Amendments at a glance , Provisions explained - Income Tax - 177/1975

CIRCULAR NO. 177 DATED 15-9-1975 FINANCE (AMENDMENT) ACT, 1975 Amendments at a glance Provisions explained 20 FINANCE (AMENDMENT) ACT, 1975 Amendments at a glance SECTION/SCHEDULE PARTICULARS FINANCE (AMENDMENT) ACT 4 Independent provision to secure that notices for payment of advance tax during 1975-76 to have effect as if they had been revised on the basis of new rate schedules 4 FINANCE ACT, 1975 2(7) Scheme of partially integrated taxation of non-agricultural income with agricultural income3 Sub-Paras Exemption limit of income-tax raised 2 I and II of Para A of Part III of 1st Sch Circular No. 177, dated 15-9-1975 Explanatory Notes Finance (Amendment) Act, 1975 1. The Finance (Amendment) Bill, 1975, as passed by Parliament, received the assent of the President on 31-7-1975 and has been enacted as Act 34 of 1975. This circular explains the substance of the provisions contained in this Act. Finance (Amendment) Act, 1975 Exemption limit of income-tax raised 2 . The main object of the Finance (Amendment) Act, 1975 (hereinafter referred to as the Amending Act, 1975) is to raise the exemption limit for income-tax in the case of individuals, Hindu undivided families, unregistered firms, other associations of persons or bodies of individuals and artificial juridical persons from Rs. 6,000 prescribed under the Finance Act, 1975 to Rs. 8,000. The Amending Act, 1975 has accordingly, replaced the rate schedule specified in Sub-Paragraph I and Sub-Paragraph II of Paragraph A of Part III of the First Schedule to the Finance Act, 1975 with retrospective effect from 1-4-1975. The changes made in these two Sub-Paragraphs are as follows: 1. The rate of income-tax in the case of individuals, Hindu undivided families (other than those having at least one member with total income exceeding the exemption limit), unregistered firms, other associations of persons or bodies of individuals and artificial juridical persons on the first slab of income up to Rs. 8,000 has been fixed at nil and the rate of income-tax of the new slab of income of Rs. 8,000 to Rs. 15,000 has been fixed at 17 per cent. The rates of income-tax on other slabs have been retained at the existing levels. 2. The rate of income-tax in the case of other Hindu undivided families (that is, those having at least one member with total income exceeding the revised exemption limit) on the first slab of income up to Rs. 8,000 has been fixed at nil and on the new slab of Rs. 8,001 to Rs. 15,000 at 20 per cent. The rates of income-tax on the other slabs of income have been retained at the existing levels. The revised rate schedules will apply for the purposes of deduction of income-tax at source from "salaries" in the case of individuals during the financial year 1975-76 and also for computation of advance tax payable in that year in the case of individuals, Hindu undivided families, unregistered firms, other associations of persons or bodies of individuals and artificial juridical persons. The revised rates will also be applicable for deduction of income-tax at source during the financial year 1975-76 from retirement annuities payable to partners of registered firms engaged in certain professions (chartered accountants, solicitors, lawyers and architects) and for charging income-tax during 1975-76 on current incomes in special cases where accelerated assessments have to be made. These special cases are: calculation of income-tax on undisclosed income represented by seized assets [section 132(5)]; assessment of persons leaving India [section 174(2)]; assessment of persons likely to transfer property to avoid tax [section 175]; and assessment of profits of a discontinued business [section 176(2)]. It may be noted that the Amending Act, 1975 has not made any change in the rate schedules for the purposes of charging income-tax for the assessment year 1975-76. Finance (Amendment) Act, 1975 3. The Amending Act, 1975 has amended section 2( 7 ) of the Finance Act, 1975 with a view to providing that the scheme of partially integrated taxation of non-agricultural income with income derived from agriculture is applicable only in the case of taxpayers who have non-agricultural income exceeding Rs. 8,000 (as against Rs. 6,000 at present). This amendment will apply for the purpose of calculation of advance tax payable during the financial year 1975-76 and in special cases where accelerated assessments have to be made as stated in the preceding paragraph. Finance (Amendment) Act, 1975 4. The Amending Act, 1975 has also made an independent provision in order to secure that notices for payment of advance tax during the current financial year already issued by the Income-tax Officer will have effect as if they had been revised on the basis of the new rate schedules. The validity of orders and notices for payment of advance tax during the current financial year which were issued before 31-7-1975 will not be called in question merely on the ground that the rate or rates for the purposes of computing the advance tax have been varied by the Amending Act, 1975 and every such order or notice of demand issued prior to that date will have effect as if the advance tax specified therein had been substituted by the amount of advance tax in accordance with the rate or rates as varied by the Amending Act, 1975. The taxpayer will also be entitled to adjust the excess amount, if any, paid by him in an instalment due on 15-6-1975 against the amount payable in the instalment due on 15-9-1975.