Amendment of section 94.
25. In section 94 of the Income-tax Act, with effect from the 1st day of April, 2023,––
(i) in sub-section (8), for the word “units” wherever it occurs, the words “securities or units” shall be substituted;
(ii) in the Explanation,––
(a) for clause (aa), the following clause shall be substituted, namely:––
‘(aa) “record date” means such date as may be fixed by-
(i) a company;
(ii) a Mutual Fund or the Administrator of the specified undertaking or the specified company referred to in the Explanation to clause (35) of section 10; or
(iii) a business trust defined in clause (13A) of section 2; or
(iv) an Alternative Investment Fund defined in clause (b) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992, (15 of 1992)
for the purposes of entitlement of the holder of the securities or units, as the case may be, to receive dividend, income, or additional securities or units without any consideration, as the case may be,’;
(b) for clause (d), the following clause shall be substituted, namely:––
‘(d) “unit" shall mean,––
(i) a unit of a business trust defined in clause (13A) of section 2;
(ii) a unit defined in clause (b) of the Explanation to section 115AB; or
(iii) beneficial interest of an investor in an Alternative Investment Fund, defined in clause (b) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), and shall include shares or partnership interests.’.
Notes on Clauses:
Clause 25 seeks to amend section 94 of the Income-tax Act relating to avoidance of tax by certain transactions in securities.
It is proposed to amend sub-section (8) of said section so as to provide that the provisions of the said sub-section shall also be applicable to securities.
It is further proposed to substitute clause (aa) of the Explanation to the said section, so as to substitute the definition of the expression "record date" to mean such date as may be fixed by a company, or a Mutual Fund or the Administrator of the specified undertaking or the specified company referred to in the Explanation to clause (35) of section 10; or a business trust as defined in clause (13A) of section 2; or an Alternative Investment Fund as defined in clause (b) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992, for the purposes of entitlement of the holder of the securities or units, as the case may be, to receive dividend, income, or additional securities or unit without any consideration, as the case may be.
It is also proposed to amend clause (d) of the aforesaid, Explanation to amend the definition of the term “unit”.
These amendments will take effect from the 1st April, 2023 and will, accordingly, apply in relation to the assessment year 2023-2024 and subsequent assessment years.
