The Finance Act, 2008. · Indian Gazettes

M. 1588

9-6-2008

REGISTERED No. DL-(N)04/0007/2003-08 रजिस्ट्री सं० डी० एल (एन) 04/0007/2003-08

असाधारण

भारत का राजपत्र The Gazette of India P.e. 183

EXTRAORDINARY

k.m. 32

भाग II - खण्ड 2

PART II- Section 2

ePB 150

प्राधिकार से प्रकाशित

PUBLISHED BY AUTHORITY

नई दिल्ली, शुक्रवार, फरवरी 29, 2008/फाल्गुन10, 1929

रूं 10]

NEW DELHI , FRIDAY, FEBRUARY 29, 2008 / PHALGUNA 10, 1929

No. 10]

इस भाग में भिन्न पृष्ठ संख्या दी जाती है जिससे कि यह अलग संकलन के रूप में रखा जा सके ।

Separate paging is given to this Part in order that it may be filed as a separate compilation .

LOK SABHA

The followingBill was introduced in Lok Sabha on 29 February, 2008 :-

BILL NO . 17 OF 2008

ABill to give effect to the financial proposals of the Central Government for the financial year 2008-2009 .

Be it enacted by Parliament in the Fifty - ninth Year of the Republic of India as follows:---

CHAPTER I

PRELIMINARY

1. (1) This Act may be called the Finance Act, 2008 .

Short title and conimence- ment .

(2) Save as otherwise provided in this Act, sections 2 to 62 shall be deemed to have come into force on the 1st day ofApril, 2008 .

CHAPTER II

RATES OF INCOME - TAX

Income-tax.

43 of 1961 .

2.(1 ) Subject to the provisions of sub - sections (2 ) and (3 ) , for the assessment year commencing on the 1st day ofApril , 2008, income - tax shall be charged at the rates specified in Part I ofthe First Schedule and such tax as reduced by the rebate of income- tax calculated underChapter VIII -A of the Income- tax Act , 1961 ( hereinafter referred to as the Income - tax Act) shall be increased by a surcharge for purposes of the Union calculated in each case in the manner provided therein .

(2) In the cases to which Paragraph A of Part I of the First Schedule applies , where the assessee has , in the previous year , any net agricultural income exceeding five thousand rupees , in addition to total income , and the total income exceeds one lakh ten thousand rupees , then,- 2

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(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 one lakh ten thousand rupees of the total income but without being liable to tax ] , only for the purpose of charging 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 of income-tax shall be determined in respect of the aggregate income at the rates specified 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 one lakh ten thousand rupees , and the amount of income - tax shall be determined in respect of the net agricultural income as so increased at the rates specified in the said Paragraph A , as if the net agricultural income as so increased were the total income;

(iii) the amount of income-tax determined in accordance with sub- clause

(i) shall be reduced by the amount of income - tax determined in accordance with sub - clause ( ii ) and the sum so arrived at shall be the income- tax in respect of the total income:

Provided that in the case of every woman , resident in India and below the age of sixty- five years at any time during the previous year , referred to in item ( 17) ofParagraph A of Part I of the First Schedule, the provisions of this sub - section shall have effect as if for the words " one lakh ten thousand rupees " , the words " one lakh forty - five thousand rupees " had been substituted:

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

Provided also that the amount of income -tax so arrived at , as reduced by the amount of rebate of income-tax calculated under Chapter VIII - A of the Income- tax Act , shall be increased by a surcharge , for purposes of the Union , calculated in each case in the manner provided in that Paragraph and the sum so arrived at shall be the income - tax in respect of the total income.

(3) In cases to which the provisions of Chapter XII or Chapter XII - A or Chapter XII - H or section 115JB or sub- section ( IA ) of section 161 or section 164 or section 164A or section 167B of the Income- tax Act apply, the tax chargeable shall be determined as provided in that Chapter or that section, and with reference 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 of section 111A or section 112 shall be increased by a surcharge, for purposes of the Union , asprovided 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 sections 115A, 115AB, 115AC, 115ACA, 115AD, 115B , 115BB , 115BBA, 115BBC, 115E and 115JB or fringe benefits chargeable to tax under section 115 WA ofthe 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,---

(a) in the case of every individual , Hindu undivided family, association of persons and body of individuals , whether incorporated or not , at the rate of ten per cent . of such income- tax where the total income exceeds ten lakh rupees;

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(b) in the case ofevery artificial juridical person referred to in sub - clause ( vii) of clause (31 ) of section 2 of the Income-tax Act, at the rate of ten per cent . of such income-tax;

(c) inthe case of every firm and domestic company, at the rate of ten per cent . of such income- tax where the total income exceeds one crore rupees ;

(a) inthe case of every company, other than a domestic company, at the rate of two and one- half per cent. of such income - tax where the total income exceeds one crore rupees:

Provided also that in the case of every company having total income chargeable to tax under section 115JB of the Income-tax Act, and such income exceeds one crore rupees , the total amount payable as income - tax and surcharge on such income shall not exceed the total amount payable as income - tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees:

Provided also that in respect of any fringe benefits chargeable to tax under section 115WA ofthe Income-tax Act, income-tax computed under this sub - section shall be increased by a surcharge, for purposes of the Union, calculated,-

(a) in the case of every association of persons and body of individuals , whether incorporated or not, at the rate of ten per cent . of income - tax where the fringe benefits exceed ten lakh rupees;

(b) inthe case ofevery firm , artificial juridical person referred to in sub -clause (v) ofclause (a) of section 115W of the Income - tax Act , and domestic company, at the rate of ten per cent . of such income- tax;

(c) in the case of every company, other than a domestic company, at the rate of two and one -half per cent . of such income-tax .

(4) In cases in which tax has to be charged and paid under section 115-0 or sub- section (2) of section 115R of the Income - tax Act, the tax shall be charged and paid at the rates as specified in those sections and shall be increased by a surcharge , for purposes of the Union, calculated at the rate of ten per cent. of such tax.

(5) In cases in which tax has to be deducted under sections 193 , 194, 1944, 1948 , 194BB, 194D and 195 of the Income- tax Act, at the rates in force, the deductions shall be made at the rates specified in Part II of the First Schedule and shall be increased by a surcharge , for purposes of the Union , calculated in each case , in the manner provided therein .

(6) In cases in which tax has to be deducted under sections 194C, 194E, 194EE , 194F, 194G, 194H, 194 - I , 194J , 194LA, 196B, 196C and 196D of the Income-tax Act , the deductions shall be made at the rates specified in those sections and shall be increased by a surcharge , for purposes of the Union, calculated,-

(a) in the case ofevery individual , Hindu undivided family, association of persons and body of individuals, whether incorporated or not , 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 and subject to the deduction exceeds ten lakh rupees ;

(b) inthe case of every artificial juridical person referred to in sub - clause (vii ) of clause (31 ) of section 2 of the Income-tax Act, at the rate of ten per cent . of such tax;

(c) inthe case of every firm and domestic company, 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 and subject to the deduction exceeds one crore rupees ;

(d) inthe case of every company, other than a domestic company, at the rate of two and one -half per cent . of such tax , where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees.

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(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 increased by a surcharge , for purposes of the Union , calculated in the manner provided therein .

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

(a) in the case ofevery individual , Hindu undivided family, association of persons and body of individuals , whether incorporated or not, at the rate of ten per cent . of such tax, where the amount or the aggregate of such amounts collected and subject to the collection exceeds ten lakh rupees ;

(b) inthe case of every artificial juridical person referred to in sub - clause ( vii) of clause( 31 ) of section 2 of the Income- tax Act , at the rate of ten per cent . of such tax;

(c) in the case of every firm and domestic company at the rate of ten per cent . of such tax, where the amount or the aggregate of such amounts collected and subject to the collection exceeds one crore rupees;

(d) in the case of every company, other than a domestic company, at the rate of two and one -half per cent . of such tax, where the amount or the aggregate of such amounts collected and subject to the collection exceeds one crore rupees .

(9) Subject to the provisions of sub - section ( 10) , in cases in which income- tax has to be charged under sub - section (4) of section 172 or sub- section (2 ) of section 174 or section 174A or section 175 or sub- section (2) of section 176 of the Income- tax Act or deducted from, or paid on, income chargeable under the head " Salaries " under section 192 of the said Act or in which the " advance tax" payable under Chapter 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 , " advance tax" shall be so charged, deducted or computed at the rate or rates specified in Part III of the First Schedule and such tax shall be increased by a surcharge , for purposes of the Union , calculated in each case in the manner provided therein:

Provided that in cases to which the provisions of Chapter XII or Chapter XII - A or Chapter XII - H or section 115JB or sub - section ( 1A) of section 161 or section 164 or section 164A or section 167B of the Income- tax Act apply, " advance tax " shall be computed with reference to the rates imposedby 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 of section 111A or section 112 of the Income-tax Act shallbe increased by a surcharge , for purposes of the Union , as provided in Paragraph A, B , C, D or E , as the case maybe , of Part III of the First Schedule:

Provided also that in respect of any income chargeable to tax under sections 115A, 115AB , 115AC, 115ACA, 115AD , 115B , 115BB , 115BBA, 115BBC, 115E and 115JB of the Income- tax Act, " advance tax" computed under the first proviso shall be increased by a surcharge, for purposes of the Union , calculated, ---

(a) in the case of every individual , Hindu undivided family, association of persons and body of individuals , whether incorporated or not , at the rate of ten per cent . of " advance tax" , where the total income exceeds ten lakh rupees ;

(6) in the case of every artificial juridical person referred to in sub - clause ( vii) of clause ( 31 ) of section 2 of the Income-tax Act , at the rate of ten per cent . of such "advance tax" ;

(c) in the case of every firm and domestic company, at the rate of ten per cent. of such " advance tax " , where the total income exceeds one crore rupees ;

(d) inthe case of every company, other than a domestic company, at the rate of two and one-half per cent . of such " advance tax " , where the total income exceeds one crore rupees:

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SEC.2]

Provided also that in the case of every company having total income chargeable to tax under section 115JB of the Income- tax Act, and such income exceeds one crore rupees , the total amount payable as " advance tax " and surcharge on such income shall not exceed the total amount payable as " advance tax " on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees:

Provided also that in respect of any fringe benefits chargeable to tax under section 115 WA ofthe Income - tax Act, " advance tax " computed under the first proviso shall be increased by a surcharge , for purposes of the Union , calculated ,-

(a) in the case of every association of persons and body of individuals , whether incorporated or not, at the rate of ten per cent . of" advance tax " , where the fringe benefits exceed ten lakh rupees;

(b) in the case of every firm , artificial juridical person referred to in sub- clause (v) of clause (a) of section 115W of the Income -tax Act , and domestic company, at the rate of ten per cent . of such " advance tax" ;

(c) in the case of every company, other than a domestic company, at the rate of two and one- half 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 charged in respect of the income of a period other than the previous year , in such other period , any net agricultural income exceeding five thousand rupees , in addition to total income and the total income exceeds one lakh fifty thousand rupees , then , in charging income- tax under sub - section (2 ) of section 174 or section 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 the first one lakh fifty thousand rupees of the total income but without being liable to tax] , only for the purpose of charging or computing such income -tax or , as the case may be , " advance tax " in respect of the total income; and

(b) such income-tax or, as the case may be, " advance tax" shall be so charged or computed as follows: -

(i) the total income and the net agricultural income shall be aggregated and the amount of income - tax or " advance tax " shall be determined in respect of the aggregate income at the rates specified 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 ofone lakh fifty thousand rupees, and the amount of income- tax or " advance tax " shall be determined in respect of the net agricultural income as so increased at the rates specified in the said Paragraph A, as if the net agricultural income 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 " determined in accordance with sub - clause ( ii) and the sum so arrived at shall be the income- tax or , as the case may be , " advance tax " in respect ofthe total income:

Provided that in the case of every woman , resident in India and below the age of sixty- five years at any time during the previous year, referred to in item (11) ofParagraph AofPart III of the First Schedule , the provisions of this sub - section shall have effect as if for the words " one lakh fifty thousand rupees " , the words " one lakh eighty thousand rupees " had been substituted:

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

Provided also that the amount of income- tax or " advance tax " so arrived at shall be increased by a surcharge , for 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 a surcharge , for purposes of the Union , calculated in the manner provided therein , shall be further increased by an additional surcharge , for purposes of the Union, to be called the "Education Cess on income- tax " , calculated at the rate of two per cent. of such income - tax and surcharge so as to fulfil the commitment of the Government to provide and finance universalised quality basic education.

(12) The amount of income - tax as specified in sub - sections ( 1 ) to ( 10 ) and as increased by a surcharge, for purposes of the Union , calculated in the manner provided therein , shall also be increased by an additional surcharge , for purposes of the Union, to be called the " Secondary and Higher Education Cess on income-tax " , calculated at the rate of one per cent. of such income- tax and surcharge so as to fulfil the commitment of the Government to provide and finance secondary and higher education .

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

(a)" domestic company" means an Indian company or any other company which . inrespect of its income liable to income - tax under the Income- tax Act, for the assessment year commencing on the 1st day ofApril , 2008 , has made the prescribed arrangements for the declaration and payment within 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 commission or otherwise , for soliciting or procuring insurance business , including business relating to the continuance , 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 in Part IV of the First Schedule ;

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

CHAPTER III

DIRECT TAXES

Income-tax

3. In section 2 of the Income- tax Act.-

Amendment of section 2 .

(a) in clause ( 1A) , after Explanation 2 , the following Explanation shall be inserted with effect fromthe 1st day ofApril , 2009 , namely:-

"Explanation 3. For the purposes of this clause , any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income: " ;

(b) for clause ( 15 ) , the following clause shall be substituted with effect from the 1stday ofApril , 2009 , namely:-

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SEC.2]

'( 15) " charitable purpose" includes relief of the poor , education , medical relief, and the advancement of any other object of general public utility :

Provided that the advancement of any other object of general public utility shall not be a charitable purpose , if it involves the carrying on of any activity in the nature of trade , commerce or business , or any activity of rendering any service in relation to any trade , commerce or business , for a cess or fee or any other consideration , irrespective of the nature of use or application , or retention , ofthe incomefrom such activity; ' .

4. In section 10 ofthe Income-tax Act,--

Amendment of section 10 .

26 of 1997 .

(a) after clause (26AA ) as omitted by the Finance Act, 1997, the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day ofApril , 1990, namely:-

'(26AAA ) in case of an individual , being a Sikkimese , any income which accrues or arises to him

(a) from any source in the State of Sikkim ; or

(b) by way of dividend or interest on securities :

Provided that nothing contained in this clause shall apply to a Sikkimese woman who , on or after the 1st day of April , 2008 , marries an individual who is not a Sikkimese .

Explanation. For the purposes of this clause , " Sikkimese " shall mean-

(1) anindividual, whose name is recorded in the register maintained under the Sikkim Subjects Regulation , 1961 read with the Sikkim Subject Rules , 1961 ( hereinafter referred to as the " Register of Sikkim Subjects " ) , immediately before the 26th day ofApril , 1975 ; or

(ii) an individual , whose name is included in the Register of Sikkim Subjects by virtue of the Government of India Order No. 26030/36/90- I.C.I. , dated the 7th August , 1990 and Order of even number dated the 8thApril , 1991; or

(iii) any other individual, whose name does not appear in the Register of Sikkim Subjects , but it is established beyond doubt that the name of such individual's father or husband or paternal grandfather or brother from the same father has been recorded in that register; ' ;

(b) in clause (294 ) , after sub - clause (g ) , the following sub - clause shall be inserted with effect from the 1st day ofApril , 2009, namely:-

"(h) the Coir Board established under section 4 of the Coir Industry Act, 1953;";

45 of 1953 .

"(43) any amount received by an individual as a loan , either in lump sum or in instalment, in a transaction of reverse mortgage referred to in clause (xvi) of section 47. ".

5. Insection 35 of the Income- tax Act , with effect from the 1st day ofApril , 2009 ,- Amendment of section 35 .

(a) in sub - section ( 1 ) , after clause ( ii ) , the following clause shall be inserted, namely:-

"( iia) an amount equal to one and one- fourth times of any sum paid to a company to be used by it for scientific research:

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Provided that such company-

(A) isregistered in India,

(B) has as its main object the scientific research and development,

(C) is , for the purposes of this clause , for the time being approved by the prescribed authority in the prescribed manner, and

(D) fulfils such other conditions as may be prescribed; " ;

(b) in sub- section (2AB) , after clause ( 5) , the following clause shall be inserted, namely:---

"(6) No deduction shall be allowed to a company approved under sub- clause (C) of clause ( iia) of sub - section ( 1 ) in respect of the expenditure referred to in clause ( 1) which is incurred after the 31st day of March , 2008. " .

6. In section 35D of the Income-tax Act, with effect from the 1st day ofApril , 2009 ,-

Amendment of section 35D .

(a) for the words " industrial undertaking " , wherever they occur, the word "undertaking" shall be substituted;

(b) for the words " industrial unit " , wherever they occur, the word " unit " shall be substituted .

Amendment of section 36 .

7. In section 36 of the Income -taxAct, in sub - section ( 1 ) , after clause (xiv ) , the following clauses shall be inserted with effect from the 1st day ofApril , 2009 , namely: -

*(xv) an amount equal to the securities transaction tax paid by the assessee in respect of the taxable securities transactions entered into in the course of his business during the previous year, if the income arising from such taxable securities transactions is included in the income computed under the head "Profits and gains of business or profession." .

23 of 2004 .

Explanation . For the purposes of this clause , the expressions " securities transaction tax " and " taxable securities transaction " shall have the meanings respectively assigned to them under Chapter VII of the Finance ( No. 2) Act , 2004;

(xvi) an amount equal to the commodities transaction tax paid by the assessee in respect of the taxable commodities transactions entered into in the course of his business during the previous year , ifthe income arising from such taxable commodities transactions is included in the income computed under the head "Profits and gains of business or profession" .

Explanation. For the purposes of this clause , the expressions " commodities transaction tax" and " taxable commodities transaction " shall have the meanings respectively assigned to them under Chapter VII of the Finance Act , 2008. ' .

Amendment of section 40.

8. In section 40 of the Income -tax Act , in clause ( a) , sub - clause ( ib) shall be omitted with effect from the 1st day ofApril , 2009 .

Amendment of section 40A.

9. In section 40 A of the Income -tax Act , for sub - section ( 3 ) , the following sub - sections shall be substituted , with effect from the 1st day ofApril , 2009 , namely:---

" ( 3 ) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payeee cheque drawn on a bank or account payeee bank draft , exceeds twenty thousand rupees , no deduction shall be allowed in respect of such expenditure .

(3A) Where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year ( hereinafter referred to as subsequent year ) the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft , the payment so made shall be deemed to be the 9.

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SEC. 2]

profits and gains of business or profession and accordingly chargeable to income-tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day, exceeds twenty thousand rupees:

Provided that no disallowance shall be made and no payment shall be deemedto be the profits and gains of business or profession under sub- section (3 ) and this sub- sectionwhere a payment or aggregate ofpayments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees , in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available , considerations of business expediency and other relevant factors ." .

Amendment of section 43 .

10. Insection 43 of the Income- tax Act , in clause ( 6) , after Explanation 5, the following Explanation shall be inserted and shall be deemed to have been inserted , with effect from the 1st day ofApril, 2003 , namely:-

"Explanation 6.-Where an assessee was not required to compute his total income for the purposes of this Act for any previous year or years preceding the previous year relevant to the assessment year under consideration,-

(a) the actual cost of an asset shall be adjusted by the amount attributable to the revaluation of such asset , if any, in the books of account;

(b) the total amount of depreciation on such asset, provided in the books of account of the assessee in respect of such previous year or years preceding the previous year relevant to the assessment year under consideration shall be deemed to be the depreciation actually allowed under this Act for the purposes ofthis clause; and

(c) the depreciation actually allowed under clause (b ) shall be adjusted by the amount of depreciation attributable to such revaluation of the asset. " .

11. In section 47 of the Income- tax Act, -

Amendment of section 47.

(a) after clause (x), the following clause shall be inserted , namely: ---

"(xa) any transfer by way of conversion of bonds referred to in clause (a) ofsub - section ( 1 ) of section 115AC into shares or debentures of any company; " ;

(b) after clause (xv ), the following clause shall be inserted , namely:-

"(xvi) any transfer of a capital asset in a transaction of reverse mortgage under a scheme made and notified by the Central Government. " .

Amendment of section 49.

12. In section 49 ofthe Income-tax Act , for sub-section (24 ) , the following sub - section shall be substituted, namely:-

"( 24) Where the capital asset, being a share or debenture of a company , became the property of the assessee in consideration of a transfer referred to in clause (x ) or clause (xa) of section 47 , the cost of acquisition of the asset to the assessee shall be deemed to be that part of the cost of debenture , debenture- stock , bond or deposit certificate in relation to which such asset is acquired by the assessee ." .

13. In section 80C of the Income- tax Act,-

Amendment of section 80C.

(a) in sub-section (2 ) , after clause (xxii) , the following clauses shall be inserted , namely:-

2004; "(xxiii) in an account under the Senior Citizens Savings Scheme Rules ,

(xxiv) as five year time deposit in an account under the Post Office Time Deposit Rules , 1981." ;

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

"( 64) If any amount, including interest accrued thereon , is withdrawn by the assessee from his account referred to in clause (xxiii) or clause (xxiv) of sub- section ( 2) , before the expiry of the period of five years from the date of its deposit, the amount so withdrawn 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 in the assessment year relevant to such previous year :

Provided that the amount liable to tax shall not include the following amounts , namely:

(i) any amount of interest, relating to deposits referred to in clause (xxiii) or clause (xxiv) of sub - section (2 ) , which has been included in the total income of the assessee of the previous year or years preceding such previous year; and

(ii) anyamount received by the nominee or legal heir of the assessee , on the death of such assessee , other than interest, if any, accrued thereon, which was not included in the total income of the assessee for the previous year or years preceding such previous year. " .

14. For section 80D of the Income- tax Act , the following section shall be substituted with effect from the 1st day ofApril , 2009 ,-

Substitution of new section for section 80D .

Deduction in

respect of

health

insurance

premia .

'80D.( 1) In computing the total income of an assessee, being an individual or a Hindu undivided family , there shall be deducted such sum, as specified in sub - section (2) or sub - section( 3) , payment of which is made by any mode , other than cash , in the previous year out of his income chargeable to tax .

(2) Where the assessee is an individual , the sum referred to in sub -section ( 1 ) shall be the aggregate of the following, namely:-

(a) thewhole ofthe amount paid to effect or to keep in force an insurance on the health of the assessee or his family as does not exceed in the aggregate fifteen thousand rupees ; and

(b) the whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of the assessee as does not exceed in the aggregate fifteen thousand rupees .

Explanation . For the purposes of clause ( a ) , " family" means the spouse and dependant children of the assessee .

(3) Where the assessee is a Hindu undivided family, the sum referred to in sub- section ( 1 ) shall be the whole of the amount paid to effect or to keep in force an insurance on the health of any member of that Hindu undivided family as does not exceed in the aggregate fifteen thousand rupees .

(4) Where the sum specified in clause (a) or clause ( b) of sub -section (2 ) or in sub -section ( 3 ) is paid to effect or keep in force an insurance on the health of any person specified therein , and who is a senior citizen , the provisions of this section shall have effect as if for the words " fifteen thousand rupees " , the words " twenty thousand rupees " had been substituted .

Explanation . For the purposes of this sub - section, " senior citizen " means an individual resident in India who is of the age of sixty - five years or more at any time during the relevant previous year.

(5) The insurance referred to in this section shall be in accordance with a scheme made in this behalf by- 11

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57 of 1972

(a) theGeneral Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation ) Act, 1972 and approved by the Central Government in this behalf; or

41 of 1999

(b) any other insurer and approved by the Insurance Regulatory and Development Authority established under sub- section ( 1 ) of section 3 of the Insurance Regulatory and Development Authority Act, 1999. ' .

15. In section 80 - IB of the Income-tax Act,-

Amendment of section 80-1B .

(a) in sub -section (9), after the second proviso, the following proviso shall be inserted , namely:-

" Provided also that no deduction under this sub - section shall be allowed to an undertaking engaged in refining of mineral oil , if it begins refining on or after the 1st day ofApril, 2009.";

(b) after sub - section ( 11B) , the following sub -section shall be inserted with effect from the 1st day ofApril , 2009 , namely:-

'(IIC) The amount of deduction in the case of an undertaking deriving profits from the business of operating and maintaining a hospital located anywhere in India, other than the excluded area, shall be hundred per cent . ofthe profits and gains derived from such business for a period of five consecutive assessment years , beginning with the initial assessment year, if--

(i) the hospital is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April , 2008 and ending on the 31st day of March , 2013;

(ii) the hospital has at least one hundred beds for patients ;

(iii) the construction of the hospital is in accordance with the regulations or bye- laws of the local authority ; and

(iv) the assessee furnishes along with the return of income, a report ofaudit in such form and containing such particulars , as may be prescribed , and duly signed and verified by an accountant, as defined in the Explanation to sub -section (2 ) of section 288 , certifying that the deduction hasbeen correctly claimed.

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

(a) a hospital shall be deemed to have been constructed on the date on which a completion certificate in respect of such construction is issued by the local authority concerned;

(b) " initial assessment year " means the assessment year relevant to the previous year in which the business of the hospital starts functioning ;

(1) Greater Mumbai urban agglomeration ;

(ii) Delhi urban agglomeration ;

( iii) Kolkata urban agglomeration;

(iv) Chennai urban agglomeration ;

(v) Hyderabad urban agglomeration;

(vi) Bangalore urban agglomeration;

(vii) Ahmedabad urban agglomeration;

(viii) District ofFaridabad;

(ix) District ofGurgaon;

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(x) District ofGautam Budh Nagar;

(xi) District ofGhaziabad;

(xii) District ofGandhinagar; and

(xiii) City of Secunderabad;

(d) the area comprising an urban agglomeration shall be the area included in such urban agglomeration on the basis of the 2001 census . ' .

16. In section 80 - ID of the Income-tax Act, with effect from the 1st day ofApril , 2009,---

Amendment of section 80- ID.

(a) in sub - section ( 2 ) , after clause ( ii) , the following clause shall be inserted, namely:-

"( iii) engaged in the business of hotel located in the specified district having a World Heritage Site , if such hotel is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April, 2008 and ending on the 31st day of March , 2013. " ;

(b) in sub - section (6) , after clause (d) , the following shall be inserted, namely: -

(e) " specified district having a World Heritage Site" means districts , specified in column (2 ) of the Table below, of the States , specified in the corresponding entry in column (3 ) of the said Table:

(1)

S.No. Name of district (2)

1. Agra

2. Jalgaon

3. Aurangabad

4. Kancheepuram

5. Puri

6. Bharatpur

7. Chhatarpur

8. Thanjavur

9. Bellary

Table

Name of State (3)

Uttar Pradesh

Maharashtra

TamilNadu

Orissa

Rajasthan

Madhya Pradesh

Tamil Nadu

Karnataka

WestBengal

10. South 24 Parganas Kolkata urban agglomeration (excluding areas falling within the on the basis of the 2001 census )

11. Chamoli

12. Raisen

13. Gaya

14. Bhopal

15 Panchmahal

16. Kamrup

17. Goalpara

18. Nagaon

19. North Goa

20. South Goa

21. Darjeeling

22. Nilgiri

Uttarakhand

Madhya Pradesh

Bihar

Madhya Pradesh

Gujarat

Assam

Goa

WestBengal

Tamil Nadu .' .

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Amendment of section 88E.

17. In section 88E of the Income- tax Act , after sub- section (2 ) , the following sub- section shall be inserted, namely :-

"(3 ) No deduction under this section shall be allowed in, or after , the assessment year beginning on the 1st day of April , 2009. " .

Amendment of section 111A .

18. In section 111A of the Income -tax Act, in sub- section ( 1 ) , in clause ( i) , for the words " ten per cent . " , the words " fifteen per cent . " shall be substituted with effect from the 1st day ofApril, 2009.

Amendment of section 115AD 19. In section 115AD of the Income- tax Act, in sub-section ( 1) , in the proviso , for the words " ten per cent. " , the words " fifteen per cent. " shall be substituted with effect from the 1st day ofApril , 2009.

20. In section 115JB ofthe Income- tax Act, after sub - section ( 2 ) ,-

Amendment of section 115JB .

(a) the Explanation shall be numbered as Explanation 1 and in Explanation 1 as so numbered , after clause (g ) , for the portion beginning with the words " if any amount referred " and ending with the words " as reduced by " , the following shall be substituted and shall be deemed to have been substituted with effect from the 1st day ofApril , 2001 , namely:-

"(h) the amount of deferred tax and the provision therefor ,

ifany amount referred to in clauses (a) to (h) is debited to the profit and loss account , and as reduced by-" ;

(b) after Explanation 1 as so numbered , the following shall be inserted and shall be deemed to have been inserted with effect from the 1st day ofApril , 2001 , namely:-

"Explanation 2.- For the purposes of clause (a ) of Explanation 1, the amount of income - tax shall include-

(i) any tax on distributed profits under section 115 -O or on distributed income under section 115R;

(ii) any interest charged under this Act ;

(iii) surcharge , if any, as levied by the Central Acts from time to time;

( iv) Education Cess on income- tax , if any, as levied by the Central Acts from time to time ; and

(v) Secondary and Higher Education Cess on income- tax, if any, as levied by the Central Acts from time to time . " .

21. In section 115 -O of the Income- tax Act , after sub-section ( 1) , the following sub- section shall be inserted , namely:-

Amendment of section 115-0.

"( 1A) The amount referred to in sub - section ( 1) shall be reduced by the amount ofdividend, if any, received by the domestic company during the financial year , if-

(a) such dividend is received from its subsidiary;

(b) the subsidiary has paid tax under this section on such dividend ; and

Provided that the same amount of dividend shall not be taken into account for reduction more than once .

Explanation . For the purposes of this sub - section , a company shall be a subsidiary of another company, if such other company holds more than half in nominal value of the equity share capital of the company. " .

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22. In section 115 WB of the Income- tax Act,-

Amendment of section 115-WB .

(a) in sub-section ( 1 ) , in the Explanation to clause ( d) , in clause ( i) , for the words " and includes employees ' stock option " , the words " and, where employees ' stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme" shall be substituted;

(b) in sub - section (2 ) , with effect from the 1st day ofApril , 2009,-

(1) in clause ( B) , after sub - clause ( ii) , the following sub- clause shall be inserted, namely:---

"( iii) any expenditure on or payment through non-transferable pre- paid electronic meal card usable only at eating joints or outlets and which fulfils such other conditions as may be prescribed ; " ;

(II) in clause (E) , for the Explanation , the following Explanation shall be substituted, namely:-

"Explanation . For the purposes of this clause , any expenditure incurred or payment made to---

(1) fulfil any statutory obligation; or

( ii) mitigate occupational hazards ; or

( iii) provide first aid facilities in the hospital or dispensary run by the employer; or

( iv) provide crèche facility for the children of the employee ; or

(v) sponsor a sportsman, being an employee ; or

(vi) organise sports events for employees ,

shall not be considered as expenditure for employees' welfare; " ;

(III) clause (K) shall be omitted.

Amendment of section 115WC .

23. In section 115 WC of the Income-tax Act , in sub- section ( 1 ) , with effect from the 1st day ofApril , 2009 ,-

(i) in clause ( c) , for the words , brackets and letters "clauses (A ) to (K) ", the words, brackets and letters " clauses ( A ) to (L) " shall be substituted;

(ii) in clause (d) , for the words , brackets and letters " clauses ( L) to ( P) " , the words, brackets and letters " clauses ( M) to ( P) " shall be substituted .

Amendment of section 115WD.

24. In section 115WD of the Income -tax Act , in sub - section ( 1) , in the Explanation , in clause (a) , for the figures, letters and words " 31st day of October" , the figures , letters and words " 30th day of September " shall be substituted.

Amendment of section 115 WE .

25. In section 115WE of the Income- tax Act , for sub- section ( 1 ) , the following sub- sections shall be substituted , namely:-

'(1) Where a return has been made under section 115WD, such return shall be processed in the following manner, namely:---

(a) the value of fringe benefits shall be computed after making the following adjustments , namely:

(1) any arithmetical error in the return ; or

(ii) an incorrect claim , if such incorrect claim is apparent from any information in the return;

(b) the tax and interest , if any, shall be computed on the basis of the value of fringe benefits computed under clause (a) ;

(c) the sum payable by, or the amount of refund due to , the assessee shall be determined after adjustment of the tax and interest, if any, computed under 15

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clause (b) by any advance tax paid, any tax paid on self- assessment and any amount paid otherwise by way of tax or interest;

(d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c ) ; and

(e) the amount of refund due to the assessee in pursuance of the determination under clause ( c ) shall be granted to the assessee:

Provided that no intimation under this sub - section shall be sent after the expiryofone year from the end ofthe financial year in which the return is made.

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

(a)" an incorrect claim apparent from any information in the return " shall mean a claim, on the basis of an entry, in the return ,

(i) ofan item, which is inconsistent with another entry ofthe same or some other item in such return;

(ii) in respect ofwhich the information required to be furnished to substantiate such entry has not been so furnished under this Act; or

(iii) in respect ofa deduction or value of fringe benefits , where such deduction or value exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;

(b) the acknowledgment of the, return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to , the assessee under clause (c) , and where no adjustment has been made under clause (a) .

(1A) For the purposes of processing of returns under sub- section ( 1 ) , the Board may make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee as required under that sub- section .

(IB) Save as otherwise expressly provided , for the purpose of giving effect to the scheme made under sub - section ( 1A) , the Central Government may, by notification inthe Official Gazette , direct that any of the provisions ofthis Act relating to processing of returns shall not apply or shall apply with such exceptions , modifications and adaptations as may be specified in that notification; so, however, that no direction shall be issued after the 31st day of March , 2009 .

(IC) Every notification issued under sub-section ( IB) , along with the scheme made under sub - section ( 1A ) , shall , as soon as may be after the notification is issued , be laid before each House of Parliament. ' .

Insertion ofnew section 115WKB.

26.After section 115 WKA of the Income-tax Act, the following section shall be inserted, namely:-

Deemed payment oftax by employee.

"115WKB. ( 1 ) Where an employer has paid any fringe benefit tax with respect to allotment or transfer of specified security or sweat equity shares , referred to in clause (d) of sub-section ( 1 ) of section 115WB , and has recovered such tax subsequently from an employee , it shall be deemed that the fringe benefit tax so recovered is the tax paid by such employee in relation to the value of the fringe benefit provided to him only to the extent to which the amount thereof relates to the value ofthe fringe benefit provided to such employee , as determined under clause ( ba) of sub-section ( 1 ) of section 115WC.

(2) Notwithstanding anything contained in any other provisions of this Act, where the fringe benefit tax recovered from the employee is deemed to be the tax paid 16

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by such employee under sub - section ( 1 ) , such employee shall , under this Act , not be entitled to claim

(i) any refund out of such payment of tax ; or

(ii) any credit of such payment of tax against tax liability on other income or against any other tax liability. " .

27. In section 139 of the Income- tax Act,-

Amendment of section 139.

(a) insub -section ( 1), in Explanation 2 , in clause ( a) , for the figures , letters and words" 31st day of October " , the figures , letters and words " 30th day of September " shall be substituted;

(b) in sub - section (9) , in the Explanation , in clause (c) , in sub - clause ( i) , the words , figures and letters " before the 1st day of April, 2008 " shall be omitted .

Amendmentof section 142.

28. In section 142 of the Income- tax Act, in sub- section ( 2C) , in the proviso , for the words " on an application " , the words " suo motu , or on an application " shall be substituted.

29. In section 143 of the Income- tax Act,-

Amendment of section 143.

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

'( 1) Where a return has been made under section 139 , or in response to a notice under sub - section ( 1 ) of section 142, such return shall be processed in the following manner , namely: ----

(a) the total income or loss shall be computed after making the following adjustments , namely:--

(i) any arithmetical error in the return ; or

(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return;

(b) the tax and interest , if any, shall be computed on the basis of the total income computed under clause (a) ;

(c) the sum payable by, or the amount of refund due to , the assessee shall be determined after adjustment of the tax and interest, if any, computed under clause (b) by any tax deducted at source , any tax collected at source, any advance tax paid , any relief allowable under an agreement under section 90 or section 90A , or any relief allowable under section 91 , any rebate allowable under Part A of Chapter VIII , any tax paid on self- assessment and any amount paid otherwise by way of tax or interest;

(d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to , the assessee under clause ( c) ; and

(e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee :

Provided that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is reduced but no tax or interest is payable by, or no refund is due to , him:

Provided further that no intimation under this sub - section shall be sent after the expiry of one year from the end of the financial year in which the return ismade.

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

(a)" an incorrect claim apparent from any information in the return " shall mean a claim , on the basis of an entry, in the return,- 17

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(i) ofan item , which is inconsistent with another entry of the same or some other item in such return;

(ii) in respect ofwhich the information required to be furnished under this Act to substantiate such entry has not been so furnished; or

(iii) in respect of a deduction , where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;

(b) the acknowledgment of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to , the assessee under clause (c) , and where no adjustment has been made under clause (a) .

( 1A) For the purposes of processing of returns under sub-section ( 1 ) , the Board may make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to , the assessee as required under the said sub-section.

(IB) Save as otherwise expressly provided, for the purpose of giving effect to the scheme made under sub- section ( 1A) , the Central Government may, by notification in the Official Gazette, direct that any ofthe provisions of this Act relating to processing of returns shall not apply or shall apply with such exceptions , modifications and adaptations as may be specified in that notification ; so, however, that no direction shall be issued after the 31st day of March , 2009 .

(IC) Every notification issued under sub - section (IB ) , alongwith the scheme made under sub - section ( 1A) , shall , as soon as may be after the notification isissued, be laid before each House of Parliament . ' ;

(b) in sub - section (2 ) , in clause (ii) , for the proviso , the following proviso shall be substituted , namely:-

"Provided that no notice under clause ( ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished." .

Amendment of section 147.

30. In section 147 of the Income - tax Act, after the proviso , the following proviso shall be inserted , namely:-

"Provided further that the Assessing Officer may assess or reassess such income , other than the income involving matters which are the subject matter of any appeal , reference or revision , which is chargeable to tax and has escaped assessment: " .

Amendment of section 151.

31. In section 151 ofthe Income -taxAct, after sub- section (2), the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of October , 1998 , namely:-

"Explanation. For the removal of doubts , it is hereby declared that the Joint Commissioner, the Commissioner or the Chief Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148 , need not issue such notice himself. " .

32. In section 153 of the Income-tax Act , after sub- section ( 3 ) ,-

Amendment of section 153 .

(a) the following sub - section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June , 2003 , namely:-

"(4) Notwithstanding anything contained in the foregoing provisions of this , section , sub-section (2 ) of section 153A and sub - section ( 1 ) of section 153B , the order of assessment or reassessment, relating to any assessment year , which stands revived under sub - section (2 ) of section 153A, shall be made 18

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within one year from the end of the month of such revival or within the period specified in this section or sub- section ( 1 ) of section 153B, whichever is later. " ;

(b) in Explanation 1 , after the proviso , the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June , 2007 , namely:-

" Provided further that where a proceeding before the Settlement Commission abates under section 245HA, the period of limitation available under this section to the Assessing Officer for making an order of assessment , reassessment or re- computation , as the case maybe , shall , after the exclusion of the period under sub - section ( 4) of section 245HA, be not less than one year ; and where such period of limitation is less than one year , it shall be deemed to have been extended to one year ; and for the purposes of determining the period of limitation under sections 149 , 153B , 154, 155 , 158BE and 231 and for the purposes of payment of interest under section 243 or section 244 or , as the case may be , section 244A, this proviso shall also apply accordingly." .

33. Section 153A of the Income - tax Act shall be renumbered as sub - section ( 1 ) thereof

Amendment of section 153A. and,-

(a) in sub - section ( 7 ) as so renumbered, in the second proviso, for the words " referred to in this section " , the words " referred to in this sub - section " shall be substituted and shall be deemed to have been substituted with effect from the 1st day ofJune , 2003;

(b) after sub - section ( 1) as so renumbered and before the Explanation , the following shall be inserted and shall be deemed to have been inserted with effect from the1stday of June, 2003 , namely:-

" (2) If any proceeding initiated or any order of assessment or reassessment made under sub - section ( 1 ) has been annulled in appeal or any other legal proceeding, then , notwithstanding anything contained in sub- section ( 1 ) or section 153 , the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub - section ( 1 ) , shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner:

Provided that such revival shall cease to have effect, if such order of annulment is set aside . " .

Amendment of section 153B .

34. In section 153B of the Income- tax Act, in sub- section ( 1 ), with effect from the 1st. day of June , 2003 ,-

( i) in clause (a), for the word , figures and letter " section 153A " , the words , brackets , figures and letter " sub - section ( 1 ) of section 153A " shall be substituted and shall be deemed to have been substituted;

(ii) in the Explanation ,--

(4) after clause (vi) and before the words " shall be excluded" , the following clause shall be inserted and shall be deemed to have been inserted , namely:-

"( vii) the period commencing from the date of annulment of a proceeding or order of assessment or reassessment referred to in sub- section ( 2) of section 153A till the date of the receipt of the order setting aside the order of such annulment, by the Commissioner , " ;

דין (B) in the proviso , for the words , brackets and letters " clause ( a ) or clause (b) of this section " , the words , brackets and letters " clause ( a ) or clause ( b ) of this sub -section " shall be substituted and shall be deemed to have been substituted.

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of section 153C . Amendment 35. In section 153C of the Income - tax Act , in sub - section ( 1 ) , in the proviso , for the word, figures and letter " section 153A " , the words , brackets , figures and letter " sub - section (1) of section 153A" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of June , 2003 .

Amendment of section 153D 36. In section 153D of the Income-tax Act , for the word , figures and letter " section 153A" , the words , brackets , figures and letter " sub - section ( 1 ) of section 153A" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of June, 2003.

Amendment of section 156.

37. In section 156 of the Income- tax Act , the following proviso shall be inserted, namely:-

"Provided that where any sum is determined to be payable by the assessee under sub - section ( 1 ) of section 143 , the intimation under that sub - section shall be deemed to be a notice of demand for the purposes of this section. " .

Amendment of section 191.

38. In section 191 of the Income -tax Act, for the Explanation, the following Explanation shall be substituted and shall be deemed to have been substituted with effect from the 1st day ofJune, 2003 , namely:-

"Explanation . For the removal of doubts , it is hereby declared that if any person, including the principal officer of a company,

(a) who is required to deduct any sum in accordance with the provisions ofthisAct; or

(b) referred to in sub - section ( 1A ) of section 192, being an employer.

does not deduct, or after so deducting fails to pay, or does not pay, the whole or any part of the tax, as requiredby or under this Act, and where the assessee has also failed to pay such tax directly, then, such person shall, without prejudice to any other consequences which he may incur , be deemed to be an assessee in default within the meaning of sub - section (1 ) of section 201 , in respect of such tax ." .

of section 193 Amendment 39. In section 193 of the Income-tax Act, in the proviso , after clause (viii) and before the Explanation , the following clause shall be inserted with effect from the 1st day of June , 2008, namely:-

42 of 1956

"(ix) any interest payable on any security issued by a company, where such security is in dematerialised form and is listed on a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act , 1956 and the rules made thereunder . " .

Amendment of section 194C.

40. In section 194C of the Income-tax Act, in sub- section ( 1 ) , after clause (j ) , the following clause shall be inserted with effect from the 1st day of June , 2008 , namely:-

"(ja) any association of persons or body of individuals , whether incorporated or not; or" .

41. In section 195 of the Income-tax Act , after sub-section ( 5 ) , the following sub- section shall be inserted, namely:-

Amendment of section 195.

"(6) The person referred to in sub - section ( 1 ) shall furnish the information relating to payment of any sum in such form and manner as may be prescribed by the Board.".

Substitution of new section for section 199 42. For section 199 of the Income- tax Act , the following section shall be substituted, namely:-

deducted. Credit for tax "199. (1 ) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment oftax on behalf of the person from whose income the deduction was made , or of the owner of 20

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the security, or of the depositor or of the owner of property or of the unit- holder, or of the shareholder , as the case may be .

(2) Any sum referred to in sub - section ( 14 ) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made .

(3) The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms ofthe provisions ofthis Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub - section ( 1) and sub - section (2 ) and also the assessment year for which such credit may be given . " .

Amendment of section 201

43. Insection 201 of the Income- tax Act, for sub - section ( 1 ), the following sub - section shali be substituted and shall be deemed to have been substituted with effect from the 1st day ofJune , 2002 , namely:-

"( 1) Where any person , including the principal officer of a company,-

(a) who is required to deduct any sum in accordance with the provisions ofthisAct; or

(b) referred to in sub- section ( 1A ) of section 192 , being an employer,

does not deduct, or does not pay, or after so deducting fails to pay , the whole or any part of the tax , as required by or under this Act , then , such person , shall , without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax:

Provided that no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such person , without good and sufficient reasons , has failed to deduct and pay such tax." .

Amendment of section 203 .

44. In section 203 of the Income- tax Act , in sub - section ( 3 ), for the figures , letters and words " 1st day ofApril , 2008 " , the figures , letters and words " 1st day ofApril , 2010 " shall be substituted.

45. In section 206C ofthe Income-taxAct,--

Amendment of section 206C .

(a) for sub - section (4) , the following sub - section shall be substituted , namely:---

"(4)Any amount collected in accordance with the provisions of this section and paid to the credit of the Central Government shall be deemed to be a payment of tax on behalf of the person from whom the amount has been collected and credit shall be given to such person for the amount so collected in a particular assessment year in accordance with the rules as may be prescribed by the Board from time to time ." ;

(b) in sub- section (5) , in the first proviso , for the figures , letters and words " 1st day ofApril , 2008" , the figures , letters and words " 1st day of April , 2010 " shall be substituted.

Amendment of section 254.

46.In section 254 ofthe Income- tax Act , in sub -section (24) , for the third proviso , the following proviso shall be substituted with effect from the 1st day ofOctober, 2008 , namely:-

"Provided also that if such appeal is not so disposed ofwithin the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not , in any case , exceed three hundred and sixty - five days , the order of stay shall stand vacated after the expiry of such period or periods . even ifthe delay in disposing of the appeal is not attributable to the assessee ." .

Insertion of new section 268A .

47. After section 268 of the Income- tax Act , the following section shall be inserted and shall be deemed to have been inserted with effect from the 1st day ofApril, 1999, namely:-

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"268A . ( 1 ) The Board may, from time to time, issue orders , instructions or directions to other income - tax authorities , fixing such monetary limits as it may deem fit, for the purpose of regulating filing of appeal or application for reference by any income- tax authority under the provisions of this Chapter .

Filing of appeal or application for reference by income- tax authority.

(2) Where, in pursuance of the orders , instructions or directions issued under sub- section ( 1 ) , an income - tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of-

(a) the same assessee for any other assessment year ; or

(b) any other assessee for the same or any other assessment year .

(3) Notwithstanding that no appeal or application for reference has been filed by an income - tax authority pursuant to the orders or instructions or directions issued under sub - section ( 1 ) , it shall not be lawful for an assessee , being a party in any appeal or reference, to contend that the income - tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case .

(4) The Appellate Tribunal or Court, hearing such appeal or reference , shall have regard to the orders , instructions or directions issued under sub - section ( 1 ) and the circumstances under which such appeal or application for reference was filed or not filed in respect of any case .

(5) Every order, instruction or direction which has been issued by the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub- section ( 1 ) and the provisions of sub - sections (2 ) , ( 3 ) and ( 4) shall apply accordingly.".

Amendment of section 271 .

48. In section 271 of the Income - tax Act , after sub -section ( 1A ) , the following sub- section shall be inserted and shall be deemed to have been inserted with effect from the 1st day ofApril , 1989, namely:-

"( 1B) Where any amount is added or disallowed in computing the total income or loss of an assessee in any order of assessment or reassessment and the said order contains a direction for initiation of penalty proceedings under sub- section (1 ) , such an order of assessment or reassessment shall be deemed to constitute satisfaction of theAssessing Officer for initiation of the penalty proceedings under sub - section ( 1 ) . " .

Amendment of section 273AA.

49.After section 273A of the Income- tax Act, the following section shall be inserted, namely:-

"273AA. (1 ) A person may make an application to the Commissioner for granting immunity from penalty, if-

Power of Commissioner to grant inmunity from penalty.

(a) he has made an application for settlement under section 245C and the proceedings for settlement have abated under section 245HA; and

(b) the penalty proceedings have been initiated under this Act .

(2) The application to the Commissioner under sub -section (1 ) shall not be made after the imposition of penalty after abatement.

(3) The Commissioner may, subject to such conditions as he may think fit to impose, grant to the person immunity from the imposition of any penalty under this Act, if he is satisfied that the person has , after the abatement , co -operated with the income- tax authority in the proceedings before him and has made a full and true .disclosure of his income and the manner in which such income has been derived .

(4) The immunity granted to a person under sub -section ( 3) shall stand withdrawn , ifsuch person fails to comply with any condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted.

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(5) The immunity granted to a person under sub - section (3) may, at any time, be withdrawn by the Commissioner , if he is satisfied that such person had , in the course of any proceedings , after abatement , concealed any particulars material to the assessment from the income-tax authority or had given false evidence, and thereupon such person shall become liable to the imposition of any penalty under this Actto which such person would have been liable , had not such immunity been granted. " .

50.After section 278AA of the Income- tax Act , the following section shall be inserted , namely:---

Insertion of new section 278AB.

"278AB . ( 1 ) A person may make an application to the Commissioner for granting immunity from prosecution, ifhe has made an application for settlement under section 245C and the proceedings for settlement have abated under section 245НА .

Power of Commissioner to grant immunity from prosecution.

(2) The application to the Commissioner under sub - section ( 1 ) shall not be made after institution of the prosecution proceedings after abatement .

(3) The Commissioner may, subject to such conditions as he may think fit to impose, grant to the person immunity from prosecution for any offence under this Act, ifhe is satisfied that the person has, after the abatement, co-operated with the income- tax authority in the proceedings before him and has made a full and true disclosure of hisincome and the manner in which such income has been derived:

45 of 1860 .

Provided that where the application for settlement under section 245C had been made before the 1st day of June , 2007 , the Commissioner may grant immunity from prosecution for any offence under this Act or under the Indian Penal Code or under any other Central Act for the time being in force .

(4) The immunity granted to a person under sub - section (3 ) shall stand withdrawn , if such person fails to comply with any condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted.

(5) The immunity granted to a person under sub - section (3 ) may, at any time , be withdrawn by the Commissioner, if he is satisfied that such person had , in the course of any proceedings , after abatement , concealed any particulars material to the assessment from the income - tax authority or had given false evidence , and thereupon such person may be tried for the offence with respect to which the immunity was granted or for any other offence of which he appears to have been guilty in connection with the proceedings ." .

51. After section 282 of the Income - tax Act , the following section shall be inserted with effect from the 1st day of June , 2008 , namely:-

Insertion of new section 282A.

"282A. ( 1 ) Where this Act requires a notice or other document to be issued by any income-tax authority, such notice or other document shall be signed in manuscript by that authority.

Authentication of notices and other documents .

(2) Every notice or other document to be issued , served or given for the purposes of this Actby any income- tax authority, shall be deemed to be authenticated if the name and office of a designated income- tax authority is printed , stamped or otherwise written thereon .

(3) For the purposes of this section , a designated income - tax authority shall mean any income- tax authority authorised by the Board to issue , serve or give such notice or other document after authentication in the manner as provided in sub - section (2) ." .

52. After section 292B of the Income- tax Act , the following section shall be inserted , namely:-

Insertion of new section 292BB . Notice deemed to be valid in certain circumstances

"292BB. Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment , it shall be deemed that any notice under any provision of this Act , which is required to be served upon him , has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- 23

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(a) not served upon him; or

(b) not served upon him in time; or

53. Section 292C of the Income- tax Act shall be renumbered as sub - section ( 1) thereof .Amendment of section 292C.

and-

(a) in sub - section ( 1 ) as so renumbered, after the words and figures " search under section 132" , the words , figures and letter " or survey under section 133A" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 2002;

(b) after sub - section ( 1 ) as so renumbered, the following sub -section shall be inserted , and shall be deemed to have been inserted with effect from the 1st day of October, 1975 namely: ---

"(2) Where any books of account , other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 132A, then, the provisions of sub- section ( 1 ) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in clause (a) or clause ( b ) or clause (c ) , as the case may be , of sub-section ( 1 ) of section 132A, had been found in the possession or control of that person in the course of a search under section 132." .

Amendment of section 295 .

54. In section 295 ofthe Income-tax Act, in sub-section (2) , after clause (1) , the following clause shall be inserted, namely:--

"(fa) the form and manner in which the information relating to payment of any sum may be furnished under sub - section ( 6) of section 195;" .

Fourth Schedule . Amendment of 55. In the Fourth Schedule to the Income-tax Act, in Part A, in rule 3, in sub -rule (1), in the first proviso, for the figures , letters and words " 31st day of March , 2008 " , the figures , letters and words " 31st day of March , 2009 " shall be substituted.

Wealth-tax

56. In section 17 of the Wealth -tax Act ,-

Amendment of section 17.

(a) in sub -section ( 1 ) , after the second proviso , the following proviso shall be inserted, namely:-

"Provided also that the Assessing Officer may assess or reassess such netwealth, other than the net wealth which is the subject matter of any appeal, reference or revision , which is chargeable to tax and has escaped assessment. " ;

(b) in sub- section ( IB) , after clause ( b ) , the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of October, 1998 , namely:-

"Explanation . For the removal of doubts, it is hereby declared that the Joint Commissioner, the Commissioner or the Chief Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice , need not issue such notice himself." .

Amendment of section 17A.

57. In section 17A of the Wealth - tax Act, after sub -section (4) , in Explanation 1, after the proviso , the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June , 2007, namely:---

"Provided further that where a proceeding before the Settlement Commission abates under section 22HA, the period of limitation referred to in this section available 24

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to the Assessing Officer for making an order of assessment or reassessment , as the case may be , shall , after the exclusion of the period under sub - section (4) of section 22HA , be not less than one year ; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year.".

Amendment of section 18

58. In section 18 of the Wealth - tax Act, after sub- section ( 1 ) , the following sub - section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1989, namely:-

" ( 14) Where any amount is added or disallowed in computing the net wealth of an assessee in any order of assessment or reassessment and the said order contains a direction for initiation of penalty proceedings under sub - section ( 1 ) , such an order of assessment or reassessment shall be deemed to constitute satisfaction of the Assessing Officer for initiation of the penalty proceedings under sub - section ( 1 ) . ".

59. After section 18B of the Wealth- tax Act , the following section shall be inserted, namely:-

" 18BA. ( 1 ) Aperson may make an application to the Commissioner for granting immunity from penalty, if-

Insertion of new section 18BA. Powerof Commissioner togrant immunityfrom penalty.

(a) he has made an application for settlement under section 22C and the proceedings for settlement have abated under section 22HA; and

(b) the penalty proceedings have been initiated under this Act.

(2) The application to the Commissioner under sub - section ( 1 ) shall not be made after the imposition of penalty after abatement .

(3) The Commissioner may, subject to such conditions as he may think fit to impose, grant to the person immunity from the imposition of any penalty under this Act, if he is satisfied that the person has , after the abatement , co - operated with the wealth-tax authority in the proceedings before him and has made a full and true disclosure ofhis net wealth and the manner in which such net wealth has been derived .

(4) The immunity granted to a person under sub - section ( 3 ) shall stand withdrawn, if such person fails to comply with any condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted.

(5) The immunity granted to a person under sub - section ( 3) may, at any time , be withdrawn by the Commissioner, if he is satisfied that such person had , in the course of any proceedings , after abatement , concealed any particulars , material to the assessment , from the wealth -tax authority or had given false evidence , and thereupon such person shall become liable to the imposition of any penalty under this Actto which such person would have been liable , had not such immunity been granted. " .

Insertion of new section 35GA .

60. After section 35G of the Wealth - tax Act, the following section shall be inserted , namely:-

1 "35GA . ( 1 ) A person may make an application to the Commissioner for granting immunity from prosecution , if he has made an application for settlement under section 22C and the proceedings for settlement have abated under section 22HA .

Powerof Commissioner to grant immunity from prosecution.

(2) The application to the Commissioner under sub - section ( 1 ) shall not be made after institution of the prosecution proceedings after abatement .

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(3) The Commissioner may, subject to such conditions as he may think fit to impose , grant to the person immunity from prosecution for any offence under this Act , ifhe is satisfied that the person has , after the abatement , co - operated with the wealth- tax authority in the proceedings before him and has made a full and true disclosure of his net wealth and the manner in which such net wealth has been derived:

45 of 1860.

Provided that where the application for settlement under section 22C had been made before the 1st day of June , 2007, the Commissioner may grant immunity from prosecution for any offence under this Act or under the Indian Penal Code or under any other Central Act for the time being in force .

(4) The immunity granted to a person under sub - section ( 3 ) shall stand withdrawn , ifsuch person fails to comply with any condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted.

(5) The immunity granted to a person under sub - section ( 3 ) may, at any time , be withdrawn by the Commissioner , if he is satisfied that such person had, in the course of any proceedings , after abatement ; concealed any particulars , material to the assessment, from the wealth- tax authority or had given false evidence , and thereupon such person may be tried for the offence with respect to which the immunity was granted or for any other offence of which he appears to have been guilty in connection with the proceedings ." .

Insertion of new section 42.

61. After section 41 of the Wealth- tax Act, the following section shall be inserted, namely:-

Notice deemed to be valid in certain circumstances .

"42. Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment , it shall be deemed that any notice under any provision of this Act, which is required to be served upon him , has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was-

(a) not served upon him ; or

(b) not served upon him in time; or

of section 42D . Amendment 62. Section 42D ofthe Wealth - tax Act shall be renumbered as sub - section (1 ) thereof and after sub- section ( 1 ) as so renumbered , the following sub -section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of October , 1975 , namely:---

"(2) Where any books ofaccount , other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 37B , then , the provisions of sub - section ( 1 ) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in clause (a ) or clause (b) or clause (c ) , as the case may be , of sub - section ( 1 ) of section 37B , had been found in the possession or control of that person in the course of a search under section 37A. " .

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CHAPTER IV

INDIRECT TAXES

Customs

63. In section 28B of the Customs Act , 1962 ( hereinafter referred to as the Customs 52 of 1962 . Act),-

Amendment ofsection 28B .

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

" ( 14) Every person who has collected any amount in excess of the duty assessed or determined or paid on any goods or has collected any amount as representing duty of customs on any goods which are wholly exempt or are chargeable to nil rate of duty from any person in any manner, shall forthwith pay the amount so collected to the credit of the Central Government . " ;

(ii) in sub - section (2) , for the word, brackets and figure " sub- section ( 1 ) " , the words, brackets , figures and letter " sub - section ( 1 ) or sub- section ( 14 ) , as the case may be, " shall be substituted;

(iii) in sub -section ( 4) , --

(a) for the words , brackets and figures " sub- section ( 1 ) or sub - section (3) " , the words , brackets , figures and letter " sub -section ( 1) or sub- section ( 1A ) or sub - section ( 3 ) , as the case may be , " shall be substituted;

(b) for the word, brackets and figure " sub - section ( 1) " , the words , brackets , figures and letter " sub- section ( 1 ) and sub- section ( 1A ) " shall be substituted.

64. In section 108 of the Customs Act , in sub- section ( 1) , the words " duly empowered

Amendment ofsection 108 .

bythe Central Government in this behalf, " shall be omitted and shall be deemed to have been omittedwith effect from the 13th July, 2006 .

Amendment of section 117.

65. In section 117 of the Customs Act, for the words " ten thousand rupees ", the words " one lakh rupees " shall be substituted.

66. In section 129A of the Customs Act, in sub- section (2) , the following proviso and Explanation shall be inserted at the end, namely: --

Amendment ofsection 129A.

'Provided that where the Committee of Commissioners of Customs differs in its opinion regarding the appeal against the order of the Commissioner (Appeals ), it shall state the point or points on which it differs and make a reference to the jurisdictional Chief Commissioner of Customs who shall , after considering the facts of the order , if is ofthe opinion that the order passed by the Commissioner (Appeals) is not legal or proper, direct the proper officer to appeal to the Appellate Tribunal against such order.

Explanation. For the purposes of this sub - section, "jurisdictional Chief Commissioner" means the Chief Commissioner of Customs having jurisdiction over the adjudicating authority in the matter.' .

67. In section 129D of the Customs Act , ----

Amendment of section 129D.

(1) insub -section ( 1 ) , the following proviso shall be inserted at the end, namely:-

" Provided that where the Committee of Chief Commissioners of Customs differs in its opinion as to the legality or propriety of the decision or order ofthe Commissioner of Customs , it shall state the point or points on which it differs and make a reference to the Board which , after considering the facts of the decision or order passed by the Commissioner of Customs , if is of the opinion that the decision or order passed by the Commissioner ofCustoms is not legal or proper, may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out ofthe decision or order , as may be specified in its order." ;

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

"(3 ) Every order under sub - section ( 1 ) or sub - section ( 2 ) , as the case may be , shall be made within a period of three months from the date ofcommunication ofthe decision or order of the adjudicating authority." .

68. After section 129E of the Customs Act, the following section shall be inserted, namely:-

insertion of new section 129EE .

Interest on delayed refund of amount deposited under the provisoto section 129E .

" 129EE. Where an amount deposited by the appellant in pursuance of an order passed by the Commissioner (Appeals) or Appellate Tribunal ( hereinafter referred to as appellate authority) , under the first proviso to section 129E, is required to be refunded consequent upon the order of the appellate authority and such amount is not refunded within three months from the date of communication of such order to the adjudicating authority, unless the operation of the order of the appellate authority is stayed by a superior court or tribunal , there shall be paid to the appellant interest at the rate specified in section 27A after the expiry of three months from the date of communication of the order of the appellate authority, till the date of refund of such amount . " .

69. Section 141 of the Customs Act shall be numbered as sub - section ( 1 ) thereof and, after sub- section ( 1 ) as so numbered , the following sub - section shall be inserted , namely: --

Amendment ofsection 141.

"(2) The imported or export goods may be received, stored , delivered , despatched or otherwise handled in a customs area in such manner as may be prescribed and the responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed." .

70. In section 158 of the Customs Act , in sub - section (2 ) , for clause ( ii) , the following clause shall be substituted , namely:-

Amendment of section 158 .

"(ii) that any person who contravenes any provision of a rule or regulation or abets such contravention or who fails to comply with any provision of a rule or regulation with which it was his duty to comply, shall be liable to a penalty which may extend to fifty thousand rupees ." .

Amendment of

52 of 1962 .

issued under sub-section ( 1 ) of section 25 of the Customs Act, 1962 . notification 71. Inthe notification of the Government of India in the Ministry of Finance ( Department ofRevenue) number G.S.R. 277 (E) , dated the 1st April , 2003 which was issued in exercise of the powers conferred by sub - section ( 1 ) of section 25 ofthe Customs Act , 1962, the condition No. 7, as inserted vide notification of the Government of India in the Ministry of Finance (Department ofRevenue ) number G.S.R. 673 (E) , dated the 17th November, 2005 which provides "that the importer shall be entitled to avail of the drawback or CENVAT credit ofadditional duty leviable under section 3 of the said Customs Tariff Act against the amount debited in the said certificate " , shall be deemed to have , and always to have for all purposes validly, come into force on and from the 4th day of June , 2005 at all material times .

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

Customs Tariff

Act), 72. In the Customs Tariff Act , 1975 ( hereinafter referred to as the Customs Tariff Amendment of Act 51 of 1975.

(i) the First Schedule shall be amended in the manner specified in the Second Schedule;

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( ii) the Second Schedule shall be amended in the manner specified in the Third Schedule.

Excise

1 of 1944 .

Amendment of section 2

73. In section 2 of the Central Excise Act , 1944 ( hereinafter referred to as the Central ExciseAct) , after clause ( d) , the following Explanation shall be inserted, namely: --

'Explanation. For the purposes of this clause , " goods " includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable . ' .

Insertion of new section 3A .

74. After section 3 of the Central Excise Act , the following section shall be inserted, namely:--

" 3A. ( 1 ) Notwithstanding anything contained in section 3 , where the Central Government, having regard to the nature of the process of manufacture or production ofexcisable goods of any specified description , the extent of evasion of duty in regard to such goods or such other factors as may be relevant , is of the opinion that it is necessary to safeguard the interest of revenue , specify, by notification in the Official Gazette, such goods as notified goods and there shall be levied and collected duty of excise on such goods in accordance with the provisions of this section.

Power of Central Government to charge excise duty on the basis of capacity of production in respect of notified goods.

(2) Where a notification is issued under sub - section ( 1 ), the Central Government may, by rules ,-

( a) provide the manner for determination of the annual capacity of production of the factory, in which such goods are produced , by an officer not below the rank of Assistant Commissioner of Central Excise and such annual capacity shall be deemed to be the annual production of such goods by such factory; or

(b) ( i) specify the factor relevant to the production of such goods and the quantity that is deemed to be produced by use of a unit of such factor; and

( ii) provide for the determination of the annual capacity of production of the factory in which such goods are produced on the basis of such factor by an officer not below the rank ofAssistant Commissioner of Central Excise and such annual capacity of production shall be deemed to be the annual production of such goods by such factory:

Provided that where a factory producing notified goods is in operation during a part ofthe year only, the annual production thereof shall be calculated on proportionate basis of the annual capacity of production:

Provided further that in a case where the factor relevant to the production isaltered or modified at any time during the year, the annual production shall be re-determined on a proportionate basis having regard to such alteration or modification .

(3) The duty of excise on notified goods shall be levied, at such rate , on the unit of production or, as the case may be , on such factor relevant to the production , as the Central Government may, by notification in the Official Gazette , specify, and collected in such manner as may be prescribed:

Provided that where a factory producing notified goods did not produce the notified goods during any continuous period of fifteen days or more , the duty calculated on a proportionate basis shall be abated in respect of such period if the manufacturer of such goods fulfils such conditions as may be prescribed .

(4) The provisions of this section shall not apply to goods produced or manufactured , by a hundred per cent. export- oriented undertaking and brought to any other place in India .

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51 of 1975.

5 of 1986 .

Explanation 1.---For the removal of doubts , it is hereby clarified that for the purposes ofsection 3 of the Customs Tariff Act , 1975 , the duty of excise leviable on the notified goods shall be deemed to be the duty of excise leviable on such goods under the First Schedule and the Second Schedule to the Central Excise TariffAct , 1985 , read with any notification for the time being in force .

Explanation 2. For the purposes of this section , the expression " hundred per cent . export- oriented undertaking" shall have the meaning assigned to it in section 3. ' .

75. In section 11B of the Central Excise Act,--

Amendment of section 11B .

(i) insub-section ( 1) ,--

(a) for the words " duty of excise" , wherever they occur, the words " duty of excise and interest, if any, paid on such duty " shall be substituted;

(b) for the word " duty" , wherever it occurs , the words "duty and interest, if any, paid on such duty" shall be substituted;

(ii) in sub - section (2 ) , except in clauses (a ) and (c ) of the first proviso ,--

(a) for the words " duty of excise" , wherever they occur, the words " duty of excise and interest, if any, paid on such duty " shall be substituted;

(b) for the word " duty " , wherever it occurs , the words "duty and interest , if any, paid on such duty" shall be substituted.

76. In section 11D of the Central Excise Act ,-

Amendment of section 11D.

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

"( 14 ) Every person , who has collected any amount in excess of the duty assessed or determined and paid on any excisable goods or has collected any amount as representing duty of excise on any excisable goods which are wholly exempt or are chargeable to nil rate ofduty from any person in any manner, shall forthwith pay the amount so collected to the credit ofthe Central Government. " ;

(ii) in sub -section (2 ) , for the word, brackets and figure " sub- section ( 1 ) " , the words , brackets , figures and letter " sub - section ( 1 ) or sub- section ( IA) , as the case may be , " shall be substituted;

(iii) in sub- section (4) ,-

(a) for the words , brackets and figures " sub- section (1 ) or sub - section (3) ", the words, brackets , figures and letter " sub - section ( 1 ) or sub -section ( 14) or sub - section ( 3 ) , as the case may be , " shall be substituted;

(b) for the word, brackets and figure " sub - section (1 ) " , the words , brackets, figures and letter " sub - section ( 1 ) and sub - section ( 1A) " shall be substituted.

Amendment of section 11DD.

77. In section 11DD of the Central Excise Act, in sub - section ( 1 ) , for the words " buyer of such goods , the person " , the words " buyer of such goods or from any person or where a person has collected any amount as representing duty of excise on any excisable goods which arewholly exempt or are chargeable to nil rate of duty, the person " shall be substituted .

78. In section 35B of the Central Excise Act, in sub- section (2) , the following proviso and Explanation shall be inserted at the end , namely:-

Amendment of section 35B.

'Provided that where the Committee of Commissioners of Central Excise differs in its opinion regarding the appeal against the order of the Commissioner (Appeals ) , it shall state the point or points on which it differs and make a reference to the jurisdictional ChiefCommissioner of Central Excise who shall , after considering the facts of the order, if is of the opinion that the order passed by the Commissioner (Appeals ) is not legal or proper, direct any Central Excise Officer to appeal to the Appellate Tribunal against such order.

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Explanation. For the purposes of this sub - section , "jurisdictional Chief Commissioner" means the Chief Commissioner of Central Excise having jurisdiction over the adjudicating authority in the matter . ' .

79. In section 35E of the Central Excise Act ,-

Amendment of section 35E .

(i) insub -section ( 1 ) , the following proviso shall be inserted at the end, namely:-

"Provided that where the Committee of Chief Commissioners of Central Excise differs in its opinion as to the legality or propriety of the decision or order ofthe Commissioner of Central Excise , it shall state the point or points on which itdiffers and make a reference to the Board which , after considering the facts of the decision or order, if is of the opinion that the decision or order passed by the Commissioner of Central Excise is not legal or proper , may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order , as may be specified in its order." ;

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

"(3 ) Every order under sub - section ( 1) or sub - section (2) , as the case may be, shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority. " .

80. After section 35F of the Central Excise Act , the following section shall be inserted , namely:-

Insertion of new section 35FF.

Interest on delayed refund of amount deposited under the proviso to section 35F.

" 35FF . Where an amount deposited by the appellant in pursuance of an order passed by the Commissioner ( Appeals ) or the Appellate Tribunal (hereinafter referred to as the appellate authority) , under the first proviso to section 35F, is required to be refunded consequent upon the order of the appellate authority and such amount is not refunded within three months from the date of communication of such order to the adjudicating authority, unless the operation of the order of the appellate authority is stayed by a superior court or tribunal , there shall be paid to the appellant interest at the rate specified in section 11BB after the expiry of three months from the date of communication of the order of the appellate authority, till the date of refund of such amount ." .

Amendment ofCentral Excise Rules , 1944 .

81. (1 ) In the Central Excise Rules , 1944 , made by the Central Government in exercise of the powers conferred by section 37 ofthe Central Excise Act , rule 12, as substituted by rule 2 of the Central Excise (Eleventh Amendment ) Rules , 1994 published in the Official Gazette vide notification of the Government of India in the Ministry of Finance (Department of Revenue) , number. G.S.R. 699( E) , dated the 22nd September, 1994 shall stand amended and shall be deemed to have been amended retrospectively in the manner specified in column (2) of the Fourth Schedule on and from the corresponding date specified in column (3 ) of that Schedule against the rule specified in column ( 1 ) of that Schedule .

(2) Notwithstanding anything contained in any judgment , decree or order of any court, tribunal or other authority, any action taken or anything done or purported to have been taken or done , at any time during the period commencing on and from the 8th July, 1999 and ending with the 30th day of June , 2001 under the rule as amended by sub - section ( 1 ) , shall be deemed to be and always to have been, for all the purposes , as validly and effectively taken or done as if the amendment made by sub - section ( 1 ) had been in force at all material times.

+ (3) Notwithstanding the supersession of the Central Excise Rules , 1944 referred to in sub- section ( 1 ) , for the purposes of that sub - section , the Central Government shall have and shall be deemed to have the power to make rules with retrospective effect as if the Central Government had the power to make rules under section 37 of the Central Excise Act , retrospectively, at all material times .

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

Amendment of Central Excise (No. 2) Rules , 2001 .

82. ( 1 ) In the Central Excise (No. 2) Rules , 2001 , made by the Central Government in exercise of the powers conferred by section 37 of the Central Excise Act , rule 18 thereof as published in the Official Gazette vide notification of the Government of India in the Ministry ofFinance (Department ofRevenue ) , number G.S.R. 444 (E) , dated the 21st June, 2001 shall stand amended and shall be deemed to have been amended retrospectively in the manner specified in column (2 ) of the Fifth Schedule on and from the corresponding date specified in column (3 ) ofthat Schedule against the rule specified in column ( 1 ) of that Schedule.

(2) Notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, any action taken or anything done or purported to have been taken or done, at any time during the period commencing on and from the 1st day of July, 2001 and ending with the 28th day of February, 2002 under the rule as amended by sub- section (1 ), shall be deemed to be and always to have been, for all the purposes, as validly and effectively taken or done as if the amendment made by sub - section (1 ) had been in force at all material times .

(3) Notwithstanding the supersession ofthe Central Excise (No. 2) Rules, 2001 referred to in sub -section ( 1 ) , for the purposes of that sub - section, the Central Government shall have and shall be deemed to have the power to make rules with retrospective effect as if the Central Government had the power to make rules under section 37 of the Central Excise Act, retrospectively, at all material times .

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

Amendment of Central Excise Rules, 2002 .

83. ( 1) In the Central Excise Rules , 2002, made by the Central Government in exercise of the powers conferred by section 37 ofthe Central Excise Act, rule 18 thereof as published in the Official Gazette vide notification of the Government of India in the Ministry of Finance (Department ofRevenue) , number GS.R. 143 (E), dated the 1st March, 2002 shall stand amended and shall be deemed to have been amended retrospectively in the manner specified in column (2) ofthe Sixth Schedule on and from the corresponding date specified in column (3 ) ofthat Schedule against the rule specified in column ( 1 ) of that Schedule .

(2) Notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, any action taken or anything done or purported to have been taken or done , at any time during the period commencing on and from the 1st day of March, 2002 and ending with the 7th day of December , 2006 under the rule as amended by sub -section ( 1 ) , shall be deemed to be and always to have been, for all the 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 deemed to have the power to make rules with retrospective effect as if the Central Government had the power to make rules under section 37 of the Central Excise Act , retrospectively, at all material times .

Excisetariff

Amendment of Act 5 of 1986 84. The First Schedule to the Central Excise TariffAct , 1985 (hereinafter referred to as the Central Excise Tariff Act) shall be amended in the manner specified in the Seventh Schedule.

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CHAPTER V

SERVICE TAX

85. In the Finance Act , 1994,---

Amendment ofAct 32 of 1994 .

(A) insection 65, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint,-

(1) after clause (7a) , the following clause shall be inserted , namely: ----

43 of 1961 .

' (76) " associated enterprise" has the meaning assigned to it in section 92A of the Income-tax Act , 1961 ; ' ;

(2) in clause( 12) ,—

(a) in sub-clause (a) , for item ( iv) , the following item shall be substituted , namely:-

"(iv) securities and foreign exchange (forex) broking , and purchase or sale of foreign currency, including money changing; " ;

(b) for sub - clause ( b ) , the following sub - clause shall be substituted , namely:-

"(b) foreign exchange broking and purchase or sale of foreign currency, including money changing provided by a foreign exchange broker or an authorised dealer in foreign exchange or an authorised money changer, other than those covered under sub - clause (a ) ; " ;

( c) after sub- clause ( b ) as so amended, the following Explanation shall be inserted at the end , namely:-

'Explanation. For the purposes of this clause, it is hereby declaredthat" purchase or sale of foreign currency, including money changing" includes purchase or sale of foreign currency, whether or not the consideration for such purchase or sale , as the case may be , is specified separately; ' ;

(3) in clause ( 19) ,—

(a) in sub -clause ( ii) , the following Explanation shall be inserted at the end, namely:-

'Explanation. For the removal of doubts , it is hereby declared that for the purposes of this sub - clause , " service in relation to promotion or marketing of service provided by the client" includes any service provided in relation to promotion or marketing of games of chance , organised, conducted or promoted by the client, in whatever form or by whatever name called , whether or not conducted online , including lottery, lotto , bingo ; ' ;

(b) the words " any information technology service and " shall be omitted;

(4) for clause ( 23 ) , the following clause shall be substituted , namely:-

'(23 ) " cargo handling service" means loading , unloading, packing

or unpacking of cargo and includes ,-

(a) cargo handling services provided for freight in special containers or for non- containerised freight, services provided by a container freight terminal or any other freight terminal , for all modes oftransport , and cargo handling service incidental to freight ; and 33

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(b) service ofpacking together with transportation of cargo or goods , with or without one or more of other services like loading , unloading , unpacking,

but does not include , handling of export cargo or passenger baggage or mere transportation of goods; ' ;

(5) in clause (31 ), for the words " to a client" , the words "to any person " shall be substituted;

(6) after clause (53 ) , the following clause shall be inserted , namely:-

"(53a) " information technology software " means any representation of instructions , data, sound or image , including source code and object code, recorded in a machine readable form , and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment ; '

(7) for clause (57a) , the following clause shall be substituted , namely:-

'(57a) " internet telecommunication service" includes,-

(i) internet backbone services , including carrier services of internet traffic by one Internet Service Provider to another Internet Service Provider ,

(ii) internet access services , including provision of a direct connection to the internet and space for the customer's web page ,

(iii) provision of telecommunication services , including fax , telephony, audio conferencing and video conferencing , over the internet;';

(8) in clause (64), for the Explanation , the following Explanation shall be substituted, namely:--

'Explanation. For the removal of doubts , it is hereby declared that for the purposes of this clause,-

(a) " goods " includes computer software;

(b) "properties " includes information technology software; ' ;

(9) in clause (68 ) , for the words "to a client " , the words "to any other person " shall be substituted;

(10) in clause (75) , for the words "to a customer " , the words "to any person " shall be substituted;

(11) after clause (86c) , the following clause shall be inserted, namely:--

'(86d) " processing and clearing house " means any person including the clearing corporation authorised or assigned by a recognised stock exchange , recognised association or a registered association to perform the duties and functions of a clearing house inrelation to,-

(i) the periodical settlement of contracts for , or relating to, the sale or purchase of securities , goods or forward contracts and differences thereunder ;

(ii) the delivery of, and payment for , securities , goods or forward contracts;

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(iii) any other matter incidental to , or connected with , securities , goods and forward contracts; ' ;

(12) in clause (90a) , the Explanation occurring at the end shall be numbered as Explanation I thereof, and after the Explanation 1 as so numbered, the following Explanation shall be inserted , namely:-

'Explanation 2.- For the removal of doubts , it is hereby declared that for the purposes of this clause "renting of immovable property" includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control ofthe said immovable property;' ;

(13) in clause (92 ) , for the words " to a client", the words " to any person" shall be substituted;

(14) in clause ( 105) ,-

(a) in sub- clauses ( e ), ( h) , (j ) , (k) , (p ) , (q ) , (r ), (s ), (1), ( u ) , ( v ), (w) , (x ) , (v ) , (z ), (za ) , (zc ) , (zi ) , (zj) , (zu) , (zzt) and ( zzw) , for the words "to a client " , occurring at the beginning , the words " to any person " shall be substituted;

(b) in sub - clauses (f) , ( 1) , (zb ) , (zh ) , (zm) , ( zo ) , ( zq) , (zt) , (zz ) , (zzd) , (zzg) , ( zzp) , ( zzv) and ( zzx) , for the words " to a customer " , occurring at the beginning , the words "to any person " shall be substituted;

"(g) to any person, by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering including the discipline of computer hardware engineering .

Explanation. For the purposes of this sub- clause, it is hereby declared that services provided by a consulting engineer in relation to advice , consultancy or technical assistance in the disciplines of both computer hardware engineering and computer software engineering shall also be classifiable under this sub- clause ;" ;

(d) in sub - clause ( m ), for the words " a client " and " the client " , wherever they occur, the words " any person " and " such person " shall respectively be substituted;

(e) for sub - clause ( zzk) , the following sub - clause shall be substituted, namely: ---

"(zzk) to any person , by a foreign exchange broker , including an authorised dealer in foreign exchange or an authorised money changer, other than a banking company or a financial institution including a non- banking financial company or any other body corporate or commercial concern referred to in sub-clause ( zm) ;" ;

() insub - clause (zzzu ) , for the words " internet telephony " , thewords " internet telecommunication service " shall be substituted;

(g) after sub -clause ( zzzzd) , the following sub - clauses shall be inserted , namely:-

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"(zzzze) to any person , by any other person in relation to information technology software for use in the course, or furtherance , of business or commerce , including ,-

(i) development of information technology software,

(ii) study, analysis , design and programming of information technology software ,

(iii) adaptation, upgradation , enhancement , implementation and other similar services related to information technology software .

(iv) providing advice , consultancy and assistance on matters related to information technology software , including conducting feasibility studies on implementation of a system , specifications for a database design, guidance and assistance during the start -up phase of a new system, specifications to secure a database, advice on proprietary information technology software,

(v) acquiring the right to use information technology software for commercial exploitation including right to reproduce , distribute and sell information technology software and right to use software components for the creation of and inclusion in other information technology software products ,

(vi) acquiring the right to use information technology software supplied electronically;

(zzzzf) to a policy holder, by an insurer carrying on life insurance business , in relation to management of investment , under unit linked insurance business , commonly known as Unit Linked Insurance Plan (ULIP ) scheme .

Explanation. For the purposes of this sub- clause,

(i) management of segregated fund of unit linked insurance business by the insurer shall be deemed to be the service provided by the insurer to the policy holder in relation to management of investment under unitlinked insurance business ; and

(ii) the gross amount charged by the insurer from the policy holder for the said services provided or to be provided shall be equivalent to the difference between,-

(a) premium paid by the policy holder for the Unit Linked Insurance Plan policy ; and

(b) the sum ofpremium paid for or attributable to risk cover, whether for life , health or other specified purposes , and the amount segregated for actual investment .

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Illustration

Total premium paid for the Unit Linked Insurance Plan policy = Rs.100

Risk premium = Rs. 10

Amount actually invested Rs . 85

Gross amount charged for the service provided = Rs. 5 [ 100-( 10+ 85 )] ;

(iii) inaddition to the amount referred to in clause (ii) , the gross amount charged shall include any amount charged subsequently, whether or not periodically, by the insurer from the policy holder in relation to management of investment under unit linked insurance business;

(zzzzg) to any person , by a recognised stock exchange in relation to assisting , regulating or controlling the business ofbuying, selling or dealing in securities and includes services provided in relation to trading , processing , clearing and settlement of transactions in securities ;

(zzzzh) to any person , by a recognised association or a registered association in relation to assisting , regulating or controlling the business of the sale or purchase of any goods or forward contracts and includes services provided in relation totrading, processing, clearing and settlement of transactions in goods or forward contracts;

(zzzzi) to any person, by a processing and clearinghouse in relation to processing , clearing and settlement of transactions in securities , goods or forward contracts including any other matter incidental to , or connected with , such securities , goods and forward contracts;

(zzzzj) to any person , by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use , without transferring right of possession and effective control of such machinery, equipment and appliances ;" ;

(15) in clause ( 106) , after the words " goods or material or " , the words" information technology software or " shall be inserted;

(16) in clause ( 108 ) , for the words " process or material " , at both the places where they occur, the words " process or material or information technology software " shall be subsituted;

(17) in clause ( 109a) , in sub- clause ( c) , for the words " internet telephony" , the words " internet telecommunication service " shall be substituted;

(18) for clause ( 115) , the following clause shall be substituted, namely:-

( 115) " tour operator " means any person engaged in the business of planning , scheduling , organising or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services ) by any mode of transport , and includes any person engaged in the business of operating tours in a tourist vehicle or a contract carriage by whatever name called , covered by 37

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59 of 1988 .

a permit, other than a stage carriage permit , granted under the Motor Vehicles Act , 1988 or the rules made thereunder .

Explanation. For the purposes ofthis clause , the expression "tour" does not include a journey organised or arranged for use by aneducational body, other than a commercial training or coaching centre , imparting skill or knowledge or lessons on any subject or field; ' ;

(B) insection 66, with effect from such date as the Central Government may, by notification in the Official Gazette , appoint, for the word, brackets and letters "and (zzzzd)" , the brackets , letters and word " ( zzzzd ) , ( zzzze ) , ( zzzzf) , ( zzzzg ) , (zzzzh ) , (zzzzi) and ( zzzzj) " shall be substituted;

(C) in section 67 , in the Explanation , in clause ( c) , for the words "book adjustment. ", the following words shall be substituted, namely:-

'book adjustment, and any amount credited or debited , as the case may be, to any account, whether called " Suspense account " or by any other name, in the books of account of a person liable to pay service tax , where the transaction oftaxable service is with any associated enterprise . ' ;

(D) after section 70 , the following sections shall be inserted , namely:---

'71. ( 1 ) Without prejudice to the provisions of section 70 , the Board may, by notification in the Official Gazette, frame a Scheme for the purposes of enabling any person or class of persons to prepare and furnish a return under section 70, and authorise a Service Tax Return Preparer to act as such under the Scheme .

Scheme for submission of through Service Tax returns Preparers .

(2 ) A Service Tax Return Preparer shall assist the person or class of persons to prepare and furnish the return in such manner as may be specified in the Scheme framed under this section.

(3) For the purposes of this section, --

(a) "Service Tax Return Preparer " means any individual , who has been authorised to act as a Service Tax Return Preparer under the Scheme framed under this section;

(b) "person or class of persons " means such person , as may be specified in the Scheme, who is required to furnish a return required to be filed under section 70 .

(4) The Scheme framed by the Board under this section may provide for the following , namely:--

(a) the manner in which and the period for which the Service Tax Return Preparer shall be authorised under sub -section ( 1 );

(b) the educational and other qualifications to be possessed , and the training and other conditions required to be fulfilled, by a person to act as a Service Tax Return Preparer ;

(c)the code ofconduct for the Service Tax Return Preparer ;

(d) the duties and obligations of the Service Tax Return Preparer ;

(e) the circumstances under which the authorisation given to a Service Tax Return Preparer may be withdrawn;

(1) any other matter which is required to be , or may be , specified by the Scheme for the purposes of this section.

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72. If any person, liable to pay service tax,-

Bestjudgment assessment .

(a) fails to furnish the return under section 70 ;

(b) having made a return, fails to assess the tax in accordance with the provisions ofthisChapter or rules made thereunder,

the Central Excise Officer , may require the person to produce such accounts , documents or other evidence as he may deem necessary and after taking into account all the relevant material which is available or which he has gathered , shall by an order in writing , after giving the person an opportunity of being heard, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment.

(E) for section 77, the following section shall be substituted, namely:-

" 77. ( 1 ) Any person ,-

Penalty for contravention of rules and provisions of Act for which no penalty is specified elsewhere.

(a) who is liable to pay service tax, or required to take registration , fails to take registration in accordance with the provisions of section 69 or rules made under this Chapter shall be liable to pay a penalty which may extend to five thousand rupees or two hundred rupees for every day during which such failure continues , whichever is higher, starting with the first day after the due date , till the date of actual compliance;

(b) who fails to keep , maintain or retain books of account and other documents as required in accordance with the provisions of this Chapter orthe rules made thereunder, shall be liable to a penalty which may extend to five thousand rupees ;

(i) furnish information called by an officer in accordance with the provisions of this Chapter or rules made thereunder ; or

(ii) produce documents called for by a Central Excise Officer in accordance with the provisions of this Chapter or rules made thereunder; or

(iii) appear before the Central Excise Officer, when issued with a summon for appearance to give evidence or to produce a document in an inquiry,

shall be liable to a penalty which may extend to five thousand rupees or two hundred rupees for every day during which such failure continues , whichever is higher , starting with the first day after the due date , till the date of actual compliance;

(d) who is required to pay tax electronically, through internet banking , fails to pay the tax electronically, shall be liable to a penalty which may extend to five thousand rupees;

(e) who issues invoice in accordance with the provisions oftheAct or rules made thereunder , with incorrect or incomplete details or fails to account for an invoice in his books of account , shall be liable to a penalty which may extend to five thousand rupees .

(2) Any person, who contravenes any of the provisions of this Chapter or any rules made thereunder for which no penalty is separately provided in this Chapter, shall be liable to a penalty which may extend to five thousand rupees . " ;

(F) in section 78, after the fourth proviso , the following proviso shall be inserted , namely:-

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"Provided also that if the penalty is payable under this section , the provisions of section 76 shall not apply. ";

(G) in section 83 , after the figures and letter " 35F " , the figures and letters "35FF, " shall be inserted;

(H) in section 86 ,-

(i) in sub- section (2) , the following proviso shall be inserted at the end, namely:-

"Provided that where the Committee of Chief Commissioners of Central Excise differs in its opinion against the order ofthe Commissioner ofCentral Excise , it shall state the point or points on which it differs and make a reference to the Board which shall , after considering the facts of the order, ifis ofthe opinion that the order passed by the Commissioner of Central Excise is not legal or proper, direct the Commissioner of Central Excise to appeal to the Appellate Tribunal against the order." ;

(ii) in sub - section ( 24) , the following proviso and Explanation shall be inserted at the end, namely:-

'Provided that where the Committee of Commissioners differs in its opinion against the order of the Commissioner of Central Excise (Appeals) , it shall state the point or points on which it differs and make a reference to the jurisdictional Chief Commissioner who shall , after considering the facts of the order, if is of the opinion that the order passed by the Commissioner of Central Excise (Appeals) is not legal or proper, direct any Central Excise Officer to appeal to the Appellate Tribunal against the order.

Explanation. Forthe purposes of this sub - section, "jurisdictional ChiefCommissioner " means the Chief Commissioner having jurisdiction over the concerned adjudicating authority in the matter. ' ;

(1) in section 94, in sub- section (4) , for the words " Chapter and every notification " , the words and figures "Chapter, Scheme framed under section 71 and every notification" shall be substituted.

(J) in section 95 , after sub- section ( ID) , the following sub - section shall be inserted , namely:-

"( IE) If any difficulty arises in respect of implementing , classifying or assessing the value of any taxable service incorporated in this Chapter by the FinanceAct, 2008 , the Central Government may, by order published in the Official Gazette, not inconsistent with the provisions of this Chapter , remove the difficulty:

Provided that no such order shall be made after the expiry of a period of one year from the date on which the Finance Bill , 2008 receives the assent ofthe President ." .

CHAPTERVI

SERVICE TAXDISPUTE RESOLUTION SCHEME , 2008

86. (1 ) This Scheme may be called the Service Tax Dispute Resolution Scheme, 2008. Short title and commencement.

(2) It shall come into force on the 1st day of July, 2008.

Definitions .

87. In this Scheme , unless the context otherwise requires ,-

32of 1994.

(a) " Chapter " means Chapter V of the Finance Act , 1994;

(b) " designated authority " means an officer not below the rank of Assistant Commissioner of Central Excise as notified by the Commissioner of Central Excise for the purposes of this Scheme;

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(d) " prescribed" means prescribed by rules made under this Scheme;

( e) " tax arrear " means service tax , cess , interest or penalty due or payable or leviable under the Chapter but not paid as on the 1st day ofMarch, 2008 , in respect of which,-

(1) an order has been passed under the Chapter; or

(ii) a demand notice or a show cause notice has been issued on or before the 1st day ofMarch , 2008 under the Chapter ;

(f) all other words and expressions used herein and not defined but defined in the Chapter or the rules made thereunder , shall have the meanings respectively assigned to them in the Chapter or the rules made thereunder.

Applicability of Scheme.

88. This Scheme shall not be applicable to a decision , an order of determination , a demand notice or , as the case may be , show cause notice,--

(i) relating to a tax arrear which includes service tax , and such service tax amount is in excess of twenty- five thousand rupees ; or

(ii) where such order or notice has been made or issued under section 73A ofthe Finance Act , 1994.

32 of 1994 .

Settlement of tax payment .

89. Subject to the provisions of this Scheme , where any person makes , on or after the 1st day of July, 2008 , but on or before the 30th day of September , 2008 , a declaration to the designated authority in accordance with the provisions of section 90 in respect of tax arrear, then notwithstanding anything contained in the Chapter, the amount payable under this Scheme by the declarant shall be determined at the rates specified hereunder , namely:--

(a) where the tax arrear has arisen due to determination , assessment or , as the case may be, order of an adjudicating authority,---

(i) such tax arrear includes the amount of service tax not exceeding twenty- five thousand rupees , at the rate of fifty per cent . of service tax amount ;

(ii) such tax arrear consists of only interest payable , or penalty levied or both , under the Chapter , at the rate of twenty - five per cent . of such tax arrear :

Provided that, if the amount of penalty levied exceeds the service tax amount to which it relates , service tax amount shall be considered to be the amount of penalty;

(b) where the tax arrear has arisen due to show cause notice or demand notice , as the case may be ,-

(i) such tax arrear includes the amount of service tax not exceeding twenty- five thousand rupees , at the rate of fifty per cent . of service tax amount;

(ii) such tax arrear consists of only interest payable , or penalty leviable or both, under the Chapter, at the rate of twenty - five per cent . of the maximum penalty leviable and interest payable:

Provided that if the amount of penalty leviable exceeds the service tax amount to which it relates , service tax amount shall be considered to be the amount of penalty.

90. A declaration under section 89 shall be made to the designated authority and shall be in such form and shall be verified in such manner as may be prescribed .

91. (1 ) Within fifteen days from the date of receipt of the declaration under section 89 , the designated authority shall, by order, determine the amount payable by the declarant in accordance with the provisions of this Scheme:

Particularsto be furnished in declaration Time and manner of payment of tax arrear .

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Provided that where any material particular furnished in the declaration is found to be false, by the designated authority at any stage , it shall be deemed never to have been made and all the pending proceeding under the Chapter shall be deemed to have been revived .

(2) The declarant shall pay, the sum determined by the designated authority within thirty days of the order by the designated authority under sub- section ( 1 ) and intimate the fact ofsuch payment to the designated authority along with proof thereof and the designated authority shall thereupon issue a certificate to the declarant in such form as may be prescribed .

(3) Every order passed under sub -section ( 1 ) , determining the sum payable under this Scheme , shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any other proceeding under the Chapter .

(4) Where the declarant has filed an appeal , reference or a reply to the show cause notice against any order or notice giving rise to the tax arrear before any authority, tribunal or court, then, notwithstanding anything contained in any other provision of the Chapter , such appeal , reference , or reply shall be deemed to have been withdrawn: Provided that where the declarant has filed a writ petition , appeal or reference before any High Court or the Supreme Court against any order in respect of the tax arrear, the declarant shall file an application before such High Court or the Supreme Court for withdrawing such writ petition , appeal or reference and after withdrawal of such writ petition , appeal or reference with the leave of the Court , furnish proof of such withdrawal along with the intimation referred to in sub - section (2) .

92. No appellate authority shall proceed to decide any issue relating to the tax arrear specified in the declaration and in respect of which an order has been made under section 91 by the designated authority.

93. Any amount paid in pursuance of a declaration made under section 89 shall not be refundable under any circumstances.

Appellate authority not to proceed in certain cases . 'No refund of amount paid under the Scheme.

Removal of doubts.

94. For the removal of doubts , it is hereby declared that, save as otherwise expressly provided in sub -section (3 ) ofsection 91 , nothing contained in this Scheme shall be construed as conferring any benefit , concession or immunity on the declarant in any proceedings other than those in relation to which the declaration has been made .

Power to remove difficulties.

95. ( 1 ) 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:

Provided that 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.

(2) Every order made under this section shall , as soon as may be after it is made, be laid before each House of Parliament .

Power to make rules .

96. ( 1 ) The Central Government may, by notification in the Official Gazette , make rules for carrying out the provisions of this Scheme.

(2) Without prejudice to the generality ofthe foregoing power , such rules may provide for all or any ofthe following matters , namely:-

(a)the form in which a declaration may be made under section 90 and the manner inwhich such declaration may be verified ;

(b) the form ofcertificate which may be issued under sub - section ( 2) of section 91 ;

(c) any other matter which is to be , or may be , prescribed , or in respect ofwhich provision is to be made , by rules .

(3) The Central Government shall cause every rule made under this Scheme to be laid, as soon as may be after it is made , before each House of Parliament, while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions , and if, before the expiry of the session immediately following the 42

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[PART II---

session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made , the rule shall thereafter have effect only in such modified form or be of no effect , as the case may be; so , however , that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule .

CHAPTER VII

COMMODITIES TRANSACTION TAX

97. ( 1 ) This Chapter extends to the whole of India.

Extent, commencement and application.

(2) Itshall come into force on such date as the Central Government may, by notification inthe Official Gazette, appoint .

(3) It shall apply to taxable commodities transactions entered into on or after the commencement of this Chapter .

Definitions .

98. In this Chapter , unless the context otherwise requires, -

( 1) "Appellate Tribunal " means the Appellate Tribunal constituted under section 252 of the Income- taxAct , 1961 ;

43 of 1961.

(2) "Assessing Officer " means the Income-tax Officer or Assistant Commissioner ofIncome-tax or Deputy Commissioner of Income - tax or Joint Commissioner of Income- tax or Additional Commissioner of Income - tax who is authorised by the Board to exercise or perform all or any of the powers and functions conferred on , or assignedto, anAssessing Officer under this Chapter;

(3) " commodities transaction tax" means tax leviable on the taxable commodities transactions under the provisions of this Chapter ;

(4) "prescribed" means prescribed by rules made under this Chapter ;

(5) "taxable commodities transaction " means a transaction of purchase or sale of option in goods , or option in commodity derivative , or any other commodity derivative , traded in recognised associations ;

74 of 1952 .

43 of 1961 .

(6) words and expressions used but not defined in this Chapter and defined in the Forward Contracts ( Regulations ) Act 1952, the Income - tax Act, 1961 , or the rules made thereunder , shall have the meanings respectively assigned to them in those Acts .

Charge of commodities transaction tax .

99. On andfrom the date of commencement of this Chapter, there shall be charged a commodities transaction tax in respect ofevery taxable commodities transaction specified in column (2) of the Table below, at the rates specified in the corresponding entry in column ( 3 ) ofthe said Table , on the value of such transaction and such tax shall be payable by the seller or the purchaser, as the case may be , specified in the corresponding entry in column (4) of the said Table:

Table

Sl . No.

Rate

Payableby

Taxable commodities transaction

(1) (2)

(3)

(4)

Seller

0.017 per cent.

L. Sale of an option in goods or an option in commodity derivative

Purchaser

Sale of an option in goods or an option in commodity derivative , where option is exercised

0.125 per cent .

Seller

0.017 per cent.

3. Sale of any other commodity derivative 43

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SEC . 2]

100. The value of a taxable commodities transaction specified under column ( 2) of the Table in section 99 shall , with reference to such transactions--

Value of taxable commodities transaction .

(a) against serial number 1 , be the option premium;

(b) against serial number 2, be the settlement price of the option in goods or option in commodity derivative , as the case may be ;

sold. (c) against serial number 3 , be the price at which the commodity derivative is

Collection and recovery of commodities transaction tax.

101. (1) Every recognised association (hereinafter in this Chapter referred to as assessee) shall collect the commodities transaction tax from the seller or the purchaser , as the case may be , who enters into a taxable commodities transaction in that recognised association , at the rates specified in section 99.

(2)The commodities transaction tax collected during any calendar month in accordance with the provisions of sub - section ( 1 ) shall be paid by every assessee to the credit of the Central Government by the seventh day ofthe month immediately following the said calendar month .

(3) Any assessee who fails to collect the tax in accordance with the provisions of sub- section (1 ) shall , notwithstanding such failure , be liable to pay the tax to the credit of the Central Government in accordance with the provisions of sub - section (2) .

return. Furnishing of 102. ( 1 ) Every assessee shall , within the prescribed time - limit after the end of each financial year, prepare and deliver or cause to be delivered to the Assessing Officer or to any other authority or agency authorised by the Board in this behalf, a return in such form, verified in such manner and setting forth such particulars as may be prescribed , in respect of all taxable commodities transactions entered into during such financial year in that recognised association.

(2) Where any assessee fails to furnish the return under sub - section ( 1 ) within the prescribed time limit , the Assessing Officer may issue a notice to such assessee and serve it upon him , requiring him to furnish the return in the prescribed form and verified in the prescribed manner setting forth such particulars within such time as may be prescribed .

(3) An assessee who has not furnished the return within the time - limit prescribed under sub- section ( 1 ) or sub - section (2 ) , or having furnished a return under sub - section ( 1 ) or sub - section (2) notices any omission or wrong statement therein, may furnish a return or a revised return , as the case may be , at any time before the assessment is made .

Assessment .

103. ( 1 ) For the purposes of making an assessment under this Chapter, the Assessing Officer may serve on any assessee , who has furnished a return under section 102 or upon whom a notice has been served under sub - section (2 ) of that section , whether a return has been furnished or not, a notice requiring him to produce or cause to be produced on a date to be specified therein such accounts or documents or other evidence as the Assessing Officer may require for the purposes of this Chapter and may, from time to time, serve further notices requiring the production of such further accounts or documents or other evidence as he may require.

(2)The Assessing Officer, after considering such accounts , documents or other evidence , if any, as he has obtained under sub - section ( 1 ) and after taking into account any other relevant material which he has gathered, shall, by an order in writing , assess the value oftaxable commodities transactions during the relevant financial year and determine the commodities transaction tax payable or the refund due on the basis of such assessment:

Provided that no assessment shall be made under this sub - section after the expiry oftwo years from the end of the relevant financial year .

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(3) Every assessee , in case any amount is refundable to it on assessment under sub- section (2) , shall , within such time as may be prescribed , refund such amount to the seller or the purchaser, as the case may be , from whom such amount was collected .

Rectification ofmistake .

104. ( 7 ) With a view to rectifying any mistake apparent from the record , the Assessing Officer may amend any order passed by him under the provisions of this Chapter within one year from the end of the financial year in which the order sought to be amended was passed .

(2) Where any matter has been considered and decided in any proceeding by way of appeal relating to an order referred to in sub - section ( 1 ) , the Assessing Officer passing such order may, notwithstanding anything contained in any other law for the time being in force , amend the order under that sub - section in relation to any matter other than the matter which has been so considered and decided .

(3) Subject to the other provisions of this section , the Assessing Officer may make an amendment under sub - section ( 1 ) , either suo motu or on any mistake brought to his notice by the assessee .

(4) An amendment, which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee , shall not be made under this section unless the Assessing Officer has given notice to the assessee of his intention so to do and has allowed the assessee a reasonable opportunity of being heard.

(5) An order of amendment under this section shall be made by the Assessing Officer inwriting .

(6) Subject to the other provisions of this Chapter , where any such amendment has the effect of reducing the assessment , the Assessing Officer shall make the refund , which may be due to such assessee .

(7) Where any such amendment has the effect of enhancing the assessment or reducing the refund already made , the Assessing Officer shall make an order specifying the sum payable by the assessee and the provisions of this Chapter shall apply accordingly.

Interest on delayed payment of commodities transaction tax .

105. Every assessee , who fails to credit the commodities transaction tax or any part thereof as required under section 101 to the account of the Central Government within the period specified in that section , shall pay simple interest at the rate of one per cent . of such tax for every month or part of a month by which such crediting of the tax or any part thereof isdelayed.

106. Any assessee who-

(a) fails to collect the whole or any part of the commodities transaction tax as required under section 101 ; or

Penalty for failure to collect or pay commodities transaction tax.

(b) having collected the commodities transaction tax , fails to pay such tax to the credit ofthe Central Government in accordance with the provisions of sub - section (2) ofthat section ,

shall be liable to pay,--

(i ) in the case referred to in clause ( a) , in addition to paying the tax in accordance with the provisions of sub - section ( 3 ) of that section , or interest , if any, in accordance with the provisions of section 105 , by way of penalty, a sum equal to the amount of commodities transaction tax that he failed to collect ; and

(ii) in the case referred to in clause ( b) , in addition to paying the tax in accordance with the provisions of sub -section (2 ) of that section and interest in accordance with the provisions of section 105 , by way of penalty, a sum of one 45

THE GAZETTE OF INDIA EXTRAORDINARY

SEC.2 ]

thousand rupees for every day during which the failure continues ; so , however , that the penalty under this clause shall not exceed the amount of commodities transaction tax that it failed to pay.

failure to furnish return . Penalty for 107. Where an assessee fails to furnish the return within the time - limits prescribed under sub - section (1 ) or sub -section (2) of section 102, it shall be liable to pay, by way of penalty, a sum of one hundred rupees for each day during which the failure continues .

Penalty for failure to complywith notice .

108. If the Assessing Officer in the course of any proceedings under this Chapter is satisfied that the assessee has failed to comply with a notice under sub -section ( 1 ) of section 103, he may direct that such assessee shall pay, by way of penalty, in addition to any commodities transaction tax and interest , if any, payable by him, a sum of ten thousand rupees for each day during which the failure continues .

Penalty not to be imposed in certain cases.

109.(1 ) Notwithstanding anything contained in section 106 or section 107 or section 108, no penalty shall be imposable for any failure referred to in the said sections, if the assessee proves to the satisfaction of the Assessing Officer that there was reasonable cause for the said failure .

(2) No order imposing a penalty under this Chapter shall be made unless the assessee has been given a reasonable opportunity of being heard .

43 of 1961 .

110. The provisions ofsections 120, 131 , 133A, 156, 178, 220 to 227, 229 , 232, 260A, 261 , 262, 265 to 269 , 278B, 282 and 288 to 293 ofthe Income-tax Act, 1961 , shall apply, so far as may be, in relation to commodities transaction tax .

Application of certain provisions of Income-tax Act.

Appeal to Commissioner of lacome- tax (Appeals ) .

111. ( 1 ) An assessee aggrieved by any assessment order made by the Assessing Officer under section 103 or any order under section 104, or denying his liability to be assessed under this Chapter, or by an order imposing penalty under this Chapter, may appeal to the Commissioner of Income- tax (Appeals ) within thirty days from the date of receipt of the order of the Assessing Officer.

(2) An appeal under sub - section ( 1 ) shall be in such form and shall be verified in such manner as may be prescribed and shall be accompanied by a fee of one thousand rupees.

43 of 1961 .

(3) Where an appeal has been filed under sub -section ( 1 ) , the provisions of sections 249 to 251 of the Income-tax Act , 1961 , shall , as far as may be , apply to such appeal..

Appeal to Appellate Tribunal.

112. ( 1) An assessee aggrieved by an order made by a Commissioner of Income- tax (Appeals ) under section 111 may appeal to the Appellate Tribunal against such order.

(2) The Commissioner of Income-tax may, if he objects to any order passed by the Commissioner of Income- tax (Appeals) under section 111 , direct the Assessing Officer to appeal to the Appellate Tribunal against such order.

(3) An appeal under sub - section ( 1 ) or sub -section (2) shall be filed within sixty days from the date on which the order sought to be appealed against is received by the assessee or by the Commissioner of Income- tax, as the case may be.

(4) An appeal under sub - section (1 ) or sub -section (2 ) shall be in such form and verified in such manner as may be prescribed and, in the case of an appeal filed under sub- section ( 1 ) , shall be accompanied by a fee of one thousand rupees .

43 of 1961 .

(5) Where an appeal has been filed before the Appellate Tribunal under sub -section (1) or sub-section (2), the provisions of sections 253 to 255 ofthe Income-tax Act , 1961 , shall , as far as may be , apply to such appeal .

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Punishment for false statement.

113. ( 7) If a person makes a false statement in any verification under this Chapter or any rule made thereunder , or delivers an account or statement , which is false , and which he either knows or believes to be false , or does not believe to be true , he shall be punishable with imprisonment for a term which may extend to three years and with fine .

2 of 1974.

(2) Notwithstanding anything contained in the Code of Criminal Procedure , 1973 , an offence punishable under sub - section ( 1 ) shall be deemed to be non - cognizable within the meaning of that Code .

Institution of prosecution .

114. No prosecution shall be instituted against any person for any offence under section 113 except with the previous sanction of the Chief Commissioner of Income-tax .

Power to make rules .

115. ( 7) The Central Government may, by notification in the Official Gazette , make rules for carrying out the provisions of this Chapter.

(2) In particular , and without prejudice to the generality of the foregoing power , such rules may provide for all or any of the following matters , namely:-

(a) the time- limits within which and the form and the manner in which the return shall be delivered or caused to be delivered or furnished under section 102 ; and

(b) the form in which an appeal may be filed and the manner in which it may be verified under sections 111 and 112 .

(3) Every rule made under this Chapter shall be laid , as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period ofthirty days which may be comprised in one session or in two or more successive sessions , and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made , the rule shall thereafter have effect only in such modified form or be of no effect , as the case may be ; so, however , that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule .

Power to remove difficulties.

116. ( 1 ) If any difficulty arises in giving effect to the provisions of this Chapter, the Central Government may, by order published in the Official Gazette , not inconsistent with the provisions ofthis Chapter , remove the difficulty:

Provided that no such order shall be made after the expiry of a period of two years from the date on which the provisions of this Chapter come into force .

(2) Every order made under this section shall be laid , as soon as may be after it is made , before each House of Parliament.

CHAPTERVIII

MISCELLANEOUS

117. The Seventh Schedule to the Finance Act , 2001 shall be amended in the manner specified in the Eighth Schedule .

Amendment ofSeventh Schedule to Act 14 of 2001 .

Amendment of section 13 ofAct 58 of 2002.

118. In the Unit Trust of India (Transfer ofUndertaking and Repeal) Act, 2002 , in section 13 , in sub - section ( 1 ) , for the words " for a period of five years computed from the appointed day" , the words , figures and letters " for the period beginning on the appointed day and ending on the 31st day of March , 2009 " shall be substituted and shall be deemed to have been substituted with effect from the 1st day ofFebruary, 2008 .

THE GAZETTE OF INDIA EXTRAORDINARY

SEC. 2]

119. In the Finance (No. 2) Act, 2004, with effect from the 1st day of June , 2008 ,- Amendment of Act 23 of 2004 .

(i) in section 98 , in the Table , for serial number 4 and the entries relating thereto , the following serial number and the entries shall respectively be substituted, namely:-

Rate

Sl . No.

Payableby

Taxable securities transaction

(3)

(4)

(2)

(1)

Seller

0.017per cent.

(a) Sale of an option insecurities

Purchaser

0.125 per cent .

(b) Sale of an option in securities , where option is exercised

Seller";

0.017per cent .

(ii) in section 99, for clause (a) , the following clause shall be substituted,

namely:---

"(a) in the case of a taxable securities transaction relating to an option in securities , shall be-

(1) theoptionpremium, in respect oftransaction at item (a) ofserial number 4 ofthe Table in section 98;

(ii) the settlement price , in respect of transaction at item (b ) of serial number 4 of the Table in section 98 ;" .

120. In the Finance Act, 2005 ,-

Amendment ofAct 18 of 2005 .

(1) insection 95, after sub - section (2), the following sub - section shall be inserted witheffect from the 1st day ofApril, 2009 , namely:--

"(3 ) Notwithstanding anything contained in sub -section ( 1 ) , no banking cash transaction tax shall be charged in respect of any taxable banking transaction entered into on or after the 1st day ofApril , 2009." ;

(ii) the Seventh Schedule shall be amended in the manner specified in the Ninth Schedule .

Declaration under the Provisional Collection of Taxes Act , 1931

16 of 1931 .

Itis hereby declared that it is expedient in the public interest that the provisions of clauses 72 ( i) , 72 ( ii) , 84 , 117 and 120( ii) of this Bill shall have immediate effect under the Provisional Collection of Taxes Act, 1931 .

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[PART II-

THE FIRST SCHEDULE

(See section 2)

PART I

INCOME - TAX

Paragraph A

(1) 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 in sub - clause ( vii) of clause ( 31 ) of section 2 of the Income -tax Act, not being a case to which any other Paragraph of this Part applies ,

Rates of income- tax

Nil ;

(1 ) where the total income does not exceed Rs . 1,10,000

10 per cent . of the amount by which the total income exceeds Rs . 1,10,000 ;

(2) where the total income exceeds Rs.1,10,000 but doesnot exceed Rs . 1,50,000

Rs . 4,000 plus 20 per cent . of the amount by which the total income exceeds Rs . 1,50,000;

(3) where the total income exceeds Rs . 1,50,000 but does not exceed Rs . 2,50,000

(4) where the total income exceeds Rs . 2,50,000 Rs . 24,000 plus 30 per cent . of the amount by which the total income exceeds Rs . 2,50,000 .

(II) Inthe case of every individual , being a woman resident in India, and below the age of sixty - five years at anytime during the previous year,-

Rates of income- tax

Nil:

(1) where the total income does not exceed Rs. 1,45,000

(2) where the total income exceeds Rs . 1,45,000 does not exceed Rs . 1,50,000

10 per cent. of the amount by which the total income exceeds Rs . 1,45,000;

(3) where the total income exceeds Rs . 1,50,000 but doesnot exceed Rs . 2,50,000

Rs. 500 plus 20 per cent . of the amount by which the total income exceeds Rs . 1,50,000;

(4) where the total income exceeds Rs . 2,50,000

Rs . 20,500 plus 30 per cent . of the amount by which the total income exceeds Rs . 2,50,000 .

(III) Inthe case of every individual , being a resident in India, who is of the age of sixty - five years or more at any time during the previous year,-

Rates of income-tax

(1) where the total income does not exceed Rs . 1,95,000 Nil;

(2) where the total income exceeds Rs . 1,95,000 but doesnot exceed Rs . 2,50,000

20 per cent . ofthe amount by which the total income exceeds Rs . 1,95,000;

(3) where the total income exceeds Rs . 2,50,000 Rs . 11,000 plus 30 per cent. of the amount by which the total income exceeds Rs . 2,50,000 .

Surcharge on income -tax

The amount of income - tax computed in accordance with the preceding provisions of this Paragraph , or in section 111A or section 112 , shall ,

( i) in the case of every individual or Hindu undivided family or association of persons or body of individuals having a total income exceeding ten lakh rupees , be reduced by the amount of rebate of income - tax calculated under 49 THE GAZETTE OF INDIA EXTRAORDINARY

SEC.2]

Chapter VIII - A, and the income - tax as so reduced, be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent . of such income-tax;

(ii) in the case of every person, other than those mentioned in item ( i) , be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent . of such income-tax:

Provided that in case of persons mentioned in item (i) above having a total income exceeding ten lakh rupees , the total amount payable as income - tax and surcharge on such income shall not exceed the total amount payable as income- tax on a total income of ten lakh rupees by more than the amount of income that exceeds ten lakh rupees .

ParagraphB

Inthe case of every co - operative society,-

Rates of income - tax

(1)   where the total income does not exceed Rs . 10,000    10 per cent . of the total income;
(2)   where the total income exceeds Rs . 10,000 but         Rs.1,000 plus 20 per cent . of the amount by
      doesnot exceed Rs . 20,000                            which the total income exceeds Rs.10,000 ;
(3) where the total income exceeds Rs . 20,000              Rs . 3,000 plus 30 per cent . ofthe amount by which the
                                                            total income exceeds Rs . 20,000 .

Paragraph C

In the case of every firm, --

Rateof income- tax

On the whole of the total income

30 per cent.

Surcharge on income-tax

The amount of income -tax computed at the rate hereinbefore specified , or in section 111A or section 112, shall , in the case of every firm having a total income exceeding one crore rupees, be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent . of such income- tax:

Provided that in the case of every firm having a total income exceeding one crore rupees , the total amount payable as income - tax and surcharge on such income shall not exceed the total amount payable as income - tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees .

Paragraph D

In the case of every local authority,

Rateof income- tax

On the whole of the total income

30 per cent .

ParagraphE

In the case of a company,-

Ratesof income-tax

30 per cent. of the total income;

I. In the case of a domestic company

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 of an agreement made by it with the Government or the Indian concern after the 31st day of March , 1961 but before the 1st day ofApril , 1976 ; or

(b) fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made by it with the THE GAZETTE OF INDIA EXTRAORDINARY

[PART II- 50

Government or the Indian concern after the 29th

day of February, 1964 but before the 1st day of

April , 1976 ,

50 per cent.;

and where such agreement has , in either case , been approved

by the Central Government

40 per cent.

(ii) on the balance, if any, of the total income

Surcharge on income -tax

The amount of income - tax computed in accordance with the preceding provisions of this Paragraph , or in section 111A or section 112 , shall , in the case of every company, be increased by a surcharge for purposes of the Union calculated,- (i) inthe case of every domestic company having a total income exceeding one crore rupees , at the rate of ten per cent. of such income-tax;

(ii) in the case of every company other than a domestic company having a total income exceeding one crore rupees, at the rate of two and one-half per cent .:

Provided that in the case of every company having a total income exceeding one crore rupees , the total amount payable as income- tax and surcharge on such income shall not exceed the total amount payable as income - tax on a total income of one crore rupees by more than the amount of income that exceeds one 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, 1944, 1948, 194BB , 194D and 195 of the Income - tax Act, tax is to be deducted at the rates in force , deduction shall be made from the income subject to the deduction 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-

10 per cent.;

(i) on income by way of interest other than " Interest on securities "

30 per cent.;

(ii) on income by way of winnings from lotteries , crossword puzzles , card games and other games of any sort

30 per cent.:

(iii) on income by way of winnings from horse races

10 per cent .:

(iv) on income by way of insurance commission

10 per cent .;

(v) on income by way of interest payable on-

(A) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central , State or Provincial Act ;

(B) any debentures issued by a company where such debentures are listed on a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act , 1956 (42 of 1956) and any rules made thereunder

20 per cent .;

(vi) on any other income

( b) where the person is not resident in India ----

(i) in the case of a non - resident Indian--

20 per cent.;

(A) on any investment income

10 per cent .;

(B) on income by way of long - term capital gains referred to in section 115E

51 THE GAZETTE OF INDIA EXTRAORDINARY

SEC. 2]

Rate of income - tax

20 per cent .;

(D) onother income by way of long -term capital gains [not being long -term capital gains referred to in clauses (33), (36) and (38) of section 10]

20 per cent .;

(E) on income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency

(F) on income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to sub - section (IA ) of section 115A ofthe Income- tax Act,to the Indian concern , or in respect of any computer software referred to in the second proviso to sub- section ( 14 ) of section 115A of the Income-taxAct, to a person resident in India----

20 per cent .;

(1) where the agreement is made on or after the 1st day of June , 1997 but before the 1st day of June , 2005

10 per cent .;

(II) where the agreement is made on or after the 1st day of June , 2005

(G) onincome by way of royalty [ not being royalty of the nature referred to insub - item ( b) ( i) (F) ] payable by Government or an Indian concern in pursuance ofan agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern , the agreement is approved by the Central Government or where it relates 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-

20 per cent.;

(1) where the agreement is made on or after the 1st day of June , 1997 butbefore the 1st day of June , 2005

10 per cent .;

(II) where the agreement is made on or after the 1st day of June, 2005

(H) on income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern , the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force , ofthe Government of India, the agreement is in accordance with that policy-

20 per cent .;

(1) where the agreement is made on or after the 1st day of June , 1997 butbefore the 1st day of June , 2005

10 per cent.;

(II) where the agreement is made on or after the 1st day of June , 2005

30 per cent.;

(1) on income by way of winnings from lotteries , crossword puzzles , card games and other games of any sort

30 per cent.;

(J) on income by way of winnings from horse races

30 per cent.;

(K) on the whole of the other income

(ii) in the case of any other person-

20 per cent.;

(A) on income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency

(B) on income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights ( including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to sub - section ( IA ) of section

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Rate of income- tax

115A ofthe Income - tax Act, to the Indian concern , or in respect of any computer software referred to in the second proviso to sub - section ( 1A ) of section 115A of the Income- tax Act, to a person resident in India-

20 per cent .;

(1) where the agreement is made on or after the 1st day of June , 1997 butbefore the 1st day of June , 2005

( 11) where the agreement is made on or after the 1st day of June , 2005 10 per cent.;

(C) on income by way of royalty [ not being royalty of the nature referred to in sub - item ( b ) ( ii ) ( B ) ] payable by Government or an Indian concern in pursuance ofan agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern , the agreement is approvedby the Central Government or where it relates 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-

20 per cent.;

(1) where the agreement is made on or after the 1st day of June , 1997 butbefore the 1st day of June , 2005

(II) where the agreement is made on or after the 1st day ofJune , 2005 10 per cent .;

(D) on incomeby way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern , the agreement is approved by the Central Government or where it relates 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-

20 per cent .;

(1) where the agreement is made on or after the 1st day of June , 1997 but before the 1st day of June, 2005

(II) where the agreement is made on or after the 1st day of June , 2005 10 per cent.;

30 per cent.;

(E) on income by way of winnings from lotteries , crossword puzzles , card games and other games of any sort

(F) on incomeby way of winnings from horse races

30 per cent.;

(G) on income by way of short-term capital gains referred to in section 15per cent.;

20 per cent.;

(H) on incomeby way of long-term capital gains [not being long - term capital gains referred to in clauses ( 33) , ( 36) and ( 38 ) of section 10 ]

(1) on the whole of the other income

30 per cent.;

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 "

20 per cent.;

30 per cent .;

(ii) on income by way of winnings from lotteries , crossword puzzles , card games and other games of any sort

(iii) on income by way of winnings from horse races

30 per cent .;

(iv) on any other income

20 per cent .;

(b) where the company is not a domestic company-

30 per cent.;

(1) on income by way of winnings from lotteries , crossword puzzles , card games and other games of any sort

(ii) on income by way of winnings from horse races

30 per cent.;

20 per cent.:

(iii) on income by way of interest payable by Government or an Indian concern onmoneys borrowed or debt incurred by Government or the Indian concern in foreign currency 53 THE GAZETTE OF INDIA EXTRAORDINARY

SEC.2]

Rate of income-tax

(iv) on income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day ofMarch, 1976 where such royalty is in consideration for the transfer ofall or any rights ( including the granting of a licence ) in respect of copyright in any book on a subject referred to in the first proviso to sub - section ( IA ) of section 115A of the Income- tax Act,to the Indian concern , or in respect of any computer software referred to in the second proviso to sub - section ( IA) of section 115A of the Income-tax Act, to a person resident in India-

30per cent.;

(A) where the agreement is made before the 1st day of June , 1997

20 per cent .;

(B) where the agreement is made on or after the 1st day of June , 1997 but before the 1st day of June , 2005

10per cent .;

10 per cent.;

(v) on income by way of royalty [not being royalty of the nature referred to in sub - item (b ) ( iv ) ] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern , the agreement is approved by the Central Government or where it relates 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-

50per cent .;

(A) where the agreement is made after the 31st day of March , 1961 but before the 1st day of April , 1976

30 per cent .;

(B) where the agreement is made after the 31st day of March , 1976 but before the 1st day of June , 1997

20 per cent.;

10 per cent .;

(D) where the agreement is made on or after the 1st day of June , 2005

(vi) on income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern , the agreement is approved by the Central Government or where it relates 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-

50 per cent.;

(A) where the agreement is made after the 29th day of February, 1964 but before the 1st day ofApril , 1976

30 per cent.;

(B) where the agreement is made after the 31st day of March, 1976 but before the 1st day of June , 1997

20 per cent .;

10per cent .;

(D)where the agreement is made on or after the 1st day of June , 2005

15 per cent.;

( vii) on income by way of short - term capital gains referred to in section 111A

20 per cent.;

(viii) on income by way of long - term capital gains [ not being long - term capital gains referred to in clauses (33 ), ( 36) and (38) of section 10 ]

40per cent.;

(ix) on any other income

Explanation. For the purpose of item 1 (b ) ( i) of this Part, " investment income " and "non- resident Indian" shall have the meanings assigned to them in Chapter XII - A of the Income-tax Act .

Surcharge on income -tax

The amount of income- tax deducted in accordance with the provisions of-

(A) item 1 of this Part, shall be increased by a surcharge, for purposes of the Union , calculated,-

(i) inthe case of every individual , Hindu undivided family, association ofpersons and body of individuals , whether incorporated or not , 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 and subject to the deduction exceeds ten lakh rupees ;

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II-

(ii) in the case of every artificial juridical person referred to in sub - clause ( vii) of clause ( 31 ) of section 2 of the Income- tax Act, at the rate of ten per cent . of such tax;

(iii) in the case ofevery firm at the rate often per cent . of such tax where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees ;

(B) item 2 of this Part , shall be increased by a surcharge, for purposes of the Union , calculated,-

(i) in the case of every domestic company at the rate of ten per cent. of such income-tax where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees ;

(ii) in the case of every company other than a domestic company at the rate of two and one - half per cent. of such income-tax where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees .

PART III

RATES FOR CHARGING INCOME - TAX IN CERTAIN CASES , DEDUCTING INCOME - TAX FROM INCOME 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) of section 174 or section 174A or section 175 or sub - section ( 2 ) of section 176 of the said Act or deducted from, or paid on, from income chargeable under the head " Salaries " under section 192 of the said Act or in which the " advance tax" payable under Chapter 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, "advance tax" [ not being " advance tax " in respect of any income chargeable to tax under Chapter XII or Chapter XII - A or fringe benefits chargeable to tax under Chapter XII - H or income chargeable to tax under section 115JB or sub- section ( 1A) of section 161 or section 164 or section 164A or section 167B of the Income-tax Act at the rates as specified in that Chapter or section or surcharge on such " advance tax " in respect of any income chargeable to tax under section 115A or section 115AB or section 115AC or section 115ACA or section 115AD or section 115B or section 115BB or section 115BBA or section 115BBC or section 115E or section 115JB or fringe benefits chargeable to tax under section 115WA] shall be charged , deducted or computed at the following rate or rates:--

Paragraph A

(1) 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 in sub - clause (vii) of clause ( 31 ) of section 2 of the Income -tax Act , not being a case to which any other Paragraph of this Part applies ,-

Rates of income- tax

(1) where the total income does not exceed Rs . 1,50,000 Nil;

(2) where the total income exceeds Rs . 1,50,000 but does not exceed Rs . 3,00,000

10 per cent . of the amount by which the total income exceeds Rs . 1,50,000;

(3) where the total income exceeds Rs . 3,00,000 but does not exceed Rs . 5,00,000

Rs . 15,000 plus 20 per cent . of the amount by which the total income exceeds Rs . 3,00,000 ;

(4) where the total income exceeds Rs . 5,00,000

Rs . 55,000 plus 30 per cent . ofthe amount by which the total income exceeds Rs . 5,00,000 .

(//) In the case of every individual , being a woman resident in India, and below the age of sixty- five years at any time during the previous year ,-

Rates of income- tax

(1) where the total income does not exceed Rs . 1,80,000 Nil;

(2) where the total income exceeds Rs . 1,80,000 but does not exceed Rs . 3,00,000

10 per cent. of the amount by which the total income exceeds Rs . 1,80,000 ;

(3) where the total income exceeds Rs . 3,00,000 but does not exceed Rs . 5,00,000

Rs . 12,000 plus 20 per cent . of the amount by which the total income exceeds Rs . 3,00,000 ;

(4) where the total income exceeds Rs . 5,00,000

Rs. 52,000 plus 30 per cent . of the amount by which the total income exceeds Rs . 5,00,000.

55 THE GAZETTE OF INDIA EXTRAORDINARY

SEC.2]

( III) In the case of every individual , being a resident in India , who, is of the age of sixty - five years or more at any time during the previous year ,-

Rates of income- tax

Nil;

(1) where the total income does not exceed Rs . 2,25,000

10 per cent. ofthe amount by which the total income exceeds Rs . 3,00,000 ;

(2) where the total income exceeds Rs . 2,25,000 but does not exceed Rs . 3,00,000

Rs . 7,500 plus 20 per cent . of the amount by which the total income exceeds Rs . 3,00,000;

(3) where the total income exceeds Rs.3,00,000 but does not exceed Rs . 5,00,000

(4) where the total income exceeds Rs . 5,00,000

Rs .47,500 plus 30 per cent. of the amount by which the total income exceeds Rs . 5,00,000 .

Surcharge on income -tax

The amount of income - tax computed in accordance with the preceding provisions of this Paragraph, or in section 111A or section 112 , shall ,-

(i) inthe case ofevery individual or Hindu undivided family or association of persons or body of individuals having a total income exceeding ten lakh rupees , be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent. of such income-tax;

(ii) in the case of every person , other than those mentioned in item (i) , be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent . of such income- tax:

Provided that in case of persons mentioned in item (i) above having a total income exceeding ten lakh rupees , the total amount payable as income -tax and surcharge on such income shall not exceed the total amount payable as income-tax on atotal income of ten lakh rupees by more than the amount of income that exceeds ten lakh rupees .

ParagraphB

In the case of every co- operative society,

10 per cent . of the total income;

(1) where the total income does not exceed Rs . 10,000

Rs. 1,000 plus 20 per cent . ofthe amount by which the total income exceeds Rs . 10,000 ;

(2) where the total income exceeds Rs.10,000 but does not exceed Rs . 20,000

(3) where the total income exceeds Rs . 20,000

Rs . 3,000 plus 30 per cent. ofthe amount by which the total income exceeds Rs . 20,000 .

Rates of income- tax

Paragraph C

In the case of every firm,-

Rate of income- tax

30per cent.

On the whole of the total income

Surcharge on income -tax

The amount of income-tax computed at the rate hereinbefore specified, or in section 111A or section 112 , shall , in the case of every firm having a total income exceeding one crore rupees, be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent of such income-tax:

Provided that in the case of every firm having a total income exceeding one crore rupees , the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income - tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees .

ParagraphD

In the case of every local authority,- 56

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II-

Rate of income-tax

On the whole of the total income

30 per cent.

Paragraph E

In the case of a company,-

Rates of income- lax

I. In the case of a domestic company

30 per cent . of the total income;

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 of an agreement made by itwith the Government or the Indian concern after the 31st day of March, 1961 but before the 1st day ofApril , 1976; or

(b) fees for rendering technical services receivedfrom Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 29th day of February, 1964 but before the 1st day ofApril , 1976,

50 per cent .;

and where such agreement has , in either case , been approved by the Central Government

( ii) on the balance , if any, of the total income

40 per cent .

Surcharge on income - tax

(i) inthe case of every domestic company having a total income exceeding one crore rupees , at the rate of ten percent. ofsuch income-tax;

(ii) in the case of every company other than a domestic company having a total income exceeding one crore rupees at the rate of two and one - half per cent .:

Provided that in the case of every company having a total income exceeding one crore rupees , the total amount payable as income -tax and surcharge on such income shall not exceed the total amount payable as income -tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees .

PART IV

[See section 2( 12) ( 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 be computed as if it were income chargeable to income - tax under that Act under the head " Income from other sources " and the provisions 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 shall be construed as not including a reference to sub- sections (3) and (4) of section 40A .

Rule 2.--Agricultural income of the nature referred to in sub - clause ( b ) or sub - clause ( c) of clause ( 14 ) of section 2 of the Income-tax Act [ other than income derived from any building required as a dwelling- house by the receiver ofthe rent or revenue of the cultivator or the receiver of rent - in -kind referred to in the said sub - clause ( c) ] shall be computed as ifitwere income chargeable to income-tax under that Act under the head " Profits and gains of business or profession " and the provisions of sections 30 , 31 , 32 , 36, 37, 38 , 40 , 40A [ other than sub -sections (3) and (4) thereof] , 41 , 43 , 43A , 43B and 43C of the Income- tax Act shall, so far as may be , apply accordingly.

57 THE GAZETTE OF INDIA EXTRAORDINARY

SEC. 2]

Rule 3.-Agricultural income of the nature referred to in sub - clause ( c ) of clause ( 14 ) of section 2 of the Income-tax Act, being income derived from any building required as a dwelling- house by the receiver of the rent or revenue or the cultivator or the receiver of rent - in-kind referred to in the said sub - clause (c ) shall be computed as if it were income chargeable to income- tax under that 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 oftea grown and manufactured by him in India, such income shall be computed in accordance with rule 8 of the Income- tax Rules , 1962 , and sixty per cent . of such income shall be regarded as the agricultural income of the assessee ;

(b) where the assessee derives income from sale of centrifuged latex or cenex or latex based crepes ( such as pale latex crepe ) or brown crepes ( such as estate brown crepe , re - milled crepe , smoked blanket crepe or flat bark crepe) or technically specified block rubbers manufactured or processed by him from rubber plants grown by him in India, such income shall be computed in accordance with rule 7A of the Income-tax Rules , 1962, and sixty - five per cent . of such income shall be regarded as 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 be computed in accordance with rule 7B ofthe Income - tax Rules, 1962 , and sixty per cent . or seventy- five per cent . , as the case may 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 undivided family, a company or a firm) which in the previous year has either no income chargeable to tax under the Income- tax Act or has total income not exceeding the maximum amount not chargeable to tax in the case of an association of persons or a body of individuals (other than a Hindu undivided family, a company or a firm) but has any agricultural income then , the agricultural income or loss of the association or body shall be computed in accordance with these rules and the share of the assessee in the agricultural income or loss so computed shall be regarded as the agricultural income or loss of the assessee .

Rule 6.--Where the result of the computation for the previous year in respect of any source of agricultural income is a loss , such loss shall be set off against the income of the assessee , if any, for that previous year from any other source ofagricultural income:

Provided that where the assessee is a member of an association of persons or a body of individuals and the share of the assessee in the agricultural income of the association or body, as the case may be , is a loss , such loss shall not be set off against any income of the assessee from any other source of agricultural income .

Rule 7.-Any sum payable by the assessee on account ofany tax levied by the State Government on the agricultural income shall 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 ofApril , 2008 , any agricultural income and the net result ofthe computation of the agricultural income of the assessee for any one or more of the previous years relevant to the assessment years commencing on the 1st day of April , 2000 or the 1st day ofApril , 2001 or the 1st day ofApril, 2002 or the 1st day ofApril , 2003 or the 1st day of April , 2004 or the 1st day ofApril , 2005 or the 1st day ofApril , 2006 or the 1st day ofApril , 2007, 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 , 2000, to the extent , if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April , 2001 or the 1st day ofApril , 2002 or the 1st day ofApril , 2003 or the 1st day ofApril , 2004 or the 1st day of April , 2005 or the 1st day ofApril , 2006 or the 1st day of April, 2007.

(ii) the loss so computed for the previous year relevant to the assessment year commencing on the ist day of April , 2001 , to the extent , if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day ofApril , 2002 or the Ist day of April , 2003 or the 1st day ofApril , 2004 or the 1st day ofApril , 2005 or the 1st day ofApril , 2006 or the 1st day ofApril , 2007,

(iii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day ofApril , 2002, to the extent , if any, such loss has not been set off against the agricultural income for the previous 58

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II---

year relevant to the assessment year commencing on the 1st day ofApril , 2003 or the 1st day ofApril , 2004 or the 1st day ofApril , 2005 or the 1st day ofApril, 2006 or the 1st day ofApril , 2007,

(iv) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April , 2003 , to the extent , if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day ofApril , 2004 or the 1st day ofApril , 2005 or the 1st day ofApril , 2006 or the 1st day ofApril , 2007 ,

(v) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April , 2004, to the extent , if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day ofApril , 2005 or the 1st day ofApril , 2006 or the 1st day ofApril, 2007,

(vi) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April , 2005 , to the extent , if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the Ist day of April , 2006 or the 1st day ofApril , 2007 ,

(vii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day ofApril , 2006, to the extent , if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April , 2007 ,

(viii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day ofApril, 2007,

shall be set off against the agricultural income of the assessee for the previous year relevant to the assessment year commencing on the 1st day ofApril, 2008 .

(2) Where the assessee has , in the previous year relevant to the assessment year commencing on the 1st day of April , 2009 , 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 the previous year, in such other period , any agricultural income and the net result of the computation of the agricultural income of the assessee for any one or more of the previous years relevant to the assessment years commencing on the 1st day ofApril , 2001 or the 1st day ofApril , 2002 or the 1st day of April , 2003 or the 1st day ofApril , 2004 or the Ist day ofApril , 2005 or the 1st day of April , 2006 or the 1st day of April , 2007 or the 1st day ofApril , 2008 , is a loss, then, for the purposes of sub-section ( 10) 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, 2001 , to the extent , if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day ofApril, 2002 or the 1st day of April , 2003 or the 1st day ofApril , 2004 or the 1st day ofApril , 2005 or the 1st day ofApril , 2006 or the 1st day ofApril , 2007 or the 1st day of April, 2008,

( ii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2002, to the extent , if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day ofApril, 2003 or the I'st day ofApril , 2004 or the 1st day ofApril , 2005 or the 1st day ofApril, 2006 or the 1st day ofApril , 2007 or the 1st day ofApril , 2008 ,

(iii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day ofApril, 2003 , to the extent , if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day ofApril , 2004 or the 1st day ofApril , 2005 or the 1st day of April , 2006 or the 1st day ofApril , 2007 or the 1st day ofApril , 2008 ,

( iv ) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April , 2004, to the extent , if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day ofApril , 2005 or the 1st day ofApril , 2006 or the 1st day ofApril , 2007 or the 1st day of April , 2008,

( v) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April , 2005 , to the extent , if any, such loss has not been set off against the agricultural income for the previous year 59 THE GAZETTE OF INDIA EXTRAORDINARY

SEC. 2]

relevant to the assessment year commencing on the 1st day ofApril , 2006 or the 1st day ofApril , 2007 or the 1st day ofApril, 2008 ,

(vi) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April , 2006, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April , 2007 or the 1st day ofApril , 2008 ,

(vii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day ofApril , 2007, to the extent , if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day ofApril , 2008 ,

(viii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2008,

shall be set off against the agricultural income of the assessee for the previous year relevant to the assessment year commencing on the 1st day ofApril , 2009 .

(3) Where any person deriving any agricultural income from any source has been succeeded in such capacity by another person , otherwise than by inheritance , nothing in sub - rule ( 1) or sub- rule (2 ) shall entitle any person , other than the person incurring 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 the provisions of these rules or the rules contained in Part IV of the First Schedule to the Finance Act, 2000 (10 of2000) , or of the First Schedule to the Finance Act, 2001 ( 14 of 2001 ) , or of the First Schedule to the Finance Act , 2002 (20 of2002) , or of the First Schedule to the Finance Act , 2003 (32 of2003 ) , or of the First Schedule to the Finance (No. 2) Act, 2004 (23 of 2004) or ofthe First Schedule to the Finance Act , 2005 ( 18 of 2005) , or of the First Schedule to the Finance Act, 2006 (21 of2006 ) or of the First Schedule to the Finance Act, 2007 (22 of2007) 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 be ignored 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 288A relating to rounding off of income ) shall , with the necessary modifications , apply in relation to the computation of the net agricultural income 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 the same powers as he has under the Income-tax Act for the purposes of assessment of the total income .

THE SECOND SCHEDULE

[See section 72 ( i) ]

In the First Schedule to the Customs Tariff Act,-

(1) in Chapter 24, in tariff items 2402 10 10 and 2402 10 20 , for the entry in column (4) occurring against each of them, the entry " 60 % " shall be substituted;

(2) in Chapter 27, in tariff item 27160000, for the entry in column (4), the entry "Rs . 2000 per 1000 kWh " shall be substituted .

THE THIRD SCHEDULE

[See section 72(ii ) ]

In the Second Schedule to the Customs Tariff Act , against heading No. 12 , for the entry in column (3 ) , the entry "Rs. 3000 per tonne " shall be substituted.

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[PART II-

THE FOURTH SCHEDULE

(See section 81 )

Amendment

Provisions of the Central Excise Rules , 1944 , to be amended

(1)

Period of effect of amendment

(2)

(3)

In the Central Excise Rules , 1944 , in rule 12, in sub - rule ( 1 ) , after the proviso, the following proviso shall be inserted , namely: - Rule 12 of the Central Excise Rules , 1944 as substituted by notification number G.S.R. 699 ( E ) , dated the 22nd September, 1994. 8th day of July, 1999to the 30th day of June , 2001 ( both days inclusive) .

"Provided further that the rebate of duty paid on excisable goods cleared from factory for export shall also be admissible for that portion of duty paid for which refund has been granted in terms of the notification of the Government of India in the Ministry of Finance (Department of Revenue) number G.S.R. 508 ( E) , dated the 8th July, 1999 [32/99 - Central Excise , dated the 8th July, 1999 ] or number G.S.R. 509 (E), dated the 8th July, 1999 [ 33 / 99 -Central Excise , dated the 8th July, 1999] ." .

THE FIFTH SCHEDULE

(See section 82)

Amendment

Provisions of the Central Excise (No. 2) Rules , 2001 , to be amended

(1)

Period of effect of amendment

(2)

(3)

Inthe Central Excise (No. 2) Rules, 2001 , in rule 18 , before the Explanation , the following proviso shall be inserted , namely:-

Rule 18 ofthe Central Excise (No. 2) Rules , 2001 as published vide notification number G.S.R. 444 (E ) , dated the 21st June , 2001 .

1st day of July, 2001 to 28th day of February, 2002 (both days inclusive) .

"Provided that the rebate of duty paid on excisable goods cleared from factory for export shall also be admissible for the portion of duty paid for which the refund has been granted in terms of the notifications of the Government of India in the Ministry of Finance (Department of Revenue ) number GS.R. 508 (E) , dated the 8th July, 1999 [ 32/ 99 - Central Excise, dated the 8th July, 1999] number G.S.R. 509 (E), dated the 8th July, 1999 [ 33 /99 - Central Excise , dated the 8th July, 1999] , number G.S.R. 565 ( E ) , dated the 31st July, 2001 [39/ 2001-Central Excise , dated the 31st July, 2001 ] . " .

THE GAZETTE OF INDIA EXTRAORDINARY

SEC.2]

THE SIXTH SCHEDULE

(See section 83)

Amendment

Provisions of the Central Excise Rules , 2002 , to be amended

Period of effect of amendment

(3)

(2)

(1)

Inthe Central Excise Rules , 2002, in rule 18 , before the Explanation , the following proviso shall be inserted, namely:-

Rule 18 ofthe Central Excise Rules , 2002 as published vide notification number G.S.R. 143 (E ) , dated the 1stMarch , 2002 .

1stday ofMarch , 2002 to 7th day of December, 2006 ( both days inclusive).

"Provided that the rebate of duty paid on excisable goods cleared from factory for export shall also be admissible for that portion of duty paid for which the refund has been granted in terms of the notifications of the Government of India in the Ministry of Finance (Department of Revenue ) number G.S.R. 508 (E) , dated the 8th July, 1999 [32 /99-Central Excise , dated the 8th July , 1999 ] or number G.S.R. 509 (E) , dated the 8th July, 1999 [33/99 -Central Excise , dated the 8th July, 1999] , number G.S.R. 565 (E) , dated the 31st July, 2001 [ 39 /2001 -Central Excise , dated the 31st July, 2001 ] , notification of the Government of India in the erstwhile Ministry of Finance and Company Affairs (Department of Revenue ) number GS.R. 764 (E) , dated 14th November, 2002 [ 56/2002 -Central Excise, dated the 14th November , 2002 ] , number G.S.R. 765(E), dated the 14th November, 2002 [ 57 / 2002-Central Excise, dated the 14th November , 2002 ] , notification of the Government of India in the Ministry of Finance (Department of Revenue ) number G.S.R. 513 (E) , dated the 25th June , 2003 [56/ 2003 - Central Excise , dated the 25th June, 2003 ] , number GS.R. 717 (E ) , dated the 9th September, 2003 [ 71 /2003 -Central Excise , dated the 9th September, 2003] .".

THE SEVENTH SCHEDULE

(See section 84 )

In the First Schedule to the Central Excise Tariff Act,-

(1) in Chapter 24,

(i) in tariff item 2402 20 10, for the entry in column (4) , the entry "Rs . 659 per thousand " shall be substituted;

(ii) in tariff item 2402 20 20, for the entry in column (4), the entry " Rs.1068 per thousand " shall be substituted;

(2) in Chapter 25 , in tariff item 2523 1000 , for the entry in column (4 ) , the entry "Rs . 450 per tonne " shall be substituted;

(3) in Chapter 39, in NOTE 16, for the word "metallization ", the words " metallization or lamination or lacquering" shall be substituted;

(4) inChapter 85, in tariff item 8523 80 20 , for the entry in column (4) , the entry " 12 % " shall be substituted.

THE GAZETTE OF INDIA EXTRAORDINARY

THE EIGHTH SCHEDULE

[PART II---

(See section 117)

Inthe Seventh Schedule to the Finance Act , 2001 ( 14 of2001 ) ,-

(1) in tariff item 2402 20 10, for the entry in column (4 ) , the entry " Rs . 90 per thousand " shall be substituted ;

(2) in tariff item 2402 20 20, for the entry in column (4 ), the entry " Rs . 145 per thousand " shall be substituted;

(3) after tariff item 2709 00 00 and the entries relating thereto , the following tariff items and entries shall be inserted , namely:-

Tariff item

Description of goods

(1)

(2)

"851712

Unit Rate of duty

(3)

(4)

Telephones for cellular networks or for other wireless networks:

8517 12 10

Push button type

8517 12 90

Other

น

1%":

( 4) sub -heading 5402 20 , tariff items 5402 20 10 , 5402 20 90, 5402 33 00 , 5402 46 00 , 5402 47 00, 5402 52 00 , 5402 62 00 , 5406 10 00 and the entries relating thereto shall be omitted.

THE NINTH SCHEDULE

[See section 120( ii ) ]

In the Seventh Schedule to the Finance Act , 2005 ( 18 of 2005 ) ,--

(1) in tariff item 2402 20 10 , for the entry in column (4 ) , the entry "Rs . 70 per thousand " shall be substituted;

(2) in tariff item 2402 20 20 , for the entry in column (4 ) , the entry " Rs . 110 per thousand" shall be substituted.

63 THE GAZETTE OF INDIA EXTRAORDINARY

SEC . 2]

STATEMENT OF OBJECTS AND REASONS

The object oftheBill is to give effect to the financial proposals ofthe Central Government for the finaricial year 2008-2009 . The notes on clauses explain the various provisions contained intheBill.

P. CHIDAMBARAM .

NEW DELHI;

The29th February, 2008 .

PRESIDENT'S RECOMMENDATION UNDER ARTICLES 117 AND 274 OF THE CONSTITUTION OF INDIA

[Copy ofletter No. 2 ( 9 ) -B(D )/2008 , dated the 29th February, 2008 from Shri P. Chidambaram, Minister of Finance, to the Secretary- General , Lok Sabha. ]

The President, having been informed of the subject matter of the proposed Bill , 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 , 2008 to the Lok Sabha and also recommends to the Lok Sabha the consideration of the Bill .

2.The Bill will be introduced in the Lok Sabha immediately after the presentation of the Budget on the 29th February, 2008 .

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[PART II ---

NOTES ON CLAUSES

Income-tax

Clause 2, read with the First Schedule to the Bill, seeks to specify the rates at which income- tax is to be levied on income chargeable to tax for the assessment year 2008-09 . Further, it lays down the rates at which tax is to be deducted at source during the financial year 2008-09 from income subject to such deduction under the Income - tax Act and the rates at which " advance tax" is to be paid , tax is to be deducted at source from , or paid on , income chargeable under the head "Salaries" and tax is to be calculated and charged in special cases for the financial year 2008-09 .

Rates of income- tax for the assessment year 2008-09

Part I of the First Schedule to the Bill specifies the rates at which income is liable to tax for the assessment year 2008-09 . These rates are the same as those specified in Part III of the First Schedule to the Finance Act , 2007 , for the purposes of deduction of tax at source from " Salaries " , computation of " advance tax " and charging of income - tax in special cases during the financial year 2007-08 .

Ratesfor deduction of tax at source during the financial year 2008-09 from income other than " Salaries "

Part II of the First Schedule to the Bill specifies the rates at which income-tax is to be deducted at source during the financial year 2008-09 from income other than " Salaries " . The rate at which tax is to be deducted from income by way of short- term capital gain referred to in section 111A has been raised from ten per cent to fifteen per cent . Further , in the case of a person resident in India, other than a company , the rate at which tax is to be deducted from income by way of interest payable on security of the Central or State Government has been specified at ten per cent . In the remaining cases , the rates are the same as those specified in Part II of the First Schedule to the Finance Act , 2007 , for the purposes of deduction of income-taxat source during the financial year 2007-08 .

The amount of tax so deducted shall be increased by a surcharge:--

( i) in the case of every individual , Hindu undivided family, association of persons and body of individuals , whether incorporated or not, 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 and subject to the deduction exceeds ten lakh rupees ;

( ii ) in case of every artificial juridical person referred to in sub - clause (vii ) of clause (31 ) of section 2 of the Income- taxAct, at the rate of ten per cent . of such tax;

(iii) in the case ofevery firm and domestic company, 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 and subject to the deduction exceeds one crore rupees ;

(iv) in the case of every company other than a domestic company at the rate of two and one - half per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees .

No surcharge shall be levied in the case of any co - operative society or local authority.

The additional surcharge , called the "Education Cess on Income -tax " for the purposes of the Union shall continue to be levied at the rate of two per cent. of income- tax and surcharge in all cases so as to fulfil the commitment of the Government to provide and finance universalized quality basic education.

The additional surcharge, called the "Secondary and Higher Education Cess " on income- tax , at the rate of one per cent. of income-tax and surcharge (not including the Education Cess ) shall also continue to be levied in all cases so as to fulfil the commitment of the Government to provide and finance secondary and higher education.

Rates for deduction of tax at sourcefrom "Salaries " computation of " advance tax " and charging of income- tax in special cases during the financial year 2008-09

Part III of the First Schedule to the Bill specifies the rates at which income - tax is to be deducted at source from , or paid on , income under the head " Salaries " , the rates at which " advance tax " is to be paid and the rates at which inconte - tax is to be calculated or charged in special cases for the financial year 2008-09.

Paragraph A of this Part specifics the rates of income-tax in the case of every individual or Hindu undivided family or every association of persons or 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, not being a case to which any other -Paragraph of Part III applies . In such cases , the rates of income - tax on total income shall be as under:---

Nil

Up to Rs . 1,50,000

Rs . 1,50,001 to Rs . 3,00,000

10 per cent .

Rs .3,00,001 to Rs . 5,00,000

20 per cent .

Above Rs . 5,00,000

30 per cent.

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SEC .2]

In the case of every individual , being a woman , resident in India and below the age of sixty - five years at any time duringthe previous year, the rate of income- tax on total income shall be as under-

Up to Rs . 1,80,000

Rs . 1,80,001 to Rs . 3,00,000 Rs . 3,00,001 to Rs . 5,00,000 Above Rs . 5,00,000

Nil

10per cent.

20 per cent.

30 per cent .

In the case of every individual , being a resident in India, who is of the age of sixty - five years or more at any time during the previous year , the rates of income- tax on total income will be as under-

Up to Rs . 2,25,000

Rs . 2,25,001 to Rs . 3,00,000 Rs . 3,00,001 to Rs . 5,00,000

Above Rs . 5,00,000

Nil

10 per cent.

20 per cent.

30 per cent .

Paragraph A further provides that the amount of income - tax computed shall , in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not , having total income exceeding ten lakh rupees be reduced by the amount of rebate of income- tax calculated under Chapter VIII - A. and the income -tax as so reduced , be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent . of such income- tax . However , the total amount payable as income- tax and surcharge on total income exceeding ten lakh rupees shall not exceed the total amount payable as income- tax on a total income of ten lakh rupees by more than the amount of income that exceeds ten lakh rupees .

Paragraph A also provides that the amount of income -tax computed shall in the case ofevery artificial juridical person referred to in sub - clause (vii ) of clause ( 31 ) of section 2 of the Income- tax Act be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent . of such income-tax.

No change is proposed in the rates of surcharge levied in Paragraph A.

Paragraph B of this Part specifies the rates of income- tax in the case of every co - operative society . In such cases , the rates oftax will continue to be the same as those specified for assessment year 2008-09 . No surcharge will be levied.

Paragraph C of this Part specifies the rate of income - tax in the case of every firm. In such cases , the rate of tax will continue to be the same as that specified for assessment year 2008-09 .

Further , the amount of income- tax computed shall , in the case of every firm having total income exceeding one crore rupees , be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent. of such income - tax . However, the total amount payable as income -tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income -tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees .

Paragraph D of this Part specifies the rate of income- tax in the case of every local authority. In such cases , the rate of taxwill continueto be the same as that specified for assessment year 2008-09. No surcharge will be levied .

Paragraph E of this Part specifies the rates of income - tax in the case of companies . In the case of domestic companies , the rate of tax will continue to be the same as that specified for assessment year 2008-09. Further , in the case of every company other than a domestic company, the rate of tax will continue to be the same as that specified for assessment year 2008-09.

Paragraph E also provides the rate of surcharge in case of companies . The amount of income- tax computed shall , in the case of every domestic company having total income exceeding one crore rupees , be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent . of such income tax. Further , the amount of income -tax computed shall, in the case of every company, other than a domestic company, having total income exceeding one crore rupees , be increased by a surcharge for purposes of the Union calculated at the rate of two and one -half per cent . of such income-tax.

Marginal reliefwill be provided in such cases whereby the total amount payable as income - tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income - tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees .

Further, marginal relief shall also be provided in the case of every company having total income chargeable to tax under section 115JB of the Income- tax Act , and such income exceeds one crore rupees .

[PART II THE GAZETTE OF INDIA EXTRAORDINARY

In respect of any fringe benefits chargeable to tax under section 115 WA of the Income- tax Act , the tax payable shall be increased by a surcharge as follows:---

(a) in the case of every association of persons and body of individuals , at the rate of ten per cent . of such tax, where the fringe benefits exceed ten lakh rupees;

tax; (b) in the case of every firm , artificial juridical person and domestic company, at the rate of ten per cent . of such

tax. (c) in the case of every company , other than a domestic company, at the rate of two and one - half per cent. of such

Theadditional surcharge , called the "Education Cess on income- tax " for the purposes of the Union shall continue to be levied at the rate of two per cent . of income- tax and surcharge . Also , the additional surcharge , called the " Secondary and Higher Education Cess " on income- tax, at the rate of one per cent . of income - tax and surcharge (not including the Education Cess ) shall continue to be levied in all cases .

Clause 3 seeks to amend section 2 of the Income- tax Act , relating to definitions .

This clause seeks to insert a new Explanation after Explanation 2 in clause ( 1A ) of section 2 , which defines agricultrual income , so as to provide that any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income .

This amendment will take effect from 1st April , 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years .

Clause ( 15) ofthe said section defines " charitable purpose " to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility.

It is proposed to amend the said clause by inserting a proviso thereto so as to exclude from " advancement of any other object of general public utility " -

(i) any activity in the nature of trade , commerce or business , or

(ii) any activity of rendering any service in relation to any trade , 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 from any such activity.

This amendment will take effect from 1st April , 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years .

Clause 4 seeks to amend section 10 of the Income- tax Act which relates to incomes which do not form part of the total income.

It isproposed to insert a new clause (26AAA ) in section 10 so as to provide that any income , which accrues or arises to a " Sikkimese " individual from any source in the State of Sikkim or by way of dividend or interest on securities , shall not be included in the total income of such individual .

The term ' Sikkimese ' has been specified in the said clause in pursuance to the Sikkim Subjects Regulation , 1961 , rules made thereunder and relevant Government orders issued in this regard .

This amendment will take effect retrospectively from 1st April , 1990 and will accordingly apply in relation to the assessment year 1990-91 and subsequent assessment years .

Clause 4 further seeks to amend clause (294) of the said section , which provides for exemption of any income of certain commodity boards and export development authorities specified in sub- clauses (a) to (g ) ofthe said clause . It is proposed to insert a new sub - clause to provide exemption in respect of any income accruing or arising also to the Coir Board established under the Coir Industry Act , 1953 .

This amendment will take effect from 1st April, 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years .

Clause 4 also seeks to insert a new clause (43 ) in the said section so as to provide that any amount received by an individual as a loan , either in lump sum or instalment , in a transaction of reverse mortgage referred to in clause (xvi) of section 47 will also not be included in total income .

This amendment will take effect from 1st April , 2008 and will , accordingly apply in relation to the assessment year 2008-09 and subsequent assessment years .

67 THE GAZETTE OF INDIA EXTRAORDINARY

SFC . 2]

Clause 5 seeks to amend section 35 of the Income- tax Act , which relates to expenditure on scientific research .

Clause (ii ) of sub-section ( 1 ) of the said section allows deduction of an amount equal to one and one- fourth times of any sum paid to a scientific research association which has as its object the undertaking of scientific research or to a university, college or other institution to be used by it for scientific research . The provision also requires such scientific research association, university, college or other institution to be approved and notified for the purposes of said clause .

Further, sub - section (2AB ) ofthe said section allows deduction of an amount equal to one and one - half times of the expenditure incurred on scientific research , not being expenditure in the nature of cost of any land or building , on approved in -house research and development facility. This deduction is available to a company engaged in the specified business .

The proposed amendment seeks to insert clause ( iia) in sub - section ( 1 ) of the said section to allow deduction of an amount equal to one and one - fourth times of any sum paid to a company for scientific research , provided such company-

(A) isregistered in India;

(B) has as its main object the scientific research and development ;

(C) is, for the purposes of this clause , for the time being approved by the prescribed authority in the prescribed manner; and

(D) fulfils such other conditions as may be prescribed.

Theproposed amendment further seeks to insert clause (6 ) in sub - section (2AB ) of the said section to provide that no deduction shall be allowed to a company approved under sub - clause (C) of clause ( iia) of sub- section ( 1 ) of the said section in respect of the expenditure referred to in clause ( 1) ofsub -section (2AB ) which is incurred after 31st March, 2008 .

These amendments will take effect from 1st April , 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assesment years .

Clause 6 seeks to amend section 35D of the Income - tax Act , relating to amortisation of certain preliminary expenses.

Under the existing provisions ofthe said section , deduction for certain specified preliminary expenses in coinputing business income is allowed. The deduction is allowed at an amount equal to 1/5th of such expenditure for five successive previous years . The preliminary expenses relate either to the period before the commencement of business or after . However, if preliminary expenses relate to a period after the commencement ofbusiness , such expenses are only allowed if they are in relation to the extension of an industrial undertaking or the setting up of a new industrial unit .

The proposed amendment seeks to substitute the words " industrial undertaking " with the word " undertaking " and the words " industrial unit " with the word " unit " , wherever they occur in the said section . This is intended to provide benefit of amortisation of specified post commencement preliminary expenses to all sectors for the extention of an undertaking or the setting up of a new unit .

Thisamendment will take effect from 1st April , 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years .

Clause 7 seeksto amend section 36 of the Income -tax Act, relating to other deductions for the purposes of computation ofbusiness income .

Itisproposed to insert clause (xv) in sub- section ( 1 ) of the said section so as to provide that any amount of securities transaction tax paid by the assessee during the previous year in respect of taxable securities transactions entered into in the course ofhis business during the previous year shall be allowed as a deduction, if the income arising from such taxable securities transactions is included in the income computed under the head " Profits and gains of business or profession " .

It isalso proposed to insert an Explanation to provide that for the purposes ofthis clause , the expressions " securities transaction tax " and " taxable securities transaction " shall have the meanings respectively assigned to them under Chapter VII ofthe Finance (No. 2) Act , 2004.

Clause 7 further seeks to insert clause (xvi ) in sub - section ( 1 ) of the said section so as to provide that any amount of commodities transaction tax paid by the assessee during the previous year in respect of taxable commodities transactions entered into in the course of his business during the previous year shall be allowed as a deduction , ifthe income arising from such taxable commodities transactions is included in the income computed under the head " Profits and gains of business or profession " .

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II----

It is also proposed to insert an Explanation to provide that for the purposes of this clause , the expressions " commodities transaction tax " and " taxable commodities transaction " shall have the meanings respectively assigned to them under Chapter VII of the Finance Act , 2008 .

These amendments will take effect from 1st April , 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years .

Clause 8 seeks to omit sub - clause ( ib) of clause ( a) of section 40 which provides that any sum paid on account of securities transaction tax shall not be allowed as a deduction in the computation of "profits and gains of business or profession".

This amendment will take effect from 1st April , 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years .

Clause 9 seeks to amend section 40A of the Income- tax Act, relating to expenses or payments not deductible in certain circumstances .

Under the existing provisions contained in clause ( a) of sub - section (3 ) of the said section any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/-otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft is not allowed as a deduction . Clause (b) of sub - section (3 ) of section 40A also provides for deeming a payment as profits and gains of business or profession ifthe payment is made in any subsequent year in a sum exceeding Rs . 20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft .

The amendment seeks to substitute the said sub - section (3 ) with sub - sections (3 ) and (3A) . The proposed sub- section( 3 ) provides that where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft , exceeds twenty thousand rupees , no deduction shall be allowed in respect of such expenditure .

The proposed sub - section (3A) provides that where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year ( hereinafter referred to as subsequent year) the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft , the payment so made shall be deemed to be the profits and gains of business or profession and accordingly chargeable to income - tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day, exceeds twenty thousand rupees .

It is also proposed to provide that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub - sections (3 ) and ( 3A) where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees , in such cases and under such circumstances as may - be prescribed , having regard to the nature and extent of banking facilities available , considerations of business expediency and other relevant factors .

The proposed amendment will take effect from the 1st day of April , 2009 and will , accordingly, apply in relation to the assessment year 2009-10 and subsequent assessment years .

Clause 10 seeks to amend section 43 of the income-tax Act relating todefinition of certain terms relevant to income from profits and gains of business or profession .

Sub -clause (b ) ofclause ( 6) ofthe said section provides that written down value in the case of assets acquired before the previous year means the actual cost to the assessee less all depreciation actually allowed to him under this Act , or under the Indian Income- tax Act , 1922 , or any Act repealed by that Act , or under any executive orders issued when the Indian Income- tax Act , 1886 , was in force .

It is proposed to insert Explanation 6 in the said clause (6 ) to provide that where an assessee was not required to compute his total income for the purposes of Income- tax Act for any previous year or years preceding the previous year relevant to the assessment year under consideration,-

(a) the actual cost of an asset shall be adjusted by the amount attributable to the revaluation of such asset, if any, in the books of account ;

(b) the total amount of depreciation on such asset provided in the books of account of the assessee in respect of such previous year or years preceding the previous year relevant to the assessment year under consideration shall be deemed to be the depreciation actually allowed under the Income- tax Act for purposes of clause ( 6 ) of the said section:

69 THE GAZETTE OF INDIA EXTRAORDINARY

SEC . 2]

(c) the depreciation actually allowed as above shall be adjusted by the amount of depreciation attributable to such revaluation .

This amendment will take effect retrospectively from 1 April , 2003 and will accordingly apply in relation to assessment year 2003-04 and subsequent assessment years .

Clause 11 seeksto amend section 47 of the Income - tax Act , which lists transactions not regarded as transfer.

It isproposed to insert a new clause (xa) to provide that any transfer by way of conversion of bonds referred to in clause (a) of sub - section ( 1 ) of section 115AC into shares or debentures of any company shall not be considered as transfer.

Further, a new clause (xvi ) is also proposed to be inserted in the said section so as to add to the list , any transfer of a capital asset in a transaction of reverse mortgage under a scheme made and notified by the Central Government.

These amendments will take effect from 1st April , 2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent assessment years .

Clause 12 seeks to amend section 49 of the Income- tax Act , which relates to cost with reference to certain modes of acquisition.

Sub-section (2A) of the said section provides that where the capital asset , being a share or debenture in a company, became the property of the assessee in consideration of a transfer referred to in clause (x) of section 47, the cost of acquisition of the asset to the assessee shall be deemed to be that part of the cost of debenture , debenture - stock or deposit certificates in relation to which such asset is acquired by the assessee .

It isproposed to substitute the said sub - section to provide that where the capital asset , being a share or debenture ofacompany, became the property of the assessee in consideration of a transfer referred to in clause (x) or clause (xa) of section 47, the cost of acquisition of the asset to the assessee shall be deemed to be that part of the cost ofdebenture, debenture-stock, bond or deposit certificates in relation to which such asset is acquired by the assessee .

This amendment will take effect from 1st April , 2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent assessment years .

Clause 13 seeks to amend section 80C of the Income -tax Act relating to deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures , etc. This section provides for a deduction of upto rupees one lakh to an individual or a Hindu undivided family for making investment in certain saving instruments or for incurring expenditure on tuition fee and repayment of housing loan .

Itisproposed to insert new clauses (xxiii ) and (xxiv) in sub - section (2) of said section to enlarge the scope ofeligible savings instruments , so as to provide that any sum paid or deposited in the previous year by the assessee in an account under the Senior Citizens Savings Scheme Rules, 2004 or as five year time deposit in an account under the Post Office Time Deposit Rules , 1981 shall also be eligible for tax benefits .

Further, a new sub - section (6A) is also proposed to be inserted so as to provide that where any amount, including the interest accrued thereon , is withdrawn by the assessee from such accounts before the expiry of the period of five years from the date of its deposit, the amount so withdrawn 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 in the assessment year relevant to such previous year . However, if such amount is received by the nominee or legal heir of the assessee on the death of such assessee, the amount so received by such nominee or legal heir, as the case may be , shall not be liable to tax. However , the interest including in such amount which has not been included in the total income of the assessee in any of the earlier year , shall be liable to tax. Further , if the interest included in such amount has been taken into consideration for computing the total income of the assessee for the previous year or years preceding the previous year in which the amount is withdrawn , such interest shall not be liable to tax again .

These amendments will take effect from 1st April, 2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent assessment years .

Clause -14 seeks to substitute section 80D of the Income-tax Act, which relates to deduction in respect of medical insurance premia.

The said section provides for deduction of up to fifteen thousand rupees to an assessee , being an individual or a Hindu undivided family, who makes payment of the specified sum by any mode , other than cash, to effect or keep in force an insurance on ,

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

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

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[PART II

The said section also provides that in case any of the insured persons is a senior citizen , the deduction would be available up to twenty thousand rupees .

With a view to encourage individual assessees to supplement their parents ' efforts to get themselves insured , it is proposed to substitute the said section so as to provide for an additional deduction of up to fifteen thousand rupees to an individual assessee who makes payment of the specified sum , by any mode , other than cash, to effect or keep in force an insurance on the health of his parent or parents . The existing condition of the parents being dependant on the assessee isproposed to be dispensed with . This deduction shall be in addition to the existing deduction of up to fifteen thousand rupees available to the individual assessee on an insurance for himself, his spouse and dependant children .

It isalso proposed that if either of the individual assessee's parents is a senior citizen , and who has been insured, the deduction available would be up to twenty thousand rupees .

This amendment will take effect from 1st April , 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years.

Clause 15 seeks to amend section 80- IB of the Income-tax Act , which relates to deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings .

Sub - section (9) of the said section provides for deduction in respect of profits and gains derived from commercial production or refining of mineral oil . The term " mineral oil" does not include petroleum and natural gas , unlike other sections of the Act .

The deduction under this sub - section is available to an undertaking for a period of seven consecutive assessment years including the initial assessment year-

( i) inwhich the commercial production under a production sharing contract has first started ; or

(ii) inwhich the refining of mineral oil has begun.

It is proposed to insert a new proviso in sub - section (9 ) of section 80 - IB so as to provide that no deduction under this sub-section shall be allowed to an undertaking engaged in refining of mineral oil , if it begins refining on or after 1st April , 2009.

Thisamendment will take effect from 1stApril , 2008 .

Further, a new sub - section ( 11C) is proposed to be inserted in the said section so as to extend a five year tax holiday to hospitals located anywhere in India, except seven urban agglomerations of Greater Mumbai , Delhi , Kolkata , Chennai , Hyderabad, Bangalore and Ahmedabad and the districts of Faridabad, Gurgaon , Ghaziabad , Gautam Budh Nagar and Gandhinagar and the city of Secunderabad . The area comprising an urban agglomeration shall be the area included in such urban agglomeration on the basis of the 2001 census . The said tax benefit will be available to a hospital which is constructed and has started or starts functioning at any time during the period beginning on 1st April , 2008 and ending on 31st March , 2013. Initial assessment is defined as the assessment year relevant to the previous year in which the business of the hospital starts functioning.

This amendment will take effect from 1st April , 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years .

Clause 16 seeks to amend section 80 - ID of the Income- tax Act which relates to deduction in respect of profits and gains from business of hotels and convention centres in specified areas .

Section 80 - ID of the Act provides for hundred percentage of tax deduction for a period of five years to new hotels of two, three and four star categories and convention centres which are constructed and started or start functioning at any time during the period beginning on 1st April , 2007 and ending on 31st March , 2010. For availing the above benefit the hotel or convention centre should be located in the specified area, which has been defined as the National Capital Territory of Delhi and the districts ofFaridabad , Gurgaon , Gautam Buddha Nagar and Ghaziabad .

Itisproposed to extend the scope of tax benefit available in this section also to new two- star, three - star or four - star hotel , located in specified district having World Heritage Site , if such hotel is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April , 2008 and ending on the 31st day of March , 2013. Specified districts having World Heritage Site are proposed to be the districts of Agra , Jalgoan, Aurangabad. Kancheepuram , Puri , Bharatpur, Chhatarpur, Thanjavur, Bellary, South 24 Parganas ( excluding areas failing within Kolkata Urban agglomeration on the basis of the 2001 census ) , Chamoli , Raisen , Gaya , Bhopal , Panchmahal , Kamrup , Goalpara, Nagaon North Goa, South Goa , Darjeeling and Nilgiri .

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This amendment will take effect from 1st April , 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years .

Clause 17 seeks to amend section 88E of the Income-tax Act , relating to rebate in respect to securities transaction tax.

The amendment seeks to provide that no deduction of Income -tax under this section shall be allowed in , or after, the assessment year beginning on the 1st April , 2009.

This amendment will take effect from 1st April , 2008 .

Clauses 18 and 19 seek to amend sections 111A and 115AD of the Income - tax relating to tax on short -term capital gains in certain cases .

Under the existing provisions of section 111A and 115AD , a special rate of tax of ten per cent . is provided on short- term capital gain arising from the transfer of a short- term capital asset , being an equity share in a company or a unit of an equity oriented fund, where such transaction is chargeable to securities transaction tax .

It is proposd to increase the rate of tax on such short - term capital gain to fifteen per cent .

These amendments will take effect from 1st April , 2009 and will accordingly apply in relation to assessment year 2009-10 and subsequent assessment years .

Clause 20 seeks to amend section 115JB of the Income-tax Act, which relates to special provision for payment oftax by certain companies.

The said section provides that in the case of a company, ifthe tax payable on the total income , as computed under the Income-tax Act in respect of any previous year is less than seven - and - a- half per cent . of its book profit ( ten per cent . for previous year relevant to assessment year 2007-08 and onwards ) , such book profit shall be deemed to be the total income ofthe assessee and the tax payable for the relevant previous year shall be seven -and- a- half per cent . (ten per cent. for previous year relevant to assessment year 2007-08 and onwards ) of such book profit . Sub-section (2) deals with the preparation ofprofit and loss account . As per the Explanation after sub - section (2) , the expression "book profit " means the net profit as shown in the profit and loss account prepared in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act , 1956 as increased or reduced by certain adjustments , as specified in that section . Clause (a) of the aforesaid Explanation, inter alia , provides that the book profit shall be increased by the amount of income-tax paid or payable and the provision therefor , if debited to profit and loss account.

It isproposed to number the Explanation of section 115JB as Explanation I and insert a new clause after clause (g) ofthe Explanation I as so numbered so as to provide that the book profit shall be increased by the amount of deferred tax and the provision therefor , if debited to profit and loss account .

Further it is proposed to insert a new Explanation after Explanation I so as to provide that for the purposes of clause (a) ofthe Explanation 1 the amount of income- tax shall include ,-

(i) tax on distributed profits or on distributed income under section 115-0 or section 115R, respectively;

(ii) any interest charged under this Act ;

(iii) surcharge, if any, as levied by the Central Acts from time to time;

(iv) Education Cess on income-tax , if any , levied by the Central Acts from time to time; and

(v) Secondary and Higher Education Cess on income- tax, if any, levied by the Central Acts from time to time.

These amendments will take effect retrospectively from 1st April , 2001 and will accordingly apply in relation to the assessment year 2001-02 and subsequent assessment years .

Clause 21 seeks to amend section 115-0 of the Income -tax Act, which relates to tax on distributed income of domestic companies.

Sub-section ( 1 ) of the said section provides , inter alia , that any amount declared , distributed or paid by such company, byway of dividends , shall be charged to additional income- tax or tax on distributed profits at the rate of fifteen per cent.

It isproposed to insert a new sub - section (1A) in the said section so as to provide that the amount of dividends referred to in sub -section (1 ) shall be reduced by the amount of dividend , if any, received by the domestic company during the inancial 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

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[PART II--

The new sub -section also provides that the same amount of dividend shall not be reduced more than once . For this purpose , a company shall be a subsidiary of another company, if such other company holds more than half in the nominal value of the equity share capital of the company.

This amendment will take effect from 1st April , 2008 .

Clause 22 seeks to amend section 115WB of the Income - tax Act , which relates to fringe benefits .

In the said section , the expression " specified security " has been defined, which , inter alia, includes employees ' stock option . It is proposed to amend this definition so as to include securities offered under an employees ' stock option plan or scheme, where the employees ' stock option has been granted.

This amendment will take effect from 1st April , 2008 and will accordingly apply in relation to the assessment year 2008- 09 and subsequent assessment years .

Sub- section ( 2) of the said section provides that the fringe benefits shall be deemed to have been provided by the employer to his employees , if the employer has in the course of his business or profession (including any activity whether or not such activity is carried on with the object of deriving income , profits or gains ) , incurred any expense on or made any payment for the specified purposes such as entertainment , hospitality, conference , sales promotion ( including publicity), etc.

Sub - clauses ( i) and ( ii ) of clause (B ) ofthe said sub - section exclude certain expenditure from the hospitality expenditure for calculation of fringe benefit tax . It is proposed to amend clause (B) to further provide that any expenditure on or payment through non- transferable pre -paid electronic meal card usable only at eating joints or outlets and which fulfils such other conditions as may be prescribed , shall also be excluded from the hospitality expenditure for calculation of fringebenefit tax.

Further, the Explanation to clause ( E) of the said sub - section excludes certain expenses from the employees ' welfare expenses for calculation of fringe benefit tax. It is proposed to enlarge the scope of the exclusion in this Explanation by providing that the expenditure incurred or payment made to-

(i ) provide crèche facility for the children of the employęe ; or

(ii) sponsor a sportsman , being an employee ; or

(iii) organise sports events for employees ,

shall also be not considered as expenditure on employees ' welfare for calculation of fringe benefit tax .

Further, clause ( K) of the said sub - section provides for expenditure on maintenance of any accommodation in the nature of guest house , other than accommodation used for training purposes , as fringe benefit. It is proposed to omit this clause so as not to subject this expenditure to fringe benefit tax .

These amendments will take effect from 1st April , 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years .

Clause 23 seeks to amend section 115WC of the Income- tax Act , which relates to value of fringe benefits .

Section 115WC provides for valuation of various fringe benefits specified in section 115WB . Under clause ( c) ofsub- section( 1 ) of section 115WC , it is provided that the value of fringe benefit relating to expenditure referred to in clauses ( A ) to (K) of sub - section ( 2 ) of section 115WB shall be twenty per cent. of the expenses . Similarly, under clause ( d) of the said sub - section , it is provided that the value of fringe benefit referred to in clauses ( L) to (P ) of sub- section (2 ) of section 115WB shall be fifty per cent . of the expenses . The fringe benefit for the purposes of expenses on festival celebrations mentioned in clause ( L) of sub - section (2) of section 115WB , is accordingly valued at fifty per cent.

Itisproposed to amend both clauses (c) and ( d) of sub - section ( 1 ) ofsection 115WC so as to provide that only 20 per cent. of the expenditure on festival celebrations shall be deemed to be the value of fringe benefit and not 50 per cent . as under the existing provisions .

This amendment will take effect from 1st April , 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years .

Clause 24 seeks to amend section 115WD of the Income - tax Act , which relates to return of fringe benefits .

Clause (a) of the Explanation to sub - section ( 1 ) of the said section provides for the due date for filing of return of fringe benefits by the categories of assessees specified thereunder . Under the said provisions of the Act , the due date for filing return of fringe benefits in the case of a company or a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force , is 31st October of the assessment year .

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It is proposed to amend the said clause ( a) so as to provide that the due date for filing return of fringe benefits shall be 30th September of the assessment year.

This amendment will take effect from 1st April , 2008 .

Clause 25 seeks to amend section 115 WE of the Income- tax Act , which relates to assessment of fringe benefits .

It is proposed to substitute sub - section ( 1 ) to the said section so as to provide that where a return has been made under section 115WD , such return shall be processed in the following manner, namely:--

(a) the value of fringe benefits shall be computed after making the following adjustments , namely:-

(i) any arithmetical error in the return ; or

(ii) an incorrect claim , if such incorrect claim is apparent from any information in the return;

(b) the tax and interest , if any, shall be computed on the basis of the value of fringe benefits computed under clause (a);

(c) the sum payable by, or the amount of refund due to , the assessee shall be determined after adjustment of the tax and interest , if any, computed under clause (b) by any advance tax paid, any tax paid on self- assessment and any amount paid otherwise by way of tax or interest ;

(a) an intimation shall be prepared or generated and sentto the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause ( c); and

(e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee:

It is further proposed to provide that no intimation under this sub - section shall be sent after the expiry of one year from the end of the financial year in which the return is made.

Further, the expression " an incorrect claim apparent from any information in the return " in the said sub-section has been defined . It is also clarified that the acknowledgment of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to , the assessee under clause (c) , and where no adjustment has been made under clause (a).

It isalso proposed to insert new sub - sections (1A), ( 1B) and ( 1C) to the said section . Sub - section ( 1A) provides that for the purpose of processing of returns under sub - section ( 1 ) , the Board may make a Scheme for centralised processing ofreturns with a view to expeditiously determining the tax payable by, or refund due to , the assessee as required under that sub- section. Sub - section ( 1B ) proposes that for the purpose of giving effect to the Scheme made under sub - section (1A) , the Central Government may, by notification in the Official Gazette , direct that any of the provisions of the Act relating to processing of returns shall not apply or shall apply with such exceptions , modifications and adaptations as may be specified in that notification so , however, that no direction shall be issued after 31st March , 2009. Sub -section ( 1C) provides that every notification issued under sub - section ( 1B) along with the Scheme , shall , as soon as may be after the notification is issued , be laid before each House of Parliament .

These amendments will take effect from 1st April , 2008.

Clause 26 seeks to insert a new section 115WKB in the Income- tax Act , relatingto deemed payment of tax by the employee.

Sub-section (1 ) of the proposed section seeks to provide that where an employer has paid any fringe benefit tax with respect to allotment or transfer of specified security or sweat equity shares , referred to in clause (d) of sub - section ( 1 ) of section 115WB , and has recovered such tax subsequently from the employee , it shall be deemed that the fringe benefit tax so recovered is the tax paid by such employee in relation to the value of the fringe benefit provided to him only to the extent to which the amount thereof relates to the value of the fringe benefits provided to such employee, as determined under clause (ba) of sub - section ( 1 ) of section 115WC.

Sub-section (2) of the new section seeks to provide that notwithstanding anything contained in any other provision ofthisAct , where the fringe benefit tax recovered from the employee is deemed to be the tax paid by such employee under sub-section ( 1 ) , such employee shall not be entitled , under this Act , to claim any refund out of such payment of tax or any credit of such payment of tax against tax liability on other income or against any other tax liability.

This amendment will take effect from 1st April , 2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent assessment years .

Clause 27 seeks to amend section 139 of the Income - tax Act . which relates to return of income .

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[PART II-...

Clause (a ) of Explanation 2 to sub - section ( 1 ) of the said section provides for the due date for filing of return of income by the categories of assessees specified thereunder . Under the said provisions of the Act, the due date for filing return of income in the case of a company or a person (other than a company ) whose accounts are required to be audited under this Act or under any other law for the time being in force , or a working partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force , is 31st October of the assessment year .

It is proposed to amend the said clause so as to provide that the due date for filing such return of income shall be 30thSeptember of the assessment year.

This amendment will take effect from 1st April, 2008.

The Explanation to sub -section (9 ) of the said section provides for conditions required to be fulfilled so that a return of income is not regarded as defective .

Sub -clause ( i ) of clause ( c) of the said Explanation provides that a return shall be regarded as a defective return if it is not accompanied by proof of the tax claimed to have been deducted or collected at source before 1st April , 2008 .

Further, it is proposed to omit the reference to the said date so as to bring the provisions relating to proof of the tax claimed to have been deducted or collected at source on par with the provisions relating to proof of payment of advance tax referred to in the said sub- clause .

This amendment will take effect from 1st April , 2008.

Clause 28 seeks to amend section 142 of the Income-tax Act , which relates to enquiry before assessment .

Sub-sections ( 2A ) to (2D) of the said section deal with power of Assessing Officer to order special audit , where the nature and complexity of the accounts requires such audit , to seek the assistance of a chartered accountant.

Sub-section (2C ) of the said section specifies the period within which the audit report is to be furnished . The proviso to the said sub -section provides that the Assessing Officer may extend the said period of furnishing of audit report, on an application made in this behalf, by the assessee and for any good and sufficient reason .

It is proposed to amend the said proviso so as to provide that the Assessing Officer may, suo motu , or on an application made in this behalf by the assessee, and for any good and sufficient reason , extend the said period by such further period or periods as he thinks fit .

This amendment will take effect from 1st April , 2008 .

Clause 29 seeks to amend section 143 of the Income- tax Act , which relates to assessment .

It isproposed to substitute sub - section ( 1 ) to the said section so as to provide that where a return has been made under section 139 , or in response to a notice under sub - section ( 1 ) of section 142 , such return shall be processed in the following manner , namely:-

(a) the total income or loss shall be computed after making the following adjustments , namely: --

(i) any arithmetical error in the return; or

(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return ;

(b) the tax and interest, if any, shall be computed on the basis of the total income computed under clause (a) ;

(c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax and interest , if any, computed under clause ( b ) by any tax deducted at source , any tax collected at source , any advance tax paid , any relief allowable under an agreement under section 90 or section 90A, or any relief allowable under section 91 , any rebate allowable under Part A of Chapter VIII , any tax paid on self- assessment and any amount paid otherwise by way of tax or interest ;

(d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to , the assessee under clause ( c) ; and

(e) the amount of refund due to the assessee in pursuance of the determination under clause ( c) shall be granted to the assessee :

Itisfurther proposed to provide that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is reduced but no tax or interest is payable by, or no refund is due to , him:

It is also proposed to provide further that no intimation under this sub - section shall be sent after the expiry of one year from the end of the financial year in which the return was made.

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Further, the expression " an incorrect claim apparent from any information in the return " in the said sub - section has beendefined. It is also clarified that the acknowledgment of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause ( c) , and where no adjustment has been made under clause (a) .

It is also proposed to insert new sub -sections ( 1A) , ( 1B ) and ( 1C) to the said section . Sub - section ( 1A) provides that for the purpose of processing of returns under sub - section (1 ) , the Board may make a Scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or refund due to, the assessee as required under that sub - section. Sub -section ( 1B ) proposes that for the purpose of giving effect to the Scheme made under sub - section ( 1A), the Central Government may, by notification in the Official Gazette , direct that any of the provisions of the Act relating to processing of returns shall not apply or shall apply with such exceptions , modifications and adaptations as may be specified in that notification so , however , that no direction shall be issued after 31st March , 2009. Sub- section ( 1C) provides that every notification, along with the Scheme , issued under sub - section ( 1B ) shall , as soon as may be after the notification is issued, be laid before each House of Parliament .

Further , it is proposed to amend said section so as to substitute the proviso to clause ( ii ) of sub - section (2 ) thereof to provide that no notice under clause ( ii ) shall be served on the assessee after the expiry ofsix months from the end of the financial year in which the return is furnished.

These amendments will take effect from 1st April , 2008 .

Clause 30 seeks to amend section 147 of the Income- tax Act, which relates to income escaping assessment .

It is proposed to insert a proviso to provide that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject-matter of any appeal , reference or revision , which is chargeable to tax and has escaped assessment .

Thisamendment will take effect from 1st April , 2008 .

Clause 31 seeks to amend section 151 of the Income- tax Act , which relates to sanction for issue ofnotice .

Under the existing provisions of section 151 , there is , in certain situations , requirement of satisfaction of the Joint Commissioner, the Commissioner or the Chief Commissioner , as the case may be, on the reasons recorded by the Assessing Officer about the fitness of a case for the issue of notice under section 148 .

It isproposed to insert an Explanation after sub - section (2) of section 151 so as to declare that the Joint Commissioner, the Commissioner or the Chief Commissioner , as the case may be , being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148 , need not issue the notice himself.

This amendment will take effect retrospectively from 1st October, 1998.

Clauses 32 to 36 seek to amend sections 153 , 153A, 153B, 153C and 153D ofthe Income-tax Act , which relate to time- limit for completion ofassessments and reassessments , assessment in case of search or requisition time - limit for completion of assessment , etc.

The proposed amendment seeks to insert a new proviso in section 153 so as to provide that where the proceedings before the Settlement Commission abate under section 245HA, the period of limitation referred to in this section available to the Assessing Officer for making an order of assessment , reassessment or re - computation , as the case may be , after the adjustment under sub - section (4) of section 245HA , shall be not less than one year, and where such period of limitation is less than one year , it shall be deemed to be extended to one year. Further, for the purposes of determining the period of limitation under sections 149, 153B , 154, 155 , 158BE and 231 and for the purposes of payment of interest under section 243 or 244 or , as the case may be , section 244A , this proviso shall also apply accordingly.

This amendment of section 153 will take effect retrospectively from 1st June, 2007 .

It is further proposed to insert a new sub-section (4) in section 153 to provide that notwithstanding anything contained in the foregoing provisions of this section , sub - section (2 ) of section 153A and sub - section ( 1 ) of section 153B , the order of assessment or reassessment , relatingto any assessment year which stands revived under sub - section (2) of section 153A , shall be made within one year from the end of the month of such revival or within the period specified in this section or sub - section ( 1) of section 153B , whichever is later.

The existing provision of section 153A is proposed to be renumbered as sub- section ( 1 ) and a new sub - section (2 ) is proposed to be inserted to provide that if any proceeding initiated or any order of assessment or reassessment made under sub - section ( 1 ) has been annulled in any appeal or other legal proceeding, then , notwithstanding anything contained [PART II- THE GAZETTE OF INDIA EXTRAORDINARY

in sub - section ( 1 ) of this section or section 153 , the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub - section (1 ) , shall stand revived with effect from the date ofreceipt ofthe order of such annulment by the Commissioner . Proviso to this sub - section proposes to provide that such revival shall cease to have effect, if such order of annulment is set aside . Further, in view of the provisions of section 153A being renumbered as sub - section ( 1 ) thereof, consequentially, second proviso to sub - section (1 ) has been amended by substituting the words " referred to in this section " with the words " referred to in this sub - section " .

Clause (b) ofsection 153A provides for assessment or reassessment of total income of six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A .

Clause (a) of sub - section ( 1 ) of section 153B provides for time - limit for completion of assessment or reassessment of total income in respect of each assessment year falling within a period of six assessment years referred to in clause (b ) of section 153A . Clause ( b ) of this sub- section provides for time- limit for completion of assessment in respect of the assessment year relevant to the previous year in which search is conducted or requisition is made .

It is also proposed to insert a new clause (vii ) in the Explanation to sub - section ( 1 ) of section 153B providing that the period commencing from the date of annulment of a proceeding or order of assessment or reassessment referred to in sub- section (2) of section 153A till the date of the receipt of the order setting aside the order of such annulment by the Commissioner , shall be excluded in computing the period of limitation for the purposes of section 153B . Consequential amendments in clause ( a ) of sub - section ( 1 ) to substitute the word , figures and letter " section 153A " with the words , figures and letter " sub - section ( 1 ) of section 153A " and in the proviso to the explanation has been made .

Further, consequential amendments in sections 153C and 153D have been made to substitute the word , figures and letter " section 153A " with the words , brackets , figures and letter " sub - section ( 1 ) of section 153A " .

These amendments will take effect retrospectively from 1st June , 2003 .

Clause 37 seeks to amend section 156 of the Income - tax Act, which relates to notice of demand.

The existing provisions of section 156 provides that when any tax, interest , penalty, fine or any other sum is payable in consequence of any order passed under this Act , the Assessing Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable .

It isproposed to amend said section so as to provide that where any sum is determined to be payable by the assessee under sub - section ( 1 ) of section 143 , the intimation under that sub- section shall be deemed to be a notice of demand for the purposes of this section.

Thisamendment will take effect from 1st April , 2008 .

Clause 38 seeks to amend section 191 of the Income - tax Act , which relates to direct payment .

The Explanation to the said section provides that if any person , referred to in section 200 and the principal officer ofthe company referred to in section 194 , does not deduct the whole or any part of the tax and such tax has not been paid by the assessce direct, then , such person , the principal officer of the company shall , without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default as referred to in sub - section ( 1 ) of section 201 in respect of such tax .

The said Explanation thus covers in its ambit persons referred to in section 200. Section 200 in turn refers to a person deducting any sum in accordance with the provisions of Chapter XVII -B and who is required to pay within the prescribed time the sum so deducted to the credit of Central Government . Thus , this provision leaves room for an interpretation that a person required to deduct tax at source but not deducting the same will not be deemed an assessee in default under section 201. Such an interpretation is contrary to legislative intent .

The proposed amendment , therefore , seeks to substitute the said Explanation to clarify that where a person is required to deduct tax at source but fails to do so , he shall also be deemed to be an assessee in default under section 201.

This amendment will take effect retrospectively from 1st June , 2003 .

Clause 39 seeks to amend section 193 of the Income - tax Act , relating to interest on securities .

Section 193 provides for deduction of tax at source on any income by way of interest on securities payable to a resident.

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The proposed amendment of the said section seeks to exempt from deduction of tax at source , any interest payable on any security issued by a company, where such security is in dematerialised form and is listed on a recognised stock exchange in India in accordance with the Securities Contracts (Regulation ) Act , 1956 and the rules made thereunder.

This amendment will take effect from 1st June , 2008 .

Clause 40 seeks to amend section 194C of the Income- tax Act, which relates to payments to contractors and sub- contractors .

Sub-section ( 1 ) of the said section specifies the entities which are liable to deduct tax at source on payments to a resident contractor. These entities include some of associations of persons or bodies of individuals but do not include all associations of persons or bodies of individuals in general .

The proposed amendment seeks to provide that every association of persons or body of individuals , whether incorporated or not , shall be liable to deduct income - tax at source under the said sub -section .

This amendment will take effect from 1st June , 2008 .

Clause 41 seeks to amend section 195 of the Income - tax Act, which relates to other sums .

Sub-section ( 1 ) of the said section provides that any person responsible for paying to a non - resident, not being a company, or to a foreign company, any interest or any other sum chargeable under the Act shall , at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode , whichever is earlier , deduct income-tax thereon at the rates in force .

The proposed amendment seeks to insert sub - section (6 ) in the said section so as to provide that the person referred to in sub - section ( 1 ) shall furnish the information relating to payment of any sum in such form and manner as may be prescribed by the Board.

This amendment will take effect from 1st April , 2008 .

Clause 42 seeks to substitute section 199 of the Income - tax Act , which relates to credit for tax deducted .

The proposed sub - section ( 1 ) seeks to provide that any deduction made in accordance with the foregoing provisions ofthis Chapter and paid to the Central Government shall be treated as a payment of tax on behalf ofthe person from whose income the deduction was made , or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder , or of the shareholder, as the case may be .

The proposed sub - section (2) seeks to provide that any sum referred to in sub - section ( 1A ) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made.

The proposed sub - section (3 ) seeks to provide that the Board may, for the purposes of giving credit in respect oftax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub - section ( 1 ) and sub -section (2 ) and also the assessment year for which such credit may be given .

This amendment will take effect from 1st April , 2008 .

pay. Clause 43 seeks to amend section 201 of the Income -tax Act , which relates to consequences of failure to deduct or

Sub-section ( 1 ) of the said section provides that if any person referred to in section 200 and in the cases referred to in section 194 , the principal officer and the company of which he is the principal officer does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under the Income- tax Act , he or it shall , without prejudice to any other consequences which he or it may incur , be deemed to be an assessee in default in respect of the tax .

The said sub - section thus covers in its ambit persons referred to in section 200. Section 200 in turn refers to a person deducting any sum in accordance with the provisions of Chapter XVII - B and who is required to pay within the prescribed time the sum so deducted to the credit of Central Government . Thus , this provision leaves room for an interpretation that a person required to deduct tax at source but not deducting the same will not be deemed an assessee in default under section 201. Such an interpretation is contrary to legislative intent .

The proposed amendment, therefore , seeks to substitute the said sub -section to clarify that where a person is required to deduct tax at source but fails to do so , he shall also be deemed to be an assessee in default under section 201 .

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This amendment will take effect retrospectively from 1st June , 2002 .

Clause 44 seeks to amend section 203 of the Income - tax Act, which relates to certificate for tax deducted.

Sub -section (3 ) of the said section provides that on or after 1st April , 2008 , there would be no requirement of furnishing--

( i) certificate of tax deducted at source; or

(ii) certificate of any sum paid as tax to the Central Government by the employer on any non - monetary perquisite to the employee .

The proposed amendment substitutes the said date with 1st April , 2010 so as to provide that upto 31st March , 2010-

(i ) the person deducting tax shall continue to furnish a certificate of tax deducted at source to the person on whose behalf deductions were made ; and

(ii) an employer shall continue to furnish a certificate of tax paid on any non - monetary perquisite to the employee .

This amendment will take effect from 1st April , 2008.

Clause 45 seeks to amend section 206C of the Income - tax Act , relating to profits and gains from the business of trading in alcoholic liquor , forest produce , scrap , etc.

Sub-section (4) of the said section provides that any. amount collected in accordance with the provisions of said section and paid to the credit of the Central Government shall be deemed as payment of tax on behalf of the person from whom the amount has been collected and credit shall be given to him for the amount so collected . The said sub- section also requires production of certificate of tax collected at source for giving credit to the person from whom the amount has been collected . The proviso to the said sub -section (4) provides that after 1st April , 2008 credit shall be given on the basis of annual statement referred to in the second proviso to sub - section (5 ) of the said section and a certificate of collection oftax is not required to be produced along with the return of income for claiming credit for tax collected at source.

The method of allowing credit to the assessee for tax collected at source needs a certain degree of flexibility considering the ongoing technological and business process changes . Therefore , the proposed amendment seeks to substitute the said sub - section (4) to provide that any amount collected in accordance with the provisions of this section and paid to the credit of the Central Government shall be deemed to be a payment of tax on behalf of the person from whom the amount has been collected and credit shall be given to such person for the amount so collected in a particular assessment year in accordance with the rules as may be prescribed by the Board from time to time.

The existing provisions of first proviso to sub -section ( 5) of the said section provide that on or after 1st April , 2008 , there would be no requirement of furnishing a certificate of collection of tax at source .

The proposed amendment substitutes the said date with 1st April , 2010 so as to provide that up to 31st March , 2010 the person who collects tax shall continue to furnish a certificate of tax collected at source to the person from whom the amount has been collected .

These amendments will take effect from 1st April , 2008.

Clause 46 seeks to amend section 254 of the Income - tax Act, relating to orders ofAppellate Tribunal .

Sub - section (2A ) of the said section provides that the Income Tax Appellate Tribunal , where it is possible , may hear and decide an appeal within a period of four years from the end of the financial year in which such appeal is filed under sub- section ( 1 ) or sub - section (2) of section 253 .

The first proviso to this sub - section provides that the said Appellate Tribunal may, on merit , pass an order of stay in any proceedings relating to an appeal . However, such period of stay cannot exceed 180 days from the date of such order and the said Appellate Tribunal shall dispose of the appeal within the specified period of stay.

The second proviso to this sub - section provides that where the appeal has not been disposed of within the said specified period and the delay in disposing of the appeal is not attributable to the assessee , the Appellate Tribunal can further extend the period of stay originally allowed . However, the aggregate of period originally allowed and the period so extended should not exceed 365 days . The Appellate Tribunal is required to dispose of the appeal within the extended period.

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The third proviso to this sub - section provides that if such appeal is not decided within the period allowed originally or the period or periods so extended or allowed, the order of stay shall stand vacated after the expiry of such period or periods.

The intention behind these provisions have been very clear that the Appellate Tribunal cannot grant stay either under the original order or under any subsequent order, beyond the period of 365 days in aggregate .

To make this intention clear , it is proposed to amend section 254 of the Income -tax Act and further provide that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not , in any case , exceed three hundred and sixty - five days , even if the delay in disposing of the appeal is not attributable to the assessee .

This amendment will take effect from 1st October, 2008.

Clause 47 seeks to insert a new section 268A in the Income - tax Act , relating to filing of appeal or application for reference by income - tax authorities .

The proposed section seeks to provide that the Board may, from time to time , issue orders , instructions or directions to other income- tax authorities , fixing such monetary limits as it may deem fit, for the purpose ofregulating filing of appeal orapplication for reference by any income-tax authority under the provisions of Chapter XX.

Itisfurther proposed to provide that where , in pursuance of the orders , instructions or directions issued under sub- section (1 ), an income -tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of (a) the same assessee for any other assessment year ; or (b ) any other assessee for the same or any other assessment year .

It isalso proposed to provide that notwithstanding that no appeal or application for reference has been filed by an income- tax authority pursuant to the orders , instructions or directions issued under sub - section (1 ) , it shall not be lawful for an assessee , being a party in any appeal or reference , to contend that the income- tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case .

It is also proposed to provide that the Appellate Tribunal or Court , hearing any appeal or reference filed under this Chapter , shall have regard to the orders , instructions or directions issued by the Board from time to time either before or after the insertion ofthis section and the circumstances in which such appeal or application for reference was filed or was not filed in any case ; and accordingly the Tribunal or Court shall decide the appeal or the reference on the merits of the issue under consideration .

It is also proposed to provide that every order or instruction or direction which has been issued by the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub - section ( 1 ) and the provisions of sub - sections (2) , (3 ) and (4) shall apply accordingly.

This amendment will take effect retrospectively from 1st April, 1999.

Clause 48 seeks to amend section 271 of the Income- tax Act , which relates to failure to furnish returns , comply with notices , concealment of income , etc.

Under the existing provisions contained in Chapter XXI the Assessing Officer is required to be satisfied during the course ofpenalty proceedings . Legislative intent was that such a satisfaction was required to be recorded only at the time oflevy ofpenalty and not at the time of initiation ofpenalty. However , some of the judicial interpretations on this issue are favouring the view that satisfaction has to be recorded at the time of initiation of penalty proceedings also .

Itistherefore proposed to insert a new sub - section ( 1B ) in section 271 of the Income - tax Act so as to provide that where any amount is added or disallowed in computing the total income or loss of an assessee in any order of assessment or reassessment and if such order contains a direction for initiation of penalty proceedings under sub - section ( 1 ) , such an order of assessment or reassessment shall be deemed to constitute satisfaction of the Assessing Officer for initiation of the penalty proceedings under sub -section ( 1 ).

Thisamendment will fake effect retrospectively from 1st April , 1989 .

Clause49 seeks to insert a new section 273AA in the Income- tax Act relating to the power of Commissioner to grant immunity from penalty.

The proposed amendment seeks to provide that a person may make application to the Commissioner for granting immunity from penalty, if (a) he has made an application for settlement under section 245C and the proceedings for settlement have abated ; and (b) penalty proceeding have been initiated under this Act .

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It isfurther proposed to provide that the application referred to in sub - section ( 1) of the said section for granting immunity from penalty shall not be made after the imposition of penalty after abatement .

It isalso proposed to provide that the Commissioner may, subject to such conditions as he may think fit to impose , grant to the person immunity from the imposition of any penalty under this Act , if he is satisfied that the person has , after abatement , co - operated with the income -tax authority in the proceedings before it and has made a full and true disclosure ofhis income and the manner in which such income has been derived .

Itisalso proposed to provide that the immunity granted to a person shall stand withdrawn , if such person fails to comply with any condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted.

Itisalso proposed to provide that the immunity granted to a person may, at any time , be withdrawn by the Commissioner , if he is satisfied that such person had , in the course of any proceeding , after abatement, concealed , any particulars , material to the assessment , from the income- tax authority or had given false evidence , and thereupon such person shall become liable to the imposition of any penalty under this Act to which such person would have been liable , had not such immunity been granted .

This amendment will take effect from 1stApril , 2008.

Clause 50 seeks to insert a new section 278AB in the Income - tax Act , relating to the power of Commissioner to grant immunity from prosecution.

The proposed amendment seeks to provide that a person may make an application to the Commissioner for granting immunity from prosecution , if he has made an application for settlement under section 245C and the proceedings for settlement have abated .

Itis further proposed to provide that the application referred to in sub - section ( 1 ) of the said section , for granting immunity from prosecution , shall not be made after institution of the prosecution proceedings after abatement .

It isalso proposed to provide that the Commissioner may grant to such person, subject to such conditions as he may think fit to impose , immunity from prosecution for any offence under this Act , ifhe is satisfied that the person has , after abatement , co -operated with the income- tax authority in the proceedings before him and has made a full and true disclosure ofhis income and the manner in which such income has been derived:

It isalso proposed to provide that where the application for settlement under section 245C is made before 1st June , 2007 , the Commissioner may grant immunity from prosecution for any offence under this Act or under the Indian Penal Code or under any Central Act for the time being in force.

It isalso proposed to provide that the immunity granted to a person under sub- section (3 ) shall stand withdrawn , if such person fails to comply with any condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted .

It is also proposed to provide that the immunity granted to a person under sub - section (3 ) may, at any time , be withdrawn by the Commissioner, if he is satisfied that such person had, in the course of any proceeding, after abatement , concealed any particulars material to the assessment , from the income- tax authroity or had given false evidence , and thereupon such person may be tried for the offence with respect to which the immunity was granted or for any other offence of which he appears to have been guilty in connection with the proceedings . "

Thisamendment will take effect from 1st April, 2008.

Clause 51 seeks to insert a new section 282A in the Income- tax Act , relating to authentication of notices and other documents .

The proposed new section seeks to provide that where this Act requires a notice or other document to be issued, served or given by any income -tax authority , such notice or other document shall be signed in manuscript by that authority.

It isfurther proposed to provide that every notice or other document to be issued , served or given , for the purposes ofthis Act by any income - tax authority, shall be deemed to be authenticated if the name and office of a designated income- tax authority is printed , stamped or otherwise written thereon.

It isalso proposed to provide that for the purposes of this section , a designated income - tax authority shall mean any income-tax authority authorised by the Board to issue , serve or give such notice or other document by authenticating it in the manner provided in sub - section (2) of the said section .

This amendment will take effect from 1st June , 2008 .

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Clause 52 seeks to insert a new section 292BB in the Income- tax Act, laying down certain circumstances in which notice shall be deemed to be valid .

It is proposed to provide that where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act , which is required to be served upon him , has been duly served upon him in time in accordance with the provisions of the Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was, (a) not served upon him ; or (b ) not served upon him in time; or (c) served upon him in an improper manner.

This amendment will take effect from 1st April, 2008 .

Clause 53 seeks to amend section 292C of the Income-tax Act, which relates to presumption as to assets , books of account, etc.

The said section provides that where any books of account, other documents , money, bullion , jewellery or other valuable article or thing are or is found in the possession or control of any person in the course ofa search under section 132, it may, în any proceeding under this Act , be presumed that-

(i) such books of account, other document , money, bullion, jewellery or other valuable article or thing belong or belongs to such person;

(ii) the contents of such books of account and other documents are true ; and

(iii) the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting , and in the case of a document stamped , executed or attested , that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested .

Itis proposed to amend the said section so as to extend the above mentioned presumptions also to books of account , other documents , etc. , found in the possession or control of any person in the course of a survey operation .

Thisamendment will take effect retrospectively from 1st June, 2002 .

It isalso proposed to extend the above -mentioned presumption also to books of account , other documents or assets which have been delivered to the requisitioning officer in accordance with the provisions of section 132A .

This amendment will take effect retrospectively from 1st October, 1975.

Clause 54 seeks to amend sub - section (2) of section 295 ofthe income- tax Act , which relates to rule -making power ofthe Board, by inserting a new clause (fa) therein so as to specifically provide the Board with the power to prescribe the form and manner in which the information relating to payment of any sum may be furnished under the proposed sub - section (6) of section 195.

This amendment will take effect from 1st April , 2008.

Clause 55 ofthe Bill seeks to amend Part A of the Fourth Schedule to the Income -tax Act , which relates to recognised provident funds .

Rule3 in Part A ofthe Fourth Schedule provides that the Chief Commissioner or Commissioner may accord recognition to any provident fund which in his opinion satisfies the conditions prescribed in rule 4 and the rules made by the Board in this behalf.

The proviso to sub -rule ( 1 ) of the said rule 3 provides that in a case where recognition has been accorded to any provident fund on or before 31st March, 2006, and such provident fund does not satisfy the conditions set out in clause (ea) ofrule 4, and any other conditions which the Board may, by rules specify in this behalf, the recognition to such fund shall be withdrawn , if such fund does not satisfy such conditions on or before 31st March , 2008.

It is proposed to amend the said proviso to sub- rule ( 1 ) , so as to extend the said time limit by one more year i.e. , from 31stMarch , 2008 to 31st March , 2009 .

Thisamendment will take effect from 1st April , 2008 .

Clause 56 seeks to amend section 17 of the Wealth- tax Act , which relates to wealth escaping assessment .

It isproposed to insert a new proviso in sub - section ( 1 ) of the said section to provide that the Assessing Officer may assess or reassess such net wealth , other than the net wealth involving matters , which are the subject matter of any appeal , reference or revision , which is chargeable to tax and has escaped assessment.

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This amendment will take effect from 1st April , 2008 .

Clause 56 further seeks to insert an Explanation after sub - section ( IB ) of the said section so as to provide that the Joint Commissioner , the Commissioner or the Chief Commissioner, as the case may be , being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice need not issue the notice himself.

This amendment will take effect retrospectively from 1st October, 1998 .

Clause 57 seeks to amend section 17A of the Wealth - tax Act, which relates to time- limit for completion of assessments and reassessments .

1 The proposed amendment seeks to insert a new proviso in the said section so as to provide that where a proceeding before the Settlement Commission abates under section 22HA , the period of limitation referred to section 17A available to the Assessing Officer for making an order of assessment , reassessment , as the case may be , shall , after the adjustment of the period under sub - section (4 ) of section 22HA , be not less than one year ; and where such period of limitation is less than one year , it shall be deemed to be extended to one year.

This amendment will take effect retrospectively from 1st June , 2007 .

Clause 58 seeks to amend section 18 of the Wealth-tax Act, which relates to failure to furnish returns , comply with notices , concealment of income, etc.

It is proposed to insert a new sub - section ( 1A) in this section so as to provide that where any amount is added or disallowed in computing the net wealth of an assessee in any order of assessment or reassessment and if such order contains a direction for initiation of penalty proceedings under sub - section ( 1 ) , such an order of assessment or reassessment shall be deemed to constitute satisfaction of the Assessing Officer for initiation of the penalty proceedings under sub- section(1) .

This amendment will take effect retrospectively from 1st April , 1989 .

Clause 59 seeks to insert a new section 18BA in the Wealth - tax Act , relating to power of the Commissioner to grant immunity from penalty.

The proposed amendment seeks to provide that a person may make an application to the Commissioner for granting immunity from penalty, if ( a) he has made an application for settlement under section 22C and the proceedings for settlement have abated under section 22HA ; and ( b) the penalty proceedings have been initiated under this Act .

It is further proposed to provide that the application to the Commissioner under sub - section ( 1 ) shall not be made after imposition of penalty after abatement.

It is also proposed to provide that the Commissioner may, subject to such conditions as he may think fit to impose, grant to the person immunity from penalty for any offence under this Act, if he is satisfied that the person has , after the abatement , co - operated with the wealth - tax authority in the proceedings before him and has made a full and true disclosure of his net wealth and the manner in which such net wealth has been derived.

1 It isalso proposed to provide that the immunity granted to a person under sub - section (3 ) shall stand withdrawn , if such person fails to comply with any condition subject to which the immunity was granted and thereupon the provisions ofthis Act shall apply as if such immunity had not been granted .

It is also proposed to provide that the immunity granted to a person under sub - section (3 ) may , at any time , be withdrawnby the Commissioner, ifhe is satisfied that such person had , in the course of any proceedings , after abatement, concealed any particulars , material to the assessment , from the wealth - tax authority or had given false evidence , and thereupon such person shall become liable to the imposition of any penalty under this Act to which such person would have been liable , had not such immunity been granted .

This amendment will take effect from 1st April, 2008.

Clause 60 seeks to insert a new section 35GA in the Wealth-tax Act relating to power of the Commissioner to grant immunity from prosecution.

The proposed amendment seeks to provide that a person may make an application to the Commissioner for granting immunity from prosecution , if he has made an application for settlement under section 22C and the proceedings for settlement have abated under section 22HA .

It is further proposed to provide that the application to the Commissioner under sub - section ( 1 ) shall not be made after institution of the prosecution proceedings after abatement .

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It isalso proposedto provide that the Commissioner may, subject to such conditions as he may think fit to impose , grant to the person immunity from the imposition of any proscution under this Act, if he is satisfied that the person has , after the abatement , co- operated with the wealth - tax authority in the proceedings before him and has made a full and true disclosure of his net wealth and the manner in which such net wealth has been derived:

It is also proposed to provide that where the application for settlement under section 22C had been made before 1st June , 2007, the Commissioner may grant immunity from prosecution for any offence under this Act or under the Indian PenalCode or under any other Central Act for the time being in force .

It is also proposed to provide that the immunity granted to a person under sub - section (3 ) shall stand withdrawn , if such person fails to comply with any condition subject to which the immunity was granted and thereupon the provisions ofthis Act shall apply as if such immunity had not been granted.

It is also proposed to provide that the immunity granted to a person under sub - section (3 ) may, at any time , be withdrawn by the Commissioner, if he is satisfied that such person had , in the course of proceedings , after abatement , concealed any particulars , material to the assessment, from the wealth - tax authority or had given false evidence , and thereupon such person may be tried for the offence with respect to which the immunity was granted or for any other offence ofwhich he appears to have been guilty in connection with the proceedings .

This amendment will take effect from 1st April , 2008.

Clause 61 seeksto insert a new section 42 in the Wealth -tax Act , laying down certain circumstances in which notice shall be deemed to be valid .

It is proposed to provide that where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment , it shall be deemed that any notice under any provision of this Act , which is required to be served upon him , has been duly served upon him in time in accordance with the relevant provisions of the Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was , (a) not served upon him ; or (b ) not served upon him in time ; or (c ) served upon him in an improper manner .

This amendment will take effect from 1st April , 2008 .

Clause 62 seeks to amend section 42D of the Wealth- tax Act , which relates to presumption as to assets , books of account, etc.

The said section provides that where any books of account , other documents , money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 37A, it may, in any proceeding under this Act , be presumed that-

(i) such books of account, other document , money, bullion , jewellery or other valuable article or thing belong or belongs to such person;

(ii) the contents of such books of account and other documents are true ; and

(iii) the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person , are in that person's handwriting, and in the case of a document stamped , executed or attested , that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested .

It isproposed to amend the said section so as to extend the above mentioned presumption also to books of account, other documents or assets which have been delivered to the equisitioning officer in accordance with the provisions of section 37B .

This amendment will take effect retrospectively from 1st October, 1975 .

Customs

Clause 63 seeks to amend section 28B of the Customs Act so as to insert a new sub- section therein to enable the Central Government to recover any amount collected by any person representing as duty of customs in excess of the duty assessed or determined or paid on any goods , and also to recover any amount collected by any person as representing duty of customs on any goods , which are wholly exempt or are chargeable to nil rate of duty. Accordingly, certain consequential amendments have been made in sub -sections (2) and (4) of the said section.

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Clause 64 seeks to amend section 108 of the Customs Act so as to omit the words " duly empowered by the Central Government in this behalf " from sub - section ( 1) of the said section with a view to give powers to all Customs Officers to issue summons.

Clause 65 seeks to amend section 117 of the Customs Act so as to increase the maximum amount of penalty for contravention of any provision of the Act from existing ten thousand rupees to one lakh rupees , where no express penalty is provided elsewhere.

Clause 66 seeks to amend sub - section ( 2) of section 129A of the Customs Act by inserting a proviso so as to provide that in case the Committee of Commissioners of Customs differs in its opinion on the order passed in an appeal by the Commissioner (Appeals) , it shall refer the matter to the jurisdictional Chief Commissioner who shall consider the facts of the case and the points of difference and ifhe is of the opinion that the order passed by the Commissioner (Appeals ) is not legal or proper , direct the proper officer to appeal to the Appellate Tribunal against the order of the Commissioner (Appeals) . The jurisdictional Chief Commissioner shall be the Chief Commissioner having jurisdiction over the adjudicating authority who has decided the case .

Clause 67 seeks to amend section 129D of the Customs Act with a view to ,-

(i) insert a proviso to sub - section ( 1 ) so as to provide that in case of the Committee of Chief Commissioners of Customs differs in its opinion about the legality or propriety of the order passed by the Commissioner of Customs as an adjudicating authority, it shall refer the matter to the Board which shall consider the facts of the case and the difference between them and if it is of the opinion that the order passed by the Commissioner is not legal or proper, direct the Commissioner or any other Commissioner to appeal to the Appellate Tribunal against the order .

(ii) substitute sub- section ( 3 ) to provide that every order under sub- section ( 1 ) or sub - section (2 ) of section 129D of the Act shall be made within a period of three months from the date of communication of the decision or the order of the adjudicating authority . The proposed amendment is of consequential nature in view of amendment of sub- section ( 1 ) of section 129D of the said Act .

Clause 68 seeks to insert a new section 129EE in the Customs Act to provide for payment of interest in case of delayed refund of amount deposited by the appellant in pursuance of the order of the Commissioner (Appeals) or the Appellate Tribunal , when the decision is in favour of the appellant . It provides that in case the amount is not refunded within three months from the communication of the order of the appellate authority, unless the order of the appellate authority is stayed by a superior court or tribunal , interest at the rate specified in section 27A shall be paid after the expiry of three months from the communication of the order of the appellate authority till the date of refund of the amount .

Clause 69 seeks to amend section 141 of the Customs Act so as to regulate the manner in which the imported or export goods may be received , stored , delivered , dispatched or otherwise handled in a customs area by any person and to specify by regulations the responsibilities of persons engaged in the aforesaid activities .

Clause 70 seeks to amend section 158 of the Customs Act so as to increase the maximum amount of penalty for contravention of any of the rules from five hundred rupees to fifty thousand rupees , and also to increase the maximum amount of penalty from two hundred rupees to fifty thousand rupees , for contravention of regulations .

Clause 71 seeks to give retrospective effect to condition No.7 of Notification number GS.R. 277 (E) , dated 1st April , 2003 (53/2003 - Customs ) , as amended vide number G.S.R. 673 (E) , dated 17th November, 2005 (97 /2005 - Customs ), so as to allow the importer to avail of the drawback or CENVAT credit of additional duty against the amount debited in the Duty Free Credit Entitlement (DFCE ) certificate .

Customs tariff

Clause 72 seeks to amend ,-

(i) the First Schedule to the Customs Tariff Act in the manner specified in the Second Schedule with a viewto enhance the rate of duty on certain items;

(ii ) the Second Schedule to the Customs Tariff Act in the manner specified in the Third Schedule with a viewto increase export duty on chromium ores and concentrates .

Excise

Clause 73 seeks to amend section 2 of the Central Excise Act with a view to insert an Explanation in clause (d) which defines " excisable goods " . The proposed Explanation provides that for the purposes of this clause , " goods " includes any article , material or substance which is capable of being bought and sold for consideration and such goods shall be deemed to be marketable . It will remove the ambiguity occurred due to the judgments in certain cases regarding the marketability of goods and it will be applicable prospectively.

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Clause 74 seeks to insert a new section 3A in the Central Excise Act . The proposed section empowers the Central Government to charge excise duty on the basis of capacity of production in respect of notified goods . The proposed section provides that the Central Government shall notify the goods on which the duty of excise shall be levied and collected and it shall also make rules in respect of the manner for determination of the annual capacity of production ofthe factory, in which the notified goods are produced, the factor relevant to the production of notified goods and quantity thereof and the determination of the annual capacity of production of the factory in which such goods are produced and rate of duty of excise on the goods to be levied subject to the condition that where the factory producing notified goods is in operation only for a part of the year, or if it remains closed for a certain period , such determination shall be made on proportionate basis . Further, the proposed amendment provides that the provisions of this section shall not be applicable to goods produced or manufactured by a hundred per cent . export -oriented undertaking and brought to any other place in India.

Clause 75 seeks to amend section 11B ofthe Central Excise Act to provide for the refund of interest paid on any duty ofexcise .

Clause 76 seeks to amend section 11D of the Central Excise Act so as to insert a new sub- section therein to enable the Central Government to collect any amount collected by any person representing as duty of excise in excess of the duty assessed or determined and paid on any excisable goods , and also to collect any amount collected by any person as representing duty of excise on any excisable goods , which are wholly exempt or are chargeable to nil rate of duty. Accordingly, certain consequential amendments have been made in sub - sections (2) and (4) of the said section.

Clause 77 seeks to amend section 11DD of the Central Excise Act so as to provide for recovery of interest on amount collected in excess of the duty assessed or determined and paid from the person who collected such amount, and also provide for recovery of interest on the amount collected by any person as representing duty of excise on any excisable goods, which are wholly exempt or are chargeable to nil rate ofduty.

Clause 78 seeks to amend sub - section (2) of section -35B of the Central Excise Act by inserting a proviso so as to provide that in case the Committee of Commissioners of Central Excise differs in its opinion on the order passed in an appeal by the Commissioner (Appeals) , it shall refer the matter to the jurisdictional Chief Commissioner who shall consider the facts of the case and the points of difference and ifhe is of the opinion that the order passed by the Commissioner of Central Excise is not legal or proper, direct the Central Excise Officer to appeal to the Appellate Tribunal against the order oftheCommissioner (Appeals) . The jurisdictional Chief Commissioner shall be the Chief Commissioner havingjurisdiction over the adjudicating authority who has decided the case .

Clause 79 seeks to amend section 35E of the Central Excise Act with a view to ,-

(i) insert aproviso to sub - section ( 1) so as to provide that in case the Committee ofChief Commissioners of Central Excise differs in its opinion about the legality or propriety ofthe order passed by the Commissioner of Central Excise as an adjudicating authority, it shall refer the matter to the Board which shall consider the facts of the case and the difference between them and if it is ofthe opinion that the order passed by the Commissioner is not legal or proper, direct the Commissioner or any other Commissioner to appeal to the Appellate Tribunal against the order.

(ii) substitute sub- section (3) to provide that every order under sub - section (1 ) or sub - section (2) ofsection 35E oftheAct shall be made within a period of three months from the date of communication of the decision or the order of the adjudicating authority. The proposed amendment is of consequential nature in view of amendment in sub- section (1) of section 35E of the said Act .

Clause 80 seeks to insert a new section 35FF in the Central Excise Act to provide for payment of interest in case ofdelayed refund ofamount deposited by the appellant in pursuance of the order ofthe Commissioner (Appeals) or theAppellate Tribunal , when the decision is in favour of the appellant . It provides that in case the amount is not refunded within three months from the communication of the order of the appellate authority, unless the order of the appellate authority is stayed by a superior court ortribunal, interest at the rate specified in section 11BB shall be paid after the expiry ofthree months from the communication of the order of the appellate authority till the date of refund ofthe amount .

Clause81 seeks to amend rule 12 of the Central Excise Rules , 1944 with retrospective effect so as to allow rebate of duty paid on excisable goods cleared from factory for export for which refund has been granted under certain notifications issued under section 5A ofthe Central Excise Act, 1944, for the period commencing on and from 8th July, 1999 and ending with the 30th June , 2001 .

Clause 82 seeks to amend rule 18 of the Central Excise (No. 2) Rules , 2001 with retrospective effect so as to allow rebate of duty paid on excisable goods cleared from factory for export for which refund has been granted under certain notifications issued under section 5A of the Central Excise Act , 1944, for the period commencing on and from 1st July, 2001 and ending with the 28th February, 2002.

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Clause 83 seeks to amend rule 18 of the Central Excise Rules , 2002 with retrospective effect so as to allow rebate of duty paid on excisable goods cleared from factory for export for which refund has been granted under certain notifications issued under section 5A of the Central Excise Act, 1944, for the period starting with 1st March, 2002 and ending with 7th December , 2006.

Excisetariff

Clause 84 seeks to amend the First Schedule to the Central Excise Tariff Act with a view to ,--

( i) enhance the rate of duty on certain items in Chapter 24 and Chapter 25;

(ii) amend NOTE 16 of Chapter 39 with a view to insert two more processes therein ;

(iii) enhance the rate of duty on an item in Chapter 85.

Service tax

Clause 85 seeks to amend Chapter V of the Finance Act, 1994 relating to service tax in the following manner, namely:-- (1) sub -clause (A) seeks to amend section 65 of the said Act , so as to,-

(a) define the terms - associated enterprise , information technology software , internet telecommunication service , processing and clearinghouse ;

(b) specify the scope of the following taxable services - banking and other financial service , business auxiliary service, cargo handling service , internet telecommunication service , management, maintenance or repair service , renting of immovable property service , consulting engineer service, information technology software service , management of investment under Unit Linked Insurance Plan (ULIP ) service, stock exchange service, recognised association or registered association commonly known as commodity exchange service , processing and clearinghouse service , supply of tangible goods for use service, technical testing and analysis service , technical inspection and certification service , tour operator service;

(a) substitute the word " client " with the words " any person " in the specified taxable services ;

(e) substitute the word " customer " with the words " any person " in the specified taxable services ;

(II) sub - clause (B ) seeks to amend section 66 of the said Act , so as to specify the following services as taxable services , namely :-

(a) informationtechnology software service,

(6) management of investment under Unit Linked Insurance Plan (ULIP ) service ,

(d) recognised association or registered association commonly known as commodity exchange service , (e) processing and clearinghouse service,

(1) supply of tangible goods for use service ,

(g) internet telecommunication service;

(III) sub - clause ( C) seeks to amend section 67 of the said Act, so as to include any amount credited or debited in the books of account within the scope of the term " gross amount charged " where the transaction of taxable service is with any associated enterprise;

( IV) sub - clause (D) seeks to insert new sections 71 and 72 respectively in the said Act so as to ,-

(i) empower the Board to frame a Scheme by notification in the Official Gazette for filing service tax returns by any person or class of persons in preparing and furnishing return required to be filed under section 71 through a Service Tax Return Preparer authorised to act under the Scheme. It seeks to provide that a Service Tax Return Preparer shall assist the person or class of persons furnishing the return in such manner as may be specified in the Scheme and seeks to define " Service Tax Return Preparer " and " Specified person or class of persons " . It seeks to 87 THE GAZETTE OF INDIA EXTRAORDINARY

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provide the manner in which and the period for which the Service Tax Return Preparer shall be authorised , the educational and other qualifications , the training and other conditions required to be fulfilled , the code of conduct, the duties and obligations , the circumstances under which the authorisation may be withdrawn and any other matterwhich is required to be , or may be specified by the Scheme;

(ii) authorise the Central Excise Officer for assessment on the basis of his best judgment after allowing assessee to represent his case where assessee fails to make service tax returns as required under section 70 or if return have been made out fails to assess the tax in accordance with the provisions of the Act or rules made thereunder.

(V) sub -clause (E) seeks to substitute section 77 of the said Act so as to provide for specific penalty for specific contraventions which are as follows:-

In case of violation ofthe provisions of section 69, failure to furnish certain information , and failure to appear before the Central Excise Officer a penalty up to five thousand rupees or rupees two hundred every day till such contravention continues , whichever is higher, starting with the first day after the due date, till the date of actual compliance.

In case of failure to pay service tax electronically, issuance of incorrect or incomplete invoices and general contravention, a penalty of up to five thousand rupees .

(VI) sub -clause (F) seeks to amend section 78 of the said Act so as to provide that where penalty for suppressing value of taxable service under section 78 is imposed, the penalty for failure to pay service tax under section 76 shall not be applicable;

(VII) sub-clause (G) seeks to insert the word, figures and letters " section 35FF " in section 83 of the said Act which deals with the application of certain provisions of the Central Excise Act, 1944.

(VIII) sub -clause (H) seeks to amend section 86 of the said Act with a view to insert a proviso, --

(i)tosub-section (2 ) so as to provide that in case the Committee of Chief Commissioners of Central Excise differs in its opinion regarding the appeal against the order of the Commissioner of Central Excise, it shall refer the matter to the Board which shall , after considering the facts of the order and the points of difference between them and if it is of the opinion that the order passed by the Commissioner is not legal or proper, direct the Commissioner to appeal to the Appellate Tribunal against the order.

(ii) to sub - section ( 24 ) so as to provide that in case the Committee of Commissioners differs in its opinion regarding the appeal against the order of the Commissioner (Appeals ) , it shall record the point or points of difference between them and refer the matter to the jurisdictional Chief Commissioner who shall , after considering the facts of the order and if he is of the opinion that the order passed by the Commissioner ( Appeals ) is not legal orproper, direct the Central Excise Officer to appeal to the Appellate Tribunal against the order ofthe Commissioner (Appeals). The jurisdictional Chief Commissioner shall be the Chief Commissioner having jurisdiction over the adjudicating authority who has decided the case .

(IX) sub-clause (1) seeks to amend section 94 of the said Act to provide that the Scheme framed by the Board under section 71 shall be laid before each House ofParliament.

(X) sub - clause (J) seeks to amend section 95 of the said Act so as to empower the Central Government to issue orders for removal ofdifficulty in case of implementing, classifying or assessing the value of any taxable service incorporated by the proposed legislation in this Chapter, up to one year from the date of enactment of the Finance Bill , 2008.

Clause 86 relates to short title and commencement of a Scheme for resolution of disputes in service tax to be calledthe ServiceTax Disputes Resolution Scheme, 2008 .

Clause 87 contains definition of certain terms and expressions used in the Scheme.

Clause 88 seeksto provide that Scheme would not be applicable in cases where tax arrears includes service tax amount of more than twenty- five thousand rupees and where notice or order has been issued under section 73A of the Finance Act, 1994.

Clause 89 seeks to specify the time frame for making the declaration by a person against whom tax arrear is pending , to the designated authority and rate of amount payable under the Scheme by the declarant.

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Clause 90 provides that a declaration under the Scheme will be made before the designated authority and further provides that the declaration will be in such form or manner as may be prescribed .

Clause 91 provides that designated authority shall determine the amount payable on the basis of declaration , within fifteen days of the receipt of the declaration and will pass order on the declaration received by him . The declarant shall pay the sum determined by the designated authority and furnish proof of such payment before him . The designated authority will also issue certificate to the person making the declaration stating therein the particulars of the sum payable by the declarant . The clause furtherprovides that the matter once determined will not be opened for such dispute in the court of law or before any other forum . In case the declarant has filed a writ petition for appeal or reference before any High Court or Supreme Court against any order in respect of tax arrear, the declarant shall file application before the High Court or Supreme Court for withdrawing such writ petition or reference and shall provide proof of such withdrawal.

Clause 92 provides that appellate authority shall not proceed to decide any issue relating to tax arrear specified in the declaration and in respect of which an order had been made by the designated authority.

Clause 93 seeks to provide that amount paid in pursuance of the declaration shall not be refundable under any circumstances .

Clause 94 clarifies that, except as expressly provided therein the Scheme should not be construed as conferring any benefit , concessions or immunity on the declarant in any assessment or proceeding other than in respect of which the declaration pertains to.

Clause 95 seeks to empower the Central Government to pass any order not inconsistent with the provisions of the Scheme for removing any difficulty which may arise in giving effect to its provisions . All such orders made by the Central Government shall be required to be laid before each House of Parliament .

Clause 96 seeks to empower the Central Government to make rules for carrying out the provisions of the Scheme . All rules made under the Scheme shall be laid before each House of Parliament .

Clauses 97 to 116 provide for levy of tax on taxable commodities transactions entered in a recognised association.

Clause 97deals with the extent, commencement and application of Chapter VII .

Clause 98 of the Bill is the definition provision . Sub - clause (5) of this clause defines taxable commodities transaction to mean a transaction of purchase or sale of option in goods , or option in commodity derivative , or any other commodity derivative, traded on recognised associations .

Clauses 99 and 100 seek to make a provision for the charging ofa tax called " commodities transaction tax " at the rate of- ( i) 0.017 per cent . ofthe option premium , payable by the seller, in the case of sale of an option in goods or an option in commodity derivative ; ( ii ) 0.125 per cent of the settlement price ofthe option in goods or an option in commodity derivative , as the case may be , payable by the purchaser, in the case of a sale of an option in goods or an option in commodity derivative, where option is exercised; (iii ) 0.017 per cent . of the price at which the commodity derivative is sold, payable by the seller of any other commodity derivative, in the case of a sale of such commodity derivative .

1 Clauses 101 to 114 provide for collection and recovery of commodities transaction tax, furnishing of returns , assessment procedure , power of Assessing Officer, rectification of mistake , chargeability of interest , levy of penalty , institution of prosecution and filing of appeals . Further , it also provides that various procedural provisions in the Income- tax Act will , so far as may be , apply in relation to commodities transaction tax.

Clause 115 confers powers on the Central Government to make rules for the purposes of carrying out the provisions of this Chapter . This clause also provides that every rule made under this clause shall be laid before each House of Parliament .

Clause 116 of the Bill confers power on the Central Government to issue orders for removal of any difficulty arising in giving effect to the provisions of this Chapter. This power is available to the Central Government for a period of two years from the date on which the provisions of this Chapter come into force . Every order made under this clause shall be laid before each House of Parliament .

Clauses 97 to 116 will take effect from the date to be notified by the Central Government .

Clause 117 seeks to amend the Seventh Schedule to the Finance Act , 2001 so as to omit certain existing tariff items and include certain new tariff items in the said Schedule . It also proposes to substitute certain entries with a view to enhance the rate ofduty.

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Clause 118 seeks to amend section 13 of the Unit Trust of India (Transfer of Undertaking and Repeal ) Act , 2002.

Sub - section ( 1 ) of section 13 provides that notwithstanding anything contained in the Income-tax Act , 1961 or any other enactment for the time being in force relating to tax or income , profits and gains , no income tax or any other tax shall be payable by the Administrator in relation to the specified undertaking for a period of five years computed from 1st February, 2003 in respect of any income , profits or gains derived , or any amount received in relation to the specified undertaking.

It isproposed to amend sub -section ( 1 ) to allow the exemption for the period beginning on 1st February, 2003 and ending on 31st March , 2009.

This amendment will take effect retrospectively from 1st February, 2008.

Clause 119 seeks to amend the provisions of Chapter VII of the Finance (No. 2 ) Act , 2004, relating to the securities transaction tax .

Section 98 of the said Act provides for charge of securities transaction tax. It is provided that in the case of sale of a derivative , where the transaction of such sale is entered into in a recognised stock exchange , the securities transaction tax will be at the rate of 0.017 per cent. and will be payable by the seller.

It is proposed to substitute said serial No. 4 of the Table in section 98 and also amend section 99 of the said Act so as to provide that the securities transactions tax shall be levied at the rate of 0.017 per cent . on sale of a futures in securities and shall be payable by the seller ; 0.017 per cent . of the option premium on the sale of a derivative , being option in . securities and shall be payable by the seller ; and 0.125 per cent . of the settlement price on the sale of an option in securities , where option is exercised , and shall be payable by the purchaser .

This amendment will take effect from 1st June , 2008 .

Clause 120 seeks to amend section 95 of the Finance Act , 2005 , relating to charge of banking cash transaction tax .

It isproposed to insert a new sub - section (3 ) in section 95 so as to provide that no banking cash transaction tax shall be charged in respect of any taxable banking transaction after 31st March , 2009 .

This amendment will take effect from 1st April , 2009 .

This clause also seeks to amend the Seventh Schedule of the said Act , so as to substitute certain entries with a view to enhance the rate of duty.

MEMORANDUM REGARDING DELEGATED LEGISLATION

Clause 5 of the Bill seeks to amend section 35 of the Income- tax Act , relating to expenditure on scientific research .

Sub- clause (a ) of the said clause seeks to insert a new clause (iia ) in sub -section (1 ) of the said section so as to allow deduction of an amount equal to one and one -fourth times of any sum paid to a company which fulfils the conditions specified therein .

Sub -clause (C) of the proviso to the said clause (iia) provides for a condition that the deduction shall be available to such company if it is , for the time being, approved by the prescribed authority in the prescribed manner.

Further, sub - clause (D) of the said proviso provides that such company shall also fulfil such other conditions as may be prescribed.

It is proposed to empower the Board to prescribe by rules the authority, the manner in which such authority may approve a company and the other conditions to be fulfilled by the company to be eligible for deductions under the said section .

Clause 11 of the Bill seeks to amend section 47 of the Income -tax Act , which lists transactions not regarded as transfer.

Sub -clause (b ) of the said clause seeks to insert a new clause (xvi ) so as to add to the list, any transfer of a capital asset in a transaction of reverse mortgage under a scheme to be made and notified by the Central Government.

It is proposed to empower the Central Government to make and notify a scheme of reverse mortgage for the puposes of the proposed clause .

Clause 15 of the Bill seeks to amend section 80 - IB of the Income- tax Act , relating to deduction in respect of profits and gains from certain industrial undertakings other than infrastucture development undertakings .

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Sub- clause (b) of the said clause seeks to insert a new sub - section ( 11C) in the said section so as to extend a five year tax holiday in respect of hospitals located anywhere in India , except the seven urban agglomerations and the districts and the city specified therein , which are constructed and have started functioning during the period between the 1st day of April , 2008 and the 31st day of March , 2013 .

Clause ( iv) of the proposed sub- section provides that the assessee shall furnish along with the return of income , an audit report in such form and containing such particulars as may be prescribed.

It is proposed to empower the Board to prescribe by rules the form and particulars of audit report for the purposes of the said sub - section .

Clause 22 of the Bill seeks to amend section 115WB of the Income- tax Act, relating to fringe benefits .

Sub -section (2 ) of the said section provides that the fringe benefits shall be deemed to have been provided by the employer to his employees if he incurs any expenditure for the purposes specified thereunder .

Clause (B) of the said sub - section provides that any provision for hospitality of every kind , except those provided in sub - clauses ( i ) and ( ii) , shall be deemed to be fringe benefits provided by the employer to his employee .

Item ( 1 ) of sub - clause ( b) of the said clause seeks to insert a new sub - clause ( iii ) in clause ( B) of sub - section (2 ) of the said section so as to provide that any expenditure on or payment through non - transferable pre -paid electronic meal card usable only at eating joints or outlets and which fulfils such other conditions as may be prescribed , shall also be exlcuded from hospitality expenditure for calculation of fringe benefit tax.

It isproposed to empower the Board to prescribe by rules such other conditions for the purposes of clause (B) .

Clause 25 of the Bill seeks to amend section 115WE of the Income- tax Act, relating to assessment of fringe benefits .

The said clause seeks to substitute sub - section ( 1 ) of the said section and also to insert new sub - sections ( 1A ) to ( 1C) in the said section.

The proposed sub - section ( 1A) seeks to provide that for the purposes of processing returns under sub -section ( 1 ), the Board may make a scheme for centralised processing of returns with a view to determine the tax payable by, or the refund due to , the assessee as required under that sub-section .

It is proposed to empower the Board to make a scheme for centralised processing of returns for the purposes of the said section.

Clause 29 of the Bill seeks to amend section 143 of the Income- tax Act, relating to assessment of income .

Sub -clause ( a ) of the said clause seeks to substitute sub - section ( 1 ) of the said section and also to insert sub - sections (1A) to ( 1C) in the said section .

The proposed sub- section ( 1A) provides that for the purposes of processing of returns under sub- section ( 1 ) , the Board may make a scheme for centralised processing of returns with a view to determine the tax payable by, or the refund due to, the assessee as required under the said sub - section.

It is proposed to empower the Board to make a scheme for centralised processing of returns for the purposes of the said section.

Clause 41 of the Bill seeks to amend section 195 of the Income - tax Act, relating to other sums .

The said clause seeks to insert a new sub - section ( 6) in the said section so as to provide that any person responsible for deduction of income -tax while crediting to the account of a non - resident , not being a company , or to a foreign company, any interest or any other sum chargeable to tax under the Act , shall furnish the information relating to the payment of such sum in such form and manner as may be prescribed .

Itisproposed to empower the Board to prescribe by rules the form and the manner for furnishing such information .

Clause 42 of the Bill seeks to substitute a new section for section 199 , relating to credit for tax deducted.

Sub -section (3 ) of the proposed section provides that the Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of provisions of Chapter XVII , make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub- section ( 1 ) and sub -section (2 ) of the proposed section and also the assessment year for which such credit may be given.

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Accordingly, it is proposed to empower the Board to make rules for giving credit in respect of tax paid or deducted.

Clause 45 of the Bill seeks to amend section 206C of the Income- tax Act , relating to profits and gains from the business oftrading in alcoholic liquor , forest produce , scrap , etc.

Sub- clause (a) of the said clause seeks to substitute sub - section (4) so as to provide that any amount collected in accordance with the provisions of the said section and paid to the credit of the Central Government shall be deemed as payment of tax on behalf of the person from whom the amount has been collected and credit shall be given to him for the amount so collected in accordance with the rules prescribed by the Board.

It is proposed to empower the Board to prescribe by rules the manner in which such credit shall be given.

Clause 69 of the Bill seeks to insert a new sub - section (2) to section 141 of the Customs Act empowering the Central Board of Excise and Customs to make regulations in respect of the manner in which imported or export goods may be received , stored , delivered , despatched or otherwise handled in a customs area and also in respect of the responsibilities of persons engaged in such activities .

Clause 74 of the Bill seeks to insert a new section 3A in the Central Excise Act , which empowers the Central Government to charge excise duty on the basis ofcapacity of production in respect of notified goods . Sub-section (2) of the said section empowers the Central Government to make rules to provide the manner ofdetermination of annual production of the factory, specify the factor relevant to the production of such goods and determination of annual capacity of production of the factory in which such goods are produced on the basis of such relevant factor. Sub- section (3 ) of the said section empowers the Central Government to fix the rate of duty of excise leviable on notified goods by notification and also to make rules in respect of the manner in which such duty shall be collected.

Sub-clause (D) of clause 85 ofthe Bill seeks to insert a new section in the Finance Act, 1994 which empowers the Central Board ofExcise and Customs to frame a scheme for enabling any person or class of persons to prepare and furnish return of service tax through Service Tax Return Preparer authorised to act as such under the Scheme . The Scheme is required to be laid before Parliament .

Sub -clause (J ) of the said clause seeks to insert a new sub -section (1E) in section 95 of the Act relating to removal of difficulties .

The proposed sub - section empowers the Central Government to issue order for removal of any difficulty which may arise in implementing , classifying or assessing the value of any taxable service incorporated by the proposed legislation. The proviso to the said sub - section seeks to provide that any such order shall not be made beyond a period of one year from the date of the assent to the Bill .

Clauses 86 to 96 of the Bill contain provisions in respect of Secrvice Tax Dispute Resolution Scheme, 2008 for settlement ofcertain service tax arrears .

Clause 87 of the Bill proposes to confer powers upon the Commissioner of Central Excise to notify designated authority not below the rank of Assistant Commissioner of Central Excise for the purposes of the Service Tax Dispute Resolution Scheme, 2008 .

Clause 96 of the Bill proposes to confer powers on the Central Government to prescribe (a) the form in which a declaration may be made under section 89 and the manner in which such declaration may be verified, (b) the form of certificate which may be issued under sub - section (2) ofsection 91 , (c) any other matter which is to be or may be prescribed , or in respect of which provision is to be made by the rules . The rules made under the scheme are required to be laid before Parliament.

Chapter VII of the Bill seeks to provide for levy, collection and recovery ofcommodities transaction tax, furnishing of returns , assessment procedure , power of assessing officer , chargeability of interest, levy of penalty, institution of prosecution and filing of appeals ; etc.

Clause 102 of the Bill provides that an assessee , being a recognised association responsible for collection ofcommodities transaction tax, shall furnish return within such time- limit, in such form , verified in such manner and setting forth such particulars as may be prescribed .

Further, it also provides that where such return has not been furnished within the prescribed time- limit , the assessing officer may issue a notice to the assessee requiring him to furnish the return in such form , verified in such manner setting forth such particulars , within such time , as may be prescribed.

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It is proposed to empower the Central Government to make rules to specify the time- limit and also to provide for the form , the manner of verification , particulars to be set forth in the return to be filed by such assessee .

Further, it is also proposed to empower the Central Government to make rules to provide for the form ; the manner of verification , particulars to be set forth in the return and the time - limit within which such return has to be filed by the assessee to whom notice under sub - section (2) of the said section has been issued .

Clause 111 of the Bill provides that an assessee who is aggrieved by any order of assessment made by the Assessing officer may appeal to the Commissioner ofIncome - tax (Appeals ) in such form , verified in such manner as may be prescribed .

T It isproposed to empower the Central Government to make rules to provide for the form and the manner for verification for the purposes of the said povision .

Clause 112 of the Bill provides that an assessee who is aggrieved by any order passed by the Commissioner of Income- tax (Appeals) may appeal to the Appellate Tribunal in such from and verified in such manner , as may be prescribed.

It isproposed to empower the Central Government to make rules to provide for the form and the manner of verification for the purposes of the said provision .

The matters in respect of which notification may be issued or rules may be made in accordance with the provisions ofthe Bill are matters of procedure and detail and it is not practicable to provide for them in the Bill itself.

Thedelegation of legislative power is , therefore , ofa normal character .

P.D.T. ACHARY, Secretary-General.

PRINTED BY THE MANAGER, GOVT. OF INDIA PRESS , MINTO ROAD , NEW DELHI AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS , DELHI-2008 ,

GMGIPMRND-677GI ( S-5 ) -25-05-2008.