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TMI BlogNOTES ON CLAUSESX X X X Extracts X X X X X X X X Extracts X X X X ..... de goodwill of a business or profession from the purview of "block of asset". It is further proposed to amend clause (14) of the said section which defines the expression "capital asset. It is proposed to insert sub-clause (c) to the said clause so as to include any unit linked insurance policy to which exemption under clause (10D) of section 10 does not apply on account of the applicability of the fourth and fifth proviso thereof. It is also proposed to amend clause (19AA) of the said section which defines the term "demerger", in relation to companies, means the transfer, pursuant to a scheme of arrangement under sections 391 to 394 of the Companies Act, 1956, by a demerged company of its one or more undertakings to any resulting company on satisfaction of conditions provided by rules in the said clause. It is proposed to amend the said clause to insert an Explanation so as to clarify that the reconstruction or splitting up of a public sector company into separate companies shall be deemed to be a demerger, if such reconstruction or splitting up has been made to transfer any asset of the demerged company to the resulting company and such resulting company- (i) is a public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also proposed to insert a new Explanation 2 to define the expression "infrastructure debt fund". These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years. Clause 4 of the Bill seeks to amend section 9A of the Income-tax Act relating to certain activities not to constitute business connection in India. Sub-section (3) and (4) of the said section provide for certain conditions for the applicability of the section. It is proposed to insert sub-section (8A) to the said section so as to provide that the Central Government may, by notification in the Official Gazette, specify that any one or more of the conditions specified in clauses (a) to (m) of sub-section (3) or clauses (a) to (d) of sub-section (4) shall not apply or shall apply with such modifications, as specified in such notification, in case of an eligible investment fund and its eligible fund manager, if such fund manager is located in an International Financial Services Centre, as defined in clause (a) of the Explanation to section 80LA, which has commenced its operations on or before 31st March, 2024. This amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 80LA, if the unit is eligible for deduction under section 80LA for that previous year and has commenced its operations on or before 31st March, 2024. These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years. Clause (5) of the said section provides for exemption in respect of the value of travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his proceeding on leave to any place in India. It is proposed to insert a second proviso in the said clause so as to provide that for the assessment year beginning on the 1st day of April, 2021, in the case of an individual, the value in lieu of any travel concession or assistance received by, or due to, such individual shall also be exempted, subject to fulfillment of such conditions (including the condition of incurring such amount of such expenditure within such period), as may be provided by rules. It is further proposed to insert Explanation 2 so as to clarify that where an individual claims such exemption and the same is allowed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Regulatory Act, 1938 and the Insurance Regulatory and Development Authority Act, 1999. These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause (11) of the said section provides for exemption with respect to any payment from a provident fund to which the Provident Funds Act, 1925 applies or from any other provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette. Clause (12) of the said section provides for exemption with respect to the accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule. It is proposed to insert a proviso to such of the aforesaid clauses so as to provide that the provisions of these clauses shall not apply to the income by way of interest accrued during the previous year in the account of a person to the extent it relates to the amount or the aggregate of amounts of contribution made by that person exceeding two lakh and fifty thousand rupees in any previous year in that fund, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purposes of third proviso of clause (23C), provided when it is invested or deposited back, into one or more of the forms or modes specified in sub-section (5) of section 11 maintained specifically for such corpus from the income of the previous year, such amount shall be allowed as application in the previous year in which it is deposited back to corpus and to the extent it is deposited back; (b) application from loans and borrowings shall not be considered as application for charitable or religious purposes for the purposes of third proviso of clause (23C) provided when loan or borrowing is repaid from the income of the previous year, such repayment shall be allowed as application in the previous year in which it is repaid and to the extent it is repaid. Fourteenth proviso of the said clause provides that if any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of said clause of said section accumulates its income, then payment or credit out of such accumulation, to exempt entities as prescribed in the proviso, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, namely, the Infrastructure Debt Fund-Non Banking Financial Companies (Reserve Bank) Directions, 2011, issued by the Reserve Bank of India, having minimum ninety per cent. investment in one or more of the companies or enterprises or entities referred to in item (b). It is also proposed to insert fourth proviso to the said clause so as to provide that in case a Category-I or Category-II Alternative Investment Fund referred to in item (c) of sub-clause (iii) has investment of less than one hundred per cent. in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause or in an Infrastructure Investment Trust referred to in item (c) of that sub-clause, income, accrued or arisen to or received or attributable to such investment, directly or indirectly, which is exempt under the said clause shall be calculated proportionately to the investment made in one or more of the companies or enterprises or entities referred to in item (b) of that sub-clause or in the Infrastructure Investment Trust referred to in item (c) of that sub-clause, in such manner as may be provided by rules. It is also proposed to insert fifth proviso to the said clause s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered as participation in day to day operations of the investee. It is also proposed to amend sub-clause (ii) of clause (c) of the said Explanation 1 so as to provide that if pension fund is liable to tax but exemption from taxation for all its income has been provided, by the foreign country under whose laws it is created or established, then such pension fund also would satisfy the condition mentioned in sub-clause (ii). It is also proposed to insert sub-clause (iiia) to the clause to provide that the pension fund does not participate in the day to day operations of investee but the monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director shall not be considered as participation in day to day operations of investee. It is also proposed to insert a new Explanation 2 in the said clause to define the expressions "loan and borrowing" and "investee". It is also proposed to insert a new Explanation 3 so as to provide that the Central Government may, by rules, provide the method of calculation of "fifty per cent." referred to in item (c) or "seventy-five per cent." referred to in item (d) or "ninety per cent." ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r charitable or religious purposes. Clause (d) of sub-section (1) of the said section provides that voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution shall not be included in the total income of the trust or institution. It is proposed to amend the said clause (d) so as to provide that such voluntary contributions should be invested or deposited in one or more of the forms or modes specified in sub-section (5) maintained specifically for such corpus. It is further proposed to insert a new Explanation 4 to sub-section (1) so as to provide that-- (A) application out of the corpus shall not be considered as application for charitable or religious purposes for the purposes of clause (a) and (b) of sub-section (1), provided when it is invested or deposited back, into one or more of the forms or modes specified in subsection (5) maintained specifically for such corpus, from the income of the previous year, such amount shall be allowed as application in the previous year in which it is deposited back to corpus and to the extent it is deposited back. (B) application from loans and borrowings shall not be consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing buildings, machinery, plant or furniture; and intangible assets, being knowhow, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. It is proposed to amend the said Explanation 3 so as to provide that goodwill of a business or profession shall not be considered as an asset for that purposes of the said subsection. These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause 8 of the Bill seeks to amend section 36 of the Income-tax Act, relating to other deductions. Sub-section (1) of the said section provides for allowing of deductions provided for in the clauses thereof for computing the income referred to in section 28 of the said Act. Clause (va) of the said sub-section provides for allowance of deduction for any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation to the said clause prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bill seeks to amend section 43CA of the Income-tax Act relating to special provision for full value of consideration for transfer of assets other than capital assets in certain cases. The proviso to sub-section (1) of the said section provides that where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and ten 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 computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer. It is proposed to insert a second proviso to said sub-section to provide that in case of transfer of an asset, being a residential unit, the provisions of the first proviso shall have the effect as if for the words "one hundred and ten per cent.", the words "one hundred and twenty per cent." had been substituted, subject to the conditions that-- (a) the transfer of such residential unit takes place during the period beginning from the 12th day of November, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, being a resident in India engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent. of the total gross receipts of the assessee in the previous year on account of such profession, or as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head "profits and gains of business of profession". It is proposed to amend the said sub-section so that the assessee referred to therein shall, inter alia, mean an individual, Hindu undivided family or a partnership firm other than a Limited Liability Partnership as defined under clause (n) of sub-section (1) of section 2 of Limited Liability Partnership Act, 2008. This amendment will come into force from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause 13 of the Bill seeks to amend section 44DB of the Income-tax Act relating to special provision for computing deductions in the case of business reorg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous year in which such amount was received and the income taxable shall be calculated in such manner as may be provided by rules. It is further proposed to substitute sub-section (4) in the said section so as to provide that where a specified person receives during the previous year any capital asset at the time of its dissolution or reconstitution of the specified entity, which represents the balance in his capital account in the books of accounts of such specified entity at the time of dissolution or reconstitution, then any profits or gains arising from receipt of such capital asset by the specified person shall be chargeable to income-tax as income of such specified entity under the head "Capital gains" and shall be deemed to be the income of such specified entity of the previous year in which such capital asset was received by the specified person. It is also proposed to amend the section to provide that fair market value of the capital asset on the date of such receipt shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of such capital asset. It is also proposed to amend the section to provide that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -generated goodwill", "self-generated asset" and "specified person" shall have the meaning assigned to them in sub-section (4) of the Act. These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause 15 of the Bill seeks to amend section 47 of the Income-tax Act relating to transactions not regarded as transfer. The said section, inter alia, provides that any transfer of a capital asset by the predecessor co-operative bank to the successor co-operative bank in a case of business reorganisation shall not be regarded as transfer. It is proposed to amend clause (vica) of the said section to expand the scope of the said clause so as to provide that any transfer of a capital asset by the primary co-operative bank which has been converted into a banking company as a result of conversion shall not be considered as transfer for the purposes of capital gains. Further, it is also proposed to amend clause (vicb) of the said section so as to provide that the allotment of shares of the converted banking company to the shareholders of the predecessor co-operative bank as a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act relating to cost with reference to certain modes of acquisition. Sub-section (1) of the said section provides that where the capital asset became the property of the assessee under certain situations, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. It is proposed to amend sub-clause (e) of clause (iii) of the said sub-section so as to include the transfer referred to in clause (viiac) and (viiad) of section 47 also within the purview of that sub-section (1). This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years. Clause 18 of the Bill seeks to amend section 50 of the Income-tax Act relating to special provision for computation of capital gains in case of depreciable assets. The said section, inter alia, provides for certain conditions for the applicability of provisions of sections 48 and 49 for computation of capital gains in case of depreciable assets, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) in the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price; and (ii) in any other case [not being a case falling under sub-clauses (i) to (iv) of sub-section (1) of section 49], shall be taken to be nil ; It is proposed to substitute the said clause so as to provide that in relation to a capital asset, being goodwill of a business or profession, or a trade mark or brand name associated with a business or profession, or a right to manufacture, produce or process any article or thing, or right to carry on any business or profession, or tenancy rights, or stage carriage permits, or loom hours,- (i) in the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price; and (ii) in the case falling under sub-clause (i) to (iv) of sub-section (1) of section 49 and where such asset was acquired by the previous owner (as defined in that section) by purchase, means the amount of the purchase price for such previous owner; and (iii) in any other case, shall be taken to be nil. It is also proposed to provide therein that in case of goodwill of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the said sub-section. This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years. Clause 22 of the Bill seeks to amend section 72A of the Income-tax Act relating to provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger, etc. Sub-section (1) of the said section provides that the accumulated loss and unabsorbed depreciation of the amalgamating company or companies shall be deemed to be the accumulated losses and unabsorbed depreciation of the amalgamated company or companies in specified cases and subject to the conditions specified in the said section. Clause (c) of the said sub-section, inter alia, provides that where there has been amalgamation of one or more public sector company or companies engaged in the business of operation of aircraft with one or more public sector company or companies engaged in similar business then notwithstanding anything contained in any other provisions of the said Act, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause 23 of the Bill seeks to amend section 79 of the Income-tax Act relating to carry forward and set off of losses in case of certain companies. Sub-section (1) of the said section provides that where a change in shareholding has taken place during the previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurred in any year 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. Further sub-section (2) of said section provides that the exceptions to the above provision contained in the said sub-section. It is proposed to insert a new clause in sub-section (2) to the said section so as to provide that nothing contained in the section shall apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible start-ups till 1st day of April, 2022. This amendment will take effect from the 1st April, 2021. Clause 26 of the Bill seeks to amend section 80-IBA of the Income-tax Act relating to deductions in respect of profits and gains from housing project. The provisions of sub-section (1) of the said section provides for hundred per cent. deductions of the profits and gains derived from the business of developing and building affordable housing project subject to certain conditions. Further the provisions of clause (a) of sub-section (2) of said section provide that the housing project shall be approved by the competent authority after 1st June, 2016 but on or before 31st March, 2021. It is proposed to insert sub-section (1A) in the said section so as to provide for hundred per cent. deductions of the profits and gains derived from the business of developing and building affordable rental housing project. It is further proposed to amend clause (a) of sub-section (2) so as to allow the deduction in respect of profits and gains derived from the business of developing and building housing project for hundred per cent. of the profits and gains derived from the business of develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 23 of the Banking Regulation Act, 1949. It is proposed to amend clause (ii) of sub-section (3) of the said section so as to provide that in case the unit is registered under the International Financial Services Centre Authority Act, 2019 then the copy of permission shall mean a copy of the permission or registration obtained under the International Financial Services Centre Authority Act, 2019. This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment year. Clause 28 of the Bill seeks to insert a new section 89A in the Income-tax Act relating to relief from taxation in income from retirement benefit account maintains in a notified country. The proposed new section provides that the income of a specified person from specified account shall be taxed in such manner and for such year as may be provided by rules and also defines the expressions "specified person", "specified account" and "notified country". This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years. Clause 29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the net profit disclosed in the profit and loss account prepared in accordance with the provisions of the Companies Act, 2013. Clause (iid) of Explanation 1 of the said section provides that the amount of income in the nature of capital gains, interest, royalty or fee for technical services accruing or arising to an assessee, being a foreign company, will be reduced from the book profit if such income is credited to the statement of profit and loss and tax on such income is at a rate less than the rate specified under that section. Further such assessee will be allowed expenses relatable to such income mentioned in the said clause under sub-clause (B) of clause (fb) of the said Explanation. It is proposed to amend the said clause (fb) and clause (iid), occurring in the long line of Explanation 1, so as to provide similar relief to dividend as already there for capital gains, interest, royalty and fee for technical services as provided in these clauses. It is further proposed to insert a new sub-section (2D) in the said section so as to provide that where in the case of the company there is an increase in book profit of the previous year due to income of past year or years i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment, whichever is earlier. It is also proposed to insert proviso before the Explanation to sub-section (9) of the said section so as to provide that the Board may specify, by notification, that any of the conditions specified in clauses (a) to (f) of the said Explanation shall not apply to such class of assessees or shall apply with such modifications, as may be specified in such notification. These amendments will take effect from lst April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause 33 of the Bill seeks to amend section 142 of the Income-tax Act relating to inquiry before assessment. Clause (i) of sub-section (1) of the said section empowers only the Assessing Officer to serve notice to an assessee requiring him to file return of income. It is proposed to insert a second proviso in the said clause so as to empower the prescribed income-tax authority also to serve notice under clause (i) of sub-section (1) of the said section for the purposes of that clause. This amendment will take effect from lst day of April, 2021. Clause 34 of the Bill seeks to amend section 143 of the Income-tax Act relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere income has escaped assessment. It is proposed to substitute the said section so as to provide that before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice along with a copy of order passed under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139, provided that no notice under the said section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and prior approval of the specified authority to issue s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 148A in the Income-tax Act relating to Conducting inquiry, providing opportunity before issue of notice under section 148. It is proposed to insert a new section 148A, which seeks to provide that the Assessing Officer shall, before issuing any notice under section 148, - (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year. Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit prescribed under the provisions of clause (b), as they stood immediately before the commencement of the Finance Act, 2021. Further, the provisions of this section shall not apply to cases where a notice under section 153A or section 153C read with section 153A is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or before the 31st day of March, 2021 and for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice under clause (b) of section 148A; or the period during which the proceeding under section 148A is stayed by an order or injunction of any court shall be excluded and also where immediately after the exclusion of such pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment will take effect from lst April, 2021. Clause 42 of the Bill seeks to amend section 153A of the Income-tax Act relating to assessment in case of search or requisition. It is proposed to amend the said section so as to provide that the search or requisition shall only apply where search or requisition is made on or before 31st March, 2021. Consequently, assessments under section 153A and 153C shall not be made in respect of a search or requisition made on or after 1st April, 2021. This amendment will take effect from 1st April, 2021. Clause 43 of the Bill seeks to amend section 153C of the Income-tax Act relating to assessment of income of any other person. It is proposed to amend the said section so as to insert sub-section (3) therein to provide that nothing contained in the said section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after 1st day of April, 2021. This amendment will take effect from 1st April, 2021. Clause 44 of the Bill seeks to amend section 194 of the Income-tax Act relating to dividends. The said section provides for deduction of tax at sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke effect from 1st July, 2021. Clause 47 of the Bill seeks to insert a new section 194P of the Income-tax Act relating to deduction of tax in case of specified senior citizen. Sub-section (1) of the said section seeks to provide that notwithstanding anything contained in the provisions of Chapter XVII-B, in case of a specified senior citizen, the specified bank shall, after giving effect to the deduction allowable under Chapter VI-A and rebate allowable under section 87A, compute the total income of such specified senior citizen for the relevant assessment year and deduct income-tax on such total income on the basis of the rates in force. Sub-section (2) of the said section seeks to provide that the provisions of section 139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which the tax has been deducted under sub-section (1). Explanation to the said section seeks to define the following expressions for the purposes of the said section,-- (a) "specified bank" means a banking company as the Central Government may, by notification in Official Gazette, specify; (b) "specified senior citizen" means an individual, being a res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idelines for the purpose of removing the difficulty. Sub-section (4) thereof seeks to provide that every guideline issued by the Board under sub-section (3) shall be laid before each House of Parliament, and shall be binding on the income-tax authorities and the person liable to deduct tax. Sub-section (5) thereof seeks to provide that the provisions of the proposed section shall not apply to a transaction on which-- (a) tax is deductible under any of the provisions of this Act; and (b) tax is collectible under the provisions of section 206C other than a transaction to which sub-section (1H) of section 206C applies. This amendment will take effect from 1st July, 2021. Clause 49 of the Bill seeks to amend section 196D of the Income-tax Act relating to income of Foreign Institutional Investors from securities. Sub-section (1) of the said section provides for deduction of tax on any income referred to in clause (a) of sub-section (1) of section 115AD, not being income by way of interest referred to in section 194LD of the Income-tax Act, payable to a Foreign Institutional Investor, being the person responsible for making the payment, at the rate of twenty per cent. It is propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent.. Sub-section (2) thereof seeks to provide that if the provision of section 206AA is applicable to a specified person, in addition to the provision of this section, the tax shall be deducted at higher of the two rates provided in this section and in section 206AA. Sub-section (3) thereof seeks to define the expression "specified person" to mean a person who has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be deducted, for which the time limit of filing return of income under sub-section (1) of section 139 has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years. Proviso to proposed sub-section (3) seeks to provide that the specified person shall not include a non-resident who does not have a permanent establishment in India. Explanation to the said section seeks to provide that for the purposes of this sub-section the expression "permanent establishment" includes a fixed place of business through which the business of the enterprise is wholl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce tax payments and tax due has been paid in the subsequent advance tax instalments. It is proposed to substitute clause (d) of the first proviso to said sub-section to include dividend income along with capital gains therein, so as to provide that the interest under the said section shall not be applicable to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate dividend. It is further proposed to insert Explanation 2 in the said sub-section to define the term "dividend". These amendments will take effect from lst April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause 54 of the Bill seeks to amend the Chapter XIX-A of the Income-tax Act relating to settlement of cases by the Income-tax Settlement Commission (ITSC). It is proposed to amend section 245A of the said Act to define various expressions such as "Interim Board" shall mean Interim Board for settlement constituted under section 245AA, "Member of the Interim Board" shall mean a Member of the Interim Board and "Pending Application" shall mean an application which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt made by Settlement Commission be omitted. It is further proposed to insert sub-section (9) to provide that on and from the 1st day of February, 2021, the provisions of sub-sections (1), (2), (2B), (2C), (3), (4), (4A), (5), (6) and section (6B) shall apply to pending applications allotted to the Interim Board. Further, for the purposes of the said section the date referred to in sub-section (2) of section 245M shall be taken as the date on which the application was made and received under section 245C and where the time-limit for amending any order or filing of rectification application as per subsection (6B) of the said section expires on or after the 1st day of February, 2021, the period of limitation shall exclude the period commencing from the 1st February, 2021 and ending on the end of the month in which the Interim Board is constituted. However, in cases where the remaining period is less than sixty days the same shall be deemed to have been extended to sixty days. It is also proposed to insert sub-section (10) so as to provide that the provisions of sub-sections (6A) and (7) shall have effect as if for the words "Settlement Commission", the words "Settlement Commission or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thdraw such application within three months from the date of commencement of Finance Act, 2021 and intimate the Assessing Officer about such withdrawal in the manner prescribed. However, if such option is not exercised by the assessee within the time allowed, the pending application shall be deemed to have been received by the Interim Board on the date on which it is allotted or transferred to it. The Board may, by an order, allot or transfer any pending application from one Interim Board to another and upon allotment or transfer of a pending application to an Interim Board, all records, documents or evidences with the Settlement Commission, shall be deemed to be the records before such Interim Board. Proposed sub-section (5) of the said section provides that where an assessee withdraws his application, the proceedings with respect to such application shall abate on the date of withdrawal and the Assessing Officer or any other income-tax authority before whom the proceedings were pending prior to the application shall dispose the case in accordance with the provisions of the said Act and in such case, for the purposes of the time-limit under sections 149, 153, 153B, 154 and 155 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transparency and accountability by eliminating the interface between the Dispute Resolution Committee and the assessee in the course of dispute resolution proceedings to the extent technologically feasible; optimising utilisation of the resources through economies of scale and functional specialisation; introducing a dispute resolution system with dynamic jurisdiction. Sub-section (4) of said section seeks to provide that the Central Government may, for the purposes of giving effect to the scheme made under sub-section (3), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. However, no direction shall be issued after the 31st day of March, 2023. Sub-section (5) of section 245MA seeks to provide that every notification issued under sub-section (3) and sub-section (4) shall, as soon as may be after the notification is issued, be laid before each House of Parliament. Explanation to section 245MA seeks to provide that the "specified conditions" in relation to a person means a person who is not a person in respect of whom an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance Rulings. This amendment will take effect from 1st April, 2021. Clause 68 of the Bill seeks to amend section 245-O of the Income-tax Act relating to Authority for Advance Rulings. It also proposed to insert a proviso in the sub-section (1) of said section so as to provide that the Authority constituted under the said sub-section shall cease to operate on and from such date as may be appointed by the Central Government by notification in the Official Gazette. This amendment will take effect from 1st April, 2021. Clause 69 of the Bill seeks to insert a section 245-OB relating to Board for Advance Rulings so as to provide that the Central Government shall constitute one or more Board for Advance Rulings, as may be necessary, for giving advance rulings under this Chapter on or after such date as may be appointed by the Central Government by notification in the Official Gazette. The Board for Advance Rulings constituted shall consist of two members, each being an officer not below the rank of Chief Commissioner, as may be nominated by the Board. This amendment will take effect from 1st April, 2021. Clause 70 of the Bill seeks to amend section 245P of the Income-tax Act rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnologically feasible; optimising utilisation of the resources through economies of scale and functional specialisation; introducing a system with dynamic jurisdiction. It also provides that the Central Government may, for the purposes of giving effect to the said scheme, by notification in the Official Gazette, direct that any of the provisions of the Income-tax Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. However, no direction shall be issued after 31st March, 2023. Every notification so issued shall, as soon as may be after the notification is issued, be laid before each House of Parliament. These amendments will take effect from 1st April, 2021. Clause 73 of the Bill seeks to amend section 245S of the Income-tax Act relating to applicability of advance ruling. It is proposed to amend the said section to insert sub-section (3) so as to provide that nothing contained in this section shall apply to any advance ruling pronounced under section 245R on or after on such date as may be appointed by the Central Government by notification in the Official Gazette. This amendment will take effect from 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may grant a further period of thirty days for filing such appeal. It is also proposed that the Central Government may make a scheme, by notification in the Official Gazette, for the purposes of preferring appeal to the High Court by the Assessing Officer, so as to impart greater efficiency, transparency and accountability by optimising utilisation of the resources through economies of scale and functional specialisation; introducing a team-based mechanism with dynamic jurisdiction. It is also proposed that the Central Government may, for the purposes of giving effect to the said scheme, by notification in the Official Gazette, direct that any of the provisions of the Income-tax Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. However, no direction shall be issued after 31st March, 2023.Every notification so issued shall, as soon as may be after the notification is issued, be laid before each House of Parliament. This amendment will take effect from 1st April, 2021. Clause 78 of the Bill seeks to amend the section 255 of the Income-tax Act relating to procedure of Appellate Tribunal. It is proposed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Bill seeks to amend sub-section (3) of section 46 of the Customs Act so as to ensure mandatory filing of bill of entry in advance, i.e. before the day of arrival (including holidays) of conveyance. It further seeks to insert a proviso therein to empower the Board to provide different time limits for presentation of bill of entry in such cases, as it deems fit, to ensure faster clearance. Clause 85 of the Bill seeks to amend section 110 of the Customs Act and to insert a new sub-section (1D) so as to provide that where gold in any form has been seized by a proper officer under sub-section (1), he shall make the application referred to in sub-section (1B) to the Commissioner (Appeals) having jurisdiction, who shall, as soon as may be, allow the application and the proper officer shall thereafter dispose of the goods in such manner as the Central Government may determine. Clause 86 of the Bill seeks to insert a new clause (ja) in section 113 of the Customs Act so as to provide that any goods entered for exportation under claim of remission or refund of any duty or tax or levy, to make a wrongful claim in contravention of the Act or any other law for the time being in force sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o seeks to amend sub-section (6) thereof to provide for further imposition of countervailing duty after review, for a period upto five years. It also seeks to insert a third proviso therein so as to provide that if countervailing duty is revoked temporarily, the period of such revocation shall not be more than one year at a time. Clause 94 of the Bill seeks to amend sub-section (1A) of section 9A of the Customs Tariff Act to provide for retrospective levy of anti-dumping duty to counter circumvention. It further seeks to insert a new sub-section (1B) in the said section to provide for anti-absorption measures in anti-dumping duty. It also seeks to substitute sub-section (2A) in that section to align it with the provisions contained in sub-section (6) of section 8B of the said Act relating to safeguard measures. It also seeks to amend sub-section (5) thereof to provide for further imposition of anti-dumping duty after review, for a period upto five years. It also seeks to insert a third proviso therein so as to provide that if anti-dumping duty is revoked temporarily, the period of such revocation shall not be more than one year at a time. Clause 95 of the Bill seeks to amend the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e place from one person to another. Clause 100 of the Bill seeks to amend section 16 of the Central Goods and Services Tax Act by inserting a new clause (aa) in sub-section (2) thereof, so as to provide that input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note. Clause 101 of the Bill seeks to omit sub-section (5) of section 35 of the Central Goods and Services Tax Act so as to remove the mandatory requirement of getting annual accounts audited and the reconciliation statement submitted by specified professional. Clause 102 of the Bill seeks to substitute a new section for section 44 of the Central Goods and Services Tax Act so as to remove the mandatory requirement of furnishing a reconciliation statement duly audited by specified professional and to provide for filing of the annual return on self-certification basis. It further empowers the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return. Clause 103 of the Bill seeks to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eks to amend sub-section (1) of section 152 of the Central Goods and Services Tax Act so as to provide that no information obtained under sections 150 and 151 shall be used for the purposes of any proceedings under the Act without giving an opportunity of being heard to the person concerned. Clause 112 of the Bill seeks to amend section 168 of the Central Goods and Services Tax Act so as to enable the jurisdictional commissioner to exercise powers under section 151 to call for information. Clause 113 of the Bill seeks to omit paragraph 7 of Schedule II to the Central Goods and Services Tax Act, with retrospective effect from the 1st day of July, 2017, consequent to the amendments made in section 7. Integrated Goods and Services Tax Clause 114 of the Bill seeks to amend section 16 of the Integrated Goods and Services Tax Act, 2017 so as to make provisions for restricting the zero rated supply on payment of integrated tax only to specified class of taxpayers or specified supplies of goods or services. It further provides to link the foreign exchange remittance in case of export of goods with refund and further restricting zero rating of supplies made to special economic zone onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Companies Act, 2013, shall have the meanings respectively assigned to them in the Companies Act, 2013. These amendments are consequential to the other amendments proposed to the LIC Act. It is further proposed to substitute section 4 of the LIC Act, to provide for the vesting of the general superintendence and direction of the affairs and business of the Life Insurance Corporation of India (hereinafter referred to as "LIC") in its Board of Directors, the composition thereof, the appointment or nomination of directors thereon, and deeming of members constituting LIC immediately before the coming into force of this section as directors under the substituted section 4, in order to bring the provisions relating to corporate governance in alignment with the requirements under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 made by the Securities and Exchange Board of India under the provisions of the Securities and Exchange Board of India Act, 1992, and thereby enabling the listing of LIC on recognised stock exchanges and making of an initial public offer, through which Government may sell its shares in LIC. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Securities Contract (Regulation) Act, 1956 and listing requirements. It is also proposed to substitute section 19 of the LIC Act to provide for the constitution, composition and powers of the Executive Committee of the Board, in order to bring the provisions relating to corporate governance in alignment with listing requirements. It is also proposed to insert new sections 19A, 19B, 19C and 19D in the LIC Act to provide for the constitution, composition and the powers, functions and duties of various committees of the Board, in order to bring the provisions relating to corporate governance in alignment with listing requirements. It is also proposed to substitute section 20 of the LIC Act to provide for entrustment and delegation of powers and duties of the Chairperson and Managing Directors of LIC by its Board, in order to bring the provisions relating to corporate governance in alignment with listing requirements. It is also proposed to amend section 22 of the LIC Act to omit the existing provision under sub-section (2) for constitution of a Board in each zone of LIC and to amend the existing provision for a "member" of LIC (who corresponds to a director under the propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mit the provisions relating to giving in the Annual Report an account of activities likely to be taken by LIC in the next financial year, in order to bring the provisions relating to the Annual Report in alignment with listing requirements. It is also proposed to substitute section 28 of the LIC Act, to provide for the allocation to or reservation for registered shareholders of one hundred per cent. of the surplus relating to non-participating policyholders in every financial year's surplus, in addition to up to ten per cent. of the surplus relating to participating policyholders, as against a maximum of ten per cent. of the total surplus under the existing section 28, representing enhancement in money receivable into the Consolidated Fund of India on account of such increased allocation or reservation. It is also proposed to amend section 28A and insert new sections 28B and 28C in the LIC Act, to make provisions regarding the declaration of dividend and crediting of unclaimed and unpaid dividend amount to an Unpaid Dividend Account, in order to bring the provisions relating to dividends in alignment with listing requirements and consequential to the provision under the proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in terms of the facility documents, entered into by such pooled investment vehicles. It further provides that in case of default, the lenders shall recover the defaulted amount against the trust assets, by initiating proceedings against the trustee acting on behalf of the pooled investment vehicle, and whatever remains after paying the lenders shall be remitted to the unit holders. These amendments will take effect from 1st April, 2021. Clause 141 of the Bill seeks to amend sub-section (3) of section 8 of the Central Sales Tax Act, 1956 by substituting clause (b) thereof, so as to exclude therefrom the goods used in the telecommunication network or in mining or in generation or distribution of electricity or any other form of power. Clauses 142 to 147 of the Bill seeks to amend certain provisions of the Prohibition of Benami Property Transactions Act, 1988. Clause (1) of section 2 of the Act provides for the definition of the expression Adjudicating Authority. It is proposed to amend said clause so as to substitute words "referred to in" for the words "appointed under". Section 7 of the said Act empowers the Central Government to appoint one or more Adjudicating Authority by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seeks to amend the provisions of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is proposed to amend clause (f) of sub-section (1) of the said section so as to clarify that the definition of "borrower" in the said Act shall also include a pooled investment vehicle, consequent to insertion of section 30B in the Securities Contracts (Regulation) Act, 1956. Further, the definition of secured creditor is being expanded to include debenture trustee appointed by a pooled investment vehicle also by removing the limitation of appointment of a debenture trustee by a company. This amendment will take effect from 1st April, 2021. Clauses 152 and 153 of the Bill seeks to amend the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003. It is proposed to amend section 3 of the said Act so as to provide that the existing provision under the first proviso to clause (a) of sub-section (2) of section 3 of the said Act to the effect that the Industrial Development Bank of India Limited shall not be required to obtain licence under section 22 of the Banking Regulation Act, 1949, shall cease to be in ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for e-commerce supply or services shall not include the consideration, which are taxable as royalty or fees for technical services in India under the Income-tax Act read with the agreement notified by the Central Government under section 90 or section 90A of the said Act. It is further proposed to insert an Explanation in clause (cb) of section 164 of the said Act to provide that for the purpose of defining e-commerce supply or service, "online sale of goods" and "online provision of services" shall include one or more of the following online activities, namely:-- (a) acceptance of offer for sale; (b) placing of purchase order; (c) acceptance of the purchase order; (d) payment of consideration; or (e) supply of goods or provision of services, partly or wholly. It is also proposed to amend sub-section (3) of section 165A of the said Act to provide that consideration received or receivable from e-commerce supply or services shall include- (i) consideration for sale of goods irrespective of whether the e-commerce operator owns the goods; (ii) consideration for provision of services irrespective of whether service is provided or facilitated by the e-commerce operato ..... X X X X Extracts X X X X X X X X Extracts X X X X
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