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Memorandum Explaining the Provisions in The Finance Bill

..... to direct taxes seek to amend the Income-tax Act, 1961 (hereafter referred to as 'the Act'), Prohibition of Benami Property Transactions Act, 1988 (hereafter referred to as PBPT Act ), and Finance Act, 2013, to continue to provide momentum to the buoyancy in direct taxes through tax-incentives, reducing tax rates for co-operative society, individual and Hindu undivided family (HUF), deepening and widening of the tax base, removing difficulties faced by taxpayers, curbing tax abuse and enhancing the effectiveness, transparency and accountability 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) Tax incentives; (C) Removing difficulties faced by taxpayers; (D) Measures to provide tax certainty; (E) Widening and deepening of tax base; (F) Revenue mobilisation measures; (G) Improving effectiveness of tax administration; (H) Preventing tax abuse; and (I) Rationalisation of provisions of the Act. DIRECT TAXES A. RATES OF INCOME-TAX I. Rates of income-tax in respect of income liable to tax for the assessment year 2020-21. In respect of income of all categories o .....

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..... 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 having income under section 115AD of the Act,- (i) having a total income exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent. of such income-tax; and (ii) having a total income exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent. of such income-tax; (iii) having a total income [excluding the income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent. of such income-tax; (iv) having a total income [excluding the income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding five crore rupees, at the rate of thirty-seven per cent. of such income-tax; (v) having a total income [including the income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but is not covered in sub-clauses (iii) and (iv), at the rate of fifteen .....

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..... specifying the rate of deduction of tax at source, the tax shall continue to be deducted as per the provisions of these sections. Two new sections 194K and 194-O have been inserted specifying the rates within the sections. Rate of section 194 has been modified from rate in force to ten per cent. (1) Surcharge- The amount of tax so deducted, in the case of a non-resident person (other than a company), shall be increased by a surcharge,- (a) in the case of every individual or HUF 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 Act, being a non-resident, calculated,- (i) at the rate of ten 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 fifty lakh rupees but does not exceed one crore rupees; (ii) at the rate of fifteen 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 two crore rupees; (iii) at the rate of twenty-five per cent. of such tax, wher .....

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..... ies (section 115 BAD of the Act) with an option to these taxpayers. The salient features of the rates specified in the said Part III are indicated in the following paragraphs4 A. Individual, HUF, association of persons, body of individuals, artificial juridical person. Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:- (i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or HUF or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part III applies) are as under:- Upto ₹ 2,50,000 Nil. ₹ 2,50,001 to ₹ 5,00,000 5 per cent. ₹ 5,00,001 to ₹ 10,00,000 20 per cent. Above ₹ 10,00,000 30 per cent. (ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,- Upto ₹ 3,00,000 Nil. ₹ 3,00,001 to ₹ 5,00,000 5 per cent. ₹ 5,00,001 to ₹ .....

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..... ph B of Part III of the First Schedule to the Bill. These rates will continue to be the same as those specified for FY 2019-20. The amount of income-tax shall be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of a co-operative society having a total income exceeding one crore rupees. However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. From the assessment year 2021-22, resident co-operative societies have an option to opt for taxation under newly inserted section 115BAD of the Act. This is discussed later. C. Firms In the case of firms, the rate of income-tax has been specified in Paragraph C of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for FY 2019-20. The amount of income-tax shall be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of a firm having a total income exceeding one crore rupees. However, the total amount payable as income-tax and su .....

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..... d, if the total income exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of five per cent shall continue to be levied, if the total income of the company other than domestic company exceeds ten crore rupees. Marginal relief is provided in surcharge in all cases. In other cases [including sub-section (2A) of section 92CE, sections 115-O, 115QA, 115R, 115TA or 115TD], the surcharge shall be levied at the rate of twelve per cent.. For FY 2020-21, additional surcharge called the Health and Education Cess on income-tax shall be levied at the rate of four per cent on the amount of tax computed, inclusive of surcharge (wherever applicable), in all cases. No marginal relief shall be available in respect of such cess. [Clause 2 & the First Schedule] IV Other amendments having impact on rates for various categories of person A. Incentives to resident co-operative societies. The TLAA, which replaced The Taxation Laws (Amendment) Ordinance, 2019, sought to provide additional fiscal stimulus to attract investment, generate employment and boost the economy in the wake of economic developments post enactment of the Finance (No. 2) Act, 2019 and keeping in vi .....

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..... section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35 or section 35AD or section 35CCC or under any provisions of Chapter VI-A; (b) without set off of any loss carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in (a) above; and (c) by claiming the depreciation, if any, under section 32, except clause (iia) of sub-section (1) thereof, determined in such manner as may be prescribed; (iii) the loss and depreciation referred to in (ii)(b) above shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year. However, where there is a depreciation allowance in respect of a block of asset which has not been given full effect to prior to the assessment year beginning on 1st April, 2021, corresponding adjustment shall be made to the written down value of such block of assets as on 1st April, 2020 in the prescribed manner, if the option is exercised for a previous year relevant to the assessment year beginning on 1st April, 2021; (iv) the con .....

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..... s. (iii) The option shall become invalid for a previous year or previous years, as the case may be, if the Individual or HUF fails to satisfy the conditions and other provisions of the Act shall apply; (iv) the condition for concessional rate shall be that the total income of the individual or HUF is computed,- (a) without any exemption or deduction under the provisions of clause (5) or clause (13A) or prescribed under clause (14) (other than those as may be prescribed for this purpose) or clause (17) or clause (32) of section 10 or section 10AA or section 16 or clause (b) of section 24 [in respect of property referred to in sub-section (2) of section 23] or clause (iia) of sub-section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35 or section 35AD or section 35CCC or clause (iia) of section 57 or under any provisions of Chapter VI-A other than the provisions of sub-section (2) of section 80CCD or section 80JJAA; (b) without set off of any loss,- (i) carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attri .....

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..... option under para (vi)(a) above shall be available. It is further proposed to amend section 115JC of the Act so as to provide that the provisions relating to AMT shall not apply to such individual or HUF having business income. It is also proposed to amend section 115JD of the Act so as to provide that the provisions relating to carry forward and set off of AMT credit, if any, shall not apply to such individual or HUF having business income. The condition listed at (iva) above, means that the individual or HUF opting for taxation under the newly inserted section 115BAC of the Act shall not be entitled to the following exemptions/ deductions: (i) Leave travel concession as contained in clause (5) of section 10; (ii) House rent allowance as contained in clause (13A) of section 10; (iii) Some of the allowance as contained in clause (14) of section 10; (iv) Allowances to MPs/MLAs as contained in clause (17) of section 10; (v) Allowance for income of minor as contained in clause (32) of section 10; (vi) Exemption for SEZ unit contained in section 10AA; (vii) Standard deduction, deduction for entertainment allowance and employment/professional tax as contained in section 16; (viii) Inter .....

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..... anies under section 115BAA and 115BAB TLAA inserted section 115BAA and section 115BAB in the Act to provide domestic companies an option to be taxed at concessional tax rates provided they do not avail specified deductions and incentives. Some of the deductions prohibited are deductions under any provisions of Chapter VI-A under the heading C. Deduction in respect of certain incomes other than the provisions of section 80JJAA. It is now proposed to amend the provisions of section 115BAA and section 115BAB to not allow deduction under any provisions of Chapter VI-A other than section 80JJAA or section 80M, in case of domestic companies opting for taxation under these sections. 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 51 & 52] D. Withdrawal of exemption on certain perquisites or allowances provided to Union Pubic Services Commission (UPSC) Chairman and members and Chief Election Commissioner and Election Commissioners Section 10 of the Act provides for exemption in respect of certain incomes and activities under specific circumstances. Clause (45) thereo .....

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..... as to delete the exemption from income-tax on value of rent-free residence, conveyance facilities, sumptuary allowance, medical facilities and other such conditions of service as are applicable to a Judge of the Supreme Court, paid to Chief Election Commissioner and other Election Commissioners. These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years. [Clause 7] B. TAX INCENTIVES Exemption in respect of certain income of wholly owned subsidiary of Abu Dhabi Investment Authority and Sovereign Wealth Fund. Section 10 of the Act provides for exemption in respect of certain incomes and activities under specific circumstances. In order to promote investment of sovereign wealth fund, including the wholly owned subsidiary of Abu Dhabi Investment Authority (ADIA), it is proposed to insert a new clause in the said section so as to provide exemption to any income of a specified person in the nature of dividend, interest or long-term capital gains arising from an investment made by it in India, whether in the form of debt or equity, in a company or enterprise carrying on the business of deve .....

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..... ed. Clause (48B) of said section, inserted by the Finance Act, 2017 and amended by the Finance Act, 2018, provides for exemption in respect of any income accruing or arising to a foreign company on account of sale of leftover stock of crude oil, if any, from the facility in India after the expiry of the agreement or the arrangement referred to in clause (48A) or on termination of the said agreement or the arrangement, in accordance with the terms mentioned therein, as the case may be, subject to such conditions as may be notified by the Central Government in this behalf. It is now proposed to provide exemption, by inserting a new clause in section 10, to any income accruing or arising to Indian Strategic Petroleum Reserves Limited (ISPRL), being a wholly owned subsidiary of Oil Industry Development Board under the Ministry of Petroleum and Natural Gas, as a result of an arrangement for replenishment of crude oil stored in its storage facility in pursuance to directions of the Central Government in this behalf. This exemption shall be subject to the condition that the crude oil is replenished in the storage facility within three years from the end of the financial year in which the .....

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..... mpetent authority is proposed to be extended to 31st March, 2021. This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years. [Clause 38] Extending time limit for sanctioning of loan for affordable housing for availing deduction under section 80EEA of the Act The existing provisions of section 80EEA of the Act provide for a deduction in respect of interest on loan taken from any financial institution for acquisition of an affordable residential house property. The deduction allowed is up to one lakh fifty thousand rupees and is subject to certain conditions. One of the conditions is that loan has been sanctioned by the financial institution during the period from 1st April, 2019 to 31st March, 2020. The said deduction is aimed to incentivise first time buyers to invest in residential house property whose stamp duty does not exceed forty-five lakh rupees. In order to continue promoting purchase of affordable housing, the period of sanctioning of loan by the financial institution is proposed to be extended to 31st March, 2021. This amendment will take effect from 1st April, 2021 and will .....

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..... ths to eighteen months, in so far as the fund established or incorporated on last day of the financial year would get six months and the fund established or incorporated on first day of the financial year would get eighteen months. It has been stated that this results in anomaly as certain funds due to its date of establishment and incorporation get favoured or discriminated against. Accordingly, it is proposed to amend section 9A of the Act to relax these two conditions so as to provide that,- (i) for the purpose of calculation of the aggregate participation or investment in the fund, directly or indirectly, by Indian resident, contribution of the eligible fund manager during first three years up to twenty-five crore rupees shall not be accounted for; and (ii) if the fund has been established or incorporated in the previous year, the condition of monthly average of the corpus of the fund to be at one hundred crore rupees shall be fulfilled within twelve months from the last day of the month of its establishment or incorporation. This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment yea .....

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..... e on or after 1st of October 2014 and before 1st July, 2020; The concessional rate of TDS of five per cent is also applicable in respect of monies borrowed by a specified company or a business trust from a source outside India by way of issue of rupee denominated bond (RDB) before 1st July, 2020, to the extent such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf. Representations have been received for extension of the time limit and also for a further concessional rate of TDS on interest payment against borrowings through issues of long-term bonds and RDB which are listed only on a recognised stock exchange in any IFSC. In order to attract fresh investment, create jobs and stimulate the economy, it is proposed to; - i. extend the period of said concessional rate of TDS of five per cent to 1st July, 2023 from 1st July, 2020; ii. provide that the rate of TDS shall be four per cent on the interest payable to a non-resident, in respect of monies borrowed in foreign currency from a source outside India, by way of issue of any long term bond or RDB on or after 1st April, 2020 but before 1st July, 2023 and which is l .....

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..... hever is less. Further, a loan is deemed to be from an AE, if an AE provides implicit or explicit guarantee in respect of that loan. AE for the purposes of this section has the meaning assigned to it in section 92A of the Act. This section was inserted in the Act through the Finance Act, 2017 in order to implement the measures recommended in final report on Action Plan 4 of the Base Erosion and Profit Shifting (BEPS) project under the aegis of G-20-Organisation of Economic Co-operation and Development (OECD) countries to address the issue of base erosion and profit shifting by way of excess interest deductions. Representations have been received to carve out interest paid or payable in respect of debt issued by a PE of a non-resident in India, being a person engaged in the business of banking for the reason that as per the existing provisions a branch of the foreign company in India is a non-resident in India. Further, the definition of the AE in section 92A, inter alia, deems two enterprises to be AE, if during the previous year a loan advanced by one enterprise to the other enterprise is at 50 per cent. or more of the book value of the total assets of the other enterprise. Thus, .....

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..... ve per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration. Clause (x) of sub-section (2) of section 56 of the Act, inter alia, provides that where any person receives, in any previous year, from any person or persons on or after 1st April, 2017, any immovable property, for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration shall be charged to tax under the head income from other sources . It also provide that where the assessee receives any immovable property for a consideration and the stamp duty value of such property exceeds five per cent of the consideration or fifty thousand rupees, whichever is higher, the stamp duty value of such property as exceeds such consideration shall be charged to tax under the head Income from other sources . Thus, the present provisions of section 43CA, 50C and 56 of the Act provide for safe harbour of five per cent. Representations h .....

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..... or technical services (FTS) received from the Government or Indian concern in pursuance of an agreement made after 31st March 1976, and which is not effectively connected with a PE, if any, of the non-resident in India. Sub-section (5) of said section provides that a non-resident is not required to furnish its return of income under sub-section (1) of section 139 of the Act, if its total income, consists only of certain dividend or interest income and the TDS on such income has been deducted according to the provisions of Chapter XVII-B of the Act. While, the current provisions of section 115A of the Act provide relief to non-residents from filing of return of income where the non-resident is not liable to pay tax other than the TDS which has been deducted on the dividend or interest income, the same relief has not been extended to non-residents whose total income consists only of the income by way of royalty or FTS of the nature as mentioned in point (b) above. Representations have been received to extend this benefit to royalty and FTS income as well. Therefore, it is proposed to amend section 115A of the Act in order to provide that a non-resident, shall not be required to file .....

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..... which the assessee ceases to be the employee of the person; whichever is the earliest on the basis of rates in force of the financial year in which the said specified security or sweat equity share is allotted or transferred . Similar amendments have been carried out in section 191 (for assessee to pay the tax direct in case of no TDS) and in section 156 (for notice of demand) and in section 140A (for calculating self-assessment). These amendments will take effect from 1st April, 2020. [Clauses 68, 71, 72 & 73] Allowing carry forward of losses or depreciation in certain amalgamations. Section 72AA of the Act provides for carry forward of accumulated losses and unabsorbed depreciation allowance in the case of amalgamation of banking company with any other banking institution under a scheme sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of the Banking Regulation Act, 1949. This section operates notwithstanding anything contained in sub-clause (i) to (iii) of clause (1B) of section 2 or section 72A of the Act. In order to address the issue faced by the amalgamated public sector banks and public sector General Insurance Companies, it .....

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..... ered as an Infrastructure Investment Trust (InvIT) or a Real Estate Investment Trust (REIT) under the relevant regulations made under the Securities and Exchange Board of India (SEBI) Act, 1992 and the units of which are required to be listed on a recognised stock exchange in accordance with the relevant regulations. Representations have been received stating that private unlisted InvITs should be given the same status as public listed InvITs with regards to tax treatments provided under the Act. Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) (Regulations), 2019 vide notification No.SEBI/LAD-NRO/GN/2019/10 has, inter-alia, done away with the mandatory listing requirement for InvITs. In light of this, the definition of business trusts under the Act is required to be aligned with the amended SEBI Regulations. Therefore, it is proposed to amend clause (13A) of section 2 of the Act to modify the definition of business trust so as to do away with the requirement of the units of business trust to be listed on a recognised stock exchange. This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment y .....

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..... dment will take effect from 1st April, 2020 and therefore will apply to an APA entered into on or after 1st April, 2020. [Clauses 43 & 44] Allowing deduction for amount disallowed under section 43B, to insurance companies on payment basis. Section 44 of the Act provides that computation of profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or a co-operative society shall be computed in accordance with the rules contained in the First Schedule to the Act. Section 43B of the Act provides for allowance of certain deductions, irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by the assessee, only in the previous year in which such sum is actually paid. Rule 5 of the said Schedule provides for computation of profits and gains of other insurance business. It states that profits and gains of any business of insurance other than life insurance shall be taken to be the profit before tax and appropriations as disclosed in the profit and loss account prepared in accordance with the provisions of the Insurance Act, 19 .....

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..... redit of such sum deduct an amount equal to one per cent in case payment is made to an individual or a HUF and two per cent in other cases. It is noticed that there are large number of litigations on the issue of short deduction of tax treating assessee in default where the assessee deducts tax under section 194C, while the tax officers claim that tax should have been deducted under section 194J of the Act. Therefore to reduce litigation, it is proposed to reduce rate for TDS in section 194J in case of fees for technical services (other than professional services) to two per cent from existing ten per cent. The TDS rate in other cases under section 194J would remain same at ten per cent. This amendment will take effect from 1st April, 2020. [Clause 79] E. WIDENING AND DEEPENENING OF TAX BASE Enlarging the scope for tax deduction on interest income under section 194A of the Act. Section 194A of the Act governs interest other than interest on securities. Sub-section (1) thereof provides that any person not being individual or HUF who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall deduct income-tax at the .....

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..... perator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform; • E-commerce operator is required to deduct tax at the time of credit of amount of sale or service or both to the account of e-commerce participant or at the time of payment thereof to such participant by any mode, whichever is earlier. • The tax at one per cent is required to be deducted on the gross amount of such sales or service or both. • Any payment made by a purchaser of goods or recipient of services directly to an e-commerce participant shall be deemed to be amount credited or paid by the e-commerce operator to the e-commerce participant and shall be included in the gross amount of such sales or services for the purpose of deduction of income-tax. • The sum credited or paid to an e-commerce participant (being an individual or HUF) by the e-commerce operator shall not be subjected to provision of this section, if the gross amount of sales or services or both of such individual or HUF, through e-commerce operator, during the previous year does not exceed five lakh rupees and such e-commerce participant has furnished his Permanent Acc .....

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..... said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of certain goods a sum equal to specified percentage, of such amount as income-tax. In order to widen and deepen the tax net, it is proposed to amend section 206C to levy TCS on overseas remittance and for sale of overseas tour package, as under: • An authorised dealer receiving an amount or an aggregate of amounts of seven lakh rupees or more in a financial year for remittance out of India under the LRS of RBI, shall be liable to collect TCS, if he receives sum in excess of said amount from a buyer being a person remitting such amount out of India, at the rate of five per cent. In non- PAN/Aadhaar cases the rate shall be ten per cent. • A seller of an overseas tour program package who receives any amount from any buyer, being a person who purchases such package, shall be liable to collect TCS at the rate of five per cent. In non-PAN/ Aadhaar cases the rate shall be ten per cent. • The above TCS provision shall not apply if the buyer is,- a. liable to deduct tax at source under any other provision of the Act and he has deducted such amount. b. th .....

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..... e 93] F. REVENUE MOBILISATION MEASURES Rationalization of tax treatment of employer s contribution to recognized provident funds, superannuation funds and national pension scheme. Under the existing provisions of the Act, the contribution by the employer to the account of an employee in a recognized provident fund exceeding twelve per cent. of salary is taxable. Further, the amount of any contribution to an approved superannuation fund by the employer exceeding one lakh fifty thousand rupees is treated as perquisite in the hands of the employee. Similarly, the assessee is allowed a deduction under National Pension Scheme (NPS) for the fourteen per cent. of the salary contributed by the Central Government and ten per cent. of the salary contributed by any other employer. However, there is no combined upper limit for the purpose of deduction on the amount of contribution made by the employer. This is giving undue benefit to employees earning high salary income. While an employee with low salary income is not able to let employer contribute a large part of his salary to all these three funds, employees with high salary income are able to design their salary package in a manner where a .....

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..... vide notification dated 27th September, 2016, which notified a number of goods for the purpose of its definition in clause (bc) of section 2 of the SCRA. These goods included cereals and pulses, oil seeds/ oil cakes and oils, spices, metals, precious metals, gem and stones, fibres, energy, sweeteners, plantation, dry fruits and others. Presently, as per SCRA regulations, derivative trading in commodities is limited only to commodity futures and option on commodity futures . The underlying asset in the option on commodity futures is a commodity future . This means that upon expiry, if the option is exercised, the option-holder gets a right to buy or sell a commodity future and not the right to buy or sell the goods directly. However, vide notification dated 18th October, 2019, option in goods has also been included in the definition of derivatives in clause (ac) of section 2 of the SCRA. This has paved the way for new derivative product options in goods with goods notified on 27.09.2016 directly as the underlying asset. Moreover, commodity futures based on prices or indices of prices of commodity futures is also likely to be introduced as a new product in the commodity derivative m .....

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..... ection (3A) of section 143 provides that the Central Government may make a scheme, by notification in the Official Gazette, for the purposes of making assessment of total income or loss of the assessee under sub-section (3) of section 143 so as to impart greater efficiency, transparency and accountability by certain means specified therein. Accordingly, E-assessment Scheme, 2019 was notified under sub-section (3A) of Section 143 of the Act. 3. It is proposed to amend sub-section (3A) of section 143 of the Act to,- (i) expand the scope so as to include the reference of section 144 of the Act relating to best judgement assessment in the said sub-section; (ii) provide that Central Government may issue any direction under sub-section (3B) of the said section upto 31st March, 2022. This amendment will take effect from 1st April, 2020. [Clause 69] Amendment in Dispute Resolution Panel (DRP). Section 144C of the Act provides that in case of certain eligible assessees, viz., foreign companies and any person in whose case transfer pricing adjustments have been made under sub-section (3) of section 92CA of the Act, the Assessing Officer (AO) is required to forward a draft assessment order to .....

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..... from the system reach the next level, it is imperative that an e-appeal scheme be launched on the lines of e-assessment scheme. Accordingly, it is proposed to insert sub-section (6A) in section 250 of the Act to provide for the following: - • Empowering Central Government to notify an e-appeal scheme for disposal of appeal so as to impart greater efficiency, transparency and accountability. • Eliminating the interface between the Commissioner (Appeals) and the appellant in the course of appellate proceedings to the extent technologically feasible. • Optimizing utilization of the resources through economies of scale and functional specialisation. • Introducing an appellate system with dynamic jurisdiction in which appeal shall be disposed of by one or more Commissioner (Appeals). It is also proposed to empower the Central Government, for the purpose of giving effect to the scheme made under the proposed sub-section, by notification in the Official Gazette, to direct that any of the provisions of this Act relating to jurisdiction and procedure of disposal of appeal shall not apply or shall apply with such exceptions, modifications and adaptations as may be specif .....

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..... n the period or periods of stay so extended or allowed. The third proviso of the said sub-section also provides that if such appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, in any case, exceed 365 days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee. It is proposed to provide that ITAT may grant stay under the first proviso subject to the condition that the assessee deposits not less than twenty per cent of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnish security of equal amount in respect thereof. It is also proposed to substitute second proviso to provide that no extension of stay shall be granted by ITAT, where such appeal is not so disposed of which the said period of stay as specified in the order of stay. However, on an application made by the assessee, a further stay can be granted, if the delay in not disposing of the appeal is not attributable to the assessee and the assessee ha .....

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..... n of Taxpayer s Charter in the Act. It is proposed to insert a new section 119A in the Act to empower the Board to adopt and declare a Taxpayer s Charter and issue such orders, instructions, directions or guidelines to other income-tax authorities as it may deem fit for the administration of Charter. This amendment will take effect from 1st April, 2020. [Clause 64] H. PREVENTING TAX ABUSE Modification of residency provisions. Sub-section (1) of section 6 of the Act provide for situations in which an individual shall be resident in India in a previous year. Clause (c) thereof provides that the individual shall be Indian resident in a year, if he,- (i) has been in India for an overall period of 365 days or more within four years preceding that year, and (ii) is in India for an overall period of 60 days or more in that year. Clause (b) of Explanation 1 of said sub-section provides that an Indian citizen or a person of Indian origin shall be Indian resident if he is in India for 182 days instead of 60 days in that year. This provision provides relaxation to an Indian citizen or a person of Indian origin allowing them to visit India for longer duration without becoming resident of India .....

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..... ) to section 6 for visiting India in that year be decreased to 120 days from existing 182 days. (ii) an individual or an HUF shall be said to be not ordinarily resident in India in a previous year, if the individual or the manager of the HUF has been a non-resident in India in seven out of ten previous years preceding that year. This new condition to replace the existing conditions in clauses (a) and (b) of sub-section (6) of section 6. (iii) an Indian citizen who is not liable to tax in any other country or territory shall be deemed to be resident in India. This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years. [Clause 4] Amending definition of work in section 194C of the Act. Section 194C of the Act provides for the deduction of tax on payments made to contractors. The section provides that any person responsible for paying any sum to a resident for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract shall at the time of such credit or at the time of payment whichever is earlier deduct an amount equal to one per cent in case pa .....

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..... person has been omitted to evade tax liability. The penalty payable by such person shall be equal to the aggregate amount of false entries or omitted entry. It is also propose to provide that any other person, who causes in any manner a person to make or cause to make a false entry or omits or causes to omit any entry, shall also pay by way of penalty a sum which is equal to the aggregate amounts of such false entries or omitted entry. The false entries is proposed to include use or intention to use - (a) forged or falsified documents such as a false invoice or, in general, a false piece of documentary evidence; or (b) invoice in respect of supply or receipt of goods or services or both issued by the person or any other person without actual supply or receipt of such goods or services or both; or (c) invoice in respect of supply or receipt of goods or services or both to or from a person who do not exist. This amendment will take effect from 1st April, 2020. [Clause 98] I. RATIONALISATION OF PROVISIONS OF THE ACT Aligning purpose of entering into Double Taxation Avoidance Agreements (DTAA) with Multilateral Instrument (MLI). Section 90 of the Act empowers the Central Government to .....

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..... DTAAs, modifying their application in order to implement the BEPS measures. Article 6 of MLI provides for modification of the Covered Tax Agreement to include the following preamble text: Intending to eliminate double taxation with respect to the taxes covered by this agreement without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in this agreement for the indirect benefit of residents of third jurisdictions), In order to achieve this, clause (b) of sub-section (1) of section 90 of the Act which provides for providing relief in respect of avoidance of double taxation of income under the laws of both country or territory (India and the other foreign country of territory) is required to contain the text provided for in MLI as mentioned at para 4 above. In case of section 90A of the Act also, similar amendment would be required to be carried out. Therefore, it is proposed to amend clause (b) of sub-section (1) of section 90 of the Act so as to provide that the Central Government may enter into an agreement with the Government of any country outside India o .....

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..... actions or activities shall constitute significant economic presence in India, whether or not, the agreement for such transactions or activities is entered in India; or the non-resident has a residence or place of business in India; or the non-resident renders services in India. It was also provided that only so much of income as is attributable to the transactions or activities mentioned at para 2(a) and (b) shall be deemed to accrue or arise in India. Therefore, for the purposes of determining SEP of a non-resident in India, threshold for the aggregate amount of payments arising from the specified transactions and for the number of users were required to be prescribed in the Rules. However, since discussion on this issue is still going on in G20-OECD BEPS project, these numbers have not been notified yet. G20-OECD report is expected by the end of December 2020. In the circumstances, it is proposed to defer the applicability of SEP to starting from assessment year 2022-23. Certain drafting changes have also been made while deferring the proposal. The current SEP provisions shall be omitted from assessment year 2021-22 and the new provisions will take effect from 1st April, 2022 an .....

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..... a capital asset, held by a non-resident by way of investment in erstwhile Category I and II FPIs under the SEBI (FPI) Regulations, 2014 may be grandfathered. Further, similar exception may be provided in respect of investment in Category-I FPI under the SEBI (FPI) Regulations, 2019. 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. [Clause 5] Clause (vi) of sub-section (1) of section 9 deems certain income by way of royalty to accrue or arise in India. Explanation 2 of said clause defines the term royalty to, inter alia, mean the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films. Due to exclusion of consideration for the sale, distribution or exhibition of cinematographic films from the definition of royalty, such royalty is not taxable in India even if the DTAA gives In .....

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..... n any amount of income distributed by them to its unit holders. Such income is then exempt in the hands of unit holders under clause (35) of section 10. The incidence of tax is, thus, on the payer company/Mutual Fund and not on the recipient, where it should normally be. The dividend is income in the hands of the shareholders and not in the hands of the company. The incidence of the tax should therefore, be on the recipient. Moreover, the present provisions levy tax at a flat rate on the distributed profits, across the board irrespective of the marginal rate at which the recipient is otherwise taxed. The provisions are hence, considered, iniquitous and regressive. The present system of taxation of dividend in the hands of company/ mutual funds was reintroduced by the Finance Act, 2003 (with effect from the assessment year 2004-05) since it was easier to collect tax at a single point and the new system was leading to increase in compliance burden. However, with the advent of technology and easy tracking system available, the justification for current system of taxation of dividend has outlived itself. In view of above, it is proposed to carry out amendments so that dividend or incom .....

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..... ng of return, in place of due date of filing return earlier. (xi) amend section 115BBDA which taxes dividend income in excess of ten lakh rupee in the hands of shareholder at ten per cent., to only dividend declared, distributed or paid by a domestic company on or before the 31st day of March, 2020. (xii) amend section 57 to provide that no deduction shall be allowed from dividend income, or income in respect of units of mutual fund or specified company, other than deduction on account of interest expense and in any previous year such deduction shall not exceed twenty per cent. of the dividend income or income from units included in the total income for that year without deduction under section 57. (xiii) amend section 194 to include dividend for tax deduction. At the same time the rates of ten per cent. is proposed to be prescribed and threshold is proposed to be increased from ₹ 2,500/- to ₹ 5,000/- for dividend paid other than cash. Further, at present the mode of payment is given as an account payee cheque or warrant . It is proposed to change this to any mode. (xiv) amend section 194LBA to provide for tax deduction by business trust on dividend income paid to unit .....

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..... ,54,55,59,60,62,74,80,81,85,86,87 & 88] Rationalization of provisions of section 55 of the Act to compute cost of acquisition. The existing provisions of section 55 of the Act provide that for computation of capital gains, an assessee shall be allowed deduction for cost of acquisition of the asset and also cost of improvement, if any. However, for computing capital gains in respect of an asset acquired before 1st April, 2001, the assessee has been allowed an option of either to take the fair market value of the asset as on 1st April, 2001 or the actual cost of the asset as cost of acquisition. It is proposed to rationalise the provision and to insert a proviso below sub-clause (ii) of clause (b) of Explanation under clause (ac) of sub-section (2) of the said section to provide that in case of a capital asset, being land or building or both, the fair market value of such an asset on 1st April, 2001 shall not exceed the stamp duty value of such asset as on 1st April, 2001 where such stamp duty value is available. It is also proposed to insert an Explanation so as to provide that for the purposes of sub-clause (i) and (ii), stamp duty value shall mean the value adopted or assessed .....

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..... constituted under a Central or State Act or by a Central or State Government. Such entities are, thus, not able to get notified under clause (46) of section 10 if they are holding registration under section 12A/12AA. The anomaly pointed out above, needs to be addressed. However, as the provisions relating to charitable entities constitute a complete code and that once any trust or institution has voluntarily opted for it by obtaining the requisite registration, it flows that the conditions in relation thereto should be complied with and the option of switching at convenience should not be available. Accordingly, while request for exclusion of clause (46) may be acceded to for exemption thereunder even in those cases where registration under section 12AA or 12A remains in force, there should be only one mode of exemption available and also, that the switching may be allowed only once so that such switching is not done routinely and also it remains efficient to be administered. Rationalising the process of registration of trusts, institutions, funds, university, hospital etc and approval in the case of association, university, college, institution or company etc The present process .....

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..... mend relevant provisions of the Act to provide that,- (i) similar to exemptions under clauses (1) and (23C), exemption under clause (46) of section 10 shall be allowed to an entity even if it is registered under section 12AA subject to the condition that the registration shall become inoperative. If the entity wishes to make it operative in the future, it will have to file an application and then it would not be entitled for deduction under clause (46) from the date on which the registration becomes operative. (ii) the registration under section 12AA would also become inoperative in case of an entity exempt under clause (23C) of section 10 as well, to have uniformity. The condition about making it operative again would also be similar to what is proposed for clause (46) of section 10. (iii) an entity approved, registered or notified under clause (23C) of section 10, section 12AA or section 35 of the Act, as the case may be, shall be required to apply for approval or registration or intimate regarding it being approved, as the case may be, and on doing so, the approval, registration or notification in respect of the entity shall be valid for a period not exceeding five previous year .....

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..... ualified for appointment as District Judge shall also be eligible for the appointment as a Member of the Adjudicating Authority. This amendment will take effect from 1st April, 2020. [Clause 143] Rationalisation of provisions relating to tax audit in certain cases. Under section 44AB of the Act, every person carrying on business is required to get his accounts audited, if his total sales, turnover or gross receipts, in business exceed or exceeds one crore rupees in any previous year. In case of a person carrying on profession he is required to get his accounts audited, if his gross receipt in profession exceeds, fifty lakh rupees in any previous year. In order to reduce compliance burden on small and medium enterprises, it is proposed to increase the threshold limit for a person carrying on business from one crore rupees to five crore rupees in cases where,- (i) aggregate of all receipts in cash during the previous year does not exceed five per cent of such receipt; and (ii) aggregate of all payments in cash during the previous year does not exceed five per cent of such payment. Further, to enable pre-filling of returns in case of persons having income from business or profession, .....

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..... y such authority referred to in sub-section (3) of section 200, to prepare and deliver a statement in Form 26AS to every person from whose income, the tax has been deducted or in respect of whose income the tax has been paid specifying the amount of tax deducted or paid. The Form 26AS as prescribed in the Rules, inter-alia, contains the information about tax collected or deducted at source. However, with the advancement in technology and enhancement in the capacity of system, multiple information in respect of a person such as sale/purchase of immovable property, share transactions etc. are being captured or proposed to be captured. In future, it is envisaged that in order to facilitate compliance, this information will be provided to the assessee by uploading the same in the registered account of the assessee on the designated portal of the Income-tax Department, so that the same can be used by the assessee for filing of the return of income and calculating his correct tax liability. As the mandate of Form 26AS would be required to be extended beyond the information about tax deducted, it is proposed to introduce a new section 285BB in the Act regarding annual financial statement. .....

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..... ost of the acquisition of the original units held by the unit holder in the main portfolio shall be deemed to have been reduced by the amount as so arrived at under the proposed sub-section (2AG). The Explanation below these two new sub-sections, as proposed to be inserted, provide that for the purposes of sub-sections (2AG) and (2AH), the expressions main portfolio , segregated portfolio and total portfolio shall have the meaning respectively assigned to them in the said circular dated 28th December, 2018 issued by SEBI. 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 3 & 25] Amendment in the provisions of Act relating to verification of the return of income and appearance of authorized representative. Section 140 of the Act provides that in case of company the return is required to be verified by the managing director (MD) thereof. Where the MD is not able to verify for any unavoidable reason or where there is no MD, any director of the company can verify the return. It is also provided that in case of a company in whose case application for insolvency reso .....

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..... Act, 2018, shall continue to be governed by the section 28 as it existed before the said enactment, notwithstanding order of the Appellate Tribunal, any Court or any other law to the contrary. [106] 3. A new Chapter VAA (a new section 28DA) is being incorporated in the Customs Act to provide enabling provision for administering the preferential tariff treatment regime under Trade Agreements. The proposed new section seeks to specifically provide for certain obligation on importer and prescribe for time bound verification from exporting country in casa of doubt. Pending verification preferential tariff treatment shall be suspended and goods shall be cleared only on furnishing security equal to differential duty. in certain cases, the preferential tariff treatment may be denied without further verification. [108] 4. A new section 51B is being inserted so as to provide for creation of an Electronic Duty Credit Ledger in the customs system. This will enable duty credit in lieu of duty remission to be giver) in respect of exports or other such benefit in electronic form for its usage, transfer etc. The provision for recovery of duties provided under Section 28AAA of Customs Act, 1962 a .....

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..... kind used for table, kitchen, toilet, office, indoor decoration or Similar purposes (other than that of heading 7010 or 7018) 10% 20% 8. 7323 Table kitchen or other household articles and parts thereof, of iron or steel, iron or steel wool; pot scourers and scouring or polishing pads, gloves and the like, of iron or steel, including pressure cookers pans utensils, misc articles such as iron & steel wool, polishing pads, gloves etc. 10% 20% 9. 7418 10 Table, kitchen or other household articles and parts thereof, of copper; pot scourers and scouring or polishing pads, gloves and the like, of copper. 10% 20% 10. 7615 10 Table, kitchen or other household articles and parts thereof, of aluminum; pot scourer and scouring or polishing pads, gloves and the like, of aluminum. 10% 20% 11. 8301 Padlocks and locks (key, combination or electrically operated) of base metal; Clasps and frames with clasps, incorporating locks of base metals; keys for any of the foregoing articles, of base metals (Other than lock of a kind used for automobiles.) 10% 20% 12. 9603 Brooms, brushes, hand operated mechanical floor sweepers, not motorized, mops and feather dusters; prepared knots and tufts for broom .....

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..... % 15% 52. 8418 40 90 Other freezers of upright type, not exceeding 800 litre capacity 7.5% 15% 53. 8418 50 00 Refrigerating or freezing display counters, cabinets, Show-cases and the like 7.5% 15% 54. 8418 61 00 Heat pumps other than air conditioning machines 7.5% 15% 55. 8418 69 10 Ice making machinery 7.5% 15% 56. 8418 69 20 Water cooler 10% 15% 57. 8418 69 30 Vending machine, other than automatic 10% 15% 58. 8418 69 40 Refrigerating equipment/devices used in leather industry 7.5% 15% 59. 8418 69 50 Refrigerated farm tanks, industrial ice cream freezer 7.5% 15% 60. 8418 69 90 Others (like freezers of capacity 800 litres and more etc.] 7.5% 15% 61. 8515 (except 8515 90 00) Welding and Plasma cutting machines 7.5% 15% Other Electronic goods 62. 8504 40 (except 8404 40 21) Static Converters 15% 20% 63. 8504 40 21 Dip bridge rectifier 10% 20% 64. 8517 70 10 Populated, loaded or stuffed printed circuit boards 10% 20% Automobile and automobile parts 65. 8421 39 20, 8421 39 90 Catalytic Convertor 10% 15% Furniture Goods 66. 9401 Seats and parts of seats (other than aircraft seats and their parts) 20% 25% 67. 9403 Other Furniture and parts thereof 20% 25% 68. 9404 Mattress supports: Arti .....

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..... tification No. 50/2017-Customs dated 30.06.2017. 10% Nil 3. 2713 12 10, 2713 1290 Calcined Petroleum Coke 10% 7.5% 4. 2843 Colloidal precious metals; compounds of precious metals; amalgams of precious metals 7.5% 10% 5. 2916 12 10 Butyl Acrylate 5% 7.5% 6. 3907 99 90 Polyester Liquid Crystal Polymers (LCP) for use in manufacture of connectors 7.5% Nil 7. 3920 10 99 Calendared plastic sheets for use in manufacturing of smart cards 10% 5% Paper Industry 8. 48 a) Newsprint, if the importer, at the time of import is an establishment registered with the Registrar of Newspapers, India (RNI) b) Uncoated paper used for printing newspaper, if the importer, at the time of import' is an establishment registered with the Registrar of Newspapers, India (RNI) c) Lightweight coated paper used for printing magazines, subject to end-use conditions 10% 5% Sports Goods 9. 44 List of items allowed duty free import up to 3% of FOB value of sports goods exported in the preceding financial year is being amended to include-Willow Applicable rate Nil Precious Stones and Metals 10. 7108 Gold used in the manufacture of semiconductor devices or light emitting diodes Nil 12.5% 11. 7103 Rubies, emeralds, sa .....

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..... d their parts 5% 10% 34. 7110 Platinum or Palladium used in manufacturing of catalytic converter and their parts 5% Applicable BCD 35. 84 or any other Chapter (A) Parts of catalytic converter tor manufacture of catalytic converters. (B) The following goods for use in the manufacture of catalytic converters and its parts, namely: - (i) Raw substrates (ceramics) (ii) Wash coated substrates (ceramics) (iii) Raw substrates (metal) (iv) Wash coated substrates (metal) (v) Stainless steel wire cloth stripe (vi) Wash coat 5% 7.5% 36. 8702, 8704 Completely Built Units (CBUs) of commercial vehicles (other than electric vehicles) (with effect from 01.04.2020) 30% 40% 37. 8702, 8704 Completely Built Units (CBUs) of commercial electric vehicles (with effect from 01.04.2020) 25% 40% 38. 8703 Semi Knocked Down (SKD) forms of electric passenger vehicles (with effect from 01.04.2020) 15% 30% 39. 8702, 8704, 8711 Semi Knocked Down (SKD) forms of electric vehicles- Bus, Trucks and Two wheelers (with effect from 01.04.2020) 15% 25% 40. 8702, 8703, 8704, 8711 Completely Knocked Down (CKD) forms of electric vehicles - Passenger vehicles, Three wheelers, Two wheelers, Bus and Trucks (with effect from 01. .....

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..... (1514 19 or 1514 99] 20. 78 Margarine, animal or vegetable oils of edible grade [1517 or 1518] 21. 83 Glycerol, crude; glycerol waters and glycerol lyes, (other than crude glycerin) [1520 00 00] 22. 88A Raw Sugar upto an aggregate of three lakh metric tonnes of total imports of such goods. Provided that the import of raw sugar in physical form is completed within sixty (60) days from the date of issue Of the Tariff Rate Quota Allocation Certificate or license by Directorate General of Foreign Trade (DGFT) to the importer. Provided further that the importer shall convert the raw sugar into white/ refined sugar within a period, not exceeding thirty (30) days, from the date of filing of bill of entry or the date of entry inwards, whichever is later [1701] 23. 89 Dextrose Monohydrate [1702) 24. 92 Molasses resulting from extraction or refining of sugar [1703] 25. 93 Chewing gum whether or not sugar coated [1704 10 00] 26. 94 Food preparations, for infant use and put up for retail sale, of- (i) goods of headings 0401 to 0404, containing cocoa calculated on a totally defatted basis, in a proportion by weight of 5% or more but less than 10%; or (ii) flour, meal, starch or malt extract con .....

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..... 90] 51. 278 Subbed polyester base, imported by M/s. Hindustan Photo Films Manufacturing Company Limited, Udhagamandalam for the manufacture of medical or industrial X-ray films and graphic art films [39201 52. 286 Patent leather [4114 20 10] 53. 287 Raw furskins [4301). tanned and dried furskins [4302] 54. 386 Lead bars. rods. profiles and wire [7806] 55. 388 Zinc tubes, pipes and tube or pipe fittings [7907] 56. 389 Tin plates, sheets and strip, of a thickness exceeding 0.2 mm; tin foil (whether or not printed or backed with paper, paperboard, plastics or similar backing materials), of a thickness (excluding any backing) not exceeding 0.2 mm; tin powders and flakes [8007] 57. 398 Parts and components of the goods specified in List 10 required for use in high voltage power transmission project (Any chapter] 58. 401 All items of equipment including machinery and rolling stock, procured by or on behalf of Delhi Metro Rail Corporation Ltd. for use in- (i) Delhi MRTS Project Phase-I, and (ii) Specified corridors of Delhi MRTS Project Phase-Il, comprising of the following, namely: - (a) Vishwavidyalaya- Jahangirpuri; (b) Central Secretariat-Qutab Minar (via All India Institute of Medica .....

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..... - Customs dated 13.7.1994 and exemption to paper money will now be granted through notification No. 50/2017-Customs dated 30.6.2017. Accordingly, the notification No. 22/2003-Customs is being rescinded.] 7. 22/2007-Customs dated 1.32007 Preferential rates on certain tariff items 8. 14/2004-Customs dated 8.1.2004 Water supply projects for industrial use exempted under Project Imports. This exemption will now be available through notification No. 50/2017 - Customs dated 30.6.2017 VII. IMPOSITION OF HEALTH CESS ON IMPORT OF CERTAIN ITEMS Clause (139] of the Finance Bill, 2020 read with Fourth Schedule to the said Bill provides for levy of 'Health Cess'. Health Cess is proposed to be imposed on the import of Medical devices falling under headings 9018 to 9022, at the rate of 5% ad valorem on the import value of such goods as determined under Section 14 of the Customs Act, 1962. This Health Cess shall be a duty of Customs. Any Export Promotion scrips shall not be used for payment of said Cess. Health Cess shall not be imposed on medical devices which are exempt from BCD. Further, inputs/parts used in the manufacture of medical devices will also be exempt from Health Cess. The pr .....

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..... CD for goods falling under heading 3903. S. No. 262 is being amended to include heading 3903 so as to provide 7.5% BCD on goods of heading 3903. Accordingly, the redundant entry at S.No. 266, is being omitted. 9. S.No. 578 of the notification No. 50/2017-Customs, dated the 30.06.2017 provides BCD exemption on assistive devices, rehabilitation aids and other goods for disabled as mentioned in List 30 to the said notification. The item at S. No. E(9) in this list is being amended to remove ambiguity about its scope. The intention has been to cover only such items which are for use of the disabled. 10. S.No. 408 (and Condition 51) of the notification No. 50/2017-Customs, dated the 30.06.2017 provides concessional BCD rate of 5% on item for renovation and modernization of Fertilizer plants It requires a techno-economic clearance from Department of Fertilizer. The Condition No. 51 is being amended so as to remove this requirement. IX. Review of levy of Social Welfare Surcharge on various items. A. Social Welfare Surcharge is being exempted on following items. S.No. HS Code Description (1) (2) (3) 1. 0404 10 10 Whey, concentrated, evaporated or condensed, liquid or semi solid 2. 0406 90 .....

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..... Rules for bringing clarity in the scope of these rules. 2. The Countervailing Duty Rules provide for manner and procedure for causing investigation into the cases of imports of subsidized goods that cause injury to domestic industry. At present, there is no provision for investigation in case of circumvention of countervailing duties. A provision is being incorporated in the Countervailing Duty Rules to enable investigation into case of circumvention of countervailing duty for enabling imposition of such duty. Certain other changes are being made for bringing clarity in the Rules. 3. Revocation of Anti-dumping duty on import of Purified Terephthalic Acid originating in or exported from: - i. South Korea and Thailand imposed vide notification No. 28/2019-Customs (ADD) dated 24.7.2019 ii. China. Iran, Indonesia, Malaysia and Taiwan imposed vide notification No. 28/2016-Customs (ADD) dated 5.7.2016 EXCISE Note: (a) Basic Excise Duty means the excise duty set forth in the Fourth Schedule to the Central Excise Act, 1944. (b) NCCD means National Calamity Contingent Duty levied under Finance Act, 2001, as a duty of excise on specified goods at rates specified in seventh schedule to Finan .....

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..... Act, 1931. GST Note: (a) CGST Act means the Central Goods and Services Tax Act, 2017 (b) IGST Act means the Integrated Goods and Services Tax Act, 2017 (c) UTGST Act means the Union Territory Goods and Services Tax Act, 2017 Amendments carried out in the Finance Bill, 2020 will come into effect from the date when the same will be notified, as far as possible, concurrently with the corresponding amendments to the similar Acts passed by the States & Union territories with legislature. I. AMENDMENTS IN THE CGST ACT 2017: S.No. Amendment Clause of the Finance Bill, 2020 1. The definition of Union territory in clause (114) of section 2 of the CGST Act is being amended to update the definition of Union territory in view of the bringing into force of the Jammu and Kashmir Reorganization Act, 2019 and the Dadra and Nagar Haveli and Daman and Diu (Merger of Union Territories), Act, 2019, Consequential changes are also being made in UTGST Act, 2017. [116] 2. Section 10 of the CGST Act is being amended, so as to exclude from the ambit of the Composition scheme certain categories of taxable persons, engaged in making- (i) supply of services not leviable to tax under the CGST Act, or (ii) i .....

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..... ision for enabling issuance of removal of difficulties order for another 2 years, i.e. till five years from the date of commencement of the said Act. [128] 14. Entries at 4(a) & 4(b) in Schedule II of the CGST Act is being amended with effect from 01.07.2017 to make provision for omission of supplies relating to transfer of business assets made without any consideration from Schedule II of the said Act. [129] II. AMENDMENTS IN THE IGST ACT 2017: S. No. Amendment Clause of the Finance Bill, 2020 1. Section 25 of the IGST Act is being amended to make provision for enabling the issuance of removal of difficulties orders for another 2 years, i.e. till five years from the date of commencement of the said Act. [132] III. AMENDMENTS IN THE UTGST ACT 2017: S.No. Amendment Clause of the Finance Bill, 2020 1. Section 26 of the UTGST Act is being amended to make provision for enabling the issuance of removal of difficulties orders for another 2 years. i.e. till five years from the date of commencement of the said Act. [136] IV. AMENDMENTS IN THE Goods and Services Tax (Compensation to States) ACT, 2017: S.No. Amendment Clause of the Finance Bill, 2020 1. Section 14 of the Goods and Servic .....

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