New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

Memorandum Explaining the Provisions in The Finance Bill 2015

Memorandum - Bill - Notes on clauses - Bill - Memorandum - FINANCE BILL, 2015 PROVISIONS RELATING TO DIRECT TAXES Introduction The provisions of the Finance Bill, 2015 relating to direct taxes seek to amend the Income-tax Act and Finance (No.2) Act, 2004, inter alia, in order to provide for - A. Rates of Income-tax B. Measures to Curb Black Money C. Measures to Promote Domestic Manufacturing and Improving the Investment Climate (Make in India) D. Ease of Doing Business/ Dispute Resolution E. Ben .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at source under the Income-tax Act; rates for computation of advance tax , deduction of income-tax from, or payment of tax on Salaries and charging of income-tax on current incomes in certain cases for the financial year 2015-2016. 3. The substance of the main provisions of the Bill relating to direct taxes is explained in the following paragraphs:- DIRECT TAXES A. RATES OF INCOME-TAX I. Rates of income-tax in respect of income liable to tax for the assessment year 2015-2016. In respect of incom .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for the assessment year 2015-2016, in the following cases:- (a) in the case of every individual or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, 1961 (hereinafter referred to as the Act ), cooperative societies, firms or local authorities, the amount of income-tax shall be increased by a surcharge for the purposes o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n (a) above having total income chargeable to tax under section 115JC of the Income-tax Act and where such income exceeds one crore rupees, surcharge at the rate mentioned above shall be levied and marginal relief shall also be provided. (b) in the case of a domestic company- (i) having total income exceeding one crore rupees but not exceeding ten crore rupees, the amount of income-tax computed shall be increased by a surcharge for the purposes of the Union calculated at the rate of five per cen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ate of two per cent. of such income tax; (ii) having total income exceeding ten crore rupees, the amount of income-tax computed shall be increased by a surcharge for the purposes of the Union calculated at the rate of five per cent. of such income tax. However, marginal relief shall be allowed in all these cases to ensure that the total amount payable as income-tax and surcharge on total income exceeding one crore rupees but not exceeding ten crore rupees, shall not exceed the total amount payab .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

where such income exceeds one crore rupees but does not exceed ten crore rupees, or exceeds ten crore rupees, as the case may be, surcharge at the rates mentioned above shall be levied and marginal relief shall also be provided. (d) In other cases (including sections 115-O, 115QA, 115R or 115TA), the surcharge shall be levied at the rate of ten percent. (2) Education Cess - For assessment year 2015-2016, additional surcharge called the Education Cess on income-tax and Secondary and Higher Educat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e been specified in Part II of the First Schedule to the Bill. The rates for all the categories of persons will remain the same as those specified in Part II of the First Schedule to the Finance (No.2) Act, 2014, for the purposes of deduction of income-tax at source during the financial year 2014-2015, except that in case of certain payments made to a non-resident (other than a company) or a foreign company, in the nature of income by way of royalty or fees for technical services, the rate shall .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed ten crore rupees; (ii) at the rate of five per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds ten crore rupees. No surcharge will be levied on deductions in other cases. (2) Education Cess- Education Cess on income-tax and Secondary and Higher .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es during the financial year 2015-2016 and also for computation of advance tax payable during the said year in the case of all categories of assessees have been specified in Part III of the First Schedule to the Bill. These rates are also applicable for charging income-tax during the financial year 2015-2016 on current incomes in cases where accelerated assessments have to be made, for instance, provisional assessment of shipping profits arising in India to non-residents, assessment of persons l .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act (not being a case to which any other Paragraph of Part III applies) are as under Upto ₹ 2,50,000 Nil. ₹ 2,50,001 to ₹ 5,00,000 10 per cent. ₹ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e of eighty years or more at anytime during the previous year,- Upto ₹ 5,00,000 Nil. ₹ 5,00,001 to ₹ 10,00,000 20 per cent. Above ₹ 10,00,000 30 per cent. The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge at the rate of twelve percent. of such income-tax in case of a person having a total income exceeding one crore rupees. However, the total amount payable as income-tax and surcharge on total .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

surcharge at the rate of twelve percent. of such income-tax in case of a co-operative society having a total income exceeding one crore rupees . However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. C. Firms In the case of firms, the rate of income-tax has been specified in Paragraph C of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rupees by more than the amount of income that exceeds one crore rupees. D. Local authorities The rate of income-tax in the case of every local authority is specified in Paragraph D of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for the financial year 2014-15. The amount of income-tax shall be increased by a surcharge at the rate of twelve percent. of such income-tax in case of a local authority having a total income exceeding one crore rup .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rate of seven per cent shall be levied in case of a domestic company if the total income of the domestic company exceeds one crore rupees but does not exceed ten crore rupees. The surcharge at the rate of twelve percent shall be levied if the total income of the domestic company exceeds ten crore rupees. In case of companies other than domestic companies, the existing surcharge of two per cent. shall continue to be levied if the total income exceeds one crore rupees but does not exceed ten cror .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

come-tax and surcharge on total income exceeding ten crore rupees, shall not exceed the total amount payable as income-tax and surcharge on a total income of ten crore rupees, by more than the amount of income that exceeds ten crore rupees. In other cases (including sections 115-O, 115QA, 115R or 115TA) the surcharge shall be levied at the rate of twelve percent. For financial year 2015-2016, additional surcharge called the Education Cess on income-tax and Secondary and Higher Education Cess on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

269SS of the Income-tax Act provide that no person shall take from any person any loan or deposit otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, if the amount of such loan or deposit is twenty thousand rupees or more. However, certain exceptions have been provided in the section. Similarly, the existing provisions contained in section 269T of the Income-tax Act provide that any loan or deposit shall not be repaid, otherwise than b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

wise, in relation to transfer of an immovable property otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more. It is also proposed to amend section 269T of the Income-tax Act so as to provide that no person shall repay any loan or deposit made with it or any specified advance received by it, otherwise than by an account payee cheque .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for failure to comply with the amended provisions of section 269SS and 269T, respectively. These amendments will take effect from 1st day of June, 2015. [Clauses 66, 67, 69 & 70] C. MEASURES TO PROMOTE DOMESTIC MANUFACTURING AND IMPROVING THE INVESTMENT CLIMATE (Make in India) Deferment of provisions relating to General Anti Avoidance Rule ( GAAR ) The existing provisions of the General Anti Avoidance Rule (GAAR) introduced by the Finance Act, 2013 are contained in Chapter X-A (consisting of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mentation of GAAR provisions has been reviewed. Concerns have been expressed regarding certain aspects of GAAR. Further, it has been noted that the Base Erosion and Profit Shifting (BEPS) project under Organisation of Economic Cooperation and Development (OECD) is continuing and India is an active participant in the project. The report on various aspects of BEPS and recommendations regarding the measures to counter it are awaited. It would, therefore, be proper that GAAR provisions are implement .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

effect from 1st April, 2015. [Clause 25 ] Pass through status to Category -I and Category -II Alternative Investment Funds The existing provisions of section 10(23FB) of the Act provide that any income of a Venture Capital Company (VCC) or a Venture Capital Fund (VCF) from investment in a Venture Capital Undertaking (VCU) shall be exempt from taxation. Section 115U of the Act provides that income accruing or arising or received by a person out of investment made in a VCC or VCF shall be taxable .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y SEBI (AIF) Regulations, 2012 w.e.f. 21.05.2012. The existing pass through is available only in respect of income which arises to the fund from investment in VCU (Venture Capital Undertaking), being a company which satisfies the conditions provided in SEBI (VCF) Regulations, 1996 or SEBI (AIF) Regulations, 2012 (AIF regulations) . Under the AIF regulations, various types of AIFs have been classified under three separate categories as Category I, II and III AIFs. Category I includes AIFs which i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

employ leverage including through investment in listed or unlisted derivatives. The funds can be set up as a trust, company, limited liability partnership and any other body corporate. Similarly, investment by AIFs can be in entities which can be a company, firm etc. Pooled investment vehicles (other than hedge funds) engaged in making passive investments have been accorded pass through in certain tax jurisdictions. In order to rationalize the taxation of Category-I and Category-II AIFs (hereaft .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

geable to income-tax in the same manner as if it were the income accruing or arising to, or received by, such person had the investments, made by the investment fund, been made directly by him. (ii) income in the hands of investment fund, other than income from profits and gains of business, shall be exempt from tax. The income in the nature of profits and gains of business or profession shall be taxable in the case of investment fund. (iii) income in the hands of investor which is of the same n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

isen to, the investment fund. (vi) if in any year there is a loss at the fund level either current loss or the loss which remained to be set off, the loss shall not be allowed to be passed through to the investors but would be carried over at fund level to be set off against income of the next year in accordance with the provisions of Chapter VI of the Income-tax Act. (vii) the provisions of Chapter XII-D (Dividend Distribution Tax) or Chapter XII-E (Tax on distributed income) shall not apply to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the scheme. Further, the existing pass through regime is proposed to be continued to apply to VCF/VCC which had been registered under SEBI (VCF) Regulations, 1996. Remaining VCFs, being part of Category-I AIFs, shall be subject to the new pass through regime. Illustration The broad features of the above regime can be explained through the following Examples. For simplicity, it is assumed that the investment fund has ten unit holders each having one unit and the income from investment in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xample 1, the income stream of investment fund consists of: Business income ₹ 100 Income by way of capital gains ₹ 700 Income from other sources ₹ 200 Then: Total Income of the investment fund ₹ 100 (Tax shall be charged at applicable rate if investment fund is a company or a firm, else at maximum marginal rate) Income arising to a unit holder ₹ 100 Income of unit holder which is exempt ₹ 10 Total income of a unit holder (chargeable to tax) ₹ 90 Break up .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fund level to be carried forward for set off in subsequent years) NIL Total income of the unit holders ₹ 300 Total income of a unit holder ₹ 30 (Chargeable under the head Income from other sources ) Example 4: If in the previous year immediately succeeding the previous year mentioned in Example 3, the income stream of the investment fund consists of: Business income ₹ 100 Income by way of capital gains ₹ 450 Income from other sources ₹ 500 Then: Total Income of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years. [Clauses 3, 7, 30, 32, 34 & 46] Fund Managers in India not to constitute business connection of offshore funds The existing provisions of section 9 of the Act deal with cases of income which are deemed to accrue or arise in India. Section 9(1)(i) provides a set of circumstances in which income is deemed to accrue or arise in India, and is taxable in India. One of the condition .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Act provides for conditions under which a person is said to be resident in India. In the case of a person other than an individual, the test is dependent upon the location of its control and management . In the case of off-shore funds, under the existing provisions, the presence of a fund manager in India may create sufficient nexus of the off-shore fund with India and may constitute a business connection in India even though the fund manager may be an independent person. Similarly, if the fund .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

investments made in countries outside India may also get taxed in India due to such fund management activity undertaken in, and from, India constituting a business connection. Further, presence of the fund manager under certain circumstances may lead to the off shore fund being held to be resident in India on the basis of its control and management being in India. There are a large number of fund managers who are of Indian origin and are managing the investment of offshore funds in various count .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d from investment in India would be neutral to the fact as to whether the investment is made directly by the fund or through engagement of Fund manager located in India; and (ii) that income of the fund from the investments outside India would not be taxable in India solely on the basis that the Fund management activity in respect of such investments have been undertaken through a fund manager located in India. The proposed regime provides that in the case of an eligible investment fund, the fun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

funds and fund management activity undertaken on its behalf is subject to the following:- (1) The offshore fund shall be required to fulfill the following conditions during the relevant year for being an eligible investment fund: (i) the fund is not a person resident in India; (ii) the fund is a resident of a country or a specified territory with which an agreement referred to in sub-section (1) of section 90 or sub-section (1) of section 90A has been entered into; (iii) the aggregate participat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

all not have any participation interest, directly or indirectly, in the fund exceeding ten percent.; (vii) the aggregate participation interest, directly or indirectly, of ten or less members along with their connected persons in the fund, shall be less than fifty percent. ; (viii) the investment by the fund in an entity shall not exceed twenty percent of the corpus of the fund; (ix) no investment shall be made by the fund in its associate entity; (x) the monthly average of the corpus of the fun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

onstitute a business connection in India other than the activities undertaken by the eligible fund manager on its behalf. (xiii) the remuneration paid by the fund to an eligible fund manager in respect of fund management activity undertaken on its behalf is not less than the arm s length price of such activity. (2) The following conditions shall be required to be satisfied by the person being the fund manager for being an eligible fund manager: (i) the person is not an employee of the eligible i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fund manager. It is further proposed that every eligible investment fund shall, in respect of its activities in a financial year, furnish within ninety days from the end of the financial year, a statement in the prescribed form to the prescribed income-tax authority containing information relating to the fulfillment of the above conditions or any information or document which may be prescribed. In case of non furnishing of the prescribed information or document or statement, a penalty of ₹ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ger. These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years. [Clauses 6, 71 & 75] Incentives for the State of Andhra Pradesh and the State of Telangana Section 94 of the Andhra Pradesh Reorganisation Act, 2014 inter alia provides that the Central Government shall take appropriate fiscal measures, including offer of tax incentives to the State of Andhra Pradesh and the State of Telangana, t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

owance of an amount equal to 15% of the cost of new asset acquired and installed by an assessee, if- (a) he sets up an undertaking or enterprise for manufacture or production of any article or thing on or after 1st April, 2015 in any notified backward areas in the State of Andhra Pradesh and the State of Telangana; and (b) the new assets are acquired and installed for the purposes of the said undertaking or enterprise during the period beginning from the 1st April, 2015 to 31st March, 2020. This .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nditions specified under the proposed section 32AD. The phrase new asset has been defined as plant or machinery but does not include- (i) any plant or machinery which before its installation by the assessee was used either within or outside India by any other person; (ii) any plant or machinery installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house; (iii) any office appliances including computers or computer software; (iv) any ve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g for a substantial period of time, it is proposed to provide suitable safeguards for restricting the transfer of the plant or machinery for a period of 5 years. However, this restriction shall not apply to the amalgamating or demerged company or the predecessor in a case of amalgamation or demerger or business reorganisation but shall continue to apply to the amalgamated company or resulting company or successor, as the case may be. (B) Additional Depreciation at the rate of 35% To incentivise .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

backward area in the State of Andhra Pradesh or the State of Telangana, it is proposed to allow higher additional depreciation at the rate of 35% (instead of 20%) in respect of the actual cost of new machinery or plant (other than a ship and aircraft) acquired and installed by a manufacturing undertaking or enterprise which is set up in the notified backward area of the State of Andhra Pradesh or the State of Telangana on or after the 1st day of April, 2015. This higher additional depreciation s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tial amendments in the second proviso to section 32(1) of the Act for applying the existing restriction of the allowance to the extent of 50% for assets used for the purpose of business for less than 180 days in the year of acquisition and installation. However, the balance 50% of the allowance is also proposed to be allowed in the immediately succeeding financial year (discussed under the head Allowance of balance 50% additional depreciation ). These amendments will take effect from 1st April, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

InviT) which is registered under regulations framed by Securities and Exchange Board of India (SEBI) in this regard. The existing tax regime for the business trust and their investors as contained in different sections of the Income-tax Act, inter alia, provides that:- (i) The listed units of a business trust, when traded on a recognised stock exchange, would be liable to securities transaction tax (STT), and the long term capital gains shall be exempt and the short term capital gains shall be t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

T) available to other unit holders of business trust, is not available to the sponsor in respect of these units at the time of their transfer. (v) For the purpose of computing capital gain, the cost of these units is considered as cost of the shares to the sponsor. The holding period of shares is included in computing the holding period of such units. (vi) The pass through is provided in respect of income by way of interest received by the business trust from SPV i.e., there is no taxation of su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f SPV and is exempt in the hands of the trust, and the dividend component of the income distributed by the trust to the unit holders is also exempt. The deferral of capital gains provided to the sponsor of business trust places such a sponsor at a disadvantageous tax position vis-a vis direct listing of the shares of the SPV. In case the sponsor holding the shares of the SPV decides to exit through the Initial Public Offer (IPO) route, then the benefit of concessional tax regime relating to capi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rder to provide parity, it is proposed that,- (i) the sponsor would get the same tax treatment on offloading of units under an Initial offer on listing of units as it would have been available had he offloaded the underlying shareholding through an IPO. (ii) the Finance (No. 2) Act, 2004 be amended to provide that STT shall be levied on sale of such units of business trust which are acquired in lieu of shares of SPV, under an Initial offer at the time of listing of units of business trust on sim .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an SPV. The rental income received at the level of SPV gets passed through by way of interest or dividend to the REIT, the rental income directly received by the REIT is taxable at REIT level and does not get pass through benefit. In order to provide pass through to the rental income arising to REIT from real estate property directly held by it, it is proposed to provide that :- (i) any income of a business trust, being a real estate investment trust, by way of renting or leasing or letting out .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted @ 10%, and in case of distribution to non-resident unit holder, the tax shall be deducted at rate in force as applicable for deduction of tax on payment to the non-resident of any sum chargeable to tax . (iv) no deduction shall be made under section 194-I of the Act where the income by way of rent is credited or paid to a business trust, being a real estate investment trust, in respect of any real estate asset held directly by such REIT. These amendments will take effect from 1st April, 2016 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ities and rupee denominated corporate bonds provided that the rate of interest does not exceed the rate notified by the Central Government in this regard. The limitation date of the eligibility period for benefit of reduced rate of tax available under section 194LC in respect of external commercial borrowings (ECB) has been extended from 30th June, 2015 to 30th June, 2017 by Finance (No.2) Act, 2014. Accordingly, it is proposed to amend section 194LD to provide that the concessional rate of 5% w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by such non-resident from Government or an Indian concern after 31.03.1976, and which is not effectively connected with permanent establishment, if any, of the non-resident in India, tax shall be levied at the rate of 25% on the gross amount of such income. This rate of 25% was provided by Finance Act, 2013. In order to reduce the hardship faced by small entities due to high rate of tax of 25%, it is proposed to amend the Act to reduce the rate of tax provided under section 115A on royalty and F .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nal wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided. Clause (a) of sub-section (2), inter alia, provides that no deduction under sub-section (1) shall be available if the factory is hived off or transferred from another existing entity or acquired by the assessee company as a result of amalgamation with another company. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ection to units employing even 50 instead of 100 regular workmen. Accordingly, it is proposed to amend sub-section (1) of the aforesaid section. It is also proposed to amend clause (i) of the Explanation so as to provide additional wages to mean the wages paid to the new regular workmen in excess of fifty workmen employed during the previous year. These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e additional depreciation would be restricted to 50% when the new plant or machinery acquired and installed by the assessee, is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in the previous year. Non-availability of full 100% of additional depreciation for acquisition and installation of new plant or machinery in the second half of the year may motivate the assessee to defer such investment to the next year for availing full 100% of a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

year. This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years. [Clause 10] D. EASE OF DOING BUSINESS/DISPUTE RESOLUTION Clarity relating to Indirect transfer provisions The existing provisions of section 9 of the Act deal with cases of income which are deemed to accrue or arise in India. Sub-section(1) of the said section creates a legal fiction that certain incomes shall be deemed to accrue or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

se in India. The Finance Act, 2012 inserted certain clarificatory amendments in the provisions of section 9. The amendments, inter alia, included insertion of Explanation 5 in section 9(1)(i) w.r.e.f. 1.04.1962 . The Explanation 5 clarified that an asset or capital asset, being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be situated in India if the share or interest derives, directly or indirectly, its value substantially from the asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Act or by way of issuance of a clarificatory circular in due course. In order to give effect to the recommendations, the following amendments are proposed in the provisions of section 9 relating to indirect transfer:- (i) the share or interest of a foreign company or entity shall be deemed to derive its value substantially from the assets (whether tangible or intangible) located in India, if on the specified date, the value of Indian assets,- (a) exceeds the amount of ten crore rupees ; and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eds by at least 15% of the book value of the assets as on the last balance sheet date preceding the date of transfer, then instead of the date mentioned in (iii) above, the date of transfer shall be the specified date of valuation. (v) the manner of determination of fair market value of the Indian assets vis-a vis global assets of the foreign company shall be prescribed in the rules. (vi) the taxation of gains arising on transfer of a share or interest deriving, directly or indirectly, its value .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the foreign company or entity directly holding the Indian assets (direct holding company). (viii) in case the transfer is of shares or interest in a foreign entity which does not hold the Indian assets directly then the exemption shall be available to the transferor if he along with its associated enterprises,- (a) neither holds the right of management or control in relation to such company or the entity, (b) nor holds any rights in such company which would entitle it to either exercise contr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oreign company. (x) exemption shall be available in respect of any transfer, subject to certain conditions, in a demerger, of a capital asset, being a share of a foreign company which derives, directly or indirectly, its value substantially from the share or shares of an Indian company, held by the demerged foreign company to the resulting foreign company. (xi) there shall be a reporting obligation on Indian concern through or in which the Indian assets are held by the foreign company or the ent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he effect of directly or indirectly transferring the right of management or control in relation to the Indian concern; and (b) a sum of five hundred thousand rupees in any other case. These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years. [Clauses 5, 13, 14, 72, 75 & 76] Raising the threshold for specified domestic transaction The existing provisions of section 92BA of the Act define spec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee in the previous year should exceed a sum of twenty crore rupees for such transaction to be treated as specified domestic transaction . This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years. [Clause 24] Rationalisation of definition of charitable purpose in the Income-tax Act The primary condition for grant of exemption to a trust or institution under section 11 of the Act is that the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r consideration, irrespective of the nature of use or application, or retention, of the income from such activity. However, this restriction shall not apply if the aggregate value of the receipts from the activities referred above is twenty five lakh rupees or less in the previous year. The institutions which, as part of genuine charitable activities, undertake activities like publishing books or holding program on yoga or other programs as part of actual carrying out of the objects which are of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to ensure appropriate balance being drawn between the object of preventing business activity in the garb of charity and at the same time protecting the activities undertaken by the genuine organization as part of actual carrying out of the primary purpose of the trust or institution. It is, therefore, proposed to amend the definition of charitable purpose to provide that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vities, during the previous year, do not exceed twenty percent. of the total receipts, of the trust or institution undertaking such activity or activities, for the previous year . These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years. [Clause 3] Exemption to income of Core Settlement Guarantee Fund (SGF) of the Clearing Corporations Under the provisions of Securities Contracts (Regulation) (S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n India or by a depository shall be exempt from taxation. On similar lines, it is proposed to exempt the income of the Core SGF arising from contribution received and investment made by the fund and from the penalties imposed by the Clearing Corporation subject to similar conditions as provided in case of Investor Protection Fund set up by a recognised stock exchange or a commodity exchange or a depository. However, where any amount standing to the credit of the Fund and not charged to income-ta .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

il, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years. [Clause 7] Raising the income-limit of the cases that may be decided by single member bench of ITAT The existing provision contained in sub-section (3) of section 255 of the Income-tax Act provides for constitution of a single member bench and a Special Bench. It provides that single member bench may dispose of any case which pertains to an assessee whose total income as computed by .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rger of similar schemes of Mutual Funds Securities and Exchange Board of India has been encouraging mutual funds to consolidate different schemes having similar features so as to have simple and fewer numbers of schemes. However, such mergers/consolidations are treated as transfer and capital gains are imposed on unitholders under the Income-tax Act. In order to facilitate consolidation of such schemes of mutual funds in the interest of the investors, it is proposed to provide tax neutrality to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the assessee. It is also proposed to define consolidating scheme as the scheme of a mutual fund which merges under the process of consolidation of the schemes of mutual fund in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and consolidated scheme as the scheme with which the consolidating scheme merges or which is formed as a result of such merger. These amendments will take effect from 1st April, 2016 and will accordingly apply, in relation to t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uestion of law already pending in his own case before the High Court or Supreme Court for another assessment year and if the Assessing Officer or any appellate authority agrees to apply the final decision on the question of law in that earlier year to the present year, he will not agitate the same question of law once again for the present year before higher appellate authorities. The Assessing Officer or any appellate authority before whom his case is pending can admit the claim of the assessee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Supreme Court thus, multiplying litigation. Accordingly, it is proposed to insert a new section 158AA so as to provide that notwithstanding anything contained in this Act, where any question of law arising in the case of an assessee for any assessment year is identical with a question of law arising in his case for another assessment year which is pending before the Supreme Court, in an appeal or in a special leave petition under Article 136 of the Constitution filed by the revenue, against the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e filed when the decision on the question of law becomes final in the earlier case. It is further proposed to provide that the Commissioner or Principal Commissioner shall proceed under sub-section (1) only if an acceptance is received from the assessee to the effect that the question of law in the other case is identical to that arising in the relevant case. However, in case no such acceptance is received the Commissioner or Principal Commissioner shall proceed in accordance with the provisions .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

direct the Assessing Officer to appeal to the Appellate Tribunal against such order within sixty days from the date on which the order of the Supreme Court is communicated to the Commissioner or Principal Commissioner and save as otherwise provided in the said section 158AA, all other provisions of Part B of Chapter XX shall apply accordingly. This amendment will take effect from the 1st day of June, 2015. [Clause 39] Enabling the Board to notify rules for giving foreign tax credit Sub-section .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ement for the purposes of avoidance of double taxation under section 90 or section 90A, a relief in respect of income-tax on doubly taxed income is available as per the respective DTAAs. The Income-tax Act does not provide the manner for granting credit of taxes paid in any country outside India. Accordingly, it is proposed to amend section sub-section (2) of section 295 of the Income-tax Act so as to provide that CBDT may make rules to provide the procedure for granting relief or deduction, as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alities and helping the enforcement of Income-tax Act through cross checks. Accordingly, all the assets of the assessees were taken into account for computation of net-wealth. The levy of wealth-tax was thoroughly revised on the recommendation of Tax Reform Committee headed by Raja J. Chelliah vide Finance Act, 1992 with effect from 01.04.1993. The Chelliah Committee had recommended abolition of wealth-tax in respect of all items of wealth other than those which can be regarded as unproductive f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re and during the financial year 2012-13 was ₹ 844.12 crore only. The number of wealth-tax assessee was around 1.15 lakh in 2011-12. Although only a nominal amount of revenue is collected from the levy of wealth-tax, this levy creates a significant amount of compliance burden on the assessees as well as administrative burden on the department. This is because the assessees are required to value the assets as per the provisions of Wealth-tax Rules for computation of net wealth and for certa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nate compliance burden on the assessees and administrative burden on the department. It is, therefore, proposed to abolish the levy of wealth tax under the Wealth-tax Act, 1957 with effect from the 1st April, 2016. It is also proposed that the objective of taxing high net worth persons shall be achieved by levying a surcharge on tax payer earning higher income as levy of surcharge is easy to collect & monitor and also does not result into any compliance burden on the assessee and administrat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. BENEFITS FOR INDIVIDUAL TAXPAYERS Tax benefits under section 80C for the girl child under the Sukanya Samriddhi Account Scheme Pursuant to the Budget announcement in July 2014, a special small savings instrument for the welfare of the girl child has been introduced under the Sukanya Samriddhi Account Rules, 2014. The following tax benefits have been envisaged in the Sukanya Samriddhi Account scheme:- (i) The investments made in the Scheme will be eligible for deduction under section 80C of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing on deposits in, and withdrawals from any account under the scheme would be exempt. The Scheme has been notified under clause (viii) of sub-section (2) of section 80C vide Notification number 9/2015 S.O.210 (E),F.No. 178/3/2015-ITA-I dated 21.012015. With a view to allow the deduction under section 80C to the parent or legal guardian of the girl child, amendment of section 80C of the Act is proposed to be made so as to provide that a sum paid or deposited during the year in the Scheme in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ection 80D, inter alia, provide for deduction of a) upto fifteen thousand rupees to an assessee, being an individual in respect of health insurance premia, paid by any mode, other than cash, to effect or to keep in force an insurance on the health of the assessee or his family or any contribution made to the Central Government Health Scheme or any other notified scheme or any payment made on account of preventive health check up of the assessee or his family; and b) an additional deduction of fi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is a senior citizen of sixty years of age or above. The quantum of deduction allowed under Section 80D to individuals and HUF in respect of premium paid for health insurance had been fixed vide Finance Act, 2008 at ₹ 15000/- and ₹ 20,000/- (for senior citizens). In view of continuous rise in the cost of medical expenditure, it is proposed to amend section 80D so as to raise the limit of deduction from fifteen thousand rupees to twenty five thousand rupees. It is further proposed to r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

health of such person, as does not exceed thirty thousand rupees shall be allowed as deduction under section 80D. The aggregate deduction available to any individual in respect of health insurance premia and the medical expenditure incurred would however be limited to thirty thousand rupees. Similarly aggregate deduction for health insurance premia and medical expenditure incurred in respect of parents would be limited to thirty thousand rupees. Example: (i) For Individual and his family Health .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e assessment year 2016-17 and subsequent assessment years. [Clause 18] Raising the limit of deduction under section 80DDB Under the existing provisions of section 80DDB of the Act, an assessee, resident in India is allowed a deduction of a sum not exceeding forty thousand rupees, being the amount actually paid, for the medical treatment of certain chronic and protracted diseases such as Cancer, full blown AIDS, Thalassaemia, Haemophilia etc. This deduction is allowed up to sixty thousand rupees .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an HUF means a member of the HUF ,wholly or mainly dependant on such individual or HUF for his support and maintenance. Under the existing provisions of this section, a certificate in the prescribed form, from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist working in a Government hospital is required. It has been represented that the requirement of a certificate from a doctor working in a Government hospital causes undue hardship to the perso .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed to amend section 80DDB to provide for a higher limit of deduction of upto eighty thousand rupees, for the expenditure incurred in respect of the medical treatment of a very senior citizen . A very senior citizen is proposed to be defined as an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year. These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subs .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ny other insurer in respect of a scheme for the maintenance of a disabled dependant. The section presently provides for a deduction of fifty thousand rupees if the dependant is suffering from disability and one lakh rupees if the dependant is suffering from severe disability (as defined under the said section). The existing provisions of section 80U, inter alia, provide for a deduction to an individual, being a resident, who, at any time during the previous year, is certified by the medical auth .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f a person with severe disability was last enhanced from seventy five thousand rupees to one lakh rupees by Finance (No.2) Act, 2009. In view of the rising cost of medical care and special needs of a disabled person, it is proposed to amend section 80DD and section 80U so as to raise the limit of deduction in respect of a person with disability from fifty thousand rupees to seventy five thousand rupees. It is further proposed to amend the section so as to raise the limit of deduction in respect .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ation of his total income, of an amount paid or deposited by him to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from a fund set up under a pension scheme. In order to promote social security, it is proposed to amend sub-section (1) of the said section so as to raise the limit of deduction under section 80CCC from one lakh rupees to one hundred and fifty thousand rupees, within the overall limit provided .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vidual has paid or deposited any amount in a previous year in his account under a notified pension scheme, a deduction of such amount not exceeding ten per cent. of his salary in the case of an employee and ten per cent. of the gross total income in case of any other individual is allowed. Similarly, the contribution made by the Central Government or any other employer to the said account of the individual under the pension scheme is also allowed as deduction under sub-section (2) of section 80C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

limit under section 80CCD(1), it is further proposed to insert a new sub-section (1B) so as to provide for an additional deduction in respect of any amount paid, of upto fifty thousand rupees for contributions made by any individual assessees under the NPS. Consequential amendments are also proposed in sub-section (3) and sub-section (4) of section 80CCD. These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

providing high threshold for deduction of tax under this section, there may be cases where the tax payable on recipient s total income, including the payment made under life insurance, will be nil. The existing provisions of section 197A of the Act inter alia provide that tax shall not be deducted, if the recipient of the certain payment on which tax is deductible furnishes to the payer a self-declaration in prescribed Form No.15G/15H declaring that the tax on his estimated total income of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y person deducting tax (deductor) or collecting tax (collector) is required to obtain Tax Deduction and Collection Account Number (TAN) and quote the same for reporting of tax deduction/collection to the Income-tax Department. However, currently, for reporting of tax deducted from payment over a specified threshold made for acquisition of immovable property (other than rural agricultural land) from a resident transferor under section 194-IA of the Act, the deductor is not required to obtain and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me transaction such as single transaction of acquisition of immovable property from non-resident by an individual or HUF on which tax is deductible under section 195 of the Act. To reduce the compliance burden of these types of deductors, it is proposed to amend the provisions of section 203A of the Act so as to provide that the requirement of obtaining and quoting of TAN under section 203A of the Act shall not apply to the notified deductors or collectors. This amendment will take effect from 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f Fund, National Foundation for Communal Harmony etc. The National Fund for Control of Drug Abuse is a fund created by the Government of India in the year 1989, under the Narcotic Drugs and Psychotropic Substances Act, 1985. Since National Fund for Control of Drug Abuse is also a Fund of national importance, it is proposed amend section 80G so as to provide hundred percent. deduction in respect of donations made to the said National Fund for Control of Drug Abuse. This amendment will take effect .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ons made except in the case of donations made to certain funds and institutions formed for a social purpose of national importance, where it is allowed at the rate of one hundred percent, such as the National Defence Fund set up by the Central Government, the Prime Minister s National Relief Fund, the Prime Minister s Armenia Earthquake Relief Fund, the Africa (Public Contributions-India) Fund, the National Children s Fund, the National Foundation for Communal Harmony etc. Swachh Bharat Kosh has .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the Act so as to incentivise donations to the two funds. It is proposed to provide that donations made by any donor to the Swachh Bharat Kosh and donations made by domestic donors to Clean Ganga Fund will be eligible for a deduction of hundred per cent from the total income. However, any sum spent in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013, will not be eligible for deduction from the total income of the donor. The existing pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at Kosh and Clean Ganga Fund from income-tax. These amendments will take effect retrospectively from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent assessment years. [Clauses 7 & 21] G. RATIONALISATION MEASURES Clarity regarding source rule in respect of interest received by the non-resident in certain cases The provisions of section 5 of the Act provide for scope of total income for the purposes of its chargeability to tax. In case of a no .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

) a person who is a resident, except where the interest is payable in respect of any debt incurred, or moneys borrowed and used, for the purposes of a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India ; or (c) a person who is a non-resident, where the interest is payable in respect of any debt incurred, or moneys borrowed and used, for the purposes of a business or profession carried on by such person .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l to him. Therefore, the taxpayer is entitled to relief from the provisions of the Act if such relief is available under the DTAA and to that extent the provisions of the Act are not applicable. Further, income of a non-resident from business activity is taxable in India if it has a business connection in India in accordance with the provisions contained in section 9(1)(i) and only such income is taxable as is attributable to the business connection. Similarly, under the DTAA income from busines .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

se with certain restrictions regarding allowability of expense paid to head office by the PE. Under DTAAs in case of a banking company the interest paid by a PE to its head office and other branches is allowed as deduction treating such a permanent establishment as an independent enterprise. The CBDT, in its Circular No. 740 dated 17/4/1996 had clarified that branch of a foreign company in India is a separate entity for the purpose of taxation under the Act and accordingly TDS provisions would a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s of the Bank being income generated from self. The view expressed in the CBDT circular has not found favour in these judicial decisions. If the legal fiction created under the treaty is treated to be of limited effect, it would lead to base erosion. The interest paid by the permanent establishment to the head office or other branch etc. is an interest payment sourced in India and is liable to be taxed under the source rule in India. This position is also recognised in some of our DTAAs in parti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Corporation [136 ITD- 66 TBOM] had mentioned that there are instances of other countries providing for specific provisions in their domestic law which allows for the taxability of interest paid by a permanent establishment to its head office and other branches and had pointed out absence of such a specific provision in the Income-tax Act. Considering that there are several disputes on the issue which are pending and likely to arise in future, it is essential that necessary clarity and certainty .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt in India and the permanent establishment in India shall be deemed to be a person separate and independent of the non-resident person of which it is a permanent establishment and the provisions of the Act relating to computation of total income, determination of tax and collection and recovery would apply . Accordingly, the PE in India shall be obligated to deduct tax at source on any interest payable to either the head office or any other branch or PE, etc. of the non-resident outside India. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

section 11 of the Act, the primary condition for grant of exemption to trust or institution in respect of income derived from property held under such trust is that the income derived from property held under trust should be applied for the charitable purposes in India. Where such income cannot be applied during the previous year, it has to be accumulated and applied for such purposes in accordance with various conditions provided in the section. While 15% of the income can be accumulated indefi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ambiguity regarding the period within which the assessee is required to file Form 10, and to ensure due compliance of the above conditions within time, it is proposed to amend the Act to provide that the said Form shall be filed before the due date of filing return of income specified under section 139 of the Act for the fund or institution. In case the Form 10 is not submitted before this date, then the benefit of accumulation would not be available and such income would be taxable at the appl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, exemption under sub-clause (iiiab) and (iiiac) of clause (23C), subject to specified conditions, is available to such university or educational institution, hospital or other institution which is wholly or substantially financed by the Government. Under the existing provisions of section 139, all entities whose income is exempt under clause (23C) of section 10, other than those referred to in sub-clauses (iiiab) and (iiiac) of the said clause, are mandatorily required to file their return of i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

provisions of sub-section (1) of section 6 provide the conditions under which an individual is held to be resident in India. The determination is based, inter alia, on the number of days during which such individual has been in India during a previous year. In the case of foreign bound ships where the destination of the voyage is outside India, there is uncertainty with regard to the manner and basis of determination of the period of stay in India for crew members of such ships who are Indian ci .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

equent assessment years. [Clause 4] Rationalising the provisions of section 115JB The existing provisions contained in section 115JB of the Act provide that in the case of a company, if the tax payable on the total income as computed under the 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 percent of its book profit, such book profit shall be deemed to be the total income of the assessee an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d in the section. Section 86 of the Act provides that no income-tax is payable on the share of a member of an AOP, in the income of the AOP in certain circumstances. However, under the present provisions, a company which is a member of an AOP is liable to MAT on such share also since such income is not excluded from the book profit while computing the MAT liability of the member. In the case of a partner of a firm, the share in the profits of the firm is exempt in the hands of the partner as per .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e (which is being proposed to be excluded from the MAT liability) are also proposed to be added back to the book profit for the purpose of computation of MAT. Further, vide Finance Act (No.2), 2014 it was provided that any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 would be capital asset. Consequently, the income arising to a Foreign Institutional Inve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ofit. The expenditures, if any, debited to the profit loss account, corresponding to such income (which is being proposed to be excluded from the MAT liability) are also proposed to be added back to the book profit for the purpose of computation of MAT. In view of the above, a new clause (iib) is proposed to be inserted in Explanation 1 so as to provide that the amount of income, being the share of income of an assessee on which no income-tax is payable in accordance with the provisions of secti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ities, (other than short term capital gains arising on transactions on which securities transaction tax is not chargeable), accruing or arising to an assessee being a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act,1992,if any such amount is credited to the profit and loss account, shall be reduced from the book profit for the purposes of calculation of income-tax payable under the s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

omic affairs (DEA) vide Notification F.No.9/1/2013-ECB dated 21st October, 2014. This scheme replaces Issue of Foreign Currency Convertible Bonds and Ordinary Shares (through depository receipt mechanism) Scheme, 1993 . The current taxation scheme of income arising in respect of depository receipts under the Act is aligned with the earlier scheme which was limited to issue of Depository Receipts (DRs) based on the underlying shares of the company issued for this purpose (i.e sponsored GDR) or FC .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

residents and non-residents. Since the tax benefits under the Act were intended to be provided in respect of sponsored GDRs and listed companies only, it is proposed to amend the Act in order to continue the tax benefits only in respect of such GDRs as defined in the earlier depository scheme. These amendments will take effect from the 1st day of April, 2016 and will, accordingly, apply to the assessment year 2016-17 and subsequent assessment years. [Clause 28] Settlement Commission The existing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to clause (b) of section 245A provides that the proceeding for assessment or reassessment under section 147 of the Act is deemed to commence from the date of issue of notice under section 148 of the Act. It has been observed that issue relating to escapement of income is often involved in more than one assessment year. In such case the assessee becomes eligible to approach Settlement Commission only for the assessment year for which notice under section 148 has been issued. Therefore, to take th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent years as well even if notice under section 148 for such other assessment years has not been issued. However, a return of income for such other assessment years should have been furnished under section 139 of the Act or in response to notice under section 142 of the Act. The existing provision contained in clause (iv) of the Explanation provides that a proceeding for any assessment year, other than the proceedings of assessment or reassessment referred to in clause (i) or clause (iii) or clau .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e under section 142 and concluded on the date on which the assessment is made or on the expiry of two years from the end of relevant assessment year, in a case where no assessment is made. The existing provision contained in sub-section (6B) of section 245D of the Income-tax Act provides that the Settlement Commission may, at any time within a period of six months from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hich the order was passed; (b) on an application made by the Principal Commissioner or Commissioner before the end of period of six months from the end of month in which the order was passed, at any time within a period of six months from the end of month in which such application was made. The existing provision contained in sub-section (1) of section 245H of the Income-tax Act provides that the Settlement Commission may, if it is satisfied that any person who made the application for settlemen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d the reasons in writing in the order passed by it. The existing provision contained in sub-section (1) of section 245HA of the Income-tax Act provides for abatement of proceedings in different situations. It is proposed to amend sub-section (1) of section 245HA of the Income-tax Act to provide that where in respect of any application made under section 245C, an order under sub-section (4) of section 245D has been passed without providing the terms of settlement the proceedings before the Settle .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or settlement before Settlement Commission. The restriction is presently applicable to a person. Therefore, an individual who has approached the Settlement Commission once can subsequently approach again through an entity controlled by him. This defeats the purpose of restricting the opportunity of approaching the Settlement Commission only once for any person. Accordingly, it is proposed to amend section 245K of the Income-tax Act to provide that any person related to the person who has already .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n is a karta; (ii) where such person is a company, any individual who held more than fifty percent. of the shares or voting power in such company at any time before the date of application before the Settlement Commission by such person; (iii) where such person is a firm or association of person or body of individual, any individual who was entitled to more than fifty percent. of the profits in such firm, association of person or body of individual, at any time before the date of application bef .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion 132B of the Income-tax Act to provide that the asset seized under section 132 or requisitioned under section 132A may also be adjusted against the amount of liability arising on an application made before the Settlement Commission under sub-section (1) of section 245C. These amendments will take effect from 1st day of June, 2015. [Clauses 35, 57, 58, 59, 60 & 61] Orders passed by the prescribed authority under section sub-clauses (vi) and (via) of clause (23C) of section 10 made appeala .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tment of persons suffering from illness or mental defectiveness or treatment of persons during convalescence or persons requiring medical attention, existing solely for philanthropic purposes and not for the purpose of profit is not liable for tax if such hospital or institution is approved by the prescribed authority. The existing provisions contained in sub-section (1) of section 253 of the Income-tax specify orders that are appealable before ITAT. Order passed by the prescribed authority unde .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t an assessee aggrieved by the order passed by the prescribed authority under sub-clause (vi) or (via) of section 10(23C) may appeal to the Appellate Tribunal. This amendment will take effect from 1st day of June, 2015. [Clause 63] Assessment of income of a person other than the person in whose case search has been initiated or books of account, other documents or assets have been requisitioned. Section 153C of the Act relates to assessment of income of any other person. The existing provisions .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. Disputes have arisen as to the interpretation of the words belongs to in respect of a document as for instance when a given document seized from a person is a copy of the original document. Accordingly, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. This amendment will take effect from the 1st day of June, 2015. [Clause 36] Simplification of approval regime for issue of notice for re-a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hin or after four years from the end of relevant assessment year, and (iii) the rank of the Assessing Officer proposing to issue notice. To bring simplicity, it is proposed to provide that no notice under section 148 shall be issued by an assessing officer upto four years from the end of relevant assessment year without the approval of Joint Commissioner and beyond four years from the end of relevant assessment year without the approval of the Principal Chief Commissioner or Chief Commissioner o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nterest at the rate of 1 per cent. on the amount of the increase in total income for the period commencing from date of determination of total income under sub-section (1) of section 143 or on regular assessment and ending on the date of reassessment under section 147 or section 153A. Interest is charged under section 234B on the principle that the amount of tax determined on the total income determined under section 143(1) or on assessment or reassessment or total income declared in a settlemen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xisting provision contained in sub-section (4), inter alia, provide that where on an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) or sub-section (3) is increased or reduced, the interest shall be increased or reduced accordingly. However, in case an application is filed before the Settlement Commission under section 245C declaring an additional amount of income-tax, there is no specific provision in secti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nal amount of income-tax referred to in that sub-section. Further, where as a result of an order of the Settlement Commission under sub-section (4) of section 245D for any assessment year, the amount of total income disclosed in the application under sub-section (1) of section 245C is increased, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the 1st day of April of such assessment year and e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that if the Principal Commissioner or Commissioner considers that any order passed by the assessing officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making an enquiry pass an order modifying the assessment made by the assessing officer or cancelling the assessment and directing fresh assessment. The interpretation of expression erroneous in so far as it is prejudicial to the interests of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision, prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. This amendment will take effect from 1st day of June, 2015. [Clause 65] Clarification regarding deduction of tax from payments made to transporters Under the existing provisions .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the previous year. Subsequently, Finance (No.2) Act, 2009 substituted section 194C of the Act with effect from 1.10.2009, which inter alia provided for non- deduction of tax from payments made to the contractor during the course of plying, hiring and leasing goods carriage if the contractor furnishes his Permanent Account Number (PAN) to the payer. The memorandum explaining the provisions of Finance (No.2) Bill, 2009 indicates that the intention was to exempt only small transport operators (as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

there is no rationale for exempting payment to all transporters, irrespective of their size, from the purview of TDS, it is proposed to amend the provisions of section 194C of the Act to expressly provide that the relaxation under sub-section (6 ) of section 194C of the Act from non-deduction of tax shall only be applicable to the payment in the nature of transport charges (whether paid by a person engaged in the business of transport or otherwise) made to an contractor who is engaged in the bu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ection 194A(1) read with section 194A(3)(i) of the Act provide for deduction of tax on interest (other than interest on securities) over a specified threshold, i.e. ₹ 10,000 for interest payment by banks, co-operative society engaged in banking business (co-operative bank) and post office and ₹ 5,000 for payment of interest by other persons. Further, sub-section (3) of section 194A inter alia also provides for exemption from deduction of tax in respect of following interest payments .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

han those mentioned in section 194A(3)(viia)(a) of the Act. [Section 194A(3)(viia)(b) of the Act] Therefore, as per the provisions of section 194A(1) read with provisions of sections 194A(3)(i)(b) and 194A(3)(viia)(b), co-operative bank is required to deduct tax from interest payment on time deposits if the amount of such payment exceeds specified threshold of ₹ 10,000/-. However, as the provisions of section 194A(3)(v) of the Act provide a general exemption from making tax deduction from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on payment of interest to members. The matter has been carried to judicial forums and in some cases a view has been taken that the provisions of section 194A(3)(viia)(b) of the Act makes no distinction between members and non-members of co-operative banks for the purposes of deduction of tax, hence, the co-operative banks are required to deduct tax on payment of interest on time deposit and cannot avoid the same by taking the plea of the general exemption provided under section 194A(3)(v) of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rovide for co-operative banks a taxation regime which is similar to that for the other commercial banks. Therefore, there is no rationale for treating the co-operative banks differently from other commercial banks in the matter of deduction of tax and allowing them to avail the exemption meant for smaller credit co-operative societies formed for the benefit of small number of members. However, as mentioned earlier, a doubt has been created regarding the applicability of the specific provisions m .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

194A(3)(v) ) of the Act shall not apply to the payment of interest on time deposits by the co-operative banks to its members. However, the existing exemption provided under section 194A(3)(viia)(a) of the Act to primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank from deduction of tax in respect of interest paid on deposit shall continue to apply. Therefore, these co-operative credit societies/banks referred .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o-operative society. The existing provision of TDS on payment of interest by banking company or co-operative bank applies only to the interest payment on time deposits made on or after the 1st day of July, 1995. The definition of time deposits provided in the section 194A of the Act excludes recurring deposit from its scope. Therefore, payment of interest on recurring deposits by banking company or co-operative bank is currently not subject to TDS. The recurring deposit is also made for a fixed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the Act provide that the interest income for the purpose of deduction of tax by the banking company or the co-operative bank or the public company shall be computed with reference to a branch of these entities. As currently, most of these entities are computerised and follow core banking solutions for crediting interest, there is no rationale for continuing branch wise calculation of interest by the entities who have adopted core banking solutions. It is, therefore, proposed to amend the pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bunal if the amount of such interest credited or paid during a financial year does not exceed ₹ 50,000/-. Finance (No.2) Act, 2009 amended the provisions of section 56 of the Act as well as substituted section 145A of the Act to, inter alia, provide that interest income received on compensation or enhanced compensation shall be deemed to be the income of the year in which the same has been received. However, the existing provisions of section 194A of the Act provides for deduction of tax f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nder section 194A of the Act from interest payment on the compensation amount awarded by the Motor Accident Claim Tribunal compensation shall be made only at the time of payment, if the amount of such payment or aggregate amount of such payments during a financial year exceeds ₹ 50,000/-. These amendments will take effect from 1st June, 2015. [Clause 42] Rationalisation of provisions relating to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) Under Chapter XVII-B of the Ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng tax ( the collector ) also is required to file a quarterly Tax Collection at Source (TCS) statement containing the details of collection of tax made during the quarter by the prescribed due date. In order to provide effective deterrence against delay in furnishing of TDS/TCS statement, the Finance Act, 2012 inserted section 234E in the Act to provide for levy of fee for late furnishing of TDS/TCS statement. The levy of fee under section 234E of the Act has proved to be an effective tool in im .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e time of processing of TDS statements. It is, therefore, proposed to amend the provisions of section 200A of the Act so as to enable computation of fee payable under section 234E of the Act at the time of processing of TDS statement under section 200A of the Act. Currently, the provisions of sub-section (3) of section 200 of the Act enable the deductor to furnish TDS correction statement and consequently, section 200A of the Act allows processing of the TDS correction statement. However, curren .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ilar to TDS statement, it is proposed to insert a provision in the Act for processing of TCS statements on the line of existing provisions for processing of TDS statement contained in section 200A of the Act. The proposed provision shall also incorporate the mechanism for computation of fee payable under section 234E of the Act. Under the existing provisions of the Act, after processing of TDS statement, an intimation is generated specifying the amount payable or refundable. This intimation gene .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ctification under section 154 of the Act; (ii) appealable under section 246A of the Act; and (iii) deemed as notice of demand under section 156 of the Act. Further, as the intimation generated after proposed processing of TCS statement shall be deemed as a notice of demand under section 156 of the Act, the failure to pay the tax specified in the intimation shall attract levy of interest as per the provisions of section 220(2) of the Act. However, section 206C (7) of the Act also contains provisi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the same amount for the same period. Under the existing scheme of payment of TDS and TCS, Government deductors/collectors are allowed to make payment of tax deducted/collected by them without production of challan i.e. through book entry. For payment of tax deducted/collected through book entry, the Drawing and Disbursing Officer (DDO) intimates the TDS/TCS amount to the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer (PAO/TO/CDDO) who credits the T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

S/TCS made through book entry has improved the mechanism of reporting of TDS/TCS by the Government deductor to some extent. However, in the absence of any specific provisions in the Act for enforcing the same, it has been noticed that in a large number of cases, PAO/ TO/CDDOs do not file Form 24G in prescribed time. Delay in furnishing of the Form 24G results into delay in furnishing of the TDS/TCS statement by the DDO. In order to improve the reporting of payment of TDS/TCS made through book en .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the prescribed income-tax authority or the person authorised by such authority by verifying the same in the prescribed manner and setting forth prescribed particulars. To ensure compliance of this proposed obligation of filing statement, it is proposed to amend the provisions of section 272A of the Act so as to provide for a penalty of ₹ 100/- for each day of default during which the default continues subject to the limit of the amount deductible or collectible in respect of which the sta .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

claimed by the employee such as rent receipt for claiming exemption of HRA, evidence of interest payments for claiming loss from self occupied house property etc. is generally not available with the DDO. In these circumstances, the DDO has to depend upon the evidence/particulars furnished, if any, by the employees in support of their claim of deductions, exemptions, etc. As the existing provisions of the Act do not contain any guidance regarding nature of evidence/documents to be obtained by th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Act in the prescribed form and manner. The existing provisions of sub-section (6) of section 195 of the Act provide that the person referred to in section 195(1) of the Act shall furnish prescribed information. Section 195(1) of the Act provides that any person responsible for paying any interest( other than interest referred to in sections 194LB or 194LC or 194LD of the Act) or any sum chargeable to tax (not being salary income) to a non-resident, not being a company, or to a foreign company, s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mittances i.e. to identify the taxable remittances on which tax was deductible but was not deducted. In view of this, it is proposed to amend the provisions of section 195 of the Act to provide that the person responsible for paying any sum, whether chargeable to tax or not, to a non-resident, not being a company, or to a foreign company, shall be required to furnish the information of the prescribed sum in such form and manner as may be prescribed. Further, currently there is no provision for l .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

end the provisions of section 273B of the Act to provide that no penalty shall be imposable under this new provision if it is proved that there was reasonable cause for non-furnishing or incorrect furnishing of information under sub-section (6) of section 195 of the Act. These amendments will take effect from 1st June, 2015. [Clauses 37, 38, 40, 48, 50, 51, 53, 54, 55, 62,73, 74 & 75] Simplification of Tax Deduction at Source (TDS) mechanism for Employees Provident Fund Scheme (EPFS) Under t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and recognised under the Income-tax Act are termed as Recognised Provident fund (RPF) under the Act. The provisions relating to RPF are contained in Part A of the Fourth Schedule (Schedule IV-A) of the Act. Under the existing provisions of rule 8 of Schedule IV-A of the Act, the withdrawal of accumulated balance by an employee from the RPF is exempt from taxation. However, in order to discourage pre-mature withdrawal and to promote long term savings, it has been provided that such withdrawal sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he trustees of the RPF, at the time of payment, shall deduct tax as computed in rule 9 of Schedule IV-A. Rule 9 of Schedule IV-A of the Act provides that the tax on withdrawn amount is required to be calculated by re-computing the tax liability of the years for which the contribution to RPF has been made by treating the same as contribution to unrecognized provident fund. The trustees of private PF schemes, being generally part of the employer group, have access to or can easily obtain the infor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to insert a new provision in Act for deduction of tax at the rate of 10% on pre-mature taxable withdrawal from EPFS. However, to reduce the compliance burden of the employees having taxable income below the taxable limit, it is also proposed to provide a threshold of payment of ₹ 30,000/- for applicability of this proposed provision. In spite of providing this threshold for applicability of deduction of tax, there may be cases where the tax payable on the total income of the employees may .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e to tax and on furnishing of such declaration, no tax will be deducted by the trustee of EPFS while making the payment to such employee. Similar facility of filing self-declaration in Form No. 15H for non-deduction of tax under section 197A of the Act shall also be extended to the senior citizen employees receiving pre-mature withdrawal. However, some employees making pre-mature withdrawal may be paying tax at higher slab rates (20% or 30%). Therefore, the shortfall in the actual tax liability .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

specified. As mentioned earlier, there may be employees who are liable to pay tax at the highest slab rate. In order to ensure the collection of balance tax by these employees, it is also proposed that non-furnishing of PAN to the EPFS for receiving these payments would attract deduction of tax at the maximum marginal rate. These amendments will take effect from 1st June, 2015. [Clauses 41 & 49] Amendment to the conditions for determining residency status in respect of Companies The existing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of control and management should be situated in India and that too for whole of the year, the condition has been rendered to be practically inapplicable. A company can easily avoid becoming a resident by simply holding a board meeting outside India. This facilitates creation of shell companies which are incorporated outside but controlled from India. 'Place of effective management' (POEM) is an internationally recognized concept for determination of residence of a company incorporated in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rovides definition of place of effective management to mean the place where key management and commercial decisions that are necessary for the conduct of the entity's business as a whole, are, in substance, made. The modification in the condition of residence in respect of company by including the concept of effective management would align the provisions of the Act with the Double Taxation Avoidance Agreements (DTAAs) entered into by India with other countries and would also be in line with .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

effective management to mean a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance made. Since POEM is an internationally well accepted concept, there are well recognised guiding principles for determination of POEM although it is a fact dependent exercise. However, it is proposed that in due course, a set of guiding principles to be followed in determination of POEM would be issued for the benefit of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t items specified in Schedule-XI) for the expenditure (not being expenditure in the nature of cost of any land or building) incurred on scientific research carried out in an approved in-house research and development facility. For availing this weighted deduction, the company is required to enter into an agreement with the Secretary, Department of Scientific and Industrial Research (DSIR) and also required to obtain his approval. The Secretary, DSIR is required to send the report regarding appro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ting to monitoring of this weighted deduction. In order to have a better and meaningful monitoring mechanism for weighted deduction allowed under section 35 (2AB) of the Act, it is proposed to amend the provisions of section 35(2AB) of the Act to provide that deduction under the said section shall be allowed if the company enters into an agreement with the prescribed authority for cooperation in such research and development facility and fulfills prescribed conditions with regard to maintenance .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lation to the assessment year 2016-17 and subsequent assessment years. [Clause 12] Certain accountants not to give reports/certificates The Act contains several provisions (e.g. section 44AB, section 80-IA, section 92E, section 115JB, etc.) which mandate the taxpayers to furnish audit reports and certificates issued by an accountant for ensuring correct reporting/computation of taxable income by the tax payers. Explanation below section 288(2) of the Act defines an accountant as a chartered acco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tor to express his opinion on the financial statement of any business or any enterprise in which he, his relative, his firm or partner in the firm, has substantial interest. However, during the course of audit, it has been noticed that an auditor has furnished his report in Form 56F in respect of a closely held company in which the auditor s brother was the managing director. To ensure the independence of auditor, sub-section (3) of section 141 of the Companies Act, 2013 contains a list of certa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Companies Act, 2013 shall not be eligible for carrying out any audit or furnishing of any report/certificate under any provisions of the Act in respect of that company. On similar lines, ineligibility for carrying out any audit or furnishing of any report/certificate under any provisions of the Act in respect of non-company is also proposed to be provided. However, it is proposed to provide that the ineligibility for carrying out any audit or furnishing of any report/certificate in respect of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

w section 288(2) of the Act on the lines of definition of chartered accountant in the Companies Act, 2013). These amendments will take effect from 1st June, 2015. [Clause 77] Amount of tax sought to be evaded for the purposes of penalty for concealment of income under clause (iii) of sub-section (1) of section 271 Under the existing provision contained in clause (c) of sub-section (1) of section 271 of the Act penalty for concealment of income or furnishing inaccurate particulars of income is le .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Act and also under the provisions other than the provisions of section 115JB or 115JC of the Act (hereafter referred as general provisions). Further, courts have held that penalty under section clause (c) of sub-section (1) of section 271 cannot be levied in cases where the concealment of income occurs under the income computed under general provisions and the tax is paid under the provisions of section 115JB or 115JC of the Act. Tax paid under the provisions of section 115JB or 115JC over and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

liability of the assessee for the year has been determined under provisions of section 115JB or 115JC of the Act. Accordingly, it is proposed to amend section 271 of the Act so as to provide that the amount of tax sought to be evaded shall be the summation of tax sought to be evaded under the general provisions and the tax sought to be evaded under the provisions of section 115JB or 115JC. However, if an amount of concealment of income on any issue is considered both under the general provisions .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

essment years. [Clause 68] Cost of acquisition of a capital asset in the hands of resulting company to be the cost for which the demerged company acquired the capital asset Under clause (vib) of section 47 of the Income-tax Act any capital asset transferred by the demerged company to the resulting company in the scheme of demerger is not regarded as transfer if the resulting company is an Indian company. In such cases the cost of such asset in the hands of resulting company should be cost of suc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Act to include transfer under clause (vib) of section 47 and to provide that the cost of acquisition of an asset acquired by resulting company shall be the cost for which the demerged company acquired the capital asset as increased by the cost of improvement incurred by the demerged company. This amendment will take effect from 1st April, 2016 and will accordingly apply, in relation to the assessment year 2016-17 and subsequent assessment years. [Clause 14] CUSTOMS Note: (a) Basic Customs Duty .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Finance Bill, 2014. Amendments carried out through the Finance Bill, 2015 come into effect on the date of its enactment unless otherwise specified. AMENDMENTS IN THE CUSTOMS ACT, 1962: 1) Section 28 is being amended so as to: (i) Insert a proviso in sub-section (2) thereof to provide that in cases not involving fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act or rules with the intent to evade payment of duty, no penalty shall be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rules with the intent to evade payment of duty, the amount of penalty payable shall be 15% instead of the present 25%; (iii) Insert Explanation 3 to provide that where a notice under clause (a) of sub-section (1) or sub-section (4) of section 28, as the case may be, has been served but an order determining duty under sub-section (8) has not been passed before the date on which the Finance Bill, 2015 receives the assent of the President, then, without prejudice to the provisions of sections 135, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sub-clause (ii) of clause (b) to provide that any person who acquires possession of or is in any way concerned with or in any other manner deals with any dutiable goods, other than prohibited goods, which he knows or has reasons to believe are liable to confiscation under section 111, shall, subject to the provisions of section 114A, be liable to a penalty not exceeding 10% of the duty sought to be evaded of ₹ 5000, whichever is greater. It is also being provided that in cases of short lev .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

81] 3) Section 114 provides for penalty for attempt to export goods improperly, etc. Section 114 is being amended so as to substitute clause (ii) to provide that any person who, in relation to any dutiable goods, other than prohibited goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 113, or abets the doing or omission of such an act, shall, subject to the provisions of section 114A, be liable to a penalty not exceeding 10% of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the amount of penalty liable to paid by such person under this section shall be 25% of the penalty so determined. [Clause 82] 4) The proviso to clause (b) of section 127A relating to the provisions of Settlement Commission is being amended to delete the reference to in appeal or revision, as the case may be so as to provide that when any proceeding is referred back, whether in appeal or revision or otherwise, by any court, Appellate Tribunal Authority or any other authority to the adjudicating a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the said section provided for the payments to be made within thirty days from 1st day of June 2007. Hence, the said section has become redundant and is being omitted. [Clause 84] 6) Sub-section (6) of section 127C provides that in respect of the applications filed before 31st day of May, 2007, Settlement Commission shall pass the final order of settlement under sub-section (5) of section 127C latest by 29th February 2008 and in cases filed after 31st day of May, 2007, within nine months. Since .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n can reopen the completed proceedings in certain conditions. As per the first proviso to the said section no proceedings can be reopened after five years from the date of application, and as per second proviso to the said section Settlement Commission cannot reopen any proceedings in respect of an application made after 1st day of June 2007. Thus, Settlement Commission has no powers to reopen any completed proceedings after expiry of five years from 1st day of June 2007, thus making this sectio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xplanation is being omitted. [Clause 87] 9) Section 127L provides the situations in which the person in whose case the order has been passed by the Settlement Commission cannot again approach the Settlement Commission. When the said section was amended in 2007, the said section made distinction in respect of the orders passed prior the commencement of section 102 of the Finance Act, 2007 and after that. In respect of the cases decided after the said commencement, the applicant was barred from ma .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

7L are being amended so as to delete the phrase passed under sub-section (7) of the section 127C, as it stood immediately before the commencement of section 102 of the Finance Act, 2007 (22 of 2007) or sub-section (5) of the section 32F as the same have become redundant. [Clause 88] AMENDMENT IN THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975: 1) The tariff rate of basic customs duty on bituminous coal is being reduced from 55% to 10%. 2) The tariff rate of basic customs duty on goods falling .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sed from 10 to 40%. The effective Basic Customs duty on such Vehicles is being increased from 10% to 20%. However, customs duty on such vehicles in Completely Knocked Down (CKD) condition and electrically operated vehicles of heading 8702 including those in CKD condition will continue to be at 10%. [Clause 89] The above changes will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. A. Proposals involving changes in rates of duty: I. CHEMICAL .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mony metal and antimony waste and scrap is being reduced from 5% to 2.5%. 7) SAD on naphtha, ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) for manufacture of excisable goods is being reduced from 4% to 2%. II. FERTILISERS 1) Basic Customs Duty on sulphuric acid for the manufacture of fertilizers is being reduced from 7.5% to 5%. III. INFRASTRUCTURE 1) The Scheduled rates of Additional Duty of Customs levied on imported Motor Spirit [Petrol] and High Speed Diese .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

SAD on melting scrap of iron & steel including stainless steel scrap for melting, copper scrap, brass scrap and aluminium scrap is being reduced from 4% to 2%. 4) The tariff rate of basic customs duty on goods falling under all the tariff items of Chapters 72 and 73 that is iron and steel and articles of iron or steel, is being increased from 10% to 15%. However, there is no change in the existing effective rates of basic customs duty on these goods. V. ELECTRONICS/HARDWARE: 1. All goods exc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f 2% without CENVAT credit or 12.5% with credit is being prescribed for tablet computers. Parts, components and accessories (falling under any Chapter) for use in the manufacture of tablet computers and their sub-parts for use in the manufacture of parts, components and accessories are being fully exempted from BCD, CVD and SAD, subject to actual user condition. 4. Basic Customs Duty on metal parts for use in the manufacture of electrical insulators is being reduced from 10% to 7.5%, subject to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and cerium compounds for use in the manufacture of washcoats, which are used in manufacture of catalytic converters, is being reduced from 7.5% to 5%, subject to actual user condition. 8. Basic Customs Duty on specified components for use in the manufacture of specified CNC lathe machines and machining centres is being reduced from 7.5% to 2.5%, subject to actual user condition. 9. Basic Customs Duty on C- Block for Compressor, Over Load Protector (OLP) & Positive thermal co-efficient and Cr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cture of LCD/LED TV panels is being reduced from 10% to Nil, subject to actual user condition. 13. Basic Customs Duty on Organic LED (OLED) TV panels is being reduced from 10% to Nil. 14. CVD and SAD are being fully exempted on specified raw materials [battery, titanium, palladium wire, eutectic wire, silicone resins and rubbers, solder paste, reed switch, diodes, transistors, capacitors, controllers, coils (steel), tubing (silicone)] for use in the manufacture of pacemakers, subject to actual u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f such cameras is being reduced to Nil. VI. RENEWABLEENERGY: 1) Basic Customs Duty is being fully exempted on Evacuated Tubes with three layers of solar selective coating for use in the manufacture of solar water heater and system, subject to actual user condition. 2) Basic Customs Duty on Active Energy Controller (AEC) for use in the manufacture of Renewable Power System (RPS) Inverters is being reduced to 5%, subject to certification by MNRE. VII. AUTOMOBILES: 1) The tariff rate of Basic Custo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d vehicles and Hybrid motor vehicles, presently available upto 31.03.2015, are being extended upto 31.03.2016. VIII. HEALTH: 1) Basic Customs Duty and CVD is being fully exempted on artificial heart (left ventricular assist device). IX. MISCELLANEOUS: 1) Parts and components of cash dispenser and automatic bank note dispensers [heading 8473 40] are exempt from Basic Customs Duty. However, since the classification of parts was not mentioned in the relevant notification, there were doubts about th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dated 17-3-2012 is being amended to include the classification [8473 40] of parts and components of cash dispensers and automatic bank note dispensers. 2) S. No. 507 of Notification No. 12/2012-Customs dated 17-3-2012 prescribes Nil BCD and NIL CVD for goods imported for setting up a Mega Power Project specified in List No. 32A of the said Notification. In case of imports for a project for which the certificate regarding Mega Power Project status is provisional, the exemption is, inter alia, su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rom BCD or attract concessional rate of 5% BCD, under Sl. No. 148(B) and 147(B) respectively of notification No 12/2012-Customs, if the procedure as laid down in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 is followed by the importers. Further, these bulk drugs used in the manufacture of the specified drugs are also exempt from excise duty, under S. No. 108 (B) of the notification 12/2012- CE, provided the procedure laid down in the C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 for the purposes of availing of the CVD exemption under notification No.12/2012-CE, if the procedure as laid down in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rule, 1996 is already followed by the importer for availing exemption / concession from BCD on the same bulk drug. 4) Notification No.12/2012-Customs [S.No.148(C)] fully exempts Basic Customs Duty and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ines. The prescribed Form is being amended so as to provide that such certificate shall be valid for a period of one year in case of patients who have to import such drugs and medicines on a regular basis. 5) CVD and SAD exemption on specified goods imported for use by Security Printing and Minting Corporation of India Limited (SPMCIL) are being withdrawn. EXCISE AMENDMENTS IN THE CENTRAL EXCISE ACT, 1944: 1) Sub section (3) of Section 3A, which empowers the Central Government to charge excise d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the specified record; (ii) Amend the provision relating to relevant date to provide definition of relevant date in respect of cases where a return is not filed on the due date and where only interest is required to be recovered. (iii) Provide that the provisions of section 11A shall not apply to cases where the non-payment or short payment of duty is reflected in the periodic returns filed and that in such cases recovery of duty shall be made in such manner as may be prescribed in the rules. [Cl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e; b) if duty and interest payable thereon under section 11AA is paid either before issue of show cause notice or within 30 days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of said duty and interest shall be deemed to be concluded; c) if duty as determined under sub-section (10) of section 11A and interest payable thereon under section 11AA is paid within 30 days of the date of communication of order of the Central Excise Officer who has determined s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cases involving fraud or collusion or wilful mis-statement of suppression of facts or contravention of any provision of the Act or rules with the intent to evade payment of excise duty, in the following manner,- a) in addition to the duty as determined under sub-section (10) of section 11A, a penalty equal to the duty so determined shall be payable. In respect of cases where the details relating to such transactions are recorded in the specified record for the period beginning with 8th April, 2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as determined under sub-section (10) of section 11A and interest payable thereon under section 11AA is paid within 30 days of the date of communication of order of the Central Excise Officer who has determined such duty, the amount of penalty shall be equal to 25% of the duty so determined, provided that such reduced penalty is also paid within 30 days of the date of communication of such order; and d) if the duty amount gets reduced in any appellate proceeding, then penalty amount shall also st .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rt, Appellate Tribunal Authority or any other authority to the adjudicating authority for a fresh adjudication or decision, then such case shall not be entitled for settlement. [Clause 93] 5) The proviso to sub-section (3) of section 32 provides that where a Member of the Central Board of Excise & Customs is appointed as the Chairman, Vice Chairman or Member of the Settlement Commission, he shall cease to be a member of the Board. As per the amended Customs and Central Excise Settlement Comm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e of applications made prior to 1st day of June 2007, and where no order under section 32F (1) has been made before said date or applicant has not paid the amount so ordered by the Settlement Commission shall within thirty days from 1st day of June 2007 pay the accepted duty liability failing which his application shall be liable to be rejected. Since the actual operation of the said section provides for the payments to be made within thirty days from 1st day of June 2007, the said sub-section h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce to the said dates have become redundant. Therefore, the said sub-section has been amended so as to omit the phrase in respect of an application filed on or before the 31st day of May, 2007, later than the 29th day of February, 2008 and in respect of application made on or after the 1st day of June, 2007 . [Clause 97] 9) Section 32H provides that Settlement Commission can reopen the completed proceedings in certain conditions. As per the first proviso to the said section no proceedings can be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t in respect of the applications filed on or before 31st day of May 2007, Settlement Commission shall decide the applications as if the amendments made in the said section were not in force. Since all the applications filed by 31st day of May, 2007 have necessarily been disposed of by 29th day of February 2008, the said Explanation has become redundant and hence, is being omitted. [Clause 99] 11) Section 32O provides the situations in which the person in whose case the order has been passed by t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the clauses mentioned in sub-section (1). However vide the amendments made by the Finance Act, 2010, even in cases decided after commencement of section 122 of the Finance Act, 2007 the applicant was allowed to approach Settlement Commission if not hit by any of the clauses to sub-section (1). Thus, clauses (i) and (ii) of sub-section (1) of section 32O are being amended so as to omit the phrase passed under sub-section (7) of the section 32F, as it stood immediately before the commencement of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

suffered excise duty and no credit of duty paid on them is taken under the CENVAT Credit Rules, 2004. This exemption is being made applicable retrospectively for the period from 17.03.2012 to 02.02.2014. [Clause 102] 14) The Third Schedule to the Central Excise Act, 1944 is being amended in the manner as specified in clause 105. [Clause 103] The change at Para 1) and 14) will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. Proposals invol .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing 2202 10 is being increased from 12% to 18%. 3) Duty of excise on cigarettes is being increased by 25% for cigarettes of length not exceeding 65 mm and by 15% for cigarettes of other lengths. Increase in duty rates is also proposed on cigars, cheroots and cigarillos. 4) Excise duty on cut tobacco is being increased from ₹ 60 per kg to ₹ 70 per kg. 5) Tariff rate of excise duty on goods falling under Chapter sub-heading 2523 29 is being increased from ₹ 900 per tonne to ͅ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t 1) to 7) will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. I. PETROLEUM 1. The Schedule Rates of the Additional Duty of Excise (commonly known as Road Cess) levied on Petrol and High Speed Diesel Oil is being increased from ₹ 2 per litre to ₹ 8 per litre. The effective rates of the Additional Duty of Excise (commonly known as Road Cess) levied on Petrol and High Speed Diesel Oil is being increased from ₹ 2 per litre .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

effect from 01.03.2015 CENVAT Rs. / Litre SAED Rs. / Litre AED Rs. / Litre Education Cesses (as % of aggregate of duties of excise) Total Rs. / Litre CENVAT SAED AED Education Cesses Total Unbranded petrol 8.95 6 2 3% 17.46 5.46 6 6 NIL 17.46 Branded petrol 10.10 6 2 3% 18.64 6.64 6 6 NIL 18.64 Unbranded Diesel 7.96 NIL 2 3% 10.26 4.26 NIL 6 NIL 10.26 Branded Diesel 14% +Rs. 5 /litre or Rs. 10.25 / litre, whichever is lower NIL 2 3% 12.62 6.62 NIL 6 NIL 12.62 Thus, the total incidence of various .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

duty with reference to the Retail Sale Price with an abatement of 35%. 3) Excise duty of 2% without CENVAT credit or 6% with CENVAT credit is being levied on condensed milk put up in unit containers. Condensed milk is also being notified under section 4A of the Central Excise Act for the purpose of valuation with reference to the Retail Sale Price with an abatement of 30%. 4) Excise duty of 2% without CENVAT credit or 6% with CENVAT credit is being levied on peanut butter. III. AUTOMOBILES: 1) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s & cigarillos and cigarettes & cigarillos of tobacco substitutes is also being increased. 2) Maximum speed of packing machine for packing of notified goods of various retail sale prices is being specified as a factor relevant to production for determining excise duty payable under the Compounded Levy Scheme presently applicable to pan masala, gutkha and chewing tobacco. Accordingly, deemed production and duty payable per machine per month are being notified with reference to the speed r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

CENVAT credit or 6% with credit to 1% without credit or 12.5% with credit. NCCD of 1% on mobile phones remains unchanged. 4) Excise duty structure of 2% without CENVAT credit or 12.5% with credit is being extended to tablet computers. Parts, components and accessories (falling under any Chapter) for use in manufacture of tablet computers and their sub-parts for use in manufacture of parts, components and accessories are being fully exempted from excise duty, subject to actual user condition. 5) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sale price. Similar changes are being made in the Third Schedule to the Central Excise Act, 1944. VI. RENEWABLEENERGY 1) Excise duty on pig iron SG grade and Ferro-silicon-magnesium for manufacture of Cast components of wind operated electricity generators is being fully exempted, subject to certification by MNRE in this regard. 2) Excise duty structure of NIL without CENVAT credit or 12.5% with credit is being prescribed for solar water heater and system. 3) Excise duty on round copper wire and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or other sweetening matter or flavoured in the Seventh Schedule to the Finance Act, 2005 related to levy of additional duty of excise @ 5% is being omitted. Till the enactment of the Finance Bill, 2015, the said additional duty of excise of 5% leviable on such goods is being exempted. Simultaneously, the Basic Excise Duty rate on these goods is being increased from 12% to 18%. VIII. SWACHH BHARAT AND ENERGY SECTOR 1) The Schedule Rate of Clean Energy Cess, levied on coal, lignite and peat, is be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

TOWARDS GST 1) Education Cess and Secondary & Higher Education Cess leviable on excisable goods are being subsumed in Basic Excise duty. Consequently, Education Cess and Secondary & Higher Education Cess leviable on excisable goods are being fully exempted. The standard ad valorem rate of Basic Excise Duty is being increased from 12% to 12.5% and specific rates of Basic Excise Duty on petrol, diesel, cement, cigarettes & other tobacco products (other than biris) are being suitably ch .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tis attract NIL excise duty. 2) S. No. 337 of Notification No. 12/2012-CE dated 17-3-2012 provided Nil excise duty on goods for setting up Ultra Mega Power Project specified in List No. 10 of the said Notification. In case of goods for a Project for which certificate regarding Ultra Mega Power Project status is provisional, the exemption is subject interalia to condition that the Chief Executive Officer of the Project furnishes a bank guarantee or fixed deposit receipt for a term of 36 months or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the Project furnishes a bank guarantee or fixed deposit receipt for a term of 36 months or more. This condition is being amended to prescribe furnishing of bank guarantee or fixed deposit receipts for a period of 66 months. 4) Goods manufactured domestically and supplied against International Competitive Bidding are eligible for full excise duty exemption provided that such goods when imported attract Nil Basic Customs Duty and Nil CVD [S.No.336 of notification No.12/2012-CE dated 17.03.2012 r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ditional Duty of Excise and Additional Duty of Customs (commonly known as Road Cess) on Motor Spirit commonly known as Petrol is being amended so as to increase the Scheduled rate from ₹ 2 per litre to ₹ 8 per litre. The effective rate of Additional Duty of Excise and Additional Duty of Customs (commonly known as Road Cess) on Motor Spirit commonly known as Petrol is being increased from ₹ 2 per litre to ₹ 6 per litre. [Clause 163] 2) The Second Schedule to the Finance Ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Act, 2005 is being amended so as to omit the entry relating to levy of Additional Duty of Excise of 5% ad valorem on waters, including mineral waters and aerated waters containing added sugar. [Clause 184] 4) The Tenth Schedule to the Finance Act, 2010 dealing with Clean Energy Cess is being amended so as to increase the Scheduled rate of Clean Energy Cess from ₹ 100 per tonne to ₹ 300 per tonne. The effective rate of Clean Energy Cess is being increased from ₹ 100 per tonne .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

12.36% (inclusive of cesses) to 14%. The new Service Tax rate shall come into effect from a date to be notified by the Central Government after the enactment of the Finance Bill, 2015. Till the time the revised rate comes into effect, the levy of Education cess and Secondary and Higher Education cess shall continued to be levied in Service Tax. 2. Swachh Bharat Cess: • An enabling provision is being made to empower the Central Government to impose a Swachh Bharat Cess on all or any of the t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks, theme parks or such other places. The Negative List entry that covers access to amusement facility is being omitted [section 66D (j)]. Consequently, the definition of amusement facility [section 65B(9)] is also being omitted. These proposed changes shall come into effect from a date to be notified by the Central Government after the enactment of the Finance Bill, 2015. • Service Tax to be levied .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssion to entertainment events, namely, exhibition of cinematographic film, circus, recognized sporting events, dance, theatrical performances including drama and ballets, by way of the Negative List entry shall be continued, irrespective of the amount charged for such service, through the route of exemption. For this purpose a new entry is being inserted in Notification No. 25/2012-ST, dated 20.6.2012. The proposed changes shall come into effect from a date to be notified by the Central Governme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

finition of the term process amounting to manufacture or production of goods [ section 65B (40) is being amended] with a consequential amendment in S. No. 30 of notification No. 25/12-ST, to exclude intermediate production of alcoholic liquor for human consumption from its ambit. The proposed changes shall come into effect from a date to be notified by the Central Government after the enactment of the Finance Bill, 2015. • Presently, services provided by the Government or a local authority, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l come into effect from a date to be notified by the Central Government in this regard after the enactment of the Finance Bill, 2015. Accordingly, as and when this amendment is given effect to, all services provided by the Government or local authority to a business entity, except the services that are specifically exempted, or covered by any other entry in the Negative List, shall be liable to Service Tax . (B) Review of general exemptions extended under Notification No. 25/2012-ST, dated 20.6. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(iii) sewerage treatment or disposal. Exemption to other services presently covered under S. No. 12 of notification No. 25/12-ST is being withdrawn. • Exemption to construction, erection, commissioning or installation of original works pertaining to an airport or port is being withdrawn. The other exemptions covered under S. No. 14 of notification No. 25/12-ST shall continue unchanged. • Exemption to services provided by a performing artist in folk or classical art form of (i) music, o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mutual fund or assets management company, (b) distributor to a mutual fund or AMC, (c) selling or marketing agent of lottery ticket to a distributor. Service tax on these services shall be levied on reverse charge basis. • Exemption is being withdrawn on the following service,- (a) Departmentally run public telephone; (b) Guaranteed public telephone operating only local calls; and (c) Service by way of making telephone calls from free telephone at airport and hospital where no bill is issue .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. • Service provided by way of exhibition of movie by the exhibitor (theatre owner) to the distributor or association of persons consisting of such exhibitor as one of it s members is being exempted. • Hitherto, any service provided by way of transportation of a patient to and from a clinical establishment by a clinical establishment is exempt from service tax. The scope of this exemption is being widened to include all ambulance services. • Service provided by way of admission to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

land customs station (LCS). [All the above New Exemptions shall come into effect from the 1st day of April, 2015] 5. New entries being incorporated in notification No. 25/12-ST, to continue exemption to some of the services that are presently covered by the Negative List entries which are being omitted: • Service by way of right to admission to,- (i) exhibition of cinematographic film, circus, dance, or theatrical performances including drama or ballet. (ii) recognized sporting events. (ii .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rnment have been included in the Negative List. Further, specified services received by the government are also exempt. Hitherto, the term government has not been defined in the Act or the notification. This has given rise to interpretational issues. To address such issues, a definition of the term government is being incorporated in the Act. • The intention in law has been to levy Service Tax on the services provided by: (i) chit fund foremen by way of conducting a chit. (ii) distributors .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

relation to chit, and distributors or selling agents of lottery in relation to lotteries. • Section 66F (1) prescribes that unless otherwise specified, reference to a service shall not include reference to any input service used for providing such service. An illustration is being incorporated in this section to exemplify the scope of this provision. • Section 67 prescribes for the valuation of taxable services. It is being prescribed specifically in this section that consideration fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt received, that is the difference in the face value of lottery ticket and the price at which the distributor or selling agent gets such tickets; • Section 73 is being amended in the following manner: (i) a new sub-section (1B) is being inserted to provide that recovery of the service tax amount self-assessed and declared in the return but not paid shall be made under section 87, without service of any notice under sub-section (1) of section 73,; and (ii) sub-section (4A), that provides fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o be paid if service tax and interest is paid within 30 days of issuance of notice under section 73 (1); (iii) a reduced penalty equal to 25% of the penalty imposed by the Central Excise officer by way of an order is to be paid if the service tax, interest and reduced penalty is paid within 30 days of such order; and (iv) if the service tax amount gets reduced in any appellate proceeding, then penalty amount shall also stand modified accordingly, and benefit of reduced penalty ( 25% of penalty i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

15% of the service tax amount is to be paid if service tax, interest and reduced penalty is paid within 30 days of service of notice in this regard; (iii) a reduced penalty equal to 25% of the service tax amount determined by the Central Excise Officer, by an order, is to be paid if the service tax, interest and reduced penalty is paid within 30 days of such order; and (iv) if the service tax amount gets reduced in any appellate proceeding, then penalty amount shall also stand modified accordin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the date of enactment of the Finance Bill, 2015; and (ii) in respect of cases covered by sub-section (4A) of section 73, if no notice is served, or notice is served under sub-section (1) of section 73 or proviso thereto but no order has been issued under sub-section (2) of section 73, before the date of enactment of the Finance Bill, 2015, penalty shall not exceed 50% of the service tax amount. • Section 80, that provided for waiver of penalty in specified situations, is being omitted. &bu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nsport by rail, road and vessel. Service Tax shall be payable on 30% of the value of such services subject to a uniform condition of non-availment of Cenvat Credit on inputs, capital goods and input services. • At present, Service Tax is payable on 40% of the value of air transport of passenger for economy as well as higher classes, e.g. business class. The abatement for classes other than economy is being reduced and service tax would be payable on 60% of the value of such higher classes. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dia, is being made liable to pay Service Tax if the service is so provided using the brand name of the aggregator in any manner. If an aggregator does not have any presence, including that by way of a representative, in such a case any agent appointed by the aggregator shall pay the tax on behalf of the aggregator. In this regard appropriate amendments have been made in rule 2 of the Service Tax Rules, 1994 and notification No. 30/2012-ST dated 20.6.2012. This change comes into effect immediatel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n under section 87 is being omitted consequent to amendment in section 73 for enabling such recovery. • In respect of certain services like money changing service, service provided by air travel agent, insurance service and service provided by lottery distributor and selling agent the service provider has been allowed to pay service tax at an alternative rate subject to the conditions as prescribed under rule 6 (7), 6(7A), 6(7B) and 6(7C) of the Service Tax Rules, 1994. Consequent to the up .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version