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The Finance No

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The Finance No

    Finance Bill, 2008 Proposed Provisions relating to Direct Taxes

Clause Section Effective Amendment Effect

    Date (A.Y.)

    3 (a) 2(1A) 01.04.2009 New Explanation 3 Any income derived from saplings or

    proposed to be inserted seedlings grown in a nursery shall be

    after Explanation 2 to deemed to be agriculture income

    expand the definition of

    Agriculture Income

    3 (b) 2(15) 01.04.2009 Definition of Advancement of any other object of

    Charitable purpose: to general public utility shall not be a

    include relief of the charitable purpose if it involves

    poor, education, carrying on of:

    medical relief and the (i) any activity in the nature of trade,

    advancement of any commerce or business or

    other object of general (ii) any activity of rendering any

    public utility. services in relation to any trade,

    New Proviso inserted commerce or business ,

    for a cess or fee or any other

    consideration, irrespective of the

    nature of use or application, or

    retention, of the income of any such

    activity. 4(a) 10(26A01.04.1990 New Clause (26AAA) To provide that any income which

    AA) inserted accrues or arises to a “Sikkemese”

    individual from any source in the state

    of Sikkim or by way of dividend or

    interest from securities shall not be

    included in the total income of such

    individual. The term “Sikkimese” has

    also been defined in the new clause. 4(b) 10(29A) 01.04.2009 New Sub-Clause (h) It is proposed to provide exemption in

    inserted respect of any income accruing or

    arising to the Coir Board established

    under the Coir Industry Act,1953. 4 (c ) 10(43) 01.04.2008 New Clause inserted Any amount received by an individual

    as a loan, either in lump sum or

    installment, in a transaction of reverse

    mortgage as referred u/s 47(xvi) will

    not be included in total income. 5(a) 35(1) 01.04.2009 New clause (iia) Proposed to allow weighted deduction

    inserted after clause (ii) of 125% of any sum paid to a

    company for scientific research

    provided such company-

    (A) is registered in India;

    (B) having its main object of scientific

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    research and development;

    (C) approved by the prescribed

    authority in the prescribed manner;

    and

    (D) fulfils other conditions as may be

    prescribed. 5(b) 35(2AB) 01.04.2009 New clause (6) inserted Where deduction has been allowed u/s

    35(1), no further deduction will be

    allowed in Sec.35 (2AB) 6 35D 01.04.2009 (a) for the words To provide benefit of amortization of

    “industrial specified post commencement

    undertaking”, the word preliminary expenses to all sectors for

    “undertaking” shall be the extension of an undertaking or the

    substituted setting of a new unit. Earlier this

    (b) for the words benefit has available to industrial

    “industrial unit”, the undertaking only.

    word “unit” shall be

    substituted

    7 36(1) 01.04.2009 New Clause (xv) STT paid by assessee in respect of

    inserted along with business of shares & securities shall

    explanation be allowed as deduction. 7 36(1) 01.04.2009 New Clause (xvi) CTT paid by assessee in respect of

    inserted along with commodity business shall be allowed

    explanation as deduction. 8 40(a)(ib) 01.04.2009 Omitted Consequential amendment to Section

    36(1)(xv) which allows deduction of

    such STT. 9 40A(3) 01.04.2009 Substitution of sub-- Transaction wise limit is replaced

    (a) & (b) section (3) by new sub-with day wise limit

    section (3) and (3A) - Where payment in excess of Rs.

    20,000/- in a day to a person, is made,

    than it would be disallowed. 10 43(6) 01.04.2003 New Explanation 6 For the purpose of computation of

    inserted WDV depreciation shall be deemed to

    be allowed in respect of period where

    assessee is not require to file return of

    income. 11(a) 47 01.04.2008 New clause (xa) Conversion of bonds referred to in

    inserted section 115AC(1)(a) into shares or

    debentures of any company shall not

    be considered as transfer. 11(b) 47 01.04.2008 New clause (xvi) Transfer of a capital asset in a

    inserted transaction of reverse mortgage under

    a scheme made and notified by the

    Central Government shall not be

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    considered as transfer. 12 49(2A) 01.04.2008 Sub section (2A) Consequential to insertion of new

    Substituted clause (xa) in section 47. Cost of bond

    referred in section 47(xa) shares or

    debenture. 13(a) 80C 01.04.2008 New clauses (xxiii) and Any sum paid or deposited

    (xxiv) inserted - in an account under the Senior

    Citizens Savings scheme

    Rules, 2004;

    - in five year time deposit in an

    account under the Post office

    Time deposit Rules, 1981

    shall also be eligible for tax benefits. 13(a) 80C 01.04.2008 New sub section 6A Any amount withdrawn by the

    Inserted assessee from his account referred to

    in Section 80C(2)(xxiii)/(xxiv) before

    the expiry of the period of 5 years

    from the date of its deposit, shall be

    deemed to be the income of the

    assessee, of the previous year in which

    the amount is withdrawn and shall be

    liable to tax. 14 80D 01.04.2009 Substitution of Section - Additional deduction of Rs.15,000/-

    80D by new Section shall be allowed in respect of medicals

    80D insurance of parents.

    - Requirement of dependent parents

    done away.

     rd15(a) 80IB(9) 01.04.2008 3 Proviso inserted Deduction shall be allowed to an

    undertaking engaged in refining

    mineral oil, if it begins refining before

    01.04.2009. 15(b) 80IB 01.04.2009 New sub-section (11C) To extend a 5-year tax holiday to

    inserted hospitals located anywhere in India

    except 7 urban agglomerations and 6

    other districts as provided in the

    section. The said tax benefit will

    available to a 100-bedded hospital,

    which has started functioning at any

    time during the period beginning on

    01.04.2008 and ending on 31.03.2013. 16(a) 80ID 01.04.2009 New clause inserted It is proposed to extend the tax benefit

    & (b) after clause (ii) of sub also to new 2, 3, or 4 Star hotels

    section 2 located in the specified districts

    New clause inserted having World Heritage site, if such

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    after clause (d) of sub hotel is constructed and had started or

    section 6 starts functioning at any time during

     the period beginning From 01.04.2008

    and ending on 31.03.2013 17 88E 01.04.2009 New sub section No tax rebate of STT shall be allowed

    inserted from asstt. Year 2009-10 18 111A 01.04.2009 Amendment in clause Short-term capital gain subjected to

    (i) of sub section (1) STT shall be charged to tax @15%

    instead of 10%. 19 115AD 01.04.2009 Amendment in proviso Short-term capital gain subjected to

    of sub section (1) STT shall be charged to tax @ 15%

    instead of 10%. 20(a) 115JB(2) 01.04.2001 Explanation The book profit shall be increased by

    renumbered as the amount of deferred tax and the

    Explanation 1 and provision thereof, if debited to profit

    inserted a new clause & loss account.

    (h) to Explanation 1

    20(b) 115JB(2) 01.04.2001 Explanation 2 inserted Explanations 2 inserted to clarify that

    income tax include 115O, 115R,

    income tax, interest, surcharge, E-cess

    & SHE cess. 21 115-O 01.04.2008 Sub-section (1A) To provide that the amount of

    inserted with proviso dividends referred to in sub-section (1)

    and explanation shall be reduced by the amount of

    dividend, if any, received by the

    domestic company during the

    financial year, if-

    (a) such amount of dividend is

    received from its subsidiary;

    (b) the subsidiary has paid tax

    under this section on such

    dividend; and

    (c) the domestic company is not

    a subsidiary of any other

    company

    It is also provided that the same

    amount of dividend shall not be

    reduced more than once.

22(a) 115WB 01.04.2008 Amendment in clause To include securities offered under

    (i) of Explanation to employees stock option plan or

    clause (d) of sub-scheme, where the employee‟s stock

    section (1) option has been granted. 22(b) 115WB 01.04.2009 - Sub-clause (iii) to - Any expenditure on or payment

    Clause (B) to sub-through non-transferable prepaid

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    section (2) inserted electronic meal card usable only at

     eating joints or outlets and which

     fulfills such other conditions as may

     be prescribed shall also be excluded

     from the hospitality expenditure.

    - Substitution of - Followings are outside the scope of

    Explanation to Clause employees:

    (E) to sub-section (2) (i) provide crèche facility for the

     children of the employee ;or

     (ii) sponsor a sportsman being an

     employee; or

     (iii) organize sports events for

     employees

    - Clause (K) to sub--No FBT on Guest House expenses.

    section (2) shall be

    omitted

    23 115WC 01.04.2009 Amendment in clause Fringe benefit on festival celebration

    (c) and (d) od sub-shall be 20% instead of 50%.

    section (1)

    24 115WD 01.04.2008 Amendment to sub-Due date of filing return of fringe stclause (ii) of clause (a) benefits has been reduced from 31 thof Explanation to sub-October to 30 September

    section (1)

    25 115WE 01.04.2008 Substitution of sub-Manner of processing of returns

    section (1) - adjustments of arithmetical

    error or an incorrect claim

    - Intimation to be issued

    determining tax payable and

    refund due

    - No intimation shall be send

    after expiry of 1Year

    - Scheme for processing of

    return to be notified. 26 115WK01.04.2008 New section inserted FBT paid on ESOP by employer and

    B recovered from employee would be

    deemed to be tax paid by employee.

     However employee will not be

    entitled for tax credit / refund of such

    tax.

    27 139 01.04.2008 - Amendment in - Time limit for furnishing a return of stExplanation 2 income has been reduced from 31 th- Sub-section (9) October to 30 September in case

    of company or whose accounts are

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    required to be audited u/s 44AB or

    partner of the auditable firm.

    - Now return can be treated defective

    if TDS/TCS certificates is not

    furnished 28 142 01.04.2008 Sub-section (2C) Now AO can suo moto extend the

    time limit for submission of special

    audit report 29 143 01.04.2008 Sub-sec. (1) substituted - Adjustment of arithmetical error

    Manner of processing or an incorrect claim

    of returns - Intimation shall be issued where

     loss is reduced or adjustment is

     made or refund is to be issued

     - No intimation after the expiry of

     one year from the end of F.Y.

     - Scheme for processing of return

     be notified.

     - Item inconsistent with another

     entry

    Incorrect claim from - Where information is required to

    any information in substantiate such claim

    return defined as: - Deduction exceed statutory limit.

     143 (2) 01.04.2008 Time limit for issue of Within six month from the end of F.Y.

    notice for scrutiny in which return is furnished. Earlier

    assessment limit was 12 months from the end of

    the month in which return is furnished. 30 147 01.04.2008 Second proviso AO may assess or reassess such

    inserted income which are not subject matter

    of appeal, reference or revision, which

    is chargeable to tax and escaped

    assessment 31 151 01.10.1998 New Explanation The JC/CIT/CC are not required to

    Inserted to remove the issue notice themselves the only

    doubt for sanctioning requirement is satisfaction on the

    of notice u/s 148 reasons recorded by AO.

32 153(4) 01.06.2003 New Sub section (4) Where the assessment or reassessment

    inserted are revived than the time limit for

    completion of assessment would be

    extended to one year if it is shorter

    than this period.

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     7 32 153 01.06.2007 In explanation 1 after Where the assessments are abetted by

    the proviso new settlement commissioner than in that

    proviso inserted case time limit would be extended for

    one year if it is shorter than this

    period.

    33 153A 01.06.2003 Section 153A shall be If any proceeding initiated for any

    renumbered as sub-order of assessment or reassessment

    sec.1,and made u/s 153A (1) has been annulled

    Sub-sec 2 has been in appeal or any other legal

    inserted proceeding, then, notwithstanding

    sec.153 (1), the assessment or

    reassessment relating to any

    assessment year which has abated

    under the second proviso to sub-

    sec.(1) shall stand revived with effect

    from the date of receipt of the order of

    such annulment by the commissioner.

    Further provided such revival shall

    cease to have effect, if such order of

    annulment is set aside. 34 153B 01.06.2003 New clause (vii) has The period commencing from the date

    been inserted in of annulment of a proceeding or order

    explanation of assessment or reassessment referred

    u/s 153A(2) till the date of the receipt

    of order setting aside the order of such

    annulment by the commissioner. 34-36 153B,C, 01.06.2003 Consequential Reference in section 153A replaced

    D with sub-sec. (1) and sec.153A. 37 156 01.04.2008 New proviso inserted Intimation u/s 143(1) shall be deemed

    to notice of demand. 38 191 01.06.2003 Explanation is Where a person is required to deduct

    substituted by new Tax at source but fails to do so, he

    explanation. shall be deemed to be an assessee in

    default u/s 201. Earlier where tax has

    been directly paid by deductee then in

    that case deductor was not to be

    treated as assessee in default. 39 193 01.06.2008 New clause (ix) Interest payable on any security issued

    inserted in proviso by a company where such security is

    in dematerialized form and is listed on

    Stock Exchange in India, not liable for

    TDS.

    40 194C 01.06.2008 New clause (ja) Now AOP or BOI whether

    inserted in sub-sec. (1) incorporated or not, are liable to

    deduct TDS u/s 194C.

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    41 195 01.04.2008 New sub-sec. (6) is The person referred in sub-sec. (1)

    inserted shall furnish the information relating

    to such payment in such form and

    manner as may be prescribed by the

    board. 42 199 01.04.2008 Sub-sec. (1), (2), (3) - Tax deducted under Chapter XVII

    substituted by new sub-and deposited shall be treated

    sec. (1), (2), (3) payment on behalf of the person

    Credit for tax deducted: from whose income deduction

     was made or the owner of deposit,

    property, security.

    - Tax deducted u/s 192(1A) and

    deposited shall be treated tax paid

    on behalf of the person from

    whose income deduction was

    made.

    - CBDT will prescribe rules for the

    purpose of giving credit as well as

    allowing credit to the other

    persons. 43 201 1.06.2002 Sub-section (1) is To clarify that where a person is

    substituted by new sub-required to deduct Tax at source but

    section (1). fails to do so or deducted TDS but

    failed to deposit then he shall be

    deemed to be an assessee in default u/s

    201. 44 203 01.04.2008 Requirement for Deductor required to issue TDS

    issuance of TDS certificate upto 31.03.2010.

    certificate extended.

    45 206C 01.04.2008 Substitution of Sub-sec. Amendment in same line of section

    (4) by new sub-sec. 199 and 203 i.e. allowance of TDS

     credit and requirement for issue of

    TDS certificate. rd46 254 01.10.2008 Proviso 3 of Sub-Proviso substituted to further clarify

    section 2A is that ITAT cannot grant stay beyond

    substituted 365 days.

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     9 47 268A 01.04.1999 New Section 268A -CBDT is empowered to issue order,

     relating to filing of instructions or directions to ITA fixing

     Appeal or Application monetary limit for the purpose of

    for Reference by ITA filing a appeal or reference.

    -Due to these instructions/orders

    appeal has not been filed, it shall not

    preclude the authority from filing an

    appeal if same assessee for other year

    and other assessee.

    -If no appeal filed due to there

    instructions/orders, the assessee is not

    entitle to plea that department has

    accepted the issue in other year by not

    filing appeal.

    -The tribunal or court hearing the

    appeal shall decide the reference on

    merit without considering these

    direction or instructions.

    -Every instruction, direction has been

    issued be treated as issued under sub-

    sec. (1) and all other provision shall

    apply accordingly.

    48 271 01.04.1989 New Sub-Section Proposed to insert sub-sec. for deemed

    271(1B) inserted satisfaction, where AO has simply

    mentioned to initiate penalty

    proceeding in assessment order. 49 273AA 01.04.2008 New Section 273AA A person may make application to the

    relating to Power of commissioner for granting immunity

    commissioner to grant from penalty, but it shall not be made

    immunity from penalty. after institution of the penalty

    proceedings. If commissioner satisfies,

    he may grant immunity if that person

    co-operated with ITA and subject to

    such other conditions. 50 278AB 01.04.2008 New Section 278AB A person may make application to the

    relating to Power of commissioner for granting immunity

    commissioner to grant from prosecution, but it shall not be

    immunity from made after institution of the

    prosecution. prosecution proceedings. If

    commissioner satisfies, he may grant

    immunity if that person co-operated

    with ITA and subject to such other

    conditions. 51 282A 01.06.2008 New Section 282A The notice and other documents issued

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    relating to by any ITA shall be signed in

    authentication of manuscript. Every notice shall be

    notices and other deemed to be authenticated if the

    documents name and office of a designated ITA is

    printed, stamped or otherwise written

    thereon. 52 292BB 01.04.2008 New Section 292BB If an assessee has appeared in any

    relating to notice proceeding or co-operated in any

    deemed to be valid in inquiry relating to assessment or

    certain circumstances. reassessment, it shall be deemed that

    any notice which is require to be

    served upon him, has been duly served

    upon him as per provisions of the Act. 53 292C 01.06.2002 Sec.292C renumbered The presumption of belonging,

     as sub-sec. (1) of sec. correctness & signature, etc. relating

     292C. to books of accounts, documents etc.

    01.10.1975 New sub-sec. (2) found in the control of any person

    inserted extended to survey u/s 133A &

    requisition u/s 132A. 54 295 01.04.2008 New clause (fa) Relates to rule-making power of the

    inserted in sub-sec. (2) Board to prescribe the form and

    manner in which the information

    relating to the payment of any sum

    may be furnished u/s 195(6). 55 Sch.IV 01.04.2008 Proviso of Sub rule 1 of Time limit for recognition of PF Trust

    Part A rule 3 in Part A has been extended from 31.03.2008 to

    amended 31.03.2009.

    WEALTH TAX ACT

    56a 17 01.04.2008 New proviso inserted in AO may assess or reassess such net

    sub-sec. (1) wealth other than net wealth, which is

    subject matter of any appeal, reference

    or revision, which is chargeable to tax

    and has escaped assessment. 56b 17 01.10.1998 New explanation The JC/CIT/CC are not required to

    inserted in clause (b) of issue notice themselves the only

    sub-sec. (1B) requirement is satisfaction recorded by

    AO.

    57 17A 01.06.2007 New proviso inserted in Where the assessment are abetted by

    explanation 1 of sub-settlement commissioner than in that

    sec.(4) case time limit would be extended for

    one year if it is shorter than this

    period. 58 18 01.04.1989 New sub-sec.(1A) Propose to insert sub-sec. for deemed

    inserted. satisfaction, where AO has simply

    mentioned to initiate penalty

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