Issue of the Finance (Second Amendment) Ordinance, 1990--Regarding increase in the levy of surcharge for companies--Circular--Regarding - Income Tax - 583/1990

Issue of the Finance (Second Amendment) Ordinance, 1990--Regarding increase in the levy of surcharge for companies--Circular--Regarding Circular No. 583 Dated 23/10/1990 The President has promulgated an Ordinance (No.8 of 1990) on 15th October, 1990. The Ordinance is named as the Finance (Second Amendment) Ordinance, 1990. The Ordinance has come into force at once. By this Ordinance, section 2 of the Finance Act, 1990 (No.12 of 1990) and Parts II and III of the First Schedule to the said Act have been amended. 2. The Ordinance has amended sub-sections (5), (6) and (7) of section 2 of the Finance Act, 1990, in respect of the following: (a) Where deduction of tax at source is made under section 194C of the Income-tax Act, 1961, in the case of a domestic company, the tax deducted shall be increased by a surcharge for the purpose of the Union calculated at the rate of 15% of such tax, instead of the earlier rate of 8%. (b) Where collection of tax is made under section 206C of the Income-tax Act, in the case of a buyer, being a domestic company, the tax so collected shall be increased by a surcharge for the purpose of the Union calculated at the rate of 15% of such tax, instead of the earlier rate of 8%. (c) In respect of any income chargeable to tax under section 115B of the Income-tax Act, relating to profits and gains of life insurance business, the "advance tax" computed under the first proviso to sub-section (7) of section 2 of the Finance Act, 1990, shall be increased by a surcharge for the purpose of the Union calculated at the rate of 15% of such "advance tax" instead of the earlier rate of 8%. (d) The amount of income-tax to be deducted as per the provisions of Part II of the First Schedule to the Finance Act, 1990, in the case of a domestic company, shall be increased by a surcharge calculated at the rate of 15% of such income-tax, instead of the earlier rate of 8%. It may be noted that tax is to be deducted at source in terms of Part II of the First Schedule to the Finance Act, 1990, from payments by way of-- (i) Interest other than "Interest on securities". (ii) Winnings from lotteries and crossword puzzles. (iii) Winnings from horse races. (iv) any other income(excluding interest payable on tax-free security) as per the provisions of the Income-tax Act, 1961. (e) The amount of interest-tax computed in accordance with the provisions of item I of paragraph E of Part III of the First Schedule to the Finance Act, 1990, in respect of a domestic company having a total income exceeding Rs.75,000 shall be increased by a surcharge calculated at the rate of 15% of such income-tax, instead of the earlier rate of 8%. In other words, the advance tax payable by domestic companies will now be increased by a surcharge at the rate of 15%. The higher rate of surcharge will also apply for calculating/charging income-tax (in the case of domestic companies) under other provisions of the Income-tax Act mentioned in Part III of the First Schedule to the Finance Act, 1990. 3. The Ordinance further stipulates that notwithstanding anything contained in the Income-tax Act, the enhanced surcharge payable under Part III of the First Schedule to the Finance Act, 1990, as amended by the Ordinance, in respect of the instalment of advance tax paid or payable on the 15th day of September, 1990, shall be payable before the 15th day of November, 1990. 4. Failure to comply with the provisions of the Ordinance, as explained above, will make a taxpayer defaulter and the consequential provisions of the Income-tax Act, will automatically apply. 5. All Ministries, State Governments and other organisations are requested to inform such persons who may be working under them or who may be associated with them and who are responsible for deducting income-tax at source from payments mentioned above, or for collecting income-tax at source under section 206C of the Income-tax Act or for payment of advance tax under Income-tax Act, etc. 6. Hindi version will follow. (Sd.) V.K. Bhatia, Director (Budget).