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TMI BlogMemorandum Explaining the Provisions in The Finance BillX X X X Extracts X X X X X X X X Extracts X X X X ..... (F) Revenue mobilisation measures; (G) Improving effectiveness of tax administration; (H) Preventing tax abuse; and (I) Rationalisation of provisions of the Act. DIRECT TAXES A. RATES OF INCOME-TAX I. Rates of income-tax in respect of income liable to tax for the assessment year 2020-21. In respect of income of all categories of assessees liable to tax for the assessment year 2020-21, the rates of income-tax have either been specified in specific sections (like section 115BAA or section 115BAB for domestic companies) or 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 (No 2) Act, 2019, as amended by Taxation Law Amendment Act, 2019 (TLAA) 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 The amount of income-tax shall be increased by a surcharge for the purposes of the Union,- (a) in the case of every individual or HUF or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (1) of section 115AD of the Act] exceeding five crore rupees, at the rate of thirty-seven per cent. of such income-tax; (v) having a total income [including the income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but is not covered in sub-clauses (iii) and (iv), at the rate of fifteen per cent. of such income-tax: Provided that in case where the total income includes any income chargeable under clause (b) of sub-section (1) of section 115AD of the Act, the rate of surcharge on the income-tax calculated on that part of income shall not exceed fifteen per cent; (b) in the case of every co-operative society or firm or local authority, at the rate of twelve per cent. of such income-tax, where the total income exceeds one crore rupees; (c) in the case of every domestic company except such domestic company whose income is chargeable to tax under section 115BAA or section 115BAB of the Act,- (i) at the rate of seven per cent. of such income-tax, where the total income exceeds one crore rupees but does not exceed ten crore rupees; (ii) at the rate of twelve per cent. of such income-tax, where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incomes paid or likely to be paid and subject to the deduction exceeds fifty lakh rupees but does not exceed one crore rupees; (ii) at the rate of fifteen per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed two crore rupees; (iii) at the rate of twenty-five per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds two crore rupees but does not exceed five crore rupees; (iv) at the rate of thirty-seven per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds five crore rupees; (b) in the case of every co-operative society or firm, being a non-resident, calculated at the rate of twelve per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees; (c) in the case of every company, other than a domestic company, calculated,- (i) at the rate of two per cent. of such tax, where the income or the aggregate of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Upto ₹ 2,50,000 Nil. ₹ 2,50,001 to ₹ 5,00,000 5 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 5 per cent. ₹ 5,00,001 to ₹ 10,00,000 20 per cent. Above ₹ 10,00,000 30 per cent. (iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year,- Upto ₹ 5,00,000 Nil. ₹ 5,00,001 to ₹ 10,00,000 20 per cent. Above ₹ 10,00,000 30 per cent. The amount of income-tax computed in accordance with the preceding provisions of this Paragraph (including capital gains under section 111A, 112 and 112A) as well as income tax computed under section 115BAC, shall be increased by a surcharge at the rate of,- (a) having a total income (including the income under the provisions of section 111A and 112A of the Act) exceeding fifty lakh rupees but not exceeding o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D of the Act. This is discussed later. C. Firms In the case of firms, the rate of income-tax has been specified in Paragraph C of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for FY 2019-20. The amount of income-tax shall be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of a firm 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. D. Local authorities The rate of income-tax in the case of every local authority has been specified in Paragraph D of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for the FY 2019-20. The amount of income-tax shall be increased by a surcharge at the rate of twelve per cent. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief shall be available in respect of such cess. [Clause 2 & the First Schedule] IV Other amendments having impact on rates for various categories of person A. Incentives to resident co-operative societies. The TLAA, which replaced The Taxation Laws (Amendment) Ordinance, 2019, sought to provide additional fiscal stimulus to attract investment, generate employment and boost the economy in the wake of economic developments post enactment of the Finance (No. 2) Act, 2019 and keeping in view the reduction of rate of corporate income tax by many countries world over. TLAA, inter alia, introduced section 115BAA in the Act so as to provide that an existing domestic company may opt to pay tax at 22 per cent., if it does not claim any incentive and deduction as provided in said section. In case of the domestic company opting to pay tax at the rate of 22 per cent. under said section, it was provided that,- (a) failure to satisfy specified conditions would disqualify it for the concessional rate and normal provisions of the Act shall apply. (b) deemed loss or depreciation arising out of amalgamation attributable to any incentive, deduction or exemption, shall not be allowed in comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction for such loss or depreciation shall be allowed for any subsequent year. However, where there is a depreciation allowance in respect of a block of asset which has not been given full effect to prior to the assessment year beginning on 1st April, 2021, corresponding adjustment shall be made to the written down value of such block of assets as on 1st April, 2020 in the prescribed manner, if the option is exercised for a previous year relevant to the assessment year beginning on 1st April, 2021; (iv) the concessional rate shall not apply unless option is exercised by the co-operative society in the prescribed manner on or before the due date specified under sub-section (1) of section 139 of the Act for furnishing the returns of income for any previous year relevant to the assessment year commencing on or after 1st April, 2021 and such option once exercised shall apply to subsequent assessment years; (v) if the person has a Unit in the International Financial Services Centre (IFSC), as referred to in sub-section (1A) of section 80LA, the deduction under section 80LA shall be available to such Unit subject to fulfilment of the conditions contained in that section; and (vi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 23] or clause (iia) of sub-section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35 or section 35AD or section 35CCC or clause (iia) of section 57 or under any provisions of Chapter VI-A other than the provisions of sub-section (2) of section 80CCD or section 80JJAA; (b) without set off of any loss,- (i) carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in (a) above; or (ii) under the head house property with any other head of income; (c) by claiming the depreciation, if any, under section 32, except clause (iia) of sub-section (1) thereof, determined in such manner as may be prescribed; and (d) without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force. (v) the loss and depreciation referred to in (ii)(b) above shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing exemptions/ deductions: (i) Leave travel concession as contained in clause (5) of section 10; (ii) House rent allowance as contained in clause (13A) of section 10; (iii) Some of the allowance as contained in clause (14) of section 10; (iv) Allowances to MPs/MLAs as contained in clause (17) of section 10; (v) Allowance for income of minor as contained in clause (32) of section 10; (vi) Exemption for SEZ unit contained in section 10AA; (vii) Standard deduction, deduction for entertainment allowance and employment/professional tax as contained in section 16; (viii) Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23. (Loss under the head income from house property for rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law); (ix) Additional deprecation under clause (iia) of sub-section (1) of section 32; (x) Deductions under section 32AD, 33AB, 33ABA; (xi) Various deduction for donation for or expenditure on scientific research contained in sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80JJAA or section 80M, in case of domestic companies opting for taxation under these sections. These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years. [Clauses 51 & 52] D. Withdrawal of exemption on certain perquisites or allowances provided to Union Pubic Services Commission (UPSC) Chairman and members and Chief Election Commissioner and Election Commissioners Section 10 of the Act provides for exemption in respect of certain incomes and activities under specific circumstances. Clause (45) thereof, inserted by the Finance Act, 2011, provides that any allowance or perquisite as may be notified by the Central Government, paid to the serving/ retired Chairman or Members of UPSC shall not be included in computing their total income and hence shall be exempt from income-tax. Further, vide Notification No. 49/2011 dated 6th September, 2011 bearing SO 2045(E), it was notified that in the case of serving Chairman and members of UPSC the following allowances and perquisites shall be exempt from income-tax for the purposes of clause (45) of section 10 of the Act, with effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u Dhabi Investment Authority and Sovereign Wealth Fund. Section 10 of the Act provides for exemption in respect of certain incomes and activities under specific circumstances. In order to promote investment of sovereign wealth fund, including the wholly owned subsidiary of Abu Dhabi Investment Authority (ADIA), it is proposed to insert a new clause in the said section so as to provide exemption to any income of a specified person in the nature of dividend, interest or long-term capital gains arising from an investment made by it in India, whether in the form of debt or equity, in a company or enterprise carrying on the business of developing, or operating and maintaining, or developing, operating or maintaining any infrastructure facility as defined in Explanation to clause (i) of sub-section (4) of section 80-IA of the Act or such other business as may be notified by the Central Government in this behalf. In order to be eligible for exemption, the investment is required to be made on or before 31st March, 2024 and is required to be held for at least three years. For the purpose of this exemption, "specified person" is proposed to be defined to mean,- (a) a wholly owned subsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified by the Central Government in this behalf. It is now proposed to provide exemption, by inserting a new clause in section 10, to any income accruing or arising to Indian Strategic Petroleum Reserves Limited (ISPRL), being a wholly owned subsidiary of Oil Industry Development Board under the Ministry of Petroleum and Natural Gas, as a result of an arrangement for replenishment of crude oil stored in its storage facility in pursuance to directions of the Central Government in this behalf. This exemption shall be subject to the condition that the crude oil is replenished in the storage facility within three years from the end of the financial year in which the crude oil was removed from the storage facility for the first time. This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years. [Clause 7] Rationalization of provisions of start-ups. The existing provisions of section 80-IAC of the Act provide for a deduction of an amount equal to one hundred per cent of the profits and gains derived from an eligible business by an eligible start-up for three consecutive assessment years ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of an affordable residential house property. The deduction allowed is up to one lakh fifty thousand rupees and is subject to certain conditions. One of the conditions is that loan has been sanctioned by the financial institution during the period from 1st April, 2019 to 31st March, 2020. The said deduction is aimed to incentivise first time buyers to invest in residential house property whose stamp duty does not exceed forty-five lakh rupees. In order to continue promoting purchase of affordable housing, the period of sanctioning of loan by the financial institution is proposed to be extended to 31st March, 2021. This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years. [Clause 32] Modification in conditions for offshore funds' exemption from "business connection". Section 9A of the Act provides for a special regime in respect of offshore funds by providing them exemption from creating a "business connection" in India on fulfilment of certain conditions. It provides that in the case of an eligible investment fund, the fund management activity carried out through an eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t,- (i) for the purpose of calculation of the aggregate participation or investment in the fund, directly or indirectly, by Indian resident, contribution of the eligible fund manager during first three years up to twenty-five crore rupees shall not be accounted for; and (ii) if the fund has been established or incorporated in the previous year, the condition of monthly average of the corpus of the fund to be at one hundred crore rupees shall be fulfilled within twelve months from the last day of the month of its establishment or incorporation. This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years. [Clause 6] Amendment of section 115BAB of the Act to include generation of electricity as manufacturing. The TLAA, inter-alia, inserted section 115BAB in the Act. The newly inserted section provides that new manufacturing domestic companies set up on or after 1st October, 2019, which commence manufacturing or production by 31st March, 2023 and do not avail of any specified incentives or deductions, may opt to pay tax at a concessional rate of 15 per cent. Further, Explanation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r extension of the time limit and also for a further concessional rate of TDS on interest payment against borrowings through issues of long-term bonds and RDB which are listed only on a recognised stock exchange in any IFSC. In order to attract fresh investment, create jobs and stimulate the economy, it is proposed to; - i. extend the period of said concessional rate of TDS of five per cent to 1st July, 2023 from 1st July, 2020; ii. provide that the rate of TDS shall be four per cent on the interest payable to a non-resident, in respect of monies borrowed in foreign currency from a source outside India, by way of issue of any long term bond or RDB on or after 1st April, 2020 but before 1st July, 2023 and which is listed only on a recognised stock exchange located in any IFSC. This amendment will take effect from 1st April, 2020. [Clause 82] Amendment of section 194LD of the Act to extend the period of concessional rate of withholding tax and also to extend this concessional rate to municipal debt securities. Section 194LD of the Act provides for lower TDS of five per cent in case of interest payments to Foreign Institutional Investors (FII) and Qualified Foreign Investors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anisation of Economic Co-operation and Development (OECD) countries to address the issue of base erosion and profit shifting by way of excess interest deductions. Representations have been received to carve out interest paid or payable in respect of debt issued by a PE of a non-resident in India, being a person engaged in the business of banking for the reason that as per the existing provisions a branch of the foreign company in India is a non-resident in India. Further, the definition of the AE in section 92A, inter alia, deems two enterprises to be AE, if during the previous year a loan advanced by one enterprise to the other enterprise is at 50 per cent. or more of the book value of the total assets of the other enterprise. Thus, the interest paid or payable in respect of loan from the branch of a foreign bank may attract provisions of interest limitation provided for under this section. It is, therefore, proposed to amend section 94B of the Act so as to provide that provisions of interest limitation would not apply to interest paid in respect of a debt issued by a lender which is a PE of a non-resident, being a person engaged in the business of banking, in India. This amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty, for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration shall be charged to tax under the head "income from other sources". It also provide that where the assessee receives any immovable property for a consideration and the stamp duty value of such property exceeds five per cent of the consideration or fifty thousand rupees, whichever is higher, the stamp duty value of such property as exceeds such consideration shall be charged to tax under the head "Income from other sources". Thus, the present provisions of section 43CA, 50C and 56 of the Act provide for safe harbour of five per cent. Representations have been received in this regard requesting that the said safe harbour of five per cent may be increased. It is, therefore, proposed to increase the limit to ten per cent.. This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years. [Clauses 22, 27 & 29] Providing an option to the assessee for not availing deduction under section 35AD. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or interest income and the TDS on such income has been deducted according to the provisions of Chapter XVII-B of the Act. While, the current provisions of section 115A of the Act provide relief to non-residents from filing of return of income where the non-resident is not liable to pay tax other than the TDS which has been deducted on the dividend or interest income, the same relief has not been extended to non-residents whose total income consists only of the income by way of royalty or FTS of the nature as mentioned in point (b) above. Representations have been received to extend this benefit to royalty and FTS income as well. Therefore, it is proposed to amend section 115A of the Act in order to provide that a non-resident, shall not be required to file return of income under sub-section (1) of section 139 of the Act if, - (i) his or its total income consists of only dividend or interest income as referred to in clause (a) of sub-section (1) of said section, or royalty or FTS income of the nature specified in clause (b) of sub-section (1) of section 115A; and (ii) the TDS on such income has been deducted under the provisions of Chapter XVII-B of the Act at the rates whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alculating self-assessment). These amendments will take effect from 1st April, 2020. [Clauses 68, 71, 72 & 73] Allowing carry forward of losses or depreciation in certain amalgamations. Section 72AA of the Act provides for carry forward of accumulated losses and unabsorbed depreciation allowance in the case of amalgamation of banking company with any other banking institution under a scheme sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of the Banking Regulation Act, 1949. This section operates notwithstanding anything contained in sub-clause (i) to (iii) of clause (1B) of section 2 or section 72A of the Act. In order to address the issue faced by the amalgamated public sector banks and public sector General Insurance Companies, it is proposed to extend the benefit of this section to amalgamation of,- (i) one or more corresponding new bank or banks with any other corresponding new bank under a scheme brought into force by the Central Government under section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or under section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d InvITs should be given the same status as public listed InvITs with regards to tax treatments provided under the Act. Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) (Regulations), 2019 vide notification No.SEBI/LAD-NRO/GN/2019/10 has, inter-alia, done away with the mandatory listing requirement for InvITs. In light of this, the definition of business trusts under the Act is required to be aligned with the amended SEBI Regulations. Therefore, it is proposed to amend clause (13A) of section 2 of the Act to modify the definition of "business trust" so as to do away with the requirement of the units of business trust to be listed on a recognised stock exchange. This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years. [Clause 62] D. MEASURES TO PROVIDE TAX CERTAINTY Amendment for providing attribution of profit to Permanent Establishment in Safe Harbour Rules under section 92CB and in Advance Pricing Agreement under section 92CC Section 92CB of the Act empowers the Central Board of Direct Taxes (Board) for making safe harbour rules (SHR) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess carried on by a mutual insurance company or a co-operative society shall be computed in accordance with the rules contained in the First Schedule to the Act. Section 43B of the Act provides for allowance of certain deductions, irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by the assessee, only in the previous year in which such sum is actually paid. Rule 5 of the said Schedule provides for computation of profits and gains of other insurance business. It states that profits and gains of any business of insurance other than life insurance shall be taken to be the profit before tax and appropriations as disclosed in the profit and loss account prepared in accordance with the provisions of the Insurance Act, 1938 or the rule made thereunder or the provisions of the Insurance Regulatory and Development Authority Act, 1999 or the regulations made thereunder, subject to the condition that any expenditure debited to the profit and loss account which is not admissible under the provisions of sections 30 to 43B shall be added back; any gain or loss on realisation of investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have been deducted under section 194J of the Act. Therefore to reduce litigation, it is proposed to reduce rate for TDS in section 194J in case of fees for technical services (other than professional services) to two per cent from existing ten per cent. The TDS rate in other cases under section 194J would remain same at ten per cent. This amendment will take effect from 1st April, 2020. [Clause 79] E. WIDENING AND DEEPENENING OF TAX BASE Enlarging the scope for tax deduction on interest income under section 194A of the Act. Section 194A of the Act governs interest other than interest on securities. Sub-section (1) thereof provides that any person not being individual or HUF who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall deduct income-tax at the rates in force. Sub-section (3) of said section provides for circumstances in which the provisions of sub-section (1) shall not apply. Clause (i) thereof provides the circumstance where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mode, whichever is earlier. • The tax at one per cent is required to be deducted on the gross amount of such sales or service or both. • Any payment made by a purchaser of goods or recipient of services directly to an e-commerce participant shall be deemed to be amount credited or paid by the e-commerce operator to the e-commerce participant and shall be included in the gross amount of such sales or services for the purpose of deduction of income-tax. • The sum credited or paid to an e-commerce participant (being an individual or HUF) by the e-commerce operator shall not be subjected to provision of this section, if the gross amount of sales or services or both of such individual or HUF, through e-commerce operator, during the previous year does not exceed five lakh rupees and such e-commerce participant has furnished his Permanent Account Number (PAN) or Aadhaar number to the e-commerce operator. • A transaction in respect of which tax has been deducted by the e-commerce operator under this section or which is not liable to deduction under the exemption discussed in the previous bullet, there shall not be further liability on that transaction for TDS u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas remittance and for sale of overseas tour package, as under: • An authorised dealer receiving an amount or an aggregate of amounts of seven lakh rupees or more in a financial year for remittance out of India under the LRS of RBI, shall be liable to collect TCS, if he receives sum in excess of said amount from a buyer being a person remitting such amount out of India, at the rate of five per cent. In non- PAN/Aadhaar cases the rate shall be ten per cent. • A seller of an overseas tour program package who receives any amount from any buyer, being a person who purchases such package, shall be liable to collect TCS at the rate of five per cent. In non-PAN/ Aadhaar cases the rate shall be ten per cent. • The above TCS provision shall not apply if the buyer is,- a. liable to deduct tax at source under any other provision of the Act and he has deducted such amount. b. the Central Government, a State Government , an embassy, a High Commission, legation, commission, consulate, the trade representation of a foreign State, a local authority as defined in Explanation to clause (20) of section 10 or any other person notified by the Central Government in the Official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an employee in a recognized provident fund exceeding twelve per cent. of salary is taxable. Further, the amount of any contribution to an approved superannuation fund by the employer exceeding one lakh fifty thousand rupees is treated as perquisite in the hands of the employee. Similarly, the assessee is allowed a deduction under National Pension Scheme (NPS) for the fourteen per cent. of the salary contributed by the Central Government and ten per cent. of the salary contributed by any other employer. However, there is no combined upper limit for the purpose of deduction on the amount of contribution made by the employer. This is giving undue benefit to employees earning high salary income. While an employee with low salary income is not able to let employer contribute a large part of his salary to all these three funds, employees with high salary income are able to design their salary package in a manner where a large part of their salary is paid by the employer in these three funds. Thus, this portion of salary does not suffer taxation at any point of time, since Exempt-Exempt-Exempt (EEE) regime is followed for these three funds. Thus, not having a combined upper cap is iniqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and stones, fibres, energy, sweeteners, plantation, dry fruits and others. Presently, as per SCRA regulations, derivative trading in commodities is limited only to commodity 'futures' and 'option on commodity futures'. The underlying asset in the 'option on commodity futures' is a 'commodity future'. This means that upon expiry, if the 'option' is exercised, the option-holder gets a right to buy or sell a 'commodity future' and not the right to buy or sell the goods directly. However, vide notification dated 18th October, 2019, 'option in goods' has also been included in the definition of 'derivatives' in clause (ac) of section 2 of the SCRA. This has paved the way for new derivative product 'options in goods' with goods notified on 27.09.2016 directly as the underlying asset. Moreover, 'commodity futures' based on prices or indices of prices of 'commodity futures' is also likely to be introduced as a new product in the commodity derivative market. Necessary changes are, therefore, proposed in Chapter VII of the Finance Act, 2013, to align the provisions of CTT with the changes in commodity derivative market. Moreover, in order to encourage the commodity transactions , settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (3) of section 143 so as to impart greater efficiency, transparency and accountability by certain means specified therein. Accordingly, E-assessment Scheme, 2019 was notified under sub-section (3A) of Section 143 of the Act. 3. It is proposed to amend sub-section (3A) of section 143 of the Act to,- (i) expand the scope so as to include the reference of section 144 of the Act relating to best judgement assessment in the said sub-section; (ii) provide that Central Government may issue any direction under sub-section (3B) of the said section upto 31st March, 2022. This amendment will take effect from 1st April, 2020. [Clause 69] Amendment in Dispute Resolution Panel (DRP). Section 144C of the Act provides that in case of certain eligible assessees, viz., foreign companies and any person in whose case transfer pricing adjustments have been made under sub-section (3) of section 92CA of the Act, the Assessing Officer (AO) is required to forward a draft assessment order to the eligible assessee, if he proposes to make any variation in the income or loss returned which is prejudicial to the interest of such assessee. Such eligible assessee with respect to such variatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 250 of the Act to provide for the following: - • Empowering Central Government to notify an e-appeal scheme for disposal of appeal so as to impart greater efficiency, transparency and accountability. • Eliminating the interface between the Commissioner (Appeals) and the appellant in the course of appellate proceedings to the extent technologically feasible. • Optimizing utilization of the resources through economies of scale and functional specialisation. • Introducing an appellate system with dynamic jurisdiction in which appeal shall be disposed of by one or more Commissioner (Appeals). It is also proposed to empower the Central Government, for the purpose of giving effect to the scheme made under the proposed sub-section, by notification in the Official Gazette, to direct that any of the provisions of this Act relating to jurisdiction and procedure of disposal of appeal shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. Such directions are to be issued on or before 31st March 2022. It is proposed that every notification issued shall be required to be laid before each Hous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, in any case, exceed 365 days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee. It is proposed to provide that ITAT may grant stay under the first proviso subject to the condition that the assessee deposits not less than twenty per cent of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnish security of equal amount in respect thereof. It is also proposed to substitute second proviso to provide that no extension of stay shall be granted by ITAT, where such appeal is not so disposed of which the said period of stay as specified in the order of stay. However, on an application made by the assessee, a further stay can be granted, if the delay in not disposing of the appeal is not attributable to the assessee and the assessee has deposited not less than twenty per cent of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnish securi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harter and issue such orders, instructions, directions or guidelines to other income-tax authorities as it may deem fit for the administration of Charter. This amendment will take effect from 1st April, 2020. [Clause 64] H. PREVENTING TAX ABUSE Modification of residency provisions. Sub-section (1) of section 6 of the Act provide for situations in which an individual shall be resident in India in a previous year. Clause (c) thereof provides that the individual shall be Indian resident in a year, if he,- (i) has been in India for an overall period of 365 days or more within four years preceding that year, and (ii) is in India for an overall period of 60 days or more in that year. Clause (b) of Explanation 1 of said sub-section provides that an Indian citizen or a person of Indian origin shall be Indian resident if he is in India for 182 days instead of 60 days in that year. This provision provides relaxation to an Indian citizen or a person of Indian origin allowing them to visit India for longer duration without becoming resident of India. Instances have come to notice where period of 182 days specified in respect of an Indian citizen or person of Indian origin visiting I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be said to be "not ordinarily resident" in India in a previous year, if the individual or the manager of the HUF has been a non-resident in India in seven out of ten previous years preceding that year. This new condition to replace the existing conditions in clauses (a) and (b) of sub-section (6) of section 6. (iii) an Indian citizen who is not liable to tax in any other country or territory shall be deemed to be resident in India. This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years. [Clause 4] Amending definition of "work" in section 194C of the Act. Section 194C of the Act provides for the deduction of tax on payments made to contractors. The section provides that any person responsible for paying any sum to a resident for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract shall at the time of such credit or at the time of payment whichever is earlier deduct an amount equal to one per cent in case payment is made to an individual or an HUF and two per cent in other cases. Clause (iv) of the Explanation of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gregate amount of false entries or omitted entry. It is also propose to provide that any other person, who causes in any manner a person to make or cause to make a false entry or omits or causes to omit any entry, shall also pay by way of penalty a sum which is equal to the aggregate amounts of such false entries or omitted entry. The false entries is proposed to include use or intention to use - (a) forged or falsified documents such as a false invoice or, in general, a false piece of documentary evidence; or (b) invoice in respect of supply or receipt of goods or services or both issued by the person or any other person without actual supply or receipt of such goods or services or both; or (c) invoice in respect of supply or receipt of goods or services or both to or from a person who do not exist. This amendment will take effect from 1st April, 2020. [Clause 98] I. RATIONALISATION OF PROVISIONS OF THE ACT Aligning purpose of entering into Double Taxation Avoidance Agreements (DTAA) with Multilateral Instrument (MLI). Section 90 of the Act empowers the Central Government to enter into agreement with foreign countries or specified territories (commonly known as DTAAs) f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 6 of MLI provides for modification of the Covered Tax Agreement to include the following preamble text: "Intending to eliminate double taxation with respect to the taxes covered by this agreement without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in this agreement for the indirect benefit of residents of third jurisdictions)," In order to achieve this, clause (b) of sub-section (1) of section 90 of the Act which provides for providing relief in respect of avoidance of double taxation of income under the laws of both country or territory (India and the other foreign country of territory) is required to contain the text provided for in MLI as mentioned at para 4 above. In case of section 90A of the Act also, similar amendment would be required to be carried out. Therefore, it is proposed to amend clause (b) of sub-section (1) of section 90 of the Act so as to provide that the Central Government may enter into an agreement with the Government of any country outside India or specified territory outside India for, inter alia, the avoidance of doubl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presence in India, whether or not, the agreement for such transactions or activities is entered in India; or the non-resident has a residence or place of business in India; or the non-resident renders services in India. It was also provided that only so much of income as is attributable to the transactions or activities mentioned at para 2(a) and (b) shall be deemed to accrue or arise in India. Therefore, for the purposes of determining SEP of a non-resident in India, threshold for the aggregate amount of payments arising from the specified transactions and for the number of users were required to be prescribed in the Rules. However, since discussion on this issue is still going on in G20-OECD BEPS project, these numbers have not been notified yet. G20-OECD report is expected by the end of December 2020. In the circumstances, it is proposed to defer the applicability of SEP to starting from assessment year 2022-23. Certain drafting changes have also been made while deferring the proposal. The current SEP provisions shall be omitted from assessment year 2021-22 and the new provisions will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment in erstwhile Category I and II FPIs under the SEBI (FPI) Regulations, 2014 may be grandfathered. Further, similar exception may be provided in respect of investment in Category-I FPI under the SEBI (FPI) Regulations, 2019. These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years. [Clause 5] Clause (vi) of sub-section (1) of section 9 deems certain income by way of royalty to accrue or arise in India. Explanation 2 of said clause defines the term "royalty" to, inter alia, mean the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films. Due to exclusion of consideration for the sale, distribution or exhibition of cinematographic films from the definition of royalty, such royalty is not taxable in India even if the DTAA gives India the right to tax such royalty. Such a sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by them to its unit holders. Such income is then exempt in the hands of unit holders under clause (35) of section 10. The incidence of tax is, thus, on the payer company/Mutual Fund and not on the recipient, where it should normally be. The dividend is income in the hands of the shareholders and not in the hands of the company. The incidence of the tax should therefore, be on the recipient. Moreover, the present provisions levy tax at a flat rate on the distributed profits, across the board irrespective of the marginal rate at which the recipient is otherwise taxed. The provisions are hence, considered, iniquitous and regressive. The present system of taxation of dividend in the hands of company/ mutual funds was reintroduced by the Finance Act, 2003 (with effect from the assessment year 2004-05) since it was easier to collect tax at a single point and the new system was leading to increase in compliance burden. However, with the advent of technology and easy tracking system available, the justification for current system of taxation of dividend has outlived itself. In view of above, it is proposed to carry out amendments so that dividend or income from units are taxable in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn, in place of due date of filing return earlier. (xi) amend section 115BBDA which taxes dividend income in excess of ten lakh rupee in the hands of shareholder at ten per cent., to only dividend declared, distributed or paid by a domestic company on or before the 31st day of March, 2020. (xii) amend section 57 to provide that no deduction shall be allowed from dividend income, or income in respect of units of mutual fund or specified company, other than deduction on account of interest expense and in any previous year such deduction shall not exceed twenty per cent. of the dividend income or income from units included in the total income for that year without deduction under section 57. (xiii) amend section 194 to include dividend for tax deduction. At the same time the rates of ten per cent. is proposed to be prescribed and threshold is proposed to be increased from ₹ 2,500/- to ₹ 5,000/- for dividend paid other than cash. Further, at present the mode of payment is given as "an account payee cheque or warrant". It is proposed to change this to any mode. (xiv) amend section 194LBA to provide for tax deduction by business trust on dividend income paid to unit h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clauses 7,30,40,47,48,49,50,54,55,59,60,62,74,80,81,85,86,87 & 88] Rationalization of provisions of section 55 of the Act to compute cost of acquisition. The existing provisions of section 55 of the Act provide that for computation of capital gains, an assessee shall be allowed deduction for cost of acquisition of the asset and also cost of improvement, if any. However, for computing capital gains in respect of an asset acquired before 1st April, 2001, the assessee has been allowed an option of either to take the fair market value of the asset as on 1st April, 2001 or the actual cost of the asset as cost of acquisition. It is proposed to rationalise the provision and to insert a proviso below sub-clause (ii) of clause (b) of Explanation under clause (ac) of sub-section (2) of the said section to provide that in case of a capital asset, being land or building or both, the fair market value of such an asset on 1st April, 2001 shall not exceed the stamp duty value of such asset as on 1st April, 2001 where such stamp duty value is available. It is also proposed to insert an Explanation so as to provide that for the purposes of sub-clause (i) and (ii), "stamp duty value" shall mean t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 10 which are established or constituted under a Central or State Act or by a Central or State Government. Such entities are, thus, not able to get notified under clause (46) of section 10 if they are holding registration under section 12A/12AA. The anomaly pointed out above, needs to be addressed. However, as the provisions relating to charitable entities constitute a complete code and that once any trust or institution has voluntarily opted for it by obtaining the requisite registration, it flows that the conditions in relation thereto should be complied with and the option of switching at convenience should not be available. Accordingly, while request for exclusion of clause (46) may be acceded to for exemption thereunder even in those cases where registration under section 12AA or 12A remains in force, there should be only one mode of exemption available and also, that the switching may be allowed only once so that such switching is not done routinely and also it remains efficient to be administered. Rationalising the process of registration of trusts, institutions, funds, university, hospital etc and approval in the case of association, university, college, instituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh the statement. Hence, it is proposed to amend relevant provisions of the Act to provide that,- (i) similar to exemptions under clauses (1) and (23C), exemption under clause (46) of section 10 shall be allowed to an entity even if it is registered under section 12AA subject to the condition that the registration shall become inoperative. If the entity wishes to make it operative in the future, it will have to file an application and then it would not be entitled for deduction under clause (46) from the date on which the registration becomes operative. (ii) the registration under section 12AA would also become inoperative in case of an entity exempt under clause (23C) of section 10 as well, to have uniformity. The condition about making it operative again would also be similar to what is proposed for clause (46) of section 10. (iii) an entity approved, registered or notified under clause (23C) of section 10, section 12AA or section 35 of the Act, as the case may be, shall be required to apply for approval or registration or intimate regarding it being approved, as the case may be, and on doing so, the approval, registration or notification in respect of the entity shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o amend the said section so as to provide that a person who is qualified for appointment as District Judge shall also be eligible for the appointment as a Member of the Adjudicating Authority. This amendment will take effect from 1st April, 2020. [Clause 143] Rationalisation of provisions relating to tax audit in certain cases. Under section 44AB of the Act, every person carrying on business is required to get his accounts audited, if his total sales, turnover or gross receipts, in business exceed or exceeds one crore rupees in any previous year. In case of a person carrying on profession he is required to get his accounts audited, if his gross receipt in profession exceeds, fifty lakh rupees in any previous year. In order to reduce compliance burden on small and medium enterprises, it is proposed to increase the threshold limit for a person carrying on business from one crore rupees to five crore rupees in cases where,- (i) aggregate of all receipts in cash during the previous year does not exceed five per cent of such receipt; and (ii) aggregate of all payments in cash during the previous year does not exceed five per cent of such payment. Further, to enable pre-filling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-alia, requires the prescribed income-tax authority or the person authorised by such authority referred to in sub-section (3) of section 200, to prepare and deliver a statement in Form 26AS to every person from whose income, the tax has been deducted or in respect of whose income the tax has been paid specifying the amount of tax deducted or paid. The Form 26AS as prescribed in the Rules, inter-alia, contains the information about tax collected or deducted at source. However, with the advancement in technology and enhancement in the capacity of system, multiple information in respect of a person such as sale/purchase of immovable property, share transactions etc. are being captured or proposed to be captured. In future, it is envisaged that in order to facilitate compliance, this information will be provided to the assessee by uploading the same in the registered account of the assessee on the designated portal of the Income-tax Department, so that the same can be used by the assessee for filing of the return of income and calculating his correct tax liability. As the mandate of Form 26AS would be required to be extended beyond the information about tax deducted, it is propose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also proposed to insert another sub-section (2AH) in the said section to provide that the cost of the acquisition of the original units held by the unit holder in the main portfolio shall be deemed to have been reduced by the amount as so arrived at under the proposed sub-section (2AG). The Explanation below these two new sub-sections, as proposed to be inserted, provide that for the purposes of sub-sections (2AG) and (2AH), the expressions "main portfolio", "segregated portfolio" and "total portfolio" shall have the meaning respectively assigned to them in the said circular dated 28th December, 2018 issued by SEBI. These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years. [Clauses 3 & 25] Amendment in the provisions of Act relating to verification of the return of income and appearance of authorized representative. Section 140 of the Act provides that in case of company the return is required to be verified by the managing director (MD) thereof. Where the MD is not able to verify for any unavoidable reason or where there is no MD, any director of the company can verify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 28 to explicitly clarify that any notice issued under the said section, prior to the enactment of the Finance Act, 2018, shall continue to be governed by the section 28 as it existed before the said enactment, notwithstanding order of the Appellate Tribunal, any Court or any other law to the contrary. [106] 3. A new Chapter VAA (a new section 28DA) is being incorporated in the Customs Act to provide enabling provision for administering the preferential tariff treatment regime under Trade Agreements. The proposed new section seeks to specifically provide for certain obligation on importer and prescribe for time bound verification from exporting country in casa of doubt. Pending verification preferential tariff treatment shall be suspended and goods shall be cleared only on furnishing security equal to differential duty. in certain cases, the preferential tariff treatment may be denied without further verification. [108] 4. A new section 51B is being inserted so as to provide for creation of an Electronic Duty Credit Ledger in the customs system. This will enable duty credit in lieu of duty remission to be giver) in respect of exports or other such benefit in electroni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain of china. 10% 20% 6. 6912 00 10, 6912 00 20, 6912 00 40, 6912 00 90 Ceramic tableware, kitchen-ware, clay articles and other household articles 10% 20% 7. 7013 Glassware of a kind used for table, kitchen, toilet, office, indoor decoration or Similar purposes (other than that of heading 7010 or 7018) 10% 20% 8. 7323 Table kitchen or other household articles and parts thereof, of iron or steel, iron or steel wool; pot scourers and scouring or polishing pads, gloves and the like, of iron or steel, including pressure cookers pans utensils, misc articles such as iron & steel wool, polishing pads, gloves etc. 10% 20% 9. 7418 10 Table, kitchen or other household articles and parts thereof, of copper; pot scourers and scouring or polishing pads, gloves and the like, of copper. 10% 20% 10. 7615 10 Table, kitchen or other household articles and parts thereof, of aluminum; pot scourer and scouring or polishing pads, gloves and the like, of aluminum. 10% 20% 11. 8301 Padlocks and locks (key, combination or electrically operated) of base metal; Clasps and frames with clasps, incorporating locks of base metals; keys for any of the foregoing articles, of base met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10% 12.5% 47. 8419 89 10 Pressure vessels 7.5% 10% 48. 8418 10 10 Commercial type combined refrigerator freezers, fitted separate external doors 7.5% 15% 49. 8418 30 10 Commercial freezer of chest type, not exceeding 800 litre capacity 7.5% 15% 50. 8418 30 90 Other chest type freezers 10% 15% 51. 8418 40 10 Electrical freezers of upright type, not exceeding 800 litre capacity 7.5% 15% 52. 8418 40 90 Other freezers of upright type, not exceeding 800 litre capacity 7.5% 15% 53. 8418 50 00 Refrigerating or freezing display counters, cabinets, Show-cases and the like 7.5% 15% 54. 8418 61 00 Heat pumps other than air conditioning machines 7.5% 15% 55. 8418 69 10 Ice making machinery 7.5% 15% 56. 8418 69 20 Water cooler 10% 15% 57. 8418 69 30 Vending machine, other than automatic 10% 15% 58. 8418 69 40 Refrigerating equipment/devices used in leather industry 7.5% 15% 59. 8418 69 50 Refrigerated farm tanks, industrial ice cream freezer 7.5% 15% 60. 8418 69 90 Others (like freezers of capacity 800 litres and more etc.] 7.5% 15% 61. 8515 (except 8515 90 00) Welding and Plasma cutting machines 7.5% 15% Other Electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 20% 0% *Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. IV. OTHER PROPOSALS INVOLVING CHANGES IN BASIC CUSTOMS DUTY RATES IN NOTIFICATIONS S.No Heading, sub-heading, tariff item Commodity From To Animals 1. 0101 21 00 Pure-bred breeding horses 30% Nil Fuels, Chemicals and Plastics 2. 27 Very low Sulphur fuel oil meeting ISO 8217:2017 RMG380 Viscosity in 220-400 CST standards/Marine Fuel 0.5% (FO), under the same conditions as available to IFO 180 CST and IFO 380 CST under entry at S. No. 139 of notification No. 50/2017-Customs dated 30.06.2017. 10% Nil 3. 2713 12 10, 2713 1290 Calcined Petroleum Coke 10% 7.5% 4. 2843 Colloidal precious metals; compounds of precious metals; amalgams of precious metals 7.5% 10% 5. 2916 12 10 Butyl Acrylate 5% 7.5% 6. 3907 99 90 Polyester Liquid Crystal Polymers (LCP) for use in manufacture of connectors 7.5% Nil 7. 3920 10 99 Calendared plastic sheets for use in manufacturing of smart cards 10% 5% Paper Industry 8. 48 a) Newsprint, if the importer, at the time of import is an establishment registered with the Registrar of Newspapers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ator/Ringer of Cellular mobile phones(with effect from 01.10.2020) Nil 10% 29. 8517 70 90 Display Panel and Touch Assembly of Cellular mobile phones (with effect from 01.10.2020) Nil 10% 30. 8518 30 00 Headphones and Earphones Applicable BCD 15% 31. 8518 90 00 Following parts of Microphone for use in manufacture of Microphone namely, a) microphone cartridge b) microphone holder c) microphone grill d) microphone body 10% Nil 32. 8538 Micro-fuse base, sub-miniature fuse base, Micro-fuse Cover and sub-miniature fuse cover for use in manufacture of micro fuse and sub-miniature fuse. 7.5% Nil Automobile and automobile parts 33. 2843 Noble metal solutions and noble metal compounds used in manufacture of catalytic converter and their parts 5% 10% 34. 7110 Platinum or Palladium used in manufacturing of catalytic converter and their parts 5% Applicable BCD 35. 84 or any other Chapter (A) Parts of catalytic converter tor manufacture of catalytic converters. (B) The following goods for use in the manufacture of catalytic converters and its parts, namely: - (i) Raw substrates (ceramics) (ii) Wash coated substrates (ceramics) (iii) Raw substrates ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 Vegetable oils of edible grade, in loose or bulk form (other than those specified against S. No. 58 and palm oil), imported for the manufacture of oil commonly known as "Vanaspati" or for refining. Explanation. -The expression "Vegetable oil" means- (a) in the case of cottonseed oil, oil having a free fatty acid content of at least 0.2%; and (b) in the case of any other vegetable oil. oil with free fatty acid content of at least 0.5%. [15] 17. 68 Crude sunflower seed or safflower oil upto an aggregate of one lakh and fifty thousand metric tonnes of total imports of such goods in a financial year [1512 11] 18. 69 Crude sunflower seed or safflower oil other than those specified against S. No. 68 [1512 11] 19. 72 Refined rape, colza or mustard oil upto an aggregate of one lakh and fifty thousand metric tonnes of total imports of such goods in a financial year (1514 19 or 1514 99] 20. 78 Margarine, animal or vegetable oils of edible grade [1517 or 1518] 21. 83 Glycerol, crude; glycerol waters and glycerol lyes, (other than crude glycerin) [1520 00 00] 22. 88A Raw Sugar upto an aggregate of three lakh metric tonnes of total imports of such goods. Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 400 feet and 1000 feet [37] 43. 245 Instant print film [3701 20 00 or 3702] 44. 246 Cinematographic films, exposed but not developed [3704] 45. 247 Promotional material (like Trailers, making of film etc.) imported in the form of electronic promotion kits (EPK)/ beta cams (Any Chapter) 46. 263 The following polymers of ethylene, namely: - (i) Cow density polyethylene (LDPE), (ii) Linear low-density polyethylene (LLDPE), (iii) High density polyethylene (HDPE), (iv) Linear medium density polyethylene (LMDPE), (v) Linear high-density polyethylene (LHDPE) [3901] 47. 264 All goods other than poly 'so-butylene [39021 48. 266 All goods [3903] 49. 274 Compostable polymer or bio-plastic used in the manufacture of bio degradable agro mulching films, nursery plantation pots and flower pots [3913 90 90] 50. 275 Water blocking tape for use in the manufacture of insulated Wires and cables falling under heading 8544 (except sub-heading 8544 11) [3919 90 90] 51. 278 Subbed polyester base, imported by M/s. Hindustan Photo Films Manufacturing Company Limited, Udhagamandalam for the manufacture of medical or industrial X-ray films and graphic art films [3920 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of cathode ray televisions [8540 11] B. Customs duty exemptions which have been granted through certain other stand-alone notifications have also been reviewed. The following notifications, which have ceased to be relevant, are being withdrawn: S. No. Notification No. Notification Subject 1. 13/2010-customs dated 19.2.2010 Exemption to import of goods in relation to Commonwealth Games, 2010 2. 73/1999-Customs dated 8.6.1999 Exemption to import by Power Grid Corporation of India for the setting up of Rihand-Sasaram-Bihar shariff HV DC Link Back to Back Station Project. 3. 205/1992-Customs dated 19.5.1992 Exemption to imports under Advance Customs Clearance Permit 4. 105/1999-Customs dated 10.8.1999 Exemption under SAARC Preferential Trade Agreement 5. 56/2006-Customs dated 7.6.2006 Exemption from Special additional duty to specified goods produced in Nepal 6. 22/2003-Customs dated 4.2.2003 This notification provides exemption to wool or woolen fabrics by Red Cross and Paper Money. [The entry related to Red Cross has been merged in notification No. 148/1994 - Customs dated 13.7.1994 and exemption to paper money will now be granted through notification No. 50/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty rate prescribed in this entry. Hence, these items do not require inclusion in this entry. 4. Import of Bamboo for use in the manufacture of Agarbatti attracts concessional rate of 10% under Entry at S. No. 55 of notification No. 50/2017-Customs dated 30.6.2017. This concession shall henceforth be subject to actual user condition. 5. S.NO. 57 of notification No. 50/2017-Customs dated 30.6.2017 (prescribing effective rate on certain edible oils) is redundant as these goods are covered in certain other entries with lower or equal applicable rates. Hence this entry is being omitted. 6. Goods falling under heading 2801, 2802, 2803, 2804, 2805 and 2814 attracts 5% BCD by Tariff. However, S. No. 169 of notification No. 50/2017-Customs dated 30.6.2017 prescribes a BCD rate of 7.5%. This entry is being amended to remove this inconsistency. 7. Phosphoric acid attracts 5% BCD vide S. Nos. 170 (a conditional exemption) and 177 of notification No. 50/2017 -Customs dated 30.6.2017. S. No. 170, is being omitted, being redundant. 8. S. No. 266 of notification No. 50/2017-Customs dated 30 6 20.17 provides 7.5% BCD for goods falling under heading 3903. S. No. 262 is being amended to inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hicles), if imported as completely built unit (CBU) * S. NC. 21 will be exempt from levy of Social Welfare Surcharge with effect from B. Exemption from Social Welfare Surcharge hitherto available on certain items falling chapter 84, 85 and 90, is being withdrawn. Accordingly, notification No 11/2018-Customs dated 02.02.2018 is being amended to, - (i) omit entries falling under chapter 34, 85 and 90 covered under S. No. 1 of the Table of the said notification; and (ii) omit existing entries at S. Nos. 9 to 49 and 51 of the Table of the said notification. X. Other Miscellaneous changes pertaining to Anti-Dumping Duty/Countervailing Duty 1. Anti-Dumping Rules provides for manner and procedure for investigation into dumping of goods that cause injury to domestic industry. These rules also provide for investigation into cases of circumvention of antidumping duty by the exporters of subject goods to India. Changes are being made in the Rules to strengthen the anti-circumvention measures by making them more comprehensive and wider in scope to take care of all types of circumventions of antidumping duty in line with best international practice. Certain other changes are being made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 70 millimetres Tu ₹ 90 per thousand ₹ 440 per thousand 5. 2402 20 50 Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) exceeding 70 millimetres but not exceeding 75 millimetres Tu ₹ 145 per thousand ₹ 545 per thousand 6. 2402 20 90 Other (Cigarettes containing tobacco) Tu ₹ 235 per thousand ₹ 735 per thousand 7. 2402 90 10 Cigarettes of tobacco substitutes Tu ₹ 150 per thousand ₹ 600 per thousand 8. 2403 11 10 Hookah or gudaku tobacco Kg 10% 25% 9. 2403 19 10 Smoking mixtures for pipes and cigarettes Kg. 45% 60% 10. 2403 19 90 Other smoking tobacco Kg. 10% 25% 11. 2403 91 00 "Homogenised" or "reconstituted" tobacco Kg. 10% 25% 12. 2403 99 10 Chewing tobacco Kg. 10% 25% 13. 2403 99 20 Preparations containing chewing tobacco Kg. 10% 25% 14. 2403 99 20 Jarda scented tobacco Kg. 10% 25% 15. 2403 99 40 Snuff Kg. 10% 25% 16. 2403 99 50 Preparations containing snuff Kg. 10% 25% 17. 2403 99 60 Tobacco extracts and essence Kg. 10% 25% 18. 2403 99 90 Other (man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS certificate by the deductor: and to omit the corresponding provision of late fees for delay in issuance of TDS certificate. [122] 8. Section 109 of the CGST Act is being amended to bring the provision for Appellate Tribunal under the CGST Act in the Union territory of Jammu and Kashmir and Ladakh. [123] 9. Section 122 of the CGST Act is being amended by inserting a new sub-section to make the beneficiary of the transactions of passing on or availing fraudulent Input Tax Credit liable for penalty similar to the penalty leviable on the person who commits such specified offences. [124] 10. Section 132 of the CGST Act is being amended to make the offence of fraudulent availment of input tax credit without an invoice or bill a cognizable and non-bailable offence; and to make any person who commits, or causes the commission, or retains the benefit of transactions arising out of specified offences liable for punishment. [125] 11. Section 140 of the CGST Act is being amended with effect from 01.07.17, to prescribe the manner and time limit for taking transitional credit. [126] 12. Section 168 of the CGST Act is being amended to make provisions for enabling the jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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