9911796707
TMI BlogFinance Act, 2000—Explanatory notes on provisions relating to direct taxesX X X X Extracts X X X X X X X X Extracts X X X X ..... ; amended sections 23, 23A and 24 of the Wealth-tax Act, 1957 ; amended section 4 of the Interest-tax Act, 1974 ; amended sections 88 and 90 of the Finance Act, 1998 ; amended Part III of the First Schedule of the Finance Act, 1998. 3. Provisions in brief : 3.1. The provisions of the Act in the sphere of direct taxes relate to the following matters : (i) Prescribing the rates of income-tax on incomes liable to tax for the assessment year 2000-2001 ; the rates at which tax will be deductible at source in the financial year 2000-2001 from interest (including interest on securities), winnings from lotteries or cross-word puzzles, winnings from horse races, insurance commission and other categories of income liable for tax deduction at source under the Income-tax Act, rates for computing "advance tax", deduction of income-tax from "salaries" and charging of income-tax on current incomes in certain cases for the financial year 2000-2001. (ii) Clarification of the definition of "agricultural income" ; —changing the conditions for demergers arising out of splitting up or the reconstruction of any authority or a body or a local authority or a public sector company ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company holding shares of Indian company and demerger of Indian company ; —rationalisation of the definition of cost inflation index. —modification in the definition of "net worth" in case of slump sale; —providing sunset clauses in sections 54EA and 54EB and introduction of a new section 54EC to ensure focussed investments of capital gains for agricultural finance and development of highways infrastructure ; —extension of scope of section 54F ; —clarification regarding value of assets in amalgamation ; —enhancement of the deduction in respect of repayment of loans taken by a student for pursuing higher studies ; —amendment of the provisions of section 80G to allow as deduction, any sum paid as donation to the Indian Olympic Association or any other notified institutions for development of sports and games ; —modification of various provisions of the Income-tax Act for phasing out of tax concessions in respect of foreign exchange earnings ; —amendment of provision of section 80HHF to extend the benefit to non-corporate entities ; —amendment of the provisions of section 80-IA to include "solid waste management and water treatment system" within the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment of section 90 of the Finance (No. 2) Act, 1998, relating to "Kar Vivad Samadhan Scheme, 1998" to clarify that the time limit of payment within 30 days will commence from the date of receipt of the order of the designated authority determining the sum payable ; —amendment of Part III of the First Schedule to the Finance Act, 1999, so as to provide that surcharge shall be charged on the income referred to in section 115ACA instead of section 115AC. (iii) Amendment of the Wealth-tax Act, 1957, to, —make consequential amendments to sections 23, 24, 31, 34A and 35 of the Wealth-tax Act. (iv) Amendment of the Interest-tax Act, 1994, with a view to, —withdraw the levy of interest-tax from the assessment year 2001-2002. Income-tax 4. Rate structure : 4.1. Rates of income-tax in respect of incomes liable to tax for the assessment year 2000-2001. In respect of incomes of all categories of taxpayers (corporate as well as non-corporate) liable to tax for the assessment year 2000-2001, the rates of income-tax have been specified in Part I of the First Schedule to the Act and are the same as those laid down in Part III of the First Schedule to the Finance Act, 1999 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also applicable for charging income-tax during the financial year 2000-2001 on current incomes in cases where accelerated assessments have to be made, e.g., provisional assessment of shipping profits arising in India to non-residents, assessment of persons leaving India for good during that financial year or assessment of persons who are likely to transfer property to avoid tax, etc. The salient features of the rates specified in the said Part III are indicated in the following paragraphs : 4.3.1. Individuals, Hindu undivided families, etc. Paragraph A of Part III of the First Schedule specifies the rates of income-tax in the case of individuals, Hindu undivided families, association of persons, etc. There is no change in the rate structure. However, the tax payable would be enhanced by a surcharge for the purposes of the union at the rate of ten per cent. of the tax payable (after allowing rebate under Chapter VIII-A of the Income-tax Act) in cases of persons having total income exceeding Rs. 60,000 but not exceeding Rs. 1,50,000. The tax payable would be enhanced by a surcharge for the purposes of the union at the rate of fifteen per cent. of the tax payable (after allowi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60,120 1,120superparanumonly 1,120superparanumonly Nil Nil 60,130 1,129 1,129 Nil Nil 60,150 1,133 1,133 Nil Nil 65,000 2,200 2,200 Nil Nil 75,000 4,400 4,400 Nil Nil 1,50,000 20,900 20,900 Nil Nil 1,50,100 20,933 21,000 67 0.32 1,50,500 21,065 21,400superparanumonly 335 1.59 1,51,000 21,230 21,900superparanumonly 670 3.16 1,51,400 21,362 22,300superparanumonly 938 4.39 1,51,450 21,379 22,350superparanumonly 971 4.54 1,51,460 21,382 22,354 972 4.55 1,52,000 21,560 22,540 980 4.55 2,00,000 37,400 39,100 1,700 4.55 3,00,000 70,400 73,600 3,200 4.55 4,00,000 1,03,400 1,08,100 4,700 4.55 5,00,000 1,36,400 1,42,600 6,200 4.55 4.3.3. Co-operative societies : In the case of co-operative societies the rates of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cultivator or the receiver of the rent-in-kind as a dwelling house or as a store house, or other out-building. 5.2. The Act has inserted an Explanation in section 2(1A) to clarify that any income from such building or land arising from the use of the building or land for any purpose other than agriculture shall not be included in the definition of "agricultural income". For example, if a person has income from using such building or land for purposes such as letting it out for residential purposes or for the purposes of any business or profession, then, such income shall not be treated as agricultural income. 5.3. This amendment shall take effect from the 1st day of April 2001 and will, accordingly, apply to the assessment year 2001-2002 and subsequent years. [Section 3(a)] 6. Modification of conditions for units arising out of splitting up or the reconstruction of any authority or a body or a local authority or a public sector company to be covered under demerger : 6.1. Explanation 4 of section 2(19AA) as inserted by the Finance Act of 1999, provided that the splitting up or reconstruction of any authority or body constituted under a Central, State or Provincial Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of voluntary retirement, is exempt from income-tax. 8.2. The Act amends this clause, so as to enlarge the scope of the exemption by extending it to the employees of a public sector company on the termination of their services under a voluntary separation scheme framed in accordance with the guidelines issued in this regard. 8.3. Under the existing provisions, the first proviso of section 10(10C) states that the scheme in relation to companies (other than public sector companies or co-operative societies) is required to be approved by the Chief Commissioner or the Director-General of Income-tax. To simplify and expedite the procedure relating to exemption of amounts received under a Voluntary Retirement Scheme framed as per the guidelines, it has been provided to dispense with the requirement of such approval. 8.4. These amendments will take effect from the 1st day of April, 2001 and will, accordingly, apply in relation to the assessment year 2001-2002 and subsequent years. [Section 5(a)] 9. Tax exemption to certain bonds issued by local authorities : 9.1. The local authorities such as Municipal Corporations, Municipal authorities, etc. need large amounts of funds t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. These amendments will take effect from the 1st day of April, 2001 and will, accordingly apply in relation to the assessment year 2001-2002 and subsequent years. [Sections 5 and 31] 12. Exemption of income of investor protection fund 12.1. The stock exchanges are required to set up an investor protection fund in accordance with the directives of the Ministry of Finance and Securities and Exchange Board of India (SEBI). The fund is set up exclusively to compensate the investors who may suffer a loss in the event of a broker defaulting in the stock exchange concerned. 12.2. Clause (23E) of section 10 provides that the income of notified exchange risk administration fund set up by public financial institutions is exempt from income-tax. 12.3. On similar lines it has been provided by the Act that income of notified investor protection fund set up by recognized stock exchanges of India will not be included while computing the total income. 12.4. However, where any amount standing to the credit of the fund and not charged to income-tax during any previous year is shared, wholly or partly with a recognized stock exchange, the amount shared shall be deemed to be the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains of a venture capital fund or a venture capital company from investments made by way of equity shares in a venture capital undertaking, shall not apply to any investment made after March 31, 2000. Such investment will qualify for exemption under the newly inserted clause (23FB) in section 10. 13.7. A new Chapter XII-F containing special provisions relating to tax on income received from venture capital companies and venture capital funds has been inserted by the Act. 13.8. Section 115U of this Chapter provides that, (i) any income received by a person out of investments made in a venture capital company or a venture capital fund shall be chargeable to income-tax as if it were the income received by such person from investments made directly in the venture capital undertaking ; (ii) the person responsible for making payment of the income on behalf of a venture capital company or a venture capital fund and the venture capital company or the venture capital fund will be required to furnish within the prescribed time a statement in the prescribed form and verified in the prescribed manner giving details of the nature of income distributed during the previous year. This stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of infrastructure capital company and infrastructure capital fund in conformity with the said clause. These amendments are consequential to the amendment of section 10(23G) by the Finance Act, 1999. 14.5. These amendments will take effect retrospectively from 1st April, 2000, and will accordingly, apply in relation to the assessment year 2000-2001 and subsequent years. [Section 5(g)] 15. New provisions substituted for existing sections 10A and 10B : (Special provision in respect of newly established undertakings in specified Free Trade Zones, Electronic Hardware Technology Parks, Software Technology Parks or any Special Economic Zones or in respect of Export Oriented Units, etc.). 15.1. Under the existing provisions, new undertakings set up in notified Free Trade Zones and Export Processing Zones are entitled to a ten-year tax holiday under section 10A of the Income-tax Act. Similarly, section 10B of the Income-tax Act allows a ten-year tax holiday to export oriented undertakings (EOUs), which manufacture or produce any article or thing. The provision of section 10B was introduced by the Finance Act, 1988. The Finance Act, 1993, extended the tax holiday under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the sale proceeds of articles or things or computer software exported out of India should be received in or brought into India within a period of six months from the end of the previous year or within such further period as the competent authority may allow. If sale proceeds are credited to a separate account maintained for the purpose with any bank outside India, with the approval of the Reserve Bank of India, the sale proceeds shall be deemed to have been received in India. 15.6. For the computation of profits derived from the export of articles or things or computer software, sub-section (4) provides that the profits derived from such exports shall be the amount which bears to the profits of the business, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of business. The profits of the business in the given context would mean the profits of the business carried on by the undertaking to which the provisions apply. The working formula for arriving at the export profits will be as under : Export Turnover Export Profits = Profits of the undertaking × ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions for depreciation under section 32, investment allowance under section 32A, development rebate under section 33, expenditure on scientific research under section 35 and capital expenditure in relation to family planning under section 36(1)(ix) shall apply as if all allowances or deduction specified therein have been given full effect to. Consequently, the respective unabsorbed amounts cannot be carried forward or set off against profits of any subsequent year. In other words, it is presumed that the allowances for depreciation, investment allowance, development rebate, capital expenditure on scientific research or family planning were fully absorbed in these ten years and that no amount of unabsorbed allowance or deduction is to be carried forward following the ten year period. Similarly no loss under the head "Profits and gains of business or profession" under section 72(1) or under the head "Capital gains" under section 74(1) in respect of the relevant assessment years, will be carried forward or set off in computing the income of the undertaking after the period of benefit. 15.11. The newly inserted provision in sub-section (7) also refers to sub-sections (8) and (10) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the eligible modes of investment for charitable or religious trusts, for a period of three years (in the case of shares), and the date of maturity of other investments or deposits, from the date a public sector company ceases to be a public sector company. 16.5. This amendment will take effect from 1st April, 2001, and will accordingly, apply in relation to the assessment year 2001-2002 and subsequent years. [Section 8] 17. Charitable trusts allowed to invest funds in long-term finance for urban infrastructure : 17.1. Under clause (ix) of sub-section (5) of section 11, deposits with or investment in any bonds issued by a public company formed or registered in India, with the main object of carrying on the business of providing long-term finance for construction of houses in India for residential purposes, is included as an eligible investment for trusts. 17.2. The Act has inserted a new clause in this sub-section so as to provide that investment in public companies formed and registered in India with the main object of carrying on the business of providing long-term finance for urban infrstructure would also be specified as one of the eligible modes for investment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndirectly under the employees stock option plan or scheme. This is sought to be done by deleting section 17(2)(iiia) and providing an Explanation below section 17(2)(iii). Sub-section (2B) in section 49 inserted by the Finance Act, 1999, has also been deleted. Under the amended provisions, such shares will only be subjected to capital gains tax at the time of sale by the employee. The difference between the consideration and the cost of acquisition will be regarded as the amount of capital gains under normal provisions of law. However, the new provisions shall be applicable only in respect of options exercised or allotments made after 31st March, 2000. The taxability of shares in respect of which option has been exercised by the employee prior to 31st March, 2000, shall continue to be governed by the old provisions. 19.3. The amended provisions further provide that in the event of gift or irrevocable transfer of such shares by the employee, the liability to capital gains tax shall arise at the time when such gift or irrevocable transfer is made and the market value of the shares on the date of such gift or transfer shall be deemed to be the consideration received by the employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to tax in the year of receipt whether the property is owned by the assessee in the year of receipt or not. A deduction of a sum equal to one-fourth of such amount of rent shall be given towards repairs and collection of rent. 21.3. This amendment will take effect from 1st April, 2001, and will, accordingly, apply in relation to the assessment year 2001-2002 and subsequent years. [Section 13] 22. Requirement of continuance of same business for set-off of unabsorbed depreciation dispensed with : 22.1. Under the existing provisions of sub-section (2) of section 32 of the Income-tax Act, carried forward unabsorbed depreciation is allowed to be set off against profits and gains of business or profession of the subsequent year, subject to the condition that the business or profession for which depreciation allowance was originally computed continued to be carried on in that year. A similar condition in section 72 for the purpose of carry forward and set off of unabsorbed business loss was removed last year. 22.2. With a view to harmonise the provisions relating to carry forward and set off of unabsorbed depreciation and unabsorbed loss, the Act has dispensed with the conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l by the Central Government for the purposes of clause (viii) of sub-section (1) of section 36. As a consequence to this, the Act has made amendments in sections 10(15)(iv)(g), 11(5)(viii), 11(5)(ix), 35D(3), 36(1)(viia), 43B, 80L(1)(vii), 80L(1)(x), 88(2)(xv) and 194A(3). 25.2. These amendments will take effect retrospectively from the 1st April, 2000, and will, accordingly, apply in relation to the assessment year 2000-2001 and subsequent years. [Sections 5, 8, 17, 18, 20, 40, 46 and 60] 26. Written down value to be the basis of adjustment in regard to transfer in a demerger : 26.1. Under the existing provisions contained in Explanations 2A and 2B in clause (6) of section 43, where the block of assets is transferred by the demerged company to the resulting company, the written down value of the block of assets of the demerged company for the immediately preceding year is reduced by the book value of the assets so transferred. In Explanation 2B, it is provided that in the corresponding situation, the written down value of block of assets in the case of resulting company shall be the value of assets as appearing in the books of the demerged company immediately before the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of assets to be effected in that year so as to calculate the amount of instalment of advance tax payable, it has to be in relation to the 1st day of April of that year and has to be calculated on the basis of average rise in consumer price index in the preceding previous year. The notifications have been issued all along on this basis. To put the issue beyond any possible controversy, the Act amends clause (v) of the Explanation to section 48 retrospectively to provide that the cost inflation index for any previous year will be such index as notified by the Central Government having regard to seventy-five per cent. of average rise in the consumer price index for urban non-manual employees for the immedia-tely preceding previous year. 28.2. This amendment takes effect retrospectively from the 1st day of April, 1993. [Section 22] 29. Modification in the definition of "net worth" in case of slump sale : 29.1. Under the existing provisions contained in sub-section (2) of section 50B of the Income-tax Act, the cost of acquisition and the cost of improvement in relation to capital gains of the undertaking or division transferred by way of slump sale shall be the "net wort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains, there is very little justification for having such an omnibus basket of exemptions. Therefore, it has been decided to insert sunset clauses to sections 54EA and 54EB limiting their application to transfers of long-term capital asset made on or before 31st March, 2000. Where the capital gain has arisen on transfers made before March 31, 2000, the investments in notified securities can be made under sections 54EA and 54EB beyond that date but within the stipulated period. 30.2. In place of sections 54EA and 54EB, which are being terminated, a new section namely, 54EC, has been inserted for transfer of capital assets made on or after 1st April, 2000. The new section will allow exemption from tax on long-term capital gains, if invested in bonds, targeted exclusively on agricultural finance and highway infrastructure. The instruments in question shall be bonds, redeemable after three years, to be issued by the National Bank for Agriculture and Rural Development (NABARD) and the National Highway Authority of India (NHAI). The exemption from long-term capital gains shall be to the extent of investment in these bonds. 30.3. These bonds will have a lock-in period of three years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets would include the current assets, which change from day-to-day. 32.2. The Act amends clause (i) of sub-section (2) of section 72A to clarify that the assets referred to in this clause are "fixed assets" and the value, is the "book value". 32.3. This amendment will take effect retrospectively from 1st April, 2000, and shall accordingly apply in relation to the assessment year 2000-2001 and subsequent years. [Section 29] 33. Deduction in respect of repayment of loan taken by a student for pursuing higher studies : 33.1. Section 80E of the Income-tax Act provides relief to students taking loan for higher studies. The repayment of the amount of loan taken for graduate or post-gratuate courses in any branch of engineering, medicine or management is allowed as a deduction from the gross total income up to a maximum amount of rupees twenty-five thousand in a year. The first year in which the deduction is available is the year in which the person starts repaying the loan. The deduction is allowed for a maximum period of eight years or till the principal of such loans together with interest is liquidated. 33.2. The amendment to the provision seeks to raise the limit of ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. of such remuneration. 34.5. Under section 80RR, a similar deduction is available to an artist, playwright, musician, actor, etc., deriving income from a foreign source, in exercise of his profession. 34.6. A similar deduction is also available under section 80RRA, to persons rendering service outside India. 34.7. The amendment seeks to phase out all the above benefits over a five-year period. This would imply that under the provisions of sections 80HHC, 80HHE and 80HHF, the assessee would be entitled to a deduction of eighty per cent. of export profits in the assessment year 2001-2002, sixty per cent. in the assessment year 2002-2003, forty per cent. in the assessment year 2003-2004, and twenty per cent. in the assessment year 2004-2005. 34.7. Under sections 80HHB, 80HHBA and 80-O, the assessee would be entitled to a deduction of forty per cent. of export profits in the assessment year 2001-2002, thirty per cent. in the assessment year 2002-2003, twenty per cent. in the assessment year 2003-2004 and ten per cent. in the assessment year 2004-2005. 34.8. In those cases where individual assessees are entitled to a deduction of seventy-five per cent., the deduction would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (3) of section 80-IA provides that the newly introduced provisions of section 80-IA would apply to any industrial undertaking that fulfils certain conditions. Doubts were raised in certain quarters that no reference having been made to sub-section (4), the deduction may be applicable to any industrial undertaking. This was not the intention of the Legislature. To remove any doubts in this regard, the words "any industrial undertaking" have been substituted by the words, "industrial undertaking referred to in clause (iv) of sub-section (4)". 36.4. The amendment will take effect from the 1st April, 2001, and will, accordingly, apply in relation to the assessment year 2001-2002 and subsequent years. [Section 38] 37. Tax holiday in respect of undertakings set up in industrially backward States and Union Territories of the Eighth Schedule and industrially backward districts extended up to 31st March, 2002 : 37.1. Under the existing provisions of section 80-IB of the Income-tax Act, 1961, a deduction is allowed, in computing the taxable income, in respect of profits derived from a new industrial undertaking or the business of a hotel. 37.2. For encouraging industrialization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Rebate of income-tax in case of senior citizens : 39.1. Section 88B of the Income-tax Act provides for a special relief in the form of rebate of an amount equal to hundred per cent. of income-tax or an amount of ten thousand rupees, whichever is less, to individual residents in India who attain the age of sixty-five years or more at any time during the previous year. 39.2. The rebate to the senior citizens has been provided to help them in meeting the rising cost of old age care and medical expenses. 39.3. The amendment seeks to raise the existing tax rebate from rupees ten thousand to rupees fifteen thousand in the case of such individuals while retaining the other requirements of the provision. 39.4. The amendment will take effect from 1st April, 2001, and will, accordingly apply in relation to the assessment year 2001-2002 and subsequent years. [Sections 45 and 47] 40. Limit of repayment of housing loan qualifying for rebate raised to Rs. 20,000 : 40.1. Under the existing provisions of section 88, contributions made in specified savings are allowed a tax rebate of 20 per cent. of the amount invested subject to a ceiling of Rs. 60,000 (Rs. 70,000 if investments ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43. Minimum Alternate Tax on companies : 43.1. In recent years, as the number of zero tax companies and companies paying marginal tax had grown, minimum alternate tax was levied under section 115JA of the Income-tax Act from the assessment year 1997-98. The efficacy of the existing provision, however, declined in view of the exclusions of various sectors from the operation of MAT and the credit system. The Act has, therefore, modified the scheme of MAT. The existing section 115JA has been made inoperative with effect from 1st April, 2001. In its place, the Act inserts a new provision, section 115JB of the Income-tax Act. 43.2. The new provisions provide that all companies having book profits under the Companies Act, prepared in accordance with Part II and Part III of Schedule VI to the Companies Act, shall be liable to pay a minimum alternate tax at a lower rate of 7.5 per cent. as against the existing effective rate of 10.5 per cent., of the book profits. These provisions will be applicable to all corporate entities without any exception. 43.3. The new provisions further provide that for purposes of MAT, the company shall follow same accounting policies and standards as ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 45. Tax on income distributed by Unit Trust of India and mutual funds : 45.1. Under the existing provisions, any amount of income distributed by the Unit Trust of India or by mutual funds to their unit holders is chargeable to tax and the Unit Trust of India or mutual funds are liable to pay tax on such distributed income at the rate of ten per cent. The provisions of section 115R, which require that the tax at the rate of 10 per cent. only is to be paid by the Unit Trust of India and the mutual funds (other than US-64 and other open-ended equity oriented funds) on their distributed income, have created a distortion in favour of debt instruments of Unit Trust of India and the mutual funds vis-a-vis the bank and company deposits. To lessen the effect of this distortion, the rate of tax has been increased from 10 per cent. to 20 per cent. 45.2. The Act also amends section 115R to provide that the person responsible for making payment of the income distributed by the Unit Trust of India or the mutual fund and the Unit Trust of India or the mutual fund, as the case may be, shall be liable to furnish a statement to the prescribed authority, in the prescribed form and manner giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2000. [Section 58] 47. Insertion of reference to section 246A of the Income-tax Act and section 23A of the Wealth-tax Act at several places in the respective Acts : 47.1. Appeal lies before the Commissioner (Appeals) under section 246A of the Income-tax Act and under section 23A of the Wealth-tax Act, as the case may be, on or after October 1, 1998. Consequential references to these sections are required at several places in the respective Acts. 47.2. The Act makes the necessary amendments to insert reference to section 246A in sub-section (3) of section 158BFA, sub-section (6) of section 220, section 267 and sub-section (1) of section 275 of the Income-tax Act. 47.3. Similar insertions of references to section 23A are made in sub-sections (2) and (6) of section 31, sub-section (4B) of section 34A and sub-section (1) of section 35 of the Wealth-tax Act. 47.4. These amendments take effect from the 1st day of June, 2000. [Sections 59, 62, 69, 70, 74, 75 and 76] 48. Rationalisation of TDS provisions : 48.1. Under the existing provisions of section 194A(3) of the Income-tax Act, no tax is deductible at source by the person responsible for paying to a resident any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or fact arising out of the order of assessment. The Central Government has already notified two classes of persons which are public sector companies and persons seeking advance ruling in relation to transactions undertaken or proposed to be undertaken by a resident with a non-resident. 50.2. These provisions needed to be further streamlined. There was an operational difficulty in determining the issue arising out of a transaction proposed to be undertaken by a resident with a non-resident within the existing definitions of "applicant" and "advance ruling", which require the application for advance ruling in such cases to be made by a non-resident. Further the definition of "advance ruling", for the resident applicants, was open to a possible interpretation that it provided an appeal against the assessment order in its entirety, which was not intended. The definition of "advance ruling", therefore, needed to be streamlined and broadened to include pre-assessment determination as well as post-assessment decision of issues relating to the computation of total income. 50.3. The Act amends sections 245N to define the terms "advance ruling" and "applicant" as follows : "advance rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) was introduced by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998, in respect of appeals against orders made before or after the appointed day. The appointed day was notified as 1st October, 1998. The introduction of a new section was necessitated by the decision to do away with one appellate level at the level of Deputy Commissioner (Appeals) 51.2. When section 246A came into effect from 1st October, 1998, no terminal clauses were provided to sub-section (1) and sub-section (2) of section 246 to take care of the pending matters, if any. The Act amends these sub-sections now by making them inapplicable to appeals filed on or after 1st June, 2000. It is also clarified that any appeal made under section 246 of the Income-tax Act on or after October 1, 1998, and before 1st June, 2000, shall be deemed to be an appeal filed under sub-section 246A. Similar amendments are made in section 23 of the Wealth-tax Act, 1957. 51.3. These amendments take effect from the 1st day of June, 2000. [Sections 65 and 72] 52. Orders passed under section 201 of the Income-tax Act made appealable before the Commissioner (Appeals) : 52.1. Sub-section (1) of section 201 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the prescribed form containing particulars of all payments of over Rs. 25,000 in aggregate made by him or due from him to each such person as is engaged by him in such production. 54.2. The Act has raised the monetary limit for furnishing the above statement from Rs. 25,000 to Rs. 50,000. 54.3. This amendment will take effect from 1st April, 2001, and will, accordingly, apply in relation to the assessment year 2001-2002 and subsequent years. [Section 71] 55. Amendments to Kar Vivad Samadhan Scheme, 1998 : 55.1. The provisions of the Kar Vivad Samadhan Scheme, 1998, are contained in Chapter IV of the Finance (No. 2) Act, 1998. Under section 90(2) of the Finance (No. 2) Act, 1998, the declarant is required to pay the sum determined by the designated authority within 30 days of the passing of the order. The above time-limit has created difficulties in a number of cases, where the taxpayers have interpreted the time-limit of 30 days as commencing from the date of receipt of the certificate. Consequently, the payments have been delayed by a few days in these cases. There have also been cases where certificates of the designated authority have been served late on the decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificatory in nature. 56.3. This amendment will take effect retrospectively from 1st April, 1999. [Section 122] Wealth-tax provisions The amendments made in the Wealth-tax Act by the Finance Act, 2000, which are of consequential nature, have already been mentioned above. For ready reference, these are summarised again as below : 57. Sunset clauses to sub-sections (1) and (1A) of section 23 of the Wealth-tax Act : 57.1. Section 23 of the Wealth-tax Act in sub-sections (1) and (2) listed out the orders passed by the Assessing Officer against which appeals may have been filed before the Deputy Commissioner (Appeals) and the Commissioner (Appeals) respectively. With the abolition of the post of Deputy Commissioner (Appeals), a new section 23A was introduced by the Finance (No. 2) Act, 1998, with effect from the 1st October, 1998, providing for appeals only before the Commissioner (Appeals). However, terminal clauses were not provided in sub-sections (1) and (1A) of section 23 to take care of pending matters if any. The Finance Act, 2000, amends these sub-sections to make them inapplicable to appeals filed on or after 1st June, 2000. It is also clarified that any appeal made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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