TaxTMI 
TaxTMI 
Finance Act, 2023 Explanatory Notes to the Provisions of the Finance Act, 2023
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....ofits 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 44BB Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils. 44BBB Special provision for computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain turnkey power projects 45 Capital Gains 47 Transactions not regarded as transfer 48 Mode of computation 49 Cost with reference to certain modes of acquisition 50AA Special provision for computation of capital gains in case of Market Linked Debenture 54 Profit on sale of property used for residence 54EA Capital gain on transfer of long-term capital assets not to be charged in the case of investment in spec....
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.... and other games of any sort or gambling or betting of any form or nature whatsoever. 115BBJ Tax on winnings from online games. 115JC Special provisions for payment of tax by certain persons other than a company 115JD Tax credit for alternate minimum tax 115TD Tax on accreted income 115UA Tax on income of unit holder and business trust. 115VP Method and time of opting for tonnage tax scheme 116 Income-tax authorities. 119 Instructions to subordinate authorities 131 Power regarding discovery, production of evidence, etc. 132 Search and seizure 133 Power to call for information. 134 Power to inspect registers of companies. 135A Faceless collection of information. 140B Tax on updated return 142 Inquiry before assessment 148 Issue of notice where income has escaped assessment 149 Time limit for notice 151 Sanction for issue of notice. 153 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 C....
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....-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 respecting assesses in certain cases 295 Power to make rules. AMENDMENTS TO THE FINANCE (NO. 2) ACT, 2004 CARRIED OUT THROUGH FINANCE ACT, 2023 Revision of rates of Securities Transaction Tax by amendments in Finance (No. 2) Act, 2004- Chapter of Finance (No. 2) Act, 2004 Particulars Chapter VII Securities Transaction Tax AMENDMENTS TO THE PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988 CARRIED OUT THROUGH FINANCE ACT, 2023 Rationalization of the provisions of the Prohibition of Benami Property Transactions Act, 1988 (the PBPT Act) - Section of PBPT Act Particulars 2 Definitions 46 Appeals to Appellate Tribunal AMENDMENTS TO THE UNIT TRUST OF INDIA (TRANSFER OF UNDERTAKING AND REPEAL) ACT, 2002 CARRIED OUT THROUGH FINANCE ACT, 2023 Extension of Income- tax exemption to Specified Undertaking of Unit Trust of India (SUUTI) till 31.03.2025 - Section of Unit Trust of In....
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....s. 5,00,001 - Rs. 10,00,000 20% 20% 20% Exceeding Rs. 10,00,000 30% 30% 30% For individuals or HUFs opting for the concessional taxation regime under section 115BAC of the Act, the rates as specified in the said section are as under: Total Income (Rs) Rate of income- tax for AY 2023-24 Up to 2,50,000 Nil From 2,50,001 to 5,00,000 5% From 5,00,001 to 7,50,000 10% From 7,50,001 to 10,00,000 15% From 10,00,001 to 12,50,000 20% From 12,50,001 to 15,00,000 25% Above 15,00,000 30% The amount of income-tax so computed, including in the case of an individual or an HUF exercising option under section 115BAC, or as computed under the provisions of section 111A or section 112 or section 112A of the Act but not having any income under section 115AD of the Act, shall be increased by a surcharge,- (i) 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 fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent of such income- tax; and (ii) having a total income (including the income by way of dividend or income under the provisions of sections 111A, 112....
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....-tax; (iv) having a total income [excluding the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding five crore rupees, at the rate of thirty-seven per cent of such income-tax; (v) having a total income [including the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but is not covered in sub-clauses (iii) and (iv), at the rate of fifteen per cent of such income-tax: Where the total income includes any income by way of dividend or income chargeable under clause (b) of sub-section (1) of section 115AD of the Act, the rate of surcharge on the income-tax calculated on that part of income shall not exceed fifteen per cent. In the case of an association of persons consisting of only companies as its members, the surcharge shall be calculated - (i) 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; (ii) at the rate of fifteen per cent of such income-tax, where the total income exceeds one crore rupees; It may be further....
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.... taxation under section 115BAD of the Act, so the total amount payable as income-tax and surcharge on total income exceeding- (i) one crore but not exceeding ten 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) 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 of income that exceeds ten 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. 3.1.4 Firms. Paragraph C 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 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 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....
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....provisions of section 111A or section 112 or section 112A of the Act shall be enhanced by a surcharge of seven per cent where such domestic company has total income exceeding one crore rupees but not exceeding ten crore rupees. Surcharge at the rate of twelve per cent shall be levied if the total income of the company exceeds ten crore rupees. However, where the domestic company exercises the option under section 115BAA or section 115BAB, the tax computed shall be enhanced by a surcharge of ten percent, for all levels of income. (ii) In the case of a company other than a domestic company, the rate of tax 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, 1....
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....newly inserted section 194BA shall be at the rate of 30%, being the rate in force; (ii) deduction of income-tax at source on the income by way of dividend received from a unit in an International Financial Services Centre, as referred to in sub-section (1A) of section 80LA, shall be at the rate of 10%, being the rate in force; (iii) deduction of income-tax at source on payments made to a non-resident (other than a company) or to a foreign company, in the nature of income by way of royalty or fees for technical services shall be at the rate of 20%, being the rate in force. For sections specifying the rate of deduction of tax at source, the tax shall continue to be deducted as per the provisions of these sections. 3.3.2 Surcharge. The amount of tax so deducted shall be increased by a surcharge,- (a) in the case of every individual or HUF or association of persons (except in case of an association of persons consisting of only companies as its members) 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 Act, being a non-resident, calculated,- (i) at the rate of ten per cent ....
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....ch tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees. (c) in the case of every co-operative society, being a non-resident, calculated ,- (i) at the rate of seven per cent of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed ten crore rupees; (ii) at the rate of twelve per cent of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds ten crore rupees. (d) in the case of every firm, being a non-resident at the rate of twelve per cent of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees; (e) in the case of every company, other than a domestic company, calculated,- (i) at the rate of two per cent of such tax, where the income or the aggregate of 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 i....
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....24 (AY 2024-25), of an individual or Hindu undivided family or association of persons [other than a co-operative society], or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2. These rates are given in the following table :- Sl. No. Total income Rate of tax (1) (2) (3) 1. Upto Rs. 3,00,000 Nil 2. From Rs. 3,00,001 to Rs. 6,00,000 5 % 3. From Rs. 6,00,001 to Rs.9,00,000 10 % 4. From Rs. 9,00,001 to Rs. 12,00,000 15 % 5. 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 speci....
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....er 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 applicable. In such cases the surcharge shall be restricte....
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....ax 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 cases. 3.4.3 Co-operative Societies . Paragraph B of Part III of the First Schedule to the FA 2023 specifies the ra....
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....ate 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 Health and Education Cess. 3.4.5 Local Authorities. Paragraph D 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 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....
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....e 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 crore rupees. However, marginal relief shall be allowed in the case of every company other than a company 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 exc....
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....fts 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 from 1st April, 2024 and accordingly applies to assessment year 2024-25 and subsequent assessment years. 5. Tax Incentives to International Financial Services Centre (IFSC) 5.1 Clarification with respect to taxation on transfer of Offshore Derivative Instruments (ODI) 5.1.1 Prior to the FA 2023, income of non-residents on transfer of Offshore Derivative Instruments (ODI) entered into with IFSC Banking unit was exempt under section 10 (4E) of the Act. Under the ODI contract, the IFSC Banking Uni....
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.... 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 1st 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 IFSC in order to make IFSC a global financial hub. In this endeavor in order to make IFSC a prominent global centre for aircraft leasing activities the following tax incentives have already been provided: (i) exemption on royalty and interest income of a non-resident on lease of an aircraft if it is paid by a unit of an IFSC which commences its operations on or before the 31st day of March, 2024 [Clause (4F) of section 10]; (ii) exemption to the income arising from the transfer of an aircraft leased by a unit of an IFSC which commences operation on or before the 31st day of....
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....e 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 Securities and Exchange Board of India Act, 1992 or any other relevant law was obtained, and fifty per cent of such income for next five consecutive assessment years. 5.5.2 The Finance (No.2 ) Act, 2019 inserted sub-section (1A) to section 80LA to provide that where the gross total income of an assessee, being a Unit of an IFSC, includes certain specified income, there shall be allowed, in accordance with and subject to the provisions of the said section, a deduction from such income, of an amount equal to one hundred per cent of such income for any ten consecutive assessment years, at the option of the assessee, out of fifteen years, beginning with....
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....ge 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 been inserted in sub-section (2) of section 115VP of the Act so as to provide that a Unit of an IFSC which has availed of deduction under section 80LA of the Act, may make an application to opt for the tonnage tax scheme within three months from the date on which the deduction under section 80LA ends. Applicability: This amendment has taken effect from 1st April, 2023. 6. Agnipath Scheme, 2022 - 6.1. The Ministry of Defence has introduced the Agnipath Scheme, 2022 (the Scheme) for enrolment of Agniveers in Indian Armed Forces. It has come into force on 1st November, 2022. In pursuance of the Government's decision to implement the Agnipath Scheme, 2022, the Competent Authority has de....
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....ment 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 the previous year, to the Agniveer Corpus Fund account of an individual enrolled in the Agnipath Scheme referred to in section 80CCH shall be considered as salary of that individual. A corresponding deduction of the same has been provided under section 80CCH of the Act as mentioned above. v. Further, it is also provided that in the new tax regime as per sub-section (1A) of section 115BAC an individual enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund shall get a deduction of the government contribution to his Seva Nidhi [sub-section(2) of section 80CCH]. Applicability: These amendments take effect from 1st April, 2023 and apply in relation to assessment year 2023-24 and subsequent assessment years. 7. Exemption to deve....
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....o 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, towns and villages; (iii) regulating, or regulating and developing, any activity for the benefit of the general public; or (iv) regulating any matter, for the benefit of the general public, arising out of the object for which it has been created. 7.7. Further, for the purposes of this clause, the body or authority or Board or Trust or Commission, not being a company, as referred above is also required to be notified by the Central Government in the Official Gazette. FA 2023 has also made consequential amendments in the Explanation to the nineteenth proviso of clause (23C) of section 10 of the Act and in sub-section (7) of section 11 of the Act so as to ensure that the trust or institution does not get exemption under more than one provision. Applicability: These amendments are effective from 1st April, 2024 and accordingly apply to....
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.... 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 deduction earlier. This provision shall apply for policies issued on or after 1st April, 2023. There is no change in taxation for polices issued before this date. It has also been provided that the sum received on the death of the insured person shall be exempt. Accordingly, the following amendments have been made to the Act: (i) insertion of a new proviso (substituted sixth proviso) to clause (10D) of the section 10 of the Act to provide that nothing contained in this clause shall apply with respect to any life insurance policy (other than a unit linked insurance policy) issued on or after the 1st April, 2023, if the amount of premium payable for any of the previous years during the term of such policy exceeds five lakh rupees; (ii) insertion of a new proviso (seventh proviso) to clause (10D) of section 10 of the Act to provide that if the premium is payable by a person for more than one li....
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....ncome 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 (22B) of section 10 of the Act, inter-alia , provided exemption to any income of a notified news agency which is set up in India solely for collection and distribution of news. This was subject to the condition that the news agency applies its income or accumulates it for application solely for collection and distribution of news and does not distribute its income in any manner to its members. 9.2. In accordance with the stated policy of the Government of phasing out of exemptions and deductions under the Act, the exemption available to news agencies under clause (22B) of section 10 of the Act has been withdrawn from the assessment year 2024-25 vide FA 2023. 9.3. In view of above, FA 2023 has inserted fourth proviso to clause (22B) of section 10 of the Act so as to provide that nothing contained in clause (22B) of section 10 of the Act shall apply to any income of the news agency, of the previous year relevant to the assessment year beginning on or after ....
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.... 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 dated the 8th April, 1991; or (iii) any other individual, whose name does not appear in the Register of Sikkim Subjects, but it is established beyond doubt that the name of such individual's father or husband or paternal grand-father or brother from the same father has been recorded in that register. 11.2. In Writ Petition (C) No. 59 of 2013, the Association of Old Settlers of Sikkim & Ors. Vs. Union of India & Others, the constitutional validity of clause (26AAA) of section 10 of the Act was challenged contending that it violated Article 14, 15 and 21 of the Indian Constitution. The Hon'ble Supreme Court decided the above Writ Petition, directing that the said clause be amended so as to extend the tax exemption to all Indian citizens domiciled in Sikkim on or before 26th April, 1975 with retrospective effect. 11.3. In order to implement the above decision of the Hon'ble Supreme Court, FA 2023 has amended clause (26AAA) of section 10 of the Act. The amended clause (26AAA) of sect....
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....rs and in turn, facilitates access to finance for the prospective borrower as part of a larger financial inclusion programme of the government covering different cross-sections and segments of the economy like students, micro entrepreneurs, women entrepreneurs, SMEs, skill and vocational training needs, etc. 12.2. Presently, there are ten dedicated credit guarantee Trusts under the Management of NCGTC viz. Credit Guarantee Fund Scheme for Educational Loans (CGFEL), Credit Guarantee Fund Scheme for Skill Development (CGFSD), Credit Guarantee Fund Scheme for Factoring (CGFF), Credit Guarantee Fund for Micro Units (CGFMU) and Credit Guarantee Fund for Stand Up India (CGFSI), Emergency Credit Line Guarantee Scheme (ECLGS), Credit Guarantee Scheme for MFIs (CGSMFI), Loan Guarantee Scheme for COVID Affected Sectors (LGSCAS) and Loan Guarantee Scheme for COVID Affected Tourism Service Sector. 12.3. Further, Credit Guarantee Fund Trust for Micro and Small Enterprises has been set up by the Ministry of Small and Medium Enterprises in collaboration with Small Industries Development Bank of India (SIDBI) to provide collateral and bank guarantees to Small and Medium Enterprises (SMEs). 12.4....
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....ng deduction as is provided for similar other deductions. Section 143(1) of the Act, however, provided that the deduction under section 10AA shall be eligible if such return is filed before the due date. Hence, FA 2023 has aligned the two provisions by inserting a proviso to sub-section (1) of section 10AA of the Act to provide that no deduction under the said section shall be allowed to an assessee who does not furnish a return of income on or before the due date specified under sub-section (1) of section 139. 14.3. Further, it was observed that there was no time limit prescribed in the Act for timely remittance of the export proceeds from sale of goods or provision of services by SEZ Units for claiming deduction under the said section as is provided under other similar export related deductions in the Act. Hence, FA 2023 has inserted a new sub-section (4A) to provide that the deduction under section 10AA of the Act shall be available for such unit, if the proceeds from sale of goods or provision of services is received in, or brought into India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year or, within such further....
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....r the trusts registered under section 12AA/12AB of the Act (hereinafter referred to as trust or institution under the second regime). 15.1.2. Section 12A of the Act, inter-alia, provides for procedure to make application for the registration of the trust or institution to claim exemption under section 11 and 12 of the Act. Section 12AA provided for procedure for registration. Section 12AB of the Act is the new section providing for the procedure for registration which comes into effect from 1st April, 2021. 15.2. Depositing back of corpus and repayment of loans or borrowings 15.2.1. Under the existing provisions of the Act, corpus donations received by trusts and institutions under both regimes are exempt as follows: a) Explanation 1 to the third proviso to clause (23C) of section 10 of the Act provides that income of the funds or trust or institution or any university or other educational institution or any hospital or other medical institution, shall not include income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus subject to the condition that such voluntary contributions are invested or deposited in one or more ....
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....for the investment or depositing back to the corpus or repayment of loan will make the implementation of the provisions quite difficult. 15.2.4. Further, it was noted that conditions that are required to be satisfied in the case of application for charitable or religious purposes must also be satisfied while making the application from the corpus or loan or borrowing. These conditions are as follows: (i) Such application should not be in the form of corpus donation to another trust [twelfth proviso to clause (23C) of section 10 of the Act for the trust or institution under first regime and Explanation 2 to sub-section (1) of section 11 of the Act for the trust or institution under second regime]; (ii) TDS, if applicable, should be deducted on such application [thirteenth proviso to clause (23C) of section 10 of the Act for the trust or institution under first regime and Explanation 3 to sub-section (1) of section 11 of the Act for the trust or institution under second regime]; (iii) Application whereby payment or aggregate of payments made to a person in a day exceeds Rs 10,000 in other than specified modes (such as cash) is not allowed (thirteenth proviso to clause (23C) of se....
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....ird proviso to clause (23C) of section 10 of the Act so as to provide that the provisions of the first proviso shall apply only if there was no violation of the conditions specified in the twelfth, thirteenth and twenty- first proviso to, and Explanation 2 and Explanation 3 to, clause (23C) of section 10 of the Act, at the time the application was made from the corpus; (ii) inserted a third proviso to clause (i) of Explanation 2 to the third proviso to clause (23C) of section 10 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; (iii) inserted a fourth proviso to clause (i) of Explanation 2 to the third proviso to clause (23C) of section 10 of the Act 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; (iv) inserted a second proviso to clause (ii) of Explanation 2 to the third proviso to clause (23C) of section 10 of th....
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...., specified in clause (c) of, and Explanations 2, 3 and 5 to, sub-section (1) of, and Explanation to section 11 of the Act or clause (c) of sub-section (1) of section 13 of the Act, at the time the application was made from loan or borrowing; (xi) inserted a third proviso to clause (ii) of Explanation 4 to sub-section (1) of section 11 of the Act so as to provide that the amount repaid shall not be treated as application for charitable or religious purposes under the first proviso unless such repayment is made within a period of five years from the end of the previous year during which such application was made form loan or borrowing; (xii) inserted a fourth proviso to clause (ii) 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 any loan or borrowing is made on or before the thirty first day of March, 2021. Applicability: These amendments are effective from 1st April, 2023 and accordingly apply to the assessment year 2023-24 and subsequent assessment years. 15.3. Treatment of donation to other trusts: 15.3.1. The income of the trusts and institutions under both regimes i....
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....shall be treated as application for charitable or religious purposes only to the extent of eighty-five per cent of such amount credited or paid; b) inserted clause (iii) in Explanation 4 to sub-section (1) of section 11 of the Act to provide that any amount credited or paid, other than the amount referred to in Explanation 2 to the said sub-section, to 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 or other trust or institution registered under section 12AB of the Act, as the case may be, shall be treated as application for charitable or religious purposes only to the extent of eighty-five per cent of such amount credited or paid. Applicability : These amendments are effective from 1st April, 2024 and accordingly apply in relation to the assessment year 2024-25 and subsequent assessment years 15.4. Omission of redundant provisions related to roll back of exemption 15.4.1. Prior to the amendments made vide FA 2023, there were roll back provisions for the trust or instituti....
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....se amendments are effective from 1st April, 2023. 15.5. Combining provisional and regular registration in some cases 15.5.1. Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 amended the provisions related to application for registration by amending the first and second proviso to clause (23C) of section 10 of the Act, clause (ac) of sub-section (1) of section 12A of the Act and first and second proviso to sub-section (5) of section 80G of the Act. The amended provisions, inter-alia, provide the following: a) New trusts or institutions under both regimes as well under section 80G regime need to apply for the provisional registration/approval at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration/approval is sought. Such provisional registration/ approval shall be valid for a period of 3 years. b) Provisionally registered/approved trusts or institutions under both regimes and section 80G regime will again need to apply for regular registration/approval at least six months prior to expiry of period of the provisional registration/ approval or within six months of the comme....
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....ve already commenced their activities, shall make application for a regular approval under sub-clause (B) of clause (iv) of the first proviso to sub- section (5) of section 80G of the Act. g) Such application shall be examined by the Principal Commissioner or Commissioner as per the procedure provided under clause (ii) of the second proviso to clause (23C) of section 10 of the Act for the trusts and institutions under the first regime, under clause (b) of sub-section (1) of section 12AB of the Act for the trusts and institutions under the second regime and under clause (ii) of the second proviso to sub-section (5) of section 80G of the Act. h) Where the Principal Commissioner or Commissioner is satisfied about the objects and genuineness of the activities and compliance of other requirements provided in law, registration or approval in such cases shall be granted for 5 years. i) The Principal Commissioner or the Commissioner shall pass an order granting or rejecting such applications within 6 months calculated from the end of the month in which such application was received. Applicability : These amendments are effective from 1st October, 2023. Vide Notification No. 45/2023 da....
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.... section (1) of section 12A of the Act is not complete or it contains false or incorrect information. Applicability: These amendments are effective from 1st April, 2023. 15.7. Trusts or institutions not filing the application in certain cases 15.7.1. Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 amended the provisions related to application for registration by amending the first and second proviso to clause (23C) of section 10 of the Act, clause (ac) of sub-section (1) of section 12A of the Act. The amended provisions provide the following: a) All the existing trusts and institutions under the first and second regime were required to apply for re-registration/approval on or before the specified due date. b) New trusts and institutions under the first and second regime are required to apply for the provisional registration/approval at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration/approval is sought. Such provisional registration/approval shall be valid for a period of 3 years. c) Provisionally registered/approved trusts and institutions under the first and sec....
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....to a non-charitable organisation or gets merged with a non- charitable organisation or a charitable organisation with dissimilar objects or does not transfer the assets to another charitable organisation. 15.7.5. The main elements of these provisions are: (i) The accretion in income (accreted income) of the trust or institution is taxable on conversion of trust or institution into a form not eligible for registration under section 12AA or section 12AB of the Act or on merger into an entity not having similar objects and registered under Section 12AA or section 12AB of the Act or on non-distribution of assets on dissolution to any charitable institution registered under section 12AA of the Act or approved under clause (23C) of section 10 of the Act within a period of twelve months from the end of the month of dissolution. (ii) Accreted income is the amount of aggregate of Fair Market Value (FMV) of total assets as reduced by the liability as on the specified date. The method of valuation has been prescribed in the rules. (iii) The taxation of accreted income is at the maximum marginal rate. (iv) This levy is in addition to any income chargeable to tax in the hands of the entity....
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....r accounts audited as per the provisions of clause (b) of the tenth proviso to clause (23C) of section 10 of the Act. The trusts and institutions under second regime are required to get their accounts audited as per the provisions of sub-clause (ii) of clause (b) of sub-section (1) of section 12A of the Act. The audit report under both the regimes is required to be furnished at least one month before the due date for furnishing the return of income. 15.8.2. Explanation 3 to the third proviso of clause (23C) of the section 10 of the Act provides that where the trust or institution under the first regime accumulates or sets apart its income, such trust or institution is required to furnish a statement in the prescribed form (Form No. 10) on or before the due date specified under sub-section (1) of section 139 of the Act for furnishing the return of income for the previous year. 15.8.3. Clause (c) of sub-section (2) of section 11 of the Act provides that where the trust or institution under the second regime accumulates or sets apart its income, such trust or institution is required to furnish a statement in the prescribed form (Form No. 10) on or before the due date specified under....
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....tion under section 11, 12 of the Act shall not be available to such trust or institution. b. Section 139 of the Act was amended by the Finance Act, 2022 providing for an option to the taxpayers to furnish updated return of income up to 2 years from the end of assessment year. c. The above amendment had resulted in unintended consequences of allowing exemption under section 11, 12 of the Act and sub-clause (iv)/(v)/(vi)/(via) of clause (23C) of section 10 of the Act to the trusts/institutions where they furnish updated return of income. Accordingly, FA 2023 has clarified that the exemption under section 11, 12 and sub-clause (iv)/(v)/(vi)/(via) of clause (23C) of section 10 of the Act shall be available only if the return of income has been furnished within the time allowed under sub-section (1) or sub- section (4) of section 139 of the Act. d. Hence, FA 2023 has, a) amended the twentieth proviso of clause (23C) section 10 of the Act to provide that the 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) is required to f....
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....ner exceeds the rent recoverable from, or payable by, the assessee. (ii) FA 2023 has deleted the Explanation 2, Explanation 3 and Explanation 4 of sub-clause (ii) of clause(2) of section 17 of the Act to rationalize the section and specify the method of computation for the value the accommodation provided to employee by his employer through Rules. 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. 16.5. Vide Notification No. 65/2023 dated 18.8.2023 GSR 615(E), effective from 01.09.2023, the methodology for computing the value of perquisites for the purpose of sub-clause (i) and (ii) of sub-section (2) of section 17 of the Income-tax Act has been prescribed. 17. Prevention of double deduction claimed on interest on borrowed capital for acquiring, renewing or reconstructing a property 17.1. Under the existing provisions of the Act, the amount of any interest payable on borrowed capital for acquiring, renewing or reconstructing a property is allowed as a deduction under the head "Income from house property" under section 24 of the Act. 17.2. Sectio....
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....ovisions of said clause also applies to cases where benefit or perquisite provided is either in cash or in kind or partly in cash and partly in kind. Applicability: This amendment will take effect from 1st April, 2024 and will accordingly apply in relation to the assessment year 2024-2025 and subsequent assessment years. 18.3 Section 194R of the Act inserted by the Finance Act 2022 provides for deduction of tax at source on benefit or perquisite provided to a resident arising from business or exercise of a profession. 18.4 Sub-section (1) of said section provides for tax deduction at source at the rate of 10% of the value or aggregate of value of such benefit or perquisite. The responsibility of tax deduction at source has been fixed on a person who is responsible for providing to a resident any benefit or perquisite, whether convertible into money or not, arising from a business or the exercise of a profession by such resident. 18.5 First proviso to sub-section (1) provides that in a case where the benefit or perquisite, as the case may be, is wholly in kind or partly in cash and partly in kind but such part in cash is not sufficient to meet the liability of deduction of tax i....
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.... the Central Board of Direct Taxes, a new rule 6ABBB has been inserted in the Rules and new Form No. 3AF has been notified to capture the details of preliminary expenses incurred which are required to be furnished under proviso to clause (a) of sub-section (2) of section 35D of the Act. Further, Form No. 3AE (Audit report under section 35D(4)/35E(6)) has also been modified to capture details of whether Form No. 3AF has been filed or not. 20. Non-Banking Financial Company (NBFC) categorization 20.1 Section 43B of the Act provided, inter-alia, that any sum payable by the assessee as interest on any loan or borrowing from a deposit taking non-banking financial company and systemically important non-deposit taking non-banking financial company shall be allowed as deduction on payment basis. It can be allowed on accrual basis if it is actually paid on or before the due date of furnishing the return of income of the relevant previous year. 20.2 Section 43D of the Act provided, inter-alia, for special provision in case of income of deposit-taking non-banking financial company and systemically important non-deposit taking non-banking financial company. Interest income in relation to cer....
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....e Act vide FA 2023. A new clause (h) has been inserted in section 43B of the Act to provide that any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006 shall be allowed as deduction only on actual payment. However, it has also been provided that the proviso to section 43B of the Act shall not apply to such payments. 21.3 Section 15 of the MSMED Act mandates payments to micro and small enterprises within the time as per the written agreement, which cannot be more than 45 days. If there is no such written agreement, the section mandates that the payment shall be made within 15 days. Thus, this amendment to section 43B of the Act allows the payment as deduction only on payment basis. It can be allowed on accrual basis only if the payment is within the time mandated under section 15 of the MSMED Act. Applicability: This amendment takes effect from 1st April, 2024 and will accordingly apply in relation to the assessment year 2024-25 and subsequent assessment years. 22. Increasing threshold limits for presumptive taxation schemes 22.1 The provisions of Section....
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....gross receipts, a threshold limit of three crore rupees will apply. - under section 44ADA of the Act, for professions referred to in sub-section (1) of section 44AA of the Act, where the amount or aggregate of the amounts received during the previous year, in cash, does not exceed five per cent of the total gross receipts, a threshold limit of seventy-five lakh rupees will apply. - the receipt by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the receipt in cash. - provision of section 44AB of the Act shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD of the Act or sub-section (1) of section 44ADA of the Act, as the case may be. Applicability: These amendments take effect from 1st April, 2024 and accordingly apply in relation to the assessment year 2024-2025 and subsequent assessment years. 23. Preventing misuse of presumptive schemes under section 44BB and section 44BBB 23.1 Section 44BB of the Act provides for presumptive scheme in the case of a non-resident assessee who is engaged in the business of providing services or faci....
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....section (1) of section 72, where an assessee declares profits and gains of business for any previous year in accordance with the provisions of presumptive taxation, no set off of unabsorbed depreciation and brought forward loss shall be allowed to the assessee for such previous year. Applicability: These amendments take effect from 1st April, 2024 and accordingly apply in relation to the assessment year 2024-2025 and subsequent assessment years. 24. Conversion of Gold to Electronic Gold Receipt and vice versa 24.1 Pursuant to the announcement in the Union Budget 2021-22 about Gold Exchange, SEBI has been made the regulator of the entire ecosystem of the proposed gold exchange. Accordingly, SEBI has come out with a detailed regulatory framework for spot trading in gold on existing stock exchanges through the instrument of Electronic Gold Receipts (EGR). 24.2 In order to promote the concept of Electronic Gold, FA 2023 has excluded the conversion of physical form of gold into EGR and vice versa by a SEBI registered Vault Manager from the purview of 'transfer' for the purposes of Capital gains. 24.3 Furthermore, the cost of acquisition of the EGR for the purpose of computi....
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....nment of provisions of section 45(5A) with the tax deducted at source provisions of section 194-IC 25.1. Prior to FA, 2023, the provisions of sub-section (5A) of section 45 of the Act, inter-alia, provided that on the capital gain arising to an assessee (individual and HUF), from the transfer of a capital asset, being land or building or both, under a Joint Development agreement (JDA),the capital gains shall be chargeable to income-tax as income of the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority. Further, for computing the capital gains amount on this transaction, the full value of consideration shall be taken as the stamp duty value of his share, as increased by the consideration received in 'cash'. 25.2. It was noticed that the taxpayers were inferring that any amount of consideration which is received in a mode other than cash, i.e., cheque or electronic payment modes would not be included in the consideration for the purpose of computing capital gains chargeable to tax under sub-section (5A) of section 45. This was not in accordance with the intention of law as is evident from the provi....
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....n which ADIA is the direct or indirect sole shareholder or unit holder or beneficiary or interest holder and such investment vehicle is wholly owned and controlled, directly or indirectly, by the Abu Dhabi Investment Authority or the Government of Abu Dhabi. 26.4 In view of the above, Finance Act 2023 has amended clause (a) of the Explanation to clause (viiac) and clause (viiad) of section 47 of the Act to provide that the definition of original fund shall also include- (i) an investment vehicle, in which Abu Dhabi Investment Authority is the direct or indirect sole shareholder or unit holder or beneficiary or interest holder and such investment vehicle is wholly owned and controlled, directly or indirectly, by the Abu Dhabi Investment Authority or the Government of Abu Dhabi, or (ii) fund notified by the Central Government in the Official Gazette in this behalf subject to such conditions as may be specified; Applicability: These amendments have come into effect from 1st April, 2023 and shall apply to the assessment year 2023-24 and subsequent assessment years. 27. Transfer of a capital asset, being interest in a joint venture in exchange of shares of a company, incorporated o....
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.... volatile compared to pure equity funds and therefore have stable flow of income through interest and involve lesser risk. 28.4 In order to tax the capital gains arising from the transfer or redemption or maturity of these securities as short-term capital gains at the applicable rates, FA 2023 has inserted a new section 50AA in the Act to treat the full value of the consideration received or accruing as a result of the transfer or redemption or maturity of "Market Linked Debentures" or a unit of a "Specified Mutual Fund" acquired on or after the 1st day of April 2023, as reduced by the cost of acquisition of the debenture or unit and the expenditure incurred wholly or exclusively in connection with transfer or redemption, as capital gains arising from the transfer of a short term capital asset. 28.5 Further, FA 2023 has defined the 'Market linked Debenture' as a security by whatever name called, which has an underlying principal component in the form of a debt security and where the returns are linked to market returns on other underlying securities or indices and include any securities classified or regulated as a Market Linked Debenture by Securities....
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....r computing deduction under the said sections. 29.4. Consequentially, the provisions of sub-section (2) of section 54 and sub-section (4) of section 54F that deals with the deposit in the Capital Gains Account Scheme have also been amended. FA 2023 has inserted a proviso to provide that the provisions of sub-section (2) of section 54 and sub-section (4) of section 54F, for the purpose of deposit in the Capital Gains Account Scheme, shall apply only to capital gains or net consideration, as the case may be, up to rupees 10 Crores Applicability: These amendments will take effect from 1st April, 2024 and shall accordingly, apply in relation to the assessment year 2024-25 and subsequent assessment years. 30. Defining the cost of acquisition in case of certain assets for computing capital gains 30.1. Prior to FA, 2023, the provisions of the section 55 of the Act, inter-alia, defined the 'cost of any improvement' and 'cost of acquisition' for the purposes of computing capital gains. However, there were certain assets like intangible assets or any sort of right for which no consideration has been paid for acquisition. The cost of acquisition of such assets was not clea....
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....e premium) received from non-resident investors. 31.3. Accordingly, FA 2023 has included the consideration received from a non- resident also under the ambit of clause (viib) by removing the phrase 'being a resident' from the said clause. This will make the provision applicable for receipt of consideration for issue of shares from any person irrespective of his residency status. Applicability: These amendments will be effective from 1st April, 2024 and shall accordingly, apply in relation to the assessment year 2024-25 and subsequent assessment years. 31.4. In this context, in order to promote ease of doing business and encourage foreign investment, Vide Notification No.29/2023 dated 24.5.2023 (S.O. 2274[E]), certain class or classes of persons, being non-resident investors to whom clause (viib) of sub-section (2) of section 56 of the Act shall not be applicable, have been notified. 31.5. Further, Notification No. 30/2023 dated 24.5.2023 (S.O 2275[E]), 2023 has been issued, modifying Notification No. S.O 1131(E) dated 5th March, 2019 providing that the provisions of section 56(2)(viib) of the Act shall not apply to consideration received from any person by start-ups cov....
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....f its shareholding below fifty-one per cent, and (ii) transfer of control to the buyer. 32.4. The first condition applies in case the shareholding of the Central Government or the State Government or the public sector company was above fifty one percent before such sale of shareholding. The requirement of transfer of control may be carried out by either the Central Government or State Government or public sector company (or any two of them or all of them). 32.5. Vide FA 2023, section 72AA of the Act has also been amended to allow carry forward of accumulated losses and unabsorbed depreciation allowance in the case of amalgamation of one or more banking company with any other banking institution or a company subsequent to a strategic disinvestment, if such amalgamation takes place within 5 years of strategic disinvestment. Applicability: These amendments have taken effect from 1st April, 2023 and accordingly apply to the assessment year 2023-24 and subsequent assessment years. 32.6. To incorporate the changes made in the definition of strategic disinvestment in section 72A of the Act, vide Notification No. 35/2023 dated 31.5.2023 (G.S.R. 403[E]), sub-rule (4) of rule 11UAC has....
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....ion 80G of the Act 34.1. Section 80G of the Act, inter-alia, provides for the procedure for granting approval to certain institutions and funds receiving donation and the allowable deductions in respect of such donations to the assessee making such donations. 34.2. Sub-section (2) of section 80G of the Act, inter-alia, provides the list of these funds to which any sum paid by the assessee in the previous year as donations is allowed as a deduction to an extent of 50 percent/100% of the amount so donated. 34.3. It has been observed that there are only three funds based on names of the persons in the said section. In order to remove such funds, FA 2023 has omitted sub-clauses (ii), (iiic) and (iiid) of clause (a) of sub-section (2) of section 80G of the Act. 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. 35. Extension of date of incorporation for eligible start-up for exemption 35.1. Prior to the FA, 2023, the provisions of the section 80-IAC of the Act, inter-alia, provides for a deduction of an amount equal to hundred percent of the profits and gains d....
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....time provided for furnishing Transfer Pricing (TP) report 37.1. Section 92D of the Act, inter-alia, provides that every person who has entered into an international transaction or a specified domestic transaction shall keep and maintain the information and documents as provided under rule 10D of the Rules. 37.2. Sub-section (3) of section 92D of the Act prior to its amendment by the FA 2023 provides that the Assessing Officer (AO) or the Commissioner (Appeals) may during the course of any proceedings under the Act require such person (referred in para 37.1 above) to furnish any information or document, as provided under rule 10D of the Rules, within a period of 30 days from the date of receipt of a notice issued in this regard. It was further provided that on an application made by the assessee, the time period of 30 days may be extended by an additional period of 30 days. 37.3. It was represented that in several instances due to limited time available for TP proceedings it may not be practically possible to provide minimum 30 days for producing these information or documents which in any case is already in possession of the assessee. Accordingly, the time period allowed for sub....
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.... 38.3. Sub-section (3) of this section excludes certain companies that are engaged in the business of banking or insurance from its scope. 38.4. Representations were received stating that certain Non-Banking Financial Companies [NBFCs] which are engaged in the business of financing like banks should also be excluded from the scope of this section as they are undertaking the similar functions and are now being subject to similar regulations and compliances in respect of those functions. 38.5. In view of the above, FA 2023 has amended sub-section (3) of section 94B of the Act to provide a carve-out to certain class of NBFCs and to provide that nothing contained in sub-section (1) of section 94B of the Act shall apply to,- (i) an Indian company or a permanent establishment of a foreign company which is engaged in the business of banking or insurance; or (ii) such class of non-banking financial companies as may be notified by the Central Government in the Official Gazette in this behalf; 38.6. FA 2023 has further provided that for the purposes of section 94B, "non-banking financial company" shall have the same meaning as assigned to it in clause (vii) of the Explanation ....
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....ese amendments are effective from 1st April, 2023. 40. Parity in respect of taxation of Royalty/FTS 40.1. Prior to the amendments made vide FA 2023, income of non-residents in the nature of royalty and fees for technical services (FTS) were provided concessional rate of taxation at the rate of 10% under section 115A of the Act. However, it was noted that some Double Taxation Avoidance Agreements provide taxation of such incomes at a higher rate of 15% or 20% or 25%. 40.2. As the taxpayer can opt for the more beneficial provision i.e. either the 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....
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....oss or depreciation is attributable to any of the deductions referred to in the para ii(a) above; and c) by claiming the depreciation, if any, under section 32, other than clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed; iii. the loss and depreciation referred to in the para (ii)(b) above shall be deemed to have been given full effect to and no further deduction for such loss shall be allowed for any subsequent year. iv. the concessional rate shall 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 ....
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....such machinery or plant or part thereof does not exceed twenty per cent of the total value of the machinery or plant used by the assessee, then, the concessional rate shall apply on fulfilment of the specified conditions. 41.4. FA 2023 has provided that the assessee shall not be engaged in any business other than the business of manufacture or production of any article or thing and research in relation to, or distribution of, such article or thing manufactured or 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....
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....nd are taxable in the hands of the unit holder. However, in respect of the distributions made by the business trust to its unit holders which are shown as repayment of debt/capital reduction, it is actually an income of unit holder which does not suffer taxation either in the hands of business trust or in the hands of unit holder. 42.7 It may be noted that dual non-taxation of any distribution made 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-....
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....f section 10 of the Act to extend the exemption to notified Sovereign Wealth Funds/Pension Funds for income of the nature referred to in clause (xii) of sub-section (2) of section 56 of the Act as well. Applicability: These amendments are effective from 1st April, 2024 and accordingly apply to assessment year 2024-25 and subsequent assessment 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,....
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....f the Rules, both introduced vide Notification No. 70/2023 dated 28.8.2023, (GSR 630[E]). 43.6 Prior to the enactment of the Finance Act, 2021, the procedure for conducting assessment in search cases was laid out in section 153A of the Act and the time limit for their completion was laid out in section 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 Not....
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.... accountant in some cases. 45.2 In order to ensure that the inventory is valued in accordance with various provisions of law, vide FA 2023, section 142 of the Act relating to inquiry before assessment has been amended to ensure the following:- (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 th....
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....was conducted or requisition was made after the date specified by Finance Act, 2021. Further, the provisions of re-assessment proceedings were rationalized by amendments made vide the Finance Act, 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 commenc....
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....documents impounded under summons or survey, as the case may be, on or before the 31st day of March of a financial year, in consequence of, a search initiated or last of the authorization 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 Prin....
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....o 3 months from the end of the relevant assessment year. This gives a time of 6 months to the Assessing Officer for making assessment which, inter-alia, 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 ....
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....he Act and others relating to re-assessment proceedings were amended providing that search assessments were to be carried out under the 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 ....
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.... in the nature of appropriation/distribution of profit and hence not allowable as deduction. 48.3 In 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 ....
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.... the "relevant assessment year") and tax has been deducted at source 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. Ap....
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....onth in which the said 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 ret....
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.....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 "business trust", in re....
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....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 on the person responsible for deduction of income-tax on....
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....dated 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 at any time on or after 01....
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.... 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 deduction. 56.3. To remove this difficulty, vide FA 202....
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....s 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 section 206AB would lead to the rate of deduction of tax (under section 194BA)....
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....hase 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 Rs 7 lakh 5% above Rs 7 Lakh LRS for other purposes Nil upto Rs 7 lakh 5% above Rs 7 Lakh Nil upto Rs 7 lakh 20% above Rs 7 Lakh Purchase of Overseas tour program package 5% (without threshold) 5% till Rs 7 Lakh 20% thereafter Note: (i) TCS rate in column two shall continue to apply till 30th September, 2023. (ii) There shall be no TCS on ex....
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....g 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 part or whole of the refund against any sum remaining payable by such person, after giving him an intimation in writing regarding the proposed action. 61.3. There is an overlap between the two provisions. Therefore, the two sections have been integrated by substituting section 245 of the Act, so as to provide that where under any of the provisions of this Act, a refund is due to any person, the Assessing Officer or Commissioner or Principal Commissioner or Chief Commissioner or Principal Chief Commissioner, may, in lieu of payment of the r....
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....lement 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. 62.3. Clause (iv) of sub-section (9) provided that where the time-limit for amending any order or filing of rectification application as per sub-section (6B) expires on or after 01.02.2021, then the period from 01.02.2021 till the constitution of IBS shall be excluded from computing the time-limit, and after such exclusion, if the time-limit available for amending the order or for making application is less than 60 days, such period shall be extended to 60 days. Therefore, as per the provisions of clause (iv) of sub-section (9) of section 245D, the period between 01.02.2021....
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....ving 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 section 143 or section 144 of the Act, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed; (ii) an order of assessment, reassessment or recomputation under section 147 of the Act; (iii) an order being an intimation under sub-section (1) of section 200A of the Act; (iv) an order under section 201 of the Act; (v) an order being an intimation under sub-section (6A) of section 206C of the Act; (vi) an order under sub-section (1) of section 206CB of the Act; (vii) an order imposing a penalt....
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....tion 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 of the Act provides that for the purposes of sub-section (1), the Board may specify that the provisions of that sub-section shall not apply to any case or any class of cases. Accordingly, specified order under sub-section (6) of the said section has been issued vide F. No. 370142/29/2023-TPL dated 16.06.2023. 63.10. An Explanation has also been inserted in this section to define "status" to mean the category under which the assessee is assessed as "individual", "Hindu undivided family" and so on. 63.11. Section 2 of the Act has been amended by inserting a definition for Joint Commissioner (Appeals) and section 116 of the Act has also been a....
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....d 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 such orders passed under section 263 of the Act in sub-section (1) of the section 253 of the Act, an assessee aggrieved by any order under section 263 of the Act by a Principal Chief Commissioner and Chief Commissioner or an order under section 154 of the Act rectifying such order under section 263 of the Act cannot appeal against such orders to the Appellate Tribunal. Therefore, section 253 of the Act has been amended so that appeal against an order passed under section 263 of the Act by Principal Chief Commissioner or Chief Commissioner or an order passed under section 154 of the Act in respect of any such order shall be made to the Appellate Tribunal. 64.5. Sub-section (4) of the s....
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....ate 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 in such areas, section 269SS of the Act has been amended by raising the limit of Rs. 20,000 to Rs. 2 lakh for PACS and PCARDs. This will imply where a) a deposit is accepted by a PACS or a PCARD bank from its member; or b) a loan is taken from a PACS or a PCARD bank by its member; the penalty would be leviable only if the amount of a loan or deposit is Rs. 2 lakh or more. 65.4. In continuation of the above, the provisions of section 269T of the Act have also been amended and the limit of Rs. 20,000 has been increased to Rs. 2 lakh in the case of PACS and PCARDs. As a result, in a case where a deposit is paid by a PACS or a PCARD to its member or a loan is repaid to a PACS or a PCARD....
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....o 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 FA 2023, a new sub-clause has been inserted under clause (b) of sub-section (1) of section 271C and clause (b) of section 276B providing reference to sub-section (2) of section 194BA. Applicability: This amendment has been made effective from 1st July, 2023. 67. Penalty for furnishing inaccurate statement of financial transaction or reportable account 67.1. Section 285BA of the Act makes it mandatory for a person responsible for registering, or, maintaining books of account or other document containing a record of any specified financial transaction or any reportable account as may be prescribed, under any law for the time being in force, to furnish a statement in respect of such specified financial transaction or such rep....
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....wo 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 offences as a step towards improving ease of business. In this regard, the provisions of the Act have been examined. Section 276A of the Act provides for prosecution of liquidator for non-compliance with section 178 of the Act. Section also imposes personal liability on such liquidator for the same non-compliance. Further, with the operationalisation of the Insolvency and Bankruptcy Code, 2016 (IBC), waterfall mechanism for payment of dues is now in place for companies under liquidation and sub-section (6) of section 178 of the Act (the parent section) provides that this section shall not have effect when provisions of the IBC are contrary. Moreover, the liquidator is now working under the oversight of this specific law. 68.3. In view of this, section 276A of the Ac....
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....tion 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 time limit and leads to delay in such filing. 70.2. Hence, the provisions of section 46 of the PBPT Act have been amended to allow the filing of appeal against the order of the Adjudicating authority within a period of 45 days from the date when such order is received in the office of the Initiating Officer or the aggrieved person, as the case may be. Similar change has also been made with reference to the order passed by an authority under section 54A of the PBPT Act. 70.3. Further, prior to FA, 2023, under the provisions of section 2(18) of the PBPT Act, the 'High Court', for the purpose of filing appeal against the order of the Adjudicating authority, had been defined as the High Court within the jurisdiction of which either the aggrieved party ordinarily resides or carries on busine....