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TMI BlogNOTES ON CLAUSES - DIRECT TAXESX X X X Extracts X X X X X X X X Extracts X X X X ..... rent incomes in certain cases for the financial year 2014-2015. 3 . The substance of the main provisions of the Bill relating to direct taxes is explained in the following paragraphs: DIRECT TAXES A. RATES OF INCOME-TAX I. Rates of income-tax in respect of income liable to tax for the assessment year 2014-2015. In respect of income of all categories of assessees liable to tax for the assessment year 2014-2015, the rates of income-tax have been specified in Part I of the First Schedule to the Bill. These are the same as those laid down in Part III of the First Schedule to the Finance Act, 2013, for the purposes of computation of advance tax , deduction of tax at source from Salaries and charging of tax payable in certain cases. (1) Surcharge on income-tax Surcharge shall be levied in respect of income liable to tax for the assessment year 2014-2015, in the following cases: (a) in the case of every individual or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harge on a total income of ten crore rupees, by more than the amount of income that exceeds ten crore rupees. Also, in the case of every company having total income chargeable to tax under section 115JB of the Act and where such income exceeds one crore rupees but does not exceed ten crore rupees, or exceeds ten crore rupees, as the case may be, surcharge at the rates mentioned above shall be levied and marginal relief shall also be provided. (d) In other cases (including sections 115-O, 115QA, 115R or 115TA), the surcharge shall be levied at the rate of ten percent. (2) Education Cess For assessment year 2014-2015, additional surcharge called the Education Cess on income-tax and Secondary and Higher Education Cess on income-tax shall continue to be levied at the rate of two per cent. and one per cent., respectively, on the amount of tax computed, inclusive of surcharge, in all cases. No marginal relief shall be available in respect of such Cess. II. Rates for deduction of income-tax at source during the financial year 2014-2015 from certain incomes other than Salaries . The rates for deduction of income-tax at source during the financial year 2014-2015 from certain incomes other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment of bodies formed for a short duration, etc. The salient features of the rates specified in the said Part III are indicated in the following paragraphs A. Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person. Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:- (i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part III applies) are as under: Upto ₹ 2,50,000 Nil. ₹ 2,50,001 to ₹ 5,00,000 10 per cent. ₹ 5,00,001 to ₹ 10,00,000 20 per cent. Above ₹ 10,00,000 30 per cent. (ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year, Upto ₹ 3,00,000 Nil. ₹ 3,00,001 to ₹ 5,00,000 10 per cent. ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inue to be the same as that specified for the financial year 2013-2014. The amount of income-tax shall be increased by a surcharge at the rate of ten percent. of such income-tax in case of a local authority having a total income exceeding one crore rupees . However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. E. Companies The rates of income-tax in the case of companies are specified in Paragraph E of Part III of the First Schedule to the Bill. These rates are the same as those specified for the financial year 2013-2014. The existing surcharge of five per cent in case of a domestic company shall continue to be levied if the total income of the domestic company exceeds one crore rupees but does not exceed ten crore rupees. The surcharge at the rate of ten percent shall continue to be levied if the total income of the domestic company exceeds ten crore rupees. In case of companies other than domestic companies, the existing surcharge of two per cent. shall continue to be levie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrently applicable but this rate is being applied on the amount paid as dividend after reduction of distribution tax by the company. Therefore, the tax is computed with reference to the net amount. Similar case is there when income is distributed by mutual funds. Due to difference in the base of the income distributed or the dividend on which the distribution tax is calculated, the effective tax rate is lower than the rate provided in the respective sections. In order to ensure that tax is levied on proper base, the amount of distributable income and the dividends which are actually received by the unit holder of mutual fund or shareholders of the domestic company need to be grossed up for the purpose of computing the additional tax. Therefore, it is proposed to amend section 115-O in order to provide that for the purposes of determining the tax on distributed profits payable in accordance with the section 115-O, any amount by way of dividends referred to in sub-section (1) of the said section, as reduced by the amount referred to in sub-section (1A) [referred to as net distributed profits], shall be increased to such amount as would, after reduction of the tax on such increased a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, where tax payable on long-term capital gains arising on transfer of a capital asset, being listed securities or unit or zero coupon bond exceeds ten per cent. of the amount of capital gains before allowing for indexation adjustment, then such excess shall be ignored. As long-term capital gains is not chargeable to tax in the case of transfer of a unit of an equity oriented fund which is liable to securities transaction tax, the benefit under section 112 in respect of unit cover only the unit of a fund, other than an equity oriented fund. It is proposed to amend the provisions of section 112 so as to allow the concessional rate of tax of ten per cent. on long term capital gain to listed securities (other than unit) and zero coupon bonds. This amendment will take effect from 1st April, 2015 and will accordingly apply, in relation to the assessment year 2015-16 and subsequent assessment years. [Clause 34 ] C. MEASURES TO PROMOTE SOCIO-ECONOMIC GROWTH Taxation Regime for Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (Invit) The Securities and Exchange Board of India (SEBI) had proposed draft regulations relating to two new categories of investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in respect of these units at the time of disposal. Further, for the purpose of computing capital gain, the cost of these units shall be considered as cost of the shares to the sponsor. The holding period of shares shall also be included in the holding period of such units. (iii) The income by way of interest received by the business trust from SPV is accorded pass through treatment i.e., there is no taxation of such interest income in the hands of the trust and no withholding tax at the level of SPV. However, withholding tax at the rate of 5 per cent. in case of payment of interest component of income distributed to non-resident unit holders, at the rate of 10 per cent. in respect of payment of interest component of distributed income to a resident unit holder shall be effected by the trust. (iv) In case of external commercial borrowings by the business trust, the benefit of reduced rate of 5 per cent. tax on interest payments to non-resident lenders shall be available on similar conditions, for such period as is provided in section 194LC of the Act. (v) The dividend received by the trust shall be subject to dividend distribution tax at the level of SPV but will be exempt in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under the existing provisions contained in sub-section (1) of section 32AC even if its investment in the year 2014-15 is below the proposed new threshold limit of investment of ₹ 25 crore during the previous year. The deduction allowable under this section after the proposed amendment in different scenario of investment is given by way of illustration in the following table: (Rs. in crore) Sl. No. Particulars P.Y. 2013-14 P.Y. 2014-15 P.Y. 2015-16 P.Y. 2016-17 Remarks 1. Amount of investment 20 90 - - Under the existing section 32AC(1) Deduction allowable Nil 16.5 - - 2. Amount of investment 30 40 - - Under the proposed section 32AC(1A) Deduction allowable Nil 6 - - 3. Amount of investment 150 10 - - Under the existing section 32AC(1) Deduction allowable 22.5 1.5 - - 4. Amount of investment 60 20 - - No deduction either u/s 32AC(1) or 32AC(1A) Deduction allowable Nil NIl - - 5. Amount of investment 30 30 30 40 Under the proposed section 32AC(1A) Deduction allowable Nil 4.5 4.5 6 6. Amount of investment 150 20 70 20 Deduction both u/s 32AC(1) 32AC(1A) Deduction allowable 22.5 3 10.5 Nil These amendments will take effect from 1st April, 2015 and will, accordingly, apply in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two-star or above category as classified by the Central Government; (v) building and operating, anywhere in India, a hospital with at least one hundred beds for patients; (vi) developing and building a housing project under a scheme for slum redevelopment or rehabilitation, framed by the Central Government or a State Government, as the case may be, and notified by the Board in accordance with the prescribed guidelines; (vii) developing and building a housing project under a scheme for affordable housing framed by the Central Government or a State Government, as the case may be, and notified by the Board in accordance with the prescribed guidelines; (viii) production of fertilizer in India; (ix) setting up and operating an inland container depot or a container freight station notified or approved under the Customs Act, 1962; (x) bee-keeping and production of honey and beeswax; and (xi) setting up and operating a warehousing facility for storage of sugar; It is proposed to include two new businesses as specified business for the purposes of the investment-linked deduction under section 35AD so as to promote investment in these sectors, which are :- (a) laying and operating a slurry p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid section would, however, not apply to a company which has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985 within the time period specified in sub-section (7A). III . The existing provisions of sub-section (3) of the aforesaid section provide that where any assessee has claimed a deduction under this section, no deduction shall be allowed under the provisions of Chapter VIA for the same or any other assessment year. As section 10AA also provides for profit linked deduction in respect of units set-up in Special Economic Zones, it is proposed to amend section 35AD so as to provide that where any deduction has been availed of by the assessee on account of capital expenditure incurred for the purposes of specified business in any assessment year, no deduction under section 10AA shall be available to the assessee in the same or any other assessment year in respect of such specified business. As a consequence of this amendment, section 10AA is also proposed to be amended so as to provide that no deduction under section 35AD shall be available in any assessment year to a specified business which has cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, it is proposed to amend the second proviso to clause (b) of said section 24, so as to increase the limit of deduction on account of interest in respect of property referred to in sub-section (2) of section 23 to two lakh rupees. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years. [Clause 10] Concessional rate of tax on overseas borrowing The existing provisions of section 194LC of the Act provide for lower withholding tax rate of 5 per cent. on interest paid by an Indian company to non-residents on monies borrowed by it in foreign currency from a source outside India under a loan agreement or through issue of long-term infrastructure bonds at any time on or after the 1st day of July, 2012 but before the 1st day of July, 2015 subject to certain conditions. In order to further incentivise low cost long-term foreign borrowings by Indian companies, it is proposed to amend section 194LC to extend the benefit of this concessional rate of withholding tax to borrowings by way of issue of any long-term bond, and not limited to a long term infrastructure bond. It is further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 5 previous years, as may be mentioned in the agreement. Once the agreement is entered into, the ALP of the international transaction, which is subject matter of the APA, would be determined in accordance with such an APA. In many countries the APA scheme provides for roll back mechanism for dealing with ALP issues relating to transactions entered into during the period prior to APA. The roll back provisions refers to the applicability of the methodology of determination of ALP, or the ALP, to be applied to the international transactions which had already been entered into in a period prior to the period covered under an APA. However, the roll back relief is provided on case to case basis subject to certain conditions. Providing of such a mechanism in Indian legislation would also lead to reduction in large scale litigation which is currently pending or may arise in future in respect of the transfer pricing matters. Therefore, it is proposed to amend the Act to provide roll back mechanism in the APA scheme. The APA may, subject to such prescribed conditions, procedure and manner, provide for determining the arm s length price or for specifying the manner in which arm s length pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been provided in place of profit linked deductions. These profit linked deductions are subject to alternate minimum tax (AMT). Accordingly, with a view to include the investment linked deduction claimed under section 35AD in computing adjusted total income for the purpose of calculating alternate minimum tax, it is proposed to amend the section so as to provide that total income shall be increased by the deduction claimed under section 35AD for purpose of computation of adjusted total income.The amount of depreciation allowable under section 32 shall, however, be reduced in computing the adjusted total income. Example: Total income : ₹ 60 Deduction claimed under Chapter VI-A : ₹ 40 Deduction claimed under section 35AD on a capital asset : ₹ 100 Computation of adjusted total income for the purposes of AMT Total income : ₹ 60 Addition: (i) deduction under Chapter VI-A (on non-specified business) : ₹ 40 (ii) deduction under section 35AD (on specified business) ₹ 100 Less: depreciation under section 32 ₹ 15 : ₹ 85 Adjusted total income under section 115JC : ₹ 185 These amendments will take effect from 1st April, 2015 and will, ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to fulfillment of conditions specified under the said section. Therefore, the sum received under a life insurance policy which does not fulfill the conditions specified under section 10(10D) are taxable under the provisions of the Act. In order to have a mechanism for reporting of transactions and collection of tax in respect of sum paid under life insurance policies which are not exempted under section 10(10D) of the Act, it is proposed to insert a new section in the Act to provide for deduction of tax at the rate of 2 per cent. on sum paid under a life insurance policy, including the sum allocated by way of bonus, which are not exempt under section 10(10D) of the Act. In order to reduce the compliance burden on the small tax payers, it has also been proposed that no deduction under this provision shall be made if the aggregate sum paid in a financial year to an assessee is less than ₹ 1,00,000/-. This amendment will take effect from 1st October, 2014. [Clause 55 ] F. RATIONALISATION MEASURES Signing and verification of return of income The existing provisions under section 140 of the Act provide that the return under section 139 shall be signed and verified in the manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust should be applied and utilised for the object or purpose for which the institution or trust has been established. In many cases it has been noted that trusts or institutions which are registered and have been claiming benefits of the exemption regime do not apply their income, which is derived from property held under trust, for charitable purposes. In such circumstances, when the income becomes taxable, then a claim of exemption under general provisions of section 10 in respect of such income is preferred and tax on such income is avoided. This defeats the very objective and purpose of placing the conditions of application of income etc. in respect of income derived from property under trust in the first place. Sections 11, 12 and 13 are special provisions governing institutions which are being given benefit of tax exemption, it is therefore imperative that once a person voluntarily opts for the special dispensation it should be governed by these specific provisions and should not be allowed flexibility of being governed by other general provisions or specific provisions at will. Allowing such flexibility has undesirable effects on the objects of the regulations and leads to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-clause (iiiab) and (iiiac) of section 10(23C) of the Act provide exemption, subject to various conditions, in respect of income of certain educational institutions, universities and hospitals which exist solely for educational purposes or solely for philanthropic purposes, and not for purposes of profit and which are wholly or substantially financed by the Government. Absence of a definition of the phrase substantially financed by the Government has led to litigation and varying decisions of judicial authorities who have, for this purpose, relied upon various other provisions of the Income-tax Act and other Acts. Thus, there is lack of certainty in this regard. Therefore, it is proposed to amend section 10(23C) by inserting an Explanation that if the Government grant to a university or other educational institution, hospital or other institution during the relevant previous year exceeds a percentage (to be prescribed) of the total receipts (including any voluntary contributions), of such university or other educational institution, hospital or other institution, as the case may be, then such university or other educational institution, hospital or other institution shall be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut in such a manner that, (i) its income does not enure for the benefit of general public; (ii) it is for benefit of any particular religious community or caste (in case it is established after commencement of the Act); (iii) any income or property of the trust is applied for benefit of specified persons like author of trust, trustees etc.; or (iv) its funds are invested in prohibited modes, then the Principal Commissioner or the Commissioner may cancel the registration if such trust or institution does not prove that there was a reasonable cause for the activities to be carried out in the above manner. This amendment will take effect from 1 st October, 2014. [Clause 9] Anonymous donations under section 115BBC The existing provisions of section 115BBC of the Act provide for levy of tax at the rate of 30 per cent. in case of certain assessees, being university, hospital, charitable organisation, etc. on the amount of aggregate anonymous donations exceeding five per cent of the total donations received by the assessee or one lakh rupees, whichever is higher. Due to the mechanism of aggregation of tax provided in section 115BBC, while tax at the rate of 30 per cent. is levied on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the terms of the relevant transaction are determined in substance between such other person and the associated enterprise, and either the enterprise or the associated enterprise or both of them are non-resident, then such transaction shall be deemed to be an international transaction entered into between two associated enterprises, whether or not such other person is a non-resident. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years. [Clause 31] Levy of Penalty under section 271G by Transfer Pricing Officers The existing provisions of section 271G of the Act provide that if any person who has entered into an international transaction or specified domestic transaction fails to furnish any such document or information as required by sub-section (3) of section 92D, then such person shall be liable to a penalty which may be levied by the Assessing Officer or the Commissioner (Appeals). Section 92CA provides that an Assessing Officer may make reference to a Transfer Pricing Officer (TPO) for determination of arm's length price (ALP). TPO has been defined in the said section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has not obtained the registration under section 12AA for the said assessment year. However, the above benefits would not be available in case of any trust or institution which at any time had applied for registration and the same was refused under section 12AA or a registration once granted was cancelled. These amendments will take effect from 1st October, 2014. [Clause 8] Corporate Social Responsibility (CSR) Under the Companies Act, 2013 certain companies (which have net worth of ₹ 500 crore or more, or turnover of ₹ 1000 crore or more, or a net profit of ₹ 5 crore or more during any financial year) are required to spend certain percentage of their profit on activities relating to Corporate Social Responsibility (CSR). Under the existing provisions of the Act expenditure incurred wholly and exclusively for the purposes of the business is only allowed as a deduction for computing taxable business income. CSR expenditure, being an application of income, is not incurred wholly and exclusively for the purposes of carrying on business. As the application of income is not allowed as deduction for the purposes of computing taxable income of a company, amount spent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture in the previous year of payment, if tax is deducted during the previous year and the same is paid on or before the due date specified for filing of return of income under section 139(1) of the Act. However, in case of disallowance for non-payment of tax from payments made to non-residents, this extended time limit of payment up to the date of filing of return of income under section 139(1) is not available. In order to provide similar extended time limit for payment of tax deducted from payments made to non-residents, it is proposed that the deductor shall be allowed to claim deduction for payments made to non-residents in the previous year of payment, if tax is deducted during the previous year and the same is paid on or before the due date specified for filing of return under section 139(1) of the Act. As mentioned above, in case of non-deduction or non-payment of tax deducted at source (TDS) from certain payments made to residents, the entire amount of expenditure on which tax was deductible is disallowed under section 40(a)(ia) for the purposes of computing income under the head Profits and gains of business or profession . The disallowance of whole of the amount of expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5th January, 2013. However, there does not exist any express provision in the Act for enabling a deductor to file correction statement. In order to bring clarity in the matter relating to filing of correction statement, it is proposed to amend section 200 of the Act to allow the deductor to file correction statements. Consequently, it is also proposed to amend provisions of section 200A of the Act for enabling processing of correction statement filed. The existing provisions of section 201(1) of the Act provide for passing of an order deeming a payer as assessee in default if he does not deduct or does not pay or after deduction fails to pay the whole or part of the tax as per the provisions of Chapter XVII-B of the Act. Section 201(3) of the Act provides for time limit for passing of order under section 201(1) of the Act for deeming a payer as assessee in default for failure to deduct tax from payments made to a resident. Clause (i) of section 201(3) of the Act provides that no order under section 201(1) of the Act shall be passed after expiry of two years from the end of the financial year in which the TDS statement has been filed. Currently, the processing of TDS statement is do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or Leasing Goods Carriages The existing provisions of section 44AE of the Act provides for presumptive taxation in the case of an assessee who is engaged in the business of plying, hiring or leasing goods carriages and not owning more than ten goods carriages at any time during the previous year. Income from the said business is calculated as under: Type of Goods carriage Amount of presumptive income Heavy goods vehicle (HGV) Rs.5,000 for every month (or part of a month) during which the goods carriage is owned by the taxpayer. Vehicle other than HGV ₹ 4,500 for every month (or part of a month) during which the goods carriage is owned by the taxpayer. The amount of presumptive income was revised by the Finance (No.2) Act, 2009. Further, the existing provisions make a distinction between HGV and vehicle other than HGV for specifying the amount of presumptive income. Considering the erosion in the real values of the amount of specified presumptive income due to inflation over the years and also in order to simplify this presumptive taxation scheme, it is proposed to provide for a uniform amount of presumptive income of ₹ 7,500 for every month (or part of a month) for al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years. [Clause 50] Extension of income-tax exemption to Special Undertaking of Unit Trust of India (SUUTI) The Special Undertaking of the Unit Trust of India (SUUTI) was created vide the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002. SUUTI is the successor of UTI. The mandate of SUUTI is to liquidate Government liabilities on account of the erstwhile UTI. Vide section 13(1) of the said Repeal Act, SUUTI is exempt from income-tax or any other tax or any income, profits or gains derived, or any amount received in relation to the specified undertaking for a period of five years, computed from the appointed day, i.e. 1st day of February, 2003. This exemption was to come to an end on 31st January, 2008 and the exemption was extended up to the 31st March, 2009 and thereafter, up to the 31 st March, 2014. Since some of the tasks of SUUTI are still pending closure, it is proposed to amend section 13(1) so as to extend the exemption for a further period of five years that is upto 31 st March, 2019. This amendment will take effect retrospec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 2014-15 and subsequent assessment years. [Clause 15] Capital gains arising from transfer of an asset by way of compulsory acquisition The existing provisions contained in section 45 provide for charging of any profits or gains arising from transfer of a capital asset. Sub-section (5) of the said section provides for dealing with capital gains arising from transfer by way of compulsory acquisition where the compensation is enhanced or further enhanced by the court, Tribunal or any other authority. Clause (b) of the said sub-section provides that where the amount of compensation is enhanced or further enhanced by the court it shall be deemed to be the income chargeable of the previous year in which such amount is received by the assessee. There is uncertainty about the year in which the amount of compensation received in pursuance of an interim order of the court is to be charged to tax, due to court orders. Accordingly, it is proposed to provide that the amount of compensation received in pursuance of an interim order of the court, Tribunal or other authority shall be deemed to be income chargeable under the head Capital gains in the previous year in which the fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l house then the portion of capital gains in the ratio of cost of new asset to the net consideration received on transfer is not chargeable to tax. The benefit was intended for investment in one residential house within India. Accordingly, it is proposed to amend the aforesaid sub-section (1) of section 54 so as to provide that the rollover relief under the said section is available if the investment is made in one residential house situated in India. It is further proposed to amend the aforesaid sub-section (1) of section 54F so as to provide that the exemption is available if the investment is made in one residential house situated in India. These amendments will take effect from 1st April, 2015 and will accordingly apply in relation to assessment year 2015-16 and subsequent assessment years. [Clauses 22 24] Capital gains exemption on investment in Specified Bonds The existing provisions contained in sub-section (1) of section 54EC of the Act provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has, within a period of six months, invested the whole or part of capital gains in the long-term specified asset, the proportionate capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on so as to provide that the provision of the Explanation shall also not be applicable to a company the principal business of which is the business of trading in shares. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent assessment years. [Clause 26] Income-tax Authorities Section 116 of the Act specifies income-tax authorities for the purposes of the Act and section 117 states that the Central Government may appoint such persons as it thinks fit to be income-tax authorities. The income-tax authorities enumerated under section 116 of the Act include Central Board of Direct taxes, Directors-General of Income-tax or Chief Commissioners of Income-tax, Directors of Income-tax or Commissioners of Income-tax etc. In view of the creation of new income-tax authorities, it is proposed to amend the aforesaid section 116 of the Act so as to include the newly created income-tax authorities. It is further proposed to insert clauses (34A), (34B), (34C) and (34D) in section 2 of the Act so as to define the terms Principal Chief Commissioner of Income-tax , Principal Commissioner of Income-tax , Principal Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on after sunrise and before sunset. Further, such income-tax authority may require the deductor or the collector or any other person who may at the time and place of survey be attending to such work, (i) to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place, and (ii) to furnish such information as he may require in relation to such matter. It is also proposed to provide that an income-tax authority may place marks of identification on the books of account or other documents inspected by him and take extracts and copies thereof. He may also record the statement of any person which may be useful for, or relevant to, any proceeding under the Act. However, while acting under sub-section (2A) he shall not impound and retain in his custody any books of account or documents inspected by him or make an inventory of any cash, stock or other valuables. These amendments will take effect from 1st October, 2014. [Clause 45] Mutual Funds, Securitisation Trusts and Venture Capital Companies or Venture Capital Funds to file return of income The existing provisions contained in section 139 of the Act pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to above, the requirement of filing of statements before an income-tax authority is proposed to be dispensed with by omitting sub-section (3A) of section 115R and sub-section (3) of section 115TA. These amendments will take effect from 1st April, 2015. [Clauses 41, 42 47] Inquiry by prescribed income-tax authority With a view to enable prescribed income-tax authority to verify the information in its possession relating to any person, it is proposed to insert a new section 133C in the Act so as to provide that for the purposes of verification of information in its possession relating to any person, prescribed income-tax authority, may, issue a notice to such person requiring him, on or before a date to be therein specified, to furnish information or documents, verified in the manner specified therein which may be useful for, or relevant to, any enquiry or proceeding under this Act. This amendment will take effect from 1st October, 2014. [Clause 46] Estimate of value of assets by Valuation Officer Under the existing provisions contained in section 142A, the Assessing Officer may, for the purpose of making an assessment or reassessment, require the Valuation Officer to make an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluded from the time limit provided under the aforesaid section for completion of assessment or reassessment. These amendments will take effect from 1st October, 2014. [Clauses 49, 51 52] Interest payable by the assessee under section 220 The existing provision contained in sub-section (1) of section 220 provides that any amount specified as payable in a notice of demand under section 156 shall be paid within thirty days of the service of notice at the place and to the person mentioned in the notice. Sub-section (2) states that if the amount specified in the notice is not paid within the period, the assessee shall be liable to pay simple interest at one per cent for every month or part of a month comprised in the period commencing from the day immediately following the end of the period mentioned in sub-section (1) and ending with the day on which the amount is paid. The proviso to sub-section (2) states that where as a result of an order under sections 154, 155, 250, 254, 260, 262, 264 or sub-section (4) of section 245D, the amount on which interest payable under this section had been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt gateways. Accordingly, it is proposed to amend the provisions of the said sections 269SS and 269T so as to provide that any acceptance or repayment of any loan or deposit by use of electronic clearing system through a bank account shall not be prohibited under the said sections if the other conditions regarding the quantum etc. are satisfied. These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent assessment years. [Clauses 63 64] Failure to produce accounts and documents The existing provisions of section 276D of the Act provide that if a person willfully fails to produce accounts and documents as required in any notice issued under sub-section (1) of section 142 or willfully fails to comply with a direction issued to him under sub-section (2A) of section 142, he shall be punishable with rigorous imprisonment for a term which may extend to one year or with fine equal to a sum calculated at a rate which shall not be less than four rupees or more than ten rupees for every day during which the default continues, or with both. It is proposed to amend the provisions of the said section so as to provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re any person, who has furnished a statement of information under sub-section (1), or in pursuance of a notice issued under sub-section (5), comes to know or discovers any inaccuracy in the information provided in the statement, then, he shall, within a period of ten days, inform the income-tax authority or other authority or agency referred to in sub-section (1) the inaccuracy in such statement and furnish the correct information in the manner as may be prescribed. It is also proposed that the Central Government may, by rules, specify,- (a) the persons referred to in sub-section (1) of section 285BA to be registered with the prescribed income-tax authority; (b) the nature of information and the manner in which such information shall be maintained by the persons referred to in (a) above; and (c) the due diligence to be carried out by the persons referred in (a) for the purpose of identification of any reportable account referred to in sub-section (1) of section 285BA. Further, the existing provisions of section 271FA of the Act provide for penalty for failure to furnish an annual information return. It is proposed to amend the said section so as to provide for penalty for failure t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to any person, other than the person referred to in section 153A, then books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A if he is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A . The amendment will take effect from 1st October, 2014. [Clause 53] Extension of tax benefits under section 80CCD to private sector employees Under the existing provisions contained in sub-section (1) of section 80CCD of the Act, if an individual, employed by the Central Government or any other employer on or after 1st January, 2004, has paid or deposited any a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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