TMI BlogNotes on clauses - Income-taxX X X X Extracts X X X X X X X X Extracts X X X X ..... for deduction of tax at source during the financial year 2011-2012 from income other than Salaries Part II of the First Schedule to the Bill specifies the rates at which income-tax is to be deducted at source during the financial year 2011-2012 from income other than Salaries . The rates are the same, as those specified in Part II of the First Schedule to the Finance Act, 2010 for the purposes of deduction of income- tax at source during the financial year 2010-2011. However, in view of the proposed insertion of new section 194LB, a special rate of tax deduction at five per cent will apply in case of certain interest payments to a non-resident. The amount of tax so deducted shall be increased by a surcharge in the case of every company other than a domestic company at the rate of two per cent. No surcharge will be levied in any other case. Rates for deduction of tax at source from Salaries , computation of advance tax and charging of income tax in special cases during the financial year 2011-2012 Part III of the First Schedule to the Bill specifies the rates at which income-tax is to be deducted at source from, or paid on, income under the head Salaries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rates of income-tax in the case of every co-operative society. In such cases, the rates of tax will continue to be the same as those specified for assessment year 2011-2012. No surcharge will be levied. Paragraph C of this Part specifies the rate of income-tax in the case of every firm. In such cases, the rate of tax will continue to be the same as that specified for assessment year 2011-2012. No surcharge will be levied. Paragraph D of this Part specifies the rate of income-tax in the case of every local authority. In such cases, the rate of tax will continue to be the same as that specified for the assessment year 2011-2012. No surcharge will be levied. Paragraph E of this Part specifies the rates of income-tax in the case of companies. In both the cases of domestic companies and companies other than domestic companies, the rate of tax will continue to be the same as that specified for assessment year 2011-2012. Surcharge in the case of domestic companies having income above one crore rupees is proposed to be reduced to five per cent. from the existing rate of seven and one-half per cent. In case of companies other than domestic companies, the surcharge is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s year. This amendment will take effect from 1st April, 2012 and will, accordingly, apply in relation to the assessment year 2012-2013 and subsequent years. Clause 4 of the Bill seeks to amend section 10 of the Income-tax Act relating to incomes not included in total income. The Explanation to clause (34) of the aforesaid section was inserted by way of a modification vide section 27 of the Special Economic Zones Act, 2005 read with the Second Schedule thereof. The existing provisions contained in the Explanation to clause(34) of the aforesaid section clarify that the dividend referred to in section 115-O shall not be included in the total income of the assessee, being a Developer or entrepreneur. Sub-clause (a) of this clause of the Bill seeks to omit the Explanation to clause (34) of the aforesaid section. This amendment will take effect from 1st June, 2011. Under the existing provisions contained in the Income-tax Act, any perquisites or allowances received by an employee is taxable under the head salary unless it is specifically exempted under the Act. Sub-clause (b) seeks to insert a new clause (45) in the said section so as to provide exemption to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012 and will, accordingly, apply in relation to assessment year 2012-2013 and subsequent years. Clause 6 of the Bill seeks to amend section 35AD of the Income-tax Act relating to deduction in respect of expenditure on specified business. The existing provisions contained in sub-section (5) of the aforesaid section provide for the date of commencement of operations of the specified businesses referred to in sub-section (2) of the said section for the purposes of availing the deduction. Further, the existing provisions of clause (c) of sub-section (8) of the aforesaid section define the expression specified business . The amendments proposed to the aforesaid section seek to include two new businesses as specified business along with their dates of commencement and also to omit the word new from the existing definition of specified business in respect of new hotel and new hospital. Sub-clause (a) of this clause seeks to insert a new clause (ad) in the said sub-section (5) so as to provide that the date of commencement of operations shall be on or after the 1st day of April, 2011 where a business is in the nature of developing and building a housing project und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . of the salary of the employee in the previous year shall be allowed as a deduction. This amendment will take effect from 1st April, 2012 and will, accordingly, apply in relation to the assessment year 2012-2013 and subsequent years. Clause 8 of the Bill seeks to amend section 80CCE of the Income-tax Act relating to the limit on deductions under sections 80C, 80CCC and 80CCD. The existing provisions contained in the aforesaid section 80CCE provide that the aggregate amount of deductions under section 80C, section 80CCC and section 80CCD shall not exceed one lakh rupees. It is proposed to amend the aforesaid section 80CCE so as to provide that contribution made by the Central Government or any other employer to a pension scheme under sub-section (2) of section 80CCD shall not be included in the limit of deduction of one lakh rupees provided under section 80CCE. This amendment will take effect from 1st April, 2012 and will, accordingly, apply in relation to the assessment year 2012-2013 and subsequent years. Clause 9 of the Bill seeks to amend section 80CCF of the Income-tax Act relating to deduction in respect of subscription to long-term infrastructure bonds. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng fulfils certain conditions stipulated therein. Clause (ii) of the said sub-section requires that such undertaking is located in any part of India and has begun or begins commercial production of mineral oil on or after the 1st day of April, 1997. It is proposed to amend the said clause so as to insert a proviso therein which provides that the provisions of said clause (ii) shall not apply to blocks licensed under a contract awarded after the 31st day of March, 2011 under the New Exploration Licencing Policy announced by the Government of India vide Resolution No. O-19018/22/95-ONG.DO.VL, dated the 10th February, 1999 or in pursuance of any law for the time being in force or by the Central or a State Government in any other manner. This amendment will take effect from 1st April, 2012 and will, accordingly, apply in relation to the assessment year 2012-2013 and subsequent years. Clause 12 seeks to amend section 92C of the Income-tax Act, relating to computation of arm s length price. Under the existing provisions contained in sub-section (2) of the aforesaid section, where more than one price is determined by the most appropriate method, then the arm s length pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to amend the said sub-section (7) so as to enable the Transfer Pricing Officer to exercise the power of survey conferred upon an income-tax authority under section 133A of the Act. These amendments will take effect from 1st June, 2011. Clause 14 of the Bill seeks to insert a new section 94A in the Income-tax Act relating to special measures in respect of transactions with persons located in a notified jurisdictional area. It is proposed to enable the Central Government to notify any country or territory outside India, having regard to the lack of effective exchange of information by it with India, as notified jurisdictional area. It is further proposed to provide that if an assessee enters into a transaction where one of the parties to the transaction is a person located in a notified jurisdictional area, then all the parties to the transaction shall be deemed to be associated enterprises within the meaning of section 92A, and that transaction shall be deemed to be an international transaction within the meaning of section 92B and, accordingly, the provisions of sections 92, 92A, 92B, 92C [except the second proviso to sub-section (2)], 92CA, 92CB, 92D, 92E and 92F sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of India. It is proposed to amend sub-clause (ii) of clause (a) of sub-section (1) of the aforesaid section so as to provide that the rates at which income-tax shall be payable, where the total income of a non-resident (not being a company) or a foreign company, includes any income by way of interest received from Government or an Indian concern on monies borrowed or debt incurred by the Government or the Indian concern in foreign currency, not being the interest received from an infrastructure debt fund referred to in clause (47) of section 10. It is further proposed to insert a new sub-clause (iia) in clause (a) of sub-section (1) of the aforesaid section so as to provide that the rates at which income-tax shall be payable, where the total income of a non-resident (not being a company) or a foreign company, includes any income by way of interest received from an infrastructure debt fund referred to in clause (47) of section 10. It is also proposed to insert a new item (BA) after item (B) of clause (a) of sub-section (1) of the aforesaid section to provide that the tax shall be payable at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income of the assessee and the tax payable for the relevant previous year shall be eighteen per cent. of such book profit. It is proposed to amend sub-section (1) of the aforesaid section to provide that if the income-tax payable on the total income as computed under the Income-tax Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2012 is less than eighteen and one-half per cent. of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable for the relevant previous year shall be eighteen and one-half per cent. of such book profit. Sub-section (6) of section 115JB of the Income-tax Act was inserted in that section by way of a modification vide section 27 of the Special Economic Zones Act, 2005 read with the Second Schedule thereof. The existing provisions contained in the aforesaid sub-section (6) provide that the provisions of section 115JB shall not apply to the income accrued or arising on or after the 1stday of April, 2005 from any business carried on, or services rendered, by an entrepreneur or a Developer, in a Unit or Special Economic Zone, as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purposes of newly inserted Chapter XII-BA. These amendments will take effect from 1st April, 2012 and will, accordingly, apply in relation to the assessment year 2012-13 and subsequent years. Clause 19 of the Bill seeks to amend section 115-O of the Income-tax Act relating to tax on distributed profits of domestic companies. Sub-section (6) was inserted in the aforesaid section by way of a modification vide section 27 of the Special Economic Zones Act, 2005 read with the Second Schedule thereof. The existing provisions contained in the aforesaid sub-section provide that notwithstanding anything contained in section 115-O, no tax on distributed profits shall be chargeable in respect of the total income of an undertaking or enterprise engaged in developing or developing and operating or developing, operating and maintaining a Special Economic Zone for any assessment year on any amount declared, distributed or paid by such Developer or enterprise, by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2005 out of its current income either in the hands of the Developer or enterprise or the person receiving such dividend. It is pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of evidence, etc. Under the existing provisions contained in section 131, certain income-tax authorities have been conferred the same power, as available to a Civil Court while trying a suit in respect of discovery and inspection, enforcing the attendance of any person, including any officer of a banking company and examining him on oath, compelling production of books of account and other documents and issuing commissions. It is proposed to insert a new sub-section (2) in the aforesaid section to provide that for the purpose of making an inquiry or investigation in respect of any person or class of persons in relation to an agreement referred to in section 90 or section 90A, it shall be competent for any income-tax authority not below the rank of Assistant Commissioner of Income-tax, as notified by the Board in this behalf, to exercise the powers conferred under sub-section(1) on the income-tax authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before it or any other income-tax authority. It is further proposed to amend sub-section (3), so as to empower the aforesaid authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of any other person in respect of which he is assessable under the Income-tax Act during the previous year exceeds the maximum amount which is not chargeable to income-tax, shall furnish a return of his income or the income of such other person during the previous year. It is proposed to insert a new sub-section (1C) in the aforesaid section so as to empower the Central Government to exempt by notification in the Official Gazette any class or classes of persons from the requirement of furnishing a return of income having regard to such conditions as may be specified in that notification. This amendment will take effect from 1st June, 2011. Under the existing provisions contained in sub-section (4C) of section 139, every entity referred to therein shall, if the total income in respect of such entity (without giving effect to the provisions of section 10) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year. It is proposed to amend the aforesaid sub-section to insert therein new clauses (g) and (h) in order to require that any body or authority or Board or Trust or Commission referred to in clause (46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or completion of assessment under section 153A. It is proposed to insert a new clause (viii) in the Explanation to the said section 153B so as to provide that the period commencing from the date on which a reference for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information so requested is received by the Commissioner or a period of six months, whichever is less, shall also be excluded. This amendment will take effect from 1st June, 2011. Clause 27 of the Bill seeks to insert a new section 194LB in the Income-tax Act relating to income by way of interest from an infrastructure debt fund. The proposed new section seeks to provide that where any income by way of interest is payable to a non-resident, not being a company, or to a foreign company, by an infrastructure debt fund referred to in clause (47) of section 10, the person responsible for making the payment shall, at the time of credit of such income to the account of payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment which has the effect of modifying the liability of the applicant, shall not be made under this sub-section unless the Settlement Commission has given notice to the applicant and the Commissioner of its intention to do so and has allowed the applicant and the Commissioner an opportunity of being heard. This amendment will take effect from 1st June, 2011. Clause 30 of the Bill seeks to omit section 282B of the Income-tax Act relating to allotment of Document Identification Number. Under the existing provisions contained in the said section 282B, every income-tax authority shall, on or after the 1st day of July, 2011, allot a computer generated Document Identification Number in respect of every notice, order, letter or any correspondence issued by him to any other income-tax authority or assessee or any other person and such number shall be quoted thereon It is proposed to omit the aforesaid section. This amendment will take effect retrospectively from 1st April, 2011. Clause 31 of the Bill seeks to insert a new section 285 [in place of said section which was omitted by the Finance Act, 1987] in the Income-tax Act relating to the submission of statement by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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