Income-tax (22nd Amendment) Rules, 2020

Last updated: 03 October 2020

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The Central Board of Direct Taxes has issued the Income-tax (22nd Amendment) Rules, 2020. These rules amend the principal Income-tax Rules, 1962, specifically focusing on depreciation allowances. For certain domestic companies, individuals, Hindu undivided families, and co-operative societies that have opted for specific tax provisions, the depreciation allowance on assets entitled to more than 40% will be restricted to 40% of the written down value.

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION

New Delhi, the 1st October, 2020

INCOME-TAX

G.S.R. 610(E).—In exercise of the powers conferred by section 44AB, section 92E, clause (iv) of sub-section (2) of section 115BAA, sub-clause (iii) of clause (c) of sub-section (2) of section 115BAB, clause (iii) of sub-section (2), proviso to sub-section (3) and sub-section (5) of section 115BAC, clause (iii) of sub-section (2), proviso to sub-section (3) and sub-section (5) of section 115BAD read with section 295 the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely: -

1. Short title and commencement.—(1) These rules may be called the Income-tax (22 nd Amendment) Rules, 2020.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereafter referred to as the principal rules), -

(a) in rule 5, in sub-rule (1), for the proviso, the following proviso shall be substituted, namely: - “Provided that the allowance under clause (ii) of sub-section (1) of section 32 in respect of depreciation of any block of assets entitled to more than forty per cent. shall be restricted to forty per cent. on the written down value of such block of assets in case of -

(i) a domestic company which has exercised option under sub-section (4) of section 115BA, or under sub-section (5) of section 115BAA, or under sub-section (7) of section 115BAB; or

(ii) an individual or Hindu undivided family which has exercised option under sub-section (5) of section 115BAC; or

(iii) a co-operative society resident in India which has exercised option under sub-section (5) of section 115BAD:

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FAQ :

These are new rules introduced by the Central Board of Direct Taxes to further amend the Income-tax Rules, 1962, concerning income tax regulations.

The Income-tax (22nd Amendment) Rules, 2020, come into force on the date of their publication in the Official Gazette.

The rules introduce a restriction on depreciation allowance. For specific entities that have opted for certain tax provisions, depreciation on assets entitled to more than 40% will be limited to 40% of the written down value.

The restriction applies to domestic companies that have opted under sections 115BA or 115BAA, individuals or Hindu undivided families opting under section 115BAC, and resident co-operative societies opting under section 115BAD.

The allowance under clause (ii) of sub-section (1) of section 32 in respect of depreciation of any block of assets entitled to more than forty per cent. shall be restricted to forty per cent. on the written down value of such block of assets.