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TMI BlogNOTES ON CLAUSESX X X X Extracts X X X X X X X X Extracts X X X X ..... odwill of a business or profession from the purview of block of asset . It is further proposed to amend clause (14) of the said section which defines the expression capital asset. It is proposed to insert sub-clause (c) to the said clause so as to include any unit linked insurance policy to which exemption under clause (10D) of section 10 does not apply on account of the applicability of the fourth and fifth proviso thereof. It is also proposed to amend clause (19AA) of the said section which defines the term demerger , in relation to companies, means the transfer, pursuant to a scheme of arrangement under sections 391 to 394 of the Companies Act, 1956, by a demerged company of its one or more undertakings to any resulting company on satisfaction of conditions provided by rules in the said clause. It is proposed to amend the said clause to insert an Explanation so as to clarify that the reconstruction or splitting up of a public sector company into separate companies shall be deemed to be a demerger, if such reconstruction or splitting up has been made to transfer any asset of the demerged company to the resulting company and such resulting company (i) is a public sector company on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation 2 to define the expression infrastructure debt fund . These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years. Clause 4 of the Bill seeks to amend section 9A of the Income-tax Act relating to certain activities not to constitute business connection in India. Sub-section (3) and (4) of the said section provide for certain conditions for the applicability of the section. It is proposed to insert sub-section (8A) to the said section so as to provide that the Central Government may, by notification in the Official Gazette, specify that any one or more of the conditions specified in clauses (a) to (m) of sub-section (3) or clauses (a) to (d) of sub-section (4) shall not apply or shall apply with such modifications, as specified in such notification, in case of an eligible investment fund and its eligible fund manager, if such fund manager is located in an International Financial Services Centre, as defined in clause (a) of the Explanation to section 80LA, which has commenced its operations on or before 31st March, 2024. This amendment will take effect from 1st April, 2022 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 80LA for that previous year and has commenced its operations on or before 31st March, 2024. These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years. Clause (5) of the said section provides for exemption in respect of the value of travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his proceeding on leave to any place in India. It is proposed to insert a second proviso in the said clause so as to provide that for the assessment year beginning on the 1st day of April, 2021, in the case of an individual, the value in lieu of any travel concession or assistance received by, or due to, such individual shall also be exempted, subject to fulfillment of such conditions (including the condition of incurring such amount of such expenditure within such period), as may be provided by rules. It is further proposed to insert Explanation 2 so as to clarify that where an individual claims such exemption and the same is allowed under the second proviso in connection with the expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment Authority Act, 1999. These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause (11) of the said section provides for exemption with respect to any payment from a provident fund to which the Provident Funds Act, 1925 applies or from any other provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette. Clause (12) of the said section provides for exemption with respect to the accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule. It is proposed to insert a proviso to such of the aforesaid clauses so as to provide that the provisions of these clauses shall not apply to the income by way of interest accrued during the previous year in the account of a person to the extent it relates to the amount or the aggregate of amounts of contribution made by that person exceeding two lakh and fifty thousand rupees in any previous year in that fund, on or after the 1st day of April, 2021 and computed in such manner a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or deposited back, into one or more of the forms or modes specified in sub-section (5) of section 11 maintained specifically for such corpus from the income of the previous year, such amount shall be allowed as application in the previous year in which it is deposited back to corpus and to the extent it is deposited back; (b) application from loans and borrowings shall not be considered as application for charitable or religious purposes for the purposes of third proviso of clause (23C) provided when loan or borrowing is repaid from the income of the previous year, such repayment shall be allowed as application in the previous year in which it is repaid and to the extent it is repaid. Fourteenth proviso of the said clause provides that if any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of said clause of said section accumulates its income, then payment or credit out of such accumulation, to exempt entities as prescribed in the proviso, shall not be treated as application. It is proposed to amend the said proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions, 2011, issued by the Reserve Bank of India, having minimum ninety per cent. investment in one or more of the companies or enterprises or entities referred to in item (b). It is also proposed to insert fourth proviso to the said clause so as to provide that in case a Category-I or Category-II Alternative Investment Fund referred to in item (c) of sub-clause (iii) has investment of less than one hundred per cent. in one or more of the companies or enterprises or entities referred to in item (b) of the said sub-clause or in an Infrastructure Investment Trust referred to in item (c) of that sub-clause, income, accrued or arisen to or received or attributable to such investment, directly or indirectly, which is exempt under the said clause shall be calculated proportionately to the investment made in one or more of the companies or enterprises or entities referred to in item (b) of that sub-clause or in the Infrastructure Investment Trust referred to in item (c) of that sub-clause, in such manner as may be provided by rules. It is also proposed to insert fifth proviso to the said clause so as to provide that in case a domestic company referred to in item (d) of sub-clause (iii) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (ii) of clause (c) of the said Explanation 1 so as to provide that if pension fund is liable to tax but exemption from taxation for all its income has been provided, by the foreign country under whose laws it is created or established, then such pension fund also would satisfy the condition mentioned in sub-clause (ii). It is also proposed to insert sub-clause (iiia) to the clause to provide that the pension fund does not participate in the day to day operations of investee but the monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director shall not be considered as participation in day to day operations of investee. It is also proposed to insert a new Explanation 2 in the said clause to define the expressions loan and borrowing and investee . It is also proposed to insert a new Explanation 3 so as to provide that the Central Government may, by rules, provide the method of calculation of fifty per cent. referred to in item (c) or seventy-five per cent. referred to in item (d) or ninety per cent. referred to in item (e), of sub-clause (iii) of the said clause. These amendments will take effect from 1st April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith a specific direction that they shall form part of the corpus of the trust or institution shall not be included in the total income of the trust or institution. It is proposed to amend the said clause (d) so as to provide that such voluntary contributions should be invested or deposited in one or more of the forms or modes specified in sub-section (5) maintained specifically for such corpus. It is further proposed to insert a new Explanation 4 to sub-section (1) so as to provide that (A) application out of the corpus shall not be considered as application for charitable or religious purposes for the purposes of clause (a) and (b) of sub-section (1), provided when it is invested or deposited back, into one or more of the forms or modes specified in subsection (5) maintained specifically for such corpus, from the income of the previous year, such amount shall be allowed as application in the previous year in which it is deposited back to corpus and to the extent it is deposited back. (B) application from loans and borrowings shall not be considered as application for charitable or religious purposes for the purposes of clause (a) and (b) of sub-section (1), provided when such loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business or commercial rights of similar nature. It is proposed to amend the said Explanation 3 so as to provide that goodwill of a business or profession shall not be considered as an asset for that purposes of the said subsection. These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause 8 of the Bill seeks to amend section 36 of the Income-tax Act, relating to other deductions. Sub-section (1) of the said section provides for allowing of deductions provided for in the clauses thereof for computing the income referred to in section 28 of the said Act. Clause (va) of the said sub-section provides for allowance of deduction for any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation to the said clause provides that for the purposes of this clause, due date means the date by which the assessee is required as an employer to credit an employee's contributi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain cases. The proviso to sub-section (1) of the said section provides that where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and ten per cent. of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer. It is proposed to insert a second proviso to said sub-section to provide that in case of transfer of an asset, being a residential unit, the provisions of the first proviso shall have the effect as if for the words one hundred and ten per cent. , the words one hundred and twenty per cent. had been substituted, subject to the conditions that (a) the transfer of such residential unit takes place during the period beginning from the 12th day of November, 2020 and ending on the 30th Day of June, 2021; (b) such transfer is by way of first time allotment of the residential unit to any person; and (c) the consideration received or accruing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent. of the total gross receipts of the assessee in the previous year on account of such profession, or as the case may 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 of profession . It is proposed to amend the said sub-section so that the assessee referred to therein shall, inter alia, mean an individual, Hindu undivided family or a partnership firm other than a Limited Liability Partnership as defined under clause (n) of sub-section (1) of section 2 of Limited Liability Partnership Act, 2008. This amendment will come into force from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause 13 of the Bill seeks to amend section 44DB of the Income-tax Act relating to special provision for computing deductions in the case of business reorganisation of cooperative banks. The said section, inter alia, provides that where business reorganisation of co-operative banks takes place, the deductions under section 32, 35D, 35DD and 35DDA shall be apporti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified person receives during the previous year any capital asset at the time of its dissolution or reconstitution of the specified entity, which represents the balance in his capital account in the books of accounts of such specified entity at the time of dissolution or reconstitution, then any profits or gains arising from receipt of such capital asset by the specified person shall be chargeable to income-tax as income of such specified entity under the head Capital gains and shall be deemed to be the income of such specified entity of the previous year in which such capital asset was received by the specified person. It is also proposed to amend the section to provide that fair market value of the capital asset on the date of such receipt shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of such capital asset. It is also proposed to amend the section to provide that the cost of acquisition of the capital asset shall be determined in accordance with the provisions of this Chapter. It is also proposed to amend the section to provide that the balance in the capital account of the specified person in the books of account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment years. Clause 15 of the Bill seeks to amend section 47 of the Income-tax Act relating to transactions not regarded as transfer. The said section, inter alia, provides that any transfer of a capital asset by the predecessor co-operative bank to the successor co-operative bank in a case of business reorganisation shall not be regarded as transfer. It is proposed to amend clause (vica) of the said section to expand the scope of the said clause so as to provide that any transfer of a capital asset by the primary co-operative bank which has been converted into a banking company as a result of conversion shall not be considered as transfer for the purposes of capital gains. Further, it is also proposed to amend clause (vicb) of the said section so as to provide that the allotment of shares of the converted banking company to the shareholders of the predecessor co-operative bank as a result of this conversion shall not be treated as transfer for the purposes of capital gains. It is also proposed to amend the Explanation to clause (vicb) of the said section so as to provide that the expression converted banking company shall have the meaning assigned to it in section 44DB. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. It is proposed to amend sub-clause (e) of clause (iii) of the said sub-section so as to include the transfer referred to in clause (viiac) and (viiad) of section 47 also within the purview of that sub-section (1). This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years. Clause 18 of the Bill seeks to amend section 50 of the Income tax Act relating to special provision for computation of capital gains in case of depreciable assets. The said section, inter alia, provides for certain conditions for the applicability of provisions of sections 48 and 49 for computation of capital gains in case of depreciable assets, where the capital asset is an asset forming part of a block of asset in respect of which depreciation has been allowed under the said Act. It is proposed to insert a proviso in the said section so as to provide that in a case where goodwill of a business or profession forms part of a block of asset for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in relation to a capital asset, being goodwill of a business or profession, or a trade mark or brand name associated with a business or profession, or a right to manufacture, produce or process any article or thing, or right to carry on any business or profession, or tenancy rights, or stage carriage permits, or loom hours,- (i) in the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price; and (ii) in the case falling under sub-clause (i) to (iv) of sub-section (1) of section 49 and where such asset was acquired by the previous owner (as defined in that section) by purchase, means the amount of the purchase price for such previous owner; and (iii) in any other case, shall be taken to be nil. It is also proposed to provide therein that in case of goodwill of business or profession acquired by the assessee by way of purchase from a previous owner (either directly or through modes specified under sub-clause (i) to (iv) of sub-section (1) of section 49) and any deduction on account of depreciation under section 32 of the said Act has been obtained by the assessee in any previous year preceding the previous year re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion allowance in amalgamation or demerger, etc. Sub-section (1) of the said section provides that the accumulated loss and unabsorbed depreciation of the amalgamating company or companies shall be deemed to be the accumulated losses and unabsorbed depreciation of the amalgamated company or companies in specified cases and subject to the conditions specified in the said section. Clause (c) of the said sub-section, inter alia, provides that where there has been amalgamation of one or more public sector company or companies engaged in the business of operation of aircraft with one or more public sector company or companies engaged in similar business then notwithstanding anything contained in any other provisions of the said Act, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss or, as the case may be, the allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected. It is proposed to substitute the said clause so as to provide that in case of amalgamation of one or more public sector company or companies with one or more public sector company or companies, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not being a company in which the public are substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year, unless on the last day of the previous year, the shares of the company carrying not less than fifty-one per cent. of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent. of the voting power on the last day of the year or years in which the loss was incurred. Further sub-section (2) of said section provides that the exceptions to the above provision contained in the said sub-section. It is proposed to insert a new clause in sub-section (2) to the said section so as to provide that nothing contained in the section shall apply to a case to the extent that a change in the shareholding takes place during the previous year on account of relocation referred to in the Explanation to clause (viiac) and (viiad) of section 47. This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years. Clause 24 of the Bill se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the business of developing and building affordable housing project subject to certain conditions. Further the provisions of clause (a) of sub-section (2) of said section provide that the housing project shall be approved by the competent authority after 1st June, 2016 but on or before 31st March, 2021. It is proposed to insert sub-section (1A) in the said section so as to provide for hundred per cent. deductions of the profits and gains derived from the business of developing and building affordable rental housing project. It is further proposed to amend clause (a) of sub-section (2) so as to allow the deduction in respect of profits and gains derived from the business of developing and building housing project for hundred per cent. of the profits and gains derived from the business of developing and building such project approved by the competent authority after 1st day of June, 2016 but on or before 31st March, 2022. It is also proposed to insert a new clause (da) in sub-clause (6) to define the expression rental housing project . These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 2019. This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment year. Clause 28 of the Bill seeks to insert a new section 89A in the Income-tax Act relating to relief from taxation in income from retirement benefit account maintains in a notified country. The proposed new section provides that the income of a specified person from specified account shall be taxed in such manner and for such year as may be provided by rules and also defines the expressions specified person , specified account and notified country . This amendment will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years. Clause 29 of the Bill seeks to amend section 112A of the Income-tax Act relating to tax on long-term capital gains in certain cases. Explanation to the said section, inter alia, provides for the definition of the expression equity oriented fund . It is proposed to amend the said Explanation to the section so as to include a fund set up under a scheme of an insurance company comprising unit linked insurance policies to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of profit and loss and tax on such income is at a rate less than the rate specified under that section. Further such assessee will be allowed expenses relatable to such income mentioned in the said clause under sub-clause (B) of clause (fb) of the said Explanation. It is proposed to amend the said clause (fb) and clause (iid), occurring in the long line of Explanation 1, so as to provide similar relief to dividend as already there for capital gains, interest, royalty and fee for technical services as provided in these clauses. It is further proposed to insert a new sub-section (2D) in the said section so as to provide that where in the case of the company there is an increase in book profit of the previous year due to income of past year or years included in the book profit on account of an advance pricing agreement entered into by the assessee under section 92CC or on account of secondary adjustment required to be made under section 92CE, the Assessing Officer shall, on an application made to him in this behalf by the asssessee, recompute the book profit of the past year or years and tax payable, if any, by the assessee during the previous year under sub-section (1), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from lst April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause 33 of the Bill seeks to amend section 142 of the Income-tax Act relating to inquiry before assessment. Clause (i) of sub-section (1) of the said section empowers only the Assessing Officer to serve notice to an assessee requiring him to file return of income. It is proposed to insert a second proviso in the said clause so as to empower the prescribed income-tax authority also to serve notice under clause (i) of sub-section (1) of the said section for the purposes of that clause. This amendment will take effect from lst day of April, 2021. Clause 34 of the Bill seeks to amend section 143 of the Income-tax Act relating to assessment. Sub-clause (iv) of clause (a) of sub-section (1) of section 143 of the said Act provides for adjustment on account of disallowance of expenditure indicated in the audit report but not taken into account in calculating the total income of the assessee. It is proposed to amend the said sub-clause so as to allow for the adjustment on account of increase in income indicated in the audit report but not taken into account in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139, provided that no notice under the said section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and prior approval of the specified authority to issue such notice has been obtained by the Assessing Officer. The proposed Explanation 1 to the said section provides for the purposes of the said section and section 148A, that information which suggests that the income chargeable to tax has escaped assessment means any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time or any final object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the showcause notice referred to in clause (b); and (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 2021. Further, the provisions of this section shall not apply to cases where a notice under section 153A or section 153C read with section 153A is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or before the 31st day of March, 2021 and for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice under clause (b) of section 148A; or the period during which the proceeding under section 148A is stayed by an order or injunction of any court shall be excluded and also where immediately after the exclusion of such period, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation in sub-section (1) shall be deemed to be extended accordingly. This amendment will take effect from 1st April, 2021. Clause 39 of the Bill seeks to substitute of a new section for section 151 relating to sanction for issue of notice. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 2021. This amendment will take effect from 1st April, 2021. Clause 43 of the Bill seeks to amend section 153C of the Income-tax Act relating to assessment of income of any other person. It is proposed to amend the said section so as to insert sub-section (3) therein to provide that nothing contained in the said section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after 1st day of April, 2021. This amendment will take effect from 1st April, 2021. Clause 44 of the Bill seeks to amend section 194 of the Income-tax Act relating to dividends. The said section provides for deduction of tax at source on payment of dividends by an Indian company including dividends on preference shares within India. The second proviso to the said section provides that the provisions of that section shall not apply to such income credited or paid to certain insurance companies or insurers. It is proposed to amend the second proviso to the said section to provide that the provisions of that section shall not apply to such income credited or paid to a business trust as defined in clause (13A) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of such specified senior citizen for the relevant assessment year and deduct income-tax on such total income on the basis of the rates in force. Sub-section (2) of the said section seeks to provide that the provisions of section 139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which the tax has been deducted under sub-section (1). Explanation to the said section seeks to define the following expressions for the purposes of the said section, (a) specified bank means a banking company as the Central Government may, by notification in Official Gazette, specify; (b) specified senior citizen means an individual, being a resident in India (i) who is of the age of seventy-five years or more at any time during the previous year; (ii) who is having income of the nature of pension and no other income except the income of the nature of interest received or receivable from any account maintained by such individual in the same specified bank in which he is receiving his pension income; and (iii) has furnished a declaration to the specified bank containing such particulars, in such form and verified in such manner, as may be prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 206C other than a transaction to which sub-section (1H) of section 206C applies. This amendment will take effect from 1st July, 2021. Clause 49 of the Bill seeks to amend section 196D of the Income-tax Act relating to income of Foreign Institutional Investors from securities. Sub-section (1) of the said section provides for deduction of tax on any income referred to in clause (a) of sub-section (1) of section 115AD, not being income by way of interest referred to in section 194LD of the Income-tax Act, payable to a Foreign Institutional Investor, being the person responsible for making the payment, at the rate of twenty per cent. It is proposed to insert a proviso to the said sub-section so as to provide that where an agreement referred to in sub-section (1) of section 90 or sub-section (1) of section 90A applies to the payee and if the payee has furnished a certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A, as the case may be, then, income tax thereon shall be deducted at the rate of twenty per cent. or at the rate or rates of income-tax provided in such agreement for such income, whichever is lower. This amendment will take effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the time limit of filing return of income under sub-section (1) of section 139 has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years. Proviso to proposed sub-section (3) seeks to provide that the specified person shall not include a non-resident who does not have a permanent establishment in India. Explanation to the said section seeks to provide that for the purposes of this sub-section the expression permanent establishment includes a fixed place of business through which the business of the enterprise is wholly or partly carried on. This amendment will take effect from 1st July, 2021. Clause 52 of the Bill seeks to insert section 206CCA of the Income-tax Act relating to specified provisions for the collection of tax at source on non-filers of income-tax return. Sub-section (1) of the proposed new section 206CCA seeks to provide that notwithstanding anything contained in any other provisions of this Act, where tax is required to be collected at source under the provisions of Chapter XVII-BB, on any sum or amount received by a person (hereafter referred to as collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents will take effect from lst April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. Clause 54 of the Bill seeks to amend the Chapter XIX-A of the Income-tax Act relating to settlement of cases by the Income-tax Settlement Commission (ITSC). It is proposed to amend section 245A of the said Act to define various expressions such as Interim Board shall mean Interim Board for settlement constituted under section 245AA, Member of the Interim Board shall mean a Member of the Interim Board and Pending Application shall mean an application which was filed under section 245C and which was not declared invalid under sub-section (2C) of section 245D and no order under sub-section (4) of section 245D was issued on or before the 31st day of January, 2021 with respect to such application for the purposes of this Chapter. This amendment will take effect retrospectively from lst February, 2021. Clause 55 of the Bill seeks to insert a new section 245AA of the Income-tax Act so as to provide for constitution of one or more Interim Board for settlement of pending applications and to provide that every Interim Board shall consist of thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsection (6B) of the said section expires on or after the 1st day of February, 2021, the period of limitation shall exclude the period commencing from the 1st February, 2021 and ending on the end of the month in which the Interim Board is constituted. However, in cases where the remaining period is less than sixty days the same shall be deemed to have been extended to sixty days. It is also proposed to insert sub-section (10) so as to provide that the provisions of sub-sections (6A) and (7) shall have effect as if for the words Settlement Commission , the words Settlement Commission or Interim Board of Settlement . It is also proposed to insert sub-sections (11), (12) and (13) in the said section so as to, inter alia, provide for a scheme, by notification in the Official Gazette, for the disposal of pending applications by the Interim Board. Proposed sub-section (11) provides that the Central Government may make a scheme, by notification in the Official Gazette, for the purposes of settlement in respect of pending applications by the Interim Board, so as to impart greater efficiency, transparency and accountability by eliminating the interface between the Interim Board and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences with the Settlement Commission, shall be deemed to be the records before such Interim Board. Proposed sub-section (5) of the said section provides that where an assessee withdraws his application, the proceedings with respect to such application shall abate on the date of withdrawal and the Assessing Officer or any other income-tax authority before whom the proceedings were pending prior to the application shall dispose the case in accordance with the provisions of the said Act and in such case, for the purposes of the time-limit under sections 149, 153, 153B, 154 and 155 and for the purposes of payment of interest under section 243 or 244 or 244A, for making the assessment or re-assessment, the period commencing on and from the date of the application to the Settlement Commission under section 245C and ending with the date of withdrawal of application shall be excluded. It is also proposed to provide that the income-tax authority shall not be entitled to use the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of proceedings before it and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. However, no direction shall be issued after the 31st day of March, 2023. Sub-section (5) of section 245MA seeks to provide that every notification issued under sub-section (3) and sub-section (4) shall, as soon as may be after the notification is issued, be laid before each House of Parliament. Explanation to section 245MA seeks to provide that the specified conditions in relation to a person means a person who is not a person in respect of whom an order of detention has been made under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 or in respect of whom prosecution for any offence punishable under the provisions of the Indian Penal Code, 1860, the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prohibition of Benami Transactions Act, 1988, the Prevention of Corruption Act, 1988 or the Prevention of Money Laundering Act, 2002 has been instituted or such person has been convicted of any offence punishable under any of those Acts; or in respect of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de that the Central Government shall constitute one or more Board for Advance Rulings, as may be necessary, for giving advance rulings under this Chapter on or after such date as may be appointed by the Central Government by notification in the Official Gazette. The Board for Advance Rulings constituted shall consist of two members, each being an officer not below the rank of Chief Commissioner, as may be nominated by the Board. This amendment will take effect from 1st April, 2021. Clause 70 of the Bill seeks to amend section 245P of the Income-tax Act relating to vacancies, etc., not to invalidate proceedings. It is proposed to insert sub-section (2) in the said section so as to provide that on and from the notified date, the provisions of the said section shall have effect as if for the words Authority , the words Board for Advance Rulings had been substituted. This amendment will take effect from 1st April, 2021. Clause 71of the Bill seeks to amend section 245Q of the Income-tax Act relating to application for advance ruling. It is proposed to amend sub-section (1) of said section so as to omit the portion or under Chapter IIIA of the Central Excise Act, 1944 under Chapter VA of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore each House of Parliament. These amendments will take effect from 1st April, 2021. Clause 73 of the Bill seeks to amend section 245S of the Income-tax Act relating to applicability of advance ruling. It is proposed to amend the said section to insert sub-section (3) so as to provide that nothing contained in this section shall apply to any advance ruling pronounced under section 245R on or after on such date as may be appointed by the Central Government by notification in the Official Gazette. This amendment will take effect from 1st April, 2021. Clause 74 of the Bill seeks to amend section 245T of the Income-tax Act relating to advanced ruling to be void in certain circumstances. It is proposed to amend the said section so as to provide that the reference in sub290 section (1) to advance ruling pronounced by the Authority shall be omitted by omitting the words by it . It is also proposed to insert sub-section (3) to the said section so as to provide that on and from such date as may be appointed by the Central Government by notification in the Official Gazette the provisions of that section shall have effect as if for the word Authority , the words Board for Advance Rulings h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. However, no direction shall be issued after 31st March, 2023.Every notification so issued shall, as soon as may be after the notification is issued, be laid before each House of Parliament. This amendment will take effect from 1st April, 2021. Clause 78 of the Bill seeks to amend the section 255 of the Income-tax Act relating to procedure of Appellate Tribunal. It is proposed to insert sub-sections (7), (8) and (9) in the said section so as to, inter alia, provide for a scheme, by notification in the Official Gazette, for the disposal of appeals under that section. This amendment will take effect from lst April, 2021. Clause 79 of the Bill seeks to amend the section 281B of the Income-tax Act relating to provisional attachment to protect revenue in certain cases. The said section provides for the provisional attachment of any property belonging to the assessee by the Assessing Officer, with the prior approval of the authorities specified therein, in case of pending assessment or reassessment proceedings so as to protect the interest of reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als) having jurisdiction, who shall, as soon as may be, allow the application and the proper officer shall thereafter dispose of the goods in such manner as the Central Government may determine. Clause 86 of the Bill seeks to insert a new clause (ja) in section 113 of the Customs Act so as to provide that any goods entered for exportation under claim of remission or refund of any duty or tax or levy, to make a wrongful claim in contravention of the Act or any other law for the time being in force shall be liable to confiscation. Clause 87 of the Bill seeks to insert a new section 114AC in the Customs Act so as to provide penalty for fraudulent utilisation of input tax credit for discharging any duty or tax on goods entered for exportation under claim of refund and such penalty shall be equivalent to five times the refund claimed. Clause 88 of the Bill also seeks to make consequential amendment in the Explanation to section 139 of the Customs Act so as to include inventories, photographs and lists certified by the Commissioner (Appeals) under sub-section (1D) to the documents within the meaning of that section to give evidentiary value to such documents. Clause 89 of the Bill seeks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn it with the provisions contained in sub-section (6) of section 8B of the said Act relating to safeguard measures. It also seeks to amend sub-section (5) thereof to provide for further imposition of anti-dumping duty after review, for a period upto five years. It also seeks to insert a third proviso therein so as to provide that if anti-dumping duty is revoked temporarily, the period of such revocation shall not be more than one year at a time. Clause 95 of the Bill seeks to amend the First Schedule to the Customs Tariff Act, 1975, so as to (i) revise the tariff rates in respect of certain tariff items in the manner specified in the Second Schedule with effect from the 2nd February, 2021; (ii) amend certain tariff entries to align with the entries in the Fourth Schedule to the Central Excise Act in the manner specified in the Third Schedule with effect from the 1st April, 2021; (iii) harmonise certain entries with Harmonised System of Nomenclature and to create new tariff lines in respect of certain entries in the manner specified in the Fourth Schedule with effect from the 1st January, 2022. Excise Clause 96 of the Bill seeks to amend the Fourth Schedule to the Central Excise Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssional. Clause 102 of the Bill seeks to substitute a new section for section 44 of the Central Goods and Services Tax Act so as to remove the mandatory requirement of furnishing a reconciliation statement duly audited by specified professional and to provide for filing of the annual return on self-certification basis. It further empowers the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return. Clause 103 of the Bill seeks to amend section 50 of the Central Goods and Services Tax Act to substitute the proviso to sub-section (1) so as to charge interest on net cash liability retrospectively with effect from the 1st July, 2017. Clause 104 of the Bill seeks to amend section 74 of the Central Goods and Services Tax Act so as to make seizure and confiscation of goods and conveyances in transit a separate proceeding from the recovery of tax. Clause 105 of the Bill seeks to amend section 75 of the Central Goods and Services Tax Act so as to insert an Explanation in sub-section (12) to clarify that self-assessed tax shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Clause 114 of the Bill seeks to amend section 16 of the Integrated Goods and Services Tax Act, 2017 so as to make provisions for restricting the zero rated supply on payment of integrated tax only to specified class of taxpayers or specified supplies of goods or services. It further provides to link the foreign exchange remittance in case of export of goods with refund and further restricting zero rating of supplies made to special economic zone only when such supplies are for authorised operations. Agriculture Infrastructure and Development Cess Clause 115 of the Bill seeks to provide for levy and collection of Agriculture Infrastructure and Development Cess as duty of customs, on goods specified in the First Schedule to the Customs Tariff Act, being goods imported into India, at the rate not exceeding the rate of customs duty as specified in the said Schedule for the purposes of the Union for financing the agriculture infrastructure and other development expenditure. Clause 116 of the Bill seeks to provide for levy and collection of Agriculture Infrastructure and Development Cess as an additional duty of excise, on excisable goods specified in the Seventh Schedule, at the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirements under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 made by the Securities and Exchange Board of India under the provisions of the Securities and Exchange Board of India Act, 1992, and thereby enabling the listing of LIC on recognised stock exchanges and making of an initial public offer, through which Government may sell its shares in LIC. It is also proposed to insert new sections 4A, 4B, 4C and 4D in the LIC Act to provide for disqualifications to be a director, disclosure of interest by director and senior management, related party transactions and adjudication of penalties for contravention or violation liable to penalty under the LIC Act, in order to bring the provisions relating to corporate governance in alignment with listing requirements. It is also proposed to substitute section 5 of the LIC Act, to provide for LIC s capital, issue of equity shares to the Central Government in consideration for paid-up equity capital provided by the Central Government to LIC before the coming into force of the new section, application of premiums received on issue of LIC s shares, increase or reduction of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hairperson and Managing Directors of LIC by its Board, in order to bring the provisions relating to corporate governance in alignment with listing requirements. It is also proposed to amend section 22 of the LIC Act to omit the existing provision under sub-section (2) for constitution of a Board in each zone of LIC and to amend the existing provision for a member of LIC (who corresponds to a director under the proposed amendments) to be a Zonal Manager of LIC, consequential to proposed constitution of Board of LIC under the substituted section 4 and the disqualification to be a director under clause (l) of the new section 4A. It is also proposed to insert new section 23A in the LIC Act, to provide for annual general meeting and other general meetings of registered shareholders of LIC, in order to bring the provisions relating to the rights of LIC s shareholders in alignment with listing requirements. It is also proposed to substitute section 24 of the LIC Act, to provide for LIC having a multiplicity of funds, establishment of reserves and maintenance of separate funds for participating and non-participating policyholders of LIC, which are matters incidental to the proposed new sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allocation or reservation. It is also proposed to amend section 28A and insert new sections 28B and 28C in the LIC Act, to make provisions regarding the declaration of dividend and crediting of unclaimed and unpaid dividend amount to an Unpaid Dividend Account, in order to bring the provisions relating to dividends in alignment with listing requirements and consequential to the provision under the proposed new section 5 for issue of equity share capital to persons other than the Central Government. It is also proposed to substitute section 46 of the LIC Act, to provide that defects in constitution of the Board and committees thereof, or in appointment or nomination of directors, will not invalidate their acts or proceedings, which are matters incidental to the proposed creation of the Board and its committees under the proposed new sections 4, 19, 19A, 19B, 19C and 19D. It is also proposed to substitute section 47 in the LIC Act, to provide for protection of action taken by a director other than a whole-time director, which are matters incidental to the provision for independent, elected and other categories of non-whole-time directors under the proposed new section 4. It is also p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Prohibition of Benami Property Transactions Act, 1988. Clause (1) of section 2 of the Act provides for the definition of the expression Adjudicating Authority. It is proposed to amend said clause so as to substitute words referred to in for the words appointed under . Section 7 of the said Act empowers the Central Government to appoint one or more Adjudicating Authority by notification to exercise jurisdiction, powers and authority conferred by or under that Act. It is further proposed to substitute the said section 7 so as to provide that the Competent Authority constituted under sub-section (1) of section 5 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 shall be the Adjudicating Authority to exercise jurisdiction, powers and authority conferred by or under this Act. It is also proposed to consequentially omit sections 8 to 17 of the said Act. It is also proposed to amend sub-section (7) of section 26 of the said Act so as to provide that where the time limit for passing an order provided therein expires during the period beginning from 1st July, 2021 and ending on 29th September, 2021, the time limit for passing such order sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. It is proposed to amend section 3 of the said Act so as to provide that the existing provision under the first proviso to clause (a) of sub-section (2) of section 3 of the said Act to the effect that the Industrial Development Bank of India Limited shall not be required to obtain licence under section 22 of the Banking Regulation Act, 1949, shall cease to be in operation immediately after the commencement of Part . of the Finance Act, 2021, and that, from such commencement, the Industrial Development Bank of India Limited shall be deemed to have obtained a licence under the said section 22, which will be a condition precedent to disinvestment of Government s stake in said Bank resulting in receipts to Government. These amendments will take effect from such date as the Central Government may, by notification in the Official Gazette appoint. Clause 154 and 155 of the Bill seeks to amend section 97 of the Finance Act (No.2) Act, 2004. Chapter-VII of the said Act provides for Securities Transaction Tax. It is proposed to amend sub-clause (b) of clause (13) of section 97 of the said Act so as to include sale or surrender or redemption of a unit of an equity oriented fund to the insur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide that consideration received or receivable from e-commerce supply or services shall include (i) consideration for sale of goods irrespective of whether the e-commerce operator owns the goods; (ii) consideration for provision of services irrespective of whether service is provided or facilitated by the e-commerce operator. These amendments will take effect retrospectively from 1st April, 2020. It is also proposed to amend section 191 of the Finance Act, 2016 relating to exemption from wealth-tax in respect of assets specified in declaration. The said section, inter alia, provides that any excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under the Income Declaration Scheme, 2016 shall not be refundable. The proviso to the said section provides that the Central Government may, by notification, specify a class of persons to whom the excess amount so paid shall be refundable. It is proposed to amend the said proviso to provide that such excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under the aforementioned Scheme shall be refundable to the specified class of persons without payment of any interest. This amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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