TMI BlogNotes on clauses-Income TaxX X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Rates for deduction of tax at source during the financial year 2016-17 from income other than Salaries Part II of the First Schedule to the Bill specifies the rates at which income-tax is to be deducted at source during the financial year 2016-17 from income other than Salaries . The rates are the same as those specified in Part II of the First Schedule to the Finance Act, 2015 for the purposes of deduction of income tax at source during the financial year 2015-16 except that in case of payment of income by way of insurance commission to a person, other than a company, resident in India , tax shall now be deducted at source at the rate of five per cent. ,as against the earlier rate of ten per cent. The amount of tax so deducted shall be increased by a surcharge in the case of (i) every non-resident being an individual or Hindu undivided family or 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, at the rate of fifteen per cent. of such tax, where the income or the aggregate of income paid or likely to be paid and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 to ₹ 10,00,000 20 per cent. Above ₹ 10,00,000 30 per cent.; (iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year : Up to ₹ 5,00,000 Nil ₹ 5,00,001 to ₹ 10,00,000 20 per cent. Above ₹ 10,00,000 30 per cent.; The surcharge in cases of persons referred to in this paragraph, having income above one crore rupees, shall be levied at the rate of fifteen per cent. Marginal relief will be provided. Paragraph B of this Part specifies the rates of income-tax in the case of every co-operative society. In such cases, the rates of tax will continue to be the same as those specified for assessment year 2016-17. The surcharge in cases of co-operative societies, having income above one crore rupees shall be levied at the rate of twelve per cent. Marginal relief will be provided. Paragraph C of this Part specifies the rate of income-tax in the case of every firm. In s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the case of domestic company and any other person who is resident in India. Both the cesses would continue to apply on tax deducted at source in the case of salary payments. These would also continue to be levied in the cases of persons not resident in India and companies other than domestic company. Clause 3 of the Bill seeks to amend section 2 of the Income-tax Act relating to definitions. Sub-clause (a) of the said clause seeks to amend clause (14) of the aforesaid section which defines capital asset and item (vi) of the said clause (14) excludes from the definition of capital asset, inter alia, Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government. It is proposed to amend item (vi) of the said clause (14) so as to also exclude the deposit certificates issued under the Gold Monetisation Scheme, 2015 from the definition of capital asset. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years. Sub-clause (b) of the said clause proposes to insert a new clause (23C) to define the term hearing so as to include communi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to insert an Explanation to clarify the expression place of effective management to mean a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance, made. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years. Clause 5 of the Bill seeks to amend section 9 of the Income-tax Act relating to income deemed to accrue or arise in India. It is proposed to insert a new clause (e) in the Explanation 1 to clause (i) of sub-section (1) of the said section so as to provide that in the case of a foreign company engaged in the business of mining of diamonds, no income shall be deemed to accrue or arise in India through or from the activities which are confined to the display of uncut and unassorted diamond in any special zone notified by the Central Government in the Official Gazette in this behalf. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years. Clause 6 of the Bill seeks to amend section 9A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the annuity, shall be chargeable to tax. The said clause also seeks to provide that any payment from an approved superannuation fund by way of transfer to the account of the employee under a pension scheme referred to in section 80CCD notified by the Central Government shall be exempt from tax. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years. Sub-clause (B) of the said clause seeks to amend clause (15) of the said section so as to provide that the interest on deposit certificates issued under the Gold Monetisation Scheme, 2015 notified by the Central Government shall also be exempted from income-tax. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years. Sub-clause (C) of the said clause seeks to amend clause (23DA) of the said section so as to provide that the definition of the term securitisation for the purposes of the said clause shall also include securitisation, as defined in clause (z) of sub-section (1) of section 2 of the Securitisation and Reconstruction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Central Government in this behalf. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-2017 and subsequent years. Sub-clause (E) of the said clause seeks to insert a new clause (50) in the said section so as to provide that any income arising from specified services provided on or after the date on which the provisions of Chapter VIII of the Finance Act, 2016, comes into force and chargeable to equalisation levy under that Chapter shall be exempt. It is further proposed to provide an Explanation under the proposed clause (50) so as to provide that the expression specified service shall have the meaning assigned to it in clause (i) of section 161 of the Chapter VIII of the Finance Act, 2016. This amendment will take effect from 1st June, 2016. Clause 8 of the Bill seeks to amend section 10AA of the Income-tax Act relating to special provisions in respect of newly established Units in Special Economic Zones. The aforesaid section provides that an assessee, being an entrepreneur as referred to in clause (j) of section 2 of the Special Economic Zones Act, 2005, who begins fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is completed within five years from the end of the financial year in which the capital was borrowed. This amendment will take effect from 1st April, 2017 and will, accordingly apply in relation to assessment year 2017-2018 and subsequent years. Clause 11 of the Bill seeks to substitute sections 25A, 25AA and 25B of the Income-tax Act relating to special provisions for cases where unrealised rent allowed as deduction is realised subsequently, unrealised rent received subsequently to be charged to income tax and special provision for arrears of rent received, with a new section 25A. It is proposed to provide that the amount of rent received in arrears or the amount of unrealised rent realised subsequently by an assessee shall be charged to income-tax in the financial year in which such rent is received or realised, whether the assessee is the owner of the property or not in that financial year. It is also proposed that thirty per cent. of the arrears of rent or the unrealised rent realised subsequently by the assessee shall be allowed as deduction. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. It is proposed to amend the said sub-section so as to provide that the deduction under the said sub-section shall be allowed if the assets are installed on or before the 31st March, 2017. It is further proposed to insert a new proviso in the said subsection so as to provide that where the installation of the new assets are in a year other than the year of acquisition, the deduction under the said sub-section shall be allowed in the year in which such new assets are installed. These amendments will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-2017 and subsequent years. Clause 15 of the Bill seeks to amend section 35 of the Incometax Act relating to expenditure on scientific research. Sub-clause (i) of the said clause seeks to amend sub-section (1) of the aforesaid section 35. Clause (ii) of sub-section (1) of the said section provides for weighted deduction to the extent of one hundred seventy-five per cent. of any sum paid to a scientific research association which has the object of undertaking scientific research or to a university, college or other institution to be used for scientif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reduce the said weighted deduction from two hundred per cent. to one hundred and fifty per cent. from financial year 2017-2018 to 2019-2020. It is further proposed to reduce the said weighted deduction to one hundred per cent. from financial year 2020-2021 and subsequent years. These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018- 2019 and subsequent years. Clause 16 of the Bill seeks to insert a new section 35ABA in the Income-tax Act relating to expenditure for obtaining right to use spectrum for telecommunication services. The proposed section seeks to provide that any capital expenditure incurred and actually paid by an assessee on the acquisition of any right to use spectrum for telecommunication services shall be allowed as a deduction in equal instalments over the period starting from the year in which such payment has been made and ending in the year in which the useful life of spectrum comes to an end. The proposed section further seeks to provide that the provisions contained in sub-sections (2) to (8) of section 35ABB, shall apply as if for the word licence , the word spectrum had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018- 2019 and subsequent years. Clause 19 of the Bill seeks to amend section 35CCC of the Income-tax Act relating to expenditure on agricultural extension project. The aforesaid section provides that where an assessee incurs any expenditure on agricultural extension project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then, there shall be allowed a deduction of a sum equal to one and one-half times of such expenditure. Sub-section (2) of the said section provides that where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provisions of the Income-tax Act for the same or any other assessment year. It is proposed to amend the said section so as to reduce the deduction from one hundred fifty per cent. to one hundred per cent. This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-2019 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and gains of business or profession . It is proposed to insert a new sub-clause (ib) in clause (a) of the aforesaid section so as to provide that any consideration paid or payable to a non-resident for a specified service on which equalisation levy is deductible under Chapter VIII of the Finance Act, 2016, and such levy has not been deducted, or, after deduction, has not been paid on or before the due date specified in subsection (1) of section 139. It is further proposed that where in respect of any such consideration, the equalisation levy has been deducted in any subsequent year, or, has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such levy has been paid. These amendments will take effect from 1st June, 2016. Clause 23 of the Bill seeks to amend section 43B of the Income-tax Act relating to certain deductions to be only on actual payment. The aforesaid section, inter alia, provides that certain sum payable by the assessee shall be allowed as deduction irrespective of the previous year in which the lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to income-tax. Sub-clause (iii) of the said clause seeks to insert a new clause (e) in the said section so as to provide that every person carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax, keep and maintain such books of account and other documents for computing his total income in accordance with the provisions of this Act. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. Clause 26 of the Bill seeks to amend section 44AD of the Income-tax Act relating to special provision for computing profits and gains of business on presumptive basis. The existing provisions contained in the said section provides that notwithstanding anything to the contrary contained in section 28 to 43C, in the case of an assessee engaged in any business having total turnover or gross receipts not exceeding one crore rupees, a sum equal to eight per cent. of the total turnover or gross receipts, or, as the case may be, a sum higher than the aforesaid sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 44AA and get them audited and furnish a report of such audit as required under section 44AB. It is also proposed to increase the threshold limit of one crore rupees specified in the definition of eligible business to two crore rupees in the Explanation. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. Clause 27 of the Bill seeks to insert a new section 44ADA in the Income-tax Act relating to special provision for computing profits and gains of profession on presumptive basis. The proposed new section 44ADA seeks to provide that notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being a resident in India, who is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent. of the total gross receipts of the assessee in the previous year on account of such profession, or as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital asset, being a unit or units, in the consolidated plan of that scheme of the mutual fund shall not be considered as transfer for capital gain tax purposes. It is also proposed to define the expressions consolidating plan , consolidated plan and mutual fund for the purposes of the proposed clause (xix). These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent assessment years. Clause 29 of the Bill seeks to amend section 48 of the Income-tax Act relating to mode of computation. The aforesaid section, inter alia, provides that indexation benefit in respect of long-term capital gains as per third proviso is not available to bonds and debentures, except capital indexed bonds issued by the Government. Sovereign Gold Bond issued under the Sovereign Gold Bond Scheme, 2015, is therefore, presently, not eligible for indexation benefits. Further, it provides that the gains on account of appreciation of rupee against a foreign currency are accounted for while calculating full value of consideration. It is proposed to amend section 48 so as to provide indexation benefits to lon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Government in this behalf. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent assessment years. Clause 32 of the Bill seeks to amend section 54GB in the Income tax relating to Capital gain on transfer of residential property not to be charged in certain cases. The existing provisions of section 54GB provide that capital gains arising on account of transfer of a residential property shall not be charged to tax if such capital gains is invested in subscription of shares of a company which qualifies to be a small or medium enterprise under the Micro, Small and Medium Enterprises Act, 2006 subject to other conditions specified therein. It is proposed to amend section 54GB so as to provide that capital gains arising on account of transfer of a residential property shall not be charged to tax if such capital gains is invested in subscription of shares of a company which qualifies to be an eligible start-up subject to other specified conditions. The existing provision of section 54GB requires that the company should invest the proceeds in the purchase of new asset being new plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily, on receipt of shares as a consequence of demerger or amalgamation of a company. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 35 of the Bill seeks to amend section 80 of the Income-tax Act relating to submission of return for losses. The aforesaid section, inter alia, provides that a loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139, shall not be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A. It is proposed to amend the said section 80 so as provide that the loss under sub-section (2) of section 73A shall also be not allowed to be carried forward and set off if such loss has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-2017 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns or limitations as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations. It is proposed to increase the maximum amount of deduction allowable under the said section to five thousand rupees per month. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years. Clause 39 of the Bill seeks to amend section 80-IA of the Income-tax Act relating to deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. Clause (i) of sub-section (4) of aforesaid section, inter alia, provides that any enterprise carrying on business of developing or operating and maintaining any infrastructure facility shall be allowed deduction as specified subject to conditions specified therein. It is proposed to amend the said section so as to provide that this section shall not apply to any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April, 2017. This amendment will take effect from 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said subsection so as to provide that such clauses of the said section shall not apply to any enterprise which commences the business activity on or after the 1st day of April, 2017. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. Clause 43 of the Bill seeks to insert a new section 80-IBA in the Income-tax Act relating to deductions in respect of profits and gains from housing project. The proposed new section seeks to provide for hundred per cent. deduction of the profits and gains of an assessee developing and building housing projects, if the project is approved by the competent authority on or before the 31st March, 2019 subject to the conditions specified therein. The assessee is required to complete the said project within three years failing which the entire deduction claimed in previous years shall be deemed as his income. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation assessment year 2017-2018 and subsequent years. Clause 44 of the Bill seeks to substitute a new section for section 80JJAA of the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sixty days. This amendment will take effect from 1st June, 2016. Clause 47 of the Bill seeks to amend section 92D of the Incometax Act relating to maintenance and keeping of information and document by persons entering into an international transaction or specified domestic transaction. The aforesaid section provides that every person who has entered into an international transaction or specified domestic transaction shall keep and maintain such information and document in respect thereof as may be prescribed. The said section further provides that the Assessing Officer or the Commissioner (Appeals) may in the course of any proceeding require such person to furnish the information and document within the period of thirty days of it being called for or within the extended period. It is proposed to amend the said section so as to provide that the person being a constituent entity of an international group, referred to in section 286, shall also keep and maintain such information and document in respect of the international group as may be prescribed. It is further proposed to amend the said section so as to provide that without prejudice to the power of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of subsection (1) or sub-section (2AA) or sub-section (2AB) of section 35 or section 35AC or section 35AD or section 35CCC or section 35CCD or under any provisions of Chapter VI-A under the heading C. Deductions in respect of certain incomes other than the provisions of section 80JJAA; (ii) without set off of any loss carried forward from any earlier assessment year if such loss is attributable to any of the deductions referred to in sub-clause (i); and (iii) depreciation under section 32, other than clause (iia) of sub-section (1) of the said section is determined in the manner as may be prescribed. Sub-section (3) of the proposed new section provides that the loss referred to in sub-clause (ii) of clause (c) of sub-section (2) shall be deemed to have been already given full effect to and no further deduction for such loss shall be allowed for any subsequent year. Sub-section (4) of the proposed new section provides that the option by the person referred to in sub-section (1) shall be exercised in the prescribed manner on or before the due date specified under sub-section (1) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yalty in respect of a patent developed and registered in India, the income-tax payable shall be the aggregate of the amount of income-tax calculated on the income by way of royalty in respect of such patent, at the rate of ten per cent., and the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the income referred to in the proposed sub-clause (a) of sub-section (1) of the proposed section. It is further proposed to provide that the assessee shall not be eligible for deduction in respect of any expenditure or allowance under any provisions of the said Act in computing his income referred to in clause (a) of sub-section (1) of the proposed section. It is also proposed to provide an Explanation in the said section to define certain expressions used therein. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 53 of the Bill seeks to amend section 115JB of the Income-tax Act relating to special provision for payment of tax by certain companies. Item (a) of sub-clause (I) of the said clause seeks to insert a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt a new Chapter XII-BC in the Income-tax Act on special provisions relating to foreign company said to be resident in India. Sub-section (1) of the proposed new section 115JH provides that where a foreign company is said to be resident in any previous year and such foreign company has not been resident in India in any of the preceding previous year, then, the provisions of the Income-tax Act relating to computation of total income, treatment of unabsorbed depreciation, set off or carry forward and set off of losses, special provisions relating to avoidance of tax and the collection and recovery shall apply with such exceptions, modifications and adaptations on fulfilment of such conditions as may be notified by the Central Government in this behalf. Proviso to sub-section (1) of the proposed section provides that in case determination regarding residence of foreign company has been done in the assessment proceedings relevant to any previous year, then, the provisions of the proposed new Chapter shall also apply in respect of previous years succeeding the relevant previous year which ends on or before the date on which the determination has been made. Sub-section (2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 56 of the Bill seeks to amend section 115QA of the Income-tax Act relating to tax on distributed income to shareholders. The Explanation to sub-section (1) of the aforesaid section provides for definition of certain expressions for the purposes of the said section. It is proposed to amend clause (i) of the said Explanation to substitute the reference of section 77A of the Companies Act, 1956 with the words any law for the time being in force relating to companies and also to amend clause (ii) to provide that distributed income shall mean the consideration paid by the company on buy-back of shares as reduced by the amount, which was received by the company for issue of such shares, determined in the manner as may be prescribed. These amendments will take effect from 1st June, 2016. Clause 57 of the Bill seeks to amend section 115TA of the Income-tax Act relating to tax on distributed income to investors. It is proposed to amend the said section so as to provide that nothing contained in this section shall apply in respect of any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or arisen to, the securitisation trust during the previous year. Sub-section (3) of the proposed new section seeks to provide that the income accruing or arising to, or received by, the securitisation trust, during a previous year, if not paid or credited to the person referred to in sub-section (1), shall be deemed to have been credited to the account of the said person on the last day of the previous year in the same proportion in which such person would have been entitled to receive the income had it been paid in the previous year. Sub-section (4) of the proposed new section seeks to provide that the securitisation trust and the person responsible for crediting or making payment of the income on behalf of securitisation trust shall furnish, within such time, as may be prescribed, to the person who is liable to tax in respect of such income and to the prescribed income-tax authority, a statement in such form and verified in such manner, giving details of the nature of the income paid or credited during the previous year and such other relevant details, as may be prescribed. Sub-section (5) of the proposed new section seeks to provide that any income included in the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious situations. The proposed section 115TE provides for the levy of interest, in case of failure to pay tax within the time provided, at the rate of one per cent. for every month and part thereof of such failure. The proposed section 115TF provides that in case of failure of payment of tax, the principal officer or the trustee and the trust or the institution shall be deemed to be an assessee in default in respect of the amount of tax payable and all provisions of the Income-tax Act relating to recovery and collection of taxes shall apply to them. This amendment will take effect from 1st June, 2016. Clause 61 of the Bill seeks to amend section 115UA of the Income-tax Act relating to tax on income of unit holder and business trust. It is proposed to amend sub-section (3) of the said section to provide that any distributed income from a business trust received by a unit holder which is of the same nature as dividend referred to in sub-section (7) of section 115-O shall not be included in the total income of such unit holder. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation and documents for the purpose of verification of information in its possession. It is proposed to amend the said section so as to further provide that the information and documents so obtained by the prescribed income-tax authority may be processed and the outcome of such processing may be made available to the Assessing Officer for further necessary action, if any. This amendment will take effect from 1st June, 2016. Clause 65 of the Bill seeks to amend section 139 of the Incometax Act relating to return of income. Sub-clause (i) of said clause seeks to amend sub-section (1), sub-section (4), sub-section (5) and sub-section (9) of the said section. Sub-section (1) of the aforesaid section provides that every person referred to therein shall file a return of income on or before the due date. The sixth proviso to the said section provides that every person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving furnished a return under sub-section (1), or under sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. It is also proposed to omit clause (aa) of the Explanation to subsection (9) of said section to provide that a return which is otherwise valid would not be treated defective merely because self assessment tax and interest payable in accordance with the provisions of section 140A, has not been paid on or before the date of furnishing of the return. These amendments will take effect from 1st day of April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. Sub-clause (ii) of the said clause seeks to amend sub-section (3) of the said section. Sub-section (3) of the said section provides that if any person who has sustained a loss in any previous year under the head profits and gains of business or profession or under the head capital gains and claims that the loss or any part thereof should be carried forward under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, the adjustment of the amount indicated in the intimation be made. Under the existing provision of sub-section (1D) of the said section 143, processing of a return is not necessary where a notice has been issued to the assessee under sub-section (2) of that section. It is proposed to amend sub-section (1D) of the said section so as to provide that before making an assessment under sub-section (3) of that section, a return shall be processed under sub-section (1) of section 143. These amendments will take effect from the 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. Sub-clause (b) of the said clause seeks to substitute sub-section (2) of the said section. The existing provisions of sub-section (2) of the aforesaid section provide that, if the Assessing Officer under the circumstances specified therein shall serve on the assessee a notice requiring him to produce, or cause to be produced on a specified date, any evidence on which the assessee may rely in support of the return. It is proposed to substitute the said sub-section (2) so as to provide that notice under the said sub-section may be served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing aside or cancelling an assessment be changed from existing one year to nine months from the end of the financial year in which the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, or the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner. It is further proposed to provide that the period for giving effect to an order, under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, where effect can be given wholly or partly otherwise than by making a fresh assessment or reassessment shall be three months from the end of the month in which order is received or passed, as the case may be, by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. It is also proposed that in a case where it is not possible for the Assessing Officer to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such reasons in writing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132A be changed from existing two years to twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed. (ii) The limitation for completion of assessment in case of other person referred to in section 153C shall be changed from existing two years to twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed or be nine months (which as per the existing provision is one year) from the end of the financial year in which the books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later. It is also proposed to simplify section 153B by substituting certain provisions which are no more relevant with the current provisions. This amendment will take effect from 1st June, 2016. Clause70 of the Bill seeks to amend section 192A of the Incometax Act relating to payment of accumulated balance due to an employee. Under the existing prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d rupees. It is proposed to reduce the said threshold limit from twenty thousand rupees to fifteen thousand rupees. This amendment will take effect from 1st June, 2016. Clause 74 of the Bill seeks to amend section 194DA of the Income-tax Act relating to payment in respect of life insurance policy. Under the existing provisions contained in the aforesaid section, any person responsible for paying to a resident any sum under a life insurance policy, including the sum allocated by way of bonus on such policy, which is not exempt under clause (10D) of section 10, shall, at the time of payment thereof, deduct income-tax at the rate of two per cent., in case the aggregate amount of such payments exceeds one hundred thousand rupees during the financial year. It is proposed to reduce the said rate of tax deduction from two per cent. to one per cent. This amendment will take effect from 1st June, 2016. Clause 75 of the Bill seeks to amend section 194EE of the Income-tax Act relating to payments in respect of deposits under National Savings Scheme, etc. Under the existing provisions of the aforesaid section, any payment in respect of deposits under National Savings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing provisions of the aforesaid section, inter alia, provide that no deduction shall be made in case where the amount of compensation or aggregate of such sum relating to acquisition of immovable property (other than agricultural land), credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee does not exceed two hundred thousand rupees. It is proposed to enhance the said threshold limit from two hundred thousand rupees to two lakh and fifty thousand rupees. This amendment will take effect from 1st June, 2016. Clause 80 of the Bill seeks to amend section 194LBA of the Income-tax Act relating to certain income from units of a business trust. It is proposed to amend sub-sections (1) and (2) of the said section so as to give the reference of sub-clause (a) of clause (23FC) of section 10 in the said sub-sections. The said amendment is consequential in nature. This amendment will take effect from 1st June, 2016. Clause 81 of the Bill seeks to amend section 194LBB of the Income-tax Act relating to income in respect of units of investment fund. The aforesaid section provides that where any income other than t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... term investor shall have the meaning assigned to it in clause (a) of the Explanation to section 115 TCA; and also that where any income referred to in the proposed section is credited to any account, whether called suspense account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be the credit of such income to the account of the payee, and the provisions of this section shall apply accordingly. These amendments will take effect from 1st June, 2016. Clause 83 of the Bill seeks to amend section 197 of the Income-tax Act relating to certificate for deduction at lower rate. It is proposed to amend sub-section (1) of the said section to provide that where, in the case of any income of any person or sum payable to any person, the income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment under the provisions of section 194LBB and section 194LBC the Assessing Officer is satisfied that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax, as the case may be, the Assessing Officer shall on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uyer at the time of sale of certain goods specified under the said section. It is proposed to amend the aforesaid section to provide that the seller shall collect the tax at the rate of one per cent. on the sale of motor vehicle of the value exceeding ten lakh rupees in cash or by the issue of a cheque or draft or by any other mode or for sale of any other goods (other than bullion and jewellery) or providing any service in cash exceeding two hundred thousand rupees. It is further proposed to insert a proviso under sub-section (1D) of the said section so as to provide that no tax shall be collected at source on any amount on which tax has been deducted by the payer under Chapter XVII-B of the Act. It is also proposed to insert a new sub-section after sub-section (1D) so as to provide that nothing contained in sub-section (1D) in relation to sale of any goods (other than bullion or jewellery) or services shall apply to such classes of buyers who fulfils such conditions, as may be prescribed. These amendments will take effect from 1st June, 2016. Clause 87 of the Bill seeks to amend section 211 of the Income-tax Act relating to instalments of advance tax and due dates. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lications pending as on 1st day of June, 2016, the order shall be passed on or before 31st May, 2017. These amendments will take effect from 1st June, 2016. Clause 89 seeks to amend section 234C of the Income-tax Act relating to interest for deferment of advance tax. It is proposed to make consequential amendments in sub-section (1) of section 234C, in view of the amendments made in section 211, so as to levy interest on deferment of advance tax, in the same manner as applicable to the company, to an assessee (other than company) also. Further, with regard to an eligible assessee referred to in section 44AD, it is proposed to provide that interest shall be levied, if the advance tax paid on or before the 15th day of March is less than the tax due on the returned income. It is also proposed to amend the said section so as to provide that nothing contained in the said sub-section (1) shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate income under the head Profits and gains of business or profession in cases where the income accrues or arises under the said head fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 270AA of the Income-tax Act seeking immunity from penalty and prosecution, then, the period beginning from the date on which such application is made to the date on which the order rejecting the application is served on the assessee shall be excluded for calculation of the aforesaid thirty days period. This amendment will take effect from the 1st April, 2017. Clause 92 of the Bill seeks to amend section 252 of the Income-tax Act relating to Appellate Tribunal. Clause (b) of sub-section (3), sub-section (4A) and sub-section (5) of the aforesaid section provide for the appointment and powers of Senior Vice-President of the Appellate Tribunal. It is proposed to omit the reference of Senior Vice-President in the aforesaid provisions. These amendments will take effect from 1st June, 2016. Clause 93 of the Bill seeks to amend section 253 of the Income-tax Act relating to appeals to the Appellate Tribunal. Sub-clause (A) of the said clause seeks to amend clauses (a) and (c) of sub-section (1) of the said section. Clause (a) and clause (c) of sub-section (1) of the aforesaid section, inter alia, provides for an appeal to the Appellate Tribunal, agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said section also, as it stood before the commencement of the Finance Act, 2016. This amendment will take effect retrospectively from 1st July, 2012. Clause 94 of the Bill seeks to amend section 254 of the Income-tax Act relating to orders of Appellate Tribunal. Sub-section (2) of the said section provides that the Appellate Tribunal may rectify any mistake apparent from the record in its order at any time within four years from the date of the order. It is proposed to amend the said sub-section (2) so as to provide that the Appellate Tribunal may rectify any mistake apparent from the record in its order at any time within six months from the end of the month in which the order was passed. It is further proposed to amend sub-section (2A) of the aforesaid section, so as to omit the reference of sub-section (2A) of section 253. The proposed amendment is consequential in nature in view of omission of sub-section (2A) of section 253. These amendments will take effect from 1st June, 2016. Clause 95 of the Bill seeks to amend section 255 of the Income-tax Act, relating to the procedure of Appellate Tribunal. Sub-section (3) of the aforesaid section, inter ali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of income assessed and the income determined under clause (a) of subsection (1) of section 143. In a case where no returns has been furnished and income is assessed for the first time, the amount of under-reported income shall be the income assessed, in the case of a company, firm or local authority, and in any other case the difference between the amount of income assessed and the maximum amount not chargeable to tax. It is further proposed that in a case where income is not assessed for the first time, the under-reported income is proposed to be the difference between the amount of income assessed, reassessed or recomputed in a preceding order. Appropriate provisions for calculating the amount of underreported income in a case of applicability of provisions of section 115JB or section 115JC or in case of loss have also been provided. Sub-section (4) of the proposed new section seeks to provide for calculation of under reported income in case where the source of any receipt, deposit or investment linked to earlier year is proposed to be provided based on the existing Explanation 2 to sub-section (1) of section 271(1). Sub-section (6) of the proposed new sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form and manner, as may be prescribed. It is proposed that the Assessing Officer shall, on fulfilment of the above conditions and after the expiry of period of filing appeal as specified in sub-section (2) of section 249, grant immunity from imposition of penalty and initiation of proceedings under section 276C , where the penalty proceedings under section 270A has not been initiated on account of the circumstances of misreporting as laid in sub-section (9) of section 270A. It is also proposed that the Assessing Officer is required to pass an order accepting or rejecting such application, as the case may be, within a period of one month from the end of the month in which such application is received. However, no order rejecting the application shall be passed by the Assessing Officer unless the assessee has been given an opportunity of being heard and the said order shall be final. This amendment will take effect from 1st April, 2017 and will accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 98 of the Bill seeks to amend section 271 of the Income-tax Act relating to failure to furnish returns, comply with notices, concealment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mend the said section so as to provide that if any person being constituent entity of an international group referred to in the proposed new section 286 fails to furnish the information and document in accordance with provisions of section 92D, then, the prescribed authority referred to in the said section may direct that such person shall be liable to pay a penalty of five hundred thousand rupees. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. Clause 101 of the Bill seeks to amend section 271AAB of the Income-tax Act relating to penalty where search has been initiated. Clause (c) of sub-section (1) of the aforesaid section provides that a penalty of a sum which shall not be less than thirty per cent. but which shall not exceed ninety per cent. of the undisclosed income of the specified previous year shall be levied in case where search has been initiated under section 132 on or after the 1st day of July, 2012, and such case is not covered under the provisions of clauses (a) and (b) of sub-section (1) of section 271AAB. It is proposed to amend the said clause (c) so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishing the report but does not inform the prescribed authority or the entity discovers the inaccuracy after the report is furnished and fails to inform the prescribed authority and furnish correct report within a period of fifteen days of such discovery or the entity furnishes inaccurate information or document in response to notice under sub-section (6) of section 286 then, the prescribed authority may direct that such person shall pay, by way of penalty, a sum of five lakh rupees. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. Clause 103 of the Bill seeks to amend section 272A of the Income-tax Act relating to penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. Sub-section (1) of the said section provides for levy of penalty of ten thousand rupees for each failure or default to answer the questions raised by an income-tax authority under the Income-tax Act, refusal to sign any statement legally required during the proceedings under the Income-tax Act or failure to attend to give evidence or prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication of an assessee shall be passed by the concerned Principal Commissioner or Commissioner within a period of twelve months from the end of the month in which such application is received. It is further proposed to provide that no order shall be passed without giving the assessee an opportunity of being heard. However, in respect of applications pending as on 1st day of June, 2016, the order shall be passed on or before 31st May, 2017. This amendment will take effect from 1st June, 2016. Clause 105 of the Bill seeks to amend section 273AA of the Income-tax Act relating to power of Principal Commissioner or Commissioner to grant immunity from penalty. The aforesaid section, inter alia, provide that the Principal Commissioner or the Commissioner may grant immunity from penalty, if penalty proceedings have been initiated in case of a person who has made application for settlement before the settlement commission and the proceedings for settlement had abated under the circumstances contained in section 245HA of the Act. It is proposed to amend the said section to provide that an order accepting or rejecting the application of an assessee shall be passed by the concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings, for a period of six months, with the prior approval of the income-tax authorities specified therein, if he is of the opinion that it is necessary to do so for the purpose of protecting the interests of the revenue. Such attachment of property is extendable by the said income-tax authorities to a maximum period of two years or sixty days after the date of assessment order, whichever is later. Explanation to sub-section (1) of section 281B provides that proceedings under sub-section (5) of section 132 shall be deemed to be proceedings for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment. Sub-section (5) of section 132 stands omitted from 1st June, 2002. Therefore, it is proposed to omit the said Explanation. It is further proposed to insert new sub-sections (3) to (9) in the said section to provide that the Assessing Officer shall revoke attachment of property made under sub-section (1) in a case where the assessee furnishes a bank guarantee from a scheduled bank, for an amount not less than the fair market value of such provisionally attached property or for an amount lower than the fair marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h notice or document should be signed by that authority in manuscript. It is proposed to amend the said sub-section (1) so as to provide that notices and documents required to be issued by income-tax authority under the Act shall be issued by such authority either in paper form or in electronic form in accordance with such procedure as may be prescribed. This amendment will take effect from 1st June, 2016. Clause 110 of the Bill seeks to insert a new section 286 in the Income-tax Act relating to furnishing of report in respect of international group. The proposed section provides for furnishing of a report in respect of an international group, if the parent entity of the group is resident in India. Sub-section (1) of the proposed new section provides that constituent entity in India of an international group, not having a parent entity resident in India shall notify the prescribed authority regarding the parent entity of the group to which it belongs or an alternate reporting entity which shall furnish the report on behalf of the group in the prescribed manner. Sub-section (2) of the proposed new section provides that the parent entity of an international group, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im under the Income-tax Act other than a penalty imposed under clause (ii) of sub-section (1) of section 271. It is proposed to amend clause (b) of sub-section (4) of section 288 so as to provide that a person on whom a penalty has been imposed under clause (d) of sub-section (1) of section 272A of the Income-tax Act shall also not be barred to represent an assessee before any income-tax authority or the Appellate Tribunal. The proposed amendment is consequential to the insertion of a new clause (d) in sub-section (1) of section 272A in the Income-tax Act relating to penalty for failure to comply with the notices and directions specified therein. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 112 of the Bill seeks to amend Part A of Fourth Schedule to the Income-tax Act relating to recognised provident fund. Rule 6 of the aforesaid Schedule, inter alia, provides that contributions made by employer to the credit of an employee participating in a recognised provident fund, which are in excess of twelve per cent. of the salary of the employee, are liable to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
