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Articles, Domestic Tax Policy, Income Tax

Relief to certain charitable institutions or funds in respect of certain dividends

Chapter XVIII- Sec 236A

Eligibility for Relief – Sec 236A(1)

  • Where 75% of the share capital of any company is
  • throughout the previous year
  • beneficially held by an charitable institution which is exempt u/s 11,
  • credit shall be given to the institution or fund against the tax, if any, payable by it,
  • of a sum calculated u/ss (2),
  • in respect of its income from dividends (other than dividends on preference shares) and
  • where the amount of credit so calculated exceeds the tax, if any, payable by the said institution or fund, the excess shall be refunded.

Quantum of tax credit – Sec 236A(2)

Tax credit = Tax payable by Co* Dividends received by trust/ Total dividends distributed by Co

Permissible Modes of Investment by a Charitable Trust – Sec 11(5) read with Rule 17C

(i) investment in savings certificates as defined in clause (c) of section 2 of the Government Savings Certificates Act, 1959 (46 of 1959), and any other securities or certificates issued by the Central Government under the Small Savings Schemes of that Government;

(ii) deposit in any account with the Post Office Savings Bank;

(iii) deposit in any account with a scheduled bank or a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank).

(iv) investment in units of the Unit Trust of India

(v) investment in any security for money created and issued by the Central Government or a State Government;

(vi) investment in debentures issued by, or on behalf of, any company or corporation both the principal whereof and the interest whereon are fully and unconditionally guaranteed by the Central Government or by a State Government;

(vii) investment or deposit in any public sector company:

Provided that where an investment or deposit in any public sector company has been made and such public sector company ceases to be a public sector company,—

(A) such investment made in the shares of such company shall be deemed to be an investment made under this clause for a period of three years from the date on which such public sector company ceases to be a public sector company;

(B) such other investment or deposit shall be deemed to be an investment or deposit made under this clause for the period up to the date on which such investment or deposit becomes repayable by such company;

(viii) deposits with or investment in any bonds issued by a financial corporation which is engaged in providing long-term finance for industrial development in India and which is eligible for deduction u/s 36(1)(viii);

(ix) deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes and which is eligible for deduction u/s 36(1)(viii)

(ixa) deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for urban infrastructure in India.
(x) investment in immovable property.
Explanation.—”Immovable property” does not include any machinery or plant (other than machinery or plant installed in a building for the convenient occupation of the building) even though attached to, or permanently fastened to, anything attached to the earth;
(xi) deposits with the Industrial Development Bank of India

(xii)        any other form or mode of investment or deposit as may be prescribed in Rule 17C:

(i)   investment in the units issued under any scheme of the mutual fund referred u/s 10(23D)
(ii)   any transfer of deposits to the Public Account of India
(iii)   deposits made with an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both;
(iv)   investment by way of acquiring equity shares of a depository
(v)   investment made by a recognised stock exchange in the equity share capital of a company:

(A)    which is engaged in dealing with securities or mainly associated with the securities market;

(B)    whose main object is to acquire the membership of another recognised stock exchange for the prescribed purpose and

(C)    in which at least fifty-one per cent of equity shares are held by the investor and the balance equity shares are held by members of such investor;]

(vi)         investment by way of acquiring equity shares of an incubatee by an incubator.

(vii)        investment by way of acquiring shares of National Skill Development Corporation;]

(viii)       investment in debt instruments issued by any infrastructure Finance Company registered with the Reserve Bank of India

(ix)         investment in “Stock Certificate” as defined in clause (c) of paragraph 2 of the Sovereign Gold Bonds Scheme, 2015

Articles, Income Tax, E-Assessments and Compliance

Assessment of Firms

Chapter XVI
Definition of Firm- Sec 2(23): firm” shall have the meaning assigned to it in:
– the Indian Partnership Act, 1932 (9 of 1932), and shall include
– a limited liability partnership as defined in the Limited Liability Partnership Act, 2008 (6 of 2009);
Assessment as a Firm – Sec 184
(1) A firm shall be assessed as a firm for the purposes of this Act, if—
(i) the partnership is evidenced by an instrument; and
(ii) the individual shares of the partners are specified in that instrument.
(2) Where a firm is assessed as such for any assessment year, it shall be assessed in the same capacity for every subsequent year if there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the assessment as a firm was first sought.
Disallowance of interest, remuneration etc – Sec 184(5):
– Where, in respect of any assessment year, there is a failure as is mentioned in Sec 144,
– the firm shall be so assessed that
– no deduction by way of any payment of interest, salary, bonus, commission or remuneration, by whatever name called, made by such firm to any partner of such firm shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession” and
– such interest, salary, bonus, commission or remuneration shall not be chargeable to income-tax u/s 28(v) for the respective partner.
Assessment when section 184 not complied with- Sec 185
– Where a firm does not comply with the provisions of Sec 184 for any assessment year,
– the firm shall be so assessed that
– no deduction by way of any payment of interest, salary, bonus, commission or remuneration, by whatever name called, made by such firm to any partner of such firm shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession” and
– such interest, salary, bonus, commission or remuneration shall not be chargeable to income-tax u/s 28(v) for the respective partner.

Change in constitution of a firm – Sec 187
(1) Where at the time of making an assessment u/s 143 or 144 it is found that a change has occurred in the constitution of a firm – the assessment shall be made on the firm as constituted at the time of making the assessment.
(2) Change in the constitution of the firm means:
(a) if one or more of the partners cease to be partners or one or more new partners are admitted, in such circumstances that one or more of the persons who were partners of the firm before the change continue as partner or partners after the change ; or
(b) where all the partners continue with a change in their respective shares or in the shares of some of them :
Provided that nothing contained in clause (a) shall apply to a case where the firm is dissolved on the death of any of its partners.
Succession of one firm by another firm – Sec 188
– Where a firm carrying on a business or profession is succeeded by another firm, and
– the case is not one covered u/s 187, separate assessments shall be made on the predecessor firm and the successor firm in accordance with the provisions of Sec 170.
Joint and several liability of partners for tax payable by firm – Sec 188A
– Every person who was, during the previous year, a partner of a firm, and the legal representative of any such person who is deceased,
– shall be jointly and severally liable along with the firm
– for the amount of tax, penalty or other sum payable by the firm, and
– all the provisions of this Act, so far as may be, shall apply to the assessment of such tax or imposition or levy of such penalty or other sum.
Firm dissolved or business discontinued – Sec 189
(1)Assessment:
– In the case of dissolution or discontinuance, the Assessing Officer shall make an assessment of the total income of the firm as if no such discontinuance or dissolution had taken place, and
– all the provisions of this Act, including the provisions relating to the levy of a penalty or any other sum chargeable under any provision of this Act, shall apply, so far as may be, to such assessment.
(2) Levy of Penalty:
– Where the Assessing Officer or the Commissioner (Appeals) in the course of any proceeding under this Act is satisfied that
– the firm was guilty of any of the acts specified in Chapter XXI (imposition of penalties)
– he may impose or direct the imposition of a penalty in accordance with the provisions of that Chapter.
(3) Joint liability:
– Every person who was at the time of such discontinuance or dissolution a partner of the firm, and the legal representative of any such person who is deceased,
– shall be jointly and severally liable for
– the amount of tax, penalty or other sum payable, and all the provisions of this Act, so far as may be, shall apply to any such assessment or imposition of penalty or other sum.
(4) Dissolution after commencement of assessment:
– Where such discontinuance or dissolution takes place after any proceedings in respect of an assessment year have commenced,
– the proceedings may be continued against the person referred to in ss(3) from
– the stage at which the proceedings stood at the time of such discontinuance or dissolution, and all the provisions of this Act shall, so far as may be, apply accordingly.
(5) Nothing in this section shall affect the provisions of Sec 159(6) i.e assessment in the case of legal representatives.
Liability of partners of limited liability partnership in liquidation – Sec 167C
– Notwithstanding anything contained in the Limited Liability Partnership Act, 2008 (6 of 2009),
– where any tax due from a LLP or from any other person in respect of any income of any previous year during which such other person was a limited liability partnership
– cannot be recovered, in a such case,
– every person who was a partner of the limited liability partnership at any time during the relevant previous year,
– shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the limited liability partnership.
Note: For the purposes of this section, the expression “tax due” includes penalty, interest or any other sum payable under the Act.

Articles, International Tax, Global Tax Policy

Special provisions relating to foreign company said to be resident in India

Chapter XII-BC – Sec 115JH
1) Foreign company said to be resident in India.
– Where a foreign company is said to be resident in India in any previous year and
– such foreign company has not been resident in India in any of the previous years preceding the said previous year, then,
– notwithstanding anything contained in this Act and subject to the conditions as may be notified by the Central Government in this behalf,
– the provisions of this Act relating to the computation of total income, treatment of unabsorbed depreciation, set off or carry forward and set off of losses, collection and recovery and special provisions relating to avoidance of tax
– shall apply with such exceptions, modifications and adaptations as may be specified in that notification for the said previous year:

Note: Where the determination regarding foreign company to be resident in India has been made in the assessment proceedings relevant to any previous year, then, the provisions of this sub-section shall also apply in respect of any other previous year, succeeding such previous year, if the foreign company is resident in India in that previous year and the previous year ends on or before the date on which such assessment proceeding is completed.

2) Withdrawal of benefits: Where, in a previous year, any benefit, exemption or relief has been claimed and granted to the foreign company in accordance with the provisions of ss(1) and, subsequently, there is failure to comply with any of the conditions specified in the notification then:
– such benefit, exemption or relief shall be deemed to have been wrongly allowed
– the Assessing Officer may, re-compute the total income of the assessee for the said previous year and make the necessary amendment as if the exceptions, modifications and adaptations referred to in ss(1) did not apply; and
– the provisions of Sec 154 shall, so far as may be, apply thereto and the period of four years specified in Sec 154(7) shall be from the end of the previous year in which the failure to comply with the condition referred to in ss (1) takes place

3) Every notification issued under this section shall be laid before each House of Parliament.

Articles, Corporate Restructuring, Transactions

Special provisions relating to Conversion of an Indian Branch of a Foreign Bank into Subsidiary

Chapter XII-BB – Sec 115JG
1) Conversion of an Indian branch of foreign company into subsidiary Indian company
– Where a foreign company is engaged in the business of banking in India through its branch situate in India and
– such branch is converted into a subsidiary company thereof, being an Indian company in accordance with the scheme framed by the Reserve Bank of India, then,
– notwithstanding anything contained in the Act and subject to the conditions as may be notified by the Central Government in this behalf,—
(i) the capital gains arising from such conversion shall not be chargeable to tax
(ii) the provisions of this Act relating to treatment of unabsorbed depreciation, set off or carry forward and set off of losses, tax credit in respect of tax paid on deemed income relating to certain companies and the computation of income in the case of the foreign company and Indian subsidiary company shall apply with such exceptions, modifications and adaptations as may be specified in that notification.
2) Withdrawal of benefits:
In case of failure to comply with any of the conditions specified in the scheme or in the notification issued u/ss (1), all the provisions of this Act shall apply to the foreign company and the said Indian subsidiary company without any benefit, exemption or relief u/ss (1)

3) Rectification:
Where, in a previous year, any benefit, exemption or relief has been claimed and granted to the foreign company or the Indian subsidiary in accordance with the provisions of ss(1) and, subsequently, there is failure to comply with any of the conditions specified in the notification then:
– such benefit, exemption or relief shall be deemed to have been wrongly allowed
– the Assessing Officer may, re-compute the total income of the assessee for the said previous year and make the necessary amendment as if the exceptions, modifications and adaptations referred to in ss(1) did not apply; and
– the provisions of Sec 154 shall, so far as may be, apply thereto and the period of four years specified in Sec 154(7) shall be from the end of the previous year in which the failure to comply with the condition referred to in ss (1) takes place

4) Every notification issued under this section shall be laid before each House of Parliament.

Tax Advisory and Litigation, Articles, Income Tax

Special provisions relating to tax on accreted income of certain trusts and institutions

Special provisions relating to tax on accreted income of certain trusts and institutions

Chapter – XII EB

 

Sec 115TD- Tax on Accreted Income

  1. Situation and consequence:Where in any previous year, a trust or institution registered u/s 12AA has:
  • Conversion:converted into any form which is not eligible for grant of registration u/s 12AA
  • Merger:merged with any entity other than an entity which is a trust or institution having objects similar to it and registered u/s 12AA
  • Dissolution:failed to transfer upon dissolution all its assets to any entity registered u/s 12AA or to any entity referred to in Sec 10(23C) (iv)/(v)/(vi)/(via) within a period of 12 months from the end of the month in which the dissolution takes place.

 

Note:

  • date of conversion” means

 

Consequence:

 

 

Additional income tax = 30% of Accreted Income

 

  1. Accreted Income:

 

 

Accreted Income = Fair market value of total assets (-) Total liabilities

 

The following asset and liability, if any, related to such asset shall be ignored:

 

–          any asset which is directly acquired out of agricultural income u/s 10(1)

–          any asset acquired during the period beginning from the date of establishment till the date of registration u/s 12AA, if no benefit u/s 11 and 12 were allowed during the said period.

 

Where due to the first proviso u/s 12A(2), the benefit of sec 11 and 12 have been allowed prior to the date of registration u/s 12AA is effective, then, for the purposes of this clause, the registration shall be deemed to have become effective from the first day of the earliest previous year for which the benefit u/s 12AA was available.

 

–          Further, in the case of dissolution, assets and liabilities, if any, related to such asset, which have been transferred to any other trust or institution registered under section 12AA orto any entity referred to in Sec 10(23C) (iv)/(v)/(vi)/(via), within the period specified in the said clause, shall be ignored.

Note:

  • Value shall be determined in accordance with prescribed methods as at the specified date

Specified date means date of conversion or merger or dissolution as the case may be

 

3 . Deemed violation on conversion:

A trust or an institution shall be deemed to have been converted into any form not eligible for registration u/s 12AA in a previous year, if:

  • the registration granted to it u/s 12AA has been cancelled; or
–          it has adopted or undertaken modification of its objects which do not conform to the conditions of registration and it,—

 

(a) has not applied for fresh registration u/s 12AA in the said previous year; or
(b) has filed application for fresh registration u/s 12AA but the said application has been rejected.

 

4 . Payment irrespective of regular income tax due:

 

Additional tax on accreted income is payable notwithstanding that no income tax is payable by a trust or the institution on its total income computed in accordance with the provisions of this Act.

 

 

5 . Due date for payment of tax on Accreted Income:

The principal officer or the trustee and the trust or the institution shall also be liable to pay the tax on accreted income within 14 days from:

Situation Due date
Cancellation of registration 14 days from the date on which:

–          the period for filing appeal u/s 253 against the order cancelling the registration expires and no appeal has been filed by the trust or the institution; or

–          the order in any appeal, confirming the cancellation of the registration, is received by the trust or institution

Where the entity has adopted or undertaken modification of its objects which do not conform to the conditions of registration and:

 

Ithas not applied for fresh registration u/s 12AA in the said previous year

 

 

 

 

 

 

 

 

14 days from the end of the previous year

It has filed application for fresh registration u/s but the said application has been rejected. 14 days from the date on which:

–          the period for filing appeal under section 253 against the order rejecting the application expires and no appeal has been filed by the trust or the institution or

–          the order in any appeal, confirming the cancellation of the application, is received by the trust or institution,

 

Merger 14 days from the date of merger
Dissolution and failure to transfer all assets 14 days from the date on which the period of 12 months for transfer expires

 

  1. No credit for tax paid: The tax on the accreted income shall be treated as the final payment of tax in respect of the said income and no further credit therefor shall be claimed by the trust or the institution or by any other person in respect of the amount of tax so paid.

 

  1. No deductions allowed: No deduction under any other provision of this Act shall be allowed in respect of the accreted income which has been charged under this section

 

Interest payable for non-payment of tax – Sec 115TE

Where there is a failure to pay the whole or any part of the tax on the accreted income within the time allowed u/s 115TD(5), simple interest @ 1% for every month or part thereof on the amount of such tax for the period beginning on the date immediately after the last date on which such tax was payable and ending with the date on which the tax is actually paid shall be levied.

 

Trust or institution is deemed to be assessee in default – Sec 115TF

(1) Failure to pay tax on accreted income:Where there is a failure to pay tax on accreted income in accordance with the provisions of sec 115TD, then, the Principal Officer or the entity shall be deemed to be an assessee in default in respect of the amount of tax payable by him or it and all the provisions of this Act for the collection and recovery of income-tax shall apply.

(2) In case of dissolution: Notwithstanding anything contained in sub-section (1), in a case where the tax on accreted income is payable owing to failure to distribute on dissolution, the person to whom any asset forming part of the computation of accreted income thereof has been transferred, shall be deemed to be an assessee in default in respect of such tax and interest thereon and all the provisions of this Act for the collection and recovery of income-tax shall apply:

However the liability of the person shall be limited to the extent to which the asset received by him is capable of meeting the liability.

Tax Advisory and Litigation, Articles, Income Tax

Special Provisions for Avoiding Repetitive Appeals

Chapter XIV-A

Repetitive appeals on similar issues at various appellate for a have led to significant increase in the number of cases and huge drain of productive judicial and executive resources. To eliminate the need to decide on similar issues pertaining the same assessee, Finance Act 2015, inserted Sec 158A and Sec 158AA where the rationale, to be pronounced in existing cases need not be further litigated in pending appeals of subsequent years.

Sec – 158A: Procedure when assessee claims identical question of law is pending before High Court or Supreme Court.
(1) Declaration by Assessee: Where an assessee claims that any question of law arising in his case for an assessment year which is pending before the Assessing Officer or any appellate authority is identical with a question of law arising in his case for another assessment year which is pending before:

  • High Court on a reference u/s 256 or
  • Supreme Court on a reference u/s 257 or
  • an appeal u/s 260A before the High Court or
  • an appeal u/s 261 before the Supreme Court

he may furnish to the Assessing Officer or the appellate authority, a declaration in Form 8 (Rule 16), that if the Assessing Officer or the appellate authority, agrees to apply in the relevant case the final decision on the question of law in the other case, he shall not raise such question of law in the relevant case in appeal before any appellate authority or any High Court or Supreme Court.
(2) Report from Assessing Officer: Where a declaration u/s 158A(1) is furnished to any appellate authority, the appellate authority shall call for a report from the Assessing Officer on the correctness of the claim made by the assessee and, where the Assessing Officer makes a request to the appellate authority to give him an opportunity of being heard in the matter, the appellate authority shall allow him such opportunity.
(3) Order of the Assessing Officer or the appellate authority: The Assessing Officer or the appellate authority, as the case may be, may, by order in writing,—
admit the claim of the assessee if he or it is satisfied that the question of law arising in the relevant case is identical with the question of law in the other case; or
reject the claim if he or it is not so satisfied.
(4) Admission of claim: Where a claim is admitted u/ss (3),—
(a) the Assessing Officer or the appellate authority may make an order disposing of the relevant case without awaiting the final decision on the question of law in the other case; and
(b) the assessee shall not be entitled to raise, in relation to the relevant case, such question of law in appeal before any appellate authority or Court.
(5) Application of decision: When the decision on the question of law in the other case becomes final, it shall be applied to the relevant case and the Assessing Officer or the appellate authority, shall, if necessary, amend the order referred u/ss (4) conformably to such decision.
(6) Order to be final: An order u/ss (3) shall be final and shall not be called in question in any proceeding by way of appeal, reference or revision under this Act.

Sec 158AA- Procedure when in an appeal by revenue an identical question of law is pending before Supreme Court.
(1) Application by Assessing Officer: Where the Commissioner or Principal Commissioner is of the opinion that any question of law arising in the case of an assessee for any assessment year is identical with a question of law arising in his case for another assessment year which is pending before:

  • the Supreme Court, in an appeal u/s 261
  • in a special leave petition under article 136 of the Constitution, against the order of the High Court in favour of the assessee

he may, instead of directing the Assessing Officer to appeal to the Appellate Tribunal u/s 253(2)/(2A), direct the Assessing Officer to make an application to the Appellate Tribunal in the prescribed form within 60 days from the date of receipt of the order of the Commissioner (Appeals) stating that an appeal on the question of law arising in the relevant case may be filed when the decision on the question of law becomes final in the other case.
(2) Acceptance by Assessee: The Commissioner or Principal Commissioner shall direct the Assessing Officer to make an application u/ss (1) only if an acceptance is received from the assessee to the effect that the question of law in the other case is identical to that arising in the relevant case; and
In case no such acceptance is received, the Commissioner or Principal Commissioner shall proceed in accordance with Sec 253(2)/(2A).
(3) Order of the CIT(A): Where the order of the Commissioner (Appeals) referred to u/ss (1) is not in conformity with the final decision on the question of law in the other case, the Commissioner or Principal Commissioner may direct the Assessing Officer to appeal to the Appellate Tribunal against such order and save as otherwise provided in this section all other provisions of Part B of Chapter XX shall apply accordingly.
(4) Time limit: Every appeal u/ss (3) shall be filed within 60 days from the date on which the order of the Supreme Court in the other case is communicated to the Commissioner or Principal Commissioner.

Tax Advisory and Litigation, Articles, Income Tax

The Direct Tax Dispute Resolution Scheme 2016

The Direct Tax Dispute Resolution Scheme 2016

Chapter X of Finance Act 2016

 

Purpose:Settle pending appeals/ disputes faster and economical for assessees

Act means Income Tax Act or Wealth Tax Act

Eligible Person:Any assessee/declarant making a declaration u/s 203 of the Finance Act 2016, to a notified officer not below the rank of CIT.

Amount Payable:

Situation Value Tax and interest payable Penalty payable
Pending appeal related to tax arrears Disputed tax does not exceed Rs 10 lakhs Disputed tax+ Interest till date of assessment 25% of minimum penalty on total income finally determined
Any other case Disputed tax+ Interest till date of assessment + 25% of minimum penalty 25% of minimum penalty on total income finally determined
Specified tax Any amount Amount of tax so determined

 

Note:

Disputed tax means the tax determined under the Act which is disputed by the assesse / declarant.

Specified taxmeans a tax:

  • the determination of which is in consequence of or validated by an amendment made to the Act with retrospective effect and relates to a period prior to the date of amendment and
  • a dispute in respect of such tax is pending on 29th February 2016.

Tax arrears means the amount of interest, tax or penalty determined under the Act in respect of which an appeal is pending with CIT(Appeals).

Time limit:Such declaration shall be filed at any time between 1st of June 2016 till 31st of December 2016.

Consequences of filing:

Nature Situation Consequence
Tax arrears Appeal is pending with CIT (Appeals) Such appeal is deemed to be withdrawn
 

 

 

 

Specified tax

–          Appeal is pending with CIT (Appeals), Tribunal, High Court or Supreme Court

 

–          Writ petition is filed with High Court or Supreme Court

With draw such appeal / writ and submit proof of such withdrawal
Initiated arbitration/conciliation proceedings under any law or DTAA Withdraw such claim/proceedings and furnish proof of such withdrawal
Further, an undertaking shall be furnished by the declarant waiving his right to pursue any remedy or claim available under any statute, agreement or in equity- Sec 203(4)

 

Caveats:

Under the following circumstances, it shall be presumed that no declaration has been made under this Scheme and consequently all proceedings / appeals shall stand revived:

  • Where any material particular furnished is found to be false or
  • There is a violation of the conditions specified in this Scheme
  • Declarant fails to act in accordance with Sec 203(4)

 

Process of determination of final tax:

  • Within 60 days of receipt of the declaration, the designated authority shall grant a certificate setting forth the details of specified tax/tax arrears and the final sum payable.
  • The declarant shall pay such sum within 30 days from the date of receipt and furnish proof of such payment

Consequences of the order

  • The order passed under this scheme shall be final and

 

  • No matter covered under this order shall be reopened in any proceeding under the Act or under any other law in force or under any agreement or treaty signed by India.

 

Immunity:

The designated authority, shall, subject to the provisions of the Scheme grant:

  • Immunity from instituting any proceedings for an offence under the Act
  • Immunity from imposition or waiver of any penalty under the Act in respect of :
    • Specified tax
    • Tax arrears to the extent of excess penalty
  • waiver of interest under the Act in respect of :
    • Specified tax
    • Tax arrears to the extent of excess interest

Note: The benefit of immunity shall be restricted to incomes/wealth covered under the declaration made under this Scheme

No refund:

Any amount paid under the Scheme shall not be refunded under any circumstances

Non Applicability of the Scheme:

The provisions of this Scheme shall not apply:

  • In respect of specified tax or tax arrears:
    • to search assessments under the Act (Sec 153A or 153 C or Sec 37A/37B)
    • to survey assessments under the Act (Sec 133A or 38A)
    • Where prosecution proceedings have been instituted before the filing of the declaration
    • to an undisclosed income or asset source located outside India
    • to assessment or reassessment proceedings consequent information received under DTAA or TIEA (Sec 90/90A) if it pertains to tax arrears

 

  • to any person in respect of whom an order of detention has been made under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 subject to the conditions specified under the Scheme

 

  • to any person in respect of whom prosecution for any offence punishable under the provisions of the:

 

  • Indian Penal Code, the Unlawful Activities (Prevention) Act, 1967,
  • Narcotic Drugs and Psychotropic Substances Act, 1985,
  • Prevention of Corruption Act, 1988 or
  • for the purpose of enforcement of any civil liability has been instituted on or before the filing of the declaration or
  • such person has been convicted of any such offence punishable under any of the above Acts
  • to any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992

 

Powers of the Central Government:

  • To issue directions:
    • Issue such directions or orders for proper administration of the Scheme
    • No order shall be issued to dispose a particular case in a particular manner
    • Pass such general or special order in public interest setting forth such directions or instructions as may be deemed fit
  • To remove difficulties:
    • If any difficulty arises in giving effect to the provisions of this Scheme, the Central Government may, by order, not inconsistent with the provisions of this Scheme, remove the difficulty. However no such order shall be made after the expiry of a period of two years from the date on which the provisions of this Scheme come into force

 

  • To make rules:
    • The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Scheme

Any order or rule made under the above sections shall, as soon as may be after it is made, be laid before each House of Parliament.

Articles, Domestic Tax Policy, Income Tax

Taxation of Alternate Investment Funds (AIF)

Chapter XIIFB- Sec 115UB

Taxation of Income Nature of Income Taxable Entity/Person Rate of tax
Investment income Investor – fund enjoys pass through status

Investment income is exempt for a fund u/s 10(23FBA)

As applicable for the investor
Business income Investment fund If fund is a company or firm – rates as per Finance Act

 

Any other case – maximum marginal rate

Loss (prior to Sec 10(23FBA) –          such loss shall be allowed to be carried forward and it shall be set-off by the investment fund in accordance with the provisions of Chapter VI; and

–          the investor shall not be eligible to set off such loss

Applicability of distribution tax There shall be no distribution tax on incomes distributed by an investment fund
Deemed distribution of income Any investment income of the investment fund,if not paid or credited to the investor shall be deemed to have been credited to the account of the investor on 31st March of the previous year in which he is entitled to receive
Furnishing information to the unitholder/investor On or before 30th June in Form 64C
Furnishing information to the Principal Commissioner /CIT On or before 30th Nov in Form 64D

 

Note:

“Investment fund” means any fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate which has been granted a certificate of registration as a Category I or a Category II Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992)

Any income which has been included in total income of the investor in a previous year, on accrual basis, shall not be included in the total income of such person in the previous year in which such income is actually paid to him by the investment fund

Uncategorized

EXEMPTION OF CENTRAL GOVERNMENT SUBSIDY OR GRANT OR CASH ASSISTANCE, ETC. TOWARDS CORPUS OF FUND

Under the existing provisions, subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement provided by the Central Government or a State Government or any authority or body or agency in cash or kind to the assessee is taxable.

It is proposed to provide that subsidy or grant provided by the Central Government for the purpose of corpus of a trust or institution established by the Central Government or State Government shall not form part of total income and shall be exempt

The above amendment is to save trusts and institutions which are specially formed for operationalizing certain government scheme from levy of taxes

The amendment shall be applicable from assessment year 2017-18 and for subsequent years.

India Budget Series

PAYMENT OF INTEREST ON REFUND

It is proposed to make the following amendments under Section 244A in relation to interest on refund:

 

Particulars Interest rate From Date To Date
Return filed after the due date 6% Date of filing of return Date on which refund is granted
Return filed on or before the due date but taxes paid after due date 6% Date of payment of tax Date on which refund is granted
Return filed and taxes paid on or before the due date 6% Date of filing of return Date on which refund is granted
Refund arising out of appeal effect being delayed beyond the time limits prescribed under Section 153 (5) 9% If Assessing Officer does not seek for extension Additional 3% interest from date of expiry of time allowed under Section 153 (5) Date on which refund is granted
9% If Assessing Officer seeks for extension Additional 3% interest from date of expiry of such extended period Date on which refund is granted

It is further proposed that for adjustment of payments received against the taxes due, TDS, TCS and advance tax shall be adjusted first.

The above amendments shall ensure timely filing of returns and reduced litigation matters viewing the additional burden of interest on department on further appeals.

Passing on the burden of additional interest on delayed refunds to the concerned Assessing Officer is a huge step in creating a more accountable bureaucracy and is certainly laudable.

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