the said clause so as to exclude goodwill of a business or profession from the purview of “block of asset”.

It is further proposed to amend clause (14) of the said section which defines the expression “capital asset. It is proposed to insert sub-clause (c) to the said clause so as to include any unit linked insurance policy to which exemption under clause (10D) of section 10 does not apply on account of the applicability of the fourth and fifth proviso thereof.

It is also proposed to amend clause (19AA) of the said section which defines the term “demerger", in relation to companies, means the transfer, pursuant to a scheme of arrangement under sections 391 to 394 of the Companies Act, 1956, by a demerged company of its one or more undertakings to any resulting company on satisfaction of conditions provided by rules in the said clause.

It is proposed to amend the said clause to insert an Explanation so as to clarify that the reconstruction or splitting up of a public sector company into separate companies shall be deemed to be a demerger, if such reconstruction or splitting up has been made to transfer any asset of the demerged company to the resulting company and such resulting company–

(i) is a public sector company on the appointed date indicated in such scheme as may be approved by the Central Government or any other body authorised under the provisions of the Companies Act, 2013 or any other law for the time being in force governing such public sector companies in this behalf; and

(ii) fulfills such other conditions as may be notified by the Central Government in the Official Gazette in this behalf.

It is also proposed to insert a new clause (29A) in the said section so as to define the expression “liable to tax”, in relation to a person, means that there is a liability of tax on such person under any law for the time being in force in any country, and shall include a case where subsequent to imposition of tax liability, an exemption has been provided.

It is also proposed to amend clause (42C) of the said section which defines the expression “slump sale” as the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales.

It is proposed to expand the scope of the definition of the term “slump sale” so as to mean the transfer of one or more undertakings, by any means, for lump sum consideration without value being assigned to individual assets and liabilities in such cases.

It is also proposed to insert an Explanation to the said clause so as to provide that the word “transfer” shall have the meaning assigned to it in clause (47) of the said section.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

It is also proposed to amend clause (48) of the said section provides for definition of “zero coupon bond”, as a bond issued by any infrastructure capital company or infrastructure capital fund or public sector company or scheduled bank and in respect of which no payment and benefit is received or receivable before maturity or redemption from such infrastructure capital company or infrastructure capital fund or public sector company or scheduled bank and which is notified by the Central Government in the Official Gazette.

It is also proposed to amend the said clause so as to insert infrastructure debt fund in sub-clauses (a) and (b) thereof so as to enable notified infrastructure debt fund also to issue zero coupon bonds.

It is also proposed to insert a new Explanation 2 to define the expression “infrastructure debt fund”.

These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause 4 of the Bill seeks to amend section 9A of the Income-tax Act relating to certain activities not to constitute business connection in India.

Sub-section (3) and (4) of the said section provide for certain conditions for the applicability of the section.

It is proposed to insert sub-section (8A) to the said section so as to provide that the Central Government may, by notification in the Official Gazette, specify that any one or more of the conditions specified in clauses (a) to (m) of sub-section (3) or clauses (a) to (d) of sub-section (4) shall not apply or shall apply with such modifications, as specified in such notification, in case of an eligible investment fund and its eligible fund manager, if such fund manager is located in an International Financial Services Centre, as defined in clause (a) of the Explanation to section 80LA, which has commenced its operations on or before 31st March, 2024.

This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

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 the total income.

Clause 4D of said section provides exemption for any income accrued or arisen to, or received by a specified fund as a result of transfer of capital asset referred to in clause (viiab) of section 47, on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in convertible foreign exchange or as a result of transfer of securities (other than shares in a company resident in India) or any income from securities issued by a non-resident ( not being a permanent establishment of a non-resident in India) and where such income otherwise does not accrue or arise in India or any income from a securitisation trust which is chargeable under the head “Profits and gains of business or profession”, to the extent such income accrued or arisen to, or is received, is attributable to units held by non-resident (not being the permanent establishment of a non-resident in India).

It is proposed to amend the said clause so as to provide that the said exemption shall also be available in case of any income accrued or arisen to, or received to the investment division of offshore banking unit to the extent attributable, and computed in the manner as may be provided by rules.

It is further proposed to insert a new clause (4E) in the said section so as to exempt any income accrued or arisen to, or received by a non-resident as a result of transfer of nondeliverable forward contracts entered into with an offshore banking unit of an International Financial Services Centre as referred to in sub-section (1A) of section 80LA, which fulfills such conditions as may be provided by rules.

It is also proposed to insert a new clause (4F) in the said section so as to exempt any income of a non-resident by way of royalty, on account of lease of an aircraft in a previous year, paid by a unit of an International Financial Services Centre as referred to in sub-section (1A) of section 80LA, if the unit is eligible for deduction under section 80LA for that previous year and has commenced its operations on or before 31st March, 2024.

These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause (5) of the said section provides for exemption in respect of the value of travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his proceeding on leave to any place in India.

It is proposed to insert a second proviso in the said clause so as to provide that for the assessment year beginning on the 1st day of April, 2021, in the case of an individual, the value in lieu of any travel concession or assistance received by, or due to, such individual shall also be exempted, subject to fulfillment of such conditions (including the condition of incurring such amount of such expenditure within such period), as may be provided by rules.

It is further proposed to insert Explanation 2 so as to clarify that where an individual claims such exemption and the same is allowed under the second proviso in connection with the expenditure provided by rules, no exemption shall be allowed under the said clause in respect of the same expenditure to any other individual.

These amendments will take effect from 1st April, 2021.

Clause (10D) of the said section provides for the exemption for the sum received under a life insurance policy in respect of which the premium payable for any of the years during the terms of the policy does not exceed ten percent of the actual capital sum assured.

It is proposed to insert fourth, fifth, sixth and seventh proviso to the clause. Proposed fourth proviso seeks to provide that the exemption under this clause shall not apply with respect to any unit linked insurance policy, issued on or after the 1st day of February, 2021, if the amount of premium payable for any of the previous year during the term of such policy exceeds two lakh fifty thousand rupees.

Proposed fifth proviso seeks to provide that if the premium is payable, by a person, for more than one unit linked insurance policies, issued on or after the 1st day of February, 2021, the provisions of this clause shall apply only with respect to those insurance policies, where the aggregate amount of premium does not exceed the amount referred to in fourth proviso in any of the previous year during the term of any of those policies.

Proposed sixth proviso seeks to provide that the provisions of the fourth and fifth provisos shall not apply to any sum received on the death of a person.

Proposed seventh proviso seeks to provide that if any difficulty arises in giving effect to the provisions of this clause, the Board may, with the approval of the Central Government, issue guidelines for the purpose of removing the difficulty and every guideline issued by the Board under this proviso shall be laid before each House of Parliament, and shall be binding on the income-tax authorities and the assessee.

It is further proposed to insert Explanation 3 to the said clause so as to define the expression “unit linked insurance policy” as a life insurance policy which has components of both investment and insurance and is linked to a unit as defined in clause (ee) of regulation (3) of the Insurance Regulatory and Development Authority of India (Unit Linked Insurance Products) Regulations, 2019 issued by Insurance Regulatory and Development Authority under the Insurance Regulatory Act, 1938 and the Insurance Regulatory and Development Authority Act, 1999.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause (11) of the said section provides for exemption with respect to any payment from a provident fund to which the Provident Funds Act, 1925 applies or from any other provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette.

Clause (12) of the said section provides for exemption with respect to the accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule.

It is proposed to insert a proviso to such of the aforesaid clauses so as to provide that the provisions of these clauses shall not apply to the income by way of interest accrued during the previous year in the account of a person to the extent it relates to the amount or the aggregate of amounts of contribution made by that person exceeding two lakh and fifty thousand rupees in any previous year in that fund, on or after the 1st day of April, 2021 and computed in such manner as may be provided by rules.

These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Sub-clause (iiiad) of clause (23C) of the said section provides for exemption for the income received by any person on behalf of university or educational institution as referred to in that sub-clause. The exemptions under the clause are available subject to the condition that the annual receipts of such university or educational institution do not exceed the annual receipts as may be prescribed.

Similarly, sub-clause (iiiae) of the said clause provides for exemption for the income received by any person on behalf of hospital or institution as referred to in that sub-clause.

The exemptions under the clause are available subject to the condition that the annual receipts of such hospital or institution do not exceed the annual receipts as may be prescribed.

Presently, the amount prescribed for sub-clause (iiiad) as well as (iiiae) is one crore rupees. It is proposed to increase the limit of annual receipts, for exemption under sub-clause (iiiad) and (iiiae), to five crore rupees and provide that such limit shall be applicable for an assessee with respect to the aggregate receipts from university or universities or educational institution or institutions as referred to in sub-clause (iiiad) as well as from hospital or hospitals or institution or institutions as referred to in sub-clause (iiiae).

Explanation to the third proviso to the said clause provides that income of the funds or trust or institution or any university or other educational institution or any hospital or other medical institution, shall not include income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus.

It is proposed to number the said Explanation as Explanation 1 thereof and to provide that such voluntary contributions should be invested or deposited in one or more of the forms or modes specified in sub-section (5) of section 11 maintained specifically for such corpus.

It is further proposed to insert Explanation 2 in the said proviso so as to provide that,––

(a) application out of such corpus shall not be considered as application for charitable or religious purposes for the purposes of third proviso of clause (23C), provided when it is invested or deposited back, into one or more of the forms or modes specified in sub-section (5) of section 11 maintained specifically for such corpus from the income of the previous year, such amount shall be allowed as application in the previous year in which it is deposited back to corpus and to the extent it is deposited back;

(b) application from loans and borrowings shall not be considered as application for charitable or religious purposes for the purposes of third proviso of clause (23C) provided when loan or borrowing is repaid from the income of the previous year, such repayment shall be allowed as application in the previous year in which it is repaid and to the extent it is repaid.

Fourteenth proviso of the said clause provides that if any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of said clause of said section accumulates its income, then payment or credit out of such accumulation, to exempt entities as prescribed in the proviso, shall not be treated as application.

It is proposed to amend the said proviso to make a reference of section 12AB which provides for the procedure of registration.

It is also proposed to number the Explanation as Explanation 1 thereof the twentieth proviso to the said clause and to insert a new Explanation 2 therein so as to provide that for the computation of income required to be applied or accumulated during the previous year, no set off or deduction or allowance of any excess application, of any of the year preceding the previous year, shall be allowed.

These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause (23FE) of the said section provides for the exemption to specified person from the income in the nature of dividend, interest or long-term capital gains arising from an investment made by it in India.

Item (c) of sub-clause (iii) of the said clause provides that the specified person may invest in a Category-I or Category-II Alternative Investment Fund regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992, having hundred per cent. investment in one or more of the company or enterprise or entity referred to in item (b).

It is proposed to relax the said condition of “hundred per cent.” to “not less than fifty per cent”. It is further proposed to allow the investment by such Category-I or Category-II Alternative Investment Fund in an Infrastructure Investment Trust referred to in sub-clause (i) of clause (13A) of section 2.

It is also proposed to insert item (d) in sub-clause (iii) of the said clause allowing the investment by specified person in a domestic company set up and registered on or after 1st April, 2021, having minimum seventy-five per cent. investments in one or more of the company or enterprise or entity referred to in item (b).

It is also proposed to insert item (e) in the said sub-clause allowing the investment by specified person in a non-banking financial company registered as an Infrastructure Finance Company, as referred to in the notification number RBI/2009-10/316 issued by the Reserve Bank of India or in an Infrastructure Debt Fund, a non banking finance company as referred to in the master circular, namely, the Infrastructure Debt Fund-Non Banking Financial Companies (Reserve Bank) Directions, 2011, issued by the Reserve Bank of India, having minimum ninety per cent. investment in one or more of the companies or enterprises or entities referred to in item (b).

It is also proposed to insert fourth proviso to the said clause so as to provide that in case a Category-I or Category-II Alternative Investment Fund referred to in item (c) of sub-clause (iii) has investment of less than one hundred per cent. in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause or in an Infrastructure Investment Trust referred to in item (c) of that sub-clause, income, accrued or arisen to or received or attributable to such investment, directly or indirectly, which is exempt under the said clause shall be calculated proportionately to the investment made in one or more of the companies or enterprises or entities referred to in item (b) of that sub-clause or in the Infrastructure Investment Trust referred to in item (c) of that sub-clause, in such manner as may be provided by rules.

It is also proposed to insert fifth proviso to the said clause so as to provide that in case a domestic company referred to in item (d) of sub-clause (iii) has investment of less than one hundred per cent. in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause, income, accrued or arisen to or received or attributable to such investments, directly or indirectly, which is exempt under the said clause shall be calculated proportionately to the investment made in one or more of the companies or enterprises or entities referred to in item (b) of that sub-clause (iii), in such manner as may be provided by rules.

It is also proposed to insert sixth proviso to the said clause so as to provide that in case a non-banking financial company registered as an Infrastructure Finance Company or Infrastructure Debt Fund referred to in item (e) of sub-clause(iii), has lending of less than one hundred per cent. in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause, income, accrued or arisen to or received or attributable to such lending, directly or indirectly, which is exempt under the said clause shall be calculated proportionately to the lending made in one or more of the companies or enterprises or entities referred to in item (b) of that sub-clause, in such manner as may be provided by rules.

It is also proposed to insert seventh proviso to the said clause so as to provide that in case a sovereign wealth fund or pension fund has loan or borrowing, directly or indirectly, for the purposes of making investment in India, such fund shall be deemed to be not eligible for exemption under this clause.

It is also proposed to number the Explanation as Explanation 1 thereof.

It is also proposed to insert a proviso to the sub-clauses (iii) and (iv) of clause (b) of the said Explanation 1 so as to provide that the provisions of sub-clauses (iii) and (iv) shall not apply to any payment made to creditors or depositors for loan taken or borrowing for purposes other than for making investment in India.

It is also proposed to amend sub-clause (v) of clause (b) of the said Explanation 1 so as to provide that the sovereign wealth fund does not participate in the day to day operations of investee but the monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director shall not be considered as participation in day to day operations of the investee.

It is also proposed to amend sub-clause (ii) of clause (c) of the said Explanation 1 so as to provide that if pension fund is liable to tax but exemption from taxation for all its income has been provided, by the foreign country under whose laws it is created or established, then such pension fund also would satisfy the condition mentioned in sub-clause (ii). It is also proposed to insert sub-clause (iiia) to the clause to provide that the pension fund does not participate in the day to day operations of investee but the monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director shall not be considered as participation in day to day operations of investee.

It is also proposed to insert a new Explanation 2 in the said clause to define the expressions “loan and borrowing” and “investee”.

It is also proposed to insert a new Explanation 3 so as to provide that the Central Government may, by rules, provide the method of calculation of “fifty per cent.” referred to in item (c) or “seventy-five per cent.” referred to in item (d) or “ninety per cent.” referred to in item (e), of sub-clause (iii) of the said clause.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

It is also proposed to insert a new clause (23FF) in the said section so as to exempt any income of the nature of capital gains, arising or received by a non-resident, which is on account of transfer of share of a company resident in India, by the resultant fund and such shares were transferred from the original fund to the resultant fund in relocation, and where capital gains on such shares were not chargeable to tax if that relocation had not taken place.

It is also proposed to refer to the definitions of the expressions “investment division of offshore banking unit”, “original fund”, “relocation” and “resultant fund” as defined in the Explantion to clause (viiac) and clause (viiad) of section 47.

These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause (50) of the said section provides for the exemption for the income arising from any specified service provided on or after the date on which the provisions of Chapter VIII of the Finance Act, 2016 comes into force or arising from any e-commerce supply or services made or provided or facilitated on or after 1st April, 2021 and chargeable to equalisation levy under the provisions of that Chapter. It is proposed to change the said year to 2020.

It is proposed to substitute the Explanation to the said clause with Explanations 1 and 2.

Explanation 1 proposes to clarify that the income referred to in this clause shall not include and shall never be deemed to have included any income which is chargeable to tax as royalty or fees for technical services in India under the said Act read with the agreement notified by the Central Government under section 90 or section 90A.

Explanation 2 proposes to define the expressions “e-commerce supply or services” and “specified service” for the purposes of the said clause.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 6 of the Bill seeks to amend section 11 of the Income-tax Act relating to income from property held for charitable or religious purposes.

Clause (d) of sub-section (1) of the said section provides that voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution shall not be included in the total income of the trust or institution.

It is proposed to amend the said clause (d) so as to provide that such voluntary contributions should be invested or deposited in one or more of the forms or modes specified in sub-section (5) maintained specifically for such corpus.

It is further proposed to insert a new Explanation 4 to sub-section (1) so as to provide that––

(A) application out of the corpus shall not be considered as application for charitable or religious purposes for the purposes of clause (a) and (b) of sub-section (1), provided when it is invested or deposited back, into one or more of the forms or modes specified in subsection (5) maintained specifically for such corpus, from the income of the previous year, such amount shall be allowed as application in the previous year in which it is deposited back to corpus and to the extent it is deposited back.

(B) application from loans and borrowings shall not be considered as application for charitable or religious purposes for the purposes of clause (a) and (b) of sub-section (1), provided when such loan or borrowing is repaid from the income of that previous year, such repayment shall be allowed as application in the previous year in which it is repaid and to the extent it is repaid.

It is also proposed to insert a new Explanation 5 to the said sub-section so as to provide that for the computation of income required to be applied or accumulated during the previous year, no set off or deduction or allowance of any excess application, of any of the year preceding the previous year, shall be allowed.

Explanation to sub-section (2) provides that if any trust or institution accumulates or set off apart its income then payment or credit out of such accumulation, to exempt entities as prescribed in the Explanation, shall not be treated as application. Clause (d) of sub-section (3) provides that such income, credited or paid to entities prescribed, shall be deemed to be income of the trust or institution.

It is proposed to make a reference of section 12AB in the said Explanation to the said sub-section (2) and clause (d) of sub-section (3), which provides for the procedure of registration.

These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause 7 of the Bill seeks to amend section 32 of the Income-tax Act relating to depreciation.

Sub-section (1) of the said section provides for deduction on account of depreciation on tangible assets (building, machinery, plant and furniture) and intangible assets (knowhow, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature) acquired on or after the 1st day of April, 1998, and are owned, wholly or partly by the assessee and are used wholly and exclusively for the purpose of business and profession while computing the income under the head ‘Profits and gains of business or profession’.

It is proposed to amend clause (ii) of the said sub-section (1) so as to provide that goodwill of a business or profession shall not be considered as an asset for the purpose of the said clause and, hence, not eligible for depreciation.

Explanation 3 to the said sub-section defines the expression “assets” to mean tangible assets, being buildings, machinery, plant or furniture; and intangible assets, being knowhow, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature.

It is proposed to amend the said Explanation 3 so as to provide that goodwill of a business or profession shall not be considered as an asset for that purposes of the said subsection.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 8 of the Bill seeks to amend section 36 of the Income-tax Act, relating to other deductions.

Sub-section (1) of the said section provides for allowing of deductions provided for in the clauses thereof for computing the income referred to in section 28 of the said Act. Clause (va) of the said sub-section provides for allowance of deduction for any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation to the said clause provides that for the purposes of this clause, "due date" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise.

It is proposed to insert Explanation 2 to clause (va) of sub-section (1) of the said section so as to clarify that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the “due date” under the said clause.

This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 9 of the Bill seeks to amend section 43B of the Income-tax Act relating to certain deductions to be only on actual payments.

Clause (b) of the said section provides that any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year, in which such sum is actually paid by him.

Proviso to the said section provides that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return.

It is proposed to insert Explanation 5 to the said section so as to clarify that the provisions of that section shall not apply and shall be deemed never to have been applied to a sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 applies.

This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 10 of the Bill seeks to amend section 43CA of the Income-tax Act relating to special provision for full value of consideration for transfer of assets other than capital assets in certain cases.

The proviso to sub-section (1) of the said section provides that where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and ten per cent. of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer.

It is proposed to insert a second proviso to said sub-section to provide that in case of transfer of an asset, being a residential unit, the provisions of the first proviso shall have the effect as if for the words “one hundred and ten per cent.”, the words “one hundred and twenty per cent.” had been substituted, subject to the conditions that––

(a) the transfer of such residential unit takes place during the period beginning from the 12th day of November, 2020 and ending on the 30th Day of June, 2021;

(b) such transfer is by way of first time allotment of the residential unit to any person; and

(c) the consideration received or accruing as a result of such transfer does not exceed two crore rupees.

It is further proposed to insert an Explanation to the said section to define the expression “residential unit” to mean an independent housing unit with separate facilities for living, cooking and sanitary requirement, distinctly separated from other residential units within the building, which is directly accessible from an outer door or through an interior door in a shared hallway and not by walking through the living space of another household.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 11 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.

Clause (a) of the said section provides for audit of accounts for every person carrying on business, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year. The proviso to the said clause provides that in the case of a person whose aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent. of the said amount; and aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent. of the said payment, the said clause shall have effect as if for the words “one crore rupees” the words “five crore rupees” had been substituted.

It is proposed to amend the said proviso so as to increase the threshold from “five crore rupees” to “ten crore rupees”.

This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 12 of the Bill seeks to amend section 44ADA of the Income-tax Act relating to special provision for computing profits and gains of profession on presumptive basis.

Sub-section (1) of the said section provides that notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being a resident in India 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 of profession”.

It is proposed to amend the said sub-section so that the assessee referred to therein shall, inter alia, mean an individual, Hindu undivided family or a partnership firm other than a Limited Liability Partnership as defined under clause (n) of sub-section (1) of section 2 of Limited Liability Partnership Act, 2008.

This amendment will come into force from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 13 of the Bill seeks to amend section 44DB of the Income-tax Act relating to special provision for computing deductions in the case of business reorganisation of cooperative banks.

The said section, inter alia, provides that where business reorganisation of co-operative banks takes place, the deductions under section 32, 35D, 35DD and 35DDA shall be apportioned between the predecessor co-operative bank and the successor co-operative bank in the proportion of the number of days before and after the date of business reorganisation.

It is proposed to expand the scope of the said section so as to include conversion of a primary co-operative bank to a banking company under its ambit.

It is also proposed to define the expressions “banking company”, “converted banking company”, “conversion” and “primary co-operative bank” and to make consequential amendment to the definition of “predecessor co-operative bank”.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 14 of the Bill seeks to amend section 45 of the Income-tax Act relating to Capital gains.

The aforesaid section inter alia, provides that any profits or gains arising from the transfer of a capital asset shall be chargeable to income-tax under the head “Capital gains” and shall be deemed to be the income of the previous year in which such transfer took place.

Further, sub-section (4) of the said section, provides that the profits or gains arising from the transfer of a capital asset by way of distribution of capital assets on the dissolution of a firm or other association of persons or body of individuals (not being a company or a cooperative society) or otherwise, shall be chargeable to tax as the income of the firm, association or body, of the previous year in which the said transfer takes place.

It is proposed to insert sub-clause (1B) so as to provide that notwithstanding anything contained in sub-section (1), where any person receives at any time during any previous year any amount under a unit linked insurance policy, to which exemption under clause (10D) of section 10 does not apply on account of the applicability of the fourth and fifth proviso thereof, including the amount allocated by way of bonus on such policy, then, any profits or gains arising from receipt of such amount by such person shall be chargeable to income-tax under the head "Capital gains" and shall be deemed to be the income of such person of the previous year in which such amount was received and the income taxable shall be calculated in such manner as may be provided by rules.

It is further proposed to substitute sub-section (4) in the said section so as to provide that where a specified person receives during the previous year any capital asset at the time of its dissolution or reconstitution of the specified entity, which represents the balance in his capital account in the books of accounts of such specified entity at the time of dissolution or reconstitution, then any profits or gains arising from receipt of such capital asset by the specified person shall be chargeable to income-tax as income of such specified entity under the head "Capital gains" and shall be deemed to be the income of such specified entity of the previous year in which such capital asset was received by the specified person.

It is also proposed to amend the section to provide that fair market value of the capital asset on the date of such receipt shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of such capital asset.

It is also proposed to amend the section to provide that the cost of acquisition of the capital asset shall be determined in accordance with the provisions of this Chapter.

It is also proposed to amend the section to provide that the balance in the capital account of the specified person in the books of account of the specified entity is to be calculated without taking into account increase in the capital account of the specified person due to revaluation of any asset or due to self-generated goodwill or any other self-generated asset.

It is also proposed to amend the section to define the expressions “self-generated goodwill” and “self-generated assets”, “specified entity” and “specified person”.

It is also proposed to insert sub-section (4A) in the said section so as to provide that where a specified person receives during the previous year any money or other asset at the time of dissolution or reconstitution of the specified entity, which is in excess of the balance in his capital account in the books of accounts of such specified entity at the time of its dissolution or reconstitution, then any profits or gains arising from receipt of such money or other asset by the specified person shall be chargeable to income-tax as income of such specified entity under the head "Capital gains" and shall be deemed to be the income of such specified entity of the previous year in which such money or other asset was received by the specified person.

It is also proposed to amend the section to provide that value of any money or the fair market value of other asset on the date of such receipt shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of such capital asset.

It is also proposed to amend the section to provide that the balance in the capital account of the specified person in the books of accounts of the specified entity at the time of its dissolution or reconstitution shall be deemed to be the cost of acquisition and the balance in the capital account of the specified person in the books of account of the specified entity is to be calculated without taking into account increase in the capital account of the specified person due to revaluation of any asset or due to self-generated goodwill or any other selfgenerated asset.

It is also proposed to amend the section to provide that for the purpose of this subsection, the expressions “specified entity”, “self-generated goodwill”, “self-generated asset” and "specified person" shall have the meaning assigned to them in sub-section (4) of the Act.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 15 of the Bill seeks to amend section 47 of the Income-tax Act relating to transactions not regarded as transfer.

The said section, inter alia, provides that any transfer of a capital asset by the predecessor co-operative bank to the successor co-operative bank in a case of business reorganisation shall not be regarded as transfer.

It is proposed to amend clause (vica) of the said section to expand the scope of the said clause so as to provide that any transfer of a capital asset by the primary co-operative bank which has been converted into a banking company as a result of conversion shall not be considered as transfer for the purposes of capital gains.

Further, it is also proposed to amend clause (vicb) of the said section so as to provide that the allotment of shares of the converted banking company to the shareholders of the predecessor co-operative bank as a result of this conversion shall not be treated as transfer for the purposes of capital gains.

It is also proposed to amend the Explanation to clause (vicb) of the said section so as to provide that the expression “converted banking company” shall have the meaning assigned to it in section 44DB.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

It is proposed to insert new clauses (viiac) and (viiad) in the said section so as to provide that any transfer, in relocation, of a capital asset by the original fund to the resultant fund shall not be considered as transfer for the purpose of Capital gains tax. It is further proposed that the allotment of shares of the resultant fund to the shareholders of the original fund as a result of this relocation shall not be treated as transfer for the purpose of capital gains.

It is also proposed to define the expressions “original Fund”, “relocation” and “resultant fund”.

These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause 16 of the Bill seeks to amend section 48 of the Income-tax Act relating to mode of computation for income chargeable under the head capital gains.

The section inter alia, provides for computation of capital gains arising out of transfer of a capital asset by deducting from the full value consideration received or accruing as a result of such transfer, the amounts of expenditure incurred wholly and exclusively for such transfer and cost of acquisition as well as cost of any improvement thereto.

It is proposed to insert clause (iii) in the said section so as to provide in case of specified entity referred to in sub-section (4A) of section 45, the amount included in the total income of such specified entity under sub-section (4A) of section 45 which is attributable to the capital asset being transferred, calculated in the prescribed manner, shall be reduced from full value of consideration received or accruing as a result of transfer of the capital asset.

This amendment shall come into effect from the 1st day of April, 2021 and shall accordingly apply to assessment year 2021-2022 and subsequent assessment years.

Clause 17 of the Bill seeks to amend section 49 of the Income-tax Act relating to cost with reference to certain modes of acquisition.

Sub-section (1) of the said section provides that where the capital asset became the property of the assessee under certain situations, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be.

It is proposed to amend sub-clause (e) of clause (iii) of the said sub-section so as to include the transfer referred to in clause (viiac) and (viiad) of section 47 also within the purview of that sub-section (1).

This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause 18 of the Bill seeks to amend section 50 of the Income–tax Act relating to special provision for computation of capital gains in case of depreciable assets.

The said section, inter alia, provides for certain conditions for the applicability of provisions of sections 48 and 49 for computation of capital gains in case of depreciable assets, where the capital asset is an asset forming part of a block of asset in respect of which depreciation has been allowed under the said Act.

It is proposed to insert a proviso in the said section so as to provide that in a case where goodwill of a business or profession forms part of a block of asset for the assessment year beginning on the 1st day of April, 2020 and depreciation thereon has been obtained by the assessee under the Act, the written down value of that block of asset and short term capital gain, if any, shall be determined in such manner as may be prescribed.

This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 19 of the Bill seeks to amend section 54GB of the Income-tax Act relating to capital gain on transfer of residential property not to be charged in certain cases.

The provisions of the said section, inter alia, provide for roll over benefit in respect of capital gain arising from the transfer of a long-term capital asset, being a residential property owned by the eligible assessee. In order to get benefit of this provision, the assessee is required to utilise the net consideration for subscription in the equity shares of an eligible company before the due date of filing of the return of income. Currently the benefit of this section is only available for investment in the equity shares of eligible start-ups upto 31st March 2021.

It is proposed to amend the proviso to sub-section (5) of the said section so as to provide that in case of an eligible start-up, the capital gains arising from transfer of residential property made upto 31st March, 2022 shall be eligible for the benefit under the said section.

This amendment will take effect from 1st April, 2021.

Clause 20 of the Bill seeks to amend section 55 of the Income –tax Act relating to meaning of “adjusted”, “cost of improvement” and “cost of acquisition”.

Clause (a) of sub-section (2) of the said section provides that for the purposes of sections 48 and 49, "cost of acquisition" in relation to a capital asset, being goodwill of a business or a trade mark 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 or profession, tenancy rights, stage carriage permits or loom hours,-

(i) in the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price; and

(ii) in any other case [not being a case falling under sub-clauses (i) to (iv) of sub-section (1) of section 49], shall be taken to be nil ;

It is proposed to substitute the said clause so as to provide that in relation to a capital asset, being goodwill of a business or profession, or a trade mark or brand name associated with a business or profession, or a right to manufacture, produce or process any article or thing, or right to carry on any business or profession, or tenancy rights, or stage carriage permits, or loom hours,-

(i) in the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price; and

(ii) in the case falling under sub-clause (i) to (iv) of sub-section (1) of section 49 and where such asset was acquired by the previous owner (as defined in that section) by purchase, means the amount of the purchase price for such previous owner; and

(iii) in any other case, shall be taken to be nil.

It is also proposed to provide therein that in case of goodwill of business or profession acquired by the assessee by way of purchase from a previous owner (either directly or through modes specified under sub-clause (i) to (iv) of sub-section (1) of section 49) and any deduction on account of depreciation under section 32 of the said Act has been obtained by the assessee in any previous year preceding the previous year relevant to the assessment year commencing on or after the 1st day of April, 2021, then the cost of acquisition will be the purchase price as reduced by the depreciation so obtained by the assessee before the previous year relevant to the assessment year commencing on the 1st day of April, 2021.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to assessment year 2021-2022 and subsequent assessment years.

Clause 21 of the Bill seeks to amend section 56 of the Income-tax Act relating to income from other sources.

Sub-clause (b) of clause (x) of sub-section (2) of the said section, inter alia, provides that where any person receives any immovable property in any previous year from any person or persons on or after the 1st day of April, 2017 for a consideration, and where the stamp duty value of such property exceeds ten per cent. of the consideration and the excess amount thereof is more than fifty thousand rupees, it shall be charged to tax under the head income from other sources.

It is proposed to insert a fourth proviso to the said clause so as to provide that in case of property being referred to in the second proviso to sub-section (1) of section 43CA, the provisions of sub-item (ii) of item (B) of the said clause shall have the effect as if for the words “ten per cent.”, the words “twenty per cent.” had been substituted.

This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause (x) of sub-section (2) of the said section, inter alia, provides that the assets received without or inadequate consideration shall be charged to tax under the head “Income from other sources”.

It is proposed to amend the proviso to said clause of the said sub-section so as to exclude the transfer of capital asset between the original Fund and the resultant fund, which are not regarded as transfer under clause (viiac) or clause (viiad) of section 47, from the scope of clause (x) of the said sub-section.

This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause 22 of the Bill seeks to amend section 72A of the Income-tax Act relating to provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger, etc.

Sub-section (1) of the said section provides that the accumulated loss and unabsorbed depreciation of the amalgamating company or companies shall be deemed to be the accumulated losses and unabsorbed depreciation of the amalgamated company or companies in specified cases and subject to the conditions specified in the said section.

Clause (c) of the said sub-section, inter alia, provides that where there has been amalgamation of one or more public sector company or companies engaged in the business of operation of aircraft with one or more public sector company or companies engaged in similar business then notwithstanding anything contained in any other provisions of the said Act, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss or, as the case may be, the allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected.

It is proposed to substitute the said clause so as to provide that in case of amalgamation of one or more public sector company or companies with one or more public sector company or companies, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss, or as the case may be, the allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected.

It is further proposed to insert a new clause (d) to the said sub-section so as to provide that in case of amalgamation of an erstwhile public sector company with one or more company or companies, if the share purchase agreement entered into under strategic disinvestment restricted immediate amalgamation of the said public sector company and the amalgamation is carried out within five years from the end of the previous year in which the restriction on amalgamation in the share purchase agreement ends, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss or, as the case may be, allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected, and other provisions of the said Act relating to set off and carry forward of loss, and the allowance for depreciation shall apply accordingly.

It is also proposed to insert a proviso to the said sub-section so as to provide that the accumulated loss and the unabsorbed depreciation of the amalgamating company, in case of an amalgamation referred to in clause (d), which is deemed to be loss or, as the case may be, allowance for unabsorbed depreciation of the amalgamated company, shall not be more than the accumulated loss and unabsorbed depreciation of the public sector company as on the date on which the public sector company ceases to be a public sector company as a result of strategic disinvestment.

It is also proposed to insert an Explanation to define the expressions “control”, “erstwhile public sector company” and “strategic disinvestment” for the purposes of clause (d) of the said sub-section.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 23 of the Bill seeks to amend section 79 of the Income-tax Act relating to carry forward and set off of losses in case of certain companies.

Sub-section (1) of the said section provides that where a change in shareholding has taken place during the previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year, unless on the last day of the previous year, the shares of the company carrying not less than fifty-one per cent. of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent. of the voting power on the last day of the year or years in which the loss was incurred. Further sub-section (2) of said section provides that the exceptions to the above provision contained in the said sub-section.

It is proposed to insert a new clause in sub-section (2) to the said section so as to provide that nothing contained in the section shall apply to a case to the extent that a change in the shareholding takes place during the previous year on account of relocation referred to in the Explanation to clause (viiac) and (viiad) of section 47.

This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause 24 of the Bill seeks to amend section 80EEA of the Income-tax Act relating to deduction in respect of interest on loan taken for certain house property.

The said section, inter alia, provides for deduction in respect of interest on loan taken for a residential house property from any financial institution up to one lakh fifty-thousand rupees subject to the condition that the loan has been sanctioned during the period beginning on 1st April, 2019 and ending on 31st March, 2021. This is subject to further condition that the stamp duty value of residential house property does not exceed forty-five lakh rupees and the assessee does not own any residential house property on the date of sanction of loan.

It is proposed to amend sub-section (3) of the said section so as to provide that the deduction under section 80EEA in respect of interest paid on loan sanctioned by a financial institution for acquisition of a residential house property, shall be available if the loan has been sanctioned during the period beginning on 1st April, 2019 and ending on 31st March, 2022, subject to other conditions specified in the said section.

This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause 25 of the Bill seeks to amend section 80-IAC of the Income-tax Act relating to special provision in respect of specified business.

The existing provisions of the section 80-IAC of the said Act, inter alia, provide for a deduction of an amount equal to one hundred per cent. of the profits and gains derived from an eligible business by an eligible start-up for three consecutive assessment years out of ten years at the option of the assessee subject to the condition that the total turnover of its business does not exceed one hundred crore rupees for an eligible start-up incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2021.

It is proposed to extend the period of incorporation of such eligible start-ups till 1st day of April, 2022.

This amendment will take effect from the 1st April, 2021.

Clause 26 of the Bill seeks to amend section 80-IBA of the Income-tax Act relating to deductions in respect of profits and gains from housing project.

The provisions of sub-section (1) of the said section provides for hundred per cent. deductions of the profits and gains derived from the business of developing and building affordable housing project subject to certain conditions. Further the provisions of clause (a) of sub-section (2) of said section provide that the housing project shall be approved by the competent authority after 1st June, 2016 but on or before 31st March, 2021.

It is proposed to insert sub-section (1A) in the said section so as to provide for hundred per cent. deductions of the profits and gains derived from the business of developing and building affordable rental housing project.

It is further proposed to amend clause (a) of sub-section (2) so as to allow the deduction in respect of profits and gains derived from the business of developing and building housing project for hundred per cent. of the profits and gains derived from the business of developing and building such project approved by the competent authority after 1st day of June, 2016 but on or before 31st March, 2022.

It is also proposed to insert a new clause (da) in sub-clause (6) to define the expression “rental housing project”.

These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause 27 of the Bill seeks to amend section 80LA of the Income-tax Act relating to deduction in respect certain incomes of Offshore Banking Units and International Financial Services Centre.

The provisions of the said section, inter alia, provides that where the gross total income of an assessee, (i) being a scheduled bank, or, any bank incorporated by or under the laws of a country outside India; and having an Offshore Banking Unit in a Special Economic Zone; or (ii) being a Unit of an International Financial Services Centre, includes any income referred to in sub-section (2), there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such income, of an amount equal to (a) one hundred per cent. of such income for such assessment years mentioned in sub-section(1) and sub-section(1A) of that section respectively.

It is proposed to amend the provisions of said sub-section (1A) so as to provide that deduction can also be claimed if permission or registration under the International Financial Services Centre Authority Act, 2019 was obtained.

Further sub-section (2) of the said section provides for the incomes which are eligible for deduction under the said section.

It is proposed to amend the provisions of said sub-section (2) of the said section by inserting new clause (d) so as to provide that the income from transfer of an asset ,being an aircraft or aircraft engine which was leased by a unit referred to in clause (c) to a domestic company engaged in the business of operation aircraft before such transfer subject to the condition that the unit has commenced operation on or before the 31st day of 2024 shall also be eligible for deduction.

Further sub-section (3) of the said section provides that no deduction under that section shall be allowed unless the assessee furnishes the report by an accountant certifying correct claim of deduction and a copy of permission obtained under clause (a) of subsection (1) of section 23 of the Banking Regulation Act, 1949.

It is proposed to amend clause (ii) of sub-section (3) of the said section so as to provide that in case the unit is registered under the International Financial Services Centre Authority Act, 2019 then the copy of permission shall mean a copy of the permission or registration obtained under the International Financial Services Centre Authority Act, 2019.

This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment year.

Clause 28 of the Bill seeks to insert a new section 89A in the Income-tax Act relating to relief from taxation in income from retirement benefit account maintains in a notified country.

The proposed new section provides that the income of a specified person from specified account shall be taxed in such manner and for such year as may be provided by rules and also defines the expressions “specified person”, “specified account” and “notified country”.

This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause 29 of the Bill seeks to amend section 112A of the Income-tax Act relating to tax on long-term capital gains in certain cases.

Explanation to the said section, inter alia, provides for the definition of the expression “equity oriented fund”.

It is proposed to amend the said Explanation to the section so as to include a fund set up under a scheme of an insurance company comprising unit linked insurance policies to which exemption under clause (10D) of section 10 does not apply on account of the applicability of the fourth and fifth proviso thereof within the definition of “equity oriented fund”.

This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 30 of the Bill seeks to amend section 115AD of the Income-tax Act relating to tax on income of Specified Fund or Foreign Institutional Investors from securities or capital gains arising from their transfer.

It is proposed to amend the said section so as to provide that income of investment division of an offshore banking unit of a non-resident from securities or capital gains arising from their transfer shall also be taxed at the rate of ten per cent. under the provisions of the said section.

It is further proposed to insert a new sub-section (1B) in the said section so as to provide investment division of an offshore banking unit, the provision of this section shall apply to the extent of income that is attributable to the investment division of such banking unit referred to in sub-clause (ii) of clause (c) to the Explanation to clause (4D) of section 10 as a Category-III portfolio investor under the Securities and exchange Board of India (Foreign Portfolio investors) Regulations, 2019 made under the Securities And Exchange Board of India Act, 1992, calculated in the prescribed manner.

It is also proposed to define the expression “investment division of an offshore banking unit”.

These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

Clause 31 of the Bill seeks to amend section 115JB of the Income-tax Act relating to special provision for payment of tax by certain company.

The said section provides for levy of tax on the basis of book profit which is determined after making certain adjustments to the net profit disclosed in the profit and loss account prepared in accordance with the provisions of the Companies Act, 2013.

Clause (iid) of Explanation 1 of the said section provides that the amount of income in the nature of capital gains, interest, royalty or fee for technical services accruing or arising to an assessee, being a foreign company, will be reduced from the book profit if such income is credited to the statement of profit and loss and tax on such income is at a rate less than the rate specified under that section. Further such assessee will be allowed expenses relatable to such income mentioned in the said clause under sub-clause (B) of clause (fb) of the said Explanation.

It is proposed to amend the said clause (fb) and clause (iid), occurring in the long line of Explanation 1, so as to provide similar relief to dividend as already there for capital gains, interest, royalty and fee for technical services as provided in these clauses.

It is further proposed to insert a new sub-section (2D) in the said section so as to provide that where in the case of the company there is an increase in book profit of the previous year due to income of past year or years included in the book profit on account of an advance pricing agreement entered into by the assessee under section 92CC or on account of secondary adjustment required to be made under section 92CE, the Assessing Officer shall, on an application made to him in this behalf by the asssessee, recompute the book profit of the past year or years and tax payable, if any, by the assessee during the previous year under sub-section (1), in such manner as may be provided by rules and the provisions of section 154 shall, so far as may be, apply and the period of four years specified in sub-section (7) of that section shall be reckoned from the end of the financial year in which the said application is received by the Assessing Officer.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 32 of the Bill seeks to amend the section 139 of the Income-tax Act relating to return of income.

The said section provides for the filing of return of income for different persons or class of persons and time-limits for doing so.

It is proposed to amend sub-clause (iii), in clause (a), in Explanation 2, in sub-section (1) of the said section so as to provide that the due date for filing return of income for the spouse of the partner of a firm, if the governed by the provisions of section 5A of the said Act, shall be 31st October of the assessment year.

It is further proposed to amend clause (aa) of the said Explanation so as to provide that the due date for filing of return of income for partners of a firm, which is required to furnish report referred to in section 92E, shall be 30th November of the assessment year.

It is also proposed to amend sub-section (4) of the said section so as to provide that any person who has not furnished a return of income within the due date as per sub-section (1) of the said section may furnish a return for any previous year at any time within three months prior to the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

It is also proposed to amend sub-section (5) of the said section so as to provide that a return of income filed under sub-sections (1) or (4) can be revised at any time within three months prior to the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

It is also proposed to insert proviso before the Explanation to sub-section (9) of the said section so as to provide that the Board may specify, by notification, that any of the conditions specified in clauses (a) to (f) of the said Explanation shall not apply to such class of assessees or shall apply with such modifications, as may be specified in such notification.

These amendments will take effect from lst April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 33 of the Bill seeks to amend section 142 of the Income-tax Act relating to inquiry before assessment.

Clause (i) of sub-section (1) of the said section empowers only the Assessing Officer to serve notice to an assessee requiring him to file return of income.

It is proposed to insert a second proviso in the said clause so as to empower the prescribed income-tax authority also to serve notice under clause (i) of sub-section (1) of the said section for the purposes of that clause.

This amendment will take effect from lst day of April, 2021.

Clause 34 of the Bill seeks to amend section 143 of the Income-tax Act relating to assessment.

Sub-clause (iv) of clause (a) of sub-section (1) of section 143 of the said Act provides for adjustment on account of disallowance of expenditure indicated in the audit report but not taken into account in calculating the total income of the assessee.

It is proposed to amend the said sub-clause so as to allow for the adjustment on account of increase in income indicated in the audit report but not taken into account in computing the total income.

Sub-clause (v) of clause (a) of sub-section (1) of the said section provides that any deduction admissible under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, shall be allowed if the return of income is furnished on or before the due date specified under sub-section (1) of section 139 of the Act.

It is proposed to amend the said sub-clause so as to provide that any deduction admissible under section 10 AA or under any of the provisions of Chapter VIA under the heading “C.-Deductions in respect of certain incomes” shall be allowed, if the return of income is furnished on or before the due date specified under the sub-section (1) of section 139 of the said Act.

It is also proposed to amend the said section so as to reduce the time limit specified for sending intimation under sub-section (1) from one year to nine months and to reduce the time limit for sending notice under sub-section (2) from six months to three months from the end of the financial year in which the return is furnished.

These amendments will take effect from 1st April, 2021.

Clause 35 of the Bill seeks to amend section 147 of the Income-tax Act relating to income escaping assessment.

It is proposed to substitute the said section so as to provide that if any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing officer may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for such assessment year.

This amendment will take effect from 1st April, 2021.

Clause 36 of the Bill seeks to amend section 148 of the Income-tax Act relating to issue of notice where income has escaped assessment.

It is proposed to substitute the said section so as to provide that before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice along with a copy of order passed under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139, provided that no notice under the said section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and prior approval of the specified authority to issue such notice has been obtained by the Assessing Officer. The proposed Explanation 1 to the said section provides for the purposes of the said section and section 148A, that information which suggests that the income chargeable to tax has escaped assessment means any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time or any final objection raised by the Comptroller and Auditor General of India to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act. The proposed Explanation 2 provides that where (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April,2021, in the case of the assessee; or (ii) survey is conducted under section 133A in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (iv) the Assessing officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. The proposed Explanation 3 provides that the “specified authority” shall mean the specified authority referred to in section 151.

This amendment will take effect from 1st April, 2021.

Clause 37 of the Bill seeks to insert a new section 148A in the Income-tax Act relating to Conducting inquiry, providing opportunity before issue of notice under section 148.

It is proposed to insert a new section 148A, which seeks to provide that the Assessing Officer shall, before issuing any notice under section 148, - (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the showcause notice referred to in clause (b); and (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires, provided that the provisions of this sub-section shall not apply 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 in the case of the assessee on or after the 1st day of April, 2021 or the Assessing officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or the Assessing officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relates to, the assessee. Explanation 3 to the said section provides that “Specified authority” shall mean specified authority referred to in section 151.

This amendment will take effect from 1st April, 2021.

Clause 38 of the Bill seeks to amend section 149 of the Income-tax Act relating to time limit for notice.

It is proposed to substitute the said section so as to provide that no notice under section 148 shall be issued for the relevant assessment year - (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year. Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit prescribed under the provisions of clause (b), as they stood immediately before the commencement of the Finance Act, 2021. Further, the provisions of this section shall not apply to cases where a notice under section 153A or section 153C read with section 153A is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or before the 31st day of March, 2021 and for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice under clause (b) of section 148A; or the period during which the proceeding under section 148A is stayed by an order or injunction of any court shall be excluded and also where immediately after the exclusion of such period, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation in sub-section (1) shall be deemed to be extended accordingly.

This amendment will take effect from 1st April, 2021.

Clause 39 of the Bill seeks to substitute of a new section for section 151 relating to sanction for issue of notice.

It is proposed to substitute the said section so as to provide that for the purpose of section 148, specified authority shall be (i) Principal Commissioner of Income-tax or Principal Director of Income-tax or Commissioner of Income-tax or Director of Income-tax, if three years or less than three years have elapsed from the end of the relevant assessment year; (ii) Principal Chief Commissioner of Income-tax or Principal Director General of Income-tax, or where there is no Principal Chief Commissioner of Income-tax or Principal Director General of Income-tax, Chief Commissioner of Income-tax or Director General of Income-tax, if more than three years have elapsed from the end of the relevant assessment year.

This amendment will take effect from 1st April, 2021.

Clause 40 of the Bill seeks to amend section 151A of the Income-tax Act relating to faceless assessment of income escaping assessment.

It is proposed to amend the said section so as to provide that conducting of enquiries or issuing show-cause notice or passing order under section 148A (before issuance of notice under section 148) in the scheme to be notified as specified under the said section.

This amendment will take effect from 1st April, 2021.

Clause 41 of the Bill seeks to amend section 153 of the Income-tax Act relating to time limit for completion of assessment, reassessment and recomputation.

The said section provides for the time-limit for completion of assessment, reassessment and recomputation in certain cases mentioned therein.

It is proposed to amend sub-section (1) of the said section to insert the third proviso so as to provide that for the assessment year commencing on or after the 1st April, 2021, the time limit for making an assessment order under sections 143 or 144 shall be reduced from the existing twenty-one months to nine months from the end of the assessment year in which the income was first assessable.

This amendment will take effect from lst April, 2021.

Clause 42 of the Bill seeks to amend section 153A of the Income-tax Act relating to assessment in case of search or requisition.

It is proposed to amend the said section so as to provide that the search or requisition shall only apply where search or requisition is made on or before 31st March, 2021. Consequently, assessments under section 153A and 153C shall not be made in respect of a search or requisition made on or after 1st April, 2021.

This amendment will take effect from 1st April, 2021.

Clause 43 of the Bill seeks to amend section 153C of the Income-tax Act relating to assessment of income of any other person.

It is proposed to amend the said section so as to insert sub-section (3) therein to provide that nothing contained in the said section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after 1st day of April, 2021.

This amendment will take effect from 1st April, 2021.

Clause 44 of the Bill seeks to amend section 194 of the Income-tax Act relating to dividends.

The said section provides for deduction of tax at source on payment of dividends by an Indian company including dividends on preference shares within India. The second proviso to the said section provides that the provisions of that section shall not apply to such income credited or paid to certain insurance companies or insurers.

It is proposed to amend the second proviso to the said section to provide that the provisions of that section shall not apply to such income credited or paid to a business trust as defined in clause (13A) of section 2 by a special purpose vehicle referred to in the Explanation to clause (23FC) of section 10 or any other person as may be notified by the Central government in this behalf.

This amendment will take effect retrospectively from 1st April, 2020.

Clause 45 of the Bill seeks to amend section 194A of the Income-tax Act relating to interest other than “Interest on securities”.

Sub-section (3) of the said section provides that the provisions of sub- section (1) of that section relating to deduction of tax on income by way of interest other than interest on securities, shall not apply.

It is proposed to include infrastructure debt fund also within the purview of clause (x) of the said sub-section so as to provide that tax shall not be deducted on income in relation to a zero coupon bond issued by infrastructure debt fund.

This amendment will take effect from 1st April, 2021.

Clause 46 of the Bill seeks to amend section 194-IB of the of the Income-tax Act, relating to payment of rent by certain individuals or Hindu undivided family.

Sub-section (1) of the said section provides that any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent. of such income as income-tax thereon.

Sub-section (4) of the said section provides that in a case where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.

It is proposed to amend the said sub-section (4) so as to insert section 206AB for the purposes of the said sub-section.

This amendment will take effect from 1st July, 2021.

Clause 47 of the Bill seeks to insert a new section 194P of the Income-tax Act relating to deduction of tax in case of specified senior citizen.

Sub-section (1) of the said section seeks to provide that notwithstanding anything contained in the provisions of Chapter XVII-B, in case of a specified senior citizen, the specified bank shall, after giving effect to the deduction allowable under Chapter VI-A and rebate allowable under section 87A, compute the total income of such specified senior citizen for the relevant assessment year and deduct income-tax on such total income on the basis of the rates in force.

Sub-section (2) of the said section seeks to provide that the provisions of section 139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which the tax has been deducted under sub-section (1).

Explanation to the said section seeks to define the following expressions for the purposes of the said section,––

(a) “specified bank” means a banking company as the Central Government may, by notification in Official Gazette, specify;

(b) “specified senior citizen” means an individual, being a resident in India–

(i) who is of the age of seventy-five years or more at any time during the previous year;

(ii) who is having income of the nature of pension and no other income except the income of the nature of interest received or receivable from any account maintained by such individual in the same specified bank in which he is receiving his pension income; and

(iii) has furnished a declaration to the specified bank containing such particulars, in such form and verified in such manner, as may be prescribed.

This amendment will take effect from 1st April, 2021.

Clause 48 of the Bill seeks to insert a new section 194Q in the Income-tax Act relating the deduction of tax at source on payment of certain sum for purchase of goods.

Sub-section (1) of the proposed new section seeks to provide that any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 per cent. of such sum exceeding fifty lakh rupees as income-tax.

The Explanation to the proposed sub-section (1) seeks to define “buyer” to mean a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is carried out, not being a person, as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

Sub-section (2) thereof section seeks to provide that where any sum referred to in subsection (1) 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 credit of income shall be deemed to be a credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

Sub-section (3) thereof seeks to provide that if any difficulty arises in giving effect to the provisions of the said section, the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty.

Sub-section (4) thereof seeks to provide that every guideline issued by the Board under sub-section (3) shall be laid before each House of Parliament, and shall be binding on the income-tax authorities and the person liable to deduct tax.

Sub-section (5) thereof seeks to provide that the provisions of the proposed section shall not apply to a transaction on which––

(a) tax is deductible under any of the provisions of this Act; and

(b) tax is collectible under the provisions of section 206C other than a transaction to which sub-section (1H) of section 206C applies.

This amendment will take effect from 1st July, 2021.

Clause 49 of the Bill seeks to amend section 196D of the Income-tax Act relating to income of Foreign Institutional Investors from securities.

Sub-section (1) of the said section provides for deduction of tax on any income referred to in clause (a) of sub-section (1) of section 115AD, not being income by way of interest referred to in section 194LD of the Income-tax Act, payable to a Foreign Institutional Investor, being the person responsible for making the payment, at the rate of twenty per cent.

It is proposed to insert a proviso to the said sub-section so as to provide that where an agreement referred to in sub-section (1) of section 90 or sub-section (1) of section 90A applies to the payee and if the payee has furnished a certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A, as the case may be, then, income tax thereon shall be deducted at the rate of twenty per cent. or at the rate or rates of income-tax provided in such agreement for such income, whichever is lower.

This amendment will take effect from 1st April, 2021.

Clause 50 of the Bill seeks to amend section 206AA of the Income-tax Act relating to requirement to furnish Permanent Account Number.

Sub-section (1) of the said section provides that notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereafter referred to as deductor), failing which tax shall be deducted at the higher of the following rates namely, at the rate specified in the relevant provision of this Act; or at the rate or rates in force; or at the rate of twenty per cent.

It is proposed to insert the second proviso so as to provide that where the tax is required to be deducted under section 194Q, the provisions of clause (iii) shall apply as if for the words “twenty per cent.”, the words “five per cent.” had been substituted.

This amendment will take effect from 1st July, 2021.

Clause 51 of the Bill seeks to insert section 206AB of the Income-tax Act relating to the deduction of tax at source on non-filers of income-tax return.

Sub-section (1) of the proposed new section 206AB seeks to provide that notwithstanding anything contained in any other provisions of this Act, where tax is required to be deducted at source under the provisions of Chapter XVIIB, other than sections 192, 192A, 194B, 194BB, 194LBCor 194N on any sum or income or amount paid, or payable or credited, by a person (hereafter referred to as deductee) to a specified person, the tax shall be deducted at the higher of the following rates, namely, at twice the rate specified in the relevant provision of the Act; or at twice the rate or rates in force; or at the rate of five per cent..

Sub-section (2) thereof seeks to provide that if the provision of section 206AA is applicable to a specified person, in addition to the provision of this section, the tax shall be deducted at higher of the two rates provided in this section and in section 206AA.

Sub-section (3) thereof seeks to define the expression “specified person” to mean a person who has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be deducted, for which the time limit of filing return of income under sub-section (1) of section 139 has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years.

Proviso to proposed sub-section (3) seeks to provide that the specified person shall not include a non-resident who does not have a permanent establishment in India.

Explanation to the said section seeks to provide that for the purposes of this sub-section the expression “permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.

This amendment will take effect from 1st July, 2021.

Clause 52 of the Bill seeks to insert section 206CCA of the Income-tax Act relating to specified provisions for the collection of tax at source on non-filers of income-tax return.

Sub-section (1) of the proposed new section 206CCA seeks to provide that notwithstanding anything contained in any other provisions of this Act, where tax is required to be collected at source under the provisions of Chapter XVII-BB, on any sum or amount received by a person (hereafter referred to as collectee) from a specified person, the tax shall be collected at the higher of the following two rates, namely, at twice the rate specified in the relevant provision of the Act; or at the rate of five per cent..

Sub-section (2) thereof seeks to provide, that if the provision of section 206CC is applicable to a specified person, in addition to the provision of this section, the tax shall be collected at higher of the two rates provided in this section and in section 206CC.

Sub-section (3) thereof seeks to define “specified person” tomean a person who has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be collected, for which the time limit of filing return of income under sub-section (1) of section 139 has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years.

Proviso to the proposed sub-section (3) provides that the specified person shall not include a non-resident who does not have a permanent establishment in India.

Explanation to the said section seeks to provide that for the purposes of this sub-section the expression “permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.

This amendment will take effect from 1st July, 2021.

Clause 53 of the Bill seeks to amend section 234C of the Income-tax Act relating to interest for deferment of advance tax.

The first proviso to sub-section (1) of the said section provides for categories of incomes for which there will be no charge of interest under the said section, in the event of failure to estimate such incomes resulting in a shortfall in the advance tax payments and tax due has been paid in the subsequent advance tax instalments.

It is proposed to substitute clause (d) of the first proviso to said sub-section to include dividend income along with capital gains therein, so as to provide that the interest under the said section shall not be applicable 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 dividend.

It is further proposed to insert Explanation 2 in the said sub-section to define the term “dividend”.

These amendments will take effect from lst April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Clause 54 of the Bill seeks to amend the Chapter XIX-A of the Income-tax Act relating to settlement of cases by the Income-tax Settlement Commission (ITSC).

It is proposed to amend section 245A of the said Act to define various expressions such as “Interim Board” shall mean Interim Board for settlement constituted under section 245AA, “Member of the Interim Board” shall mean a Member of the Interim Board and “Pending Application” shall mean an application which was filed under section 245C and which was not declared invalid under sub-section (2C) of section 245D and no order under sub-section (4) of section 245D was issued on or before the 31st day of January, 2021 with respect to such application for the purposes of this Chapter.

This amendment will take effect retrospectively from lst February, 2021.

Clause 55 of the Bill seeks to insert a new section 245AA of the Income-tax Act so as to provide for constitution of one or more Interim Board for settlement of pending applications and to provide that every Interim Board shall consist of three members, each being an officer of the rank of Chief Commissioner. If the members of the Interim Board differ in opinion on any point, the point shall be decided according to the opinion of majority.

This amendment will take effect retrospectively from lst February, 2021.

Clause 56 of the Bill seeks to amend section 245B of the said Act so as to provide that the Income tax Settlement Commission shall cease to operate on or after the 1st day of February, 2021.

This amendment will take effect retrospectively from lst February, 2021.

Clause 57 of the Bill seeks to amend section 245BC of the said Act so as to provide that the existing provisions of the said section shall not apply on or after the 1st day of February, 2021.

This amendment will take effect retrospectively from lst February, 2021.

Clause 58 of the Bill seeks to amend section 245BD of the said Act so as to provide that the existing provisions of the said section shall not apply on or after the 1st day of February, 2021.

This amendment will take effect retrospectively from lst February, 2021.

Clause 59 of the Bill seeks to amend section 245C of the said Act so as to provide that no application shall be made under this section on or after 1st day of February, 2021.

This amendment will take effect retrospectively from lst February, 2021.

Clause 60 of the Bill seeks to amend section 245D of the said Act so as to provide that where an order was required to be passed on an application made under sub-section (2C) of the said section on or before the 31st day of January, 2021 and has not been passed till such date, such application shall be deemed to be valid. It is further proposed to amend sub-section (6B) to provide that any order passed under sub-section (4) may be amended and specific reference to any amendment made by Settlement Commission be omitted. It is further proposed to insert sub-section (9) to provide that on and from the 1st day of February, 2021, the provisions of sub-sections (1), (2), (2B), (2C), (3), (4), (4A), (5), (6) and section (6B) shall apply to pending applications allotted to the Interim Board. Further, for the purposes of the said section the date referred to in sub-section (2) of section 245M shall be taken as the date on which the application was made and received under section 245C and where the time-limit for amending any order or filing of rectification application as per subsection (6B) of the said section expires on or after the 1st day of February, 2021, the period of limitation shall exclude the period commencing from the 1st February, 2021 and ending on the end of the month in which the Interim Board is constituted. However, in cases where the remaining period is less than sixty days the same shall be deemed to have been extended to sixty days. It is also proposed to insert sub-section (10) so as to provide that the provisions of sub-sections (6A) and (7) shall have effect as if for the words “Settlement Commission”, the words “Settlement Commission or Interim Board of Settlement”.

It is also proposed to insert sub-sections (11), (12) and (13) in the said section so as to, inter alia, provide for a scheme, by notification in the Official Gazette, for the disposal of pending applications by the Interim Board. Proposed sub-section (11) provides that the Central Government may make a scheme, by notification in the Official Gazette, for the purposes of settlement in respect of pending applications by the Interim Board, so as to impart greater efficiency, transparency and accountability by eliminating the interface between the Interim Board and the assessee in the course of proceedings to the extent technologically feasible, optimising utilisation of the resources through economies of scale and functional specialisation and introducing a mechanism with dynamic jurisdiction.

Proposed sub-section (12) provides that the Central Government may, for the purposes of giving effect to the scheme made under sub-section (11), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification provided no direction shall be issued after the 31st day of March, 2023. Proposed sub-section (13) provides that every notification issued under sub-section (11) and sub-section (12) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.

This amendment will take effect retrospectively from lst February, 2021.

Clauses 61, 62, 63 and 64 of the Bill seeks to amend sections 245DD, 245F, 245G and 245H of the Income-tax Act so as to provide that the powers and functions of Settlement Commission under the said sections shall be exercised or performed by the Interim Board on or after the 1st day of February, 2021 and all the provisions of the said sections shall mutatis mutandis apply to Interim Board as they applied to Settlement Commission.

These amendments will take effect retrospectively from lst February, 2021.

Clause 65 of the Bill seeks to insert new section 245M in the Income-tax Act so as to provide that the assessee an option to withdraw his application made under section 245C.

Proposed sub-section (1) thereof, inter alia, provides that the assessee who had filed an application which is pending before the Interim Board has the option to withdraw such application within three months from the date of commencement of Finance Act, 2021 and intimate the Assessing Officer about such withdrawal in the manner prescribed. However, if such option is not exercised by the assessee within the time allowed, the pending application shall be deemed to have been received by the Interim Board on the date on which it is allotted or transferred to it. The Board may, by an order, allot or transfer any pending application from one Interim Board to another and upon allotment or transfer of a pending application to an Interim Board, all records, documents or evidences with the Settlement Commission, shall be deemed to be the records before such Interim Board.

Proposed sub-section (5) of the said section provides that where an assessee withdraws his application, the proceedings with respect to such application shall abate on the date of withdrawal and the Assessing Officer or any other income-tax authority before whom the proceedings were pending prior to the application shall dispose the case in accordance with the provisions of the said Act and in such case, for the purposes of the time-limit under sections 149, 153, 153B, 154 and 155 and for the purposes of payment of interest under section 243 or 244 or 244A, for making the assessment or re-assessment, the period commencing on and from the date of the application to the Settlement Commission under section 245C and ending with the date of withdrawal of application shall be excluded. It is also proposed to provide that the income-tax authority shall not be entitled to use the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of proceedings before it and the preceding conditions shall not apply in relation to the material and other information collected, or results of the inquiry held or evidence recorded by income-tax authority during the course of any other proceeding under this Act irrespective of whether such material or other information or results of the inquiry or evidence were also produced by the assessee or such income-tax authority before the Settlement Commission.

This amendment will take effect retrospectively from lst February, 2021.

Clause 66 of the Bill seeks to insert a new Chapter XIX-AA containing section 245MA in the Income-tax Act, 1961 relating to Dispute Resolution Committee in certain cases.

Sub-section (1) of said section seeks to provide that the Central Government shall constitute, one or more Dispute Resolution Committee, as may be necessary, in accordance with the rules made under this Act, for dispute resolution in the case of such persons or class of persons, as may be specified by the Board, and who may opt for dispute resolution under this Chapter in respect of dispute arising from any variation in the specified order in his case for an assessment year and who fulfils the specified conditions.

Sub-section (2) of said section seeks to provide that the Dispute Resolution Committee, subject to such conditions, as may be prescribed, shall have the powers to reduce or waive any penalty imposable under this Act or grant immunity from prosecution for any offence punishable under this Act in case of a person whose dispute is resolved under this Chapter.

Sub-section (3) of said section seeks to provide that Central Government may make a scheme, by notification in the Official Gazette, for the purposes of dispute resolution under this Chapter, so as to impart greater efficiency, transparency and accountability by eliminating the interface between the Dispute Resolution Committee and the assessee in the course of dispute resolution proceedings to the extent technologically feasible; optimising utilisation of the resources through economies of scale and functional specialisation; introducing a dispute resolution system with dynamic jurisdiction.

Sub-section (4) of said section seeks to provide that the Central Government may, for the purposes of giving effect to the scheme made under sub-section (3), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. However, no direction shall be issued after the 31st day of March, 2023.

Sub-section (5) of section 245MA seeks to provide that every notification issued under sub-section (3) and sub-section (4) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.

Explanation to section 245MA seeks to provide that the “specified conditions” in relation to a person means a person who is not a person in respect of whom an order of detention has been made under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 or in respect of whom prosecution for any offence punishable under the provisions of the Indian Penal Code, 1860, the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prohibition of Benami Transactions Act, 1988, the Prevention of Corruption Act, 1988 or the Prevention of Money Laundering Act, 2002 has been instituted or such person has been convicted of any offence punishable under any of those Acts; or in respect of whom prosecution has been initiated by an income-tax authority for any offence punishable under the provisions of this Act or the Indian Penal Code or for the purpose of enforcement of any civil liability under any law for the time being in force, or such person has been convicted of any such offence consequent to the prosecution initiated by an Income-tax authority or who is notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 or who fulfils such other conditions, as may be prescribed. Also, “specified order” means such order, including draft order, as may be specified by the Board, and, aggregate sum of variations proposed or made in such order does not exceed ten lakh rupees; such order is not based on search initiated under section 132 or requisition under section 132A in the case of assessee or any other person or survey under section 133A or information received under an agreement referred to in section 90 or section 90A; where return has been filed by the assessee for the assessment year relevant to such order, total income as per such return does not exceed fifty lakh rupees.

This amendment will take effect from the 1st day of April, 2021.

Clause 67 of the Bill seeks to amend section 245N of the Income-tax Act relating to definitions.

It is proposed to omit sub-clauses (B), (C) and (D) of said section with effect from such date as may be appointed by the Central Government by notification in the Official Gazette.

It is further proposed to amend clause (c) of said section so as to insert the words “or the Board for Advance Rulings”. It is also proposed to insert clause (ca) to said section so as to provide definitions of Board for Advance Rulings and members of the Board for Advance Rulings.

This amendment will take effect from 1st April, 2021.

Clause 68 of the Bill seeks to amend section 245-O of the Income-tax Act relating to Authority for Advance Rulings.

It also proposed to insert a proviso in the sub-section (1) of said section so as to provide that the Authority constituted under the said sub-section shall cease to operate on and from such date as may be appointed by the Central Government by notification in the Official Gazette.

This amendment will take effect from 1st April, 2021.

Clause 69 of the Bill seeks to insert a section 245-OB relating to Board for Advance Rulings so as to provide that the Central Government shall constitute one or more Board for Advance Rulings, as may be necessary, for giving advance rulings under this Chapter on or after such date as may be appointed by the Central Government by notification in the Official Gazette. The Board for Advance Rulings constituted shall consist of two members, each being an officer not below the rank of Chief Commissioner, as may be nominated by the Board.

This amendment will take effect from 1st April, 2021.

Clause 70 of the Bill seeks to amend section 245P of the Income-tax Act relating to vacancies, etc., not to invalidate proceedings.

It is proposed to insert sub-section (2) in the said section so as to provide that on and from the notified date, the provisions of the said section shall have effect as if for the words “Authority”, the words “Board for Advance Rulings” had been substituted.

This amendment will take effect from 1st April, 2021.

Clause 71of the Bill seeks to amend section 245Q of the Income-tax Act relating to application for advance ruling.

It is proposed to amend sub-section (1) of said section so as to omit the portion “or under Chapter IIIA of the Central Excise Act, 1944 under Chapter VA of the Finance Act, 1994” with effect from such date as may be appointed by the Central Government by notification in the Official Gazette.

It is further proposed to insert sub-section (4) so as to provide where an application was made under the said section before the notified date but in respect of which no order under sub-section (2) of section 245R has been passed or advance ruling under sub-section (4) of section 245R has been pronounced before such date, such application along with all the relevant records, documents or material, by whatever name called, on the file of the Authority shall be transferred to the Board for Advance Rulings and shall be deemed to be the records before it for all purposes.

This amendment will take effect from 1st April, 2021.

Clause 72 of the Bill seeks to amend section 245R of the Income-tax Act relating to procedure on receipt of application.

It is proposed to insert sub-sections (8), (9), (10) and (11) so as to provide that on such date as may be appointed by the Central Government by notification in the Official Gazette, the provisions of the said section shall have effect as if for the words “Authority”, the words “Board for Advance Rulings” had been substituted and the provisions of that section shall apply mutatis mutandis to the Board for Advance Rulings as they apply to the Authority. Further, it provides that the Central Government may make a scheme, by notification in the Official Gazette, for the purposes of giving advance ruling under Chapter XIX-B by the Board for Advance Rulings, so as to impart greater efficiency, transparency and accountability by eliminating the interface between the Board for Advance Rulings and the applicant in the course of proceedings to the extent technologically feasible; optimising utilisation of the resources through economies of scale and functional specialisation; introducing a system with dynamic jurisdiction. It also provides that the Central Government may, for the purposes of giving effect to the said scheme, by notification in the Official Gazette, direct that any of the provisions of the Income-tax Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. However, no direction shall be issued after 31st March, 2023. Every notification so issued shall, as soon as may be after the notification is issued, be laid before each House of Parliament.

These amendments will take effect from 1st April, 2021.

Clause 73 of the Bill seeks to amend section 245S of the Income-tax Act relating to applicability of advance ruling.

It is proposed to amend the said section to insert sub-section (3) so as to provide that nothing contained in this section shall apply to any advance ruling pronounced under section 245R on or after on such date as may be appointed by the Central Government by notification in the Official Gazette.

This amendment will take effect from 1st April, 2021.

Clause 74 of the Bill seeks to amend section 245T of the Income-tax Act relating to advanced ruling to be void in certain circumstances.

It is proposed to amend the said section so as to provide that the reference in sub290 section (1) to advance ruling pronounced by the Authority shall be omitted by omitting the words “by it”. It is also proposed to insert sub-section (3) to the said section so as to provide that on and from such date as may be appointed by the Central Government by notification in the Official Gazette the provisions of that section shall have effect as if for the word “Authority”, the words “Board for Advance Rulings” had been substituted.

These amendments will take effect from 1st April, 2021.

Clause 75 of the Bill seeks to amend section 245U of the Income-tax Act relating to powers of Authority.

It is proposed to insert sub-section (3) to the said section so as to provide that on and from such date as may be appointed by the Central Government by notification in the Official Gazette, the powers of the Authority under this section shall be exercised by the Board for Advance Rulings and the provisions of this section shall apply mutatis mutandis to the Board for Advance Rulings as they apply to the Authority.

This amendment will take effect from 1st April, 2021.

Clause 76 of the Bill seeks to amend section 245V of the Income-tax Act relating to procedure of Authority.

It is proposed to insert a proviso to the said section so as to provide that nothing contained in that section shall apply on or after the notified date.

This amendment will take effect from 1st April, 2021.

Clause 77 of the Bill seeks to insert a new section 245W to the Income-tax Act relating to Appeal.

It is proposed to insert a new section 245W so as to provide that the applicant may, if he is aggrieved by any ruling pronounced or order passed by the Board for Advance Rulings; or the Assessing Officer, on the directions of the Principal Commissioner or Commissioner, appeal to the High Court within sixty days from the date of the communication of such ruling or order, in such form and manner as may be provided by rules. However, where the High Court is satisfied, on an application made by the appellant in this behalf, that the appellant was prevented by sufficient cause from presenting the appeal within the period specified in sub-section (1), it may grant a further period of thirty days for filing such appeal. It is also proposed that the Central Government may make a scheme, by notification in the Official Gazette, for the purposes of preferring appeal to the High Court by the Assessing Officer, so as to impart greater efficiency, transparency and accountability by optimising utilisation of the resources through economies of scale and functional specialisation; introducing a team-based mechanism with dynamic jurisdiction.

It is also proposed that the Central Government may, for the purposes of giving effect to the said scheme, by notification in the Official Gazette, direct that any of the provisions of the Income-tax Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. However, no direction shall be issued after 31st March, 2023.Every notification so issued shall, as soon as may be after the notification is issued, be laid before each House of Parliament.

This amendment will take effect from 1st April, 2021.

Clause 78 of the Bill seeks to amend the section 255 of the Income-tax Act relating to procedure of Appellate Tribunal.

It is proposed to insert sub-sections (7), (8) and (9) in the said section so as to, inter alia, provide for a scheme, by notification in the Official Gazette, for the disposal of appeals under that section.

This amendment will take effect from lst April, 2021.

Clause 79 of the Bill seeks to amend the section 281B of the Income-tax Act relating to provisional attachment to protect revenue in certain cases.

The said section provides for the provisional attachment of any property belonging to the assessee by the Assessing Officer, with the prior approval of the authorities specified therein, in case of pending assessment or reassessment proceedings so as to protect the interest of revenue.

It is proposed to amend sub-section (1) of the said section so as to provide that the aforesaid provisional attachment of a property of the assessee may also be made during the pendency of proceedings for imposition of penalty under section 271AAD where the amount or aggregate of amounts of penalty likely to be imposed under that section exceeds two crore rupees.

This amendment will take effect from lst April, 2021.

Customs

Clause 80 of the Bill seeks to amend section 2 of the Customs Act by inserting a new clause (7B) therein so as to define the expression “common portal”.

Clause 81 of the Bill seeks to make amendment in sub-section (3) of section 5 of the Customs Act so as to substitute the words and figures “Chapter XV and section 108” with the words, figures, brackets and letter “Chapter XV, section 108 and sub-section (1D) of section 110” for indicating the powers of the Commissioner (Appeals).

Clause 82 of the Bill seeks to insert a new sub-section (4A) in section 25 of the Customs Act so as to provide that the exemption to be granted subject to conditions under sub-section (1) shall, unless otherwise specified or varied or rescinded, be valid for a period upto the 31st March falling immediately after two years from the date of such grant or variation.

It further seeks to insert a proviso therein to provide that in respect of any such exemption in force as on the date on which the Finance Bill, 2021 receives the assent of the President, the said period of two years shall be reckoned from the 1st February, 2021.

Clause 83 of the Bill seeks to insert a new section 28BB in the Customs Act so as to provide time limit for completion of certain actions under this Act.

Clause 84 of the Bill seeks to amend sub-section (3) of section 46 of the Customs Act so as to ensure mandatory filing of bill of entry in advance, i.e. before the day of arrival (including holidays) of conveyance. It further seeks to insert a proviso therein to empower the Board to provide different time limits for presentation of bill of entry in such cases, as it deems fit, to ensure faster clearance.

Clause 85 of the Bill seeks to amend section 110 of the Customs Act and to insert a new sub-section (1D) so as to provide that where gold in any form has been seized by a proper officer under sub-section (1), he shall make the application referred to in sub-section (1B) to the Commissioner (Appeals) having jurisdiction, who shall, as soon as may be, allow the application and the proper officer shall thereafter dispose of the goods in such manner as the Central Government may determine.

Clause 86 of the Bill seeks to insert a new clause (ja) in section 113 of the Customs Act so as to provide that any goods entered for exportation under claim of remission or refund of any duty or tax or levy, to make a wrongful claim in contravention of the Act or any other law for the time being in force shall be liable to confiscation.

Clause 87 of the Bill seeks to insert a new section 114AC in the Customs Act so as to provide penalty for fraudulent utilisation of input tax credit for discharging any duty or tax on goods entered for exportation under claim of refund and such penalty shall be equivalent to five times the refund claimed.

Clause 88 of the Bill also seeks to make consequential amendment in the Explanation to section 139 of the Customs Act so as to include inventories, photographs and lists certified by the Commissioner (Appeals) under sub-section (1D) to the documents within the meaning of that section to give evidentiary value to such documents.

Clause 89 of the Bill seeks to amend section 149 of the Customs Act by inserting second and third provisos therein so as to provide that documents may be amended electronically through the customs automated system and also to enable certain amendments to be done by the importer or exporter on common portal.

Clause 90 of the Bill seeks to amend sub-section (1) of section 153 of the Customs Act by inserting clause (ca) therein so as to enable service of order, summons, notice or any other communication under the said Act by making it available on the common portal.

Clause 91 of the Bill seeks to insert a new section 154C in the Customs Act so as to empower the Board to notify a common portal to be called the Common Customs Electronic Portal for facilitating registration, filing of bill of entry, shipping bill, other documents and forms, payment of duty and for such other purposes as may be specified by the Board.

Customs tariff

Clause 92 of the Bill seeks to amend sub-section (6) of section 8B of the Customs Tariff Act to make both conditions thereunder mutually exclusive and to define the expression ‘special economic zone’ in the same manner as defined in the Special Economic Zone Act, 2005 (28 of 2005).

Clause 93 of the Bill seeks to amend sub-section (1A) of section 9 of the Customs Tariff Act to provide for retrospective levy of countervailing duty to counter circumvention.

It further seeks to insert a new sub-section (1B) in the said section to provide for antiabsorption measures in countervailing duty. It also seeks to insert a new sub-section (2A) in that section to align it with the provisions contained in sub-section (6) of section 8B of the said Act relating to safeguard measures. It also seeks to amend sub-section (6) thereof to provide for further imposition of countervailing duty after review, for a period upto five years. It also seeks to insert a third proviso therein so as to provide that if countervailing duty is revoked temporarily, the period of such revocation shall not be more than one year at a time.

Clause 94 of the Bill seeks to amend sub-section (1A) of section 9A of the Customs Tariff Act to provide for retrospective levy of anti-dumping duty to counter circumvention.

It further seeks to insert a new sub-section (1B) in the said section to provide for anti-absorption measures in anti-dumping duty. It also seeks to substitute sub-section (2A) in that section to align it with the provisions contained in sub-section (6) of section 8B of the said Act relating to safeguard measures. It also seeks to amend sub-section (5) thereof to provide for further imposition of anti-dumping duty after review, for a period upto five years. It also seeks to insert a third proviso therein so as to provide that if anti-dumping duty is revoked temporarily, the period of such revocation shall not be more than one year at a time.

Clause 95 of the Bill seeks to amend the First Schedule to the Customs Tariff Act, 1975, so as to ––

(i) revise the tariff rates in respect of certain tariff items in the manner specified in the Second Schedule with effect from the 2nd February, 2021;

(ii) amend certain tariff entries to align with the entries in the Fourth Schedule to the Central Excise Act in the manner specified in the Third Schedule with effect from the 1st April, 2021;

(iii) harmonise certain entries with Harmonised System of Nomenclature and to create new tariff lines in respect of certain entries in the manner specified in the Fourth Schedule with effect from the 1st January, 2022.

Excise

Clause 96 of the Bill seeks to amend the Fourth Schedule to the Central Excise Act.

Sub-clause (i) of the said clause seeks to revise the heading, tariff items and entries falling under the heading 2709 of Chapter 27 thereof, with effect from the 1st April, 2021 in the manner specified in the Fifth Schedule;

Sub-clause (ii) of the said clause seeks to amend Section heading of SECTION IV and certain entries of Chapter 24 thereof, with effect from the 1st January, 2022 in the manner specified in the Sixth Schedule.

Clause 97 of the Bill seeks to amend the Fourth Schedule to the Central Excise Act so as to rectified errors in certain entries with retrospective effect from the 1st day of January, 2020.

Clause 98 of the Bill seeks to revise the date of effect to the amendments made in the Fourth Schedule to the Central Excise Act vide notification number G.S.R. 978 (E), dated the 31st December, 2019, issued in exercise of powers under section 3C thereof, so as to give effect to said amendments on and from the 1st day of January, 2020.

Central Goods and Services Tax

Clause 99 of the Bill seeks to amend section 7 of the Central Goods and Services Tax Act, 2017, with retrospective effect from the 1st July, 2017, by inserting a new clause (aa) in sub-section (1) thereof, so as to ensure levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.

It is also proposed to insert an Explanation therein, to clarify that the person or its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one person to another.

Clause 100 of the Bill seeks to amend section 16 of the Central Goods and Services Tax Act by inserting a new clause (aa) in sub-section (2) thereof, so as to provide that input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note.

Clause 101 of the Bill seeks to omit sub-section (5) of section 35 of the Central Goods and Services Tax Act so as to remove the mandatory requirement of getting annual accounts audited and the reconciliation statement submitted by specified professional.

Clause 102 of the Bill seeks to substitute a new section for section 44 of the Central Goods and Services Tax Act so as to remove the mandatory requirement of furnishing a reconciliation statement duly audited by specified professional and to provide for filing of the annual return on self-certification basis. It further empowers the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return.

Clause 103 of the Bill seeks to amend section 50 of the Central Goods and Services Tax Act to substitute the proviso to sub-section (1) so as to charge interest on net cash liability retrospectively with effect from the 1st July, 2017.

Clause 104 of the Bill seeks to amend section 74 of the Central Goods and Services Tax Act so as to make seizure and confiscation of goods and conveyances in transit a separate proceeding from the recovery of tax.

Clause 105 of the Bill seeks to amend section 75 of the Central Goods and Services Tax Act so as to insert an Explanation in sub-section (12) to clarify that “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.

Clause 106 of the Bill seeks to substitute sub-section (1) of section 83 of the Central Goods and Services Tax Act so as to provide that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV till the expiry of a period of one year from the date of order made thereunder.

Clause 107 of the Bill seeks to insert a new proviso in sub-section (6) of section 107 of the Central Goods and Services Tax Act so as to provide that no appeal shall be filed against an order made under sub-section (3) of section 129, unless a sum equal to twenty-five per cent. of the penalty has been paid by the appellant.

Clause 108 of the Bill seeks to amend section 129 of the Central Goods and Services Tax Act so as to delink the proceedings under that section relating to detention, seizure and release of goods and conveyances in transit, from the proceedings under section 130 relating to confiscation of goods or conveyances and levy of penalty.

Clause 109 of the Bill seeks to amend section 130 of the Central Goods and Services Tax Act, so as to delink the proceedings under that section relating to confiscation of goods or conveyances and levy of penalty from the proceedings under section 129 relating to detention, seizure and release of goods and conveyances in transit.

Clause 110 of the Bill seeks to substitute section 151 of the Central Goods and Services Tax Act so as to empower the jurisdictional commissioner to call for information from any person relating to any matters dealt with in connection with the Act.

Clause 111 of the Bill seeks to amend sub-section (1) of section 152 of the Central Goods and Services Tax Act so as to provide that no information obtained under sections 150 and 151 shall be used for the purposes of any proceedings under the Act without giving an opportunity of being heard to the person concerned.

Clause 112 of the Bill seeks to amend section 168 of the Central Goods and Services Tax Act so as to enable the jurisdictional commissioner to exercise powers under section 151 to call for information.

Clause 113 of the Bill seeks to omit paragraph 7 of Schedule II to the Central Goods and Services Tax Act, with retrospective effect from the 1st day of July, 2017, consequent to the amendments made in section 7.

Integrated Goods and Services Tax

Clause 114 of the Bill seeks to amend section 16 of the Integrated Goods and Services Tax Act, 2017 so as to make provisions for restricting the zero rated supply on payment of integrated tax only to specified class of taxpayers or specified supplies of goods or services.

It further provides to link the foreign exchange remittance in case of export of goods with refund and further restricting zero rating of supplies made to special economic zone only when such supplies are for authorised operations.

Agriculture Infrastructure and Development Cess

Clause 115 of the Bill seeks to provide for levy and collection of Agriculture Infrastructure and Development Cess as duty of customs, on goods specified in the First Schedule to the Customs Tariff Act, being goods imported into India, at the rate not exceeding the rate of customs duty as specified in the said Schedule for the purposes of the Union for financing the agriculture infrastructure and other development expenditure.

Clause 116 of the Bill seeks to provide for levy and collection of Agriculture Infrastructure and Development Cess as an additional duty of excise, on excisable goods specified in the Seventh Schedule, at the rate specified in the said Schedule, for the purposes of the Union for financing the agriculture infrastructure and other development expenditure.

Miscellaneous

Clause 117 of the Bill seeks to insert a new section 8G in the Indian Stamp Act, 1899 to provide that strategic sale, disinvestment, etc., of immovable property by Government company shall not be liable to stamp duty.

Clause 118 of the Bill seeks to insert a new sub-section (3) in section 2 of the Contingency Fund of India Act, 1950 relating to enhancement of the Contingency Fund of India so as to enhance the corpus of the Fund from five hundred crores of rupees, as at present, to thirty thousand crores of rupees by transfer of an additional amount of twenty nine thousand five hundred crores of rupees from the Consolidated Fund of India to the Contingency Fund of India.

This amendment will take effect from the date on which the Finance Bill, 2021 receives the assent of the President.

Clauses 119 to 137 of the Bill seek to amend certain provisions of the Life Insurance Corporation Act, 1956 (hereinafter referred to as “the LIC Act”).

It is proposed to amend section 2 of the LIC Act so as to insert new clauses to define the expressions “Audit Committee”, “Board of Directors” or “Board”, “Chairperson”, “Companies Act”, “court”, “director”, “financial statement”, “fully diluted basis”, “independent director”, “Managing Director”, “Nomination and Remuneration Committee”, “notification” and “special resolution”, to amend the definition of expression “member”, and to provide that the words and expressions not defined in the LIC Act or in the Insurance Act, 1938 but defined in the Companies Act, 2013, shall have the meanings respectively assigned to them in the Companies Act, 2013. These amendments are consequential to the other amendments proposed to the LIC Act.

It is further proposed to substitute section 4 of the LIC Act, to provide for the vesting of the general superintendence and direction of the affairs and business of the Life Insurance Corporation of India (hereinafter referred to as “LIC”) in its Board of Directors, the composition thereof, the appointment or nomination of directors thereon, and deeming of members constituting LIC immediately before the coming into force of this section as directors under the substituted section 4, in order to bring the provisions relating to corporate governance in alignment with the requirements under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 made by the Securities and Exchange Board of India under the provisions of the Securities and Exchange Board of India Act, 1992, and thereby enabling the listing of LIC on recognised stock exchanges and making of an initial public offer, through which Government may sell its shares in LIC.

It is also proposed to insert new sections 4A, 4B, 4C and 4D in the LIC Act to provide for disqualifications to be a director, disclosure of interest by director and senior management, related party transactions and adjudication of penalties for contravention or violation liable to penalty under the LIC Act, in order to bring the provisions relating to corporate governance in alignment with listing requirements.

It is also proposed to substitute section 5 of the LIC Act, to provide for LIC’s capital, issue of equity shares to the Central Government in consideration for paid-up equity capital provided by the Central Government to LIC before the coming into force of the new section, application of premiums received on issue of LIC’s shares, increase or reduction of share capital by the Central Government, making of reservation on a competitive basis in favour of LIC’s life insurance policyholders who may be offered shares at a price lower than that offered to public, eligibility of all LIC shares acquired by the Central Government during three years preceding an initial public offer for computation of minimum promoter’s contribution and of all fully paid-up equity shares of LIC held by the Central Government for an offer of sale by way of an initial public offer notwithstanding any ineligibility for such computation or any condition for a minimum holding period under any law for the time being in force, and issuing of other securities by LIC for raising funds to meet its business requirements. These amendments will enable issue of shares to the Central Government against paid-up capital invested by it in LIC as well as issue of bonus shares to the Central Government, which could be offered for sale by way of an initial public offer, with resultant receipt of money into the Consolidated Fund of India.

It is also proposed to insert new sections 5A, 5B, 5C, 5D, 5E and 5F in the LIC Act, to provide respectively for transferability of shares, voting rights, register of members, declaration in respect of beneficial interest in shares, deeming of LIC’s shares to be securities and right of registered shareholders to nominate, in order to bring the provisions relating to share transfer, rights of shareholders including voting in shareholder meeting, disclosure of beneficial interest in securities and recognition of securities as shares in alignment with the requirements under the Securities Contract (Regulation) Act, 1956 and listing requirements.

It is also proposed to substitute section 19 of the LIC Act to provide for the constitution, composition and powers of the Executive Committee of the Board, in order to bring the provisions relating to corporate governance in alignment with listing requirements.

It is also proposed to insert new sections 19A, 19B, 19C and 19D in the LIC Act to provide for the constitution, composition and the powers, functions and duties of various committees of the Board, in order to bring the provisions relating to corporate governance in alignment with listing requirements.

It is also proposed to substitute section 20 of the LIC Act to provide for entrustment and delegation of powers and duties of the Chairperson and Managing Directors of LIC by its Board, in order to bring the provisions relating to corporate governance in alignment with listing requirements.

It is also proposed to amend section 22 of the LIC Act to omit the existing provision under sub-section (2) for constitution of a Board in each zone of LIC and to amend the existing provision for a “member” of LIC (who corresponds to a director under the proposed amendments) to be a Zonal Manager of LIC, consequential to proposed constitution of Board of LIC under the substituted section 4 and the disqualification to be a director under clause (l) of the new section 4A.

It is also proposed to insert new section 23A in the LIC Act, to provide for annual general meeting and other general meetings of registered shareholders of LIC, in order to bring the provisions relating to the rights of LIC’s shareholders in alignment with listing requirements.

It is also proposed to substitute section 24 of the LIC Act, to provide for LIC having a multiplicity of funds, establishment of reserves and maintenance of separate funds for participating and non-participating policyholders of LIC, which are matters incidental to the proposed new sections 28, 28B and 28C.

It is also proposed to insert new sections 24A, 24B, 24C and 24D in the LIC Act, to provide respectively for books of account, financial statements, Board’s report and penalties for contravention by person charged with the duty of complying with the provisions of new sections 24A or 24B or 24C, in order to bring the provisions relating to the integrity of LIC’s accounting and financial reporting systems, control systems and compliance with the law and relevant standards in alignment with listing requirements.

It is also proposed to substitute section 25 of the LIC Act, to provide for appointment of auditors, and bring the provisions relating to the integrity of LIC’s audit, accounting standards and compliance with the law and relevant standards in alignment with listing requirements.

It is also proposed to insert new sections 25A, 25B, 25C and 25D in the LIC Act, to provide respectively for removal and resignation of auditor, powers and duties of auditor and auditor’s report, internal auditor and special auditor, in order to bring the provisions relating to the integrity of LIC’s audit, accounting standards and compliance with the law and relevant standards in alignment with listing requirements.

It is also proposed to amend section 26 of the LIC Act to provide for substitution of the reference to the Corporation with reference to the Board, consequential to constitution of the Board of LIC under the proposed amended section 4 in place of the constitution of the Corporation under the existing section 4.

It is also proposed to amend section 27 of the LIC Act, to omit the provisions relating to giving in the Annual Report an account of activities likely to be taken by LIC in the next financial year, in order to bring the provisions relating to the Annual Report in alignment with listing requirements.

It is also proposed to substitute section 28 of the LIC Act, to provide for the allocation to or reservation for registered shareholders of one hundred per cent. of the surplus relating to non-participating policyholders in every financial year’s surplus, in addition to up to ten per cent. of the surplus relating to participating policyholders, as against a maximum of ten per cent. of the total surplus under the existing section 28, representing enhancement in money receivable into the Consolidated Fund of India on account of such increased allocation or reservation.

It is also proposed to amend section 28A and insert new sections 28B and 28C in the LIC Act, to make provisions regarding the declaration of dividend and crediting of unclaimed and unpaid dividend amount to an Unpaid Dividend Account, in order to bring the provisions relating to dividends in alignment with listing requirements and consequential to the provision under the proposed new section 5 for issue of equity share capital to persons other than the Central Government.

It is also proposed to substitute section 46 of the LIC Act, to provide that defects in constitution of the Board and committees thereof, or in appointment or nomination of directors, will not invalidate their acts or proceedings, which are matters incidental to the proposed creation of the Board and its committees under the proposed new sections 4, 19, 19A, 19B, 19C and 19D.

It is also proposed to substitute section 47 in the LIC Act, to provide for protection of action taken by a director other than a whole-time director, which are matters incidental to the provision for independent, elected and other categories of non-whole-time directors under the proposed new section 4.

It is also proposed to amend sub-section (2) of section 48 of the LIC Act, to provide for making of rules by the Central Government relating to various matters that are either incidental to or consequent upon the various other amendments proposed in this Part.

It is also proposed to amend section 49 of the LIC Act, to provide for making of regulations by the Board of LIC relating to various matters that are either incidental or consequent upon the various other amendments proposed in this Part.

It is also proposed to insert new sections 50 and 51 in the LIC Act to provide for the form, manner, etc. for companies to apply with modifications to LIC, and to provide for the power of the Central Government to remove difficulties by order published in the Official Gazette, which are matters incidental to the various other amendments proposed in this Part.

These amendments will take effect from such dates as the Central Government may, by notification in the Official Gazette, appoint.

Clauses 138 to 140 of the Bill seeks to amend the provisions of the Securities Contracts (Regulation) Act, 1956.

It is proposed to define the expression “pooled investment vehicle”. It is further proposed to clarify that debt securities and such other marketable securities as well as the units issued by pooled investment vehicles are “securities”.

It is also proposed to insert a new section 30B in the said Act to specify that a pooled investment vehicle, whether constituted as a trust or otherwise, shall be eligible to borrow and issue debt securities and shall be permitted to provide security interest to lenders, in terms of the facility documents, entered into by such pooled investment vehicles. It further provides that in case of default, the lenders shall recover the defaulted amount against the trust assets, by initiating proceedings against the trustee acting on behalf of the pooled investment vehicle, and whatever remains after paying the lenders shall be remitted to the unit holders.

These amendments will take effect from 1st April, 2021.

Clause 141 of the Bill seeks to amend sub-section (3) of section 8 of the Central Sales Tax Act, 1956 by substituting clause (b) thereof, so as to exclude therefrom the goods used in the telecommunication network or in mining or in generation or distribution of electricity or any other form of power.

Clauses 142 to 147 of the Bill seeks to amend certain provisions of the Prohibition of Benami Property Transactions Act, 1988.

Clause (1) of section 2 of the Act provides for the definition of the expression Adjudicating Authority. It is proposed to amend said clause so as to substitute words “referred to in” for the words “appointed under”.

Section 7 of the said Act empowers the Central Government to appoint one or more Adjudicating Authority by notification to exercise jurisdiction, powers and authority conferred by or under that Act. It is further proposed to substitute the said section 7 so as to provide that the Competent Authority constituted under sub-section (1) of section 5 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 shall be the Adjudicating Authority to exercise jurisdiction, powers and authority conferred by or under this Act.

It is also proposed to consequentially omit sections 8 to 17 of the said Act.

It is also proposed to amend sub-section (7) of section 26 of the said Act so as to provide that where the time limit for passing an order provided therein expires during the period beginning from 1st July, 2021 and ending on 29th September, 2021, the time limit for passing such order shall be extended to 30th September, 2021.

It is also proposed to consequentially omit clauses (b) and (c) of sub-section (2) of section 68 of the said Act.

These amendments will take effect from 1st July, 2021.

Clause 148 of the Bill seeks to amend section 12 of the Securities and Exchange Board of India Act, 1992 relating to regulation of stock-brokers, sub-brokers, share transfer, agents, etc.

It is proposed to insert a new sub-section (1C) in the said section so as to provide that any alternative investment fund or a business trust as defined in clause (13A) of section 2 of the Income-tax Act, 1961, shall establish and operate only after the Securities and Exchange Board of India grants a certificate of registration in accordance with the regulations made under the said Act.

This amendment will take effect from 1st April, 2021.

Clause 149 of the Bill seeks to amend section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 relating to definitions.

It is proposed to amend clause (g) of the said section so as to clarify that definition of “debt” shall also include debt incurred by pooled investment vehicles as defined in clause (da) of section 2 of the Securities Contracts (Regulation) Act, 1956.

This amendment is consequential in nature in view of the insertion of new section 30B in the Securities Contracts (Regulation) Act, 1956.

This amendment will take effect from 1st April, 2021.

Clause 150 of the Bill seeks to amend the Seventh Schedule of the Finance Act, 2001, with effect from 1st January, 2022.

Clause 151 of the Bill seeks to amend the provisions of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

It is proposed to amend clause (f) of sub-section (1) of the said section so as to clarify that the definition of “borrower” in the said Act shall also include a pooled investment vehicle, consequent to insertion of section 30B in the Securities Contracts (Regulation) Act, 1956. Further, the definition of secured creditor is being expanded to include debenture trustee appointed by a pooled investment vehicle also by removing the limitation of appointment of a debenture trustee by a company.

This amendment will take effect from 1st April, 2021.

Clauses 152 and 153 of the Bill seeks to amend the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003.

It is proposed to amend section 3 of the said Act so as to provide that the existing provision under the first proviso to clause (a) of sub-section (2) of section 3 of the said Act to the effect that the Industrial Development Bank of India Limited shall not be required to obtain licence under section 22 of the Banking Regulation Act, 1949, shall cease to be in operation immediately after the commencement of Part…. of the Finance Act, 2021, and that, from such commencement, the Industrial Development Bank of India Limited shall be deemed to have obtained a licence under the said section 22, which will be a condition precedent to disinvestment of Government’s stake in said Bank resulting in receipts to Government.

These amendments will take effect from such date as the Central Government may, by notification in the Official Gazette appoint.

Clause 154 and 155 of the Bill seeks to amend section 97 of the Finance Act (No.2) Act, 2004.

Chapter-VII of the said Act provides for Securities Transaction Tax.

It is proposed to amend sub-clause (b) of clause (13) of section 97 of the said Act so as to include sale or surrender or redemption of a unit of an equity oriented fund to the insurance company, on maturity or partial withdrawal, with respect to unit linked insurance policy issued by such insurance company on or after 1st February, 2021, under the definition of “taxable securities transaction”.

It is further proposed to insert clause (13A) to the said section define the expression “unit linked insurance policy”.

These amendments will take effect retrospectively from 1st February, 2021.

Clause 156 of the Bill seeks to amend section 98 of the Finance Act (No.2) Act, 2004.

It is proposed to insert serial number 5A and entries relating thereto in the Table in section 98 so to provide that the rate for sale or surrender or redemption of a unit of an equity oriented fund to an insurance company, on maturity or partial withdrawal, with respect to unit linked insurance policy issued by such insurance company on or after 1st February, 2021.

This amendment will take effect retrospectively from 1st February, 2021.

Clauses 157 and 158 of the Bill seeks to amend sections 100 and 101 of the Finance Act (No.2) Act, 2004.

It is proposed to consequentially amend sections 100 and 101 of the said Act so as to include insurance company within their purview.

This amendment will take effect retrospectively from 1st February, 2021.

Clause 159 of the Bill seeks to amend sections 163, 164,165A and 191 of the Finance Act, 2016.

It is proposed to insert a proviso to sub-section (3) of section 163 of the said Act to provide that the consideration received or receivable for specified services and consideration received or receivable for e-commerce supply or services shall not include the consideration, which are taxable as royalty or fees for technical services in India under the Income-tax Act read with the agreement notified by the Central Government under section 90 or section 90A of the said Act.

It is further proposed to insert an Explanation in clause (cb) of section 164 of the said Act to provide that for the purpose of defining e-commerce supply or service, “online sale of goods” and “online provision of services” shall include one or more of the following online activities, namely:––

(a) acceptance of offer for sale;

(b) placing of purchase order;

(c) acceptance of the purchase order;

(d) payment of consideration; or

(e) supply of goods or provision of services, partly or wholly.

It is also proposed to amend sub-section (3) of section 165A of the said Act to provide that consideration received or receivable from e-commerce supply or services shall include–

(i) consideration for sale of goods irrespective of whether the e-commerce operator owns the goods;

(ii) consideration for provision of services irrespective of whether service is provided or facilitated by the e-commerce operator.

These amendments will take effect retrospectively from 1st April, 2020.

It is also proposed to amend section 191 of the Finance Act, 2016 relating to exemption from wealth-tax in respect of assets specified in declaration.

The said section, inter alia, provides that any excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under the Income Declaration Scheme, 2016 shall not be refundable. The proviso to the said section provides that the Central Government may, by notification, specify a class of persons to whom the excess amount so paid shall be refundable.

It is proposed to amend the said proviso to provide that such excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under the aforementioned Scheme shall be refundable to the specified class of persons without payment of any interest.

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

Clause 160 of the Bill seeks to amend section 2 of the Direct Tax Vivad se Vishwas Act, 2020 relating to definitions.

It is proposed to make the following amendments in sub-section (1) of the said section, namely:––

(i) clause (a) of the said sub-section provides the definition of appellant. It is proposed to amend the said clause by inserting an Explanation for the removal of doubts, to clarify that the expression “appellant” shall not include and shall be deemed never to have been included a person in whose case a writ petition or special leave petition or any other proceeding has been filed either by him or by the income-tax authority or both, before an appellate forum arising out of an order of Income-tax Settlement Commission under Chapter XIX-A of the Income-tax Act, and such petition or appeal is either pending or is disposed of;

(ii) clause (j) of said sub-section provides definition of disputed tax. It is further proposed to amend the said clause by inserting an Explanation for the removal of doubts, to clarify that the expression “disputed tax”, in relation to an assessment year or financial year, as the case may be, shall not include and shall be deemed never to have been included any sum payable either by way of tax, penalty or interest pursuant to an order passed by the Income-tax Settlement Commission under Chapter XIX-A of the Income-tax Act; and (iii) clause (o) of the said sub-section provides for the definition of the expression “tax arrear”. It is proposed to amend the said clause by inserting an Explanation for removal of doubts to clarify that the expression “tax arrear” shall not include and shall be deemed never to have been included any sum payable either by way of tax, penalty or interest pursuant to an order passed by the Settlement Commission under Chapter XIX-A of the Income-tax Act.

These amendments will take effect retrospectively from 17th March, 2020.

 
 
 
 
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