TaxTMI 
TaxTMI 
TaxTMI 
Notes on clauses-Income Tax
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....tion of tax at source during the financial year 2016-17 from income other than "Salaries" Part II of the First Schedule to the Bill specifies the rates at which income-tax is to be deducted at source during the financial year 2016-17 from income other than "Salaries". The rates are the same as those specified in Part II of the First Schedule to the Finance Act, 2015 for the purposes of deduction of income tax at source during the financial year 2015-16 except that in case of payment of income by way of insurance commission to a person, other than a company, resident in India , tax shall now be deducted at source at the rate of five per cent. ,as against the earlier rate of ten per cent. The amount of tax so deducted shall be increased by a surcharge in the case of- (i) every non-resident being an individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, at the rate of fifteen per cent. of such tax, where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds o....
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.... 20 per cent. Above ₹ 10,00,000 30 per cent.; The surcharge in cases of persons referred to in this paragraph, having income above one crore rupees, shall be levied at the rate of fifteen per cent. Marginal relief will be provided. Paragraph B of this Part specifies the rates of income-tax in the case of every co-operative society. In such cases, the rates of tax will continue to be the same as those specified for assessment year 2016-17. The surcharge in cases of co-operative societies, having income above one crore rupees shall be levied at the rate of twelve per cent. Marginal relief will be provided. Paragraph C of this Part specifies the rate of income-tax in the case of every firm. In such cases, the rate of tax will continue to be the same as that specified for assessment year 2016-17. The surcharge in cases of firms, having income above one crore rupees shall be levied at the rate of twelve per cent. Marginal relief will be provided. Paragraph D of this Part specifies the rate of income-tax in the case of every local authority. In such cases, the rate of tax will continue to be the same as that specified for the assessment year 2016-17. The surcharge in cases o....
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....ines "capital asset" and item (vi) of the said clause (14) excludes from the definition of capital asset, inter alia, Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government. It is proposed to amend item (vi) of the said clause (14) so as to also exclude the deposit certificates issued under the Gold Monetisation Scheme, 2015 from the definition of capital asset. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years. Sub-clause (b) of the said clause proposes to insert a new clause (23C) to define the term "hearing" so as to include communication of data and documents through electronic mode. This amendment will take effect from 1st June, 2016. Sub-clause (c) of the said clause proposes to amend clause (24) relating to the definition of income. Sub-clause (xviii) of clause (24) of the aforesaid section, inter alia, provides that any assistance in the form of a subsidy or grant or cash incentives, etc., by the Central or a State Government to any assessee other than the subsidy or grant or reimbursement which is taken into account fo....
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....ert a new clause (e) in the Explanation 1 to clause (i) of sub-section (1) of the said section so as to provide that in the case of a foreign company engaged in the business of mining of diamonds, no income shall be deemed to accrue or arise in India through or from the activities which are confined to the display of uncut and unassorted diamond in any special zone notified by the Central Government in the Official Gazette in this behalf. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years. Clause 6 of the Bill seeks to amend section 9A of the Incometax Act relating to certain activities not to constitute business connection in India. Sub-section (3) of the aforesaid section provides for the conditions to be fulfilled for being an eligible investment fund. It is proposed to amend clause (b) of the said sub-section so as to provide that the eligible investment fund also means a fund established or incorporated or registered in a country or a specified territory notified by the Central Government in this behalf. It is further proposed to amend clause (k) of the said sub-....
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.... deposit certificates issued under the Gold Monetisation Scheme, 2015 notified by the Central Government shall also be exempted from income-tax. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-2017 and subsequent years. Sub-clause (C) of the said clause seeks to amend clause (23DA) of the said section so as to provide that the definition of the term "securitisation" for the purposes of the said clause shall also include securitisation, as defined in clause (z) of sub-section (1) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is further proposed to amend clause (23FC) of the said section so as to provide that any income of a business trust by way of interest received or receivable from a special purpose vehicle or the dividend referred to in sub-section (7) of section 115-O shall also not be included in total income of such business trust. It is also proposed to amend clause (23FD) of the said section so as to provide that any distributed income from a business trust received by a unit holder which is of the same nat....
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....planation under the proposed clause (50) so as to provide that the expression "specified service" shall have the meaning assigned to it in clause (i) of section 161 of the Chapter VIII of the Finance Act, 2016. This amendment will take effect from 1st June, 2016. Clause 8 of the Bill seeks to amend section 10AA of the Income-tax Act relating to special provisions in respect of newly established Units in Special Economic Zones. The aforesaid section provides that an assessee, being an entrepreneur as referred to in clause (j) of section 2 of the Special Economic Zones Act, 2005, who begins from his unit for manufacturing or producing articles or things or providing any services during the previous year relevant to any assessment year commencing on or after the 1st day of April, 2006, is allowed deduction on the profits derived from the export of articles or things or services. It is proposed to amend sub-section (1) of the said section 10AA so as to provide that the deduction under this section is available only for an above referred enterpreneur whose unit begins to carryout above referred activity before the 1st day of April, 2021. This amendment will take effect from 1st Ap....
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....ovide that the amount of rent received in arrears or the amount of unrealised rent realised subsequently by an assessee shall be charged to income-tax in the financial year in which such rent is received or realised, whether the assessee is the owner of the property or not in that financial year. It is also proposed that thirty per cent. of the arrears of rent or the unrealised rent realised subsequently by the assessee shall be allowed as deduction. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 12 of the Bill seeks to amend section 28 of the Income-tax Act relating to "Profits and gains of business or profession". Clause (va) of the aforesaid section, inter alia, provides that any sum, whether received or receivable, in cash or kind, under an agreement for not carrying out any activity in relation to any business, is chargeable to tax as business income for business entities. It is proposed to amend the said clause so as to provide that any sum received or receivable, in cash or kind, under an agreement, for not carrying out any activity in relation to any profession,....
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....quent years. Clause 15 of the Bill seeks to amend section 35 of the Incometax Act relating to expenditure on scientific research. Sub-clause (i) of the said clause seeks to amend sub-section (1) of the aforesaid section 35. Clause (ii) of sub-section (1) of the said section provides for weighted deduction to the extent of one hundred seventy-five per cent. of any sum paid to a scientific research association which has the object of undertaking scientific research or to a university, college or other institution to be used for scientific research. It is proposed to amend the said clause (ii) so as to reduce the said weighted deduction from one hundred seventy-five per cent. to one hundred fifty per cent. from financial year 2017-2018 to 2019-2020. It is further proposed to reduce the said weighted deduction to one hundred per cent. from the financial year 2020- 2021 and subsequent years. Clause (iia) of sub-section (1) of the said section provides weighted deduction in respect of contribution to a company engaged in scientific research. It is proposed to amend the said clause (iia) so as to reduce the said weighted deduction from one hundred twenty-five per cent. to one hundre....
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....urred and actually paid by an assessee on the acquisition of any right to use spectrum for telecommunication services shall be allowed as a deduction in equal instalments over the period starting from the year in which such payment has been made and ending in the year in which the useful life of spectrum comes to an end. The proposed section further seeks to provide that the provisions contained in sub-sections (2) to (8) of section 35ABB, shall apply as if for the word "licence", the word "spectrum" had been substituted. It is also proposed to provide an Explanation to define certain expressions used for the purposes of the said section. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 17 of the Bill seeks to amend section 35AC of the Income-tax Act relating to expenditure on eligible projects or schemes. The existing provisions of section 35AC, inter alia, provides for deduction for expenditure incurred by way of payment of any sum to a public sector company or a local authority or to an approved association or institution, etc., on certain eligible social development p....
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....ar in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provisions of the Income-tax Act for the same or any other assessment year. It is proposed to amend the said section so as to reduce the deduction from one hundred fifty per cent. to one hundred per cent. This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-2019 and subsequent years. Clause 20 of the Bill seeks to amend section 35CCD of the Income-tax Act relating to expenditure on skill development project. The aforesaid section provides that where a company incurs any expenditure (not being expenditure in the nature of cost of any land or building) on any skill development project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then, there shall be allowed a deduction of a sum equal to one and one-half times of such expenditure. Sub-section (2) of the said section provides that where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), de....
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....as a deduction in computing the income of the previous year in which such levy has been paid. These amendments will take effect from 1st June, 2016. Clause 23 of the Bill seeks to amend section 43B of the Income-tax Act relating to certain deductions to be only on actual payment. The aforesaid section, inter alia, provides that certain sum payable by the assessee shall be allowed as deduction irrespective of the previous year in which the liability to pay such sum was incurred if the same is actually paid on or before the due date of furnishing of the return of income. It is proposed to insert a new clause in the said section so as to provide that any sum payable by the assessee to the Indian Railways for use of railway assets shall be allowed as deduction only, if it is actually paid on or before the due date of furnishing the return of income of the relevant previous year. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 24 of the Bill seeks to amend section 44AA of the Income-tax Act relating to maintenance of accounts by certain persons carrying on profession or bus....
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....ness on presumptive basis. The existing provisions contained in the said section provides that notwithstanding anything to the contrary contained in section 28 to 43C, in the case of an assessee engaged in any business having total turnover or gross receipts not exceeding one crore rupees, a sum equal to eight per cent. of the total turnover or gross receipts, or, as the case may be, a sum higher than the aforesaid sum declared by the assessee in his return of income, shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profit and gains of business or profession". The proposed section 44AD seeks to provide for estimating income of assessee who is engaged in any business, at a sum equal to eight per cent. of the total turnover or gross receipts, or, as the case may be, a sum higher than the aforesaid sum earned by the assessee. The scheme will apply to such residential assessee who is an individual, Hindu undivided Family or partnership firm but not Limited Liability Partnership firm, whose total gross receipts does not exceed two crores rupees. It is further proposed that the scheme does not apply to an assessee, who is carrying on prof....
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....ofession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent. of the total gross receipts of the assessee in the previous year on account of such profession, or as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head "Profits and gains of business or profession". It is further proposed that any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1) of the proposed section, be deemed to have been already given full effect to and no further deduction under those sections shall be allowed. It is also proposed that the written down value of any asset of profession shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. It is also proposed to provide that an assessee who claims that his profits and gains from the profession are lower than the profits and gain....
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....nt. Sovereign Gold Bond issued under the Sovereign Gold Bond Scheme, 2015, is therefore, presently, not eligible for indexation benefits. Further, it provides that the gains on account of appreciation of rupee against a foreign currency are accounted for while calculating full value of consideration. It is proposed to amend section 48 so as to provide indexation benefits to long-term capital gains arising on transfer of the said Sovereign Gold Bond. It is further proposed to provide that in case of an assessee being a non-resident, any gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company subscribed by him, shall be ignored for the purpose of computation of full value of consideration under the said section. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years. Clause 30 of the Bill seeks to amend section 50C of the Income-tax Act relating to special provision for full value of consideration in certain cases. Sub-section (1) of the aforesaid section provides that in case of transfer of a capi....
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....ansfer of a residential property shall not be charged to tax if such capital gains is invested in subscription of shares of a company which qualifies to be an eligible start-up subject to other specified conditions. The existing provision of section 54GB requires that the company should invest the proceeds in the purchase of new asset being new plant and machinery but does not include inter alia, computers or computer software. It is proposed to amend section 54GB so as to provide that the expression "new asset" includes computers or computer software in case of technology driven start-ups so certified by the Inter- Ministerial Board of Certification notified by the Central Government in the Official Gazette. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent assessment years. Clause 33 of the Bill seeks to amend section 55 of the Incometax relating to meaning of "adjusted", "cost of improvement" and "cost of acquisition". Sub-clause (1) of clause (b) of sub-section (1) of the aforesaid section provides that the cost of improvement in relation to a capital asset, being goodwill of a bus....
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....wed to be carried forward and set off if such loss has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139. This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-2017 and subsequent years. Clause 36 of the Bill seeks to amend section 80CCD of the Income-tax Act relating to deduction in respect of contribution to pension scheme of Central Government. Sub-section (3) of the aforesaid section provides that the whole of the amount standing to the credit of the assesse including the accrual on the amount received by the assesse or nominee is taxed in the year of such receipt on account of closure or his opting out of the pension scheme. It is proposed to amend the sub-section so as to provide that any amount received by the nominee, on the death of the assessee, under the pension scheme referred to in clause (a) of the said sub-section, is exempt from tax. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years. Clause 37 of the Bill seeks to su....
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....d therein. It is proposed to amend the said section so as to provide that this section shall not apply to any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April, 2017. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 40 of the Bill seeks to amend section 80-IAB of the Income-tax Act relating to deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone. Under the aforesaid section, an enterprise being a developer in a notified Special Economic Zone, who has commenced the business of developing a Special Economic Zone on or after 1st day of April, 2005 shall be allowed deduction of an amount equal to one hundred per cent. of the profits and gains derived from such business. It is proposed to amend the said section so as to provide that this section shall not apply to any enterprise which commences the business activity on or after the 1st day of April, 2017. This amendment will take effect from 1st April, 2017 and will, accordi....
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....be deemed as his income. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation assessment year 2017-2018 and subsequent years. Clause 44 of the Bill seeks to substitute a new section for section 80JJAA of the Income-tax Act relating to deduction in respect of employment of new employees. The existing section provide for a deduction of thirty per cent. of additional wages paid to the new regular workmen in a factory for three years. The provisions apply to business of manufacture of goods in a factory. It is proposed to extend the benefit to all assessees who are required to get their accounts audited under section 44AB. Further, it is also proposed to liberalise the eligibility condition relating to minimum number of persons employed and the total number of days for which they must be employed during the year. Deduction under the proposed provisions will be available in respect of cost incurred on those employees whose total emoluments are less than or equal to twenty-five thousand rupees per month. No deduction, however, shall be allowed in respect of cost incurred on those employees for whom the entire contribution is paid by the Gov....
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....o keep and maintain such information and document in respect of the international group as may be prescribed. It is further proposed to amend the said section so as to provide that without prejudice to the power of the Assessing Officer or the Commissioner (Appeals) to call for the information and document, the person being a constituent entity of an international group, shall furnish the prescribed information and document to the prescribed authority referred to in section 286 in the prescribed manner on or before the date to be prescribed. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. Clause 48 of the Bill seeks to amend section 112 of the Income-tax Act relating to tax on long-term capital gains. Sub-clause (iii) of clause (c) of sub-section (1) of the aforesaid section, inter alia, provides that long-term capital gains arising from transfer of a capital asset, being unlisted securities, shall be chargeable to tax at the rate of ten per cent. It is proposed to amend the said sub-clause (iii) so as to provide that long-term capital gains arising from transfer of a capit....
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.... proposed new section provides that the option by the person referred to in sub-section (1) shall be exercised in the prescribed manner on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the relevant previous year. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation the assessment year 2017-2018 and subsequent years. Clause 50 of the Bill seeks to insert a new section 115BBDA in the Income-tax Act relating to tax on certain dividends received from domestic companies. The provisions of the Income-tax Act provide that dividend income shall be exempt if dividend distribution tax is paid on such income. It is proposed to insert a new section 115BBDA in the said Act so as to provide that any income by way of dividend declared, distributed or paid by a domestic company, in excess of ten lakh rupees shall be chargeable to tax at the rate of ten per cent. in the case of an individual, Hindu undivided family or a firm who is a resident in India. It is further proposed to provide that no deduction in respect of any expenditure or allowance or set off of loss shall be allowed in comp....
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....115JB of the Income-tax Act relating to special provision for payment of tax by certain companies. Item (a) of sub-clause (I) of the said clause seeks to insert a new clause (fd) in Explanation 1 to sub-section (1) of the aforesaid section so as to provide that the book profit shall be increased by an amount or amounts of expenditure relatable to income, by way of royalty in respect of patent chargeable to tax in accordance with the provisions of section 115BBF. It is further proposed to insert a new clause (iig) in the long line to the said Explanation 1 so as to provide that the amount of income, by way of royalty in respect of patent chargeable to tax in accordance with the provisions of section 115BBF, shall be reduced from the book profit, if any such amount is credited to the profit or loss account. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Item (b) of sub-clause (i) of the said clause seeks to insert an Explanation so as to provide that the provisions of the said section, shall not be applicable and shall be deemed never to have been applicable to an assessee, bein....
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....years succeeding the relevant previous year which ends on or before the date on which the determination has been made. Sub-section (2) of the proposed section provides that on failure to comply with the conditions provided in the notification issued under sub-section (1), the provisions of the Income-tax Act shall apply without any modification and the necessary rectification may be undertaken by the Assessing Officer and the period of four years shall be available for such rectification from the date of failure. Sub-section (3) of the proposed section provides that every notification issued under the proposed new section 115JH shall be laid before each House of Parliament. This amendment will take effect from 1st April 2017 and will, accordingly, apply to the assessment year 2017-2018 and subsequent years. Clause 55 of the Bill seeks to amend section 115-O of the Income-tax Act relating to tax on distributed profits of domestic companies. Sub-clause (a) of the said clause seeks to insert a new subsection to provide that no tax on distributed profits shall be chargeable under this section in respect of any amount declared, distributed or paid by the specified domestic company....
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....o amend the said section so as to provide that nothing contained in this section shall apply in respect of any income distributed by the securitisation trust to its investors on or after the 1st day of June, 2016. This amendment will take effect from 1st June, 2016. Clause 58 of the Bill seeks to amend section 115TC of the Income-tax Act relating to securitisation trust to be assessee in default. The Explanation to the aforesaid section defines various expressions for the purposes of section 115TA, section 115TB and also the said section 115TC. It is proposed to amend the definition of "investor" as provided in clause (a) of the said Explanation so as to include a person who has invested in the security receipt as defined under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is further proposed to amend the definition of "securitisation trust" provided in clause (d) of the said Explanation so as to include a trust set up by a securitisation company or a reconstruction company formed, in accordance with the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act....
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....n (5) of the proposed new section seeks to provide that any income included in the total income of the person referred to in sub-section (1) in a previous year shall not be included in the total income of such person in the previous year in which such income is actually paid to him by the securitisation trust. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 60 of the Bill seeks to insert a new Chapter XII-EB consisting of new sections 115TD, 115TE and 115TF in the Income-tax Act on special provisions relating to tax on accreted income of certain trusts and institutions. Sub-section (1) of the proposed new section 115TD provides that notwithstanding anything contained in any other provision of the Act, a trust or institution registered under section 12AA in any previous year shall be liable to tax on accreted income in the event of certain eventualities mentioned in the proposed new section, as on the specified date, at the maximum marginal rate, in addition to the income-tax chargeable in respect of the total income. Sub-section (2) of the proposed section provides that ....
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....ly in relation to the assessment year 2017-2018 and subsequent years. Clause 62 of the Bill seeks to amend section 119 of the Income-tax Act relating to instructions to subordinate authorities. Clause (a) of sub-section (2) of the aforesaid section empowers the Board to issue directions or instructions for the purpose of proper and efficient management of the work of assessment and collection of revenue provided such directions are not prejudicial to the assessee. It is proposed to make a reference to section 270A in the said clause (a) of sub-section (2) of section 119, so as to enable the Board to issue directions and instructions in respect of section 270A of the Income-tax Act, as well. The proposed amendment is consequential to the insertion of a new section 270A in the Income-tax Act which provides for levy of penalty for under-reporting and misreporting of income. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 63 of the Bill seeks to amend section 124 of the Income-tax Act relating to jurisdiction of Assessing Officers. Sub-section (3) of the aforesaid secti....
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....during the previous year, without giving effect to the provisions of section 10A or section 10B or section 10BA or Chapter VI-A, exceeded the maximum amount which is not chargeable to income-tax shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Sub-section (4) of the said section provides that any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a noticed issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. Sub-section (5) of the said section provides that if any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142 discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the completion of the assessm....
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....d under sub-section (1) of section 72, or sub-section (2) of section 73, or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A, he may furnish, within the time allowed under sub-section (1), a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1). It is proposed to amend sub-section (3) of the said section so as to give the reference of sub-section (2) of section 73A in the said section. This amendment will take effect retrospectively from 1st April, 2016. Clause 66 of the Bill seeks to amend section 143 of the Income-tax Act relating to assessment. Sub-clause (a) of the said clause seeks to amend clause (a) of sub-section (1) of said section. Clause (a) of sub-section (1) of the aforesaid section provides that a return filed is to be processed and total income or loss is computed after making the adjustments on account of any arithmetical error in the return or on account of an incorrect claim, if such incorrect claim is apparent from any information in the return. It is ....
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.... Assessing Officer or, as the case may be, the prescribed income-tax authority under the circumstances specified therein requiring him to produce or caused to be produced on a specified date before the Assessing Officer any evidence on which the assessee may rely in support of the return. This amendment will take effect from 1st June, 2016. Clause 67 of the Bill seeks to amend section 147 of the Income-tax Act relating to income escaping assessment. Under the existing provisions of the aforesaid section, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment, he may assess or reassess such income or re-compute the loss or any other allowance. Explanation 2 to the said section provides certain situations which shall also be deemed to be the cases where income chargeable to tax has escaped assessment. It is proposed to amend the said Explanation 2 so as to provide that a case shall be deemed to be a case where income chargeable to tax has escaped assessment where on the basis of information or document received from the prescribed income-tax authority it is noticed by the Assessing Officer that the income of the assessee exceeds th....
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....y allow additional period of six months to give effect to the order. However, where effect to an order is pending as on 1st June, 2016, effect to the same shall be given by the 31st March, 2017. It is also proposed to provide that where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under sections 250, 254, 260, 262, 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under the Income-tax Act, then such assessment, reassessment or recomputation shall be made on or before the expiry of twelve months from the end of the month in which such order is received by the Principal Commissioner or Commissioner. However, for cases pending as on 1st June, 2016 action shall be taken by 31st March, 2017 or within twelve months from the end of the month in which order is received, whichever is later. It is also proposed that where an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147, such assessment be made on or before the expiry of twelve months from the e....
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....tax shall be made where the amount of income relating to accumulated balance due to an employee credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee does not exceed thirty thousand rupees. It is proposed to enhance the said threshold limit from thirty thousand rupees to fifty thousand rupees. This amendment will take effect from 1st June, 2016. Clause 71 of the Bill seeks to amend section 194BB of the Income-tax Act relating to winnings from horse race. Under the existing provisions of the aforesaid section, any person responsible for paying to any person any income by way of winning from horse race in excess of five thousand rupees shall deduct income-tax on such payment at the rates in force. It is proposed to enhance the said threshold limit from five thousand rupees to ten thousand rupees. This amendment will take effect from 1st June, 2016. Clause 72 of the Bill seeks to amend section 194C of the Incometax Act relating to payments to contractors. The proviso to sub-section (5) of the aforesaid section provides that the person responsible for paying the sums referred to in subsection (1) of the said section sha....
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....s two thousand five hundred rupees. It is proposed to reduce the said rate of tax deduction from twenty per cent. to ten per cent. This amendment will take effect from 1st June, 2016. Clause 76 of the Bill seeks to amend section 194G of the Income-tax Act relating to commission, etc., on the sale of lottery tickets. Under the existing provisions contained in the aforesaid section, deduction of income-tax at the rate of ten per cent. shall be made in a case where, the amount of income exceeding one thousand rupees relating to stocking, distribution, purchase or sale of lottery tickets, whether by way of commission or remuneration or prize is credited to the account of the payee or at the time of payment of such income in cash or by the issue of cheque or a draft or by any other mode, whichever is earlier during the financial year. It is proposed to reduce the said rate of tax deduction from ten per cent. to five per cent. It is further proposed to increase the said threshold limit from one thousand rupees to fifteen thousand rupees. These amendments will take effect from 1st June, 2016. Clause 77 of the Bill seeks to amend section 194H of the Income-tax Act relating to commi....
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.... of units of an investment fund specified in clause (a) of the Explanation 1 to section 115UB, the person responsible for making the payment shall, at the time of credit of such income to the account of payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent. It is proposed to amend the said section so as to provide that the income-tax on such payment shall be deducted-- (i) at the rate of ten per cent. in a case where the payee is a resident; (ii) at the rates in force in a case where the payee is a nonresident (not being a company) or a foreign company. This amendment will take effect from 1st June, 2016. Clause 82 of the Bill seeks to insert a new section 194LBC in the Income-tax Act relating to income in respect of investment in securitisation trust. Sub-section (1) of the proposed new section seeks to provide that where any income is payable to an investor, being a resident, in respect of an investment in a securitisation trust specified in clause (d) of the Explanation to section 115TCA, the person responsible for making the payment shall, at the t....
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....the Bill seeks to amend section 197A of the Income-tax Act relating to no deduction to be made in certain cases. Sub-sections (1A) and (1C) of the aforesaid section provide that no deduction of tax shall be made under the sections referred to in the said sub-sections, if the individuals referred to in the said subsections furnish to the persons responsible for paying any income of the nature referred to in specified sections, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil. It is proposed to amend the said sub-sections to give reference of section 194-I therein so as to provide that payments in the nature of rent may be allowed to be received without deduction of tax. This amendment will take effect from 1st June, 2016. Clause 85 of the Bill seeks to amend section 206AA of the Income-tax Act relating to requirement to furnish Permanent Account Number. The aforesaid section, inter alia, provides that any person who is entitled to receive any sum or income or amount on wh....
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.... per cent. of tax payable on the current income by 15th June, 15th September, 15th December and 15th March, respectively. For assessees (other than companies), the advance tax payment schedule is thirty per cent., sixty per cent. and hundred per cent. of tax payable on current income by 15th September, 15th December and 15th March, respectively. It is proposed to amend the advance tax payment schedule for assessees (other than companies) and bring it in consonance with the existing advance tax payment schedule applicable for a company. It is further proposed that an eligible assessee in respect of eligible business referred to in section 44AD opting for computation of profits or gains of business on presumptive basis, shall be required to pay advance tax of the whole amount in one instalment on or before the 15th March of the financial year. These amendments will take effect from 1st June, 2016. Clause 88 of the Bill seeks to amend section 220 of the Income-tax Act relating to when tax payable and when assessee is deemed in default. The aforesaid section provides for an assessee to be deemed to be in default and its consequences in case of failure on the part of the assessee ....
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....end clause (a) of sub-section (1) of the said section. The aforesaid section provides that an assessee is entitled to interest on refund arising out of excess payment of advance tax, tax deducted or collected at source, etc. Further, it is provided that the period for which the interest is paid on excess payment of tax begins from the 1st April of the assessment year and ends on the date on which refund is granted. It is proposed to amend the said section to provide that in cases where the return is filed after the due date, the period for grant of interest on refund shall begin from the date of filing of return. It is further proposed to provide that an assessee shall be eligible to interest on refund of self-assessment tax for the period beginning from the date of payment of tax or filing of return, whichever is later, to the date on which the refund is granted. Sub-clause (B) of the said clause seeks to insert a new subsection (1A) so as to provide that that where a refund arising out of appeal effect is delayed beyond the time prescribed under subsection (5) of section 153, the assessee shall be entitled to receive, in addition to the interest payable under sub-section (1....
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....sioner under section 270A, may also appeal to the Appellate Tribunal against such order. The proposed amendments are consequential to the insertion of a new section 270A in the Income-tax Act which provides for levy of penalty for under-reporting and misreporting of income. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. Sub-clause (B) of the said clause seeks to omit sub-sections (2A) and (3A) and to substitute sub-section (4) of the said section. Sub-section (2A) of the aforesaid section provides that the Principal Commissioner or Commissioner may, if he objects to any direction issued by the Dispute Resolution Panel under sub-section (5) of section 144C in respect of any objection filed on or after the 1st day of July, 2012, by the assessee under sub-section (2) of section 144C in pursuance of which the Assessing Officer has passed an order completing the assessment or reassessment, direct the Assessing Officer to appeal to the Appellate Tribunal against the order. Further, sub-section (3A) of the said section provides that every appeal under sub-section (2A) shall be fi....
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....ere the total income as computed by the Assessing Officer does not exceed fifty lakh rupees. This amendment will take effect from 1st day of June, 2016. Clause 96 of the Bill seeks to insert section 270A in the Income-tax Act relating to penalty for under-reporting and misreporting of income. Under the existing provisions, penalty on account of concealment of particulars of income or furnishing inaccurate particulars of income is leviable under clause (c) of sub-section (1) of section 271 of the Income-tax Act. In order to rationalize the penalty provisions, it has been provided that section 271 shall not apply to and in relation to any assessment for the assessment year commencing on or after the 1st day of April, 2017. It is proposed to insert a new section 270A for under-reporting and misreporting of income. Sub-section (1) of the proposed new section seeks to provide that the Assessing Officer, Commissioner (Appeals) or the Principal Commissioner or Commissioner may have the power to levy penalty if a person has under reported his income. Sub-section (2) of the proposed new section seeks to provide that a person shall be considered to have under reported his income if,--....
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.... that the cases of under - reported income falling under misreporting of income shall be liable for penalty at the rate of two hundred per cent. of the tax payable on such misreported income. Sub-section (9) of the proposed new section seeks to specify the cases of misreporting of income referred to in sub-section (8). Sub-section (10) of the proposed new section seeks to provide that the tax payable on under-reported income shall be calculated as if such under-reported income was the total income in case of a company, firm or local authority, and at the rate of thirty per cent. of under-reported income in any other case based on the tax rate applicable in case of company, firm or local authority, and in other cases. Sub-section (11) of the proposed new section seeks to provide that no addition or disallowance of an amount shall form the basis for imposition of penalty, if such addition or disallowance has formed the basis of imposition of penalty in the case of the person for the same or any other assessment year. Sub-section (12) of the proposed new section seeks to provide that the penalty under the said section shall be imposed by an order in writing. These amendments wil....
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....f income, is leviable. It is proposed to provide that provisions of section 271 shall not apply to and in relation to any assessment for the assessment year commencing on or after the 1st day of April, 2017. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 99 of the Bill seeks to amend section 271A of the Incometax Act relating to failure to keep, maintain or retain books of account, documents, etc. The aforesaid section provides for penalty in case of failure to keep and maintain any such books of account and other documents as required under section 44AA or the rules made thereunder, or to retain books of account or documents for the period specified. It is proposed to amend the said section so as to provide that section 271A shall be applicable without prejudice to the provisions of section 270A. The proposed amendment is consequential to the insertion of a new section 270A in the Income-tax Act which provides for levy of penalty for under-reporting and misreporting of income. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relat....
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....e levied under section 270A also in respect of the undisclosed income referred to in sub-section (1) of section 271AAB. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years. Clause 102 of the Bill seeks to insert a new section 271GB in the Income-tax Act relating to penalty for failure to furnish report or for furnishing inaccurate report under section 286. The proposed new section provides that if any reporting entity referred to in section 286 fails to furnish a report referred to in subsection (2) of the said section then, the prescribed authority may direct such entity to pay by way of penalty a sum of five thousand rupees for every day for which the failure continues if the period of failure does not exceed one month and fifteen thousand rupees for every day for which failure continues beyond the period of one month. It is further provided that where any reporting entity fails to produce the information and documents within the period allowed under sub-section (6) of section 286, the prescribed authority may direct that such entity shall pay, by way of penalty, a sum of five ....
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....of section 142. It is also proposed to amend sub-section (3) of the aforesaid section to provide that penalty under clause (d) of sub-section (1) shall be imposed by the Income-tax authority issuing such notice or direction. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause104 of the Bill seeks to amend section 273A of the Income-tax Act relating to power to reduce or waive penalty, etc., in certain cases. Sub-clause (i) of the said clause seeks to amend sub-section (1) of the said section. Clause (ii) of sub-section (1) of section 273A provides for reduction or waiver of penalty imposed or imposable under clause (iii) of sub-section (1) of section 271. Explanation to the said sub-section clarifies that if the nature of income assessed over the returned income is such that it does not attract provisions of clause (c) of sub-section (1) of section 271, then, the person shall be deemed to have made full and true disclosure for the purposes of sub-section (1) of the said section 271. Further, clause (b) of sub-section (2) of section 273A provides for condition, wherein penal....
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..... Clause 106 of the Bill seeks to amend section 273B of the Income-tax Act relating to penalty not to be imposed in certain cases. The aforesaid section provides that the penalties referred to in different sections enumerated in the said section 273B shall not be imposable on the person or the assessee for any failure referred to in the said sections, if he proves that there was reasonable cause for the said failure. It is proposed to amend the said section so as to include the reference of the proposed new section 271GB. This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years. Clause 107 of the Bill seeks to amend section 279 of the Income-tax Act relating to prosecution to be at instance of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. Sub-section (1A) of the aforesaid section provides that prosecution proceeding shall not be proceeded against a person for offences under section 276C or section 277 in respect of whom penalty under clause (iii) of sub-section (1) of section 271 has been reduced or waived under section 273A. It is prop....
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....days of receipt of such guarantee, and in a case where a reference is made to the Valuation Officer, within forty-five days from the date of receipt of such guarantee. It is also proposed that where a notice of demand specifying a sum payable is served upon the assessee and the assessee fails to pay such sum within the time specified in the notice, the Assessing Officer may invoke the bank guarantee, wholly or partly, to recover the said amount. If the assessee fails to renew the bank guarantee furnished under sub-section (3) or fails to furnish a fresh guarantee from a scheduled bank for an equal amount, fifteen days before the expiry of such guarantee, the Assessing Officer shall, if it is necessary to do so to protect the interest of the revenue, invoke the bank guarantee. The amount realised by invoking the bank guarantee shall be adjusted against the existing demand which is payable and the balance amount, if any, be deposited in the Personal Deposit Account of the Principal Commissioner or Commissioner in the branch of Reserve Bank of India or the State Bank of India or of its subsidiaries or any bank as may be appointed by the Reserve Bank of India as its agent under the ....
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....r of employees, details of constituent entities and the country or territory in which such entities are resident or located. Sub-section (4) of the proposed new section provides for furnishing report by entities resident in India and belonging to an international group not headed by Indian resident entity. Sub-section (5) of the proposed new section provides for circumstances under which the constituent entities referred to in sub-section (4) shall not be required to furnish the report. Sub-section (6) of the proposed new section provides that the prescribed authority may, by issuance of notice for the purpose of verifying the accuracy of the report furnished by any entity, require submission of information and document as specified in the notice Sub-section (7) of the proposed new section provides that the reporting requirement under this section shall not apply to an accounting year, if the total consolidated group revenue for the accounting year preceding it, does not exceed the prescribed threshold. Sub-section (8) of the proposed new section provides for application of the section in accordance with such guidelines and subject to such conditions as may be prescribed. Sub....