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Taxation of royalties and technical service fees: non resident receipts taxed as business profits if effectively connected to a permanent establishment.
Clause 59 charges royalties and fees for technical services received by non residents as Profits and gains of business or profession when receipts from the Government or an Indian concern arise under an agreement, the assessee carries on business in India through a permanent establishment or fixed place of profession, and the rights, property or contract are effectively connected with that presence; deductions are limited to expenses wholly and exclusively for the Indian establishment and books of account and audit are required.
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Presumptive taxation for professionals deems a portion of gross receipts as taxable income, simplifying compliance but restricting deductions.
Clause 58 institutes a presumptive taxation scheme for specified resident professionals, prescribing turnover-based eligibility and deeming taxable income at a fixed proportion of gross receipts or actual profit, whichever is higher. Eligible taxpayers are generally relieved from routine accounting and audit obligations, but must maintain books and undergo audit if they claim profits lower than the presumptive amount. Deductions or losses are not permitted against the presumptive income, and depreciation is to be treated as if claimed and allowed. Certain entity types are excluded from the scheme.
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Presumptive taxation scheme differentiates rates by transaction mode and imposes a five-year lock-in to simplify compliance.
Clause 58 permits computation of presumptive income for eligible small businesses and professions with turnover-based eligibility, distinguishes presumptive rates by mode of receipt, allows actual profit to be claimed if higher, mandates books and audit where actual profits are lower and total income exceeds the basic exemption, and imposes a five-year lock-in for continued application of the scheme.
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Revenue recognition requires percentage-of-completion for construction and service contracts, with completion or straight-line service options.
Clause 57 mandates the percentage of completion method for construction and service contracts, with a project completion alternative for short-term services and a straight-line option for recurring service arrangements. Contract revenue includes retention money, and contract costs must not be reduced by incidental income such as interest, dividends, or capital gains. The provision references notified accounting standards and aims to align revenue recognition with international practices while imposing compliance and disclosure obligations.
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Taxation of interest income: interest on bad or doubtful debts is taxable when credited or received, whichever is earlier.
Clause 56 makes interest income on bad or doubtful debts of specified financial institutions taxable in the year it is credited to the profit and loss account or actually received, whichever is earlier, defines specified institutions to include public financial institutions, scheduled and certain cooperative banks, State Financial Corporations, State Industrial Investment Corporations and notified NBFCs, and links the classification of bad or doubtful debts to categories prescribed under Reserve Bank of India guidelines.
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Insurance business taxation uses a new dedicated schedule, changing computation and overriding conflicting provisions sector.
A distinct, self contained computation regime requires insurers, including mutual insurance companies and co operative societies, to compute profits and gains using a designated industry specific schedule; this regime expressly overrides general provisions to provide a uniform, tailored method that aligns tax accounting with insurance operations and streamlines compliance and administration.
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Deductions for trade associations enable relief for member contribution shortfalls under a new statutory provision and prioritize loss carryforward.
Clause 50 permits a special deduction for specified trade, professional or similar associations when member-derived income is less than expenditure for members' common interests. The deduction is capped at fifty percent of total income before deduction and is available only after applying carry forward and set off provisions. Income includes subscriptions but excludes specified service remuneration; expenditure excludes capital and other deductible expenses. Eligibility is narrowed by exclusions in Schedule III and by restrictions on income distribution to members, and substantiation through accurate records is required.
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Full value of consideration deemed as stamp duty value where declared consideration is lower, affecting business income taxation.
Clause 53 deems the stamp duty value to be the full value of consideration for transfers of land or buildings when stamp duty value exceeds declared consideration, subject to exceptions where the stamp duty value falls within a prescribed margin above consideration, allowance for stamp duty value as of the agreement date when agreement and registration dates differ, conditions tied to receipt of consideration through prescribed banking or electronic modes before the agreement date, and reference to statutory value-determination rules.
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Cost of acquisition rules align transferee basis with transferor cost, including improvements and transfer expenditures to ensure tax consistency.
Special provisions set the transferee's cost of acquisition equal to the transferor's cost, include improvements and expenditures wholly and exclusively incurred in connection with the transfer, and require recordkeeping; Clause 40 expressly excludes assets under section 67(6), while Section 43C similarly treats improvements and transfer expenditures with an explicit reference to gift-tax and a historical temporal application.
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Actual payment requirement for tax deductions: only payments made qualify, with specific rules protecting small suppliers.
Specified deductions are allowable only in the year when actual payment is made, irrespective of accounting method or liability year. Deductible items include taxes, employer welfare fund contributions, leave payments, interest to defined financial entities, payments for asset use, and delayed payments to micro and small enterprises. Payments made after the year-end but before return filing remain deductible; conversions of interest into loans are not treated as payment. Employer contributions are eligible while employee receipts are excluded, and a deduction already claimed in the liability year cannot be claimed again when paid.
Act Rules Bills
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Taxation of foreign exchange fluctuation standardizes treatment of gains and losses under updated income computation standards.
Taxation of foreign exchange fluctuation treats gains or losses from changes in foreign exchange rates on foreign currency transactions as taxable income or loss, to be computed under the income computation and disclosure standards referenced in clause 276(2), and applies to monetary and non monetary items, translation of foreign operations' financial statements, forward exchange contracts, and foreign currency translation reserves.
Act Rules Bills
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Foreign exchange fluctuation capitalisation changes asset cost computation, requiring exchange rate variations to be added to or deducted from acquisition cost.
Clause 42 requires capitalization of foreign exchange fluctuations into the cost of assets: an overriding rule mandates accounting for exchange rate variations; the variation is computed as the amount paid in domestic currency less the liability at acquisition; that variation is added to or deducted from the asset's actual cost; where contracts with authorised dealers exist, the contract exchange rate governs measurement, and foreign exchange law is incorporated for definitions and consistency.
Act Rules Bills
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Amortisation of expenditure allows staged tax deduction for mineral prospecting expenses with carry-forward and anti-double-deduction safeguards.
Clause 51 establishes a regime permitting amortisation of qualifying prospecting and mine-development expenses for Indian companies and resident individuals by allowing an annual deduction of one-tenth of the specified expenditure over ten tax years from the year of commercial production. It limits eligible expenditure to amounts incurred in the year of commercial production and the four preceding years, excludes acquisition costs of mineral sites and depreciable capital assets, bars double claims under other provisions, permits carry-forward within the ten-year ceiling, and requires audited accounts for non-corporate claimants.
Act Rules Bills
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Deductions for oil exploration clarify eligibility, government agreements and transfer treatment under new tax clause.
Clause 54 establishes a tax framework for prospecting for mineral oils by permitting deductions for pre commercial production expenses and depletion of mineral oil, defining specified oil exploration business and including petroleum and natural gas as mineral oil, and requiring agreements with the Central Government to be laid before Parliament. It prescribes deduction interplay with other allowances and specifies tax treatment on business transfers, cessation during transfer year, and applicability on amalgamation or demerger.
Act Rules Bills
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Written down value reforms standardize WDV computation and clarify depreciation and block asset adjustments under the new tax provision.
Clause 41 prescribes a standardized method for computing the written down value of depreciable assets: assets acquired in the tax year are valued at actual cost; earlier-acquired assets at cost less depreciation allowed; blocks of assets by the formula [(A-D)+B-C]-E; carried-forward depreciation is deemed allowed; adjustments are required for years where total income was not computed; mixed agriculture-business income is treated as business for depreciation; and the term "sold" is referenced to the Act for consistency.
Act Rules Bills
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Computation of actual cost updated to exclude subsidies and non-banking payments, tightening asset valuation for tax purposes.
Clause 39 redefines actual cost for depreciation by reducing asset cost for amounts met by others, GST credits, additional duties and subsidies; excluding certain non-banking payments; providing a formula for indirect subsidy apportionment; specifying treatment in amalgamation, demerger and asset conversion; empowering assessing officers with supervisory approval to determine cost in avoidance cases; and defining special acquisition modes for transfer clarity.
Act Rules Bills
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Modernizing business income definitions clarifies taxable profit scope and aligns terms with contemporary financial instruments.
Clause 66 revises key definitions for computing income under Profits and Gains of Business or Profession, broadening terms like agreement, specifying classifications for banking and housing finance companies, updating the scope of plant, refining fees for technical services, and narrowing the definition of speculative transactions with exceptions for bona fide hedging and specified derivatives; these updates modernise earlier Section 43 concepts to align with electronic payment modes, contemporary derivatives, and non cash considerations to reduce ambiguity in tax assessments.
Act Rules Bills
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Deemed business income: expanded scope taxes benefits from remission, asset disposals and successors' receipts under new Clause 38.
Clause 38 deems specified sums as profits and gains of business or profession where deductions or allowances were earlier claimed, covering cessation or remission of trading liabilities, excess proceeds on disposal of assets over written down value, sale of research capital assets, recovery of bad debts, and withdrawals from special reserves; it conditions taxability on prior allowance, permits loss set off for ceased businesses, defines key terms and extends liability to successors and post cessation situations.
Act Rules Bills
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Non-deductibility of excessive payments: reinforces banking-mode payment rules and limits unreasonable related-party deductions.
Clause 36 empowers disallowance of deductions for payments deemed excessive or unreasonable to specified persons by reference to fair market value and business need, treats related disallowed deductions as income where previously claimed, and conditions deductibility on payments above prescribed thresholds being made through specified banking or online channels while providing limited exceptions for business expediency.

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AMENDMENTS IN THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975

3 February, 2020

Contents
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Budget 2020-21 + FINANCE BILL, 2020

AMENDMENTS

A.

Tariff rate changes for Basic Customs Duty [to be effective from 02.02.2020] * [Clause 115 (a) of the Finance Bill, 2020]

Rate of Duty

S.No.

Heading, sub-heading, tariff item

Commodity

From

To

 

 

Food processing

 

 

1.

0802 32 00

Walnuts, shelled

30%

100%

 

 

Chemicals

 

 

2.

3824 99 00

Other Chemical products and preparations of the chemical or allied industries, not elsewhere specified

10%

17.5%

 

 

Footwear

 

 

3.

6401, 6402,

6403, 6404, 6405

Footwear

25%

35%

4.

6406

Parts of footwear

15%

20%

 

 

Household Items

 

 

5.

6911 10, 6911 90 20, 6911 90 90

Tableware, kitchenware, water filters (of a capacity not exceeding 40 litres) and other household articles, of porcelain of china.

10%

20%

6.

6912 00 10, 6912 00 20, 6912 00 40, 6912 00 90

Ceramic tableware, kitchen-ware, clay articles and other household articles

10%

20%

7.

7013

Glassware of a kind used for table, kitchen, toilet, office, indoor decoration or Similar purposes (other than that of heading 7010 or 7018)

10%

20%

8.

7323

Table kitchen or other household articles and parts thereof, of iron or steel, iron or steel wool; pot scourers and scouring or polishing pads, gloves and the like, of iron or steel, including pressure cookers pans utensils, misc articles such as iron & steel wool, polishing pads, gloves etc.

10%

20%

9.

7418 10

Table, kitchen or other household articles and parts thereof, of copper; pot scourers and scouring or polishing pads, gloves and the like, of copper.

10%

20%

10.

7615 10

Table, kitchen or other household articles and parts thereof, of aluminum; pot scourer and scouring or polishing pads, gloves and the like, of aluminum.

10%

20%

11.

8301

Padlocks and locks (key, combination or electrically operated) of base metal; Clasps and frames with clasps, incorporating locks of base metals; keys for any of the foregoing articles, of base metals (Other than lock of a kind used for automobiles.)

10%

20%

12.

9603

Brooms, brushes, hand operated mechanical floor sweepers, not motorized, mops and feather dusters; prepared knots and tufts for broom or brush making; paint pads and rollers; Squeegees (other than roller squeegees).

10%

20%

13.

9604 00 00

Hand sieves and hand riddles.

10%

20%

14.

9615

Combs, hair-slides and the like, hairpins curling pins, curling grips, hair curlers and the like other than those of heading 8516 and parts thereof.

10%

20%

15.

9617

Vacuum flasks and other vacuum vessels, complete with cases; parts thereof other than glass inners.

10%

20%

16.

8414 51 10

Table Fans

10%

20%

17.

8414 51 20

Ceiling Fans

10%

20%

18.

8414 51 30

Pedestal Fans

10%

20%

19.

8414 59 20

Blowers, Portable

10%

20%

20.

8509 40 10

Food Grinders

10%

20%

21.

8509 40 90

Other grinders and Mixer

10%

20%

22.

8509 80 00

Other Appliances

10%

20%

23.

8510 10 00

Shavers

10%

20%

24.

8510 20 00

Hair Clippers

10%

20%

25.

8510 30 00

Hair-removing appliances

10%

20%

26.

8516 10 00

Water heaters and immersion heaters

10%

20%

27.

8516 21 00

Storage heating radiators

10%

20%

28.

8516 29 00

Other electrical space heating apparatus

10%

20%

29.

8516 31 00

Hair Dryers

10%

20%

30.

8516 32 00

Other hair dressing apparatus

10%

20%

31.

8516 33 00

Hand Drying apparatus

10%

20%

32.

8516 40 00

Electric smoothing irons

10%

20%

33.

8516 60 00

Other ovens, cookers, cooking plates, boiling rings, grillers and roasters

10%

20%

34.

8516 71 00

Coffee and Tea Makers

10%

20%

35.

8516 72 00

Toasters

10%

20%

36.

8516 79 10

Electro-thermic fluid heaters

10%

20%

37.

8516 79 20

Electrical or electronic devices for repelling insects

10%

20%

38.

8516 79 90

Other electro-thermic appliances used for domestic purposes

10%

20%

39.

8516 80 00

Electric heating resistors

10%

20%

 

 

Precious Metals

 

 

40.

7118

Coin

10%

20%

 

 

Machinery

 

 

41.

8414 51 40

Railway Carriage fans

7.5%

10%

42.

8414 51 90

Other fans with a self-contained electric motor not exceeding 125W

7.5%

20%

43.

8414 59 10

Air Circulator

7.5%

10%

44.

8414 59 30

Industrial fans blowers and similar blowers

7.5%

10%

45.

8414 59 9

Other industrial fans

7.5%

10%

46.

8414 30 00, 8414 80 11

Compressor of Refrigerator and Air conditioner

10%

12.5%

47.

8419 89 10

Pressure vessels

7.5%

10%

48.

8418 10 10

Commercial type combined refrigerator freezers, fitted separate external doors

7.5%

15%

49.

8418 30 10

Commercial freezer of chest type, not exceeding 800 litre capacity

7.5%

15%

50.

8418 30 90

Other chest type freezers

10%

15%

51.

8418 40 10

Electrical freezers of upright type, not exceeding 800 litre capacity

7.5%

15%

52.

8418 40 90

Other freezers of upright type, not exceeding 800 litre capacity

7.5%

15%

53.

8418 50 00

Refrigerating or freezing display counters, cabinets, Show-cases and the like

7.5%

15%

54.

8418 61 00

Heat pumps other than air conditioning machines

7.5%

15%

55.

8418 69 10

Ice making machinery

7.5%

15%

56.

8418 69 20

Water cooler

10%

15%

57.

8418 69 30

Vending machine, other than automatic

10%

15%

58.

8418 69 40

Refrigerating equipment/devices used in leather industry

7.5%

15%

59.

8418 69 50

Refrigerated farm tanks, industrial ice cream freezer

7.5%

15%

60.

8418 69 90

Others (like freezers of capacity 800 litres and more etc.]

7.5%

15%

61.

8515 (except 8515 90 00)

Welding and Plasma cutting machines

7.5%

15%

 

 

Other Electronic goods

 

 

62.

8504 40 (except 8404 40 21)

Static Converters

15%

20%

63.

8504 40 21

Dip bridge rectifier

10%

20%

64.

8517 70 10

Populated, loaded or stuffed printed circuit boards

10%

20%

 

 

Automobile and automobile parts

 

 

65.

8421 39 20, 8421 39 90

Catalytic Convertor

10%

15%

 

 

Furniture Goods

 

 

66.

9401

Seats and parts of seats (other than aircraft seats and their parts)

20%

25%

67.

9403

Other Furniture and parts thereof

20%

25%

68.

9404

Mattress supports: Articles of bedding and similar furnishing

20%

25%

69.

9405

Lamps and lighting fittings including searchlights and spotlights and pads thereof; Illuminated signs, illuminated name plates and the like, having a permanently fixed light source, and parts thereof (except solar lantern and solar lamps).

20%

25%

 

 

Toys

 

 

70.

9503

Tricycles, scooters, pedal-cars and similar wheeled-toys; dolls' carriages; dolls; other toys; reduced-Size (“scale”) models and similar recreational models, working or not; puzzles of all kinds

20%

60%

 

 

Stationary items

 

 

71.

8304 00 00

Filing, cabinets. card-index cabinets, paper-trays, paper rests, pen trays, office-stamp stands and similar office or desk equipment of base metal, Other than office furniture of heading 9403

10%

20%

72.

8305

Fittings for loose-leaf binders or files, letter clips, letter corners, paper clips, indexing tags and similar office articles, of base metal; staples in strips (for example, for offices, upholstery, packaging), of base metal

10%

20%

73.

8310

Sign-plates, name-plates, address-plates and similar plates, numbers, letters and other symbols, of base metal, excluding those of heading 9405

10%

20%

 

 

Miscellaneous

 

 

74.

6702

Artificial Flowers

10%

20%

75.

7018 10 20

Glass Beads

10%

20%

76.

8306

Bells, gongs, statuettes, trophies and like, non-electric of base metal; statuettes and other ornaments of base metal; photograph, picture or similar frames, of base metal; mirrors of base metal.

10%

20%

B.

New entries added to the First Schedule [to be effective from 02.02.2020] * [Clause 115(b) of the Finance Bill, 2020]

S. No

Tariff Item

Description

Tariff Rate

Effective rate

1.

8414 51 50

Wall fans

20%

20%

2.

8529 90 30

Open cell for television set

15%

0%

3.

8541 40 11

Solar cells, not assembled

20%

0%

4.

8541 40 12

Solar cells, assembled in modules or made up in panels

20%

0%

*Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

 


Full Text:

Budget 2020-21 + FINANCE BILL, 2020

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Acts Income Tax