Amendment of section 56.
32. In section 56 of the Income-tax Act, in sub-section (2), with effect from the 1st day of April, 2024,––
(a) in clause (viib), the words “being a resident” shall be omitted;
(b) after clause (xi), the following clauses shall be inserted, namely:––
‘(xii) any sum received by a unit holder from a business trust which––
(a) is not in the nature of income referred to in clause (23FC) or clause (23FCA) of section 10; and
(b) is not chargeable to tax under sub-section (2) of section 115UA:
Provided that where the sum received by a unit holder from a business trust is for redemption of unit or units held by him, the sum so received shall be reduced by the cost of acquisition of the unit or units to the extent such cost does not exceed the sum received;
(xiii) where any sum is received, including the amount allocated by way of bonus, at any time during a previous year, under a life insurance policy, other than the sum,––
(a) received under a unit linked insurance policy;
(b) being the income referred to in clause (iv),
which is not to be excluded from the total income of the previous year in accordance with the provisions of clause (10D) of section 10, the sum so received as exceeds the aggregate of the premium paid, during the term of such life insurance policy, and not claimed as deduction under any other provision of this Act, computed in such manner as may be prescribed.
Explanation.-For the purposes of this clause “unit linked insurance policy” shall have the meaning assigned to it in Explanation 3 to clause (10D) of section 10.’.
Notes on Clauses:
Clause 32 of the Bill seeks to amend section 56 of the Income-tax Act relating to income from other sources.
Sub-section (2) of the said section provides for incomes that are chargeable to income tax under the head “Income from other sources”.
The provisions of clause (viib) of sub-section (2) of the said section, inter alia, provides that where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be chargeable to income tax under the head “Income from other sources”.
It is proposed to omit the words “being a resident” from the said clause (viib) so as to cover all the investors within the ambit of the said clause of sub-section (2) of section 56, irrespective of their residency.
It is further proposed to insert a new clause (xii) in the said sub-section (2) to provide that income chargeable to income-tax under the head “income from other sources” shall also include any sum received by a unit holder from a business trust which––
(a) is not in the nature of income referred to in clause (23FC) or clause (23FCA) of section 10; and
(b) is not chargeable to tax under sub-section (2) of section 115UA.
It is also proposed to insert a proviso to the said clause (xii) of the said sub-section (2) to provide that where the sum received by a unit holder from a business trust is for redemption of unit or units held by him, the sum so received shall be reduced by the cost of acquisition of the unit or units to the extent such cost does not exceed the sum received.
It is also proposed to insert clause (xiii) in the said sub-section (2) so as to provide that where any sum is received, including the amount allocated by way of bonus, at any time during a previous year, under a life insurance policy, other than the sum,––
(a) received under a unit linked insurance policy;
(b) being the income referred to in clause (iv),
which is not to be excluded from the total income of the previous year in accordance with the provisions of clause (10D) of section 10, the sum so received as exceeds the aggregate of the premium paid, during the term of such life insurance policy, and not claimed as deduction in any other provision of the Act, computed in the manner as may be provided by rules shall be chargeable to income-tax under the head “Income from other sources”.
It is also proposed to define the expression “unit linked insurance policy” for the purposes of the said clause.
These amendments will take effect from 1st April, 2024 and will, accordingly, apply in relation to the assessment year 2024-2025 and subsequent assessment years.
