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TMI BlogNotes on clauses-Income TaxX X X X Extracts X X X X X X X X Extracts X X X X ..... at source during the financial year 2016-17 from income other than Salaries Part II of the First Schedule to the Bill specifies the rates at which income-tax is to be deducted at source during the financial year 2016-17 from income other than Salaries . The rates are the same as those specified in Part II of the First Schedule to the Finance Act, 2015 for the purposes of deduction of income tax at source during the financial year 2015-16 except that in case of payment of income by way of insurance commission to a person, other than a company, resident in India , tax shall now be deducted at source at the rate of five per cent. ,as against the earlier rate of ten per cent. The amount of tax so deducted shall be increased by a surcharge in the case of (i) every non-resident being an individual or Hindu undivided family or 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, at the rate of fifteen per cent. of such tax, where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore rupees; (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases of persons referred to in this paragraph, having income above one crore rupees, shall be levied at the rate of fifteen per cent. Marginal relief will be provided. Paragraph B of this Part specifies the rates of income-tax in the case of every co-operative society. In such cases, the rates of tax will continue to be the same as those specified for assessment year 2016-17. The surcharge in cases of co-operative societies, having income above one crore rupees shall be levied at the rate of twelve per cent. Marginal relief will be provided. Paragraph C of this Part specifies the rate of income-tax in the case of every firm. In such cases, the rate of tax will continue to be the same as that specified for assessment year 2016-17. The surcharge in cases of firms, having income above one crore rupees shall be levied at the rate of twelve per cent. Marginal relief will be provided. Paragraph D of this Part specifies the rate of income-tax in the case of every local authority. In such cases, the rate of tax will continue to be the same as that specified for the assessment year 2016-17. The surcharge in cases of local authorities, having income above one crore rupees shall be levied a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of capital asset, inter alia, Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government. It is proposed to amend item (vi) of the said clause (14) so as to also exclude the deposit certificates issued under the Gold Monetisation Scheme, 2015 from the definition of capital asset. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years. Sub-clause (b) of the said clause proposes to insert a new clause (23C) to define the term hearing so as to include communication of data and documents through electronic mode. This amendment will take effect from 1st June, 2016. Sub-clause (c) of the said clause proposes to amend clause (24) relating to the definition of income. Sub-clause (xviii) of clause (24) of the aforesaid section, inter alia, provides that any assistance in the form of a subsidy or grant or cash incentives, etc., by the Central or a State Government to any assessee other than the subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset, in accordance with Explanation 10 to clause (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of a foreign company engaged in the business of mining of diamonds, no income shall be deemed to accrue or arise in India through or from the activities which are confined to the display of uncut and unassorted diamond in any special zone notified by the Central Government in the Official Gazette in this behalf. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years. Clause 6 of the Bill seeks to amend section 9A of the Incometax Act relating to certain activities not to constitute business connection in India. Sub-section (3) of the aforesaid section provides for the conditions to be fulfilled for being an eligible investment fund. It is proposed to amend clause (b) of the said sub-section so as to provide that the eligible investment fund also means a fund established or incorporated or registered in a country or a specified territory notified by the Central Government in this behalf. It is further proposed to amend clause (k) of the said sub-section to omit reference to the fund not carrying on or controlling and managing, directly or indirectly, any business from In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years. Sub-clause (C) of the said clause seeks to amend clause (23DA) of the said section so as to provide that the definition of the term securitisation for the purposes of the said clause shall also include securitisation, as defined in clause (z) of sub-section (1) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is further proposed to amend clause (23FC) of the said section so as to provide that any income of a business trust by way of interest received or receivable from a special purpose vehicle or the dividend referred to in sub-section (7) of section 115-O shall also not be included in total income of such business trust. It is also proposed to amend clause (23FD) of the said section so as to provide that any distributed income from a business trust received by a unit holder which is of the same nature as dividend referred to in sub-section (7) of section 115-O shall not be included in the total income of such unit holder. It is also propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 161 of the Chapter VIII of the Finance Act, 2016. This amendment will take effect from 1st June, 2016. Clause 8 of the Bill seeks to amend section 10AA of the Income-tax Act relating to special provisions in respect of newly established Units in Special Economic Zones. The aforesaid section provides that an assessee, being an entrepreneur as referred to in clause (j) of section 2 of the Special Economic Zones Act, 2005, who begins from his unit for manufacturing or producing articles or things or providing any services during the previous year relevant to any assessment year commencing on or after the 1st day of April, 2006, is allowed deduction on the profits derived from the export of articles or things or services. It is proposed to amend sub-section (1) of the said section 10AA so as to provide that the deduction under this section is available only for an above referred enterpreneur whose unit begins to carryout above referred activity before the 1st day of April, 2021. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 9 of the Bill seeks to amend section 17 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such rent is received or realised, whether the assessee is the owner of the property or not in that financial year. It is also proposed that thirty per cent. of the arrears of rent or the unrealised rent realised subsequently by the assessee shall be allowed as deduction. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 12 of the Bill seeks to amend section 28 of the Income-tax Act relating to Profits and gains of business or profession . Clause (va) of the aforesaid section, inter alia, provides that any sum, whether received or receivable, in cash or kind, under an agreement for not carrying out any activity in relation to any business, is chargeable to tax as business income for business entities. It is proposed to amend the said clause so as to provide that any sum received or receivable, in cash or kind, under an agreement, for not carrying out any activity in relation to any profession, shall also be income chargeable to income-tax under the head Profits and gains of business or profession . This amendment will take effect from 1st April, 2017 and will, accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the aforesaid section 35. Clause (ii) of sub-section (1) of the said section provides for weighted deduction to the extent of one hundred seventy-five per cent. of any sum paid to a scientific research association which has the object of undertaking scientific research or to a university, college or other institution to be used for scientific research. It is proposed to amend the said clause (ii) so as to reduce the said weighted deduction from one hundred seventy-five per cent. to one hundred fifty per cent. from financial year 2017-2018 to 2019-2020. It is further proposed to reduce the said weighted deduction to one hundred per cent. from the financial year 2020- 2021 and subsequent years. Clause (iia) of sub-section (1) of the said section provides weighted deduction in respect of contribution to a company engaged in scientific research. It is proposed to amend the said clause (iia) so as to reduce the said weighted deduction from one hundred twenty-five per cent. to one hundred per cent. from financial year 2017-2018 and subsequent years. Clause (iii) of sub-section (1) of the aforesaid section provides that weighted deduction shall be allowed in respect of contributions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such payment has been made and ending in the year in which the useful life of spectrum comes to an end. The proposed section further seeks to provide that the provisions contained in sub-sections (2) to (8) of section 35ABB, shall apply as if for the word licence , the word spectrum had been substituted. It is also proposed to provide an Explanation to define certain expressions used for the purposes of the said section. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 17 of the Bill seeks to amend section 35AC of the Income-tax Act relating to expenditure on eligible projects or schemes. The existing provisions of section 35AC, inter alia, provides for deduction for expenditure incurred by way of payment of any sum to a public sector company or a local authority or to an approved association or institution, etc., on certain eligible social development project or a scheme not related to business. It is proposed to insert a new sub-section (7) in the aforesaid section so as to provide that the deduction under this section shall not apply, in respect of any assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to amend the said section so as to reduce the deduction from one hundred fifty per cent. to one hundred per cent. This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-2019 and subsequent years. Clause 20 of the Bill seeks to amend section 35CCD of the Income-tax Act relating to expenditure on skill development project. The aforesaid section provides that where a company incurs any expenditure (not being expenditure in the nature of cost of any land or building) on any skill development project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then, there shall be allowed a deduction of a sum equal to one and one-half times of such expenditure. Sub-section (2) of the said section provides that where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provisions of the Income-tax Act for the same or any other assessment year. It is proposed to amend the said section so as to reduce the deduction from one hundre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be only on actual payment. The aforesaid section, inter alia, provides that certain sum payable by the assessee shall be allowed as deduction irrespective of the previous year in which the liability to pay such sum was incurred if the same is actually paid on or before the due date of furnishing of the return of income. It is proposed to insert a new clause in the said section so as to provide that any sum payable by the assessee to the Indian Railways for use of railway assets shall be allowed as deduction only, if it is actually paid on or before the due date of furnishing the return of income of the relevant previous year. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 24 of the Bill seeks to amend section 44AA of the Income-tax Act relating to maintenance of accounts by certain persons carrying on profession or business. It is proposed to amend the sub-section (2) of the aforesaid section so as to provide that every person carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng one crore rupees, a sum equal to eight per cent. of the total turnover or gross receipts, or, as the case may be, a sum higher than the aforesaid sum declared by the assessee in his return of income, shall be deemed to be the profits and gains of such business chargeable to tax under the head Profit and gains of business or profession . The proposed section 44AD seeks to provide for estimating income of assessee who is engaged in any business, at a sum equal to eight per cent. of the total turnover or gross receipts, or, as the case may be, a sum higher than the aforesaid sum earned by the assessee. The scheme will apply to such residential assessee who is an individual, Hindu undivided Family or partnership firm but not Limited Liability Partnership firm, whose total gross receipts does not exceed two crores rupees. It is further proposed that the scheme does not apply to an assessee, who is carrying on profession as referred to in subsection (1) of section 44AA or earning income in the nature of commission or brokerage or carrying on any agency business and who has claimed deduction under any of the section 10AA, 10A, 10B, 10BA or deduction under any provisions of Chapter VI-A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 or profession . It is further proposed that any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1) of the proposed section, be deemed to have been already given full effect to and no further deduction under those sections shall be allowed. It is also proposed that the written down value of any asset of profession shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. It is also proposed to provide that an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) of the proposed section and whose total income exceeds the maximum amount which is not chargeable to income-tax shall be required to keep and maintain such books of account and other documents under sub-section (1) of section 44AA and get them audited under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is proposed to amend section 48 so as to provide indexation benefits to long-term capital gains arising on transfer of the said Sovereign Gold Bond. It is further proposed to provide that in case of an assessee being a non-resident, any gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company subscribed by him, shall be ignored for the purpose of computation of full value of consideration under the said section. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years. Clause 30 of the Bill seeks to amend section 50C of the Income-tax Act relating to special provision for full value of consideration in certain cases. Sub-section (1) of the aforesaid section provides that in case of transfer of a capital asset being land or building or both, the value adopted or assessed or assessable by the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer is taken as the full value of consideration for the purpose of computation of capital gains. It is proposed to amend the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of new asset being new plant and machinery but does not include inter alia, computers or computer software. It is proposed to amend section 54GB so as to provide that the expression new asset includes computers or computer software in case of technology driven start-ups so certified by the Inter- Ministerial Board of Certification notified by the Central Government in the Official Gazette. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent assessment years. Clause 33 of the Bill seeks to amend section 55 of the Incometax relating to meaning of adjusted , cost of improvement and cost of acquisition . Sub-clause (1) of clause (b) of sub-section (1) of the aforesaid section provides that the cost of improvement in relation to a capital asset, being goodwill of a business or a right to manufacture, produce or process any article or thing or right to carry on any business, shall be taken to be nil. Further, clause (a) of sub-section (2) of the aforesaid section provides that the cost of acquisition in relation to a capital asset, being goodwill of a business or a trademark or brand name associa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 36 of the Bill seeks to amend section 80CCD of the Income-tax Act relating to deduction in respect of contribution to pension scheme of Central Government. Sub-section (3) of the aforesaid section provides that the whole of the amount standing to the credit of the assesse including the accrual on the amount received by the assesse or nominee is taxed in the year of such receipt on account of closure or his opting out of the pension scheme. It is proposed to amend the sub-section so as to provide that any amount received by the nominee, on the death of the assessee, under the pension scheme referred to in clause (a) of the said sub-section, is exempt from tax. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years. Clause 37 of the Bill seeks to substitute section 80EE of the Income-tax Act relating to deduction in respect of interest on loan taken for residential house property. The provisions contained in the existing section provides for deduction upto one lakh rupees in respect of interest payable on loan taken by an assessee being an individual from any financial institution for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2017-2018 and subsequent years. Clause 40 of the Bill seeks to amend section 80-IAB of the Income-tax Act relating to deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone. Under the aforesaid section, an enterprise being a developer in a notified Special Economic Zone, who has commenced the business of developing a Special Economic Zone on or after 1st day of April, 2005 shall be allowed deduction of an amount equal to one hundred per cent. of the profits and gains derived from such business. It is proposed to amend the said section so as to provide that this section shall not apply to any enterprise which commences the business activity on or after the 1st day of April, 2017. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 41 of the Bill seeks to insert a new section 80-IAC in the Income-tax Act relating to Special provisions in respect of specified business. It is proposed to amend the Income-tax Act so as to provide a deduction of one hundred per cent. of the profits and gains derived by an eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irty per cent. of additional wages paid to the new regular workmen in a factory for three years. The provisions apply to business of manufacture of goods in a factory. It is proposed to extend the benefit to all assessees who are required to get their accounts audited under section 44AB. Further, it is also proposed to liberalise the eligibility condition relating to minimum number of persons employed and the total number of days for which they must be employed during the year. Deduction under the proposed provisions will be available in respect of cost incurred on those employees whose total emoluments are less than or equal to twenty-five thousand rupees per month. No deduction, however, shall be allowed in respect of cost incurred on those employees for whom the entire contribution is paid by the Government under the Employees Pension Scheme notified in accordance with the Employees Provident Funds and Miscellaneous Provisions Act, 1952. This amendment will take effect from 1st April, 2017 will, accordingly, apply in relation assessment year 2017-2018 and subsequent years. Clause 45 of the Bill seeks to amend section 87A of the Income-tax Act relating to rebate of income-tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information and document to the prescribed authority referred to in section 286 in the prescribed manner on or before the date to be prescribed. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. Clause 48 of the Bill seeks to amend section 112 of the Income-tax Act relating to tax on long-term capital gains. Sub-clause (iii) of clause (c) of sub-section (1) of the aforesaid section, inter alia, provides that long-term capital gains arising from transfer of a capital asset, being unlisted securities, shall be chargeable to tax at the rate of ten per cent. It is proposed to amend the said sub-clause (iii) so as to provide that long-term capital gains arising from transfer of a capital asset being, shares of a company not being a company in which the public are substantially interested, shall also be chargeable to tax at the rate of ten per cent. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years. Clause 49 of the Bill seeks to insert a new section 115BA in the Income-tax Act relating to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause 50 of the Bill seeks to insert a new section 115BBDA in the Income-tax Act relating to tax on certain dividends received from domestic companies. The provisions of the Income-tax Act provide that dividend income shall be exempt if dividend distribution tax is paid on such income. It is proposed to insert a new section 115BBDA in the said Act so as to provide that any income by way of dividend declared, distributed or paid by a domestic company, in excess of ten lakh rupees shall be chargeable to tax at the rate of ten per cent. in the case of an individual, Hindu undivided family or a firm who is a resident in India. It is further proposed to provide that no deduction in respect of any expenditure or allowance or set off of loss shall be allowed in computing the income by way of dividend and to define the term dividends. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years. Clause 51 of the Bill seeks to amend section 115BBE of the Income-tax Act relating to tax on income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69D. Sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 115BBF. It is further proposed to insert a new clause (iig) in the long line to the said Explanation 1 so as to provide that the amount of income, by way of royalty in respect of patent chargeable to tax in accordance with the provisions of section 115BBF, shall be reduced from the book profit, if any such amount is credited to the profit or loss account. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Item (b) of sub-clause (i) of the said clause seeks to insert an Explanation so as to provide that the provisions of the said section, shall not be applicable and shall be deemed never to have been applicable to an assessee, being a foreign company, if (i) the assessee is a resident of a country or a specified territory with which India has an agreement referred to in subsection (1) of section 90 or the Central Government has adopted any agreement under sub-section (1) of section 90A and the assessee does not have a permanent establishment in India in accordance with the provisions of such agreement; or (ii) the assessee is a resident of a country with which India does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable for such rectification from the date of failure. Sub-section (3) of the proposed section provides that every notification issued under the proposed new section 115JH shall be laid before each House of Parliament. This amendment will take effect from 1st April 2017 and will, accordingly, apply to the assessment year 2017-2018 and subsequent years. Clause 55 of the Bill seeks to amend section 115-O of the Income-tax Act relating to tax on distributed profits of domestic companies. Sub-clause (a) of the said clause seeks to insert a new subsection to provide that no tax on distributed profits shall be chargeable under this section in respect of any amount declared, distributed or paid by the specified domestic company by way of dividends (whether interim or otherwise) to a business trust out of its current income on or after the specified date. It is further proposed to provide that nothing contained in the proposed subsection shall apply in respect of any amount declared, distributed or paid, at any time, by the specified domestic company by way of dividends (whether interim or otherwise) out of its accumulated profits and current profits up to the specified date. It is also p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 115TA, section 115TB and also the said section 115TC. It is proposed to amend the definition of investor as provided in clause (a) of the said Explanation so as to include a person who has invested in the security receipt as defined under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is further proposed to amend the definition of securitisation trust provided in clause (d) of the said Explanation so as to include a trust set up by a securitisation company or a reconstruction company formed, in accordance with the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or in pursuance of any guidelines and directions issued by the Reserve Bank of India. It is also proposed to provide that the expression security receipt shall have the same meaning as assigned to it in in clause (zg) of sub-section (1) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. These amendments will take effect from 1st June, 2016. Clause 59 of the Bill seeks to insert a new section 115TCA in the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter XII-EB consisting of new sections 115TD, 115TE and 115TF in the Income-tax Act on special provisions relating to tax on accreted income of certain trusts and institutions. Sub-section (1) of the proposed new section 115TD provides that notwithstanding anything contained in any other provision of the Act, a trust or institution registered under section 12AA in any previous year shall be liable to tax on accreted income in the event of certain eventualities mentioned in the proposed new section, as on the specified date, at the maximum marginal rate, in addition to the income-tax chargeable in respect of the total income. Sub-section (2) of the proposed section provides that the accreted income for the purposes of sub-section (1) means the amount by which the aggregate fair market value of the total assets of the trust or the institution, as on the specified date, exceeds the total liability of such trust or institution computed in accordance with the method of valuation as may be prescribed. It is further proposed to provide that while computing the accreted income in respect of a case referred to in clause (c) of sub-section (1), assets and liabilities, if any, related to suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said clause (a) of sub-section (2) of section 119, so as to enable the Board to issue directions and instructions in respect of section 270A of the Income-tax Act, as well. The proposed amendment is consequential to the insertion of a new section 270A in the Income-tax Act which provides for levy of penalty for under-reporting and misreporting of income. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 63 of the Bill seeks to amend section 124 of the Income-tax Act relating to jurisdiction of Assessing Officers. Sub-section (3) of the aforesaid section, inter alia, provides that no person shall be entitled to call in question the jurisdiction of an Assessing Officer in a case where return is filed under section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or subsection (2) of section 143 or after the completion of the assessment, whichever is earlier. It is proposed to amend the said sub-section (3) so as to provide that in a case where a search is initiated under section 132 or books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the time allowed to him under sub-section (1), or within the time allowed under a noticed issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. Sub-section (5) of the said section provides that if any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142 discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the completion of the assessment, whichever is earlier. Clause (aa) of Explanation to sub-section (9) of the said section provides that a return of income shall be regarded as defective unless the self-assessment tax together with interest, if any, payable in accordance with the provisions of section 140A, has been paid on or before the date of furnishing of the return. It is proposed to amend the sixth proviso to sub-section (1) of the said section so as to provide that a person, who during the previous year, earns income under clause (38) of section 10 and such inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (2) of section 73A in the said section. This amendment will take effect retrospectively from 1st April, 2016. Clause 66 of the Bill seeks to amend section 143 of the Income-tax Act relating to assessment. Sub-clause (a) of the said clause seeks to amend clause (a) of sub-section (1) of said section. Clause (a) of sub-section (1) of the aforesaid section provides that a return filed is to be processed and total income or loss is computed after making the adjustments on account of any arithmetical error in the return or on account of an incorrect claim, if such incorrect claim is apparent from any information in the return. It is proposed to expand the scope of adjustments that can be made at the time of processing under sub-section (1) of the said section to further include adjustments as under: (i) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed is furnished beyond the due date specified under sub-section (1) of section 139; (ii) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; (iii) disallowance of deduction claimed under sections 10AA, 80-IA, 80-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chargeable to tax has escaped assessment, he may assess or reassess such income or re-compute the loss or any other allowance. Explanation 2 to the said section provides certain situations which shall also be deemed to be the cases where income chargeable to tax has escaped assessment. It is proposed to amend the said Explanation 2 so as to provide that a case shall be deemed to be a case where income chargeable to tax has escaped assessment where on the basis of information or document received from the prescribed income-tax authority it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return. This amendment will take effect from 1st June, 2016. Clause 68 of the Bill seeks to substitute section 153 of the Income-tax Act with a new section relating to time limit for completion of assessment, reassessment and recomputation. It is proposed to substitute the existing section 153 to simplify the said section by retaining only those provisions that are relevant to the current provisions. The changes proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment, reassessment or recomputation shall be made on or before the expiry of twelve months from the end of the month in which such order is received by the Principal Commissioner or Commissioner. However, for cases pending as on 1st June, 2016 action shall be taken by 31st March, 2017 or within twelve months from the end of the month in which order is received, whichever is later. It is also proposed that where an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147, such assessment be made on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed. However, for cases pending as on 1st June, 2016, assessment of partner can be made by 31st March, 2017 or within twelve months from the end of the month in which assessment order in case of firm is passed. These amendments will take effect from 1st day of June, 2016. Clause 69 of the Bill seeks to substitute the section 153B of the Income-tax Act by a new section 153B relating to time limit for completion of assessment under section 153A and 153C. It is proposed to substitute the existing section 153B t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aying to any person any income by way of winning from horse race in excess of five thousand rupees shall deduct income-tax on such payment at the rates in force. It is proposed to enhance the said threshold limit from five thousand rupees to ten thousand rupees. This amendment will take effect from 1st June, 2016. Clause 72 of the Bill seeks to amend section 194C of the Incometax Act relating to payments to contractors. The proviso to sub-section (5) of the aforesaid section provides that the person responsible for paying the sums referred to in subsection (1) of the said section shall be liable to deduct income-tax, where the aggregate of the amounts of the sums credited or paid or likely to be credited or paid during the financial year exceeds seventy-five thousand rupees. It is proposed to enhance the said threshold limit from seventyfive thousand rupees to one lakh rupees for the aggregate transactions during the financial year. This amendment will take effect from 1st June, 2016. Clause 73 of the Bill seeks to amend section 194D of the Income-tax Act relating to insurance commission. Under the existing provisions contained in the aforesaid section, deduction of income tax at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emuneration or prize is credited to the account of the payee or at the time of payment of such income in cash or by the issue of cheque or a draft or by any other mode, whichever is earlier during the financial year. It is proposed to reduce the said rate of tax deduction from ten per cent. to five per cent. It is further proposed to increase the said threshold limit from one thousand rupees to fifteen thousand rupees. These amendments will take effect from 1st June, 2016. Clause 77 of the Bill seeks to amend section 194H of the Income-tax Act relating to commission or brokerage. Under the existing provisions contained in the aforesaid section, deduction of income-tax at the rate of ten per cent. shall be made in a case where the amount of income, of the aggregate of the amounts of income relating to commission or brokerage, credited or paid or likely to be credited or paid during the financial year, to the account of, or to, the payee exceed five thousand rupees. It is proposed to reduce the said rate of tax deduction from ten per cent. to five per cent. It is further proposed to increase the said threshold limit from five thousand rupees to fifteen thousand rupees. These amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a company) or a foreign company. This amendment will take effect from 1st June, 2016. Clause 82 of the Bill seeks to insert a new section 194LBC in the Income-tax Act relating to income in respect of investment in securitisation trust. Sub-section (1) of the proposed new section seeks to provide that where any income is payable to an investor, being a resident, in respect of an investment in a securitisation trust specified in clause (d) of the Explanation to section 115TCA, the person responsible for making the payment shall, at the time of credit of such income to the account of payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon, at the rate of (i) twenty-five per cent., if the payee is an individual or a Hindu undivided family; (ii) thirty per cent., if the payee is any other person. Sub-section (2) of the proposed new section seeks to provide that where any income is payable to an investor, being a nonresident (not being a company) or a foreign company, in respect of an investment in a securitisation trust specified in clause (d) of the Explanation to section 115TCA, the perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e will be nil. It is proposed to amend the said sub-sections to give reference of section 194-I therein so as to provide that payments in the nature of rent may be allowed to be received without deduction of tax. This amendment will take effect from 1st June, 2016. Clause 85 of the Bill seeks to amend section 206AA of the Income-tax Act relating to requirement to furnish Permanent Account Number. The aforesaid section, inter alia, provides that any person who is entitled to receive any sum or income or amount on which tax is deductible at source under Chapter XVII shall furnish his Permanent Account Number to the deductor, failing which tax shall be deducted at the rate mentioned in the relevant provisions of the Act or at the rate in force or at the rate of twenty per cent., whichever is higher. It is proposed to substitute sub-section (7) of the said section so as to provide that the provisions of the said section shall also not apply to a non-resident, not being a company, or to a foreign company, in respect of payment of interest on long-term bonds as referred to in section 194LC and any other payment subject to such conditions as may be prescribed. This amendment will take eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of business on presumptive basis, shall be required to pay advance tax of the whole amount in one instalment on or before the 15th March of the financial year. These amendments will take effect from 1st June, 2016. Clause 88 of the Bill seeks to amend section 220 of the Income-tax Act relating to when tax payable and when assessee is deemed in default. The aforesaid section provides for an assessee to be deemed to be in default and its consequences in case of failure on the part of the assessee to pay the amount of tax due. Sub-section (2) of the said section provides for levy of interest at the rate of one per cent. for every month or part of month for the period during which the default continues. Sub-section (2A) of the said section, inter alia, empowers the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner to reduce or waive the amount of interest paid or payable under sub-section (2) of the said section. It is proposed to amend sub-section (2A) of the said section so as to provide that an order accepting or rejecting the application of an assessee shall be passed by the concerned Principal Chief Commissioner, Chief Commissioner, Princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of self-assessment tax for the period beginning from the date of payment of tax or filing of return, whichever is later, to the date on which the refund is granted. Sub-clause (B) of the said clause seeks to insert a new subsection (1A) so as to provide that that where a refund arising out of appeal effect is delayed beyond the time prescribed under subsection (5) of section 153, the assessee shall be entitled to receive, in addition to the interest payable under sub-section (1) of section 244A, an additional interest on such refund amount calculated at the rate of three per cent. per annum, for the period beginning from the date following the date of expiry of the time allowed under sub-section (5) of section 153 to the date on which the refund is granted. Sub-clause (C) of said clause seeks to amend sub-section (2) of the said section so as to give the reference of sub-section (1A) in the said sub-section which is consequential in nature. These amendments will take effect from 1st June, 2016. Clause 91 of the Bill seeks to amend section 249 of the Income-tax Act relating to form of appeal and limitation. Clause (b) of sub-section (2) of the aforesaid section provides that an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-section (5) of section 144C in respect of any objection filed on or after the 1st day of July, 2012, by the assessee under sub-section (2) of section 144C in pursuance of which the Assessing Officer has passed an order completing the assessment or reassessment, direct the Assessing Officer to appeal to the Appellate Tribunal against the order. Further, sub-section (3A) of the said section provides that every appeal under sub-section (2A) shall be filed within sixty days of the date on which the order sought to be appealed against is passed by the Assessing Officer in pursuance of the directions of the Dispute Resolution Panel under sub-section (5) of section 144C. It is proposed to omit the said sub-sections (2A) and (3A) to do away with the filing of such appeal by the Assessing Officer. It is also proposed to consequently amend sub-section (4) of the aforesaid section so as to exclude therefrom the reference relating to direction of the Dispute Resolution Panel, sub-section (2A) and the order of the Assessing Officer (in pursuance of the directions of the Dispute Resolution Panel). These amendments will take effect from 1st June, 2016. Sub-clause (C) of the said section se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a new section 270A for under-reporting and misreporting of income. Sub-section (1) of the proposed new section seeks to provide that the Assessing Officer, Commissioner (Appeals) or the Principal Commissioner or Commissioner may have the power to levy penalty if a person has under reported his income. Sub-section (2) of the proposed new section seeks to provide that a person shall be considered to have under reported his income if, (i) the income assessed is greater than the maximum amount not chargeable to tax, where no return of income is filed; (ii) the assessed income is greater than the income determined upon processing under clause (a) of sub-section (1) of section 143, where return is filed; (iii) the income assessed is greater than the income assessed or reassessed immediately before such reassessment; (iv) the income assessed or reassessed has the effect of reducing the loss or converting such loss into income, Appropriate provisions to cover minimum alternate tax and alternate minimum tax cases on the above lines are proposed to be provided. Sub-section (3) of the proposed section seeks to provide that the amount of under-reported income shall be, in a case where income h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide that no addition or disallowance of an amount shall form the basis for imposition of penalty, if such addition or disallowance has formed the basis of imposition of penalty in the case of the person for the same or any other assessment year. Sub-section (12) of the proposed new section seeks to provide that the penalty under the said section shall be imposed by an order in writing. These amendments will take effect from the 1st day of April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 97 of the Bill seeks to insert a new section 270AA in the Income-tax Act relating to immunity from imposition of penalty etc. It is proposed to provide that an assessee may make an application to the Assessing Officer for grant of immunity from imposition of penalty under section 270A and initiation of proceedings under section 276C, provided he pays the tax and interest payable as per the order of assessment or reassessment within the period specified in such notice of demand and does not prefer an appeal against such assessment order. The assessee can make such application within one month from the end of the month in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said section so as to provide that section 271A shall be applicable without prejudice to the provisions of section 270A. The proposed amendment is consequential to the insertion of a new section 270A in the Income-tax Act which provides for levy of penalty for under-reporting and misreporting of income. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 100 of the Bill seeks to amend section 271AA of the Income-tax Act relating to penalty for failure to keep and maintain information and document, etc., in respect of certain transactions The aforesaid section provides that the Assessing Officer or Commissioner (Appeals) may direct that a person who has failed to keep and maintain any information and document referred to in section 92D, shall pay by way of penalty a sum equal to two per cent. of the value of each international transaction or specified domestic transaction entered into by such person. It is proposed to amend sub-section (1) of the said section so as to give the reference of section 270A in the said section which is consequential in nature. It is further proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xceed one month and fifteen thousand rupees for every day for which failure continues beyond the period of one month. It is further provided that where any reporting entity fails to produce the information and documents within the period allowed under sub-section (6) of section 286, the prescribed authority may direct that such entity shall pay, by way of penalty, a sum of five thousand rupees for every day during which the failure continues, beginning from the day immediately following the day on which the period for furnishing the information and document expires. It is also provided that if the failures continue after any order directing the person to pay by way of penalty any sum has been served on the entity, then the prescribed authority may direct that such entity shall pay, by way of penalty, a sum of fifty thousand rupees for every day for which such failure continues begining from the date of service of such order. It is also provided that in case a reporting entity provides inaccurate information in the report furnished in accordance with sub-section (2) of the said section 286 and where the entity knows of the inaccuracy at the time of furnishing the report but does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of income assessed over the returned income is such that it does not attract provisions of clause (c) of sub-section (1) of section 271, then, the person shall be deemed to have made full and true disclosure for the purposes of sub-section (1) of the said section 271. Further, clause (b) of sub-section (2) of section 273A provides for condition, wherein penalty shall not be waived and reduced under sub-section (1) of section 273A. It is proposed to make a reference of section 270A in clause (ii) and in the Explanation to sub-section (1) and in clause (b) of subsection (2) of section 273A, owing to insertion of a new section 270A which provides for levy of penalty for under-reporting or misreporting of income and ceasing of operation of section 271, for the assessment year commencing on or after 1st April, 2017. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Sub-clause (ii) of the said clause seeks to insert a new subsection (4A) in the said section so as to provide that an order accepting or rejecting application of an assessee shall be passed by the concerned Principal Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner or Principal Commissioner or Commissioner. Sub-section (1A) of the aforesaid section provides that prosecution proceeding shall not be proceeded against a person for offences under section 276C or section 277 in respect of whom penalty under clause (iii) of sub-section (1) of section 271 has been reduced or waived under section 273A. It is proposed to amend the said sub-section so as to provide that the prosecution proceeding shall not be proceeded against a person for offences under section 276C or section 277 in respect of whom penalty under section 270A has also been reduced or waived under section 273A. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 108 of the Bill seeks to amend section 281B of the Income-tax Act relating to provisional attachment to protect revenue in certain cases. The aforesaid section provides that the Assessing Officer has the power to provisionally attach any property of the assessee during the pendency of assessment or reassessment proceedings, for a period of six months, with the prior approval of the income-tax authorities specified therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the existing demand which is payable and the balance amount, if any, be deposited in the Personal Deposit Account of the Principal Commissioner or Commissioner in the branch of Reserve Bank of India or the State Bank of India or of its subsidiaries or any bank as may be appointed by the Reserve Bank of India as its agent under the provisions of subsection (1) of section 45 of the Reserve Bank of India Act, 1934 at the place where the office of the Principal Commissioner or Commissioner is situated. In a case where the Assessing Officer is satisfied that the bank guarantee is not required any more to protect the interests of the revenue, he shall release that guarantee forthwith. These amendments will take effect from 1st day of June, 2016. Clause 109 of the Bill seeks to amend section 282A of the Income-tax Act relating to authentication of notices and other documents. Sub-section (1) of the aforesaid section provides that where a notice or other document is required to be issued by any income-tax authority under the Act, such notice or document should be signed by that authority in manuscript. It is proposed to amend the said sub-section (1) so as to provide that notices and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to an accounting year, if the total consolidated group revenue for the accounting year preceding it, does not exceed the prescribed threshold. Sub-section (8) of the proposed new section provides for application of the section in accordance with such guidelines and subject to such conditions as may be prescribed. Sub-section (9) of the proposed new section, inter alia, defines various terms for the purposes of the new section. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 111 of the Bill seeks to amend section 288 of the Income-tax Act relating to appearance by authorised representative. Clause (b) of sub-section (4) of the aforesaid section bars an authorised representative to represent an assessee before any income-tax authority or the Appellate Tribunal if he has been convicted of an offence connected with any income-tax proceedings or if a penalty has been imposed on him under the Income-tax Act other than a penalty imposed under clause (ii) of sub-section (1) of section 271. It is proposed to amend clause (b) of sub-section (4) of section 288 so as to provide that a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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