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Proposed income tax amendments in Budget 2012-13-Part-2


Amit Bajaj  
posted on 20 March 2012



Consideration in excess of F.M.V of shares to be treated as income from other source if consideration received is in excess of Face Value of shares: It is proposed to insert a new clause (viib) in the  aforesaid sub-section so as to provide that where a company, not being a company in which the public are substantially interested, receives, in any previous year,  from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be chargeable to income-tax under the head “Income  from other sources”. However, the said new clause  shall not apply where the consideration for issue of shares is received by a venture capital undertaking from a venture capital company or a venture capital fund.

 

It is further proposed that the company  receiving  the consideration for issue of shares shall be provided an opportunity to substantiate its claim  regarding  the fair market value of the shares.

 

This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.

 

Amendment in section 68- explanation for any sum credited as Share capital, share premium or share application money in company’s account not to be accepted unless such entry is also recorded in the books of the person contributing such sum:

 

The existing provisions of the aforesaid section 68 provide that where any sum is found credited in the  books of an assessee maintained for any previous  year,  and the assessee offers no explanation about the nature and source thereof or the explanation offered by  him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.

 

It is proposed to insert two new provisos to the aforesaid section. The first proviso seeks to provide that where the assessee is a company, (not being a company in which the public are substantially interested) and the sum so credited consists of share application money, share capital, share  premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory, unless—

 

(a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum  so credited; and

 

(b) such explanation in the opinion of Assessing Officer aforesaid has been found to be satisfactory.

 

The second proviso seeks to provide that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.

 

This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.

 

Amendment in section 80A: The existing provision of the Explanation to sub-section (6) of the aforesaid section 80A provides the definition  of  expression “market value” in relation to any goods or services sold or supplied and in relation to goods or services acquired.

 

It is proposed to amend the aforesaid Explanation so  as to provide that “market value” in relation to any goods or services sold, supplied or acquired, in case of a transaction being a domestic transaction referred to in section 92BA shall be the arm’s length price as defined in clause (ii) of section 92F.

 

This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years.

 

Deduction u/s 80C in respect of life insurance policy issued on or after 01-04-2012 not to be allowed if premium is in excess of 10% of the actual capital sum assured: The existing provisions of sub-section (3) of the aforesaid section 80C provide that sub-section (2) shall apply only to so much of any premium or other payment made on an insurance policy other than a contract for a deferred annuity as is not in excess of twenty per cent. of the actual capital sum assured.

 

It is proposed to amend the aforesaid section so as to restrict the deduction for insurance policies issued on or after 1st April, 2012 to any premium or other payment made on such insurance policy as is not in excess of ten per cent. of the actual capital sum assured.

 

It is further proposed to define the expression “actual  capital sum assured”.

 

Actual Capital sum, assured in relation to a life insurance policy has been defined to mean as the minimum amount assured under the policy on happening of the assured event at any time during the term of policy, not taking into account-

 

(i) the value of any premium agreed to be returned or,

 

(ii) any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person. 

 

These amendments will take effect from 1st April, 2013, and will, accordingly, apply in relation to the  assessment year 2013-2014 and subsequent assessment years.

 

Benefit of Deduction u/s 80D extended to preventive health check ups upto Rs. 5000 within the existing limit of Rs. 15000: The existing provisions of section 80D provide for deduction up to fifteen thousand rupees to an assessee, being an individual or a Hindu undivided family, who makes payment of the specified sum by any mode, other than cash, to effect or keep in force an insurance on–

 

(a) the health of the assessee or on the health of the wife or husband, or dependant children of the  assessee where the assessee is an individual;

 

(b) the health of any member of the family where the assessee is a Hindu undivided family.

 

Further, a deduction up to fifteen thousand rupees is also allowed to keep in force an insurance on the health of parents.

 

It is proposed to amend the aforesaid section so as to allow for a deduction in respect of any payment made  by an assessee on account of preventive health check-up of self, spouse, dependent children or parent during the  previous year up to a limit of five thousand rupees within the existing limits prescribed in the section.

 

It is also proposed that for the purposes of the  aforesaid deduction, payment shall be made by —

 

(i) any mode, including cash, in respect of any sum paid on account of preventive health check-up;

 

(ii) any mode other than cash in all other cases.

 

These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.

 

Age of senior citizen for the purpose of deduction u/s 80D and 80DDB reduced to 60 years: The existing provisions u/s 80D allow a higher deduction up to twenty thousand rupees and section 80DDB provides for higher deduction of Rs. 60000 in the case of senior citizen.

 

It is proposed to reduce the age for defining a senior citizen from sixty-five years to sixty years for the purposes of the said deductions.

 

These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.

 

Deduction u/s 80G for donation above 10000 to be allowed only if payment is made by cheque: It is proposed to insert a new sub-section (5D) in the aforesaid section so as to provide that no deduction shall be allowed under this section in respect of donation of any sum exceeding ten thousand rupees unless such sum is paid by any mode other than cash.

 

This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.

 

Deduction u/s 80GGA for any sum above 10000 to be allowed only if payment is made by cheque: It is proposed to insert a new sub-section (2A) in the aforesaid section so as to provide that no deduction shall be allowed under this section in respect of any sum exceeding ten thousand rupees unless such sum is paid by any mode other than cash.

 

This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.

 

Amendment in section 80IA:

 

Extension of time limit of deduction u/s 80IA from 31-03-2012 to 31-03-2013:

 

The  existing  provisions  contained  in  clause   (iv)  of sub-section (4) of the aforesaid section 80-IA  provide that, a deduction shall be allowed to an undertaking which,- (a) is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on 1st April, 1993 and ending on 31st March, 2012; (b) starts transmission or distribution by laying a  network of new transmission or distribution lines at any  time during the period beginning on 1st April, 1999 and ending on 31st March, 2012; (c) undertakes substantial renovation and modernization of the existing network of transmission or distribution lines at any time during the period beginning on 1st April, 2004 and ending on 31st March, 2012.

 

It is proposed to amend the aforesaid clause so as to extend the time limit from 31st March, 2012 to 31st March, 2013.

 

Substitution of definition of market value [as given in Explanation to section 80IA(8)]  with arm’s length price as defined u/s 92F:

 

The existing Explanation to sub-section (8) of the  aforesaid section 80-IA provides for the definition of “market value” in relation to goods or services.

 

It is proposed to substitute the aforesaid Explanation so as to include the arm’s length price as defined in clause (ii) of section 92F, where the transfer of such goods or services  is “specified domestic transaction” referred to in section  92BA within the definition of “market value” in relation to any goods or services.

 

Extension of section 92BA and 92F to section 80IA:

 

The existing provisions of sub-section (10) of the  aforesaid section provide that where it appears to the Assessing Officer, owing to the close connection between  the assessee carrying on the eligible business to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits  which might be expected to arise in such eligible business, the Assessing Officer shall, in computing the profits and gains of such eligible business for the  purposes of the deduction under this section, take the amount of profits as may be reasonably deemed to have been derived there from.

 

It is proposed to insert a new proviso to the aforesaid sub-section so as to provide that in case the arrangement mentioned in the sub-section involves a specified domestic transaction referred to in section 92BA, and the amount of profits from such transaction shall be determined having regard to arm’s length price as defined in clause (ii) of section 92F.

 

These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years.

 

Deduction from Interest from Saving accounts up to Rs. 10000-New section 80TTA: Under the proposed new section, a deduction up to an extent of ten thousand rupees in aggregate shall be allowed to an assessee, being an individual or a Hindu undivided family, in respect of any income by way of interest on deposits (not being time deposits) in a savings account with –

 

(i) a banking company to which the Banking Regulation Act,1949, applies (including any bank or banking institution referred to in section 51 of that Act);

 

(ii) a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or

 

(iii) a post office as defined in clause (k) of section (2) of the Indian Post Office Act, 1898.

 

This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.

 

Amendments in section 90: The existing provisions of the aforesaid section 90 confers power upon the Central Government to enter into  agreement with the Government of any specified territory outside India in addition to entering into agreement with foreign countries.

 

It is proposed to insert a new sub-section (2A) in the aforesaid section 90 so as to provide that the provisions of newly inserted Chapter X-A shall apply even if such provisions are not beneficial to the assessee.

 

It is further proposed to insert a new sub-section (4) in the aforesaid section so as to provide that an assessee, not being a resident, to whom an agreement  referred to in sub-section (1) applies, shall not be  entitled to claim any relief under such agreement unless a certificate, containing prescribed particulars, of his being a resident in any country outside India or specified territory outside India, as the case may be, is obtained by him from the Government of that country or specified territory.

 

These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years.

 

The existing sub-section (3) of the aforesaid section provides that any term used but not defined in this Act or in the agreement referred to in sub-section (1) shall, unless the context otherwise requires, and is not inconsistent with the provisions of this Act or the agreement, have the same meaning as assigned to it in the notification issued by the Central Government in the Official Gazette in this behalf.

 

It is proposed to insert an Explanation after Explanation 2 in the aforesaid section so as to provide that for the removal of doubts, it is hereby declared that where any term is used in any agreement entered into under sub-section (1) and not defined in the agreement or the Act, but is assigned a meaning to it in the notification issued under sub-section (3) and such notification issued thereunder being in force, then, the meaning assigned to such term shall be deemed to have effect from the date on which the said agreement came into force.

 

This amendment will take effect retrospectively from 1st October, 2009.

 

Amendments in section 90A: The existing provisions of the aforesaid section 90A provides that any specified association in India may enter into agreement with any specified association in a specified territory outside India and the Central  Government may, by notification in the Official Gazette,  make the necessary provisions for adopting and implementing such agreement for grant of double taxation relief, for avoidance of double taxation or exchange of information for the prevention of evasion of avoidance of income-tax or for recovery of income-tax.  It further provides that in relation to any assessee to whom the agreement referred to in the said section applies, the provisions of the Income-tax Act shall apply to the extent they are more beneficial to the assessee.  It also provides that any term used but not defined in the income-tax Act or the said agreement shall have the same meaning as assigned to it in the notification issued by the Central Government, unless the context otherwise requires and it is not  inconsistent with the provisions of the Income-tax Act or the said agreement.

 

It is proposed to insert a new sub-section (2A) in the aforesaid section 90A so as to provide that the provisions of newly inserted Chapter X-A shall apply even if such provisions are not beneficial to the assessee.

 

It is further proposed to insert a new sub-section (4) in the aforesaid section so as to provide that an assessee, not being a resident, to whom the agreement referred to in sub-section (1) applies, shall not be entitled to claim any relief under such agreement  unless  a  certificate,  containing  prescribed particulars, of his being a resident in any specified  territory outside India is obtained by him from the Government of that specified territory.

 

These amendments will take effect from 1st April,  2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years.

 

The existing sub-section (3) of the aforesaid section provides that any term used but not defined in the Income-tax Act or in the said agreement shall have the same meaning as assigned to it in the notification issued  by the Central Government, unless the context  otherwise requires and it is not inconsistent with the provisions of the Income-tax Act or the said agreement.

 

It is proposed to insert an Explanation in the aforesaid section so as to provide that for the removal of doubts, it is hereby declared that any term used in any agreement, where such agreement is entered into under sub-section  (1) and not defined under the agreement or the Act,  but  is assigned a meaning to it in the notification issued under sub-section (3) and the notification issued thereunder being in force, then, the meaning assigned  to  such term shall be deemed to have effect from the date on which the said agreement came into force.

 

This amendment will take effect retrospectively from 1st June, 2006.

 

Amendment in section 92:

 

Allowance for an expenditure or interest or allocation of any cost or expense or any income in relation to the specified domestic transaction to be computed having regard to the arm’s length price:

 

The existing provisions of the aforesaid section 92 provide that income arising from an international transaction shall be computed having regard to arm’s length price.

 

It is proposed to amend the aforesaid section to insert a new sub-section (2A) so as to provide that any  allowance for an expenditure or interest or allocation of any cost or expense or any income in relation to the specified domestic transaction shall be computed having regard to the arm’s length price.

 

Expression  “international transaction or specified domestic  transaction” redefined as “international transaction”:

 

It is further proposed to amend sub-sections (2) and (3) of the aforesaid section to substitute the expression  “international transaction or specified domestic  transaction” in place of “international transaction” so as to include therein the specified domestic transaction and apply the provisions of sub-sections (2) and (3) to specified domestic transactions.

 

These amendments will take effect from 1st April,  2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years.

 

Amendment in section 92B-international transaction and intangible property:

 

The existing provisions of the aforesaid section 92B  provide the definition of “international transaction” for the purposes of the said section and sections 92, 92C, 92D and 92E.

 

It is proposed to insert an Explanation to the aforesaid section so as to clarify the definition of the expressions  “international transaction” and “intangible property”.

 

This amendment will take effect retrospectively from 1st April, 2002 and will, accordingly, apply in relation to the  assessment year 2002-2003 and subsequent assessment years

 

New section 92BA legislated defining specified domestic transaction which are not international transactions to whom arm’s length price to be applied: 

 

The proposed new section 92BA provides for meaning  of “specified domestic transaction” with reference to which the income is computed under section 92 having regard to arm’s length price as follows:

 

“any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of sub-section (2) of section 40A; any transaction referred to in section 80A;  any transfer of goods or services referred to in sub-section (8) of section 80-IA; any business transacted between the assessee and other person as  referred to in sub-section (10) of section 80-IA; any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which provisions of sub-section (8) or sub-section (10) of section 80-IA are applicable; or any other transaction as may be prescribed, where the aggregate of such transactions entered into by the assessee in the previous year exceeds a sum of five crore rupees.”

 

This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years

 

Amendments in section 92C: The existing provisions of sub-section (2) of the aforesaid section 92C provide that where more than one price is determined by the most appropriate method, then, the arm’s length  price shall be taken to be arithmetical mean of such price. Further, the second proviso to the said sub-section provides that if the variation between the arm’s length  price  as determined and price at which the international transaction has actually been undertaken does not exceed such percentage as may be notified  by the Central Government in this behalf, the price at  which the international transaction has actually been undertaken shall be deemed to be the arm’s length price.

 

The provisions contained in the first proviso to sub-section (2) of section 92C, as it stood before its amendment by the Finance (No.2) Act, 2009 provides that where more than one price is determined by the most appropriate method, the arm’s length price shall be taken to be the arithmetical mean of such prices, or, at the option of the assessee, a price which may vary from the arithmetical mean by an amount not exceeding five per cent. of such arithmetical mean.

 

The existing provisions of second proviso to sub-section (2) of the aforesaid section 92C provides that the variation between the arm’s length price so determined and price at which the international transaction has actually been undertaken does not exceed such percentage of latter as may be notified by the Central Government in the Official  Gazette in this behalf, the price at which the international transaction has actually been undertaken  shall be deemed to be the arm’s length price.

 

It is proposed to amend the aforesaid second proviso so as to confer power upon the Central Government to notify the limit of percentage as not exceeding three per cent. of the latter in case of the variation between the arm’s length price so determined and price at which the  international transaction has actually been undertaken.

 

This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.

 

It is further proposed to insert an Explanation after the second proviso to sub-section (2) of the aforesaid section so as to clarify that the provisions of the second proviso shall also be applicable to any assessment or reassessment proceedings for computation of arm’s length price, if pending as on the 1st day of October, 2009 before an Assessing Officer.

 

This amendment will take effect retrospectively  from  1st October, 2009.

 

It is also proposed to insert new sub-section (2A) to the aforesaid section so as to provide that where the first proviso to sub-section (2) as it stood before its amendment by the Finance (No. 2) Act, 2009, is applicable in respect of an international transaction for an assessment year and the variation between the arithmetical mean referred to in said proviso and the price at which such transaction has actually been undertaken  exceeds five per cent. of the arithmetical mean, then,  the assessee shall not be entitled to exercise the option as referred to in the said proviso.

 

These amendments will take effect retrospectively from 1st April, 2002 and will, accordingly, apply in relation to the assessment year 2002-2003 and subsequent assessment years.

 

General Anti-Avoidance Rule: Clause 40 of the Bill seeks to insert a new Chapter X-A consisting of new sections 95, 96, 97, 98, 99, 100,  101  and 102 in the Income-tax Act relating to general anti-avoidance rule.

 

The provisions of the proposed new section 95 provide that an arrangement entered into by an assessee may be declared to be an impermissible avoidance arrangement and consequences in relation to tax of such a declaration can be determined.

 

The proposed section 96 provides the definition and conditions under which an  arrangement  can  be  declared  to  be an impermissible avoidance arrangement. The section also provides for circumstances under which an arrangement shall be presumed to be entered into or carried out for main purpose of obtaining tax benefit.

 

The proposed section 97 provides for circumstances  under which an arrangement shall be deemed to lack  commercial substance.

 

The proposed section 98 provides for method of determination of consequences in relation to tax of an arrangement after it is declared to be an impermissible  avoidance arrangement.   It provides for certain  illustrative but not exhaustive methods for determination of tax consequences.

 

The proposed section 99 provides that for  determining tax benefits for the purposes of the newly inserted Chapter X-A parties who are connected may be  treated as one and same person, accommodating party may be disregarded; any accommodating or other party to an arrangement may be treated as one and the same person; and an arrangement may be looked through.

 

The proposed section 100 provides that provisions of  newly inserted Chapter X-A can be applied in alternative to or in addition to any other basis of determination of tax liability.

 

The proposed section 101 provides for power to  prescribe guidelines for application of provisions of newly inserted Chapter X-A.

 

The proposed section 102 provides definition of certain terms relevant for newly inserted Chapter X-A.

 

These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years.

 

Amendment in section 111A-balance short term capital gains after exhausting exemption limit to be taxable @ 15% instead of 10%: Under the existing provisions contained in sub-section  (1) of the aforesaid section 111A, a special rate of tax of fifteen per cent. is provided on short-term capital gain arising from the transfer of a certain capital asset, being an equity share in a company or a unit of an equity oriented fund, where such transaction is chargeable to securities transaction tax.

 

The proviso to the aforesaid sub-section provides that in the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by such short-term capital gains is below the maximum  amount which is not chargeable to income-tax, then, such short-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such short-term capital gains shall be computed at the rate of ten per cent. It is proposed to amend the aforesaid proviso of the said sub-section so as to increase the tax on the balance of such short-term capital gains to fifteen per cent. instead of ten per cent.

 

This amendment will take effect retrospectively from 1st April, 2009 and will, accordingly, apply in relation to the assessment year 2009-2010 and subsequent assessment years.

 

Addition of income u/s 68, 69, 69A, 69B,69C or 69D to be taxed @ 30%-section 115BBE:

 

Sub-section (1) of the proposed new section 115BBE provides that where the total income of an assessee includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section  69D, the income-tax payable shall be the aggregate of- (a) the amount of income-tax calculated on income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, at the rate of thirty per cent.; and (b) the amount of income-tax with which the assesse would have been chargeable had his total income being reduced by the amount of income referred to in  clause (a) of the said sub-section.

 

Sub-section (2) of the aforesaid new section provides  that notwithstanding anything contained in the Act, no  deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provisions of this Act in computing his income referred to in clause (a) of sub-section (1).

 

This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.

 

Cascading effect of Dividend Distribution Tax (DDT) removed:

 

The existing provisions in sub-section (1A) of the  aforesaid section 115-O provide that the amount of dividends referred to in sub-section (1) shall be reduced by the amount of dividend, if any, received by the domestic  company during the financial year, if (a) such amount of dividend is received from its subsidiary; (b) the subsidiary has paid tax under this section on such dividend; and (c) the domestic company is not a subsidiary of any other company. The said sub-section also provides that the  same amount of dividend shall not be reduced more than once.

 

It is proposed to amend clause (i) of aforesaid sub-section (1A) so as to provide that in case domestic company receives during the year any dividend from any of its subsidiary and the subsidiary has paid dividend  distribution tax, which is payable, on such dividend, then the said amount, if it is distributed as dividend by the domestic company being the holding company in the same year, shall not be subject to dividend distribution tax under the aforesaid section. It is also proposed to omit sub-clause (c), so as to remove the condition that such  domestic company is not a subsidiary of any other company.

 

This amendment will take with effect from 1st July, 2012.

 

Persons having any asset outside India compulsorily required to file return in prescribed form:The existing provisions of sub-section (1) of the aforesaid section 139 provide that every person, if his total income or the total income of any other person in respect of which he is assessable under the Income-tax Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year in the prescribed form and verified in the prescribed manner and setting forth  such other particulars as may be prescribed.

 

It is proposed to amend the aforesaid sub-section by inserting a proviso after the third proviso so as to provide that a person, being a resident, who is not required to furnish a return under this sub-section and who during the previous year has any asset (including any financial interest in  any  entity) located outside India or signing authority in any account located outside India, shall furnish, on or before the due date, a return in respect of his income or loss for the previous year in such form and verified in such manner and setting forth such other particulars as may be prescribed.

 

Due date of filing return for persons required to file audit report u/s 92E entering into international transaction extended to 30th November: 

 

The existing provisions of clause (a) of Explanation  2 to sub-section (1) of the aforesaid section 139 provides the due date for filing return of income, in the case of company other than a company referred to in clause  (aa); or a person “other than a company” whose accounts are required to be audited under the Income-tax Act or under any other law for the time being in force; or a working partner of a firm whose accounts are required to be audited under the Income-tax Act or under any other law for time being in force shall be the 30th day of September of the assessment year.

 

Clause (aa) of the aforesaid Explanation provides that in the case of assessee which is a company, which is required to furnish a report from an accountant by persons entering into international transaction under section 92E,  the due date for filing return of income shall be the 30th day of November of the assessment year.

 

It is proposed to amend the aforesaid clauses (a) and (aa) so as to extend the due date for filing return of income in case of all the persons who are required to furnish a report referred to section 92E.

 

These amendments will take effect retrospectively from 1st April, 2012 and will, accordingly, apply in relation to the assessment year 2012-2013 and subsequent assessment years.

 

Amendment in section 140A: The existing provisions of sub-section (1) of the aforesaid section140A provide that the assessee is liable to pay tax after taking into account the amount specified in clause (i) to clause (v) together with the interest payable under any provision of the Act  before furnishing the return of income.

 

It is proposed to insert “or section 115JD” after “section115JAA” in clause (v) of sub-section (1);  sub-clause (e) of clause (i) of sub-section (1A) and clause (iv) of the Explanation to sub-section (1B) of the aforesaid section so as to provide that credit available to be set off in accordance with the provisions of section 115JD will also be taken into account under section 140A for the purposes of computing tax payable, and interest chargeable under sections 234A and 234B, before furnishing the return of income.

 

These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.

 

Processing of returns u/s 143(1) not necessary when notice u/s 143(2) is issued:

 

The existing provision of aforesaid section 143, inter alia, provides that where a return has been made in section 139 or in response to a notice under sub-section (1) of section 142, such return shall be processed in the manner provided therein.

 

It is proposed to insert a new sub-section (1D) in the aforesaid section so as to provide that notwithstanding anything contained in sub-section (1), processing of a return shall not be necessary, where a notice has  been  issued to the assessee under sub-section (2).

 

This amendment will take effect from 1st July, 2012.

 

It is further proposed to insert a new proviso to sub-section (3) of the aforesaid section so as to provide  that notwithstanding anything contained in the first and the second proviso, no effect shall be given by the Assessing Officer to the provisions of clause (23C) of section 10 in case of a trust or institution for a previous year, if the provisions of first proviso to clause (15) of section 2 become applicable in the case of such person in such previous year whether or not the approval granted to such trust or institution or notification issued in respect of such trust or institution has been withdrawn or rescinded.

 

This amendment will take effect retrospectively from 1st April, 2009 and will, accordingly, apply in relation to the assessment year 2009-2010 and subsequent assessment years.

 

Reassessment of income in relation to asset located outside India: The time limit for reassessment for escaped income is 6 assessment years, this time limit has been extended to 16 assessment years by amending section 149, where the income in relation top any asset (including financial interest in any entity) located outside India, chargeable to tax.

 

Similar amendment has been made in section 147 so as to provide that income shall be deemed to have escaped assessment where a person is found to have any asset (including financial interest in any entity) located outside India. 

 

These amendments will take effect from 01-07-2012.

 

It is further proposed to insert a new sub-clause (ba)  to the aforesaid Explanation, so as to include therein the case where the assessee has failed to furnish a report in respect of any international transaction which he was  required under section 92E for the purposes of deemed cases where income chargeable to tax has escaped assessment under the aforesaid  section.

 

Tax deduction u/s 194J on Director’s remuneration: The existing provisions in sub-section (1) of the aforesaid section194J provide that a person, not being a individual or a  Hindu undivided family, who is responsible for paying to a resident any sum by way of fees for professional services, fees for technical services royalty or sums referred to in clause (va) of section 28 shall deduct an  amount equal to ten per cent. of such sum as income tax.

 

It is proposed to amend the aforesaid sub-section (1) to insert a new clause (ba) so as to provide that the person referred to in sub-section (1) of the aforesaid section who is responsible for paying to a director of a company any sum by way of any remuneration or fees or commission, by whatever name called (other than those on which tax is deductible under section 192), shall deduct an amount equal to ten per cent. of such sum as income-tax in accordance with the provisions of the aforesaid section.

 

This amendment will take effect from 1st July 2012.

 

TDS on purchase of immovable property: It is proposed to insert a new section 194LAA to provide that any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land) shall deduct an amount equal to one per cent. of such sum as income-tax at the time of credit of such sum to the account of transferor or at the time of payment of such sum in cash or by issue of cheque or by draft or by any other mode, whichever is earlier.

 

It is further proposed to provide that no deduction shall be made where the consideration paid or payable for the transfer of such property is less than fifty lakh rupees in case such property is situated in a specified area or is less than twenty lakh rupees in case such property is situated in any area other than the specified area.

 

It is also proposed to provide that if the consideration paid or payable for the transfer of such property is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of transfer of such  property, the value so adopted or assessed or assessable shall, for the purposes of the aforesaid sub-section (1) or sub-section (2) be deemed to be the consideration paid or payable for the transfer of such property.

 

It is also proposed to provide that where any document required to be registered under clause (a) to clause (e) of sub-section (1) or sub-section (1A) of section 17 of the Indian Registration Act, 1908 purports to transfer, assign,  limit or extinguish the right, title or interest of any  person  to or in any immovable property and in respect of which tax is required to be deducted under the aforesaid sub-section (1), no registering officer appointed under that Act shall register any such document unless the transferee furnishes the proof of deduction of income-tax in accordance with the provisions of this section and payment of sum so deducted to the credit of the Central Government in the prescribed form.

 

It is also proposed to provide that the provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.

 

It is also proposed to provide an Explanation  defining the expressions “agricultural land”, “immovable property” and “specified area”.

 

This amendment will take effect from 1st October, 2012.

 

Deductor not to be treated assessee in default if requisite tax paid by deductee and other conditions are fulfilled: It is proposed to insert a new proviso in sub-section (1) of the aforesaid section 201 so as to provide that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident ––

 

(i) has furnished his return of income under section 139;

(ii) has taken into account such sum for computing income in such return of income; and

(iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect  from an accountant in such form as may be prescribed.

 

It is further proposed to insert a new proviso to sub-section (1A) of the aforesaid section so as to provide that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso of sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident.

 

This amendment will take effect from 1st July, 2012.

 

The existing provisions of sub-section (3) of the aforesaid section 201 provide that no order shall be made under sub-section (1) of the  said section deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of two years from the end of the financial year in a case in which the statement referred to in section 200 has been filed, and in any other case four years from the end of the financial year in which payment is made or credit is given.

 

It is proposed to amend clause (ii) of the aforesaid sub-section so as to extend the period of four years to six years.

 

This amendment will take effect retrospectively from 1st April, 2010.

 

It is also proposed to insert an Explanation after sub-section (4)of the aforesaid section so as to define the expression “accountant”.

 

This amendment will take effect from 1st July, 2012.

 

TCS on cash sale of bullion and jewellery and on sale of certain materials: In order to reduce the quantum of cash transaction in bullion and jewellery sector and for curbing the flow of unaccounted money in the trading system of bullion and jewellery, it is proposed to provide that the seller of bullion and jewellery shall collect tax @ 1% of the sale consideration from every buyer of bullion and jewellery if sale consideration exceeds two lakh rupees and the sale is in cash. This would be irrespective of the fact whether buyer is a manufacturer, trader or purchase is for personal use.

 

Similarly TCS @1% has been imposed on coal, Lignite and iron ore. However no TCS will be collected if the said materials are purchased for personal consumption or if the buyer declares that these minerals are to be utilized for the purpose of manufacturing, processing or producing articles or things.

 

These amendments will take effect from 01-07-2012.

 

No Advance Tax for senior citizens having income other than business income: It is proposed to amend  section 207 so as to insert a new sub-section (2) to provide that the provisions of the aforesaid section shall not apply to an individual resident in India who does not have any income chargeable under the head “Profits and gains of business or profession” and is of the age of sixty years or more at any time during the previous year.

 

This amendment will take effect retrospectively  from  1st April, 2012.

 

Advance tax is to be paid if requisite TDS is not deducted by deductor inspite of the fact that the said sum was liable to suffer TDS:  It is proposed to amend clause (d) of sub-section (1) of the aforesaid section 209 so as to insert a proviso to provide that for computing liability for advance tax, income-tax calculated under clause (a) or clause (b) or clause (c) shall not, in each case, be reduced by the aforesaid amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income, if the person responsible for deducting tax has paid or credited such income without deduction of tax or it has been received or debited by person responsible for collecting tax without collection of such tax.

 

This amendment will take effect retrospectively  from  1st April, 2012.


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