Taxmann’s analysis of changes made in the Finance Bill, 2021 as passed by the Lok Sabha

Blog|Income Tax|
47 Min Read

By Taxmann
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Last Updated on 3 August, 2023

Taxmann’s Editorial Team

Table of Contents:

Tax on transfer of money or property by a firm/AOP/BOI to its partners or members [Section 9B, Section 45(4) and Section 48]
[Assessment Year 2021-22]
- Meaning of certain terms
- Income on receipt of capital asset or stock in trade by a partner from a firm [Section 9B]
- Tax on receipt of money or capital asset by partner in connection with reconstitution of firm [Section 45(4)]
- Mode of computation of capital gain [Section 48]
Goodwill forming part of existing block of assets to be reduced from WDV
[Applicable from Assessment Year 2021-22]
- Background
- Amendment Proposed by the Finance Bill, 2021
- Ambiguity in the Bill
- Clarity in the Finance Bill (Lok Sabha)
FMV of capital assets transferred under slump sale to be calculated in prescribed manner
[Applicable from Assessment Year 2021-22]
- Introduction
- Amendment by the Finance Bill (Lok Sabha)
- Impact of the Amendment
Tax on Interest earned on PF contribution exceeding Rs. 2.50 Lakhs or Rs. 5 Lakhs
Tax Audit: Transaction settled by way of a non-account payee cheque/draft is a cash transaction
[Applicable from Assessment Year 2021-22]
HUF is also not eligible for presumptive taxation scheme under section 44ADA
[Applicable from Assessment Year 2021-22]
Fee for default in furnishing return of income
Fee for default in linking Aadhaar and PAN
No re-computation of past year’s book profit if MAT credit has been utilized
[Applicable from Assessment Year 2021-22]
Tax on ULIPs
- Introduction
- Amendment by the Finance Bill, 2021
- Amendment by the Finance Bill (Lok Sabha)
Definition of ‘Liable to tax’ rephrased
No tax on income of ‘DFI’ and ‘Institution’ established for financing infrastructure and development
[Applicable from Assessment Year 2022-23]
- Exemption to Financial Institution [Section 10(48D)]
- Exemption to DFI [Section 10(48E)]
Due date to file return of income by the spouse of a partner
Due date for filing of belated and revised ITR
New scheme of Re-Assessment
- Changes proposed by the Finance Bill, 2021
- Power to assess or reassess for assessment or reassessment or recomputation
- Information suggests income escaping in case of Survey
- Information suggesting escapement of income in case of Requisition
- Meaning of ‘Asset’ representing the income escaping assessment
- Exclusion of Time limit for Completion of Assessment
- Time-limit for completion of assessment on withdrawal of application filed before settlement commission
Pending Applications before AAR
Scope of investment extended for exemption under Section 10(23FE)
- Introduction
- Amendment by Finance Bill, 2021
- Amendment by the Finance Bill (Lok Sabha)
Income of a non-resident from leasing of aircraft to a unit of an IFSC [Section 10(4F)]
[Applicable from Assessment Year 2022-23]
- Exemption shall be available for both operating and finance lease charges
- Condition of ‘Unit of IFSC to be eligible for deduction under section 80LA’ is removed
- Meaning of ‘aircraft’ is defined
Exemption to be available to non-resident investors and Category-III AIF [Section 10(23FF)]
[Applicable from Assessment Year 2022-23]
Taxation of Income from GDRs issued by Overseas Depository Bank situated outside India or IFSC [Section 115ACA]
[Applicable from Assessment Year 2022-23]
Regulations applicable in case of Category-I and Category-II AIFs [Section 115UB]
[Applicable from Assessment Year 2022-23]
Transaction not regarded as transfer
- Transfer of capital asset by Indian Infra Finance Co. to an Institution established for financing infrastructure and development (Section 47(viiae)
- Transfer of capital asset under a plan approved by Central government (Section 47(viiaf)
Performance of functions of Verification Unit
Investment division of offshore banking unit to be registered as Category-I FPI and not as category-III AIF [Section 10(4D) and 115AD]
[Applicable from Assessment Year 2022-23]
Curative amendments under section 115AD
Changes to Indian Stamp Act
- Introduction
- Amendment by Finance Bill, 2021
- Amendment by the Finance Bill (Lok Sabha)

The Lok Sabha has passed the Finance Bill, 2021 on March 23, 2021. The Bill presented originally in the Lok Sabha on February 01, 2021 has not been passed in its original shape. More than 100 changes have been made in the Finance Bill, 2021 as passed by the Lok Sabha [hereinafter referred to as Finance Bill (Lok Sabha)]. New amendments have been proposed, some proposed amendments have been removed or altered.

The Finance Bill (Lok Sabha) has also introduced various curative amendments. For instance, section 43(6)(c) has been amended by the Finance Bill (Lok Sabha) to reduce the WDV of the block of asset if goodwill forms part of that block. Further, section 234F has been amended to withdraw the late-filing fees of Rs. 10,000 as belated return cannot be filed on or after 01^st January from the assessment year 2021-22.

A snippet of all changes made in the Finance Bill, 2021 as passed by the Lok Sabha viz-a-viz the Finance Bill, 2021 are presented hereunder:

Tax on transfer of money or property by a firm/AOP/BOI to its partners or members [Section 9B, Section 45(4) and Section 48]

[Assessment Year 2021-22]
Where any partner receives any amount or property on account of dissolution or reconstitution of the firm, the income-tax implications in such cases in the hands of partner or the firm has always been a controversial matter. Some of them are discussed below:

Whether the expression “dissolution of the firm or otherwise” includes reconstitution of the firm?
Whether consideration (in money or in kind) received by a partner from the firm could be said to be received on account of transfer of his interest in the partnership firm?
Whether transfer of property (stock-in-trade and capital asset) by a firm to its partners be treated as transfer for Income-tax purposes? If yes, whether income from such transfer be chargeable to tax in the hands of firm?
What shall be the mechanism to compute income in such cases?
Where a firm does the re-valuation of the property or record self-generated asset in the books of account and credit the corresponding gain to the capital accounts of the partners, what should be the tax treatment of the amount received by partner in excess of his capital contribution made on account of such revaluation or self-generated asset?

The Finance Bill (Lok Sabha) has addressed the aforesaid issues by inserting Section 9B, substituting Section 45(4) and inserting Section 48(iii). Before understanding the amendment, it is imperative to understand that when a partner disassociates from the partnership firm in lieu of transfer of a property by that firm to him, there will be two transactions. One, transfer of right by the partner and second, transfer of property by the firm to the partner. The former transaction is dealt with under Section 45(4) and the latter in Section 9B.

1.1 Meaning of certain terms

Section 9B defines the meaning of ‘specified entity’ and ‘specified person’ as under.

“Specified entity” means a firm or other Association of Persons (AOP) or Body of Individuals (BOI) [not being a company or a co-operative society]. For simplicity, hereinafter the ‘specified entity’ is just referred to as a ‘firm’.
“Specified person” means a person who is a partner of a firm or member of other AOP or BOI (not being a company or a co-operative society) in any previous year. For simplicity, hereinafter the ‘specified person’ is just referred to as a ‘partner’.

1.2 Income on receipt of capital asset or stock in trade by a partner from a firm [Section 9B]

Section 9B provides that where a partner receives during the previous year any capital asset or stock-in-trade or both from a firm in connection with the dissolution or reconstitution of such firm, then the firm shall be deemed to have transferred such capital asset or stock-in-trade or both, as the case may be, to the partner in the year in which such capital asset or stock in trade or both are received by that partner.

Further, it provides that any profits and gains arising from such deemed transfer of capital asset or stock in trade or both, as the case may be, by the firm shall be deemed to be the income of the firm of the previous year in which stock or capital asset were received by the partner and chargeable to income-tax under the head ‘business or profession’ or ‘capital gain’ in accordance with the provisions of the Act.

Furthermore, the fair market value of the capital asset or stock on the date of its receipt by the partner shall be deemed to be the full value of consideration while computing profit and gains arising from deemed transfer of such stock or capital asset by the firm.

Section 9B also defines the expressions “reconstitution of specified entity”. It means where:

One or more of its partners or members ceases to be partners or members;
One or more new partners or members are admitted. However, at least one existing partner or member should continue to be partner or member of the specified entity after admission of the new partner(s) or member(s); or
All the partners or members continue with change in their respective share or in share of some of them.

Further, the CBDT is empowered to issue guidelines, with prior approval of the Central Government, for removing difficulties arising in giving effect to the provisions of this section. Every such guidelines shall be laid before each house of parliament and shall be binding on the Income-tax authorities and assessee.

Section 9B deals with the following three aspects.

1.2-1 Distribution of stock or capital asset by a firm to its partner is deemed as transfer

This provision creates a deeming fiction that the distribution of stock or capital asset by a firm to its partner is a transfer. This is done to overrule various judicial ruling which held that the distribution, division or allotment of assets by a partnership firm upon dissolution or reconstitution is nothing but a mutual adjustment of rights between the partners.

The Apex Court in case of Malabar Fisheries Co. vs. CIT [1979] 2 Taxman 409 (SC) has held that a partnership firm, under the Indian Partnership Act, 1932, is not a distinct legal entity, apart from the partners constituting it. The firm, as such, has no separate rights of its own in the partnership assets and when one talks of the firm’s property or firm’s assets, all that is meant is property or assets in which all partners have a joint or common interest. If that be the position, it is difficult to accord the contention that upon dissolution the firm’s rights in the partnership assets are extinguished. The firm, as such, has no separate rights of its own in the partnership assets but it is the partners who own jointly in common its assets. Therefore, the consequence of the distribution, division or allotment of assets to the partnership, which flows upon dissolution after discharge of liabilities, is nothing but a mutual adjustment of rights between the partners and there is no question of any extinguishment of the firm’s rights in the partnership assets amounting to a transfer of assets within the meaning of section 2(47).

Now, the Section 9B, has created a deeming fiction for treating such flow of stock or capital asset at the time of dissolution or reconstitution as transfer.

1.2-2 How to compute the gains arising from deemed transfer of stock-in-trade?

Sub-section (2) of Section 9B provides that any profit and gains arising from deemed transfer of stock-in-trade shall be deemed to be income of the partner of the year in which such stock is received by the partner and, accordingly, it shall be charged to tax under the head “Profit and gains from business or profession”.

For such computation, it provides that the fair market value of the stock on the date of its receipt by the partner shall be deemed to be the full value of consideration while computing profit and gains arising from deemed transfer of such stock by the firm. The income arising from the transfer of stock shall be taxable as business income under Section 28. In simple words, the fair market value of stock transferred to the partner shall be recorded as sale by the firm as the same shall form part of the business of the firm.

1.2-3 How to compute the gains arising from deemed transfer of capital asset?

Sub-section (2) of Section 9B provides that any profit and gains arising from deemed transfer of capital asset shall be deemed to be income of the firm of the year in which such capital asset is received by the partner. It shall be charged to tax under the head “Capital Gains”.

Further, it provides that fair market value of capital asset on the date of its receipt by the partner shall be deemed to be the full value of consideration while computing capital gain arising from deemed transfer of such stock by the firm.

Determination of income taxable under the head capital gains depends upon various factors such as nature of capital asset, period of holding, cost of acquisition, full value of consideration, etc. Section 48 prescribes the mode of computation of income taxable under the head capital gains. As per said section, the capital gain is computed by reducing the cost of acquisition, cost of improvement and attributable expense from the full value of consideration of the capital asset.

Section 48 has also been amended by the Finance Bill (Lok Sabha) to mitigate the double taxation arising due to introduction of Section 9B and substitution of section 45(4). A new clause (iii) is inserted to provide that profit and gains chargeable to tax under section 45(4) which is attributable to capital asset being transferred by the firm shall be reduced while computing capital gain in the hands of the firm in respect of such capital asset. In other words, the amount of capital gain computed under section 45(4) which is attributable to capital asset being transferred by the firm shall be deducted while computing capital gain in the hands of the firm in respect of such capital asset.

The computation of capital gain under section 9B read with section 48(iii) shall be as follows:

Particular

Amount

Full value of consideration received or accrued (FMV of capital asset)

Less:

(a) Expenditure incurred wholly and exclusively in connection with transfer;

(b) Cost of Acquisition/Indexed cost of acquisition;

(c) Cost of improvement/ Indexed cost of improvement; or

(d) The amount chargeable to tax as income of firm under Section 45(4) which is attributable to capital asset being transferred by the firm

(e) Exemption under Sections 54 to 54GB to the be extent of net result of above calculation

xxx

(xxx)

Income taxable under the head capital gains

xxx

The rate at which such capital gain shall be charged to tax will be depend on the nature of capital asset transferred and period for which such asset is held by the specified entity.

1.3 Tax on receipt of money or capital asset by partner in connection with reconstitution of firm [Section 45(4)]

The Finance Bill (Lok Sabha), has substituted sub-section (4) as proposed to be substituted by the Finance Bill, 2021. This provision provides that where a partner receives during the previous year any capital asset or money or both from a firm in connection with the reconstitution then any profit and gains arising from such receipt of money by specified person shall be deemed to be the income of the specified entity under the head “Capital Gains’ of the previous year in which such capital asset or money or both were received by the specified person. Further, it also prescribes the formula to compute the profit and gains arising to the partner from such receipt of money or capital asset from the firm.

The profit and gains shall be computed in accordance with the following formulae:

–

A = Income chargeable to income-tax under this provision as income of the firm under the head capital gains;

B = Value of money received by partner on the date of such receipt;

C = Fair market value of the capital asset received by the partner on the date of such receipt; and

D = Balance in the capital account (represented in any manner) of the partner in the books of accounts of the firm at the time of reconstitution.

Where the value of A is negative, it shall be deemed to be nil.

While computing the balance in the capital account of partner in the books of accounts of firm, increase in capital account due to the following shall not be taken into account:

Revaluation of any asset;
Self-generated goodwill (goodwill acquired without incurring any cost for purchase or which has been generated during the course of business or profession);
Other self-generated assets.

Explanation 2 to Section 45(4) clarifies that when a capital asset is received by the partner from a firm in connection with the reconstitution, the provisions of the said section shall operate in addition to the provisions of section 9B. Thus, the taxation under both the provisions shall be worked out independently.

1.3-1 Analysis of section 45(4)

Section 45(4) provides for the computation of capital gain which arises to a partner on extinguishment or relinquishment of his right in the firm in connection with reconstitution of the firm. Though the income arises to partner but it is deemed as income of the firm. Thus, the firm would be assessed under section 9B for its own income and under section 45(4) for income arising to partner thereof.

1.3-2 Section 45(4) v. Section 9B

Section 9B provides for taxability arising at the time of dissolution or reconstitution. Whereas Section 45(4) deals with the taxability at the time of reconstitution only. Where any asset or money is transferred to partner or member at the time of dissolution, same amounts to extinguishment or relinquishment of rights. Term “transfer” as defined under section 2(47) covers extinguishment or relinquishment of rights within its ambit. However, since such rights are not extinguished or relinquished in favor of another person in case of dissolution, no one derives any benefit from the same. Thus, section 45(4) does not apply at the time of dissolution.

1.4 Mode of computation of capital gain [Section 48]

Section 9B deals with the taxability of the income arising to the firm on transfer of capital asset to a partner in connection with dissolution or reconstitution. Section 45(4) deals with the income which arises to the partner on receipt of a capital asset in connection with the reconstitution. However, tax in respect of such receipt is charged in the hands of firm only. Thus, in case of reconstitution double taxability will arise once under section 45(1) read with section 9B and second under section 45(4). To remove the impact of such double taxation, Section 48 is amended. This section provides for reduction of cost of acquisition, improvement and expenditure incurred in connection with transfer from full value of consideration of capital asset while computing income chargeable under the head capital gains.

An additional deduction is allowed under Section 48(iii) in respect of the capital gains charged to tax under section 45(4) which is attributable to capital asset being transferred by the firm. In other words, a portion of the capital gains so taxed under Section 45(4) shall be reduced from the full value of consideration of the capital asset being transferred by the firm. Such portion shall be attributable to only that capital asset which is being transferred by the firm. This method of attribution shall be prescribed by the CBDT.

Goodwill forming part of existing block of assets to be reduced from WDV

[Applicable from Assessment Year 2021-22]

2.1 Background

Depreciation is an allowance under the Income-tax Act which is computed as per the written-down value (WDV) method on basis of the relevant block of assets. In other words, for the computation of the depreciation, it is essential to identify the relevant block of asset and its written-down value.

‘Block of assets’ is a group of assets falling within a class of assets for which the same rate of depreciation is prescribed. For example, all intangible assets are eligible for a 25% rate of depreciation.

Written-down value of a ‘block of asset’, as per Section 43(6)(c), means the aggregate of WDVs of all the assets falling within that block of assets at the beginning of the previous year and:

increased by the actual cost of any asset falling within that block acquired during the previous year;
reduced by the money payable in respect of any asset (falling within that block) which is sold or discarded or demolished or destroyed during that previous year.

Particulars

Amount

Opening WDV of block of assets

Add: Actual cost of any asset acquired during the previous year under that block

Less: Money payable in respect of any asset, sold, destroyed discarded, or demolished during the previous year together with the scrap value, if any

xxx

(xxx)

Closing WDV of block of assets

xxx

2.2 Amendment Proposed by the Finance Bill, 2021

The Finance Bill 2021 proposes to prohibit the depreciation on the goodwill. The following amendments have been proposed to various provisions of the Act:

2.2-1 Amendment to Section 2(11)

It has been proposed that ‘block of asset’ as defined under section 2(11) shall not include the ‘goodwill of a business or profession’.

2.2-2 Amendment to Section 32(1)

Clause (ii) to section 32(1) has been proposed to be amended to provide that ‘goodwill of a business or profession’ shall not be eligible for depreciation. Further, an amendment has been proposed to Explanation 3 to Section 32(1) which defines the expression ‘asset’. It has been proposed that ‘goodwill of a business or profession’ shall not be treated as an ‘intangible asset’ for Section 32(1).

2.2-3 Amendment to Section 50

A new proviso has been proposed to be inserted to Section 50(2) that the CBDT may prescribe a manner to determine the WDV of the block of asset and short-term capital gain if goodwill is forming part of the block of asset and depreciation has been claimed on it.

2.2-4 Amendment to Section 55

Section 55 provides the meaning of various terms including ‘cost of acquisition’ for computation of capital gains. The Finance Bill also proposes amendment to Section 55.

2.3 Ambiguity in the Bill

The Finance Bill, 2021 sought to amend above-referred four sections of the Income-tax Act but, it does not propose any amendment to section 43 which defines the WDV of the block of assets.

Thus, the questions arose what would happen to the amount of goodwill which formed part of an existing block of assets. Once an asset forms part of the ‘block of assets’, it loses its identity and deprecation is allowed on the whole block of asset. So, if an assessee has a block of intangible assets and in any previous year he has acquired the goodwill, which formed part of such block of assets, then how the depreciation shall be allowed on such block of assets.

2.4 Clarity in the Finance Bill (Lok Sabha)

The Finance Bill, 2021, as passed by the Lok Sabha, makes the necessary amendments to Section 43(6)(c) to provide that WDV of block of assets shall be reduced by the actual cost of goodwill falling within such block of assets. However, the actual cost of goodwill shall be first decreased by the:

Amount of depreciation actually allowed to the assessee for such goodwill before the Assessment Year 1988-89, and
Amount of depreciation that would have been allowable to the assessee from the Assessment Year 1988-89 as if the goodwill was the only asset in the relevant block of assets.

It should be noted that while computing the WDV for the assessment year 2021-22, if the depreciation was claimed on the goodwill forming part of the block of assets in the immediately preceding previous year, the amount of reduction calculated above shall not exceeds the WDV of the block of assets.

Example, XYZ Limited is running a manufacturing business. On 10-04-2018, it acquired the following intangible assets in an M&A transaction:

Goodwill worth Rs. 100 crores;
Trademarks worth Rs. 50 crores; and
Licenses and franchise agreement worth Rs. 50 crores.

Compute the WDV of the block of intangible assets of XYZ Ltd. as on March 31, 2021 in the following two situations:

Situation 1 – In April 2019, XYZ Ltd. sold the trademarks in Rs. 40 crores.

Situation 2 – In April 2019, XYZ Ltd. sold the trademarks in Rs. 80 crores.

Computation of WDV as on 31-03-2021 (In Crores)

*Particulars*		*Situation 1*	*Situation 2*
*Previous Year 2018-19*
Intangible assets acquired on April 10, 2018
–Goodwill		100.00	100.00
–Trademarks		50.00	50.00
-Licenses & franchisees		50.00	50.00
Block of intangible assets [A]		200.00	200.00
Less: Depreciation [B = A * 25%]		(50.00)	(50.00)
WDV as on 31-03-2019 [C = A-B]		150.00	150.00

Previous Year 2019-20
Opening WDV [C]		150.00	150.00
Less: Intangible assets sold during year [D]		(40.00)	(80.00)
Less: Depreciation [E = (C – D) * 25%]		(27.50)	(17.50)
WDV as on 31-03-2020 [F = C – D – E]		82.50	52.50

Previous Year 2020-21
Opening WDV [F]		82.50	52.50
Adjustment on account of goodwill
Less: Actual cost of goodwill included in block of assets as reduced by the previous years’ depreciation [G]		(56.25)	(52.50) see note
Cost of Goodwill	100
Less: Dep. allowed on goodwill:
–Previous Year 2018-19 [100 25%]*	(25.00)
–Previous Year 2019-20 [(100-25) 25%]*	(18.75)
	56.25
Less: Depreciation [H = (F – G) * 25%]		(6.56)	0.00
WDV of block of intangible assets as on 31-03-2021		19.69	0.00

Note: If the goodwill forms part of block of assets on which deprecation is claimed in previous year 2019-20 then the ‘amount of reduction’ on account of such goodwill shall not exceed the WDV assuming that the goodwill is the only asset in that block. As in the situation 2, the ‘amount of reduction’ is calculated at Rs. 56.25 which exceeds the WDV of Rs. 52.50, the reduction of WDV on account of goodwill shall be restricted to Rs. 52.50.

FMV of capital assets transferred under slump sale to be calculated in prescribed manner

[Applicable from Assessment Year 2021-22]

3.1 Introduction

The term ‘slump sale’ has been defined under section 2(42C) to mean the transfer of one or more undertakings as a result of sale for lump sum consideration without value being assigned to individual assets and liabilities in such cases. Section 50B of the Income-tax Act provides for computation of capital gains in case of slump sale.

As slump sale is defined to mean sale of undertaking for a lump sum consideration, some courts have taken a view that transfer by way of exchange, relinquishment etc. shall not be considered as slump sale. To provide clarity on this issue, Section 2(42C) is proposed to be amended by the Finance Bill, 2021 to provide that all types of ‘transfer’ as defined under section 2(47) shall be included within the scope of slump sale. However, the Finance Bill, 2021 has not proposed any amendments to section 50B.

Section 50B(2) provides that where an undertaking or division is acquired, the net worth of such undertaking or division is deemed as the cost of acquisition. Further, the benefit of indexation shall not be available even if the undertaking transferred under the slump sale is deemed as long-term capital asset. The mechanism for the computation of net worth has been provided in the Explanation 2 to Section 50B. It provides that for computing net worth, depreciable assets are taken at written down value and non-depreciable asset at book value. However, capital asset which are fully allowed as deduction under Section 35AD are taken at nil value.

3.2 Amendment by the Finance Bill (Lok Sabha)

The existing Section 50B does not contain any provision for the computation of the full value of consideration in relation to the transfer of the undertaking under a slump sale. The Finance Bill (Lok Sabha) has amended Section 50B(2) to provide that the fair market value (FMV) of the capital assets (being an undertaking or division transferred by way of slump sale) as on the date of transfer shall be calculated in the prescribed manner. Such FMV shall be deemed to be full value of the consideration received or accruing as a result of transfer of such capital asset.

Further, a new clause in Explanation 2 has been inserted to provide that the value of capital asset being goodwill, which has not been acquired by the assessee by purchase from previous owner, shall be taken as nil while computing net worth.

3.3 Impact of the Amendment

As per the amendments by the Finance Bill (Lok Sabha), FMV of the undertaking or division transferred during slump sale shall be deemed to be the full value of the consideration as a result of such transfer. This deeming fiction may give rise to following two situations:
- Actual amount received by transferor (seller) from transferee (buyer) is higher than such FMV; or
- Actual amount received by seller from buyer is lower than such FMV.
3.3-1 Tax implications in hands of seller

Irrespective of the amount of the actual consideration, Section 50B(2)(ii) provides that the FMV of the capital asset (being a unit or undertaking) shall be taken as full value of consideration for the computation of the capital gain under Section 50B. However, such full value of consideration shall be calculated in the prescribed manner. More clarity on this aspect will be provided when the Rules are prescribed in this regard. Where the actual consideration is less than the FMV determined in the prescribed manner, it would result in higher capital gain tax liability in hands of seller due to this deeming fiction.

3.3-2 Tax implications in hands of buyer

As per Accounting Standard 14 – Accounting for Amalgamations, any excess of the sales consideration over the value of the net assets of seller acquired by buyer should be recognized in the buyer’s financial statements as goodwill. If the amount of the consideration is lower than the value of the net assets acquired, the difference should be recognized as Capital Reserve.

Thus, if the buyer has paid lower than FMV of undertaking transferred in slump sale, the difference between the actual consideration and FMV shall be treated as capital reserve. Such capital reserve should be treated as capital receipt not chargeable to tax. It may not be taxed under Section 56(2)(x) either as the unit or undertaking covered under Section 50B cannot be regarded as a property as defined in Section 56(2)(x).

However, if the buyer has paid consideration in excess of FMV, then such excess consideration shall be recognised as goodwill in books of account of buyer. The Finance Bill, 2021 has sought to prohibit the depreciation on the goodwill. However, the goodwill would be treated as capital assets and capital gain shall arise on its subsequent transfer.

Tax on Interest earned on PF contribution exceeding Rs. 2.50 Lakhs or Rs. 5 Lakhs

As per the existing provision, interest on the contribution made by the employees to the statutory provident fund, recognised provident fund and the public provident fund is exempt from tax.

The Finance Bill, 2021 proposed that no exemption shall be available for the interest income accrued during the previous year in the recognised and statutory provident fund to the extent it relates to the contribution made by the employees over Rs. 2,50,000 in the previous year. This amendment is applicable from the assessment year 2022-23. This amendment has been proposed as the Government noticed that some employees have been contributing a huge amount to these funds and earning interest free income. Thus, to curb this practice, the Government has proposed such amendment to Section 10(11) and Section 10(12). The amendment proposed that the taxable component shall be computed in such manner as may be provided by rules.

The Finance Bill (Lok Sabha) has added a second proviso to Section 10(11) and Section 10(12) that if an employee is contributing to the fund but there is no contribution to such fund by the employer, then the interest income accrued during the previous year shall be taxable to the extent it relates to the contribution made by the employee to that fund in excess of Rs. 5,00,000 in a financial year.

The impact of this amendment can be understood with the help of the following example.

Amount Contributed by assessee during Previous Year (INR)	Whether employer contributing to fund?	Whether interest earned shall be taxable?	How much interest of employee’s contribution shall be taxable?

2,00,000	Yes	No	–
4,00,000	Yes	Yes	Interest on contribution of Rs. 1,50,000
6,00,000	Yes	Yes	Interest on contribution of Rs. 3,50,000
2,00,000	No	No	–
4,00,000	No	No	–
6,00,000	No	Yes	Interest on contribution of Rs. 1,00,000

The interest income shall be taxable under the head ‘Income from other sources’. Such income should be taxable as a residuary income as it is not accruing from a source emanating from an employer-employee relationship. This interest income will become part of the total taxable income of the taxpayer. There are no special rates for the taxability of this interest. Hence, such income shall be taxed at the prevailing income tax rates.

Possibly, such interest component shall be subject to TDS under Section 194A by the EPFO.

Tax Audit: Transaction settled by way of a non-account payee cheque/draft is a cash transaction

[Applicable from Assessment Year 2021-22]
Every person carrying on a business and maintaining books of account is required to get them audited from a Chartered Accountant if total sales, turnover or gross receipt from the business during the previous year exceeds Rs. 1 crore.

To reduce the compliance burden on small and medium enterprises, the Finance Act, 2020 has increased such threshold limit of turnover, for a person carrying on business, from Rs. 1 crore to Rs. 5 crores. The higher threshold limit applies only if the cash receipt and payment made during the year does not exceed 5% of total receipt and total payment respectively.

The Finance Bill, 2021 has proposed to further increase this threshold limit from Rs. 5 crores to Rs. 10 crores. The Finance Bill (Lok Sabha) inserts a new proviso that for computation of the threshold limit of Rs. 10 crores, the payment or receipt settled through a non-account payee cheque or non-account payee bank draft shall be deemed to be cash payment or cash receipt respectively. Thus, the same shall be included while computing 5% cash transaction limit under section 44AB.
HUF is also not eligible for presumptive taxation scheme under section 44ADA

[Applicable from Assessment Year 2021-22]

Section 44ADA provides for computation of profit and gains of profession on a presumptive basis. It applies to an assessee engaged in the specified profession. Under the presumptive taxation scheme, the assessee computes the taxable income on a presumptive basis if gross receipts of the profession do not exceed Rs. 50 lakhs during the year. The presumptive income shall be 50% of total receipts of the year from such a profession.

The existing Section 44ADA only provides that the benefit of this provision is available to an assessee being resident in India. It restricts an assessee on basis of residential status and not on basis of type of assessee. In other words, there was no explicit or obvious prohibition on the Companies, LLP or the HUF to compute the income under this presumptive scheme. The Finance Bill 2021 has specifically excluded an LLP from the scope of presumptive taxation under section 44ADA. Thus, the Finance Bill 2021 first time proposed to expressly limit the provisions of Section 44ADA to a resident assessee being an Individual, Hindu Undivided Family (HUF) or a partnership firm (other than an LLP). The Finance Bill (Lok Sabha) has further restricted the scope of section 44ADA. Now an HUF shall also not be eligible for presumptive taxation scheme under section 44ADA.

Consequently, w.e.f. Assessment Year 2021-22, only a resident Individual and a resident partnership firm shall be eligible to compute the income under the said presumptive taxation scheme. An LLP, HUF, Company, AOP, BOI, etc. shall not be eligible to claim the benefit of Section 44ADA.

Fee for default in furnishing return of income

The late filing fee under Section 234F is charged when a person fails to furnish a return of income by the due date prescribed under section 139(1). The fees to be charged (Rs. 1,000 or Rs. 5,000 or Rs. 10,000) shall depend on the quantum of income and the date of filing of return of income.

The fee for default in furnishing return of income is levied at the following rates:

Amount of total income	Date of filing of Income-tax return	Fees (in Rs.)

Not liable to file return of income	Any time	Nil
Any amount of Income	On or before the due date	Nil
Up to Rs. 500,000	After the due date	1,000
Above Rs. 500,000	After the due date but on or before December 31 of the relevant Assessment Year	5,000
Above Rs. 500,000	After the due date but between January 1 and March 31 of the relevant Assessment Year	10,000

The Finance Bill, 2021 has proposed to reduce the time-limit to file belated or revised returns of income, as the case may be, by 3 months. Therefore, the last date to file the revised or belated return shall be 31^st December of the relevant Assessment Year.

As the last date cannot exceed 31^st December, the higher late filing fees of Rs. 10,000 cannot be levied in any situation. The Finance Bill (Lok Sabha) has made a consequential amendment to Section 234F that the late-filing fee shall be Rs. 5,000. However, where the total income of a person does not exceed Rs. 5 Lakhs, the fee payable shall not exceed Rs. 1,000.

After, the amendment, the late-filing fee shall be leviable in the following manner:

Amount of total income	Date of filing of Income-tax return	Fees (in Rs.)

Not liable to file return of income	Any time	Nil
Any amount of Income	On or before the due date	Nil
Up to Rs. 500,000	After the due date	1,000
Above Rs. 500,000	After the due date	5,000

Fee for default in linking Aadhaar and PAN

As per Section 139AA, it is mandatory for every person, who is eligible to obtain Aadhaar, to quote the Aadhar Number (a 12-digit Unique Identification Number) in the Income-tax return and the application for allotment of PAN.

Further, every person who has been allotted PAN as on July 1, 2017, and who is eligible to obtain Aadhaar number, shall link his PAN with Aadhaar. In case, assessee fails to do so, the PAN allotted to the person shall be made inoperative after the notified due date. The due date for such linking had been extended on multiple occasions and the latest date is 31-03-2021.

The Finance Bill (Lok Sabha) has inserted a new Section 234H to levy a fee for default in intimating the Aadhaar Number. If a person is required to intimate his Aadhaar under Section 139AA(2) and such person fails to do so, he shall be liable to pay a fee, as may be prescribed, not exceeding Rs. 1,000 at the time of making such intimation.

Therefore, if the person fails to link PAN-Aadhaar by 31-03-2021, he shall be liable to pay a fee, maximum of Rs. 1,000. This fee shall be in addition to the other consequences the person has to face if PAN becomes inoperative due to non-intimation of Aadhaar.

Dive Deeper:
Aadhar Card (आधार कार्ड) – Get Aadhaar Card Complete Information Online

As per Rule 114AAA, where a person is required to furnish, intimate or quote his PAN, and his PAN has become inoperative, it shall be deemed that he has not furnished, intimated or quoted the PAN. Consequently, he shall be liable for all the consequences for not furnishing, intimating or quoting the PAN. Some of these consequences have been enumerated below:
1. The tax shall be deducted at a higher rate as per Section 206AA;
2. The tax shall be collected at a higher rate as per Section 206CC;
3. Taxpayers will not be able to file the return of income. Consequently, he shall be liable for the consequences of non-filing of a return, inter-alia, payment of late fee under section 234F, interest under section 234A, forfeiture of current year’s losses, best judgment assessment, the penalty for concealment of income, prosecution for failure to furnish return of income, so on and so forth;
4. A penalty under Section 272B shall be levied as such person shall not be able to comply with the provisions of Section 139A requiring him to quote his PAN in certain financial transactions, etc.
No re-computation of past year’s book profit if MAT credit has been utilised

[Applicable from Assessment Year 2021-22]
To provide relief to the taxpayers affected due to the outcome of Advance Pricing Agreement (APA) and Secondary Adjustment, the Finance Bill, 2021 has proposed to insert a new sub-section (2D) to Section 115JB. As per the proposed provision, the Assessing Officer, on an application by the assessee, shall re-compute the book profit of the past years and tax payable thereon if assessee’s current year’s income has increased due to APA or secondary adjustment. The CBDT may notify the manner for re-computing the book profits of past years by the Assessing Officer.

The Finance Bill (Lok Sabha) has inserted two provisos to the proposed sub-section (2D) to Section 115JB. The first proviso provides that the benefit of re-computation of book profit under section 115(2D) shall be available only if the assessee has not utilised the MAT credit in any subsequent Assessment Year. In other words, if such assessee has utilised the MAT credit for payment of tax liability of any subsequent assessment year, he shall not be eligible to claim the benefit of Section 115(2D).

In the second proviso, it is provided that the assessee can make an application for re-computation of book profit only for the past years beginning on or before Assessment Year 2020-21. Further, the assessee shall not be eligible to claim the interest on the refund, if any, arising to him on account of reduction in tax payable due to re-computation of profit of past years.
Tax on ULIPs

10.1 Introduction

Unit Linked Insurance Plan (ULIP) is a life insurance product, which provides risk cover for the policyholder along with investment. In ULIP, a small amount of the premium paid by the individual goes to secure life and the rest of the money is invested in qualified stocks, bonds or mutual funds. Currently, the amount received under the ULIPs is exempt from tax.

Section 10(10D) provides for exemption with respect to any sum received under ULIP, including the sum allocated by way of bonus on such policy. However, if the premium payable for any of the years during the term of the policy exceeds 10% of the actual capital sum assured, then no exemption under this section would be allowed with respect to the sum received under the policy. Such situation hereinafter referred to as ‘excess premium’.

10.2 Amendment by the Finance Bill, 2021

Besides restricting the exemption under Section 10(10D) for payment of excess premium, the Finance Bill, 2021 has proposed to insert Fourth and Fifth Proviso to Section 10(10D) that no exemption shall be available under this provision in respect of ULIPs issued on or after the 01-02-2021, if the amount of premium payable for any of the previous year during the term of the policy exceeds Rs. 2,50,000 (‘high premium ULIPs’). Further, if the premium is payable by a person for more than one ULIPs, the exemption shall be available only for those policies whose aggregate premium does not exceed Rs. 2,50,000, for any of the previous years during the term of any of the policy.

The income arising from such high-premium ULIPs are proposed to be taxed under Section 112A. Consequently, the Finance Bill, 2021 has proposed to amend the definition of equity-oriented fund to cover the high premium ULIPs. Thus, the equity-oriented fund to cover the ULIPs if such fund invests minimum 90% (in case of investments in other units listed on a recognised stock exchange) or 65% (in any other case) in equity shares of a domestic company.

10.3 Amendment by the Finance Bill (Lok Sabha)

The Finance Bill (Lok Sabha) has inserted second proviso to Section 112A that the minimum requirement of 90% or 65%, as the case may be, is required to be satisfied throughout the term of such insurance policy.

Dive Deeper:
FAQs on Taxation of ULIPs
Taxation of Unit Linked Insurance Plan (ULIPs)
Definition of ‘Liable to tax’ rephrased

The definition of ‘liable to tax’ has been proposed to be inserted by the Finance Bill, 2021 in Section 2(29A). The proposed definition provides that “liable to tax”, in relation to a person, means that there is a liability of tax on such person under any law for the time being in force in any country, and shall include a case where subsequent to imposition of tax liability, an exemption has been provided.

The definition proposed by the Finance Bill, 2021 does not specify the nature of tax which shall be considered for this purpose. In absence of specific reference to ‘Income-tax’, it could be concluded that if a person is paying any tax he may be regarded as liable to tax in such country.

To remove this ambiguity, the Finance Bill (Lok Sabha) inserts a new definition of this term as under.

“Liable to tax”, in relation to a person and with reference to a country, means that there is an income-tax liability on such person under the law of that country for the time being in force and shall include a person who has subsequently been exempted from such liability under the law of that country.

Two major changes have been made in the Finance Bill (Lok Sabha) vis-à-vis Finance Bill, 2021. First, the liability shall be with reference to a country and second, there should be an income-tax liability.

However, it has yet not been defined whether the comprehensive liability shall be considered for the purpose of this definition or even in case of source-based taxability, such person shall be considered as liable to tax in such country.
No tax on income of ‘DFI’ and ‘Institution’ established for financing infrastructure and development

[Applicable from Assessment Year 2022-23]

The Finance Minister, Smt. Nirmala Sithraman, in her budget speech said that infrastructure needs long-term debt financing. A professionally managed Developmental Financing Institution (DFI) is necessary to act as a provider, enabler and catalyst for infrastructure financing. Accordingly, the FM said that she shall introduce a Bill to set up a DFI.

A DFI is an institution promoted or assisted by the Government mainly to provide development finance to one or more sectors or sub-sectors of the economy. The basic emphasis of a DFI is on long-term finance and on assistance for activities or sectors of the economy where the risks may be higher than that the ordinary financial system is willing to bear[1]. The Finance Bill (Lok Sabha) has inserted two new clauses (48D) and (48E) to Section 10.

12.1 Exemption to Financial Institution [Section 10(48D)]

Section 10(48D) has been inserted to grant exemption for any income accruing or arising to an institution established for financing the infrastructure and development. The institution shall be set up under an Act of Parliament and later would be notified by the Central Government. The exemption shall be available for a period of 10 consecutive assessment year beginning from the assessment year relevant to the previous year in which such institution is set up.

12.2 Exemption to DFI [Section 10(48E)]

Section 10(48E) is inserted to provide the exemption to any income accruing or arising to a DFI licensed by the Reserve Bank of India. The exemption shall be available for 5 consecutive assessment years beginning from the assessment year relevant to the previous year in which the DFI is set up.

However, the Central Government may extend the period of exemption of 5 years for a further period, not exceeding 5 more consecutive assessment years, subject to fulfilment of such conditions as may be specified.

Due date to file return of income by the spouse of a partner

If firm or LLP is required to get its accounts audited under Income-tax Act or any other law, the due date to file the return of income by such firm or LLP shall be 31^st October of the assessment year. Similarly, the due date to file the return of income by the partner of such firm shall be 31^st October. However, no such extended time limit was available to the spouse of that partner who is covered under Section 5A.

Section 5A requires equal apportionment of income (except salary income) between spouses governed by the Portuguese Civil Code. Such provision is in the state of Goa and the Union Territories of Dadra & Nagar Haveli and Daman & Diu.

Thus, the Finance Bill 2021 proposed that the due date for the filing of original return of income shall be extended to 31^st October in case of spouse of a partner of a firm whose accounts are required to be audited under the Income-tax Act or under any other law for the time being in force, if the provisions of section 5A apply to them.

The Finance Bill, 2021 also proposes that the due date for filing of return of income by the partners of a firm, which is required to furnish report under Section 92E, shall be 30^th November of the assessment year. Therefore, in case of a firm which is required to furnish a Transfer Pricing report in Form 3CEB, the due date for filing of original return of income by the partner shall be 30^th November of the assessment year. There was no corresponding extension to the spouse of the partner governed by Section 5A.

The Finance Bill (Lok Sabha) extends the due date for the filing of return of income by the spouse of the partner of a firm, if governed by the provisions of section 5A, to 30^th November where such firm is required to furnish report under Section 92E. Therefore, after the proposed amendments, the due dates in case of firm, its partners and spouse of partner governed by Portuguese Civil Code shall be as under:

Person	Firm is not liable for audit	Firm is liable for audit	Firm is liable for TP Audit
Firm	31^st July	31^st October	30^th November
Partner of Firm	31^st July	31^st October	30^th November
Spouse of Partner governed by Portuguese Civil Code	31^st July	31^st October	30^th November

Due date for filing of belated and revised ITR

If a return of income is not filed on or before the specified due date, it is regarded as a belated return. Further, the taxpayer has an option to revise a return to correct any error or omission in the original return. An assessee may file a revised or belated return for any previous year at any time before the expiry of the relevant assessment year or before completion of the assessment, whichever is earlier. Thus, as per the existing provisions, the last date to file the revised or belated return is 31^st March of the relevant Assessment Year.

The Finance Bill, 2021 proposed amendments to Section 139(4) and 139(5), with effect from the assessment year 2021-22, to provide that the belated and revised return can be filed at any time within three months prior to the end of the relevant assessment year or before completion of the assessment, whichever is earlier.

The Finance Bill (Lok Sabha) has redrafted the wordings of the proposed amendment although the intent remains the same. Now, it has been provided that the belated and revised return can be filed before three months prior to the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

Thus, pursuant to the amendment, a belated and revised return in respect of assessment year 2021-22 and subsequent assessment years can be filed up to 31^st December of that assessment year.

New scheme of Re-Assessment

15.1 Changes proposed by the Finance Bill, 2021

The Finance Bill, 2021 proposes a new re-assessment procedure for an income which has escaped the assessment and in search and seizure cases. The Explanatory Memorandum stated that the new scheme of assessment would result in less litigation and would provide ease of doing business to the taxpayers. The Finance Bill substituted existing Sections 147, 148, 149 and 151 and inserted a new section 148A making a complete change in the assessment proceedings relating to income escaping assessment and search-related cases. Consequential amendments have also been proposed to Section 151A, 153A and 153C.

The new Section 147 provides that the Assessing Officer can make the re-assessment of an income escaping assessment if the following conditions are satisfied:

Any income chargeable to tax has escaped assessment for any assessment year; and
The assessing officer follows the provisions of sections 148 to 153.

If the above conditions are satisfied, the assessing officer can assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year. It is imperative to note that in view of Explanation to Section 147 the Assessing Officer can assess or reassess all those incomes which have escaped assessment and which come to his notice subsequently in the course of such proceeding notwithstanding that the procedure prescribed in section 148A was not followed before issuing such notice for such income.

15.2 Power to assess or reassess for assessment or reassessment or recomputation

The Finance Bill (Lok Sabha) has also covered ‘recomputation’ within the scope of the said Explanation to Section 147. Thus, the Assessing Officer for the purpose of assessment or reassessment or recomputation can assess or reassess all those incomes which have escaped assessment and which come to his notice subsequently in the course of such proceeding notwithstanding that the procedure prescribed in Section 148A was not followed before issuing such notice for such income.

15.3 Information suggests income escaping in case of Survey

The new scheme of reassessment proposes that the Assessing Officer can initiate the proceedings if he has the information which suggests that some income has escaped the assessment. Explanation 1 and 2 of the proposed Section 148 define the situation in which an assessing officer shall be deemed to have the information which suggests that the income chargeable to tax has escaped the assessment.

Explanation 2 applies in the case of search, survey or requisition of books, documents or other assets. Explanation 1 applies in other cases.

In search, survey or requisition cases initiated or made or conducted, on or after 01-04-2021, it shall be deemed that the Assessing Officer has information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the 3 assessment years immediately preceding the assessment year relevant to the previous year in the following cases:

A search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A, on or after the 01-04-2021, in the case of the assessee;
A survey is conducted under section 133A in the case of the assessee;
The Assessing Officer is satisfied, with the prior approval of PCIT or CIT, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned in case of any other person on or after the 01-04-20201, belongs to the assessee; or
The Assessing Officer is satisfied, with the prior approval of PCIT or CIT, that any books of account or documents, seized or requisitioned in case of any other person on or after 01-04-2021, pertains or pertain to, or any information contained therein, relate to, the assessee.

The Finance Bill (Lok Sabha) has excluded the survey under Section 133A(2A) and Section 133A(5) from the scope (point (b) mentioned above). Therefore, in the following surveys conducted under Section 133A, it shall not be deemed that the Assessing Officer has information which suggests that the income chargeable to tax has escaped assessment.

Survey for verifying that tax has been deducted or collected at source in accordance with the provisions of sub-heading B of Chapter XVII or under sub-heading BB of Chapter XVII.
Survey at any function, ceremony or event where, having regard to the nature and scale of expenditure incurred by an assessee.

In other words, the assessing officer cannot initiate re-assessment proceedings merely based on the survey conducted in the above two cases.

15.4 Information suggesting escapement of income in case of Requisition

The Finance Bill, 2021 proposed that it shall be deemed that the Assessing Officer has the information which suggests that some income has escaped the assessment where the Assessing Officer is satisfied, with the prior approval of PCIT or CIT, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned in case of any other person on or after the 01-04-20201, belongs to the assessee.

The Finance Bill (Lok Sabha) has provided that this deeming fiction shall apply only in the case of requisition under Section 132 or Section 132A. Therefore, in case of any unauthorized requisition it shall not be deemed that the Assessing Officer has the information which suggests that some income has escaped the assessment.

15.5 Meaning of ‘Asset’ representing the income escaping assessment

The Finance Bill 2021 proposes the following time-limit for issuance of notice under Section 148 for re-assessment under Section 147.

Particulars	Time Limit

In General	No notice shall be issued if 3 years have elapsed from the end of the relevant assessment year.
Where the Assessing Officer has evidence in his possession which reveals that the income escaping assessment, represented in the form of asset, amounts to or is likely to amount to Rs. 50 lakhs or more.	Notice can be issued beyond a period of 3 years but not beyond the period of 10 years from the end of the relevant assessment year.

The Finance Bill (Lok Sabha) has inserted an Explanation to new Section 149(1) to define the meaning of Asset. For this purpose, the asset shall include the following:

Immovable property, being land or building or both;
Shares and Securities;
Loans and Advances;
Deposits in Bank Account.

Thus, the notice can be issued up to 10 years if the Assessing Officer has evidence in his possession which reveals that the income escaping assessment, represented in the form of any asset, amounts to or is likely to amount to Rs. 50 lakhs or more. The income escaping assessment may be represented by any immovable property, shares, securities, loans, advances, bank balance, sundry debtors, jewellery, cash-in-hand, stock-in-trade, paintings, other investments, etc.

15.6 Exclusion of Time limit for Completion of Assessment

While computing the period allowed for completion of assessment or reassessment, certain time periods are excluded. Where assessee approaches the Authority for Advance Ruling, the period to be excluded from the limitation period shall commence from the date on which an application is made before the AAR and end with the date on which the order rejecting such application or the Advance Ruling, as the case may be, is received by Principal CIT or CIT.

The Finance Bill, 2021 proposed that the Authority for Advance Rulings shall cease to operate with effect from such date, as may be notified by the Central Government in the Official Gazette. The Central Government has been empowered to constitute one or more Board for Advance Rulings for giving advance rulings on and after the notified date.

The Finance Bill (Lok Sabha) has made consequential amendments to make the reference of Board for Advance Rulings along with the Authority for Advance Rulings in Section 153. Therefore, while computing the period of limitation, the period to be excluded from the limitation period shall commence from the date on which an application is made before the AAR or Board for Advance Rulings and end with the date on which the order rejecting such application or the Advance Ruling, as the case may be, is received by Principal CIT or CIT. Similar amendments have been made to Section 153B (time-limit for completion of assessment in search or requisition cases).

15.7 Time-limit for completion of assessment on withdrawal of application filed before settlement commission

The Finance Bill, 2021 proposed to discontinue the Income-tax Settlement Commission (‘ITSC’) with effect from 01-02-2021. It has been proposed to constitute an Interim board for settlement of cases pending with the Settlement Commission.

The assessee (who had filed an application with the settlement commission) has the option to withdraw such application within 3 months from the date of commencement of the Finance Act, 2021. If not withdrawn, the application will be deemed to be received by the Interim Board on the date on which the application was allotted by the Board.

The Finance Bill (Lok Sabha) has inserted fourth proviso after Explanation 1 to Section 153 to provide that if the assessee has exercised the option to withdraw the application filed before Settlement Commission, the period of limitation available to the assessing officer for making an assessment, reassessment or recomputation after the excluded time shall not be less than one year. If such period of limitation is less than one year, it shall be deemed to have been extended to one year.

Similar amendments have been made to Section 153B (time-limit for completion of assessment in search or requisition cases). In such cases, the period shall stand extended to a minimum one year where assessee has exercised the option to withdraw the application filed before the Settlement Commission.

This amendment shall also apply for determining the period of limitation in the following sections:

For determination the period of limitation for issue of notice for re-assessment under Section 149;
For filing of application for rectification of mistake apparent from record under Section 154;
For other amendments as specified in Section 155;
For payment of interest on refund under Section 244A.

Pending Applications before AAR

The Finance Bill, 2021 proposed that the Authority for Advance Rulings shall cease to operate with effect from such date, as may be notified by the Central Government in the Official Gazette. The Central Government has been empowered to constitute one or more Board for Advance Rulings for giving advance rulings on and after the notified date. Every such Board shall consist of two members, each being an officer not below the rank of Chief Commissioner.

The Finance Bill, 2021 also proposed to amend Section 245Q (which deals with filing of application) that the application pending with the Authority, in respect of which order under section 245R(2) or section 245R(4) has not been passed before the notified date, shall be transferred to the Board for Advance Rulings along with all records, documents or material, by whatever name called and shall be deemed to be the records before the Board for all purposes.

The Finance Bill (Lok Sabha) changed the reference from application filed under this Section to under this Chapter. Therefore, if any application is pending under Chapter XIX-B of the Income-tax Act in respect of which order under section 245R(2) or section 245R(4) has not been passed before the notified date shall be transferred to the Board for Advance Rulings.
Scope of investment extended for exemption under Section 10(23FE)

17.1 Introduction

To encourage investments by Sovereign Wealth Fund (SWF) and Pension Fund (PF) into infrastructure sector of India, the Finance Act, 2020, has inserted clause (23FE) to Section 10 to provide an exemption from the income in the nature of dividend, interest or long-term capital gains arising from an investment made in India. This exemption was allowable subject to fulfilment of various conditions. One of such conditions provide that the specified person should invest in a Category-I or Category-II Alternative Investment Fund regulated under the SEBI (Alternative Investment Fund) Regulations, 2012 having 100% investment in one or more of the company or enterprise carrying on the business of developing, or operating and maintaining, or developing, operating and maintaining any infrastructure facility as defined in the Explanation to Section 80-IA(4)(i).

17.2 Amendment by Finance Bill, 2021

The Finance Bill, 2021 has proposed the following changes to section 10(23FE) with respect to types of eligible investments by the specified persons for claiming exemption under such section:
1. Presently, SWF/PFs are not allowed to invest through holding company. It is proposed to allow the same through a domestic holding company of an infrastructure company if the prescribed conditions are fulfilled;
2. Presently, SWF/PFs are not allowed to invest in NBFC-IFC/IDF. It is proposed to allow the same if the prescribed conditions are fulfilled.
Currently the exemption could be availed only if the investment is made in Category I or II AIF having 100% investment in the Infrastructure companies. The Finance Bill, 2020, has proposed to relax this condition to reduce the holding limit for Category-I or Category-II AIFs from 100% to 50%. Further, it is proposed to allow these AIFs to invest in an Infrastructure Investment Trust (InvIT) in addition to these entities specified under Section 80-IA(4)(i) or notified entities.

17.3 Amendment by the Finance Bill (Lok Sabha)

The Finance Bill (Lok Sabha) has extended the relaxation with respect to further investment by the Category I or II AIF in any of the following entities:
1. A domestic holding company registered on or after 01-04-2021 having a minimum 75% investments in one or more infrastructure companies; or
2. A NBFC-IDF/IFC having minimum 90% lending to one or more infrastructure entities.
Further, the amendment has been made to provide that exemption under this clause shall be calculated proportionately if the aggregate investment of holding company in Infrastructure Company or companies or NBFC-IDF/IFC is less than 100%.
Income of a non-resident from leasing of aircraft to a unit of an IFSC [Section 10(4F)]

[Applicable from Assessment Year 2022-23]

The Finance Bill, 2021 has proposed to insert Section 10(4F) to provide exemption in respect of income of a non-resident by way of royalty on account of leasing of an aircraft to a unit located in an International Financial Services Centre (IFSC). The exemption is proposed to be allowed only when the following condition are satisfied:
1. The unit of IFSC should be eligible for deduction under Section 80LA for the previous year in which aircraft is leased; and
2. The operations of the unit of IFSC must be commenced on or before 31-03-2024.
The Finance Bill (Lok Sabha) has made the following changes to the said section:

18.1 Exemption shall be available for both operating and finance lease charges

A lease is an agreement whereby the lessor conveys the right to use an asset to the lessee for an agreed period. For conveying such rights, the lessor may receive lumpsum payment or series of payments from lessee (‘lease payment’). The nature of lease payment depends upon the lease agreement. It may be in the form of royalty or rent. Further, in case of finance lease where the lessee acquires the economic benefits of the use of the leased asset for the major part of its economic life, the lease payment may also be in the form of interest charged on the fair value of asset.

Thus, considering the fact that the income from leasing may also be in the nature of interest, section 10(4F) is suitably amended to provide exemption in respect of interest income arising to a non-resident on account of leasing of aircraft to a unit of an IFSC.

18.2 Condition of ‘Unit of IFSC to be eligible for deduction under section 80LA’ is removed

The condition that the unit of IFSC should be eligible for deduction under Section 80LA for the previous year in which aircraft is leased has been removed. Thus, a non-resident shall be able to claim exemption under section 10(4F) even if the aircraft is leased to a unit of an IFSC which is not eligible for deduction under Section 80LA.

18.3 Meaning of ‘aircraft’ is defined

An Explanation has been inserted to Section 10(4F) to define the meaning of aircraft. It provides that the ‘aircraft’ means an aircraft or a helicopter, or an engine of an aircraft or a helicopter, or any part thereof.
Exemption to be available to non-resident investors and Category-III AIF [Section 10(23FF)]

[Applicable from Assessment Year 2022-23]

The Finance Bill, 2021 proposes to insert two new clauses (viiac) and (viiad) to Section 47. Clause (viiac) provides that any transfer of capital asset by a foreign investment fund (‘original fund’) to a fund located in IFSC (‘resultant fund’) in pursuance of its relocation to such IFSC, is not regarded as transfer for the purpose of computing capital gain. Similarly, clause (viiad) provides that transfer of shares, unit or interest held by an investor in original fund in consideration of share, unit or interest in resultant fund is also not regarded as transfer.

Section 56(2)(x) provides for the taxability under the head other sources if any property is received by any person without or for inadequate consideration. This provision has also been proposed to be amended to exclude the transfer of property made in relation to relocation of foreign investment fund to IFSC. Thus, no taxability shall arise even in the hands of resultant fund on receipt of capital asset from the original fund.

The expressions “original Fund”, “relocation” and “resultant fund” are defined under an explanation to clauses (viiac) and (viiad) of section 47.

Here, it is to be noted that the relocation of foreign investment fund to IFSC is treated as a tax neutral transaction. However, when the resultant fund subsequently transfers the capital asset received from the original fund, it shall be regarded as transfer unless provided otherwise and, accordingly, capital gain arising from such transfer shall be chargeable to tax.

The resultant fund is required to be registered as Alternative Investment Fund (AIF) with SEBI. AIFs (except Category-III AIF) are provided pass-through status under the Income-tax Act whereby they can pass their income (except income chargeable under the head business or profession) to their investors without paying tax thereon and, consequently, such income is chargeable to tax in the hands of the investors.

As resultant fund is required to be incorporated and registered as AIF in India, its world-wide income is taxable in India. Whereas the taxability of foreign investment fund in India depends upon various factors such as its country of residence, nature of investment in India, place of business in India, provisions of double taxation avoidance agreement (DTAA) etc. Thus, it is possible that the foreign investment fund would not have been chargeable to tax in India if it had not been relocated to India. Thus, to provide relief in such cases, a new section 10(23FF) is also proposed to be inserted to provide exemption in respect of income in the nature of capital gains, arising or received by a non-resident, which is on account of transfer of share of a company resident in India by the resultant fund and such shares were transferred from the original fund to the resultant fund in relocation, if capital gains on such shares were not chargeable to tax had that relocation not taken place.

The exemption under section 10(23FF) is proposed to be provided to non-resident investors of the resultant fund and not to the resultant fund itself. Thus, where the resultant fund is registered as category-III AIF, the taxability may arise in its hands because Category-III AIF is not recognized as pass-through entity under the Income-tax Act. Considering this fact, the Finance Bill (Lok Sabha) has made changes to Section 10(23FF) to provide exemption to Category-III AIF as well. However, Category-III AIF shall be entitled for the exemption only when it falls under the definition of specified fund as defined under clause (c) of the Explanation to section 10(4D). Further, the exemption shall be available only to the extent of income attributable to units held by non-resident (not being a permanent establishment of a non-resident in India) in such specified fund.

Further, it is provided that Section 10(23FF) shall apply even in cases the resultant fund received the shares of a company resident in India from wholly owned special purpose vehicle of the original fund. Consequential amendment is made to the definition of ‘relocation’ as defined under Explanation to Clause (viiac) and Clause (viiad) of Section 47. The meaning of ‘resultant fund’ is also amended to provide that it can also be regulated under the International Financial Services Centres Authority Act, 2019.
Taxation of Income from GDRs issued by Overseas Depository Bank situated outside India or IFSC [Section 115ACA]

[Applicable from Assessment Year 2022-23]

Where an Indian company or its subsidiary, engaged in information technology, entertainment, pharmaceutical or biotechnology industry, distributes dividend in respect of Global Depository Receipts (GDRs) issued to its employees under an Employees’ Stock Option Scheme, the dividend is taxable at a concessional tax rate of 10% under Section 115ACA in the hands of the employee provided he is a resident in India and GDRs are purchased by him in foreign currency. Further, the long-term capital gain arising from transfer of such GDRs shall also be taxable at concessional rate of 10%.

The GDR for this purpose is defined under clause (a) of the Explanation to said section to mean any instrument in the form of a depository receipt or certificate (by whatever name called) created by the Overseas Depository Bank outside India and issued to investors against the issue of:
1. ordinary shares of issuing company, being a company listed on a recognised stock exchange in India; or
2. foreign currency convertible bonds of issuing company.
The Finance Bill (Lok Sabha) has amended the definition of GDRs to provide that they can be created by the Overseas Depository Bank in an International Financial Services Centre (IFSC) as well. Further, GDRs can also be issued against the issue of ordinary shares of issuing company, being a company incorporated outside India, if such depository receipt or certificate is listed and traded on any IFSC.

IFSC is also defined to provide that it shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zone Act, 2005.
Regulations applicable in case of Category-I and Category-II AIFs [Section 115UB]

[Applicable from Assessment Year 2022-23]

Category-I and Category-II Alternative Investment Funds (AIFs) are provided pass-through status under the Income-tax Act as per Section 115UB read with Section 10(23FBA) and Section 10(23FBB). The pass-through entitles pass their income (except income chargeable under the head business or profession) to their investors without paying tax thereon and, consequently, such income is chargeable to tax in the hands of the investors. Currently, section 115UB provides that AIFs should be registered with SEBI and regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012.

However, where AIF is located in an International Financial Services Centre (IFSC), it is regulated under the International Financial Services Centres Authority Act, 2019. Thus, considering the same, the Finance Bill (Lok Sabha) has made an amendment to Section 115UB to provide that Category-I and Category-II AIF can also be regulated under the said Act.
Transaction not regarded as transfer

22.1 Transfer of capital asset by Indian Infra Finance Co. to an Institution established for financing infrastructure and development (Section 47(viiae)

The Finance Bill (Lok Sabha) has inserted a new clause (viiae) to Section 47 to provide that any transfer of a capital asset by Indian Infrastructure Finance Company Limited to institution established for financing infrastructure and development, set up under an Act of Parliament and notified by the Central Government, shall not be regarded as transfer.

The consequential amendments have also been made to Section 49 to provide that the cost of a capital asset in the hands of the transferee shall be the same as in the hands of the transferor. Further, Section 56(2)(x) is also amended that this provision shall not apply in respect of transfer referred to in Section 47(viiae).

22.2 Transfer of capital asset under a plan approved by Central government (Section 47(viiaf)

The Finance Bill (Lok Sabha) has inserted a new clause (viiaf) to Section 47 to provide that any transfer of a capital asset by a public sector company to another notified public sector company, Central Government or State Government shall not be regarded as transfer. Such transfer must be under a plan approved by the Central Government.

The consequential amendments have also been made to Section 49 to provide that the cost of a capital asset in the hands of the transferee shall be the same as in the hands of the transferor. Further, Section 56(2)(x) is also amended that this provision shall not apply in respect of transfer referred to in Section 47(viiaf).
Performance of functions of Verification Unit

The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 inserted a new Section 144B, to provide the manner in which faceless assessment under Section 143(3) and best judgment assessment under Section 144 shall be conducted.

The CBDT has been authorised to set up the following centres and units by specifying their respective jurisdiction.
1. National Faceless Assessment Centre (NFAC);
2. Regional Faceless Assessment Centres (RFAC);
3. Assessment Units (AU);
4. Verification Units (VU);
5. Technical Units (TU); and
6. Review Units (RU).
The Verification Unit shall perform the function of verification, which includes enquiry, cross verification, examination of books of accounts, examination of witnesses and recording of statements, and such other functions as may be required for the purposes of verification.

The Finance Bill 2021 (Lok Sabha) has provided that the function of verification unit under this section may also be performed by a verification unit located in any other faceless centre set up under the provisions of this Act or under any scheme notified under the provisions of this Act. The request for verification may also be assigned by the National Faceless assessment centre to such verification unit.
Investment division of offshore banking unit to be registered as Category-I FPI and not as category-III AIF [Section 10(4D) and 115AD]

[Applicable from Assessment Year 2022-23]

The Finance Bill, 2021, has proposed to amend the definition of specified fund as provided under section 10(4D) to extend the benefit of exemption of this section to the investment division of offshore banking unit. The ‘investment division of offshore banking unit’ has been proposed to be defined as a unit which has been:
1. granted a certificate of registration as a Category-III AIF and is regulated under the SEBI (AIF) Regulations, 2012, made under the SEBI Act, 1992 or which has commenced its operations on or before the 31-03-2024; and
2. fulfils such conditions including maintenance of separate accounts for its investment division, as may be prescribed.
Corresponding amendment has also been proposed to Section 115AD for extending the benefit of concessional tax rate prescribed under that section to investment division of offshore banking unit. However, said unit was defined under Section 115AD as a unit registered as Category-III FPI under the SEBI (FPI) Regulations, 2019 made under the SEBI Act, 1992.

Under the SEBI (FPI) Regulations, 2019, FPIs can be registered under 2 categories only – Category-I FPIs and Category-II FPIs. Thus, reference of Category-III FPI under section 115AD was inadvertently made.

Now, the Finance Bill (Lok Sabha) has amended the definition of ‘investment division of offshore banking unit’ to provide that it should be granted registration as a Category-I Foreign Portfolio Investor under the SEBI (FPI) Regulations, 2019. Thus, instead of taking registration as Category-III AIF under SEBI (AIF) Regulations, 2012, it shall be required to take registration as Category-I FPI. This amendment is made both to section 10(4D) and section 115AD.

Further, specified funds as defined under Section 10(4D) includes a fund established or incorporated in India in the form of a trust or a company or a LLP or a body corporate:
1. Which has been granted a certificate of registration as a Category III AIF and is regulated under the SEBI (AIF) Regulations, 2012, made under the SEBI Act, 1992;
2. Which is located in any International Financial Services Centre (IFSC);
3. Entire units of which are held by non-residents other than unit held by a sponsor or manager.
The Finance Bill (Lok Sabha) has amended the aforesaid definition to provide that such fund can also be regulated under International Financial Service Centres Authority Act, 2019.
Curative amendments under section 115AD

The Finance Bill, 2021, has proposed to amend the definition of specified fund provided under Section 10(4D) to include Investment division of offshore banking unit within its ambit. Consequently, Section 115AD has also been proposed to be amended to extend the benefit of concessional tax rates prescribed therein to such investment division of offshore banking unit. The proposed amendment has specifically inserted words “investment division of an offshore banking unit” after specified fund, whereas such investment unit were already covered within the meaning of specified fund by virtue of amendment proposed to Section 10(4D). To remove this error, the Finance Bill (Lok Sabha) has removed the reference of the ‘investment division of offshore banking unit’ wherever provided before the expression ‘specified fund’ under 115AD.

The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (‘Amendment Act, 2020) substituted clause (i) of section 115AD(1) which provides for concessional tax rates on income from securities held by FPIs with effect from Assessment Year 2021-22 to provide tax rate in case of specified fund as defined under Section 10(4D). Before the said amendment, clause (i) of section 115AD(1) used to have a Proviso which provides for further concessional tax rate of 5% in respect of securities covered under section 194LD. But, in the clause (i) (as substituted by the Amendment Act, 2020), the said proviso was missing. Thus, there was no clarity whether such proviso would continue to be applicable or not after substitution of clause (i).

To clarify this issue, the CBDT issued a press release dated 17-03-2021 and provided that such proviso shall continue to be applicable. Consequentially, the Finance Bill (Lok Sabha) has now made necessary amendment under the Amendment Act, 2020 and inserted the said proviso under the substituted clause (i) itself with effect from Assessment Year 2021-22.
Changes to Indian Stamp Act

26.1 Introduction

As per the provisions contained under the Indian Stamp Act, 1899 stamp duty is payable on execution of transaction or the instrument. Stamp duty is levied on specified transactions at the rates specified by various Stamps Acts which includes Central and State Acts.

26.2 Amendment by Finance Bill, 2021

The Finance Bill, 2021 proposed to amend various sections to make the reconstruction or splitting up of a public sector company into separate companies a tax neutral transaction. The Finance Bill, 2021 has also proposed that such splitting up or reconstruction shall be regarded as demerger under Section 2(19AA) provided various conditions are satisfied. In addition to this, set off and carry forward of losses would be allowed if proposed conditions under section 72AA are complied with.

India Stamp Act, 1899 has also been proposed to be amended that stamp duty will not be levied if the following conditions were satisfied:
1. There is an instrument for conveyance or transfer of a business or asset or right in any immovable property;
2. Transfer is made from a Government company, its subsidiary, unit or joint venture, to another Government company or to the Central Government or any State Government;
3. Reconstruction was done by way of:
  - Strategic sale;
  - Disinvestment;
  - Demerger; or
  - Any other scheme of arrangement.
26.3 Amendment by the Finance Bill (Lok Sabha)

The Finance Bill (Lok Sabha) has amended the Indian Stamp Act, 1899 to extend the waiver of the stamp duty even if transfer is made to the development financial institution established by any law made by the parliament.

Further, the Stamp duty will not be charged under the Act if the Government companies under the following stages are transferred to another Government Company or to the Central Govt. or the State Govt.:
1. Winding up;
2. Closing;
3. Striking-off;
4. Liquidation; or
5. Shut down.

[1] https://m.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=387#1

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One thought on “Taxmann’s analysis of changes made in the Finance Bill, 2021 as passed by the Lok Sabha”

CA ISHAN ASLOT says:

April 21, 2021 at 3:53 pm

As per para 1.2-2 line 2, you have mentioned “any profit and gains arising from deemed transfer of stock-in-trade shall be deemed to be income of the partner of the year in…”. I have question whether here deemed income is of the partner or the partnership firm ?

Thank You.

Reply

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The statutory material is obtained only from the authorized and reliable sources
All the latest developments in the judicial and legislative fields are covered
Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
Every content published by Taxmann is complete, accurate and lucid
All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
The golden rules of grammar, style and consistency are thoroughly followed
Font and size that's easy to read and remain consistent across all imprint and digital publications are applied

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Taxmann’s analysis of changes made in the Finance Bill, 2021 as passed by the Lok Sabha

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Tax on transfer of money or property by a firm/AOP/BOI to its partners or members [Section 9B, Section 45(4) and Section 48]

1.1 Meaning of certain terms

1.2 Income on receipt of capital asset or stock in trade by a partner from a firm [Section 9B]

1.2-1 Distribution of stock or capital asset by a firm to its partner is deemed as transfer

1.2-2 How to compute the gains arising from deemed transfer of stock-in-trade?

1.2-3 How to compute the gains arising from deemed transfer of capital asset?

1.3 Tax on receipt of money or capital asset by partner in connection with reconstitution of firm [Section 45(4)]

1.3-1 Analysis of section 45(4)

1.3-2 Section 45(4) v. Section 9B

1.4 Mode of computation of capital gain [Section 48]

Goodwill forming part of existing block of assets to be reduced from WDV

2.1 Background

2.2 Amendment Proposed by the Finance Bill, 2021

2.2-1 Amendment to Section 2(11)

2.2-2 Amendment to Section 32(1)

2.2-3 Amendment to Section 50

2.2-4 Amendment to Section 55

2.3 Ambiguity in the Bill

2.4 Clarity in the Finance Bill (Lok Sabha)

FMV of capital assets transferred under slump sale to be calculated in prescribed manner

3.1 Introduction

3.2 Amendment by the Finance Bill (Lok Sabha)

3.3 Impact of the Amendment

3.3-1 Tax implications in hands of seller

3.3-2 Tax implications in hands of buyer

Tax on Interest earned on PF contribution exceeding Rs. 2.50 Lakhs or Rs. 5 Lakhs

Tax Audit: Transaction settled by way of a non-account payee cheque/draft is a cash transaction

HUF is also not eligible for presumptive taxation scheme under section 44ADA

Fee for default in furnishing return of income

Fee for default in linking Aadhaar and PAN

No re-computation of past year’s book profit if MAT credit has been utilised

Tax on ULIPs

10.1 Introduction

10.2 Amendment by the Finance Bill, 2021

10.3 Amendment by the Finance Bill (Lok Sabha)

Definition of ‘Liable to tax’ rephrased

No tax on income of ‘DFI’ and ‘Institution’ established for financing infrastructure and development

12.1 Exemption to Financial Institution [Section 10(48D)]

12.2 Exemption to DFI [Section 10(48E)]

Due date to file return of income by the spouse of a partner

Due date for filing of belated and revised ITR

New scheme of Re-Assessment

15.1 Changes proposed by the Finance Bill, 2021

15.2 Power to assess or reassess for assessment or reassessment or recomputation

15.3 Information suggests income escaping in case of Survey

15.4 Information suggesting escapement of income in case of Requisition

15.5 Meaning of ‘Asset’ representing the income escaping assessment

15.6 Exclusion of Time limit for Completion of Assessment

15.7 Time-limit for completion of assessment on withdrawal of application filed before settlement commission

Pending Applications before AAR

Scope of investment extended for exemption under Section 10(23FE)

17.1 Introduction

17.2 Amendment by Finance Bill, 2021

17.3 Amendment by the Finance Bill (Lok Sabha)

Income of a non-resident from leasing of aircraft to a unit of an IFSC [Section 10(4F)]

18.1 Exemption shall be available for both operating and finance lease charges

18.2 Condition of ‘Unit of IFSC to be eligible for deduction under section 80LA’ is removed

18.3 Meaning of ‘aircraft’ is defined

Exemption to be available to non-resident investors and Category-III AIF [Section 10(23FF)]

Taxation of Income from GDRs issued by Overseas Depository Bank situated outside India or IFSC [Section 115ACA]

Regulations applicable in case of Category-I and Category-II AIFs [Section 115UB]

Transaction not regarded as transfer

22.1 Transfer of capital asset by Indian Infra Finance Co. to an Institution established for financing infrastructure and development (Section 47(viiae)

22.2 Transfer of capital asset under a plan approved by Central government (Section 47(viiaf)

Performance of functions of Verification Unit

Investment division of offshore banking unit to be registered as Category-I FPI and not as category-III AIF [Section 10(4D) and 115AD]

Curative amendments under section 115AD

Changes to Indian Stamp Act

26.1 Introduction

26.2 Amendment by Finance Bill, 2021

26.3 Amendment by the Finance Bill (Lok Sabha)

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