9911796707
TMI BlogFinance Act, 2023 ─ Explanatory Notes to the Provisions of the Finance Act, 2023X X X X Extracts X X X X X X X X Extracts X X X X ..... Income from property held for charitable or religious purposes. 12A Conditions for applicability of sections 11 and 12 12AB Procedure for fresh registration 13 Section 11 not to apply in certain cases 17 Salary , perquisite and profits in lieu of salary defined 28 Profits and gains of business or profession 35D Amortization of certain preliminary expenses 43B Certain deductions to be only on actual payment 43D Special provision in case of income of public financial institutions, public companies etc. 44AB Audit of accounts of certain persons carrying on business or profession 44AD Special provision for computing profits and gains of business on presumptive basis 44ADA Special provision for computing profits and gains of profession on presumptive basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. 80CCC Deduction in respect of contribution to certain pension funds 80CCD Deduction in respect of contribution to pension scheme of Central Government 80CCH Deduction in respect of contribution to Agnipath Scheme 80G Deduction in respect of donations to certain funds, charitable institutions, etc. 80-IAC Special provision in respect of specified business 80LA Deductions in respect of certain incomes of Offshore Banking Units and International Financial Services Centre 87 Rebate to be allowed in computing income-tax 87A Rebate of income-tax in case of certain individuals 88 Rebate on life insurance premia, contribution to provident fund, etc. (omitted) 92BA Meaning of specified domestic transaction 92D Maintenance, keeping and furnishing of information and document by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53 Time limit for completion of assessment, reassessment and recomputation 154 Rectification of mistake. 155 Other amendments 158A Procedure when assessee claims identical question of law is pending before High Court or Supreme Court. 158AB Procedure where an identical question of law is pending before High Courts or Supreme Court. 170A Effect of order of tribunal or court in respect of business reorganisation 177 Association dissolved or business discontinued. 189 Firm dissolved or business discontinued. 192A Payment of accumulated balance due to an employee 193 Interest on securities 194B Winnings from lottery or crossword puzzle,etc. 194BA Winnings from online games 194BB Winnings from horse race. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or retain books of account, documents, etc. 271AAC Penalty in respect of certain income. 271AAD Penalty for false entry, etc., in books of account. 271C Penalty for failure to deduct tax at source 271FAA Penalty for furnishing inaccurate statement of financial transaction or reportable account. 271J Penalty for furnishing incorrect information in reports or certificates. 274 Procedure. 275 Bar of limitation for imposing penalties. 276A Failure to comply with the provisions of sub-sections (1) and (3) of section 178. 276B Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B. 279 Prosecution to be at instance of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. 287 Publication of information respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax in respect of incomes of all categories of assessees liable to tax for the assessment year 2023-24. These rates are the same as those laid down in Part III of the First Schedule to the Finance Act, 2022 for the purposes of computation of advance tax , deduction of tax at source from Salaries and charging of tax payable in certain cases during the financial year 2022-23. Main features of the rates specified in the said Part I are as follows: 3.1.2 Individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person. Paragraph A of Part I of the First Schedule specifies the rates of income-tax in the case of every individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company) as under: Income chargeable to tax Rate of income-tax for AY 2023-24 Individual (other than senior and very senior citizen), HUF, association of persons, body of individuals and artificial juridical person. Individu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 111A, 112 and 112A of the Act) exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent of such income-tax; (iv) having a total income (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A 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 by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding two crore rupees, but is not covered under clause (iii) or (iv) above, at the rate of fifteen per cent of such income tax. Where total income includes any income by way of dividend or income chargeable under sections 111A, 112 and 112A of the Act, the surcharge on the amount of income-tax computed in respect of that part of income shall not exceed fifteen percent. However, surcharge shall be at the rates provided in (i) to (v) above for all category of income without excluding dividend or capital gains in case the income is taxable under sections 115A, 115AB, 115AC, 115ACA and 115E. In the case of individual or Hindu undivided family ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re rupees shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees. (ii) one crore rupees but not exceeding two crore rupees shall not exceed the total amount payable as income-tax and surcharge on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. (iii) two crore rupees but not exceeding five crore rupees shall not exceed the total amount payable as income-tax and surcharge on a total income of two crore rupees by more than the amount of income that exceeds two crore rupees. (iv) five crore rupees shall not exceed the total amount payable as income-tax and surcharge on a total income of five crore rupees by more than the amount of income that exceeds five crore rupees. The Health and Education Cess on income-tax shall be levied at the rate of four per cent on the amount of tax computed inclusive of surcharge. No marginal relief shall be available in respect of Health and Education Cess. 3.1.3 Co-operative Societies . Paragraph B of Part I of the First Schedule to the FA 2023 specifies the rates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income exceeding one crore rupees. However, marginal relief shall be available so that 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. The Health and Education Cess on income-tax shall be levied at the rate of four per cent on the amount of tax computed inclusive of surcharge. No marginal relief shall be available in respect of Health and Education Cess. 3.1.5 Local Authorities . Paragraph D of Part I of the First Schedule to the FA 2023 specifies the rate of income-tax as thirty per cent in the case of every local authority. The amount of income-tax so computed or as computed under the provisions of section 111A or section 112 or section 112A of the Act 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, marginal relief shall be available so that the total amount payable as income-tax and surcharge on total income exceeding on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an agreement made by it with the Government or the Indian concern after the 29th day of February, 1964 but before the 1st day of April, 1976, and where such agreement has, in either case, been approved by the Central Government. The tax so computed shall be enhanced by a surcharge of two per cent where such company has total income exceeding one crore rupees but not exceeding ten crore rupees. Surcharge at the rate of five per cent shall be levied if the total income of such company exceeds ten crore rupees. However, marginal relief shall be allowed in the case of every company, other than companies opting for taxation under section 115BAA or 115BAB of the Act, to ensure that,- (i) 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, (ii) the total amount payable as income-tax and surcharge on total income exceeding ten crore rupees shall not exceed the total amount payable as income-tax and surcharge on a total income of ten crore rupees, by more than the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act, being a non-resident, calculated,- (i) at the rate of ten per cent of such tax, where the income or aggregate of income (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) 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 aggregate of income (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) 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 aggregate of income (excluding the income by way of dividend or income under the provisions of sections 111A,112 and 112A of the Act) 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rate of two 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 ten crore rupees; (ii) at the rate of 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 ten crore rupees. (f) No surcharge on tax deducted at source shall be levied in the case of an individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person, co-operative society, local authority, firm, being a resident or a domestic company. 3.3.3 Health and Education Cess. Health and Education Cess on income-tax shall continue to be levied for the purposes of the Union at the rate of four per cent of income-tax including tax deducted and surcharge, if any. For instance, if the amount of income of a foreign company is Rs. 1,20,00,000/- and tax to be deducted from such foreign company is Rs. 12,00,000/- at the rate of 10 per cent, then the surcharge at the rate of two per cent on such tax deducted shall be Rs. 24,000/-. Health and Education cess on su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From Rs. 12,00,001 to Rs. 15,00,000 20 % 6. Above Rs. 15,00,000 30 % However, if such person exercises the option under sub-section (6) of section 115BAC of the Act, the rates as provided in Part III of the First Schedule shall be applicable. Vide Notification no. 43/2023 (G.S.R. 452[E]) dated 21.06.2023, rule 21AGA has been inserted in the Income-tax Rules, 1962 ( the Rules') to provide the manner of exercising option under sub-section (6) of section 115BAC of the Act, prescribing Form No. 10-IEA. Further, consequential amendments have also been carried out in rules 2BB, 3 and 5 of the Rules. Paragraph A of Part III of the First Schedule specifies the rates of income-tax in the case of every individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company) whose income is not chargeable to tax under sub-section (1A) of section 115BAC. The basic exemption limits, rates of tax and slabs of income for various categories in such cases remain the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of dividend or income under sections 111A, 112 and 112A) exceeding two crore rupees but which is not included in (c) or (d) above; It may be noted that in case where the total income includes any income by way of dividend or income chargeable under sections 111A, section 112 and section 112A of the Act, the rate of surcharge on the amount of income-tax computed in respect of that part of income shall not exceed fifteen per cent. Further, in case of an association of persons consisting of only companies as its members, the surcharge shall be calculated,- (a) at the rate of ten per cent of such income-tax, where the total income exceeds fifty lakh rupees but does not exceed one crore rupees; (b) at the rate of fifteen per cent of such income-tax, where the total income exceeds one crore rupees. Further, for a person whose income is chargeable to tax under sub-section (1A) of section 115BAC of the Act, the surcharge at the rate of 37 per cent on the income or aggregate of income of such person (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding five crore rupees shall not be applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter VIII of the Act) on his total income, of an amount equal to the amount by which the income-tax payable on such total income is in excess of the amount by which the total income exceeds seven hundred thousand rupees. Rebate under section 87A to a resident individual who has opted out of taxation under sub-section (1A) of section 115BAC is available only if his total income does not exceed rupees five lakh. No marginal relief is available in such cases. The Health and Education Cess on income-tax shall be levied at the rate of four per cent on the amount of tax computed inclusive of surcharge. No marginal relief shall be available in respect of Health and Education Cess. Further where the total income of a person, being a specified fund referred to in clause (c) of the Explanation to clause (4D) of section 10 of the Act, whose income is chargeable to tax under sub-section (1A) of section 115BAC and where such income includes any income under clause (a) of sub-section (1) of section 115AD of the Act, tax computed on that part of income shall not be increased by any surcharge. Further, no Health and Education Cess on such income-tax shall be levied in such cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Education Cess on income-tax shall be levied at the rate of four per cent of the amount of income-tax computed inclusive of surcharge. No marginal relief shall be available in respect of Health and Education Cess. 3.4.4 Firms. Paragraph C of Part III of the First Schedule to the FA 2023 specifies the rate of income-tax as thirty per cent in the case of every firm. The amount of income-tax so computed or as computed under the provisions of section 111A or section 112 or section 112A of the Act shall continue to 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, marginal relief shall be available so that 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. The Health and Education Cess on income-tax shall be levied at the rate of four per cent on the amount of tax computed inclusive of surcharge. No marginal relief shall be available in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 115BAA or section 115BAB, the tax computed shall be enhanced by a surcharge of ten per cent for all levels of income. (ii) In the case of a company other than a domestic company, the tax rate is forty per cent. However, the tax rate shall be fifty percent, on so much of total income of the company, as consists of: (a) royalties received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961 but before the 1st day of April, 1976; or (b) fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 29th day of February, 1964 but before the 1st day of April, 1976, and where such agreement has, in either case, been approved by the Central Government. The tax so computed, shall continue to be enhanced by a surcharge of two per cent where such company has total income exceeding one crore rupees but not exceeding ten crore rupees. Surcharge at the rate of five per cent shall continue to be levied if the total income of such company exceeds ten c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (1) of section 9 of the Act to provide that the any sum of money exceeding fifty thousand rupees, received by a non-resident without consideration from a person resident in India, on or after the 5th day of July, 2019, shall be income deemed to accrue or arise in India. Sum of money is referred to in sub-clause (xviia) of clause (24) of section 2 of the Act. 4.3. The above amendment was introduced as an anti-abuse provision, as certain instances were observed where gifts were being made by persons resident in India to non-residents and were claimed to be non-taxable in India by such non-residents. 4.4. It had further been noticed that certain persons being not ordinarily resident were receiving the gifts from persons resident in India and not paying tax on it. 4.5. In view of the above, FA 2023 has amended clause (viii) of sub-section (1) of section 9 of the Act to extend this deeming provision to sum of money exceeding fifty thousand rupees, received by a person not ordinarily resident in India within the meaning of clause (6) of section 6 of the Act, without consideration from a person resident in India. Applicability: This amendment is effective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from various financial products are received in an account(s) maintained with Banking Units located in IFSC which become taxable on receipt basis. However, both the financial products are issued outside India and also income therefrom accrues or arises to non-residents situated in foreign jurisdictions. 5.2.3 In view of the above, on the lines of the exemption provided to income from portfolio management services, FA 2023 amended clause (4G) of section 10 of the Act to enable Central Government to notify in the Official Gazette, activity carried out by notified person, such that income received by a non-resident from such activity, in an account maintained with Offshore Banking Unit of IFSC would not be taxable if such income accrues or arises outside India and is not deemed to accrue or arise in India. Applicability: This amendment is effective from 1 st April 2024, and accordingly applies to the assessment year 2024-25 and subsequent assessment years. 5.3 Providing exemption to income of a non-resident or a Unit of an IFSC engaged primarily in the business of leasing of an aircraft 5.3.1 Over the years several tax incentives have been provided to the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest in resultant fund, in a relocation from original fund to resultant fund. In order to provide further time for such relocation, clause (b) of the Explanation to clause (viiad) of section 47 of the Act has been amended to extend the date for transfer of assets of the original fund, or of its wholly owned special purpose vehicle, to a resultant fund in case of relocation to 31 st March, 2025 from current limitation of 31 st March, 2023. Applicability: The amendment is effective from 1 st April 2023, and applies to the assessment year 2023-24 and subsequent assessment years. 5.5 Tax Holiday for IFSC units who have obtained license from RBI before 1st April 2020. 5.5.1 Section 80LA provides specified deduction to an assessee, being a scheduled bank or a foreign bank, on the income earned from its Offshore Banking Unit in the IFSC. The deduction is allowed for one hundred per cent of such income for five consecutive assessment years beginning with the assessment year relevant to the previous year in which the permission, under clause (a) of sub-section (1) of section 23 of the Banking Regulation Act, 1949 or permission or registration under the Securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been amended in clause (c) of the Explanation to clause (4D) of section 10, clause (c) of the Explanation to clause (viiad) of section 47, and clause (aa) of the Explanation to clause (viib) of subsection (2) of section 56 of the Act to include the reference of IFSCA (Fund Management) Regulations,2022 in the Act. Applicability: The amendment will take effect from 1 st April, 2023 and accordingly apply to assessment year 2023-24 and subsequent assessment years 5.7 Relief for Unit of an IFSC claiming deduction under section 80LA of the Act opting for tonnage tax scheme 5.7.1 Under sub-section (2) of section 115VP of the Act, a qualifying company may opt for the tonnage tax scheme by making an application within three months of the date of its incorporation or the date on which it became a qualifying company, as the case may be. 5.7.2 Representations were received that for a Unit of an IFSC which has availed of deduction under section 80LA of the Act, the time period of three months under sub-section (2) of section 115VP of the Act be calculated from the date on which such deduction under section 80LA of the Act ends. Accordingly, vide FA 2023, a proviso has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o provide that any payment received from the Agniveer Corpus Fund by a person enrolled under the Agnipath Scheme, 2022, or the nominee of such person shall be exempted from income tax. ii. A new section 80CCH has also been inserted to provide that an assessee, being an individual enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after the 1 st day of November, 2022, shall be allowed a deduction of the whole of the amount deposited by him and also the amount contributed by the Central Government to his account in the Agniveer Corpus Fund, from his total income. iii. For the purposes of clause (12C) of section 10 and section 80CCH, the Agnipath scheme' has been defined as a scheme for the enrolment of Agniveers in Indian Armed Forces introduced by the Central Government, and Agniveer Corpus Fund' as a fund in which consolidated contributions of all Agniveers and matching contributions of the Central Government along with interest on both these contributions are held. iv. Further a new sub-clause (ix) in clause (1) of section 17 of the Act has been inserted to provide that the contribution made by the Central Government in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Court has also made a fine distinction in respect of statutory authorities, boards etc. which have been established by the State government or Central governments, for achieving essentially public functions/services . In such cases, the court have held that the amounts or any money whatsoever charged for the public services are prima facie to be excluded from the mischief of business or commercial receipts as their objects are essential for advancement of public purposes/ functions. 7.5. In view of the above, FA 2023 has amended the Act so as to exclude income of a body or authority or Board or Trust or Commission, not being a company, from the scope of clause (46) of section 10 of the Act and inserted a new clause (46A) in section 10 of the Act for their income. 7.6. The new clause (46A) provides exemption to any income arising to a body or authority or Board or Trust or Commission, not being a company, which has been established or constituted by or under a Central or State Act with one or more of the following purposes, namely: - (i) dealing with and satisfying the need for housing accommodation; (ii) planning, development or improvement of cities, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceeds Rs 2,50,000. It was also provided that if premium is payable for more than one ULIPs, issued on or after the 01.02.2021, the exemption under the said clause shall be available only with respect to such policies where the aggregate premium does not exceed Rs 2,50,000 for any of the previous years during the term of any of the policies. Circular No. 2 of 2022 dated 19.01.2022 was issued to explain how the exemption is to be calculated when there is more than one policy. 8.4. After the enactment of the above amendment, while ULIPs having premium payable exceeding Rs 2, 50,000/- were excluded from the purview of clause (10D) of section 10 of the Act, all other kinds of life insurance policies were still eligible for exemption irrespective of the amount of premium payable. 8.5. In order to curb such misuse, FA 2023 has provided for the taxation of sums received under a life insurance policy (other than ULIP for which provisions already exist) having premium or aggregate of premium above Rs 5,00,000 in a year. This sum shall be taxable under the head income from other sources . Deduction shall be allowed for premium paid, if such premium has not been claimed as d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 56 of the Act to provide that for the purposes of this clause, unit linked insurance policy shall have the same meaning as assigned to it in Explanation 3 to clause (10D) of section 10 of the Act; (vi) insertion of sub-clause (xviid) in clause (24) of section 2 of the Act to provide that income shall include any sum referred to in clause (xiii) of sub-section (2) of section 56 of the Act. Applicability: These amendments are effective from 1st April, 2024 and accordingly apply to the assessment year 2024-25 and subsequent assessment years. Vide Circular no. 15/2023 dated 16.08.2023, the Board has issued guidelines for removal of difficulties, in terms of the ninth proviso to clause (10D) of section 10 of the Act. Computation mechanism has been prescribed vide Notification No. 51/2023 dated 18.7.2023 (GSR 519[E]) through which rule 11UACA has been inserted to prescribe the manner of computation of income chargeable to tax under clause (xiii) of sub-section (2) of section 56 of the Act. 9. Removal of exemption of news agency under clause (22B) of section 10 of the Act 9.1. Prior to the amendments made vide FA 2023, Clause (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Indian citizen, domiciled in Sikkim on or before 26th April, 1975 11.1. Clause (26AAA) of section 10 of the Act provides exemption to any income of a Sikkimese from any source in Sikkim as well as exemption to any dividend income and interest on securities. Prior to amendment by the FA 2023, the said clause (26AAA) provided that in case of an individual, being a Sikkimese, any income which accrues or arises to him from any source in the State of Sikkim; or by way of dividend or interest on securities, would be exempt. Further, this exemption would not be applicable to a Sikkimese woman who, on or after 1st April, 2008, married an individual who is not a Sikkimese. For this purposes, Sikkimese meant: (i) an individual, whose name is recorded in the register maintained under the Sikkim Subjects Regulation, 1961 read with the Sikkim Subject Rules, 1961 (referred to as the Register of Sikkim Subjects ), immediately before the 26th day of April, 1975; or (ii) an individual, whose name is included in the Register of Sikkim Subjects by virtue of the Government of India Order No. 26030/36/90-I.C.I., dated the 7th August, 1990 and Order of even number d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is established beyond doubt that such individual's father or husband or paternal grand-father or brother from the same father was domiciled in Sikkim on or before the 26th day of April, 1975. 11.4. The term Sikkimese defined for the purposes of the clause (26AAA) of section 10, is only for the purposes of the Income-tax Act, 1961, and not for any other purpose. Applicability: This amendment is effective from 1st April, 1990 and applies to assessment year 1990-91 and subsequent assessment years. 12. Providing exemption to any income of National Credit Guarantee Trustee Company Limited (NCGTC), subsidiaries of NCGTC and Credit Guarantee Fund Trust for Micro and Small Enterprises 12.1. National Credit Guarantee Trustee Company Ltd (NCGTC) is a company incorporated under the Companies Act, 1956 established by the Department of Financial Services, as a wholly financed company of the Government of India, to act as a common trustee company for multiple credit guarantee funds. It shares the lending risk of the lenders and in turn, facilitates access to finance for the prospective borrower as part of a larger financial inclusion programme of the government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 of the Act provides for incomes which are not included in total income. Clauses (23BBF), (23EB),(26A), (41) and (49) of this have already been sunset. 13.2. Hence, Finance Act 2023 has omitted clauses (23BBF), (23EB), (26A), (41) and (49) of section 10 of the Act. Applicability: This amendment has taken effect from 1st April, 2023. 14. Specifying time limit for bringing consideration against export proceeds into India 14.1. Prior to FA 2023, the provisions of the section 10AA of the Act, inter-alia, provided 15-year tax benefit to a unit established in a SEZ which begins to manufacture or produce articles or things or provide any services on or after 01.04.2005. The deduction is available for units that begin operations before 01.04.2020, which has been extended to 30.09.2020 through the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and is allowed in the specified manner therein. 14.2. However, the said section did not provide for the condition to file return before due date provided under sub-section (1) of section 139 of the Act for claiming deduction as is provided for similar other deductions. Section 143(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endments will be effective from 1st April, 2024 and shall accordingly, apply in relation to the assessment year 2024-25 and subsequent assessment years. 15. Rationalisation of the provisions of Charitable Trust and Institutions 15.1. Background 15.1.1. Income of 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 clause (23C) of section 10 of the Act or any trust or institution registered u/s 12AA or 12AB of the Act is exempt subject to the fulfilment of the conditions provided under various sections. The exemption to these trusts or institutions is available under the two regimes- (i) Regime for 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 clause (23C) of section 10 of the Act (hereinafter referred to as trust or institution under first regime); and (ii) Regime for the trusts registered under section 12AA/12AB of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m loans and borrowings shall not be considered as application for charitable or religious purposes for the purposes of third proviso of clause (23C) of section 10 of the Act and clauses (a) and (b) of section 11 of the Act. However, 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 to the extent of such repayment. 15.2.2. While implementing the recent changes vide the Finance Act, 2021 to the provisions related to corpus and loan or borrowing, it was noticed that application from corpus or loan or borrowings have already been claimed as application prior to 01.04.2021. Hence, allowing such amount to be application again as investment or depositing back in corpus or repayment of loan or borrowing will amount to double deduction. 15.2.3. It was also noted that, a trust may invest or deposit back the amount in to corpus or repay the loan after many years of application from the corpus or loan and claim such repayment of loan or investment/depositing back in to corpus as application for charitable or religious purposes. Availability of indefinite period for the inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion should be in India except with the approval of the Board in accordance with the provisions of clause (c) of sub-section (1) of section 11 of the Act. 15.2.5. In order to ensure proper implementation of both the exemption regimes, FA 2023, has provided that application out of corpus or loans or borrowings before 01.04.2021 shall not be allowed as application for charitable or religious purposes when such amount is deposited back or invested in to corpus or when the loan or borrowing is repaid. It has further been provided that if the trust or institution invests or deposits back the amount in to corpus or repays the loan within 5 years of application from the corpus or loan, then such investment/depositing back in to corpus or repayment of loan will be allowed as application for charitable or religious purposes. It is also provided that where the application from corpus or loan did not satisfy the conditions as stated in paragraph 15.2.4, the repayment of loan or investment/depositing back in to corpus of such amount will not be treated as application. 15.2.6. In view of the above, FA 2023 has made the following amendments: (i) inserted a second proviso to clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provide that the provisions of the first proviso shall apply only if there was no violation of the conditions, specified in clause (c) of, and Explanations 2, 3 and 5 to, sub-section (1) of, and Explanation to, section 11 of the Act and clause (c) of sub-section (1) of section 13 of the Act, at the time the application was made from the corpus; (viii) inserted a third proviso to clause (i) of Explanation 4 to sub-section (1) of section 11 of the Act so as to provide that the amount invested or deposited back shall not be treated as application for charitable or religious purposes under the first proviso unless such investment or deposit is made within a period of five years from the end of the previous year in which such application was made from corpus; (ix) inserted a fourth proviso to clause (i) of Explanation 4 to sub-section (1) of section 11 of the Act so as to provide that nothing contained in the first proviso shall apply where application from corpus is made on or before the 31st day of March, 2021; (x) inserted a second proviso to clause (ii) of Explanation 4 to sub-section (1) of section 11 of the Act so as to provide that the provisions of the first p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icantly to a lesser percentage compared to the mandatory requirement of 85%. 15.3.3. In order to ensure intended application toward charitable or religious purpose, FA 2023 has provided that only 85% of the eligible donations made by a trust or institution under the first or the second regime to another trust under the first or second regime shall be treated as application only to the extent of 85% of such donation. Accordingly, FA 2023 has made the following amendments: a) inserted clause (iii) in Explanation 2 to the third proviso of clause (23C) of section 10 of the Act to provide that any amount credited or paid out of income of any fund or trust or institution 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 clause (23C) of section 10 of the Act, other than the amount referred to in the twelfth proviso, to any other fund or trust or institution 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 cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non- registration of such trust or institution for the said assessment year. 15.4.4. Fourth proviso to sub-section (2) of section 12A of the Act provided that provisions contained in the second and third proviso to sub-section (2) of section 12A of the Act shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA of the Act or section 12AB of the Act. 15.4.5. Second, third and fourth proviso to sub-section (2) of section 12A of the Act discussed above had become redundant after the amendment of section 12A of the Act by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 as the trusts and institutions under the second regime are required to apply for provisional registration before the commencement of their activities and therefore there was no need of roll back provisions provided in second and third proviso to sub-section (2) of section 12A of the Act. 15.4.6. With a view to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has made the following amendments: a) The trusts and institutions under the first regime shall be allowed to make application for the provisional approval only before the commencement of activities under sub-clause (A) of clause (iv) of the first proviso to clause (23C) of section 10 of the Act. b) Similarly trusts and institutions under the second regime shall be allowed to make application for the provisional registration only before the commencement of activities under item (A) of sub-clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act. c) Similarly trusts and institutions under section 80G regime shall be allowed to make application for the provisional approval only before the commencement of activities under sub-clause (A) of clause (iv) of the first proviso to sub-section (5) of section 80G of the Act. d) The trusts and institutions under first regime, which have already commenced their activities, shall make application for a regular approval under sub-clause (B) of clause (iv) of the first proviso to clause (23C) of section 10 of the Act. e) The trusts and institutions under second regime, which have already commenced their acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration/approval. The process of granting the provisional approval/ registration for the new trusts and re-registration/approval for the trusts already registered is automated. Application is filed by the trust or institution on e-filing portal and provisional approval/registration or the approval/registration in such cases is granted in an automated manner without verification. 15.6.2. It was noticed that in some cases the form furnished by the trusts for provisional approval/registration and for re-registration/approval are defective and since the process of registration/approval/provisional registration/approval is automated, registration has been granted by the CPC. At present the approval/registration and the provisional approval/registration of the trusts can be cancelled by the PCIT/CIT for certain specified violations. 15.6.3. In order to rationalise the provisions, FA 2023 has made the following amendments, a) inserted clause (e) in Explanation 2 to the fifteenth proviso of clause (23C) of section 10 of the Act to provide that the specified violation shall also include the case where the application referred to in the first proviso is not complete or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the following unintended consequences: a) Once a trust or institution under the first or second regime enters in-to exemption regime and thereafter desires to exit from it, it is allowed to exit on payment of tax at the rate of maximum marginal rate on its accreted income (difference between the fair market value of assets and liabilities). This is because of the reason that the income of the trust or institution has been exempted from tax and the accreted income of the trust represents the income on which tax has not been paid and appreciation thereof. b) By not applying for re-registration/approval or registration/approval, the trust gets an easy route to exit without payment of the tax on accreted income. 15.7.3. A trust or institution under the first or second regime may voluntarily wind up its activities and dissolve or may also merge with any other non-charitable institution, or it may convert into a non-charitable organization. In order to ensure that the benefit conferred over the years by way of exemption is not misused and to plug the gap in law that allowed the trusts and institutions having built up corpus/wealth through exemptions being converted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or sub-clauses. Upon violation of these, it shall be deemed to have been converted into any form not eligible for registration or approval in the previous year in which such period expires. (ii) amendment of clause (ii) of sub-section (5) of section 115TD of the Act to provide that principal officer or the trustee of the specified person, as the case may be, and the specified person shall also be liable to pay the tax on accreted income to the credit of the Central Government within fourteen days from the end of the previous year in a case referred to in clause (iii) of sub-section (3) of section 115TD of the Act; (iii) insertion of sub-clause (c) in clause (i) to the Explanation to section 115TD of the Act to provide that date of conversion shall also mean the last date for making an application for registration under sub-clause (i) or sub-clause (ii) or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or for making an application for approval under clause (i) or clause (ii) or clause (iii) of the first proviso to clause (23C) of section 10 of the Act, as the case may be, in a case referred to in clause (iii) of sub-section (3) of section 115TD of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to report the details of Form No. 9A/10 in the audit report. Since the due date for furnishing Form No. 10B/10BB is one month before the due date of furnishing the ITR, auditors find it difficult to report. 15.8.6. In order to rationalise the provisions, FA 2023 has provided for filing of Form No. 10/9A at least two months prior to the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year. Necessary amendments in this regard have been made in, a) clause (c) of Explanation 3 to third proviso of clause (23C) of section 10 of the Act; b) clause (2) of Explanation 1 sub-section (1) of section 11 of the Act; c) clause (c) of sub-section (2) of the said section 11 of the Act. Applicability: These amendments are effective from 1st April, 2023 and accordingly apply to the assessment year 2023-24 and subsequent assessment years. 15.9. Denial of exemption where return of income is not furnished within time 15.9.1. As per the provisions of twentieth proviso to clause (23C) of section 10 of the Act, if the return of income is not furnished by a trust or institution under first regime within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of provisions related to the valuation of residential accommodation provided to employees 16.1. As per clause (2) of section 17 of the Act, perquisite inter-alia includes value of rent-free accommodation or value of any concession in the matters of rent provided to employees by the employer. The employer may be either Central/State Government or other than that, with different methodologies of valuation of perquisites for the two categories of employers. 16.2. However, the methodology to compute the value of rent-free accommodation was prescribed in Rule 3 of the Rules, while the methodology to compute the value of any concession in the matters of rent provided to employees by the employer was specified in the Explanations to the clause (2) of section 17. 16.3. In order to rationalize this provision by prescribing a uniform methodology in the Rules for computing the value of perquisite and to clearly classify the two categories of perquisites with respect to accommodation provided by the employers, FA 2023 has amended sub-clauses (i) and (ii) of clause (2) of section 17 of the Act. The method for computation of the value of rent-free accommodation provided to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital gains on transfer of such property this same interest also formed a part of cost of acquisition or cost of improvement under section 48 of the Act. 17.4. In order to prevent this double deduction, FA 2023 has inserted a proviso after clause (ii) of the section 48 to provide that the cost of acquisition or the cost of improvement shall not include the amount of interest claimed under clause (b) of section 24 or Chapter VIA. Applicability: This amendment shall take effect from 1st April, 2024 and shall accordingly, apply in relation to the assessment year 2024-25 and subsequent assessment years. 18. Providing clarity on benefits and perquisites in cash 18.1 Section 28 of the Act provides for income that shall be chargeable to income-tax under the head Profits and gains of business or profession . Clause (iv) of this section brings to chargeability the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession. This provision was inserted through the Finance Act 1964 and the Circular No. 20D dated 7th July 1964 issued to explain the provisions of this Act stated clearly that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified by way of insertion of an Explanation to section 194R of the Act that provisions of sub-section (1) apply to benefit or perquisite whether in cash or in kind or partly in cash and partly in kind. Applicability: This amendment has taken effect from 1st April, 2023. 19. Ease in claiming deduction on amortization of preliminary expenditure 19.1 Section 35D of the Act provides for amortization of certain preliminary expenses which are incurred prior to the commencement of business or after commencement, in connection with extension of undertaking or setting up of a new unit. This includes expenditure in connection with preparation of feasibility report, project report etc. 19.2 Prior to FA 2023, the section inter-alia provided that the work in connection with the preparation of feasibility report or the project report or the conducting of market survey or of any other survey or the engineering services would need to be carried out either by the assessee himself or by a concern which is approved by the CBDT. 19.3 In order to ease the process of claiming amortization of these preliminary expenses, section 35D of the Act has been amended to remove the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20.4 In view of the above, vide FA 2023, section 43B and section 43D of the Act were amended, to substitute for the words, a deposit taking non-banking financial company or systemically important non-deposit taking non-banking financial company , the words such class of non-banking financial companies as may be notified by the Central Government in the Official Gazette in this behalf . Applicability: These amendments will take effect from 1st April, 2024 and will accordingly apply in relation to the assessment year 2024-2025 and subsequent assessment years. 20.5 Vide Notification No. 80/2023 dated 22.9.2023 (S.O. 4193[E]) , certain classes of NBFCs have been notified for section 43B and vide Notification No. 79/2023 dated 22.9.2023 (S.O. 4192 [E]) , certain classes of NBFCs have been notified for section 43D. By these Notifications the following classes of NBFCs have been notified, namely:- (a) all NBFCs classified in the Top Layer; (b) all NBFCs classified in the Upper Layer; (c) all NBFCs classified in the Middle Layer. It has also been clarified that this classification of NBFCs in the Top Layer, Upper Layer and Middle Layer shall be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sum is taxable. 22.2 Section 44ADA of the Act provides for a presumptive income scheme for small professionals. Prior to FA 2023, this scheme applied to certain resident assessees (i.e., an individual, partnership firm other than LLP) who are engaged in any profession referred to in subsection (1) of section 44AA, and whose total gross receipts do not exceed fifty lakh rupees in a previous year. Under this scheme, a sum equal to 50% of the gross receipts is deemed to be the profits and gains from business. If assessee has claimed to have earned a sum higher than 50%, then that higher sum is taxable. 22.3 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 exceeds one crore rupees in any previous year. The limit is raised to ten crore rupees where at least 95% of receipts/payments are in non-cash mode. In case of a person carrying on profession, he is required to get his accounts audited, if his gross receipts in profession exceeds, fifty lakh rupees in any previous year. Those opting for and fulfilling the conditions laid in the presumptive scheme are exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n company who is engaged in the business of civil construction or the business of erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project approved by the Central Government. Under this scheme, a sum equal to ten per cent of the amount paid or payable (whether in or out of India) to the said assessee or to any person on his behalf on account of such civil construction, erection, testing or commissioning is deemed to be the profits and gains of such business chargeable to tax under the head Profits and gains of business or profession . 23.3 Both sections provide that an assessee may claim lower profits and gains than the profits and gains specified if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA of the Act and gets his accounts audited and furnishes a report of such audit as required under section 44AB of the Act. 23.4 It was seen that taxpayers opt in and opt out of presumptive scheme in order to avail benefit of both presumptive scheme income and non-presumptive income. In a year when they have loss, they claim actual loss as per the books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld to the Electronic Gold Receipt issued by a Vault Manager or such Electronic Gold Receipt to physical gold shall not be considered as 'transfer'. ii. For the purposes of this clause, the expressions 'Electronic Gold Receipt' and 'Vault Manager' shall have the meanings respectively assigned to them in clauses (h) and (l) of sub-regulation (1) of regulation 2 of Securities and Exchange Board of India (Vault Managers) Regulations, 2021. iii. A new sub-section (10) to section 49 of the Act has been inserted to provide that where an Electronic Gold Receipt issued by a Vault Manager, became the property of the person as consideration of a transfer, as referred in the newly inserted clause (viid) in section 47, the cost of acquisition of the asset for the purpose of the said transfer, shall be deemed to be the cost of gold in the hands of the person in whose name Electronic Gold Receipt is issued. Similarly, where the gold released against an Electronic Gold Receipt, which became the property of the person as consideration for a transfer, as referred in clause (viid) in section 47,the cost of acquisition of the asset (being gold) for the purposes of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he stamp duty value of his share as increased by any consideration received in cash or by a cheque or draft or by any other mode. Applicability: This amendment will take effect from 1st April, 2024 and shall accordingly, apply in relation to the assessment year 2024-25 and subsequent assessment years. 26. Definition of 'original fund' for the purposes of exemption under section 47 26.1 Clause (viiac) of section 47 of the Act exempts any transfer, in a relocation, of a capital asset by the original fund to the resulting fund, while clause (viiad) of section 47 of the Act exempts any transfer by a shareholder or unit holder or interest holder, in a relocation, of a capital asset being a share or unit or interest held by him in the original fund in consideration for the share or unit or interest in the resultant fund. 26.2 Prior to the amendment by the FA 2023, for the purposes of these clauses, clause (a) of the Explanation to clause (viiac) and (viiad) of section 47 of the Act defined an 'original fund' as a fund established or incorporated or registered outside India, which collects funds from its members for investing it for their benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utside India by a foreign government, in accordance with the laws of that foreign state shall not be considered as a transfer. 27.2 Further, Finance Act 2023 has inserted a new sub-section (2AI) after sub-section (2AH) of section 49 of the Act, to provide that where the capital asset, being shares as referred to in clause (xx) of section 47, became the property of the assessee, the cost of acquisition of such asset shall be deemed to be the cost of acquisition to it of the interest in the joint venture referred to in the said clause. Applicability: This amendment has come into effect from 1st April, 2023 and shall accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. 28. Special provision for taxation of capital gains in case of Market Linked Debentures and certain Specified Mutual Funds 28.1 It has been noticed that a variety of hybrid securities that combine features of plain vanilla debt securities and exchange traded derivatives are being issued through private placements and listed on stock exchanges. It is seen that such securities differ from plain vanilla debt securities. 28.2 'Market Linked Debentures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to the annual average of the daily closing figures. Applicability: This amendment will take effect from 1st April, 2024 and shall accordingly, apply in relation to the assessment year 2024-25 and subsequent assessment years. 29. Limiting the roll over benefit claimed under section 54 and section 54F 29.1. Prior to the FA, 2023, the provisions of section 54 and section 54F of the Act allowed deduction on the Capital gains arising from the transfer of long-term capital asset if an assessee, within a period of one year before or two years after the date on which the transfer took place purchased any residential property in India, or within a period of three years after that date constructed any residential property in India. For section 54 of the Act, the deduction was available on the long-term capital gain arising from transfer of a residential house if the capital gain is reinvested in a residential house. In section 54F of the Act, the deduction is available on the long term capital gain arising from transfer of any long term capital asset except a residential house, if the net consideration was reinvested in a residential house. These deductions ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nil, the chargeability of capital gains from transfer of such assets had not found favour with the Courts. 30.2. Therefore, to define the term 'cost of acquisition' and 'cost of improvement' of such assets, FA 2023 has amended the provisions of sub-clause (1) of the clause (b) of the sub-section (1) to provide that the cost of improvement of an intangible asset or any other right shall be taken to be nil. Also clause (a) of sub-section (2) of section 55 has been amended to provide that the 'cost of acquisition' of a capital asset being any intangible asset or any other right shall be 'Nil' where it falls in sub-clause (iii) of clause (a) of sub-section (2) of section 55 of the Act.. Applicability: This amendment is will take effect from 1st April, 2024 and shall accordingly apply in relation to the assessment year 2024-25 and subsequent assessment years. 31. Bringing the non-resident investors within the ambit of section 56(2)(viib) to eliminate the possibility of tax avoidance 31.1. Prior to FA, 2023, section 56(2)(viib) of the Act, inter-alia, provided that where a company, not being a company in which the public are substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of valuation of fair market value of unquoted equity shares for the purposes of the Section 56(2) (viib) of the Act was put in the public domain for comments. Taking into consideration the suggestions received in this regard and detailed interactions held with stakeholders, Rule 11UA has been amended vide Notification No. 81/2023 dated 25.9.2023 (GSR 685 [E]). The notified Rule provides for expansion of the valuation methodologies to include globally accepted methodology. 32. Facilitating strategic disinvestment of public sector companies 32.1. Section 72A of the Act relates to provisions on carry forward and set off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger. Sub-section (1) of section 72A provides that in specified cases, accumulated loss and unabsorbed depreciation of the amalgamating company shall be deemed to be the accumulated loss and unabsorbed depreciation of amalgamated company for the previous year in which the amalgamation was affected. Conditions have also been laid down in the said section to facilitate carry forward and set off of loss and unabsorbed depreciation in the case of strategic disinvestment. Prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m a public sector company or the Central Government or any State Government under strategic disinvestment. 33. Relief to start-ups in carrying forward and setting off of losses 33.1. Section 79 of the Act restricts carrying forward and setting off of losses in cases of companies, other than the companies in which the public is substantially interested. It prohibits setting off of carried forward losses if there is change in shareholding. The carried forward loss is set off only if at least 51% shareholding (as on the last date of the previous year) remains same with the company on the last date of the previous year to which the loss belongs. 33.2. However, some relaxation has been provided in case of an eligible start-up as referred to in section 80-IAC of the Act. The condition of continuity of at least 51% shareholding is not applicable to the eligible start-up, if all the shareholders of the company as on the last day of the year, in which the loss was incurred, continue to hold those shares on the last day of the previous year in which the loss is set off. There was an additional condition that the loss is allowed to be set off, under this relaxation, only if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... option of the assessees subject to the condition that,- i. the total turnover of its business does not exceed one hundred crore rupees, ii. it is holding a certificate of eligible business from the Inter-Ministerial Board of Certification, and iii. it is incorporated on or after 1st day of April, 2016 but before 1st day of April 2023. 35.2. In order to further promote the development of start-ups in India and to provide them with a competitive platform, FA 2023 has amended the provisions of section 80-IAC of the Act and extended the period of incorporation of eligible start-ups to 1st day of April 2024. Applicability: This amendment has taken effect from 1st April, 2023 and shall accordingly; apply in relation to the assessment year 2023-24 and subsequent assessment years. 36. Omission of certain redundant provisions of the Act 36.1. The provisions of the section 88 of the Act related to rebate on life insurance premia, contribution to provident fund, etc. 36.2. The said section had no relevance at present as it was sunset by the Finance Act, 2005 and section 80C was introduced for allowing deduction on various instruments listed therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions or a specified domestic transaction has been rationalised vide FA 2023 so as to provide the AOs a reasonable amount of time to examine the information/documents submitted and complete the pending proceedings. 37.4. In view of the above, FA 2023 has amended sub-section (3) of section 92D of the Act to provide that,- (i) the Assessing Officer or the Commissioner (Appeals) may, in the course of any proceeding under the Act, require any person referred to in clause (i) of sub-section (1) of section 92D of the Act i.e., who has entered into an international transaction or specified domestic transaction, to furnish any information or document referred therein, within a period of ten days from the date of receipt of a notice issued in this regard; and (ii) the Assessing Officer or the Commissioner (Appeals) may, on an application made by such person who has entered into an international transaction or specified domestic transaction, extend the period of ten days by a further period not exceeding thirty days. Applicability: This amendment is effective from 1st April, 2023. 38. Excluding non-banking financial companies (NBFC) from restriction on interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (1) of section 36 of the Act. Applicability: This amendment is effective from 1st April, 2024 and will accordingly apply to assessment year 2024-25 and subsequent assessment years. 39. Modification of directions related to faceless schemes and e-proceedings 39.1. The Central Government has undertaken a number of measures to make the processes under the Act, electronic, by eliminating person to person interface between the taxpayer and the Department to the extent technologically feasible, and provide for optimal utilisation of resources and a team-based assessment with dynamic jurisdiction. 39.2. Consequent to these amendments introduced in the Act, various schemes have been notified and directions issued for implementation of e-proceedings and faceless schemes, as follows: Sl. No. Section Scheme 1. 135A e-Verification Scheme, 2021 2. 245MA e-Dispute Resolution Scheme, 2022 3. 245R e-advance rulings Scheme, 2022 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rates provided under the domestic Act or DTAA, there was a possibility of revenue leakage as the non-resident always opts for taxation at the reduced rate of 10% and India was unable to tax such incomes at a rate higher than 10% whereas the other treaty partner was able to tax royalty/FTS paid from their country to an Indian resident at a higher rate as per their domestic law. 40.3. It may further be noted that income in the nature of royalty and FTS of non-resident from non-treaty countries is also taxed at a lower rate of 10% 40.4. In view of the above FA 2023 has amended section 115A of the Act in order to provide for increase in the rate of taxation of royalty and fees for technical services from 10% to 20%. Applicability: These amendments are effective from 1st April, 2024 and apply to the assessment year 2024-25 and subsequent assessment years. 41. 15% concessional tax to promote new manufacturing co-operative society 41.1. The Taxation Laws (Amendment) Act, 2019, inter-alia, inserted section 115BAB in the Act which provides that new manufacturing domestic companies set up on or after 01.10.2019, which commence manufacturing or production by 31.03. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall not apply unless the option is exercised by the person in the prescribed manner on or before the due date specified under sub-section(1) of section 139 for furnishing the first of the returns of income for any previous year relevant to the assessment year commencing on or after 1st day of April, 2024 and such option once exercised shall apply to subsequent assessment years; v. the option so exercised cannot be withdrawn; vi. if the income of the assessee, includes any income, which has neither been derived from nor is incidental to manufacturing or production of an article or thing and in respect of which no specific rate of tax has been provided separately under Chapter-XII, such income shall be taxed at the rate of twenty-two percent thereof and no deduction or allowance in respect of any expenditure or allowance shall be made in computing such income; vii. where it appears to the Assessing Officer that, owing to the close connection between the assessee to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r produced by it. 41.5. Further, FA 2023 has provided that the business of manufacture or production of any article or thing shall include the business of generation of electricity, but not include certain specified businesses. 41.6. Further, FA 2023 has inserted a new clause (vb) in the section 92BA of the Act to include the transaction between the Cooperative society and the other person with close connection within the purview of 'specified domestic transaction'. Applicability: These amendments take effect from 1st April, 2024 and shall accordingly, apply in relation to the assessment year 2024-25 and subsequent assessment years. 41.7. Vide Notification No. 83/2023 dated 29.9.2023 (GSR 702[E]), Rule 21AHA has been inserted in the Rules in order to allow the exercise of the option to be taxed as per the provisions of section 115BAE of the Income-tax Act. Further, Form 10-IFA has also been issued to enable exercise of option under sub-section (5) of section 115BAE of the Act for new manufacturing co-operative societies. 42. Tax avoidance through distribution by business trusts to its unit holders 42.1 Finance (No.2) Act, 2014 had i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the business trust i.e. which is exempt in the hands of the business trust as well as the unit holder, is not the intent of the special taxation regime applicable to business trusts. 42.8 In view of the above, FA 2023 has made such sum received by unit holder taxable in his hands. FA 2023 has therefore (i) provided for taxation of sum received by unit holders from a business trust with respect to a unit, which is not in the nature of interest, dividend or rent, and which is in excess of the amount for which such unit was issued by the business trust. The specified sum that shall be taxable under clause (xii) of sub-section (2) of section 56 of the Act shall be computed as under: Specified sum = A-B-C (which shall be deemed to be zero if sum of B and C is greater than A), where- A = aggregate of sum distributed by the business trust with respect to such unit, during the previous year or during any earlier previous year or years, to such unit holder, who holds such unit on the date of distribution of sum or to any other unit holder who held such unit at any time prior to the date of such distribution, which is,- (a) not in the nature of income ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years. 43. Assistance to authorised officer during search and seizure 43.1 Section 132 of the Act makes provisions related to search and seizure. The section makes detailed provisions for powers of income-tax authority during the search and seizure proceedings, procedure to be followed, requisition of services of other officers for assistance, examination of books of account or other documents, procedure for custody of evidence, provisional attachment etc. The section also provides the timelines to be followed by the income-tax authority during and post search proceedings. 43.2 The section provides that during the course of search, the authorised officer may requisition the services of any police officer or any officer of the Central Government, to assist him for any of the actions required to be performed during the course of such search, and it shall be the duty of such officer to comply. Similarly, there is also a provision that the authorised officer may make a reference to a valuation officer for estimating the fair market value of the property and such reference can be made during the search or within 60 days from the date of executing the last authorisati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 153B of the Act. Consequent to the changes in 2021, the assessment or reassessment in consequence to search is now performed under section 147 of the Act and provisions of sections 153A and 153B of the Act are no longer applicable. 43.7 The timelines for completing assessment or reassessment in search cases is linked to the execution of the last of the authorisations during such procedure, in order to establish the day of conclusion of search proceedings, and what constitutes as last authorisation is provided in section 153B of the Act. As the provisions of section 153B of the Act are no longer applicable, the meaning of last authorisation and its execution has now been provided under section 132 of the Act itself. Applicability: The amendments made in sub-section (2) and (9D) of section 132 by Finance Act, 2023 are applicable from 1st April, 2023. Moreover, the aforementioned Notification No. 70/2023 by which procedure has been prescribed to requisition services of various persons during the search is applicable from 28th August, 2023. Further, the amendment providing the meaning of last authorization and its execution in Explanation 1 of section 132, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) To enable the Assessing Officer to direct the assessee to get the inventory valued by a cost accountant, nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in this behalf. Assessee is then required to furnish the report of inventory valuation in the prescribed form duly signed and verified by such cost accountant and setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require. (ii) To provide that the expenses of, and incidental to, such inventory valuation (including remuneration of the cost accountant) shall be determined by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with the prescribed guidelines and that the expenses so determined shall be paid by the Central Government. (iii) To provide that except where the assessment is made under section 144 of the Act, the assessee will be given an opportunity of being heard in respect of any material gathered on the basis of such inventory valuation which is proposed to be utilized for assessment. (iv) To define cost accountant to mean a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022. 46.2 Amendments have been made in the provisions relating to conduct of re-assessment proceedings under the Act to further streamline them and facilitate their conduct and completion in a seamless manner. The section 148 of the Act has been amended to provide that a return in response to a notice under section 148 of the Act shall be furnished within three months from the end of the month in which such notice is issued, or within such further time as may be allowed by the Assessing Officer on a request made in this behalf by the assessee. However, any return which is furnished beyond the period allowed in the section 148 to furnish such return of income shall be deemed not to be a return under section 139 of the Act. As a result, the consequential requirements viz. notice under sub-section (2) of section 143 etc. are not mandatory for such returns. 46.3 Further, section 149 of the Act provides the period of limitation for issuance of notice under section 148 of the Act for commencement of proceedings under section 147 of the Act. It is imperative to note here that in case of a search action under section 132 of the Act, requisition under section 132A of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horization executed under section 132 of the Act or a requisition made under section 132A of the Act, after the 15th day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation for issuance of notice under section 148 of the Act and the show cause notice issued under clause (b) of section 148A of the Act in such case shall be deemed to have been issued on the 31st day of March of such financial year. It has also been provided that the impounding or the recording of the statement in consequence of the search or the search itself should be before the 31st March only. Only extension has been provided for the time consumed in the procedure for issuance of notice under section 148 or 148A of the Act, as the case may be. 46.7 Section 151 of the Act contains provisions relating to the specified authority who can grant approval for the purposes of sections 148 and 148A of the Act. The said section provided that the authority would be the Principal Chief Commissioner and where there is no Principal Chief Commissioner, the Chief Commissioner shall give approvals beyond a period of three years. 46.8 It was see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia, includes making investigations, giving assessees opportunities of hearing, bringing on record any material relevant to the case, analysing judicial positions of various legal matters etc. Further, with the Faceless Assessment, different aspects of the assessment are carried out by different units viz. Assessment Unit, Verification Unit, Technical Unit and Review Unit, Therefore, a lot of co-ordination is required between the different units in every single scrutiny assessment and adequate time is essential for a rational and speaking order. 47.3 The period of six months is, however, short to complete the entire process of assessment. As a result, taxpayers' grievances of not being given enough time to explain themselves or provide evidences in their favour may arise. This may also compromise the dispensation of reasonableness of orders as well as natural justice to the assessees. Therefore, amendment has been made in section 153 of the Act by the FA 2023 to provide that the time available for completion of assessment relating to the assessment year commencing on or after the 1st day of April, 2022 shall be twelve months from the end of the assessment year in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 147 of the Act. However, the current provisions of the Act relating to reassessment do not provide for abatement or revival of any assessment or reassessment proceedings pending on the date of search under section 132 of the Act or requisition under section 132A of the Act. As a result, the information available in a search, which has a bearing on the pending scrutiny proceedings may not be effectively used due to the limitation of such proceedings. 47.7 Further, even if the last of the authorizations have been executed in the relevant search case, the seized material etc. are transferred to the Assessing Officer only after some time owing to the pre-assessment processing of such material and data. Further, the Assessing Officer also needs to carry out investigation and gather evidence to compute the income of the assessee as a result of the search or requisition proceedings. Therefore, there was a need to amend the provisions of the Act so as to allow the Assessing Officer to conduct proper scrutiny of the case on the basis of seized material and investigation made and align the dates of limitation for completion of reassessment proceedings for all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to provide certainty in this matter and to encourage co-operative movement in sugar sector, a new clause (xvii) was inserted to amend sub-section (1) of section 36 of the Act through the Finance Act 2015 to provide that the amount paid for purchase of sugarcane by the co-operative societies engaged in the manufacture of sugar at a price which is equal to or less than the price fixed by or fixed with the approval of the Government shall be allowed as deduction for computing business income of the sugar co-operative factories. The said amendment came into force on 01.04.2016 and was applicable from A.Y. 2016-17 onwards. Pending demands and litigation still persisted in respect of AYs prior to 2016-17. 48.4 Therefore, to conclude the matter logically and to extend the benefit of the above-mentioned relief to all the applicable years, section 155 of the Act has been amended by inserting a new sub-section (19). It provides that in the case of a sugar mill co-operative, where any deduction in respect of any expenditure incurred for the purchase of sugarcane has been claimed by an assessee and such deduction has been disallowed wholly or partly, the Assessing Officer shall, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on such income and paid to the credit of the Central Government in accordance with the provisions of Chapter XVII-B in a subsequent financial year. In such a case the assessee can make application in the prescribed form to the Assessing Officer within two years from the end of the financial year in which such tax was deducted at source. Then Assessing Officer shall amend the order of assessment or any intimation allowing credit of such tax deducted at source in the relevant assessment year. It has been further provided that the provisions of section 154 of the Act shall, so far as may be, apply thereto, and the period of four years specified in sub-section (7) of that section shall be reckoned from the end of the financial year in which such tax has been deducted. Further, credit of such tax deducted at source shall not be allowed in any other assessment year. 49.3. Amendment has also been carried out in section 244A of the Act to provide that the interest on refund arising out of above rectification shall be for the period from the date of the application to the date on which the refund is granted. Applicability: These amendments have taken effect from 1st October, 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order was issued, a modified return in the form and manner, as may be prescribed, in accordance with and limited to the said order. This would also enable modification of the returns filed by the predecessor wherever required. 50.5. There was no provision of the procedure to be followed by the Assessing Officer after the modified return is furnished by the successor entity. It has therefore been provided that, if proceedings of assessment or reassessment for the relevant assessment year have been completed on the date of furnishing of modified return under sub-section (1), the Assessing Officer shall pass an order modifying the total income of the relevant assessment year in accordance with the order of the business reorganisation and taking into account the modified return so furnished. Where proceedings of assessment or reassessment for the relevant assessment year are pending on the date of furnishing of modified return under sub-section (1), the Assessing Officer shall pass an order assessing or reassessing the total income of the relevant assessment year in accordance with the order of the business reorganisation and taking into account the modified return so furnished. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. 52.2. The proviso to section 193 of the Act provides exemption from TDS in respect of payment of interest on certain securities. Prior to FA 2023, clause (ix) of the proviso to the aforesaid section provided that no tax was to be deducted in the case of any interest payable on any security issued by a company, where such security was in dematerialized form and was listed on a recognized stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 (32 of 1956) and the rules made there under. 52.3. It was seen that there was under reporting of interest income by the recipient due to above TDS exemption. Hence there was a need to remove this exemption. 52.4. Further, it was also necessary to exempt deduction of tax at source on any interest payable to a business trust, in respect of any securities, by a special purpose vehicle (SPV), which otherwise is not taxable in the hands of the business trust. 52.5. Accordingly vide FA 2023, clause (ix) of the proviso to section 193 of the Act was substituted to remove exemption for interest on listed debentures and provide exemption from TDS in respect of any interest payable to a busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23, to provide for deduction of tax at source on net winnings in the user account at the end of the financial year. In case there is withdrawal from user account during the financial year, the income-tax shall be deducted at the time of such withdrawal on net winnings comprised in such withdrawal. In addition, income-tax shall also be deducted on the remaining amount of net winnings in the user account at the end of the financial year. (v) provided in section 194BA that in a case where the net winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the net winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the net winnings; (vi) provided that if any difficulty arises in giving effect to the provisions of new section 194BA, the Board may, with the prior approval of the Central Government, issue guidelines for the purpose of removing the difficulty. Every such guideline issued by the Board shall be laid before each House of Parliament, and shall be binding on the income-tax authorities and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 22.5.2023 (GSR 379[E]) , which lays down the formula for calculating net winnings under section 194BA of the Act. Circular No. 5 of 2023 dated 22nd May 2023 has also been issued for removal of difficulty being faced by the taxpayers for the purposes of section 194BA of the Act. 54. Concessional rate of taxation of interest under section 194LC of the Act 54.1. Section 194LC of the Act provides for a concessional rate of withholding tax @ 5 % on the interest income paid to a non-resident from a specified company or a business trust, on money borrowed from a source outside India by way of, (i) an loan agreement (borrowing) at any time on or after 01.07.2012 but before 01.07.2023; (ii) issue of long-term infrastructure bonds (in foreign currency) at any time on or after 01.07.2012 but before 01.10.2014; (iii) issue of long-term bond including long-term infrastructure bond (in foreign currency) at any time on or after 01.10.2014 but before 01.07.2023; (iv) issue of rupee denominated bonds before 01.07.2023. 54.2. Further, where money is borrowed from a source outside India by way of issue of any long-term bond or rupee denominated bonds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 56.1. Section 197 of the Act relates to grant of a certificate of tax deduction at lower or nil rate. It provided for assessee to apply to the Assessing Officer for TDS at zero rate or lower rate, if the tax is required to be deducted under sections 192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194-I, 194J, 194K, 194LA, 194LBB, 194LBC, 194M, 194-O and 195 of the Act. If the Assessing Officer is satisfied that the total income of the recipient justifies the deduction of income-tax at any lower rates or zero rate, he is required to give an appropriate certificate to the assessee. 56.2. Section 194LBA of the Act, inter-alia, provides that business trust shall deduct and deposit tax at the rate of 5% on interest income of non-resident unit holders. Representations have been received that in some cases rate of deduction may be required to be reduced due to some exemption, for example exemption under section 10(23FE) of the Act allowed to notified Sovereign Wealth Funds and Pension Funds. However, since certificate for lower deduction under section 194LBA of the Act cannot be obtained under section 197 of the Act, benefit of exemption is not available at the time of tax deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing the return of income under sub-section (1) of section 139 has expired; and (ii) the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in the said previous year. 58.3. The provisos to these definitions exclude a non-resident from the definition of specified person, if the non-resident does not have a permanent establishment in India. 58.4. There may be certain persons who are not required to furnish the return of income. It is not the intention to include such persons in the category of non-filers. Hence, in order to provide relief in such cases, vide FA 2023, the definition of the specified person in sections 206AB and 206CCA of the Act was amended so as to exclude a person who is not required to furnish the return of income for the assessment year relevant to the said previous year and who is notified by the Central Government in the Official Gazette in this behalf. 58.5. Further, section 194BA of the Act (TDS on winnings from online games) has been excluded from the scope of the provisions of section 206AB of the Act, as keeping the deduction of tax under section 194BA within the scope of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , has been issued by the Central Board of Direct Taxes to remove difficulty in implementation of changes relating to TCS on LRS and on purchase of overseas tour program package Effectivity: It was also announced vide the aforesaid press release that the increase in TCS rates; which were to come into effect from 1st July, 2023 shall come into effect from 1st October, 2023 with the modifications as discussed above. Till 30th September, 2023, earlier rates (prior to amendment by the FA 2023) shall continue to apply. The earlier and new TCS rates are summarized as under: Nature of payment Earlier rate before FA 2023 New rate w.e.f 1st October 2023 (1) (2) (3) LRS for education financed by loan from a financial institution as defined in section 80E of the Act Nil up to Rs 7 lakh 0.5% above Rs 7 Lakh Nil upto Rs 7 lakh 0.5% above Rs 7 Lakh LRS for Medical treatment/ education (other than financed by loan) Nil upto Rs 7 lakh 5% above Rs 7 Lakh Nil upto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de FA 2023, section 206CCA was amended to provide that the rate of TCS under the said section shall not exceed twenty per cent. Applicability: This amendment has taken effect from 1st July, 2023. 61. Set off and withholding of refunds in certain cases 61.1. Section 241A of the Act deals with withholding of refund in certain cases. As per the section, where a refund becomes due to an assessee under sub-section (1) of section 143 and notice for assessment is issued to him under sub-section (2) of section 143, the Assessing Officer (AO) may withhold such refund till the date of the assessment, if he is of the opinion that the grant of refund is likely to adversely affect the revenue. Such withholding can be done after recording the reasons for doing so and with the prior approval of the Principal Commissioner or Commissioner, and is applicable to assessment years on or after 2017-18. 61.2. Section 245 of the Act deals with set off of refunds against tax remaining payable. It provides that where refund is found to be due to any person under any provisions of the Act, the AO or other income-tax authorities mentioned in the section, may, in lieu of payment, set off pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing position with regard to all other types of interest, except additional interest under sub-section (1A) of section 244A, payable to the assessee as required under the Act. Applicability: These amendments are effective from 1st April, 2023. 62. Extension of time for disposing rectification applications by Interim Board for Settlement 62.1. Section 245D of the Act lays down the procedure for Settlement Commission upon receiving an application for settlement from an assessee. The section also provides the timelines to be followed with respect to settlement or disposal of pending applications and also the procedures to be followed in this regard. 62.2. The Act was amended vide Finance Act, 2021 with retrospective effect from 01.02.2021, abolishing the Settlement Commission. Consequently, the Central Government was enabled to constitute one or more Interim Boards for Settlement (IBS), as an interim measure, for settlement of applications pending with Settlement Commission as on 31.01.2021. Sub-sections (9) to (13) were introduced in section 245D vide Finance Act, 2021 to make provisions for dealing with applications pending before the Settlement Commission. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity for appeals was created vide Finance Act,2023 at Joint Commissioner/ Additional Commissioner level to handle certain class of cases involving small amount of disputed demand. Such authority has all powers, responsibilities and accountability similar to that of Commissioner (Appeals) with respect to the procedure for disposal of appeals. 63.3. The earlier section 246 of the Act provided for an institution of Deputy Commissioner (Appeals) for the appeal functions. That institution was discontinued in the year 2000. With a view to provide for an appellate level to handle certain class of cases involving small amount of disputed demand, section 246 of the Act was substituted by the FA 2023 to provide for appeals to be filed before Joint Commissioner (Appeals). Sub-section (1) of the said section provides that any assessee aggrieved by any of the following orders of an Assessing Officer (below the rank of Joint Commissioner) may appeal to the Joint Commissioner (Appeals) against- (i) an order being an intimation under sub-section (1) of section 143 of the Act, where the assessee objects to the making of adjustments, or any order of assessment under sub-section (3) of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of sub-section (2) or sub-section (3), the appellant shall be provided an opportunity of being reheard. 63.8. Sub-section (5) of section 246 of the Act provides that for the purposes of disposal of appeal by the Joint Commissioner (Appeals), the Central Government may make a Scheme, by notification in the Official Gazette, so as to dispose appeals in an expedient manner with transparency and accountability by eliminating the interface between the Joint Commissioner (Appeals) and the appellant in the course of appellate proceedings to the extent technologically feasible and direct that any of the provisions of this Act relating to jurisdiction and procedure for disposal of appeals by Joint Commissioner (Appeals) shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. Accordingly, the e-Appeal Scheme 2023 has been notified vide Notification No. 33/2023 dated 29.5.2023 (S.O. No. 2352[E]) which has provided the basic procedures for the disposal of appeals by the Joint Commissioner (Appeals). The e-Appeal Scheme, 2023 is applicable from 29.05.2023. 63.9. Sub-section (6) of section 246 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f penalty by the Assessing Officer if during any proceedings under the Act it is found that in the books of account maintained by any person there is a false entry or an omission of any entry which is relevant for computation of total income of such person to evade tax liability. 64.3. Vide Finance Act, 2022, sections 271AAB, 271AAC and 271AAD of the Act were amended to enable Commissioner (Appeals) also to pass an order imposing penalty under the said sections. However, as the reference to the same has not been inserted in sub-section (1) of section 253 of the Act, an aggrieved assessee cannot appeal against such penalty orders passed by Commissioner (Appeals) which may lead to taxpayer grievance. Therefore, the provisions of section 253 of the Act have been amended to provide that appeal against penalty orders passed by Commissioner (Appeals) under sections 271AAB, 271AAC and 271AAD of the Act shall be made to the Appellate Tribunal. 64.4. Further, vide Finance Act, 2021, section 263 of the Act was amended to enable Principal Chief Commissioner and Chief Commissioner to also pass an order of revision under the said section. However, in the absence of any reference to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no loan or deposit shall be repaid otherwise than by an account payee cheque or account payee bank draft or online transfer through a bank account, if the amount of such loan or deposit is Rs. 20,000 or more. Certain exceptions have, however, been specified in the provisions to banking companies etc. 65.2. Request was received to bring parity to Primary Agricultural Credit Societies ( PACS ) and Primary Co-Operative Agricultural and Rural Development Bank ( PCARD ) for limits on cash transactions with banking companies with regards to sections 269SS and 269T of the Act as they are involved in granting loans and accepting deposits from the rural segment. Present provisions state that every person including PACS and PCARD are liable for penalty on accepting loan or deposit in cash exceeding Rs.20,000 as per section 269SS of the Act as well as repayment of loan and deposit in cash exceeding Rs.20,000 under section 269T of the Act. Since PACS and PCARD are providing credit facilities at the grass-root level, a relaxation was sought for them under the aforesaid provisions. 65.3. To provide relief to the low-income groups and facilitate easier conduct of business operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to benefit or perquisite or VDA may also be wholly in kind or partly in cash and partly in kind. Accordingly, the first proviso to section 194S provides that in case the benefit or perquisite or VDA has a in kind component, then the person responsible shall ensure that required amount of tax has been paid, before releasing the benefit or perquisite. 66.4. Prior to FA 2023, the provisions for penalty and prosecution did not clearly mandate a penalty or prosecution for a person who does not pay or fails to ensure that tax has been paid in a situation where the benefit or perquisite is passed in kind. Therefore, to enable such penalty and prosecution, section 271C has been amended vide FA 2023 by inserting two new sub-clauses viz. sub-clause (iii) sub-clause (iv) under clause (b) in sub-section (1) providing references to the first proviso to section sub-section (1) of 194R and proviso to sub-section (1) to section 194S. Further, vide FA 2023, similar amendments have also been made in section 276B of the Act. Applicability: These amendments have been effective from 1stApril, 2023. 66.5. Further, in consequence to the insertion of section 194BA in the Act, vide F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 285BA of the Act. Further, the reporting financial institution may recover the amount so paid on behalf of the account holder or retain out of any moneys that may be in its possession or may come to it from every such reportable account holder an amount equal to the sum of penalty so paid. 67.4. It has also been clarified that the reference to the income-tax authority prescribed which shall levy the said penalty in the section 271FAA of the Act is the prescribed authority under sub-section (1) of section 285BA of the Act. Applicability: These amendments are effective from 1st April, 2023. 68. Decriminalisation of section 276A of the Act 68.1. Section 276A of the Act makes provision for prosecution with rigorous imprisonment up to two years in the case of a person, being a liquidator who fails to give notice in accordance with sub-section (1) of section 178 of the Act, or fails to set aside the amount as required by sub-section (3) of the said section or parts with any of the assets of the company or the properties in contravention of the provisions of the said section. 68.2. It has been the stated policy of the Government to decriminalise minor off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial recession in the markets. At the same time, volatile markets contribute to higher inflation as well. Accordingly, the rates of STT have been increased on such transactions to discourage investment in these speculative instruments. Accordingly, the rate of securities transaction tax payable by seller have been amended as follows- (a) for sale of an option in securities, from 0.05 per cent to 0.0625 per cent; and (b) for sale of a future in securities, from 0.01 per cent to 0.0125 per cent. Applicability: The above amendments to Chapter-VII of the Finance (No.2) Act, 2004 are effective from 1st April, 2023. 70. Rationalization of the provisions of the Prohibition of Benami Property Transactions Act,1988 (the PBPT Act) 70.1. Prior to FA, 2023, as per the provisions of section 46 of the PBPT Act, any person, including the Initiating Officer (IO), aggrieved by the order of the Adjudicating Authority, may prefer an appeal to the Appellate Tribunal within a period of 45 days from the date of the order. The order often takes time to reach the office of the Initiating Officer or the approving authority and, it is difficult to file an appeal within the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Government liabilities on account of erstwhile UTI. 71.2. As per sub-section (1) of section 13 of the Repeal Act, 2002, SUUTI has been exempted from payment of income-tax up to 31.03.2023. Further, sub-section (1) of section 8 of the UTI Repeal Act, 2002 provides that the Administrator, SUUTI shall vacate its office only on the redemption of all the schemes. 71.3. It was represented that SUUTI has been continuously working for payment of investors' dues through redemption of various schemes since its formation. However, at the current pace, the redemption of all the schemes and payment of entire amount to remaining investors may take time. Further, the work of SUUTI pertaining to the redemption of schemes, payments of entire amounts, pending litigation etc. is expected to extend beyond 31.03.2023, i.e., beyond the time limit till which the income-tax exemption has been provided. 71.4. In view of the above, FA 2023 amended the UTI Repeal Act, 2002, by way of amendment of,- (i) sub-section (1) of section 8, to provide that the Administrator, SUUTI shall immediately on redemption of all the schemes of the specified undertaking and the payment of entire am ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
