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PROVISIONS RELATING TO DIRECT TAXES & RELATED LAWS

..... mp; RELATED LAWS Introduction The provisions of Finance (No. 2) Bill, 2019 relating to direct taxes seek to amend the Income-tax Act, 1961 (hereafter referred to as the Act ), to continue to provide momentum to the buoyancy in direct taxes through deepening and widening of the tax base, promoting less cash economy, reducing the corporate tax rate for small enterprises, strengthening anti-abuse measures providing tax incentives, removing difficulties of taxpayers and enhancing the effectiveness of the tax administration. With a view to achieving the above, the various proposals for amendments are organised under the following heads:- (A) Rates of income-tax (B) Widening and deepening of tax base (C) Measures for promoting less cash economy (D) Tax incentives (E) Facilitating resolution of distressed companies (F) Improving effectiveness of tax administration (G) Strengthening anti-abuse measures (H) Removing difficulties faced by taxpayers (I) Rationalisation of provisions (J) Miscellaneous DIRECT TAXES A. RATES OF INCOME-TAX I. Rates of income-tax in respect of income liable to tax for the assessment year 2019-20. In respect of income of all categories of assessees liable to tax fo .....

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..... eeding 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 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; and (iii) surcharge will also be levied at the appropriate rates in cases where the company is liable to tax under section 115JB of the Act. (e) In other cases (including cases where provisions of sections 115-O, 115QA, 115R, 115TA or 115TD are applicable), the surcharge shall be levied at the rate of twelve per cent. Surcharge shall also be levied at the rate of twelve per cent. on additional Income-tax chargeable under newly inserted sub-section (2A) in existing section 92CE. (2) Marginal Relief- Marginal relief has also been provided in all cases where surcharge is proposed to be levied. (3) Health and Education Cess- For assessment year 2019-20, Education Cess on income-tax and Secondary and Higher Education Cess on income-tax has been discontinued. Howeve .....

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..... o be paid and subject to the deduction exceeds one crore rupees. The amount of tax so deducted, in the case of a company other than a domestic company, shall be increased by a surcharge,- (a) at the rate of two 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 one crore rupees but does not exceed ten crore rupees; (b) 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) Health and Education Cess- Health and Education Cess shall continue to be levied at the rate of four per cent. of income-tax including surcharge wherever applicable, in the cases of persons not resident in India, including company other than a domestic company. III. Rates for deduction of income-tax at source from Salaries , computation of advance tax and charging of income-tax in special cases during the financial year 2019-20. The rates for deduction of income-tax at source from Salaries during the financial year 2019-20 and also for computation of a .....

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..... ) fifteen per cent. of such income-tax in case of a person having a total income exceeding one crore rupees but not exceeding two crore rupees; (iii) twenty five per cent. of such income-tax in case of a person having a total income exceeding two crore rupees but not exceeding five crore rupees; and (iv) thirty seven per cent. of such income-tax in case of a person having a total income exceeding five crore rupees. However, in case of above mentioned person having total income exceeding,- (i) fifty lakh rupees but not exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees; (ii) one crore rupees but not exceeding two crore rupees, the total amount payable as income-tax and surcharge on such income 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; (iii) two crore rupees but not exceeding five crore rupees, the total amount payable as income-tax and surcharge on such income shall .....

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..... crore rupees by more than the amount of income that exceeds one crore rupees. E. Companies The rates of income-tax in the case of companies have been specified in Paragraph E of Part III of the First Schedule to the Bill. In case of domestic company, the rate of income-tax shall be twenty five per cent. of the total income, if its total turnover or gross receipts in the previous year 2017-18 does not exceed four hundred crore rupees, and in all other cases the rate of Incometax shall be thirty per cent. of the total income. In the case of company other than domestic company, the rates of tax are the same as those specified for the financial year 2018-19. Surcharge at the rate of seven per cent. shall continue to 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. Surcharge at the rate of twelve per cent. shall continue to 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 .....

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..... deduct tax at source under section 194C and 194J of the Act, if such sum, or aggregate of such sums, exceeds fifty lakh rupees in a year. However, in order to reduce the compliance burden, it is proposed that such individuals or HUFs shall be able to deposit the tax deducted using their Permanent Account Number (PAN) and shall not be required to obtain Tax deduction Account Number (TAN). This amendment will take effect from 1st September, 2019. [Clause 46] TDS at the time of purchase of immovable property Section 194-IA of the Act relates to payment on transfer of certain immovable property other than agricultural land and provides for levy of TDS at the rate of one per cent. on the amount of consideration paid or credited for transfer of such property. The term consideration for immovable property is presently not defined for the purposes of this section. It is noted that in the transaction involving purchase of immovable property, there are other types of payments made besides the sales consideration and the buyer is contractually bound to make such payments to the builder/seller, either under the same agreement or under a different agreement. Some of such payments are those for .....

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..... not chargeable to tax, subject to certain exceptions. Therefore, a person entering into certain high value transactions is not necessarily required to furnish his return of income. In order to ensure that persons who enter into certain high value transactions do furnish their return of income, it is proposed to amend section 139 of the Act so as to provide that a person shall be mandatorily required to file his return of income, if during the previous year, he- (i) has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current account maintained with a banking company or a co-operative bank; or (ii) has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or (iii) has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or (iv) fulfils such other prescribed conditions, as may be prescribed. Further, currently, a person claiming rollover benefit of exemption from capital gains tax on investment in specified assets like house, bonds etc., is not required to furnish a return of .....

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..... ed to be quoted shall ensure that the PAN has been duly quoted therein. It is proposed to provide that every person receiving such documents shall also ensure that the PAN or the Aadhaar number, as the case may be, has been duly quoted. A new sub-section (6A) is also proposed to be inserted to ensure quoting of PAN or Aadhaar number for entering into prescribed transactions and authontication thereof in the prescribed manner. Duty is also proposed to be cast upon the person receiving any document relating to such transactions, through newly proposed sub-section (6B), to ensure that PAN or Aadhaar number, as the case may be, is duly quoted, and authenticated. In order to ensure proper compliance of the provisions relating to quoting and authentication of PAN or Aadhaar, the penalty provision contained in section 272B is proposed to be amended suitably. These amendments will take effect from 1st September, 2019. [Clauses 40 & 64] Consequence of not linking PAN with Aadhaar The existing proviso to the sub-section (2) of section 139AA, provides that the PAN allotted to a person shall be deemed to be invalid, in case the person fails to intimate the Aadhaar number, on or before the .....

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..... n of such donation. Section 35AD of the Act provides that the term any expenditure of capital nature shall not include any expenditure in respect of which the assessee makes payment (or an aggregate of payments) exceeding rupees ten thousand to a person in a day through any mode other than an account payee cheque or an account payee bank draft or using the electronic clearing system through a bank account. Section 40A of the Act provides for disallowance of any expenditure for which the assessee makes payment (or an aggregate of payments) exceeding rupees ten thousand through any mode other than an account payee cheque or an account payee bank draft or using the electronic clearing system through a bank account. Sub-section (1) to section 43 of the Act provides the definition of the term actual cost . The second proviso to the said section specifies that where the assessee incurs any expenditure for the acquisition of an asset or part thereof, and in respect of such acquisition, he makes a payment or aggregate of payments exceeding rupees ten thousand in a day to a person in any mode other than an account payee cheque or an account payee bank draft or using the electronic clearing .....

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..... may be prescribed, in addition to the already existing permissible modes of payment in the form of an account payee cheque or an account payee bank draft or the electronic clearing system through a bank account. These amendments will take effect from 1st April, 2020 and will, accordingly apply in relation to assessment year 2020-2021 and subsequent assessment years. [Clauses 8,9,11,12,14,16, 18, 21 & 27] Similarly section 269SS of the Act prohibits a person from taking or accepting from a depositor any loan or deposit or any specified sum equal to rupees twenty thousand or more otherwise than by an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account. Section 269ST of the Act prohibits a person from receiving an amount of rupees two lakh or more in aggregate from a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion from a person otherwise than by an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account. Section 269T of the Act prohibits a banking company or a co-operative bank and any other .....

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..... provided by such person, if his total sales, turnover or gross receipts in business exceeds fifty crore rupees during the immediately preceding previous year. In order to ensure compliance of the aforesaid provisions, it is further proposed to insert a new section 27IDB to provide that the failure to provide facility for electronic modes of payment prescribed under section 269SU shall attract penalty of a sum of five thousand rupees, for every day during which such failure continues. However, the penalty shall not be imposed if the person proves that there were good and sufficient reasons for such failure. Any such penalty shall be imposed by the Joint Commissioner. This amendment will take effect from 1st November, 2019. [Clauses 59 & 62] Further, it is proposed to make a consequential amendment in the Payment and Settlement Systems Act, 2007 so as to provide that no bank or system provider shall impose any charge upon anyone, either directly or indirectly, for using the modes of electronic payment prescribed under section 269SU of the Income-tax Act. This amendment will take effect from 1st November, 2019. [Clause 194] D.TAX INCENTIVES Incentives to International Financial S .....

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..... 17, out of its current income, either in the hands of the company or the person receiving such dividend. To facilitate distribution of dividend by companies operating in IFSC, it is proposed to amend the provision of the said section to provide that any dividend paid out of accumulated income derived from operations in IFSC, after 1st April 2017 shall also not be liable for tax on distributed profits. This amendment will take effect from 1st September, 2019. [Clause 35] D) The existing provisions of the section 115R of the Act, provide that any amount of income distributed by the specified company or a Mutual Fund to its unit holders shall be chargeable to tax and such specified company or Mutual Fund shall be liable to pay additional income-tax on such distributed income. In order to incentivize relocation of Mutual Fund in IFSC, it is proposed to amend the said section so as to provide that no additional income-tax shall be chargeable in respect of any amount of income distributed, on or after the 1st day of September, 2019, by a Mutual Fund of which all the unit holders are non-residents and which fulfills certain other specified conditions. This amendment will take effect, from .....

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..... putation of total income. The benefit of this provision is presently available to public financial institutions, scheduled banks, cooperative banks, State financial corporations, State industrial investment corporations and public companies like housing finance companies. With a view to provide a level playing field to certain categories of NBFCs who are adequately regulated, it is proposed to amend section 43D of the Act so as to include deposit-taking NBFCs and systemically important non deposit-taking NBFCs within the scope of this section. Consequentially, as per matching principle in taxation, it is proposed to amend section 43B of the Act to provide that any sum payable by the assessee as interest on any loan or advances from a deposit-taking NBFCs and systemically important non deposit-taking NBFCs shall be allowed as deduction if it is actually paid on or before the due date of furnishing the return of income of the relevant previous year. These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent years. [Clauses 13 & 15] Relaxation in conditions of special taxation regime for offshore fu .....

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..... ; (ii) the assessee does not own any other electric vehicle on the date of sanction of loan. It is also proposed that where a deduction under this section is allowed for any interest, deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year. This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to assessment year 2020-2021 and subsequent assessment years. [Clause 25] Exemption of interest income of a non-resident arising from borrowings by way of issue of Rupee Denominated Bonds referred to under section 194LC The existing provisions of section 194LC of the Act provide that the interest income payable to a non-resident by a specified company on borrowings made by it in foreign currency from sources outside India under a loan agreement or by way of issue of any long-term bond including long-term infrastructure bond, or rupee denominated bond shall be eligible for TDS at a concessional rate of five per cent. In order to incentivise low cost foreign borrowings through Off-shore Rupee Denominated Bond, the press release dated 17th September, 2018, inter alia, announ .....

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..... tain conditions, be allowed, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business. With a view to align the definition of "affordable housing" under section 80-IBA with the definition under GST Act, it is proposed to amend the said section so as to modify certain conditions regarding the housing project approved on or after 1st day of September, 2019. The modified conditions are as under: (i) the assessee shall be eligible for deduction under the section, in respect of a housing project if a residential unit in the housing project have carpet area not exceeding 60 square meter in metropolitan cities or 90 square meter in cities or towns other than metropolitan cities of Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region); and (ii) the stamp duty value of such residential unit in the housing project shall not exceed forty five lakh rupees; These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to assessment year 2020-21 and subsequent assessment y .....

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..... prior to the previous year shall be carried forward and set off against the income of the previous year, unless on the last day of the previous year, the shares of the company carrying not less than fifty-one per cent of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent of the voting power on the last day of the year or years in which the loss was incurred. Under clause (b), the loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year, if, all the shareholders of such company who held shares carrying voting power on the last day of the year or years in which the loss was incurred, continue to hold those shares on the last day of such previous year and such loss has been incurred during the period of seven years beginning from the year in which such company is incorporated. The said clause was inserted vide Finance Act, 2017 in order to facilitate ease of doing business and to promote start-up India. To further facilitate ease of doing business in the case of an eligible start-up, it is proposed to amend section 79 so as to .....

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..... Act, inter alia, provide that where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be charged to tax. However, exemption from this provision has been provided for the consideration for issue of shares received by a venture capital undertaking from a venture capital company or a venture capital fund or by a company from a class or classes of persons as may be notified by the Central Government in this behalf. Currently the benefit of exemption is available to Category I AIF. With a view to facilitate venture capital undertakings to receive funds from Category II AIF, it is proposed to amend the said section to extend this exemption to fund received by venture capital undertakings from Category II AIF as well. This amendment will take effect, from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years. [Clause 21] E. FACILITATING RESOLUT .....

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..... deeming of fair market value of unquoted shares for computing the capital gains from the transfer of such shares. For both these provisions, the fair market value is determined based on the prescribed method. Currently, the provisions of section 56(2)(x) are not applicable to certain specified transactions. However, no such exemption is available under section 50CA. Determination of fair market value based on the prescribed rules may result into genuine hardship in certain cases where the consideration for transfer of shares is approved by certain authorities and the person transferring the share has no control over such determination. In order to provide relief to such types of transactions from the applicability of sections 56(2)(x) and 50CA, it is proposed to amend these sections to empower the Board to prescribe transactions undertaken by certain class of persons to which the provisions of section 56(2)(x) and 50CA shall not be applicable. These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years. [Clauses 19 & 21] F. IMPROVING EFFECTIVENESS OF TAX ADMINISTRATION Online fili .....

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..... rupees. These amendments will take effect from 1st September, 2019. [Clause 50] G. STRENGTHENING ANTI-ABUSE MEASURES Tax on income distributed to shareholder in case of listed companies Section 115QA of the Act provides for the levy of additional Income-tax at the rate of twenty per cent. of the distributed income on account of buy-back of unlisted shares by the company. As additional income-tax has been levied at the level of company, the consequential income arising in the hands of shareholders has been exempted from tax under clause (34A) of section 10 of the Act. This section was introduced as an anti-abuse provision to check the practice of unlisted companies resorting to buy-back of shares instead of payment of dividends. This practice of widespread abuse was noted, in the past, amongst unlisted companies where the taxpayers preferred it for tax avoidance, as tax rate for capitals gains was lower than the rate of Dividend Distribution Tax (DDT). However, instances of similar tax arbitrage have now come to notice in case of listed shares as well, whereby the listed companies are also indulging in such practice of resorting to buy-back of shares, instead of payment of dividend .....

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..... other law which was material for the purpose of achieving its objects, and the order, direction or decree, by whatever name called, holding that such violation has occurred, has either not been disputed or has attained finality, the Principal Commissioner or Commissioner may, by an order in writing, cancel the registration of such trust or institution after affording a reasonable opportunity of being heard. These amendments shall be effective from 1st September, 2019. [Clause 7] H. REMOVING DIFFICULTIES FACED BY TAX PAYERS Facilitating demerger of Ind-AS compliant companies One of the existing conditions for tax-neutral demergers is that the resulting company should record the property and the liabilities of the undertaking at the value appearing in the books of accounts of the demerged company. It has been represented that Indian Accounting Standards (Ind-AS) compliant companies are required to record the property and the liabilities of the undertaking at a value different from the book value of the demerged company. In order to facilitate, it is proposed to amend section 2 of the Act to provide that the requirement of recording property and liabilities at book value by the resul .....

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..... ails to deduct tax in accordance with the provisions of Chapter XVII-B on any sum paid to a non-resident, but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of the return of income by the payee referred to in that proviso. Thus, there will be no disallowance under section 40 in respect of such payments. This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years. [Clause 10] Clarification with regard to power of the Assessing Officer in respect of modified return of income filed in pursuance to signing of the Advance Pricing Agreement (APA) Section 92CC of the Act empowers the Central Board of Direct Taxes (CBDT) to enter into an APA, with the approval of the Central Government, with any person for determining the Arm s Length Price (ALP) or specifying the manner in which ALP is to be determined in relation to an international transaction which is to be entered into by that person. The APA is valid for a period, not exceedin .....

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..... e Act; or is arising as a result of resolution of an assessment through mutual agreement procedure under an agreement entered into under section 90 or 90A of the Act. The proviso to said sub-section provides exemption in cases where the amount of primary adjustment made in any previous year does not exceed one crore rupees; and the primary adjustment is made in respect of an assessment year commencing on or before 1st April, 2016. Several concerns have been expressed regarding effective implementation of secondary adjustments regime and seeking clarity in law. In order to address such concerns and to make the secondary adjustment regime more effective and easy to comply with, it is proposed to amend section 92CE of the Act so as to provide that:- (i) the condition of threshold of one crore rupees and of the primary adjustment made upto assessment year 2016-17 are alternate conditions; (ii) the assessee shall be required to calculate interest on the excess money or part thereof; (iii) the provision of this section shall apply to the agreements which have been signed on or after 1st April, 2017; however, no refund of the taxes already paid till date under the pre amended section woul .....

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..... ns from business) has been allowed to individual investors so as to give them benefit of lower rate of tax, if applicable. Pass through of losses are not provided under the existing regime and are retained at AIF level to be carried forward and set off in accordance with Chapter VI. In order to remove the genuine difficulty faced by Category I and II AIFs , it is proposed to amend section 115UB to provide that (i) the business loss of the investment fund, if any, shall be allowed to be carried forward and it shall be set-off by it in accordance with the provisions of Chapter VI and it shall not be passed onto the unit holder; (ii) the loss other than business loss, if any, shall also be ignored for the purposes of pass through to its unit holders, if such loss has arisen in respect of a unit which has not been held by the unit holder for a period of atleast twelve months; (iii) the loss other than business loss, if any, accumulated at the level of investment fund as on 31st March, 2019, shall be deemed to be the loss of a unit holder who held the unit on 31st March, 2019 in respect of the investments made by him in the investment fund and allowed to be carried forward by him for th .....

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..... he assessee. The person who is paying a sum to a resident under a life insurance policy is aware of the amount of insurance premium paid by the assessee. Hence, it is proposed to provide for tax deduction at source at the rate of five per cent. on income component of the sum paid by the person. This amendment shall be effective from 1st September, 2019. [Clause 44] Clarification regarding definition of the accounting year in section 286 of the Act Section 286 of the Act contains provisions relating to specific reporting regime in the form of Country-by-Country Report (CbCR) in respect of an international group. It provides that every parent entity or the alternate reporting entity, resident in India, shall, for every reporting accounting year, in respect of the international group of which it is a constituent, furnish a report, to the prescribed authority within a period of twelve months from the end of the said reporting accounting year, in the form and manner as may be prescribed. Several concerns have been expressed that in case of an alternate reporting entity (ARE) resident in India whose ultimate parent entity is not resident in India, the accounting year would always be the .....

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..... the prescribed authority. This amendment will take effect from the 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years. [Clause 31] Compliance with the notification of exemption issued under section 56(2)(viib) The provisions of section 56(2)(viib) of the Act provides for charging of the consideration received for issue of shares by certain companies, where such consideration exceeds the fair market value of such shares. However, the Central Government is empowered to notify that the provisions of this section shall not be applicable to consideration received by a notified company. Certain notifications issued under this sub-clause by the Central Government provide for exemption, subject to the fulfilment of certain conditions. With a view to ensure compliance to the conditions specified in the notification, it is proposed to provide that in case of failure to comply with the conditions, the consideration received for issue of shares which exceeds the face value of such shares shall be deemed to be the income of the company chargeable to income-tax for the previous year in which the failure to comply with any of th .....

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..... ousand rupees. The existing provisions do not provide for taking into account tax collected at source and self-assessment tax for the purposes of determining the tax liability. Since the intent of said provision has always been to take into account pre-paid taxes, while determining the tax payable, it is proposed to amend the said section so as to make the legislative intention clear and to include the self-assessment tax, if any, paid before the expiry of the assessment year, and tax collected at source for the purpose of determining tax liability. Further, in order to rationalise the existing threshold limit of tax payable under said section, it is further proposed to amend the said section so as to increase the threshold of tax payable from the existing rupees three thousand to rupees ten thousand. These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to assessment year 2020-21 and subsequent assessment years. [Clause 65] Rationalisation of provision relating recovery of tax in pursuance of agreements with foreign countries The existing provisions of section 228A of the Act provide inter alia that where an agreement is entered into by th .....

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..... In order to ensure that the limitation of time period for sale of attached property may not be an impediment in recovery of tax dues and may not lead to permanent loss of revenue to the exchequer, it is further proposed to insert a new proviso in the said sub-rule so as to provide that the Board may, for reasons to be recorded in writing, extend the aforesaid period of limitation by a further period of three years. These amendments will take effect from 1st September, 2019. [Clause 68] Rationalisation of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 The existing provisions of section 2 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the BM Act) provide inter alia that the assessee means a person who is resident in India within the meaning of section 6 of the Income-tax Act. In order to clarify the legislative intent behind enacting the BM Act, which was to tax such foreign income and assets, which were not charged to tax under the Income-tax Act, it is proposed to amend the said section so as to provide that the assessee shall mean a person being a resident in India within the meaning of section .....

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..... period, commencing on the date immediately following the due date and ending on the date of such payment. Further, the existing section 191 of the Finance Act, 2016 provides, inter alia, that any amount of tax, surcharge or penalty paid in pursuance of a declaration made under the Scheme shall not be refundable. In order to address genuine concern of the declarants, it is proposed to amend the said section so as to provide that the Central Government may notify the class of persons to whom the amount of tax, surcharge and penalty, paid in excess of the amount payable under the Scheme shall be refundable. This amendment will take effect retrospectively from 1st June, 2016. [Clauses 199 & 200] Rationalisation of provisions relating to STT As per the existing provisions section 99 of the Finance (No.2) Act, 2004, the value of taxable securities transaction in respect of sale of an option in securities, where option is exercised, shall be, the settlement price. In order to rationalise the levy of STT where the option is exercised, it is proposed to amend the said section so as to provide that value of taxable securities transaction in respect of sale of an option in securities, whe .....

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..... ffect from 1st September, 2019. [Clauses 173 & 174] With a view to ensure compliance with the summons issued and information required to be furnished under the PBPT Act, it is proposed to insert a new section 54A in the PBPT Act so as to provide for levy of penalty of rupees twenty five thousand for failure to comply with the summons issued or to furnish information under section 19 or section 21 respectively of the PBPT Act. This amendment will take effect from 1st September, 2019. [Clause 175] With a view to enable admissibility of certified copies of records or other documents in the custody of the authority as evidence in any proceeding under the PBPT Act, it is proposed to insert a new section 54B in the said Act so as to provide that entries in the records or other documents in the custody of an authority shall be admitted in evidence in any proceedings for the prosecution of any person for an offence under the PBPT Act. This amendment will take effect from 1st September, 2019. [Clause 175] The existing provisions of the section 55 of the PBPT Act provide that no prosecution shall be instituted against any person in respect of any offence under the said Act without the pr .....

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..... . It is proposed to do the verification of the person through the Aadhaar number or through such other alternative and viable means of identification as may be prescribed through the regulations. It also empowers the Board interalia to make regulations to exempt such persons or class of persons who may not be required to undergo the said verification. Failure to comply with the specified provisions of this section may result in suspension or denial of certain benefits. [70] 3 Section 103 is being amended so as to- (a)substitute sub-section (1) in order to enable the proper officer to scan or screen, with the prior approval of Deputy Commissioner of Customs or Assistant Commissioner of Customs, any person referred to in sub-section (2) of section 100 who has any goods liable to confiscation secreted inside his body. The proper officer can directly furnish the report of the said screening or scanning to the nearest magistrate if such goods are found secreted inside the body of the said person. (b)so as to enable the magistrate to take action upon the report of scanning or screening by the proper officer under sub-section (6). [71] 4 Section 104 is being amended so as to- (a)empower a .....

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..... ion, wilful misstatement or suppression of facts, where such instrument has been utilized by any person a punishable offence. (b)insert a new sub-item (E) under item (i) to make obtaining an instrument from any authority by fraud, collusion, wilful misstatement or suppression of facts, where such instrument has been utilized by any person a punishable offence if the duty relatable to utilization of the instrument exceeds fifty lakhs of rupees. (c)insert an Explanation to define the term instrument. [78] 11 Section 149 is being amended so as to empower Board to make regulations specifying time, form, manner, restrictions and conditions for amendment of any document. [79] 12 Section 157 is being amended so as to empower the Board to make regulations for purposes of sections 99B and 149 respectively. [80] 13 Sub-section (2) of section 158 is being amended so as to increase the maximum limit of penalty for violation of any provision of rules or regulations from fifty thousand rupees to two lakh rupees. [81] II. AMENDMENTS IN THE CUSTOMS TARIFF ACT, 1975 S. No Amendment Clause of the Finance (No. 2) Bill, 2019 1 Section 9 is being amended so as to insert sub-section (1A) to provide for .....

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..... engines 7.5% 10% 15 8421 31 00 Intake air-filters for internal combustion engines 7.5% 10% 16 8421 39 20, 8421 39 90 Air purifiers or cleaners and other filtering or purifying machinery and apparatus for gases 7.5% 10% 17 8512 10 00, 8512 20 10, 8512 20 20 Lighting or visual signaling equipment of a kind used in bicycles or motor vehicles 10% 15% 18 8512 20 90, 8512 30 90 Other visual or sound signalling equipment for bicycles or motor vehicles 7.5% 15% 19 8512 30 10 Horns for vehicles 10% 15% 20 8512 90 00 Parts of visual or sound signalling equipment for bicycles or motor vehicles 7.5% 10% 21 8512 40 00, 8539 10 00, 8539 21 20, 8539 29 40 Windscreen wipers, defrosters and demisters, Sealed beam lamp units and other lamps for automobiles 10% 15% 22 8706 Chassis fitted with engines, for the motor vehicles of headings 8701 to 8705. 10% 15% 23 8707 Bodies (including cabs), for the motor vehicles of headings 8701 to 8705 10% 15% Electronics and Electrical equipments 24 8415 90 00 Indoor and outdoor unit of split -system air conditioner 10% 20% 25 8518 21 00, 8518 22 00 Loudspeaker 10% 15% 26 8521 90 90 Digital Video Recorder (DVR) and Network Video Recorder (NVR) 15% 20% 27 8525 80 C .....

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..... - 1 & 2, Chutka site, Madhya Pradesh Applicable rate Nil Oils and associated chemicals 8 Chapter 15, 2915 70, 3823 11 00, 3823 12 00, 3823 13 00, 3823 19 00 Palm stearin and other oils, having 20% or more free fatty acid, Palm Fatty Acid Distillate and other industrial monocarboxylic fatty acids, acid oils from refining, for use in manufacture of soap and oleochemicals. Nil 7.5% Petroleum and Petrochemicals 9 2709 00 00 Petroleum Crude Nil Re. 1 per tonne 10 2710 Naphtha 5% 4 % 11 2903 15 00 Ethylene dichloride (EDC) 2% Nil 12 2910 20 00 Methyloxirane (Propylene Oxide) 7.5% 5% 13 Plastic and Rubber 14 3904 Poly Vinyl Chloride 7.5% 10% 15 3926 90 91, 3926 90 99 Articles of plastics 10% 15% 16 4002 31 00 All goods i.e. Butyl Rubber 5% 10% 17 4002 39 00 Chlorobutyl rubber or bromobutyl rubber 5% 10% Paper and Paper products 18 48 a. Newsprint Nil 10% b.Uncoated paper used for printing of newspapers c.Lightweight coated paper used for printing of magazines 19 4901 10 10, 4901 91 00, 4901 99 00 Printed books (including covers for printed books) and printed manuals, in bound form or in loose-leaf form with binder, executed on paper or any other material including transparencies. Nil .....

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..... ke plugs, sockets, switches, connectors, relays. Nil Applicable rate Automobile and automobile parts 39 8421 39 20, 8421 39 90 Catalytic convertor (All goods under these tariff items other than catalytic converters will continue at 7.5%) 5% 10% 40 8702, 8704 Completely Built Unit (CBU) of vehicles falling under heading 8702, 8704 25% 30% 41 Any Chapter (i)E-Drive assembly, (ii)On board charger, (iii)E-compressor and (iv)Charging Gun Following parts of electric vehicles: - Applicable rate Nil 42 87 Prescribing actual user condition in respect of existing exemption from BCD to parts of Hybrid vehicles - Oil rigs and other goods used for oil exploration 43 84 or any other chapter Providing option to pay BCD at transaction value on the disposal of goods, imported without payment of customs duty for petroleum operations / coal bed Methane operations where such disposal is made in unserviceable and mutilated condition Applicable rate on depreciated value 7.5% on transaction value Export Promotion for Sports goods 44 39 , 4407 Foam/EVA foam (39) and Pine Wood (4407) are being included in the list of items allowed duty free import upto 3% of FOB value of sports goods exported in the preced .....

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..... y, on the temporary importation of vehicles under the Customs Convention on the Temporary Importation of Private Road Vehicles (carnet de passages-en-douane) for the period 1st July, 2017 to 31st December, 2018. [84] 3 Retrospective effect, for the period 21st October, 2015 to 22nd February, 2016 to notification No. 5/2016-Customs (ADD) dated 22nd February, 2016 to insert correct classification of product under consideration for ADD namely All Fully Drawn or Fully Oriented Yarn/Spin Draw Yarn/Flat Yarn of Polyester (non-textured and non - POY) (from 5402 to 5402 47). This notification amended the notification No. 51/2015-Customs (ADD) dated 21st October, 2015. [88] 4 Retrospective effect, for the period 8th March, 2016 to 4th July, 2016 to notification No. 29/2016-Customs (ADD) dated 5th July, 2016 to exclude ter polymer from the ambit of product under consideration for ADD on Polypropylene. This notification amended notification No. 7/2016-Customs dated 8th March, 2016. [89] IX Other Miscellaneous changes 1 To rephrase the existing entry to make the intention explicitly clear that prawn feed, shrimp larvae feed in any form are entitled to concessional rate of 5% whereas fish feed .....

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..... e length of filter being 11 millimeters or its actual length, whichever is more) exceeding 65 millimeters but not exceeding 70 millimeters Nil ₹ 5 per thousand 5 2402 20 50 Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimeters or its actual length, whichever is more) exceeding 70 millimeters but not exceeding 75 millimeters Nil ₹ 5 per thousand 6 2402 20 90 Other (Cigarettes containing tobacco) Nil ₹ 10 per thousand 7 2402 90 10 Cigarettes of tobacco substitutes Nil ₹ 5 per thousand 8 2403 11 10 Hookah or gudaku tobacco Nil 0.5% 9 2403 19 10 Smoking mixtures for pipes and cigarettes Nil 1% 10 2403 19 21 Other than paper rolled biris, manufactured without the aid of machine Nil 5 paisa per thousand 11 2403 19 29 Other (Biris) Nil 10 paisa per thousand 12 2403 19 90 Other smoking tobacco Nil 0.5% 13 2403 91 00 Homogenised or reconstituted tobacco Nil 0.5% 14 2403 99 10 Chewing tobacco Nil 0.5% 15 2403 99 20 Preparations containing chewing tobacco Nil 0.5% 16 2403 99 30 Jarda scented tobacco Nil 0.5% 17 2403 99 40 Snuff Nil 0.5% 18 2403 99 50 Preparations containing snuff Nil 0.5% 19 2403 99 60 Tobacco extrac .....

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..... the date of its enactment, unless otherwise specified. S. No. Retrospective exemptions Clause of Finance (No.2) Bill, 2019 1 Services provided or agreed to be provided by the State Government by way of grant of liquor licence, against consideration in the form of licence fee or application fee or by whatever name it is called, are proposed to be exempted from service tax for during the period commencing from 1st April, 2016 and ending with the 30th June, 2017. [116] 2 Services provided or agreed to be provided by the Indian Institutes of Management, as per the guidelines of the Central Government, to their students, by way of the following educational programmes, except Executive Development Programme, - (a) two-year full time Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT), conducted by Indian Institute of Management; (b) fellow programme in Management; (c)five year integrated programme in Management. are proposed to be exempted from service tax for during the period commencing from the 1st day of July, 2003 and ending with the 31st day of March, 2016. [117] 3 Consideratio .....

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..... ing the aggregate turnover to determine eligibility for the composition scheme, value of exempt supplies services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount shall not be taken into account; and ii. for determining the value of turnover in a State or Union territory to calculate tax payable, value of exempt supplies of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount; and value of the first supplies from 1st of April till the date when the taxpayer becomes liable for registration shall not be taken into account. [92] 3 A proviso and an explanation is being inserted in section 22 of the CGST Act so as to provide for higher threshold exemption limit from ₹ 20 lakhs to such amount not exceeding ₹ 40 lakhs in case of supplier who is engaged in exclusive supply of goods. [93] 4 New sub-sections are being inserted in section 25 of the CGST Act to make Aadhaar authentication mandatory for specified class of new taxpayers and to prescribe the manner in which certain class of registered taxpayers a .....

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..... ces of the National Appellate Authority for Advance Ruling; to provide for procedures to be followed for hearing appeals against conflicting advance rulings pronounced on the same question by the Appellate Authorities of two or more States or Union territories in case of distinct persons; and to provide that the National Appellate Authority shall pass order within a period of ninety days from the date of filing of the appeal respectively. [104] 15 Section 102 of the CGST Act is being amended so as to allow the National Appellate Authority to amend any order passed by it so as to rectify any error apparent on the face of the record, within a period of six months from the date of the order, except under certain specified circumstances. [105] 16 Section 103 of the CGST Act is being amended so as to provide that the advance ruling pronounced by the National Appellate Authority shall be binding, unless there is a change in law or facts, on the applicants, being distinct person and all registered persons having the same Permanent Account Number and on the concerned officers or the jurisdictional officers in respect of the said applicants and the registered persons having the same Permane .....

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