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BILL No. 12 OF 2017

THE FINANCE BILL, 2017

(AS INTRODUCED IN LOK SABHA)

THE FINANCE BILL, 2017_________

ARRANGEMENT OF CLAUSES__________

CHAPTER I

PRELIMINARY

CLAUSES

1. Short title and commencement.

CHAPTER II

RATES OF INCOME-TAX

2. Income-tax.

CHAPTER III

DIRECT TAXES

Income-tax

3. Amendment of section 2.4. Amendment of section 9.5. Amendment of section 9A.6. Amendment of section 10.7. Amendment of section 10AA.8. Amendment of section 11.9. Amendment of section 12A.

10. Amendment of section 12AA.11. Amendment of section 13A.12. Amendment of section 23.13. Amendment of section 35AD.14. Amendment of section 36.15. Amendment of section 40A.16. Amendment of section 43.17. Amendment of section 43B.18. Amendment of section 43D.19. Amendment of section 44AA.20. Amendment of section 44AB.21. Amendment of section 44AD.22. Amendment of section 45.23. Amendment of section 47.24. Amendment of section 48.25. Amendment of section 49.26. Insertion of new section 50CA.27. Amendment of section 54EC.28. Amendment of section 55.

29. Amendment of section 56.30. Amendment of section 58.31. Amendment of section 71.32. Substitution of new section for section 79.33. Amendment of section 80CCD.34. Amendment of section 80CCG.35. Amendment of section 80G.36. Amendment of section 80-IAC.37. Amendment of section 80-IBA.38. Amendment of section 87A.39. Amendment of section 90.40. Amendment of section 90A.41. Amendment of section 92BA.42. Insertion of new section 92CE.43. Insertion of new section 94B.44. Amendment of section 115BBDA.45. Amendment of section 115BBG.46. Amendment of section 115JAA.47. Amendment of section 115JB.48. Amendment of section 115JD.49. Amendment of section 119.50. Amendment of section 132.51. Amendment of section 132A.52. Amendment of section 133.53. Amendment of section 133A.54. Amendment of section 133C.55. Amendment of section 139.56. Amendment of section 140A.57. Amendment of section 143.58. Amendment of section 153.59. Amendment of section 153A.60. Amendment of section 153B.61. Amendment of section 153C.62. Amendment of section 155.63. Insertion of new section 194-IB.64. Insertion of new section 194-IC.65. Amendment of section 194J.66. Amendment of section 194LA.67. Amendment of section 194LC.68. Amendment of section 194LD69. Amendment of section 197A.70. Amendment of section 204.71. Amendment of section 206C.72. Insertion of new section 206CC.73. Amendment of section 211.74. Amendment of section 234C.75. Insertion of new section 234F.76. Insertion of new section 241A.77. Amendment of section 244A.

(ii)

CLAUSES

78. Amendment of section 245A.79. Amendment of section 245N.

80. Amendment of section 245-O.81. Amendment of section 245Q.

82. Amendment of section 253.83. Insertion of section 269ST.84. Insertion of section 271DA.

85. Amendment of section 271F.86. Insertion of new section 271J.

87. Amendment of section 273B.

CHAPTER IV

INDIRECT TAXES

Customs

88. Amendment of section 2.89. Amendment of section 7.

90. Amendment of section 17.91. Amendment of section 27.

92. Amendment of section 28E.93. Substitution of new section for section 28F.94. Omission of section 28G.

95. Amendment of section 28H.96. Amendment of section 28-I.

97. Insertion of new section 30A.98. Insertion of new section 41A.99. Amendment of section 46.

100. Amendment of section 47.101. Substitution of new section for section 49.

102. Amendment of section 69.103. Omission of section 82.

104. Amendment of section 84.105. Amendment of section 127B.106. Amendment of section 127C.

107. Amendment of section 157.

Customs Tariff

108. Amendment of section 9.109. Amendment of First Schedule.

110. Amendment of Second Schedule.

Excise

111. Amendment of section 23A.112. Omission of section 23B.

113. Amendment of section 23C.114. Amendment of section 23D.

(iii)

CLAUSES

(iv)

115. Insertion of new section 23-I.

116. Amendment of section 32E.

117. Amendment of section 32F.

Central Excise Tariff

118. Amendment of First Schedule.

119. Retrospective amendment of certain entries in First Schedule.

CHAPTER V

SERVICE TAX

120. Amendment of section 65B.

121. Amendment of section 66D.

122. Amendment of section 96A.

123. Omission of section 96B.

124. Amendment of section 96C.

125. Amendment of section 96D.

126. Insertion of new section 96HA.

127. Insertion of new sections 104 and 105.

128. Amendment of rule 2A of Service Tax (Determination of Value) Rules, 2006, retrospectively.

CHAPTER VI

MISCELLANEOUS

PART I

AMENDMENTS TO THE INDIAN TRUSTS ACT, 1882

129. Commencement of this Part.

130. Amendment of section 20 of Act 2 of 1882.

PART II

AMENDMENTS TO THE INDIAN POST OFFICE ACT, 1898



PART III

AMENDMENTS TO THE RESERVE BANK OF INDIA ACT, 1934



PART IV

AMENDMENTS TO THE REPRESENTATION OF THE PEOPLE ACT, 1951


136. Amendment of section 29C of Act 43 of 1951.

CLAUSES

PART VAMENDMENTS TO THE OIL INDUSTRY (DEVELOPMENT) ACT, 1974

137. Commencement of this Part.138. Amendment of section 18 of Act 47 of 1974.

PART VIREPEAL OF THE RESEARCH AND DEVELOPMENT CESS ACT, 1986

139. Commencement of this Part.140. Repeal of Act 32 of 1986.141. Savings.142. Collection and payment of arrears of duties.

PART VIIAMENDMENTS TO THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

143. Commencement of this Part.144. Amendment of Act 15 of 1992.145. Amendment of Chapter VIB.

PART VIIIAMENDMENT TO THE FINANCE ACT, 2005

146. Amendment of Act 18 of 2005.

PART IXAMENDMENTS TO THE PAYMENT AND SETTLEMENT SYSTEMS ACT, 2007

147. Commencement of this Part.148. Amendment of Act 51 of 2007.149. Amendment of section 38.

PART XAMENDMENTS TO THE FINANCE ACT, 2016

150. Amendment of Act 28 of 2016.

THE FIRST SCHEDULE.THE SECOND SCHEDULE.THE THIRD SCHEDULE.THE FOURTH SCHEDULE.THE FIFTH SCHEDULE.THE SIXTH SCHEDULE.THE SEVENTH SCHEDULE.

(v)

CLAUSES

1

Income-tax.

AS INTRODUCED IN LOK SABHAON 1ST FEBRUARY, 2017

Bill No.12 of 2017

THE FINANCE BILL, 2017A

BILLto give effect to the financial proposals of the Central Government for the financial year 2017-2018.

BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:—

CHAPTER I

PRELIMINARY

1. (1) This Act may be called the Finance Act, 2017.

(2) Save as otherwise provided in this Act, sections 2 to 87 shall come into force on the 1st day ofApril, 2017.

CHAPTER II

RATES OF INCOME-TAX

Short title andcommencement.

2. (1) Subject to the provisions of sub-sections (2) and (3), for the assessment year commencing onthe 1st day of April, 2017, income-tax shall be charged at the rates specified in Part I of the FirstSchedule and such tax shall be increased by a surcharge, for purposes of the Union, calculated ineach case in the manner provided therein.

(2) In the cases to which Paragraph A of Part I of the First Schedule applies, where the assesseehas, in the previous year, any net agricultural income exceeding five thousand rupees, in addition tototal income, and the total income exceeds two lakh fifty thousand rupees, then,—

(a) the net agricultural income shall be taken into account, in the manner provided in clause (b)[that is to say, as if the net agricultural income were comprised in the total income after the first twolakh fifty thousand rupees of the total income but without being liable to tax], only for the purpose ofcharging income-tax in respect of the total income; and

(b) the income-tax chargeable shall be calculated as follows:—

(i) the total income and the net agricultural income shall be aggregated and the amount ofincome-tax shall be determined in respect of the aggregate income at the rates specified in thesaid Paragraph A, as if such aggregate income were the total income;

(ii) the net agricultural income shall be increased by a sum of two lakh fifty thousand rupees,and the amount of income-tax shall be determined in respect of the net agricultural income as soincreased at the rates specified in the said Paragraph A, as if the net agricultural income as soincreased were the total income;

(iii) the amount of income-tax determined in accordance with sub-clause (i) shall be reducedby the amount of income-tax determined in accordance with sub-clause (ii) and the sum soarrived at shall be the income-tax in respect of the total income:

Provided that in the case of every individual, being a resident in India, who is of the age of sixtyyears or more but less than eighty years at any time during the previous year, referred to in item (II)of Paragraph A of Part I of the First Schedule, the provisions of this sub-section shall have effect asif for the words “two lakh fifty thousand rupees”, the words “three lakh rupees” had been substituted:

Provided further that in the case of every individual, being a resident in India, who is of the age ofeighty years or more at any time during the previous year, referred to in item (III) of Paragraph A ofPart I of the First Schedule, the provisions of this sub-section shall have effect as if for the words“two lakh fifty thousand rupees”, the words “five lakh rupees” had been substituted.

(3) In cases to which the provisions of Chapter XII or Chapter XII-A or section 115JB or section115JC or Chapter XII-FA or Chapter XII-FB or sub-section (1A) of section 161 or section 164 orsection 164A or section 167B of the Income-tax Act, 1961 (hereinafter referred to as the Income-tax

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Act) apply, the tax chargeable shall be determined as provided in that Chapter or that section, and withreference to the rates imposed by sub-section (1) or the rates as specified in that Chapter or section,as the case may be:

Provided that the amount of income-tax computed in accordance with the provisions ofsection 111A or section 112 of the Income-tax Act shall be increased by a surcharge, for the purposes ofthe Union, as provided in Paragraph A, B, C, D or E, as the case may be, of Part I of the First Schedule:

Provided further that in respect of any income chargeable to tax under section 115A, 115AB, 115AC,115ACA, 115AD, 115B, 115BB, 115BBA, 115BBC, 115BBD, 115BBDA, 115BBF,115E, 115JB or 115JCof the Income-tax Act, the amount of income-tax computed under this sub-section shall be increasedby a surcharge, for the purposes of the Union, calculated,—

(a) in the case of every individual or Hindu undivided family or association of persons or body ofindividuals, whether incorporated or not, or every artificial juridical person referred to insub-clause (vii) of clause (31) of section 2 of the Income-tax Act, at the rate of fifteen per cent. ofsuch income-tax, where the total income exceeds one crore rupees;

(b) in the case of every co-operative society or firm or local authority, at the rate of twelve percent. of such income-tax, where the total income exceeds one crore rupees;

(c) in the case of every domestic company,—

(i) at the rate of seven per cent. of such income-tax, where the total income exceeds one crorerupees but does not exceed ten crore rupees;

(ii) at the rate of twelve per cent. of such income-tax, where the total income exceeds ten crorerupees;

(d) in the case of every company, other than a domestic company,—

(i) at the rate of two per cent. of such income-tax, where the total income exceeds one crorerupees but does not exceed ten crore rupees;

(ii) at the rate of five per cent. of such income-tax, where the total income exceeds ten crorerupees:

Provided also that in the case of persons mentioned in (a) and (b) above, having total incomechargeable to tax under section 115JC of the Income-tax Act, and such income exceeds one crorerupees, the total amount payable as income-tax on such income and surcharge thereon shall notexceed the total amount payable as income-tax on a total income of one crore rupees by more thanthe amount of income that exceeds one crore rupees:

Provided also that in the case of every company having total income chargeable to tax undersection 115JB of the Income-tax Act, and such income exceeds one crore rupees but does notexceed ten crore rupees, the total amount payable as income-tax on such income and surchargethereon, shall not exceed the total amount payable as income-tax on a total income of one crorerupees by more than the amount of income that exceeds one crore rupees:

Provided also that in the case of every company having total income chargeable to tax undersection 115JB of the Income-tax Act, and such income exceeds ten crore rupees, the total amountpayable as income-tax on such income and surcharge thereon, shall not exceed the total amountpayable as income-tax and surcharge on a total income of ten crore rupees by more than theamount of income that exceeds ten crore rupees:

Provided also that in respect of any income chargeable to tax under clause (i) of sub-section (1)of section 115BBE of the Income-tax Act, the amount of income-tax computed under this sub-section shall be increased by a surcharge, for purposes of the Union, calculated at the rate oftwenty-five per cent. of such income-tax.

(4) In cases in which tax has to be charged and paid under section 115-O or section 115QA orsub-section (2) of section 115R or section 115TA or section 115TD of the Income-tax Act, the tax shallbe charged and paid at the rates as specified in those sections and shall be increased by a surcharge,for the purposes of the Union, calculated at the rate of twelve per cent. of such tax.

(5) In cases in which tax has to be deducted under sections 193, 194, 194A, 194B, 194BB, 194D,194LBA, 194LBB, 194LBC and 195 of the Income-tax Act, at the rates in force, the deductions shall bemade at the rates specified in Part II of the First Schedule and shall be increased by a surcharge, forthe purposes of the Union, calculated in cases wherever prescribed, in the manner provided therein.

(6) In cases in which tax has to be deducted under sections 192A, 194C, 194DA, 194E, 194EE,194F, 194G, 194H, 194-I, 194-IA, 194-IB, 194-IC, 194J, 194LA, 194LB, 194LBA, 194LBB, 194LBC,194LC, 194LD, 196B, 196C and 196D of the Income-tax Act, the deductions shall be made at the ratesspecified in those sections and shall be increased by a surcharge, for the purposes of the Union,—

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(a) in the case of every individual or Hindu undivided family or association of persons or body ofindividuals, whether incorporated or not, or every artificial juridical person referred to insub-clause (vii) of clause (31) of section 2 of the Income-tax Act, being a non-resident, calculated,—

(i) at the rate of ten per cent. of such tax, where the income or the aggregate of such incomespaid or likely to be paid and subject to the deduction exceeds fifty lakh rupees but does notexceed one crore rupees;

(ii) at the rate of fifteen per cent. of such tax, where the income or the aggregate of suchincomes paid or likely to be paid and subject to the deduction exceeds one crore rupees;

(b) in the case of every co-operative society or firm, being a non-resident, calculated at the rateof twelve per cent. of such tax, where the income or the aggregate of such incomes paid or likely tobe paid and subject to the deduction exceeds one crore rupees;

(c) 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 incomespaid or likely to be paid and subject to the deduction exceeds one crore rupees but does notexceed ten crore rupees;

(ii) at the rate of five per cent. of such tax, where the income or the aggregate of such incomespaid or likely to be paid and subject to the deduction exceeds ten crore rupees.

(7) In cases in which tax has to be collected under the proviso to section 194B of the Income-tax Act,the collection shall be made at the rates specified in Part II of the First Schedule, and shall be increasedby a surcharge, for the purposes of the Union, calculated, in cases wherever prescribed, in the mannerprovided therein.

(8) In cases in which tax has to be collected under section 206C of the Income-tax Act, the collectionshall be made at the rates specified in that section and shall be increased by a surcharge, for thepurposes of the Union,—

(a) in the case of every individual or Hindu undivided family or association of persons or body ofindividuals, whether incorporated or not, or every artificial juridical person referred to insub-clause (vii) of clause (31) of section 2 of the Income-tax Act, being a non-resident, calculated,—

(i) at the rate of ten per cent. of such tax, where the amount or the aggregate of such amountscollected and subject to the collection exceeds fifty lakh rupees but does not exceed one crorerupees;

(ii) at the rate of fifteen per cent. of such tax, where the amount or the aggregate of suchamounts collected and subject to the collection exceeds one crore rupees;

(b) in the case of every co-operative society or firm, being a non-resident, calculated at the rateof twelve per cent. of such tax, where the amount or the aggregate of such amounts collected andsubject to the collection exceeds one crore rupees;

(c) 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 amount or the aggregate of such amountscollected and subject to the collection exceeds one crore rupees but does not exceed ten crorerupees;

(ii) at the rate of five per cent. of such tax, where the amount or the aggregate of such amountscollected and subject to the collection exceeds ten crore rupees.

(9) Subject to the provisions of sub-section (10), in cases in which income-tax has to be chargedunder sub-section (4) of section 172 or sub-section (2) of section 174 or section 174A or section 175 orsub-section (2) of section 176 of the Income-tax Act or deducted from, or paid on, income chargeableunder the head “Salaries” under section 192 of the said Act or in which the “advance tax” payableunder Chapter XVII-C of the said Act has to be computed at the rate or rates in force, such income-taxor, as the case may be, “advance tax” shall be charged, deducted or computed at the rate or ratesspecified in Part III of the First Schedule and such tax shall be increased by a surcharge, for thepurposes of the Union, calculated in such cases and in such manner as provided therein:

Provided that in cases to which the provisions of Chapter XII or Chapter XII-A or section 115JB orsection 115JC or Chapter XII-FA or Chapter XII-FB or sub-section (lA) of section 161 or section 164 orsection 164A or section 167B of the Income-tax Act apply, “advance tax” shall be computed withreference to the rates imposed by this sub-section or the rates as specified in that Chapter or section,as the case may be:

Provided further that the amount of “advance tax” computed in accordance with the provisions ofsection 111A or section 112 of the Income-tax Act shall be increased by a surcharge, for the purposesof the Union, as provided in Paragraph A, B, C, D or E, as the case may be, of Part III of the FirstSchedule:

Provided also that in respect of any income chargeable to tax under section 115A, 115AB, 115AC,115ACA, 115AD, 115B, 115BA, 115BB, 115BBA, 115BBC, 115BBD, 115BBDA, 115BBF, 115BBG,115E, 115JB or 115JC of the Income-tax Act, “advance tax” computed under the first proviso shall beincreased by a surcharge, for the purposes of the Union, calculated,—

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(a) in the case of every individual or Hindu undivided family or association of persons or body ofindividuals, whether incorporated or not, or every artificial juridical person referred to insub-clause (vii) of clause (31) of section 2 of the Income-tax Act,—

(i) at the rate of ten per cent. of such “advance tax”, where the total income exceeds fifty lakhrupees but does not exceed one crore rupees;

(ii) at the rate of fifteen per cent. of such “advance tax”, where the total income exceeds onecrore rupees;

(b) in the case of every co-operative society or firm or local authority at the rate of twelve per cent.of such “advance tax”, where the total income exceeds one crore rupees;

(c) in the case of every domestic company,—

(i) at the rate of seven per cent. of such “advance tax”, where the total income exceeds onecrore rupees but does not exceed ten crore rupees;

(ii) at the rate of twelve per cent. of such “advance tax”, where the total income exceeds tencrore rupees;

(d) in the case of every company, other than a domestic company,—

(i) at the rate of two per cent. of such “advance tax”, where the total income exceeds one crorerupees but does not exceed ten crore rupees;

(ii) at the rate of five per cent. of such “advance tax”, where the total income exceeds ten crorerupees:

Provided also that in the case of persons mentioned in (a) above, having total income chargeable totax under section 115JC of the Income-tax Act, and such income exceeds,—

(a) fifty lakh rupees but does not exceed one crore rupees, the total amount payable as “advancetax” on such income and surcharge thereon shall not exceed the total amount payable as “advancetax” on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakhrupees;

(b) one crore rupees, the total amount payable as “advance tax” on such income and surchargethereon shall not exceed the total amount payable as “advance tax” on a total income of one crorerupees by more than the amount of income that exceeds one crore rupees:

Provided also that in the case of persons mentioned in (b) above, having total income chargeable totax under section 115JC of the Income-tax Act, and such income exceeds one crore rupees, the totalamount payable as “advance tax” on such income and surcharge thereon shall not exceed the totalamount payable as “advance tax” on a total income of one crore rupees by more than the amount ofincome that exceeds one crore rupees:

Provided also that in the case of every company having total income chargeable to tax under section115JB of the Income-tax Act, and such income exceeds one crore rupees but does not exceed tencrore rupees, the total amount payable as “advance tax” on such income and surcharge thereon, shallnot exceed the total amount payable as “advance tax” on a total income of one crore rupees by morethan the amount of income that exceeds one crore rupees:

Provided also that in the case of every company having total income chargeable to tax under section115JB of the Income-tax Act, and such income exceeds ten crore rupees, the total amount payable as“advance tax” on such income and surcharge thereon, shall not exceed the total amount payable as“advance tax” and surcharge on a total income of ten crore rupees by more than the amount of incomethat exceeds ten crore rupees:

Provided also that in respect of any income chargeable to tax under clause (i) of sub-section (1) ofsection 115BBE of the Income-tax Act, the “advance tax” computed under the first proviso shall beincreased by a surcharge, for the purposes of the Union, calculated at the rate of twenty-five per cent.of such “advance tax”.

(10) In cases to which Paragraph A of Part III of the First Schedule applies, where the assessee has,in the previous year or, if by virtue of any provision of the Income-tax Act, income-tax is to be chargedin respect of the income of a period other than the previous year, in such other period, any net agriculturalincome exceeding five thousand rupees, in addition to total income and the total income exceeds twolakh fifty thousand rupees, then, in charging income-tax under sub-section (2) of section 174 orsection 174A or section 175 or sub-section (2) of section 176 of the said Act or in computing the“advance tax” payable under Chapter XVII-C of the said Act, at the rate or rates in force,—

(a) the net agricultural income shall be taken into account, in the manner provided in clause (b)[that is to say, as if the net agricultural income were comprised in the total income after thefirst two lakh fifty thousand rupees of the total income but without being liable to tax], only for the

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purpose of charging or computing such income-tax or, as the case may be, “advance tax” in respectof the total income; and

(b) such income-tax or, as the case may be, “advance tax” shall be so charged or computed asfollows:—

(i) the total income and the net agricultural income shall be aggregated and the amount ofincome-tax or “advance tax” shall be determined in respect of the aggregate income at the ratesspecified in the said Paragraph A, as if such aggregate income were the total income;

(ii) the net agricultural income shall be increased by a sum of two lakh fifty thousand rupees,and the amount of income-tax or “advance tax” shall be determined in respect of the net agriculturalincome as so increased at the rates specified in the said Paragraph A, as if the net agriculturalincome were the total income;

(iii) the amount of income-tax or “advance tax” determined in accordance with sub-clause (i)shall be reduced by the amount of income-tax or, as the case may be, “advance tax” determinedin accordance with sub-clause (ii) and the sum so arrived at shall be the income-tax or, as thecase may be, “advance tax” in respect of the total income:

Provided that in the case of every individual, being a resident in India, who is of the age of sixtyyears or more but less than eighty years at any time during the previous year, referred to in item (II) ofParagraph A of Part III of the First Schedule, the provisions of this sub-section shall have effect as if forthe words “two lakh fifty thousand rupees”, the words “three lakh rupees” had been substituted:

Provided further that in the case of every individual, being a resident in India, who is of the age ofeighty years or more at any time during the previous year, referred to in item (III) of Paragraph A ofPart III of the First Schedule, the provisions of this sub-section shall have effect as if for the words “twolakh fifty thousand rupees”, the words “five lakh rupees” had been substituted:

Provided also that the amount of income-tax or “advance tax” so arrived at, shall be increased by asurcharge for the purposes of the Union, calculated in each case, in the manner provided therein.

(11) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by theapplicable surcharge, for the purposes of the Union, calculated in the manner provided therein, shallbe further increased by an additional surcharge, for purposes of the Union, to be called the “EducationCess on income-tax”, calculated at the rate of two per cent. of such income-tax and surcharge so as tofulfil the commitment of the Government to provide and finance universalised quality basic education:

Provided that nothing contained in this sub-section shall apply to cases in which tax is to be deductedor collected under the sections of the Income-tax Act mentioned in sub-sections (5), (6), (7) and (8), ifthe income subjected to deduction of tax at source or collection of tax at source is paid to a domesticcompany and any other person who is resident in India.

(12) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by theapplicable surcharge, for the purposes of the Union, calculated in the manner provided therein, shallalso be increased by an additional surcharge, for the purposes of the Union, to be called the “Secondaryand Higher Education Cess on income-tax”, calculated at the rate of one per cent. of such income-taxand surcharge so as to fulfil the commitment of the Government to provide and finance secondary andhigher education:

Provided that nothing contained in this sub-section shall apply to cases in which tax is to be deductedor collected under the sections of the Income-tax Act mentioned in sub-sections (5), (6), (7) and (8), ifthe income subjected to deduction of tax at source or collection of tax at source is paid to a domesticcompany and any other person who is resident in India.

(13) For the purposes of this section and the First Schedule,—

(a) “domestic company” means an Indian company or any other company which, in respect of itsincome liable to income-tax under the Income-tax Act, for the assessment year commencing on the1st day of April, 2017, has made the prescribed arrangements for the declaration and paymentwithin India of the dividends (including dividends on preference shares) payable out of such income;

(b) “insurance commission” means any remuneration or reward, whether by way of commissionor otherwise, for soliciting or procuring insurance business (including business relating to thecontinuance, renewal or revival of policies of insurance);

(c) “net agricultural income” in relation to a person, means the total amount of agricultural income,from whatever source derived, of that person computed in accordance with the rules contained inPart IV of the First Schedule;

(d) all other words and expressions used in this section and the First Schedule but not defined inthis sub-section and defined in the Income-tax Act shall have the meanings, respectively, assignedto them in that Act.

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CHAPTER III

DIRECT TAXES

Income-tax

3. In section 2 of the Income-tax Act, in clause (42A),—

(a) in the third proviso [as inserted by section 3 of the Finance Act, 2016], after the words andbrackets “a company (not being a share listed in a recognised stock exchange in India)”, the words“or an immovable property, being land or building or both,” shall be inserted with effect from the1st day of April, 2018;

(b) in Explanation 1, in clause (i),—

(A) after sub-clause (he), the following sub-clause shall be inserted with effect from the 1st dayof April, 2018, namely:—

“(hf) in the case of a capital asset, being equity shares in a company, which becomes theproperty of the assessee in consideration of a transfer referred to in clause (xb) of section47, there shall be included the period for which the preference shares were held by theassessee;”;

(B) after sub-clause (hf) as so inserted, the following sub-clause shall be inserted, namely:—

“(hg) in the case of a capital asset, being a unit or units, which becomes the property of theassessee in consideration of a transfer referred to in clause (xix) of section 47, there shall beincluded the period for which the unit or units in the consolidating plan of a mutual fund schemewere held by the assessee;”.

4. In section 9 of the Income-tax Act, in sub-section (1), in clause (i), after Explanation 5, the followingExplanation shall be inserted and shall be deemed to have been inserted with effect from the 1st dayof April, 2012, namely:—

“Explanation 5A.––For the removal of doubts, it is hereby clarified that nothing contained inExplanation 5 shall apply to an asset or capital asset mentioned therein, which is held by a non-resident by way of investment, directly or indirectly, in a Foreign Institutional Investor as referred toin clause (a) of the Explanation to section 115AD and registered as Category-I or Category-IIforeign portfolio investor under the Securities and Exchange Board of India (Foreign PortfolioInvestors) Regulations, 2014 made under the Securities and Exchange Board of India Act, 1992.”.

5. In section 9A of the Income-tax Act, in sub-section (3), in clause (j), after the proviso, the followingproviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day ofApril, 2016, namely:—

“Provided further that nothing contained in this clause shall apply to a fund which has beenwound up in the previous year;”.

6. In section 10 of the Income-tax Act,—

(a) in clause (4), in sub-clause (ii), in the proviso, for the word, brackets and letter “clause (q)”, theword, brackets and letter “clause (w)” shall be substituted and shall be deemed to have beensubstituted with effect from the 1st day of April, 2013;

(b) after clause (12A) [as inserted by section 7 of the Finance Act, 2016], the following clauseshall be inserted with effect from the 1st day of April, 2018, namely:—

“(12B) any payment from the National Pension System Trust to an employee under the pensionscheme referred to in section 80CCD, on partial withdrawal made out of his account in accordancewith the terms and conditions, specified under the Pension Fund Regulatory and DevelopmentAuthority Act, 2013 and the regulations made thereunder, to the extent it does not exceed twenty-five per cent. of the amount of contributions made by him;”;

(c) in clause (23C),—

(I) after sub-clause (iiiaaa), the following sub-clause shall be inserted and shall be deemed tohave been inserted with effect from the 1st day of April, 1998, namely:—

“(iiiaaaa) the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund inrespect of any State or Union territory as referred to in sub-clause (iiihf) of clause (a) ofsub-section (2) of section 80G; or”;

(II) after the eleventh proviso, the following proviso shall be inserted with effect from the 1stday of April, 2018, namely:—

“Provided also that any amount credited or paid out of income of any fund or trust or institutionor any university or other educational institution or any hospital or other medical institutionreferred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), to anytrust or institution registered under section 12AA, being voluntary contribution made with aspecific direction that they shall form part of the corpus of the trust or institution, shall not betreated as application of income to the objects for which such fund or trust or institution oruniversity or educational institution or hospital or other medical institution, as the case may be,is established:”;

Amendmentof section 9.

Amendmentof section 9A.


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(d) after clause (37), the following clause shall be inserted and shall be deemed to have beeninserted with effect from the 1st day of April, 2015, namely:—

‘(37A) any income chargeable under the head “Capital gains” in respect of transfer of a specifiedcapital asset arising to an assessee, being an individual or a Hindu undivided family, who was theowner of such specified capital asset as on the 2nd day of June, 2014 and transfers that specifiedcapital asset under the Land Pooling Scheme (herein referred to as “the scheme”) covered underthe Andhra Pradesh Capital City Land Pooling Scheme (Formulation and Implementation) Rules,2015 made under the provisions of the Andhra Pradesh Capital Region Development Authority Act,2014 and the rules, regulations and Schemes made under the said Act.

Explanation.—For the purposes of this clause, “specified capital asset” means,—

(a) the land or building or both owned by the assessee as on the 2nd day of June, 2014and which has been transferred under the scheme; or

(b) the land pooling ownership certificate issued under the scheme to the assessee inrespect of land or building or both referred to in clause (a); or

(c) the reconstituted plot or land, as the case may be, received by the assessee in lieu ofland or building or both referred to in clause (a) in accordance with the scheme, if such plotor land, as the case may be, so received is transferred within two years from the end of thefinancial year in which the possession of such plot or land was handed over to him;’;

(e) in clause (38), after the second proviso and before the Explanation [as inserted by section 7of the Finance Act, 2016], the following proviso shall be inserted with effect from the 1st day of April,2018, namely:—

“Provided also that nothing contained in this clause shall apply to any income arising from thetransfer of a long-term capital asset, being an equity share in a company, if the transaction ofacquisition, other than the acquisition notified by the Central Government in this behalf, of suchequity share is entered into on or after the 1st day of October, 2004 and such transaction is notchargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004.”;

(f) after clause (48A), the following clause shall be inserted with effect from the 1st day of April,2018, namely:—

“(48B) any income accruing or arising to a foreign company on account of sale of leftover stockof crude oil, if any, from the facility in India after the expiry of the agreement or the arrangementreferred to in clause (48A) subject to such conditions as may be notified by the Central Governmentin this behalf;”.

7. In section 10AA of the Income-tax Act, after sub-section (1), the following Explanation shall beinserted with effect from the 1st day of April, 2018, namely:—

“Explanation.––For the removal of doubts, it is hereby declared that the amount of deductionunder this section shall be allowed from the total income of the assessee computed in accordancewith the provisions of this Act, before giving effect to the provisions of this section and the deductionunder this section shall not exceed such total income of the assessee.”.

8. In section 11 of the Income-tax Act, in sub-section (1), the Explanation below clause (d) shall benumbered as Explanation 1 thereof and after Explanation 1 as so numbered, the following Explanationshall be inserted with effect from the 1st day of April, 2018, namely:—

“Explanation 2.—Any amount credited or paid, out of income referred to in clause (a) orclause (b) read with Explanation 1, to any other trust or institution registered under section 12AA,being contribution with a specific direction that they shall form part of the corpus of the trust orinstitution, shall not be treated as application of income for charitable or religious purposes.”.

9. In section 12A of the Income-tax Act, in sub-section (1), with effect from the 1st day ofApril, 2018,—

(i) after clause (aa), the following clause shall be inserted, namely:—

“(ab) the person in receipt of the income has made an application for registration of the trustor institution, in a case where a trust or an institution has been granted registration undersection 12AA or has obtained registration at any time under section 12A [as it stood before itsamendment by the Finance (No. 2) Act, 1996], and, subsequently, it has adopted or undertakenmodifications of the objects which do not conform to the conditions of registration, in theprescribed form and manner, within a period of thirty days from the date of said adoption ormodification, to the Principal Commissioner or Commissioner and such trust or institution isregistered under section 12AA;”;

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Amendmentof section10AA.


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(ii) after clause (b), the following clause shall be inserted, namely:—

“(ba) the person in receipt of the income has furnished the return of income for the previousyear in accordance with the provisions of sub-section (4A) of section 139, within the time allowedunder that section.”.

10. In section 12AA of the Income-tax Act, with effect from the 1st day of April, 2018,—

(a) in sub-section (1), after the word, brackets and letters “clause (aa)”, the words, brackets andletters “or clause (ab)” shall be inserted;

(b) in sub-section (2), after the word, brackets and letters “clause (aa)”, the words, brackets andletters “or clause (ab)” shall be inserted.

11. In section 13A of the Income-tax Act, with effect from the 1st day of April, 2018,—

(I) in the first proviso,—

(i) in clause (b),—

(A) after the words “such voluntary contribution”, the words “other than contribution by wayof electoral bond” shall be inserted;

(B) the word “and” occurring at the end shall be omitted;

(ii) in clause (c), the word “; and” shall be inserted at the end;

(iii) after clause (c), the following clause shall be inserted, namely:—

‘(d) no donation exceeding two thousand rupees is received by such political party otherwisethan by an account payee cheque drawn on a bank or an account payee bank draft or use ofelectronic clearing system through a bank account or through electoral bond.

Explanation.––For the purposes of this proviso, “electoral bond” means a bond referred toin the Explanation to sub-section (3) of section 31 of the Reserve Bank of India Act, 1934.’;

(II) after the second proviso, the following proviso shall be inserted, namely:—

“Provided also that such political party furnishes a return of income for the previous year inaccordance with the provisions of sub-section (4B) of section 139 on or before the due dateunder that section.”.

12. In section 23 of the Income-tax Act, after sub-section (4), the following sub-section shall beinserted with effect from the 1st day of April, 2018, namely:___

“(5) Where the property consisting of any building or land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not let during the whole or any part of theprevious year, the annual value of such property or part of the property, for the period up to one yearfrom the end of the financial year in which the certificate of completion of construction of the propertyis obtained from the competent authority, shall be taken to be nil.”.

13. In section 35AD of the Income-tax Act, in sub-section (8), in clause (f), after the words “shall notinclude”, the words “any expenditure in respect of which the payment or aggregate of payments madeto a person in a day, otherwise than by an account payee cheque drawn on a bank or an accountpayee bank draft or use of electronic clearing system through a bank account, exceeds ten thousandrupees or” shall be inserted with effect from the 1st day of April, 2018.

14. In section 36 of the Income-tax Act, in sub-section (1), in clause (viia), in sub-clause (a), for thewords “seven and one-half per cent.”, the words “eight and one-half per cent.” shall be substituted witheffect from the 1st day of April, 2018.

15. In section 40A of the Income-tax Act,—

(a) in sub-section (2), in clause (a), in the proviso, after the words “Provided that”, the words,figures and letters “for an assessment year commencing on or before the 1st day of April, 2016”shall be inserted;

(b) with effect from the 1st day of April, 2018,—

(A) in sub-section (3), for the words “exceeds twenty thousand rupees”, the words “or use ofelectronic clearing system through a bank account, exceeds ten thousand rupees,” shall besubstituted;

(B) in sub-section (3A),—

(i) after the words “account payee bank draft,”, the words “or use of electronic clearingsystem through a bank account” shall be inserted;

(ii) for the words “twenty thousand rupees”, the words “ten thousand rupees” shall besubstituted;

Amendmentof section12AA.


Amendmentof section35AD.




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(iii) in the first proviso, for the words “exceeds twenty thousand rupees”, the words “or useof electronic clearing system through a bank account, exceeds ten thousand rupees,” shall besubstituted;

(iv) in the second proviso, for the words “twenty thousand rupees”, the words “ten thousandrupees” shall be substituted;

(C) in sub-section (4),—

(i) after the words “account payee bank draft”, the words “or use of electronic clearingsystem through a bank account” shall be inserted;

(ii) after the words “such cheque or draft”, the words “or electronic clearing system” shall beinserted.

16. In section 43 of the Income-tax Act, in clause (1), with effect from the 1st day of April, 2018,—

(a) after the proviso and before Explanation 1, the following proviso shall be inserted, namely:—

“Provided further that where the assessee incurs any expenditure for acquisition of any assetor part thereof in respect of which a payment or aggregate of payments made to a person in aday, otherwise than by an account payee cheque drawn on a bank or an account payee bankdraft or use of electronic clearing system through a bank account, exceeds ten thousand rupees,such expenditure shall be ignored for the purposes of determination of actual cost.”;

(b) in Explanation 13, the following proviso shall be inserted, namely:—

“Provided that where any capital asset in respect of which deduction or part of deductionallowed under section 35AD is deemed to be the income of the assessee in accordance with theprovisions of sub-section (7B) of the said section, the actual cost of the asset to the assesseeshall be the actual cost to the assessee, as reduced by an amount equal to the amount ofdepreciation calculated at the rate in force that would have been allowable had the asset beenused for the purposes of business since the date of its acquisition.”.

17. In section 43B of the Income-tax Act, with effect from the 1st day of April, 2018,—

(i) in clause (e), after the words “scheduled bank”, the words “or a co-operative bank other than aprimary agricultural credit society or a primary co-operative agricultural and rural development bank”shall be inserted;

(ii) in Explanation 4, after clause (c), the following clause shall be inserted, namely:—

‘(d) “co-operative bank”, “primary agricultural credit society” and “primary co-operativeagricultural and rural development bank” shall have the meanings respectively assigned to themin the Explanation to sub-section (4) of section 80P.’.

18. In section 43D of the Income-tax Act, with effect from the 1st day of April, 2018,—

(i) in clause (a), after the words “scheduled bank or”, the words “a co-operative bank other than aprimary agricultural credit society or a primary co-operative agricultural and rural development bankor” shall be inserted;

(ii) in the long line, after the words “scheduled bank or”, the words “a co-operative bank otherthan a primary agricultural credit society or a primary co-operative agricultural and rural developmentbank or” shall be inserted;

(iii) in the Explanation, after clause (f), the following clause shall be inserted, namely:—

‘(g) “co-operative bank”, “primary agricultural credit society” and “primary co-operativeagricultural and rural development bank” shall have the meanings respectively assigned to themin the Explanation to sub-section (4) of section 80P.’.

19. In section 44AA of the Income-tax Act, in sub-section (2), the following provisos shall be insertedwith effect from the 1st day of April, 2018, namely:—

‘Provided that in the case of a person being an individual or a Hindu undivided family, the provisionsof clause (i) and clause (ii) shall have effect, as if for the words “one lakh twenty thousand rupees”,the words “two lakh fifty thousand rupees” had been substituted:

Provided further that in the case of a person being an individual or a Hindu undivided family, theprovisions of clause (i) and clause (ii) shall have effect, as if for the words “ten lakh rupees”, thewords “twenty-five lakh rupees” had been substituted.’.

20. In section 44AB of the Income-tax Act,—

(i) before the first proviso, the following proviso shall be inserted, namely:—

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“Provided that this section shall not apply to the person, who declares profits and gains for theprevious year in accordance with the provisions of sub-section (1) of section 44AD and his totalsales, turnover or gross receipts, as the case may be, in business does not exceed two crorerupees in such previous year:”;

(ii) in the first proviso, for the words “Provided that”, the words “Provided further that” shall besubstituted;

(iii) in the second proviso, for the words “Provided further”, the words “Provided also” shall besubstituted.

21. In section 44AD of the Income-tax Act, in sub-section (1), the following proviso shall be inserted,namely:—

‘Provided that this sub-section shall have effect as if for the words “eight per cent.”, the words “sixper cent.” had been substituted, in respect of the amount of total turnover or gross receipts which isreceived by an account payee cheque or an account payee bank draft or use of electronic clearingsystem through a bank account during the previous year or before the due date specified in sub-section (1) of section 139 in respect of that previous year.’.

22. In section 45 of the Income-tax Act, after sub-section (5) and the Explanation thereto, the followingsub-section shall be inserted with effect from the 1st day of April, 2018, namely:—

‘(5A) Notwithstanding anything contained in sub-section (1), where the capital gain arises to anassessee, being an individual or a Hindu undivided family, from the transfer of a capital asset,being land or building or both, under a specified agreement, the capital gains shall be chargeableto income-tax as income of the previous year in which the certificate of completion for the whole orpart of the project is issued by the competent authority; and for the purposes of section 48, thestamp duty value, on the date of issue of the said certificate, of his share, being land or buildingor both in the project, as increased by the consideration received in cash, if any, shall be deemedto be the full value of the consideration received or accruing as a result of the transfer of thecapital asset:

Provided that the provisions of this sub-section shall not apply where the assessee transfers hisshare in the project on or before the date of issue of said certificate of completion, and the capitalgains shall be deemed to be the income of the previous year in which such transfer takes place andthe provisions of this Act, other than the provisions of this sub-section, shall apply for the purpose ofdetermination of full value of consideration received or accruing as a result of such transfer.

Explanation.—For the purposes of this sub-section, the expression—

(i) “competent authority” means the authority empowered to approve the building plan by orunder any law for the time being in force;

(ii) “specified agreement” means a registered agreement in which a person owning land orbuilding or both, agrees to allow another person to develop a real estate project on such land orbuilding or both, in consideration of a share, being land or building or both in such project, whetherwith or without payment of part of the consideration in cash;

(iii) “stamp duty value” means the value adopted or assessed or assessable by any authority ofGovernment for the purpose of payment of stamp duty in respect of an immovable property beingland or building or both.’.

23. In section 47 of the Income-tax Act, with effect from the 1st day of April, 2018,—

(a) after clause (viia), the following clause shall be inserted, namely:—

“(viiaa) any transfer, made outside India, of a capital asset being rupee denominated bond ofan Indian company issued outside India, by a non-resident to another non-resident;”;

(b) after clause (xa), the following clause shall be inserted, namely:—

“(xb) any transfer by way of conversion of preference shares of a company into equity sharesof that company;”.


(a) in the fifth proviso, for the word “subscribed”, the word “held” shall be substituted;

(b) in the Explanation, in clause (iii), for the figures, letters and words “1st day of April, 1981”, thefigures, letters and words “1st day of April, 2001” shall be substituted.

Amendmentof section44AD.


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(a) in sub-section (1), in clause (iii), in sub-clause (e), after the word, brackets, figures and letter“clause (vib)”, the words, brackets, figures and letter “or clause (vic)” shall be inserted with effectfrom the 1st day of April, 2018;

(b) after sub-section (2AD), the following sub-section shall be inserted with effect from the 1stday of April, 2018, namely:–-

“(2AE) Where the capital asset, being equity share of a company, became the property of theassessee in consideration of a transfer referred to in clause (xb) of section 47, the cost of acquisitionof the asset shall be deemed to be that part of the cost of the preference share in relation to whichsuch asset is acquired by the assessee.”;

(c) after sub-section (2AE) as so inserted, the following sub-section shall be inserted, namely:—

“(2AF) Where the capital asset, being a unit or units in a consolidated plan of a mutual fundscheme, became the property of the assessee in consideration of a transfer referred to inclause (xix) of section 47, the cost of acquisition of the asset shall be deemed to be the cost ofacquisition to him of the unit or units in the consolidating plan of the scheme of the mutual fund.”;

(d) in sub-section (4), after the words, brackets, figures and letter “or clause (viia)” at both theplaces where they occur, the words, brackets and figure “or clause (x)” shall be inserted;

(e) after sub-section (5) [as inserted by section 30 of the Finance Act, 2016], the followingsub-sections shall be inserted with effect from the 1st day of April, 2018, namely:—

‘(6) Where the capital gain arises from the transfer of a specified capital asset referred to inclause (c) of the Explanation to clause (37A) of section 10, which has been transferred after theexpiry of two years from the end of the financial year in which the possession of such asset washanded over to the assessee, the cost of acquisition of such specified capital asset shall bedeemed to be its stamp duty value as on the last day of the second financial year after the end ofthe financial year in which the possession of the said specified capital asset was handed over tothe assessee.

Explanation.––For the purposes of this sub-section, “stamp duty value” means the value adoptedor assessed or assessable by any authority of the State Government for the purpose of paymentof stamp duty in respect of an immovable property.

(7) Where the capital gain arises from the transfer of a capital asset, being share in the project,in the form of land or building or both, referred to in sub-section (5A) of section 45, not being thecapital asset referred to in the proviso to the said sub-section, the cost of acquisition of suchasset, shall be the amount which is deemed as full value of consideration in that sub-section.’;

(f) after sub-section (7) as so inserted, the following sub-section shall be inserted and shall bedeemed to have been inserted with effect from the 1st day of June, 2016, namely:–

“(8) Where the capital gain arises from the transfer of an asset, being the asset held by a trustor an institution in respect of which accreted income has been computed and the tax has beenpaid thereon in accordance with the provisions of Chapter XII-EB, the cost of acquisition of suchasset shall be deemed to be the fair market value of the asset which has been taken into accountfor computation of accreted income as on the specified date referred to in sub-section (2) ofsection 115TD.”.

26. After section 50C of the Income-tax Act, the following section shall be inserted with effect fromthe 1st day of April, 2018, namely:—

‘50CA. Where the consideration received or accruing as a result of the transfer by an assesseeof a capital asset, being share of a company other than a quoted share, is less than the fair marketvalue of such share determined in such manner as may be prescribed, the value so determinedshall, for the purposes of section 48, be deemed to be the full value of consideration received oraccruing as a result of such transfer.

Explanation.—For the purposes of this section, “quoted share” means the share quoted on anyrecognised stock exchange with regularity from time to time, where the quotation of such share isbased on current transaction made in the ordinary course of business.’.

27. In section 54EC of the Income-tax Act, in sub-section (3), in the Explanation, in clause (ba), forthe words and figures “the Companies Act, 1956” occurring at the end, the words and figures “theCompanies Act, 1956; or any other bond notified by the Central Government in this behalf” shall besubstituted with effect from the 1st day of April, 2018.


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Specialprovision forfull value ofconsiderationfor transfer ofshare otherthan quotedshare.

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(A) in sub-section (1), in clause (b), in sub-clause (2), in item (i), for the figures, letters and words“1st day of April, 1981”, the figures, letters and words “1st day of April, 2001” shall be substituted;

(B) in sub-section (2), in clause (b), for the figures, letters and words “1st day of April, 1981”wherever they occur, the figures, letters and words “1st day of April, 2001” shall be substituted.

29. In section 56 of the Income-tax Act, in sub-section (2),—

(I) in clause (vii), after the figures, letters and words “1st day of October, 2009”, the words, figuresand letters “but before the 1st day of April, 2017” shall be inserted;

(II) in clause (viia), after the figures, letters and words “1st day of June, 2010”, the words, figuresand letters “but before the 1st day of April, 2017” shall be inserted;

(III) after clause (ix), the following clause shall be inserted, namely:—

‘(x) where any person receives, in any previous year, from any person or persons on or afterthe 1st day of April, 2017,—

(a) any sum of money, without consideration, the aggregate value of which exceeds fiftythousand rupees, the whole of the aggregate value of such sum;

(b) any immovable property,—

(A) without consideration, the stamp duty value of which exceeds fifty thousand rupees,the stamp duty value of such property;

(B) for a consideration which is less than the stamp duty value of the property by anamount exceeding fifty thousand rupees, the stamp duty value of such property as exceedssuch consideration:

Provided that where the date of agreement fixing the amount of consideration for thetransfer of immovable property and the date of registration are not the same, the stamp dutyvalue on the date of agreement may be taken for the purposes of this sub-clause:

Provided further that the provisions of the first proviso shall apply only in a case wherethe amount of consideration referred to therein, or a part thereof, has been paid by way ofan account payee cheque or an account payee bank draft or by use of electronic clearingsystem through a bank account, on or before the date of agreement for transfer of suchimmovable property:

Provided also that where the stamp duty value of immovable property is disputed by theassessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officermay refer the valuation of such property to a Valuation Officer, and the provisions of section50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to thestamp duty value of such property for the purpose of this sub-clause as they apply forvaluation of capital asset under those sections;

(c) any property, other than immovable property,—

(A) without consideration, the aggregate fair market value of which exceeds fifty thousandrupees, the whole of the aggregate fair market value of such property;

(B) for a consideration which is less than the aggregate fair market value of the propertyby an amount exceeding fifty thousand rupees, the aggregate fair market value of suchproperty as exceeds such consideration:

Provided that this clause shall not apply to any sum of money or any property received—

(I) from any relative; or

(II) on the occasion of the marriage of the individual; or

(III) under a will or by way of inheritance; or

(IV) in contemplation of death of the payer or donor, as the case may be; or

(V) from any local authority as defined in the Explanation to clause (20) of section 10; or

(VI) from any fund or foundation or university or other educational institution or hospitalor other medical institution or any trust or institution referred to in clause (23C) of section10; or

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(VII) from or by any trust or institution registered under section 12AA; or

(VIII) by any fund or trust or institution or any university or other educational institutionor 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; or

(IX) by way of transaction not regarded as transfer under clause (i) or clause (vi) orclause (via) or clause (viaa) or clause (vib) or clause (vic) or clause (vica) or clause (vicb)or clause (vid) or clause (vii) of section 47.

Explanation.— For the purposes of this clause, the expressions “assessable”, “fair market value”,“jewellery”, “property”, “relative” and “stamp duty value” shall have the same meanings respectivelyassigned to them in the Explanation to clause (vii).’.

30. In section 58 of the Income-tax Act, in sub-section (1A), for the word, brackets, figures and letter“sub-clause (iia)”, the words, brackets, figures and letters “sub-clauses (ia) and (iia)” shall be substitutedwith effect from the 1st day of April, 2018.

31. In section 71 of the Income-tax Act, after sub-section (3), the following sub-section shall beinserted with effect from the 1st day of April, 2018, namely:—

‘(3A) Notwithstanding anything contained in sub-section (1) or sub-section (2), where in respectof any assessment year, the net result of the computation under the head “Income from houseproperty” is a loss and the assessee has income assessable under any other head of income, theassessee shall not be entitled to set off such loss, to the extent the amount of the loss exceeds twolakh rupees, against income under the other head.’.

32. For section 79 of the Income-tax Act, the following section shall be substituted with effect fromthe 1st day of April, 2018, namely:—

“79. Notwithstanding anything contained in this Chapter, where a change in shareholding hastaken place in a previous year,—

(a) in the case of a company not being a company in which the public are substantially interestedand other than a company referred to in clause (b), no loss incurred in any year prior to theprevious year shall be carried forward and set off against the income of the previous year, unlesson the last day of the previous year, the shares of the company carrying not less than fifty-one percent. of the voting power were beneficially held by persons who beneficially held shares of thecompany carrying not less than fifty-one per cent. of the voting power on the last day of the yearor years in which the loss was incurred;

(b) in the case of a company, not being a company in which the public are substantially interestedbut being an eligible start-up as referred to in section 80-IAC, the loss incurred in any year priorto the previous year shall be carried forward and set off against the income of the previous year,if, all the shareholders of such company who held shares carrying voting power on the last day ofthe year or years in which the loss was incurred,—

(i) continue to hold those shares on the last day of such previous year; and

(ii) such loss has been incurred during the period of seven years beginning from theyear in which such company is incorporated:

Provided that nothing contained in this section shall apply to a case where a change in thesaid voting power and shareholding takes place in a previous year consequent upon the death ofa shareholder or on account of transfer of shares by way of gift to any relative of the shareholdermaking such gift:

Provided further that nothing contained in this section shall apply to any change in theshareholding of an Indian company which is a subsidiary of a foreign company as a result ofamalgamation or demerger of a foreign company subject to the condition that fifty-one per cent.shareholders of the amalgamating or demerged foreign company continue to be the shareholdersof the amalgamated or the resulting foreign company.”.

33. In section 80CCD of the Income-tax Act, in sub-section (1), in clause (b), for the words “ten percent.”, the words “twenty per cent.” shall be substituted with effect from the 1st day of April, 2018.

34. In section 80CCG of the Income-tax Act, after sub-section (4), the following sub-section shall beinserted with effect from the 1st day of April, 2018, namely:—

“(5) Notwithstanding anything contained in sub-sections (1) to (4), no deduction under this sectionshall be allowed in respect of any assessment year commencing on or after the 1st day ofApril, 2018:



Substitution ofnew section forsection 79.

Carry forwardand set off oflosses in caseof certaincompanies.

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Amendmentof section80CCD.Amendmentof section80CCG.

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Provided that an assessee, who has acquired listed equity shares or listed units of an equityoriented fund in accordance with the scheme referred to in sub-section (1) and claimed deductionunder this section for any assessment year commencing on or before the 1st day of April, 2017,shall be allowed deduction under this section till the assessment year commencing on the 1st day ofApril, 2019, if he is otherwise eligible to claim the deduction in accordance with the other provisionsof this section.”.

35. In section 80G of the Income-tax Act, in sub-section (5D), for the words “ten thousand rupees”,the words “two thousand rupees” shall be substituted with effect from the 1st day of April, 2018.

36. In section 80-IAC of the Income-tax Act [as inserted by section 42 of the Finance Act, 2016], insub-section (2), for the words “five years”, the words “seven years” shall be substituted with effect fromthe 1st day of April, 2018.

37. In section 80-IBA of the Income-tax Act [as inserted by section 44 of the Finance Act, 2016],with effect from the 1st day of April, 2018,—

(a) in sub-section (2),—

(i) in clause (b), for the words “three years”, the words “five years” shall be substituted;

(ii) in clauses (c) and (f), for the expression “built-up area” wherever they occur, the words“carpet area” shall be substituted;

(iii) the words “or within the distance, measured aerially, of twenty-five kilometres from themunicipal limits of these cities” wherever they occur shall be omitted;

(b) in sub-section (6), for clause (a), the following clause shall be substituted, namely:—

‘(a) “carpet area” shall have the same meaning as assigned to it in clause (k) of section 2 of theReal Estate (Regulation and Development) Act, 2016.’.


(a) for the words “five hundred thousand rupees”, the words “three hundred fifty thousand rupees”shall be substituted;

(b) for the words “five thousand rupees” [as substituted by section 46 of the Finance Act, 2016],the words “two thousand five hundred rupees” shall be substituted.

39. In section 90 of the Income-tax Act, after Explanation 3, the following Explanation shall beinserted with effect from the 1st day of April, 2018, namely:—

“Explanation 4.––For the removal of doubts, it is hereby declared that where any term used in anagreement entered into under sub-section (1) is defined under the said agreement, the said termshall have the same meaning as assigned to it in the agreement; and where the term is not definedin the said agreement, but defined in the Act, it shall have the same meaning as assigned to it in theAct and any explanation given to it by the Central Government.”.

40. In section 90A of the Income-tax Act, after Explanation 3, the following Explanation shall beinserted with effect from the 1st day of April, 2018, namely:—

“Explanation 4.––For the removal of doubts, it is hereby declared that where any term used in anagreement entered into under sub-section (1) is defined under the said agreement, the said termshall have the same meaning as assigned to it in the agreement; and where the term is not definedin the said agreement, but defined in the Act, it shall have the same meaning as assigned to it in theAct and any explanation given to it by the Central Government.”.

41. In section 92BA of the Income-tax Act, clause (i) shall be omitted.

42. After section 92CD of the Income-tax Act, the following section shall be inserted with effect fromthe 1st day of April, 2018, namely:—

‘92CE. (1) Where a primary adjustment to transfer price,—

(i) has been made suo motu by the assessee in his return of income;

(ii) made by the Assessing Officer has been accepted by the assessee;

(iii) is determined by an advance pricing agreement entered into by the assessee under section92CC;

(iv) is made as per the safe harbour rules framed under section 92CB; or

(v) is arising as a result of resolution of an assessment by way of the mutual agreementprocedure under an agreement entered into under section 90 or section 90A for avoidance ofdouble taxation,

Amendmentof section80G.




Amendmentof section92BA.Insertion ofnew section92CE.Secondaryadjustment incertain cases.

16 of 2016.

Amendmentof section80-IAC.

28 of 2016.

Amendmentof section80-IBA.

28 of 2016.

28 of 2016.

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the assessee shall make a secondary adjustment:

Provided that nothing contained in this section shall apply, if,–

(i) the amount of primary adjustment made in any previous year does not exceed one crorerupees; and

(ii) the primary adjustment is made in respect of an assessment year commencing on orbefore the 1st day of April, 2016.

(2) Where, as a result of primary adjustment to the transfer price, there is an increase in the totalincome or reduction in the loss, as the case may be, of the assessee, the excess money which isavailable with its associated enterprise, if not repatriated to India within the time as may be prescribed,shall be deemed to be an advance made by the assessee to such associated enterprise and theinterest on such advance, shall be computed in such manner as may be prescribed.

(3) For the purposes of this section,—

(i) “associated enterprise” shall have the meaning assigned to it in sub-section (1) andsub-section (2) of section 92A;

(ii) “arm’s length price” shall have the meaning assigned to it in clause (ii) of section 92F;

(iii) “excess money” means the difference between the arm’s length price determined in primaryadjustment and the price at which the international transaction has actually been undertaken;

(iv) “primary adjustment” to a transfer price means the determination of transfer price inaccordance with the arm’s length principle resulting in an increase in the total income or reductionin the loss, as the case may be, of the assessee;

(v) “secondary adjustment” means an adjustment in the books of account of the assessee andits associated enterprise to reflect that the actual allocation of profits between the assessee andits associated enterprise are consistent with the transfer price determined as a result of primaryadjustment, thereby removing the imbalance between cash account and actual profit of theassessee.’.

43. After section 94A of the Income-tax Act, the following section shall be inserted with effect fromthe 1st day of April, 2018, namely:—

‘94B. (1) Notwithstanding anything contained in this Act, where an Indian company, or a permanentestablishment of a foreign company in India, being the borrower, pays interest or similar considerationexceeding one crore rupees which is deductible in computing income chargeable under the head“Profits and gains of business or profession” in respect of any debt issued by a non-resident, being anassociated enterprise of such borrower, the interest shall not be deductible in computation of incomeunder the said head to the extent that it arises from excess interest, as specified in sub-section (2):

Provided that where the debt is issued by a lender which is not associated but an associatedenterprise either provides an implicit or explicit guarantee to such lender or deposits a correspondingand matching amount of funds with the lender, such debt shall be deemed to have been issued byan associated enterprise.

(2) For the purposes of sub-section (1), the excess interest shall mean an amount of total interestpaid or payable in excess of thirty per cent. of earnings before interest, taxes, depreciation andamortisation of the borrower in the previous year or interest paid or payable to associated enterprisesfor that previous year, whichever is less.

(3) Nothing contained in sub-section (1) shall apply to an Indian company or a permanentestablishment of a foreign company which is engaged in the business of banking or insurance.

(4) Where for any assessment year, the interest expenditure is not wholly deducted againstincome under the head “Profits and gains of business or profession”, so much of the interestexpenditure as has not been so deducted, shall be carried forward to the following assessment yearor assessment years, and it shall be allowed as a deduction against the profits and gains, if any, ofany business or profession carried on by it and assessable for that assessment year to the extent ofmaximum allowable interest expenditure in accordance with sub-section (2):

Provided that no interest expenditure shall be carried forward under this sub-section for morethan eight assessment years immediately succeeding the assessment year for which the excessinterest expenditure was first computed.

(5) For the purposes of this section, the expressions––

(i) “associated enterprise” shall have the meaning assigned to it in sub-section (1) andsub-section (2) of section 92A;

Insertion ofnew section94B.

Limitation oninterestdeduction incertain cases.

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(ii) “debt” means any loan, financial instrument, finance lease, financial derivative, or anyarrangement that gives rise to interest, discounts or other finance charges that are deductible inthe computation of income chargeable under the head “Profits and gains of business or profession”;

(iii) “permanent establishment” includes a fixed place of business through which the businessof the enterprise is wholly or partly carried on.’.

44. In section 115BBDA of the Income-tax Act [as inserted by section 52 of the Finance Act, 2016],with effect from the 1st day of April, 2018,—

(i) in sub-section (1), for the words “an assessee, being an individual, a Hindu undivided family ora firm”, the words “a specified assessee” shall be substituted;

(ii) for sub-section (3), the following Explanation shall be substituted, namely:—

‘Explanation.––For the purposes of this section,—

(a) “dividend” shall have the meaning assigned to it in clause (22) of section 2 but shall notinclude sub-clause (e) thereof;

(b) “specified assessee” means a person other than,—

(i) a domestic company; or

(ii) a fund or institution or trust or any university or other educational institution or anyhospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) orsub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or

(iii) a trust or institution registered under section 12AA.’.

45. After section 115BBF of the Income-tax Act [as inserted by section 54 of the Finance Act, 2016],the following section shall be inserted with effect from the 1st day of April, 2018, namely:—

‘115 BBG. (1) Where the total income of an assessee includes any income by way of transfer ofcarbon credits, the income-tax payable shall be the aggregate of––

(a) the amount of income-tax calculated on the income by way of transfer of carbon credits, atthe rate of ten per cent.; and

(b) the amount of income-tax with which the assessee would have been chargeable had histotal income been reduced by the amount of income referred to in clause (a).

(2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure orallowance shall be allowed to the assessee under any provision of this Act in computing his incomereferred to in clause (a) of sub-section (1).

Explanation.––For the purposes of this section “carbon credit” in respect of one unit shall meanreduction of one tonne of carbon dioxide emissions or emissions of its equivalent gases which isvalidated by the United Nations Framework on Climate Change and which can be traded in marketat its prevailing market price.’.

46. In section 115JAA of the Income-tax Act, with effect from the 1st day of April, 2018,—

(a) in sub-section (2A), after the proviso, the following proviso shall be inserted, namely:—

“Provided further that where the amount of tax credit in respect of any income-tax paid in anycountry or specified territory outside India, under section 90 or section 90A or section 91, allowedagainst the tax payable under the provisions of sub-section (1) of section 115JB exceeds theamount of such tax credit admissible against the tax payable by the assessee on its income inaccordance with the other provisions of this Act, then, while computing the amount of creditunder this sub-section, such excess amount shall be ignored.”;

(b) in sub-section (3A), for the words “tenth assessment year”, the words “fifteenth assessmentyear” shall be substituted.

47. In section 115JB of the Income-tax Act,—

(i) in sub-section (2),—

(a) for the words “profit and loss account” wherever they occur, the words “statement of profitand loss” shall be substituted;

(b) for the words and figures “the Companies Act, 1956” wherever they occur, the words andfigures “the Companies Act, 2013” shall be substituted;

(c) in clause (a), for the words and figures “Part II of Schedule VI”, the word and figures“Schedule III” shall be substituted;

Insertion ofnew section115BBG.

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Tax onincome fromtransfer ofcarboncredits.

Amendmentof section115BBDA.

28 of 2016.

Amendmentof section115JAA.

Amendmentof section115JB.

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(d) in clause (b), for the words, brackets and figures “proviso to sub-section (2) of section 211”,the words, brackets and figures “second proviso to sub-section (1) of section 129” shall besubstituted;

(e) in the first proviso, for the word and figures “section 210”, the word and figures“section 129” shall be substituted;

(ii) after sub-section (2), the following sub-sections shall be inserted, namely:—

‘(2A) For a company whose financial statements are drawn up in compliance to the IndianAccounting Standards specified in Annexure to the Companies (Indian Accounting Standards)Rules, 2015, the book profit as computed in accordance with Explanation 1 to sub-section (2)shall be further––

(a) increased by all amounts credited to other comprehensive income in the statement ofprofit and loss under the head “Items that will not be re-classified to profit or loss”;

(b) decreased by all amounts debited to other comprehensive income in the statement ofprofit and loss under the head “Items that will not be re-classified to profit or loss”;

(c) increased by amounts or aggregate of the amounts debited to the statement of profitand loss on distribution of non-cash assets to shareholders in a demerger in accordance withAppendix A of the Indian Accounting Standards 10;

(d) decreased by all amounts or aggregate of the amounts credited to the statement of profitand loss on distribution of non-cash assets to shareholders in a demerger in accordance withAppendix A of the Indian Accounting Standards 10:

Provided that nothing contained in clause (a) or clause (b) shall apply to the amount creditedor debited to other comprehensive income under the head “Items that will not be re-classifiedto profit or loss” in respect of—

(i) revaluation surplus for assets in accordance with the Indian Accounting Standards 16and Indian Accounting Standards 38; or

(ii) gains or losses from investments in equity instruments designated at fair value throughother comprehensive income in accordance with the Indian Accounting Standards 109:

Provided further that the book profit of the previous year in which the asset or investmentreferred to in the first proviso is retired, disposed, realised or otherwise transferred shall beincreased or decreased, as the case may be, by the amount or the aggregate of the amountsreferred to in the first proviso for the previous year or any of the preceding previous yearsand relatable to such asset or investment.

(2B) In the case of a resulting company, where the property and the liabilities of the undertakingor undertakings being received by it are recorded at values different from values appearing in thebooks of account of the demerged company immediately before the demerger, any change insuch value shall be ignored for the purpose of computation of book profit of the resulting companyunder this section.

(2C) For a company referred to in sub-section (2A), the book profit of the year of convergenceand each of the following four previous years, shall be further increased or decreased, as thecase may be, by one-fifth of the transition amount:

Provided that the book profit of the previous year in which the asset or investment referred toin sub-clauses (B) to (E) of clause (iii) of the Explanation is retired, disposed, realised or otherwisetransferred, shall be increased or decreased, as the case may be, by the amount or the aggregateof the amounts referred to in the said sub-clause relatable to such asset or investment:

Provided further that the book profit of the previous year in which the foreign operation referredto in sub-clause (F) of clause (iii) of the Explanation is disposed or otherwise transferred, shall beincreased or decreased, as the case may be, by the amount or the aggregate of the amountsreferred to in the said sub-clause relatable to such foreign operations.

Explanation.––For the purposes of this sub-section, the expression––

(i) “year of convergence” means the previous year within which the convergence datefalls;

(ii) “convergence date” means the first day of the first Indian Accounting Standards reportingperiod as defined in the Indian Accounting Standards 101;

(iii) “transition amount” means the amount or the aggregate of the amounts adjusted in the

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other equity (excluding equity component of compound financial instruments, capital reserve,and securities premium reserve) on the convergence date but not including the following,––

(A) amount or aggregate of the amounts adjusted in the other comprehensive income onthe convergence date which shall be subsequently re-classified to the profit or loss;

(B) revaluation surplus for assets in accordance with the Indian AccountingStandards 16 and Indian Accounting Standards 38 adjusted on the convergence date;

(C) gains or losses from investments in equity instruments designated at fair value throughother comprehensive income in accordance with the Indian Accounting Standards 109adjusted on the convergence date;

(D) adjustments relating to items of property, plant and equipment and intangible assetsrecorded at fair value as deemed cost in accordance with paragraphs D5 and D7 of theIndian Accounting Standards 101 on the convergence date;

(E) adjustments relating to investments in subsidiaries, joint ventures and associatesrecorded at fair value as deemed cost in accordance with paragraph D15 of the IndianAccounting Standards 101 on the convergence date; and

(F) adjustments relating to cumulative translation differences of a foreign operation inaccordance with paragraph D13 of the Indian Accounting Standards 101 on the convergencedate.’;

(iii) in Explanation 1,—

(a) for the words “net profit”, the word “profit” shall be substituted;

(b) for the words “profit and loss account” wherever they occur, the words “statement of profitand loss” shall be substituted;

(c) in clause (k) for the words “profit or loss account”, the words “statement of profit and loss”shall be substituted;

(iv) in Explanation 3,—

(a) for the words, brackets and figures “proviso to sub-section (2) of section 211 of the CompaniesAct, 1956”, the words, brackets and figures “second proviso to sub-section (1) of section 129 ofthe Companies Act, 2013” shall be substituted;

(b) for the words “profit and loss account”, the words “statement of profit and loss” shall besubstituted;

(c) for the words and figures “Part II and Part III of Schedule VI to the Companies Act, 1956”,the words and figures “Schedule III to the Companies Act, 2013” shall be substituted.

48. In section 115JD of the Income-tax Act, with effect from the 1st day of April, 2018,—

(a) in sub-section (2), the following proviso shall be inserted, namely:—

“Provided that where the amount of tax credit in respect of any income-tax paid in any countryor specified territory outside India, under section 90 or section 90A or section 91, allowed againstthe alternate minimum tax payable exceeds the amount of the tax credit admissible against theregular income-tax payable by the assessee, then, while computing the amount of credit underthis sub-section, such excess amount shall be ignored.”;

(b) in sub-section (4), for the words “tenth assessment year”, the words “fifteenth assessmentyear” shall be substituted.

49. In section 119 of the Income-tax Act, in sub-section (2), in clause (a), after the figures “271”, thefigures and letters “,271C, 271CA” shall be inserted.


(i) in sub-section (1), after the fourth proviso, the following Explanation shall be inserted andshall be deemed to have been inserted with effect from the 1st day of April, 1962, namely:—

“Explanation.––For the removal of doubts, it is hereby declared that the reason to believe, asrecorded by the income-tax authority under this sub-section, shall not be disclosed to any personor any authority or the Appellate Tribunal.”;

(ii) in sub-section (1A), the following Explanation shall be inserted and shall be deemed to havebeen inserted with effect from the 1st day of October, 1975, namely:—

“Explanation.––For the removal of doubts, it is hereby declared that the reason to suspect, asrecorded by the income-tax authority under this sub-section, shall not be disclosed to any personor any authority or the Appellate Tribunal.”;

Amendmentof section115JD.

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Amendmentof section119.Amendmentof section132.

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(iii) after sub-section (9A), the following sub-sections shall be inserted, namely:—

“(9B) Where, during the course of the search or seizure or within a period of sixty days from thedate on which the last of the authorisations for search was executed, the authorised officer, forthe reasons to be recorded in writing, is satisfied that for the purpose of protecting the interest ofrevenue, it is necessary so to do, he may with the previous approval of the Principal DirectorGeneral or Director General or the Principal Director or Director, by order in writing, attachprovisionally any property belonging to the assessee, and for the said purpose the provisions ofthe Second Schedule shall, mutatis mutandis, apply.

(9C) Every provisional attachment made under sub-section (9B) shall cease to have effectafter the expiry of a period of six months from the date of the order referred to in sub-section (9B).

(9D) The authorised officer may, during the course of the search or seizure or within a periodof sixty days from the date on which the last of the authorisations for search was executed, makea reference to a Valuation Officer referred to in section 142A, who shall estimate the fair marketvalue of the property in the manner provided under that section and submit a report of the estimateto the said officer within a period of sixty days from the date of receipt of such reference.”;

(iv) for Explanation 1, the following Explanation shall be substituted, namely:—

‘Explanation 1.––For the purposes of sub-sections (9A), (9B) and (9D), with respect to “executionof an authorisation for search”, the provisions of sub-section (2) of section 153B shall apply.’.

51. In section 132A of the Income-tax Act, in sub-section (1), the following Explanation shall beinserted and shall be deemed to have been inserted with effect from the 1st day of October, 1975,namely:—

“Explanation.––For the removal of doubts, it is hereby declared that the reason to believe, asrecorded by the income-tax authority under this sub-section, shall not be disclosed to any person orany authority or the Appellate Tribunal.”.


(i) in the first proviso, for the words “and the Principal Commissioner or Commissioner”, thewords “or the Principal Commissioner or Commissioner or the Joint Director or Deputy Director orAssistant Director” shall be substituted;

(ii) in the second proviso, after the words “Director or Principal Commissioner or Commissioner”,the words “, other than the Joint Director or Deputy Director or Assistant Director,” shall be inserted.

53. In section 133A of the Income-tax Act, in sub-section (1),—

(i) in the long line, for the portion beginning with “at which a business or profession” and endingwith “such business or profession––”, the following shall be substituted, namely:—

“at which a business or profession or an activity for charitable purpose is carried on, whethersuch place be the principal place or not of such business or profession or of such activity forcharitable purpose, and require any proprietor, trustee, employee or any other person who mayat that time and place be attending in any manner to, or helping in, the carrying on of suchbusiness or profession or such activity for charitable purpose––”;

(ii) in the Explanation, after the words “business or profession” wherever they occur, the words“or activity for charitable purpose” shall be inserted.

54. In section 133C of the Income-tax Act, after sub-section (2) and before the Explanation, thefollowing sub-section shall be inserted, namely:––

“(3) The Board may make a scheme for centralised issuance of notice and for processing ofinformation or documents and making available the outcome of the processing to the AssessingOfficer.”.


(i) in sub-section (4C),—

(I) after clause (c), the following clause shall be inserted, namely:—

“(ca) person referred to in clause (23AAA) of section 10;”;

(II) after clause (eb), the following clauses shall be inserted, namely:—

“(eba) Investor Protection Fund referred to in clause (23EC) or clause (23ED) of section 10;

(ebb) Core Settlement Guarantee Fund referred to in clause (23EE) of section 10;”;

(III) after clause (f), the following clause shall be inserted, namely:—

“(fa) Board or Authority referred to in clause (29A) of section 10;”;

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Amendmentof section133.


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(IV) in the long line occurring after clause (h), after the words “association or institution,”, thewords “person or” shall be inserted;

(ii) in sub-section (5) [as substituted by section 67 of the Finance Act, 2016], the words “the expiryof one year from” shall be omitted.


(i) in sub-section (1),—

(a) in the long line,—

(A) after the words “together with interest”, the words “and fee” shall be inserted;

(B) for the words “and interest”, the words, “, interest and fee” shall be substituted;

(b) in the Explanation, for the words “and interest as aforesaid, the amount so paid shall firstbe adjusted towards”, the words “, interest and fee as aforesaid, the amount so paid shall first beadjusted towards the fee payable and thereafter towards” shall be substituted;

(ii) in sub-section (3), for the words “or interest or both” at both the places where they occur , thewords “,interest or fee” shall be substituted.


(a) in sub-section (1), with effect from the 1st day of April, 2018,—

(i) in clause (b), for the words “and interest”, the words “, interest and fee” shall be substituted;

(ii) in clause (c),—

(A) for the words “and interest”, the words “, interest and fee” shall be substituted;

(B) for the words “or interest”, the words “, interest or fee” shall be substituted;

(iii) in the first proviso, for the words “or interest”, the words “, interest or fee” shall be substituted;

(b) for sub-section (1D) [as substituted by section 68 of the Finance Act, 2016], the following shallbe substituted, namely:—

“(1D) Notwithstanding anything contained in sub-section (1), the processing of a return shallnot be necessary, where a notice has been issued to the assessee under sub-section (2):

Provided that the provisions of this sub-section shall not apply to any return furnished forthe assessment year commencing on or after the 1st day of April, 2017.”.


(i) in sub-section (1), the following provisos shall be inserted, namely:—

‘Provided that in respect of an order of assessment relating to the assessment year commencingon the 1st day of April, 2018, the provisions of this sub-section shall have effect, as if for thewords “twenty-one months”, the words “eighteen months” had been substituted:

Provided further that in respect of an order of assessment relating to the assessment yearcommencing on or after the 1st day of April, 2019, the provisions of this sub-section shall haveeffect, as if for the words “twenty-one months”, the words “twelve months” had been substituted.’;

(ii) in sub-section (2), the following proviso shall be inserted, namely:—

‘Provided that where the notice under section 148 is served on or after the 1st day ofApril, 2019, the provisions of this sub-section shall have effect, as if for the words “nine months”,the words “twelve months” had been substituted.’;

(iii) in sub-section (3), the following proviso shall be inserted, namely:—

‘Provided that where the order under section 254 is received by the Principal Chief Commissioneror Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, theorder under section 263 or section 264 is passed by the Principal Commissioner or Commissioneron or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if forthe words “nine months”, the words “twelve months” had been substituted.’;

(iv) in sub-section (5), after the proviso, the following proviso shall be inserted and shall bedeemed to have been inserted with effect from the 1st day of June, 2016, namely:—

“Provided further that where an order under section 250 or section 254 or section 260 orsection 262 or section 263 or section 264 requires verification of any issue by way of submissionof any document by the assessee or any other person or where an opportunity of being heard is


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to be provided to the assessee, the order giving effect to the said order under section 250 orsection 254 or section 260 or section 262 or section 263 or section 264 shall be made within thetime specified in sub-section (3).”;

(v) in sub-section (9), the following proviso shall be inserted and shall be deemed to have beeninserted with effect from the 1st day of June, 2016, namely:—

“Provided that where a notice under sub-section (1) of section 142 or sub-section (2) ofsection 143 or section 148 has been issued prior to the 1st day of June, 2016 and the assessmentor reassessment has not been completed by such date due to exclusion of time referred to inExplanation 1, such assessment or reassessment shall be completed in accordance with theprovisions of this section as it stood immediately before its substitution by the Finance Act, 2016.”;

(vi) in Explanation 1, in the third proviso, the figures and letter “153B,” shall be omitted.

59. In section 153A of the Income-tax Act, in sub-section (1),—

(i) in clause (a), first proviso and the second proviso, after the words “six assessment years”wherever they occur, the words “and for the relevant assessment year or years” shall be inserted;

(ii) in clause (b), after the words “requisition is made”, the words “and of the relevant assessmentyear or years” shall be inserted;

(iii) in the third proviso, after the words “requisition is made”, the words “and for the relevantassessment year or years” shall be inserted;

(iv) after the third proviso, the following shall be inserted, namely:—

‘Provided also that no notice for assessment or reassessment shall be issued by the AssessingOfficer for the relevant assessment year or years unless––

(a) the Assessing Officer has in his possession books of account or other documents orevidence which reveal that the income, represented in the form of asset, which has escapedassessment amounts to or is likely to amount to fifty lakh rupees or more in the relevantassessment year or in aggregate in the relevant assessment years;

(b) the income referred to in clause (a) or part thereof has escaped assessment for suchyear or years; and

(c) the search under section 132 is initiated or requisition under section 132A is made on orafter the 1st day of April, 2017.

Explanation 1.––For the purposes of this sub-section, the expression “relevant assessmentyear” shall mean an assessment year preceding the assessment year relevant to the previousyear in which search is conducted or requisition is made which falls beyond six assessmentyears but not later than ten assessment years from the end of the assessment year relevant tothe previous year in which search is conducted or requisition is made.

Explanation 2.––For the purposes of the fourth proviso, “asset” shall include immovableproperty being land or building or both, shares and securities, loans and advances, deposits inbank account.’.

60. In section 153B of the Income-tax Act,—

(a) in sub-section (1),—

(i) in clause (a), after the words “six assessment years”, the words “and for the relevantassessment year or years” shall be inserted;

(ii) for the second and third provisos, the following provisos shall be substituted, namely:—

‘Provided further that in the case where the last of the authorisations for search undersection 132 or for requisition under section 132A was executed during the financial yearcommencing on the 1st day of April, 2018,—

(i) the provisions of clause (a) or clause (b) of this sub-section shall have effect, as if forthe words “twenty-one months”, the words “eighteen months” had been substituted;

(ii) the period of limitation for making the assessment or reassessment in case of otherperson referred to in section 153C, shall be the period of eighteen months from the end of thefinancial year in which the last of the authorisations for search under section 132 or for requisitionunder section 132A was executed or twelve months from the end of the financial year in whichbooks of account or documents or assets seized or requisitioned are handed over undersection 153C to the Assessing Officer having jurisdiction over such other person, whicheveris later:

Provided also that in the case where the last of the authorisations for search undersection 132 or for requisition under section 132A was executed during the financial yearcommencing on or after the 1st day of April, 2019,—

(i) the provisions of clause (a) or clause (b) of this sub-section shall have effect, as iffor the words “twenty-one months”, the words “twelve months” had been substituted;


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(ii) the period of limitation for making the assessment or reassessment in case of otherperson referred to in section 153C, shall be the period of twelve months from the end ofthe financial year in which the last of the authorisations for search under section 132 orfor requisition under section 132A was executed or twelve months from the end of thefinancial year in which books of account or documents or assets seized or requisitionedare handed over under section 153C to the Assessing Officer having jurisdiction oversuch other person, whichever is later:

Provided also that in case where the last of the authorisations for search undersection 132 or for requisition under section 132A was executed and during the course ofthe proceedings for the assessment or reassessment of total income, a reference undersub-section (1) of section 92CA is made, the period available for making an order ofassessment or reassessment shall be extended by twelve months:

Provided also that in case where during the course of the proceedings for theassessment or reassessment of total income in case of other person referred to insection 153C, a reference under sub-section (1) of section 92CA is made, the periodavailable for making an order of assessment or reassessment in case of such otherperson shall be extended by twelve months.’;

(b) in sub-section (3), the following proviso shall be inserted and shall be deemed to have beeninserted with effect from the 1st day of June, 2016, namely:—

“Provided that where a notice under section 153A or section 153C has been issued prior to the1st day of June, 2016 and the assessment has not been completed by such date due to exclusionof time referred to in the Explanation, such assessment shall be completed in accordance withthe provisions of this section as it stood immediately before its substitution by theFinance Act, 2016.”;

(c) in the Explanation, after the second proviso, the following proviso shall be inserted,namely:—

“Provided also that where a proceeding before the Settlement Commission abates undersection 245HA, the period of limitation available under this section to the Assessing Officer formaking an order of assessment or reassessment, as the case may be, shall, after the exclusionof the period under sub-section (4) of section 245HA, be not less than one year; and where suchperiod of limitation is less than one year, it shall be deemed to have been extended to one year.”.

61. In section 153C of the Income-tax Act, in sub-section (1),—

(a) in the long line, after the words “total income of such other person”, the words “for six assessmentyears immediately preceding the assessment year relevant to the previous year in which search isconducted or requisition is “made and” shall be inserted;

(b) in the second proviso, after the words “requisition is made”, the words, brackets, figures andletter “and for the relevant assessment year or years as referred to in sub-section (1) of section153A” shall be inserted.

62. In section 155 of the Income-tax Act, after sub-section (14), the following sub-section shall beinserted with effect from the 1st day of April, 2018, namely:—

“(14A) Where in the assessment for any previous year or in any intimation or deemed intimationunder sub-section (1) of section 143 for any previous year, credit for income-tax paid in any countryoutside India or a specified territory outside India referred to in section 90, section 90A or section 91has not been given on the ground that the payment of such tax was under dispute, and if subsequentlysuch dispute is settled; and the assessee, within six months from the end of the month in which thedispute is settled, furnishes to the Assessing Officer evidence of settlement of dispute and evidenceof payment of such tax along with an undertaking that no credit in respect of such amount hasdirectly or indirectly been claimed or shall be claimed for any other assessment year, the AssessingOfficer shall amend the order of assessment or any intimation or deemed intimation undersub-section (1) of section 143, as the case may be, and the provisions of section 154 shall, so far asmay be, apply thereto:

Provided that the credit of tax which was under dispute shall be allowed for the year in which suchincome is offered to tax or assessed to tax in India.”.

63. After section 194-IA of the Income-tax Act, the following section shall be inserted with effectfrom the 1st day of June, 2017, namely:—

‘194-IB. (1) Any person, being an individual or a Hindu undivided family (other than those referredto in the second proviso to section 194-I), responsible for paying to a resident any income by way ofrent exceeding fifty thousand rupees for a month or part of a month during the previous year, shalldeduct an amount equal to five per cent. of such income as income-tax thereon.

(2) The income-tax referred to in sub-section (1) shall be deducted on such income at the time ofcredit of rent, for the last month of the previous year or the last month of tenancy, if the property isvacated during the year, as the case may be, to the account of the payee or at the time of paymentthereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordancewith the provisions of this section.


28 of 2016.


Insertion ofnew section194-IB.Payment ofrent bycertainindividuals orHinduundividedfamily.

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(4) In a case where the tax is required to be deducted as per the provisions of section 206AA,such deduction shall not exceed the amount of rent payable for the last month of the previous yearor the last month of the tenancy, as the case may be.

Explanation.—For the purposes of this section, “rent” means any payment, by whatever namecalled, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use ofany land or building or both.’.

64. After section 194-IB of the Income-tax Act as so inserted, the following section shall be inserted,namely:—

“194-IC. Notwithstanding anything contained in section 194-IA, any person responsible for payingto a resident any sum by way of consideration, not being consideration in kind, under the agreementreferred to in sub-section (5A) of section 45, shall at the time of credit of such sum to the account ofthe payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any othermode, whichever is earlier, deduct an amount equal to ten per cent. of such sum as income-taxthereon.”.

65. In section 194J of the Income-tax Act, after the third proviso and before the Explanation, thefollowing proviso shall be inserted with effect from the 1st day of June, 2017, namely:—

“Provided also that the provisions of this section shall have effect, as if for the words“ten per cent.”, the words “two per cent.” had been substituted in the case of a payee, engaged onlyin the business of operation of call centre.”.

66. In section 194LA of the Income-tax Act, after the proviso and before the Explanation, the followingproviso shall be inserted, namely:—

“Provided further that no deduction shall be made under this section where such payment ismade in respect of any award or agreement which has been exempted from levy of income-taxunder section 96 of the Right to Fair Compensation and Transparency in Land Acquisition,Rehabilitation and Resettlement Act, 2013.”.

67. In section 194LC of the Income-tax Act, in sub-section (2),—

(a) in clause (i), with effect from the 1st day of April, 2018,—

(A) in sub-clauses (a) and (c), for the figures, letters and words “1st day of July, 2017”, thefigures, letters and words “1st day of July, 2020” shall be substituted;

(B) in the long line, for the word “and”, the word “or” shall be substituted;

(b) after clause (i), the following clause shall be inserted and shall be deemed to have beeninserted with effect from the 1st day of April, 2016, namely:—

“(ia) in respect of monies borrowed by it from a source outside India by way of issue of rupeedenominated bond before the 1st day of July, 2020, and”.

68. In section 194LD of the Income-tax Act, in sub-section (2), for the figures, letters and words“1st day of July, 2017”, the figures, letters and words “1st day of July, 2020” shall be substituted witheffect from the 1st day of April, 2018.

69. In section 197A of the Income-tax Act, with effect from the 1st day of June, 2017,—

(a) in sub-section (1A), after the word, figures and letter “section 194A” at both the places wherethey occur, the words, figures and letter “or section 194D” shall be inserted;

(b) in sub-section (1C), after the word, figures and letter “section 194A” at both the places wherethey occur, the words, figures and letter “or section 194D” shall be inserted.

70. In section 204 of the Income-tax Act, after clause (iia), the following clause shall be inserted,namely:—

“(iib) in the case of furnishing of information relating to payment to a non-resident, not being acompany, or to a foreign company, of any sum, whether or not chargeable under the provisions ofthis Act, the payer himself, or, if the payer is a company, the company itself including the principalofficer thereof;”.

71. In section 206C of the Income-tax Act,—

(a) in sub-section (1D),—

(A) for the words and brackets “or jewellery or any other goods (other than bullion or jewellery)”,the words and brackets “or any other goods (other than bullion)” shall be substituted;

(B) clause (ii) shall be omitted;

(b) in sub-section (1E), the words “or jewellery” shall be omitted;

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Insertion ofnew section194-IC.Paymentunderspecifiedagreement.

Amendmentof section194J.

Amendmentof section194LA.

30 of 2013.



Amendment ofsection194LC.

Amendment ofsection194LD.

Amendment ofsection 197A.

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(c) in the Explanation occurring after sub-section (11),—

(A) in clause (aa),—

(I) in sub-clause (ii), the words, brackets, figure and letter “or sub-section (1F)” shall beomitted;

(II) after sub-clause (ii), the following sub-clause shall be inserted, namely:—

“(iii) sub-section (1F) means a person who obtains in any sale, goods of the naturespecified in the said sub-section, but does not include,—

(A) the Central Government, a State Government and an embassy, a High Commission,legation, commission, consulate and the trade representation of a foreign State; or

(B) a local authority as defined in Explanation to clause (20) of section 10; or

(C) a public sector company which is engaged in the business of carrying passengers.”;

(B) clause (ab) shall be omitted.

72. After section 206CB of the Income-tax Act, the following section shall be inserted, namely:—

‘206CC. (1) Notwithstanding anything contained in any other provisions of this Act, any personpaying any sum or amount, on which tax is collectible at source under Chapter XVII-BB (hereinreferred to as collectee) shall furnish his Permanent Account Number to the person responsible forcollecting such tax (herein referred to as collector), failing which tax shall be collected at the higherof the following rates, namely:—

(i) at twice the rate specified in the relevant provision of this Act; or

(ii) at the rate of five per cent.

(2) No declaration under sub-section (1A) of section 206C shall be valid unless the person furnisheshis Permanent Account Number in such declaration.

(3) In case any declaration becomes invalid under sub-section (2), the collector shall collect thetax at source in accordance with the provisions of sub-section (1).

(4) No certificate under sub-section (9) of section 206C shall be granted unless the applicationmade under that section contains the Permanent Account Number of the applicant.

(5) The collectee shall furnish his Permanent Account Number to the collector and both shallindicate the same in all the correspondence, bills, vouchers and other documents which are sent toeach other.

(6) Where the Permanent Account Number provided to the collector is invalid or does not belongto the collectee, it shall be deemed that the collectee has not furnished his Permanent AccountNumber to the collector and the provisions of sub-section (1) shall apply accordingly.

(7) The provisions of this section shall not apply to a non-resident who does not have permanentestablishment in India.

Explanation.—For the purposes of this sub-section, the expression “permanent establishment” includesa fixed place of business through which the business of the enterprise is wholly or partly carried on.’.

73. In section 211 of the Income-tax Act, in sub-section (1), in clause (b), for the words, figures andletters “an eligible assessee in respect of an eligible business referred to in section 44AD”, the words,brackets, figures and letters “an assessee who declares profits and gains in accordance with theprovisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA, as the case may be”shall be substituted.

74. In section 234C of the Income-tax Act, in sub-section (1),—

(i) in clause (a), for the words, figures and letters “an eligible assessee in respect of the eligiblebusiness referred to in section 44AD”, the words, brackets and letter “the assessee referred to inclause (b)” shall be substituted;

(ii) in clause (b), for the words, figures and letters “an eligible assessee in respect of the eligiblebusiness referred to in section 44AD”, the words, brackets, figures and letters “an assessee whodeclares profits and gains in accordance with the provisions of sub-section (1) of section 44AD orsub-section (1) of section 44ADA, as the case may be” shall be substituted;

(iii) in the first proviso,—

(A) in clause (c), for the words “first time,” occurring at the end, the words “first time; or” shallbe substituted;

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(B) after clause (c) and before the long line, the following clause shall be inserted, namely:—

“(d) income of the nature referred to in sub-section (1) of section 115BBDA,”;

(C) in the long line, after the words, brackets and letter “or clause (c)”, the words, brackets andletter “or clause (d)” shall be inserted.

75. After section 234E of the Income-tax Act, the following section shall be inserted with effect fromthe 1st day of April, 2018, namely:—

“234F. (1) Without prejudice to the provisions of this Act, where a person required to furnish areturn of income under section 139, fails to do so within the time prescribed in sub-section (1) of saidsection, he shall pay, by way of fee, a sum of,—

(a) five thousand rupees, if the return is furnished on or before the 31st day of December of theassessment year;

(b) ten thousand rupees in any other case:

Provided that if the total income of the person does not exceed five lakh rupees, the fee payableunder this section shall not exceed one thousand rupees.

(2) The provisions of this section shall apply in respect of return of income required to be furnishedfor the assessment year commencing on or after the 1st day of April, 2018.”.

76. After section 241 of the Income-tax Act [as it stood immediately before its omission bysection 81 of the Finance Act, 2001], the following section shall be inserted, namely:—

“241A. For every assessment year commencing on or after the 1st day of April, 2017, whererefund of any amount becomes due to the assessee under the provisions of sub-section (1) ofsection 143 and the Assessing Officer is of the opinion, having regard to the fact that a notice hasbeen issued under sub-section (2) of section 143 in respect of such return, that the grant of therefund is likely to adversely affect the revenue, he may, for reasons to be recorded in writing andwith the previous approval of the Principal Commissioner or Commissioner, as the case may be,withhold the refund up to the date on which the assessment is made.”.

77. In section 244A of the Income-tax Act,—

(i) after sub-section (1A), the following sub-section shall be inserted, namely:—

“(1B) Where refund of any amount becomes due to the deductor in respect of any amount paidto the credit of the Central Government under Chapter XVII-B, such deductor shall be entitled to

receive, in addition to the said amount, simple interest thereon calculated at the rate of one-halfper cent. for every month or part of a month comprised in the period, from the date on which––

(a) claim for refund is made in the prescribed form; or

(b) tax is paid, where refund arises on account of giving effect to an order under section 250or section 254 or section 260 or section 262,

to the date on which the refund is granted.”;

(ii) in sub-section (2),—

(a) after the words “to the assessee”, the words “or the deductor, as the case may be,” shall beinserted;

(b) after the word, brackets, figure and letter “or (1A)”, the word, brackets, figure and letter “or(1B)” shall be inserted.

78. In section 245A of the Income-tax Act, in clause (b), in the Explanation, in clause (iv), for the

words “two years from the end of the relevant assessment year”, the words, brackets and figures “thetime specified for making assessment under sub-section (1) of section 153” shall be substituted.

79. In section 245N of the Income-tax Act, for clause (b), the following clause shall be substituted,namely:—

‘(b) “applicant” means—

(A) any person who—

(I) is a non-resident referred to in sub-clause (i) of clause (a); or

Insertion ofnew section234F.

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(II) is a resident referred to in sub-clause (ii) of clause (a); or

(III) is a resident referred to in sub-clause (iia) of clause (a) falling within any such class orcategory of persons as the Central Government may, by notification in the Official Gazette,

specify; or

(IV) is a resident falling within any such class or category of persons as the CentralGovernment may, by notification in the Official Gazette, specify in this behalf; or

(V) is referred to in sub-clause (iv) of clause (a),

and makes an application under sub-section (1) of section 245Q;

(B) an applicant as defined in clause (c) of section 28E of the Customs Act, 1962;

(C) an applicant as defined in clause (c) of section 23A of the Central Excise Act, 1944;

(D) an applicant as defined in clause (b) of section 96A of the Finance Act, 1994;’.

80. In section 245-O of the Income-tax Act,—

‘(a) in sub-section (3),—

(i) in clause (a), after the words “a Judge of the Supreme Court”, the words “or the ChiefJustice of a High Court or for at least seven years a Judge of a High Court” shall be inserted;

(ii) for clause (c), the following clause shall be substituted, namely:—

“(c) a revenue Member—

(i) from the Indian Revenue Service, who is, or is qualified to be, a Member of the Board; or

(ii) from the Indian Customs and Central Excise Service, who is, or is qualified to be, aMember of the Central Board of Excise and Customs,

on the date of occurrence of vacancy;”;

(iii) in clause (d), after the words “Government of India”, the words “on the date of occurrenceof vacancy” shall be inserted;

(b) after sub-section (6), the following sub-sections shall be inserted, namely:—

“(6A) In the event of the occurrence of any vacancy in the office of the Chairman by reason ofhis death, resignation or otherwise, the senior-most Vice-chairman shall act as the Chairmanuntil the date on which a new Chairman, appointed in accordance with the provisions of this Act

to fill such vacancy, enters upon his office.

(6B) In case the Chairman is unable to discharge his functions owing to absence, illness orany other cause, the senior-most Vice-chairman shall discharge the functions of the Chairmanuntil the date on which the Chairman resumes his duties.”.

81. In section 245Q of the Income-tax Act, in sub-section (1), after the words “advance ruling underthis Chapter”, the words, figures and letters “or under Chapter V of the Customs Act, 1962 or under

Chapter IIIA of the Central Excise Act, 1944 or under Chapter VA of the Finance Act, 1994” shall beinserted.

82. In section 253 of the Income-tax Act, in sub-section (1), in clause (f), after the words “authority

under”, the words, brackets and figures “sub-clause (iv) or sub-clause (v) or” shall be inserted.

83. After section 269SS of the Income-tax Act, the following section shall be inserted, namely:—

‘269ST. No person shall receive an amount of three lakh rupees or more—

(a) in aggregate from a person in a day; or

(b) in respect of a single transaction; or

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(c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or an account payee bank draft or use of electronicclearing system through a bank account:

Provided that the provisions of this section shall not apply to—

(i) any receipt by—

(a) Government;

(b) any banking company, post office savings bank or co-operative bank;

(ii) transactions of the nature referred to in section 269SS;

(iii) such other persons or class of persons or receipts, which the Central Government may, bynotification in the Official Gazette, specify.

Explanation.—For the purposes of this section,—

(a) “banking company” shall have the same meaning as assigned to it in clause (i) of the

Explanation to section 269SS;

(b) “co-operative bank” shall have the same meaning as assigned to it in clause (ii) of theExplanation to section 269SS.’.

84. After section 271D of the Income-tax Act, the following section shall be inserted, namely:—

“271DA. (1) If a person receives any sum in contravention of the provisions of section 269ST, heshall be liable to pay, by way of penalty, a sum equal to the amount of such receipt:

Provided that no penalty shall be imposable if such person proves that there were good andsufficient reasons for the contravention.

(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.”.

85. In section 271F of the Income-tax Act, the following proviso shall be inserted with effect from the1st day of April, 2018, namely:—

“Provided that nothing contained in this section shall apply to and in relation to the return ofincome required to be furnished for any assessment year commencing on or after the 1st day ofApril, 2018.”.

86. After section 271-I of the Income-tax Act, the following section shall be inserted, namely:—

‘271J. Without prejudice to the provisions of this Act, where the Assessing Officer or theCommissioner (Appeals), in the course of any proceedings under this Act, finds that an accountantor a merchant banker or a registered valuer has furnished incorrect information in any report orcertificate furnished under any provision of this Act or the rules made thereunder, the AssessingOfficer or the Commissioner (Appeals) may direct that such accountant or merchant banker orregistered valuer, as the case may be, shall pay, by way of penalty, a sum of ten thousand rupeesfor each such report or certificate.

Explanation.––For the purposes of this section,—

(a) “accountant” means an accountant referred to in the Explanation below sub-section (2) ofsection 288;

(b) “merchant banker” means Category I merchant banker registered with the Securities andExchange Board of India established under section 3 of the Securities and Exchange Board ofIndia Act, 1992;

(c) “registered valuer” means a person defined in clause (oaa) of section 2 of theWealth-tax Act, 1957.’.

87. In section 273B of the Income-tax Act, after the word, figures and letter “section 271-I,”, theword, figures and letter “section 271J,” shall be inserted.

Insertion ofnew section271J.

Penalty forfurnishingincorrectinformation inreports orcertificates.

Insertion ofnew section271DA

Penalty forfailiure tocomply withprovisions ofsection269ST.

Amendment ofsection 271F.

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CHAPTER IV

INDIRECT TAXES

Customs

88. In the Customs Act, 1962 (hereinafter referred to as the Customs Act), in section 2,––

(a) after clause (3), the following clause shall be inserted, namely:—

‘(3A) “beneficial owner” means any person on whose behalf the goods are being imported orexported or who exercises effective control over the goods being imported or exported;’;

(b) in clause (13), for the words “customs airport”, the words “customs airport, international courierterminal, foreign post office” shall be substituted;

(c) in clause (16), the words “in the case of goods imported or to be exported by post, the entryreferred to in section 82 or’’ shall be omitted;

(d) in clause (20), for the words “any owner”, the words “any owner, beneficial owner” shall besubstituted;

(e) after clause (20), the following clause shall be inserted, namely:––

‘(20A) “foreign post office” means any post office appointed under clause (e) of sub-section (1)of section 7 to be a foreign post office;’;

(f) in clause (26), for the words “any owner”, the words “any owner, beneficial owner” shall besubstituted;

(g) after clause (28), the following clause shall be inserted, namely:––

‘(28A) “international courier terminal” means any place appointed under clause (f) of sub-section (1) of section 7 to be an international courier terminal;’;

(h) after clause (30A), the following clause shall be inserted, namely:––

‘(30B) “passenger name record information” means the records prepared by an operator ofany aircraft or vessel or vehicle or his authorised agent for each journey booked by or on behalfof any passenger;’.

89. In the Customs Act, in section 7, in sub-section (1), after clause (d), the following clauses shallbe inserted, namely:––

“(e) the post offices which alone shall be foreign post offices for the clearance of imported goodsor export goods or any class of such goods;

(f) the places which alone shall be international courier terminals for the clearance of importedgoods or export goods or any class of such goods.”.

90. In the Customs Act, in section 17, for sub-section (3), the following sub-section shall besubstituted, namely:––

“(3) For verification of self-assessment under sub-section (2), the proper officer may require theimporter, exporter or any other person to produce any document or information, whereby the dutyleviable on the imported goods or export goods, as the case may be, can be ascertained andthereupon, the importer, exporter or such other person shall produce such document or furnishsuch information.”.

91. In the Customs Act, in section 27, in sub-section (2), in the first proviso, after clause (f), thefollowing clause shall be inserted, namely:—

“(g) the duty paid in excess by the importer before an order permitting clearance of goods forhome consumption is made where—

(i) such excess payment of duty is evident from the bill of entry in the case of self-assessed billof entry; or

(ii) the duty actually payable is reflected in the reassessed bill of entry in the case of reassessment.”.

92. In the Customs Act, in section 28E, for clause (e), the following clause shall be substituted,namely:––


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52 of 1962.

f



Amendment ofsection 28E.

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‘(e) “Authority” means the Authority for Advance Rulings constituted under section 245-O of theIncome-tax Act, 1961;’.

93. In the Customs Act, for section 28F, the following section shall be substituted, namely:––

“28F. (1) Subject to the provisions of this Act, the Authority for Advance Rulings constituted undersection 245-O of the Income-tax Act, 1961 shall be the Authority for giving advance rulings for thepurposes of this Act and the said Authority shall exercise the jurisdiction, powers and authorityconferred on it by or under this Act:

Provided that the Member from the Indian Revenue Service (Customs and Central Excise), whois qualified to be a Member of the Board, shall be the revenue Member of the Authority for thepurposes of this Act.

(2) On and from the date on which the Finance Bill, 2017 receives the assent of the President,every application and proceeding pending before the erstwhile Authority for Advance Rulings (CentralExcise, Customs and Service Tax) shall stand transferred to the Authority from the stage at whichsuch application or proceeding stood as on the date of such assent.”.

94. In the Customs Act, section 28G shall be omitted.

95. In the Customs Act, in section 28H, in sub-section (3), for the words “two thousand five hundredrupees”, the words “ten thousand rupees” shall be substituted.

96. In the Customs Act, in section 28-I, in sub-section (6), for the words “ninety days”, the words“six months” shall be substituted.

97. In the Customs Act, after section 30, the following section shall be inserted, namely:––

“30A. (1) The person-in-charge of a conveyance that enters India from any place outside India orany other person as may be specified by the Central Government by notification in the OfficialGazette, shall deliver to the proper officer—

(i) the passenger and crew arrival manifest before arrival in the case of an aircraft or a vesseland upon arrival in the case of a vehicle; and

(ii) the passenger name record information of arriving passengers,

in such form, containing such particulars, in such manner and within such time, as may be prescribed.

(2) Where the passenger and crew arrival manifest or the passenger name record information orany part thereof is not delivered to the proper officer within the prescribed time and if the properofficer is satisfied that there was no sufficient cause for such delay, the person-in-charge or the otherperson referred to in sub-section (1) shall be liable to such penalty, not exceeding fifty thousandrupees, as may be prescribed.”.

98. In the Customs Act, after section 41, the following section shall be inserted, namely:––

“41A. (1) The person-in-charge of a conveyance that departs from India to a place outside Indiaor any other person as may be specified by the Central Government by notification in the OfficialGazette, shall deliver to the proper officer—

(i) the passenger and crew departure manifest; and

(ii) the passenger name record information of departing passengers,

in such form, containing such particulars, in such manner and within such time, as may be prescribed.

(2) Where the passenger and crew departure manifest or the passenger name record informationor any part thereof is not delivered to the proper officer within the prescribed time and if the properofficer is satisfied that there was no sufficient cause for such delay, the person-in-charge or the otherperson referred to in sub-section (1) shall be liable to such penalty, not exceeding fifty thousandrupees, as may be prescribed.”.

99. In the Customs Act, in section 46, for sub-section (3), the following sub-section shall besubstituted, namely:—

“(3) The importer shall present the bill of entry under sub-section (1) before the end of the nextday following the day (excluding holidays) on which the aircraft or vessel or vehicle carrying the

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Insertion of newsection 30A.

Insertion ofnew section41A.

Authority forAdvanceRulings.

Omission ofsection 28G.

Amendment ofsection 28H.

Amendment ofsection 28-I.

Passenger andcrew arrivalmanifest andpassengername recordinformation.

43 of 1961.

Substitution ofnew section forsection 28F.

43 of 1961.

Amendment ofsection 46.

Passenger andcrew departuremanifest andpassengername recordinformation.

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goods arrives at a customs station at which such goods are to be cleared for home consumption orwarehousing:

Provided that a bill of entry may be presented within thirty days of the expected arrival of theaircraft or vessel or vehicle by which the goods have been shipped for importation into India:

Provided further that where the bill of entry is not presented within the time so specified and theproper officer is satisfied that there was no sufficient cause for such delay, the importer shall paysuch charges for late presentation of the bill of entry as may be prescribed.”.

100. In the Customs Act, in section 47, in sub-section (2), for the portion beginning with the words“Where the importer fails to pay” and ending with the words “in the Official Gazette”, the followingshall be substituted, namely:—

“The importer shall pay the import duty—

(a) on the date of presentation of the bill of entry in the case of self-assessment; or

(b) within one day (excluding holidays) from the date on which the bill of entry is returned tohim by the proper officer for payment of duty in the case of assessment, reassessment orprovisional assessment; or

(c) in the case of deferred payment under the proviso to sub-section (1), from such due dateas may be specified by rules made in this behalf,

and if he fails to pay the duty within the time so specified, he shall pay interest on the duty not paidor short-paid till the date of its payment, at such rate, not less than ten per cent. but not exceedingthirty-six per cent. per annum, as may be fixed by the Central Government, by notification in theOfficial Gazette.”.

101. In the Customs Act, for section 49, the following section shall be substituted, namely:––

“49.Where,––

(a) in the case of any imported goods, whether dutiable or not, entered for home consumption,the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied on theapplication of the importer that the goods cannot be cleared within a reasonable time;

(b) in the case of any imported dutiable goods, entered for warehousing, the AssistantCommissioner of Customs or Deputy Commissioner of Customs is satisfied on the application ofthe importer that the goods cannot be removed for deposit in a warehouse within a reasonabletime,

the goods may pending clearance or removal, as the case may be, be permitted to be stored in apublic warehouse for a period not exceeding thirty days:

Provided that the provisions of Chapter IX shall not apply to goods permitted to be stored in apublic warehouse under this section:

Provided further that the Principal Commissioner of Customs or Commissioner of Customs mayextend the period of storage for a further period not exceeding thirty days at a time.”.

102. In the Customs Act, in section 69, in sub-section (1), for clause (a), the following clause shallbe substituted, namely:––

“(a) a shipping bill or a bill of export or the form as prescribed under section 84 has been presentedin respect of such goods;”.

103. In the Customs Act, section 82 shall be omitted.

104. In the Customs Act, in section 84, for clause (a), the following clause shall be substituted,namely:––

“(a) the form and manner in which an entry may be made in respect of goods imported or to beexported by post;”.

105. In the Customs Act, in section 127B, after sub-section (4), the following sub-section shall beinserted, namely:––

“(5) Any person, other than an applicant referred to in sub-section (1), may also make an applicationto the Settlement Commission in respect of a show cause notice issued to him in a case relating to

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Storage ofimportedgoods inwarehousependingclearance orremoval.


Omission ofsection 82.

Substitution ofnew section forsection 49.


31

the applicant which has been settled or is pending before the Settlement Commission and suchnotice is pending before an adjudicating authority, in such manner and subject to such conditions,as may be specified by rules.’’.

106. In the Customs Act, in section 127C,––

(i) in sub-section (3), for the words “Commissioner of Customs having jurisdiction and theCommissioner”, the words “Commissioner of Customs or Principal Additional Director General ofRevenue Intelligence or Additional Director General of Revenue Intelligence, as the case may be,having jurisdiction and such Commissioner or Additional Director General” shall be substituted;

(ii) after sub-section (5), the following sub-section shall be inserted, namely:––

“(5A) The Settlement Commission may, at any time within three months from the date ofpassing of the order under sub-section (5), may amend such order to rectify any error apparenton the face of record, either suo motu or when such error is brought to its notice by the jurisdictionalPrincipal Commissioner of Customs or Commissioner of Customs or Principal Additional DirectorGeneral of Revenue Intelligence or Additional Director General of Revenue Intelligence or theapplicant:

Provided that no amendment which has the effect of enhancing the liability of the applicantshall be made under this sub-section, unless the Settlement Commission has given notice ofsuch intention to the applicant and the jurisdictional Principal Commissioner of Customs orCommissioner of Customs or Principal Additional Director General of Revenue Intelligence orAdditional Director General of Revenue Intelligence, as the case may be, and has given them areasonable opportunity of being heard.”.

107. In the Customs Act, in section 157, in sub-section (2), after clause (aa), the following clauseshall be inserted, namely:––

“(ab) the form, the particulars, the manner and the time of delivering the passenger and crewmanifest for arrival and departure and passenger name record information and the penalty for delayin delivering such information under sections 30A and 41A;”.

Customs Tariff

108. In the Customs Tariff Act, 1975 (hereinafter referred to as the Customs Tariff Act), in section9, in sub-section (3), for clause (c), the following clause shall be substituted, namely:––

“(c) the subsidy has been conferred on a limited number of persons engaged in the manufacture,production or export of articles;”.

109. In the Customs Tariff Act, the First Schedule shall—

(a) be amended in the manner specified in the Second Schedule;

(b) be also amended in the manner specified in the Third Schedule.

110. In the Customs Tariff Act, the Second Schedule shall be amended in the manner specified inthe Fourth Schedule.

Excise

111. In the Central Excise Act, 1944 (hereinafter referred to as the Central Excise Act), in section23A, for clause (e), the following clause shall be substituted, namely:––

‘(e) “Authority” means the Authority for Advance Rulings as defined in clause (e) of section 28Eof the Customs Act, 1962;’.

112. In the Central Excise Act, section 23B shall be omitted.

113. In the Central Excise Act, in section 23C, in sub-section (3), for the words “two thousand andfive hundred rupees”, the words “ten thousand rupees” shall be substituted.

114. In the Central Excise Act, in section 23D, in sub-section (6), for the words “ninety days”, thewords “six months” shall be substituted.

115. In the Central Excise Act, after section 23H, the following section shall be inserted, namely:—

“23-I. On and from the date on which the Finance Bill, 2017 receives the assent of the President,every application and proceeding pending before the erstwhile Authority for Advance Rulings (CentralExcise, Customs and Service Tax) shall stand transferred to the Authority from the stage at whichsuch application or proceeding stood as on the date of such assent.”.

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51 of 1975.

Amendment ofFirst Schedule.




Amendment ofsection 23A.

Amendment ofSecondSchedule.

52 of 1962.

Omission ofsection 23B.

Amendment ofsection 23C.

Amendment ofsection 23D.

Insertion of newsection 23-I.Transitionalprovision.

1 of 1944.

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116. In the Central Excise Act, in section 32E, after sub-section (4), the following sub-section shallbe inserted, namely:––

“(5) Any person other than an assessee, may also make an application to the SettlementCommission in respect of a show cause notice issued to him in a case relating to the assesseewhich has been settled or is pending before the Settlement Commission and such notice is pendingbefore an adjudicating authority, in such manner and subject to such conditions, as may beprescribed.”.

117. In the Central Excise Act, in section 32F,––

(i) in sub-section (3), for the words “Commissioner of Central Excise having jurisdiction and theCommissioner”, the words “Commissioner of Central Excise or Principal Additional Director Generalof Central Excise Intelligence or Additional Director General of Central Excise Intelligence, as thecase may be, having jurisdiction and such Commissioner or Additional Director General” shall besubstituted;

(ii) after sub-section (5), the following sub-section shall be inserted, namely:––

“(5A) The Settlement Commission may, at any time within three months from the date of passingof the order under sub-section (5), amend such order to rectify any error apparent on the face ofrecord, either suo motu or when such error is brought to its notice by the jurisdictional PrincipalCommissioner of Central Excise or Commissioner of Central Excise or Principal Additional DirectorGeneral of Central Excise Intelligence or Additional Director General of Central Excise Intelligenceor the applicant:

Provided that no amendment which has the effect of enhancing the liability of the applicantshall be made under this sub-section, unless the Settlement Commission has given notice ofsuch intention to the applicant and the jurisdictional Principal Commissioner of Central Excise orCommissioner of Central Excise or Principal Additional Director General of Central ExciseIntelligence or Additional Director General of Central Excise Intelligence, as the case may be,and has given them a reasonable opportunity of being heard.”.


118. In the Central Excise Tariff Act, 1985 (hereinafter referred to as the Central Excise Tariff Act),the First Schedule shall be amended in the manner specified in the Fifth Schedule.

119. In the Central Excise Tariff Act, in the First Schedule, in Chapter 87, in column (4), for theentry “27%” occurring against tariff items 8702 90 21, 8702 90 22, 8702 90 28 and 8702 90 29, theentry “12.5%” shall be substituted and shall be deemed to have been substituted retrospectively witheffect from the 1st day of January, 2017.

CHAPTER V

SERVICE TAX

120. In the Finance Act, 1994 (hereinafter referred to as the 1994 Act), in section 65B, clause (40)shall be omitted.

121. In the 1994 Act, in section 66D, clause (f) shall be omitted.

122. In the 1994 Act, in section 96A, for clause (d), the following clause shall be substituted,namely:––

‘(d) “Authority” means the Authority for Advance Rulings as defined in clause (e) of section 28E ofthe Customs Act, 1962;’.

123. In the 1994 Act, section 96B shall be omitted.

124. In the 1994 Act, in section 96C, in sub-section (3), for the words “two thousand and fivehundred rupees”, the words “ten thousand rupees” shall be substituted.

125. In the 1994 Act, in section 96D, in sub-section (6), for the words “ninety days”, the words “sixmonths” shall be substituted.

126. In the 1994 Act, after section 96H, the following section shall be inserted, namely:––

Amendmentof section66D.

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Amendmentof section32E.

Amendmentof section32F.

Amendmentof FirstSchedule.


5 of 1986.

32 of 1994.


52 of 1962.

Omission ofsection 96B.

Amendmentof section96C.Amendmentof section96D.

Insertion ofnew section96HA.

Retrospectiveamendmentof certainentries inFirstSchedule.

33

“96HA. On and from the date on which the Finance Bill, 2017 receives the assent of the President,every application and proceeding pending before the erstwhile Authority for Advance Rulings (CentralExcise, Customs and Service Tax) shall stand transferred to the Authority from the stage at whichsuch application or proceeding stood as on the date of such assent.”.

127. In the 1994 Act, after section 103, the following sections shall be inserted, namely:—

“104. (1) Notwithstanding anything contained in section 66, as it stood prior to the 1st day of July,2012, or in section 66B, no service tax, leviable on one time upfront amount (premium, salami, cost,price, development charge or by whatever name called) in respect of taxable service provided oragreed to be provided by a State Government industrial development corporation or undertaking toindustrial units by way of grant of long term lease of thirty years or more of industrial plots, shall belevied or collected during the period commencing from the 1st day of June, 2007 and ending withthe 21st day of September, 2016 (both days inclusive).

(2) Refund shall be made of all such service tax which has been collected, but which would nothave been so collected, had sub-section (1) been in force at all material times.

(3) Notwithstanding anything contained in this Chapter, an application for claim of refund ofservice tax shall be made within a period of six months from the date on which the Finance Bill,2017 receives the assent of the President.

105. (1) Notwithstanding anything contained in section 66, as it stood prior to the 1st day of July,2012, or in section 66B, no service tax shall be levied or collected in respect of taxable servicesprovided or agreed to be provided by the Army, Naval and Air Force Group Insurance Funds by wayof life insurance to members of the Army, Navy and Air Force, respectively, under the Group InsuranceSchemes of the Central Government, during the period commencing from the 10th day of September,2004 and ending with the 1st day of February, 2016 (both days inclusive).

(2) Refund shall be made of all such service tax which has been collected, but which would nothave been so collected, had sub-section (1) been in force at all material times.

(3) Notwithstanding anything contained in this Chapter, an application for the claim of refund ofservice tax shall be made within a period of six months from the date on which the Finance Bill,2017 receives the assent of the President.”.

128. (1) In the Service Tax (Determination of Value) Rules, 2006 made by the Central Governmentin exercise of the powers conferred by section 94 of the Finance Act, 1994, published in the Gazetteof India vide notification of the Government of India in the Ministry of Finance (Department of Revenue)number G.S.R. 228(E), dated the 19th April, 2006,—

(a) rule 2A as inserted by the Service Tax (Determination of Value) (Amendment) Rules, 2007published vide number G.S.R. 375(E), dated the 22nd May, 2007; and

(b) rule 2A as substituted by the Service Tax (Determination of Value) Second AmendmentRules, 2012 published vide number G.S.R. 431(E), dated the 6th June, 2012,

shall stand amended and shall be deemed to have been amended in the manner specified in column(3) of the Sixth Schedule, on and from and up to the corresponding date specified in column (4),against each of the rule specified in column (2) thereof.

(2) Notwithstanding anything contained in any judgment, decree or order of any court, tribunal orother authority, any action taken or anything done or purported to have been taken or done at anytime during the period specified in column (4) of the Sixth Schedule relating to the provisions asamended by sub-section (1) shall be deemed to be and deemed always to have been, for all purposes,as validly and effectively taken or done as if the amendment made by sub-section (1) had been inforce at all material times.

(3) For the purposes of sub-section (1), the Central Government shall have and shall be deemedto have the power to make rules with retrospective effect as if the Central Government had the powerto make rules under section 94 of the Finance Act, 1994, retrospectively, at all material times.

Explanation.––For the removal of doubts, it is hereby declared that no act or omission on the partof any person shall be punishable as an offence which would not have been so punishable had thissection not come into force.

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Specialprovision forexemption incertain casesrelating to lifeinsuranceservicesprovided tomembers ofarmed forcesof Union.

32 of 1994.

Amendment ofrule 2A ofService Tax(Determinationof Value)Rules, 2006,retrospectively.

Transitionalprovision.

Insertion ofnew sections104 and 105.

Specialprovision forexemption incertain casesrelating tolong termlease ofindustrialplots.

32 of 1994.

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CHAPTER VI

MISCELLANEOUS

PART I

AMENDMENTS TO THE INDIAN TRUSTS ACT, 1882

129. The provisions of this Part shall come into force on such date as the Central Governmentmay, by notification in the Official Gazette, appoint.

130. In section 20 of the Indian Trusts Act,1882 [as substituted by section 2 of the Indian Trusts

(Amendment) Act, 2016],––

(i) for the words “invest the money in any of the securities or class of securities expressly authorised

by the instrument of trust or”, the words “make investments as expressly authorised by the instrument

of trust or in any of the securities or class of securities” shall be substituted;

(ii) in the proviso, the words “in any of the securities or class of securities mentioned above” shallbe omitted.

PART II

AMENDMENTS TO THE INDIAN POST OFFICE ACT, 1898

131. The provisions of this Part shall come into force on the 1st day of April, 2017.

132. In section 7 of the Indian Post Office Act, 1898,—

(a) in sub-section (1), for the proviso, the following proviso shall be substituted, namely:—

"Provided that until such notification is issued, the rates set forth in the First Schedule shall bethe rates chargeable under this Act.";

(b) sub-section (2) shall be omitted.

PART III

AMENDMENTS TO THE RESERVE BANK OF INDIA ACT, 1934


134. In the Reserve Bank of India Act, 1934, in section 31, after sub-section (2), the followingsub-section shall be inserted, namely:—

"(3) Notwithstanding anything contained in this section, the Central Government may authoriseany scheduled bank to issue electoral bond.

Explanation.–– For the purposes of this sub-section, ‘’electroal bond’’ means a bond issued byany scheduled bank under the scheme as may be notified by the Central Government.’’.

PART IV

AMENDMENTS TO THE REPRESENTATION OF THE PEOPLE ACT, 1951

135.The provisions of this Part shall come into force on the 1st day of April, 2017.

136. In the Representation of the People Act, 1951, in section 29C, in sub-section (1), the followingshall be inserted, namely:––

‘Provided that nothing contained in this sub-section shall apply to the contributions received byway of an electoral bond.

Explanation.––For the purposes of this sub-section, “electoral bond” means a bond referred to inthe Explanation to sub-section (3) of section 31 of the Reserve Bank of India Act, 1934.

PART V

AMENDMENTS TO THE OIL INDUSTRY (DEVELOPMENT) ACT, 1974


138. In the Oil Industry (Development) Act, 1974, in section 18, in sub-section (2), after clause (d),

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Commencementof this Part.

Amendmentof section 20of Act 2 of1882.

34 of 2016.

Commencementof this Part.Amendmentof section 7of Act 6 of1898.


Amendmentto section 31of Act 2 of1934.


Amendmentof section29C of Act43 of 1951.


Amendment ofsection 18 ofAct 47 of 1974.

2 of 1934.

35

the following clauses shall be inserted, namely:—

'' (e) for meeting any expenditure incurred by any Central Public Sector Undertaking in the oiland gas sector, on behalf of the Central Government;

(f) for meeting expenditure on any scheme or activity by the Central Government relating to oiland gas sector.''.

PART VI

REPEAL OF THE RESEARCH AND DEVELOPMENT CESS ACT, 1986.


140. The Research and Development Cess Act, 1986 is hereby repealed.

141. (1) The repeal of the Research and Development Cess Act, 1986 by this Act shall not—

(a) affect any other enactment in which the repealed enactment has been applied, incorporatedor referred to;

(b) affect the validity, invalidity, effect or consequences of anything already done or suffered, orany right, title, obligation or liability already acquired, accrued or incurred or any remedy or proceedingin respect thereof, or any release or discharge of or from any debt, penalty, obligation, liability, claimor demand, or any indemnity already granted, or the proof of any past act or thing;

(c) affect any principle or rule of law, or established jurisdiction, form or course of pleading,practice or procedure, or existing usage, custom, privilege, restriction, exemption, office orappointment, notwithstanding that the same respectively may have been in any manner affirmed orrecognised or derived by, in or from the enactment hereby repealed;

(d) revive or restore any jurisdiction, office, custom, liability, right, title, privilege, restriction,exemption, usage, practice, procedure or other matter or thing not now existing or in force.

(2) The mention of particular matter in sub-section (1) shall not be held to prejudice or affect thegeneral application of section 6 of the General Clauses Act, 1897, with regard to the effect of repeal.

142. Notwithstanding the repeal of the Research and Development Cess Act, 1986, the proceeds ofduties levied under the said Act immediately preceding the date of commencement of this Part,—

(i) if collected by the collecting agencies but not paid into the Reserve Bank of India; or

(ii) if not collected by the collecting agencies,

shall be paid or, as the case may be, collected and paid into the Reserve Bank of India for beingcredited to the Consolidated Fund of India.

PART VII

AMENDMENTS TO THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

143.The provisions of this Part shall come into force on such date as the Central Governmentmay, by notification, appoint, and different dates may be appointed for different provisions of thisPart.

144. In the Securities and Exchange Board of India Act, 1992 (hereafter in this Part referred to asthe principal Act), in section 2, in sub-section (1),––

(A) after clause (d), the following clauses shall be inserted, namely:––

‘(da) “Insurance Regulatory and Development Authority” means the Insurance Regulatory andDevelopment Authority of India established under sub-section (1) of section 3 of the InsuranceRegulatory and Development Authority Act, 1999;

(db) “Judicial Member” means a Member of the Securities Appellate Tribunal appointed undersub-section (1) of section 15MA and includes the Presiding Officer;’;

(B) after clause (f), the following clause shall be inserted, namely:––

‘(fa) “Pension Fund Regulatory and Development Authority” means the Pension Fund Regulatoryand Development Authority established under sub-section (1) of section 3 of the Pension FundRegulatory and Development Authority Act, 2013;’;

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41 of 1999.

Amendmentof Act 15 of1992.

15 of 1992.

23 of 2013.

Commencementof this Part.Repeal of Act32 of 1986.

Collection andpayment ofarrears ofduties.

32 of 1986.

10 of 1897.

Savings.

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(C) after clause (i), the following clause shall be inserted, namely:––

‘(j) “Technical Member” means a Technical Member appointed under sub-section (1) ofsection 15MB.’.

145. In Chapter VIB of the principal Act,––

(a) in the chapter heading, for the words “APPELLATE TRIBUNAL”, the words “SECURITIESAPPELLATE TRIBUNAL” shall be substituted;

(b) for section 15K, the following section shall be substituted, namely:––

“15K. (1) The Central Government shall, by notification, establish a Tribunal to be known asthe Securities Appellate Tribunal to exercise the jurisdiction, powers and authority conferred on itby or under this Act or any other law for the time being in force.

(2) The Central Government shall also specify in the notification referred to in sub-section (1),the matters and places in relation to which the Securities Appellate Tribunal may exercisejurisdiction.”;

(c) for section 15L, the following section shall be substituted, namely:––

“15L. (1) The Securities Appellate Tribunal shall consist of a Presiding Officer and such numberof Judicial Members and Technical Members as the Central Government may determine, bynotification, to exercise the powers and discharge the functions conferred on the SecuritiesAppellate Tribunal under this Act or any other law for the time being in force.

(2) Subject to the provisions of this Act,—

(a) the jurisdiction of the Securities Appellate Tribunal may be exercised by Benches thereof;

(b) a Bench may be constituted by the Presiding Officer of the Securities Appellate Tribunalwith two or more Judicial or Technical Members as he may deem fit:

Provided that every Bench constituted shall include at least one Judicial Member and oneTechnical Member;

(c) the Benches of the Securities Appellate Tribunal shall ordinarily sit at Mumbai and mayalso sit at such other places as the Central Government may, in consultation with the PresidingOfficer, notify.

(3) Notwithstanding anything contained in sub-section (2), the Presiding Officer may transfer aJudicial Member or a Technical Member of the Securities Appellate Tribunal from one Bench toanother Bench.”;

(d) for section 15M, the following sections shall be substituted, namely:––

“15M. A person shall not be qualified for appointment as the Presiding Officer or a Judicial

Member or a Technical Member of the Securities Appellate Tribunal, unless he—

(a) is, or has been, a Judge of the Supreme Court or a Chief Justice of a High Court or a

Judge of High Court for at least seven years, in the case of the Presiding Officer; and

(b) is, or has been, a Judge of High Court for at least five years, in the case of a Judicial

Member; or

(c) in the case of a Technical Member––

(i) is, or has been, a Secretary or an Additional Secretary in the Ministry or Department of

the Central Government or any equivalent post in the Central Government or a State

Government; or

(ii) is a person of proven ability, integrity and standing having special knowledge and

professional experience, of not less than fifteen years, in financial sector including securities

market or pension funds or commodity derivatives or insurance.

15MA. The Presiding Officer and Judicial Members of the Securities Appellate Tribunal shallbe appointed by the Central Government in consultation with the Chief Justice of India or hisnominee.

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Amendment ofChapter VIB.

Establishmentof SecuritiesAppellateTribunal.

Qualifications forappointment asPresiding Officer,Judicial Memberand TechnicalMember.

Appointmentof PresidingOfficer andJudicialMembers.

Compositionof SecuritiesAppellateTribunal.

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15MB. (1) The Technical Members of the Securities Appellate Tribunal shall be appointed bythe Central Government on the recommendation of a Search-cum-Selection Committee consistingof the following, namely:––

(a) the Presiding Officer, Securities Appellate Tribunal—Chairperson;

(b) the Secretary, Department of Economic Affairs—Member;

(c) the Secretary, Department of Financial Services—Member; and

(d) the Secretary, Legislative Department or Secretary, Department of Legal Affairs—Member.

(2) The Secretary, Department of Economic Affairs shall be the Convener of the Search-cum-Selection Committee.

(3) The Search-cum-Selection Committee shall determine its procedure for recommendingthe names of persons to be appointed under sub-section (1).

15MC. (1) No appointment of the Presiding Officer, a Judicial Member or a Technical Memberof the Securities Appellate Tribunal shall be invalid merely by reason of any vacancy or anydefect in the constitution of the Search-cum-Selection Committee.

(2) A member or part time member of the Board or the Insurance Regulatory and DevelopmentAuthority or the Pension Fund Regulatory and Development Authority, or any person at seniormanagement level equivalent to the Executive Director in the Board or in such Authorities, shall notbe appointed as Presiding Officer or Member of the Securities Appellate Tribunal, during his serviceor tenure as such with the Board or with such Authorities, as the case may be, or within two yearsfrom the date on which he ceases to hold office as such in the Board or in such Authorities.

(3) The Presiding Officer or such other member of the Securities Appellate Tribunal, holdingoffice on the date of commencement of Part VII of Chapter VI of the Finance Act, 2017 shallcontinue to hold office for such term as he was appointed and the other provisions of this Act shallapply to such Presiding Officer or such other member, as if Part VII of Chapter VI of the FinanceAct, 2017 had not been enacted.”;

(e) for section 15N, the following section shall be substituted, namely:––

“15N. The Presiding Officer or every Judicial or Technical Member of the Securities Appellate

Tribunal shall hold office for a term of five years from the date on which he enters upon his office,

and shall be eligible for reappointment for another term of maximum five years:

Provided that no Presiding Officer or the Judicial or Technical Member shall hold office after

he has attained the age of seventy years.”;

(f) after section 15P, the following section shall be inserted, namely:—

“15PA. In the event of occurrence of any vacancy in the office of the Presiding Officer of theSecurities Appellate Tribunal by reason of his death, resignation or otherwise, the senior-mostJudicial Member of the Securities Appellate Tribunal shall act as the Presiding Officer until thedate on which a new Presiding Officer is appointed in accordance with the provisions of this Act.”;

(g) in section 15Q, for sub-section (2), the following sub-section shall be substituted, namely:—

“(2) The Central Government may, after an inquiry made by the Judge of the Supreme Court,remove the Presiding Officer or Judicial Member or Technical Member of the Securities AppellateTribunal, if he—

(a) is, or at any time has been, adjudged as an insolvent;

(b) has become physically or mentally incapable of acting as the Presiding Officer, Judicialor Technical Member;

(c) has been convicted of any offence which, in the opinion of the Central Government,involves moral turpitude;

(d) has, in the opinion of the Central Government, so abused his position as to render hiscontinuation in office detrimental to the public interest; or

(e) has acquired such financial interest or other interest as is likely to affect prejudicially his

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Vacancy notto invalidateselectionproceeding.

Tenure of office ofPresiding Officer,Judicial orTechnicalMembers ofSecuritiesAppellate Tribunal.

Member toact asPresidingOfficer incertaincircumstances.

Search-cum-SelectionCommitteeforappointmentof TechnicalMembers.

38

functions as the Presiding Officer or Judicial or Technical Member:

Provided that he shall not be removed from office under clauses (d) and (e), unless he hasbeen given a reasonable opportunity of being heard in the matter.”;

(h) In section 15T,—

(I) in sub-section (1),––

(A) in clause (b), for the words “under this Act,”, the words “under this Act; or” shall besubstituted;

(B) after clause (b) and before the long line, the following clause shall be inserted, namely:––

“(c) by an order of the Insurance Regulatory and Development Authority or the PensionFund Regulatory and Development Authority,”;

(II) in sub-section (3), after the words “adjudicating officer”, the words “or the InsuranceRegulatory and Development Authority or the Pension Fund Regulatory and DevelopmentAuthority” shall be inserted;

(III) in sub-section (5), after the words “the Board”, the words “or the Insurance Regulatory andDevelopment Authority or the Pension Fund Regulatory and Development Authority, as the casemay be” shall be inserted;

(i) in section 15U, after sub-section (3), the following sub-sections shall be inserted, namely:––

“(4) Where Benches are constituted, the Presiding Officer of the Securities Appellate Tribunalmay, from time to time make provisions as to the distribution of the business of the SecuritiesAppellate Tribunal amongst the Benches and also provide for the matters which may be dealtwith, by each Bench.

(5) On the application of any of the parties and after notice to the parties, and after hearingsuch of them as he may desire to be heard, or on his own motion without such notice, thePresiding Officer of the Securities Appellate Tribunal may transfer any case pending before oneBench, for disposal, to any other Bench.

(6) If a Bench of the Securities Appellate Tribunal consisting of two members differ in opinionon any point, they shall state the point or points on which they differ, and make a reference to thePresiding Officer of the Securities Appellate Tribunal who shall either hear the point or pointshimself or refer the case for hearing only on such point or points by one or more of the othermembers of the Securities Appellate Tribunal and such point or points shall be decided accordingto the opinion of the majority of the members of the Securities Appellate Tribunal who have heardthe case, including those who first heard it.”.

PART VIII

AMENDMENT TO THE FINANCE ACT, 2005

146. In the Finance Act, 2005, the Seventh Schedule shall be amended in the manner specified inthe Seventh Schedule.

PART IX

AMENDMENTS TO THE PAYMENT AND SETTLEMENT SYSTEMS ACT, 2007

147. The provisions of this Part shall come into force on such date as the Central Governmentmay, by notification, appoint, and different dates may be appointed for different provisions of thisPart.

148. In the Payment and Settlement Systems Act, 2007 (hereafter in this Part referred to as theprincipal Act), for Chapter II, the following Chapter shall be substituted, namely:––

‘CHAPTER II

DESIGNATED AUTHORITY

3. (1) The Reserve Bank shall be the designated authority for the regulation and supervision ofpayment systems under this Act.

(2) The Reserve Bank shall exercise the powers, perform the functions and discharge the dutiesconferred on it under this Act through a Board to be known as the “Payments Regulatory Board”.

(3) The Board shall consist of the following members, namely:––

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Amendment ofAct 51 of 2007.


Designatedauthority.

51 of 2007.

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(a) the Governor of the Reserve Bank—Chairperson, ex officio;

(b) the Deputy Governor of the Reserve Bank who is in-charge of the Payment and SettlementSystems—Member, ex officio;

(c) one officer of the Reserve Bank to be nominated by the Central Board of theReserve Bank—Member, ex officio; and

(d) three persons to be nominated by the Central Government—Members.

(4) The powers and functions of the Board referred to in sub-section (2), the time and venue of itsmeetings, the procedures to be followed in such meetings (including the quorum at such meetings)and other matters incidental thereto shall be such as may be prescribed.’.

149. In section 38 of the principal Act, in sub-section (2), in clause (a), for the words, brackets andfigure “Committee constituted under sub-section (2)”, the words, brackets and figure “Board referredto in sub-section (2)” shall be substituted.

PART X

AMENDMENTS TO THE FINANCE ACT, 2016

150. In the Finance Act, 2016,––

(i) in section 50, for the words, figures and letters “with effect from the 1st day of April, 2017”, thewords, figures and letters “and shall be deemed to have been substituted with effect from the1st day of April, 2013” shall be substituted;

(ii) in section 197, clause (c) shall be omitted and shall be deemed to have been omitted witheffect from the 1st day of June, 2016.

————————

Declaration under the Provisional Collection of Taxes Act, 1931

It is hereby declared that it is expedient in the public interest that the provisions of clauses 109(a),110, 118 and 146 of this Bill shall have immediate effect under the Provisional Collection of Taxes Act,1931.

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16 of 1931.

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THE FIRST SCHEDULE(See section 2)

PART I

INCOME-TAX

Paragraph A

(I) In the case of every individual other than the individual referred to in items (II) and (III) of this Paragraph or Hindu undividedfamily or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to insub-clause (vii) of clause (31) of section 2 of the Income-tax Act, not being a case to which any other Paragraph of this Partapplies,—

Rates of income-tax

(1) where the total income does not exceed Rs. 2,50,000

(2) where the total income exceeds Rs. 2,50,000 but does notexceed Rs. 5,00,000


(4) where the total income exceeds Rs. 10,00,000

Nil;

10 per cent. of the amount by which the total incomeexceeds Rs. 2,50,000;

Rs. 25,000 plus 20 per cent. of the amount by whichthe total income exceeds Rs. 5,00,000;

Rs. 1,25,000 plus 30 per cent. of the amount by whichthe total income exceeds Rs. 10,00,000.

(II) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty yearsat any time during the previous year,—

Rates of income-tax


(2) where the total income exceeds Rs. 3,00,000 but doesnot exceed Rs. 5,00,000

(3) where the total income exceeds Rs. 5,00,000 but doesnot exceed Rs. 10,00,000


Nil;


Rs. 20,000 plus 20 per cent. of the amount by whichthe total income exceeds Rs. 5,00,000;


(III) In the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during theprevious year,—

Rates of income-tax




Nil;



Surcharge on income-tax

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section111A or section 112 of the Income-tax Act, shall, in the case of every individual or Hindu undivided family or association of personsor body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31)of section 2 of the Income-tax Act, having a total income exceeding one crore rupees, be increased by a surcharge for the purposeof the Union calculated at the rate of fifteen per cent. of such income-tax:

Provided that in the case of persons mentioned above having total income exceeding one crore rupees, the total amountpayable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total incomeof one crore rupees by more than the amount of income that exceeds one crore rupees.

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Paragraph C

In the case of every firm,—

Rate of income-tax

On the whole of the total income 30 per cent.


The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section111A or section 112 of the Income-tax Act, shall, in the case of every firm, having a total income exceeding one crore rupees, beincreased by a surcharge for the purposes of the Union calculated at the rate of twelve per cent. of such income-tax:

Provided that in the case of every firm mentioned above having total income exceeding one crore rupees, the total amountpayable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total incomeof one crore rupees by more than the amount of income that exceeds one crore rupees.

Paragraph D

In the case of every local authority,—

Rate of income-tax



The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section111A or section 112 of the Income-tax Act, shall, in the case of every local authority, having a total income exceeding one crorerupees, be increased by a surcharge for the purposes of the Union calculated at the rate of twelve per cent. of such income-tax:

Provided that in the case of every local authority mentioned above having total income exceeding one crore rupees, the totalamount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a totalincome of one crore rupees by more than the amount of income that exceeds one crore rupees.

Paragraph E

In the case of a company,—

Rates of income-tax

I. In the case of a domestic company,—

Paragraph B

In the case of every co-operative society,—

Rates of income-tax

(1) where the total income does not exceed Rs.10,000

(2) where the total income exceeds Rs.10,000 but does notexceed Rs. 20,000

(3) where the total income exceeds Rs. 20,000

10 per cent. of the total income;

Rs.1,000 plus 20 per cent. of the amount by which thetotal income exceeds Rs.10,000;

Rs. 3,000 plus 30 per cent. of the amount by which thetotal income exceeds Rs. 20,000.


The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section111A or section 112 of the Income-tax Act, shall, in the case of every co-operative society, having a total income exceeding one crorerupees, be increased by a surcharge for the purposes of the Union calculated at the rate of twelve per cent. of such income-tax:

Provided that in the case of every co-operative society mentioned above having total income exceeding one crore rupees, thetotal amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on atotal income of one crore rupees by more than the amount of income that exceeds one crore rupees.

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29 per cent. of the total income


(i) where its total turnover or the gross receipt in the previous year2014-15 does not exceed five crore rupees;

(ii) other than that referred to in item (i)

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II. In the case of a company other than a domestic company,—

( i) on so much of the total income as consists of,—

(a) royalties received from Government or an Indian concern in pursuance ofan agreement made by it with the Government or the Indian concern after the31st day of March, 1961 but before the 1st day of April, 1976; or

(b) fees for rendering technical services received from Government or anIndian concern in pursuance of an agreement made by it with the Government orthe Indian concern after the 29th day of February, 1964 but before the 1st day ofApril, 1976,

and where such agreement has, in either case, been approved by the CentralGovernment

(ii) on the balance, if any, of the total income

50 per cent.;

40 per cent..


The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions ofsection 111A or section 112 of the Income-tax Act, shall, be increased by a surcharge for the purposes of the Union calculated,—

(i) in the case of every domestic company,––

(a) having a total income exceeding one crore rupees but not exceeding ten crore rupees, at the rate of seven per cent. ofsuch income-tax; and

(b) having a total income exceeding ten crore rupees, at the rate of twelve per cent. of such income-tax;

(ii) in the case of every company other than a domestic company,––

(a) having a total income exceeding one crore rupees but not exceeding ten crore rupees, at the rate of two per cent. ofsuch income-tax; and

(b) having a total income exceeding ten crore rupees, at the rate of five per cent. of such income-tax:

Provided that in the case of every company having a total income exceeding one crore rupees but not exceeding ten crorerupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable asincome-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees:

Provided further that in the case of every company having a total income exceeding ten crore rupees, the total amount payableas income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a totalincome of ten crore rupees by more than the amount of income that exceeds ten crore rupees.

PART II

RATES FOR DEDUCTION OF TAX AT SOURCE IN CERTAIN CASES

In every case in which under the provisions of sections 193, 194, 194A, 194B, 194BB, 194D , 194LBA, 194LBB, 194LBC and195 of the Income-tax Act, tax is to be deducted at the rates in force, deduction shall be made from the income subject to thededuction at the following rates:––

Rate of income-tax

1. In the case of a person other than a company—

(a) where the person is resident in India—

(i) on income by way of interest other than “Interest on securities”

(ii) on income by way of winnings from lotteries, crossword puzzles, card gamesand other games of any sort

(iii) on income by way of winnings from horse races

(iv) on income by way of insurance commission

(v) on income by way of interest payable on—

(A) any debentures or securities for money issued by or on behalf of anylocal authority or a corporation established by a Central, State or ProvincialAct;

(B) any debentures issued by a company where such debentures are listedon a recognised stock exchange in India in accordance with the SecuritiesContracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;

30 per cent.;

10 per cent.;

30 per cent.;

5 per cent.;

10 per cent.;

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Rate of income-tax

(C) any security of the Central or State Government;

(vi) on any other income

(b) where the person is not resident in India—

(i) in the case of a non-resident Indian—

(A) on any investment income

(B) on income by way of long-term capital gains referred to in section 115E orsub-clause (iii) of clause (c) of sub-section (1) of section 112

(C) on income by way of short-term capital gains referred to in section 111A

(D) on other income by way of long-term capital gains [not being long-term capitalgains referred to in clauses (33), (36) and (38) of section 10]

(E) on income by way of interest payable by Government or an Indian concernon moneys borrowed or debt incurred by Government or the Indian concern in foreigncurrency (not being income by way of interest referred to in section 194LB or section194LC)

(F) on income by way of royalty payable by Government or an Indian concern inpursuance of an agreement made by it with the Government or the Indian concernwhere such royalty is in consideration for the transfer of all or any rights (includingthe granting of a licence) in respect of copyright in any book on a subject referred toin the first proviso to sub-section (1A) of section 115A of the Income-tax Act, to theIndian concern, or in respect of any computer software referred to in the secondproviso to sub-section (1A) of section 115A of the Income-tax Act, to a person residentin India

(G) on income by way of royalty [not being royalty of the nature referred to in sub-item (b)(i)(F)] payable by Government or an Indian concern in pursuance of anagreement made by it with the Government or the Indian concern and where suchagreement is with an Indian concern, the agreement is approved by the CentralGovernment or where it relates to a matter included in the industrial policy, for thetime being in force, of the Government of India, the agreement is in accordance withthat policy

(H) on income by way of fees for technical services payable by Government oran Indian concern in pursuance of an agreement made by it with the Government orthe Indian concern and where such agreement is with an Indian concern, theagreement is approved by the Central Government or where it relates to a matterincluded in the industrial policy, for the time being in force, of the Government ofIndia, the agreement is in accordance with that policy

(I) on income by way of winnings from lotteries, crossword puzzles, card gamesand other games of any sort

(J) on income by way of winnings from horse races

(K) on the whole of the other income

(ii) in the case of any other person—

(A) on income by way of interest payable by Government or an Indian concernon moneys borrowed or debt incurred by Government or the Indian concern in foreigncurrency (not being income by way of interest referred to in section 194LB or section194LC)

(B) on income by way of royalty payable by Government or an Indian concern inpursuance of an agreement made by it with the Government or the Indian concernwhere such royalty is in consideration for the transfer of all or any rights (includingthe granting of a licence) in respect of copyright in any book on a subject referred toin the first proviso to sub-section (1A) of section 115A of the Income-tax Act, to theIndian concern, or in respect of any computer software referred to in the secondproviso to sub-section (1A) of section 115A of the Income-tax Act, to a person residentin India

10 per cent.;

20 per cent.;

10 per cent.;

15 per cent.;

20 per cent.;

20 per cent.;

10 per cent.;

10 per cent.;

10 per cent.;

30 per cent.;

30 per cent.;

30 per cent.;

10 per cent.;

20 per cent.;

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(C) on income by way of royalty [not being royalty of the nature referred toin sub-item (b)(ii)(B)] payable by Government or an Indian concern in pursuanceof an agreement made by it with the Government or the Indian concern andwhere such agreement is with an Indian concern, the agreement is approvedby the Central Government or where it relates to a matter included in theindustrial policy, for the time being in force, of the Government of India, theagreement is in accordance with that policy

(D) on income by way of fees for technical services payable by Governmentor an Indian concern in pursuance of an agreement made by it with theGovernment or the Indian concern and where such agreement is with an Indianconcern, the agreement is approved by the Central Government or where itrelates to a matter included in the industrial policy, for the time being in force,of the Government of India, the agreement is in accordance with that policy

(E) on income by way of winnings from lotteries, crossword puzzles, cardgames and other games of any sort

(F) on income by way of winnings from horse races

(G) on income by way of short-term capital gains referred to in section111A

(H) on income by way of long-term capital gains referred to in sub-clause(iii) of clause (c) of sub-section (1) of section 112

(I) on income by way of other long-term capital gains [not being long-term capital gains referred to in clauses (33), (36) and (38) of section 10]

(J) on the whole of the other income

2. In the case of a company—

(a) where the company is a domestic company—

(i) on income by way of interest other than “Interest on securities”

(ii) on income by way of winnings from lotteries, crossword puzzles, cardgames and other games of any sort

(iii) on income by way of winnings from horse races

(iv) on any other income

(b) where the company is not a domestic company—

(i) on income by way of winnings from lotteries, crossword puzzles, cardgames and other games of any sort

(ii) on income by way of winnings from horse races

(iii) on income by way of interest payable by Government or an Indian concernon moneys borrowed or debt incurred by Government or the Indian concern inforeign currency (not being income by way of interest referred to in section 194LBor section 194LC)

(iv) on income by way of royalty payable by Government or an Indian concernin pursuance of an agreement made by it with the Government or the Indianconcern after the 31st day of March, 1976 where such royalty is in considerationfor the transfer of all or any rights (including the granting of a licence) in respectof copyright in any book on a subject referred to in the first proviso to sub-section(1A) of section 115A of the Income-tax Act, to the Indian concern, or in respect ofany computer software referred to in the second proviso to sub-section (1A) ofsection 115A of the Income-tax Act, to a person resident in India

(v) on income by way of royalty [not being royalty of the nature referred to insub-item (b)(iv)] payable by Government or an Indian concern in pursuance ofan agreement made by it with the Government or the Indian concern and wheresuch agreement is with an Indian concern, the agreement is approved by theCentral Government or where it relates to a matter included in the industrialpolicy, for the time being in force, of the Government of India, the agreement is inaccordance with that policy—

(A) where the agreement is made after the 31st day of March, 1961 butbefore the 1st day of April, 1976

10 per cent.;

10 per cent.;

30 per cent.;

10 per cent.;

10 per cent.;

15 per cent.;

30 per cent..

30 per cent.;

20 per cent.;

10 per cent.;

30 per cent.;

30 per cent.;

30 per cent.;

30 per cent.;

20 per cent.;

10 per cent.;

Rate of income-tax

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50 per cent.;

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(B) where the agreement is made after the 31st day of March, 1976

(vi) on income by way of fees for technical services payable by Government or anIndian concern in pursuance of an agreement made by it with the Government or theIndian concern and where such agreement is with an Indian concern, the agreement isapproved by the Central Government or where it relates to a matter included in theindustrial policy, for the time being in force, of the Government of India, the agreementis in accordance with that policy—

(A) where the agreement is made after the 29th day of February, 1964 butbefore the 1st day of April, 1976

(B) where the agreement is made after the 31st day of March, 1976

(vii) on income by way of short-term capital gains referred to in section 111A

(viii) on income by way of long-term capital gains referred to in sub-clause (iii) ofclause (c) of sub-section (1) of section 112

(ix) on income by way of other long-term capital gains [not being long-term capitalgains referred to in clauses (33), (36) and (38) of section 10]

(x) on any other income

10 per cent.;

10 per cent.;

10 per cent.;

50 per cent.;

15 per cent.;

20 per cent.;

40 per cent..

Rate of income-tax


The amount of income-tax deducted in accordance with the provisions of––

(i) item 1 of this Part, shall be increased by a surcharge, for the purposes of the Union,––

(a) in the case of every individual or Hindu undivided family or association of persons or body of individuals, whetherincorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, being a non-resident, calculated,––

I. at the rate of ten per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid andsubject to the deduction exceeds fifty lakh rupees but does not exceed one crore rupees;

II. at the rate of fifteen per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paidand subject to the deduction exceeds one crore rupees; and

(b) in the case of every co-operative society or firm, being a non-resident, calculated at the rate of twelve per cent., wherethe income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees;

(ii) Item 2 of this Part shall be increased by a surcharge, for purposes of the Union, in the case of every company other thana domestic company, calculated,––

(a) at the rate of two per cent. of such income-tax where the income or the aggregate of such incomes paid or likely to bepaid and subject to the deduction exceeds one crore rupees but does not exceed ten crore rupees; and

(b) at the rate of five per cent. of such income-tax where the income or the aggregate of such incomes paid or likely to bepaid and subject to the deduction exceeds ten crore rupees.

PART III

RATES FOR CHARGING INCOME-TAX IN CERTAIN CASES, DEDUCTING INCOME-TAX FROMINCOME CHARGEABLE UNDER THE HEAD “SALARIES” AND COMPUTING “ADVANCE TAX”

In cases in which income-tax has to be charged under sub-section (4) of section 172 of the Income-tax Act or sub-section (2) ofsection 174 or section 174A or section 175 or sub-section (2) of section 176 of the said Act or deducted from, or paid on, fromincome chargeable under the head “Salaries” under section 192 of the said Act or in which the “advance tax” payable underChapter XVII-C of the said Act has to be computed at the rate or rates in force, such income-tax or, as the case may be, “advancetax” [not being “advance tax” in respect of any income chargeable to tax under Chapter XII or Chapter XII-A or income chargeableto tax under section 115JB or section 115JC or Chapter XII-FA or Chapter XII-FB or sub-section (1A) of section 161 or section 164or section 164A or section 167B of the Income-tax Act at the rates as specified in that Chapter or section or surcharge, whereverapplicable, on such “advance tax” in respect of any income chargeable to tax under section 115A or section 115AB or section115AC or section 115ACA or section 115AD or section 115B or section 115BA or section 115BB or section 115BBA or section115BBC or section 115BBD or section 115BBDA or section 115BBE or section 115BBF or section 115BBG or section 115E orsection 115JB or section 115JC] shall be charged, deducted or computed at the following rate or rates:—

Paragraph A(I) In the case of every individual other than the individual referred to in items (II) and (III) of this Paragraph or Hindu undivided

family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to insub-clause (vii) of clause (31) of section 2 of the Income-tax Act, not being a case to which any other Paragraph of this Partapplies,—

Explanation.— For the purposes of item 1(b)(i) of this Part, “investment income” and “non-resident Indian” shall have themeanings assigned to them in Chapter XII-A of the Income-tax Act.

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Rates of income-tax





Nil;


Rs. 12,500 plus 20 per cent. of the amount by which thetotal income exceeds Rs. 5,00,000;


(II) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty yearsat any time during the previous year,—

Rates of income-tax





Nil;


Rs. 10,000 plus 20 per cent. of the amount by which thetotal income exceeds Rs. 5,00,000;


(III) In the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during theprevious year,—

Rates of income-tax




Nil;




The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section111A or section 112 of the Income-tax Act, shall be increased by a surcharge for the purposes of the Union, calculated, in the caseof every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or everyartificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act,—

(a) having a total income exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent. of suchincome-tax; and

(b) having a total income exceeding one crore rupees, at the rate of fifteen per cent. of such income-tax:

Provided that in the case of persons mentioned above having total income exceeding,—

(a) fifty lakh rupees but not exceeding one crore rupees, the total amount payable as income-tax and surcharge on suchincome shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amountof income that exceeds fifty lakh rupees;

(b) one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the totalamount payable as income-tax and surcharge on a total income of one crore rupees by more than the amount of income thatexceeds one crore rupees.

Paragraph B

In the case of every co-operative society,—Rates of income-tax

(1) where the total income does not exceed Rs. 10,000

(2) where the total income exceeds Rs. 10,000 but does notexceed Rs. 20,000

(3) where the total income exceeds Rs. 20,000


Rs. 1,000 plus 20 per cent. of the amount by which thetotal income exceeds Rs. 10,000;

Rs. 3,000 plus 30 per cent. of the amount by which thetotal income exceeds Rs. 20,000.

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The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section111A or section 112 of the Income-tax Act, shall, in the case of every co-operative society, having a total income exceeding onecrore rupees, be increased by a surcharge for the purposes of the Union calculated at the rate of twelve per cent. of such income-tax:

Provided that in the case of every co-operative society mentioned above having total income exceeding one crore rupees, thetotal amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on atotal income of one crore rupees by more than the amount of income that exceeds one crore rupees.

Paragraph C

In the case of every firm,—

Rate of income-tax



The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section111A or section 112 of the Income-tax Act, shall, in the case of every firm, having a total income exceeding one crore rupees, beincreased by a surcharge for the purposes of the Union calculated at the rate of twelve per cent. of such income-tax:

Provided that in the case of every firm mentioned above having total income exceeding one crore rupees, the total amountpayable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total incomeof one crore rupees by more than the amount of income that exceeds one crore rupees.

Paragraph D

In the case of every local authority,—

Rate of income-tax



The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section111A or section 112 of the Income-tax Act, shall, in the case of every local authority, having a total income exceeding one crorerupees, be increased by a surcharge for the purposes of the Union calculated at the rate of twelve per cent.of such income-tax:

Provided that in the case of every local authority mentioned above having total income exceeding one crore rupees, thetotal amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on atotal income of one crore rupees by more than the amount of income that exceeds one crore rupees.

Paragraph E

In the case of a company,—

Rates of income-tax

40 per cent..

50 per cent.;

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I. In the case of a domestic company,—

(i) where its total turnover or the gross receipt in the previous year2015-16 does not exceed fifty crore rupees;

(ii) other than that referred to in item (i)

II. In the case of a company other than a domestic company—

(i) on so much of the total income as consists of,—

(a) royalties received from Government or an Indian concern inpursuance of an agreement made by it with the Government or theIndian concern after the 31st day of March, 1961 but before the 1stday of April, 1976; or

(b) fees for rendering technical services received from Governmentor an Indian concern in pursuance of an agreement made by it withthe 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 theCentral Government

(ii) on the balance, if any, of the total income


30 per cent. of the total income.

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The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section111A or section 112 of the Income-tax Act, shall, be increased by a surcharge for the purposes of the Union, calculated,––

(i) in the case of every domestic company,––

(a) having a total income exceeding one crore rupees but not exceeding ten crore rupees, at the rate of seven per cent. ofsuch income-tax; and

(b) having a total income exceeding ten crore rupees, at the rate of twelve per cent. of such income-tax;

(ii) in the case of every company other than a domestic company,––

(a) having a total income exceeding one crore rupees but not exceeding ten crore rupees, at the rate of two per cent. ofsuch income-tax; and

(b) having a total income exceeding ten crore rupees, at the rate of five per cent. of such income-tax:

Provided that in the case of every company having a total income exceeding one crore rupees but not exceeding ten crorerupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable asincome-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees:

Provided further that in the case of every company having a total income exceeding ten crore rupees, the total amount payableas income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a totalincome of ten crore rupees by more than the amount of income that exceeds ten crore rupees.

PART IV

[See section 2(13)(c)]

RULES FOR COMPUTATION OF NET AGRICULTURAL INCOME

Rule 1.—Agricultural income of the nature referred to in sub-clause (a) of clause (1A) of section 2 of the Income-tax Act shall becomputed as if it were income chargeable to income-tax under that Act under the head “Income from other sources” and theprovisions of sections 57 to 59 of that Act shall, so far as may be, apply accordingly:

Provided that sub-section (2) of section 58 shall apply subject to the modification that the reference to section 40A therein shallbe construed as not including a reference to sub-sections (3), (3A) and (4) of section 40A.

Rule 2.—Agricultural income of the nature referred to in sub-clause (b) or sub-clause (c) of clause (1A) of section 2 of theIncome-tax Act [other than income derived from any building required as a dwelling-house by the receiver of the rent or revenueof the cultivator or the receiver of rent-in-kind referred to in the said sub-clause (c)] shall be computed as if it were incomechargeable to income-tax under that Act under the head “Profits and gains of business or profession” and the provisions ofsections 30, 31, 32, 36, 37, 38, 40, 40A [other than sub-sections (3), (3A) and (4) thereof], 41, 43, 43A, 43B and 43C of the Income-tax Act shall, so far as may be, apply accordingly.

Rule 3.—Agricultural income of the nature referred to in sub-clause (c) of clause (1A) of section 2 of the Income-tax Act, beingincome derived from any building required as a dwelling-house by the receiver of the rent or revenue or the cultivator or thereceiver of rent-in-kind referred to in the said sub-clause (c) shall be computed as if it were income chargeable to income-tax underthat Act under the head “Income from house property” and the provisions of sections 23 to 27 of that Act shall, so far as may be,apply accordingly.

Rule 4.—Notwithstanding anything contained in any other provisions of these rules, in a case—

(a) where the assessee derives income from sale of tea grown and manufactured by him in India, such income shall becomputed in accordance with rule 8 of the Income-tax Rules, 1962, and sixty per cent. of such income shall be regarded as theagricultural income of the assessee;

(b) where the assessee derives income from sale of centrifuged latex or cenex or latex based crepes (such as pale latexcrepe) or brown crepes (such as estate brown crepe, re-milled crepe, smoked blanket crepe or flat bark crepe) or technicallyspecified block rubbers manufactured or processed by him from rubber plants grown by him in India, such income shall becomputed in accordance with rule 7A of the Income-tax Rules, 1962, and sixty-five per cent. of such income shall be regardedas the agricultural income of the assessee;

(c) where the assessee derives income from sale of coffee grown and manufactured by him in India, such income shall becomputed in accordance with rule 7B of the Income-tax Rules, 1962, and sixty per cent. or seventy-five per cent., as the casemay be, of such income shall be regarded as the agricultural income of the assessee.

Rule 5.—Where the assessee is a member of an association of persons or a body of individuals (other than a Hindu undividedfamily, a company or a firm) which in the previous year has either no income chargeable to tax under the Income-tax Act or hastotal income not exceeding the maximum amount not chargeable to tax in the case of an association of persons or a body ofindividuals (other than a Hindu undivided family, a company or a firm) but has any agricultural income then, the agricultural incomeor loss of the association or body shall be computed in accordance with these rules and the share of the assessee in the agriculturalincome or loss so computed shall be regarded as the agricultural income or loss of the assessee.

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Rule 6.—Where the result of the computation for the previous year in respect of any source of agricultural income is a loss, suchloss shall be set off against the income of the assessee, if any, for that previous year from any other source of agricultural income:

Provided that where the assessee is a member of an association of persons or a body of individuals and the share of theassessee in the agricultural income of the association or body, as the case may be, is a loss, such loss shall not be set off againstany income of the assessee from any other source of agricultural income.

Rule 7.—Any sum payable by the assessee on account of any tax levied by the State Government on the agricultural incomeshall be deducted in computing the agricultural income.

Rule 8.—(1) Where the assessee has, in the previous year relevant to the assessment year commencing on the 1st day of April,2017, any agricultural income and the net result of the computation of the agricultural income of the assessee for any one or moreof the previous years relevant to the assessment years commencing on the 1st day of April, 2009 or the 1st day of April, 2010 orthe 1st day of April, 2011 or the 1st day of April, 2012 or the 1st day of April, 2013 or the 1st day of April, 2014 or the 1st day of April,2015 or the 1st day of April, 2016, is a loss, then, for the purposes of sub-section (2) of section 2 of this Act,––

(i) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2009, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2010 or the 1st day of April, 2011 or the 1st day of April, 2012 or the 1st day of April,2013 or the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April, 2016,

(ii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2010, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2011 or the 1st day of April, 2012 or the 1st day of April, 2013 or the 1st day of April,2014 or the 1st day of April, 2015 or the 1st day of April, 2016,

(iii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2011, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2012 or the 1st day of April, 2013 or the 1st day of April, 2014 or the 1st day of April,2015 or the 1st day of April, 2016,

(iv) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2012, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2013 or the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April,2016,

(v) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2013, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April, 2016,

(vi) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2014, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2015 or the 1st day of April, 2016,

(vii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2015,to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2016,

(viii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2016,

shall be set off against the agricultural income of the assessee for the previous year relevant to the assessment year commencingon the 1st day of April, 2017.

(2) Where the assessee has, in the previous year relevant to the assessment year commencing on the 1st day of April, 2018, or,if by virtue of any provision of the Income-tax Act, income-tax is to be charged in respect of the income of a period other than theprevious year, in such other period, any agricultural income and the net result of the computation of the agricultural income of theassessee for any one or more of the previous years relevant to the assessment years commencing on the 1st day of April, 2010 orthe 1st day of April, 2011 or the 1st day of April, 2012 or the 1st day of April, 2013 or the 1st day of April, 2014 or the 1st day of April,2015 or the 1st day of April, 2016 or the 1st day of April, 2017, is a loss, then, for the purposes of sub-section (10) of section 2 ofthis Act,––

(i) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2010, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2011 or the 1st day of April, 2012 or the 1st day of April, 2013 or the 1st day of April,2014 or the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April, 2017,

(ii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2011, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2012 or the 1st day of April, 2013 or the 1st day of April, 2014 or the 1st day of April,2015 or the 1st day of April, 2016 or the 1st day of April, 2017,

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(iii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2012, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2013 or the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April,2016 or the 1st day of April, 2017,

(iv) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2013, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April,2017,

(v) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2014, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April, 2017,

(vi) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2015, tothe extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2016 or the 1st day of April, 2017,

(vii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2016,to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessmentyear commencing on the 1st day of April, 2017,

(viii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2017,

shall be set off against the agricultural income of the assessee for the previous year relevant to the assessment year commencingon the 1st day of April, 2018.

(3) Where any person deriving any agricultural income from any source has been succeeded in such capacity by anotherperson, otherwise than by inheritance, nothing in sub-rule (1) or sub-rule (2) shall entitle any person, other than the personincurring the loss, to have it set off under sub-rule (1) or, as the case may be, sub-rule (2).

(4) Notwithstanding anything contained in this rule, no loss which has not been determined by the Assessing Officer under theprovisions of these rules or the rules contained in the First Schedule to the Finance (No. 2) Act, 2009 (33 of 2009) or the FirstSchedule to the Finance Act, 2010 (14 of 2010) or the First Schedule to the Finance Act, 2011 (8 of 2011) or the First Schedule tothe Finance Act, 2012 (23 of 2012) or the First Schedule to the Finance Act, 2013 (17 of 2013) or the First Schedule to the Finance(No. 2) Act, 2014 (25 of 2014) or the First Schedule to the Finance Act, 2015 (20 of 2015) or the First Schedule to the Finance Act,2016 (28 of 2016) shall be set off under sub-rule (1) or, as the case may be, sub-rule (2).

Rule 9.—Where the net result of the computation made in accordance with these rules is a loss, the loss so computed shall beignored and the net agricultural income shall be deemed to be nil.

Rule 10.—The provisions of the Income-tax Act relating to procedure for assessment (including the provisions of section 288Arelating to rounding off of income) shall, with the necessary modifications, apply in relation to the computation of the net agriculturalincome of the assessee as they apply in relation to the assessment of the total income.

Rule 11.—For the purposes of computing the net agricultural income of the assessee, the Assessing Officer shall have thesame powers as he has under the Income-tax Act for the purposes of assessment of the total income.

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THE SECOND SCHEDULE[See section 109(a)]

In the First Schedule to the Customs Tariff Act,––

(a) in Chapter 20, for the entry in column (4) occurring against tariff item 2008 19 10, the entry “45%” shall be substituted;

(b) in Chapter 84, for the entry in column (4) occurring against tariff item 8421 99 00, the entry “10%” shall be substituted.

THE THIRD SCHEDULE[See section 109(b)]

In the First Schedule to the Customs Tariff Act,––

Tariff item Description of goods. Unit Rate of DutyStandard Preferential

(1) (2) (3) (4) (5)

(1) in Chapter 11, for tariff item 1106 10 00 and the entries relating thereto, the following shall be substituted, namely:—

“1106 10 - Of the dried leguminous vegetables of heading 0713

1106 10 10 --- Guar Meal kg. 30% -

1106 10 90 --- Others kg. 30% -”;

(2) in Chapter 13, tariff items 1302 32 10 and 1302 32 20 and the entries relating thereto shall be omitted;

(3) in Chapter 15, after tariff item 1511 90 20 and the entries relating thereto, the following tariff item and entries shall beinserted, namely:––

“1511 90 30 --- Refined bleached deodorised palm stearin kg. 100% 90%”;

(4) in Chapter 38,––

(a) in heading 3823, for sub-heading 3823 11 and tariff items 3823 11 11 to 3823 11 90 and the entries relating thereto, thefollowing shall be substituted, namely:––

“3823 11 00 -- Stearic acid kg. 30% -”;

(b) in heading 3824, against tariff item 3824 88 00 , in column (2), for the words “hexa-hepta-”, the words “ hexa-, hepta-”shall be substituted;

(5) in Chapter 39, in heading 3904, for sub-heading 3904 00 and tariff items 3904 10 10 and 3904 10 90, sub-heading3904 21, tariff items 3904 21 10 and 3904 21 90 and sub-heading 3904 22, tariff items 3904 22 10 and 3904 22 90 and the entriesrelating thereto, the following shall be substituted, namely:––

“3904 10 - Poly (vinyl chloride), not mixed with any other substances:

3904 10 10 --- Emulsion grade PVC resin / PVC Paste resin/ PVCdispersion resin kg. 10% -

3904 10 20 --- Suspension grade PVC resin kg. 10% -

3904 10 90 --- Other kg. 10% -

- Other poly (vinyl chloride), mixed with other substances:

3904 21 00 -- Non-plasticised kg. 10% -

3904 22 00 -- Plasticised kg. 10% -”;

(6) in Chapter 44, against tariff item 4401 22 00, in column (2), for the words “agglomerated, in logs”, the words “agglomeratedin logs” shall be substituted;

(7) in Chapter 48, in Note 4, for the word “apply”, the word “applies” shall be substituted;

(8) in Chapter 54, tariff items 5402 59 10 and 5402 69 30 and the entries relating thereto shall be omitted;

(9) in Chapter 63, in sub-heading Note, for the words “from fabrics”, the words “from warp knit fabrics” shall be substituted;

(10) in Chapter 98,––

(i) in Chapter Note 4, for clauses (b) and (c), the following clauses shall be substituted, namely:––

“(b) alcoholic beverages; and

(c) tobacco and manufactured products thereof.”;

(ii) for the entry in column (2) occurring against heading 9804, the entry “All dutiable goods imported for personal use” shallbe substituted.

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THE FOURTH SCHEDULE(See section 110)

In the Second Schedule to the Customs Tariff Act, after Sl. No. 23B and the entries relating thereto, the following Sl. No. andentries shall be inserted, namely:—

(1) (2) (3) (4)

“23C 2606 00 90 Other aluminium ores and concentrates 30%”.

THE FIFTH SCHEDULE(See section 118)

In the First Schedule to the Central Excise Tariff Act, in Chapter 24,––

(a) for the entry in column (4) occurring against tariff items 2402 10 10 and 2402 10 20, the entry “12.5% or Rs.4006 perthousand, whichever is higher” shall be substituted;

(b) for the entry in column (4) occurring against tariff item 2402 90 10, the entry “Rs.4006 per thousand” shall be substituted;

(c) for the entry in column (4) occurring against tariff items 2402 90 20 and 2402 90 90, the entry “12.5% or Rs.4006 perthousand, whichever is higher” shall be substituted.

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THE SIXTH SCHEDULE(See section 128)

Sl. No. Provisions of the Amendment Period of effect ofService Tax amendment(Determination ofValue) Rules, 2006to be amended

(1) (2) (3) (4)

In the Service Tax (Determination of Value) Rules, 2006, inrule 2A,––

(I) in sub-rule (1), in clause (i), after the words “value oftransfer of property in goods”, the words “or in goods andland or undivided share of land, as the case may be,” shallbe inserted;

(II) after sub-rule (1), the following sub-rule shall beinserted, namely:-

“(2) Where the value has not been determined undersub-rule (1) and the gross amount charged includes thevalue of goods as well as land or undivided share of land,the service tax shall be payable on twenty-five per cent.of the gross amount charged for the works contract, subjectto the following conditions, namely:––

(i) the CENVAT Credit of duty paid on inputs or capitalgoods or the CENVAT Credit of service tax on inputservices, used for providing such taxable service, hasnot been taken under the provisions of the CENVATCredit Rules, 2004;

(ii) the service provider has not availed the benefitunder the notification of the Government of India in theMinistry of Finance (Department of Revenue), No. 12/2003-Service Tax, dated the 20th June, 2003 [G.S.R.503(E), dated the 20th June, 2003].

Explanation.––For the purposes of this sub-rule, thegross amount charged shall include the value of goodsand materials supplied or provided or used forproviding the taxable service by the service provider.”.

In the Service Tax (Determination of Value) Rules, 2006, inrule 2A,––

(I) in clause (i), after the words “value of property in goods”,the words “or in goods and land or undivided share of land,as the case may be,” shall be inserted;

(II) in clause (ii), in sub-clause (A),––

(a) the following proviso shall be inserted, namely:––

“Provided that where the amount charged for workscontract includes the value of goods as well as land orundivided share of land, the service tax shall bepayable on twenty-five per cent. of the total amountcharged for the works contract.”;

Rule 2A as inserted bynotification number G.S.R.375(E), dated the 22ndMay, 2007 [29/2007–Service Tax, dated the22nd May, 2007].

Rule 2A as substituted bynotification number G.S.R.431(E), dated the6th June, 2012. [24/2012– Service Tax, datedthe 6th June, 2012].

1st day of July, 2010 to 30thday of June, 2012 (bothdays inclusive).

1st day of July, 2010 to 30thday of June, 2012 (bothdays inclusive).

1st day of July, 2012onwards.

1st day of July, 2012 to 28thday of February, 2013(both days inclusive).

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2.

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Sl. No. Provisions of the Amendment Period of effect ofService Tax amendment(Determination ofValue) Rules, 2006to be amended

(1) (2) (3) (4)

(b) for the proviso, the following provisos shall be substituted,namely:––

“Provided that where the amount charged for workscontract includes the value of goods as well as land orundivided share of land, the service tax shall be payable onthirty per cent. of the total amount charged for the workscontract:

Provided further that in case of works contract forconstruction of residential units having carpet area up to2000 square feet or where the amount charged perresidential unit from service recipient is less than rupeesone crore and the amount charged for the works contractincludes the value of goods as well as land or undividedshare of land, the service tax shall be payable on twenty-fiveper cent. of the total amount charged for the works contract.”;

(c) for the provisos, the following provisos shall besubstituted, namely:––

“Provided that where the amount charged for workscontract includes the value of goods as well as land orundivided share of land, the service tax shall be payable onthirty per cent. of the total amount charged for the workscontract:

Provided further that in case of works contract forconstruction of residential units having carpet area up to2000 square feet and where the amount charged perresidential unit from service recipient is less than rupeesone crore and the amount charged for the works contractincludes the value of goods as well as land or undividedshare of land, the service tax shall be payable on twenty-fiveper cent. of the total amount charged for the works contract.”;

(d) for the provisos, the following proviso shall be substituted,namely:––

“Provided that where the amount charged for workscontract includes the value of goods as well as land orundivided share of land, the service tax shall be payable onthirty per cent. of the total amount charged for the workscontract.”.

1st day of March, 2013to 7th day of May, 2013(both days inclusive).

8th day of May, 2013 to31st day of March, 2016(both days inclusive).

1st day of April, 2016onwards.

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THE SEVENTH SCHEDULE(See section 146)

In the Seventh Schedule to the Finance Act, 2005,––

(a) for the entry in column (4) occurring against tariff item 2402 20 10, the entry “Rs.311 per thousand” shall be substituted;

(b) for the entry in column (4) occurring against tariff item 2402 20 20, the entry “Rs.541 per thousand” shall be substituted;

(c) for the entry in column (4) occurring against tariff item 2402 20 30, the entry “Rs.311 per thousand” shall be substituted;

(d) for the entry in column (4) occurring against tariff item 2402 20 40, the entry “Rs.386 per thousand” shall be substituted;

(e) for the entry in column (4) occurring against tariff item 2402 20 50, the entry “Rs.541 per thousand” shall be substituted;

(f) for the entry in column (4) occurring against tariff item 2402 20 90, the entry “Rs.811 per thousand” shall be substituted;

(g) for the entry in column (4) occurring against tariff items 2403 99 10, 2403 99 30 and 2403 99 90, the entry “12%” shall besubstituted.

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STATEMENT OF OBJECTS AND REASONS

The object of the Bill is to give effect to the financial proposals of theCentral Government for the financial year 2017-2018. The notes on clausesexplain the various provisions contained in the Bill.

ARUN JAITLEY.

NEW DELHI;

The 28th January, 2017.

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PRESIDENT’S RECOMMENDATION UNDER ARTICLES 117 AND 274 OF THECONSTITUTION OF INDIA

[Copy of letter No.F.2(1)-B(D)/2017, dated the 28th January, 2017 fromShri Arun Jaitley, Minister of Finance, to the Secretary-General, Lok Sabha.]

The President, having been informed of the subject matter of the proposedBill, recommends, under clauses (1) and (3) of article 117, read with clause (1)of article 274, of the Constitution of India, the introduction of the Finance Bill,2017 to the Lok Sabha and also recommends to the Lok Sabha the considerationof the Bill.

2. The Bill will be introduced in the Lok Sabha immediately after thepresentation of the Budget on the 1st February, 2017.

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Notes on clauses

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Income-tax

Clause 2, read with the First Schedule to the Bill, specifiesthe rates at which income- tax is to be levied on incomechargeable to tax for the assessment year 2017-2018.Further, it lays down the rates at which tax is to be deductedat source during the financial year 2017-2018 from incomeother than “Salaries” subject to such deductions under theIncome-tax Act; and the rates at which “advance tax” is tobe paid, tax is to be deducted at source from, or paid on,income chargeable under the head “Salaries” and tax is tobe calculated and charged in special cases for the financialyear 2017-2018.

Rates of income-tax for the assessment year 2017-2018

Part I of the First Schedule to the Bill specifies the rates atwhich income is liable to tax for the assessment year 2017-18. These rates are the same as those specified in Part Ill ofthe First Schedule to the Finance Act, 2016 as amended bythe Taxation Laws (Second Amendment) Act, 2016 (48 of2016), for the purposes of deduction of tax at source from“Salaries”, computation of “advance tax” and charging ofincome-tax in special cases during the financial year 2016-2017.

Rates for deduction of tax at source during the financialyear 2017-2018 from income other than "Salaries"

Part II of the First Schedule to the Bill specifies the ratesat which income-tax is to be deducted at source during thefinancial year 2017-2018 from income other than “Salaries”.The rates are the same, as those specified in Part II of theFirst Schedule to the Finance Act, 2016 for the purposes ofdeduction of income tax at source during the financial year2016-2017.

The amount of tax so deducted shall be increased by asurcharge in the case of—

(i) every non-resident being an individual or Hinduundivided family or association of persons or body ofindividuals, whether incorporated or not, or every artificialjuridical person referred to in sub-clause (vii) of clause(31) of section 2 of the Income-tax Act,—

(a) at the rate of ten per cent. of such tax, where theincome or the aggregate of income paid or likely to bepaid and subject to deduction exceeds fifty lakh rupeesbut does not exceed one crore rupees;

(b) at the rate of fifteen per cent. of such tax, wherethe income or the aggregate of income paid or likely tobe paid and subject to deduction exceeds one crorerupees;

(ii) every non-resident being a co-operative society orfirm or local authority at the rate of twelve per cent. wherethe income or the aggregate of income paid or likely to bepaid and subject to deduction exceeds one crore rupees;

(iii) every company other than a domestic company atthe rate of two per cent. where the income or the aggregateof income paid or likely to be paid and subject to deductionexceeds one crore rupees but does not exceed ten crorerupees;

(iv)every company other than a domestic companyat the rate of five per cent. where the income or theaggregate of income paid or likely to be paid and subjectto deduction exceeds ten crore rupees.

Rates for deduction of tax at source from "Salaries",computation of "advance tax" and charging of income-tax

in special cases during the financial year 2017-2018

Part III of the First Schedule to the Bill specifies the ratesat which income-tax is to be deducted at source from, orpaid on, income under the head "Salaries" and also the ratesat which "advance tax" is to be paid and income-tax is to becalculated or charged in special cases for the financial year2017-2018.

Paragraph A of this Part specifies the rates of income-taxas under:—

(i) in the case of every individual [other than thosespecifically mentioned in sub-paras (ii) and (iii)] or Hinduundivided family or every association of persons or bodyof individuals, whether incorporated or not, or everyartificial juridical person referred to in sub-clause (vii) ofclause (31) of section 2 of the Income-tax Act, not being acase to which any other Paragraph of this Part applies:—

Up to Rs. 2,50,000 Nil

Rs. 2,50,001 to Rs. 5,00,000 5 per cent.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.

Above Rs. 10,00,000 30 per cent.;

(ii) In the case of every individual, being a resident inIndia, who is of the age of sixty years or more but lessthan the age of eighty years at any time during the previousyear:—


Rs. 3,00,001 to Rs. 5,00,000 5 per cent.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.

Above Rs. 10,00,000 30 per cent.;

(iii)In the case of every individual, being a resident inIndia, who is of the age of eighty years or more at anytime during the previous year:—


Rs. 5,00,001 to Rs. 10,00,000 20 per cent.

Above Rs. 10,00,000 30 per cent.

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The surcharge in cases of persons referred to in thisparagraph, having total income above fifty lakh but not aboveone crore rupees, shall be levied at the rate of ten per cent.In cases of persons referred to in this paragraph, havingtotal income above one crore rupees, surcharge shall belevied at the rate of fifteen per cent. Marginal relief will beprovided.

Paragraph B of this Part specifies the rates of income-taxin the case of every co-operative society. In such cases, therates of tax will continue to be the same as those specifiedfor assessment year 2017-2018. The surcharge in cases ofco-operative societies, having income above one crorerupees shall be levied at the rate of twelve per cent. Marginalrelief will be provided.

Paragraph C of this Part specifies the rate of income-taxin the case of every firm. In such cases, the rate of tax willcontinue to be the same as that specified for assessmentyear 2017-2018. The surcharge in cases of firms, havingincome above one crore rupees shall be levied at the rate oftwelve per cent. Marginal relief will be provided.

Paragraph D of this Part specifies the rate of income-taxin case of every local authority. In such cases, the rate of taxwill continue to be the same as that specified for theassessment year2017-2018. The surcharge in cases of local authorities,having income above one crore rupees shall be levied at therate of twelve per cent. Marginal relief will be provided.

Paragraph E of this Part specifies the rates of income-taxin case of companies. In the case of domestic companiesthe rate of income-tax shall be twenty-five per cent. of thetotal income where the total turnover or gross receipts ofprevious year 2015-2016 does not exceed fifty crore rupeesand in all other cases the rate of income-tax shall be thirtyper cent. of the total income. In the case of companies otherthan domestic companies, the rate of tax will continue to bethe same as that specified for assessment year 2017-2018.

Surcharge in the case of domestic companies having totalincome above one crore rupees but not above ten crorerupees shall be levied at the rate of seven per cent. In thecase of domestic companies having total income above tencrore rupees, surcharge shall be levied at the rate of twelveper cent. In the case of companies other than domesticcompanies having income above one crore rupees but notabove ten crore rupees, surcharge shall be levied at the rateof two per cent. In the case of companies other than domesticcompanies having total income above ten crore rupees,surcharge shall be levied at the rate of five per cent. Marginalrelief will be provided.

In all other cases (including sections 115-O, 115QA, 115R,115TA, 115TD, etc.), the surcharge will be applicable at therate of twelve per cent.

"Education Cess" at the rate of two per cent. and"Secondary and Higher Education Cess" at the rate of one

per cent. shall continue to be levied in all cases coveredunder Part III of the First Schedule. In the cases coveredunder Part II of the First Schedule, there will be no levy ofthe Education Cess and Secondary and Higher EducationCess on tax deducted or collected at source in the case ofdomestic company and any other person who is resident inIndia. Both the cesses would continue to apply on taxdeducted at source in the case of salary payments. Thesewould also continue to be levied in the cases of persons notresident in India and companies other than domesticcompany.

Clause 3 of the Bill seeks to amend section 2 of the Income-tax Act relating to definitions.

The existing provisions contained in clause (42A) of thesaid section defines the expression "short-term capital asset"to be a capital asset held by an assessee for not more thanthirty-six months immediately preceding the date of itstransfer. Further Explanation 1 of the said clause providesfor determining the period for which the capital asset is heldby the assessee.

It is proposed to amend the third proviso to the said clauseso as to provide that in the case of an immovable propertybeing land or building or both, the aforesaid period of holdingshall be less than twenty-four months for it to be treated asshort term capital asset.

It is also proposed to insert a new sub-clause (hf) inClause (i) of Explanation 1 of the said clause so as to providethat in the case of a capital asset being equity shares in acompany, which becomes the property of the assessee inconsideration of a transfer referred to in clause (xb) of section47, there shall be included the period for which the preferenceshares were held by the assessee.

These amendments will take effect from 1st April, 2018and will, accordingly, apply in relation to the assessmentyear 2018-2019 and subsequent years.

It is also proposed to amend clause (i) of the saidExplanation to insert clause (hg) so as to provide that in thecase of a capital asset, being a unit or units, which becomesthe property of the assessee in consideration of a transferreferred to in clause (xix) of section 47, there shall be includedthe period for which the unit or units in the consolidatingplan of the mutual fund scheme were held by the assessee.

This amendment will take effect from 1st April, 2017 andwill, accordingly, apply in relation to the assessment year2017-2018 and subsequent years.

Clause 4 of the Bill seeks to amend section 9 of the Income-tax Act relating to income deemed to accrue or arise in India.

Clause (i) of sub-section (1) of the said section providesthat certain incomes mentioned therein shall be deemed toaccrue or arise in India. Explanation 5 to the said clauseprovides that an asset or capital asset being any share orinterest in a company or entity registered or incorporated

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outside India shall be deemed to be and shall always bedeemed to have been situated in India, if the share or interestderives, directly or indirectly, its value substantially from theassets located in India.

It is proposed to insert a new Explanation 5A so as toclarify that the Explanation 5 shall not apply to an asset orcapital asset mentioned therein and held by a non-residentby way of investment, directly or indirectly, in a ForeignInstitutional Investor, as referred to in clause (a) of theExplanation to section 115AD, and registered as Category-I or Category-II foreign portfolio investor under the Securitiesand Exchange Board of India (Foreign Portfolio Investors)Regulations, 2014 made under the Securities and ExchangeBoard of India Act, 1992. The proposed amendment isclarificatory in nature.

This amendment will take effect retrospectively from 1stApril, 2012 and will, accordingly, apply in relation to theassessment year 2012-2013 and subsequent years.

Clause 5 of the Bill seeks to amend section 9A of theIncome-tax Act relating to certain activities not to constitutebusiness connection in India.

Sub-section (3) of the said section 9A provides for theconditions to be fulfilled for being an eligible investment fund.Clause (j) of the said sub-section and the proviso providesthat the monthly average of the corpus of the fund shall notbe less than one hundred crore rupees except where thefund has been established or incorporated in the previousyear, in which case, the corpus of fund shall not be less thanone hundred crore rupees at the end of such previous year.

It is proposed to insert another proviso to clause (j) of thesaid sub-section so as to provide that the provisions of thesaid clause shall not be applicable to a fund which has beenwound up in the previous year.


Clause 6 of the Bill seeks to amend section 10 of theIncome-tax Act relating to incomes not included in totalincome.

The existing provisions contained in the said sectionprovide that in computing the total income of a previous yearof any person, certain categories of income shall not beincluded in total income.

Further, sub-clause (ii) of clause (4) of the said sectionrefers to any income of an individual by way of interest onmoneys standing to his credit in a Non-Resident (External)Account in any bank in India in accordance with the ForeignExchange Management Act, 1999 (42 of 1999), and therules made thereunder. The proviso to the said sub-clauserefers individual to be a person resident outside India, asdefined in clause (q) of section 2 of Act 46 of 1973, whichstands repealed and re-enacted as Act 42 of 1999. The

definition of person outside India is occurring in clause (w)of Act 42 of 1999.

It is proposed to amend the proviso to sub-clause (ii) ofclause (4) of the said section so as to reflect the correctdefinition of the expression "person resident outside India"and is clarificatory in nature.

This amendment will take effect retrospectively from 1stApril, 2013, the date on which sub-clause (ii) of clause (4) ofthe said section was brought into force.

Further, clause (12A) of the said section providesexemption up to forty per cent. of the total amount payablefrom National Pension System Trust paid to an employee atthe time of closure or his opting out of the scheme.

It is also proposed to insert a new clause (12B) in the saidsection so as to provide exemption from tax at the time ofpartial withdrawal by an employee from National PensionSystem Trust in accordance with the terms and conditionsspecified under Pension Fund Regulatory DevelopmentAuthority Act, 2013 and regulations made thereunder, to theextent it does not exceed twenty-five per cent. of the amountof contributions made by him.


The provisions contained in clause (23C) of the saidsection, provide exemption in respect of income of certainfunds which, inter alia, include, the Prime Minister's NationalRelief Fund. However, the Chief Minister's Relief Fund orthe Lieutenant Governor's Relief Fund referred to in sub-clause (iiihf) of clause (a) of sub-section (2) of section 80G,are not exempt under the said clause (23C).

It is further proposed to insert a new sub-clause (iiiaaaa)in clause (23C) so as to provide the benefit of exemptionalso to the Chief Minister's Relief Fund or the LieutenantGovernor's Relief Fund.

This amendment will take effect retrospectively from 1stApril, 1998, the date on which sub-clause (iiihf) of clause (a)of sub-section (2) of section 80G relating to deduction in anysum paid to the Chief Minister's and Lieutenant Governor'sRelief Fund came into force, and will, accordingly, apply inrelation to assessment year 1998-1999 and subsequentyears.

Clause (23C) of said section provides that donations madeby entities referred to in sub-clause (iv) or sub-clause (v) orsub-clause (vi) or sub-clause (via) to any trust or institutionregistered under section 12AA, except those made out ofaccumulated income, is considered as application of incomefor the purposes of its objects.

It is also proposed to insert a new proviso in the said clause(23C) so as to provide restriction in respect of any amountcredited or paid out of income, being voluntary contributions

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with specific direction that they shall form part of the corpus,to any trust or institution registered under section 12AA bynot treating the said contribution of amount as application ofincome to the objects of such entities.


It is also proposed to insert a new clause (37A) in the saidsection so as to provide that any income chargeable underthe head "Capital gains" in respect of transfer of a specifiedcapital asset arising to an assessee, being an individual or aHindu undivided family, was the owner of such specifiedcapital asset as on the 2nd June, 2014 and transfers suchland under the Land Pooling Scheme covered under theAndhra Pradesh Capital City Land Pooling Scheme(Formulation and Implementation) Rules, 2015 made underthe provisions of the Andhra Pradesh Capital RegionDevelopment Authority Act, 2014 and the rules, regulationsand schemes made under the said Act, shall not be includedin the total income of the assessee. It is also proposed toclarify the term "specified capital asset" in this regard.


Clause 38 of the said section, inter alia, provides for anexemption from tax on the income arising from the transferof a long-term capital asset, being an equity share in acompany or a unit of an equity oriented fund or a unit of abusiness trust, where such transaction is chargeable tosecurities transaction tax under Chapter VII of the Finance(No.2) Act, 2004.

It is proposed to amend the said clause (38) so as toprovide that any income arising from the transfer of a longterm capital asset, being an equity share in a company shallnot be exempted, if the transaction of acquisition, other thanthe acquisition notified by the Central Government in thisbehalf, of such equity share is entered into on or after the 1stday of October, 2004 and such transaction is not chargeableto securities transaction tax under Chapter VII of the Finance(No. 2) Act, 2004.

Clause (48A) of said section provides that any incomeaccruing or arising to a foreign company on account ofstorage of crude oil in a facility in India and sale of crude oiltherefrom to any person resident in India shall be exempt, ifthe said storage and sale is pursuant to an agreement or anarrangement entered into by the Central Government orapproved by the Central Government; and having regard tothe national interest, the said foreign company and the saidagreement or arrangement is notified by the CentralGovernment in that behalf.

It is also proposed to insert a new clause (48B) in the saidsection so as to provide for exemption of any income accruingor arising to a foreign company on account of sale of leftover

stock of crude oil, if any, from the facility in India after theexpiry of the agreement or the arrangement referred to inclause (48A), subject to such conditions as may be notifiedby the Central Government in this behalf.

These amendments will take effect, from 1st April, 2018and will, accordingly, apply in relation to the assessmentyear 2018-2019 and subsequent years.

Clause 7 of the Bill seeks to amend section 10AA of theIncome-tax Act relating to special provisions in respect ofnewly established Units in Special Economic Zones.

Under the existing provisions of the said section, deductionfor fifteen consecutive years is provided from the total incomeof an assessee in respect of profits and gains from his Unitoperating in Special Economic Zone which are engaged inmanufacturing or production of articles or things or providingany services, subject to fulfilment of the conditions mentionedin that section.

It is proposed to insert a new Explanation after sub-section(1) of the said section so as to provide that the amount ofdeduction referred to in that section shall be allowed fromthe total income of the assessee computed in accordancewith the provisions of the Income-tax Act, before giving effectto the provisions of the said section and the deduction underthe said section shall not exceed such total income of theassessee.


Clause 8 of the Bill seeks to amend section 11 of theIncome-tax Act relating to income from property held forcharitable or religious purposes.

Sub-section (1) of the said section provides that voluntarycontributions made by a trust to any other trust or institution,except those made out of accumulated income, is consideredas application of income for the purposes of its objects.

It is proposed to insert a new Explanation 2 under the saidsub-section so as to provide that in respect of any amountcredited or paid, out of income referred to in clause (a) orclause (b) read with Explanation 1, being contributions witha specific direction that they shall form part of the corpus ofthe trust or institution shall not be treated as application ofsuch contribution to charitable or religious purposes.

This amendment will take effect from 1st April, 2018 andwill, accordingly, apply to the assessment year 2018-2019and subsequent years.

Clause 9 of the Bill seeks to amend section 12A of theIncome-tax Act relating to conditions for applicability ofsections 11 and 12.

It is proposed to insert a new clause (ab) in sub-section(1) of said section so as to provide another condition forapplicability of sections 11 and 12, where a trust or an

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institution has been granted registration under section 12AAor has obtained registration at any time under section 12A[as it stood before its amendment by the Finance (No. 2)Act, 1996], and, subsequently, it has adopted or undertakenmodification of the objects which do not conform to theconditions of registration, it shall be required to make anapplication for registration in the prescribed form and manner,within a period of thirty days from the date of such adoptionor modification in the objects, and that it is registered undersection 12AA.

It is also proposed to insert a new clause (c) in sub-section(1) of the said section so as to provide that the person inreceipt of the income shall furnish the return of incomereferred to in sub-section (4A) of section 139 within the timeallowed under that section.

These amendments will take effect from 1st April, 2018and will, accordingly, apply in relation to assessment year2018-2019 and subsequent years.

Clause 10 of the Bill seeks to amend section 12AA of theIncome-tax Act relating to procedure for registration.

It is proposed to amend sub-sections (1) and (2) of thesaid section so as to give reference of newly inserted clause(ab) in section 12A .

The proposed amendment is consequential in nature.

This amendment will take effect from 1st April, 2018 andwill, accordingly, apply in relation to assessment year 2018-2019 and subsequent years.

Clause 11 of the Bill seeks to amend section 13A of theIncome-tax Act relating to special provision relating toincomes of political parties.

Section 13A of the Income-tax Act, inter alia, provides thatany income of a political party which is chargeable underthe head "Income from house property" or" Income from othersources" or "Capital gains" or any income by way of voluntarycontributions received by a political party from any personshall be excluded in computing the total income of theprevious year of such political party subject to the conditionsthat such political party keeps and maintains such books ofaccount and other documents, maintains a record ofvoluntary contribution in excess of twenty thousand rupeesand the accounts are audited by an accountant as defined inthe Explanation below sub-section (2) of section 288 andfurnishes a report under sub-section (3) of section 29C ofthe Representation of the People Act,1951 to the ElectionCommission.

It is proposed to amend the said section so as to provide,inter alia, that political party shall be eligible for exemption ofincome-tax under section 13A if,—

(i) no donation exceeding two thousand rupees isreceived otherwise than by an account payee cheque

drawn on a bank or an account payee bank draft or use ofelectronic clearing system through a bank account orthrough electoral bond;

(ii) it furnishes a return of income for the previous yearin accordance with the provisions of sub-section (4B) ofsection 139 on or before the due date as per section 139.

It is further proposed to provide that any contributionsreceived by way of electoral bond shall be excluded fromreporting as per clause (b) of said section.

It is also proposed to define the expression “electoralbond”.


Clause 12 of the Bill seeks to amend section 23 of theIncome-tax Act relating to annual value how determined.

It is proposed to insert a new sub-section (5) in the saidsection so as to provide that where the property consistingof any building and land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not letduring the whole or any part of the previous year, the annualvalue of such property or part of the property, for the periodup to one year from the end of the financial year in which thecertificate of completion of construction of the property isobtained from the competent authority, shall be taken to benil.


Clause 13 of the Bill seeks to amend section 35AD of theIncome-tax Act relating to deduction in respect of expenditureon specified business.

The existing provisions of the said section provides thatdeduction in respect of the whole of any expenditure of capitalnature incurred, wholly and exclusively, for the purposes ofany specified business carried on during the previous yearin which such expenditure is incurred, is allowed to anassessee. Clause (f) of sub-section (8) of the said sectionprovides for exclusion of any expenditure incurred on theacquisition of any land or goodwill or financial instrumentfrom the purview of expenditure of capital nature accordingly,not be allowed as deduction.

It is proposed to amend the said clause (f) so as to providethat any expenditure in respect of which a payment oraggregate of payments made to a person in a day, otherwisethan by an account payee cheque drawn on a bank or anaccount payee bank draft or use of electronic clearing systemthrough a bank account, exceeds ten thousand rupees, nodeduction shall be allowed in respect of such expenditurealso.

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Clause 14 of the Bill seeks to amend section 36 of theIncome-tax Act relating to other deductions.

The provisions of sub-clause (a) of clause (viia) of sub-section (1) of the said section, inter alia, provide that ascheduled bank (not being a bank incorporated by or underthe laws of a country outside India) or a non-scheduled bankor a co-operative bank other than a primary agricultural creditsociety or a primary co-operative agricultural and ruraldevelopment bank, shall be allowed deduction in respect ofprovision for bad and doubtful debts. Further, the amount ofsuch deduction is limited to seven and one-half per cent. ofthe amount of the total income (computed before makingany deduction under the said clause and Chapter VIA) andan amount not exceeding ten per cent. of the aggregateaverage advances made by the rural branches of such bankcomputed in the prescribed manner.

It is proposed to amend the provisions of said sub-clauseso as to enhance the limit from seven and one-half per cent.to eight and one-half per cent. of the amount of the total income(computed before making any deduction under the said clauseand Chapter VIA).


Clause 15 of the Bill seeks to amend section 40A of thelncome -tax Act relating to expenses or payments notdeductible in certain circumstances.

Sub-section (3) of the said section provides that wherethe assessee incurs any expenditure in respect of whichpayment exceeding twenty thousand rupees is madeotherwise than by an account payee cheque drawn on a bankor account payee bank draft to a person in a single day, nodeduction shall be allowed in respect of such expenditure.

It is proposed to amend the said sub-section so as toprovide that where the payments or aggregate of paymentsin a day to a person otherwise than by an account payeecheque or account payee bank draft or use of electronicclearing system through a bank account, exceeds tenthousand rupees in a day, no deduction shall be allowedunder the said sub-section or, as the case may be, suchpayment shall be deemed to be the profits and gains ofbusiness or profession of the assessee.

Consequential amendments are also proposed to be madein sub-sections (3A) and (4) of the said section.

It is also proposed to amend the proviso to clause (a) ofsub-section (2) which is consequential to the amendmentsproposed in section 92BA.

These amendments will take effect from 1st April, 2018

and will, accordingly, apply in relation to the assessmentyear 2018-20l9 and subsequent years.

Clause 16 of the Bill seeks to amend section 43 of theIncome-tax Act relating to definitions of certain terms relevantto income from profits and gains of business or profession.

Clause (1) of the said section provides for the definition of"actual cost" for the purposes of claiming depreciation undersection 32 of the Act.

It is proposed to insert a proviso before Explanation 1 ofclause (1) of said section so as to provide that where theassessee incurs any expenditure for acquisition of any assetin respect of which a payment or aggregate of paymentsmade to a person in a day, otherwise than by an accountpayee cheque drawn on a bank or an account payee bankdraft or use of electronic clearing system through a bankaccount, exceeds ten thousand rupees, such expenditureshall be ignored for the purposes of determination of actualcost.

It is also proposed to insert a proviso in Explanation 13of clause (1) of the said section so as to provide that whereany capital asset in respect of which deduction or part ofdeduction allowed under section 35AD is deemed to be theincome of the assessee in accordance with the provisions ofsub-section (7B) of the said section, the actual cost of theasset to the assessee shall be the actual cost to the assessee,as reduced by an amount equal to the amount of depreciationcalculated at the rate in force that would have been allowablehad the asset been used for the purposes of business sincethe date of its acquisition.


Clause 17 of the Bill seeks to amend section 43B of theIncome-tax Act relating to certain deductions to be only onactual payment.

The said section inter alia, provides that any sum payableby the assessee by way of tax, cess, duty or fee, or intereston any loan or borrowing from any scheduled bank or publicfinancial institution, etc., shall be allowed as deduction ofthe previous year in which the liability to pay such sum wasincurred (relevant previous year) and if the same is actuallypaid on or before the due date of furnishing of the return ofincome.

It is proposed to amend the said section so as to providethat any sum payable by the assessee as interest on anyloan or advances from a co-operative bank other than aprimary agricultural credit society or a primary co-operativeagricultural and rural development bank shall also be allowedas deduction, if it is actually paid on or before the due date offurnishing the return of income of the relevant previous year.

It is further proposed to include the definitions of theexpressions "co-operative bank", "primary agricultural credit

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society" and "primary co-operative agricultural and ruraldevelopment bank" in the said section.


Clause 18 of the Bill seeks to amend section 43D of theIncome-tax Act relating to special provision in case of incomeof public financial institutions, public companies, etc.

The said section inter alia, provides that interest incomein relation to certain categories of bad or doubtful debtsreceived by certain institutions or banks or corporations orcompanies, as referred to in the Explanation to the saidsection, shall be chargeable to tax in the previous year inwhich it is credited to its profit and loss account for that yearor actually received, whichever is earlier.

It is proposed to amend the said section so as to providethat the interest income in relation to certain categories ofbad or doubtful debts received by a co-operative bank otherthan a primary agricultural credit society or a primary co-operative agricultural and rural development bank shall alsobe chargeable to tax in the previous year in which it is creditedto its profit and loss account for that year or actually received,whichever is earlier.

It is further proposed to include the definitions of theexpressions "co-operative bank", "primary agricultural creditsociety" and "primary co-operative agricultural and ruraldevelopment bank" in the said section.


Clause 19 of the Bill seeks to amend section 44AA of theIncome-tax Act relating to maintenance of accounts by certainpersons carrying on profession or business.

Clause (i) of sub-section (2) of the said section, providesthat certain persons carrying on business or profession arerequired to maintain books of account and such otherdocuments if the income from business or professionexceeds one lakh twenty thousand rupees or total sales,turnover or gross receipts, as the case may be, in businessor profession exceed or exceeds ten lakh rupees in any oneof the three years immediately preceding the previous yearto enable the Assessing Officer to compute total income.

Clause (ii) of sub-section (2) of the said section, providesthat certain persons carrying on newly set up business orprofession in any previous year, are required to maintainbooks of account and such other documents if the incomefrom such business or profession is likely to exceed onelakh twenty thousand rupees or total sales, turnover or grossreceipts, as the case may be, in business or profession are,or is, likely to exceed ten lakh rupees, during such previousyear to enable the Assessing Officer to compute his totalincome.

It is proposed to amend sub-section (2) of the said sectionso as to provide that the monetary limits of income and totalsales, turnover or gross receipts specified in clauses (i) and(ii) shall be enhanced from one lakh twenty thousand rupeesto two lakh fifty thousand rupees and from ten lakh rupees totwenty-five lakh rupees, respectively, in the case of anindividual and a Hindu undivided family.


Clause 20 of the Bill seeks to amend section 44AB of theIncome-tax Act relating to audit of accounts of certain personscarrying on business or profession.

Section 44AB, inter alia, provides that every personcarrying on business is required to get his accounts auditedbefore a specified date, if the total sales, turn over or grossreceipts in a previous year, as the case may be, exceed orexceeds one crore rupees.

It is proposed to amend the said section so as to insert anew proviso to provide that this section shall not apply to theperson, who declares profits and gains for the previous yearin accordance with the provisions of sub-section (1) of section44AD and his total sales, turnover or gross receipts, as thecase may be, in business does not exceed two crore rupeesin such previous year.


Clause 21 of the Bill seeks to amend section 44AD of theIncome-tax Act relating to special provision for computingprofits and gains of business on presumptive basis.

The provisions contained in the said section (as amendedby the Finance Act, 2016), provides that notwithstandinganything to the contrary contained in sections 28 to 43C, inthe case of an eligible assessee engaged in an eligiblebusiness, having total turnover or gross receipts notexceeding two crore rupees, a sum equal to eight per cent.of the total turnover or gross receipts of the assesse in theprevious year on account of such business, or, as the casemay be, a sum higher than the aforesaid sum claimed tohave been earned by the eligible assessee, shall be deemedto be the profits and gains of such business chargeable totax under the head "profits and gains of business orprofession".

It is proposed to insert a proviso to the said sub-section(1) so as to reduce the existing rate of deemed total incomeof eight per cent. to six per cent., in respect of the amount oftotal turnover or gross receipts which is received by anaccount payee cheque or an account payee bank draft oruse of electronic clearing system through a bank accountduring the previous year or before the due date specified insub-section (1) of section 139 in respect of that previous

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year. However, the existing rate of deemed profit and gainsof eight per cent. referred to in the provisions of the saidsection, shall continue to apply in respect of total turnover orgross receipts received in any other mode.

This amendment will take effect from 1st April, 2017 andshall accordingly, apply in relation to assessment year 2018-2019 and subsequent years.

Clause 22 of the Bill seeks to amend section 45 of theIncome-tax Act relating to Capital gains.

Under the existing provisions of the said section, theCapital gains is chargeable in the year in which transfer takesplace except in certain cases as provided in the said section.

It is proposed to insert a new sub-section (5A) in the saidsection so as to provide that where the Capital gains arisesto an assessee being an individual or Hindu undivided family,from the transfer of a Capital asset, being land or building orboth, under a specified agreement, the capital gains shall bechargeable to income-tax as income of the previous year inwhich the certificate of completion for the whole or part ofthe project is issued by the competent authority.

It is further proposed to provide that the stamp duty valueof his share, being land or building or both, in the project onthe date of issuing of said certificate as increased byconsideration received in cash, if any, shall be deemed tobe the full value of the consideration received or accruing asa result of the transfer of the capital asset.

It is also proposed to provide that the provisions of thissub-section shall not apply where the assessee transfershis share in the project to any other person on or before thedate of issue of said certificate of completion and the capitalgains shall be deemed to be the income of the previousyear in which such transfer took place and the provisionsof the Act, other than the provisions of this sub-section,shall apply for the determination of the full value ofconsideration received or accruing as a result of suchtransfer.

It is also proposed to define the expressions "competentauthority", "specified agreement" and "stamp duty value".


Clause 23 of the Bill seeks to amend section 47 of theIncome-tax Act relating to transactions not regarded astransfer.

The said section provides that certain transfers of capitalassets are not chargeable to tax under section 45 of the Act.

Further, under the existing provisions of clause (x) of thesaid section, any transfer by way of conversion of bonds ordebentures, debenture-stock or deposit certificates in anyform, of a company into shares or debentures of that companyis not regarded as transfer.

It is proposed to insert a new clause (viiaa) in section 47so as to provide that any transfer made outside India of acapital asset being rupee denominated bond of Indiancompany issued outside India, by a non-resident to anothernon-resident shall not be regarded as transfer.

It is also proposed to insert a new clause (xb) in the saidsection so as to provide that the conversion of preferenceshares of a company into equity shares of that companyshall also not be regarded as transfer.


Clause 24 of the Bill seeks to amend section 48 of theIncome-tax Act relating to mode of computation.

The fifth proviso to the said section provides that in caseof an assessee being a non-resident, any gains arising onaccount of appreciation of rupee against a foreign currencyat the time of redemption of rupee denominated bond of anIndian company subscribed by him, shall be ignored for thepurposes of computation of full value of consideration.

Further, under the existing provisions of the said section,"indexed cost of acquisition" is defined to be an amount whichbears to the cost of acquisition the same proportion as CostInflation Index for the year in which the asset is transferredbears to the Cost Inflation Index for the first year in which theasset was held by the assessee or for the year beginning onthe 1st day of April, 1981, whichever is later.

It is proposed to amend the said proviso so as to providethat in case of an assessee being a non-resident, any gainsarising on account of appreciation of rupee against a foreigncurrency at the time of redemption of rupee denominatedbond of an Indian company held by him, shall be ignored forthe purposes of computation of full value of consideration.

It is also proposed to make consequential amendmentsto the said section so as to replace the reference of 1st dayof April, 1981 with the 1st day of April, 2001.

These amendments will take effect from 1st April, 2018and will, accordingly, apply to the assessment year 2018-2019 and subsequent years.

Clause 25 of the Bill seeks to amend section 49 of theIncome-tax Act relating to cost with reference to certainmodes of acquisition.

The existing provisions contained in sub-section (1) of thesaid section provides that where the capital asset becamethe property of the assessee under certain situations, thecost of acquisition of the asset shall be deemed to be thecost for which the previous owner of the property acquired it,as increased by the cost of any improvement of the assetsincurred or borne by the previous owner or the assessee, asthe case may be.

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It is proposed to amend sub-clause (e) of clause (iii) ofsaid sub-section (1) so as to include the transfer referred toin clause (vic) of section 47 also within the purview of thesaid sub-section (1).

It is further proposed to insert a new sub-section (2AE) inthe said section so as to provide that where the capital asset,being equity share of a company, became the property ofthe assessee in consideration of a transfer as referred to inclause (xb) of section 47, the cost of acquisition of the assetshall be deemed to be the cost of the preference share inrelation to which such asset is acquired by the assessee.


It is also proposed to insert a new sub-section (2AF)so asto provide that where the capital asset, being a unit or unitsin a consolidated plan of a mutual fund scheme, became theproperty of the assessee in consideration of a transferreferred to in clause (xix) of section 47, the cost of acquisitionof the asset shall be deemed to be the cost of acquisition tohim of the unit or units in the consolidating plan of the schemeof the mutual fund.


It is also proposed to insert a new sub-section (6) in thesaid section so as to provide that where the capital gain arisesfrom the transfer of specified capital asset referred to inclause (c) of the Explanation to clause (37A) of section 10,received under the Land Pooling Scheme covered underthe Andhra Pradesh Capital City Land Pooling Scheme(Formulation and Implementation) Rules, 2015 made underthe provisions of Andhra Pradesh Capital RegionDevelopment Authority Act, 2014 and the rules, regulationsand schemes made under the said Act, which has beentransferred after the expiry of two years from the end of thefinancial year in which the possession of such specifiedcapital asset was handed over to the assessee, the cost ofacquisition of that specified capital asset shall be deemed tobe the stamp duty value of the said specified capital assetas on the last day of the second financial year after the endof the financial year in which the possession of the saidspecified capital asset was handed over to the assessee.

It is also proposed to define "stamp duty value".

It is also proposed to insert a new sub-section (7) in thesaid section so as to provide that the cost of acquisition ofthe share in the project, in the form of land or building orboth, as referred to in sub-section (5A) of section 45, notbeing the capital asset referred to in the proviso of the saidsub-section, shall be the amount which is deemed as fullvalue of consideration in that sub-section.


It is also proposed to amend the said section by insertionof a new sub-section so as to provide that where the capitalgain arises from the transfer of an asset, being the assetheld by a trust or an institution in respect of which accretedincome has been computed, and the tax has been paidthereon in accordance with the provisions of Chapter XII-EB, the cost of acquisition of such asset shall be deemed tobe the fair market value of the asset which has been takeninto account for computation of accreted income as on thespecified date referred to in sub-section (2) of section 115TD.


This amendment will take effect retrospectively from 1stJune, 2016.

Clause 26 of the Bill seeks to insert a new section 50CAin the Income-tax Act relating to special provision for fullvalue of consideration for transfer of share other than quotedshare.

It is proposed to provide that in case of transfer of sharesof a company other than quoted share, the fair market valueof such shares determined in the prescribed manner shallbe deemed to be the full value of consideration for thepurpose of computing income chargeable to tax as capitalgains.

It is also proposed to define the term “quoted share”.


Clause 27 of the Bill seeks to amend section 54EC of theIncome-tax Act relating to capital gain not to be charged oninvestment in certain bonds.

The existing provisions contained in clause (ba) of sub-section (3) of the said section define long-term specifiedasset for making any investment under the said section onor after the 1st day of April, 2007 means any bond,redeemable after three years and issued on or after the 1stday of April, 2007 by the National Highways Authority of Indiaconstituted under section 3 of the National HighwaysAuthority of India Act, 1988 or by the Rural ElectrificationCorporation Limited, a company formed and registered underthe Companies Act, 1956.

It is proposed to amend the said clause (ba) so as toinclude any other bond as notified by the Central Governmentin this behalf.

This amendment will take effect, from 1st April, 2018 andwill, accordingly, apply in relation to the assessment year2018-2019 and subsequent years.

Clause 28 of the Bill seeks to amend section 55 of theIncome-tax Act relating to meaning of "adjusted", "cost ofimprovement" and "cost of acquisition".

Under the existing provisions of the said section, the cost

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of long-term capital asset acquired before the 1st day of April,1981 is taken to be the cost of acquisition to the assessee orthe fair market value of the asset on that date, at the optionof the assessee. The cost of improvement is also taken intoaccount after the assessee has acquired the asset on orafter 1st April, 1981.

It is proposed to amend the said section so as to advancethe aforesaid cut-off date to 1st day of April, 2001. Wherethe long-term capital asset has been acquired before the 1stday of April, 2001, then, the cost of acquisition will be takento be the value of the asset as on the 1st day of April, 2001.Similarly, in such cases the cost of improvement will be takento be the cost of improvement after this date.


Clause 29 of the Bill seeks to amend section 56 of theIncome-tax Act relating to income from other sources.

The existing provisions of clause (vii) of sub-section (2) ofthe said section provide for taxability in the hands of individualor Hindu undivided family on receipt of any money orimmovable property or specified movable property withoutor inadequate consideration, if the value of such receiptexceeds rupees fifty thousand. Further, clause (viia) of sub-section (2) of the said section 56 provides for the taxabilityof receipt of shares of a closely held company by a firm or aclosely held company for without or inadequate consideration,if the fair market value of shares exceeds fifty thousandrupees. However, the taxability under clause (vii) and clause(viia) of sub-section (2) of the said section is subject to certainspecified exceptions.

It is proposed to insert a new clause (x) in sub-section (2)of the said section so as to expand the scope of the provisionsof the said section to all categories of assessees so that theassets received without or inadequate consideration may bebrought to the tax. Further, the existing exception containedin the said section is proposed to be rationalised by includingcertain additional exceptions consequently, it is proposed tosun set clauses (vii) and (viia) of sub-section (2) of the saidsection.

This amendment will take effect from 1st April, 2017.

Clause 30 of the Bill seeks to amend section 58 of theIncome-tax Act relating to amounts not deductible.

The provisions of the said section specify the amountswhich are not deductible in computing the income from othersources.

It is proposed to amend sub-section (1A) of the said sectionso as to provide that the provisions of sub-clause (ia) of clause(a) of section 40 shall also apply in computing the incomechargeable under the head "Income from other sources" asthey apply in computing the income chargeable under thehead "Profit and gains of business or profession".


Clause 31 of the Bill seeks to amend section 71 of theIncome-tax Act relating to set off of loss from one headagainst income from another.

It is proposed to insert a new sub-section (3A) in theaforesaid section to provide that notwithstanding anythingcontained in sub-section (1) or sub-section (2) of the saidsection, set off of loss under the head "Income from houseproperty" against any other head of income shall be restrictedto two lakh rupees for any assessment year.


Clause 32 of the Bill seeks to substitute section 79 of theIncome-tax Act relating to carry forward and set off of lossesin the case of certain companies.

It is proposed to provide that where a change inshareholding has taken place in a previous year in the caseof a company, not being a company in which the public aresubstantially interested, no loss incurred in any year prior tothe previous year shall be carried forward and set off againstthe income of the previous year unless on the last day of theprevious year the shares of the company carrying not lessthan fifty-one per cent. of the voting power were beneficiallyheld by persons who beneficially held shares of the companycarrying not less than fifty-one per cent. of the voting poweron the last day of the year or years in which the loss wasincurred.

It is further proposed to provide that where a change inshareholding has taken place in a previous year in the caseof a company, not being a company in which the public aresubstantially interested but being an eligible start-up asreferred to in section 80-IAC, the loss incurred in any yearprior to the previous year shall be carried forward and set offagainst the income of the previous year, if, all theshareholders of such company which held shares carryingvoting power on the last day of the year or years in which theloss was incurred, being the loss incurred during the periodof seven years beginning from the year in which suchcompany is incorporated, continue to hold those shares onthe last day of such previous year.

It is also proposed to provide that the provisions of thissection shall not apply to a case where a change in the votingpower and shareholding, as aforesaid, takes place in aprevious year consequent upon the death of a shareholderor on account of transfer of shares by way of gift to any relativeof the shareholder making such gift.

It is also proposed to provide that nothing contained inthis section shall apply to any change in the shareholding ofan Indian company which is a subsidiary of a foreign companyas a result of amalgamation or demerger of a foreign

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company subject to the condition that fifty-one per cent.shareholders of the amalgamating or demerged foreigncompany continue to be the shareholders of the amalgamatedor the resulting foreign company.


Clause 33 of the Bill seeks to amend section 80CCD ofthe Income-tax Act relating to deduction in respect ofcontribution to pension scheme of the Central Government.

Sub-section (1) of the said section inter alia, provides thatin the case of an individual employed by the CentralGovernment on or after the 1st day of January, 2004 or, beingan individual employed by any other employer, or any otherassessee, being an individual who has in the previous yearpaid or deposited any amount in his account under a pensionscheme notified or as may be notified by the CentralGovernment, he shall be allowed a deduction of an amountnot exceeding ten per cent. of his salary in the previous year.In case of any other assessee, the deduction is limited to tenper cent. of gross total income in the previous year.

It is proposed to amend sub-section (1) so as to increasethe upper limit of gross total income from ten per cent. totwenty per cent. in case of an individual other than employee.


Clause 34 of the Bill seeks to amend section 80CCG ofthe Income-tax Act relating to deduction in respect ofinvestment made under an equity savings scheme.

The existing provisions of the said section provides thatwhere an assessee, being a resident individual, has, in aprevious year, acquired listed equity shares or listed units ofan equity oriented fund in accordance with a scheme, asmay be notified by the Central Government, he shall, subjectto certain conditions, be allowed a deduction, in thecomputation of his total income of the assessment yearrelevant to such previous year, of fifty per cent. of the amountinvested in such equity shares or units to the extent suchdeduction does not exceed twenty-five thousand rupees.

It is proposed to insert a new sub-section (5) in the saidsection so as to provide that no deduction under the saidsection shall be allowed in respect of any assessment yearcommencing on or after the 1st day of April, 2018. However,an assessee who has acquired shares or units in accordancewith the aforesaid scheme and claimed deduction under theprovisions of the said section for any assessment yearcommencing on or before the 1st day of April, 2017 shall beallowed deduction under the said section till the assessmentyear commencing on the 1st day of April, 2019, if he isotherwise eligible to claim the deduction in accordance withthe other provisions of this section.


Clause 35 of the Bill seeks to amend section 80G of theIncome-tax Act relating to deduction in respect of donationsto certain funds, charitable institutions, etc.

Under the existing provisions contained in sub-section (5D)of the said section, no deduction is allowed in respect ofdonation of any sum exceeding ten thousand rupees unlesssuch sum is paid by any mode other than cash.

It is proposed to amend the said sub-section so as toprovide that no deduction is allowed in respect of donationof any sum exceeding two thousand rupees unless such sumis paid by any mode other than cash.


Clause 36 of the Bill seeks to amend section 80-IAC ofthe Income-tax Act relating to special provision in respect ofspecified business.

The existing provisions of said section, inter alia, providethat where the gross total income of an assessee, being aneligible start-up, includes any profits and gains derived fromeligible business, there shall, in accordance with and subjectto the provisions of this section, be allowed, in computingthe total income of the assessee, a deduction of an amountequal to one hundred per cent. of the profits and gains derivedfrom such business for three consecutive assessment yearsand at the option of the assessee the said deduction may beclaimed for any three consecutive assessment years out offive years beginning from the year in which the eligible start-up is incorporated subject to the condition that it isincorporated.

It is proposed to amend the said sub-section so as toprovide that the deduction shall be allowed for any threeconsecutive assessment years out of seven years insteadof five years, beginning from the year in which such eligiblestart-up is incorporated.


Clause 37 of the Bill seeks to amend section 80-IBA ofthe Income-tax Act relating to deductions in respect of profitsand gains from housing projects.

The said section provides for hundred per cent. deductionof the profits and gains of an assessee developing andbuilding housing projects subject to certain conditions which,inter alia, include that the upper limit for the built-up area ofresidential unit comprised in the housing project does notexceed thirty square metres in the cities of Chennai, Delhi,Kolkata and Mumbai and any place, within the distance of

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twenty-five kilometres, measured aerially, from the municipallimits of the said cities; and sixty square metres in any otherplace; and the project shall be completed within a period ofthree years.

It is proposed to amend the said section so as to substitutethe expression “built-up area” with the words “carpet area”and also to do away with the restriction of aerial distance oftwenty-five kilometres from the municipal limits of the abovesaid cities and further to extend the period of completion ofthe housing project from three years to five years for eligibilityunder the section.

It is also proposed to provide the definition of “carpet area”as provided in the Real Estate (Regulation and Development)Act, 2016.

These amendments will take effect, from 1st April, 2018and will, accordingly, apply in relation to the assessmentyear 2018-2019 and subsequent years.

Clause 38 of the Bill seeks to amend section 87A of theIncome-tax Act relating to rebate of income-tax in case ofcertain individuals.

The existing provisions contained in the said sectionprovide that an assessee, being an individual resident inIndia, whose total income does not exceed five hundredthousand rupees, shall be entitled to a deduction, from theamount of income-tax (as computed before allowing thedeductions under Chapter VIII) on his total income with whichhe is chargeable for any assessment year, of an amountequal to one hundred per cent. of such income-tax or anamount of five thousand rupees, whichever is less.

It is proposed to amend the said section so as to providethat the deduction under the said section shall be allowed toan assessee, being an individual resident in India, whosetotal income does not exceed three hundred fifty thousandrupees, upto hundred percent. of income chargeable for anyassessment year or two thousand five hundred rupees,whichever is less.


Clause 39 of the Bill seeks to amend section 90 of theIncome-tax Act relating to agreement with foreign countriesor specified territories.

The existing provisions of the said section confers powerupon the Central Government to enter into an agreementwith the Government of any country or specified territoryoutside India for granting of relief in respect of income onwhich income-tax has been paid both under the Income-taxAct and income-tax in that country or specified territory. It isfurther provided that any term used but not defined in thisAct or in the agreement referred to in sub-section (1) of thesaid section shall have the meaning assigned to it in thenotification issued by the Central Government in the Official

Gazette in this behalf, unless the context otherwise requires,provided the same is not inconsistent with the provisions ofthe Income-tax Act or the said agreement.

It is proposed to provide that where any term used in anagreement entered into under sub-section (1) of the saidsection is defined under the said agreement, the said termshall have the same meaning as assigned to it in theagreement; and where the term is not defined in the saidagreement, but defined in the Income-tax Act, it shall havethe same meaning as assigned to it in the said Act and anyExplanation given to it by the Central Government.


Clause 40 of the Bill seeks to amend section 90A of theIncome-tax Act relating to adoption by Central Governmentof agreement between specified associations for doubletaxation relief.

Under the provisions of section 90A, the CentralGovernment may make necessary provisions for adoptingand implementing an agreement entered into by any specifiedassociation in India with any specified association in thespecified territory outside India, for granting of relief in respectof which income-tax has been paid both under the Income-tax Act and income-tax in that specified territory outside India,for the avoidance of double taxation of income, exchange ofinformation for the prevention of evasion or avoidance ofincome-tax or recovery of income-tax. It is further providedthat any term used but not defined in Income-tax Act or inthe agreement referred to in sub-section (1) of the said sectionshall have the meaning assigned to it in the notification issuedby the Central Government in the Official Gazette in thisbehalf, unless the context otherwise requires, provided thesame is not inconsistent with the provisions of Income-taxAct or the said agreement.

It is proposed to provide that where any term used in anagreement entered into under sub-section (1) of the saidsection is defined under the said agreement, the said termshall have the same meaning as assigned to it in theagreement; and where the term is not defined in the saidagreement, but is defined in the Income-tax Act, it shall havethe same meaning as assigned to it in the said Act and anyExplanation to it by the Central Government.


Clause 41 of the Bill seeks to amend section 92BA of theIncome-tax Act relating to meaning of specified domestictransaction.

The provisions of the said section, inter alia, provides thatany transaction entered into by the assessee exceeding themonetary threshold of twenty crore rupees in aggregateduring a previous year for the purposes of clause (b) of sub-

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section (2) of section 40A, shall come within the meaning of"specified domestic transaction" and shall accordingly, berequired to be computed having regard to arm's lengthprinciple.

It is proposed to amend the said section so as to omitclause (i) of the said section so as to exclude the expenditurein respect of which payment has been made or to be madeby the assessee to a person referred to in clause (b) of sub-section (2) of section 40A, from the scope of section 92BAof the Income-tax Act.


Clause 42 of the Bill seeks to insert a new section 92CEin the Income-tax Act relating to secondary adjustments incertain cases.

The proposed new section 92CE provides that a secondaryadjustment shall be made where a primary adjustment totransfer price, has been made suo motu by the assessee inhis return of income; or made by the Assessing Officer hasbeen accepted by the assessee; or is determined by anadvance pricing agreement entered into by the assesseeunder section 92CC; or is made as per the safe harbourrules framed under section 92CB; or is arising as a result ofresolution of an assessment by way of the mutual agreementprocedure under an agreement entered into under section90 or 90A for avoiding double taxation.

It is further proposed to provide that where as a result ofprimary adjustment to the transfer price, there is an increasein the total income or reduction in the loss, as the case maybe, of the assessee, the excess money which is availablewith its associated enterprise, if not repatriated to India withinthe time as may be prescribed, shall be deemed to be anadvance made by the assessee to such associated enterpriseand the interest on such advance, shall be computed in suchmanner as may be prescribed.

It is also proposed to provide that the provisions of thissection shall apply, if, the amount of primary adjustment madein case of the assessee in any previous year, exceeds onecrore rupees.

It is also proposed to provide that the provisions of thissection shall not apply to such assessees in whose case theprimary adjustment is made in respect of an assessmentyear commencing on or before 1st April, 2016.

It is also proposed to define the term "associate enterprise","arm's length price", "excess money", "primary adjustment"and "secondary adjustment".


Clause 43 of the Bill seeks to insert a new section 94B inthe Income-tax Act relating to limitation on interest deductionin certain cases.

Sub-section (1) of the said section seeks to provide thatwhere an Indian company, or a permanent establishmentof a foreign company in India being the borrower, paysinterest or similar consideration exceeding one crore rupeeswhich is deductible in computing income chargeable underthe head "Profits and gains of business or profession" inrespect of any debt issued by a non-resident, being anassociated enterprise of such borrower, interest shall not bedeductible in computation of income under the said head tothe extent that it arises from excess interest, as specified insub-section (2).

It is further proposed to provide that where the debt issuedby a lender which is not associated but an associatedenterprise either provides an implicit or explicit guaranteesuch lender or deposits a corresponding and matchingamount of funds with the lender, such debt shall be deemedto have been issued by an associated enterprise.

Sub-section (2) of the said section seeks to provide thatfor the purposes of sub-section (1), the expression "excessinterest" shall mean an amount of total interest paid orpayable in excess of thirty per cent. of earnings beforeinterest, taxes, depreciation, and amortisation of the borrowerin the previous year or interest paid or payable to associatedenterprises for that previous year, whichever is less.

Sub-section (3) of the said section seeks to provide thatnothing contained in sub-section (1) shall apply to an Indiancompany or a permanent establishment of a foreign companywhich is engaged in the business of banking or insurance.

Sub-section (4) of the said section seeks to provide thatwhere for any assessment year, the interest expenditure isnot wholly deducted against income under the head "Profitsand gains of business or profession", so much of the interestexpenditure as has not been so deducted, shall be carriedforward to the following assessment year or assessmentyears, and it shall be allowed as deduction against the profitsand gains, if any, of any business or profession carried onby him and assessable for that assessment year to the extentof maximum allowable interest expenditure in accordancewith sub-section (2). It is further provided that no interestexpenditure shall be carried forward under this section formore than eight assessment years immediately succeedingthe assessment year for which the excess interestexpenditure was first computed.

Sub-section (5) of the said section seeks to define theexpressions "associated enterprise", "debt" and "permanentestablishment".


Clause 44 of the Bill seeks to amend section 115BBDA ofthe Income-tax Act relating to tax on certain dividendsreceived from domestic companies.

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Under the existing provisions of section 115BBDA, in caseof an assessee, being an individual, Hindu undivided familyor a firm, resident in India, tax is charged at the rate of tenper cent. on income by way of dividend exceeding ten lakhrupees.

It is proposed to amend the said section so as to providethat this section shall be applicable to all resident personsother than a domestic company, a fund or institution or trustor any university or other educational institution or any hospitalor other medical institution referred to in sub-clause (iv) orsub-clause (v) or sub-clause (vi) or sub-clause (via) of clause(23C) of section 10 or a trust or institution registered undersection 12AA of the Income-tax Act.


Clause 45 of the Bill seeks to insert a new section 115BBGin the Income-tax Act relating to tax on income from transferof carbon credits.

The proposed new section 115BBG seeks to provide thatin case of an assessee whose total income includes anyincome by way of transfer of carbon credits, the income-taxpayable shall be the aggregate of the amount of income-taxcalculated on the income by way of transfer of carbon creditsat the rate of ten per cent., and the amount of income-taxwith which the assessee would have been chargeable hadhis total income been reduced by the amount of income byway of transfer of carbon credit.

It is further proposed to provide that the assessee shallnot be eligible for deduction in respect of any expenditure orallowance under any provision of the Income-tax Act incomputing his income referred to in clause (a) of sub-section(1) of the proposed section.

It is also proposed to define the expression "carbon credits"in the said section.


Clause 46 of the Bill seeks to amend section 115JAA ofthe Income-tax Act relating to tax credit in respect of taxpaid on deemed income relating to certain companies.

Sub-section (2A) of the said section provides that the taxcredit to be allowed under sub-section (1A) shall be thedifference of the tax paid for any assessment year undersub-section (1) of section 115JB and the amount of taxpayable by the assessee on his total income computed inaccordance with the other provisions of the Income-tax Act.

It is proposed to amend the said sub-section so as toprovide that where the amount of tax credit in respect of anyincome-tax paid in any country or specified territory outsideIndia allowed against the tax payable by the assessee underthe provisions of section 115JB exceeds the amount of suchtax credit admissible against the tax payable by the assesseeon its income in accordance with the other provisions of thisAct, then, while computing the amount of credit under thesaid sub-section, such excess amount shall be ignored.

It is further proposed to amend sub-section (3A) of thesaid section so as to extend the period for carry forward oftax credit from tenth assessment year to fifteenth assessmentyear.


Clause 47 of the Bill seeks to amend section 115JB of theIncome-tax Act relating to special provision for payment oftax by certain companies.

The said section provides for levy of tax on certaincompanies on the basis of book profit which is determinedafter making certain adjustments to the net profit disclosedin the profit and loss account prepared in accordance withthe provisions of the Companies Act, 1956.

It is proposed to amend the section so as to align theprovisions of section 115JB for the company preparingfinancial statements in accordance with the provisions ofIndian Accounting Standards and to update the provisionsof the Companies Act,1956 referred in the said section inaccordance with the provisions of the new Companies Act,2013.

The amendment will take effect from 1st April, 2017 andwill, accordingly, apply in relation to the assessment year2017-2018 and subsequent years.

Clause 48 of the Bill seeks to amend section 115JD of theIncome-tax Act relating to tax credit for alternate minimumtax.

Sub-section (2) of the said section provides that tax creditof an assessment year shall be the excess of the alternateminimum tax paid over the regular income-tax payable forthat year and sub-section (4) provides that such tax credit isallowed to be carried forward for a period of ten years.

It is proposed to amend the said sub-sections so as toprovide that where the amount of tax credit in respect of anyincome-tax paid in any country or specified territory outsideIndia allowed against the alternate minimum tax payableexceeds the amount of tax credit admissible against theregular income-tax payable by the assessee on his incomein accordance with the other provisions of this Act, suchexcess amount shall be ignored, while computing the amountof credit and the period for carry forward of tax credit shallbe extended from tenth assessment year to fifteenthassessment year.


Clause 49 of the Bill seeks to amend section 119 of theIncome-tax Act relating to instructions to subordinateauthorities.

Sub-clause (a) of sub-section (2) of the said sectionempowers the Board to issue orders setting forth directionsor instructions (not being prejudicial to assessees) to befollowed by the subordinate authorities in the work relatingto assessment or collection of revenue or the initiation ofproceedings for the imposition of penalties.

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It is proposed to insert reference of sections 271C and271CA in the said sub-section, so as to empower the Boardto issue directions or instructions in respect of the saidsections also.


Clause 50 of the Bill seeks to amend section 132 of theIncome-tax Act relating to search and seizure.

Sub-section (1) of the said section provides that where anincome-tax authority mentioned therein, based on theinformation in his possession, has reason to believe ofcircumstances specified therein, he may authorise anauthority specified therein to carry out search and seizure.

It is proposed to insert an Explanation after the fourthproviso to the said sub-section (1) so as to provide that thereason to believe recorded by the income-tax authorityspecified therein under the said sub-section shall not bedisclosed to any person or any authority or the AppellateTribunal.

This amendment will take effect retrospectively from 1st ,April, 1962, the date of commencement of the Income-taxAct, 1961.

Sub-section (1A) of the said section provides that wherean authority mentioned therein, based on the information inhis possession, has reason to suspect of the circumstancesspecified therein, he may authorise an authority specifiedtherein to carry out search and seizure.

It is proposed to insert an Explanation in the said sub-section (1A) so as to declare that reason to suspect recordedby the income-tax authority specified therein under theprovisions of the said sub-section shall not be disclosed toany person or any authority, or the Appellate Tribunal.

This amendment will take effect retrospectively from 1stOctober, 1975.

It is further proposed to insert sub-section (9B) in the saidsection, to provide that in a search case, where the authorisedofficer is satisfied that for the purpose of protecting the interestof revenue and for reasons to be recorded in writing it isnecessary so to do he may, by order in writing, attachprovisionally any property belonging to the assessee withthe prior approval of Principal Director General or DirectorGeneral or Principal Director or Director.

It is also proposed to insert sub-section (9C) in the saidsection, so as to provide that such provisional attachmentshall cease to have effect after the expiry of six months fromthe date of order of attachment.

It is also proposed to insert sub-section (9D) in the saidsection, to provide that in a search case, the authorised officerfor estimation of fair market value of a property, may make areference to a Valuation Officer referred to in section 142A,for valuation in the manner provided under the said sub-section. It is also proposed that the Valuation Officer shallfurnish the valuation report within sixty days of receipt ofsuch reference.

It is also proposed to amend Explanation 1 to section 132,

so as to provide that for the purposes of sub-section (9A),sub-section (9B) and sub-section (9D), with respect to"execution of an authorisation for search" the provisions ofsub-section (2) of section 153B shall apply.

These amendments will take effect from 1st April, 2017.

Clause 51 of the Bill seeks to amend section 132A of theIncome-tax Act relating to powers to requisition books ofaccount, etc.

Sub-section (1) of the said section provides that thespecified income-tax authority, based on the information inhis possession, has reason to believe of circumstancesspecified therein, may authorise other income-tax authoritymentioned therein to requisition from other officer or authorityreferred to in clauses (a) to (c) of the said sub-section todeliver books of account, documents or assets of theassessee to the income-tax authority so authorised.

It is proposed to insert an Explanation in the said sub-section, so as to declare that the reason to believe for makingthe requisition as recorded by the income-tax authority shallnot be disclosed to any person or any authority or theAppellate Tribunal.

This amendment will come into effect retrospectively from1st October, 1975.

Clause 52 of the Bill seeks to amend section 133 of theIncome-tax Act relating to power to call for information.

The said section empowers certain income-tax authoritiesto call for information for the purpose of any inquiry orproceeding under the Act.

It is proposed to amend the first proviso of the said sectionso as to provide that the power in respect of inquiry orproceeding under the Act, as referred to in clause (6) of thesaid section, may also be exercised by the Joint Director,Deputy Director or Assistant Director.

It is further proposed to amend the second proviso of thesaid section, so as to provide that the Joint Director, DeputyDirector or Assistant Director, in a case where no proceedingis pending, may exercise the powers in respect of inquirywithout seeking prior approval of the authorities as specifiedin the said proviso.


Clause 53 of the Bill seeks to amend section 133A of theIncome-tax Act relating to power of survey.

The said section empowers an income-tax authority tosurvey a place, at which a business or profession is carriedon, or at which any books of account or other documents orany part of cash or stock or other valuable article or thingrelating to the business or profession are kept.

It is proposed to amend sub-section (1) of the said section,so as to provide that a place, at which an activity for charitablepurpose is carried on may also be surveyed by an income-tax authority.

It is further proposed to insert the reference of activity forcharitable purpose in the Explanation to sub-section (1) ofthe said section which is consequential in nature.

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Clause 54 of the Bill seeks to amend section 133C of theIncome-tax Act relating to power to call for information byprescribed income-tax authority.

Sub-section (1) of the said section provides that aprescribed income-tax authority may issue a notice to anyperson, requiring him to submit information or documentsfor the purposes of verification of the information in thepossession of such income-tax authority.

Sub-section (2) of the said section provides that theprescribed income-tax authority may process any informationor document that has been received in response to a noticeissued under sub-section (1) and provide the outcome ofsuch processing to the Assessing Officer.

It is proposed to insert a new sub-section (3) in the saidsection so as to provide that the Central Board of Direct Taxesmay make a scheme for enabling the centralised issuanceof notice, processing of information or documents and formaking available the outcome of the said processing to theAssessing Officer.


Clause 55 of the Bill seeks to amend section 139 of theIncome-tax Act relating to return of income.

Sub-section (4C) of the said section mandates filing ofreturn by certain entities which are exempted under section10.

It is proposed to amend the said sub-section so as toprovide that any person referred to in clause (23AAA),Investor Protection Fund referred to in clause (23EC) orclause (23ED), Core Settlement Guarantee Fund referredto in clause (23EE) and Board or Authority referred to inclause (29A) of section 10 shall also be mandatorily requiredto file return of income.

Sub-section (5) of the said section 139 provides that aperson can furnish a revised return, in case he discoversany omission or wrong statement in his return of incomealready furnished, within one year from the end of the relevantassessment year or before completion of assessment,whichever is earlier.

It is proposed to amend the said sub-section (5) so as toprovide that the time for furnishing of revised return shall beavailable upto the end of the relevant assessment year orbefore the completion of assessment, whichever is earlier.

These amendments will take effect from 1st April, 2018and will, accordingly apply in relation to assessment year2018-2019 and subsequent years.

Clause 56 of the Bill seeks to amend section 140A of theIncome-tax Act relating to self-assessment.

The said section provides that the assessee shall be liableto pay tax together with interest payable under any provisionof the Income-tax Act as reduced by the amounts specifiedtherein before furnishing a return under the said Act. It alsoprovides the manner of calculation of the amount so payableand consequence of non-payment of the said amount.

It is proposed to amend the said section to include that incase of delay in furnishing of return of income, alongwith thetax and interest payable as aforesaid, fee for delay infurnishing of return of income shall also be payable.

The proposed amendment is consequential to the insertionof a new section 234F which provides for fee for delay infurnishing of return of income.

This amendment will take effect from 1st April, 2018 andwill, accordingly apply in relation to assessment year 2018-2019 and subsequent years.

Clause 57 of the Bill seeks to amend section 143 of theIncome-tax Act relating to assessment.

Sub-section (1) of the said section provides the mannerof processing of a return furnished under section 139 or inresponse to a notice under sub-section (1) of section 142.

It is proposed to amend the said sub-section to providethat in computation of amount payable or refund due, as thecase may be, on account of processing of return under thesaid sub-section, the fee payable under section 234F shallalso be considered.

The proposed amendment is consequential to the insertionof a new section 234F which provides for fee for delay infurnishing of return of income.


Sub-section (1D) of the said section (as substituted bysection 68 of the Finance Act, 2016) is proposed to besubstituted by a new sub-section so as to provide that theprocessing of a return shall not be necessary, where a noticehas been issued to the assessee under sub-section (2) ofthe said section.

It is proposed to provide that the provisions of the saidsub-section shall not apply in relation to any return furnishedfor the assessment year commencing on or after the 1st dayof April, 2017.


Clause 58 of the Bill seeks to amend section 153 of theIncome-tax Act relating to time-limit for completion ofassessment, reassessment and recomputation.

The said section provides for time-limit for completion ofassessment, reassessment and recomputation in certaincases mentioned therein.

It is proposed to amend sub-section (1) of the said sectionto provide that for the assessment year 2018-2019, the time-limit for making an assessment order under section 143 or144 shall be reduced from existing twenty-one months toeighteen months from the end of the assessment year, andfor the assessment year 2019-2020 and onwards, the saidtime-limit shall be twelve months from the end of theassessment year in which the income was first assessable.

It is further proposed to amend sub-section (2) of the saidsection to provide that the time-limit for making an order of

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assessment, reassessment or recomputation under section147, in respect of notices served under section 148 on orafter the 1st day of April, 2019 shall be twelve months fromthe end of the financial year in which notice under section148 was served.

It is also proposed to amend sub-section (3) of the saidsection to provide that the time-limit for making an order offresh assessment in pursuance of an order passed orreceived in the financial year 2019-2020 and onwards undersection 254 or 263 or 264 shall be twelve months from theend of the financial year in which order under section 254 isreceived or order under section 263 or 264 is passed by theauthority referred therein.

It is also proposed to amend the third proviso toExplanation 1 of the said section to omit the reference ofsection 153B therein.


It is also proposed to amend sub-section (5) of the saidsection to provide that where an order under section 250 or254 or 260 or 262 or 263 or 264 requires verification of anyissue by way of submission of any document by the assesseeor any other person or where an opportunity of being heardis to be provided to the assessee, the time-limit relating tofresh assessment provided in sub-section (3) shall apply tothe order giving effect to such order.

It is also proposed to amend sub-section (9) of the saidsection to provide that where a notice under sub-section (1)of section 142 or sub-section (2) of section 143 or section148 has been issued prior to the 1st day of June, 2016 andthe assessment or reassessment has not been completedby such date due to exclusion of time referred to inExplanation 1, such assessment or reassessment shall becompleted in accordance with the provisions of section 153as it stood immediately before its substitution by the FinanceAct, 2016.

These amendments will take effect retrospectively from1st June, 2016.

Clause 59 of the Bill seeks to amend section 153A of theIncome-tax Act, 1961 relating to assessment in case ofsearch or requisition.

Sub-section (1) of the aforesaid section provides thatwhere a search is conducted under section 132 or requisitionis made under section 132A, a notice shall be issued to suchperson to furnish the return of income in respect of eachassessment year falling within six assessment yearsimmediately preceding the assessment year relevant to theprevious year in which search is conducted or requisition ismade. It also provides for assessment or reassessment oftotal income of the said years.

It is proposed that issuance of notice and assessment orreassessment under the said section can also be made foran assessment year preceding the assessment year relevantto the previous year in which search is conducted orrequisition is made which falls beyond six assessment yearsbut not beyond ten assessment years from the assessmentyear relevant to the previous year in which search isconducted or requisition is made, provided that—

(i) the Assessing Officer has in his possession booksof account or other documents or evidence which revealthat the income which has escaped assessment amountsto or is likely to amount to fifty lakh rupees or more in oneyear or in aggregate in the relevant assessment years;

(ii) such income escaping assessment is representedin the form of asset which shall include immovable propertybeing land or building or both, shares and securities,deposits in bank account, loans and advances;

(iii)the income escaping assessment or part thereofrelates to such year or years; and

(iv)search under section 132 is initiated or requisitionunder section 132A is made on or after the 1st day ofApril, 2017.

It is further proposed to make consequential amendmentto the provisos of the said sub-section.

It is also proposed to define the expression "relevantassessment year" and "asset" in the form of Explanation.


Clause 60 of the Bill seeks to amend section 153B of theIncome-tax Act, 1961 relating to time-limit for completion ofassessment under section 153A.

Clause (a) of sub-section (1) of the said section providesthat in respect of each assessment year falling within sixassessment years referred to in clause (b) of sub-section(1) of section 153A, the order of assessment or reassessmentshall be made within a period of twenty-one months from theend of the financial year in which the last of the authorisationsfor search under section 132 or for requisition under section132A was executed.

It is proposed to amend the above clause to provide thatthe time-limit for assessment and reassessment as specifiedtherein shall also apply in respect of the relevant assessmentyear referred to in sub-section (1) of section 153A.

The proposed amendment is consequential to theamendment to section 153A of the Income-tax Act.

It is further proposed to amend sub-section (1) to providethat for search and seizure cases conducted in the financialyear 2018-2019, the time-limit for making an assessmentorder under section 153A shall be reduced from existingtwenty-one months to eighteen months from the end of thefinancial year in which the last of the authorisations for searchunder section 132 or for requisition under section 132A wasexecuted. It is further proposed that for search and seizurecases conducted in the financial year 2019-2020 andonwards, the said time-limit shall be further reduced to twelvemonths from the end of the financial year in which the last ofthe authorisations for search under section 132 or forrequisition under section 132A was executed.

It is also proposed to provide that period of limitation formaking the assessment or reassessment in case of otherperson referred to in section 153C, shall be as available incase of person on whom search is conducted or twelvemonths from the end of the financial year in which books of

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account or documents or assets seized or requisitioned arehanded over under section 153C to the Assessing Officerhaving jurisdiction over such other persons, whichever islater.

It is also proposed to insert a proviso to the Explanation ofthe said section so as to provide that where a proceedingbefore the Settlement Commission abates under section245HA, the period of limitation available under this sectionfor assessment or reassessment shall after the exclusion ofthe period under sub-section (4) of section 245HA shall notbe less than one year; and where such period of limitation isless than one year, it shall be deemed to have been extendedto one year.


It is also proposed to amend sub-section (3) of the saidsection to provide that that where a notice under section 153Aor section 153C has been issued prior to the 1st day of June,2016 and the assessment has not been completed by suchdate due to exclusion of time referred to in the Explanation,such assessment shall be completed in accordance with theprovisions of this section as it stood immediately before itssubstitution by the Finance Act, 2016.


Clause 61 of the Bill seeks to amend section 153C of theIncome-tax Act, 1961 relating to assessment of income ofany other person.

It is proposed to amend the second proviso to sub-sectionof the said section so as to provide a reference to the relevantassessment year as referred to in sub-section (1) of section153A.

The proposed amendment is consequential to theamendment to section 153A of the Income-tax Act and shallapply in respect of search conducted or requisition made onor after the 1st day of April, 2017.


Clause 62 of the Bill seeks to amend section 155 of theIncome-tax Act relating to other amendments.

It is proposed to insert a new sub-section (14A) in thesaid section so as to provide that where credit for income-tax paid in any country outside India or a specified territoryoutside India, referred to in section 90, section 90A or section91, has not been given in the order of assessment for therelevant assessment year on the grounds that the paymentof such tax was in dispute, then, the Assessing Officer shallrectify the order of assessment or an intimation under sub-section (1) of section 143, if the assessee, within six monthsfrom the end of the month in which the dispute is settled,furnishes proof of settlement of such dispute and evidenceof payment of such tax along with an undertaking that nocredit of such amount of tax has been directly or indirectlyclaimed or shall be claimed for any other assessment year.

This amendment will take effect from 1st April, 2018 andwill, accordingly, apply in relation to assessment years 2018-2019 and subsequent years.

Clause 63 of the Bill seeks to insert a new section 194-IBof the Income-tax Act relating to payment of rent by certainindividuals or Hindu undivided family.

The proposed new section provides that any person, beingan individual or a Hindu undivided family (other than thosereferred to in second proviso of section 194-I), responsiblefor paying to a resident any income by way of rent exceedingfifty thousand rupees for a month or part of a month duringthe previous year, shall deduct an amount equal to five percent. of such income as income-tax thereon.

It is further proposed to provide that income-tax referredto in sub-section (1) shall be deducted on such income atthe time of credit of rent, for the last month of the previousyear or the last month of tenancy, if the property is vacatedduring the year, as the case may be, to the account of thepayee or at the time of payment thereof in cash or by issueof a cheque or draft or by any other mode, whichever is earlier.

It is also proposed to provide that the provisions of section203A shall not apply to a person required to deduct tax inaccordance with the provisions of this section.

It is also proposed to provide that where the tax is requiredto be deducted as per the provisions of section 206AA, suchdeduction shall not exceed the amount of rent payable forthe last month of the previous year or the last month of thetenancy, as the case may be.

It is also proposed to define the term "rent" for the purposesof this section to mean any payment, by whatever namecalled, under any lease, sub-lease, tenancy or any otheragreement or arrangement for the use of any land or buildingor both.

This amendment will take effect from 1st June, 2017.

Clause 64 of the Bill seeks to insert a new section 194-ICin the Income-tax Act relating to deductions in respect ofpayment under specified agreement.

The proposed new section seeks to provide thatnotwithstanding anything contained in section 194-IA, anyperson responsible for paying to resident any sum by way ofconsideration, not being consideration in kind, under theagreement referred to in sub-section (5A) of section 45, shall,at the time of credit of such sum to the account of the payeeor at the time of payment thereof in cash or by issue of acheque or draft or by any other mode, whichever is earlier,deduct an amount equal to ten per cent. of such sum asincome-tax thereon.


Clause 65 of the Bill seeks to amend section 194J of theIncome-tax Act which provides for deduction of tax at sourceon fees for professional or technical services.

The said section provides that a person, not being anindividual or a Hindu undivided family, who is responsiblefor paying to a resident any sum by way of fees forprofessional or technical services or other servicesmentioned therein shall deduct an amount equal to ten percent. of such sum as income-tax on income comprisedtherein.

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It is proposed to insert a proviso in the said section so asto reduce the rate of tax deduction at source to two per cent.from ten per cent. in case of payments received or creditedto a payee, who is engaged only in the business of operationof call centre.


Clause 66 of the Bill seeks to amend section 194LA of theIncome-tax Act relating to payment of compensation onacquisition of certain immovable property.

The said section, inter alia, provides that any personresponsible for paying compensation to a resident shalldeduct tax at source at the rate of ten per cent. on thecompensation or enhanced compensation or considerationon account of compulsory acquisition of any immovableproperty (other than agricultural land) under any law for thetime being in force subject to certain conditions specifiedtherein.

It is proposed to amend the said section so as to insert anew proviso to provide that no deduction of tax at sourceshall be made under this section, where such payment ismade in respect of any award or agreement which has beenexempted from the levy of income-tax under section 96 ofthe Right to Fair Compensation and Transparency in LandAcquisition, Rehabilitation and Resettlement Act, 2013.


Clause 67 of the Bill seeks to amend section 194LC of theIncome-tax Act relating to income by way of interest fromIndian company.

The existing provisions contained in sub-section (2) of thesaid section, specify the interest eligible for lower withholdingtax at the rate of five per cent. It shall be the interest incomepayable by the specified company on borrowings made by itin foreign currency from sources outside India under a loanagreement or by way of issue of any long-term bondsincluding long-term infrastructure bonds subject to theapproval by the Central Government.

Sub-clauses (a) and (c) of clause (i) of the said sub-sectionfurther provides that the borrowing shall be made, under aloan agreement at any time on or after the 1st day of July,2012, but before the 1st day of July, 2017; and by way of anylong-term bond including long-term infrastructure bond onor after the 1st day of October, 2014, but before the 1st dayof July, 2017, respectively.

It is proposed to amend sub-clauses (a) and (c) of clause(i) of sub-section (2) of the said section to provide that theborrowings can be made before the 1st day of July, 2020instead of the 1st day of July, 2017.


It is also proposed to insert a new clause (ia) in sub-section(2) of the said section to extend the benefit of the said sectionto the rupee denominated bond issued outside India before1st July, 2020 also.


Clause 68 of the Bill seeks to amend section 194LD of theIncome-tax Act relating to income by way of interest on certainbonds and Government securities.

Under the existing provisions contained in sub-section (2)of the said section, the interest income eligible for lowerwithholding tax rate of five per cent. as provided in sub-section(1) has been specified to be the interest payable on or afterthe 1st day of June, 2013 but before 1st day of July, 2017.

It is proposed to amend the aforesaid sub-section so asto provide concessional rate of five per cent. withholding taxon interest payment in respect of investments in Governmentsecurities and rupee denominated corporate bonds to bemade available on interest payable before 1st day of July,2020.


Clause 69 of the Bill seeks to amend section 197A of theIncome-tax Act relating to no deduction to be made in certaincases.

The existing provisions contained in sub-sections (1A) and(1C) of the aforesaid section provide that no deduction oftax shall be made under the various sections referred to inthe said sub-sections (1A) and (1C) of section 197A, if thepersons referred to in the said sub-sections furnish to thepersons responsible for paying any income of the naturereferred to in specified sections, a declaration in writing induplicate in the prescribed form and verified in the prescribedmanner to the effect that the tax on his estimated total incomeof the previous year in which such income is to be includedin computing his total income will be nil.

It is proposed to amend the said sub-sections (1A) and(1C) of the said section so as to cover deduction at sourceunder section 194D also.


Clause 70 of the Bill seeks to amend section 204 of theIncome-tax Act relating to meaning of “person responsiblefor paying”.

It is proposed to insert a new clause (iib) in the said sectionso as to provide that in the case of furnishing of informationrelating to payment to a non-resident, not being a company,or to a foreign company, of any sum, whether or notchargeable under the provisions of this Act, the payer himself,or, if the payer is a company, the company itself includingthe principal officer thereof shall also be the personresponsible for paying, within the meaning of definition underthis section.


Clause 71 of the Bill seeks to amend section 206C of theIncome-tax Act relating to profits and gains from the businessof trading in alcoholic liquor, forest produce, scrap, etc.

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Clause (ii) of sub-section (1D) of the said section providesfor tax collection at source at the rate of one per cent. of saleconsideration on cash sale of jewellery exceeding five lakhrupees. It is proposed to omit the said clause in view ofrestriction on cash transactions as proposed to be providedunder section 269ST.

The proposed amendment is consequential to the insertionof a new section 269ST in the Income-tax Act.

Sub-section (1F) of the said section, inter alia, providesthat the seller who receives any amount as consideration forsale of a motor vehicle of the value exceeding ten lakh rupees,shall at the time of receipt of such amount, collect from thebuyer a sum equal to one per cent. of the sale considerationas income-tax.

It is further proposed to insert a new sub-clause (iii) inclause (aa) of the Explanation to section 206C to exemptthe following class of buyers from the provision of sub-section(1F) of the said section, namely:—

(i) the Central Government, a State Government andan embassy, a High Commission, legation, commission,consulate and the trade representation of a foreign State;or

(ii) local authority as defined in the Explanation toclause (20) of section 10; or

(iii) a public sector company which is engaged in thebusiness of carrying passengers.

It is also proposed to omit the reference of sub-section(1F) in sub-clause (ii) in the Explanation to section 206C.


Clause 72 of the Bill seeks to insert a new section 206CCafter section 206CB of the Income-tax Act relating torequirement to furnish Permanent Account Number bycollectee.

The proposed sub-section (1) of the said section specifiesthat any person paying any sum or amount, on which tax iscollectible at source under Chapter XVII BB (herein referredto as collectee) shall furnish his Permanent Account Numberto the person responsible for collecting such tax (hereinreferred to as collector), failing which tax shall be collectedat twice the rate mentioned in the relevant section or at therate of five per cent., whichever is higher.

The proposed sub-section (2) provides that the declarationfiled under sub-section (1A) of section 206C shall not bevalid unless the person filing the declaration furnishes hisPermanent Account Number in such declaration.

The proposed sub-section (3) provides that in case anydeclaration becomes invalid under sub-section (2), thecollector shall collect the tax at source in accordance withthe provisions of sub-section (1).

The proposed sub-section (4) provides that no certificateunder sub-section (9) of section 206C shall be granted unlessit contains the Permanent Account Number of the applicant.

The proposed sub-section (5) provides that the collectee

shall furnish his Permanent Account Number to the collectorwho shall indicate the same in all its correspondence, bills,vouchers and other documents which are sent to each other.

The proposed sub-section (6) of the said section providesthat where the Permanent Account Number provided by thecollectee is invalid or it does not belong to the collectee,then it shall be deemed that Permanent Account Numberhas not been furnished to the collector and the tax shall becollected under sub-section (1).

The proposed sub-section (7) provides that the newsection 206CC shall not apply to a non-resident who doesnot have permanent establishment in India and also to explainthe expression 'permanent establishment'.


Clause 73 of the Bill seeks to amend section 211 of theIncome-tax Act relating to instalments of advance tax anddue dates.

Clause (a) of sub-section (1) of the said section providesthat all the assessees, except those referred to in clause (b),are liable to pay advance tax in four instalments during eachfinancial year and also provides the due dates for thepayments and amounts payable.

Clause (b) of sub-section (1) of the said section providesthat an eligible assessee engaged in an eligible businessreferred to in section 44AD is liable to pay advance tax in asingle instalment on or before the 15th of March everyfinancial year.

It is proposed to amend the said clause (b) so as to providethat the assessee who declares profits and gains inaccordance with the provisions of sub-section (1) of section44ADA, shall also be liable to pay advance tax in oneinstalment on or before the 15th of March every financialyear.


Clause 74 of the Bill seeks to amend section 234C of theIncome-tax Act relating to interest for deferment of advancetax.

It is proposed to provide that in respect of an assesseereferred to in section 44ADA, interest under the aforesaidsection shall be levied, if the advance tax paid on or beforethe 15th day of March, is less than the tax due on the returnedincome. The said amendment is consequential to theamendment of section 211.

Tax on certain dividends received from domesticcompanies is being levied under section 115BBDA with effectfrom the 1st April, 2017, if such income exceeds ten lakhrupees. The first proviso to sub-section (1) of section 234Clays down exceptions to the applicability of the said sub-section to short fall in the payment of advance tax in case ofcertain incomes. It is proposed to amend the aforesaidproviso so as to provide that no interest under said sectionshall be levied on the income referred to in sub-section (1)

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of section 115BBDA subject to the conditions specifiedtherein.


Clause 75 of the Bill seeks to insert section 234F of theIncome-tax Act relating to fee for default in furnishing returnof income.

It is proposed to provide that a fee for delay in filing ofreturn shall be paid for assessment year 2018-2019 andonwards in a case where the return is not filed within the duedates specified for filing of return under sub-section (1) ofsection 139. It is further proposed that a fee of five thousandrupees be payable, if the return is furnished after the duedate but on or before the 31st day of December of theassessment year. A fee of ten thousand rupees is proposedto be payable in any other case. However, in a case wherethe total income does not exceed five lakh rupees, it isproposed that the fee amount shall not exceed one thousandrupees.


Clause 76 of the Bill seeks to insert a new section 241Ain the Income-tax Act relating to withholding of refund incertain cases.

It is proposed to provide that, for every assessment yearcommencing on or after the 1st day of April, 2017, whererefund of any amount becomes due to the assessee underthe provisions of sub-section (1) of section 143 and theAssessing Officer is of the opinion that grant of the refundmay adversely affect the recovery of revenue, he may, forthe reasons to be recorded in writing and with the previousapproval of the Principal Commissioner or Commissioner,withhold the refund up to the date on which the assessmentis made.


Clause 77 of the Bill seeks to amend section 244A of theIncome-tax Act relating to interest on refunds.

The said section provides that an assessee is entitled toreceive interest on refund arising out of excess payment ofadvance tax, tax deducted or collected at source, etc.

It is proposed to insert a new sub-section (1B) in the saidsection so as to provide that where refund of any amountbecomes due to the deductor, then such person shall beentitled to receive, in addition to the refund, simple intereston such refund, calculated at the rate of one-half per cent.for every month or part of a month comprised in the period,from the date on which claim for refund is made in theprescribed form or for giving effect to an order under section250 or 254 or 260 or 262 from the date on which the tax ispaid up to the date on which refund is granted.

It is also proposed to amend sub-section (2) of the said

section to give reference of the deductor in addition to theassessee and to provide that the interest shall not be allowedfor the period for which the delay in the proceedings resultingin the refund is attributable to the deductor.


Clause 78 of the Bill seeks to amend section 245A of theIncome-tax Act relating to definitions for the purposes ofChapter XIX-A relating to settlement of cases.

Clause (b) of the said section provides definition of "case".Clause (iv) of the Explanation to the said clause (b) providesthat unless as otherwise specified, in case where noassessment is made, proceedings shall be deemed to haveconcluded on the expiry of two years from the end of therelevant assessment year.

It is proposed to amend the said clause (iv) to theExplanation so as to provide that conclusion of proceedingsshall be construed in accordance with the time specified formaking assessment under sub-section (1) of section 153.

The proposed amendment is consequential to theamendment to section 153 and section 153B of the Income-tax Act.


Clause 79 of the Bill seeks to amend section 245N of theIncome-tax Act relating to the definitions under Chapter XIX-B relating to advance rulings.

Clause (b) of the said section provides the definition ofthe term "applicant".

It is proposed to amend the said clause so as to includewithin the scope of the definition of "applicant" an applicantas in section 28E of the Customs Act, 1962, section 23A ofthe Central Excise Act, 1944 and section 96A of the FinanceAct, 1994.


Clause 80 of the Bill seeks to amend section 245-O of theIncome-tax Act relating to the Authority for Advance Rulings.

Clause (a) of sub-section (3) of the aforesaid sectionprovides that the Chairman of the Authority for AdvanceRulings shall be a person who has been a Judge of theSupreme Court.

It is proposed to amend the said clause (a) so as to providethat a person who has been the Chief Justice of a High Courtor a Judge of a High Court for at least seven years shall alsobe eligible to be appointed as the Chairman of the Authorityfor Advance Rulings.

Clause (c) of sub-section (3) of the aforesaid sectionprovides that the revenue Member of the Authority forAdvance Rulings shall be a person from the Indian RevenueService, who is of the rank of Principal Chief Commissioneror Principal Director General or Chief Commissioner orDirector General.

It is proposed to amend the said clause (c) so as to providethat an officer from the Indian Revenue Service who is, or is

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qualified to be, a Member of the Central Board of Direct Taxesor an officer from the Indian Customs and Central ExciseService, who is, or is qualified to be, a Member of the CentralBoard of Excise and Customs as on the date of occurrenceof the said vacancy shall be eligible to be appointed as therevenue Member of the Authority for Advance Rulings.

It is further proposed to amend clause (d) of the said sub-section (3) so as to provide that eligibility for appointment oflaw Member shall also be determined on the date ofoccurrence of vacancy.

It is also proposed to insert sub-sections (6A) and (6B) inthe aforesaid section so as to provide that in the event theoffice of Chairman falls vacant or in case the Chairman isunable to discharge his duties, the senior-most Vice-chairman shall act as Chairman or shall discharge thefunctions of the Chairman till such time the new Chairmanenters upon his office or the Chairman resumes his duties,as the case may be.


Clause 81 of the Bill seeks to amend section 245Q of theIncome-tax Act relating to the application for advance ruling.

Sub-section (1) of the aforesaid section provides that anapplicant desirous of obtaining an advance ruling underChapter XIX-B of the Income-tax Act may make anapplication in such form and in such manner as may beprescribed.

It is proposed to amend the said section so as to providethat an application for advance ruling may also be madeunder Chapter V of the Customs Act, 1962 or under ChapterIIIA of the Central Excise Act, 1944 or under Chapter VA ofthe Finance Act, 1994.


Clause 82 of the Bill seeks to amend section 253 of theIncome-tax Act relating to Appeals to the Appellate Tribunal.

Sub-clause (f) of sub-section (1) of the aforesaid sectionprovides that an order passed by the prescribed authorityunder sub-clause (vi) or sub-clause (via) of clause (23C) ofsection 10 shall be appealable before the Appellate Tribunal.

It is proposed to insert sub-clause (iv) and sub-clause (v)of clause (23C) in the aforesaid section, so as to make anorder passed by the prescribed authority under said sub-clauses also appealable before the Appellate Tribunal.


Clause 83 of the Bill seeks to insert a new section 269STin the Income-tax Act relating to mode of undertakingtransactions.

It is proposed to provide that no person shall receive anamount of three lakh rupees or more, in aggregate from aperson in a day; or in respect of a single transaction; or inrespect of transactions relating to one event or occasion froma person, otherwise than by an account payee cheque or anaccount payee bank draft or use of electronic clearing systemthrough a bank account.

It is further proposed to provide that the said restrictionshall not apply to Government, any banking company, postoffice savings bank or co-operative bank, any receipt fromsale of agricultural produce by any person being an individualor Hindu Undivided family in whose hands such receiptsconstitutes agricultural income and in respect of transactionsof the nature referred to in section 269SS; and such otherpersons or class of persons or receipts, as may be specifiedby the Central Government by notification in the OfficialGazette.


Clause 84 of the Bill seeks to insert a new section 271DAof the Income-tax Act relating to penalty for failure to complywith provisions of section 269ST.

It is proposed to provide that if a person receives any sumin contravention of the provisions of section 269ST, he shallbe liable to pay, by way of penalty, a sum equal to the amountof such receipt. It is further proposed that the penalty shallnot be imposable if such person proves that there were goodand sufficient reasons for the contravention. It is alsoproposed that any such penalty shall be imposed by the JointCommissioner.


Clause 85 of the Bill seeks to amend section 271F of theIncome-tax Act relating to penalty for failure to furnish returnof income.

The said section provides for penalty for failure to furnishreturn of income.

It is proposed to provide that the provisions of the saidsection shall not apply in respect of assessment year 2018-2019 and subsequent years.


Clause 86 of the Bill seeks to insert a new section 271J inthe Income-tax Act relating to penalty for furnishing incorrectinformation in reports or certificates.

It is proposed to provide that if an accountant or a merchantbanker or a registered valuer furnishes incorrect informationin a report or certificate under any provisions of the Act orthe rules made thereunder, the Assessing Officer or theCommissioner (Appeals), without prejudice to the provisionsof the Income tax Act, may direct him to pay, by way ofpenalty, a sum of ten thousand rupees for each such reportor certificate. It is also proposed to define the expressions of"accountant", "merchant banker" and "registered valuer".


Clause 87 of the Bill seeks to amend section 273B in theIncome-tax Act relating to penalty not to be imposed in certaincases.

It is proposed that penalty shall not be imposable in respectof the proposed section 271J also, if the person proves thatthere was reasonable cause for the failure referred to in thesaid section.

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This amendment is consequential in nature.


Customs

Clause 88 of the Bill seeks to amend section 2 of theCustoms Act. It is proposed to amend clauses (13), (16),(20) and (26) and to insert new clauses (3A), (20A), (28A)and (30B) therein.

Clause 89 of the Bill seeks to amend section 7 of theCustoms Act so as to insert new clauses (e) and (f) in sub-section (1) to provide for appointment of foreign post officesand international courier terminals.

Clause 90 of the Bill seeks to amend section 17 of theCustoms Act so as to substitute sub-section (3) thereof tosimplify the production of document or information by theimporter or exporter or any other person for verification ofself-assessment under sub-section (2) of the said section.

Clause 91 of the Bill seeks to amend section 27 of theCustoms Act so as to insert a new clause (g) therein toexclude certain category of refunds from the scope of unjustenrichment.

Clause 92 of the Bill seeks to amend section 28E of theCustoms Act, so as to substitute the definition of “Authority”in clause (e) of the said section.

Clause 93 of the Bill seeks to substitute section 28F of theCustoms Act so as to provide that the Authority for AdvanceRulings constituted under section 245-O of the Income-taxAct shall be the Authority for giving advance rulings for thepurposes of the Customs Act. It further seeks to provide thatthe Member of the Indian Revenue Service (Customs andCentral Excise), who is qualified to be a Member of the Board,shall be the revenue Member of the Authority for the purposesof the Customs Act.

It also seeks to provide for transferring the applicationspending before the erstwhile Authority for Advance Rulings(Central Excise, Customs and Service Tax) to the Authorityconstituted under section 245-O of the Income-tax Act fromthe stage at which such application or proceeding stood ason the date on which the Finance Bill, 2017 receives theassent of the President.

Clause 94 of the Bill seeks to omit section 28G of theCustoms Act.

Clause 95 of the Bill seeks to amend section 28H of theCustoms Act so as to enhance the application fee to rupeesten thousand.

Clause 96 of the Bill seeks to amend section 28-I of theCustoms Act so as to extend the time-limit to six months forthe Authority to pronounce its rulings.

Clause 97 of the Bill seeks to insert a new section 30A inthe Customs Act so as to make it obligatory on the person-in-charge of a conveyance that enters India from any placeoutside India or any other person as may be specified by theCentral Government by notification in the Official Gazette,to deliver to the proper officer the passenger and crew arrival

manifest before arrival in the case of an aircraft or a vesseland upon arrival in the case of a vehicle; and passengername record information of arriving passengers in such form,containing such particulars, in such manner and within suchtime as may be prescribed. It is proposed to impose suchpenalty not exceeding fifty thousand rupees as may beprescribed, in case of delay in delivering the information.

Clause 98 of the Bill seeks to insert a new section 41A inthe Customs Act so as to make it obligatory on the person-in-charge of a conveyance that departs from India to a placeoutside India or any other person as may be specified by theCentral Government by notification in the Official Gazette,to deliver to the proper officer the passenger and crewdeparture manifest and passenger name record informationof departing passengers before the departure of theconveyance in such form, containing such particulars, in suchmanner and within such time as may be prescribed. It is alsoproposed to impose a penalty not exceeding fifty thousandrupees as may be prescribed in case of delay in deliveringthe information.

Clause 99 of the Bill seeks to amend section 46 of theCustoms Act so as to provide that the bill of entry for importedgoods shall be presented before the end of the next dayfollowing the day on which the aircraft or vessel or vehiclecarrying the goods arrives at a customs station at which suchgoods are to be cleared for home consumption orwarehousing and that in the case of default, he shall paysuch charge for late presentation as may be prescribed.

Clause 100 of the Bill seeks to amend section 47 of theCustoms Act so as to provide the manner of payment ofinterest in the case of self-assessed bills of entry or, as thecase may be, assessed, reassessed or provisionallyassessed bills of entry.

Clause 101 of the Bill seeks to substitute section 49 of theCustoms Act so as to provide for storage of imported goodsin a public warehouse pending removal.

Clause 102 of the Bill seeks to substitute clause (a) ofsub-section (1) of section 69 of the Customs Act so as tosubstitute the reference of section 82 therein to section 84.

Clause 103 of the Bill seeks to omit section 82 of the CustomsAct.

Clause 104 of the Bill seeks to substitute clause (a) ofsection 84 of the Customs Act so as to provide for the formand manner in which an entry may be made in respect ofgoods imported or to be exported by post.

Clause 105 of the Bill seeks to amend section 127B of theCustoms Act so as to insert a new sub-section (5) therein toenable any person, other than applicant referred to in sub-section (1), to make an application to the SettlementCommission.

Clause 106 of the Bill seeks to amend sub-section (3) ofsection 127C of the Customs Act, so as to substitute certainwords therein. It further seeks to insert a new sub-section(5A) therein to enable the Settlement Commission to amendthe order passed by it under sub-section (5) to rectify anyerror apparent on the face of record.

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Clause 107 of the Bill seeks to amend section 157 of theCustoms Act so as to empower the Board to make regulationsfor prescribing the form, particulars, manner and time ofproviding the passenger and crew manifest for arrival anddeparture and passenger name record information andpenalty in the case of delay in delivering the information.

Customs Tariff

Clause 108 of the Bill seeks to amend clause (c) ofsub-section (3) of section 9 of the Customs Tariff Act so asto withdraw the exemption to three categories of non-actionable subsidies specified therein, from the scope of anti-subsidy investigations.

Clause 109 of the Bill seeks to amend the First Scheduleto the Customs Tariff Act,––

(i) in the manner specified in the Second Schedule soas to revise tariff rates in respect of certain tariff items;

(ii) in the manner specified in the Third Schedule so asto harmonise certain entries with Harmonised System ofNomenclature and also to amend Chapter 98.

Clause 110 of the Bill seeks to amend the Second Scheduleto the Customs Tariff Act in the manner specified in the FourthSchedule so as to fix a tariff rate of export duty of 30% inrespect of tariff item 2606 00 90 relating to other aluminiumores and concentrates.

Excise

Clause 111 of the Bill seeks to amend section 23A of theCentral Excise Act so as to substitute the definition of“Authority” in clause (e) of the said section.

Clause 112 of the Bill seeks to omit section 23B of theCentral Excise Act.

Clause 113 of the Bill seeks to amend sub-section (3) ofsection 23C of the Central Excise Act so as to enhance theapplication fee to rupees ten thousand.

Clause 114 of the Bill seeks to amend sub-section (6) ofsection 23D of the Central Excise Act so as to extend thetime-limit to six months for the Authority to pronounce itsrulings.

Clause 115 of the Bill seeks to insert a new section 23-I inthe Central Excise Act so as to provide for transferring thepending applications before the erstwhile Authority forAdvance Rulings (Central Excise, Customs and Service Tax)to the Authority constituted under section 245-O of theIncome-tax Act, from the stage at which such proceedingsstood as on the date on which the Finance Bill, 2017 receivesthe assent of the President.

Clause 116 of the Bill seeks to amend section 32E of theCentral Excise Act so as to insert a new sub-section (5)therein, to enable any person, other than assessee referredto in sub-section (1), to make an application to the SettlementCommission.

Clause 117 of the Bill seeks to amend sub-section (3) ofsection 32F of the Central Excise Act so as to substitutecertain words therein. It further seeks to insert a new sub-

section (5A) therein to enable the Settlement Commissionto amend the order passed by it under sub-section (5) torectify any error apparent on the face of record.


Clause 118 of the Bill seeks to amend the First Schedule tothe Central Excise Tariff Act in the manner specified in theFifth Schedule so as to revise the tariff rates in respect ofcertain tariff items.

Clause 119 of the Bill seeks to amend the First Scheduleto the Central Excise Tariff Act so as to substitute exciseduty on motor vehicles falling under tariff items 8702 90 21,8702 90 22,8702 90 28 and 8702 90 29 retrospectively with effect fromthe 1st day of January, 2017.

Service Tax

Clause 120 of the Bill seeks to amend section 65B of the1994 Act so as to omit clause (40) thereof.

Clause 121 of the Bill seeks to amend section 66 D of the1994 Act so as to omit clause (f) thereof.

Clause 122 of the Bill seeks to amend section 96A of the1994 Act so as to substitute the definition of “Authority” inclause (e) of the said section.

Clause 123 of the Bill seeks to omit section 96B of the1994 Act.

Clause 124 of the Bill seeks to amend sub-section (3) ofsection 96C of the 1994 Act so as to enhance the applicationfee to rupees ten thousand.

Clause 125 of the Bill seeks to amend sub-section (6) ofsection 96D of the 1994 Act so as to extend the time-limit tosix months for the Authority to pronounce its rulings.

Clause 126 of the Bill seeks to insert a new section 96HAin the 1994 Act so as to provide for transferring the pendingapplications and proceedings before the erstwhile Authorityfor Advance Rulings (Central Excise, Customs and ServiceTax) to the Authority constituted under section 245-O of theIncome-tax Act, from the stage at which such application orproceeding stood as on the date on which the Finance Bill,2017 receives the assent of the President.

Clause 127 of the Bill seeks to insert new sections 104and 105 in the 1994 Act so as to––

(a) exempt service tax leviable on one-time upfrontamount (premium, salami, cost, price, development chargeor by whatever name called) in respect of taxable serviceprovided or agreed to be provided by a State Governmentindustrial development corporation or undertaking toindustrial units by way of grant of long-term lease of thirtyyears or more of industrial plots, during the periodcommencing from the 1st day of June, 2007 and endingwith the 21st day of September, 2016 (both days inclusive);

(b) extend service tax exemption on taxable servicesprovided or agreed to be provided by the Army, Naval andAir Force Group Insurance Funds by way of life insuranceto members of the Army, Navy and Air Force under the

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Group Insurance Schemes of the Central Governmentduring the period commencing from the 10th day ofSeptember, 2004 and ending with the 1st day of February,2016 (both days inclusive).

Clause 128 of the Bill seeks to retrospectively amend rule2A of the Service Tax (Determination of Value) Rules, 2006in the manner specified in column (3) of the Sixth Schedulewith retrospective effect, on and from and up to the datespecified in column (4) thereof, so as to make it clear thatvalue of service portion in execution of a works contract,which involves transfer of land or undivided share of land,as the case may be, shall not include value of property inland or undivided share of land so transferred.

Miscellaneous

Clauses 129 and 130 seek to amend section 20 of theIndian Trusts Act, 1882 [as substituted by section 2 of theIndian Trusts (Amendment) Act, 2016], relating to investmentof trust money.

The provisions of the aforesaid section, inter alia, providesthat where trust-property consists of money and cannot beapplied immediately or at an early date, the trustee shall,subject to any direction contained in the instrument of trust,invest the money in any of the securities or class of securitiesexpressly authorised by the instrument of trust or as specifiedby the Central Government, by notification in the OfficialGazette.

The said section further provides that where there is aperson competent to contract and entitled in possession toreceive the income of the trust-property for his life or anygreater estate, no investment in any of the securities or classof securities mentioned above shall be made without hisconsent in writing.

It is proposed to amend the said section so as to providethat the trustee can make investment of such money asexpressly authorised by the instrument of trust or in any ofthe securities or class of securities as specified by the CentralGovernment by notification in the Official Gazette.

It is further proposed to amend the proviso to the saidsection so as to omit the expression "in any of the securitiesor class of securities mentioned above" occurring therein,which is consequential in nature.

This amendment shall come into force on such date asthe Central Government may, by notification in the OfficialGazette, appoint.

Clauses 131 and 132 of the Bill seek to amend section 7of the Indian Post Office Act, 1898 relating to power to fixrates of inland postage.

The aforesaid section, inter alia, provides that the CentralGovernment may, by notification in the Official Gazette, fixthe rates of postage and other sums to be charged in respectof postal articles sent by the inland post under the said Act,provided that the highest rate of postage when pre-paid, shallnot exceed the rate set forth for each class of postal articlesin the First Schedule.

It is proposed to substitute the proviso to sub-section (1)

of the said section of the said Act so as to provide that till theissuance of notification in the Official Gazette, by the CentralGovernment, to fix the rates of postage and other sums ofpostal articles, in accordance with provisions of sub-section(1) of the said section, the rates set forth in the First Scheduleshall be the rates chargeable under the said Act.

It is further proposed to omit sub-section (2) of the saidsection which is consequential in nature.


Clauses 133 and 134 of the Bill seek to amend section 31of the Reserve Bank of India Act, 1934 relating to issue ofdemand bills and notes.

It is proposed to insert a new sub-section (3) to the saidsection so as to provide that the Central Government mayauthorise any scheduled bank to issue electoral bond asreferred to in the proposed clause (d) of the first proviso tosection 13A of the Income-tax Act.

It is also proposed to define the expression “electoralbond”.

This amendment is consequential in nature.

This amendment will come into force from 1st April, 2017.

Clauses 135 and 136 of the Bill seek to amend section29C of the Representation of the People Act, 1951 relatingto declaration of donation received by the political parties.

Sub-section (3) of section 29C of the Representation ofthe People Act, 1951, inter alia, provides that every politicalparty shall furnish a report to the Election Commission withregard to the details of contributions received by it in excessof twenty thousand rupees from any person in order to availthe income-tax relief as per the provisions of Income-taxAct,1961.

It is proposed to provide that the contributions receivedby way of "electoral bond" shall be excluded from the scopeof sub-section (3) of section 29C of the said Act. It is alsoproposed to define the term "electoral bond" which isconsequential in nature.


Clauses 137 and 138 of the Bill seek to amend section 18of the Oil Industry (Development) Act, 1974 relating to OilIndustry Development Fund.

Sub-section (2) of section 18 of the said Act provides forapplication of the Oil Industry Development Fund for certainpurposes. It is proposed to expand the scope of the saidsection, so as to utilise the said Fund for meeting anyexpenditure incurred by any Central Public SectorUndertaking in the oil and gas sector, on behalf of the CentralGovernment and for meeting expenditure on any scheme oractivity by the Central Government relating to oil and gassector.


Clauses 139 to 142 of the Bill seek to repeal the Researchand Development Cess Act, 1986.

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The Research and Development Cess Act, 1986 providesfor the levy and collection of a cess on all payments madefor the import of technology for the purposes of encouragingthe commercial application of indigenously developedtechnology and for adapting imported technology to widerdomestic application and for matters connected therewith orincidental thereto.

It is proposed to repeal the said Act, and to make budgetaryallocation for Research and Development.


Clauses 143 to 145 of the Bill seek to amend certainprovisions of the Securities and Exchange Board of IndiaAct, 1992.

It is proposed to amend section 2 of the Act so as to inserttherein definitions of the expressions "Insurance Regulatoryand Development Authority", "Judicial Member", "PensionFund Regulatory and Development Authority" and "TechnicalMember". It is proposed to substitute section 15K relating tothe establishment of Securities Appellate Tribunal, section15L relating to the composition of the Appellate Tribunal,section 15M relating to the qualifications for appointment asPresiding Officer and Judicial Member. It is further proposedto insert new sections 15MA, 15MB and section 15MCrelating to appointment of Presiding Officer, JudicialMembers, Search-cum-Selection Committee for appointmentof Technical Members, vacancy not to invalidate selectionproceedings. It is also proposed to substitutesection 15N relating to tenure of the office of Presiding Officer,Judicial Members and Technical Members. It is alsoproposed to insert a new section 15PA authorising theMember to act as Presiding Officer in certain circumstances.It is also proposed to substitute sub-section (2) of section15Q relating to removal of Presiding Officer, Judicial Memberor Technical Member of the Tribunal. It is also proposed tomake certain consequential amendments in section 15T inview of the above amendments. New sub-sections (4) to (6)are proposed to be inserted in section 15U relating todistribution of business amongst Benches, transfer casesfrom one Bench to another Bench.

Clause 146 of the Bill seeks to amend the SeventhSchedule to the Finance Act, 2005 so as to revise the ratesof certain tariff items as specified in the Seventh Schedule.

Clauses 147 to 149 of the Bill seek to amend certainprovisions of the Payment and Settlement Systems Act, 2007(hereinafter referred to as the said Act) which provides forthe regulation and supervision of payment systems in India.

The existing provisions of Chapter II of the said Act relatesto Designated Authority and its Committee. It is proposed tosubstitute the said Chapter so as to provide that instead ofthe existing Board for Regulation and Supervision of

Payments and Settlement, the Payments Regulatory Boardwill exercise the functions relating to the regulation andsupervision of payments and settlement systems under theAct. The proposed new Board shall consist of the Governor,Reserve Bank as Chairperson, Deputy Governor ReserveBank who is in-charge of Payment and Settlement Systemsas Member, one officer of the Reserve Bank to be nominatedby the Central Board of the Reserve Bank as Member of theBoard and three persons to be nominated by the CentralGovernment as Members. It is also proposed to empowerthe said Board to devise the procedures to be followed inthe meetings, venue of the meetings and other matters,incidental thereto by regulations.

It is also proposed to make consequential amendmentsin section 38 of the Act, so as to give reference of the Boardin that section and reference of sub-section (1).

These amendments shall come into force on such dateas the Central Government may, by notification, in the OfficialGazette, appoint.

Clause 150 of the Bill seeks to amend the Finance Act,2016.

Section 50 of the said Act amended sub-clause (iii) ofclause (c) of sub-section (1) of section 112 of Income-taxAct to provide that with effect from the 1st day of April, 2017,the long-term capital gains arising from transfer of a capitalasset being shares of a company not being a company inwhich the public are substantially interested, shall also bechargeable to tax at the rate of ten per cent.

It is now proposed to amend the said section 50 so as toprovide that the above said amendments shall be effectivefrom 1st April, 2013 instead of 1st April, 2017.

This amendment will take effect, retrospectively from1st April, 2013 and will, accordingly, apply in relation to theassessment year 2013-2014 and subsequent years.

Clause (c) of the section 197 of the said Act provides thatwhere any income has accrued, arisen or received or anyasset has been acquired out of such income prior tocommencement of the Income Declaration Scheme, 2016,and no declaration in respect of such income is made underthe said Scheme, then such income shall be deemed to haveaccrued, arisen or received, as the case may be, in the yearin which a notice under sub-section (1) of section 142, sub-section (2) of section 143 or section 148 or section 153A orsection 153C of the Income-tax Act, 1961 is issued by theAssessing Officer, and provisions of the said Act shall applyaccordingly.

It is proposed to omit clause (c) of the said section.


MEMORANDUM REGARDING DELEGATED LEGISLATION

Clause 9 of the Bill seeks to amend section 12Aof the Income-tax Act relating to conditions forapplicability of sections 11 and 12.

The said clause, inter alia, seeks to insert a newclause (ab) in sub-section (1) of the said section toprovide that provisions of sections 11 and 12 shall notapply in relation to income of the trust or institution,unless the person in receipt of the income has madean application for registration of the trust or theinstitution which has adopted or undertakenmodifications in the objects which do not conform tothe conditions of registration, in the prescribed formand manner to the Principal Commissioner orCommissioner.

Clause 26 of the Bill seeks to insert a new section50CA in the Income-tax Act relating to special provisionfor full value of consideration for transfer of share otherthan quoted shares.

In the said new section, it is proposed to providethat in case of transfer of shares of a company otherthan quoted shares, the full value of consideration forthe purpose of computing income chargeable to tax ascapital gain shall be the fair market value of such sharesdetermined in accordance with such manner as maybe prescribed.

Clause 42 of the Bill seeks to insert a new section92CE of the Income-tax Act relating to secondaryadjustment in certain cases.

Sub-section (2) of the proposed new section,inter alia, seeks to provide that where, as a result ofprimary adjustment to the transfer price, there is anincrease in the total income or reduction in the loss, asthe case may be, of the assessee, the excess moneywhich is available with its associated enterprise, shallbe deemed to be an advance made by the assesseeto such associated enterprise, if it is not repatriatedwithin the time as may be prescribed and shall becomputed in such manner as may be prescribed.

Clause 99 of the Bill seeks to amend section 46of the Customs Act so as to substitute sub-section (3)thereof. The second proviso to the said sub-section

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empowers the Board to make regulations to prescribethe charges for late presentation of bill of entry.

Clause 105 of the Bill seeks to insert a newsub-section (5) in section 127B of the Customs Act.The said sub-section empowers the CentralGovernment to make rules to specify the manner inwhich and the conditions subject to which an applicationmay be made by any person, other than the applicant,before the Settlement Commission.

Clause 107 of the Bill seeks to insert a newclause (ab) in sub-section (2) of section 157 of theCustoms Act relating to power to make regulations.The said clause empowers the Board to makeregulations to provide for the form, the particulars, themanner and the time of delivering the passenger andcrew manifest for arrival and departure and thepassenger name record information and the penalty,for the delay in furnishing such information undersections 30A and 41A thereof.

Clause 116 of the Bill seeks to insert a newsub-section (5) in section 32E of the Central Excise Act.The said sub-section empowers the CentralGovernment to make rules to specify the manner inwhich and the conditions subject to which an applicationmay be made by any person, other than an assessee,before the Settlement Commission.

Clause 148 of the Bill seeks to substitute Chapter IIof the Payment and Settlement Systems Act, 2007relating to Designated Authority which, inter alia, seeksto substitute section 3 of the said Act. The proposedsub-section (4) provides that the powers and functionsof the Board, the time and venue of its meeting, theprocedure to be followed in such meetings (includingthe quorum at such meetings) and other mattersincidental thereto shall be such as may be prescribed.

2. The matters in respect of which rules orregulations may be made in accordance with theprovisions of the Bill are matters of procedure and detailand it is not practicable to provide for them in the Bill.

3. The delegation of legislative power is, therefore,of a normal character.

LOK SABHA

________

A

BILL

to give effect to the financial proposals of the Central Governmentfor the financial year 2017-2018.

________

(Shri Arun Jaitley,Minister of Finance.)

The provisions of Finance Bill, 2017 relating to direct taxes seek to amend the Income-tax Act, 1961 ('the Act') and the FinanceAct, 2016

A. Rates of Income-tax

B. Additional Resource Mobilisation

C. Measures for Promoting Affordable Housing and Real Estate Sector

D. Measures for Stimulating Growth

E. Promoting Digital Economy

F. Transparency in Electoral Funding

G. Ease of doing Business

H. Anti-abuse Measures

I. Rationalisation Measures

J. Benefit for NPS subscribers

DIRECT TAXESA. RATES OF INCOME-TAX

I. Rates of income-tax in respect of income liable to tax for the assessment year 2017-18.

In respect of income of all categories of assessees liable to tax for the assessment year 2017-18, the rates of income-tax havebeen specified in Part I of the First Schedule to the Bill. These are the same as those laid down in Part III of the First Scheduleto the Finance Act, 2016 as amended by the Taxation Laws (Second Amendment) Act, 2016 (No.48 of 2016), for the purposesof computation of "advance tax", deduction of tax at source from "Salaries" and charging of tax payable in certain cases.

(1) Surcharge on income-tax-

The amount of income-tax shall be increased by a surcharge for the purposes of the Union,—

(a) in the case of every individual or Hindu undivided family or every association of persons or body of individuals, whetherincorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act,at the rate of fifteen per cent. of such income-tax; and

(b) in the case of cooperative societies, firms or local authorities, at the rate of twelve per cent. of such income-tax;

having total income exceeding one crore rupees.

However, marginal relief shall be allowed in all these cases to ensure that the total amount payable as income-tax andsurcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total incomeof one crore rupees by more than the amount of income that exceeds one crore rupees.

In the case of persons mentioned in (a) and (b) above having total income chargeable to tax under section 115JC of the Actand where such income exceeds one crore rupees, surcharge at the rate mentioned above shall be levied and marginal relief shallalso be provided.

(c ) in the case of a domestic company,—

(i) having total income exceeding one crore rupees but not exceeding ten crore rupees, the amount of income-taxcomputed shall be increased by a surcharge for the purposes of the Union calculated at the rate of seven per cent.of such income tax;

FINANCE BILL, 2017

PROVISIONS RELATING TO DIRECT TAXES

Introduction

2

(ii) having total income exceeding ten crore rupees, the amount of income-tax computed shall be increased by asurcharge for the purposes of the Union calculated at the rate of twelve per cent. of such income-tax.

(d) in the case of a company, other than a domestic company,—

(i) having total income exceeding one crore rupees but not exceeding ten crore rupees, the amount of income-taxcomputed shall be increased by a surcharge for the purposes of the Union calculated at the rate of two per cent. ofsuch income tax;

(ii) having total income exceeding ten crore rupees, the amount of income-tax computed shall be increased by asurcharge for the purposes of the Union calculated at the rate of five per cent. of such income tax.

However, marginal relief shall be allowed in all these cases to ensure that the total amount payable as income-tax andsurcharge on total income exceeding one crore rupees but not exceeding ten crore rupees, shall not exceed the total amountpayable as income-tax on a total income of one crore rupees, by more than the amount of income that exceeds one crore rupees.The total amount payable as income-tax and surcharge on total income exceeding ten crore rupees, shall not exceed the totalamount payable as income-tax and surcharge on a total income of ten crore rupees, by more than the amount of income thatexceeds ten crore rupees.

Also, in the case of every company having total income chargeable to tax under section 115JB of the Act and where suchincome exceeds one crore rupees but does not exceed ten crore rupees, or exceeds ten crore rupees, as the case may be,surcharge at the rates mentioned above shall be levied and marginal relief shall also be provided.

(e) In other cases (including sections 115-O, 115QA, 115R, 115TA or 115TD), the surcharge shall be levied at the rate oftwelve per cent.

(2) Education Cess—

For assessment year 2017-18, additional surcharge called the "Education Cess on income-tax" and "Secondary and HigherEducation Cess on income-tax" shall continue to be levied at the rate of two per cent. and one per cent., respectively, on the amountof tax computed, inclusive of surcharge, in all cases. No marginal relief shall be available in respect of such Cesses.

II. Rates for deduction of income-tax at source during the financial year 2017-18 from certain incomes other than"Salaries".

The rates for deduction of income-tax at source during the financial year 2017-18 from certain incomes other than "Salaries"have been specified in Part II of the First Schedule to the Bill. The rates for all the categories of persons will remain the same asthose specified in Part II of the First Schedule to the Finance Act, 2016, for the purposes of deduction of income-tax at source duringthe financial year 2016-17.

(1) Surcharge-

The amount of tax so deducted, in the case of a non-resident person (other than a company), shall be increased by asurcharge,—

(i) in case of an individual, Hindu undivided family, association of person, body of individual or artificial juridical person;

(a) at the rate of ten per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paidand subject to the deduction exceeds fifty lakh rupees but does not exceed one crore rupees;

(b) at the rate of fifteen per cent. of such tax, where the income or the aggregate of such incomes paid or likely to bepaid and subject to the deduction exceeds one crore rupees; and

(ii) in case of a firm or cooperative society, at the rate of twelve per cent. of such tax, where the income or the aggregateof such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees.

The amount of tax so deducted, in the case of a company other than a domestic company, shall be increased by a surcharge,—

(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 andsubject 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 income or the aggregate of such incomes paid or likely to be paid andsubject to the deduction exceeds ten crore rupees.

3

No surcharge will be levied on deductions in other cases.

(2) Education Cess-

"Education Cess on income-tax" and "Secondary and Higher Education Cess on income-tax" shall continue to be levied atthe rate of two per cent. and one per cent. respectively, of income tax including surcharge wherever applicable, in the cases ofpersons not resident in India including company other than a domestic company.

III. Rates for deduction of income-tax at source from "Salaries", computation of "advance tax" and charging ofincome-tax in special cases during the financial year 2017-18.

The rates for deduction of income-tax at source from "Salaries" during the financial year 2017-18 and also for computationof "advance tax" payable during the said year in the case of all categories of assessees have been specified in Part III of the FirstSchedule to the Bill. These rates are also applicable for charging income-tax during the financial year 2017-18 on current incomesin cases where accelerated assessments have to be made, for instance, provisional assessment of shipping profits arising in Indiato non-residents, assessment of persons leaving India for good during the financial year, assessment of persons who are likelyto transfer property to avoid tax, assessment of bodies formed for a short duration, etc.

The salient features of the rates specified in the said Part III are indicated in the following paragraphs-

A. Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person.

Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:—

(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or Hindu undividedfamily or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical personreferred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of PartIII applies) are as under:—

Upto Rs. 2,50,000 Nil.

Rs. 2,50,001 to Rs. 5,00,000 5 per cent.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.


(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty yearsat any time during the previous year,—

Upto Rs.3,00,000 Nil.

Rs. 3,00,001 to Rs. 5,00,000 5 per cent.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.


(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at anytime during theprevious year,—

Upto Rs. 5,00,000 Nil.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.


The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by asurcharge at the rate of,—

(i) ten per cent. of such income-tax in case of a person having a total income exceeding fifty lakh rupees but not exceedingone crore rupees; and

(ii) fifteen per cent. of such income-tax in case of a person having a total income exceeding one crore rupees.

However, in case of (i) above, the total amount payable as income-tax and surcharge on total income exceeding fifty lakhrupees but not exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not

4

exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income thatexceeds fifty lakh rupees.

Further, in case of (ii) above, the total amount payable as income-tax and surcharge on total income exceeding one crorerupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amountof income that exceeds one crore rupees.

B. Co-operative Societies

In the case of co-operative societies, the rates of income-tax have been specified in Paragraph B of Part III of the First Scheduleto the Bill. These rates will continue to be the same as those specified for financial year 2016-17.

The amount of income-tax shall be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of aco-operative society having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceedthe total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceedsone crore rupees.

C. Firms

In the case of firms, the rate of income-tax has been specified in Paragraph C of Part III of the First Schedule to the Bill. Thisrate will continue to be the same as that specified for financial year 2016-17.

The amount of income-tax shall be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of afirm having a total income exceeding one crore rupees.


D. Local authorities

The rate of income-tax in the case of every local authority has been specified in Paragraph D of Part III of the First Scheduleto the Bill. This rate will continue to be the same as that specified for the financial year 2016-17.

The amount of income-tax shall be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of alocal authority having a total income exceeding one crore rupees.


E. Companies

The rates of income-tax in the case of companies have been specified in Paragraph E of Part III of the First Schedule to theBill. In case of domestic company, the rate of income-tax shall be twenty five per cent. of the total income if the total turnover orgross receipts of the previous year 2015-16 does not exceed fifty crore rupees and in all other cases the rate of Income-tax shallbe thirty per cent. of the total income. In the case of company other than domestic company, the rates of tax are the same as thosespecified for the financial year 2016-17.

Surcharge at the rate of seven per cent shall continue to be levied in case of a domestic company if the total income of thedomestic company exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of twelve per cent shallcontinue to be levied if the total income of the domestic company exceeds ten crore rupees. In case of companies other thandomestic companies, the existing surcharge of two per cent. shall continue to be levied if the total income exceeds one crore rupeesbut does not exceed ten crore rupees. Surcharge at the rate of five per cent shall continue to be levied if the total income of thecompany other than domestic company exceeds ten crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees but notexceeding ten crore rupees, shall not exceed the total amount payable as income-tax on a total income of one crore rupees, bymore than the amount of income that exceeds one crore rupees. The total amount payable as income-tax and surcharge on total

5

income exceeding ten crore rupees, shall not exceed the total amount payable as income-tax and surcharge on a total incomeof ten crore rupees, by more than the amount of income that exceeds ten crore rupees.

In other cases (including sections 115-O, 115QA, 115R, 115TA or 115TD), the surcharge shall be levied at the rate of twelve

per cent.

For financial year 2017-18, additional surcharge called the "Education Cess on income-tax" and "Secondary and Higher

Education Cess on income-tax" shall continue to be levied at the rate of two per cent. and one per cent. respectively, on the amount

of tax computed, inclusive of surcharge (wherever applicable), in all cases. No marginal relief shall be available in respect of such

Cesses.

[Clause 2 & First Schedule]

B. ADDITIONAL RESOURCE MOBILISATION

Rationalization of taxation of income by way of dividend

Under the existing provisions of section 115BBDA, income by way of dividend in excess of Rs. 10 lakh is chargeable to tax

at the rate of 10% on gross basis in case of a resident individual, Hindu undivided family or firm.

With a view to ensure horizontal equity among all categories of tax payers deriving income from dividend, it is proposed to

amend section 115BBDA so as to provide that the provisions of said section shall be applicable to all resident assessees except

domestic company and certain funds, trusts, institutions, etc.

This amendment will take effect from 1st April, 2018 and will, accordingly apply in relation to the assessment year

2018-19 and subsequent years.

[Clause 44]

Deduction of tax at source in the case of certain Individuals and Hindu undivided family

The existing provisions of section 194-I of the Act, inter alia, provide for deduction of tax at source at the time of credit or

payment of rent to the account of the payee beyond a threshold limit. It is further provide that an Individual or a Hindu undivided

family who is liable for tax audit under section 44AB for any financial year immediately preceding the financial year in which such

income by way of rent is credited or paid shall be required to deduction of tax at source under this section.

Therefore, under the existing provisions of the aforesaid section, an Individual and HUF, being a payer (other than those liable

for tax audit) are out of the scope of section 194-I of the Act.

In order to widen the scope of tax deduction at source, it is proposed to insert a new section 194-IB in the Act to provide that

Individuals or a HUF (other than those covered under 44AB of the Act), responsible for paying to a resident any income by way

of rent exceeding fifty thousand rupees for a month or part of month during the previous year, shall deduct an amount equal to five

per cent. of such income as income-tax thereon.

It is further proposed that tax shall be deducted on such income at the time of credit of rent, for the last month of the previous

year or the last month of tenancy if the property is vacated during the year, as the case may be, to the account of the payee or

at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

In order to reduce the compliance burden, it is further proposed that the deductor shall not be required to obtain tax deduction

account number (TAN) as per section 203A of the Act. It is also proposed that the deductor shall be liable to deduct tax only once

in a previous year.

It is also proposed to provide that where the tax is required to be deducted as per the provisions of section 206AA, such

deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as

the case may be.

This amendment will take effect from 1st June, 2017.[Clause 63]

6

C. MEASURES FOR PROMOTING AFFORDABLE HOUSING AND REAL ESTATE SECTOR

Incentives for Promoting Investment in immovable property

The existing provision of the Act provide for concessional rate of tax and also indexation benefit for taxation of capital gainsarising from transfer of long-term capital asset. To qualify for long-term asset, an assessee is required to hold the asset for morethan 36 months subject to certain exceptions, for example, the holding period of 24 months has been specified for unlisted shares.

With a view to promote the real-estate sector and to make it more attractive for investment, it is proposed to amend section2 (42A) of the Act so as to reduce the period of holding from the existing 36 months to 24 months in case of immovable property,being land or building or both, to qualify as long term capital asset.

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19and subsequent years.

[Clause 3]

Rationalisation of Provisions of Section 80-IBA to promote Affordable Housing

The existing provisions of section 80-IBA provides for 100% deduction in respect of the profits and gains derived fromdeveloping and building certain housing projects subject to specified conditions. The conditions specified, inter alia, include thelimit of 30 square meters for the built-up area of residential unit in respect of project located in the Chennai, Delhi, Kolkata andMumbai or within 25 kms from the municipal limits of these four cities. Further, it is also provided that in order to be eligible to claimdeductions, the project shall be completed within a period of three years.

In order to promote the development of affordable housing sector, it is proposed to amend section 80-IBA so as to providethe following relaxations:—

(i) The size of residential unit shall be measured by taking into account the "carpet area" as defined in Real Estate(Regulation and Development) Act, 2016 and not the "built-up area".

(ii) The restriction of 30 square meters on the size of residential units shall not apply to the place located within a distanceof 25 kms from the municipal limits of the Chennai, Delhi, Kolkata or Mumbai.

(iii) The condition of period of completion of project for claiming deduction under this section shall be increased from existingthree years to five years.

These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year2018-19 and subsequent years.

[Clause 37]

Tax incentive for the development of capital of Andhra Pradesh

As per section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation andResettlement Act, 2014, the specified compensation received by the landowner in lieu of acquisition of land is exempt fromincome tax. The Land Pooling Scheme is an alternative form of arrangement made by the Government of Andhra Pradeshfor formation of new capital city of Amaravati to avoid land-acquisition disputes and lessen the financial burden associatedwith payment of compensation under that Act. In Land pooling scheme, the compensation in the form of reconstituted plotor land is provided to landowners. However, the existing provisions of the Act do not provide for exemption from tax on transferof land under the land pooling scheme as well as on transfer of Land Pooling Ownership Certificates (LPOCs) or reconstitutedplot or land.

With a view to provide relief to an individual or Hindu undivided family who was the owner of such land as on 2nd June, 2014,and has transferred such land under the land pooling scheme notified under the provisions of Andhra Pradesh Capital RegionDevelopment Authority Act, 2014, it is proposed to insert a new clause (37A) in section 10 to provide that in respect of said persons,capital gains arising from following transfer shall not be chargeable to tax under the Act:

(i) Transfer of capital asset being land or building or both, under land pooling scheme.

(ii) Sale of LPOCs by the said persons received in lieu of land transferred under the scheme.

(iii) Sale of reconstituted plot or land by said persons within two years from the end of the financial year in which the possessionof such plot or land was handed over to the said persons.

7

This amendment will take effect retrospectively, from 1st April, 2015 and will, accordingly, apply in relation to the assessmentyear 2015-16 and subsequent years.

It is also proposed to make amendment in section 49 so as to provide that where reconstituted plot or land, received underland pooling scheme is transferred after the expiry of two years from the end of the financial year in which the possession of suchplot or land was handed over to the said assessee, the cost of acquisition of such plot or land shall be deemed to be its stampduty value on the last day of the second financial year after the end of financial year in which the possession of such asset washanded over to the assessee.


[Clauses 6 & 25]

Special provisions for computation of capital gains in case of joint development agreement

Under the existing provisions of section 45, capital gain is chargeable to tax in the year in which transfer takes place exceptin certain cases. The definition of 'transfer', inter alia, includes any arrangement or transaction where any rights are handed overin execution of part performance of contract, even though the legal title has not been transferred. In such a scenario, executionof Joint Development Agreement between the owner of immovable property and the developer triggers the capital gains tax liabilityin the hands of the owner in the year in which the possession of immovable property is handed over to the developer fordevelopment of a project.

With a view to minimise the genuine hardship which the owner of land may face in paying capital gains tax in the year of transfer,it is proposed to insert a new sub-section (5A) in section 45 so as to provide that in case of an assessee being individual or Hinduundivided family, who enters into a specified agreement for development of a project, the capital gains shall be chargeable toincome-tax as income of the previous year in which the certificate of completion for the whole or part of the project is issued bythe competent authority.

It is further proposed to provide that the stamp duty value of his share, being land or building or both, in the project on the dateof issuing of said certificate of completion as increased by any monetary consideration received, if any, shall be deemed to be thefull value of the consideration received or accruing as a result of the transfer of the capital asset.

It is also proposed to provide that benefit of this proposed regime shall not apply to an assessee who transfers his share inthe project to any other person on or before the date of issue of said certificate of completion. It is also proposed to provide thatin such a situation, the capital gains as determined under general provisions of the Act shall be deemed to be the income of theprevious year in which such transfer took place and shall be computed as per provisions of the Act without taking into account thisproposed provisions.

It is also proposed to define the following expressions "competent authority", "specified agrement" and "stamp duty value"for this purpose.

It is also proposed to make consequential amendment in section 49 so as to provide that the cost of acquisition of the sharein the project being land or building or both, in the hands of the land owner shall be the amount which is deemed as full value ofconsideration under the said proposed provision.


It is also proposed to insert a new section 194-IC in the Act so as to provide that in case any monetary consideration is payableunder the specified agreement, tax at the rate of ten per cent shall be deductible from such payment.

This amendment will take effect from 1st April,2017. [Clauses 22, 25 & 64]

Shifting base year from 1981 to 2001 for computation of capital gains

The existing provisions of section 55 provide that for computation of capital gains, an assessee shall be allowed deductionfor cost of acquisition of the asset and also cost of improvement, if any. However, for computing capital gains in respect of an assetacquired before 01.04.1981, the assessee has been allowed an option of either to take the fair market value of the asset as on01.04.1981 or the actual cost of the asset as cost of acquisition. The assessee is also allowed to claim deduction for cost ofimprovement incurred after 01.04.1981, if any.

As the base year for computation of capital gains has become more than three decades old, assessees are facing genuinedifficulties in computing the capital gains in respect of a capital asset, especially immovable property acquired before 01.04.1981due to non-availability of relevant information for computation of fair market value of such asset as on 01.04.1981.

8

In order to revise the base year for computation of capital gains, it is proposed to amend section 55 of the Act so as to providethat the cost of acquisition of an asset acquired before 01.04.2001 shall be allowed to be taken as fair market value as on 1st April,2001 and the cost of improvement shall include only those capital expenses which are incurred after 01.04.2001.

Consequential amendment is also proposed in section 48 so as to align the provisions relating to cost inflation index to theproposed base year.


[Clauses 28 & 24]

Expanding the scope of long term bonds under 54EC

The existing provision of section 54EC provides that capital gain to the extent of Rs. 50 lakhs arising from the transfer of along-term capital asset shall be exempt if the assessee invests the whole or any part of capital gains in certain specified bonds,within the specified time. Currently, investment in bond issued by the National Highways Authority of India or by the RuralElectrification Corporation Limited is eligible for exemption under this section.

In order to widen the scope of the section for sectors which may raise fund by issue of bonds eligible for exemption under section54EC, it is proposed to amend section 54EC so as to provide that investment in any bond redeemable after three years which hasbeen notified by the Central Government in this behalf shall also be eligible for exemption.


[Clause 27]

No notional income for house property held as stock-in-trade

Section 23 of the Act provides for the manner of determination of annual value of house property.

Considering the business exigencies in case of real estate developers, it is proposed to amend the said section so as to providethat where the house property consisting of any building and land appurtenant thereto is held as stock-in-trade and the propertyor any part of the property is not let during the whole or any part of the previous year, the annual value of such property or partof the property, for the period upto one year from the end of the financial year in which the certificate of completion of constructionof the property is obtained from the competent authority, shall be taken to be nil

This amendment will take effect from 1st April, 2018 and will, accordingly apply in relation to assessment year 2018-19 andsubsequent years.

[Clause 12]

D. MEASURES FOR STIMULATING GROWTH

Extension of eligible period of concessional tax rate on interest in case of External Commercial Borrowing andExtension of benefit to Rupee Denominated Bonds

The existing provisions of section 194LC of the Act provide that the interest payable to a non-resident by a specified companyon borrowings made by it in foreign currency from sources outside India under a loan agreement or by way of issue of anylong-term bond including long-term infrastructure bond shall be eligible for concessional TDS of five per cent.

It further provides that the borrowings shall be made, under a loan agreement at any time on or after the 1st July, 2012, butbefore the 1st July, 2017; or by way of any long-term bond including long-term infrastructure bond on or after the 1st October, 2014but before the 1st July, 2017, respectively.

Representations have been received requesting for extension of concessional rate of TDS under sections 194LC of the Actto boost the economy by way of introduction of foreign capital.

Therefore, it is proposed to amend section 194LC to provide that the concessional rate of five per cent. TDS on interestpayment under this section will now be available in respect of borrowings made before the 1st July, 2020.


9

Further, consequent upon demand from various stakeholders for granting benefit of lower rate of TDS to rupee denominatedbonds, a Press Release dated 29th October, 2015 was issued clarifying that TDS at the rate of 5 per cent would be applicable tothese bonds in the same way as it is applicable for off-shore dollar denominated bonds.

In order to give effect to the above, it is further proposed to extend the benefit of section 194LC to rupee denominated bondissued outside India before the 1st July, 2020.

This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to the assessmentyear 2016-17 and subsequent years.

[Clause 67]

Extension of eligible period of concessional tax rate under section 194LD

The existing provisions of section 194LD of the Act, provides for lower TDS at the rate of five per cent. in the case of interestpayable at any time on or after 1st June, 2013 bue before the 1st July, 2017 to FIIs and QFIs on their investments in Governmentsecurities and rupee denominated corporate bonds provided that the rate of interest does not exceed the rate notified by the CentralGovernment in this behalf.

Considering the representations received from stakeholders, it is proposed to amend section 194LD to provide that theconcessional rate of five per cent. TDS on interest will now be available on interest payable before the 1st July, 2020.


[Clause 68]

Carry forward and set off of loss in case of certain companies.

The existing provisions of section 79 of the Act, inter-alia provides that where a change in shareholding has taken place ina previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurredin any year prior to the previous year shall be carried forward and set off against the income of the previous year unless on thelast day of the previous year the shares of the company carrying not less than fifty-one per cent of the voting power were beneficiallyheld by person who beneficially held shares of the company carrying not less than fifty-one per cent of the voting power on thelast day of the year or years in which the loss was incurred.

In order to facilitate ease of doing business and to promote start up India, it is proposed to amend section 79 of the Act to providethat where a change in shareholding has taken place in a previous year in the case of a company, not being a company in whichthe public are substantially interested and being an eligible start-up as referred to in section 80 -IAC of this Act, loss shall be carriedforward and set off against the income of the previous year, if all the shareholders of such company which held shares carryingvoting power on the last day of the year or years in which the loss was incurred, being the loss incurred during the period of sevenyears beginning from the year in which such company is incorporated, continue to hold those shares on the last day of suchprevious year.


[Clause 32]

Extending the period for claiming deduction by start-ups

The existing provisions of section 80-IAC, inter alia, provide that an eligible start-up shall be allowed a deduction of an amountequal to one hundred per cent of the profits and gains derived from eligible business for three consecutive assessment years outof five years beginning from the year in which such eligible start-up is incorporated.

In view the fact that start-ups may take time to derive profit out of their business, it is proposed to provide that deduction undersection 80-IAC can be claimed by an eligible start-up for any three consecutive assessment years out of seven years beginningfrom the year in which such eligible start-up is incorporated.

This amendment will take effect from 1st April, 2018 and will accordingly, apply in relation to assessment year2018-19 and subsequent years.

[Clause 36]

10

Rationalisation of Provisions relating to tax credit forMinimum Alternate Tax and Alternate Minimum Tax

Section 115JAA contains provisions regarding carrying forward and set off of tax credit in respect of Minimum Alternate Tax (MAT)paid by companies under section 115JB. Currently, the tax credit can be carried forward upto tenth assessment years. With a viewto provide relief to the assessees paying MAT, it is proposed to amend section 115JAA to provide that the tax credit determined underthis section can be carried forward up to fifteenth assessment years immediately succeeding the assessment years in which suchtax credit becomes allowable. Further, similar amendment is proposed in section 115JD so as to allow carry forward of AlternateMinimum Tax (AMT) paid under section 115JC upto fifteenth assessment years in case of non corporate assessee.

It is also proposed to amend section 115JAA and 115JD so as to provide that the amount of tax credit in respect of MAT/ AMTshall not be allowed to be carried forward to subsequent year to the extent such credit relates to the difference between the amountof foreign tax credit (FTC) allowed against MAT/ AMT and FTC allowable against the tax computed under regular provisions of Actother than the provisions relating to MAT/AMT.


[Clauses 46 & 48]

Extension of scope of section 43D to Co-operative Banks

The existing provisions of section 43D of the Act, inter-alia, provides that interest income in relation to certain categories ofbad or doubtful debts received by certain institutions or banks or corporations or companies, shall be chargeable to tax in theprevious year in which it is credited to its profit and loss account for that year or actually received, whichever is earlier. This provisionis an exception to the accrual system of accounting which is regularly followed by such assessees for computation of total income.

The benefit of this provision is presently available to scheduled banks, public financial institutions, State financialcorporations, State industrial investment corporations and certain public companies like Housing Finance companies. With a viewto provide a level playing field to co-operative banks vis-à-vis scheduled banks and to rationalise the scope of the section 43D,it is proposed to amend section 43D of the Act so as to include co-operative banks other than a primary agricultural credit societyor a primary co-operative agricultural and rural development bank.

Consequentially, as per matching principle in taxation, if the interest income on bad or doubtful debts is chargeable to tax onreceipt basis, the interest payable on such bad or doubtful debts need to be allowed on actual payment. In view of this, it is proposedto amend section 43B of the Act to provide that any sum payable by the assessee as interest on any loan or advances from aco-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bankshall be allowed as deduction if it is actually paid on or before the due date of furnishing the return of income of the relevant previousyear.


[Clauses 17 & 18]

Increase in deduction limit in respect of provision for bad and doubtful debts

The existing provisions of sub-clause (a) of section 36(1)(viia) of the Act, inter-alia provides that a scheduled bank (not beinga bank incorporated by or under the laws of a country outside India) or a non-scheduled bank or a co-operative bank other thana primary agricultural credit society or a primary co-operative agricultural and rural development bank, can claim deduction inrespect of provision for bad and doubtful debts. The amount of such deduction is limited to seven and one-half per cent. of thetotal income (computed before making any deduction under that clause and Chapter VIA) and an amount not exceeding ten percent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner at the endof the previous year.

In order to strengthen the financial position of the entities specified in the sub-clause (a) of section 36(1) (viia) of the Act, itis proposed to amend the said sub-clause to enhance the present limit from seven and one-half per cent. to eight and one-halfper cent of the amount of the total income (computed before making any deduction under that clause and Chapter VIA).


[Clause 14]

11

E. PROMOTING DIGITAL ECONOMY

Restricting cash donations

Under the existing provisions of section 80G, deduction is not allowed in respect of donation made of any sum exceedingRs.10,000, if the same is not paid by any mode other than cash.

In order to provide cash less economy and transparency, it is proposed to amend section 80G so as to provide that nodeduction shall be allowed under the section 80G in respect of donation of any sum exceeding two thousand rupees unless suchsum is paid by any mode other than cash.


[Clause 35]

Disallowance of depreciation under section 32 and capital expenditure under section 35AD on cash payment

Under the existing provisions of the Act, revenue expenditure incurred in cash exceeding certain monetary threshold is notallowable as per sub-section (3) of section 40A of the Act except in specified circumstances as referred to in Rule 6DD of theIncome-tax Rules, 1962. However, there is no provision to disallow the capital expenditure incurred in cash. Further, section 35ADof the Act , inter-alia provides for investment linked deduction on the amount capital expenditure incurred, wholly or exclusivelyfor the purposes of business, during the previous year for a specified business except capital expenditure incurred for acquisitionof any land or goodwill or financial instrument.

In order to discourage cash transactions even for capital expenditure, it is proposed to amend the provisions of section 43of the Act to provide that where an assessee incurs any expenditure for acquisition of any asset in respect which a payment oraggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payeebank draft or use of electronic clearing system through a bank account, exceeds ten thousand rupees, such expenditure shall beignored for the purposes of determination of actual cost of such asset.

It is further proposed to amend section 35AD of the Act to provide that any expenditure in respect of which payment oraggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or an accountpayee bank draft or use of electronic clearing system through a bank account, exceeds ten thousand rupees, no deduction shallbe allowed in respect of such expenditure.


[Clauses 13 & 16]

Measures to discourage cash transactions

The existing provision of sub-section (3) of Section 40A of the Act, provides that any expenditure in respect of which paymentor aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or accountpayee bank draft, exceeds twenty thousand rupees, shall not be allowed as a deduction. Further, sub-section (3A) of section 40Aalso provides for deeming a payment as profits and gains of business of profession if the expenditure is incurred in a particularyear but the payment is made in any subsequent year of a sum exceeding twenty thousand rupees otherwise than by an accountpayee cheque drawn on a bank or account payee bank draft.

In order to disincentivise cash transactions, it is proposed to amend the provision of section 40A of the Act to provide thefollowing:

(i) To reduce the existing threshold of cash payment to a person from twenty thousand rupees to ten thousand rupees ina single day; i.e any payment in cash above ten thousand rupees to a person in a day, shall not be allowed as deductionin computation of Income from "Profits and gains of business or profession";

(ii) Deeming a payment as profits and gains of business of profession if the expenditure is incurred in a particular year butthe cash payment is made in any subsequent year of a sum exceeding ten thousand rupees to a person in a single day;and

12

(iii) Further expand the specified mode of payment under respective sub-section of section 40A from an account payeecheque drawn on a bank or account payee bank draft to by an account payee cheque drawn on a bank or account payeebank draft or use of electronic clearing system through a bank account.

These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.

[Clause 15]

Measures for promoting digital payments in case of small unorganized businesses

The existing provisions of section 44AD of the Act, inter-alia, provides for a presumptive income scheme in case of eligibleassesses carrying out eligible businesses. Under this scheme, in case of an eligible assessee engaged in eligible business havingtotal turnover or gross receipts not exceeding two crore rupees in a previous year, a sum equal to eight per cent of the total turnoveror gross receipts, or, as the case may be, a sum higher than the aforesaid sum declared by the assessee in his return of income,is deemed to be the profits and gains of such business chargeable to tax under the head "profits and gains of business orprofession".

In order to promote digital transactions and to encourage small unorganized business to accept digital payments, it isproposed to amend section 44AD of the Act to reduce the existing rate of deemed total income of eight per cent. to six per centin respect of the amount of such total turnover or gross receipts received by an account payee cheque or account payee bank draftor use of electronic clearing system through a bank account during the previous year or before the due date specified in sub-section(1) of section 139 in respect of that previous year. However, the existing rate of deemed profit of 8% referred to in section 44ADof the Act, shall continue to apply in respect of total turnover or gross receipts received in any other mode.


[Clause 21]

Restriction on cash transactions

In India, the quantum of domestic black money is huge which adversely affects the revenue of the Government creating aresource crunch for its various welfare programmes. Black money is generally transacted in cash and large amount of unaccountedwealth is stored and used in form of cash.

In order to achieve the mission of the Government to move towards a less cash economy to reduce generation and circulationof black money, it is proposed to insert section 269ST in the Act to provide that no person shall receive an amount of three lakhrupees or more,—

(a) in aggregate from a person in a day;

(b) in respect of a single transaction; or

(c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bankaccount.

It is further proposed to provide that the said restriction shall not apply to Government, any banking company, post officesavings bank or co-operative bank. Further, it is proposed that such other persons or class of persons or receipts may be notifiedby the Central Government, for reasons to be recorded in writing, on whom the proposed restriction on cash transactions shall notapply. Transactions of the nature referred to in section 269SS are proposed to be excluded from the scope of the said section.

It is also proposed to insert new section 271DA in the Act to provide for levy of penalty on a person who receives a sum incontravention of the provisions of the proposed section 269ST. The penalty is proposed to be a sum equal to the amount of suchreceipt. The said penalty shall however not be levied if the person proves that there were good and sufficient reasons for suchcontravention. It is also proposed that any such penalty shall be levied by the Joint Commissioner.

It is also proposed to consequentially amend the provisions of section 206C to omit the provision relating to tax collection atsource at the rate of one per cent. of sale consideration on cash sale of jewellery exceeding five lakh rupees.

These amendments will take effect from 1st April, 2017.[Clauses 71, 83 & 84]

13

F. TRANSPARENCY IN ELECTORAL FUNDING

The existing provisions of section 13A of the Act, inter-alia provides that political parties that are registered with the ElectionCommission of India, are exempt from paying income-tax. To avail the exemption, the political parties are required to submit areport to the Election Commission of India as mandated under sub-section (3) of section 29C of the Representation of the PeopleAct,1951 ( 43 of 1951) furnishing the details of contributions received by a political party in excess of Rs.20,000 from any person.However, under existing provisions of the Act, there is no restriction of receipt of any amount of donation in cash by a political party.

Secondly, a political party is also required to file its return of income under section 139(4B) of the Act, if its income exceedsthe maximum amount not chargeable to tax (without considering the exemption under section 13A). However, filing of the returnis not a condition precedent for availing exemption under the said section.

In order to discourage the cash transactions and to bring transparency in the source of funding to political parties , it isproposed to amend the provisions of section 13A to provide for additional conditions for availing the benefit of the said sectionwhich are as under:

(i) No donations of Rs.2000/- or more is received otherwise than by an account payee cheque drawn on a bank or anaccount payee bank draft or use of electronic clearing system through a bank account or through electoral bonds,

(ii) Political party furnishes a return of income for the previous year in accordance with the provisions of sub-section (4B)of section 139 on or before the due date under section 139.

Further, in order to address the concern of anonymity of the donors, it is proposed to amend the said section to provide thatthe political parties shall not be required to furnish the name and address of the donors who contribute by way of electoral bond.

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 andsubsequent years.

[Clause 11]

G. EASE OF DOING BUSINESS

Clarity relating to Indirect transfer provisions

Section 9 of the Act deals with cases of income which are deemed to accrue or arise in India. Sub-section (1) of the said sectioncreates a legal fiction that certain incomes shall be deemed to accrue or arise in India. Clause (i) of said sub-section (1) providesa set of circumstances in which income accruing or arising, directly or indirectly, is taxable in India. The said clause provides thatall income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or fromany property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situatein India shall be deemed to accrue or arise in India.

The Finance Act, 2012 inserted certain clarificatory amendments in the provisions of section 9. The amendments, inter-alia,included insertion of Explanation 5 in section 9(1)(i) w.e.f. 1st April, 1962. The Explanation 5 clarified that an asset or capital asset,being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be situated in India,if the share or interest derives, directly or indirectly, its value substantially from the assets located in India.

In response to various queries raised by stakeholders seeking clarification on the scope of indirect transfer provisions, theCBDT issued Circular No 41 of 2016. However, concerns have been raised by stakeholders that the provisions result in multipletaxation.

In order to address these concerns, it is proposed to amend the said section so as to clarify that the Explanation 5 shall notapply to any asset or capital asset mentioned therein being investment held by non-resident, directly or indirectly, in a ForeignInstitutional Investor, as referred to in clause (a) of the Explanation to section 115AD, and registered as Category-I or CategoryII Foreign Portfolio Investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014made under the Securities and Exchange Board of India Act, 1992, as these entities are regulated and broad based. The proposedamendment is clarificatory in nature.

This amendment will take effect retrospectively from 1st April, 2012 and will, accordingly, apply in relation to assessment year2012-13 and subsequent years.

[Clause 4]

14

Modification in conditions of special taxation regime for off shore funds under section 9A

Section 9A of the Act provides for a special regime in respect of offshore funds. It provides that in the case of an eligibleinvestment fund, the fund management activity carried out through an eligible fund manager acting on behalf of such fund shallnot constitute business connection in India of the said fund. Further, an eligible investment fund shall not be said to be residentin India merely because the eligible fund manager undertaking fund management activities on its behalf is located in India. Thebenefit under section 9A is available subject to the conditions provided in sub-sections (3), (4) and (5) of the section.

Sub-section (3) of section 9A provides for the conditions for the eligibility of the fund. These conditions, inter-alia, are relatedto residence of fund, corpus, size, investor broad basing, investment diversification and payment of remuneration to fund managerat arm's length. In respect of corpus of the fund, the condition is that the monthly average of the corpus of the fund shall not beless than one hundred crore rupees except where the fund has been established or incorporated in the previous year in which case,the corpus of fund shall not be less than one hundred crore rupees at the end of such previous year.

Representations have been received stating that in the year in which the fund is being wound up, it would not be possible tomaintain the monthly average of the corpus of the fund to an amount which would not be less than one hundred crore rupees asrequired.

In order to rationalise the regime and to address the concerns of the stakeholders, it is proposed to provide that in the previousyear in which the fund is being wound up, the condition that the monthly average of the corpus of the fund shall not be less thanone hundred crore rupees, shall not apply.

This amendment will take effect retrospectively from 1st April, 2016 and shall apply to the assessment year 2016-17 andsubsequent years.

[Clause 5]

Exemption of income of Foreign Company from sale of leftover stock of crude oil from strategic reserves at theexpiry of agreement or arrangement

The existing provisions of clause (48A) of section 10 of the Act, provides that any income accruing or arising to a foreigncompany on account of storage of crude oil in a facility in India and sale of crude oil therefrom to any person resident in India shallbe exempt, if the said storage and sale is pursuant to an agreement or an arrangement entered into by the Central Government;and having regard to the national interest, said foreign company and the said agreement or arrangement are notified by the CentralGovernment in that behalf. The benefit of exemption presently is not available to sale out of the leftover stock of crude after theexpiry of said agreement or the arrangement.

Given the strategic nature of the project benefitting India to augment its strategic petroleum reserves, it is proposed to inserta new clause (48B) in section 10 so as to provide that any income accruing or arising to a foreign company on account of sale ofleftover stock of crude oil, if any, from a facility in India after the expiry of an agreement or an arrangement referred to in clause(48A) of section 10 of the Act shall also be exempt subject to such conditions as may be notified by the Central Government inthis behalf.


[Clause 6]

Enabling of Filing of Form 15G/15H for commission payments specified under section 194D

The existing provision of sub-section 194D of the Act, inter-alia, provides for tax deduction at source (TDS) at the rate of 5%for payments in the nature of insurance commission beyond a threshold limit of Rs. 15,000 per financial year. Further, the existingprovisions of section 197A of the Act , inter-alia provide that tax shall not be deducted, if the recipient of certain payments on whichtax is deductible furnishes to the payer a self- declaration in prescribed Form.No.15G/15H declaring that the tax on his estimatedtotal income of the relevant previous year would be nil. Presently, the payment in the nature of income referred to in section 194Dis not covered by provisions of section 197A.

In order to reduce compliance burden in the case of Individuals and HUFs, it is proposed to amend section 197A so as to makethem eligible for filing self-declaration in Form.No.15G/15H for non-deduction of tax at source in respect insurance commissionreferred to in section 194D.

This amendment will take effect from 1st June, 2017.[Clause 69]

15

Increasing the threshold limit for maintenance of books of accounts in case ofIndividuals and Hindu undivided family

The existing provisions of clause (i) and clause (ii) of sub-section (2) of section 44AA of the Act cast an obligation on everyperson carrying on business or profession [other than those mentioned in sub-section (1) such as legal, medical, engineering orarchitectural profession or the profession of accountancy or technical consultancy or interior decoration or any other professionas is notified by the Board in the Official Gazette] to maintain such books of accounts and documents in the previous year to enablethe Assessing Officer to compute his total income in accordance with the provisions of Act, provided that the income and total salesor turn over or gross receipts, etc specified in said clauses exceeds rupees one lakh twenty thousand and rupees ten lakh,respectively.

In order to reduce the compliance burden, it is proposed to amend the provisions of section 44AA to increase monetary limitsof income and total sales or turn over or gross receipts, etc specified in said clauses for maintenance of books of accounts fromone lakh twenty thousand rupees to two lakh fifty thousand rupees and from ten lakh rupees to twenty-five lakh rupees, respectivelyin the case of Individuals and Hindu undivided family carrying on business or profession.


[Clause 19]

Exclusion of certain specified person from requirement of audit of accounts under section 44AB

The existing provision of section 44AB of the Act, inter-alia provides that every person carrying on the business is requiredto get his accounts audited if the total sales, turnover or gross receipts in the previous year exceeds one crore rupees. Thethreshold limit for applicability of presumptive taxation in case of eligible business carried on by eligible person under section 44ADwas increased to two crore rupees from one crore rupees with effect from 1st April, 2017 relevant to Assessment year 2017-18by Finance Act, 2016. Further vide press release dated 20th June, 2016, it was clarified that if an eligible person opts for presumptivetaxation scheme as per section 44AD(1) of the Act, he shall not be required to get his accounts audited if the total turnover or grossreceipts of the relevant previous year does not exceed two crore rupees.

In light of the above legislative changes and to reduce the compliance burden of the small tax payers and facilitate the easeof doing business, it is proposed to amend the section 44AB to exclude the eligible person, who declares profits for the previousyear in accordance with the provisions of sub-section (1) of section 44AD and his total sales, total turnover or gross receipts, asthe case may be, in business does not exceed two crore rupees in such previous year, from requirement of audit of books ofaccounts under section 44AB.


[Clause 20]

Non-deduction of tax in case of exempt compensation under RFCTLAAR Act, 2013

The existing provision of section 194LA of the Act, inter-alia, provides that any person paying compensation shall deduct taxat source at the rate of ten per cent. on the compensation or enhanced compensation or consideration on account of compulsoryacquisition of any immovable property (other than agricultural land) under any law for the time being in force subject to certainconditions specified therein.

The Central Government has enacted a new law namely Right to Fair Compensation and Transparency in Land Acquisition,Rehabilitation and Resettlement Act, 2013, ('RFCTLARR Act') on 26th September, 2013 which came into force on 1st January,2014. Section 96 of the RFCTLARR Act inter-alia, provides that income-tax shall not be levied on award or agreement made subjectto limitations mentioned in section 46 of the said Act. Therefore, compensation received for compulsory acquisition of land underthe RFCTLARR Act (except those made under section 46 of RFTCLARR Act), is exempted from the levy of income-tax.

The Board has issued Circular number 36/2016 dated 25th October, 2016 clarifying that compensation received in respect ofany award or agreement which has been exempted from the levy of income-tax vide section 96 of the RFCTLARR Act shall notbe taxable under the provisions of the Act, even if there is no specific provision of exemption for such compensation under the Act.However, the circular addressed only the matter pertaining to taxability of compensation received on compulsory acquisition ofland and not tax deduction at source under section 194LA of the Act.

16

Thus in order to rationalise the provisions of the Act, it is proposed to amend the section 194LA to provide that no deduction

shall be made under this section where such payment is made in respect of any award or agreement which has been exempted

from levy of income-tax under section 96 (except those made under section 46) of RFCTLARR Act.


[Clause 66]

Exemption from tax collection at source under sub-section (1F) of section 206C in case of certain specified buyers.

The existing provision of sub-section (1F) of section 206C of the Act, inter-alia provides that the seller who receives

consideration for sale of a motor vehicle exceeding ten lakh rupees, shall collect one per cent of the sale consideration as tax from

the buyer.

In order to reduce compliance burden in certain cases, it is proposed to amend section 206C, to exempt the following class

of buyers such as the Central Government, a State Government, an embassy, a High Commission, legation, commission,

consulate and the trade representation of a foreign State; local authority as defined in explanation to clause (20) of Section 10;

a public sector company which is engaged in the business of carrying passengers, from the applicability of the provision of sub-

section (1F) of section 206C of the Act.


[Clause 71]

Simplification of the provisions of tax deduction at source in case Fees for professional ortechnical services under section 194J

The existing provisions of sub-section (1) of section 194J of the Act, inter-alia provides that a specified person is required to

deduct an amount equal to ten per cent. of any sum payable or paid ( whichever is earlier) to a resident by way of fees for

professional services or fees for technical services provided such sum paid/payable or aggregate of sum paid/payable exceeds

thirty thousand rupees to a person in a financial year.

In order to promote ease of doing business, it is proposed to amend section 194J to reduce the rate of deduction of tax at source

to two per cent. from ten per cent. in case of payments received or credited to a payee, being a person engaged only in the business

of operation of call center.

This amendment will take effect from the 1st day of June, 2017.

[Clause 65]

Scope of section 92BA of the Income-tax Act relating to Specified Domestic Transactions

The existing provisions of section 92BA of the Act, inter-alia provide that any expenditure in respect of which payment has

been made by the assessee to certain "specified persons" under section 40A(2)(b) are covered within the ambit of specified

domestic transactions.

As a matter of compliance and reporting, taxpayers need to obtain the chartered accountant's certificate in Form 3CEB

providing the details such as list of related parties, nature and value of specified domestic transactions (SDTs), method used to

determine the arm's length price for SDTs, positions taken with regard to certain transactions not considered as SDTs, etc. This

has considerably increased the compliance burden of the taxpayers.

In order to reduce the compliance burden of taxpayers, it is proposed to provide that expenditure in respect of which payment

has been made by the assessee to a person referred to in under section 40A(2)(b) are to be excluded from the scope of section

92BA of the Act. Accordingly, it is also proposed to make a consequential amendment in section 40(A)(2)(b) of the Act.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-

18 and subsequent years.

[Clauses 15 & 41]

17

Tax neutral conversion of preference shares to equity shares

Under the existing provisions of the Act, conversion of security from one form to another is regarded as transfer for the purposeof levy of capital gains tax. However, tax neutrality to the conversion of bond or debenture of a company to share or debentureof that company is provided under the section 47. No similar tax neutrality to the conversion of preference share of a companyinto its equity share is provided.

In order to provide tax neutrality to the conversion of preference share of a company into equity share of that company, it isproposed to amend section 47 to provide that the conversion of preference share of a company into its equity share shall not beregarded as transfer.

Consequential amendments are also proposed in section 49 and section 2(42A) in respect of cost of acquisition and periodof holding.


[Clauses 3, 23 & 25]

Cost of acquisition in Tax neutral demerger of a foreign company

Under the existing provision of section 47(vic), the transfer of shares of an Indian company by a demerged foreign companyto a resulting foreign company is not regarded as transfer.

It is proposed to amend section 49 so as to provide that cost of acquisition of the shares of Indian company referred to in section47(vic) in the hands of the resulting foreign company shall be the same as it was in the hands of demerged foreign company.


[Clause 25]

Income from transfer of Carbon credits

Carbon credits is an incentive given to an industrial undertaking for reduction of the emission of GHGs (Green House gases),including carbon dioxide which is done through several ways such as by switching over to wind and solar energy, forestregeneration, installation of energy-efficient machinery, landfill methane capture, etc. The Kyoto Protocol commits certaindeveloped countries to reduce their GHG emissions and for this, they will be given carbon credits. A reduction in emissions entitlesthe entity to a credit in the form of a Certified Emission Reduction (CER) certificate. The CER is tradable and its holder can transferit to an entity which needs Carbon Credits to overcome an unfavourable position on carbon credits.

Income-tax Department has been treating the income on transfer of carbon credits as business income which is subject totax at the rate of 30%. However, divergent decisions have been given by the courts on the issue as to whether the income receivedor receivable on transfer of carbon credit is a revenue receipt or capital receipt.

In order to bring clarity on the issue of taxation of income from transfer of carbon credits and to encourage measures to protectthe environment, it is proposed to insert a new section 115BBG to provide that where the total income of the assessee includesany income from transfer of carbon credit, such income shall be taxable at the concessional rate of ten per cent ( plus applicablesurcharge and cess) on the gross amount of such income. No expenditure or allowance in respect of such income shall be allowedunder the Act.


[Clause 45]

Processing of return within the prescribed time and enable withholding of refund in certain cases

The provisions of sub-section (1D) of section 143 provide that the processing of a return shall not be necessary, where a noticehas been issued to the assessee under sub-section (2) of the said section. Amendment to the said sub-section brought by FinanceAct, 2016 provides that with effect from assessment year 2017-18, processing under section 143(1) is to be done before passingof assessment order.

18

In order to address the grievance of delay in issuance of refund in genuine cases which are routinely selected for scrutinyassessment, it is proposed that provisions of section 143(1D) shall cease to apply in respect of returns furnished for assessmentyear 2017-18 and onwards.

However, to address the concern of recovery of revenue in doubtful cases, it is proposed to insert a new section 241A to providethat, for the returns furnished for assessment year commencing on or after 1st April, 2017, where refund of any amount becomesdue to the assessee under section 143(1) and the Assessing Officer is of the opinion that grant of refund may adversely affectthe recovery of revenue, he may, for the reasons recorded in writing and with the previous approval of the Principal Commissioneror Commissioner, withhold the refund upto the date on which the assessment is made.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply to returns furnished for assessment year2017-18 and subsequent years.

[Clauses 57 & 76]

Rationalisation of section 211 and section 234C relating to advance tax

Section 211 of the Act provides for instalments of advance tax and due dates for depositing the same. Clause (b) of sub-section(1) of the said section provides that an eligible assessee engaged in an eligible business referred to in section 44AD is liable topay advance tax in a single instalment on or before the 15th of March every financial year.

Vide Finance Act 2016, presumptive taxation regime has been extended to professionals also. Hence, it is proposed to amendthe said clause (b) to provide that the assessee who declares profits and gains in accordance with presumptive taxation regimeprovided under section 44ADA shall also be liable to pay advance tax in one instalment on or before the 15th of March.

It is also proposed to make consequential amendments in sub-section (1) of section 234C to provide that in respect of anassessee referred to in section 44ADA, interest under the said section shall be levied, if the advance tax paid on or before the15th March, is less than the tax due on the returned income.

Vide Finance Act, 2016, tax on certain dividends received from domestic companies is to be levied under section 115BBDAof the Act with effect from the 1st April, 2017, if such income exceeds ten lakh rupees. However, in view of the uncertain natureof declaration and receipt of dividend incomes, an assessee liable to pay advance tax may not be able to correctly determine suchliability within the payment schedule as specified under section 211 and shall, therefore, incur levy of interest on deferment ofadvance tax as specified under clauses (a) or (b) of section 234C(1).

It is hence proposed to provide that that if shortfall in payment of advance tax is on account of under-estimation or failure inestimation of income of the nature referred to in section 115BBDA, the interest under section 234C shall not be levied subject tofulfilment of conditions specified therein.


[Clauses 73 & 74]

Interest on refund due to deductor

The existing section 244A of the Act provides that an assessee is entitled to receive interest on refund arising out of excesspayment of advance tax, tax deducted or collected at source, etc.

It is proposed to insert a new sub-section (1B) in the said section to provide that where refund of any amount becomes dueto the deductor, such person shall be entitled to receive, in addition to the refund, simple interest on such refund, calculated atthe rate of one-half per cent. for every month or part of a month comprised in the period, from the date on which claim for refundis made in the prescribed form or in case of an order passed in appeal, from the date on which the tax is paid, to the date on whichrefund is granted.

It is also proposed to provide that the interest shall not be allowed for the period for which the delay in the proceedings resultingin the refund is attributable to the deductor.

This amendment will take effect from 1st April, 2017.[Clause 77]

19

Extension of capital gain exemption to Rupee Denominated Bonds

With a view to provide relief to non-resident investor, in the wake of permission to the Indian corporates by the Reserve Bankof India (the RBI) to issue rupee denominated bonds outside India as a measure to enable the Indian corporates to raise fundsfrom a source outside India, the Finance Act, 2016, inter-alia, amended section 48 of the Act with effect from the 1st April, 2017so as to provide that the gains arising on account of appreciation of rupee against a foreign currency at the time of redemptionof rupee denominated bond of an Indian company subscribed by him, shall be ignored for the purpose of computation of full valueof consideration.

Representations have been received to allow exemption from capital gain arising to secondary holders as well. It has alsobeen represented to allow exemption in respect of transfer of Rupee Denominated Bonds from non-resident to non-resident forthe purpose of increasing acceptability and transferability of such instrument in the foreign market.

In order to further provide relief in respect of gains arising on account of appreciation of rupee against a foreign currency atthe time of redemption of rupee denominated bond of an Indian company to secondary holders as well, it is proposed to amendsection 48 providing that the said appreciation of rupee shall be ignored for the purposes of computation of full value ofconsideration.

Further, with a view to facilitate transfer of Rupee Denominated Bonds from non-resident to non-resident, it is proposed toamend section 47 so as to provide that any transfer of capital asset, being rupee denominated bond of Indian company issuedoutside India, by a non- resident to another non- resident shall not be regarded as transfer.


[Clause 24]

Enabling claim of credit for foreign tax paid in cases of dispute

The existing provisions of section 155 of the Act provide for procedure for amendment of assessment order in case of certainspecified errors.

In view of rule 128 of the Income-tax Rules, 1962, which provides a mechanism for claim of foreign tax credit, it is proposedto insert sub-section (14A) in section 155 to provide that where credit for foreign taxes paid is not given for the relevant assessmentyear on the grounds that the payment of such foreign tax was in dispute, the Assessing Officer shall rectify the assessment orderor an intimation under sub-section (1) of section 143, if the assessee, within six months from the end of the month in which thedispute is settled, furnishes proof of settlement of such dispute, submits evidence before the Assessing Officer that the foreigntax liability has been discharged and furnishes an undertaking that credit of such amount of foreign tax paid has not been directlyor indirectly claimed or shall not be claimed for any other assessment year.


[Clause 62]

Amendments to the structure of Authority for Advance Rulings

Chapter XIX-B of the Act relates to the Advance rulings under the Act.

With a view to promote ease of doing business, it has been decided by the Government to merge the Authority for AdvanceRuling (AAR) for income-tax, central excise, customs duty and service tax. Accordingly, necessary amendments, have been madeto Chapter XIX-B to allow merger of these AARs.

Accordingly, it is proposed to amend the definition of applicant in section 245N of the Act to provide reference of applicationsfor Advance Ruling made under the Customs Act, 1962, the Central Excise Act, 1944 and the Finance Act, 1994 (which makesprovisions in respect of Service Tax Matters). Similarly, amendment has been proposed to section 245Q which relates toapplication for advance ruling.

It is further proposed to amend the qualifications for appointment as revenue Member of the AAR and provide that an officerof the Indian Revenue Service qualified to be a Member of the Central Board of Direct Taxes Board and an officer of the Indian

20

Customs and Central Excise Service, who is qualified to be a member of the Central Board of Excise & Customs, shall be eligibleto be appointed as revenue Member of AAR.

In order to improve the efficiency and efficacy of the AAR, and to increase the available pool for appointment as Chairman,AAR, it is proposed to amend the qualifications for appointment as Chairman as provided in section 245-O and provide that a formerChief Justice of a High Court, or a person who has been a High Court Judge for at least seven years shall also be eligible to beChairman of the AAR.

It is also proposed to provide that the qualifications for appointment as revenue Member or law Member shall be consideredas on the date of occurrence of the vacancy.

It is also proposed that in the event the Chairman is unable to discharge his functions owing to absence, illness or any otherreason, or in the event that the office of the Chairman falls vacant, the Vice-chairman shall discharge the functions of the Chairmanuntil the new Chairman enters upon his office or until the incumbent Chairman resumes his duties.

These amendments will take effect from 1st April, 2017. [Clauses 79, 80 & 81]

Amendment of Section 253

The existing provisions of sub-clause (f) of sub-section (1) of section 253 provide that an order passed by the prescribedauthority under sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 shall be appealable before the Appellate Tribunal.

It is proposed to expand the scope of the said section to provide that the orders passed by the prescribed authority undersub-clauses (iv) and (v) of sub-section (23C) of section 10 shall also be appealable before the Appellate Tribunal.


Empowering Board to issue directions in respect of penalty for failure to deduct or collect tax at source

Existing provision of clause (a) of sub-section (2) of section 119 empowers the Board to issue orders setting forth directionsor instructions (not being prejudicial to assessees) to be followed by subordinate authorities in the work relating to assessmentor collection of revenue or the initiation of proceedings for the imposition of penalties.

In order to reduce the genuine hardship which may be faced by a person responsible for deduction and collection of tax atsource due to levy of penalty under section 271C or 271CA, it is proposed to insert reference of sections 271C and 271CA in thesaid clause, so as to empower the Board to issue directions or instructions in respect of the said sections also.

The amendment will take effect from 1st April, 2017.[Clause 49]

Rationalisation of time limits for completion of assessment, reassessment and re-computationand reducing the time for filing revised return

The existing provisions of section 153 specify time limit for completion of assessment, reassessment and re-computation ofcases mentioned therein.

In the effort to minimise human interface and move towards technology, massive computerisation has been carried out in theDepartment, which has translated into overall enhanced efficiency in the functioning of the Department. In view of the same, it isproposed to amend sub-section (1) of the said section, to provide that for the assessment year 2018-19, the time limit for makingan assessment order under sections 143 or 144 shall be reduced from existing twenty-one months to eighteen months from theend of the assessment year, and for the assessment year 2019-20 and onwards, the said time limit shall be twelve months fromthe end of the assessment year in which the income was first assessable.

It is further proposed to amend sub-section (2) of the said section to provide that the time limit for making an order ofassessment, reassessment or re-computation under section 147, in respect of notices served under section 148 on or after the1st day of April, 2019 shall be twelve months from the end of the financial year in which notice under section 148 is served.

It is also proposed to amend sub-section (3) of the said section to provide that the time limit for making an order of freshassessment in pursuance of an order passed or received in the financial year 2019-20 and onwards under sections 254 or 263

21

or 264 shall be twelve months from the end of the financial year in which order under section 254 is received or order under section263 or 264 is passed by the authority referred therein.


It is also proposed to amend sub-section (5) of the said section to provide that where an order under section 250 or 254 or260 or 262 or 263 or 264 requires verification of any issue by way of submission of any document by the assessee or any otherperson or where an opportunity of being heard is to be provided to the assessee, the time limit relating to fresh assessment providedin sub-section (3) shall apply to the order giving effect to such order.

It is also proposed to amend sub-section (9) of the said section to provide that where a notice under sub-section (1) of section142 or sub-section (2) of section 143 or under section 148 has been issued prior to the 1st day of June, 2016 and the assessmentor reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessmentor reassessment shall be completed in accordance with the provisions of section 153 as it stood immediately before its substitutionby the Finance Act, 2016.

These amendments will take effect retrospectively from 1st June, 2016.

It is also proposed to amend third proviso to Explanation 1 of the said section to omit the reference of section 153B therein.

It is also proposed to consequentially amend the meaning of conclusion of proceeding in the Explanation to clause (b) ofsection 245A so as to provide that conclusion of proceedings shall be construed in accordance with the time specified for makingassessment or reassessment under sub-section (1) of section 153.


In order to expedite assessments of the Department as proposed above, it is critical that the returns for an assessment yearalso freeze by the end of the assessment year. It is hence proposed to amend the provisions of sub-section (5) of section 139to provide that the time for furnishing of revised return shall be available upto the end of the relevant assessment year or beforethe completion of assessment, whichever is earlier.

These amendments will take effect from 1st April, 2018 and will, accordingly apply in relation to assessment year 2018-19 andsubsequent years.

[Clauses 55, 58 & 78]

Rationalisation of the provisions in respect of time limits for completion of search assessment

The existing provisions of section 153B provide for the time limit for completion of assessment under section 153A.

Since the time limit for completion of assessment under section 153 is proposed to be rationalised, the time limit for completionof assessment under section 153A is also proposed to be consequentially rationalised. It is accordingly proposed to amend sub-section (1) of the said section to provide that for search and seizure cases conducted in the financial year 2018-19, the time limitfor making an assessment order under section 153A shall be reduced from existing twenty-one months to eighteen months fromthe end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section132A was executed. It is further proposed that for search and seizure cases conducted in the financial year 2019-20 and onwards,the said time limit shall be further reduced to twelve months from the end of the financial year in which the last of the authorisationsfor search under section 132 or for requisition under section 132A was executed.

It is further proposed to provide that period of limitation for making the assessment or reassessment in case of other personreferred to in section 153C, shall be the period available to make assessment or reassessment in case of person on whom searchis conducted or twelve months from the end of the financial year in which books of accounts or documents or assets seized orrequisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other persons, whicheveris later.

It is also proposed to insert a proviso to the Explanation of the said section to provide that where a proceeding before theSettlement Commission abates under section 245HA, the period of limitation available under this section for assessment orreassessment shall after the exclusion of the period under sub-section (4) of section 245HA shall not be less than one year; andwhere such period of limitation is less than one year, it shall be deemed to have been extended to one year.


22

It is also proposed to amend sub-section (3) of section 153B to provide that where a notice under section 153A or section 153Chas been issued prior to 1st day of June, 2016 and the assessment has not been completed by such date due to exclusion of timereferred to in the Explanation, such assessment shall be completed in accordance with the provisions of this section as it stoodimmediately before its substitution by the Finance Act, 2016.

This amendment will take effect retrospectively from 1st June, 2016.[Clause 60]

H. ANTI-ABUSE MEASURES

Exemption of long term capital gains tax u/s 10(38)

Under the existing provisions of the Section 10(38) of the Income-tax Act, 1961, the income arising from a transfer of long termcapital asset, being equity share of a company or a unit of an equity oriented fund, is exempt from tax if the transaction of sale isundertaken on or after 1st October, 2014 and is chargeable to Securities Transaction Tax under Chapter VII of the Finance (No.2)Act, 2004.

It has been noticed that exemption provided under section 10(38) is being misused by certain persons for declaring theirunaccounted income as exempt long-term capital gains by entering into sham transactions. With a view to prevent this abuse,it is proposed to amend section 10(38) to provide that exemption under this section for income arising on transfer of equity shareacquired or on after 1st day of October, 2004 shall be available only if the acquisition of share is chargeable to SecuritiesTransactions Tax under Chapter VII of the Finance (No 2) Act, 2004. However, to protect the exemption for genuine cases wherethe Securities Transactions Tax could not have been paid like acquisition of share in IPO, FPO, bonus or right issue by a listedcompany acquisition by non-resident in accordance with FDI policy of the Government etc., it is also proposed to notify transfersfor which the condition of chargeability to Securities Transactions Tax on acquisition shall not be applicable.

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19and subsequent assessment years.

[Clause 6]

Fair Market Value to be full value of consideration in certain cases

Under the existing provisions of the Act, income chargeable under the head "Capital gains" is computed by taking into accountthe amount of full value of consideration received or accrued on transfer of a capital asset. In order to ensure that the full valueof consideration is not understated, the Act also contained provisions for deeming of full value of consideration in certain casessuch as deeming of stamp duty value as full value of consideration for transfer of immovable property in certain cases.

In order to rationalise the provisions relating to deeming of full value of consideration for computation of income under the head"capital gains", it is proposed to insert a new section 50CA to provide that where consideration for transfer of share of a company(other than quoted share) is less than the Fair Market Value (FMV) of such share determined in accordance with the prescribedmanner, the FMV shall be deemed to be the full value of consideration for the purposes of computing income under the head"Capital gains".


[Clause 26]

Widening scope of Income from other sources

Under the existing provisions of section 56(2)(vii), any sum of money or any property which is received without considerationor for inadequate consideration (in excess of the specified limit of Rs. 50,000) by an individual or Hindu undivided family ischargeable to income-tax in the hands of the resident under the head "Income from other sources" subject to certain exceptions.Further, receipt of certain shares by a firm or a company in which the public are not substantially interested is also chargeable toincome-tax in case such receipt is in excess of Rs. 50,000 and is received without consideration or for inadequate consideration.

The existing definition of property for the purpose of this section includes immovable property, jewellery, shares, paintings,etc. These anti-abuse provisions are currently applicable only in case of individual or HUF and firm or company in certain cases.Therefore, receipt of sum of money or property without consideration or for inadequate consideration does not attract theseanti-abuse provisions in cases of other assessees.

23

In order to prevent the practice of receiving the sum of money or the property without consideration or for inadequateconsideration, it is proposed to insert a new clause (x) in sub-section (2) of section 56 so as to provide that receipt of the sum ofmoney or the property by any person without consideration or for inadequate consideration in excess of Rs. 50,000 shall bechargeable to tax in the hands of the recipient under the head "Income from other sources". It is also proposed to widen the scopeof existing exceptions by including the receipt by certain trusts or institutions and receipt by way of certain transfers not regardedas transfer under section 47.

Consequential amendment is also proposed in section 49 for determination of cost of acquisition.

These amendments will take effect from 1st April, 2017 and the said receipt of sum of money or property on or after 1st April,2017 shall be chargeable to tax in accordance with the provisions of proposed clause (x) of sub-section (2) of section 56.

[Clauses 25 & 29]

Disallowance for non-deduction of tax from payment to resident

Existing provisions of section 58 of the Act, specify the amounts which are not deductible in computing the income under thehead "Income from other sources" which include certain disallowances made in computation of income under the head "Profitsand gains of business or profession". These disallowances include disallowances such as disallowance of cash expenditure,disallowance for non-deduction of tax from payment to non-resident, etc.

For computing income under the head "Profits and gains of business or profession", a disallowance is made for non-deductionof tax from payment to resident also. With a view to improve compliance of provision relating to tax deduction at source (TDS),it is proposed to amend the said section so as to provide that provisions of section 40(a)(ia) shall, so far as they may be, applyin computing income chargeable under the head "income from other sources" as they apply in computing income chargeable underthe head "Profit and gains of business or Profession".


[Clause 30]

Limitation of Interest deduction in certain cases.

A company is typically financed or capitalized through a mixture of debt and equity. The way a company is capitalized often

has a significant impact on the amount of profit it reports for tax purposes as the tax legislations of countries typically allow adeduction for interest paid or payable in arriving at the profit for tax purposes while the dividend paid on equity contribution is not

deductible . Therefore, the higher the level of debt in a company, and thus the amount of interest it pays, the lower will be its taxableprofit. For this reason, debt is often a more tax efficient method of finance than equity. Multinational groups are often able to

structure their financing arrangements to maximize these benefits. For this reason, country's tax administrations often introduce

rules that place a limit on the amount of interest that can be deducted in computing a company's profit for tax purposes. Such rulesare designed to counter cross-border shifting of profit through excessive interest payments, and thus aim to protect a country's

tax base.

Under the initiative of the G-20 countries, the Organization for Economic Co-operation and Development (OECD) in its Base

Erosion and Profit Shifting (BEPS) project had taken up the issue of base erosion and profit shifting by way of excess interestdeductions by the MNEs in Action plan 4. The OECD has recommended several measures in its final report to address this issue.

In view of the above, it is proposed to insert a new section 94B, in line with the recommendations of OECD BEPS ActionPlan 4, to provide that interest expenses claimed by an entity to its associated enterprises shall be restricted to 30% of itsearnings before interest, taxes, depreciation and amortization (EBITDA) or interest paid or payable to associated enterprise,whichever is less.

The provision shall be applicable to an Indian company, or a permanent establishment of a foreign company being theborrower who pays interest in respect of any form of debt issued to a non-resident or to a permanent establishment of a non-residentand who is an 'associated enterprise' of the borrower. Further, the debt shall be deemed to be treated as issued by an associatedenterprise where it provides an implicit or explicit guarantee to the lender or deposits a corresponding and matching amount offunds with the lender.

24

The provisions shall allow for carry forward of disallowed interest expense to eight assessment years immediately succeedingthe assessment year for which the disallowance was first made and deduction against the income computed under the head"Profits and gains of business or profession to the extent of maximum allowable interest expenditure.

In order to target only large interest payments, it is proposed to provide for a threshold of interest expenditure of one crorerupees exceeding which the provision would be applicable.

It is further proposed to exclude Banks and Insurance business from the ambit of the said provisions keeping in view of specialnature of these businesses.


[Clause 43]

Secondary adjustments in certain cases.

"Secondary adjustment" means an adjustment in the books of accounts of the assessee and its associated enterprise to reflectthat the actual allocation of profits between the assessee and its associated enterprise are consistent with the transfer pricedetermined as a result of primary adjustment, thereby removing the imbalance between cash account and actual profit of theassessee. As per the OECD's Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD transferpricing guidelines), secondary adjustment may take the form of constructive dividends, constructive equity contributions, orconstructive loans.

The provisions of secondary adjustment are internationally recognised and are already part of the transfer pricing rules ofmany leading economies in the world. Whilst the approaches to secondary adjustments by individual countries vary, they representan internationally recognised method to align the economic benefit of the transaction with the arm's length position.

In order to align the transfer pricing provisions in line with OECD transfer pricing guidelines and international best practices, it is proposed to insert a new section 92CE to provide that the assessee shall be required to carry out secondary adjustment wherethe primary adjustment to transfer price, has been made suo motu by the assessee in his return of income; or made by theAssessing Officer has been accepted by the assessee; or is determined by an advance pricing agreement entered into by theassessee under section 92CC; or is made as per the safe harbour rules framed under section 92CB; or is arising as a result ofresolution of an assessment by way of the mutual agreement procedure under an agreement entered into under section 90 or 90A.

It is proposed to provide that where as a result of primary adjustment to the transfer price, there is an increase in the totalincome or reduction in the loss, as the case may be, of the assessee, the excess money which is available with its associatedenterprise, if not repatriated to India within the time as may be prescribed, shall be deemed to be an advance made by the assesseeto such associated enterprise and the interest on such advance, shall be computed as the income of the assessee , in the manneras may be prescribed.

It is also proposed to provide that such secondary adjustment shall not be carried out if, the amount of primary adjustmentmade in the case of an assessee in any previous year does not exceed one crore rupees and the primary adjustment is madein respect of an assessment year commencing on or before 1st April,2016.


[Clause 42]

Restriction on exemption in case of corpus donation by exempt entities to other exempt entities

As per the existing provisions of the Act, donations made by a trust to any other trust or institution registered under section12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institutionreferred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, except thosemade out of accumulated income, is considered as application of income for the purposes of its objects.

Similarly, donations made by entities exempted under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via)of clause (23C) of section 10 to any trust or institution registered under section 12AA, except those made out of accumulatedincome, is also considered as application of income for the purposes of its objects.

25

However, donation given by these exempt entities to another exempt entity, with specific direction that it shall form part ofcorpus, is though considered application of income in the hands of donor trust but is not considered as income of the recipient trust.Trusts, thus, engage in giving corpus donations without actual applications.

Therefore, it is proposed to insert a new Explanation to section 11 of the Act to provide that any amount credited or paid, outof income referred to in clause (a) or clause (b) of sub-section (1) of section 11, being contributions with specific direction that theyshall form part of the corpus of the trust or institution, shall not be treated as application of income.

It is also proposed to insert a proviso in clause (23C) of section 10 so as to provide similar restriction as above on the entitiesexempt under sub-clauses (iv), (v), (vi) or (via) of said clause in respect of any amount credited or paid out of their income.

These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.

[Clauses 6 & 8]

Mandatory furnishing of return by certain exempt entities

The existing provisions of sub-section (4C) of section 139 mandate filing of return by certain entities which are exempt fromthe levy of income-tax.

In order to verify that certain entities which enjoy exemption under section 10 actually carry out the activities for which theexemption has been provided under the Act, it is proposed to provide that any person as referred to in clause (23AAA), InvestorProtection Fund referred to in clause (23EC) or clause (23ED), Core Settlement Guarantee Fund referred to in clause (23EE) andany Board or Authority referred to in clause (29A) of section 10 shall also be mandatorily required to furnish a return of income.


[Clause 55]

Fee for delayed filing of return

In view of the non-intrusive information-driven approach for improving tax compliance and effective utilization of informationin tax administration, it is important that the returns are filed within the due dates specified in section 139(1). Further, the reducedtime limits proposed for making of assessment are also based on pre-requisite that returns are filed on time.

In order to ensure that return is filed within due date, it is proposed to insert a new section 234F in the Act to provide that afee for delay in furnishing of return shall be levied for assessment year 2018-19 and onwards in a case where the return is not filedwithin the due dates specified for filing of return under sub-section (1) of section 139. The proposed fee structure is as follows:—

(i) a fee of five thousand rupees shall be payable, if the return is furnished after the due date but on or before the 31st dayof December of the assessment year;

(ii) a fee of ten thousand rupees shall be payable in any other case.

However, in a case where the total income does not exceed five lakh rupees, it is proposed that the fee amount shall not exceedone thousand rupees.

In view of above, it is proposed to make consequential amendment in section 140A to include that in case of delay in furnishingof return of income, alongwith the tax and interest payable, fee for delay in furnishing of return of income shall also be payable.

It is also proposed to make consequential amendment in sub-section (1) of section 143, to provide that in computation ofamount payable or refund due, as the case may be, on account of processing of return under the said sub-section, the fee payableunder section 234F shall also be taken into account.

Consequentially, it is also proposed that the provisions of section 271F in respect of penalty for failure to furnish return ofincome shall not apply in respect of assessment year 2018-19 and onwards.

These amendments will take effect from lst April, 2018 and will, accordingly apply in relation to assessment year 2018-19 andsubsequent years.

[Clauses 56, 57, 75 & 85]

26

Penalty on professionals for furnishing incorrect information in statutory report or certificate

The thrust of the Government in recent past is on voluntary compliance. Certification of various reports and certificates by a

qualified professional has been provided in the Act to ensure that the information furnished by an assessee under the provisions

of the Act is correct. Various provisions exist under the Act to penalise the defaulting assessee in case of furnishing incorrect

information. However, there exist no penal provision for levy of penalty for furnishing incorrect information by the person who is

responsible for certifying the same.

In order to ensure that the person furnishing report or certificate undertakes due diligence before making such certification,

it is proposed to insert a new section 271J so as to provide that if an accountant or a merchant banker or a registered valuer,

furnishes incorrect information in a report or certificate under any provisions of the Act or the rules made thereunder, the Assessing

Officer or the Commissioner (Appeals) may direct him to pay a sum of ten thousand rupees for each such report or certificate by

way of penalty.

It is further proposed to define the expressions "accountant", "merchant banker" and "registered valuer". It is also proposed

to provide through amendment of section 273B that if the person proves that there was reasonable cause for the failure referred

to in the said section, then penalty shall not be imposable in respect of the proposed section 271J.


[Clauses 86 & 87]

I. RATIONALISATION MEASURES

Rationalisation of provisions of section 115JB in line with Indian Accounting Standard (Ind-AS)

Central Government notified the Indian Accounting Standards (Ind AS) which are converged with International Financial

Reporting Standards(IFRS) and prescribed the Companies( Indian Accounting Standards) Rules, 2015 which laid down a

roadmap for implementation of these Ind AS.

Globally, different approaches have been adopted to deal with the tax issues arising from adoption of IFRS. For ensuring

horizontal equity across the companies irrespective of the fact that whether they follow Ind AS or the existing Indian GAAP, the

Central Government has issued Income Computation and Disclosure Standards (ICDS) for computation of taxable income for

specified heads of income.

As the book profit based on Ind AS compliant financial statement is likely to be different from the book profit based on existing

Indian GAAP, the Central Board of Direct Taxes (CBDT) constituted a committee in June, 2015 for suggesting the framework for

computation of minimum alternate tax (MAT) liability under section 115JB for Ind AS compliant companies in the year of adoption

and thereafter.

The Committee submitted first interim report on 18th March, 2016 which was placed in public domain by the CBDT for wider

public consultations. The Committee submitted the second interim report on 5th August, 2016 which was also placed in public

domain. The comments/ suggestions received in respect of the first and second interim report were examined by the Committee.

After taking into account all the suggestions/ comments received, the Committee submitted its final report on 22nd December,

2016.

In view of the above, it is proposed to amend section 115JB so as to provide the framework for computation of book profit for

Ind AS compliant companies in the year of adoption and thereafter. The main features of this proposed framework are as under:

A. MAT on Ind AS compliant financial statement

(i) No further adjustments to the net profits before other comprehensive income of Ind AS compliant companies, other than

those already specified under section 115JB of the Act shall be made.

(ii) The other comprehensive income includes certain items that will permanently be recorded in reserves and hence never

be reclassified to the statement of profit and loss included in the computation of book profits. These items shall be included

in book profits for MAT purposes at the point of time as specified below—

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(iii) Appendix A of Ind AS 10 provides that any distributions of non-cash assets to shareholders (for example, in a demerger)shall be accounted for at fair value. The difference between the carrying value of the assets and the fair value is recorded in theprofit and loss account. Correspondingly, the reserves are debited at fair value to record the distribution as a 'deemed dividend'to the shareholders. As there is a corresponding adjustment in retained earnings, this difference arising on demerger shall beexcluded from the book profits. However, in the case of a resulting company, where the property and the liabilities of the undertakingor undertakings being received by it are recorded at values different from values appearing in the books of account of the demergedcompany immediately before the demerger, any change in such value shall be ignored for the purpose of computing of book profitof the resulting company.

B. MAT on first time adoption

(i) The adjustments arising on account of transition to Ind AS from existing Indian GAAP is required to be recorded directlyin Other Equity at the date of transition to Ind AS. Several of these items would subsequently never be reclassified to thestatement of profit and loss / included in the computation of book profits. Accordingly, the following treatment is proposed:

(I) Those adjustments recorded in other comprehensive income and which would subsequently be reclassified to the profitand loss, shall be included in book profits in the year in which these are reclassified to the profit and loss;

(II) Those adjustments recorded in other comprehensive income and which would never be subsequently reclassified to theprofit and loss shall be included in book profits as specified hereunder-

Sl.No. Items Point of time

1 Changes in revaluation surplus of PPE and Intangible assets (Ind AS 16 and Ind AS 38)

To be included in book profits at the time of realisation/ disposal/ retirement or otherwise transferred

2 Gains and losses from investments in equity instruments designated at fair value through other comprehensive income (Ind AS 109)


3 Remeasurements of defined benefit plans (Ind AS 19) To be included in book profits equally over a period of five years starting from the year of first time adoption of Ind AS

4 Any other item To be included in book profits equally over a period of five years starting from the year of first time adoption of Ind AS

(III) All other adjustments recorded in Reserves and Surplus (excluding Capital Reserve and Securities Premium

Reserve) as referred to in Division II of Schedule III of Companies Act, 2013 and which would otherwise neversubsequently be reclassified to the profit and loss account, shall be included in the book profits, equally over a periodof five years starting from the year of first time adoption of Ind AS subject to the following—

Sl.No Items Point of time

1 Changes in revaluation surplus of Property, Plant or Equipment (PPE) and Intangible assets (Ind AS 16 and Ind AS 38)


2 Gains and losses from investments in equity instruments designated at fair value through other comprehensive income (Ind AS 109)


3 Remeasurements of defined benefit plans (Ind AS 19) To be included in book profits every year as the remeasurements gains and losses arise

4 Any other item To be included in book profits every year as the gains and losses arise

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a) PPE and intangible assets at fair value as deemed cost

An entity may use fair value in its opening Ind AS Balance Sheet as deemed cost for an item of PPE or an intangible assetas mentioned in paragraphs D5 and D7 of Ind AS 101. In such cases the treatment shall be as under—

• The existing provisions for computation of book profits under section 115JB of the Act provide that in case of revaluationof assets, any impact on account of such revaluation shall be ignored for the purposes of computation of book profits.Further, the adjustments in retained earnings on first time adoption with respect to items of PPE and Intangible assetsshall be ignored for the purposes of computation of book profits.

• Depreciation shall be computed ignoring the amount of aforesaid retained earnings adjustment.

• Similarly, gain/loss on realisation/ disposal/ retirement of such assets shall be computed ignoring the aforesaid retainedearnings adjustment.

b] Investments in subsidiaries, joint ventures and associates at fair value as deemed cost

An entity may use fair value in its opening Ind AS Balance Sheet as deemed cost for investment in a subsidiary, joint ventureor associate in its separate financial statements as mentioned in paragraph D15 of Ind AS 101. In such cases retained earningsadjustment shall be included in the book profit at the time of realisation of such investment.

c] Cumulative translation differences

• An entity may elect a choice whereby the cumulative translation differences for all foreign operations are deemed to bezero at the date of transition to Ind AS. Further, the gain or loss on a subsequent disposal of any foreign operation shallexclude translation differences that arose before the date of transition to Ind AS and shall include only the translationdifferences after the date of transition.

• In such cases, to ensure that such Cumulative translation differences on the date of transition which have beentransferred to retained earnings, are taken into account, these shall be included in the book profits at the time of disposalof foreign operations as mentioned in paragraph 48 of Ind AS 21.

(ii) All other adjustments to retained earnings at the time of transition (including for example, Decommissioning Liability,Asset retirement obligations, Foreign exchange capitalisation/ decapitalization, Borrowing costs adjustments etc.) shallbe included in book profits, equally over a period of five years starting from the year of first time adoption of Ind AS.

(iii) Section 115JB of the Act already provides for adjustments on account of deferred tax and its provision. Any deferred taxadjustments recorded in Reserves and Surplus on account of transition to Ind AS shall also be ignored.

C. Reference year for first time adoption adjustments

In the first year of adoption of Ind AS, the companies would prepare Ind AS financial statement for reporting year with acomparative financial statement for immediately preceding year. As per Ind AS 101, a company would make all Ind ASadjustments on the opening date of the comparative financial year. The entity is also required to present an equity reconciliationbetween previous Indian GAAP and Ind AS amounts, both on the opening date of preceding year as well as on the closing dateof the preceding year. It is proposed that for the purposes of computation of book profits of the year of adoption and the proposedadjustments, the amounts adjusted as of the opening date of the first year of adoption shall be considered. For example,companies which adopt Ind AS with effect from 1 April 2016 are required prepare their financial statements for the year2016-17 as per requirements of Ind AS. Such companies are also required to prepare an opening balance sheet as of 1 April2015 and restate the financial statements for the comparative period 2015-16. In such a case, the first time adoption adjustmentsas of 31 March 2016 shall be considered for computation of MAT liability for previous year 2016-17 (Assessment year 2017-18) and thereafter. Further, in this case, the period of five years proposed above shall be previous years 2016-17, 2017-18,2018-19, 2019-20 and 2020-21.

As the Ind-AS is required to be adopted by certain companies for financial year 2016-17 mandatorily, these amendments willtake effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent assessmentyears.

[Clause 47]

29

Clarification regarding the applicability of section 112

Finance Act, 2012 with effect from 1st April, 2013 amended the provisions of section 112(1)(c) to provide concessional rateof taxation of ten per cent for long-term capital gains arising from the transfer of unlisted securities in case of non-resident. Therewas an uncertainty as to whether the provision of section 112(1)(c)(iii) is applicable to the transfer of share of a private company.Finance Act, 2016 amended section 112(1)(c) to clarify that the share of company in which public are not substantially interestedshall also be chargeable to tax at the rate of ten per cent with effect from 1st April, 2017. As the concessional rate was providedwith effect from 1st April, 2013, there was uncertainty about the applicability of the amendment to the intervening period.

With a view to clarify that the amendment made by Finance Act, 2016 shall also apply to the period from 1st April, 2013 to31st March, 2017, it is proposed to amend section 50 of the Finance Act, 2016 so as to provide that the effective date of amendmentmade to section 112(1)(c)(iii) vide Finance Act,2016 shall be 01-04-2013 instead of 01-04-2017.

This amendment will take effect, retrospectively from 1st April, 2013 and will, accordingly, apply in relation to the assessmentyear 2013-14 and subsequent assessment years.

[Clause 150]

Rationalization of rebate allowable under Section 87A

The existing provisions of section 87A provide for a rebate up to Rs. 5000 from the income-tax payable to a resident individualif this total income does not exceed Rs. 5,00,000.

In view of proposed rationalisation of tax rates for individuals in the income slab of Rs. 2,50,000 to Rs.5,00,000,it is proposedto amend section 87A so as to reduce the maximum amount of rebate available under this section from existing Rs. 5000 to Rs.2500. It is also proposed to provide that this rebate shall be available to only resident individuals whose total income does notexceed Rs. 3,50,000.


[Clause 38]

Rationalisation of provisions of Section 10AA

Under the existing provisions of the section 10AA, deduction is allowed from the total income of an assessee, in respect ofprofits and gains from his Unit operating in SEZ, subject to fulfilment of certain conditions.

Section 10AA allows deduction in computing the total income of the assessee, hence the deduction is to be allowed for thetotal income of the assessee as computed in accordance with the provision of the Act before giving effect to the provisions of section10AA. However, courts have taken a view (while deciding the matter pertaining to section 10A which also contains similarprovision) that the deduction is to be allowed from the total income of the undertaking and not from the total income of the assessee.

In view of the above, it is proposed to clarify that the amount of deduction referred to in section 10AA shall be allowed fromthe total income of the assessee computed in accordance with the provisions of the Act before giving effect to the provisions ofthe section 10AA and the deduction under section 10AA in no case shall exceed the said total income.


[Clause 7]

Consolidation of plans within a scheme of mutual fund

Finance Act,2016 amended section 47 of the Act so as to provide tax neutrality to the transfer of units in a consolidating planof mutual fund scheme made in consideration of the allotment of units in the consolidated plan of that mutual fund scheme.

It is proposed to amend section 2(42A) and section 49 to provide that cost of acquisition of the units in the consolidated planof mutual fund scheme referred to in section 47(xix) shall be the cost of units in consolidating plan of mutual fund scheme and periodof holding of the units of consolidated plan of mutual fund scheme shall include the period for which the units in consolidating planof mutual fund scheme were held by the assessee.

30

These amendments will take effect accordingly, from 1st April, 2017 and will, accordingly, apply in relation to the assessmentyear 2017-18 and subsequent assessment years.

[Clauses 3 & 25]

Definition of 'person responsible for paying' in case of payments covered under sub-section (6) of section 195

The existing provisions of section 204 of Act, has defined the meaning of 'person responsible for paying' to include employer,company or its principal officer or the payer. Further clause (iii) of section 204 of the Act, inter alia, provides that in the case of creditor payment of any sum chargeable under the provisions of this Act, the 'person responsible for paying' shall be the payer himself,or, if the payer is a company, the company itself including the principal officer thereof. However, the said section does not coverin respect of payment of any sum as per sub-section (6) of section 195. Which mandates the 'person responsible for paying' tofurnish information relating to payment of any sum, whether chargeable to tax or not.

Thus in order to bring clarity to the meaning of 'person responsible for paying' in case of payment by a resident to a non-residentin accordance with section 195(6) of the Act, it is proposed to amend the said section of the Act to provide that in the case offurnishing of information relating to payment to a non-resident, not being a company, or to a foreign company, of any sum, whetheror not chargeable under the provisions of this Act, 'person responsible for paying' shall be the payer himself, or, if the payer is acompany, the company itself including the principal officer thereof.


Clarification with regard to interpretation of 'terms' used in an agreement entered into under section 90 and 90A.

Under the existing provisions of Section 90 of the Act, power has been conferred upon the Central Governmentto enter into agreement with the Government of any country outside India for granting relief in respect of income on which income-tax has been paid both under the said Act and income-tax Act in that foreign country, avoidance of double taxation of income,exchange of information for the prevention of evasion or avoidance of income-tax or recovery of income-tax. Similar provisionsare provided in section 90A of the Act in the case of an agreement entered into by any specified association in India with anyspecified association in the specified territory outside India. It is further provided in section 90 and 90A of the Act that any 'term'used but not defined in this Act or in the agreement referred to in sub-section (1) of respective provisions shall have the meaningassigned to it in the notification issued by the Central Government in the Official Gazette in this behalf, unless the context otherwiserequires, provided the same is not inconsistent with the provisions of this Act or the agreement.

The Income-tax simplification committee in its final report has suggested to bring in more clarity in the Act in respect ofinterpretation of 'terms' used in an agreement entered under section 90 or 90A for the purposes of its application in order to reducethe avoidable litigation related to taxation of non- residents.

In the light of above discussion and to bring in clarity to avoid litigation , it is proposed to amend the sections 90 and 90A ofthe Act, to provide that where any 'term' used in an agreement entered into under sub-section (1) of Section 90 and 90A of theAct, is defined under the said agreement, the said term shall be assigned the meaning as provided in the said agreement and wherethe term is not defined in the agreement, but is defined in the Act, it shall be assigned the meaning as definition in the Act or anyexplanation issued by the Central Government.


[Clauses 39 & 40]

Actual cost of asset in case of withdrawal of deduction in terms of Sub-section (7B) of section 35AD

The existing provisions of Section 35AD of the Act, inter alia provides for investment linked deduction on amount of capitalexpenditure incurred, wholly or exclusively, the purposes of business, during the previous year for a specified business excludingcapital expenditure incurred for acquisition of any land or goodwill or financial instrument. Further sub-section (7B) of Section 35ADprovides that where any asset on which benefit of section 35AD is claimed and allowed, is used for a purpose other than specifiedbusiness, the benefit of deduction already granted under section 35AD shall be deemed to be the income of the assessee.However, it further provides that the deemed income shall be net of normal depreciation as would be entitled.

31

Clause (1) of section 43 defines "actual cost" for the purposes of claiming depreciation under section 32 of the Act in certainsituations. However, there is no clarity on determination of actual cost for the purposes of allowance of depreciation of such assetsin respect of which the deduction which is already allowed in a previous year under section 35AD of the Act, is withdrawn in termsof sub-section (7B) of the said section.

In light of the recommendations of Income-tax simplification committee and to bring clarity, it is proposed to amend theprovisions of the section 43 of the Act, to provide that where any capital asset in respect of which deduction allowed under section35AD is deemed to be the income of the assessee in accordance with the provisions of sub-section (7B) of the said section, theactual cost to the assessee shall be the actual cost to the assessee, as reduced by an amount equal to the amount of depreciationcalculated at the rate in force that would have been allowable had the asset been used for the purposes of business since the dateof its acquisition.


[Clause 16]

Clarity of procedure in respect of change or modifications of object and filing of return ofincome in case of entities exempt under sections 11 and 12

The existing provisions of section 12A of the Act provide for conditions for applicability of sections 11 and 12 in relation to thebenefit of exemption in respect of income of any trust or institution.

Further, the provisions of section 12AA of the Act provide for registration of the trust or institution which entitles them to thebenefit of sections 11 and 12. It also provides the circumstances under which registration can be cancelled, one such circumstancebeing satisfaction of the Principal Commissioner or Commissioner that its activities are not genuine or are not being carried outin accordance with its objects subsequent to grant of registration. However, at present there is no explicit provision in the Act whichmandates said trust or institution to approach for fresh registration in the event of adoption or undertaking modifications of theobjects after the registration has been granted.

Therefore, it is proposed to amend section 12A so as to provide that where a trust or an institution has been granted registrationunder section 12AA or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance(No. 2) Act, 1996] and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to theconditions of registration, it shall be required to obtain fresh registration by making an application within a period of thirty days fromthe date of such adoption or modifications of the objects in the prescribed form and manner.

Further, as per the existing provisions of said section, the entities registered under section 12AA are required to file returnof income under sub-section (4A) of section 139, if the total income without giving effect to the provisions of sections 11 and 12exceeds the maximum amount which is not chargeable to income-tax. However, there is no clarity as to whether the said returnof income is to be filed within time allowed u/s 139 of the Act or otherwise.

In order to provide clarity in this regard, it is proposed to further amend section 12A so as to provide for further condition thatthe person in receipt of the income chargeable to income-tax shall furnish the return of income within the time allowed under section139 of the Act.

These amendments are clarificatory in nature.

These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19and subsequent years.

[Clauses 9 & 10]

Cost of Acquisition of capital assets of entities in case of levy of tax on accreted income under section 115TD

The existing provisions of the section 49 of the Act provides for computation of cost with reference to certain modes ofacquisition of capital asset.

It is proposed to amend said section so as to provide that where the capital gain arises from the transfer of an asset, beingthe asset held by a trust or an institution in respect of which accreted income has been computed, and the tax has been paid thereonin accordance with the provisions of Chapter XII-EB, the cost of acquisition of such asset shall be deemed to be the fair marketvalue of the asset which has been taken into account for computation of accreted income as on the specified date referred to insub-section (2) of section 115TD.

32


This amendment will take effect retrospectively from 1st June, 2016 and will, accordingly, apply in relation to the assessmentyear 2016-17 and subsequent years.

[Clause 25]

Strengthening of PAN quoting mechanism in the TCS regime

Statuary provisions for deduction of tax at source (TDS) at higher rate of 20% or the applicable rate whichever is higher) incase of non-quoting of Permanent Account Number (PAN) is provided under section 206AA of the Act and it exist since April, 2010.PAN acts as a common thread for linking the information in the departmental data base. It may also be noted that the process ofallotment of PAN is made simple and robust. PAN application can be made online and PAN gets allotted in less than a week.

In order to strengthen the PAN mechanism, it is proposed to insert new section 206CC to provide the following:

I. any person paying any sum or amount, on which tax is collectable at source under Chapter XVII BB (hereafter referredto as collectee) shall furnish his Permanent Account Number to the person responsible for collecting such tax (hereafterreferred to as collector), failing which tax shall be collected at the twice the rate mentioned in the relevant section underChapter XVII BB or at the rate of five per cent. whichever is higher.

II. that the declaration filed under sub section (1A) of section 206C shall not be valid unless the person filing the declarationfurnishes his Permanent Account Number in such declaration.

III. that in case any declaration becomes invalid under sub-section (2), the collector shall collect the tax at source inaccordance with the provisions of sub-section (1).

IV. no certificate under sub section (9) of section 206C shall be granted unless it contains the Permanent Account Numberof the applicant.

V. the collector knows about the correct PAN of the collectee it is also proposed to provide for mandatory quoting of PANof the collectee by both the collector and the collectee in all correspondence, bills and vouchers exchanged betweenthem.

VI. that the collectee shall furnish his Permanent Account Number to the collector who shall indicate the same in all itscorrespondence, bills, vouchers and other documents which are sent to collectee.

VII. where the Permanent Account Number provided by the collectee is invalid or it does not belong to the collectee, then itshall be deemed that Permanent Account Number has not been furnished to the collector.

VIII. to exempt the non-resident who does not have permanent establishment in India from the provisions of this proposed

section 206CC of the Act.


Rationalization of deduction under section 80CCG.

Under the existing provisions of section 80CCG, deduction for three consecutive assessment years is allowed upto Rs. 25,000to a resident individual for investment made in listed equity shares or listed units of an equity oriented fund subject to fulfilmentof certain conditions. This deduction was introduced vide Finance Act, 2012. However considering the fact that limited numberof individuals availed this deduction and also to rationalize the multiplicity of deductions available under Chapter VI-A of the Act,it is proposed to phase out this deduction by providing that no deduction under section 80CCG shall be allowed from assessment

year 2018-19. However, an assessee who has claimed deduction under this section for assessment year 2017-18 and earlierassessment years shall be allowed deduction under this section till the assessment year 2019-20 if he is otherwise eligible to claimthe deduction as per the provisions of this section.

This amendment will take effect from the 1st April, 2018 and shall accordingly apply in relation to assessment year 2018-19and subsequent years.

[Clause 34]

33

Restriction on set-off of loss from House property

Section 71 of the Act relates to set-off of loss from one head against income from another. In line with the internationalbest practices it is proposed to insert sub-section (3A) in the said section to provide that set-off of loss under the head "Incomefrom house property" against any other head of income shall be restricted to two lakh rupees for any assessment year. However,the unabsorbed loss shall be allowed to be carried forward for set-off in subsequent years in accordance with the existingprovisions of the Act.


[Clause 31]

Reason to believe to conduct a search, etc. not to be disclosed

Sub-section (1) and (1A) of section 132 provide that where an authority mentioned therein, based on the information in hispossession, has 'reason to believe' or 'reason to suspect' of circumstances referred to in the said sub-sections, he may authorizean authority specified therein to carry out search & seizure.

Similarly, sub-section (1) of section 132A provides that the specified income-tax authority based on 'reason to believe' canauthorise other income-tax authority mentioned therein to requisition from some other officer or authority to deliver books ofaccount, documents or assets of the assessee to the income-tax authority so authorised.

Confidentiality and sensitivity are the hallmarks of proceedings under section 132 and section 132A. However, certain judicialpronouncements have created ambiguity in respect of the disclosure of 'reason to believe' or 'reason to suspect' recorded by theincome-tax authority to conduct a search under section 132 or to make requisition under section 132A. It is therefore proposedto insert an Explanation to sub-section (1) and to sub-section (1A) of section 132 and to sub-section (1) of section 132A to declarethat the 'reason to believe' or 'reason to suspect', as the case may be, shall not be disclosed to any person or any authority or theAppellate Tribunal.

These amendments will take effect retrospectively from the date of enactment of the said provisions viz. to sub-section (1)of section 132 from 1st day of April, 1962 and to sub-section (1A) of section 132 and to sub-section (1) of section 132A from1st day of October, 1975.

[Clauses 50 & 51]

Power of provisional attachment and to make reference to Valuation Officer to authorised officer

Section 132 of the Act provides the power of search and seizure subject to fulfilment of conditions specified therein.

In order to protect the interest of revenue and safeguard recovery in search cases, it is proposed to insert sub-section (9B)and (9C) in the said section, to provide that during the course of a search or seizure or within a period of sixty days from the dateon which the last of the authorisations for search was executed, the authorised officer on being satisfied that for protecting theinterest of revenue it is necessary so to do, may attach provisionally any property belonging to the assessee with the prior approvalof Principal Director General or Director General or Principal Director or Director. It has been proposed that such provisionalattachment shall cease to have effect after the expiry of six months from the date of order of such attachment.

In order to enable correct estimation and quantification of undisclosed income held in the form of investment or property bythe assessee by the Investigation wing of the Department, it is further proposed to insert a new sub-section (9D) in the said sectionto provide that in a case of search, the authorised officer may, for the purpose of estimation of fair market value of a property, makea reference to a Valuation Officer referred to in section 142A, for valuation in the manner provided under that sub-section. It alsoprovides that the Valuation Officer shall furnish the valuation report within sixty days of receipt of such reference.

It is also proposed to amend Explanation 1 to section 132, so as to provide that for the purposes of sub-sections 9A, 9B and9D, with respect to "execution of an authorisation for search" under the provisions of sub-section (2) of section 153B shall apply.

These amendments will take effect from lst April, 2017.[Clause 50]

Rationalisation of the provisions in respect of power to call for information

The existing provisions of section 133 empower certain income-tax authorities to call for information for the purpose of anyinquiry or proceeding under the Act. The second proviso to the said section provides that the power in respect of an inquiry, in a

34

case where no proceeding is pending, shall not be exercised by any income-tax authority below the rank of the Principal Directoror Director or the Principal Commissioner or Commissioner without the prior approval of such authorities.

Considering the requirement of the work profile of the authorities working in the Investigation Directorate, it is proposed toamend the first proviso of the said section and provide that the power in respect of inquiry or proceeding under the Act, as referredto in clause (6) of the said section, may also be exercised by the Joint Director, the Deputy Director and the Assistant Director.

It is further proposed to amend the second proviso of the said section to provide that the Joint Director, the Deputy Directoror the Assistant Director may exercise the powers in respect of such inquiry, without seeking prior approval of higher authorities.

These amendments will take effect from lst April, 2017.[Clause 52]

Extension of the power to survey

The existing provisions of section 133A empower an income-tax authority to enter any place, at which a business or professionis carried on, or at which any books of account or other documents or any part of cash or stock or other valuable article or thingrelating to the business or profession are kept, for the purposes of conducting a survey.

It is proposed to widen the scope of the said section by amending sub-section (1) to include any place, at which an activityfor charitable purpose is carried on.

This amendment will take effect from lst April, 2017.[Clause 53]

Legislative framework to enable centralised issuance of notice and processing of information under section 133C

Section 133C of the Act empowers the prescribed income-tax authority to issue notice calling for information and documentsfor the purpose of verification of information in its possession.

In order to expedite verification and analysis of the information and documents so received, it is proposed to amend section133C to empower the Central Board of Direct Taxes to make a scheme for centralised issuance of notice calling for informationand documents for the purpose of verification of information in its possession, processing of such documents and making theoutcome thereof available to the Assessing Officer for necessary action, if any.


Rationalisation of provisions of the Income Declaration Scheme, 2016 and consequentialamendment to section 153A and 153C

The existing provisions of clause (c) of the section 197 of the Finance Act, 2016 provide that where any income has accrued,arisen or been received or any asset has been acquired out of such income prior to commencement of the Income DeclarationScheme, 2016 (the Scheme), and no declaration in respect of such income is made under the Scheme, then, such income shallbe deemed to have accrued, arisen or received, as the case may be, in the year in which a notice under sub-section (1) of section142 or sub-section (2) of section 143 or section 148 or section 153A or section 153C of the Income-tax Act is issued by theAssessing Officer, and provisions of the said Act shall apply accordingly.

In view of the various representations received from stakeholders citing genuine hardships if the said provision is madeapplicable, it is proposed to omit clause (c) of section 197 of the Finance Act, 2016.

This amendment will take effect retrospectively from lst June, 2016.

However, in order to protect the interest of the revenue in cases where tangible evidence(s) are found during a search orseizure operation (including 132A cases) and the same is represented in the form of undisclosed investment in any asset, it isproposed that section 153A relating to search assessments be amended to provide that notice under the said section can be issuedfor an assessment year or years beyond the sixth assessment year already provided upto the tenth assessment year if—

(i) the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that theincome which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in one year or inaggregate in the relevant four assessment years(falling beyond the sixth year);

35

(ii) such income escaping assessment is represented in the form of asset;

(iii) the income escaping assessment or part thereof relates to such year or years.

It is however proposed that the amended provisions of section 153A shall apply where search under section 132 is initiatedor requisition under section 132A is made on or after the 1st day of April, 2017.

It is also proposed to consequentially amend section 153C to provide a reference to the relevant assessment year or yearsas referred to in section 153A.

These amendments will take effect from lst April, 2017.[Clauses 59, 61, & 150]

Exemption of income of Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund

Under the existing provisions contained in clause (23C) of section 10, exemption is provided in respect of income of certainfunds which, inter-alia, include, the Prime Minister's National Relief Fund.

The Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund, referred at sub-clause (iiihf) of clause (a) ofsub-section (2) of section 80G, which is of the same nature at the level of state or the Union Territory as is the Prime Minister'sNational Relief Fund at the national level, is not exempted under the said clause. In the absence of such exemption, these fundsare required to obtain registration under section 12A of the Act in order to avail exemption of its income under section 11 and 12of the said Act and are required to fulfil certain conditions.

Therefore, it is proposed to amend said clause so as to provide the benefit of exemption to the Chief Minister's Relief Fundor the Lieutenant Governor's Relief Fund also.

This amendment will take effect retrospectively from the 1st April, 1998, the date on which sub-clause (iihf) of clause (a) ofsub-section (2) of section 80G relating to deduction in any sum paid to the Chief Minister's Relief Fund or the Lieutenant Governor'sRelief Fund came into force, and will, accordingly, apply in relation to assessment year 1998-99 and subsequent years.

[Clause 6]

Correct reference to FEMA instead of FERA

Existing sub-clause (ii) of clause 4 of section 10 refers to any income of an individual by way of interest on moneys standingto his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Management Act,1999 (42 of 1999), and the rules made thereunder. The proviso to the said sub-clause refers individual to be a person residentoutside India, as defined in clause (q) of section 2 of Act 46 of 1973, i.e., Foreign Exchange Regulation Act, 1973, (FERA) whichstands repealed and re-enacted as Act 42 of 1999, i.e., the Foreign Exchange Management Act, 1999 (FEMA). The definition ofperson outside India is occurring in clause (w) of FEMA.

With a view to reflect the correct definition of the expression "person resident outside India", it is proposed to amend the saidproviso. The amendment is clarificatory in nature.

This amendment will take effect retrospectively from 1st April, 2013, and will, accordingly, apply in relation to the assessmentyear 2013-14 and subsequent years.

[Clause 6]

J. BENEFIT FOR NPS SUBSCRIBERS

Tax-exemption to partial withdrawal from National Pension System (NPS)

The existing provision of section 10(12A) provides that payment from National Pension System (NPS) trust to an employeeon closer of his account or opting out shall be exempt up to 40% of total amount payable to him.

In order to provide further relief to an employee subscriber of NPS, it is proposed to amend the section 10 so as to provideexemption to partial withdrawal not exceeding 25% of the contribution made by an employee in accordance with the terms andconditions specified under Pension Fund Regulatory and Development Authority Act, 2013 and regulations made there under.


[Clause 6]

36

Rationalisation of deduction under section 80CCD for self-employed individual

The existing provisions of section 80CCD provides that employee or other individuals shall be allowed a deduction for amountdeposited in National Pension System trusts (NPS). The deduction under section 80CCD (1) cannot exceed 10% of salary in caseof an employee or 10% of gross total income in case of other individuals. However, under the provisions of section 80CCD (2) ofthe Act, further deduction to an employee in respect of contribution made by his employer is allowed up to 10% of salary of theemployee. Thus, in case of an employee, the deduction allowed under section 80CCD adds up to 20% of salary whereas in caseof other individuals, the total deduction under section 80CCD is limited to 10% of gross total income.

In order to provide parity between an individual who is an employee and an individual who is self-employed, it is proposedto amend section 80CCD so as to increase the upper limit of ten per cent of gross total income to twenty per cent in case of individualother than employee.

This amendment will take effect from 1st April, 2018 and, will accordingly, apply in relation to assessment year2018-19 and subsequent years.

[Clause 33]

37

CUSTOMS

Note: (a) “Basic Customs Duty” means the customs duty levied under the Customs Act, 1962.

(b) “CVD” means the Additional Duty of Customs levied under sub-section (1) of section 3 of the Customs Tariff Act,

1975.

(c) “SAD” means the Additional Duty of Customs levied under sub-section (5) of section 3 of the Customs Tariff Act,

1975.

(d) “Export duty” means duty of Customs leviable on goods specified in the Second Schedule to the Customs Tariff

Act, 1975.

(e) Clause nos. in square brackets [ ] indicate the relevant clause of the Finance Bill, 2017.

Amendments carried out through the Finance Bill, 2017 come into effect on the date of its enactment unless otherwise

specified.

I. AMENDMENTS IN THE CUSTOMS ACT, 1962:

S.

No.

Amendment Clause of the Finance

Bill, 2017

1. Section 2 is being amended to:

(a) insert clause (3A) to define a beneficial owner as any person on whose behalf the goods are being imported or exported or who exercises effective control over the goods being imported or exported.

(b) include Foreign Post Office and International Courier Terminal in the definition of a Customs Station in clause (13);

(c) omit certain words in clause (13) to align with the proposed omission of Section 82;

(d) provide that the existing definition of exporter in clause (20) includes the beneficial owner;

(e) provide that the existing definition of importer in clause (26) includes the beneficial owner;

(f) insert clause (30B) so as to define passenger name record information;

(g) define Foreign Post Office and International Courier Terminal.

[88]

2. Section 7 is being amended to empower the Board to notify Foreign Post Offices and

International Courier Terminals. [89]

3. Section 17 is being amended to rationalize the requirement of documents for

verification of self assessment. [90]

4. Sub-section (2) of section 27 is being amended so as to keep outside the ambit of

unjust enrichment, the refund of duty paid in excess by the importer before an order

permitting clearance of goods for home consumption is made, where-

(i) such excess payment is evident from the bill of entry in the case of self-

assessed bill of entry or

(ii) the duty actually payable is reflected in the reassessed bill of entry in the

case of reassessment.

[91]

5. Clause (e) of section 28E is being amended so as to substitute the definition of

“Authority” to mean the Authority for Advance Ruling as constituted under section 245-

O of the Income-tax Act, 1961.

[92]

38

6. Section 28F is being amended so as to provide that the Authority for Advance Rulings

constituted under section 245-O of the Income-tax Act shall be the Authority for giving

advance rulings for the purposes of the Customs Act. It further seeks to provide that

the Member of the Indian Revenue Service (Customs and Central Excise), who is

qualified to be a Member of the Board, shall be the revenue Member of the Authority

for the purposes of Customs Act. It also seeks to provide for transferring the pending

applications before the Authority for Advance Rulings (Central Excise, Customs and

Service Tax) to the Authority constituted under section 245-O of the Income-tax Act

from the stage at which such proceedings stood as on the date on which the Finance

Bill, 2017 receives the assent of the President.

[93]

7. Section 28G relating to vacancies not to invalidate proceedings is being omitted. [94]

8. Sub-section (3) of section 28H is being amended so as to increase the application fee

for seeking advance ruling from rupees two thousand five hundred to rupees ten

thousand on the lines of the Income-tax Act. [95]

9. Sub-section (6) of section 28I is being amended so as to provide time of limit of six

months by which Authority shall pronounce its ruling on the lines of the Income-tax

Act. [96]

10. A new section 30A is being introduced so as to make it obligatory on the person-in-

charge of a conveyance that enters India from any place outside India or any other

person as may be specified by the Central Government by notification in the Official

Gazette, to deliver to the proper officer the passenger and crew arrival manifest before

arrival in the case of an aircraft or a vessel and upon arrival in the case of a vehicle;

and passenger name record information of arriving passengers in such form,

containing such particulars, in such manner and within such time as may be

prescribed. The section also intends to provide for imposition of a penalty not

exceeding fifty thousand rupees as may be prescribed, in the case of delay in

delivering the information.

[97]

11. A new section 41A is being introduced so as to make it obligatory on the person-in-

charge of a conveyance that departs from India to a place outside India or any other

person as may be specified by the Central Government by notification in the Official

Gazette, to deliver to the proper officer the passenger and crew departure manifest

and passenger name record information of departing passengers before the

departure of the conveyance in such form, containing such particulars, in such

manner and within such time as may be prescribed. The section also intends to

provide for a penalty not exceeding fifty thousand rupees as may be prescribed in

the case of delay in delivering the information.

[98]

12. Sub-section (3) of section 46 is being substituted so as to make it mandatory to file the

bill of entry before the end of the next day following the day (excluding holidays) on

which the vessel or aircraft or vehicle carrying the goods arrives at a customs station

at which such goods are to be cleared for home consumption or warehousing and to

provide for imposition of such charges for late presentation of the bill of entry as may

be prescribed.

[99]

13. Sub-section (2) of section 47 is being amended so as to provide the manner of

payment of duty and interest thereon in the case of self-assessed bills of entry or, as

the case may be, assessed, reassessed or provisionally assessed bills of entry.

[100]

14. Section 49 is being amended to extend the facility of storage under section 49 to

imported goods entered for warehousing before their removal. [101]

15. Section 69 relating to clearance of warehoused goods for exportation is being

amended to align it with the proposed omission of section 82.

[102]

39

16. Section 82 relating to label or declaration accompanying goods to be treated as entry

is being omitted.

[103]

17. Section 84 is being amended to empower the Board to make regulations to provide for

the form and manner in which an entry may be made in respect of goods imported or

to be exported by post.

[104]

18. Section 127B is being amended so as to insert a new sub-section (5) therein to enable

any person, other than applicant, referred to in sub-section (1) to make an application

to the Settlement Commission.

[105]

19. Sub-section (3) of section 127C is being amended so as to substitute certain words

therein. It further seeks to insert a new sub-section (5A) therein to enable the

Settlement Commission to amend the order passed by it under sub-section (5), to

rectify any error apparent on the face of record.

[106]

20. Section 157 is being amended so as to empower Board to make regulations for

specifying the form, particulars, manner and time of providing the passenger and crew

manifest for arrival and departure and passenger name record information and penalty

in the case of delay in delivering the information.

[107]

II. AMENDMENT IN THE CUSTOMS TARIFF ACT, 1975

S.

No.


Bill, 2017

1. Clause (c) of sub-section (3) of section 9 is being substituted so as to withdraw the

exemption to three categories of non-actionable subsidies specified therein from the

scope of anti-subsidy investigations.

[108]

III. AMENDMENT IN THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975

S.

No.


Bill, 2017

A. Amendments not affecting rates of duty

1. To:

(i) Delete tariff items 1302 32 10 and 1302 32 20 and entries relating thereto

and create new tariff items 1106 10 10 and 1106 10 90, in relation to Guar

meal and its products to harmonize the Customs Tariff with HS

Nomenclature.

(ii) Create new tariff item 1511 90 30 for Refined bleached deodorised palm

stearin” to harmonize Customs Tariff in accordance with WCO classification

decision.

(iii) Substitute tariff items 3823 11 11 to 3823 11 90 and entries relating thereto

with tariff item 3823 11 00.

(iv) Substitute tariff items 3904 10 10 to 3904 22 90 with tariff items 3904 10 10

to 3904 22 00 in relation to the PVC Resin.

[109(b)]

2. To amend Chapter Note (4) of Chapter 98 so as to remove the non-applicability of

headings 9803 and 9804 to goods imported through courier service. Also, to amend

heading 9804 so as to extend the classification of personal imports by courier, sea, or

land under this heading.

[109(b)]

40

B. Amendments affecting rates of BCD [Clause 109(a) of the Finance Bill, 2017] Rate of Duty

Commodity From To

1. Cashew nut, roasted, salted or roasted and salted 30% 45%

2. RO membrane element for household type filters 7.5% 10%

The amendments involving increase in the duty rates will come into effect immediately owing to a declaration under the

Provisional Collection of Taxes Act, 1931.

IV. AMENDMENT IN THE SECOND SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975 [Clause 110 of the Finance

Bill, 2017]

S.

No.

Amendment

Amendments affecting rates of Export duty Rate of Duty

From To

Ores and concentrates

1. Other aluminium ores and concentrates Nil 30%

The above amendment involving increase in the duty rate will come into effect immediately owing to a declaration under the


V. OTHER PROPOSALS INVOLVING CHANGES IN BCD, CVD, SAD AND EXPORT DUTY RATES

S.

No.

Commodity BCD/Excise/CV duty/SAD/Export

Duty

A. Ores and Concentrates From To

1. Other aluminium ores, including laterite Export Duty - Nil Export Duty – 15%

B. Mineral fuels and Mineral oils

2. Liquefied Natural Gas BCD – 5% BCD – 2.5%

C. Chemicals & Petrochemicals

3. o-Xylene BCD – 2.5% BCD – Nil

4. Medium Quality Terephthalic Acid (MTA) & Qualified Terephthalic Acid

(QTA)

BCD – 7.5% BCD – 5%

5. 2-Ethyl Anthraquinone [29146990] for use in manufacture of hydrogen

peroxide, subject to actual user condition

BCD – 7.5% BCD – 2.5%

6. Clay 2 Powder (Alumax) for use in ceramic substrate for catalytic convertors,

subject to actual user condition

BCD – 7.5% BCD – 5%

7. Vinyl Polyethylene Glycol (VPEG) for use in manufacture of Poly

Carboxylate Ether, subject to actual user condition

BCD – 10% BCD – 7.5%

D. Textiles

8. Nylon mono filament yarn for use in monofilament long line system for Tuna

fishing, subject to certain specified conditions

BCD – 7.5% BCD – 5%

41

E. Finished Leather, Footwear and Other Leather Products

9. Vegetable tanning extracts, namely Wattle extract and Myrobalan fruit

extract

BCD – 7.5% BCD – 2.5%

10. Limit of duty free import of eligible items for manufacture of leather footwear

or synthetic footwear or other leather products for use in the manufacture of

said goods for export

3% of FOB value

of said goods

exported during

the preceding

financial year

5% of FOB value

of said goods

exported during

the preceding

financial year

F. Metals

11. Co-polymer coated MS tapes / stainless steel tapes for manufacture of

telecommunication grade optical fibres or optical fibre cables, subject to

actual user condition

BCD – Nil BCD – 10%

12. Nickel BCD – 2.5% BCD – Nil

13. MgO coated cold rolled steel coils [7225 19 90] for use in manufacture of

CRGO steel, subject to actual user condition

BCD – 10% BCD – 5%

14. Hot Rolled Coils [7208], when imported for use in manufacture of welded

tubes and pipes falling under heading 7305 or 7306, subject to actual user

condition

BCD – 12.5% BCD – 10%

G. Capital Goods

15. Ball screws, linear motion guides and CNC systems for use in manufacture

of all CNC machine tools, subject to actual user condition

Ball screws and

liner motion

guides

BCD – 7.5%

CNC systems

BCD – 10%

BCD – 2.5%

H. Electronics / Hardware

16. Populated Printed Circuit Boards (PCBs) for the manufacture of mobile phones, subject to actual user condition

SAD – Nil SAD – 2%

I. Renewable Energy

17. Solar tempered glass for use in the manufacture of solar

cells/panels/modules subject to actual user condition

BCD – 5% BCD – Nil

18. Parts/raw materials for manufacture of solar tempered glass for use in solar

photovoltaic cells/modules, solar power generating equipment or systems, flat plate solar collector, solar photovoltaic module and panel for water pumping and other applications, subject to actual user condition

CVD – 12.5% CVD – 6%

19. Resin and catalyst for manufacture of cast components for Wind Operated Energy Generators [WOEG], subject to actual user condition

BCD – 7.5%

CVD – 12.5%

SAD – 4%

BCD – 5%

CVD – Nil

SAD – Nil

20. All items of machinery required for fuel cell based power generating systems

to be set up in the country or for demonstration purposes, subject to certain specified conditions

BCD – 10% /

7.5%

CVD – 12.5%

BCD – 5%

CVD – 6%

21. All items of machinery required for balance of systems operating on biogas/ bio-methane/ by-product hydrogen, subject to certain specified conditions

BCD – 10% / 7.5%

CVD – 12.5%

BCD – 5%

CVD – 6%

42

J. Miscellaneous

22. Membrane Sheet and Tricot / Spacer for use in manufacture of RO

membrane element for household type filters, subject to actual user

condition

CVD – 12.5% CVD – 6%

23. All parts for manufacture of LED lights or fixtures, including LED lamps,


Applicable BCD,

CVD

BCD – 5%

CVD – 6%

24. All inputs for use in the manufacture of LED Driver and MCPCB for LED

lights or fixtures, including LED lamps, subject to actual user condition

Applicable BCD 5%

25. De-minimis customs duties exemption limit for goods imported through

parcels, packets and letters

Duty payable not

exceeding

Rs.100 per

consignment

CIF value not

exceeding

Rs.1000 per

consignment

26. Miniaturized POS card reader for m-POS (not including mobile phones, or

tablet computers), micro ATM as per standards version 1.5.1, Finger Print

Reader / Scanner or Iris Scanner

Applicable BCD,

CVD SAD

BCD – Nil

CVD – Nil

SAD – Nil

27. Parts and components for manufacture of miniaturized POS card reader for

m-POS (not including mobile phones, or tablet computers), micro ATM as

per standards version 1.5.1, Finger Print Reader / Scanner or Iris Scanner,


Applicable BCD,

CVD SAD

BCD – Nil

CVD – Nil

SAD – Nil

28 Silver medallion, silver coins having silver content not below 99.9%, semi-

manufactured form of silver and articles of silver

CVD - Nil CVD – 12.5%

29 Goods imported for petroleum and coal bed methane operations by availing of the benefit of notification No.12/2012-

Customs, dated 17.03.2012 [S. No.357A] no longer required for the said purpose are being allowed to be disposed of

on payment of applicable customs duties or excise duty, on the depreciated value calculated as per straight line

method (subject to depreciated value not being less than 30% of the original value) of such goods.

43

EXCISE

Note: “Basic Excise Duty” means the excise duty set forth in the First Schedule to the Central Excise Tariff Act, 1985.

I. AMENDMENTS IN THE CENTRAL EXCISE ACT, 1944:

S.

No.


Bill, 2017

1. Clause (e) of section 23A is being amended so as to substitute the definition of

“Authority” to mean the Authority for Advance Ruling as constituted under section

245-O of the Income-tax Act, 1961.

[111]

2. Section 23B relating to vacancies not to invalidate proceedings is being omitted. [112]

3. Sub-section (3) of section 23C is being amended so as to increase the application

fee for seeking advance ruling from rupees two thousand five hundred to rupees ten

thousand on the lines of the Income-tax Act.

[113]

4. Sub-section (6) of section 23D is being amended so as to provide time of limit of six

months by which Authority shall pronounce its ruling on the lines of the Income-tax Act. [114]

5. A new section 23-I is being inserted so as to provide for transferring the pending





[115]

6. Section 32E is being amended so as to insert a new sub-section (5) therein to enable

any person, other than assessee, referred to in sub-section (1) to make an

application to the Settlement Commission.

[116]

7. Sub-section (3) of section 32F is being amended so as to substitute certain words

therein. It further seeks to insert a new sub-section (5A) therein to enable the

Settlement Commission to amend the order passed by it under sub-section (5), to

rectify any error apparent on the face of record.

[117]

II. AMENDMENTS IN THE FIRST SCHEDULE TO THE CENTRAL EXCISE TARIFF ACT, 1985 [Clause 118 of the

Finance Bill, 2017]

S.

No.

Amendment

Amendments involving change in the rate of Basic Excise

duty Rate of Duty

Commodity From To

A. Tobacco and Tobacco Products

1. Cigar and cheroots 12.5% or Rs.3755 per thousand, whichever

is higher

12.5% or Rs.4006 per thousand, whichever

is higher

2. Cigarillos 12.5% or Rs.3755 per thousand, whichever

is higher

12.5% or Rs.4006 per thousand, whichever

is higher

3. Cigarettes of tobacco substitutes Rs.3755 per thousand

Rs.4006 per thousand

44

4. Cigarillos of tobacco substitutes 12.5% or Rs.3755 per

thousand, whichever

is higher

12.5% or Rs.4006 per

thousand, whichever

is higher

5. Others of tobacco substitutes 12.5% or Rs.3755 per

thousand, whichever

is higher

12.5% or Rs.4006 per

thousand, whichever

is higher

The amendments involving change in the duty rates will come into effect immediately owing to a declaration under the


III. OTHER PROPOSALS INVOLVING CHANGES IN EXCISE DUTY RATES:

S.

No. Commodity From To

Amendments involving change in the rate of Additional Excise duty under Finance Act, 2005

B. Pan Masala

6. Pan Masala 6% 9%

C. Tobacco and Tobacco Products

7. Unmanufactured tobacco 4.2% 8.3%

Amendments involving change in the rate of Basic Excise duty

8. Paper rolled biris – handmade Rs.21 per thousand Rs.28 per thousand

9. Paper rolled biris – machine made Rs.21 per thousand Rs.78 per thousand

D. Renewable Energy

10. Solar tempered glass for use in solar photovoltaic cells/modules, solar power generating equipment or systems, flat plate solar collector, solar photovoltaic module and panel for water pumping and other applications, subject to actual user condition

Nil 6%

11. Parts/raw materials for manufacture of solar tempered glass for use in solar photovoltaic cells/modules, solar power generating equipment or systems, flat plate solar collector, solar photovoltaic module and panel for water pumping and other applications, subject to actual user condition

12.5% 6%

12. Resin and catalyst for manufacture of cast components for Wind Operated Energy Generators [WOEG], subject to actual user condition

12.5% Nil

13. All items of machinery required for fuel cell based power generating systems to be set up in the country or for demonstration purposes

12.5% 6%

14. All items of machinery required for balance of systems operating on biogas/ bio-methane/ by-product hydrogen

12.5% 6%

E. Miscellaneous

15 Membrane Sheet and Tricot / Spacer for use in manufacture of RO membrane element for household type filters, subject to actual user condition

12.5% 6%

45

17. All parts for manufacture of LED lights or fixtures, including LED lamps, subject to actual user condition

Applicable duty 6%

18. Miniaturized POS card reader for m-POS (not including mobile phones, or tablet computers), micro ATM as per standards version 1.5.1, Finger Print Reader / Scanner or Iris Scanner

Applicable duty Nil

19. Parts and components for manufacture of miniaturized POS card reader for m-POS (not including mobile phones, or tablet computers), micro ATM as per standards version 1.5.1, Finger Print Reader / Scanner or Iris Scanner, subject to actual user condition

Applicable duty Nil

20. a. Waste and scrap of precious metals or metals clad with precious metals arising in course of manufacture of goods falling in Chapter 71

b. Strips, wires, sheets, plates and foils of silver

c. Articles of silver jewellery, other than those studded with diamond, ruby, emerald or sapphire

d. Silver coin of purity 99.9% and above, bearing a brand name when manufactured from silver on which appropriate duty of customs or excise has been paid

Nil

Nil, subject to the condition that no

credit of duty paid on inputs or input

services or capital goods has been

availed by manufacturer of such

goods

IV. AMENDMENTS IN THE CENTRAL EXCISE RULES, 2002 AND THE CENVAT CREDIT RULES, 2004

S.

No.

Amendment

1. Sub-rule (2) is being inserted in rule 21 of Central Excise Rules, 2002 so as to provide for a time limit of three months [further extendable by 6 months] for granting remission of duty under the said rule 21 read with section 5 of the Central Excise Act, 1944.

2. Sub-rule (4) is being inserted in rule 10 of CENVAT Credit Rules, 2004 so as to provide for a time limit of three months [further extendable by 6 months] for approval of requests regarding transfer of CENVAT credit on shifting, sale, merger, etc. of the factory.

V. RETROSPECTIVE AMENDMENT

S.

No.

Amendment Clause of the Finance Bill, 2016

1. To retrospectively [that is with effect from 01.01.2017] specify a tariff rate of excise duty of 12.5% [as against present tariff rate of 27%] on motor vehicles for transport of more than 13 persons falling under tariff items 8702 90 21 to 8702 90 29 of the First Schedule to the Central Excise Tariff Act, 1985.

[119]

VI. AMENDMENTS IN THE SEVENTH SCHEDULE TO THE FINANCE ACT, 2005

[Clause 146 of the Finance Bill, 2017]

S.

No.

Amendment

Amendments involving change in the rate of Additional Excise duty Rate of duty

Commodity From To

A. Tobacco and Tobacco Products

1. Non-filter Cigarettes of length not exceeding 65mm Rs.215 per thousand

Rs.311 per thousand

46

2. Non-filter Cigarettes of length exceeding 65mm but not exceeding 70mm Rs.370 per

thousand

Rs.541 per

thousand

3. Filter Cigarettes of length not exceeding 65mm Rs.215 per

thousand

Rs.311 per

thousand

4. Filter Cigarettes of length exceeding 65mm but not exceeding 70mm Rs.260 per

thousand

Rs.386 per

thousand

5. Filter Cigarettes of length exceeding 70mm but not exceeding 75mm Rs.370 per

thousand

Rs.541 per

thousand

6. Other Cigarettes Rs.560 per

thousand

Rs.811 per

thousand

7. Chewing tobacco (including filter khaini) 10% 12%

8. Jarda scented tobacco 10% 12%

9. Pan Masala containing Tobacco (Gutkha) 10% 12%

The amendments involving change in the duty rates will come into effect immediately owing to a declaration under the


47

SERVICE TAX

A. Legislative changes Existing Proposed

1. The Negative List entry in respect of “services by way of carrying out any process

amounting to manufacture or production of goods excluding alcoholic liquor for

human consumption”, is proposed to be omitted. However, the same entry is

being placed in exemption notification No. 25/2012-Service Tax dated 20th June,

2012. Consequently, the definition of ‘process amounting to manufacture’ [clause

(40) section 65B] is also proposed to be omitted from the Finance Act, 1994 and

is being incorporated in the general exemption notification. (Clauses 120 & 121 of

the Bill refers)

Nil Nil

2. Service tax exemption to taxable services provided or agreed to be provided by the

Army, Naval and Air Force Group Insurance Funds by way of life insurance to

members of the Army, Navy and Air Force under the Group Insurance Schemes of

the Central Government, is being made effective from 10th day of September, 2004,

the date when services of life insurance became taxable (Clause 127 of the Bill

refers).

14% Nil

3. Benefit of the exemption notification No. 41/2016-ST dated 22.09.2016 is being

extended with effect from 1.6.2007, the date when the services of renting of

immovable property became taxable. Notification No.41/2016-ST dated 22.09.2016,

exempts one time upfront amount (called as premium, salami, cost, price,

development charges or by whatever name) payable for grant of long-term lease of

industrial plots (30 years or more) by State Government industrial development

corporations/undertakings to industrial units from Service Tax (Clause 127 of the Bill

refers).

14% Nil

4. Rule 2 A of Service Tax (Determination of Value) Rules, 2006 is being amended with

effect from 01.07.2010 so as to make it clear that value of service portion in execution

of works contract involving transfer of goods and land or undivided share of land, as

the case may be, shall not include value of property in such land or undivided share

of land (Clause 128 of the Bill refers).

4.2% 4.2%

B. Other Legislative Changes regarding Authority for Advance Ruling Clause of Finance

Bill, 2017

5. Clause (d) of section 96A is being amended so as to substitute the definition of

“Authority” to mean the Authority for Advance Ruling as constituted under section 28E

of the Customs Act, 1962.

[122]

6. Section 96B relating to vacancies not to invalidate proceedings is being omitted. [123]

7. Sub-section (3) of section 96C is being amended so as to increase the application fee

for seeking advance ruling from rupees two thousand five hundred to rupees ten

thousand on the lines of the Central Excise Act.

[124]

8. Sub-section (6) of section 96D is being amended so as to provide time limit of six months

by which Authority shall pronounce its ruling on the lines of the Central Excise Act. [125]

9. A new section 96HA is being inserted so as to provide for transferring the pending





[126]

48

C. New Exemptions

1. Services provided or agreed to be provided by the Army, Naval and Air Force Group

Insurance Funds by way of life insurance to members of the Army, Navy and Air

Force under the Group Insurance Schemes of the Central Government is being

exempted from service tax from 2nd February, 2017.

14% Nil

2. The exemption vide S. No. 9B of notification No. 25/2012-ST dated 20.06.2012, is

being amended so as to omit the word “residential” appearing in the notification. The

exemption remains the same in all other respects. S. No. 9B of notification No.

25/2012-ST exempts services provided by Indian Institutes of Management (IIMs) by

way of two year full time residential Post Graduate Programmes (PGP) in

Management for the Post Graduate Diploma in Management (PGDM), to which

admissions are made on the basis of the Common Admission Test (CAT), conducted

by IIM.

14% Nil

3. Under the Regional Connectivity Scheme (RCS), exemption from service tax is being

provided in respect of the amount of viability gap funding (VGF) payable to the

selected airline operator for the services of transport of passengers, with or without

accompanied belongings, by air, embarking from or terminating in a Regional

Connectivity Scheme (RCS) airport, for a period of one year from the date of

commencement of operations of the Regional Connectivity Scheme (RCS) airport as

notified by Ministry of Civil Aviation.

14% Nil

D. Rationalisation measure

1. Explanation-I (e) for the purpose of sub-rule (3) and (3A) of Rule 6 of Cenvat Credit Rules, 2004 is being amended

so as to exclude banks and financial institutions including non-banking financial companies engaged in providing

services by way of extending deposits, loans or advances from its ambit. It has been provided in the Cenvat Credit

Rules, 2004 that value for the purpose of reversal of common input tax credit on inputs and input services used in

providing taxable services and exempted services, shall not include the value of service by way of extending

deposits, loans or advances against consideration in the form of interest or discount.

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