Income Tax.pptx

INDIA BUDGET HIGHLIGHTS
FINANCE BILL, 2021

PERSONAL TAXATION
RATES OF TAXES

Domestic
Company
MSME
(TO < 400 Cr
in FY 2019-
20)
TI <
Rs. 1
Cr
26.00
%
TI b/w Rs.
1 Cr to 10
Cr
TI >
Rs. 10
Cr
29.12
%
Non -
MSME
TI <
Rs. 1
Cr
31.20
%
TI b/w
Rs. 1 Cr
to 10 Cr
33.38
%
TI > Rs.
10 Cr
27.82
%
34.94
%

SURCHARGE
Domestic
Companies
TI <
Rs. 1
Cr
NIL
TI b/w Rs.
1 Cr to 10
Cr
TI >
Rs. 10
Cr
12%
Foreign
Companies
TI <
Rs. 1
Cr
NIL
TI b/w
Rs. 1 Cr
to 10 Cr
2%
TI > Rs.
10 Cr
7% 5%

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

MAT RATE
Domestic
Companies
Book
profit
< Rs. 1
Cr
15.6%
Book
profit
b/w Rs.
1 Cr to
10 Cr
16.69%
Book
profit
> Rs.
10 Cr
17.47%
Foreign
Companies
Book
profit
< Rs. 1
Cr
15.6%
Book
profit
b/w Rs.
1 Cr to
10 Cr
15.91%
Book
profit
> Rs.
10 Cr
16.38%

Domestic
Company
S.
115BAA
Tax 22%
SC 10%
Cess 4%
25.17%
S.
115BAB
Tax 15%
SC 10%
Cess 4%
17.16%
No MAT
Flat SC without initial
limit of Rs.1 CR

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
Company
Non-MSME or
MSME > 400 Cr
Cr
Domestic
Company
MSME <=
400 Cr
Domestic
Company
Sec 115BA
115BA
Domestic
Company
Sec 115BAA
115BAA
Domestic
Company
Sec 115BAB
115BAB
Tax 30 25 25 22 15/22/30
Surcharge:
a) Up to 1Cr
Nil Nil Nil 10 10
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 /
80LA
80JJAA

Income Tax rate
Income upto Rs. 2,50,000/- NIL
Income from Rs. 2,50,001/- to Rs. 5,00,000/- 5%
Income from Rs. 5,00,001/- to Rs.
10,00,000/-
20%
Above Rs. 10,00,000/- 30%
TAX SLAB: INDIVIDUAL (MALE/FEMALE) BELOW 60 YEARS
OF AGE

Income Tax rate
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 Rate
Income of Rs. 50 Lakhs > Rs. 1 Crore
(including CG u/s. 111A &112A)
10%
Income of Rs. 1 Crore > Rs. 2 Crore
15%
Income of Rs. 2 Crores > Rs. 5 Crores
(Excluding CG u/s. 111A &112A)
25%
Income of Rs. 5 Crores >
37%
Income of Rs. 2 Crore >
15%
SURCHARGE

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%

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.
5. From Rs 10,00,001 to Rs
12,50,000
20 per cent.
6. From Rs 12,50,001 to Rs 25 per cent.
SECTION 115BAC- TAX ON INCOME OF INDIVIDUALS AND
HINDU UNDIVIDED FAMILY

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
a)1/3 rd of Specified Expenditure

3.SP = 12.10.2020 to 31.03.2021
4.SE

SE
Expenditure incurred by
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)
Clause
[c]
inserte
d
45(1B)
inserted
45 112A
Explanation
(a)
amended
1. 4
provisos
are
added;
2. Expl. 3
defines
‘ULIP’
STT
45(1B)
inserted

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
Issued on/after
01.02.2021
Premium for any PY > Rs.
2.5 lakhs
if

SECTION 10(10D) - COMMENTS
 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
ULIP LIP
Investment component
Insurance component
Linked as
unit
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

112A
Cont..
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)]

LTCG
Explanation (a)
to Section 112A
Defines Equity Oriented
Fund (EOF)
Proposed amendment
defines EOF to include ULIP
[falling under 4th & 5th
Proviso to Section 10(10D)]
subject to conditions
provided therein
Taxable @ 10%
Short-term Capital
Asset
Explanation 4 to
Section 2(42A)
EOF definition as
assigned to in Exp.
(a) to Section 112A
EOF includes ULIP
STCG
Explanation (a)
to Section 112A
EOF definition as
assigned to in Exp.
(a) to Section 112A
EOF includes
ULIP
Taxable @
15%

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

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

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
 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.
Multiple Branches
Bank

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.

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)
University/Educatio
nal institution
(iiiae)
Hospital/institution
AAR does not exceed
Rs. 5 cr
AAR does not exceed
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 3rd
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,

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,
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,
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

 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

 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)

 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

PERSONAL TAXATION
INTERNATIONAL
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
IFSC
Is located in
Which commenced operations on
or before 31.03.2024

SECTION 115JB – MAT – INTERNATIONAL TAX

Section 115JB (2) – Explanation 1
(fb) – Existing
Section 115JB (2) – Explanation 1 (fb) –
Proposed
For the purposes of this
section, “book profit”
means the profit as shown
in the statement of profit
and loss for the relevant
previous year prepared
under sub-section (2), as
increased by—
For the purposes of this
section, “book profit” means
the profit as shown in the
statement of profit and loss
for the relevant previous year
prepared under sub-section
(2), as increased by—

(fb) – Existing
Section 115JB (2) – Explanation 1 (fb) –
Proposed
(fb) the amount or amounts of
expenditure relatable to income
accruing or arising to an
assessee, being a foreign
company, from,—
(A) the capital gains arising on
transactions in securities; or
(B) the interest, royalty or fees for
technical services chargeable to
tax at the rate or rates specified
in Chapter XII.
(fb) the amount or amounts of
expenditure relatable to income accruing
or arising to an assessee, being a foreign
company, from,—
(B) the interest, dividend, royalty or fees
for technical services chargeable to tax at
the rate or rates specified in Chapter XII.

(iid) – Existing
Section 115JB (2) – Explanation 1 (iid) –
Proposed
the amount of income accruing or
arising to an assessee, being a
foreign company, from,—
(B) the interest, royalty or fees for
technical services chargeable to
tax at the rate or rates specified
in Chapter XII,
the amount of income accruing or arising
to an assessee, being a foreign company,
from,—
(B) the interest, dividend, royalty or fees
for technical services chargeable to tax at
the rate 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
IT Act FA 2016
Cont..
Sec 10(50)
Exemption
is made
w.e.f.
01.04.2020
Explanation
Royalty/ FTS
excluded from sec
10(50)
Explanation 2
e-com
supply/
service
Specified
service
Sec
164(cb) of
FA 2016
Sec 164(i)
of FA 2016

FA 2016
Sec
163(1)
Sec
164(cb)
Sec
164(cb)
Sec
165A(3)
Proviso added
to exclude
Royalty/ FTS
from EL
Defines e-com
supply/ service
New clause (b)
added

Equalisation Levy
Existing
clause
online sale of goods owned by the
e-commerce operator;
online provision of services
provided by the e-commerce
operator;
online sale of goods or provision of
services or both, facilitated by the
e-com operator;
any combination of activities listed
in clause (i), (ii) or clause (iii);
Explanation
Online sale of goods/ provision of
service
Shall include one/ more online
activities
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;’;
Cont..

Section 165A(3)
Clause (a)
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
sale of data, collected from a person
who is resident in India or from a person
who uses internet protocol address located
in India
Clause (b)
consideration received
or receivable from
ecommerce
supply or services shall
include
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.
Cont..

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
as per
Act
Only
as per
DTAA
Both as
per
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
(EC)
Supply of
goods/services/both
Including digital products
over
Digital/electronic network
E-commerce operator
(ECO)
A person who
Owns/operates/manages
Digital/electronic
facility/platform
For EC
And is responsible for
paying ECP
E-commerce Participant
(ECP)
Person resident in India
selling
Good/services/both
(including digital producs)
through
Digital/electronic
facility/platform
For EC

TDS @ 1% by ECO to
ECP
[S. 206AA @ 5%]
Exception to ECP
At the time of payment
by purchasers to ECP
directly
At the time of
credit/payment
Individual/HUUF
PAN
Gross Amount > 5
Lakhs
Note: Lower rate u/s 197 is facilitated by amendment to Section 197(1)

PERSONAL TAXATION
BUSINESS INCOME

GOODWILL OF BUSINESS/
PROFESSION
2(11) 32(1)(ii)
Exp. 3 Proviso
added
COA
Not being goodwill of a B/P
(inserted)
50 55(2)
32(1)(ii)
Cont..

COA
Cont..
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
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 goodwill of a business or
a trade mark or brand name
associated with a business or a
right to manufacture, produce or
process any article or thing or
right to carry on any business or
profession, tenancy rights,
stage carriage permits or loom
hours,—
in relation to a capital asset, being
goodwill of a business or profession,
or a trade mark or brand name
associated with a business or
profession, or a right to manufacture,
produce or process any article or
thing, or right to carry on any business
or profession, or tenancy rights, or
stage carriage permits, or loom
hours,—

(i) in the case of acquisition
of such asset by the
assessee by purchase
from a previous owner,
means the amount of the
purchase price; and
(i) in the case of acquisition of
such asset by the assessee
by purchase from a previous
owner, means the amount of
the 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
being a case falling under
sub-clauses (i) to (iv) of
subsection (1) of section
49], shall be taken to be
nil;
(iii) in any other case, shall be taken to
be nil:

Section 55 (2)
(a) - Existing
Section 55 (2) (a) - Proposed
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
COST OF IMPROVEMENT & COST OF ACQUISITION
 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
of his employees to which the provisions of
sub-clause (x) of clause (24) of section
2 apply, if such sum is credited by the
assessee to the employee's account in the
relevant fund or funds on or before the due
date.
any sum received by the assessee from any of
of his employees to which the provisions of
sub-clause (x) of clause (24) of section
2 apply, if such sum is credited by the
assessee to the employee's account in the
relevant fund or funds on or before the due
date.

Explanation.—For the purposes of this clause,
clause, "due date" means the date by which
the assessee is required as an employer to
credit an employee's contribution to the
employee's account in the relevant fund
under any Act, rule, order or notification
issued thereunder or under any standing
order, award, contract of service or otherwise;
otherwise;
Explanation. 1—For the purposes of this
clause, "due date" means the date by which
the assessee is required as an employer to
credit an employee's contribution to the
employee's account in the relevant fund
under any Act, rule, order or notification
issued thereunder or under 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 provision of this Act, a deduction
otherwise allowable under this Act in respect
respect of—
…
(b) any sum payable by the assessee as an
employer by way of contribution to any
provident fund or superannuation fund or
gratuity fund or any other fund for the
welfare of employees,
Notwithstanding anything contained in any
other provision of this Act, a deduction
otherwise allowable under this Act in respect
respect of—
…
(b) any sum payable by the assessee as an
employer by way of contribution to any
provident fund or superannuation fund or
gratuity fund or any other fund for the
welfare of employees,

Explanation 5.––For the removal of doubts, it is
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
by the assessee from any of his employees to
which the provisions of sub-clause (x) of clause
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).

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 or gross receipts, as the case may be, in
business exceed or exceeds one crore rupees in
any previous year;
Provided that in the case of a person whose––
(a) aggregate of all amounts received including
amount received for sales, turnover or gross
receipts during the previous year, in cash, does not
exceed five per cent of the said amount; and
(b) aggregate of all payments made including
amount incurred for expenditure, in cash, during
the previous year does not exceed five per cent of
the said payment,
this clause shall have effect as if for the words “one
crore rupees”, the words “five crore rupees” had
(a) carrying on business shall, if his total sales,
turnover or gross receipts, as the case may be, in
business exceed or exceeds one crore rupees in
any previous year;
Provided that in the case of a person whose––
(a) aggregate of all amounts received including
amount received for sales, turnover or gross
receipts during the previous year, in cash, does not
exceed five per cent of the said amount; and
(b) aggregate of all payments made including
amount incurred for expenditure, in cash, during
the previous year does not exceed five per cent of
the said payment,
this clause shall have effect as if for the words “one
crore rupees”, the words “ten crore rupees” had

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
in sections 28 to 43C, in the case of an
assessee, being a resident in India, who
who is engaged in a profession referred
referred to in sub-section (1) of section
44AA and whose total gross receipts do
do not exceed fifty lakh rupees in a
previous year, …….
(1) Notwithstanding anything contained
in sections 28 to 43C, in the case of an assessee,

SECTION 44ADA - COMMENTS
a sum equal to fifty per cent of the total gross
gross receipts of the assessee in the previous
previous year on account of such profession
or, as the case may be, a sum higher than the
the aforesaid sum claimed to have been
earned by the assessee, shall be deemed to be
be the profits and gains of such profession
chargeable to tax under the head "Profits and
and gains of business or profession".
a sum equal to fifty per cent of the total gross
gross receipts of the assessee in the previous
previous year on account of such profession
or, as the case may be, a sum higher than the
the aforesaid sum claimed to have been
earned by the assessee, shall be deemed to be
be the profits and gains of such profession
chargeable to tax under the head "Profits and
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

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

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

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
10(23FC)
Income of
Business
Trust
a) Interest received
or receivable from
SPV
b) Dividend received
or receivable from
SPV
By way of
Sec
10(23FC) Sec
10(23FCA)
Income of
InVIT
renting or leasing
or letting out any
real estate asset
owned directly by
such business
trust
By way of
Sec 194
w.e.f
01.04.2020
Dividend
paid by
SPV to BT
Business Trust [Sec 2(13A)]

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
115AD(1)(a)
Lower rate
20%
Sec 196D
Amended to provide for applicable lower rate
Investment income of FII

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%
[against
20%]
1%
[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.

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