India Budget Highlights Finance Bill, 2021

INDIA BUDGET HIGHLIGHTS
FINANCE BILL, 2021

RATES OF TAXES
PERSONAL TAXATION
Corporate
Taxation
Domestic Company
MSME
Non -
(TO < 400 Cr MSME
in FY 2019-20)
TI < TI b/w TI > TI < TI b/w

Rs. 1 TI > Rs.
Rs. 1 Rs. 1 Cr Rs. 10 Rs. 1 Cr
10 Cr
Cr to 10 Cr Cr to 10 Cr
Cr
26.00 27.82 29.12 31.20 33.38 34.94

% % % % % %
SURCHARGE
Domestic Foreign
Companies Companies
TI < TI b/w TI > TI < TI b/w

Rs. 1 TI > Rs.
Rs. 1 Rs. 1 Cr Rs. 10 Rs. 1 Cr
10 Cr
Cr to 10 Cr Cr to 10 Cr
Cr
NIL 7% 12% NIL 2% 5%

CORPORATE TAX
RATES
Foreign Companies
TI < Rs. 1 Cr TI b/w Rs. 1 Cr to 10 Cr TI > Rs. 10 Cr
41.60% 42.43% 43.68%

MAT RATE
Domestic Foreign
Companies Companies
Book Book Book Book Book Book

profit profit b/w profit profit profit profit
Rs. 1 Cr b/w Rs.
< Rs. 1 > Rs. 10 < Rs. 1 > Rs. 10
Cr to 10 Cr 1 Cr to 10
Cr Cr Cr
Cr
15.6% 16.69% 17.47% 15.6% 15.91% 16.38%

Domestic
Company
S. 115BAA S. 115BAB
No MAT
Tax 22% Tax 15%

SC 10% SC 10%
Flat SC without initial
Cess 4% Cess 4% limit of Rs.1 CR
25.17% 17.16%
SECTION 115BA
 WREF 1.4.17 [PY 16-17]
 Sec 115BA was introduced by FA 2016 wef 1.4.17 [AY 17-18]
 Sec 115BA provides optional lower tax of 25% subject to satisfying

certain conditions
 Sec 115BA applies only to a company and to the business of

manufacturing, production, research or distribution referred to therein;
[and no other business]
 Sec 115BA is subject to other sections in Chapter XII providing for

lower rate than 25% [Lower rates found in sections 115BBD, 112A,
115BBF]
SUMMARY OF DOMESTIC CORPORATE TAX RATES
Particulars Domestic Domestic Domestic Domestic Domestic
Company Company Company Company Company
Non-MSME or MSME <= Sec 115BA Sec 115BAA Sec 115BAB
MSME > 400 400 Cr
Cr
Tax 30 25 25 22 15/22/30
Surcharge: Nil Nil Nil 10 10
a) Up to 1Cr
b) 1Cr to 10 Cr 5 5 5 10 10
c) Above 10 Cr 7 7 7 10 10
MAT 15 15 15 Nil Nil
Chapter VIA deductions Full Full 80JJAA 80JJAA / 80JJAA
80LA
Personal
Taxation
TAX SLAB: INDIVIDUAL (MALE/FEMALE) BELOW 60
YEARS OF AGE
Income Tax rate

Income upto Rs. 2,50,000/- NIL
Income from Rs. 2,50,001/- to Rs. 5,00,000/- 5%
Above Rs. 10,00,000/- 30%
TAX SLAB: INDIVIDUAL (MALE/FEMALE) 60 YEARS OF
AGE OR MORE BUT BELOW 80 YEARS
Income Tax rate

Above Rs. 10,00,000/- 30%
TAX SLAB: INDIVIDUAL (MALE/FEMALE) 80 YEARS AND
ABOVE
Income Tax rate

Above Rs. 10,00,000/- 30%
SURCHARGE
Income Rate
Income of Rs. 50 Lakhs > Rs. 1 Crore 10%
(including CG u/s. 111A &112A)
Income of Rs. 1 Crore > Rs. 2 Crore 15%
Income of Rs. 2 Crores > Rs. 5 Crores 25%
(Excluding CG u/s. 111A &112A)
Income of Rs. 5 Crores > 37%
Income of Rs. 2 Crore > 15%
EFFECTIVE RATE
Income Rate
Income of Rs. 50 Lakhs > Rs. 1 Crore 34.32%
Income of Rs. 1 Crore > Rs. 2 Crore 35.88%
Income of Rs. 2 Crores > Rs. 5 Crores 39.00%
Income of Rs. 5 Crores > 42.74%
Income of Rs. 2 Crore > 35.88%
SECTION 115BAC- TAX ON INCOME OF INDIVIDUALS AND
HINDU UNDIVIDED FAMILY
Sl. No. Total Income Rate of tax

(1) (2) (3)
1. Upto Rs 2,50,000 Nil
2. From Rs 2,50,001 to Rs 5,00,000 5 per cent.
7. Above Rs 15,00,000 30 per cent.:
PERSONAL TAXATION
PERSONAL TAXATION
EXEMPTION FOR LEAVE TRAVEL CONCESSION
– CASH SCHEME
SECTION 10(5)
2ND PROVISO TO SECTION 10(5)
EXEMPTION FOR LTC – CASH SCHEME
5. In section 10 of the Income-tax Act,––
(b) in clause (5),––
(i) after the proviso and before the Explanation, the following proviso shall be inserted, namely:––
“Provided further that for the assessment year beginning on the 1st day of April, 2021,
the value in lieu of any travel concession or assistance received by, or due to, such individual
shall also be exempt under this clause subject to the fulfillment of such conditions (including the
condition of incurring such amount of such expenditure within such period), as may be
prescribed.”;
EXPLANATION 2 TO SECTION 10(5)
EXEMPTION FOR LTC – CASH SCHEME
(ii) the Explanation shall be numbered as Explanation 1 thereof and after Explanation 1 as
so numbered, the following Explanation shall be inserted, namely:––
“Explanation 2.—For the removal of doubts, it is hereby clarified that
where an individual claims exemption and
the exemption is allowed under the second proviso in connection with the prescribed
expenditure,
no exemption shall be allowed under this clause in respect of such prescribed expenditure
to any other individual.”;
SECTION 10(5)
EXEMPTION FOR LTC – CASH SCHEME - APPLICABILITY
 W.r.e.f. 01.04.2021
 For AY 2021-22 only
 M: 15-16/NC: 5
 Newly Inserted
 Section 10(5) provides for exemption in respect of LTC received by or due to an

employee
SECTION 10(5) - COMMENTS
 Value in lieu of LTC/LTA is exempt.
 Proposed condition.
1.Employee opts for deemed LTC fare in lieu of LTC for block year 2018-21.
2.Exemption is lower of –
a) Rs. 36K per person; or
b) 1/3 rd of Specified Expenditure

3.SP = 12.10.2020 to 31.03.2021
4.SE
SE
Expenditure incurred by
Ind/Family members
During SP [12.10.2020 to 31.03.2020]
On goods/service liable to GST >= 12%
Procured from GST registered dealers
Consideration is paid by
cheque/draft/ECS etc
 Even if employee is eligible for higher benefit, exemption is limited to what is stated
above.
 Will it add to the number of journeys in the block?
 Office Memorandum for CG Employees No. 12(2)/2020 – EII (A) dt. 12.10.2020.
 Press Release dt. 29.10.2020 extending it to others.

UNIT LINKED INSURANCE POLICY
SECTIONS 2(14)(c), 10(10D), 45(1B), 112A
ULIP
2(14) 10(10D) 45 112A STT
1. 4 provisos 45(1B)
Clause Explanation
are added; inserted
[c] 2. Expl. 3 (a) amended
inserted defines
‘ULIP’
4TH PROVISO TO SECTION 10(10D)
(c) in clause (10D),––
(i) after the third proviso and before Explanation 1, the following provisos shall be inserted,
namely:––
“Provided also that nothing contained in this clause shall apply with respect to
any unit linked insurance policy, issued on or after the 1st day of February, 2021,
if the amount of premium payable for any of the previous year during the term of such policy
exceeds two lakh and fifty thousand rupees:

Provided also that if the premium is payable, by a person,
for more than one unit linked insurance policies, issued on or after the 1st day of February, 2021,
the provisions of this clause shall apply
only with respect to those unit linked insurance policies,
where the aggregate amount of premium
does not exceed the amount referred to in fourth proviso
in any of the previous year during the term of any of those policies:
Provided also that
the provisions of the fourth and fifth provisos
shall not apply
to any sum received
on the death of a person:

Provided also that
if any difficulty arises in giving effect to the provisions of this clause,
the Board may, with the previous approval of the Central Government,
issue guidelines for the purpose of removing the difficulty and
every guideline issued by the Board under this proviso
shall be laid before each House of Parliament, and
shall be binding on the income-tax authorities and the assessee.”;

EXPLANATION 3 TO SECTION 10(10D)
‘Explanation 3.— For the purposes of this clause, “unit linked insurance policy” means
a life insurance policy
which has components of both investment and insurance and
is linked to a unit
as defined in clause (ee) of regulation 3 of the Insurance Regulatory and Development

Authority of India (Unit Linked Insurance Products) Regulations, 2019
issued by the Insurance Regulatory and Development Authority under the Insurance Act, 1938
and the Insurance Regulatory and Development Authority Act, 1999.’;
4TH, 5TH, 6TH & 7TH PROVISOS TO SECTION 10(10D)
APPLICABILITY
 W.r.e.f. 01.04.2021
 From AY 2021-22 and subsequent years
 M: 58-59/NC: 5
 Newly Inserted
SECTION 10(10D) - COMMENTS
 No exemption for:
ULIP
Issued on/after 01.02.2021

if
Premium for any PY > Rs.
2.5 lakhs
 If more than 1 ULIPs are issued on/after 01.02.2021 – Exemption to apply to such
ULIPs where aggregate premium does not exceed Rs. 2.5 lakhs.
 NA to ULIP/ULIPs issued before 01.02.2021.
 In the case of aggregation, consider only those ULIPs issued on or after 01.02.2021.
 TDS under 194DA at 5%.
 Corresponding provisions- Secs 2(14), 45(1B), 112A & 111A.

SECTION 10(10D) – EXPLANATION 3
Investment component
ULIP LIP Linked as
unit
Insurance component
As defined in Regulation 3(ee) of IRDA (ULIP) Regulations, 2019 issued by

IRDA under Insurance Act, 1938 & IRDA Act, 1999
EXPLANATION 3: SECTION 10(10D)
DEFINITION OF ULIP
 Regulation 3(ee) of IRDA (ULI Products) Regulations, 2019:
 (ee) “Units” means a specific portion or part of the underlying

segregated Unit Linked fund which is representative of the
policyholder’s entitlement in such funds.
SECTION 10(10D) – SECURITY TRANSACTION TAX
STT is also provided – Sec 154 of FB [FA 2004]
Seller has to pay STT of 0.001%.

STT
FA 2004
Sec.98 Table
Entry 5A
Sale/surrender/redemption
0.001 on seller
4TH, 5TH, 6TH & 7TH TO SECTION 10(10D)
ANALYSIS
 Memorandum:
 High networth individuals are claiming benefit by investing in ULIP

with huge premium
 Object of Section 10(10D) is to provide benefit to small and genuine

cases of life insurance
ANALYSIS
 In case of more than one ULIP, no exemption if ULIPs are
 Issued on or after 01.02.2021
 Where the aggregate amount of premium
 Does not exceed Rs.2,50,000/- in any of the PY during the term of any of those polices
 Multiple policies-
P1- Rs. 1.5 lakhs

P2- Rs. 1.25 lakhs
P3- Rs. 1.00 lakhs
P4- Rs. 0.75 lakhs
ANALYSIS
 Exemption is available if any sum under ULIP
 Is received
 On death of a person
CAPITAL ASSET - SECTION 2(14)(c)
In section 2 of the Income-tax Act,––
(ii) in clause (14), after sub-clause (b), the following subclause shall be
inserted, namely:––
“(c) any unit linked insurance policy
to which exemption under clause (10D) of section 10 does not apply
on account of the applicability of the fourth and fifth proviso thereof;”;

ANALYSIS
 W.r.e.f. 01.04.2021
 From AY 2021-22 and subsequent years
 M: 58-59/NC: 3
 Newly Inserted
 ULIP falling under 4th & 5th Proviso to Section 10(10D) is regarded as a
capital asset
ANALYSIS
 Ravjibhai L Kakadia v. ACIT 2020-TIOL-1533-ITAT-MUM
 Property to be considered as a capital asset u/s 2(14) must be capable of

being transferred as defined u/s 2(47).
 life insurance policy is not a property which can be transferred in the

mode and manner prescribed u/s 2(47)
 Exemption/value of premium decides whether it is a capital asset or not –

illogical.
CAPITAL GAIN - SECTION 45(1B)
14. In section 45 of the Income-tax Act, after sub-section (1A), the following sub-section
shall be inserted, namely:––
‘(1B) Notwithstanding anything contained in sub-section (1),
where any person receives at any time during any previous year
any amount under a unit linked insurance policy,
to which exemption under clause (10D) of section 10 does not apply on account of the
applicability of the fourth and fifth proviso thereof,
including the amount allocated by way of bonus on such policy,

CAPITAL GAIN - SECTION 45(1B)
then, any profits or gains arising from receipt of such amount by such
person
shall be chargeable to income-tax under the head "Capital gains" and
shall be deemed to be the income of such person of the previous year in

which such amount was received and
the income taxable shall be calculated in such manner as may be

prescribed.’;
SECTION 45(1B)
CAPITAL GAIN – ULIP PROCEEDS
 M – 58 & 59/NC - 3
 W.r.e.f. 01.04.2021 [AY 2021-2022/PY 2020-2021
 Consequential amendment to Section 2(14) & Section 10(10D).
 Section 2(47) is not amended
 Profits & Gain from receipt of non exempt ULIP proceeds to be chargeable as Capital Gain
 Computation of Capital Gain shall be as per the Rule

EXPLANATION (a) TO SECTION 112A
EQUITY ORIENTED FUND DEFINED TO INCLUDE ULIP
29. In section 112A of the Income-tax Act, in the Explanation, in clause (a), in the
opening portion, after the word and figures “section 10”, the words, brackets, figures
and letter
“or under a scheme of an insurance company comprising unit linked insurance policies
to which exemption under clause (10D) of the said section does not apply on account of
the applicability of the fourth and fifth proviso thereof”
shall be inserted.
SECTION 112A
ULIP TO BE REGARDED AS EOU
 M – 31/NC - 28
 W.r.e.f. 01.04.2021; [AY 2021-22 / PY 2020-21]
 ULIPs are out of Section 10(10D) in some cases
 Those ULIPs are regarded as Equity Oriented Fund (EOF) as per Explanation
(a) to Section 112A subject to satisfying other conditions applicable to EOF
 Therefore, these are covered by Section 2(42A)(a) r.w. Explanation 4

Cont.. 112A
Explanation
Clause(a) is amended
Impact on
Exp.4 to Sec.2(42A) Exp.2 to Sec.111A

TAXATION OF ULIP IF REGARDED AS EOU
 Explanation 4 to section 2(42A) refers to EOF as defined in Section

112A [Explanation (a)] : Minimum holding is 12 months
 LTCG : Concessional rate of 10% applies under Section 112A(1)(ii)
 STCG : Concessional rate of 10% under section 111A is applicable

as per Explanation (a) which refers to Section 112A [Explanation
(a)]
Short-term Capital
LTCG Asset STCG
Explanation (a) to Explanation 4 to Section Explanation (a) to
Section 112A 2(42A) Section 112A
Defines Equity Oriented EOF definition as EOF definition as

Fund (EOF) assigned to in Exp. (a) assigned to in Exp.
to Section 112A (a) to Section 112A
Proposed amendment defines
EOF to include ULIP [falling
under 4th & 5th Proviso to EOF includes ULIP EOF includes ULIP
Section 10(10D)] subject to
conditions provided therein
Taxable @ 15%
Taxable @ 10%
TAXATION OF ULIP IF NOT REGARDED AS EOU
 Minimum holding is 36 months
 LTCG : 20% under Section 112(1)(a)(ii) subject to indexation
 STCG : Slab rate

TAXABILITY OF INTEREST ON VARIOUS FUNDS
WHERE INCOME IS EXEMPT
SECTION 10(11) & 10(12)
SECTION 10(11)
INTEREST ON PROVIDENT FUND
(d) with effect from the 1st day of April, 2022,––
(i) in clause (11), the following proviso shall be inserted, namely:––
“Provided that the provisions of this clause shall not apply to
the income by way of interest accrued during the previous year in the account of a person
to the extent it relates to the amount or the aggregate of amounts of contribution made by that
person
exceeding two lakh and fifty thousand rupees in any previous year in that fund,
on or after the 1st day of April, 2021 and computed in such manner as may be prescribed;”;
SECTION 10(12)
INTEREST ON PROVIDENT FUND
(d) with effect from the 1st day of April, 2022,––
(ii) in clause (12), the following proviso shall be inserted, namely:––
“Provided that the provisions of this clause shall not apply to
the income by way of interest accrued during the previous year in the account of a person
to the extent it relates to the amount or the aggregate of amounts of contribution made by that
person
exceeding two lakh and fifty thousand rupees in any previous year in that fund,
on or after the 1st day of April, 2021 and computed in such manner as may be prescribed;”;
SECTIONS 10(11) & 10(12)
INTEREST ON VARIOUS FUND
 W.e.f. 01.04.2022
 From AY 2022-23 and subsequent assessment years
 M: 78-79/NC: 5
 Clause (11) provides for exemption w.r.t payment from PPF
 Clause (12) provides for exemption w.r.t. accumulated balance due and becoming due
to an employee participating in recognised PF
 PPF contribution > Rs. 2.5 lakhs = Interest on excess contribution not eligible for
exemption.
 Should not apply to Outstanding Balance as on 31.03.2021.
 Rules to provide for manner of computation.
 Academic for PPF as no contribution > Rs. 1.5 lakhs permitted

 Sec 192 v. 10(11).
 Any payment is exempt.
 Meaning, taxability would only be at the time of payment.
 There is no accrual as there is no right to receive.
 Proviso affects interests accrued & taxable could be taxed only at the time of
withdrawal.
 To be charged to tax as ‘IFOS’ based on method of accounting.
 Interest on unrecognised PF is IFOS – G. Hyatt 80 ITR 177 (SC)

 No exemption of interest on annual contribution > Rs. 2.5 lakhs.

TDS IN CASE OF SPECIFIED SENIOR CITIZEN
SECTION 194P
SECTION 194P
DEDUCTION OF TAX IN CASE OF SPECIFIED SENIOR CITIZEN.
47. After section 194-O of the Income-tax Act, the following section shall be inserted,
namely:––
‘194P. (1) Notwithstanding anything contained in the provisions of Chapter XVII-B,
in case of a specified senior citizen,
the specified bank shall,

SECTION 194P
after giving effect to the deduction allowable under Chapter VI-A and rebate allowable
under section 87A,
compute the total income of such specified senior citizen
for the relevant assessment year and
deduct income-tax on such total income
on the basis of the rates in force.

SECTION 194P
(2) The provisions of section 139 shall not apply
to a specified senior citizen
for the assessment year relevant to the previous year
in which the tax has been deducted under subsection (1).

SECTION 194P
Explanation.–– For the purposes of this section,––
(a) “specified bank” means a banking company as the Central Government may, by
notification in Official Gazette, specify;
SECTION 194P
Explanation.–– For the purposes of this section,––
(b) “specified senior citizen” means an individual, being a resident in India––
(i) who is of the age of seventy-five years or more at any time during the previous year;
(ii) who is having income of the nature of pension and no other income except the income
of the nature of interest received or receivable from any account maintained by such
individual in the same specified bank in which he is receiving his pension income; and
(iii) has furnished a declaration to the specified bank containing such particulars, in such
form and verified in such manner, as may be prescribed.’.
SECTION 194P
 W.r.e.f. 01.04.2021
 From AYs 2021-22 and subsequent years
 M: 27-28/NC: 47
 Newly Inserted
SECTION 194P
 Rates in force. Section 2(37A) does not deal with Sec. 194P amend Sec. 2(37A)(i) to
refer 194P;
 Sec. 194P overrides whole of XVIIB
 Time of TDS:
• PY (within PY) as suggested by 194P(2)
• No Separated time limit

SECTION 194P
 Mandate 194P - Shall:
• 201(1)/(1A)
• Sec. 40(a)(ia) wherever bank claims
 There is no mandate on SP to give details of Chapter VIA & 87A
 Pension – TDS made by any other person where pension is not paid by bank
• Are other section like 192/192A are no more applicable;
• Alternatively, should SB give due credit to TDS already made.

SECTION 194P
 SB
Bank
Multiple Branches
 Specified person
• Resident 75+
• Has pension and no other income except interest from that bank
• Unfair where he has no pension but int. from that bank will not qualify for the benefit.
SECTION 194P
 If SP fails to furnish Chapter VI-A and SB deducts excess tax how SP claims refund
when Sec. 139 is NA. Similar situation arises when Sec. 89 (1) relief exists but cannot
be given.
 Failure by SP to deduct TDS v. Implication of Sec. 271F
 194P – Year wise
 If SB by mistake gives a deduction but later on finds that he has some other income –
Implication of Sec. 139/234F etc.
 Sec. 206AA will apply in case of no PAN situation. How will he claim return.
TRUST
PERSONAL TAXATION
UNIVERSITIES OR EDUCATIONAL
INSTITUTIONS
HOSPITAL/S OR INSTITUTION/S
SECTIONS 10(23C)(iiiad) & (iiiae)
SECTION 10(23C)(iiiad)
UNIVERSITIES OR EDUCATIONAL INSTITUTIONS
(iii) in clause (23C),––
(I) in sub-clause (iiiad),
for the words “receipts of such university or educational institution do not exceed the amount
of annual receipts as may be prescribed”,
the words “receipts of the person from such university or universities or educational
institution or educational institutions do not exceed five crore rupees”
shall be substituted;
SECTION 10(23C)(iiiae)
HOSPITAL/S OR INSTITUTION/S
(II) in sub-clause (iiiae),––
(A) for the words “receipts of such hospital or institution do not exceed the amount of
annual receipts as may be prescribed; or”,
the words “receipts of the person from such hospital or hospitals or institution or
institutions do not exceed five crore rupees.”
shall be substituted;
EXPLANATION TO SECTION 10(23C)(iiiae) & (iiiad)
AGGREGATION OF RECEIPTS: EDUCATION & HOSPITAL INST.
(II) in sub-clause (iiiae),––
(B) after sub-clause (iiiae), the following Explanation shall be inserted, namely:––
“Explanation.––For the purposes of sub-clauses (iiiad) and (iiiae), it is hereby clarified that
if the person has receipts from
university or universities or educational institution or institutions as referred to in sub-clause (iiiad),
as well as from
hospital or hospitals or institution or institutions as referred to in sub-clause (iiiae),

EXPLANATION TO SECTION 10(23C)(iiiae) & (iiiad)
AGGREGATION OF RECEIPTS: EDUCATION & HOSPITAL INST.
the exemptions under these clauses shall not apply,
if the aggregate of annual receipts of the person
from such university or universities or educational institution or institutions or hospital

or hospitals or institution or institutions,
exceed five crore rupees; or”;

SECTION 10(23C)(iiiae) & (iiiad)
ANNUAL RECEIPT LIMIT INCREASED
 W.e.f. 01.04.2022
 M: 36/NC: 5
 Amendment
 Annual receipts increased from 1 Crore to 5 Crore to universities, educational or hospital

institutions
 Exemption shall not apply, if aggregate of annual receipts from both educational and
hospital institutions exceeds Rs. 5 Crore
EXPLANATION 1: 3RD PROVISO TO SECTION 10(23C)
VOLUNTARY CONTRIBUTION FORMING PART OF CORPUS
 In case more than one institution, limit of annual receipt to be determined with
respect to each institution:
 In CIT and another v. Children’s Education Society [2013] 358 ITR 373 (Kar)
SECTIONS 10(23C)(iiiad) & (iiiae) - COMMENTS
Sec 10(23C)(iiiad) & (iiiae)
(iiiad) (iiiae)
University/
Educational Hospital/institution
institution
AAR does not exceed AAR does not exceed

Rs. 5 cr Rs. 5 cr
Persons in receipts from
(iiiad) (iiiae)
1+ 1+
AAR of all does not exceed Rs. 5

crores
 Change in drafting
Existing = AAR of University etc [singular]
Proposed = AAR of person from University etc [plural – aggregation of multiple

universities etc].
 When read along with section 10(23C) preamble – any income received by a person
on behalf of any university etc if the AAR of the person from such university etc do
not exceed Rs. 5 crores.
SECTION 10(23C)(iiiad) & (iiiae) - COMMENTS
 Aggregation-
I. There has to be combination of both (iiiad) and (iiiae).
II.This is evident from use of ‘as well as’
III.However, merger within each ‘category’ is provided for in the amendment.
IV.Memorandum only speaks of aggregation across but is silent on aggregation within.
 FM’s speech 32 & 49 - para 170 & Sl. No. 20 respectively.

(III) in the third proviso,––
(A) the Explanation shall be numbered as Explanation 1 thereof and in Explanation 1 as so

numbered, after the words “medical institution:” occurring at the end,
the words, brackets and figures “subject to the condition that such voluntary contributions are
invested or deposited in one or more of the forms or modes specified in subsection (5) of section
11 maintained specifically for such corpus.”
shall be inserted;
 W.e.f. 01.04.2022
 M: 56-58/NC: 5 & 6
 Amendment
 Earlier voluntary contribution made with a specific direction to treat the same as corpus was
not included in the total income.
 Now, additional condition is proposed so as to give exemption, if such voluntary

contribution is invested or deposited in the modes prescribed under Section 11(5)
SECTION 10(23C) – AMENDMENTS W.R.T. APPLICATION-
COMMENTS
 Amendments relating to corpus donation-
1. 3rd proviso seeks (a) Application & (b) Investment – Explanation below 3 rd proviso
exempts corpus donation.
2. Such exemption is now conditional upon investment/deposit of corpus donation as

per section 11(5).
3. Existing Explanation is re-numbered as Explanation 1 and amended to add the

condition of investment/deposit.
INSTITUTIONS & CHARITABLE TRUSTS
SECTIONS 10(23C) & 11 – ELIMINATION OF POSSIBILITY OF DOUBLE DEDUCTION
APPLICATION FROM CORPUS
(III) in the third proviso,––
(B) after Explanation 1 as so numbered, the following Explanation shall be inserted, namely:––
“Explanation 2.––For the purposes of determining the amount of application under this proviso,-
(i) application for charitable or religious purposes
from the corpus as referred to in Explanation 1,
shall not be treated as application of income for charitable or religious purposes:

Provided that
the amount not so treated as application or part thereof,
shall be treated as application for charitable or religious purposes
in the previous year in which the amount, or part thereof,
is invested or deposited back,
into one or more of the forms or modes specified in sub-section (5) of section 11
maintained specifically for such corpus,
from the income of that year and to the extent of such investment or deposit; and
EXPLANATION 4: SECTION 11(1)
6. In section 11 of the Income-tax Act, with effect from the 1st day of April, 2022,––
(a) in sub-section (1),––
(ii) after Explanation 3, the following Explanations shall be inserted, namely:––
“Explanation 4.––For the purposes of determining the amount of application under clause (a) or
clause (b),––
(i) application for charitable or religious purposes
from the corpus as referred to in clause (d) of this subsection,

Provided that
the amount not so treated as application, or part thereof,
in the previous year in which the amount, or part thereof,
is invested or deposited back,
into one or more of the forms or modes specified in sub-section (5)
maintained specifically for such corpus,
from the income of that year and to the extent of such investment or deposit; and
SECTION 10(23C) & SECTION 11(1)
APPLICATION FROM CORPUS - ANALYSIS
 W.e.f. 01.04.2022
 M: 56-58/NC: 5 & 6
 Newly Inserted
 Determination of amount of application

COMMENTS
 New Explanation 2(i) is added to deal with corpus.
1. Any application from corpus is not treated as an application of charitable/religious purpose

[Explanation 2(i)]
2. On restoration/reinstatement of such investment, amount so restored is treated as application

[Explanation 2(i) – Proviso]
 Restoration shall be in one/more forms/modes specifically for corpus.

 Deemed application is to the extent of restoration.
 Deemed application is essentially w.r.t non-corpus income [as expenditure from corpus &
but subsequent restoration takes funds out of non corpus].
 Purpose is to avoid exemption of corpus as well application of corpus towards non-corpus.
APPLICATION FROM CORPUS - ANALYSIS
 Application out of corpus shall not be treated as application of income for charitable
or religious purpose under Sections 10(23C) & 11(11)
 However, it will be treated as application of income if it is invested or deposited back,

into one or more modes prescribed under Section 11(1) maintained specifically for
such corpus, to the extent of such investment or deposit
APPLICATION FROM LOAN OR BORROWING
“Explanation 2.––For the purposes of determining the amount of application under this
proviso,-
(ii) application for charitable or religious purposes,
from any loan or borrowing,

Provided that
the amount not so treated as application or part thereof,
in the previous year in which the loan or borrowing, or part thereof,
is repaid
from the income of that year and to the extent of such repayment:”;
“Explanation 4.––For the purposes of determining the amount of application under

clause (a) or clause (b),––
(ii) application for charitable or religious purposes,
from any loan or borrowing,

Provided that
the amount not so treated as application, or part thereof,
in the previous year in which the loan or borrowing, or part thereof,
is repaid
from the income of that year and to the extent of such repayment.
APPLICATION FROM LOAN OR BORROWING - ANALYSIS
 W.e.f. 01.04.2022
 M: 56-58/NC: 5 & 6
 Newly Inserted
 Determination of amount of application

COMMENTS
 Existing 12th proviso bars donation [from non-corpus pool] of one institution to the corpus
pool of another institution.
 Loan & repayment:
1. Application from loan shall be ignored [Exp 2(ii)].

2. Application from non loan [deposit or other capital receipt] is tolerated.
3. Deemed application in the year of repayment to the extent of repayment [Exp 2(ii) –
proviso].
4. Circular 100 deleted.
5. Repayment cannot be out of past unconditional accumulation.
 Existing corpus is not affected by Explanation 2.

APPLICATION FROM LOAN OR BORROWING - ANALYSIS
 Application from the loan or borrowing shall not be treated as application of income
for charitable or religious purpose under Section 10(23C) & Section 11(1)
 However, it will be treated as application of income in the year in which it is repaid

and to the extent it is repaid
EXPLANATION 2 TO SECTION 10(23C)
CALCULATION OF INCOME
(V) after the twentieth proviso,
the Explanation shall be numbered as Explanation 1 thereof
and after Explanation 1 as so numbered,
the following Explanation shall be inserted, namely:––

EXPLANATION 2 TO SECTION 10(23C)
“Explanation 2.––For the purposes of this clause, it is clarified that
the calculation of income required to be applied or accumulated
during the previous year
shall be made
without any set off or deduction or allowance of any excess application
of any of the year preceding to the previous year;”;

Explanation 5.––For the purposes of this sub-section, it is hereby clarified that
the calculation of income required to be applied or accumulated
during the previous year
shall be made
without any set off or deduction or allowance of any excess application
of any of the year preceding the previous year.”;

CALCULATION OF INCOME - ANALYSIS
 W.e.f. 01.04.2022
 M: 56-58/NC: 5 & 6
 Newly Inserted
 Computing income required to be accumulated or applied, shall be made without:
 Any set off or

 Deduction or
 Allowance
of any excess application of any of the year preceding to the PY

 Overruled the following decisions:
 DIT v. Society for Applied Microwave Electronic Engineering & Research [2019] 106
taxmann.com 203 (Bom.). SLP dismissed in [2019] 264 Taxman 81 (SC)
 Institute of Banking Personnel Selection (2003) 264 ITR 110 (Bom.)
 CIT(E) v. Ohio University Christ College [2018] 408ITR352 (Kar)
 Pr. CIT v. Manipal Academy of Higher Education [2019] 415 ITR 361 (Kar)
 Pr. CIT(E) v. Green Wood High School [2020] 426 ITR 364 (Kar)
 CIT v. Mangalore Urban Development Authority 2018-TIOL-1896-HC-KAR-IT
 CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal [1995] 211ITR293 (Guj.)
SECTION 10(23C) – AMENDMENTS TO 20th PROVISO-
COMMENTS
 Existing Explanation denies depreciation in respect of prior year deduction of capex.
 New Explanation 2 is inserted to bar set off/deduction/allowance of any excess

application of prior years.
 Revenue deficit – Loss – unaffected by Exp 2- set off against income is permissible;
v.
 Excess application – excess spend – unaffected by Exp 2- applies only while

calculating income & hence NA.
14TH PROVISO TO SECTION 10(23C)
DONATION TO OTHER TRUST OR INSTITUTIONS
(IV) in the fourteenth proviso, after the figures and letters “12AA”, the words, figures
and letters “or section 12AB” shall be inserted;
EXPLANATION TO SECTION 11(2) & CLAUSE (d) TO SECTION 11(3)
DONATION TO REGISTERED TRUST OR INSTITUTIONS
6. In section 11 of the Income-tax Act, with effect from the 1st day of April, 2022,––
(b) in sub-section (2), in the Explanation, after the figures and letters “12AA”, the
words, figures and letters “or section 12AB” shall be inserted;
(c) in sub-section (3), in clause (d), after the figures and letters “12AA”, the words,
figures and letters “or section 12AB” shall be inserted.
14TH PROVISO TO SECTION 10(23C), SECTIONS 11(2)&11(3)
 W.r.e.f. 01.04.2021
 From 2021-21 and subsequent years
 NC: 5
 Amendment
 14th Proviso to Section 10(23C), Explanation to Section 11(2) & Clause (d) to Section 11(3)
provides that any donation made out of accumulated funds to trust or institutions registered under
Section 12AA shall not be treated as application of income
 Section 12AA deals with procedure to make registration to claim exemption under Section 11 & 12
14TH PROVISO TO SECTION 10(23C), SECTIONS 11(2)&11(3)
 Section 12AB was inserted by FA, 2020 providing procedure for fresh registration of
trusts and institution to claim exemption under Section 11 & 12
 In FA, 2020, consequential amendments were not carried out under 14th Proviso to
Section 10(23C), Explanation to Section 11(2) & Clause (d) to Section 11(3) so as to
include Section 12AB
 Therefore, amendment is made to include trust or institutions registered under Section

12AB
SECTION 10(23C) – AMENDMENTS TO 14th PROVISO-
COMMENTS
 14th proviso bars donation out of accumulated funds to another institution
 Finance Act, 2020 introduced – section 12AB.
 Consequential amendment to 14th proviso to include reference to section 12AB.

 Institute of Banking Personnel Selection (2003) 264 ITR 110 (Bom. HC)
 CIT v. Rajasthan and Gujarati Charitable Foundation (SC) [2018] 402 ITR 441
(SC)
 DIT(E) v. Gem & Jewellery Exports Promotion Council [2016] 384 ITR 412
(Bom) upheld in Rajasthan & Gujarati Charitable Foundation
INTERNATIONAL
TAXATION
PERSONAL TAXATION
ADDRESSING MISMATCH IN TAXATION OF INCOME
FROM NOTIFIED OVERSEAS RETIREMENT FUND
SECTION 89A
SECTION 89A
RELIEF FROM TAXATION IN INCOME FROM RETIREMENT
BENEFIT ACCOUNT MAINTAINED IN A NOTIFIED COUNTRY.
28. After section 89 of the Income-tax Act, the following section shall be inserted with
effect from the 1st day of April, 2022, namely:––
‘89A. Where a specified person
has income accrued in a specified account,
such income shall be taxed
in such manner and
in such year as may be prescribed.

SECTION 89A
Explanation.––For the purposes of this section,––
(a) “specified person” means
a person resident in India
who opened a specified account in a notified country
while being non-resident in India and resident in that country;

SECTION 89A
(b) “specified account” means
an account maintained in a notified country
by the specified person
in respect of his retirement benefits and
the income from such account
is not taxable on accrual basis
but is taxed by such country at the time of withdrawal or redemption;

SECTION 89A
(c) “notified country” means
a country as may be notified by the Central Government in the Official Gazette for the
purposes of this section.’.
SECTION 89A
ADDRESSING MISMATCH IN TAXATION OF INCOME FROM NOTIFIED
OVERSEAS RETIREMENT FUND
 M – 31/NC - 28
 W.e.f. 01.04.2022; [AY 2022-23/ PY 2021-22]
 Section 89A provides for addressing time mismatch
 A person while he was a NR, might have opened an account in respect of retirement benefit
 Later he may become resident
 Income accrual during his residency is taxed in India regularly but other country taxes the
income much later on receipt basis
SECTION 89A
ADDRESSING MISMATCH IN TAXATION OF INCOME FROM NOTIFIED
OVERSEAS RETIREMENT FUND
This addresses time mismatch & may result in denial of FTC
Section 89A provides for prescribing the manner & year of

taxation of such income
SECTION 89A
 Article 20(2) of Indo-USA DTAA provides that social security benefits or other public
pensions paid by USA to a resident of India or a citizen of US shall be taxable only in
USA
Specified Person
Person Resident in India
Who opened
Specified account
In a notified country
While being
(a) non-resident in India &
(b) Resident in that country
Specified Account
An Account maintained
In a notified country
By the specified person
In respect of his retirement benefits
And the income from such account
Is not taxable on accrual basis
But is taxed by such country

at the time of withdrawal or redemption
Notified Country
A country
As may be notified
By the
Central Government in the Official Gazette
For the purpose of this Section

SECTION 2(29A)
DEFINITION OF ‘LIABLE TO TAX’ – NEW PROVISION
SECTION 2(29A)
(iv) clause (29A) shall be renumbered as clause (29AA) thereof and before clause
(29AA) as so renumbered, the following clause shall be inserted, namely:––
‘(29A) “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;’
SECTION 2(29A) - COMMENTS
 W.e.f. 01.04.2021 (AY 2021-22/PY 2020-21)
 M – 75, NC – 3.
 Existing section 2(29A) proposed to be renumbered as section 2(29AA).
 New section 2(29A) proposed to be added to define the term ‘liable to tax’ in relation
to a person to mean:
1. Liability to tax on such person under any law for the time being in force in any
country, and
2. Shall include a case where subsequent to imposition of tax liability, an exemption
has been provided.
 There should exist a law to create liability.
 No law- no liability.
 Exemption should follow creation of liability.
 Does not cover where exempt because of law.
 Memorandum says it applies to sections 6, 10(23FE), and treaties concluded under

section 90 and 90A.
 Effect on section 6(1A) & DTAA 3(…) and section 90(3).
 If in his resident state, there is no tax at all due to no law providing for tax, he cannot
be called as ‘liable’.
 He will get hit by section 6(1A).

 BP Singapore TS-556-ITAT-2017 (Rajkot) – liable to tax v. subject to tax.
 ACC 137 STC 389 SC – liability to tax v. exigibility to tax
 Kapil Steels 61 VST 332 MP - -do-
 Peekay Re Rolling Mills 2007 (219) ELT 3 SC – ‘exemption does not negate the levy’
 The proposed amendment is in line with the judgement of the Supreme Court in the case
of Union of Indian v. Azadi Bachao Andolan And Anr (2003) 263 ITR 706 (SC).
 Sections which would be impacted by the definition:

1. Section 6(1A) – residence criteria in case of stateless persons.
2. Explanation (c) to Section 10(23FE) – Exemption for pension fund where one of
the conditions is it should not be liable to tax
3. Treaties entered into under sections 90 and 90A – Residency test and applicability
of DTAA
 However, in countries such as UAE, where no personal tax is applicable, the interpretation
of the said definition would be interesting as the section requires that there is a liability of
tax on such person under any law for the time being in force in any country.
 In following cases, in the context of Article 4 of the DTAAs, it has been held
that liable to tax therein by reason of his domicile, residence, place of
incorporation or place of management or any other criterion of a similar nature
will then connote not the existence of an actual taxation measure in the State
under which the person in question is factually charged to tax in that State but
will connote a person who is liable to be subjected to tax by the taxation laws
of that State because of a nexus existing between him and the State, of one of
the kinds mentioned in the article:
1. Mohsinally Alimohammed Rafik [TS-5003-AAR-1994-O]

2. ADIT v. Green Emirate Shipping and Travels [TS-18-ITAT-2005(MUM)-O]
 However, contrary view has been taken by Delhi AAR in Cyril Eugene Pereira
v. CIT [1999] 239 ITR 650 (New Delhi –AAR) where the AAR held that since
individuals like the assessee were not liable to tax in UAE in absence of a law
in UAE, the assessee was not a resident of UAE. The AAR distinguished its’
judgement in Mohsinally Alimohammed Rafik [TS-5003-AAR-1994-O].
 The proposed definition in section 2(29A) seems to be in line with

interpretation of AAR in Cyril Eugene Pereira’s case.
 Going by the literal reading of section 2(29A), the result would be that a person
resident in country would not be liable to tax where such country does not have a law
in place to levy taxation on its residents.
SECTION 9A
CERTAIN ACTIVITIES NOT TO CONSTITUTE BUSINESS CONNECTION IN INDIA
SECTION 9A
In section 9A of the Income-tax Act, after sub-section (8), the following sub-section
shall be inserted with effect from the 1st day of April, 2022, namely:––
“(8A) The Central Government may, by notification in the Official Gazette, specify that
any one or more of the conditions specified in clauses (a) to (m) of sub-section (3) or
clauses (a) to (d) of sub-section (4) shall not apply or shall apply with such
modifications, as may be specified in such notification, in case of an eligible investment
fund and its eligible fund manager, if such fund manager is located in an International
Financial Services Centre, as defined in clause (a) of the Explanation to section 80LA,
and has commenced its operations on or before the 31st day of March, 2024.”.
SECTION 9A - COMMENTS
 W.e.f. 01.04.2021 (AY 2021-22/PY 2020-21)
 M – 17, NC – 4.
 Section 9A exempts eligible fund management activity from constituting business

connection/Residence in India.
 Sec 9A(3) – (a) to (m) are conditions for an eligible investment fund.
Sec 9A(4) – (a) to (d) are conditions for an eligible fund manager.
.
SECTION 9A - COMMENTS
 Sec 9A(8A) empowers CG to exempt the above conditions.
Eligible Fund manager
Is located in
IFSC
Which commenced operations on or

before 31.03.2024
SECTION 115JB – MAT – INTERNATIONAL TAX
Section 115JB (2) – Explanation 1 (fb) – Section 115JB (2) – Explanation 1 (fb) – Proposed
Existing
For the purposes of this For the purposes of this section,
section, “book profit” means “book profit” means the profit as
the profit as shown in the shown in the statement of profit
statement of profit and loss
and loss for the relevant previous
for the relevant previous year
prepared under sub-section year prepared under sub-section
(2), as increased by— (2), as increased by—
Section 115JB (2) – Explanation 1 (fb) – Section 115JB (2) – Explanation 1 (fb) – Proposed
Existing
(fb) the amount or amounts of (fb) the amount or amounts of expenditure
expenditure relatable to income relatable to income accruing or arising to an
accruing or arising to an assessee, assessee, being a foreign company, from,—
being a foreign company, from,—
(A) the capital gains arising on transactions in
(A) the capital gains arising on securities; or
transactions in securities; or
(B) the interest, dividend, royalty or fees for
(B) the interest, royalty or fees for technical services chargeable to tax at the rate
technical services chargeable to tax or rates specified in Chapter XII.
at the rate or rates specified in
Chapter XII.
Section 115JB (2) – Explanation 1 (iid) – Section 115JB (2) – Explanation 1 (iid) – Proposed
Existing
the amount of income accruing or the amount of income accruing or arising to
arising to an assessee, being a an assessee, being a foreign company, from,
foreign company, from,— —
(A) the capital gains arising on

transactions in securities; or (A) the capital gains arising on transactions in
securities; or
(B) the interest, royalty or fees for
technical services chargeable to tax (B) the interest, dividend, royalty or fees for
at the rate or rates specified in technical services chargeable to tax at the rate
Chapter XII, or rates specified in Chapter XII,
SECTION 115JB (2D) – NEWLY INSERTED
In the case of an assessee being a company, where there is an increase in book

profit of the previous year due to income of past year or years included in the book
profit on account of an advance pricing agreement entered into by the assessee
under section 92CC or on account of secondary adjustment required to be made
under section 92CE, the Assessing Officer shall, on an application made to him in
this behalf by the assessee, recompute the book profit of the past year or years
and tax payable, if any, by the assessee during the previous year under sub-section
(1), in such manner as may be prescribed and the provisions of section 154 shall,
so far as may be, apply and the period of four years specified in sub-section (7) of
that section shall be reckoned from the end of the financial year in which the said
application is received by the Assessing Officer.
SECTION 115JB
MAT – INTERNATIONAL TAXATION
 M – 20/NC - 30
 W.r.e.f. 01.04.2021; [AY 2021-22 / PY 2020-21]
 Explanation 1, Clause (fb) & Clause (ii) amended to include dividend income
of a foreign company
 Dividend of foreign company is outside MAT in addition to

CG/Interest/Royalty/FTS for a FC
SECTION 115JB
MAT – INTERNATIONAL TAXATION
 Section 115JB(2D) is introduced
 If income of past year is included in book profit of current year due to APA under
Section 92CC or on account of Secondary Adjustment under Section 92CE
 Assessee can make application for re-computation of past years’ book profit
 AO to do so in the prescribed manner
 Period of 4 years under Section 154(7) to be reckoned from end of FY of such

application
EQUALISATION LEVY
Equalisation Levy
IT Act FA 2016
Sec 10(50) Cont..
Exemption is Explanation Explanation 2

made w.e.f.
e-com supply/ Sec 164(cb)
01.04.2020
service of FA 2016
Royalty/ FTS excluded
from sec 10(50) Specified Sec 164(i)
service of FA 2016
FA 2016
Sec 163(1) Sec 164(cb) Sec 165A(3)
Proviso added to
Defines e-com New clause (b)
exclude Royalty/
supply/ service added
FTS from EL
Equalisation Levy
Existing clause Explanation
online sale of goods owned by the e-

commerce operator;
Online sale of goods/ provision of
online provision of services service
provided by the e-commerce operator;
online sale of goods or provision of

services or both, facilitated by the
e-com operator; Shall include one/ more online
activities
any combination of activities listed in
clause (i), (ii) or clause (iii); Cont..
Cont..
a) acceptance of offer for sale; or
b) placing of purchase order; or
c) acceptance of the purchase order; or
d) payment of consideration; or
e) supply of goods or provision of services, partly or

wholly;’;
Section 165A(3)
Clause (a) Clause (b)
sale of advertisement, which targets a customer, consideration received or

who is resident in India or a customer who
accesses the advertisement though internet receivable from
protocol address located in India; and ecommerce
supply or services shall
sale of data, collected from a person who is include
resident in India or from a person who uses
internet protocol address located in India Cont..
Cont..
(i) consideration for sale of goods irrespective of

whether the e-commerce operator owns the
goods;
(ii)consideration for provision of services

irrespective of whether service is provided or
facilitated by the e-commerce operator.
SECTION 10 OF INCOME TAX ACT
SECTION 10(50) OF THE IT ACT AMENDED
SECTION 10(50) - AMENDED
any income arising from any specified service provided

on or after the date on which the provisions of Chapter
VIII of the Finance Act, 2016 comes into force or
arising from any e-commerce supply or services made
or provided or facilitated on or after the 1st day of
April, 2020 and chargeable to equalisation levy under
that Chapter.
EXPLANATION 1 TO SECTION 10(50) - SUBSTITUTED
For the removal of doubts it is hereby clarified that the

income referred to in this clause shall not include and
shall be deemed never to have been included any
income which is chargeable to tax as royalty or fees for
technical services in India under this Act read with the
agreement notified by the Central Government under
section 90 or section 90A.
EXPLANATION 2 TO SECTION 10(50) – NEWLY INSERTED
For the purposes of this clause,––
(i) “e-commerce supply or services” shall have the meaning

assigned to it in clause (cb) of section 164 of the Finance Act, 2016;
(ii) "specified service" shall have the meaning assigned to it in

clause (i) of section 164 of the Finance Act, 2016.’
AMENDMENT TO SECTION 10(50)– COMMENTS
 W.e.f. 01.04.2021(AY 2021-22/PY 2020-21)
 N – 5 ; M – 66 & 67
 Syncing dates of EL and corresponding exemption from Income Tax

i.e. 01.04.2020 in respect of e-commerce supply or services.
SECTION 10(50) –COMMENTS
 Retro effect.
 FM’s speech page 50 [para 22]
 Sec 163(3) of FA 2016- proviso
 Royalty/FTS – with a DTAA country
Only Only Both as

as per as per per
Act DTAA Act/DTAA
SECTION 163 OF FINANCE ACT 2016 - EXTENT,
COMMENCEMENT AND APPLICATION.
PROVISO TO SECTION 163(3) ADDED
PROVISO TO SECTION 163(3) NEWLY INSERTED
Provided that the consideration received or receivable for

specified services and for e-commerce supply or services shall not
include the consideration, which are taxable as royalty or fees for
technical services in India under the Income-tax Act, read with the
agreement notified by the Central Government under section 90
or section 90A of the said Act.
PROVISO TO SECTION 163(3) NEWLY INSERTED– COMMENTS
 W.r.e.f. 01.04.2020
 N – 159; M – 65-66;
 Clarified that consideration received/receivable for specified services and

consideration received/ receivable for e-commerce supply or services shall not include
consideration which are taxable as Royalty or FTS in India under the IT Act or
treaties.
 Hence EL is not applicable to royalties and FTS. They are taxable under IT Act read
with applicable treaty
SECTION 164(cb) OF FINANCE ACT 2016 – DEFINITION
OF E-COMMERCE SUPPLY OR SERVICES .
EXPLANATION TO SECTION 164(cb) ADDED
EXPLANATION TO SECTION 164(cb) ADDED
Explanation.––For the purposes of this clause, “online sale of goods” and “online
provision of services” shall include one or more of the following online activities,
namely:––
(a) acceptance of offer for sale; or

(b) placing of purchase order; or
(c) acceptance of the purchase order; or
(d) payment of consideration; or
(e) supply of goods or provision of services, partly or wholly
EXPLANATION TO SECTION 164(cb) ADDED– COMMENTS
 W.r.e.f. 01.04.2020
 N – 159; M – 65-66;
 The scope of the definition "e-commerce supply or services“ under Section

164(cb) increased by adding explanation to the same.
 Even if one of the elements is present, it would be regarded as "e-commerce

supply or services“
SECTION 165A(3) OF FINANCE ACT 2016
SECTION 165(3) AMENDED
SECTION 165A(3) AMENDED
For the purposes of this section,
(a) "specified circumstances" mean—
(i) sale of advertisement, which targets a customer, who is resident in India or a

customer who accesses the advertisement though internet protocol address
located in India; and
(ii) sale of data, collected from a person who is resident in India or from a
person who uses internet protocol address located in India
(b) consideration received or receivable from ecommerce supply or

services shall include––
(i) consideration for sale of goods irrespective of whether the e-

commerce operator owns the goods;
(ii) consideration for provision of services irrespective of whether

service is provided or facilitated by the e-commerce operator.
SECTION 165(3) AMENDED– COMMENTS
 W.r.e.f. 01.04.2020
 N – 159; M – 65-66;
 EL is applicable even if the E-commerce operator does not own goods / does not
facilitate services (i.e. provided by third party).
 In other words, EL is applicable even if E-commerce operator acts as a facilitator and

receives consideration on behalf of the owner/ service provider.
 Entire consideration will be considered irrespective of e-commerce
operator provides himself or only facilitates
 Earlier interpretation of adopting consideration only facilitation fee is no

more applicable
 Consider triangular situation involving E-commerce operator (NR), E-

commerce participant (R ) and Indian customer
 Consider triangular situation involving E-commerce operator (NR), E-

commerce participant (NR ) and Indian customer
SITUATION 1
 E-commerce operator (NR) – suffers EL on entire amount [including the
amount passed on to E-commerce participant
 E-commerce participant (R ) – suffers TDS under section 194O
 Customer not required to effect TDS due to section 10(50)

SITUATION 2
 E-commerce operator (NR) – suffers EL on entire amount [including the
amount passed on to E-commerce participant
 E-commerce participant (NR )
– Does not suffer TDS under section 194O

- No EL as it is between NR to NR and situation is not covered by section
165(3)(a)
 Customer not required to effect TDS due to section 10(50)

CHARGE OF EQUILISATION LEVY ON E-COMMERCE
SUPPLY OR SERVICES
‘165A. (1) On and from the 1st day of Apirl, 2020, there shall be charged an equalisation levy at
the rate of two per cent. of the amount of consideration received or receivable by an e-commerce
operator from e-commerce supply or services made or provided or facilitated by it—
(i) to a person resident in India; or
(ii) to a non-resident in the specified circumstances as referred to in sub-section (3); or
(iii) to a person who buys such goods or services or both using internet protocol address located
in India.
NEW SECTION 165A: CHARGE OF EQUILISATION LEVY ON E-
COMMERCE SUPPLY OF SERVICES
(2) The equalisation levy under sub-section (1) shall not be charged—
(i) where the e-commerce operator making or providing or facilitating e-commerce supply
or services has a permanent establishment in India and such e-commerce supply or
services is effectively connected with such permanent establishment;
(ii) where the equalisation levy is leviable under section 165; or
(iii) sales, turnover or gross receipts, as the case may be, of the e-commerce operator from
the e-commerce supply or services made or provided or facilitated as referred to in sub-
section (1) is less than two crore rupees during the previous year.
Section 194-O
Electronic Commerce E-commerce operator E-commerce Participant
(EC) (ECO) (ECP)
Supply of
A person who Person resident in India
goods/services/both
Including digital products Owns/operates/manages selling
Digital/electronic Good/services/both
over
facility/platform (including digital producs)
Digital/electronic network For EC through
And is responsible for paying Digital/electronic

ECP facility/platform
For EC
TDS @ 1% by ECO to ECP
[S. 206AA @ 5%]
At the time of At the time of payment by

credit/payment purchasers to ECP directly
Exception to ECP
Individual/HUUF
Gross Amount > 5 Lakhs PAN
Note: Lower rate u/s 197 is facilitated by amendment to Section 197(1)

BUSINESS INCOME
PERSONAL TAXATION
Goodwill
GOODWILL OF BUSINESS/ PROFESSION
2(11) 32(1)(ii) 50 55(2)
32(1)(ii) Exp. 3 Proviso COA

added
Not being goodwill of a B/P

(inserted) Cont..
Cont.. COA
55(2)(a) substituted
1. Goodwill of profession is
included;
2. When Goodwill is transferred,
past depreciation is reduced
(Proviso) from sale price
SECTION 2(11)
DEFINITION OF ‘BLOCK OF ASSETS’
SECTION 2(11)
In section 2 of the Income-tax Act,––
(i) in clause (11), in sub-clause (b), after the words “or

commercial rights of similar nature,”, the words “not being
goodwill of a business or profession,” shall be inserted;
W.e.f. 01.04.2021 (AY 2021-22/PY 2020-21)```
M- 67-71, NC- 3
Section 2(11) defines ‘block of assets’.

 G/w removed with effect from 1.4.2021 [PY 2020-21]
 G/w vs other business/commercial rights
 Customer database/HR resources etc.
 Self generated G/w v. self generated other asset [Sec 45(4) – Exp (ii)]
 234C- interest implications

FM’s speech pg 49, point 17.
Going forward, recharacterization of G/w as trademarks etc

may happen.
SECTION 32
DEPRECIATION
SECTION 32
In section 32 of the Income-tax Act, in sub-section (1),––
(a) in clause (ii), after the words, figures and letters, “after the 1st
day of April, 1998,”, the words “not being goodwill of a business
or profession,” shall be inserted;
(b) in Explanation 3, in clause (b), after the words “or commercial

rights of similar nature”, the words “, not being goodwill of a
business or profession” shall be inserted.
SECTION 32
INTANGIBLE ASSET – GOODWILL
 M-67/NC - 7
 W.r.e.f. 01.04.2021 [AY 2021-22/PY 2020-2021]
 See amendment to Section 2(11)
 Smiff Securities 348 ITR 302 (SC) is undone
 Explanation 3 defines ‘assets’
 No amendment made to Section 43(6) making it difficult to give effect to this

amendment
SECTION 32
INTANGIBLE ASSET – GOODWILL
Amendment to Section 50 is not helpful for Section 43(6)

[See Explanation 2 to Section 32 which refer to Section
43(6)(c)
Impact on brought forward goodwill – section 32(2)

SECTION 50 – COMPUTATION OF CAPITAL
GAINS IN CASE OF DEPRECIABLE ASSETS
In clause (2) to section 50: Proviso inserted
Provided that in a case where goodwill of a business or

profession forms part of a block of asset for the assessment
year beginning on the 1st day of April, 2020 and depreciation
thereon has been obtained by the assessee under the Act, the
written down value of that block of asset and short term
capital gain, if any, shall be determined in such manner as
may be prescribed.
SECTION 50
 M – 70/NC - 18
 W.r.e.f. 01.04.2021 [AY 2021-2022 /PY 2020-2021]
 WDV of block & STCG to be determined as prescribed if block excluded depreciation as on

01.04.2019
 What if WDV consists of only Goodwill
 Proviso operates even when goodwill forming part of WDV is not sold, but some other
intangible in the same block is sold.
SECTION 55(2) - “COST OF ACQUISITION”
Section 55 (2) (a) - Existing Section 55 (2) (a) - Proposed
in relation to a capital asset, being in relation to a capital asset, being
goodwill of a business or a trade goodwill of a business or profession, or a
mark or brand name associated trade mark or brand name associated with
with a business or a right to a business or profession, or a right to
manufacture, produce or process manufacture, produce or process any
any article or thing or right to carry article or thing, or right to carry on any
on any business or profession, business or profession, or tenancy rights,
tenancy rights, stage carriage or stage carriage permits, or loom hours,
permits or loom hours,— —
(i) in the case of acquisition (i) in the case of acquisition of
of such asset by the assessee such asset by the assessee by
by purchase from a previous purchase from a previous owner,
owner, means the amount of
means the amount of the
the purchase price; and
purchase price; and
(ii) in the case falling under sub-

clauses (i) to (iv) of sub-section
(1) of section 49 and where such
asset was acquired by the
previous owner (as defined in
that section) by purchase, means
the amount of the purchase price
for such previous owner; and
(ii) in any other case [not (iii) in any other case, shall be taken to be
being a case falling under nil:
sub-clauses (i) to (iv) of
subsection (1) of section 49],
shall be taken to be nil;
Section 55 (2) Section 55 (2) (a) - Proposed
(a) - Existing
Provided that where the capital asset, being goodwill of a
business or profession, in respect of which a deduction on
account of depreciation under sub-section (1) of section 32 has
been obtained by the assessee in any previous year preceding the
previous year relevant to the assessment year commencing on or
after the 1st day of April, 2021, the provisions of sub-clauses (i)
and (ii) shall apply with the modification that the total amount of
depreciation obtained by the assessee under sub-section (1) of
section 32 before the assessment year commencing on the 1st
day of April, 2021 shall be reduced from the amount of purchase
price;
SECTION 55
COST OF IMPROVEMENT & COST OF ACQUISITION
 M – 70/NC - 20
 W.r.e.f. 01.04.2021 [AY 2021-2022 /PY 2020-2021]
 Section 55(1): Cost of Improvement/Section 55(2): Cost of acquisition
 Section 55(2)(a) is substituted by new clause
 Goodwill of a profession is also included in the scope of Section 55(2)(a)
 Section 55(2)(a)(ii) amended to provide for cost of previous owner covered by

Section 49(1)(i) to (iv)
SECTION 55
 Proviso added to remove depreciation claimed upto AY 2020-21 [PY 2019-20] on

goodwill shall be reduced from the purchase price
 How to determine depreciation on goodwill in the absence of Rules similar to proviso

to Section 50
 Block may have several intangibles: Goodwill and others

SECTIONS 36(1)(va) AND 43B
EMPLOYEE’S CONTRIBUTION TO FUNDS SPECIFIED IN SECTION 2(24)(x)
SECTION36(1)(va)
In section 36 of the Income-tax Act, in sub-section (1), in clause (va), the Explanation
shall be numbered as Explanation 1 thereof and after Explanation 1 as so numbered, the
following Explanation shall be inserted, namely:––
‘Explanation 2.––For the removal of doubts, it is hereby clarified that the provisions of
section 43B shall not apply and shall be deemed never to have been applied for the
purposes of determining the “due date” under this clause;’.
SECTION36(1)(va) - COMMENTS
Existing text Proposed text

any sum received by the assessee from any of any sum received by the assessee from any of
his employees to which the provisions of sub- his employees to which the provisions of sub-
clause (x) of clause (24) of section 2 apply, if clause (x) of clause (24) of section 2 apply, if
such sum is credited by the assessee to the such sum is credited by the assessee to the
employee's account in the relevant fund or funds employee's account in the relevant fund or funds
on or before the due date. on or before the due date.
Explanation.—For the purposes of this clause, Explanation. 1—For the purposes of this clause,
"due date" means the date by which the assessee "due date" means the date by which the assessee
is required as an employer to credit an is required as an employer to credit an
employee's contribution to the employee's employee's contribution to the employee's
account in the relevant fund under any Act, rule, account in the relevant fund under any Act, rule,
order or notification issued thereunder or under order or notification issued thereunder or under
any standing order, award, contract of service or any standing order, award, contract of service or
otherwise; otherwise;
Explanation 2.––For the removal of doubts, it

is hereby clarified that the provisions of section
43B shall not apply and shall be deemed never
to have been applied for the purposes of
determining the “due date” under this clause;
SECTION 36(1)(va)
EMPLOYEES CONTRIBUTION FUND – DUE DATE
 M – 39 & 40/NC – 8
 W.r.e.f. 01.04.2021 [AY 2021-22/PY 2020-21]
 Existing Explanation defines ‘due date’
 Existing Explanation is renumbered as Explanation 1
 New Explanation 2 is inserted to make Section 43B inapplicable

SECTION 36(1)(va)
 Cases which are affirmed:
 CIT v. Gujarat State Road Transport Corporation [2014] 41 taxmann.com

100/223 Taxman 398/366 ITR 170 (Guj)
 CIT v. Merchem Ltd. [2015] 235 Taxman 291/61 taxmann.com 119 (Ker)
 Unifac Management Services (India) (P.) Ltd. v. Dy. CIT [2018] 100
taxmann.com 244/[2019] 260 Taxman 60 (Mad).
 B.S. Patel v. Dy. CIT [2010] 326 ITR 457/[2008] 171 Taxman 304 (MP).
 Popular Vehicles & Services Pvt Ltd v. CIT [2018] 96 taxmann.com 13/257
Taxman 120/406 ITR (Ker).
SECTION 36(1)(va)
 Cases which are overturned:
 CIT v. Sabari Enterprises [2008] 298 ITR 141 (Kar);

 CIT v. Spectrum Consultants India (P.) Ltd. (Kar);
 Essae Teraoka (P.) Ltd. v. DCIT [2014] 366 ITR 408 (Kar);
 CIT v. Ghatge Patil Transports Ltd. [2014] 368 ITR 749 (Bombay);
 CIT v. Vijay Shree Ltd. [2014] 224 Taxman 12 (Calcutta);
 CIT v. AIMIL Ltd. [2010] 321 ITR 508 (Delhi);
 CIT v. Hemla Embroidery Mills (P.) Ltd. [2014] 366 ITR 167 (Punjab & Haryana);
 CIT v. Jaipur Vidyut Vitran Nigam Ltd. [2014] 363 ITR 307 (Rajasthan)
SECTION 36(1)(va)
 Un-recognised PF contribution is allowable: Greater Ludhiana Area Development

Authority [2015] 61 taxmann.com 349 (Chandigarh - Trib.)
 What are the due dates of PF/ESI

 Amendment made to overcome the above decisions.
 Assessee that have not complied with section 36(1)(va) in light of interpretation of
section 43B will have to pay 234B and 234C due to advance tax arising on such
disallowance.
SECTION 43B
In section 43B of the Income-tax Act, after Explanation 4, the following Explanation
shall be inserted, namely:––
“Explanation 5.––For the removal of doubts, it is hereby clarified that the provisions of
this section shall not apply and shall be deemed never to have been applied to a sum
received by the assessee from any of his employees to which the provisions of sub-
clause (x) of clause (24) of section 2 applies.”.
SECTION 43B - COMMENTS
Notwithstanding anything contained in any other Notwithstanding anything contained in any other
provision of this Act, a deduction otherwise provision of this Act, a deduction otherwise
allowable under this Act in respect of— allowable under this Act in respect of—
… …
(b) any sum payable by the assessee as an (b) any sum payable by the assessee as an
employer by way of contribution to any employer by way of contribution to any
provident fund or superannuation fund or provident fund or superannuation fund or
gratuity fund or any other fund for the welfare of gratuity fund or any other fund for the welfare of
employees, employees,

Explanation 5.––For the removal of doubts, it is
hereby clarified that the provisions of this section
shall not apply and shall be deemed never to have
been applied to a sum received by the assessee
from any of his employees to which the provisions
of sub-clause (x) of clause (24) of section 2 applies.
 W.e.f. 01.04.2021 (AY 2021-22/PY 2020-21)
 M – 39 & 40, NC – 9.
 Consequential to amendment to section 36(1)(va).

TAX AUDIT
SECTION 44AB
 w.r.e.f 01.04.2021 [AY 2021-22 & subsequent AYs]
 Mem – 34
 NC – Clause 11
 Section 44AB (a) – Proviso of higher limit if 95% + receipts/payments are non-cash
 In order to incentivise non-cash transactions to promote digital economy and to

further reduce compliance burden of small and medium enterprises, it is proposed to
increase the threshold from Rs.5 Crores to Rs. 10 Crores in cases listed in section
44AB (a)
Existing Proposed
(a) carrying on business shall, if his total sales, turnover (a) carrying on business shall, if his total sales, turnover
or gross receipts, as the case may be, in business exceed or gross receipts, as the case may be, in business exceed
or exceeds one crore rupees in any previous year; or exceeds one crore rupees in any previous year;
Provided that in the case of a person whose–– Provided that in the case of a person whose––
(a) aggregate of all amounts received including amount (a) aggregate of all amounts received including amount
received for sales, turnover or gross receipts during the received for sales, turnover or gross receipts during the
previous year, in cash, does not exceed five per cent of previous year, in cash, does not exceed five per cent of
the said amount; and the said amount; and
(b) aggregate of all payments made including amount (b) aggregate of all payments made including amount
incurred for expenditure, in cash, during the previous incurred for expenditure, in cash, during the previous
year does not exceed five per cent of the said payment, year does not exceed five per cent of the said payment,
this clause shall have effect as if for the words “one this clause shall have effect as if for the words “one
crore rupees”, the words “five crore rupees” had been crore rupees”, the words “ten crore rupees” had been
substituted; substituted;
SECTION 44ADA
PRESUMPTIVE TAXATION IN THE CASE OF PROFESSIONALS
SECTION 44ADA
In section 44ADA of the Income-tax Act, in sub-section (1), for the words
“in the case of an assessee, being a resident in India, who”, the words,
brackets, letter and figures “in case of an assessee, being an individual,
Hindu undivided family or a partnership firm other than a limited liability
partnership as defined under clause (n) of sub-section (1) of section 2 of the
Limited Liability Partnership Act, 2008, who is a resident in India, and”
shall be substituted.
SECTION 44ADA - COMMENTS

(1) Notwithstanding anything contained (1) Notwithstanding anything contained in sections
in sections 28 to 43C, in the case of an 28 to 43C, in the case of an assessee, being a resident
assessee, being a resident in India, who is in India , who in case of an assessee, being an
engaged in a profession referred to in sub- individual, Hindu undivided family or a partnership
section (1) of section 44AA and whose firm other than a limited liability partnership as
total gross receipts do not exceed fifty lakh defined under clause (n) of sub-section (1) of section
rupees in a previous year, ……. 2 of the Limited Liability Partnership Act, 2008, who
is a resident in India, and is engaged in a profession
referred to in sub-section (1) of section 44AA and
whose total gross receipts do not exceed fifty lakh
rupees in a previous year, …..
SECTION 44ADA - COMMENTS

a sum equal to fifty per cent of the total gross a sum equal to fifty per cent of the total gross
receipts of the assessee in the previous year on receipts of the assessee in the previous year on
account of such profession or, as the case may account of such profession or, as the case may
be, a sum higher than the aforesaid sum claimed be, a sum higher than the aforesaid sum claimed
to have been earned by the assessee, shall be to have been earned by the assessee, shall be
deemed to be the profits and gains of such deemed to be the profits and gains of such
profession chargeable to tax under the head profession chargeable to tax under the head
"Profits and gains of business or profession". "Profits and gains of business or profession".
SECTION 44ADA
PRESUMPTIVE TAXATION - PROFESSIONAL
 M – 73 /NC – 12
 W.e.f 01.04.2021 [AY 2021-22/PY 2020-2021]
 Earlier Section 44ADA applied to any resident engaged in profession
 Now only Individual/HUF/Firm (not being LLP) qualifies
 LLPs/AOP/BOI/AJP are of outside the scope
 Partner cannot get benefit: A Anandkumar TS-690-HC-Mad-2020

REAL ESTATE
SECTION 43CA: SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION
FOR TRANSFER OF ASSETS OTHER THAN CAPITAL ASSETS IN CERTAIN CASES
Provided further that in case of transfer of an asset, being a residential unit, the provisions of this
proviso shall have the effect as if for the words “one hundred and ten per cent.”, the words “one
hundred and twenty per cent.” had been substituted, if the following conditions are satisfied,
namely:––
(i) the transfer of such residential unit takes place during the period beginning from the 12th day of
November, 2020 and ending on the 30th day of June, 2021;
(ii) such transfer is by way of first time allotment of the residential unit to any person; and
(iii) the consideration received or accruing as a result of such transfer does not exceed two crore
rupees.’;
SECTION 43CA - EXPLANATION
For the purposes of this section, “residential unit” means an independent housing
unit with separate facilities for living, cooking and sanitary requirement,
distinctly separated from other residential units within the building, which is
directly accessible from an outer door or through an interior door in a shared
hallway and not by walking through the living space of another household.
SECTION 43CA
FULL VALUE OF CONSIDERATION – OTHER THAN CAPITAL ASSETS
 M – 26 & 27/NC – 10
 W.r.e.f 01.04.2021; [AY 2021-22/ PY 2020-21]
 Applies to one/more PY depending on method of accounting
 Increased bandwidth of 20%

SECTION 43CA
 Conditions:
o Transfer takes place between 12.11.2020 & 30.06.2021
o Of a residential unit
o First time allotment:

 booking cancelled and re-booked in the same name – Disqualifies
 Booking cancelled but re-booked for a different customer - Qualifies
o Consideration > Rs. 2 Crore (Actual consideration and not stamp duty value)
o Meaning of consideration (Car parking/BESCOM/BWSSB/Maintenance Deposit etc]

SECTION 43CA
 Definition of ‘residential unit’ same as Section 80-IBA(6)(e)
 Provisions of ‘this proviso’ v. ‘first proviso’
 Residential unit – Independent unit appear not covered by strict literal reading
 Section 43CA v. Section 80-IAB (Affordable Housing)
o Are separate provisions and independent of each
o Only ‘Residential Unit’ has the identical

SECTION 43CA
 Meaning of consideration
o Section 145A, GST etc.

o Inclusion of GST etc.
 May help under main provision Section 43CA(1) as SDV will be compared with actual
consideration + GST
 May not help in determining Rs.2 Crores
o Comparison should be apple to apple – Parameters which SDV authorities accepted should
also applied while computing consideration
SECTION 56(2)(X) - INCOME FROM OTHER SOURCES
Newly inserted 4th Proviso:
Provided also that in case of property being referred to in the second proviso to sub-
section (1) of section 43CA, the provisions of sub-item (ii) of item (B) shall have effect
as if for the words “ten per cent.”, the words “twenty per cent.” had been substituted;
SECTION 56(2)(x)
INCOME FROM OTHER SOURCES
 M – 70/NC - 21
 W.r.e.f. 01.04.2021 [AY 2021-2022 /PY 2020-2021]
 Corresponding to amendment to Section 43CA
 Property referred is the ‘residential unit’
 Conditions of 2nd Proviso to Section 43CA are not imported for this benefit. These clauses
related to capital gain exemption to transfer:
o By original fund to resulting fund
o Exchange of share/unit/interest holder in the scheme of relocation of Original Fund to
IFSC
SECTION 56(2)(x)
INCOME FROM OTHER SOURCES
 Section 43CA(1) – 2nd Proviso is mirror image of Section 56(2)(x)(B)
 Section 43CA(1) is on transfer v. Section 56(2)(x)(B) on receipt. Receipt need not

take during the time band
SECTION 80-IBA(1A) - DEDUCTIONS IN RESPECT OF PROFITS
AND GAINS FROM HOUSING PROJECTS
Newly inserted:
Where the gross total income of an assessee includes any profits and gains
derived from the business of developing and building rental housing project,
there shall be allowed a deduction of an amount equal to hundred per cent. of the
profits and gains derived from such business.
SECTION 80-IBA(2)(A)
 For the purposes of sub-section (1), a housing project shall be a project which
fulfils the following conditions, namely:
 the project is approved by the competent authority after the 1st day of June,
2016, but on or before the 31st day of March, 2022
SECTION 80-IBA(6)(DA)
Newly inserted:
(da) “rental housing project” means a project which is notified by the Central
Government in the Official Gazette under this clause on or before the 31st day of
March, 2022 and fulfils such conditions as may be specified in the said
notification;
SECTION 80-IBA
DEDUCTIONS: PROFITS & GAINS FROM HOUSING PROJECTS
 M – 16/NC - 26
 W.e.f. 01.04.2022; [AY 2022-23/ PY 2021-22]
 Section 80-IBA(1) grants tax holiday to housing project (HP)
 Section 80-IBA(1A) is inserted to provide tax holiday to rental housing project (RHP)
 RHP – Notified by Central Govt. on/before 31.03.2022 & fulfil prescribed conditions
 For HP [S. 80-IBA(1)], Section 80-IBA(2)(a) is amended to extend the time limit for
project approval to 31.03.2022
SECTION – 80EEA(3) - DEDUCTION IN RESPECT OF INTEREST
ON LOAN TAKEN FOR CERTAIN HOUSE PROPERTY
 The deduction under sub-section (1) shall be subject to the following

conditions, namely:
 the loan has been sanctioned by the financial institution during the period
beginning on the 1st day of April, 2019 and ending on the 31st day of
March, 2022
SECTION 80EEA
DEDUCTION: INTEREST ON LOAN TAKEN FOR CERTAIN PROPERTY
 M – 19/NC - 24
 W.e.f. 01.04.2022 [AY 2022-2023 /PY 2021-2022]
 Section 80EEA grants deduction of interest > Rs. 1.5 Lakhs
 Section 80EEA(3)(i) to (iii) give conditions
 Section 80EE(3)(i) is amended to extend the loan sanction date to 31.03.2022

START UPS
SECTION – 80-IAC - SPECIAL PROVISION IN RESPECT OF
SPECIFIED BUSINESS
 "eligible start-up“ means a company or a limited liability partnership engaged

in eligible business which fulfils the following conditions, namely:
 it is incorporated on or after the 1st day of April, 2016 but before the 1st day of
April, 2022
SECTION 80-IAC
SPECIAL PROVISION IN RESPECT OF SPECIFIED BUSINESS
 M – 25/NC - 25
 W.e.f. 01.04.2021; [AY 2021-22/ PY 2020-21]
 Section 80-IAC – Explanation (ii)(a) – Company/LLP to be incorporated before

01.04.2021
 Amended to extend the same to 01.04.2022

TAX DEDUCTION AT SOURCE
&
TAX COLLECTED AT SOURCE
SECTION – 194 - DIVIDENDS
 (d) a “business trust”, as defined in clause (13A) of section 2, by a special

purpose vehicle referred to in the Explanation to clause (23FC) of section 10;
 (e) any other person as may be notified by the Central Government in the
Official Gazette in this behalf.
Business Trust [Sec 2(13A)]
Sec
Sec 194
10(23FC) Sec
10(23FCA)
Income of
Business w.e.f
Income of
Trust 01.04.2020
InVIT
By way of
By way of
a) Interest received or Dividend
renting or leasing or
receivable from SPV paid by SPV
letting out any real
b) Dividend received to BT
estate asset owned
or receivable from
directly by such
SPV
business trust
SECTION – 194 - COMMENTS
 M –33; NC – 44
 W.r.e.f. 01.04.2020;
SECTION – 2(48)
"zero coupon bond" means a bond:
(a) issued by any infrastructure capital company or infrastructure capital fund or

infrastructure debt fund or public sector company or scheduled bank on or after the
1st day of June, 2005;
(b) in respect of which no payment and benefit is received or receivable before maturity or
redemption from infrastructure capital company or infrastructure capital fund
infrastructure debt fund or or public sector company or scheduled bank; and
(c) which the Central Government may, by notification in the Official Gazette, specify in
this behalf.
SECTION – 2(48)
 Explanation 1: For the purposes of this clause, the expression "scheduled

bank" shall have the meaning assigned to it in clause (ii) of the Explanation to
sub-clause (c) of clause (viia) of sub-section (1) of section 36.
 Explanation 2: For the purposes of this clause, the expression “infrastructure

debt fund” shall mean the infrastructure debt fund notified by the Central
Government in the Official Gazette under clause (47) of section 10.
SECTION – 194A(3)(X) - INTEREST OTHER THAN "INTEREST
ON SECURITIES"
(x) to such income which is paid or payable by an infrastructure capital company

or infrastructure capital fund or infrastructure debt fund or a public sector
company or scheduled bank in relation to a zero coupon bond issued on or after
the 1st day of June, 2005 by such company or fund or public sector company or
scheduled bank
SECTION – 194A - COMMENTS
 M –20, 21; NC – 45
 W.e.f. 01.04.2022; [AY 2022-23; PY 2021-2022]
 Rule 8B of Income-tax Rules shall be amendment subsequently after the

Finance Bill 2021 is enacted.
Sec 194A(3)
Clause (x)
Infrastructure
Debt Fund
SECTION – 194-IB(4) - PAYMENT OF RENT BY CERTAIN
INDIVIDUALS OR HINDU UNDIVIDED FAMILY
 In a case where the tax is required to be deducted as per the provisions of

section 206AA or section 206AB, such deduction shall not exceed the amount
of rent payable for the last month of the previous year or the last month of the
tenancy, as the case may be.
SECTION – 194IB - COMMENTS
 M –77, 78; NC – 46;
 W.e.f. 01.07.2021;
SECTION – 194Q - DEDUCTION OF TAX AT SOURCE ON PAYMENT OF
CERTAIN SUM FOR PURCHASE OF GOODS.
(1) Any person, being a buyer who is responsible for paying any sum to any resident
(hereafter in this section referred to as the seller) for purchase of any goods of the value
or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at
the time of credit of such sum to the account of the seller or at the time of payment thereof
by any mode, whichever is earlier, deduct an amount equal to 0.1 per cent. of such sum
exceeding fifty lakh rupees as income-tax.
Explanation: For the purposes of this sub-section, “buyer” means a person whose total
sales, gross receipts or turnover from the business carried on by him exceed ten crore
rupees during the financial year immediately preceding the financial year in which the
purchase of goods is carried out, not being a person, as the Central Government may, by
notification in the Official Gazette, specify for this purpose, subject to such conditions as
may be specified therein.
SECTION – 194Q
(2) Where any sum referred to in sub-section (1) is credited to any account,
whether called “suspense account” or by any other name, in the books of account
of the person liable to pay such income, such credit of income shall be deemed to
be the credit of such income to the account of the payee and the provisions of this
section shall apply accordingly.
(3) If any difficulty arises in giving effect to the provisions of this section, the
Board may, with the previous approval of the Central Government, issue
guidelines for the purpose of removing the difficulty.
SECTION – 194Q
(4) Every guideline issued by the Board under sub-section (3) shall, as soon as
may be after it is issued, be laid before each House of Parliament, and shall be
binding on the income tax authorities and the person liable to deduct tax.
SECTION – 194Q
(5) The provisions of this section shall not apply to a transaction on which:
(a) tax is deductible under any of the provisions of this Act; and
(b) tax is collectible under the provisions of section 206C other than a
transaction to which sub-section (1H) of section 206C applies.
SECTION – 194Q - COMMENTS
 M – 76, 77; NC – 48;
 W.e.f. 01.07.2021;
 Tax is required to be deducted by such person (i.e., buyer) where the value or aggregate of such value of
such goods exceeds Rs. 50 lakhs during the previous year.
 TDS @ 0.1% of such sum exceeding Rs. 50 lakhs;
 In the absence of Permanent Account Number (PAN), the tax shall deducted at the higher of the
following rates:
(a) at the rate specified in the relevant provision of this Act or;
(b) at the rate or rates in force; or
(c) at the rate of 5%
SECTION 194Q - DEDUCTION OF TAX AT SOURCE ON PAYMENT OF
CERTAIN SUM FOR PURCHASE OF GOODS
 Mirror of section 206C(1H)
 Consider the Circular & FAQ on section 206C(1H)
 Implications of Section 40(a)(ia) on the buyer (safe bet is to deduct)
 Triangular situation between section 194O/ 194Q & 206C(1H) vs. 194O/ 194Q & 206C(1F)
SECTION 194Q
Section 194Q Section 206C(1H)

1. Buyer responsible for paying 1. Seller receiving any amount as consideration
2. Professional is not covered by Explanation 2. Professional not a seller of goods
3. 1st Year not available 3. 1st year NA

SECTION 194Q
1. Overlapping survives
a) All cases of overlapping between TDS & TCS – TCS
b) In a case covered by section 206C(1H) [2nd Proviso to section 206C(1H) – 194Q
2. How will not section 194Q & 206C(1H) overlap – They are identifcal
 Exemption notified for either but not both
3. Deductible vs. Deducted
4. Collectable vs. Collected

SECTION – 196D(1) INCOME OF FOREIGN INSTITUTIONAL
INVESTORS FROM SECURITIES
 Newly inserted Proviso:
Provided that where an agreement referred to in subsection (1) of section 90 or

sub-section (1) of section 90A applies to the payee and if the payee has furnished
a certificate referred to in sub-section (4) of section 90 or sub-section (4) of
section 90A, as the case may be, then, income-tax thereon shall be deducted at
the rate of twenty per cent. or at the rate or rates of income-tax provided in
such agreement for such income, whichever is lower.
Investment income of FII
DTAA Act
Lower rate 115AD(1)(a)
20%
Sec 196D
Amended to provide for applicable lower rate

SECTION – 196D - COMMENTS
 M – 33, 34; NC – 49;
 W.e.f. 01.04.2021;
 Currently on rate of TDS the benefit of agreement under section 90 or section 90A of the Act
cannot be given.
 It is now proposed in case of a payee to whom an agreement referred to section 90(1) or

section 90A (1) applies and such payee has furnished the tax residency certificate referred in
section 90 (4) or section 90A (4) of the Act;
 Then the tax shall be deducted at the rate of 20% or rate or rates of income-tax provided in
such agreement for such income, whichever is lower.
SECTION 196D - INCOME OF FOREIGN INSTITUTIONAL
INVESTORS FROM SECURITIES
 PILCOM (2020) 425 ITR 312 (SC) effect removed only for section 196D
 Ideally should have been removed for other sections as well.

SECTION – 206AA (1) - REQUIREMENT TO FURNISH
PERMANENT ACCOUNT NUMBER.
 Newly inserted Proviso:
Provided further that where the tax is required to be deducted under section
194Q, the provisions of clause (iii) shall apply as if for the words “twenty per
cent.”, the words “five per cent.” had been substituted.
SECTION – 206AA - COMMENTS
 M – 77, 78; NC – 48;
 W.e.f. 01.07.2021;
 In the absence of Permanent Account Number (PAN) with respect to payment

under section 194Q, the tax shall deducted at the higher of the following rates:
(a) at the rate specified in the relevant provision of this Act or;
(b) at the rate or rates in force; or
(c) at the rate of 5%
SECTION 206AA - REQUIREMENT TO FURNISH PERMANENT
ACCOUNT NUMBER
Disparity
[No PAN]
Sec 194Q 206C(1H)
5% 1%
[against 20%] [against 5%]
Sec 206AA Sec 206(1H)

[1st Proviso
r.w.s. 206CC]
SECTION – 206AB – SPECIAL PROVISION FOR DEDUCTION OF
TAX AT SOURCE FOR NON-FILERS OF INCOME TAX RETURN
(1) Notwithstanding anything contained in any other provisions of this Act, where tax is
required to be deducted at source under the provisions of Chapter XVIIB, other than
sections 192, 192A, 194B, 194BB, 194LBC or 194N on any sum or income or amount
paid, or payable or credited, by a person (hereafter referred to as deductee) to a specified
person, the tax shall be deducted at the higher of the following rates, namely:
(i) at twice the rate specified in the relevant provision of the Act; or
(ii) at twice the rate or rates in force; or
(iii) at the rate of five per cent.

SECTION – 206AB
(2) If the provisions of section 206AA is applicable to a specified person, in

addition to the provision of this section, the tax shall be deducted at higher of the
two rates provided in this section and in section 206AA.
SECTION – 206AB
(3) For the purposes of this section “specified person” means a person who has
not filed the returns of income for both of the two assessment years relevant to
the two previous years immediately prior to the previous year in which tax is
required to be deducted, for which the time limit of filing return of income under
sub-section (1) of section 139 has expired; and the aggregate of tax deducted at
source and tax collected at source in his case is rupees fifty thousand or more
in each of these two previous years:
Provided that the specified person shall not include a non-resident who does
not have a permanent establishment in India.
SECTION – 206AB
Explanation: For the purposes of this sub-section, the expression “permanent

establishment” includes a fixed place of business through which the business of
the enterprise is wholly or partly carried on.
SECTION – 206AB - COMMENTS
 M – 77, 78; NC – 51;
 W.e.f. 01.07.2021;
 a special provision providing for higher rate for TDS for the non-filers of income-tax
return. The tax shall deducted at the higher of the following rates:
(a) twice the rate specified in the relevant provision of the Act; or
(b) twice the rate or rates in force; or
(c) the rate of five per cent
SECTION 206AB - SPECIAL PROVISION FOR DEDUCTION OF
TAX AT SOURCE FOR NON-FILERS OF INCOME TAX RETURN
 Applies to all cases of TDS except :
- Sec 192 – Salary;

- Sec 192A – PF
- Sec 194B – Lottery
- Sec 194BB – Horse race
- Sec 194LBC – Securitization Trust
- Sec 194N – Bank withdrawal
 Basic condition – TDS under original section should be attracted

SECTION 206AB
 Applies to all payees Resident/ Non-resident (PE) – However resident payees xxxx
 Applies to only those Non-residents who have PE
 Applies even when payee has PAN
 How to ascertain whether specified person or not from payer’s end?
 Payment to NR with a Local office in India without TDS
 Local office is treated as PE by department.

SECTION – 206CCA – SPECIAL PROVISION FOR COLLECTION OF TAX
AT SOURCE FOR NON-FILERS OF INCOME-TAX RETURN
(1) Notwithstanding anything contained in any other provisions of this Act, where
tax is required to be collected at source under the provisions of Chapter XVII-
BB, on any sum or amount received by a person (hereafter referred to as
collectee) from a specified person, the tax shall be collected at the higher of the
following two rates, namely:
(ii) at the rate of five per cent.

SECTION – 206CCA
(2) If the provisions of section 206CC is applicable to a specified person, in

addition to the provisions of this section, the tax shall be collected at higher of the
two rates provided in this section and in section 206CC.
SECTION – 206CCA
(3) For the purposes of this section “specified person” means a person who has not filed the
returns of income for both of the two assessment years relevant to the two previous years
immediately prior to the previous year in which tax is required to be collected, for which the time
limit of filing return of income under sub-section (1) of section 139 has expired; and the
aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand
or more in each of these two previous years:
Provided that the specified person shall not include a non-resident who does not have a
permanent establishment in India.
Explanation: For the purposes of this sub-section, the expression “permanent establishment”
includes a fixed place of business through which the business of the enterprise is wholly or
partly carried on.’
SECTION – 206CCA - COMMENTS
 M – 77, 78; NC – 52;
 W.e.f. 01.07.2021;
 any sum or amount received by a person from a specified person. The tax shall
collected at the higher of the following rates:
(ii) at the rate of five per cent

CAPITAL GAINS
PERSONAL TAXATION
SECTION 2(42C)
DEFINITION OF ‘SLUMP SALE’
SECTION 2(42C)
in clause (42C),──
(I) for the words “undertaking as a result of the sale”, the words “undertaking, by any
means,” shall be substituted;
(II) after Explanation 2, the following Explanation shall be inserted, namely:––
‘Explanation 3.––For the purposes of this clause, “transfer” shall have the meaning
assigned to it in clause (47);’;
SECTION 2(42C)
 w.e.f 01.04.2021 [AY 2021-22/PY 2020-21]
 Mem – 60 to 61
 NC – Clause 3
SECTION 2(42C) - COMMENTS
 ‘Transfer by any means’ is substituted for ‘as a result of sale’.
 Slump exchanges are brought in.
 Computation is an issue as there is a difference between FVC v. FMV
 Decision in Bharat Bijlee (2014) 365 ITR 258 (Bom) undone.
 Decision in Srei Infra (2012) 207 Taxman 74 (Delhi) upheld.

 Srei Infra [SLP is pending].
s
 Section 2(42C) has the word ‘undertaking ’ and not ‘undertaking’.
 ‘transfer’…..’by any means’
Already wide enough
Why apply sec 2(47) through Explanation 3.
 Effect of section 2(47) Explanation 2
 Various clauses of sec 2(47) like (iv), (iva), (v) , (vi) etc may not be relevant.
PARTNERSHIP FIRM
SECTIONS 45 (4) & (4A)
 w.r.e.f 01.04.2021 [AY 2021-22 & subsequent AYs]
 Mem – 61 to 64
 Section 45 (4) – Substituted
 Section 45 (4A) – Newly Inserted

SECTION 45(4)
DISSOLUTION OR RECONSTITUTION OF SPECIFIED ENTITY
Existing Section New Section

Didn’t have non-withstanding clause to Provides for non-withstanding clause to
Section 45(1) Section 45(1)
Used ‘transfer’ of a capital asset by way of Uses ‘receives’ as against ‘transfer’
dissolution
[Punjab Steel 571 ITR 1 (SC)]
Dealt with the occasion of ‘dissolution or Deals only with ‘dissolution or re-
otherwise’ constitution’
Conspicuously avoids reference to

‘otherwise’
SECTION 45(4)
Existing Section New Section

FMV was FVC and actual cost of
acquisition was not dealt with
Receipt of capital asset which represents balance

in his capital account
This means that such partner should have

contributed the very same capital asset
Transfer by firm to Partner on other occasion is

not covered
SECTION 45(4)
New Section
Meaning of specified person – Explanation (iii)
o Partner or member in any PY
o Will cover ex-partner/ex-member
Proviso:
o Capital balance to ignore revaluation/self-generated asset/other self-generated asset
Cost of acquisition – Section 45(4)(b):
o To be determined under this chapter
Meaning of ‘at the time of’:
o Time gap between receipt & dissolution/reconstitution
o ‘at the time of’ v. ‘on the occasion of’
SECTION 45(4)
New Section
Reconstitution of firm:
o As per Partnership Act: Chapter v. Section 31 to
o As per Section 187: Change in constitution [Section 187(2)]
Reconstitution of AOP/BOI?
Section 45(4) overrides not only Section 45(1), also whole of the Act for the purpose of
Section 48: Section 46(2)
LTCG or STCG
Section 45 (4) – Existing Section 45 (4) – Proposed
The profits or gains arising from the Notwithstanding anything contained in sub-section
transfer of a capital asset by way of (1), where a specified person receives during the
distribution of capital assets on the previous year any capital asset at the time of
dissolution of a firm or other association of dissolution or reconstitution of the specified entity,
persons or body of individuals (not being a which represents the balance in his capital account in
company or a co-operative society) or the books of accounts of such specified entity at the
otherwise, shall be chargeable to tax as the time of its dissolution or reconstitution, then any
income of the firm, association or body, of profits or gains arising from receipt of such capital
the previous year in which the said transfer asset by the specified person shall be chargeable to
takes place and, for the purposes of section income-tax as income of such specified entity under
48, the fair market value of the asset on the the head "Capital gains" and shall be deemed to be
date of such transfer shall be deemed to be the income of such specified entity of the previous
the full value of the consideration received year in which such capital asset was received by
or accruing as a result of the transfer. the specified person and notwithstanding anything to
the contrary contained in this Act, for the purposes of
section 48,––
Section 45 (4) Section 45 (4) – Proposed
– Existing
(a) fair market value of the capital asset on the date of such receipt
shall be deemed to be the full value of the consideration received or
accruing as a result of the transfer of such capital asset; and
(b) the cost of acquisition of the capital asset shall be determined in

accordance with the provisions of this Chapter:
Provided that the balance in the capital account of the specified

person in the books of account of the specified entity is to be
calculated without taking into account increase in the capital account
of the specified person due to revaluation of any asset or due to self-
generated goodwill or any other self-generated asset.
Section 45 (4) – Section 45 (4) – Proposed
Existing
Explanation.––For the purposes of this sub-section,––
(i) “specified entity” means a firm or other association of persons or

body of individuals (not being a company or a cooperative society);
(ii) “self-generated goodwill” and “self-generated asset” mean goodwill

or asset, as the case may be, which has been acquired without incurring
any cost for purchase or which has been generated during the course of
the business or profession;
(iii) “specified person” means a person who is partner of a firm or

member of other association of persons or body of individuals (not being
a company or a cooperative society), in any previous year.
SECTIONS 45 (4A)
Notwithstanding anything contained in sub-section (1), where a specified person

receives during the previous year any money or other asset at the time of
dissolution or reconstitution of the specified entity, which is in excess of the
balance in his capital account in the books of accounts of such specified entity at
the time of its dissolution or reconstitution, then any profits or gains arising from
receipt of such money or other asset by the specified person shall be
chargeable to income-tax as income of such specified entity under the head
"Capital gains" and shall be deemed to be the income of such specified entity of
the previous year in which such money or other asset was received by the
specified person and notwithstanding anything to the contrary contained in this
Act, for the purposes of section 48,––
(a) value of any money or the fair market value of other asset on the
date of such receipt shall be deemed to be the full value of the
consideration received or accruing as a result of the transfer of such
capital asset; and
(b) the balance in the capital account of the specified person in the
books of accounts of the specified entity at the time of its dissolution
or reconstitution shall be deemed to be the cost of acquisition:
Provided that the balance in the capital account of the specified
person in the books of account of the specified entity is to be
calculated without taking into account increase in the capital account
of the specified person due to revaluation of any asset or due to self-
generated goodwill or any other self-generated asset.
Explanation.––For the purpose of this sub-section, the expressions

“specified entity”, “self-generated goodwill”, “self generated asset”
and "specified person" shall have the meaning respectively assigned
to them in sub-section (4).
SECTION 45(4A)
 M – 62 & 63/NC - 14
 W.r.e.f. 01.04.2021 [AY 2021-2022/PY 2020-2021
 Applies for receipt of money/other asset
 At the time of dissolution or reconstitution
 How money/other asset – capital balance
 It should be money/FMV of other asset

SECTION 45(4A)
 If Specified Person receives money/other asset: His capital balance, on date of receipt
Specified Entity is liable to capital gains tax
 Delta is FMV + Money = Balance in capital a/c [without revaluation]
 Other Asset [Section 45(4A) v. Capital Asset [Section 45(4)]
 ‘Such’ – No such reference
 No reference to ‘capital asset’ anywhere in Section 45(4A) except in Clause (a)
 LTCG/STCG
SECTION 45(4A)
 Indexation?
 Section 45(4) is different from Section 45(4A)
 Section 45(4) refers to chapter
 Section 45(4A) refer to capital A/c balance
 No indexation under Section 45(4A) [Overrides entire Act]

POINTS
 What if money is received by the retiring partner from continuing

partners
 What if money is received by the retiring partner from incoming

partners
 What is the position if a partner receives money or other asset from

the firm on occasion other than D/R
Section 45 (4) – Proposed Section 45 (4A) – Proposed
A specified person receives during the previous year A specified person receives during the previous year
any capital asset at the time of dissolution or any money or other asset at the time of dissolution or
reconstitution of the specified entity, reconstitution of the specified entity,
which represents the balance in his capital account which is in excess of the balance in his capital account
in the books of accounts of such specified entity at the in the books of accounts of such specified entity at the
time of its dissolution or reconstitution, then time of its dissolution or reconstitution, then
any profits or gains arising from receipt of such any profits or gains arising from receipt of such
capital asset by the specified person shall be money or other asset by the specified person shall be
chargeable to income-tax as income of such chargeable to income-tax as income of such specified
specified entity under the head "Capital gains" and entity under the head "Capital gains" and
shall be deemed to be the income of such specified shall be deemed to be the income of such specified
entity of the previous year in which such capital entity of the previous year in which such money or
asset was received by the specified person and other asset was received by the specified person and
notwithstanding anything to the contrary contained in notwithstanding anything to the contrary contained in
this Act, for the purposes of section 48 this Act, for the purposes of section 48
POSITION BEFORE PROPOSED AMENDMENT TO SEC 45(4)
 Compensation received by a partner from other existing partners for

reduction in profit sharing ratio would not tantamount to CG
chargeable to tax under section 45(1) - Anik Industries Ltd. v. DCIT
[2020] 116 taxmann.com 385 (Mumbai - Trib.)
 On reconstitution of a partnership, when the immovable asset

transferred to the outgoing partner, no capital gains tax attracted in
the hands of the assessee firm u/s 45(4) - Vikas Academy v. ITO
2019-TIOL-2270-HC-MAD-IT;
 Where assessee firm decided to re-organise its business whereby a couple of
partners were retired and fresh partners were inducted but assets and
liabilities relating to business remained with assessee-firm, it was a case of
reconstitution of firm and thus, no CG could be said to arise under section
45(4) - G.H. Reddy & Associates v. ACIT [2019] 102 taxmann.com 399
(Madras)
National Company v. ACIT (2019) 415 ITR 5 (Madras):
 During relevant AY 2004-05, two partners of the assessee-firm retired and

the Firm continued by inducting another partner.
 Pursuant to immovable properties transferred to the retiring partners, the AO

had made capital gains addition u/s.45(4) in the hands of assessee-firm;
 Firstly, HC notes that it was only a case of reconstitution of partnership,
 Next HC refers to Sec. 4 of the Partnership Act to note that a partner has
right to obtain a share in profits during the subsistence of a partnership and
to get the value of his share in the net assets of the partnership upon firm
dissolution or retirement;
National Company v. ACIT (2019) 415 ITR 5 (Madras):
 HC held that “When a partner retires from a partnership he receives his share
in the partnership and this does not represent consideration received by him
in lieu of relinquishment of his interest in the partnership asset”,
 Thus, holds that there is no element of transfer of interest in the partnership

assets by the retiring partner to the continuing partners;
Savitri Kadur TS-257-ITAT-2019(Bang):
 During relevant AY, an MOU was signed whereby it was agreed that
assessee would retire from the firm and the other two partners will continue
the business, assessee was paid Rs.339.50 lakhs for giving up all her rights
as partner of the firm.
 The AO treated the difference between the sum received on retirement and
credit to capital account as capital gains.
Savitri Kadur TS-257-ITAT-2019(Bang):
 ITAT expounds on taxability in 3 scenarios where the retiring partner is paid:

(a) on the basis of amount lying in his/her capital account, (b) amount over
and above the sum lying in his/her capital account, or (c) a lump sum
consideration with no reference to the amount lying in his/her capital
account
 ITAT upholds Revenue’s action in taxing the excess payment to assessee (a

retiring partner) over and above the sum standing to the credit of his capital
account at the time of retirement, as capital gains. However, it modifies the
computation of capital gains by treating value of goodwill also as part of the
credit in the partners capital account.
 Dynamic Enterprises 359 ITR 83 (Karn) [FB] held that when a retiring
partner takes only money towards the value of the share and when there is no
distribution of capital asset/assets among the partners, there is no transfer of
capital asset and consequently, no profits or gains are payable under Section
45(4) of the Act.
 If new partners come into the partnership and bring cash by way of capital
contribution and the retiring partners take cash and retire, the retiring
partners are not relinquishing their interest in the immovable property. What
they relinquish is their share in the partnership. As there is no transfer of a
capital asset, no capital gains or profit can arise & s. 45(4) has no application
- PCIT vs. Electroplast Engineers TS-168-HC-2019(BOM).
SECTIONS 48
48. Mode of computation.—The income chargeable under the head

“Capital gains” shall be computed, by deducting from the full value of
the consideration received or accruing as a result of the transfer of the
capital asset the following amounts, namely:— ………….
(iii) in case of specified entity referred to in sub-section (4A) of section

45, the amount included in the total income of such specified entity
under sub-section (4A) of section 45 which is attributable to the
capital asset being transferred, calculated in the prescribed manner:
SECTION 48
COMPUTATION OF CAPITAL GAIN: 45(4A)
 M – 63/NC - 16
 W.e.f. 01.04.2021 [AY 2021-2022/PY 2020-2021]
 Applies in respect of subsequent transfer of capital asset
 Amount previously taxed under Section 45(4A) calculated as peer Rules prescribed
will be allowed as a deduction
 Memorandum says purpose is to avoid double taxation

SECTION 50 – COMPUTATION OF CAPITAL
GAINS IN CASE OF DEPRECIABLE ASSETS
In clause (2) to section 50: Proviso inserted
Provided that in a case where goodwill of a business or profession

forms part of a block of asset for the assessment year beginning on
the 1st day of April, 2020 and depreciation thereon has been obtained
by the assessee under the Act, the written down value of that block of
asset and short term capital gain, if any, shall be determined in such
manner as may be prescribed.
SECTION 50
 M – 70/NC - 18
 W.r.e.f. 01.04.2021 [AY 2021-2022 /PY 2020-2021]
 WDV of block & STCG to be determined as prescribed if block excluded depreciation as

on 01.04.2019
 Determination of WDV of block should also be provided in Section 43(6)
 What is WDV consists of only Goodwill
 Section 50 operates even when goodwill forming part of WDV is not sold, but some other
intangible is sold. Proviso still works
SECTION 54GB – CG EXEMPTION FOR
INVESTMENT IN ELIGIBLE START-UP
SECTION 54GB
 w.e.f 01.04.2021
 Mem – 25
Section 54GB (5) – Existing Section 54GB (5) – Proposed
The provisions of this section shall The provisions of this section shall not
not apply to any transfer of apply to any transfer of residential
residential property made after the property made after the 31st day of March,
31st day of March, 2017: 2017:
Provided that in case of an Provided that in case of an investment in

investment in eligible start-up, the eligible start-up, the provisions of this
provisions of this sub-section shall sub-section shall have the effect as if for
have the effect as if for the figures, the figures, letters and words 31st day of
letters and words 31st day of March, 2017, the figures, letters and words
March, 2017, the figures, letters 31st day of March, 2022 had been
and words 31st day of March, 2021 substituted.
had been substituted.
SECTION 55(2) - “COST OF ACQUISITION”
in relation to a capital asset, being in relation to a capital asset, being
goodwill of a business or a trade goodwill of a business or profession, or a
mark or brand name associated trade mark or brand name associated with
with a business or a right to a business or profession, or a right to
manufacture, produce or process manufacture, produce or process any
any article or thing or right to carry article or thing, or right to carry on any
on any business or profession, business or profession, or tenancy rights,
tenancy rights, stage carriage or stage carriage permits, or loom hours,
permits or loom hours,— —
(i) in the case of acquisition (i) in the case of acquisition of
of such asset by the assessee such asset by the assessee by
by purchase from a previous purchase from a previous owner,
owner, means the amount of
means the amount of the
the purchase price; and
purchase price; and
(ii) in the case falling under sub-

clauses (i) to (iv) of sub-section
(1) of section 49 and where such
asset was acquired by the
previous owner (as defined in
that section) by purchase, means
the amount of the purchase price
for such previous owner; and
(ii) in any other case [not (iii) in any other case, shall be taken to be
being a case falling under nil:
sub-clauses (i) to (iv) of
subsection (1) of section 49],
shall be taken to be nil;
Section 55 (2) Section 55 (2) (a) - Proposed
(a) - Existing
Provided that where the capital asset, being goodwill of a
business or profession, in respect of which a deduction on
account of depreciation under sub-section (1) of section 32 has
been obtained by the assessee in any previous year preceding the
previous year relevant to the assessment year commencing on or
after the 1st day of April, 2021, the provisions of sub-clauses (i)
and (ii) shall apply with the modification that the total amount of
depreciation obtained by the assessee under sub-section (1) of
section 32 before the assessment year commencing on the 1st
day of April, 2021 shall be reduced from the amount of purchase
price;
SECTION 55
 M – 70/NC - 20
 W.r.e.f. 01.04.2021 [AY 2021-2022 /PY 2020-2021]
 Section 55(1): Cost of Improvement/Section 55(2): Cost of acquisition
 Section 55(2)(a) is substituted by new clause
 Goodwill of a profession is also included in the scope of Section 55(2)(a)
 Section 55(2)(a(ii) amended to provide for cost of previous owner covered by Section
49(1)(i) to (iv)
SECTION 55
 Proviso added to remove depreciation claimed upto AY 2020-21 [PY 2019-20] on

goodwill shall be reduced from the purchase price
 How to determine depreciation on goodwill in the absence of Rules similar to proviso

to Section 50
 Block may have several intangibles: Goodwill and others

CAPITAL MARKET
SECTION 2(48)
DEFINITION OF ‘ZERO COUPON BOND’
SECTION 2(48)- DEFINITION OF ZERO COUPON BOND
In clause (48), with effect from the 1st day of April, 2022,––
(I) in sub-clause (a), after the words “infrastructure capital fund or”, the words “infrastructure debt fund or”
shall be inserted;
(II) in sub-clause (b), after the words “infrastructure capital fund or”, the words “infrastructure debt fund or”
shall be inserted;
(III) the Explanation shall be numbered as Explanation 1 thereof and after Explanation 1 as so numbered, the
following Explanation shall be inserted, namely:––
‘Explanation 2.—For the purposes of this clause, the expression “infrastructure debt fund” shall mean the
infrastructure debt fund notified by the Central Government in the Official Gazette under clause (47) of
section 10.’.
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M- 21, NC- 3
 Prior to proposed amendment, Zero Coupon Bond means bond,:
1. Issued by any infrastructure capital company or infrastructure capital fund or public sector company
or scheduled bank;
2. in respect of which no payment and benefit is received or receivable before maturity or redemption,
and,
3. notified by the Central Government in the Official Gazette.

 Sec 2(48) defines ‘zero coupon bonds’
 Infrastructure Debt Funds are allowed to issue Zero Coupon Bonds.
 Taxability of zero coupon bonds is dealt with by-
a) Sec 2(47)(iva) – Maturity/redemption treated as a transfer
b) Sec 2(42A) – 1st proviso period of holding is 12 months.

 Reference to Zero Coupon Bonds in the following sections:
 1st Proviso to Section 2(42A) : 12 months minimum holding
 Section 2(47)(iva) : Redemption or maturity deemed as transfer
 Section 36(1)(iiia) : Prorata allowance of discount during bond period
 1st Proviso to Section 112(1) – 10% tax without indexation
 Section 194A(3)(x) : No TDS on payment on account of Zero coupon bond

SPECIFIED FUND
SECTION 10(4D)
INCOME ACCRUED OR ARISEN TO OR RECEIVED BY A SPECIFIED FUND
SECTION 10(4D)
(a) with effect from the 1st day of April, 2022,––
(i) in clause (4D),––
(I) after the words “attributable to units held by non-resident (not being the permanent
establishment of a non-resident in India)”, the words “or is attributable to the
investment division of offshore banking unit, as the case may be,” shall be
inserted;
SECTION 10(4D)
(II) in the Explanation,––
(A) after clause (a), the following clause shall be inserted, namely:––
‘(aa) “investment division of offshore banking unit” means an investment division of a

banking unit of a non resident located in an International Financial Services Centre, as
referred to in sub-section (1A) of section 80LA and which has commenced its operations
on or before the 31st day of March, 2024’;
SECTION 10(4D)
(B) for clause (c), the following clause shall be substituted, namely:––
‘(c) “specified fund” means,––
(i) a fund established or incorporated in India in the form of a trust or a company or a limited liability
partnership or a body corporate,––
(I) which has been granted a certificate of registration as a Category III Alternative Investment Fund
and is regulated under the Securities and Exchange Board of India (Alternative Investment Fund)
Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992;
(II) which is located in any International Financial Services Centre; and
(III) of which all the units other than unit held by a sponsor or manager are held by non-residents; or
SECTION 10(4D)
(ii) investment division of an offshore banking unit, which has been––
(I) granted a certificate of registration as a Category III Alternative Investment Fund and
is regulated under the Securities and Exchange Board of India (Alternative Investment
Fund) Regulations, 2012, made under the Securities and Exchange Board of India Act,
1992 or which has commenced its operations on or before the 31st day of March, 2024;
and
(II) fulfils such conditions including maintenance of separate accounts for its investment
division, as may be prescribed;’;
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22).
 M – 17, NC – 5.
 Amended earlier by Taxation and Other Laws (Relaxation and Amendment of Certain
Provisions) Act, 2020.
Section 10(4D) prior to

Existing text as amended vide the
amendment vide the Taxation
Taxation and Other Laws
and Other Laws (Relaxation and Proposed text
(Relaxation and Amendment of
Amendment of certain
certain provisions) Act, 2020
provisions) Act, 2020
(4D) any income accrued or

(4D) any income accrued or (4D) any income accrued or
arisen to, or received by a
arisen to, or received by a arisen to, or received by a
specified fund as a result of
specified fund as a result of specified fund as a result of
transfer of capital asset
transfer of capital asset transfer of capital asset
referred to in clause (viiab)
referred to in clause (viiab) referred to in clause (viiab)
of section 47, ….
of section 47, … of section 47, ….

on a recognised stock on a recognised stock on a recognised stock

exchange located in any exchange located in any exchange located in any
International Financial International Financial International Financial
Services Centre and where Services Centre and where Services Centre and where the
the consideration for such the consideration for such consideration for such
transaction is paid or payable transaction is paid or payable transaction is paid or payable
in convertible foreign in convertible foreign in convertible foreign
exchange,…. exchange…. exchange…..

or as a result of transfer of as a result of transfer of

securities (other than shares securities (other than shares in
in a company resident in a company resident in India)
India)….. …..

or any income from securities or any income from securities

issued by a non-resident (not issued by a non-resident (not
being a permanent being a permanent
establishment of a non- establishment of a non-
resident in India) and where resident in India) and where
such income otherwise does such income otherwise does
not accrue or arise in not accrue or arise in
India……. India…….

or any income from a or any income from a

securitisation trust which is securitisation trust which is
chargeable under the head chargeable under the head
"Profits and gains of business "Profits and gains of business
or profession",….. or profession", ….

Existing text as amended vide
the Taxation and Other Laws
and Other Laws (Relaxation Proposed text
and Amendment of certain
to the extent such income to the extent such income

to the extent such income accrued
accrued or arisen to, or is accrued or arisen to, or is
or arisen to, or is received, ….
received …. received,….

Existing text as amended vide
amendment vide the
the Taxation and Other Laws
Taxation and Other
(Relaxation and Amendment Proposed text
Laws (Relaxation and
of certain provisions) Act,
2020
is attributable to units held is attributable to units held by non-

by non-resident (not being resident (not being the permanent
the permanent establishment of a non-resident in India)
in respect of units
establishment of a non- or is attributable to the investment
held by a non-resident
resident in India) division of offshore banking unit, as
computed in the prescribed the case may be, computed in the
manner. prescribed manner.
 Sec 10(4D) gives exemption with respect to capital gains from transfer of 115AC
bonds/masala bond/derivative/notified securities [sec 47(viiab)] to a specified fund.
 Such exemption is extended to investment division of an offshore banking unit

located in an IFSC & which commenced operations on or before 31.03.2024.
 Sec 10(4D) was amended by TOLA, 2020

 Amendment brought extend exemption to investment division of offshore banking

unit to the extent attributable to it and computed in the prescribed manner.
 ‘investment division of offshore banking unit’ defined in Explanation (aa) to

section 10(4D) as:
1. investment division of a banking unit of a non-resident,

2. located in an International Financial Services Centre,
3. As referred to in sub-section (1A) of section 80LA and
4. which has commenced its operations on or before the 31st day of March, 2024
 ‘investment division of offshore banking unit’ -

Investment division of a
banking unit of a Non
Resident Which has commenced
its operations on or
located in before the 31st day of
March, 2024
IFSC as referred to in
section 80LA(1A)
 Definition of ‘Specified Fund’ amended to include investment division of an offshore

banking unit, which has been––
(I) granted a certificate of registration as a Category III Alternative Investment Fund and
is regulated under the Securities and Exchange Board of India (Alternative Investment
Fund) Regulations, 2012, made under the Securities and Exchange Board of India Act,
1992 and which has commenced its operations on or before the 31st day of March, 2024;
and
(II) fulfils such conditions including maintenance of separate accounts for its investment
division, as may be prescribed;’;
AIF CATEGORY III
 As per regulation 3(4)(c) of SEBI (AIF) Regulations, 2021, Category III are
funds which employs diverse or complex trading strategies and may employ
leverage including through investment in listed or unlisted derivatives.
 Further, Explanation to said regulation provides that Alternative Investment

Funds such as hedge funds or funds which trade with a view to make short
term returns or such other funds which are open ended and for which no
specific incentives or concessions are given by the government or any other
Regulator shall be included.
SECTION 10(23FBC)
EXEMPTION IN RESPECT OF ANY INCOME ACCRUING OR ARISING TO, OR RECEIVED BY UNIT HOLDER
OF SPECIFIED FUND ON TRANSFER OF UNITS OF SPECIFIED FUND
SECTION 10(23FBC)
(c) after clause (23FBB), the following clause shall be inserted, with effect from the 1st
day of April, 2021, namely:—
"(23FBC) any income accruing or arising to, or received by, a unit holder from a
specified fund or on transfer of units in a specified fund.
SECTION 10(23FBC)
Explanation.—For the purposes of this clause, the expressions—
(a) "specified fund" shall have the same meaning as assigned to it in clause (c) of the
Explanation to clause (4D);
(b) "unit" means beneficial interest of an investor in the fund and shall include shares or
partnership interests.";
SECTION 10(23FBC) - COMMENTS
 W.e.f. 01.04.2021 (AY 2021-22/PY 2020-21).
 Inserted by Taxation The Taxation and Other Laws (Relaxation and Amendment of
certain provisions) act, 2020.
 Said section provides exemption in respect of any income accruing or arising to, or
received by unit-holder-
1. from a specified fund or

2. on transfer of units in a specified fund.
SECTION 10(23FBC) - COMMENTS
 Specified Fund shall have same meaning as assigned to it in section 10(4D).
 Unit means:
1. Beneficial interest of an investor in the fund, and
2. Shall include-
a) Shares in the fund
b) Partnership interests in the fund

SECTION 115AD (1)
In section 115AD of the Income-tax Act, with effect from the 1st day
of April, 2022,––
(i) in sub-section (1),––
(a) in the opening portion, after the words “a specified fund”, the
words “or investment division of an offshore banking unit” shall be
inserted;
SECTION 115AD
TAX ON INCOME OF FIIS FROM SECURITIES OR CAPITAL GAINS ARISING FROM
THEIR TRANSFER.
 M – 20/NC - 30
 W.e.f. 01.04.2022; [AY 2022-23 / PY 2021-22]
 TOLA 2020 amended
 Section 115AD to included specified fund under Section 115AD
 It is proposed to extend section to ‘Investment division of OBV’
 Concessional rate of 10% is provided for income from securities

SECTION 115AD (1) - COMMENTS
Section 115AD(1) prior to Existing text post amendment vide Proposed text
amendment vide the Taxation and the Taxation and Other Laws
Other Laws (Relaxation and (Relaxation and Amendment of
Amendment of certain provisions) certain provisions) Act, 2020
Act, 2020
Where the total income of a Where the total income of a Where the total income of a
the Taxation and Other Laws (Relaxation and Amendment of certain provisions) Act, 2020
Foreign Institutional Investor specified fund or Foreign specified fund or investment
includes— Institutional Investor includes division of an offshore banking
— unit or Foreign Institutional
….. Investor includes—
…..
…….
Act, 2020
(a) income received in (a) income received in respect (a) income received in respect of
respect of securities (other of securities (other than units securities (other than units referred
than units referred to in referred to in section 115AB); to in section 115AB); or
section 115AB); or or
Act, 2020
(b)theincome
Taxationbyand
way of Laws
Other short-(Relaxation
(b) incomeand by way of of
Amendment short- (b)provisions)
certain income Act,
by way
2020 of short-
term or long-term capital gains term or long-term capital gains term or long-term capital gains
arising from the transfer of such arising from the transfer of such arising from the transfer of such
securities, securities, securities,
the income-tax payable shall be the income-tax payable shall be the income-tax payable shall be
the aggregate of— the aggregate of— the aggregate of—
SECTION 115AD (1)(i)(B)
In section 115AD of the Income-tax Act, with effect from the 1st day of April, 2022,––
(i) in sub-section (1),––
(b) in clause (b), in sub-clause (i), in item (B), after the words “of specified fund”, the
words “or investment division of an offshore banking unit” shall be inserted;
SECTION 115AD (1)(i)(B) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22).
 M – 20, NC – 30.
 Substituted earlier by Taxation and Other Laws (Relaxation and Amendment of

Certain Provisions) Act, 2020.
 Section proposed to be extended to investment division of an offshore banking unit.

Section 115AD(1)(i) prior to Existing text post amendment Proposed text

amendment vide the Taxation vide the Taxation and Other
and Other Laws (Relaxation Laws (Relaxation and
and Amendment of certain Amendment of certain
provisions) Act, 2020 provisions) Act, 2020
(i) the amount of income-tax (i) the amount of income-tax (i) the amount of income-tax
calculated on the income in calculated on the income in calculated on the income in
respect of securities referred to respect of securities referred to respect of securities referred to
in clause (a), if any, included in in clause (a), if any, included in in clause (a), if any, included in
the total income, at the rate of the total income,— the total income,—
twenty per cent :
Section 115AD(1)(i) prior to Existing text Proposed text

amendment vide the
(Relaxation and Amendment
of certain provisions) Act,
2020
Provided that the amount of (A) at the rate of twenty per (A) at the rate of twenty per cent. in
income-tax calculated on the cent. in case of Foreign case of Foreign Institutional Investor;
income by way of interest Institutional Investor;
referred to in section 194LD (B) at the rate of ten per cent. in case
shall be at the rate of five per (B) at the rate of ten per of specified fund or investment
cent; cent. in case of specified division of an offshore banking unit;
fund;
SECTION 115AD(1A)
(b) after sub-section (1), the following sub-section shall be inserted, namely:—
"(1A) Notwithstanding anything contained in sub-section (1), in case of specified fund,

the provision of this section shall apply only to the extent of income that is attributable
to units held by non-resident (not being a permanent establishment of a non-resident in
India) calculated in the prescribed manner."
SECTION 115AD(1A) - COMMENTS
 W.e.f. 01.04.2021 (AY 2021-22/PY 2020-21).
 Inserted by Taxation The Taxation and Other Laws (Relaxation and Amendment of
certain provisions) act, 2020.
 Section 115AD(1) provides for special rates of tax in the case of Foreign Institutional
Investors ,Specified Fund as referred to in section 10(4D) and Investment division of
an offshore banking as referred to in section 10(4D)[as proposed].
SECTION 115AD(1A) - COMMENTS
 Section 115AD(IA) provides that the special rates provided in sections 115AD(1)
shall apply only to the extent of income that is attributable to units held by a non-
resident(not being a permanent establishment of an non-resident).
SECTION 115AD (1B)
after sub-section (1A), the following sub-section shall be inserted, namely:––
“(1B) Notwithstanding anything contained in subsection (1), in case of investment

division of an offshore banking unit, the provisions of this section shall apply to the
extent of income that is attributable to the investment division of such banking units,
referred to in sub-clause (ii) of clause( c) to the Explanation to clause (4D) of section
10, as a Category-III portfolio investor under the Securities and Exchange Board of
India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities And
Exchange Board of India Act, 1992, calculated in such manner as may be prescribed.”;
SECTION 115AD (1B) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22).
 M – 20, NC – 30.
 Special Tax rates in section 115AD(1) would apply to the investment division of an
offshore banking unit only to the extent of income that is attributable to the investment
division of such banking unit as a Category-III portfolio investor under the Securities
and exchange Board of India (Foreign Portfolio investors) Regulations, 2019 made
under the Securities And Exchange Board of India Act, 1992 (15 of 1992), calculated in
the prescribed manner.
SECTION 115AD (2)
in sub-section (2), after the words “the specified fund” at both the places where they
occur, the words “or investment division of an offshore banking unit” shall be inserted;
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22).
 M – 20, NC – 30.
 Amendment consequential to amendment to section 115AD(1).
 Investment division of an offshore banking unit included.

Section 115AD(2) prior to Existing text post amendment Proposed text

Where the gross total income of Where the gross total income of Where the gross total income of
the Foreign Institutional the specified Fund or Foreign the specified Fund or
Investor— Institutional Investor— investment division of an
offshore banking unit or
Foreign Institutional Investor—
Section 115AD(2) prior to Existing text post amendment Proposed text
(a) consists only of income in (a) consists only of income in (a) consists only of income in
respect of securities referred to respect of securities referred to respect of securities referred to
in clause (a) of sub-section (1), in clause (a) of sub-section (1), in clause (a) of sub-section (1),
no deduction shall be allowed no deduction shall be allowed no deduction shall be allowed
to it under sections 28 to 44C or to it under sections 28 to 44C or to it under sections 28 to 44C or
clause (i) or clause (iii) of clause (i) or clause (iii) of clause (i) or clause (iii) of
section 57 or under Chapter VI- section 57 or under Chapter VI- section 57 or under Chapter VI-
A; A; A;
Section 115AD(2) prior to Existing text Proposed text
and Other Laws (Relaxation and
(b) includes any income referred to (b) includes any income referred to (b) includes any income referred to
in clause (a) or clause (b) of sub- in clause (a) or clause (b) of sub- in clause (a) or clause (b) of sub-
section (1), the gross total income section (1), the gross total income section (1), the gross total income
shall be reduced by the amount of shall be reduced by the amount of shall be reduced by the amount of
such income…. such income…. such income ….
Section 115AD(2) prior to Existing text Proposed text
and Other Laws (Relaxation and
and the deduction under Chapter and the deduction under Chapter and the deduction under Chapter
VI-A shall be allowed as if the VI-A shall be allowed as if the VI-A shall be allowed as if the
gross total income as so reduced, gross total income as so reduced, gross total income as so reduced,
were the gross total income of the were the gross total income of the were the gross total income of the
Foreign Institutional Investor. specified Fund or Foreign specified Fund or investment
Institutional Investor. division of an offshore banking
unit or Foreign Institutional
Investor.
EXPLANATION TO SECTION 115AD
in the Explanation, after clause (a), the following clause shall be inserted, namely:–––
“(aa) the expression “investment division of offshore banking unit” shall have the
meaning assigned to it in clause (aa) of the Explanation to clause (4D) of section 10;”.
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22).
 M – 20, NC – 30.
 Amendment consequential to amendment to section 115AD(1).
 Investment division of an offshore banking unit assigned same meaning as assigned

to it in section 10(4D)(aa).
SECTION 10(4D) v. SECTION 115AD(1) [w.r.t. TO SPECIFIED
FUNDS]
Incomes exempt under section 10(4D) Incomes taxable under section 115AD(1)
Incomes as a result of transfer of a capital

asset referred to in section 47(viiab) [bond
or GDR u/s 115AC(1), Rupee Denominated
Bond, derivative or such other security as
may be notified] on a recognized stock
exchange located in any IFSC, where
consideration is paid or payable in
convertible foreign currency.
FUNDS]
Income as a result of transfer of securities Income by way of STCG and LTCG arising
[other than shares of a company resident in on account of transfer of securities.
India]
Securities means securities under Securities
Contracts (Regulation) Act, 1956. Thus, it
would apply only to securities issued by
Indian companies.
FUNDS]
Income from securities issued by a non- Income received in respect of securities

resident (not being a PE of a non-resident) (other than units referred to in section
and where such income otherwise does not 115AB [units of UTI referred to in section
accrue or arise in India. 10(23D)])
Securities means securities under Securities

Contracts (Regulation) Act, 1956. Thus, it
would apply only to securities issued by
Indian companies.
FUNDS]
Income from a securitization trust

chargeable under the head PGBP (since
securitization trusts are pass through under
section 115TCA)
Specified Fund (SF) [Sec 10(4D)]
Existing Newly added
Fund established or incorporated in India

Investment division of Offshore
In the form of trust or a company or LLP or body Banking Unit of NR in IFSC
corporate
1. Cat III AIF regulated under SEBI (AIF)
Regulations, 2012; and
2. located in IFSC
3. Of which all units held by non-residents other
than units held by sponsor or manager
Specified Fund [Exp (c) to sec 10(4D)]
Specified Fund all unit holders
L1- T/f of sec 47(viiab)

investments Sec 10(23FBC)
L2- T/f of securities (other than

1. All incomes
shares of company resident in India)
L3- income from securities issued by 2. Capital gains

NR [Not being PE of NR]
3. Includes residents,
L4- income from securitization trust sponsors, managers
under the head PGBP
Contd…
Overarching
conditions
L1 to L4 should
be attributable
to
IBD of OBU of
Units held by NR
NR (not being a
PE of NR)
Note : SF is AIF III and hence is not a pass through

Sec 115AD(1) – FII and
SF
(a) (b)
Investment CG
Sec Sec
115AD(1) 115AD(1)
(i) (ii) &
115AD(1)
(iii)
SF
L1 to L4 L5 to LN
Attribution Attribution
conditions satisfied conditions satisfied
Yes No Yes No
Sec Normal Sec Normal

10(4D) rates 115AD rates
Sec 115AD(1)
FII SF [Excluding ID of Investment

OBU] division of
Offshore Banking
Unit [qualifying
as SF]
SECTION 10(4E)
INCOME ACCRUED OR ARISEN TO OR RECEIVED BY A NON-RESIDENT AS A RESULT OF TRANSFER OF
NON-DELIVERABLE FORWARD CONTRACT WITH AN OFFSHORE BANKING UNIT IN AN IFSC.
SECTION 10(4E)
(ii) after clause (4D), the following clauses shall be inserted, namely:––
“(4E) any income accrued or arisen to, or received by a non-resident as a result of

transfer of non-deliverable forward contracts entered into with an offshore banking unit
of an International Financial Services Centre as referred to in sub-section (1A) of
section 80LA, which fulfils such conditions as may be prescribed;”
SECTION 10(4E) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 18, NC – 5.
 Proposed amendment to exempt any income:
1. accrued or arisen to, or received by a non-resident,

2. as a result of transfer of non-deliverable forward contracts,
3. entered into with an offshore banking unit of International Financial Services Centre,
4. which commenced operations on or before the 31st day of Mach, 2024 and fulfils
prescribed conditions.
NR
Income
Transfer of FW
NBFC
In OBU of
IFSC
 NA on settlement.
 FW entered into
 Is it taxable in the hands of NR – unless brought under section 9(1)(i)
 P.H. Divecha 48 ITR 222 (SC)

SECTION 10(4F)
INCOME OF A NON-RESIDENT BY WAY OF ROYALTY ON ACCOUNT OF LEASE OF AN AIRCRAFT PAID BY A
UNIT OF AN IFSC
SECTION 10(4F)
(4F) any income of a non-resident by way of royalty, on account of lease

of an aircraft in a previous year, paid by a unit of an International
Financial Services Centre as referred to in sub-section (1A) of section
80LA, if the unit––
(i) is eligible for deduction under the said section for that previous year;
and
(ii) has commenced its operations on or before the 31st day of March,
2024.”;
SECTION 10(4F) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 18, NC – 5.
1. of a non-resident,
2. by way of royalty,
3. on account of lease of an aircraft in a previous year,
4. paid by a unit of an International Financial Services Centre,
5. if the unit is eligible for deduction under section 80LA for that previous year, and
6. has commenced operation on or before the 31st day of the March, 2024.
 Explanation 2 (iva) read with Explanation 5 to section 9(1)

NR
Eligible for sec
Paid by a unit in IFSC 80LA
Royalty
Commenced
For lease of an on/before
aircraft 31.03.2024
RELOCATION FROM ORIGINAL FUND TO
RESULTANT FUND
SECTIONS 47(viiac) & 47(viiad) – Transactions not regarded as a
transfer
(c) after clause (viiab), the following clauses shall be inserted with effect from the 1st
day of April, 2022, namely:––
‘(viiac) any transfer, in a relocation, of a capital asset by the original fund to the
resulting fund;
(viiad) any transfer by a shareholder or unit holder or interest holder, in a relocation, of a

capital asset being a share or unit or interest held by him in the original fund in
consideration for the share or unit or interest in the resultant fund;
transfer
Explanation.–– For the purposes of clauses (viiac) and (viiad),––
(a) “original fund” means a fund established or incorporated or registered outside India,
which collects funds from its members for investing it for their benefit and fulfills the
following conditions, namely:—
(i) the fund is not a person resident in India;
(ii) the fund is a resident of a country or a specified territory with which an agreement
referred to in sub-section (1) of section 90 or subsection (1) of section 90A has been
entered into; or is established or incorporated or registered in a country or a specified
territory as may be notified by the Central Government in this behalf;
transfer
(iii) the fund and its activities are subject to applicable investor protection regulations in
the country or specified territory where it is established or incorporated or is a resident;
and
(iv) fulfils such other conditions as may be prescribed;

transfer
(b) “relocation” means transfer of assets of the original fund to a resultant fund on or
before the 31st day of March, 2023, where consideration for such transfer is discharged
in the form of share or unit or interest in the resulting fund to the shareholder or unit
holder or interest holder of the original fund in the same proportion in which the share
or unit or interest was held by such shareholder or unit holder or interest holder in such
original fund;
transfer
(c) “resultant fund” means a fund established or incorporated in India in the form of a
trust or a company or a limited liability partnership, which––
(i) has been granted a certificate of registration as a Category I or Category II or

Category III Alternative Investment Fund, and is regulated under the Securities and
Exchange Board of India (Alternative Investment Fund) Regulations, 2012 made under
the Securities and exchange Board of India Act, 1992; and
(ii) is located in any International Financial Services Centre as referred to in sub-section

(1A) of section 80LA;’.
SECTIONS 47(viiac) & 47(viiad) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22).
 M – 19, NC – 15.
 Transfer in relocation, of a capital asset by the original fund to the resultant fund not considered
as transfer for capital gain tax purpose under section 47(viiac).
 Transfer by a shareholder or unit holder or interest holder, in a relocation, of a capital asset being
a share or unit or interest held by him in the original fund in consideration for the share or unit or
interest in the resultant fund not treated as transfer for the purpose of capital gains under section
47(viiab).
SECTION 47(viiac) & (viiad)
CERTAIN TRANSFERS NOT REGARDED AS TRANSFER
Relocation of original fund to the resulting und is made tax neutral
Section 47(viiac) Section 47(viiad)

Original Fund Shareholder/unit holder/internal holder in original fund
No tax on gain due to relocation
 See also new Section 10(23FF)


‘Original Fund’ is a fund:
1.established or incorporated or registered outside India,

2.which collects funds from its members for investing it for their benefit, and
3.fulfils the following conditions, namely:
a)the fund is not a person resident in India

b)the fund is a resident of a country or a specified territory with which an agreement referred to in sub-
section (1) of section 90 or sub-section (1) of section 90A has been entered into; or is established or
incorporated or registered in a country or a specified territory notified by the Central Government in
this behalf,
c)the fund and its activities are subject to applicable investor protection regulations in the country or
specified territory where it is established or incorporated or is a resident; and
d)fulfils such other conditions as prescribed;
 ‘Relocation’ is proposed to be defined as:
1. transfer of assets of the original fund to a resultant fund on or before the 31st day of
March, 2023, where,
2. consideration for such transfer is discharged in the form of share or unit or interest in
the resulting fund to the shareholder or unit holder or interest holder of the original
fund
3. in the same proportion in which the share or unit or interest was held by such
shareholder or unit holder or interest holder in such original fund.
 ‘Resultant fund’ is proposed to be defined as a fund established or incorporated in

India in the form of a trust or a company or a limited liability partnership, which-
(a) has been granted a certificate of registration as a Category I or Category II or

Category III Alternative Investment Fund, and is regulated under the Securities and
Exchange Board of India (Alternative Investment Fund) Regulations, 2012, made
under the Securities and exchange Board of India Act, 1992 (15 of 1992); and
(b) is located in any International Financial Services Centre as referred to in sub-section

(1A) of section 80LA.
 As per Regulation 3(4)(a) of SEBI (AIF) Regulations, 2012, Category I AIF means
fund which invests in start-up or early stage ventures or social ventures or SMEs or
infrastructure or other sectors or areas which the government or regulators consider as
socially or economically desirable and shall include venture capital funds, SME
Funds, social venture funds, infrastructure funds and such other Alternative
Investment Funds as may be specified
 Further, Explanation to regulation 3(4)(a) provides that the Alternative Investment

Funds which are generally perceived to have positive spillover effects on economy
and for which the Board or Government of India or other regulators in India might
consider providing incentives or concessions shall be included and such funds which
are formed as trusts or companies shall be construed as “venture capital company” or
“venture capital fund” as specified under sub-section (23FB) of Section 10 of the
Income Tax Act, 1961.
 As per Regulation 3(4)(b) of SEBI (AIF) Regulations, 2012, Category II AIF means
fund which does not fall in Category I and III and which does not undertake leverage
or borrowing other than to meet day -to- day operational requirements and as
permitted in these regulations ;
 Further, Explanation to regulation 3(4)(b) provides that Alternative Investment Funds

such as private equity funds or debt funds for which no specific incentives or
concessions are given by the government or any other Regulator shall be included.
 As per regulation 3(4)(c) of SEBI (AIF) Regulations, 2021, Category III AIF are
funds which employ diverse or complex trading strategies and may employ leverage
including through investment in listed or unlisted derivatives.
 Further, Explanation to said regulation provides that Alternative Investment Funds

such as hedge funds or funds which trade with a view to make short term returns or
such other funds which are open ended and for which no specific incentives or
concessions are given by the government or any other Regulator shall be included.
SECTIONS 49– Cost of acquisition of capital assets which became the property of
the assessee under any transfer referred to in sections 47(viiac) and 47(viiad)
In section 49 of the income-tax Act, in sub-section (1), in clause (iii), in sub-clause (e),
after the words, brackets, figures and letters “clause (vicc) or”, the words, brackets,
figures and letters “clause (viiac) or clause (viiad) or” shall be inserted with effect from
the 1st day of April, 2022.
SECTION 49 - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22).
 M – 19, NC – 17.
 Consequential to insertion of sections 47(viiac) and 47(viiad).
 Cost of acquisition of asset relocated by original fund to the resultant fund [as envisaged in section
47(viiac)] in the hands of the resultant fund would be the cost of acquisition in the hands of original fund
(previous owner).
 Cost of acquisition of shares or units or interests held by a shareholder or unit holder or interest holder in the
resultant fund shall be cost of acquisition of shares or units or interests in the original fund.
CLAUSE (IX) TO PROVISO TO SECTION 56(2)(x)(c)
In section 56 the Income-tax Act, in sub-section (2), in clause (x),––
(b) in the proviso, in clause (IX) after the words, brackets and figures “clause (vii)”, the
words, brackets, figures and letters “or clause (viiac) or clause (viiad)” shall be inserted
with effect from the 1st day of April, 2022.
CLAUSE (IX) TO PROVISO TO SECTION 56(2)(x)(c) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22).
M– 19, NC – 21.
 Consequential to insertion of sections 47(viiac) and 47(viiad).

SECTION 79- CARRY FORWARD AND SET OFF OF LOSSES IN
CASE OF CERTAIN COMPANIES
In section 79 of the Income-tax Act, in sub-section (2), after clause (d), the following
clause shall be inserted with effect from the 1st day of April, 2022, namely:––
“(e) to a company to the extent that a change in the shareholding has taken place during
the previous year on account of relocation referred to in the Explanation to clause (viiac)
and (viiad) of section 47.”.
SECTION 79
C/W & SET OFF OF LOSSES IN CASE OF CERTAIN COMPANIES
 M – 19/NC - 23
 W.e.f. 01.04.2022 [AY 2022-2023 /PY 2021-2022]
 A change in shareholding may take place in a company due to original fund

transferring such shares to resulting fund
SECTION 10(23FF)
(f) after clause (23FE), the following clause shall be inserted with effect from the 1st
day of April, 2022, namely:––
‘(23FF) any income of 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, and where capital gains on such shares were not chargeable to tax if that
relocation had not taken place.
Explanation.––For the purposes of this clause, the expressions “original fund”,

“relocation” and “resultant fund” shall have the meanings respectively assigned to them
in the Explanation to clause (viiac) and clause (viiad) of section 47;’;
SECTION 10(23FF) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 18, NC – 5.
1. in the nature of capital gains,

2. arising or received by a non-resident,
3. which is on account of transfer of share of a company resident in India by the resultant fund,
and
4. such shares were transferred from the original fund to the resultant fund in relocation,
5. if capital gains on such shares were not chargeable to tax had that relocation not taken place.
 Meaning of terms ‘Original Fund’, ‘Relocation’ and ‘Resultant Fund’ as defined in

sections 47(viiac) and 47(viiad).
 As per section 115UB, Category I and Category II AIF are treated as pass through
entities. Hence, capital gains earned from alienation of shares of a company resident
in India such investment fund is taxable in the hands of the non-resident unit holder.
Hence, the above exemption has been given in the hands of the non-resident unit
holder under section 10(23FF).
 Had the original fund transferred such shares of a company resident in India, the unit
holder would have not been liable to tax as the fund would be taxed in respect of the
same. That is why the section uses the word, “if capital gains on such shares were not
chargeable to tax had that relocation not taken place.”
Original Fund (OF)
Fund established or incorporated or registered outside India
Collects funds from its members for investing it for their benefit
and
Fulfils following conditions-

1. Fund is not person resident in India.
2. Fund is a resident of resident of treaty country or specified territory or
established, registered or incorporated in notified country or territory
3. Fund and activities subject to investor protection regulations in country or
specified territory
4. Such other prescribed conditions
Resultant Fund (RF)
Fund established or incorporated in India
In the form of trust or a company or LLP
which
1. Has been granted registration as Cat I or Cat II or Cat III AIF and regulated
under SEBI (AIF) Regulations, 2012; and
2. Is located in IFSC as referred to in sec 80LA(1A)

Relocation of OF to RF
IFSC
T/f to CA by Exchange of Subsequent

Receipt of Change in
OF to RF units by unit t/f of CA
CA by shareholding
holders b/w covered by
RF/UH of due to
OF to RF sec 47(viiac)
units in RF relocation
Sec 47(viiac) and 47(viiad)
Sec
47(viiad) Sec 49(1)
India based Sec 79
(iii)(e) Sec 56(2)(x)
assets / Indirect Proviso IX
transfer u/s Exp
5 to sec 9(1)(i)
Resultant Fund (RF)
AIF I/II AIF III
Pass through [Sec

115UB} No pass through
UH Not
Specified
specified
fund
fund
R NR
RF UH RF UH
Pays tax Sec

Sec 161 v 166
10(23FBC)
Indian Foreign Indian
income income income
Outside CG wrt t/f of shares

Pays tax sec 5(2) of resident company
CIRCULAR NO. Originally moved

14/2019
Treaty protected
before relocation
Sec 10(23FF)
SECTION 80LA
DEDUCTIONS IN RESPECT OF CERTAIN INCOMES OF OFFSHORE BANKING UNIT AND INTERNATIONAL
FINANCIAL SERVICES CENTRE
SECTION 80LA
In section 80LA of the Income-tax Act, with effect from the 1st day of April, 2022,––
(i) in sub-section (1A), for the words “any other relevant laws was obtained”, the words
“permission or registration under the International Financial Services Centre Authority
Act, 2019 was obtained” shall be substituted;
(ii) in sub-section (2), after clause (c), the following clause shall be inserted, namely:––
“(d) arising from the transfer of an asset, being an aircraft or aircraft engine, which was
leased by a unit referred to in clause (c) to a domestic company engaged in the business
of operation of aircraft, before such transfer subject to condition that the unit has
commenced operation on or before the 31st day of March, 2024.”;
SECTION 80LA
(iii) in sub-section (3), for clause (ii), the following clause shall be substituted,
namely:––
“(ii) a copy of the permission obtained under clause (a) of sub-section (1) of section 23
of the Banking Regulation Act, 1949 or copy of permission or registration obtained
under the International Financial Services Centre Authority Act, 2019.”.
SECTION 80LA
DEDUCTIONS: CERTAIN INCOMES OF OFFSHORE BANKING UNIT & IFSC
 M – 20/NC - 27
 W.e.f. 01.04.2022; [AY 2022-23/ PY 2021-22]
 Present Section 80LA (See Chart in next Slide)
 Section 80LA(1A) is amended to recognise approval by permission/registration by

IFSC Authority
Present Section 80LA
Sub-Section (1) Sub-Section (1A)
OBV of Scheduled
Unit in IFSC
Bank/Foreign Bank
5 years – 100%
10/15 years – 100%
Next 5 years – 50%
Section 80LA(2)(d) is inserted to provide exemption w.r.t.
Income
Arising from transfer of
Aircraft/Aircraft Engine
Which was, before transfer, leased
By unit to a domestic airline company
Unit commenced operation on/before 31.03.2024

SECTION 10(23FE)
INCOME OF A SPECIFIED PERSON IN THE NATURE OF DIVIDEND, INTEREST OR LONG-TERM CAPITAL
GAINS ARISING FROM INVESTMENT MADE BY IT IN INDIA
SECTION 10(23FE)(iii)
in clause (23FE),––
(A) in sub-clause (iii),––
(i) in item (c),––
(I) for the words “hundred per cent.”, the words “not less than fifty per cent.” shall be
substituted;
(II) after the word, brackets and letter “item (b)”, the words, brackets, figures and letter
“or in an Infrastructure Investment Trust referred to in subclause (i) of clause (13A) of
section 2; or” shall be inserted;
(ii) after item (c), the following items shall be inserted, namely:––
“(d) a domestic company, set up and registered on or after the 1st day of April, 2021,
having minimum seventy-five per cent. investments in one or more of the companies or
enterprises or entities referred to in item (b); or
(e) a non-banking financial company registered as an Infrastructure Finance Company

as referred to in notification number RBI/2009-10/316 issued by the Reserve Bank of
India or in an Infrastructure Debt Fund, a non-banking finance company, as referred to
in the Infrastructure Debt Fund-Non-Banking Financial Companies (Reserve Bank)
Directions, 2011, issued by the Reserve Bank of India, having minimum ninety per cent.
lending to one or more of the companies or enterprises or entities referred to in item
(b):”;
Existing Text Proposed Text

any income of a specified person in the nature of any income of a specified person in the nature of
dividend, interest or long-term capital gains dividend, interest or long-term capital gains
arising from an investment made by it in India, arising from an investment made by it in India,
whether in the form of debt or share capital or whether in the form of debt or share capital or
unit, if the investment— unit, if the investment—
(i) is made on or after the 1st day of April, 2020 (i) is made on or after the 1st day of April, 2020
but on or before the 31st day of March, 2024; but on or before the 31st day of March, 2024;
(ii)is held for at least three years; and (ii)is held for at least three years; and
(iii)is in— (iii)is in—
(a) a business trust referred to in sub-clause (i) of (a) a business trust referred to in sub-clause (i) of
clause (13A) of section 2; or clause (13A) of section 2; or
(b) a company or enterprise or an entity carrying (b) a company or enterprise or an entity carrying
on the business of developing, or operating and on the business of developing, or operating and
maintaining, or developing, operating and maintaining, or developing, operating and
maintaining any infrastructure facility as defined maintaining any infrastructure facility as defined
in the Explanation to clause (i) of sub-section (4) in the Explanation to clause (i) of sub-section (4)
of section 80-IA or such other business as the of section 80-IA or such other business as the
Central Government may, by notification in the Central Government may, by notification in the
Official Gazette, specify in this behalf; or Official Gazette, specify in this behalf; or

(c) a Category-I or Category-II Alternative (c) a Category-I or Category-II Alternative
Investment Fund regulated under the Securities Investment Fund regulated under the Securities
and Exchange Board of India (Alternative and Exchange Board of India (Alternative
Investment Fund) Regulations, 2012, made Investment Fund) Regulations, 2012, made
under the Securities and Exchange Board of under the Securities and Exchange Board of
India Act, 1992 (15 of 1992), having hundred India Act, 1992 (15 of 1992), having not less
per cent investment in one or more of the than fifty per cent investment in one or more of
company or enterprise or entity referred to in the company or enterprise or entity referred to in
item (b): item (b) or in an Infrastructure Investment Trust
referred to in sub-clause (i) of clause (13A) of
section 2; or
(d) a domestic company, set up and registered on or after the 1st day of
April, 2021, having minimum seventy-five per cent. investments in
one or more of the companies or enterprises or entities referred to in
item (b); or
(e) a non-banking financial company registered as an Infrastructure

Finance Company as referred to in notification number RBI/2009-
10/316 issued by the Reserve Bank of India or in an Infrastructure
Debt Fund, a non-banking finance company, as referred to in the
Infrastructure Debt Fund-Non-Banking Financial Companies (Reserve
Bank) Directions, 2011, issued by the Reserve Bank of India, having
minimum ninety per cent. lending to one or more of the companies or
enterprises or entities referred to in item (b):
SECTION 10(23FE)(iii) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 28-30, NC – 5.
 Section 10(23FE) provides exemption to specified persons from the income in the
nature of dividend, interest or long-term capital gains arising from an investment made
by it in India.
 Specified persons are Abudhabi Investment Authority, Sovereign Welfare Funds (SWF)
or Pension Funds (PF) that meet the conditions as may be prescribed.
 In order to remove difficulties, following amendments are proposed:
Section 10(23FE)(iii)(c): Presently SWF/PFs may invest in a Category-I or Category-

II Alternative Investment Fund, having 100% investment in eligible infrastructure
company. It has been proposed to:
i. relax the condition of 100% to 50%.
ii. allow the investment by Category-I or Category-II AIF in an Infrastructure

Investment Trust (InvIT).
 Section 10(23FE)(iii)(d): Presently, SWF/PFs are not allowed to invest through holding
company. It is proposed to allow the same subject to the following conditions:
i. Holding company should be a domestic company.\
ii. It should be set up and registered on or after 1st April, 2021.
iii.It should have minimum 75% investments in one or more infrastructure companies.
 Section 10(23FE)(iii)(e): Presently, SWF/PFs are not allowed to invest in NBFC-

IFC/IDF. It is proposed to allow the same subject to the following condition:
i. NBFC-IDF/IFC should have minimum 90% lending to one or more infrastructure

entities.
An IFC is defined under paragraph 19A of the NonBanking Financial (Non- Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions, 2007, as non deposit taking NBFC that fulfills the
criteria mentioned below:
i) a minimum of 75 per cent of its total assets should be deployed in infrastructure loans as defined in Para
2(viii) of the Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms
(Reserve Bank) Directions, 2007;
ii) Net owned funds of Rs. 300 crore or above;
iii) minimum credit rating 'A' or equivalent of CRISIL, FITCH, CARE, ICRA or equivalent rating by any
other accrediting rating agencies
iv) CRAR of 15 percent (with a minimum Tier I capital of 10 percent)

An Infrastructure Development Fund (IDF) has been defined in paragraph 3(b) of

Infrastructure Debt Fund-Non-Banking Financial Companies (Reserve Bank)
Directions, 2011 to mean a non-deposit taking NBFC that has Net Owned Fund of Rs.
300 crores or more and which invests only in Public Private Partnerships (PPP) and post
commencement operations date (COD) infrastructure projects which have completed at
least one year of satisfactory commercial operation and becomes a party to a Tripartite
Agreement.
4TH PROVISO TO SECTION 10(23FE)
(B) after the third proviso, the following provisos shall be inserted, namely:––
“Provided also that in case a Category-I or Category- II Alternative Investment Fund

referred to in item (c) of sub-clause (iii) has investment of less than one hundred per
cent. in one or more of the companies or enterprises or entities referred to in item (b) of
the said sub-clause or in an Infrastructure Investment Trust referred to in item (c) of the
said sub-clause, income accrued or arisen or received or attributable to such investment,
directly or indirectly, which is exempt under this clause shall be calculated
proportionately to that investment made in one or more of the companies or enterprises
or entities referred to in item (b) of the said sub-clause or in the Infrastructure
Investment Trust referred to in item (c) of the said sub-clause, in such manner as may be
prescribed:
4TH PROVISO TO SECTION 10(23FE) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 28-30, NC – 5.
 The proviso is consequential to proposed amendment to section 10(23FE)(iii)(c) where the

investment criteria by AIF in Infrastructure Funds have been liberalised from 100% to not less
than 50%.
 The said proviso provides for proportionate exemption under section 10(23FE), in case if
aggregate investment of AIF in infrastructure company or companies or in InvIT is less than
100%.
Provided also that in case a domestic company referred to in item (d) of sub-clause (iii)
has investment of less than one hundred per cent. in one or more of the companies or
enterprises or entities referred to in item (b) of the said sub-clause, income accrued or
arisen or received or attributable to such investments, directly or indirectly, which is
exempt under this clause shall be calculated proportionately to the investment made in
one or more of the companies or enterprises or entities referred to in item (b) of the said
sub-clause, in such manner as may be prescribed:
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 28-30, NC – 5.
 The proviso is consequential to proposed amendment to section 10(23FE)(iii)(d) where

the SWF/PFs are allowed to invest through holding company.
 The said proviso provides for proportionate exemption under section 10(23FE), in case
if aggregate investment of aggregate investment of holding company in infrastructure
company or companies is less than 100%.
Provided also that in case a non-banking finance company registered as an Infrastructure

Finance Company or Infrastructure Debt Fund, referred to in item (e) of sub-clause (iii),
has lending of less than one hundred per cent. in one or more of the companies or
enterprises or entities referred to in item (b) of the said sub-clause, income accrued or
arisen or received or attributable to such lending, directly or indirectly, which is exempt
under this clause shall be calculated proportionately to the lending made in one or more
of the companies or enterprises or entities referred to in item (b) of the said sub-clause,
in such manner as may be prescribed:
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 28-30, NC – 5.
 The proviso is consequential to proposed amendment to section 10(23FE)(iii)(e) where

the SWF/PFs are allowed to invest in NBFC-IFC/IDF.
 The said proviso provides for proportionate exemption under section 10(23FE), in case
if aggregate aggregate lending of NBFC-IDF or NBFC-IFC in infrastructure company
or companies is less than 100%.
Provided also that in case a sovereign wealth fund or pension fund has loans or
borrowings, directly or indirectly, for the purposes of making investment in India, such
fund shall be deemed to be not eligible for exemption under this clause.”
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 28-30, NC – 5.
 It has been proposed to provide that there should not be any loan or borrowing for the
purpose of making investment in India.
EXPLANATION 1(b) TO SECTION 10(23FE)
(C) the Explanation shall be numbered as Explanation 1 thereof, and in Explanation 1 as

so numbered,––
(i) in clause (b),––
(I) after sub-clause (iv), the following proviso shall be inserted, namely:––
“Provided that the provisions of sub-clause (iii) and (iv) shall not apply to any payment
made to creditors or depositors for loan taken or 28 borrowing for the purposes other
than for making investment in India;”;
(II) in sub-clause (v), for the words “undertake any commercial activity whether within
or outside India”, the words “participate in the day to day operations of investee but the
monitoring mechanism to protect the investment with the investee including the right to
appoint directors or executive director shall not be considered as participation in the day
to day operations of the investee” shall be substituted;
Explanation.—For the purposes of this clause, Explanation. 1—For the purposes of this clause,
"specified person" means— "specified person" means—
(b) a sovereign wealth fund which satisfies the (b) a sovereign wealth fund which satisfies the
following conditions, namely:— following conditions, namely:—
…. ….
(iii) the earnings of the said fund are credited (iii) the earnings of the said fund are credited
either to the account of the Government of that either to the account of the Government of that
foreign country or to any other account foreign country or to any other account
designated by that Government so that no designated by that Government so that no
portion of the earnings inures any benefit to any portion of the earnings inures any benefit to any
private person; private person;

(iv) the asset of the said fund vests in the (iv) the asset of the said fund vests in the
Government of such foreign country upon Government of such foreign country upon
dissolution; dissolution;
Provided that the provisions of sub-clause (iii)

and (iv) shall not apply to any payment made to
creditors or depositors for loan taken or
borrowing for the purposes other than for
making investment in India;

(v) it does not undertake any commercial (v) it does not participate in the day to day
activity whether within or outside India; and operations of investee but the monitoring
mechanism to protect the investment with the
investee including the right to appoint directors
or executive director shall not be considered as
participation in the day to day operations of the
investee; and
PROVISO TO EXPLANATIONS 1(b)(iii) & 1(b)(iv) TO SECTION
10(23FE) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 28-30, NC – 5.
 It has been proposed to renumber Existing Explanation to section 10(23FE) as Explanation 1.
 Proposed Explanation 1 defines a ‘specified person’.
 Clause (b) to Explanation 1 provides for conditions to be satisfied by a sovereign wealth fund
to be qualify as a ‘specified person’.
PROVISO TO EXPLANATIONS 1(b)(iii) & 1(b)(iv) TO SECTION
10(23FE) - COMMENTS
 Conditions (iii) mandates that the earnings of the said fund are credited either to the
account of the Government of that foreign country or to any other account designated
by that Government so that no portion of the earnings inures any benefit to any
private person.
 Conditions (iv) mandates that the asset of the said fund vests in the Government of
such foreign country upon dissolution
 However, it has been proposed to add a proviso after condition (iv) to provide that the
bar in conditions (iii) and (iv) does not apply to any payment made to creditor or
depositor for loan taken or borrowing other than for the purpose of making
investment in India.
EXPLANATIONS 1(b)(v) TO SECTION 10(23FE) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 28-30, NC – 5.
 Presently, the SWFs are not permitted to undertake any commercial activity whether
within or outside India.
 It has been proposed to do away with that condition and provide that the SWFs shall
not participate in day to day operation of investee. However, appointing director and
executive director for monitoring the investment would not amount to participation in
day to day operation.
EXPLANATION 1(c) TO SECTION 10(23FE)
(ii) in clause (c),––
(I) in sub-clause (ii), after the word “country”, the words “or if liable to tax, exemption
from taxation for all its income has been provided by such foreign country” shall be
inserted;
(II) in sub-clause (iii), for the words “prescribed; and”, the word “prescribed;”, shall be
substituted;
(III) after sub-clause (iii), the following subclause shall be inserted, namely:––
“(iiia) it does not participate in the day to day operations of investee but the monitoring
mechanism to protect the investment with the investee including the right to appoint
directors or executive director shall not be considered as participation in day to day
operations of the investee; and”;
Explanation.—For the purposes of this clause, Explanation. 1— For the purposes of this
"specified person" means— clause, "specified person" means—
(c) a pension fund, which— (c) a pension fund, which—
…. ….
(ii) is not liable to tax in such foreign country; (ii) is not liable to tax in such foreign country or
if liable to tax, exemption from taxation for
all its income has been provided by such
foreign country;
(ii) satisfies such other conditions as may be (ii) satisfies such other conditions as may be
prescribed; and prescribed; and
(iiia) it does not participate in the day to day

operations of investee but the monitoring
mechanism to protect the investment with the
investee including the right to appoint directors
or executive director shall not be considered as
participation in day to day operations of the
investee; and
EXPLANATION 1(c)(ii) TO SECTION 10(23FE) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 28-30, NC – 5.
 One of the conditions for a Pension Fund to qualify as a specified fund under
Explanation 1(c) to Section 10(23FE) is that the fund should not be liable to tax in
such foreign country.
 It has been proposed to amend this condition (iii) to provide that if pension fund is
liable to tax but exemption from taxation for all its income has been provided by the
foreign country under whose laws it is created or established, then such pension fund
shall also be eligible.
EXPLANATION 1(c)(ii) TO SECTION 10(23FE) - COMMENTS
 This amendment was necessary as some PFs are liable to tax in their country though
given exemption subsequently. If the amendment had not been made such PFs would
be liable to tax in the foreign country by virtue of proposed section 2(29A).
EXPLANATION 1(c)(iiia) TO SECTION 10(23FE) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 28-30, NC – 5.
 It has been proposed to provide that that the PFs shall not participate in day to day
operation of investee. However, appointing director and executive director for
monitoring the investment would not amount to participation in day to day operation.
 This condition is similar to condition (v) of Explanation 1(b) as proposed to be

amended.
EXPLANATION 2 TO SECTION 10(23FE)
(D) after Explanation 1, the following Explanations shall be inserted, namely:––
‘Explanation 2.— For the purposes of this clause,––
(i) “investee” means a business trust, or a company, or an enterprise, or an entity, or a

Category I or Category II Alternative Investment Fund, or an Infrastructure Investment
Trust or a domestic company, or an Infrastructure Finance Company or an Infrastructure
Debt Fund referred to in item (e) of sub-clause (iii), in which the sovereign wealth fund
or the pension fund, as the case may be, has made the investment, directly or indirectly,
under the provisions of this clause;
(ii) “loan and borrowing” means—
(a) any loan taken or borrowing by a sovereign wealth fund from, or any deposit or
investment made in a sovereign wealth fund by, any person other than the Government
of the country in which the sovereign wealth fund is set up;
(b) any loan taken or borrowing by a pension fund from or any deposit or investment
made in a pension fund by, any person but shall not include the deposit or investment
which represents statutory obligations and defined contributions of one or more funds or
plans established for providing retirement, social security, employment, disability, death
benefits or any similar compensation to the participants or beneficiaries of such funds or
plans, as the case may be.
EXPLANATION 2 TO SECTION 10(23FE) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 28-30, NC – 5.
EXPLANATION 2(i) TO SECTION 10(23FE) - COMMENTS
 Explanation 2(i) defines ‘investee’ as referred to in proposed Explanations 1(b)(v) and

1(c)(iiia) to mean:
1. A Business Trust, or
2. A company, or
3. An enterprise, or
4. An entity, or
5. A Category I or Category II AIF, or
6. An Infrastructure Finance Company, or
7. An Infrastructure Debt Fund referred to in section 10(23FE)(iii)(e),
in which the SWF or PF as the case may be, has made the investment, directly or
indirectly, under the provisions of section 10(23FE).
EXPLANATION 2(ii) TO SECTION 10(23FE) - COMMENTS
 Explanation 2(ii) defines ‘loan and borrowing’.
 Section 10(23FE) [combined with the proposed amendments] does not use the above
words.
Explanation 3.––For the purposes of this clause, the Central Government may prescribe
that the method of calculation of “fifty per cent.” referred to in item (c) or “seventy-five
per cent.” referred to in item (d) or “ninety per cent.” referred to in item (e), of sub-
clause (iii) shall be such as may be prescribed;’;
EXPLANATION 3 TO SECTION 10(23FE) - COMMENTS
 W.e.f. 01.04.2022 (AY 2022-23/PY 2021-22)
 M – 28-30, NC – 5.
 Explanation 3 empowers the Central Government to prescribe the method of

calculation of 50% referred to in section 10(23FE)(iii)(c) or 75% referred to in
section 10(23FE)(iii)(d) or 90% referred to in section 10(23FE)(iii)(e).
Sec 10(23FE)
Exempts income of SP
1. dividend Arising from

investment made in
2. interest
India
3. LTCG
(i) (ii) (iii)
Timing- on or after 1.4.20 Lok in period Investment

but on or before 31.3.24 – 3yrs condition
Sec 10(23FE) - Explanation
Specified person (SP)
(a) WOS of Abu

Dhabi (b) Sovereign
(c) Pension Fund
Investment Wealth Fund
Authority
Investment of SP
Sec 10(23FE)
(iii)
(a) (b) (c) (d) (e)
New New
Existing Existing Existing
Domestic
Company/ AIF I/II company set NBFC-IFC
InVIT or IDF
enterprise/entity Investing min up on or
u/s
50% after 1.4.21
2(13A)
D/O/M of Investing min Investing min
(i)
infrastructure (b) (a) 75% in (b) 90% in (b)
ASSESSMENT
PERSONAL TAXATION
SECTION 139
SECTION 139 AMENDED
EXPLANATION 2 TO SECTION 139(1) AMENDED
Provision
Before Amendment Amended (proposed)
Reference
a partner of a firm whose accounts are

a partner of a firm whose accounts are required to be audited under this Act or
Sub-clause (iii) required to be audited under this Act or under any other law for the time being in
of clause (a) under any other law for the time being force or the spouse of such partner if the
in force, provisions of section 5A applies to such
spouse,
in the case of an assessee including the

in the case of an assessee who is
partners of the firm being such assessee,
required to furnish a report referred to
Clause (aa) who is required to furnish a report referred
in section 92E, the 30th day of
to in section 92E, the 30th day of
November of the assessment year;
November of the assessment year;
EXPLANATION 2 TO SECTION 139(1) AMENDED - COMMENTS
 W.e.f. 01.04.2021(AY 2021-22/PY 2020-21)
 N – 32 ; M – 36 – 40
 Section 139(1) - Explanation 2 provides for due dates
 Section 5A of the IT Act deals with “Apportionment of income between spouses governed by
Portuguese Civil Code”. Income earned by a partner of a firm whose accounts are required to be
audited shall be apportioned between the spouses.
 If a firm requires audit

 Partners get extended time;
 Similarly, his spouse covered by Section 5A also gets extended time as per amendment to
Explanation 2(a) (iii)
EXPLANATION 2 TO SECTION 139(1) AMENDED – COMMENTS
(CONT..)
 Further, in the case of a firm which is required to furnish report as per section 92E of
the Act, the due date for filing of original return of income is the 30th November of the
assessment year.
 Accordingly, the due date for filing the partner’s return of such firm extended to 30th
November of the assessment year.
SECTION 139(4) & (5) AMENDED
Provision Before Amendment Amended (proposed)
Any person who has not furnished a return

Any person who has not furnished a return within
within the time allowed to him under
Section the time allowed to him under subsection (1), may
subsection (1), may furnish the return for any
139(4) – furnish a return for any previous year at any time
previous year at any time before the end of the
Belated within three months prior to the end of the relevant
relevant assessment year or before the
ROI assessment year or before the completion of the
completion of the assessment, whichever is
assessment, whichever is earlier
earlier
If any person, having furnished a return under If any person, having furnished a return under sub-
sub-section (1) or sub-section (4), discovers section (1) or sub-section (4), discovers any
Section
any omission or any wrong statement therein, omission or any wrong statement therein, he may
139(5) –
he may furnish a revised return at any time furnish a revised return at any time within three
Revised
before the end of the relevant assessment year months before the end of the relevant assessment
ROI
or before the completion of the assessment, year or before the completion of the assessment,
whichever is earlier. whichever is earlier.
SECTION 139(4) & (5) AMENDED - COMMENTS
 W.e.f. 01.04.2021(AY 2021-22/PY 2020-21)
 N – 32 ; M – 36 – 40
 Section 139(4) and (5) deals with filing of belated and revised returns of
income respectively.
 Due to massive technological upgrade, department is moving towards
faceless and jurisdiction-less.
 Hence the time limit to file the belated/ revised returns is reduced by 3
months.
 Accordingly, 31st December of the relevant assessment year shall be the
new due date.
PROVISO TO EXPLANATION TO SECTION 139(9) - INSERTED
Provided that the Board may, by notification in the Official

Gazette, specify that any of the conditions specified in
clauses (a) to (f) to the Explanation shall not apply to such
class of assessees or shall apply with such modifications,
as may be specified in such notification.
PROVISO TO EXPLANATION TO SECTION 139(9) - COMMENTS
 W.e.f. 01.04.2021(AY 2021-22/PY 2020-21)
 N – 32 ; M – 36 – 40
 Section 139(9) deals with procedure for curing a defective return. Explanation to
Section 139(9) provides deemed defect in various circumstances (a) to (f).
 Many representations were received that the conditions create difficulties to taxpayers
and the department. Affected even the genuine cases.
 Board is empowered to notify exemptions of circumstances of (a) to (f).

SECTION 142
SECTION 142 AMENDED
SECOND PROVISO TO SECTION 142(1) - INSERTED
Provided further that a notice under this sub-section for the

purposes of this clause may also be served by the
prescribed income-tax authority
SECOND PROVISO TO SECTION 142(1) - COMMENTS
 W.e.f. 01.04.2021(AY 2021-22/PY 2020-21)
 N – 33 ; M – 50
 Section 142 deals with the “Inquiry before assessment”.
 Due to the faceless assessment, notices will be issued in centralized and automated manner.
 In order to catch non filers and to facilitate faceless proceedings 142(1)(i) is amended to
enable the prescribed income-tax authority (not necessary AO) to issue notice u/s 142(1)(i)
for filing returns
SECTION 142B - FACELESS INQUIRY OR
VALUATION.
SECTION 142B INSERTED BY THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF
CERTAIN PROVISIONS) ACT, 2020
SECTION 142B (1)
(1) The Central Government may make a scheme, by notification in the
Official Gazette, for the purposes of issuing notice under sub-section (1) or
making inquiry before assessment under sub-section (2), or directing the
assessee to get his accounts audited under sub-section (2A) of section 142, or
estimating the value of any asset, property or investment by a Valuation
Officer under section 142A, so as to impart greater efficiency, transparency
and accountability by—
(a) eliminating the interface between the income-tax authority or Valuation
Officer and the assessee or any person to the extent technologically
feasible;
SECTION 142B (1) (CONT..)
(b) optimising utilisation of the resources through economies of

scale and functional specialisation;
(c) introducing a team-based issuance of notice or making of

enquiries or issuance of directions or valuation with dynamic
jurisdiction.
SECTION 142B(2)
(2) The Central Government may, for the purpose of giving effect
to the scheme made under sub-section (1), by notification in the
Official Gazette, direct that any of the provisions of this Act shall
not apply or shall apply with such exceptions, modifications and
adaptations as may be specified in the notification:
Provided that no direction shall be issued after the 31st day of

March, 2022.
SECTION 142B(3)
(3) Every notification issued under sub-section (1) and

sub-section (2) shall, as soon as may be after the
notification is issued, be laid before each House of
Parliament.";
SECTION 142B- FACELESS INQUIRY OR VALUATION -
COMMENTS
 Inserted by The Taxation And Other Laws (Relaxation And Amendment Of Certain Provisions)
Act, 2020 [TOLA]
 W.e.f. 01.11.2020(AY 2021-22/PY 2020-21)
 Empowers the CG to make scheme through notification, for the purposes of:
• Issuing notice or making inquiry before assessment or directing the assessee to get his accounts
audited under section 142(1) or 142(2) or 142(2A), respectively, or
• Estimating the value of any asset, property or investment by a Valuation Officer (s. 142A)
 Imparts greater efficiency, transparency and accountability

SECTION 143
SECTION 143 AMENDED
SECOND PROVISO TO SECTION 143(1) - AMENDED

Provided further that no Provided further that no
intimation under this sub-section intimation under this sub-section
shall be sent after the expiry of shall be sent after the expiry of
one year from the end of the nine months from the end of the
financial year in which the financial year in which the return
return is made. is made.
SECOND PROVISO TO SECTION 143(1) - COMMENTS
 W.e.f. 01.04.2022(AY 2022-23/PY 2021-22)
 N – 34 ; M – 71-72
 Section 143 deals with the “Assessment”.
 Time limit for sending intimation under Section 143(1) under 2nd proviso
reduced from one year to nine months from the end of the financial year in
which the return was furnished.
CLAUSE (a) TO SECTION 143(1) - AMENDED
Provision
Reference
disallowance of expenditure indicated disallowance of expenditure or increase in

Sub- in the audit report but not taken into income indicated in the audit report but not
clause (iv) account in computing the total income taken into account in computing the total
in the return; income in the return;
disallowance of deduction claimed under
disallowance of deduction claimed
section 10AA or under any of the provisions
under sections 10AA, 80-IA, 80-IAB,
of Chapter VI-A under the heading “C.-
Sub- 80-IB, 80-IC, 80-ID or section 80-IE,
Deductions in respect of certain incomes”, if
clause (v) if the return is furnished beyond the
the return is furnished beyond the due date
due date specified under sub-section
specified under sub-section (1) of section
(1) of section 139; or
139; or
CLAUSE (a) TO SECTION 143(1) - COMMENTS
 W.e.f. 01.04.2022(AY 2022-23/PY 2021-22)
 N – 34 ; M – 71-72
 Sub-clause (iv) of Section 143(1)(a) was amended to allow for the adjustment on
account of increase in income indicated in the Form 3CD, not considered in computing
the total income.
 Sub-clause (vi) of Section 143(1)(a) was amended to bring the language in line with
Section 80 AC.
PROVISO TO SECTION 143(2) - AMENDED

Provided that no notice under Provided that no notice under
this sub-section shall be served this sub-section shall be served
on the assessee after the expiry on the assessee after the expiry of
of six months from the end of three months from the end of the
the financial year in which the financial year in which the return
return is furnished. is furnished.
PROVISO TO SECTION 143(2) - COMMENTS
 W.e.f. 01.04.2022(AY 2022-23/PY 2021-22)
 N – 34 ; M – 71-72
 Time limit to issue notice under Section 143(2) reduced from 6 months to 3
months from the end of the financial year in which the return was furnished.
 If ROI is filed within the due dates, Notice u/s. 143 (2) will have to be
served before 30th June
FACELESS
ASSESSMENT
PERSONAL TAXATION
SECTION 144B – FACELESS ASSESSMENT.
SECTION 144B INSERTED BY THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF
SECTION 144B (1)
(1) Notwithstanding anything to the contrary contained in any other provisions
of this Act, the assessment under sub-section (3) of section 143 or under section
144, in the cases referred to in sub-section (2), shall be made in a faceless
manner as per the following procedure, namely:—
(i) the National Faceless Assessment Centre shall serve a notice on the
assessee under sub-section (2) of section 143;
(ii) the assessee may, within fifteen days from the date of receipt of notice
referred to in clause (i), file his response to the National Faceless Assessment
Centre;
(iii) where the assessee—
(a) has furnished his return of income under section 139 or in response to a notice issued
under sub-section (1) of section 142 or under sub-section (1) of section 148, and a notice
under sub-section (2) of section 143 has been issued by the Assessing Officer or the
prescribed income-tax authority, as the case may be; or
(b) has not furnished his return of income in response to a notice issued under sub-section
(1) of section 142 by the Assessing Officer; or
(c) has not furnished his return of income under sub-section (1) of section 148 and a
notice under sub-section (1) of section 142 has been issued by the Assessing Officer,
the National Faceless Assessment Centre shall intimate the assessee that assessment in his
case shall be completed in accordance with the procedure laid down under this section;
(iv) the National Faceless Assessment Centre shall assign the case
selected for the purposes of faceless assessment under this section to a
specific assessment unit in any one Regional Faceless Assessment
Centre through an automated allocation system;
(v) where a case is assigned to the assessment unit, it may make a

request to the National Faceless Assessment Centre for—
(a) obtaining such further information, documents or evidence from

the assessee or any other person, as it may specify;
(b) conducting of certain enquiry or verification by verification unit;
and
(c) seeking technical assistance from the technical unit;
(vi) where a request for obtaining further information, documents or

evidence from the assessee or any other person has been made by the
assessment unit, the National Faceless Assessment Centre shall issue
appropriate notice or requisition to the assessee or any other person
for obtaining the information, documents or evidence requisitioned by
the assessment unit;
(vii) the assessee or any other person, as the case may be, shall file his response
to the notice referred to in clause (vi), within the time specified therein or such
time as may be extended on the basis of an application in this regard, to the
National Faceless Assessment Centre;
(viii) where a request for conducting of certain enquiry or verification by the

verification unit has been made by the assessment unit, the request shall be
assigned by the National Faceless Assessment Centre to a verification unit in any
one Regional Faceless Assessment Centre through an automated allocation
system;
(ix) where a request for seeking technical assistance from the technical unit has
been made by the assessment unit, the request shall be assigned by the National
Faceless Assessment Centre to a technical unit in any one Regional Faceless
Assessment Centre through an automated allocation system;
(x) the National Faceless Assessment Centre shall send the report received from
the verification unit or the technical unit, based on the request referred to in
clause (viii) or clause (ix) to the concerned assessment unit;
(xi) where the assessee fails to comply with the notice referred to in clause (vi)
or notice issued under sub-section (1) of section 142 or with a direction issued
under sub-section (2A) of section 142, the National Faceless Assessment Centre
shall serve upon such assessee a notice under section 144 giving him an
opportunity to show-cause, on a date and time to be specified in the notice, why
the assessment in his case should not be completed to the best of its judgment;
(xii) the assessee shall, within the time specified in the notice referred
to in clause (xi) or such time as may be extended on the basis of an
application in this regard, file his response to the National Faceless
Assessment Centre;
(xiii) where the assessee fails to file response to the notice referred to
in clause (xi) within the time specified therein or within the extended
time, if any, the National Faceless Assessment Centre shall intimate
such failure to the assessment unit;
(xiv) the assessment unit shall, after taking into account all the relevant material
available on the record make in writing, a draft assessment order or, in a case
where intimation referred to in clause (xiii) is received from the National
Faceless Assessment Centre, make in writing, a draft assessment order to the
best of its judgment, either accepting the income or sum payable by, or sum
refundable to, the assessee as per his return or making variation to the said
income or sum, and send a copy of such order to the National Faceless
Assessment Centre;
(xv) the assessment unit shall, while making draft assessment order, provide
details of the penalty proceedings to be initiated therein, if any;
(xvi) the National Faceless Assessment Centre shall examine the draft
assessment order in accordance with the risk management strategy specified by
the Board, including by way of an automated examination tool, whereupon it
may decide to—
(a) finalise the assessment, in case no variation prejudicial to the interest of

assessee is proposed, as per the draft assessment order and serve a copy of
such order and notice for initiating penalty proceedings, if any, to the assessee,
along with the demand notice, specifying the sum payable by, or refund of any
amount due to, the assessee on the basis of such assessment; or
SECTION 144B (1) (xvi) (CONT..)
(b) provide an opportunity to the assessee, in case any variation

prejudicial to the interest of assessee is proposed, by serving a notice
calling upon him to show-cause as to why the proposed variation
should not be made; or
(c) assign the draft assessment order to a review unit in any one
Regional Faceless Assessment Centre, through an automated
allocation system, for conducting review of such order;
(xvii) the review unit shall conduct review of the draft assessment order
referred to it by the National Faceless Assessment Centre whereupon it
may decide to—
(a) concur with the draft assessment order and intimate the National
Faceless Assessment Centre about such concurrence; or
(b) suggest such variation, as it may deem fit, in the draft assessment
order and send its suggestions to the National Faceless Assessment
Centre;
(xviii) the National Faceless Assessment Centre shall, upon receiving

concurrence of the review unit, follow the procedure laid down in—
(a) sub-clause (a) of clause (xvi); or
(b) sub-clause (b) of clause (xvi);

(xix) the National Faceless Assessment Centre shall, upon receiving

suggestions for variation from the review unit, assign the case to an
assessment unit, other than the assessment unit which has made the
draft assessment order, through an automated allocation system;
(xx) the assessment unit shall, after considering the variations

suggested by the review unit, send the final draft assessment order to
the National Faceless Assessment Centre;
(xxi) the National Faceless Assessment Centre shall, upon receiving

final draft assessment order follow the procedure laid down in—
(a) sub-clause (a) of clause (xvi); or
(b) sub-clause (b) of clause (xvi);
(xxii) the assessee may, in a case where show-cause notice has been served upon
him as per the procedure laid down in sub-clause (b) of clause (xvi), furnish his
response to the National Faceless Assessment
Centre on or before the date and time specified in the notice or within the
extended time, if any;
(xxiii) the National Faceless Assessment Centre shall,—
(a) where no response to the show-cause notice is received as per clause (xxii),—
(A) in a case where the draft assessment order or the final draft assessment order is
in respect of an eligible assessee and proposes to make any variation which is
prejudicial to the interest of said assessee, forward the draft assessment order or final
draft assessment order to such assessee; or
(B) in any other case, finalise the assessment as per the draft assessment order or the
final draft assessment order and serve a copy of such order and notice for initiating
penalty proceedings, if any, to the assessee, alongwith the demand notice, specifying
the sum payable by, or refund of any amount due to, the assessee on the basis of such
assessment;
SECTION 144B (1) (xxiii)(CONT..)
(xxiii) the National Faceless Assessment Centre shall,—
(a) where no response to the show-cause notice is received as per clause (xxii),—
(A) in a case where the draft assessment order or the final draft assessment order
is in respect of an eligible assessee and proposes to make any variation which is
prejudicial to the interest of said assessee, forward the draft assessment order or
final draft assessment order to such assessee; or
(B) in any other case, finalise the assessment as per the draft assessment order or
the final draft assessment order and serve a copy of such order and notice for
initiating penalty proceedings, if any, to the assessee, alongwith the demand
notice, specifying the sum payable by, or refund of any amount due to, the
assessee on the basis of such assessment;
SECTION 144B (1) (xxiii)(CONT..)
(b) in any other case, send the response received from the assessee to
the assessment unit;
(xxiv) the assessment unit shall, after taking into account the response
furnished by the assessee, make a revised draft assessment order and
send it to the National Faceless Assessment Centre;
(xxv) the National Faceless Assessment Centre shall, upon receiving the revised
draft assessment order,—
(a) in case the variations proposed in the revised draft assessment order are
not prejudicial to the interest of the assessee in comparison to the draft
assessment order or the final draft assessment order, and—
SECTION 144B (1) (xxv)(a)(CONT..)
(A) in case the revised draft assessment order is in respect of an eligible assessee
and there is any variation prejudicial to the interest of the assessee proposed in
draft assessment order or the final draft assessment order, forward the said
revised draft assessment order to such assessee;
(B) in any other case, finalise the assessment as per the revised draft assessment
order and serve a copy of such order and notice for initiating penalty proceedings,
if any, to the assessee, along with the demand notice, specifying the sum payable
by, or refund of any amount due to, the assessee on the basis of such assessment;
SECTION 144B (1) (xxv)(CONT..)
(b) in case the variations proposed in the revised draft assessment
order are prejudicial to the interest of the assessee in comparison to the
draft assessment order or the final draft assessment order, provide an
opportunity to the assessee, by serving a notice calling upon him to
show-cause as to why the proposed variation should not be made;
SECTION 144B (1)(CONT..)
(xxvi) the procedure laid down in clauses (xxiii), (xxiv) and (xxv) shall
apply mutatis mutandis to the notice referred to in sub-clause (b) of clause
(xxv);
(xxvii) where the draft assessment order or final draft assessment order or
revised draft assessment order is forwarded to the eligible assessee as per
item (A) of sub-clause (a) of clause (xxiii) or item (A) of sub-clause (a) of
clause (xxv), such assessee shall, within the period specified in sub-section
(2) of section 144C, file his acceptance of the variations to the National
Faceless Assessment Centre;
(xxviii) the National Faceless Assessment Centre shall,—
(a) upon receipt of acceptance as per clause (xxvii); or
(b) if no objections are received from the eligible assessee within the
period specified in sub-section (2) of section 144C,
finalise the assessment within the time allowed under sub-section (4) of
section 144C and serve a copy of such order and notice for initiating penalty
proceedings, if any, to the assessee, along with the demand notice,
specifying the sum payable by, or refund of any amount due to, the assessee
on the basis of such assessment;
(xxix) where the eligible assessee files his objections with the Dispute
Resolution Panel, the National Faceless Assessment Centre shall upon
receipt of the directions issued by the Dispute Resolution Panel under sub-
section (5) of section 144C, forward such directions to the concerned
assessment unit;
(xxx) the assessment unit shall in conformity of the directions issued by the
Dispute Resolution Panel under sub-section (5) of section 144C, prepare a
draft assessment order in accordance with sub-section (13) of section 144C
and send a copy of such order to the National Faceless Assessment Centre;
(xxxi) the National Faceless Assessment Centre shall, upon receipt of draft
assessment order referred to in clause (xxx), finalise the assessment within
the time allowed under sub-section (13) of section 144C and serve a copy of
such order and notice for initiating penalty proceedings, if any, to the
assessee, along with the demand notice, specifying the sum payable by, or
refund of any amount due to, the assessee on the basis of such assessment;
(xxxii) The National Faceless Assessment Centre shall, after completion of

assessment, transfer all the electronic records of the case to the Assessing
Officer having jurisdiction over the said case for such action as may be
required under the Act.
SECTION 144B (2)
(2) The faceless assessment under sub-section (1) shall be made in respect
of such territorial area, or persons or class of persons, or incomes or class of
incomes, or cases or class of cases, as may be specified by the Board.
SECTION 144B (3)
(3) The Board may, for the purposes of faceless assessment, set up the following
Centres and units and specify their respective jurisdiction, namely:—
(i) a National Faceless Assessment Centre to facilitate the conduct of faceless

assessment proceedings in a centralised manner, which shall be vested with the
jurisdiction to make faceless assessment;
(ii) Regional Faceless Assessment Centres, as it may deem necessary, to

facilitate the conduct of faceless assessment proceedings in the cadre
controlling region of a Principal Chief Commissioner, which shall be vested
with the jurisdiction to make faceless assessment;
SECTION 144B (3) (Cont..)
(iii) assessment units, as it may deem necessary to facilitate the
conduct of faceless assessment, to perform the function of making
assessment, which includes identification of points or issues material
for the determination of any liability (including refund) under the Act,
seeking information or clarification on points or issues so identified,
analysis of the material furnished by the assessee or any other person,
and such other functions as may be required for the purposes of
making faceless assessment;
(iv) verification units, as it may deem necessary to facilitate the conduct of
faceless assessment, to perform the function of verification, which includes
enquiry, cross verification, examination of books of account, examination of
witnesses and recording of statements, and such other functions as may be
required for the purposes of verification;
(v) technical units, as it may deem necessary to facilitate the conduct of faceless
assessment, to perform the function of providing technical assistance which
includes any assistance or advice on legal, accounting, forensic, information
technology, valuation, transfer pricing, data analytics, management or any other
technical matter which may be required in a particular case or a class of cases,
under this section; and
(vi) review units, as it may deem necessary to facilitate the conduct of faceless
assessment, to perform the function of review of the draft assessment order,
which includes checking whether the relevant and material evidence has been
brought on record, whether the relevant points of fact and law have been duly
incorporated in the draft order, whether the issues on which addition or
disallowance should be made have been discussed in the draft order, whether
the applicable judicial decisions have been considered and dealt with in the
draft order, checking for arithmetical correctness of variations proposed, if
any, and such other functions as may be required for the purposes of review.
SECTION 144B (4)
(4) The assessment unit, verification unit, technical unit and the review unit
shall have the following authorities, namely:—
(a) Additional Commissioner or Additional Director or Joint Commissioner

or Joint Director, as the case may be;
(b) Deputy Commissioner or Deputy Director or Assistant Commissioner or

Assistant Director, or Income-tax Officer, as the case may be;
(c) such other income-tax authority, ministerial staff, executive or consultant,

as considered necessary by the Board.
SECTION 144B (5)
(5) All communication among the assessment unit, review unit,
verification unit or technical unit or with the assessee or any other
person with respect to the information or documents or evidence or
any other details, as may be necessary for the purposes of making a
faceless assessment shall be through the National Faceless Assessment
Centre.
SECTION 144B (5)
(5) All communication among the assessment unit, review unit,
verification unit or technical unit or with the assessee or any other
person with respect to the information or documents or evidence or
any other details, as may be necessary for the purposes of making a
faceless assessment shall be through the National Faceless Assessment
Centre.
SECTION 144B (6)
(6) All communications between the National Faceless Assessment Centre and
the assessee, or his authorised representative, or any other person shall be
exchanged exclusively by electronic mode; and all internal communications
between the National Faceless Assessment Centre, Regional Faceless Assessment
Centres and various units shall be exchanged exclusively by electronic mode:
Provided that the provisions of this sub-section shall not apply to the enquiry or
verification conducted by the verification unit in the circumstances referred to in
sub-clause (g) of clause (xii) of sub-section (7).
SECTION 144B (7)
(7) For the purposes of faceless assessment—
(i) an electronic record shall be authenticated by—
(a) the National Faceless Assessment Centre by affixing its digital signature;
(b) assessee or any other person, by affixing his digital signature if he is

required to furnish his return of income under digital signature, and in any
other case, by affixing his digital signature or under electronic verification
code in the prescribed manner;
SECTION 144B (7) (cont..)
(ii) every notice or order or any other electronic communication shall be
delivered to the addressee, being the assessee, by way of—
(a) placing an authenticated copy thereof in the assessee’s registered account;
or
(b) sending an authenticated copy thereof to the registered email address of

the assessee or his authorised representative; or
(c) uploading an authenticated copy on the assessee's Mobile App,

and followed by a real time alert;
(iii) every notice or order or any other electronic communication shall be
delivered to the addressee, being any other person, by sending an authenticated
copy thereof to the registered email address of such person, followed by a real
time alert;
(iv) the assessee shall file his response to any notice or order or any other
electronic communication, through his registered account, and once an
acknowledgement is sent by the National Faceless Assessment Centre containing
the hash result generated upon successful submission of response, the response
shall be deemed to be authenticated;
(v) the time and place of dispatch and receipt of electronic record shall be
determined in accordance with the provisions of section 13 of the Information
Technology Act, 2000;
(vi) a person shall not be required to appear either personally or through

authorised representative in connection with any proceedings before the income-
tax authority at the National Faceless Assessment Centre or Regional Faceless
Assessment Centre or any unit set up under this sub-section;
(vii) in a case where a variation is proposed in the draft assessment order or final
draft assessment order or revised draft assessment order, and an opportunity is
provided to the assessee by serving a notice calling upon him to show-cause as to
why the assessment should not be completed as per the such draft or final draft or
revised draft assessment order, the assessee or his authorised representative, as
the case may be, may request for personal hearing so as to make his oral
submissions or present his case before the income-tax authority in any unit;
(viii) the Chief Commissioner or the Director General, in charge of the Regional
Faceless Assessment Centre, under which the concerned unit is set up, may approve
the request for personal hearing referred to in clause (vii) if he is of the opinion that
the request is covered by the circumstances referred to in sub-clause (h) of clause
(xii);
(ix) where the request for personal hearing has been approved by the Chief
Commissioner or the Director General, in charge of the Regional Faceless Assessment
Centre, such hearing shall be conducted exclusively through video conferencing or
video telephony, including use of any telecommunication application software which
supports video conferencing or video telephony, in accordance with the procedure laid
down by the Board;
(x) subject to the proviso to sub-section (6), any examination or recording of the
statement of the assessee or any other person (other than statement recorded in
the course of survey under section 133A of the Act) shall be conducted by an
income-tax authority in any unit, exclusively through video conferencing or
video telephony, including use of any telecommunication application software
which supports video conferencing or video telephony in accordance with the
procedure laid down by the Board;
(xi) the Board shall establish suitable facilities for video conferencing or video
telephony including telecommunication application software which supports
video conferencing or video telephony at such locations as may be necessary, so
as to ensure that the assessee, or his authorized representative, or any other
person is not denied the benefit of faceless assessment merely on the
consideration that such assessee or his authorised representative, or any other
person does not have access to video conferencing or video telephony at his end;
(xii) the Principal Chief Commissioner or the Principal Director General, in
charge of the National Faceless Assessment Centre shall, with the prior approval
of the Board, lay down the standards, procedures and processes for effective
functioning of the National Faceless Assessment Centre, Regional Faceless
Assessment Centres and the unit set up, in an automated and mechanised
environment, including format, mode, procedure and processes in respect of the
following, namely:—
(a) service of the notice, order or any other communication;
(b) receipt of any information or documents from the person in response to the
notice, order or any other communication;
SECTION 144B (7)(xii) (cont..)
(c) issue of acknowledgement of the response furnished by the person;
(d) provision of "e-proceeding" facility including login account facility, tracking
status of assessment, display of relevant details, and facility of download;
(e) accessing, verification and authentication of information and response
including documents submitted during the assessment proceedings;
(f) receipt, storage and retrieval of information or documents in a centralised
manner;
(g) circumstances in which proviso to sub-section (6) shall apply;
SECTION 144B (7)(xii) (cont..)
(h) circumstances in which personal hearing referred to clause (viii) shall be
approved;
(i) general administration and grievance redressal mechanism in the respective

Centres and units.
SECTION 144B (8)
(8) Notwithstanding anything contained in sub-section (1) or sub-section (2), the
Principal Chief Commissioner or the Principal Director General in charge of
National Faceless Assessment Centre may at any stage of the assessment, if
considered necessary, transfer the case to the Assessing Officer having
jurisdiction over such case, with the prior approval of the Board.
SECTION 144B (9)
(9) Notwithstanding anything contained in any other provision of this Act,
assessment made under sub-section (3) of section 143 or under section 144 in the
cases referred to in sub-section (2) [other than the cases transferred under sub-
section (8)], on or after the 1st day of April, 2021, shall be non-est if such
assessment is not made in accordance with the procedure laid down under this
section.
EXPLANATION TO SECTION 144B
Explanation.—In this section, unless the context otherwise requires—
(a) "addressee" shall have the same meaning as assigned to it in clause (b) of sub-
section (1) of section 2 of the Information Technology Act, 2000;
(b) "authorised representative" shall have the same meaning as assigned to it in

sub-section (2) of section 288;
(c) "automated allocation system" means an algorithm for randomized allocation

of cases, by using suitable technological tools, including artificial intelligence
and machine learning, with a view to optimise the use of resources;
EXPLANATION TO SECTION 144B (CONT..)
(d) "automated examination tool" means an algorithm for standardised
examination of draft orders, by using suitable technological tools, including
artificial intelligence and machine learning, with a view to reduce the scope of
discretion;
(e) "computer resource" shall have the same meaning as assigned to it in

clause (k) of sub-section (1) of section 2 of the Information Technology Act,
2000;
(f) "computer system" shall have the same meaning as assigned to it in clause
(l) of sub-section (1) of section 2 of the Information Technology Act, 2000;
(g) "computer resource of assessee" shall include assessee’s registered account
in designated portal of the Income-tax Department, the Mobile App linked to the
registered mobile number of the assessee, or the registered email address of the
assessee with his email service provider;
(h) "digital signature" shall have the same meaning as assigned to it in clause (p)
of sub-section (1) of section 2 of the Information Technology Act, 2000;
(i) "designated portal" means the web portal designated as such by the Principal
Chief Commissioner or the Principal Director General, in charge of the National
Faceless Assessment Centre;
(j) "Dispute Resolution Panel" shall have the same meaning as assigned to it in
clause (a) of sub-section (15) of section 144C;
(k) "faceless assessment" means the assessment proceedings conducted

electronically in 'e-Proceeding' facility through assessee’s registered account in
designated portal;
(l) "electronic record" shall have the same meaning as assigned to itin clause (t)
of sub-section (1) of section 2 of the Information Technology Act, 2000;
(m) "eligible assessee" shall have the same meaning as assigned to in clause (b)
of sub-section (15) of section 144C;
(n) "email" or "electronic mail" and "electronic mail message" means a message
or information created or transmitted or received on a computer, computer
system, computer resource or communication device including attachments in
text, image, audio, video and any other electronic record, which may be
transmitted with the message;
(o) "hash function" and "hash result" shall have the same meaning as assigned to
them in the Explanation to sub-section (2) of section 3 of the Information
Technology Act, 2000;
(p) "Mobile app" shall mean the application software of the Income-tax
Department developed for mobile devices which is downloaded and installed on
the registered mobile number of the assessee;
(q) "originator" shall have the same meaning as assigned to it in clause (za) of
sub-section (1) of section 2 of the Information Technology Act, 2000;
(r) "real time alert" means any communication sent to the assessee, by way of
Short Messaging Service on his registered mobile number, or by way of update
on his Mobile App, or by way of an email at his registered email address, so as
to alert him regarding delivery of an electronic communication;
(s) "registered account" of the assessee means the electronic filing account
registered by the assessee in designated portal;
(t) "registered e-mail address" means the e-mail address at which an electronic
communication may be delivered or transmitted to the addressee, including—
(i) the e-mail address available in the electronic filing account of the
addressee registered in designated portal; or
(ii) the e-mail address available in the last income-tax return furnished by the
addressee; or
(iii) the e-mail address available in the Permanent Account Number database
relating to the addressee; or
CLAUSE (t) IN EXPLANATION TO SECTION 144B (CONT..)
(iv) in the case of addressee being an individual who possesses the Aadhaar
number, the e-mail address of addressee available in the database of Unique
Identification Authority of India; or
(v) in the case of addressee being a company, the e-mail address of the
company as available on the official website of Ministry of Corporate Affairs;
or
(vi) any e-mail address made available by the addressee to the income-tax
authority or any person authorised by such authority.
(u) "registered mobile number" of the assessee means the mobile number of the
assessee, or his authorised representative, appearing in the user profile of the
electronic filing account registered by the assessee in designated portal;
(v) "video conferencing or video telephony" means the technological solutions

for the reception and transmission of audio-video signals by users at different
locations, for communication between people in realtime.';
SECTION 144B – FACELESS ASSESSMENT - COMMENTS
 Inserted by The Taxation And Other Laws (Relaxation And Amendment Of

Certain Provisions) Act, 2020
 W.e.f. 01.04.2021
 Overrides anything contained contrary in any other provisions of the IT Act,

1961 in relation to 'Faceless assessment’
 Assessment under sections 143(3) or 144 now shall be made carried as per the
procedure laid down under section 144B(1)(i) to (xxxii).
SECTION 144B – FACELESS ASSESSMENT – COMMENTS
(CONT..)
 CBDT is empowered to specify such territorial area or persons or class of persons, or

incomes or class of incomes, or cases or class of cases under section 144B(2);
 CBDT is empowered to set up certain centres and units and specify their respective
jurisdiction under Section 144B(3);
 Authorities for the Assessment/Verification/Technical/Review Unit shall be Additional

Commissioner or Additional Director or Joint Commissioner or Joint Director; Deputy
Commissioner or Deputy Director or Assistant Commissioner or Assistant Director or ITO
or as such considered necessary by the CBDT - Section 144B(4);
(CONT..)
 All their communications with the assessee or any other person shall channel through the
National Faceless Assessment Centre(NFAC) [Section 144B(5)]
 Internal communications shall be by electronic mode only except for the provisions under
Section144B(7)(xii)(g) [Section 144B(6)]
 Other provisions for smooth functioning of 'Faceless assessment’ is provided under section
144B(7).
 Principal Chief Commissioner or the Principal Director General in charge of NFAC, may at any
stage of such assessment, transfer the case to the AO with prior approval of the CBDT [Section
144B(8)]
(CONT..)
 Assessment shall be non-est if not found as per the procedures laid in Section [Section
144B(9)]
 Definition of various terms are provided in Explanation to Section 144B.

SECTION 144C – REFERENCE TO DISPUTE
RESOLUTION PANEL.
AMENDMENT BY THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF CERTAIN
PROVISIONS) ACT, 2020
SECTION 144C (14B) INSERTED
The Central Government may make a scheme, by notification in the Official
Gazette, for the purposes of issuance of directions by the dispute resolution
panel, so as to impart greater efficiency, transparency and accountability by—
(a) eliminating the interface between the dispute resolution panel and the
eligible assessee or any other person to the extent technologically feasible;
(b) optimising utilisation of the resources through economies of scale and
functional specialisation;
(c) introducing a mechanism with dynamic jurisdiction for issuance of
directions by dispute resolution panel.
SECTION 144C (14C) INSERTED
The Central Government may, for the purpose of giving effect to the scheme
made under sub-section (14B), by notification in the Official Gazette, direct that
any of the provisions of this Act shall not apply or shall apply with such
exceptions, modifications and adaptations as may be specified in the
notification:
Provided that no direction shall be issued after the 31st day of March, 2022.
SECTION 144C (14D) INSERTED
Every notification issued under sub-section (14B) and sub-section (14C) shall,
as soon as may be after the notification is issued, be laid before each House of
Parliament.
SECTION 144C- INSERTION OF SUB SECTION (14B), (14C) &
(14D) - COMMENTS
 The same was inserted by The Taxation And Other Laws (Relaxation And
Amendment Of Certain Provisions) Act, 2020
 W.e.f. 01.11.2020(AY 2021-22/PY 2020-21)
 Permits the Central Government to make a Scheme, through notification, for the
purposes of issuance of directions by the DRP.
 To impart greater efficiency, transparency and accountability.

SECTION 234C - INTEREST
SECTION – 234C(1) - INTEREST FOR DEFERMENT OF ADVANCE
TAX
Provided that nothing contained in this sub-section shall apply to any shortfall in

the payment of the tax due on the returned income where such shortfall is on
account of under-estimate or failure to estimate:
(d) the amount of dividend income,
Explanation 2: For the purposes of this sub-section, the term “dividend” shall
have the meaning assigned to it in clause (22) of section 2, but shall not include
sub-clause (e) thereof.
TAX - COMMENTS
 M-35/ N-
 W.e.f. 01.04.2021(AY 2021-22/PY 2020-21)
 234C – 1st Proviso relaxes in four circumstances
 Clause (d) of 1st Proviso dealt with Sec.115BBDA
 It is substituted by ‘dividend’
TAX - COMMENTS
 Shortfall due to dividend does not attract interest if arrears are paid in the next falling
instalment.
 Benefit does not apply to Sec. 2(22)(e);
 Sec. 8 has to be borne in mind.

RE-ASSESSMENT
PERSONAL TAXATION
SECTION 147 - INCOME ESCAPING
ASSESSMENT
SECTION 147 REVAMPED
SECTION 147 - REVAMPED
If any income chargeable to tax, in the case of an assessee,

has escaped assessment for any assessment year, the
Assessing Officer may, subject to the provisions of sections
148 to 153, assess or reassess such income or recompute the
loss or the depreciation allowance or any other allowance or
deduction for such assessment year (hereafter in this section
and in sections 148 to 153 referred to as the relevant
assessment year).
SECTION 147 REVAMPED (CONT..) – EXPLANATION SECTION
147
Explanation.—For the purpose of assessment or reassessment

under this section, the Assessing Officer may assess or reassess
the income in respect of any issue, which has escaped assessment,
and such issue comes to his notice subsequently in the course of
the proceedings under this section, irrespective of the fact that the
provisions of section 148A have not been complied with.”.
SECTION 147 REVAMPED - COMMENTS
 N – 35 ; M – 46 to 50/ FM Speech 29/45
 W.e.f. 01.04.2021 (FY 2020-21)
 Circular 549 – 7.13 & 7.14
 CIT v. Vatika Township (P.) Ltd. [2014] 367 ITR 466 (SC)
 CIT v. Kelvinator of India Ltd.256 ITR 1 (Delhi FB)
 Concepts thrown out – FTD/ ROB/ Explanation 1
 Merger similar to 3rd Proviso to existing 147 – No provision

 ROB v/s COO v/s Information flagged by RMS
 Power to reassess v. Power to review;
• Sec. 147 does not use “review”, for which Sec. 263 is to be invoked;
• COO amounts to review
• If RMS results in COO – translates to review
• If one can prove RMS is selective, it results in arbitrariness

 Meaning of income escaping assessment – Explanation 2 is not there;
• FTC
• Relief/ Rebate
• Loss
• Rate of tax
 Income includes loss CIT v. Harprasad & Co. (P.) Ltd [1975] 99 ITR 118 (SC)
 Explanation 2(ba) – Failure to file report u/s 92E
 Explanation 2(ca) – Information u/s 133 (2)
 Explanation 2(d) – assets outside India

 Explanation;
• Similar to Explanation 3 to Section 147
• Ranbaxy/ Jetairways – Read 147 (and also) with Explanation 3
• N. Govindaraju v. ITO 377 ITR 243 Kar – Read them disjuctively
• As new 147 does not use “and also”, Govindaraju appears to be legislatively approved
• Dispenses with only 148ª and not with 148 – which requires suggestive information +
prior approval
 Section 150 & 152 continue to operate
Lifting of time - OK
 Explanation 2 to Sec. 153
147 process – Not OK unless flagged

by RMS
 Dispenses with 148A

SECTION 148 - ISSUE OF NOTICE WHERE
INCOME HAS ESCAPED ASSESSMENT.
Before making the assessment, reassessment or recomputation under section
147, and subject to the provisions of section 148A, the Assessing Officer
shall serve on the assessee a notice, along with a copy of the order passed, if
required, under clause (d) of section 148A, requiring him to furnish within
such period, as may be specified in such notice, a return of his income or the
income of any other person in respect of which he is assessable under this Act
during the previous year corresponding to the relevant assessment year, in the
prescribed form and verified in the prescribed manner and setting forth such
other particulars as may be prescribed; and the provisions of this Act shall, so
far as may be, apply accordingly as if such return were a return required to be
furnished under section 139:
SECTION 148 REVAMPED –PROVISO TO SECTION 148
Provided that no notice under this section shall be issued unless

there is information with the Assessing Officer which suggests
that the income chargeable to tax has escaped assessment in the
case of the assessee for the relevant assessment year and the
Assessing Officer has obtained prior approval of the specified
authority to issue such notice.
SECTION 148– EXPLANATION 1
For the purposes of this section and section 148A, the information with the
Assessing Officer which suggests that the income chargeable to tax has escaped
assessment means,—
(i) any information flagged in the case of the assessee for the relevant
assessment year in accordance with the risk management strategy formulated
by the Board from time to time;
(ii) any final objection raised by the Comptroller and Auditor General of India
to the effect that the assessment in the case of the assessee for the relevant
assessment year has not been made in accordance with the provisions of this
Act.
SECTION 148 REVAMPED – EXPLANATION 2
For the purposes of this section, where,—
(i) 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 1st day of April, 2021, in the case of the assessee; or
(ii) a survey is conducted under section 133A in the case of the assessee on
or after the 1st day of April, 2021; or
SECTION 148 REVAMPED – EXPLANATION 2 (CONT..)
(iii) the Assessing Officer is satisfied, with the prior approval of the Principal
Commissioner or Commissioner, that any money, bullion, jewellery or other
valuable article or thing, seized or requisitioned in case of any other person on
or after the 1st day of April, 2021, belongs to the assessee; or
(iv) the Assessing Officer is satisfied, with the prior approval of Principal
Commissioner or Commissioner, that any books of account or documents,
seized or requisitioned in case of any other person on or after the 1st day of
April, 2021, pertains or pertain to, or any information contained therein, relate
to, the assessee,
SECTION 148 REVAMPED – EXPLANATION 2 (CONT..)
…
the Assessing Officer shall be deemed to have information which suggests
that the income chargeable to tax has escaped assessment in the case of the
assessee for the three assessment years immediately preceding the
assessment year relevant to the previous year in which the search is initiated
or books of account, other documents or any assets are requisitioned or
survey is conducted in the case of the assessee or money, bullion, jewellery
or other valuable article or thing or books of account or documents are seized
or requisitioned in case of any other person.
SECTION 148 REVAMPED – EXPLANATION 3
For the purposes of this section, specified authority means

the specified authority referred to in section 151.
 W.e.f. 01.04.2021
 N – 36 ; M – 46 to 50;
 Copy of order of Sec.148A (d) to be given
• Why “if required” – should be “if any”
• Purpose is to enable assessee to challenge in writ

 Proviso – Conditions
• Suggestive info
• In the case of assessee
• For the relevant AY
• Prior Approval
After approval u/s 14A(d) this approval is surplusage
Relevant when 148A is Not available

EXPLANATION 1 TO SEC. 148 - COMMENTS
 RMS – Information is flagged by RMS – Sec. 285BA/285BB/ Assessment order

Information Flagged:
Court Decisions
Board Circulars/Notifications
Panama Leaks
Penny Stocks
Share Capital issue
 Exp. 1 gives exhaustive meaning of “information with the AO” which suggests that
information means [suggests – ‘supposes’ Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007]
291 ITR 500 (SC)]
EXPLANATION 1 TO SEC. 148 - COMMENTS
 Exp. 1 (ii) – C & AG
 Meaning of final objection
 Procedure of C & AG
• Half margin
• Draft Para
• Final objection is what is placed before the parliament.

EXPLANATION 1(ii) TO SEC. 148 - COMMENTS
 AO’s comment’s/ justification is irrelevant;
 Final objection to effect that assessment is not made in accordance with the provisions of
the Act:
• Sections
• Circulars – binding in nature
• Instructions.
 Mistakes by AO cannot be cured through new Sec. 148 as the same cannot be regarded as
SI
DEEMED SUGGESTIVE INFO EXPLANATION 2 TO SEC. 148 -
COMMENTS
 There are 4 circumstances C1 to C4
 In case of C1 & C2 - Mere search & survey, without anything cannot apply if nothing is
found
 In case of C3 & C4
 Satisfaction with the prior approval;
 Which AO?
 Is satisfied?
 No 2 tier satisfaction unlike 153C
 If AO of the Searched party

DEEMED SUGGESTIVE INFO EXPLANATION 2 TO SEC. 148 –
COMMENTS (CONT..)
 Effect of Expl. 2 – deeming fiction for 3 Ays prior to AY of PY of search. Even if 149
provides for 10AYs, DSI does not extend for more than 3 years
 In case of C2 - Survey
 Expl. 2 to 148 – deemed suggestive info
 However, 148A procedure is not dispensed with
 In case of C1, C2 & C3
 Expl. 2 to 148 – deemed suggestive info
 However, 148A is dispensed with

SECTION 148A – CONDUCTING INQUIRY, PROVIDING
OPPORTUNITY BEFORE ISSUE OF NOTICE UNDER
SECTION 148.
SECTION 148A NEWLY INSERTED
The Assessing Officer shall, before issuing any notice under

section 148, —
(a) conduct any enquiry, if required, with the prior approval

of specified authority, with respect to the information which
suggests that the income chargeable to tax has escaped
assessment;
(b) provide an opportunity of being heard to the assessee, with the prior
approval of specified authority, by serving upon him a notice to show
cause within such time, as may be specified in the notice, being not less
than seven days and but not exceeding thirty days from the date on which
such notice is issued, or such time, as may be extended by him on the
basis of an application in this behalf, as to why a notice under section 148
should not be issued on the basis of information which suggests that
income chargeable to tax has escaped assessment in his case for the
relevant assessment year and results of enquiry conducted, if any, as per
clause (a);
(c) consider the reply of assessee furnished, if any, in response to the show-
cause notice referred to in clause (b);
(d) decide, on the basis of material available on record including reply of the
assessee, whether or not it is a fit case to issue a notice under section 148, by
passing an order, with the prior approval of specified authority, within one
month from the end of the month in which the reply referred to in clause (c)
is received by him, or where no such reply is furnished, within one month
from the end of the month in which time or extended time allowed to furnish
a reply as per clause (b) expires:
SECTION 148A NEWLY INSERTED – PROVISO TO SECTION
148A
Provided that the provisions of this section shall not apply in a case where,—
(a) a search is initiated under section 132 or books of account, other documents
or any assets are requisitioned under section 132A in the case of the assessee on
or after the 1st day of April, 2021; or
(b) the Assessing Officer is satisfied, with the prior approval of the Principal
Commissioner or Commissioner that any money, bullion, jewellery or other
valuable article or thing, seized in a search under section 132 or requisitioned
under section 132A, in the case of any other person on or after the 1st day of
April, 2021, belongs to the assessee; or
SECTION 148A NEWLY INSERTED – PROVISO TO SECTION
148A
(c) the Assessing Officer is satisfied, with the prior approval of the Principal
Commissioner or Commissioner that any books of account or documents,
seized in a search under section 132 or requisitioned under section 132A, in
case of any other person on or after the 1st day of April, 2021, pertains or
pertain to, or any information contained therein, relate to, the assessee.
SECTION 148A NEWLY INSERTED – EXPLANATION TO
SECTION 148A
For the purposes of this section, specified authority means

the specified authority referred to in section 151.
SECTION 148A NEWLY INSERTED – COMMENTS
 W.e.f. 01.04.2021
 N – 37 ; M – 46 to 50;
 Section 148A deals conducting inquiry, providing opportunity before issue of notice under
section 148. Hence the same is prior to issuance of notice under Section 148.
 Section 148(a)
 Enquiry is discretionary;
 SA’s prior approval;
 Enquiry is confined to SI/DSI
 No Roving/fishing enquiry
SECTION 148A(b)– COMMENTS (CONT..)
 Providing an opportunity is a must;
 When mandatory, why prior approval of SA?
Three Situations:
Opportunity w/o Opportunity with

No Opportunity Prior Approval Prior Approval
OK (Jurisdiction
Not OK Not OK Condition)
SECTION 148A(b)– COMMENTS (CONT..)
 7 to 30 days from the date of issue – Not date of service;
 Notice to be accompanied by SI and results of enquiry (by necessary implications)

SECTION 148A(c) & (d)– COMMENTS (CONT..)
 Consider & decide
 Whether it is a fit case;
 Pass an order
 Prior approval of SA
 Within 1 month:
• End of the month in which reply is made
• End of the month in which time to reply lapses.
 Serve a copy along with notice u/s 148

PROVISO TO SECTION 148A– COMMENTS (CONT..)
 Satisfaction with prior approval
 AO to have a draft satisfaction & get it approved
 If condition of (b)/(c) are not met, proviso is Not applicable. Sec.148A bounces back. In
such case issue of Sec.148 without 148A becomes without jurisdiction.
SECTION 149 – TIME LIMIT FOR NOTICE.
SECTION 149 REVAMPED - SECTION 149 (1)
No notice under section 148 shall be issued for the relevant assessment year,—
(a) if 3 years have elapsed from the end of the relevant assessment year, unless the
case falls under clause (b);
(b) if 3 years, but not more than 10 years, have elapsed from the end of the
relevant assessment year unless the Assessing Officer has in his possession books
of accounts or other documents or evidence which reveal that the income
chargeable to tax, represented in the form of asset, which has escaped assessment
amounts to or is likely to amount to Rs.50 lakhs or more for that year:
SECTION 149 REVAMPED – 1ST PROVISO TO SECTION 149 (1)
Provided that no notice under section 148 shall be issued at any time in a case
for the relevant assessment year beginning on or before 1st day of April, 2021,
if such notice could not have been issued at that time on account of being
beyond the time limit specified under the provisions of clause (b) of sub-
section (1) of this section, as they stood immediately before the
commencement of the Finance Act, 2021:
SECTION 149 REVAMPED – 2ND PROVISO TO SECTION 149 (1)
Provided further that the provisions of this sub-section shall not apply in a
case, where a notice under section 153A, or section 153C read with section
153A, is required to be issued in relation to a search initiated under section 132
or books of account, other documents or any assets requisitioned under section
132A, on or before the 31st day of March, 2021:
SECTION 149 REVAMPED – 3RD PROVISO TO SECTION 149 (1)
Provided also that for the purposes of computing the period of limitation as per
this section, the time or extended time allowed to the assessee, as per show-
cause notice issued under clause (b) of section 148A or the period during
which the proceeding under section 148A is stayed by an order or injunction of
any court, shall be excluded:
SECTION 149 REVAMPED – 4TH PROVISO TO SECTION 149 (1)
Provided also that where immediately after the exclusion of the period referred
to in the immediately preceding proviso, the period of limitation available to
the Assessing Officer for passing an order under clause (d) of section 148A is
less than 7 days, such remaining period shall be extended to 7 days and the
period of limitation in sub-section (1) shall be deemed to be extended
accordingly.
SECTION 149 REVAMPED –SECTION 149 (2)
The provisions of sub-section (1) as to the issue of notice

shall be subject to the provisions of section 151.
SECTION 149 REVAMPED– COMMENTS
 W.e.f. 01.04.2021
 N – 38 ; M – 46 to 50;
 New time limits for issuance of notice:
Cases Time Limit
Normal cases Within 3 years from the end of the relevant AY
Specific cases (Income Within 10 years from the end of the relevant AY
Escaped or likely > 50
lakhs)
 16 years wrt income from asset outside India

 149(1)(b) – 10 years
 Beyond 3 years to re-open
SI/DSI Suggesting
+
Books/ Documents/
Revealing
Evidence (BDE)
(BDE) reveals Income escaped

Represented in
the form of asset
 “Reveals” – Confirmed as a fact

 “Represented by asset” – At what point of time – Issue of notice
Sec. 149(1) Same as 4th Proviso (Memorandum to Fin

(b) language 153A(1) Bill 2017 – tangible evidence found
in search & such TE is represented
in the form of an asset
Compare Sec. 158BB –
Undisclosed income
FIRST PROVISO SECTION 149(1)– COMMENTS
Up to AY 2020-
AY 2021-22* 2022-23 onwards
21*
New Law New Law New Law
Limitation 6 years Limitation 6 years New Limitation
* Not covered by 153A

SECTION 149(2)- COMMENTS
 Income reference to Sec. 151 as Section 151 is only defining SA
 Reference should have been to Sec.148 & 148A

SECTION 151 – SANCTION FOR ISSUE OF
NOTICE.
SECTION 151 REVAMPED - SANCTION FOR ISSUE OF NOTICE.
Specified authority for the purposes of section 148 and section 148A shall be,—
(i) Principal Commissioner or Principal Director or Commissioner or Director,

if three years or less than 3 years have elapsed from the end of the relevant
assessment year;
(ii) Principal Chief Commissioner or Principal Director General or where there

is no Principal Chief Commissioner or Principal Director General, Chief
Commissioner or Director General, if more than 3 years have elapsed from the
end of the relevant assessment year.”
 W.e.f. 01.04.2021
 N – 39 ; M – 46 to 50;
 New sanctioning authority for the purpose of Section 148/148A:
Cases Sanctioning Authority
Normal cases PCIT/ PCIT/ CIT/ DIT
Specific cases (Income • PCCIT/PDGIT;
Escaped or likely > 50 • Chief Commissioner or Director General, (if no
lakhs) PCCIT/ PDGIT)
 Earlier Sec. 151 provided for sanction

 Present 151 only prescribes specified authority
SECTION 151A – FACELESS ASSESSMENT OF
INCOME ESCAPING ASSESSMENT.
SECTION 151A INSERTED BY THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF
SECTION 151A (1) – FACELESS ASSESSMENT OF INCOME
ESCAPING ASSESSMENT
The Central Government may make a scheme, by notification in the Official Gazette, for the
purposes of assessment, reassessment or re-computation under section 147 or issuance of notice
under section 148 or sanction for issue of such notice under section 151, so as to impart greater
efficiency, transparency and accountability by—
(a) eliminating the interface between the income-tax authority and the assessee or any other
person to the extent technologically feasible;
(b) optimising utilisation of the resources through economies of scale and functional
specialisation;
(c) introducing a team-based assessment, reassessment, re-computation or issuance or sanction

of notice with dynamic jurisdiction.
ESCAPING ASSESSMENT
(2) The Central Government may, for the purpose of giving effect to the scheme
made under sub-section (1), by notification in the Official Gazette, direct that
notification:
ESCAPING ASSESSMENT
Every notification issued under sub-section (1) and sub-section (2) shall, as soon
as may be after the notification is issued, be laid before each House of
Parliament.
SECTION 151A– FACELESS ASSESSMENT OF INCOME
ESCAPING ASSESSMENT - COMMENTS
 The same was inserted by The Taxation And Other Laws (Relaxation And Amendment Of
 W.e.f. 01.11.2020(AY 2021-22/PY 2020-21)
 Empowers the CG to make a Scheme, through notification, for the purposes of

assessment, reassessment or re-computation (s. 147) or issuance of notice (s. 148) or
sanction for issue of such notice (s. 151)
 Imparts greater efficiency, transparency and accountability by such means as provided

therein.
SECTION 151A – FACELESS ASSESSMENT OF
INCOME ESCAPING ASSESSMENT.
SECTION 151A(1) AMENDED BY FINANCE BILL 2021
151A(1) - AMENDED
The Central Government may make a
The Central Government may make a scheme, by notification in the Official
scheme, by notification in the Official Gazette, for the purposes of assessment,
Gazette, for the purposes of assessment, reassessment or re-computation under
reassessment or re-computation under section 147 or conducting of enquiries or
section 147 or issuance of notice under issuance of show-cause notice or passing of
section 148 or sanction for issue of such order under section 148A or issuance of
notice under section 151, so as to impart notice under section 148 or sanction for
greater efficiency, transparency and issue of such notice under section 151, so
accountability by…. as to impart greater efficiency,
transparency and accountability by….
SECTION 151A(1) AMENDED– COMMENTS
 W.e.f. 01.04.2021
 N – 40 ; M – 46 to 50;
 Even conducting of enquiries or issuance of show-cause notice or passing

of order under section 148A included under the Faceless Re-assessment
scheme.
LIMITATION
PERSONAL TAXATION
SECTION 153 – TIME LIMIT FOR COMPLETION OF
ASSESSMENT, REASSESSMENT AND RECOMPUTATION.
153(1) AMENDED
3RD PROVISIO TO SECTION 153(1) INSERTED
Provided also that in respect of an order of assessment relating to the assessment

year commencing on or after the 1st day of April, 2021, the provisions of this
sub-section shall have effect, as if for the words “twenty-one months”, the
words “nine months” had been substituted
3RD PROVISIO TO SECTION 153(1) INSERTED– COMMENTS
 W.e.f. 01.04.2021
 N – 41 ; M – 46 to 50;
 The time for completing of assessment is reduced to 9 months from the end of the
assessment year.
 If reference to TPO is made, 9 months + 12 months = 21 months
 Applicable for assessment relating to the AY commencing on or after 01.04.2021 (i.e AY

2021-22)
SEARCH
PERSONAL TAXATION
SECTION 153A – ASSESSMENT IN CASE OF
SEARCH OR REQUISITION.
153A(1) AMENDED
153A(1) - AMENDED
Notwithstanding anything contained in
Notwithstanding anything contained in
section 139, section 147, section 148,
section 139, section 147, section 148,
section 149, section 151 and section 153, in
section 149, section 151 and section 153,
the case of a person where a search is
in the case of a person where a search is
initiated under section 132 or books of
initiated under section 132 or books of
account, other documents or any assets are
account, other documents or any assets are
requisitioned under section 132A after the
requisitioned under section 132A after the
31st day of May, 2003 but on or before the
31st day of May, 2003, the Assessing
31st day of March, 2021, the Assessing
Officer shall …
Officer shall …
153A(1) - AMENDED– COMMENTS
 W.e.f. 01.04.2022(AY 2022-23/PY 2021-22)
 N – 42 ; M – 46 to 50;
 Sunset of Section 153A.

SECTION 153C – ASSESSMENT OF INCOME OF
ANY OTHER PERSON.
153C - AMENDED
153C(3) – INSERTED
Nothing contained in this section shall apply in relation to a search initiated

under section 132 or books of account, other documents or any assets
requisitioned under section 132A on or after the 1st day of April, 2021.”.
153C(3) – INSERTED – COMMENTS
 W.e.f. 01.04.2022(AY 2022-23/PY 2021-22)
 N – 43 ; M – 46 to 50;
 Sunset of Section 153C.

SECTION 157A – FACELESS RECTIFICATION,
AMENDMENTS AND ISSUANCE OF NOTICE OR
INTIMATION.
157A – NEWLY INSERTED BY THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF
SECTION 157A (1)
The Central Government may make a scheme, by notification in the Official Gazette, for the
purposes of rectification of any mistake apparent from record under section 154 or other
amendments under section 155 or issue of notice of demand under section 156, or intimation
of loss under section 157, so as to impart greater efficiency, transparency and accountability
by—
(a) eliminating the interface between the income-tax authority and the assessee or any other
person to the extent technologically feasible;
specialisation;
(c) introducing a team-based rectification of mistakes, amendment of orders, issuance of
notice of demand or intimation of loss, with dynamic jurisdiction.
SECTION 157A (2)
The Central Government may, for the purpose of giving effect to the scheme
made under sub-section (1), by notification in the Official Gazette, direct that
notification:
SECTION 157A (3)
Every notification issued under sub-section (1) and sub-section (2) shall, as soon
as may be after the notification is issued, be laid before each House of
Parliament
157A – NEWLY INSERTED – COMMENTS
 The same was inserted by The Taxation And Other Laws (Relaxation And Amendment Of
 W.e.f. 01.11.2020(AY 2021-22/PY 2020-21)
 CG to make a Scheme, through notification, for the purposes of rectification of any

mistake apparent from record (s. 154) or other amendments (s. 155) or issue of notice of
demand (s. 156) or intimation of loss (s. 157)
 Imparts greater efficiency, transparency and accountability by such means as provided

therein.
CO-OPERATIVE SOCIETIES
SECTION 44DB
SPECIAL PROVISIONS FOR SPECIAL PROVISION FOR COMPUTING DEDUCTIONS IN THE CASE OF
BUSINESS REORGANIZATION OF CO-OPERATIVE BANKS.
SECTION 44DB
In section 44DB of the Income-tax Act,──
(a) in sub-section (3), after the words “successor cooperative bank”, the words “or to the
converted banking company” shall be inserted;
(b) in sub-section (4), after the words “a successor cooperative bank”, and the words
“the successor co-operative bank” the words “or to a converted banking company” and
the words “or to the converted banking company” shall, respectively, be inserted;
SECTION 44DB
In section 44DB of the Income-tax Act,──
(c) in sub-section (5),––
(i) after clause (c), the following clause shall be inserted, namely:––
‘(ca) "banking company" shall have the meaning assigned to it in clause (c) of section 5
of Banking Regulation Act, 1949;’
SECTION 44DB
(ii) in clause (d), after the words “a co-operative bank”, the words “or conversion of a
primary cooperative bank” shall be inserted;
(iii) after clause (d), the following clauses shall be inserted, namely:––
‘(da) “conversion” means transition of a primary co-operative bank to a banking

company under the scheme of the Reserve Bank of India as notified vide its circular
number DCBR. CO. LS. PCB. Cir. No. 5/07.01.000/2018-19, dated the 27th September,
2018;
(db) “converted banking company” means a banking company formed as a result of

conversion from primary co-operative bank;’ ;
SECTION 44DB
(iv) in clause (h), after the words “the demerged cooperative bank”, the words “or the
primary co-operative bank which has been succeeded as a result of conversion” shall be
inserted;
(v) after clause (h), the following clause shall be inserted, namely:––
‘(ha) “primary co-operative bank” shall have the meaning assigned to it in clause (ccv)
of section 5 of the Banking Regulation Act, 1949;’.
SECTION 44DB
 W.e.f. 01.04.2021 (AY 2021-22/PY 2020-21)
 M – 21 & 22, NC – 13.
 Section 44DB(1) provides that deductions under the following sections shall be allowed in
the year of reorganization as per the provisions of the section:
1. section 32- depreciation,

2. section 35D- Amortization of certain preliminary expenses,
3. Section 35DD- Amortization of expenditure in the case of amalgamation or demerger
4. Section 35DDA- Amortization of expenditure incurred under voluntary retirement
scheme.
SECTION 44DB
 Section 44DB(4) provides for formula for computation of deductions under section 32,
35D, 35DD and 35DDA allowable to the predecessor co-operative bank in the year of
reorganization between predecessor co-operative bank and successor co-operative bank.
 Section 44DB(3) provides for method of computation of deductions under section 32,
35D, 35DD and 35DDA allowable to the successor co-operative bank in the year of
 Section 44DB(4) deals with deductions under sections 35D, 35DD and 35DDA in the
hands of successor co-operative bank in the years subsequent to the the year of
SECTION 44DB
 In short section 44DB provides for computing deductions under sections 32, 35D, 35DD and
35DDA in the case of business reorganization of co-operative banks.
 PresentlySection 44DB is applicable for re-organization of co-operative banks

(Amalgamation & demerger) involving only co-operative banks
 RBI vide circular reference no. DCBR.CO.LS.PCB. Cir.No.5/07.01.000/2018-19 dated

September 27, 2018 has permitted voluntary transition of primary cooperative bank [urban co-
operative banks (UCB)] into a banking company by way of transfer of Assets and Liabilities.
 Section 44DB is amended to provide relief for conversion of primary co-operative bank into a
banking company
SECTION 44DB
 In terms of section 5(c) of Banking Regulation Act, 1949, "banking company" means
any company which transacts the business of banking in India;
Explanation.--Any company which is engaged in the manufacture of goods or carries on

any trade and which accepts deposits of money from the public merely for the purpose
of financing its business as such manufacturer or trader shall not be deemed to transact
the business of banking within the meaning of this clause.
SECTION 44DB
 In terms of Section 5 (ccv) read with Section 56 of the Banking Regulation Act, 1949 a
primary co-operative bank (Urban Co-operative Bank or UCB) means a co-operative
society, other than a primary agricultural credit society, whose,
a) Primary object or principal business of which is the transaction of banking business;

b) Paid-up share capital and reserves of which are not less than one lakh of rupees; and
c) Bye-laws of which do not permit admission of any other co-operative society as a
member: Provided that this sub-clause shall not apply to the admission of a co-
operative bank as a member by reason of such co-operative bank subscribing to the
share capital of such co-operative society out of funds provided by the State
Government for the purpose.
SECTION 44DB – MANNER OF CONVERSION
 Transition path [Source: https://www.rbi.org.in/ScriptS/NotificationUser.aspx?

Id=11381]
 After incorporating the banking company and complying with all the terms &
conditions of the in-principle approval, the promoters shall approach RBI for
banking licence along with following:
 UCB’s board resolution for transfer of assets and liabilities to the banking
company.
 The general body resolution passed by 2/3rd majority of members present and
voting to surrender the UCB’s licence to RBI for cancellation under Section
22(4) read with Section 56 of the BR Act, 1949.
SECTION 44DB
 The general body resolution passed by 2/3rd majority of members present and
voting to voluntarily wind up the Co-operative Society in terms of provisions in
the Central/State Co-operative Societies Act once the banking license of the
UCB is cancelled by RBI.
 Firm commitment from promoters for infusion of capital into the company
equity for meeting the minimum net worth and minimum promoter’s
contribution requirement for SFB.
[UCB stands for Urban Co-operative bank]

SECTIONS 47(vica)
TRANSFER IN A BUSINESS REORGANIZATION, OF A CAPITAL ASSET BY PREDECESSOR CO-OPERATIVE
BANK TO SUCCESSOR CO-OPERATIVE SOCIETY OR BANKING COMPANY.
SECTION 47(vica)
In section 47 of the Income-tax Act,──
(a) in clause (vica), after the words “successor cooperative bank”, the words “or to the
converted banking company” shall be inserted;
SECTION 47(vica)- COMMENTS
 W.e.f. 01.04.2021 (AY 2021-22/PY 2020-21)
 M – 21 & 22, NC – 15.
 Section 47(vica) provides that transfer of a capital asset in a business reorganization, by

predecessor co-operative bank to the successor co-operative bank, shall not be regarded as a
transfer.

SECTION 47(vica)- COMMENTS
 To facilitate the same, it has been proposed to include transfer of capital asset in a
business reorganization, by predecessor co-operative bank to the converted banking
company.
 Such transfer will not be regarded as transfer under section47(vica).

SECTIONS 47(vicb)
TRANSFER BY SHAREHOLDER IN A BUSINESS REORGANIZATION, OF A CAPITAL ASSET BEING SHARES
HELD BY HIM IN PREDECESSOR CO-OPERATIVE BANK
SECTION 47(vicb)
In section 47 of the Income-tax Act,──
(b) in clause (vicb),––
(i) after the words “successor co-operative bank”, the words “or to the converted
banking company” shall be inserted;
(ii) in the Explanation, for the words ‘expressions “business reorganisation”,

“predecessor co-operative bank” and’, the words ‘expressions “business reorganisation”,
“converted banking company”, “predecessor co-operative bank” and’ shall be
substituted;
SECTION 47(vicb)- COMMENTS
 W.e.f. 01.04.2021 (AY 2021-22/PY 2020-21)
 M – 21 & 22, NC – 15.
 Section 47(vicb) provides that any transfer by a shareholder, in a business reorganisation, of a

capital asset being a share or shares held by him in the predecessor co-operative bank if the
transfer is made in consideration of the allotment to him of any share or shares in the successor
co-operative bank, shall not be regarded as a transfer.

SECTION 47(vicb)- COMMENTS
 To facilitate the same, it has been proposed to include transfer by a shareholder, in a

business reorganisation, of a capital asset being a share or shares held by him in the
predecessor co-operative bank if the transfer is made in consideration of the allotment
to him of any share or shares in the converted banking company.
 Explanation to sections 47(vica) and 47(vicb) is proposed to be amended in light of

amendments in sections sections 47(vica) and 47(vicb).
DISPUTE RESOLUTION
IN SMALL CASES
PERSONAL TAXATION
CHAPTER XIX-AA – DISPUTE RESOLUTION
COMMITTEE IN CERTAIN CASES – NEWLY INSERTED
SECTION 245MA
SECTION 245MA
 w.e.f 01.04.2021
 Mem – 40 to 42
SECTION 245MA - FEATURES
 The Central Government shall constitute one or more Dispute Resolution

Committee (DRC).
 This committee shall resolve disputes of such persons or class of person

which shall be specified by the Board. The assessee would have an option
to opt for or not opt for the dispute resolution through the DRC.
 Only those disputes where the returned income is fifty lakh rupee or less
(if there is a return) and the aggregate amount of variation proposed in
specified order is ten lakh rupees or less shall be eligible to be considered
by the DRC.
 If the specified order is based on a search initiated under section 132 or requisition
made under section 132A or a survey initiated under 133A or information received
under an agreement referred to in section 90 or section 90A,of the Act, such
specified order shall not be eligible for being considered by the DRC.
 Assessee would not be eligible for benefit of this provision if there is detention,
prosecution or conviction under various laws as specified in the proposed section.
 Board will prescribe some other conditions in due course which would also need to
be satisfied for being eligible under this provision.
 The DRC, subject to such conditions as may be prescribed, shall have the powers
to reduce or waive any penalty imposable under this Act or grant immunity from
prosecution for any offence under this Act in case of a person whose dispute is
resolved under this provision.
 If the specified order is based on a search initiated under section 132 or requisition
made under section 132A or a survey initiated under 133A or information received
under an agreement referred to in section 90 or section 90A,of the Act, such
specified order shall not be eligible for being considered by the DRC.
 Assessee would not be eligible for benefit of this provision if there is detention,
prosecution or conviction under various laws as specified in the proposed section.
 Board will prescribe some other conditions in due course which would also need to
be satisfied for being eligible under this provision.
 The DRC, subject to such conditions as may be prescribed, shall have the powers
to reduce or waive any penalty imposable under this Act or grant immunity from
prosecution for any offence under this Act in case of a person whose dispute is
resolved under this provision.
 The Central Government has also been empowered to make a scheme by
notification in the Official Gazette for the purpose of dispute resolution
under this provision. The scheme shall impart greater efficiency,
transparency and accountability by eliminating interface to the extent
technologically feasible, by optimising utilisation of resources and
introducing dynamic jurisdiction. The Central Government may, for the
purposes of giving effect to the scheme, by notification in the Official
Gazette, direct that any of the provisions of this Act shall not apply or shall
apply with such exceptions, modifications and adaptations as may be
specified in the notification. However, no such direction shall be issued after
the 31st day of March, 2023. Every such notification shall, as soon as may be
after the notification is issued, be laid before each House of Parliament.
SECTION 245MA
(1) The Central Government shall constitute, one or more

Dispute Resolution Committees, as may be necessary, in
accordance with the rules made under this Act, for dispute
resolution in the case of such persons or class of persons, as
may be specified by the Board, who may opt for dispute
resolution under this Chapter in respect of dispute arising
from any variation in the specified order in his case and who
fulfils the specified conditions.
(2) The Dispute Resolution Committee, subject to such
conditions, as may be prescribed, shall have the powers to
reduce or waive any penalty imposable under this Act or
grant immunity from prosecution for any offence punishable
under this Act in case of a person whose dispute is resolved
under this Chapter.
(3) The Central Government may make a scheme, by
notification in the Official Gazette, for the purposes of
dispute resolution under this Chapter, so as to impart greater
efficiency, transparency and accountability by –
(a) eliminating the interface between the Dispute Resolution

Committee and the assessee in the course of dispute
resolution proceedings to the extent technologically feasible;
(b) optimising utilisation of the resources through economies
of scale and functional specialisation;
(c) introducing a dispute resolution system with dynamic

jurisdiction.
(4) The Central Government may, for the purposes of giving
effect to the scheme made under sub-section (3), by
notification in the Official Gazette, direct that any of the
provisions of this Act shall not apply or shall apply with such
exceptions, modifications and adaptations as may be
specified in the said notification:
Provided that no such direction shall be issued after the 31st

day of March, 2023.
(5) Every notification issued under sub-sections (3) and (4)
shall, as soon as may be after the notification is issued, be
laid before each House of Parliament.
Explanation.— For the purposes of this section,—
(a) “specified conditions” in relation to a person means a

person who fulfils the following conditions, namely:—
(I) where he is not a person,—
(A) in respect of whom an order of detention has been made

under the provisions of the Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act, 1974:
Provided that—
(i) such order of detention, being an order to which the

provisions of section 9 or section 12A of the said Act do not
apply, has been revoked on the report of the Advisory Board
under section 8 of the said Act or before the receipt of the
report of the Advisory Board; or
(ii) such order of detention being an order to which the
provisions of section 9 of the said Act apply, has not been
revoked before the expiry of the time for, or on the basis of,
the review under sub-section (3) of section 9, or on the report
of the Advisory Board under section 8, read with sub-section
(2) of section 9, of the said Act; or
(iii) such order of detention, being an order to which the
provisions of section 12A of the said Act apply, has not been
revoked before the expiry of the time for, or on the basis of,
the first review under sub-section (3) of the said section, or
on the basis of the report of the Advisory Board under section
8, read with subsection (6) of section 12A, of the said Act; or
(iv) such order of detention has not been set aside by a court
of competent jurisdiction;
(B) in respect of whom prosecution for any offence
punishable under the provisions of the Indian Penal Code, the
Unlawful Activities (Prevention) Act, 1967, the Narcotic
Drugs and Psychotropic Substances Act, 1985, the
Prohibition of Benami Transactions Act, 1988, the Prevention
of Corruption Act, 1988 or the Prevention of Money
Laundering Act, 2002 has been instituted and he has been
convicted of any offence punishable under any of those Acts;
(C) in respect of whom prosecution has been initiated by an
income-tax authority for any offence punishable under the
provisions of this Act or the Indian Penal Code or for the
purpose of enforcement of any civil liability under any law
for the time being in force, or such person has been convicted
of any such offence consequent upon the prosecution initiated
by an Income-tax authority;
(D) who is notified under section 3 of the Special Court (Trial
of Offences Relating to Transactions in Securities) Act, 1992;
(II) such other conditions, as may be prescribed

(b) “specified order” means such order, including draft order, as may be
specified by the Board, and,—
(i) aggregate sum of variations proposed or made in such order does not exceed
ten lakh rupees;
(ii) such order is not based on search initiated under section 132 or requisition
under section 132A in the case of assessee or any other person or survey under
section 133A or information received under an agreement referred to in section
90 or section 90A;
(iii) where return has been filed by the assessee for the assessment year relevant
to such order, total income as per such return does not exceed fifty lakh
rupees.’.
SETTLEMENT
COMMISSION
PERSONAL TAXATION
SETTLEMENT COMMISSION TO INTERIM
BOARD
INCOME TAX SETTLEMENT COMMISSION - ITSC
 w.e.f 01.02.2021
 Mem – 52 to 54
 NC – Clauses 54 to 65
 Proposed to discontinue ITSC

INCOME TAX SETTLEMENT COMMISSION – ITSC –
AMENDMENTS - SUMMARY
 ITSC shall cease to operate on or after 01.02.2021
 No application under section 245C of the Act for settlement of cases shall
be made on or after 01.02.2021;
 All applications that were filed under section 245C of the Act and not
declared invalid under section 245D (2C) and in respect of which no
order under section 245D(4) of the Act was issued on or before the
31.01.2021 shall be treated as pending applications.
 Where in respect of an application, an order, which was required to be
passed by the ITSC under section 245(2C) of the Act on or before the
31.01.2021 to declare an application invalid but such order has not been
passed on or before 31.01.2021, such application shall be deemed to be
valid and treated as pending application.
 The CG shall constitute one or more Interim Board for Settlement

(hereinafter referred to as the Interim Board), as may be necessary, for
settlement of pending applications. Every Interim Board shall consist of
three members, each being an officer of the rank of CCIT, as may be
nominated by the Board. If the Members of the Interim Board differ in
opinion on any point, the point shall be decided according to the opinion
of majority.
 On and from 01.02.2021, the provisions related to exercise of powers or
performance of functions by the ITSC viz. provisional attachment,
exclusive jurisdiction over the case, inspection of reports and power to
grant immunity shall apply mutatis mutandi to the Interim Board for the
purposes of disposal of pending applications and in respect of functions
like rectification of orders for all orders passed under section 245D (4).
However, where the time-limit for amending any order or filing of
rectification application under section 245(6B) of the Act expires on or
after 01.02.2021, in computing the period of limitation, the period
commencing from 01.02.2021 and ending on the end of the month in
which the Interim Board is constituted shall be excluded and the
remaining period shall be extended to 60 days, if less than 60 days.
With respect to a pending application, the assessee who had filed
such application may, at his option, withdraw such application
within a period of 3 months from the date of commencement of the
Finance Act, 2021 and intimate the Assessing Officer, in the
prescribed manner, about such withdrawal.
Where the option for withdrawal of application is not exercised by

the assessee within the time allowed, the pending application shall
be deemed to have been received by the Interim Board on the date
on which such application is allotted or transferred to the Interim
Board.
The Board may, by an order, allot any pending application to any
Interim Board and may also transfer, by an order, any pending
application from one Interim Board to another Interim Board.
Where the pending application is allotted to an Interim Board or

transferred to another Interim Board subsequently, all the records,
documents or evidences, with whatever name called, with the
ITSC shall be transferred to such Interim Board and shall be
deemed to be the records before it for all purposes.
 Where the assessee exercises the option to withdraw his application, the
proceedings with respect to the application shall abate on the date on which
such application is withdrawn and the AO, or, as the case may be, any other
income-tax authority before whom the proceeding at the time of making the
application was pending, shall dispose of the case in accordance with the
provisions of this Act as if no application under section 245C of the Act had
been made. However, for the purposes of the time-limit under sections 149,
153, 153B, 154 and 155 and for the purposes of payment of interest under
section 243 or 244 or, as the case may be, section 244A, for making the
assessment or reassessment, the period commencing on and from the date of
the application to the ITSC under section 245C of the Act and ending with
the date on which application is withdrawn shall be excluded.
 Further, the income-tax authority shall not be entitled to use the
material and other information produced by the assessee before the
ITSC or the results of the inquiry held or evidence recorded by the
ITSC in the course of proceeding before it. However, this restriction
shall not apply in relation to the material and other information
collected, or results of the inquiry held or evidence recorded by the AO,
or, as the case may be, other income-tax authority during the course of
any other proceeding under this Act irrespective of whether such
material or other information or results of the inquiry or evidence was
also produced by the assessee or the Assessing officer before the ITSC.
 The CG may make a scheme, by notification in the Official Gazette, for the
purposes of settlement in respect of pending applications by the Interim
Board, so as to impart greater efficiency, transparency and accountability by
eliminating the interface between the Interim Board and the assessee in the
course of proceedings to the extent technologically feasible; optimising
utilisation of the resources through economies of scale and functional
specialisation; and introducing a mechanism with dynamic jurisdiction. The
CG may, for the purposes of giving effect to the said scheme, by notification
in the Official Gazette, direct that any of the provisions of this Act shall not
apply or shall apply with such exceptions, modifications and adaptations as
may be specified in the notification. However, no such direction shall be
issued after the 31.03.2023. Every such notification issued shall, as soon as
may be after the notification is issued, be laid before each House of
Parliament.
SECTION 245A
(da) “Interim Board” means the Interim Board for Settlement constituted under section
245AA;
(ea) “Member of the Interim Board” means a Member of the Interim Board;
(eb) “pending application” means an application which was filed under section 245C
and which fulfils the following conditions, namely: —
(i) it was not declared invalid under sub-section (2C) of section 245D; and
(ii) no order under sub-section (4) of section 245D was issued on or before the 31st day
of January, 2021 with respect to such application;
SECTION 245AA
(1) The Central Government shall constitute one or more Interim Boards for
Settlement, as may be necessary, for the settlement of pending applications.
(2) Every Interim Board shall consist of three members, each being an
officer of the rank of Chief Commissioner, as may be nominated by the
Board.
(3) If the Members of the Interim Board differ in opinion on any point, the
point shall be decided according to the opinion of the majority.
SECTION 245B (1)
Provided that the Income-tax Settlement Commission so

constituted shall cease to operate on or after the 1st day of
February, 2021.
SECTION 245BC
Provided that the provisions of this section shall not apply

on or after the 1st day of February, 2021.
SECTION 245BD
Provided that the provisions of this section shall not apply

on or after the 1st day of February, 2021.
SECTION 245C (5)
No application shall be made under this section on or after

the 1st day of February, 2021
SECTION 245D (2C)
Provided also that where in respect of an application, an

order, which was required to be passed under this
subsection on or before the 31st day of January, 2021, has
not been passed on or before the 31st day of January, 2021,
such application shall deemed to be valid.
SECTION 245D (9)
On and from the 1st day of February, 2021, the provisions

of sub-sections (1), (2), (2B), (2C), (3), (4), (4A), (5), (6)
and (6B) shall apply to pending applications allotted to
Interim Board with the following modifications, namely:–
(i) for the words “Settlement Commission”, wherever they
occur, the words “Interim Board” shall be substituted;
(ii) for the word “Bench”, the words “Interim Board” shall be
substituted;
(iii) for the purposes of this section, the date referred to in sub-
section (2) of section 245M shall be deemed to be date on
which the application was made under section 245C and
received by the Interim Board;
(iv) where the time-limit for amending any order or filing of
rectification application as per sub-section (6B) expires on or after
the 1st day of February, 2021, in computing the period of limitation,
the period commencing from the 1st February, 2021 and ending on
the end of the month in which the Interim Board is constituted shall
be excluded and where immediately after exclusion of such period,
the remaining period available to the Interim Board for amending the
order or to the Principal Commissioner or Commissioner or the
applicant for filing of application is less than sixty days, such
remaining period shall be extended to sixty days and the period of
limitation shall be deemed to have been extended accordingly.
SECTION 245D (10)
On and from the 1st day of February, 2021, the provisions

of sub-sections (6A) and (7) shall have effect as if for the
words “Settlement Commission”, the words “Settlement
Commission or Interim Board of Settlement” had been
substituted
SECTION 245D (11)
The Central Government may by notification in the

Official Gazette, make a scheme, for the purposes of
settlement in respect of pending applications by the
Interim Board, so as to impart greater efficiency,
transparency and accountability by—
(a) eliminating the interface between the Interim Board and
the assessee in the course of proceedings to the extent
technologically feasible;

(c) introducing a mechanism with dynamic jurisdiction.

SECTION 245D (12)
The Central Government may, for the purposes of giving effect to

the scheme made under sub-section (11), by notification in the
adaptations as may be specified in the said notification:
Provided that no such direction shall be issued after the 31st day
of March, 2023.
SECTION 245D (13)
Every notification issued under sub-section (11) and sub-section

(12) shall, as soon as may be after the notification is issued, be
laid before each House of Parliament.
SECTION 245DD (3)
On and from the 1st day of February, 2021, the power of the
Settlement Commission under this section shall be exercised by
the Interim Board and the provisions of this section shall mutatis
mutandis apply to the Interim Board as they apply to the
Settlement Commission.
SECTION 245F (8)
On and from the 1st day of February, 2021, the powers and
functions of the Settlement Commission under this section shall
be exercised or performed, by the Interim Board and all the
provisions of this section shall mutatis mutandis apply to the
Interim Board as they apply to the Settlement Commission.
SECTION 245G
2nd Proviso:
Provided further that on or after the 1st day of February, 2021,

functions of the Settlement Commission under this section shall
be performed by the Interim Board and the provisions of this
section shall mutatis mutandis apply to Interim Board as they
apply to the Settlement Commission.
SECTION 245H (3)
On and from the 1st day of February, 2021, the power of the
Settlement Commission under this section shall be exercised by
the Interim Board and the provisions of this section shall mutatis
mutandis apply to the Interim Board as they apply to the
Settlement Commission.
SECTION 245M – NEWLY INSERTED
 w.e.f 01.02.2021
 Mem – 52 to 54
SECTION 245M
(1) With respect to a pending application, the assessee who had

filed such application may, at his option, withdraw such
application within a period of three months from the date of
commencement of the Finance Act, 2021 and intimate the
Assessing Officer, in the prescribed manner, about such
withdrawal.
(2) Where the option under sub-section (1) is not exercised by
the assessee within the time allowed under that sub-section, the
pending application shall be deemed to have been received by
the Interim Board on the date on which such application is
allotted or transferred to the Interim Board under sub-section
(3).
(3) The Board may, by an order, allot any pending application

to any Interim Board and may also transfer, by an order, any
pending application from one Interim Board to another Interim
Board.
(4) Where the pending application is allotted to an Interim
Board under sub-section (3) or transferred to another Interim
Board subsequently, all the records, documents or evidences,
by whatever name called, with the Settlement Commission
shall be transferred to such Interim Board and shall be deemed
to be the records before it for all purposes.
(5) Where the assessee exercises the option under subsection
(1) to withdraw his application, the proceedings with respect to
the application shall abate on the date on which such
application is withdrawn and the Assessing Officer, or, as the
case may be, any other income-tax authority before whom the
proceeding at the time of making the application was pending,
shall dispose of the case in accordance with the provisions of
this Act as if no application under section 245C had been
made:
Provided that for the purposes of the time-limit under sections
149, 153, 153B, 154 and 155 and for the purposes of payment
of interest under section 243 or 244 or, as the case may be,
section 244A, for making the assessment or reassessment under
this sub-section, the period commencing on and from the date
of the application to the Settlement Commission under section
245C and ending with the date referred to in this sub-section
shall be excluded:
Provided further that the income-tax authority shall not be
entitled to use the material and other information produced by
the assessee before the Settlement Commission or the results of
the inquiry held or evidence recorded by the Settlement
Commission in the course of proceedings before it:
Provided also that nothing contained in the first proviso shall
apply in relation to the material and other information
collected, or results of the inquiry held or evidence recorded by
the Assessing Officer, or as the case may be, other income tax
authority during the course of any other proceeding under this
Act irrespective of whether such material or other information
or results of the inquiry or evidence were also produced by the
assessee or the Assessing Officer before the Settlement
Commission.
AAR
TO
BOARD FOR ADVANCE

RULINGS
PERSONAL TAXATION
AUTHORITY FOR ADVANCE RULING
AAR
 W.e.f. – Yet to be notified
 Mem – 42 to 46
 NC – Clauses 67 to 70
 Chapter XIX-B was inserted into the Statute by FA 1993

AAR – BACKGROUND FOR AMENDMENT
 A bench cannot function if the post of Chairman or Vice-Chairman is vacant.
 As per section 245-O of the Act, persons eligible for appointment as Chairman of AAR
are retired judges of the Supreme Court, retired Chief Justice of a High Court or retired
Judge of a High Court who has served in that capacity for at least seven years. Similarly,
the persons eligible for appointment as Vice-Chairman are retired judges of a High Court.
 As per past experience, the posts of Chairman and Vice-Chairman have remained vacant
for a long time due to non-availability of eligible persons.
 This has seriously hampered the working of AAR and a large number of applications are
pending since last many years.
AAR – AMENDMENT FEATURES
 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 (hereinafter referred to as the notified date).
 It is proposed that the Central Government shall constitute one or more Board
for Advance Rulings for giving advance rulings under the said Chapter 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. Advance rulings
of such Board shall not be binding on the applicant or the Department and if
aggrieved, the applicant or the Department may appeal against the ruling or
order passed by the Board before the High Court.
 Since the work of Authority shall be carried out by the Board for
Advance Rulings on and after the notified date, amendments are
proposed to be made to the various provisions of the Chapter to this
effect.
 Section 245N is proposed to be amended to incorporate the definitions

of the Board of Advance Rulings, notified date, Member of the Board of
Advance Rulings and change in the definition of Authority to include the
Board for Advance Rulings.
 Section 245-O is proposed to be amended to provide that the Authority

constituted under the said section shall cease to operate on or after the
notified date.
 Section 245-OB shall be inserted to provide for the constitution of the Board of
Advance Rulings.
 Section 245P is proposed to be amended to provide that on or from the notified

date, the provisions of the said section shall have effect as if for the words
“Authority”, the words “Board for Advance Rulings” had been substituted;
 Section 245Q (which deals with filing of application) is proposed to be

amended to provide that the pending application with the Authority i.e. 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 records before the Board for all purposes
Section 245R (which deals with the procedure) is proposed to
be amended to provide that on or from the notified date, the
provisions of the said section shall have effect as if for the
words “Authority”, the words “Board for Advance Rulings” had
been substituted and the provisions of the said section shall
apply mutatis mutandi to the Board for Advance Rulings as they
apply to the Authority.
The CG is also proposed to be empowered to make a scheme by
notification in the Official Gazette for the purpose of giving advance
ruling by Board of Advance Ruling under this provision. The scheme shall
impart greater efficiency, transparency and accountability by eliminating
interface to the extent technologically feasible, by optimising utilisation of
resources and introducing dynamic jurisdiction. The CG may, for the
purposes of giving effect to the scheme, by notification in the Official
Gazette, direct that any of the provisions of this Act shall not apply or
shall apply with such exceptions, modifications and adaptations as may be
specified in the notification. However, no such direction shall be issued
after the 31.03.2023. Every such notification shall, as soon as may be after
the notification is issued, be laid before each House of Parliament.
 Section 245S (which deals with the applicability of advance ruling and
makes it binding on the assessee and the Department) is proposed to be
amended to provide that nothing contained in the said section shall apply on
and after the notified date.
 Section 245T (which deals with advance ruling to be void in certain

situation) is proposed to be amended to provide that on or from the notified
date, the provisions of the said section shall have effect as if for the words
“Authority”, the words “Board for Advance Rulings” had been substituted.
Also, a specific reference to advance ruling pronounced by the Authority
shall be amended to make it advance ruling pronounced under section 245R
(6) so that the Board for Advance Ruling can also exercise powers under the
said section in respect of rulings pronounced by the present Authority
Section 245S Section 245U is proposed to be amended to provide
that on or from the notified date, the powers of the “Authority”
under the said section shall be exercised by the “Board for
Advance Rulings” and the provisions of the said section shall
apply mutatis mutandi to the Board for Advance Rulings as they
apply to the Authority.
Section 245V is proposed to be amended to provide that nothing

contained in the said section shall apply on and after the notified
date.
SECTION 245-O (1)
Provided further that the Authority so constituted shall

cease to operate on and from such date as the Central
Government may, by notification in the Official Gazette,
appoint.
SECTION 245-OB – NEWLY INSERTED
(1) The Central Government shall constitute one or more Boards

for Advance Rulings, as may be necessary, for giving advance
rulings under this Chapter on or after such date as the Central
Government may, by notification in the Official Gazette, appoint.
(2) The Board for Advance Rulings shall consist of two members,
each being an officer not below the rank of Chief Commissioner,
as may be nominated by the Board.
SECTION 245-Q (4)
Where an application is made under this section before such date as

the Central Government may, by notification in the Official Gazette
appoint, and in respect of which no order under sub-section (2) of
section 245R has been passed or advance ruling under sub-section (4)
of section 245R has been pronounced before such date, such
application along with all the relevant records, documents or material,
by whatever name called, on the file of the Authority shall be
transferred to the Board for Advance Rulings and shall be deemed to
be the records before the Board for Advance Rulings for all purposes.
SECTION 245R (8)
On and from such date as the Central Government may, by

notification in the Official Gazette, appoint, the provisions of this
section shall have effect as if for the word “Authority”, the words
“Board for Advance Rulings” had been substituted and the
provisions of this section shall apply mutatis mutandis to the
Board for Advance Rulings as they apply to the Authority.
SECTION 245R (9)
(9) The Central Government may, by notification in the Official Gazette, make a
scheme for the purposes of giving advance rulings under this Chapter by the Board
for Advance Rulings, so as to impart greater efficiency, transparency and
accountability by—
(a) eliminating the interface between the Board for Advance Rulings and the
applicant in the course of proceedings to the extent technologically feasible;
specialisation;
(c) introducing a system with dynamic jurisdiction.

SECTION 245R (10)
The Central Government may, for the purposes of giving effect to

the scheme made under sub-section (9), by notification in the
adaptations as may be specified in the said notification:
Provided that no such direction shall be issued after the 31st day of
March, 2023.
SECTION 245R (11)
Every notification issued under sub-section (9) and sub-

section (10) shall, as soon as may be after the notification is
issued, be laid before each House of Parliament.
SECTION 245T (3)
With effect from such date as the Central Government may,

by notification in the Official Gazette, appoint, the provisions
of this section shall have effect as if for the word
“Authority”, the words “Board for Advance Rulings” had
been substituted.
SECTION 245U (3)
On and from such date as the Central Government may, by

notification in the Official Gazette, appoint, the powers of the
Authority under this section shall be exercised by the Board
for Advance Rulings and the provisions of this section shall
mutatis mutandis apply to the Board for Advance Rulings as
they apply to the Authority.
SECTION 245V
Provided that nothing contained in this section shall apply on

or after such date as the Central Government may, by
notification in the Official Gazette, appoint.
SECTION 245W
 w.e.f 01.04.2021
 Mem – 45 & 46
SECTION 245W – NEWLY INSERTED
(1) The applicant, if he is aggrieved by any ruling

pronounced or order passed by the Board for Advance
Rulings or the Assessing Officer, on the directions of the
Principal Commissioner or Commissioner, may appeal to
the High Court against such ruling or order of the Board of
Advance Rulings within sixty days from the date of the
communication of that ruling or order, in such form and
manner, as may be prescribed:
Provided that where the High Court is satisfied, on an
application made by the appellant in this behalf, that
the appellant was prevented by sufficient cause from
presenting the appeal within the period specified in
sub-section (1), it may grant further period of thirty
days for filing such appeal.
(2) The Central Government may make a scheme, by notification
in the Official Gazette, for the purposes of filing appeal to the
High Court under sub-section (1) by the Assessing Officer, so as
to impart greater efficiency, transparency and accountability by
—
(a) optimising utilisation of the resources through economies of

scale and functional specialisation;
(b) introducing a team-based mechanism with dynamic

jurisdiction.
(3) The Central Government may, for the purposes of giving
effect to the scheme made under sub-section (2), by notification
in the Official Gazette, direct that any of the provisions of this
Act shall not apply or shall apply with such exceptions,
modifications and adaptations as may be specified in the said
notification:
Provided that no such direction shall be issued after the 31st day
of March, 2023.
(4) Every notification issued under sub-section (2) and sub-
FACELESS ITAT
PERSONAL TAXATION
APPELLATE TRIBUNAL - FACELESS
SECTION 255 (7)
 w.e.f 01.04.2021
 Mem – 51 & 52
SECTION 255 (7)
The Central Government may make a scheme, by

notification in the Official Gazette,
for the purposes of disposal of appeals by the Appellate

Tribunal
so as to impart greater efficiency, transparency and

accountability by—
(a) eliminating the interface between the Appellate Tribunal
and parties to the appeal in the course of appellate
proceedings to the extent technologically feasible;

(c) introducing an appellate system with dynamic jurisdiction.

SECTION 255 (8)
The Central Government may, for the purposes of giving

effect to the scheme made under sub-section (7), by
notification in the Official Gazette, direct that any of the
provisions of this Act shall not apply to such scheme or shall
apply with such exceptions, modifications and adaptations as
may be specified in the said notification:
Provided that no such direction shall be issued after the 31st

day of March, 2023.
SECTION 255 (9)
Every notification issued under sub-section (7) and sub-

BUSINESS REORGANISATION
SECTION 2(19AA) – MEANING OF
"DEMERGER"
EXPLANATION 6 TO SECTION 2(19AA) INSERTED
EXPLANATION 6 TO SECTION 2(19AA) INSERTED
For the purposes of this clause, the reconstruction or splitting up of

a public sector company into separate companies shall be deemed
to be a demerger, if such reconstruction or splitting up has been
made to transfer any asset of the demerged company to the
resulting company and the resulting company––
EXPLANATION 6 TO SECTION 2(19AA) INSERTED (CONT..)
(i) is a public sector company on the appointed day indicated in

such scheme, as may be approved by the Central Government or
any other body authorized under the provisions of the Companies
Act, 2013 or any other law for the time being in force governing
such public sector companies in this behalf; and
(ii) fulfils such other conditions as may be notified by the Central

Government in the Official Gazette in this behalf;”;
SECTION 2(19AA) - COMMENTS
 W.e.f. 01.04.2021 (AY 2021-22/PY 2020-21)
 M – 22-24, NC – 3
 Section 2(19AA) defines ‘demerger’, in relation to companies.
 Explanation 6 to section 2(19AA) has been proposed to be added to relax the

provisions of these two sections for public sector companies in order to facilitate
strategic disinvestment by the Government
 W.e.f. 01.04.2021 (AY 2021-22/PY 2020-21)
 M – 22-24, NC – 3
 Section 2(19AA) defines ‘demerger’, in relation to companies.
 As per memorandum, Explanation 6 to section 2(19AA) has been proposed to be

added to relax the provisions of these two sections for public sector companies in
order to facilitate strategic disinvestment by the Government.
Reconstructed
Original Public or split into Resultant
Sector Company Company
if
1. Such reconstruction or splitting up has been made to transfer any asset

of the demerged company to the resultant company; &
2. The resultant company is a public sector company on the appointed
date indicated in the scheme approved by CG or body authorized; &
3. Resultant company fulfils such other conditions as may be notified by
GC in official gazette.
SECTION 72A - PROVISIONS RELATING TO CARRY FORWARD AND SET
OFF OF ACCUMULATED LOSS AND UNABSORBED DEPRECIATION
ALLOWANCE IN AMALGAMATION OR DEMERGER, ETC
AMENDMENT OF SECTION 72A(1)
SECTION 72A(1)(c) SUBSTITUTED

one or more public sector company
or companies engaged in the one or more public sector company
business of operation of aircraft or companies with one or more
with one or more public sector public sector company or companies;
company or companies engaged in or
similar business,
SECTION 72A(1)(d) NEWLY INSERTED
an erstwhile public sector company with one or more company or

companies, if the share purchase agreement entered into under
strategic disinvestment restricted immediate amalgamation of the
said public sector company and the amalgamation is carried out
within five year from the end of the previous year in which the
restriction on amalgamation in the share purchase agreement ends
PROVISO TO SECTION 72A (1) INSERTED
‘Provided that the accumulated loss and the unabsorbed depreciation

of the amalgamating company, in case of an amalgamation referred
to in clause (d), which is deemed to be the loss or, as the case may be,
the allowance for unabsorbed depreciation of the amalgamated
company, shall not be more than the accumulated loss and
unabsorbed depreciation of the public sector company as on the date
on which the public sector company ceases to be a public sector
company as a result of strategic disinvestment.
EXPLANATION TO SECTION 72A (1) INSERTED
Explanation.––For the purposes of clause (d),––
(i) “control” shall have the same meaning as assigned to in clause

(27) of section 2 of the Companies Act, 2013;
(ii) “erstwhile public sector company” means a company which

was a public sector company in earlier previous years and ceases
to be a public sector company by way of strategic disinvestment
by the Government;
EXPLANATION TO SECTION 72A (1) INSERTED (CONT..)
(iii) “strategic disinvestment” means sale of shareholding by the

Central Government or any State Government in a public sector
company which results in reduction of its shareholding to below
fifty-one per cent. along with transfer of control to the buyer.’.
SECTION 72A
C/W & SET OFF OF ACCUMULATED LOSS & UNABSORBED DEPRECIATION:
AMALGAMATION/DEMERGER
 M – 22 to 24/NC - 22
 W.r.e.f. 01.04.2021 [AY 2021-2022 /PY 2020-2021]
 Pre-amended Section 72A(1) had 3 clauses
 Clause (c) dealt with public sector company or company engaged in the business of
operation of air craft
 Clause (c) amended to all public sector companies

SECTION 72A
C/W & SET OFF OF ACCUMULATED LOSS & UNABSORBED DEPRECIATION:
AMALGAMATION/DEMERGER
 Clause (d) is added for facilitation amalgamation of erstwhile public sector company
with one or more companies if:
o SPA restricted immediate amalgamation

o Amalgamation is done within 5 years from end of PY in which restriction ends
 No benefit, if SPA does not have any restriction on amalgamation
 In case of clause (d), the accumulated loss/unabsorbed depreciation at the time of

amalgamation is capped to what it was on the date of public sector ceasing to be so.
THE INCOME DECLARATION SCHEME, 2016
SECTION 191 OF FINANCE ACT 2016 - TAX IN RESPECT OF
VOLUNTARILY DISCLOSED INCOME NOT REFUNDABLE.
AMENDMENT OF PROVISO TO SECTION 191 OF THE FINANCE ACT,2016
AMENDMENT OF PROVISO TO SECTION 191 OF THE FINANCE
ACT,2016
Provided that the Central Government Provided that the Central Government may,
may, by notification in the Official by notification in the Official Gazette,
Gazette, specify the class of persons to specify the class of persons to whom the
whom the amount of tax, surcharge and amount of tax, surcharge and penalty, paid
penalty, paid in excess of the amount in excess of the amount payable under this
payable under this Scheme shall be Scheme shall be refundable without any
refundable. interest.
AMENDMENT TO SECTION 191 OF THE FINANCE ACT,2016
 W.r.e.f. 01.06.2016
 Proviso was amended to provide that such excess amount of tax, surcharge or penalty
paid in pursuance of a declaration made under the Income Declaration Scheme, 2016
shall be refundable to the specified class of persons without payment of any interest.
DIRECT TAX VIVAD SE VISHWAS
ACT, 2020
SECTION 2(1)(A) - APPELLANT
Explanation: For the removal of doubts, it is hereby clarified that

the expression “appellant” shall not include and shall be deemed
never to have been included a person in whose case a writ petition
or special leave petition or any other proceeding has been filed
either by him or by the income-tax authority or by both before an
appellate forum, arising out of an order of the Settlement
Commission under Chapter XIX-A of the Income-tax Act, and such
petition or appeal is either pending or is disposed of.
SECTION 2(J) - DISPUTED TAX
Explanation: For the removal of doubts, it is hereby clarified that

the expression “disputed tax”, in relation to an assessment year or
financial year, as the case may be, shall not include and shall be
deemed never to have been included any sum payable either by
way of tax, penalty or interest pursuant to an order passed by
the Settlement Commission under Chapter XIX-A of the
Income-tax Act.’;
SECTION 2(O) - TAX ARREAR
Explanation: For the removal of doubts, it is hereby

clarified that the expression “tax arrear” shall not include
and shall be deemed never to have been included any sum
payable either by way of tax, penalty or interest pursuant to
an order passed by the Settlement Commission under
Chapter XIX-A of the Income-tax Act.
VIVAD SE VISHWAS SCHEME - COMMENTS
Notification No. 04/2021 - Extending the due date for filing the
declaration under V se V scheme to 28.02.2021;
Over 1,10,000 taxpayers have opted to settle tax disputes of over

Rs.85,000 crores under V se V scheme.
AGRICULTURE INFRASTRUCTURE AND
DEVELOPMENT CESS
SECTION – 115 – AGRICULTURE INFRASTRUCTURE AND
DEVELOPMENT CESS ON IMPORTED GOODS.
(1) There shall be levied and collected, in accordance with the

provisions of this section, for the purposes of the Union, a duty of
customs, to be called Agriculture Infrastructure and
Development Cess, on the goods specified in the First Schedule to
the Customs Tariff Act, 1975 (hereinafter referred to as the Customs
Tariff Act), being the goods imported into India, at the rate not
exceeding the rate of customs duty as specified in the said Schedule,
for the purposes of financing the agriculture infrastructure and
other development expenditure.
SECTION – 115
(2) The Central Government may, after due appropriation made by Parliament by
law in this behalf, utilise such sums of money of the Agriculture Infrastructure and
Development Cess levied under this section for the purposes specified in sub-
section (1), as it may consider necessary.
(3) Where the duty is leviable on the goods at any percentage of its value, then, for
the purposes of calculating the Agriculture Infrastructure and Development Cess
under this section, the value of such goods shall be calculated in the same manner
as the value of goods is calculated for the purpose of customs duty under section 14
of the Customs Act, 1962.
SECTION – 115
(4) The Agriculture Infrastructure and Development Cess on imported goods

shall be in addition to any other duties of customs chargeable on such goods,
under the Customs Act, 1962 or any other law for the time being in force.
(5) The provisions of the Customs Act, 1962 and the rules and regulations made
thereunder, including those relating to assessment, non-levy, short-levy, refund,
exemptions, interest, appeals, offences, and penalties shall, as far as may be,
apply in relation to the levy and collection of the Agriculture Infrastructure and
Development Cess on the said Act, or the rules or regulations, as the caimported
goods as they apply in relation to the levy and collection of duties of customs on
such goods under se maybe.
 M – 92, 93; NC – 115;
 W.e.f. 02.02.2021;
 An Agriculture Infrastructure and Development Cess (AIDC) has been proposed on import
of specified goods in the First Schedule to the Customs Tariff Act.
 This cess shall be used to finance the improvement of agriculture infrastructure and other
development expenditure.
 To ensure that imposition of cess does not lead to additional burden in most of these items
on the consumer, the Basic Customs Duty (BCD) rates has been lowered.
SECTION – 116 – AGRICULTURE INFRASTRUCTURE AND
DEVELOPMENT CESS ON EXCISABLE GOODS
(1) There shall be levied and collected, in accordance with the

provisions of this section, for the purposes of the Union, an
additional duty of excise, to be called Agriculture Infrastructure
and Development Cess, on the goods specified in the Seventh
Schedule (hereinafter referred to as scheduled goods), being the
goods manufactured or produced, at the rates specified in column
(3) of the said Schedule, for the purposes of financing the
agriculture infrastructure and other development expenditure.
SECTION – 116
(2) The Central Government may, after due appropriation made by

Parliament by law in this behalf, utilise such sums of money of the
Agriculture Infrastructure and Development Cess levied under this section
for the purposes specified in sub-section (1), as it may consider necessary.
(3) The cess leviable under sub-section (1), chargeable on the scheduled
goods, shall be in addition to any other duties of excise chargeable on such
goods under the Central Excise Act, 1944 or any other law for the time being
in force.
SECTION – 116
(4) The provisions of the Central Excise Act, 1944 and the rules
and the regulations made thereunder, including those relating to
assessment, non-levy, short-levy, refund, exemptions, interest,
appeals, offences, and penalties shall, as far as may be, apply in
relation to the levy and collection of the cess leviable under this
section in respect of scheduled goods as they apply in relation to
the levy and collection of duties of excise on such goods under
the said Act or the rules or regulations, as the case maybe.
 M – 92, 93; NC – 115;
 W.e.f. 02.02.2021; [Will come into effect immediately owing to a declaration under the
Provisional Collection of Taxes Act, 1931]
 AIDC as an additional duty of excise, proposed on Petrol and High speed diesel on
excisable goods specified in the Seventh Schedule.
 This cess shall be used to finance the improvement of agriculture infrastructure and
other development expenditure.
 Consequent to imposition of AIDC, the Basic Excise Duty (BED) and Special Additional
Excise Duty (SAED) on Petrol and High-speed diesel is being reduced so that consumer
does not have to bear any additional burden on account of imposition of AIDC.
 The details of AID cess are as under:
Sl No. Commodity Rate of AIDC

1. Motor spirit commonly known as petrol Rs. 2.5 per litre
2. High speed diesel Rs. 4 per litre

THE PROHIBITION OF BENAMI
PROPERTY TRANSACTION ACT, 1988
SECTION 2(1)
"Adjudicating Authority" means the Adjudicating

Authority appointed under referred to in section 7;
SECTION 7 – ADJUDICATING AUTHORITY
SUBSTITUTED
 The competent authority authorised under sub-section (1) of section 5 of the
Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act,
1976 shall be the Adjudicating Authority to exercise jurisdiction, powers and
authority conferred by or under this Act.
 Section 5(1) of Smugglers and Foreign Exchange Manipulators (forfeiture of

property) Act, 1976 - The Central Government may, by order published in the
Official Gazette, authorize as many officers of the Central Government (not
below the rank of a Joint Secretary to the Government), as it thinks fit, to
perform the functions of the competent authority under this Act.
OMISSION OF SECTIONS
 Section 8 - Composition of Authority
 Section 9 - Qualifications for appointment of Chairperson and Members
 Section 10 - Constitution of Benches of Adjudicating Authority
 Section 11 - Power of Adjudicating Authority to regulate its own procedure
 Section 12 - Term of office of Chairperson and Members of Adjudicating Authority
 Section 13 - Terms and conditions of services of Chairperson and Members of

Adjudicating Authority
OMISSION OF SECTIONS
 Section 14 - Removal of Chairperson and Members of Adjudicating Authority
 Section 15 - Member to act as Chairperson in certain circumstances
 Section 16 - Vacancies, etc., not to invalidate proceedings of Adjudicating Authority
 Section 17 - Officers and employees of Adjudicating Authority

SECTION 26(7)
Provided that where the time limit for passing order under
this sub-section expires during the period beginning from the
1st day of July, 2021 and ending on the 29th day of
September, 2021, the time limit for passing such order shall
be extended to the 30th day of September, 2021.
SECTION 68 - POWER TO MAKE RULES
(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:
(b) the manner of appointing the Chairperson and the Member of the Adjudicating
Authorities under sub-section (2) of section 9; - Omitted
(c) the salaries and allowances payable to the Chairperson and the Members of the
Adjudicating Authority under sub-section (1) of section 13; - Omitted
PROPERTY TRANSACTION ACT, 1988 - COMMENTS
 M – 72, 73; NC – 142 to 147
 W.e.f. 01.07.2021;
 Since there is no appointment of the Adjudicating Authority under the PBPT Act,
the Adjudicating Authority under the PMLA is discharging the functions of the
Adjudicating Authority under the PBPT Act;
 The Competent Authority constituted under section 5(1) of the Smugglers and
Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA)
shall be the Adjudicating Authority under the PBPT Act
PROPERTY TRANSACTION ACT, 1988 - COMMENTS
Limitation u/s. 26 (7) for passing order - The time limit for
passing order is expiring during the period beginning from
01.07.2021 and ending on 29.09.2021, such the time limit for
passing such order shall stand extended to 30.09.2021.
CENTRAL SALES TAX
SECTION 8(3) - RATES OF TAX ON SALES IN THE COURSE OF
INTER-STATE TRADE OR COMMERCE
(1) Every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer
goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act,
which shall be three per cent of his turnover or at the rate applicable to the sale or purchase of
such goods inside the appropriate State under the sales tax law of that State, whichever is lower:
(3) The goods referred to in sub-section (1):
Clause (b) - Current Clause (b) - Proposed
(b) are goods of the class or classes specified in the (b) are goods of the class or classes specified in the
certificate of registration of the registered dealer purchasing certificate of registration of the registered dealer
the goods as being intended for resale by him or subject to purchasing the goods as being intended for re-sale by
any rules made by the Central Government in this behalf, him or subject to any rules made by the Central
for use by him in the manufacture or processing of goods
for sale or in the telecommunications network or] in Government in this behalf, for use by him in the
mining or in the generation or distribution of electricity manufacture or processing for sale of goods specified
or any other form of power; under clause (d) of section 2;
SECTION 8(3)(B) - COMMENTS
 Section 8(3)(b) is amended to exclude the goods used in the telecommunication
network or in mining or in generation or distribution of electricity or any other
form of power - In pursuance to Taxation Amendment Act, 2017
 By Taxation Amendment Act, 2017 - Certain sections in Central Sales Tax Act,
1956 were Omitted;
 Definition under section 2(c) “declared goods” - was omitted
 Section 14 and Section 15 of CST Act - was omitted

SECTION 8(3)(B) - COMMENTS
Section 2(d) – Definition of “Goods” amended:
(d) “goods” means:
(i) petroleum crude;
(ii) high speed diesel;
(iii) motor spirit (commonly known as petrol);
(iv) natural gas;
(v) aviation turbine fuel; and
(vi) alcoholic liquor for human consumption;’

CENTRAL GOODS AND SERVICES TAX
SECTION 7(1) - SCOPE OF SUPPLY
(1) For the purposes of this Act, the expression "supply" includes:
(aa) the activities or transactions, by a person, other than an individual, to its

members or constituents or vice versa, for cash, deferred payment or other
valuable consideration.
Explanation: For the purposes of this clause, it is hereby clarified that, notwithstanding anything
contained in any other law for the time being in force or any judgment, decree or order of any
Court, tribunal or authority, the person and its members or constituents shall be deemed to be
two separate persons and the supply of activities or transactions inter se shall be deemed to
take place from one such person to another.
NC - 99
SECTION 16(2)(A) - ELIGIBILITY AND CONDITION FOR
TAKING INPUT TAX CREDIT
(2) Notwithstanding anything contained in this section, no registered person shall be entitled
to the credit of any input tax in respect of any supply of goods or services or both to him
unless:
 (aa) the details of the invoice or debit note referred to in clause (a) has
been furnished by the supplier in the statement of outward supplies and
such details have been communicated to the recipient of such invoice or
debit note in the manner specified under section 37 ;
NC - 100
SECTION 35 (5) - ACCOUNTS AND OTHER RECORDS
Omitted
 (5) Every registered person whose turnover during a financial year exceeds the prescribed
limit shall get his accounts audited by a chartered accountant or a cost accountant and shall
submit a copy of the audited annual accounts, the reconciliation statement under sub-section
(2) of section 44 and such other documents in such form and manner as may be prescribed.
 Provided that nothing contained in this sub-section shall apply to any department of the
Central Government or a State Government or a local authority, whose books of account are
subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for
auditing the accounts of local authorities under any law for the time being in force.
NC - 101
SECTION 44 – ANNUAL RETURN
(SUBSTITUTED)
 Every registered person, other than an Input Service Distributor, a person paying tax
under section 51 or section 52, a casual taxable person and a non-resident taxable person
shall furnish an annual return which may include a self certified reconciliation statement,
reconciling the value of supplies declared in the return furnished for the financial year,
with the audited annual financial statement for every financial year electronically, within
such time and in such form and in such manner as may be prescribed:
 Provided that the Commissioner may, on the recommendations of the Council, by

notification, exempt any class of registered persons from filing annual return under this
section:
NC - 102
SECTION 44
 Provided further that nothing contained in this section shall apply to any department of
the Central Government or a State Government or a local authority, whose books of
account are subject to audit by the Comptroller and Auditor-General of India or an
auditor appointed for auditing the accounts of local authorities under any law for the
time being in force.
SECTION 50(1) - INTEREST ON DELAYED PAYMENT OF TAX
(SUBSTITUTED PROVISO)
(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made
thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed,
shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such
rate, not exceeding eighteen per cent, as may be notified by the Government on the recommendations of
the Council:
Provided that the interest on tax payable in respect of supplies made during a
tax period and declared in the return for the said period furnished after the
due date in accordance with the provisions of section 39, except where such
return is furnished after commencement of any proceedings under section 73 or
section 74 in respect of the said period, shall be payable on that portion of the
tax which is paid by debiting the electronic cash ledger.
NC - 103
SECTION 74 - DETERMINATION OF TAX NOT PAID OR SHORT PAID OR ERRONEOUSLY
REFUNDED OR INPUT TAX CREDIT WRONGLY AVAILED OR UTILIZED BY REASON OF
FRAUD OR ANY WILFUL-MISSTATEMENT OR SUPPRESSION OF FACTS
Explanation 1: For the purposes of section 73 and this section:
(i) the expression "all proceedings in respect of the said notice" shall not include
proceedings under section 132;
(ii) where the notice under the same proceedings is issued to the main person liable to pay
tax and some other persons, and such proceedings against the main person have been
concluded under section 73 or section 74, the proceedings against all the persons liable to
pay penalty under sections 122, 125, 129 and 130 sections 122 and 125 are deemed to be
concluded.
NC - 104
SECTION 75 - GENERAL PROVISIONS RELATING TO
DETERMINATION OF TAX
 Explanation: For the purposes of this sub-section, the expression "self-assessed
tax" shall include the tax payable in respect of details of outward supplies
furnished under section 37, but not included in the return furnished under section
39.
NC - 105
SECTION 83(1) - PROVISIONAL ATTACHMENT TO PROTECT
REVENUE IN CERTAIN CASES (SUBSTITUTED)
Sec 83(1) - Current Sec 83(1) - Proposed
(1) Where during the pendency of any (1) Where, after the initiation of any proceeding
proceedings under section 62 or section 63 or under Chapter XII, Chapter XIV or Chapter
section 64 or section 67 or section 73 or section XV, the Commissioner is of the opinion that for
74, the Commissioner is of the opinion that for the purpose of protecting the interest of the
the purpose of protecting the interest of the Government revenue it is necessary so to do, he
Government revenue, it is necessary so to do, he may, by order in writing, attach provisionally,
may, by order in writing attach provisionally any any property, including bank account, belonging
property, including bank account, belonging to to the taxable person or any person specified in
the taxable person in such manner as may be sub-section (1A) of section 122, in such
prescribed manner as may be prescribed.
NC - 106
SECTION 107(6) - APPEALS TO APPELLATE AUTHORITY
 Provided that no appeal shall be filed against an order under sub-section (3) of
section 129, unless a sum equal to twenty-five per cent. of the penalty has been
paid by the appellant.
 Section 129(3) - The proper officer detaining or seizing goods or conveyances

shall issue a notice specifying the tax and penalty payable and thereafter, pass an
order for payment of tax and penalty under clause (a) or clause (b) or clause (c)
NC - 107
SECTION 129(1) - DETENTION, SEIZURE AND RELEASE OF
GOODS AND CONVEYANCES IN TRANSIT
 Clauses (a) and (b) – Substituted
(1) Notwithstanding anything contained in this Act, where any person

transports any goods or stores any goods while they are in transit in
contravention of the provisions of this Act or the rules made thereunder, all
such goods and conveyance used as a means of transport for carrying the said
goods and documents relating to such goods and conveyance shall be liable to
detention or seizure and after detention or seizure, shall be released:
NC - 108
SECTION 129(1)
Sec 129(1)(a) - Current Sec 129(1)(a) - Proposed
on payment of the applicable tax and penalty on payment of penalty equal to two hundred
equal to one hundred per cent of the tax payable per cent. of the tax payable on such goods and,
on such goods and, in case of exempted goods, in case of exempted goods, on payment of an
on payment of an amount equal to two per cent amount equal to two per cent. of the value of
of the value of goods or twenty five thousand goods or twenty-five thousand rupees,
rupees, whichever is less, where the owner of whichever is less, where the owner of the goods
the goods comes forward for payment of such comes forward for payment of such penalty;
tax and penalty;
SECTION 129(1)
Sec 129(1)(b) - Current Sec 129(1)(b) - Proposed
on payment of the applicable tax and penalty on payment of penalty equal to fifty per cent.
equal to the fifty per cent of the value of the of the value of the goods or two hundred per
goods reduced by the tax amount paid thereon cent. of the tax payable on such goods,
and, in case of exempted goods, on payment of whichever is higher, and in case of exempted
an amount equal to five per cent of the value of goods, on payment of an amount equal to five
goods or twenty five thousand rupees, per cent. of the value of goods or twenty-five
whichever is less, where the owner of the goods thousand rupees, whichever is less, where the
does not come forward for payment of such tax owner of the goods does not come forward for
and penalty; payment of such penalty;
SECTION 129(2)
 Omitted
(2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for
detention and seizure of goods and conveyances.
SECTION 129(3)
The proper officer detaining or seizing goods or The proper officer detaining or seizing goods or
conveyances shall issue a notice specifying the conveyance shall issue a notice within seven
tax and penalty payable and thereafter, pass an days of such detention or seizure, specifying
order for payment of tax and penalty under the penalty payable, and thereafter, pass an
clause (a) or clause (b) or clause (c). order within a period of seven days from the
date of service of such notice, for payment of
penalty under clause (a) or clause (b) of sub-
section (1).
SECTION 129(4)
 No tax, interest or penalty shall be determined under sub-section (3) without
giving the person concerned an opportunity of being heard.
SECTION 129(6)
Sec 129(6) - Current Sec 129(6) – Proposed
Where the person transporting any goods or the Where the person transporting any goods or the
owner of the goods fails to pay the amount of owner of such goods fails to pay the amount of
tax and penalty as provided in sub-section (1) penalty under sub-section (1) within fifteen
within fourteen days of such detention or days from the date of receipt of the copy of
seizure, further proceedings shall be initiated in the order passed under sub-section (3), the
accordance with the provisions of section 130. goods or conveyance so detained or seized
shall be liable to be sold or disposed of
otherwise, in such manner and within such time
as may be prescribed, to recover the penalty
payable under sub-section (3):
SECTION 129(6)
Provided that the conveyance shall be released

on payment by the transporter of penalty
under sub-section (3) or one lakh rupees,
whichever is less:
Provided that where the detained or seized Provided further that where the detained or
goods are perishable or hazardous in nature or seized goods are perishable or hazardous in
are likely to depreciate in value with passage of nature or are likely to depreciate in value with
time, the said period of fourteen days may be passage of time, the said period of fifteen days
reduced by the proper officer. may be reduced by the proper officer.
SECTION 130(1) - CONFISCATION OF GOODS OR
CONVEYANCES AND LEVY OF PENALTY
 Notwithstanding anything contained in this Act, if Where any person:
NC - 109
SECTION 130(2)
 (2) Whenever confiscation of any goods or conveyance is authorised by this Act,
the officer adjudging it shall give to the owner of the goods an option to pay in
lieu of confiscation, such fine as the said officer thinks fit:
 Provided that such fine leviable shall not exceed the market value of the goods
confiscated, less the tax chargeable thereon:
 Provided further that the aggregate of such fine and penalty leviable shall not be
less than the amount of penalty leviable under sub-section (1) of section 129
penalty equal to hundred per cent. of the tax payable on such goods:
SECTION 130(3)
 Omitted
(3) Where any fine in lieu of confiscation of goods or conveyance is imposed under
sub-section (2), the owner of such goods or conveyance or the person referred to in
sub- section (1), shall, in addition, be liable to any tax, penalty and charges payable
in respect of such goods or conveyance.
SECTION 151 - POWER TO CALL FOR
INFORMATION
Sec 151 - Current Sec 151 – Proposed
POWER TO COLLECT STATISTICS POWER TO CALL FOR INFORMATION
(1) The Commissioner may, if he considers that The Commissioner or an officer authorised by
it is necessary so to do, by notification, direct him may, by an order, direct any person to
that statistics may be collected relating to any furnish information relating to any matter dealt
matter dealt with by or in connection with this with in connection with this Act, within such
Act. time, in such form, and in such manner, as may
(2) Upon such notification being issued, the be specified therein.
Commissioner, or any person authorised by him
in this behalf, may call upon the concerned
persons to furnish such information or returns,
in such form and manner as may be prescribed,
relating to any matter in respect of which
statistics is to be collected.
SECTION 152(1) - BAR ON DISCLOSURE OF INFORMATION
 No information of any individual return or part thereof with respect to any
matter given for the purposes of section 150 or section 151 shall, without the
previous consent in writing of the concerned person or his authorised
representative, be published in such manner so as to enable such particulars to be
identified as referring to a particular person and no such information shall be used
for the purpose of any proceedings under this Act without giving an
opportunity of being heard to the person concerned.
NC - 110
SECTION 152(2)
 Omitted
(2) Except for the purposes of prosecution under this Act or any other Act for the
time being in force, no person who is not engaged in the collection of statistics
under this Act or compilation or computerisation thereof for the purposes of this
Act, shall be permitted to see or have access to any information or any individual
return referred to in section 151.
NC - 111
SECTION 168(2)
 (2) The Commissioner specified in clause (91) of section 2, sub-section (3) of
section 5, clause (b) of sub-section (9) of section 25, sub-sections (3) and (4) of
section 35, sub-section (1) of section 37, sub-section (2) of section 38, sub-section
(6) of section 39, sub-section (1) of section 44, sub-sections (4) and (5) of section
52, sub-section (1) of section 143, except the second proviso thereof, sub-section
(1) of section 151, clause (l) of sub-section (3) of section 158 and section 167
shall mean a Commissioner or Joint Secretary posted in the Board and such
Commissioner or Joint Secretary shall exercise the powers specified in the said
sections with the approval of the Board.
NC - 112
SCHEDULE II
Omitted – w.r.e.f. 01.07.2017
7. Supply of Goods:
The following shall be treated as supply of goods, namely:
Supply of goods by any unincorporated association or body of persons to a member

thereof for cash, deferred payment or other valuable consideration.
NC - 113
INTEGRATED GOODS AND SERVICES TAX
SECTION 16 - ZERO RATED SUPPLY
(1) "Zero rated supply" means any of the following supplies of goods or services or
both, namely:
(a) export of goods or services or both; or
(b) supply of goods or services or both for authorised operations to a Special

Economic Zone developer or a Special Economic Zone unit.
NC - 114
SECTION 16(3)
(SUBSTITUTED)
(3) A registered person making zero rated supply shall be eligible to claim refund of
unutilised input tax credit on supply of goods or services or both, without payment of
integrated tax, under bond or Letter of Undertaking, in accordance with the provisions
of section 54 of the Central Goods and Services Tax Act or the rules made thereunder,
subject to such conditions, safeguards and procedure as may be prescribed:
Provided that the registered person making zero rated supply of goods shall, in case of
non-realisation of sale proceeds, be liable to deposit the refund so received under this
sub-section along with the applicable interest under section 50 of the Central Goods and
Services Tax Act within thirty days after the expiry of the time limit prescribed under
the Foreign Exchange Management Act, 1999 for receipt of foreign exchange
remittances, in such manner as may be prescribed.
SECTION 16(4)
(4) The Government may, on the recommendation of the Council, and subject to
such conditions, safeguards and procedures, by notification, specify:
(i) a class of persons who may make zero rated supply on payment of integrated tax
and claim refund of the tax so paid;
(ii) a class of goods or services which may be exported on payment of integrated tax
and the supplier of such goods or services may claim the refund of tax so paid.”.
THE INDIAN STAMP ACT, 1899
SECTION 8G - STRATEGIC SALE, DISINVESTMENT, ETC., OF
IMMOVABLE PROPERTY BY GOVERNMENT COMPANY NOT LIABLE TO
STAMP DUTY.
Notwithstanding anything contained in this Act or any other law for the time being in
force, any instrument for conveyance or transfer of a business or asset or right in
any immovable property from a Government company, its subsidiary, unit or
joint venture, by way of strategic sale or disinvestment or demerger or any other
scheme of arrangement, to another Government company or to the Central
Government or any State Government, after the approval of the Central
Government, shall not be liable to duty under this Act.
Explanation: For the purposes of this section, “Government company” shall have the
same meaning as assigned to it in clause (45) of section 2 of the Companies Act,
2013.”.
NC - 117
DIRECT TAX VIVAD SE VISHWAS
ACT, 2020
SECTION 2(1)(A) - APPELLANT
Explanation: For the removal of doubts, it is hereby clarified that the expression
“appellant” shall not include and shall be deemed never to have been included a
person in whose case a writ petition or special leave petition or any other proceeding
has been filed either by him or by the income-tax authority or by both before an
appellate forum, arising out of an order of the Settlement Commission under
Chapter XIX-A of the Income-tax Act, and such petition or appeal is either pending
or is disposed of.
SECTION 2(J) - DISPUTED TAX
“disputed tax”, in relation to an assessment year or financial year, as the case may
be, shall not include and shall be deemed never to have been included any sum
payable either by way of tax, penalty or interest pursuant to an order passed by
the Settlement Commission under Chapter XIX-A of the Income-tax Act.’;
SECTION 2(O) - TAX ARREAR
“tax arrear” shall not include and shall be deemed never to have been included any
sum payable either by way of tax, penalty or interest pursuant to an order passed by
the Settlement Commission under Chapter XIX-A of the Income-tax Act.
VIVAD SE VISHWAS SCHEME - COMMENTS
 Notification No. 04/2021 - Extending the due date for filing the declaration under V se V
scheme to 28.02.2021;
 Over 1,10,000 taxpayers have opted to settle tax disputes of over Rs.85,000 crores under
V se V scheme.
K.K. CHYTHANYA,
ADVOCATE
#1109, 1st Floor, 9th Main,

(Between Metro Pillar Nos. 303 & chyti@clclawyers.com Ph : 080-4120 3610/ 2320 4106
304), Vijayanagara, Mob: 9844114184
Bengaluru – 560 040.

India Budget Highlights Finance Bill, 2021

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India Budget Highlights Finance Bill, 2021

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INDIA BUDGET HIGHLIGHTS

FINANCE BILL, 2021

TI < TI b/w TI > TI < TI b/w

26.00 27.82 29.12 31.20 33.38 34.94

TI < TI b/w TI > TI < TI b/w

NIL 7% 12% NIL 2% 5%

TI < Rs. 1 Cr TI b/w Rs. 1 Cr to 10 Cr TI > Rs. 10 Cr

41.60% 42.43% 43.68%

Book Book Book Book Book Book

15.6% 16.69% 17.47% 15.6% 15.91% 16.38%

Tax 22% Tax 15%

 Sec 115BA was introduced by FA 2016 wef 1.4.17 [AY 17-18]

 Sec 115BA provides optional lower tax of 25% subject to satisfying

 Sec 115BA applies only to a company and to the business of

 Sec 115BA is subject to other sections in Chapter XII providing for

Income Tax rate

Income Tax rate

Income upto Rs. 3,00,000/- NIL

Income Tax rate

Income upto Rs. 5,00,000/- NIL

Sl. No. Total Income Rate of tax

(b) in clause (5),––

“Explanation 2.—For the removal of doubts, it is hereby clarified that

where an individual claims exemption and

 For AY 2021-22 only

 Section 10(5) provides for exemption in respect of LTC received by or due to an

 Value in lieu of LTC/LTA is exempt.

a) Rs. 36K per person; or

b) 1/3 rd of Specified Expenditure

3.SP = 12.10.2020 to 31.03.2021

During SP [12.10.2020 to 31.03.2020]

On goods/service liable to GST >= 12%

Procured from GST registered dealers

 Will it add to the number of journeys in the block?

 Press Release dt. 29.10.2020 extending it to others.

2(14) 10(10D) 45 112A STT

(c) in clause (10D),––

exceeds two lakh and fifty thousand rupees:

the provisions of this clause shall apply

only with respect to those unit linked insurance policies,

where the aggregate amount of premium

does not exceed the amount referred to in fourth proviso

Provided also that

the provisions of the fourth and fifth provisos

shall not apply

to any sum received

on the death of a person:

Provided also that

if any difficulty arises in giving effect to the provisions of this clause,

issue guidelines for the purpose of removing the difficulty and

every guideline issued by the Board under this proviso

shall be laid before each House of Parliament, and

shall be binding on the income-tax authorities and the assessee.”;

a life insurance policy

which has components of both investment and insurance and

as defined in clause (ee) of regulation 3 of the Insurance Regulatory and Development

 From AY 2021-22 and subsequent years

Issued on/after 01.02.2021

 NA to ULIP/ULIPs issued before 01.02.2021.

 TDS under 194DA at 5%.

 Corresponding provisions- Secs 2(14), 45(1B), 112A & 111A.

As defined in Regulation 3(ee) of IRDA (ULIP) Regulations, 2019 issued by

 (ee) “Units” means a specific portion or part of the underlying