Finance Bill 2023 – Amendments Proposed in Lok Sabha

Sl. No.

“(2) Save as otherwise provided in this Act,-

(a) sections 2 to 122 shall come into force on the 1st day of April, 2023;

(b) sections 123 to 144B shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.”.

`(ha) in clause (23 FE), in the opening paragraph,      for the word “interest”, the words, brackets and figures “interest, any sum referred to in clause

(xii) of sub-section (2) of section 56” shall be substituted with effect, from the 1st day of April, 2024;’.

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

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

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

Explanation.—For the purposes of this clause “Sikkimese” shall mean—

(i) an individual, whose name s recorded in the register maintained under the Sikkim Subjects Regulation, 1961 read with the Sikkim Subject Rules, 1961. (hereinafter referred to as the “Register of Sikkim Subjects”), immediately before the 26th day of April, 1975; or

(ii) an individual, whose name is included in the Register of Sikkim  Subjects by virtue of the Government of India Order No. 26030/36/90- 1.C.1., dated the 7th August, 1990 and Order of even number dated the 8th April, 1991; or

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

(iv) any other individual, whose name does not appear in the Register of Sikkim Subjects but it is established that such individual was domiciled in Sikkim  on or before the 26th day of April, 1975; or

(v) any other individual, who was not domiciled in Sikkim on or before the 26th day of April, 1975, but it is established beyond doubt that such individual’s father or husband or paternal grand-father or brother from the same father was domiciled in Sikkim on or before the 26th day of April, 1975;

(ib) after clause (34A), the following clause shall be inserted with effect from the 1st day  of April, 2024, namely:–

“(i).for clause (a), the following clause shall be substituted, namely:—

`(a) “original fund” means—

(A) a fund established or incorporated or registered outside India, which collects funds-from its members for investing it for their benefit and fulfils 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 sub-section  (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;

(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;

(B) an investment vehicle, in which Abu Dhabi Investment Authority is the direct or indirect sole shareholder or unit holder or beneficiary or interest   holder  and     such   investment   vehicle    is   wholly owned and controlled, directly or indirectly, by the Abu Dhabi Investment Authority or the Government of Abu Dhabi; or

(C) a fund notified by the Central Government in the Official Gazette in this behalf subject to such conditions as may be specified;’.”.

`(xx) any transfer of a capital asset, being an interest in a joint venture, held by a public sector company, in exchange of shares of a company incorporated outside India by the Government of a foreign State, in accordance with the laws of that foreign State.

Explanation. —For the purposes of this clause, “joint venture” shall mean a business entity, as may be notified by the Central Government in the Official Gazette.’.”.

Explanation 2.—For the purposes of Explanation 1, it is clarified that where transaction of transfer Of a unit is not considered as transfer under section 47 and cost of acquisition of such unit is determined under section 49, sum received with respect to such unit before such transaction as well as after such transaction shall be reduced from the cost of acquisition under the said Explanation”.

(a) after sub-section (2AH), the following sub-section shall be inserted, namely:—

“(2AI) Where the capital asset, being shares as referred to in clause (ax) of section 47, became the property of the assessee, the cost of acquisition of such asset shall be deemed to be the cost of acquisition to it of the interest in the joint venture referred to in the said clause.”;

(b) after sub-section (9), the following sub-section shall be inserted with effect from the 1st day of April, 2024, namely:—

“(10) Where the capital asset, being—–“. ‘.

(i) “Market Linked Debenture” means a security by whatever name called, which has an underlying principal component in the form of a debt security and where the returns are linked to market returns on other underlying securities or indices and include any security classified or regulated as a market linked debenture by the Securities and Exchange Board of India;

(ii)    “Specified Mutual Fund” means a Mutual Fund by whatever name called, where not more-than thirty five per cent. of its total proceeds is invested in the equity shares of domestic companies: –

Provided that the percentage of equity shareholding held in respect of the Specified Mutual Fund shall be computed with reference to the annual average of the daily closing figures:’.

(i)  with effect from the 1st day of April, 2024, the words “being a resident” shall be omitted;

(ii)  in the Explanation, in &Rise (aa), after the words and figures “Securities and Exchange Eoard of India Act, 1992 or regulated under  the”,  the  words,    brackets   and   figures    “International

Financial Services Centre Authority (Fund  Management) Regulations, 2022 made under the” shall be inserted;

(b) after clause (xi), with effect from the 1st day of April, 2024, the following clauses shall be inserted, namely:—

`(xii) any specified sum received by a unit holder from a business trust during the previous year, with respect to a unit held by him at any time during the previous year.

Explanation.—For the purposes of this clause, “specified sum” shall be computed in accordance with the following formula, namely:—

Specified sum=A-B-C (which shall be deemed to be zero if sum of B and C is greater than A), where–

A=aggregate of sum distributed by the business trust with respect to such unit, during the previous year or during any earlier previous year or years, to such unit holder, who holds such unit on the date of distribution of sum or to any other unit holder who held such unit at any^–time prior to the date of such distribution, which is,-

(a) not in the nature of income referred to in clause (23FC) or clause (23FCA) of section 10; and

(b) not chargeable to tax under sub-section (2) of section 115UA;

B—amount at which such unit was issued by the business trust; and

C=amount charged to tax under this clause in any earlier previous year;’.’.

(a) does not exceed seven hundred thousand rupees, the assessee shall be entitled to a deduction, from the amount of income-tax (as computed before allowing for the deductions under this Chapter) on his total income with. which he is chargeable for any assessment year, of an amount equal to one hundred per cent. of such income-tax or an amount of twenty-five thousand rupees, whichever is less;

(b) exceeds seven hundred thousand rupees and the income-tax payable on such total income exceeds the amount by which the total income is in excess of seven hundred thousand rupees, the assessee shall be entitled to a deduction from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income, of an amount equal to the amount by which the income-tax. payable on such total income is in excess of the amount by which the total income exceeds seven hundred thousand rupees.”.

`(ix) any interest payable to a “business trust”, as defined in clause (13A) of section 2, .in respect of any securities, by a special purpose vehicle referred to in the Explanation to clause (23FC) of section 10.’.”.

(i) in sub-section (1), after the figures and letter “194B,”, the figures and letters “194BA,” shall be inserted;

(ii)  in sub-section (3), .for the proviso, the following proviso shall be substituted,’.

(i) in sub-section (I), the following proviso shall be inserted with effect from the 1st day of July, 2023, namely:—

“Provided that the rate of tax collection at source under this section shall not exceed twenty per cent.”;

(ii) in sub-section (3), for the proviso, the following proviso shall be substituted,’.

“65A. (1) Notwithstanding anything to the contrary contained in this Act or the Customs Tariff Act, 1975_; the following-provision shall, with effect from such date as may be notified by the Central Government, apply to goods in relation to which any manufacturing process or other operations in terms of section 65 may be carried out, namely:–

(A) the dutiable goods, which are deposited in the warehouse shall be goods on which the integrated tax under sub-section (7) and the goods and services tax compensation cess under sub-section (9), of section 3 of the Customs Tariff Act, 1975 have been paid, and only for the purpose of the duty payable, other than the said tax and cess paid, such dutiable goods shall be warehoused goods;

(B) the dutiable goods  shall be permitted to be removed for the purpose of deposit in the warehouse, where —

(i)   in respect of the goods, an entry thereof has been made by presenting electronically on the customs automated system, a bill of entry for home consumption under section 46 and the goods have been assessed to duty under section 17 or section 18, as the case may be, in accordance with clause (a) of sub­section (1) of section 15;

(ii)  the integrated tax under sub-section (7), and the goods and services tax compensation cess under sub-section (9), of section 3 of the Customs Tariff Act, 1975 have been paid in accordance with section 47;

(iii)   on removal of the goods from another warehouse in terms of section 67, a bill of entry for home consumption under clause (a) of section 68 has been presented and the integrated tax under sub-section (7), and the goods and services tax compensation cess under sub-section (9), of section 3 of the Customs Tariff Act, 1975 have been paid before the goods are so removed from that other warehouse;

(iv) the provisions of section 59, subject to the following modifications therein, have been complied with, namely: —

(a) for the words “bill of entry for warehousing”, the words “bill of entry for home consumption” shall be substituted; and

(b) for the words “amount of the duty assessed”, the words “amount of duty assessed, but not paid” shall be substituted;

(C) the duty payable in respect of warehoused goods referred to in clause (A), to the extent not paid, is paid before the goods are removed from the warehouse in such manner as may be prescribed.

(2) The provisions of sub-section (1) shall not apply for the purpose of manufacturing process or other operations in terms of section 65 to dutiable goods which have been deposited in the warehouse or permitted to be removed for deposit in the warehouse prior to the date notified under that sub-section.

(3) The Central Government may, if it considers necessary or expedient, and having regard to such criteria, including but not limited to, the nature or class or categories of goods, or class of importers or exporters, or industry sector, exempt, by notification, such goods in relation to which any manufacturing process or other operations in terms of section 65 may be carried out, as may be specified in the notification, from the application of this section.”.

Goods brought for operations in warehouse to have ordinarily paid certain taxes.

51 of 1975.

“(ca) the manner and conditions for payment of duty and removal of goods under clause (C) of sub-section (1) of section 65A;”.

159.

= :

23.

30.

(2) The jurisdiction, powers and authority conferred on the Appellate Tribunal shall be exercised by the Principal Bench and the State Benches constituted under sub-section (3) and sub-section (4).

(3) The Government shall, by notification, constitute a Principal Bench of the Appellate Tribunal at New Delhi which shall consist of the President, a Judicial. Member, a Technical Member (Centre) and a Technical Member (State).

(4) On the request of the State, the Government may, by notification, constitute such number of State Benches at such places and with such jurisdiction as may be recommended by the Council, which shall consist of two Judicial Members, a Technical Member (Centre) and a Technical Member (State).

(5) The Principal Bench and the State Bench shall hear appeals against the orders passed by the Appellate Authority or the Revisional. Authority;

Provided that the cases in which any one of the issues involved relates to the place of supply, shall be heard only by the Principal Bench.

(6) The President shall, from time to time, by a general or special order, distribute the business of the Appellate Tribunal among the Benches and may transfer cases from one Bench to another.

(7) The senior-most Judicial Member within the State Benches, as may be notified, shall act as the Vice-President for such State Benches and shall exercise such powers of the President as may be prescribed but for all other purposes be considered as a Member.

(8) Appeals,. where the tax or input tax credit involved .or the amount of fine, fee or penalty determined in any order appealed against, does not exceed fifty lakh rupees and which does-not involve any question of law may, with the approval of the President, and subject to such conditions as may be prescribed on the recommendations of the Council, be heard by a single Member, and in all other cases, shall be heard together by one Judicial Member and one Technical Member.

(a) where the appeal was originally heard by Members of a State Bench, to another Member of a State Bench within the State or, where no such other State Bench is available within the State, to a Member of a State Bench in another State;

(b) where the appeal was originally heard by Members of the Principal Bench, to another Member from the Principal Bench or, where 110 such other Member is available, to a Member of any State Bench, and such point or points shall be decided according to the majority opinion including the opinion of the Members who first heard the case.

(10)   The Government may, in consultation with the President, for the administrative efficiency, transfer Members from one Bench to another Bench:

Provided that a Technical Member (State) of a State Bench may be transferred to a State Bench only of the same State in which he was originally appointed, in consultation with the State Government.

(11)   No act or proceedings of the Appellate Tribunal shall be questioned or shall be invalid merely on the ground of the existence of any vacancy or defect in the constitution of the Appellate Tribunal.”

(a)  the President, unless he has been a Judge of the Supreme Court or is or has been the Chief Justice of a High. Court

(b)  a Judicial Member, unless he —

(i)   has been a Judge of the High Court; or

(ii) has, for a combined period of ten years, been a District Judge or an Additional District Judge;

(c)  a Technical Member (Centre), unless he is or has been a  member of the Indian Revenue (Customs and indirect Taxes)

Service, Group A, or of the All India Service with at least three years of experience in the administration of an existing law or

goods and services tax in the Central Government, and has completed at least twenty-five years of service in Group A;

(d) a Technical Member (State), unless he is or has been an officer of the State Government or an officer of the All India Service, not below the rank of Additional Commissioner of Value Added Tax or the State goods and services tax or such rank, not lower than that of the First Appellate Authority, as may be notified by the concerned State Government, on the recommendations of the Council and has completed twenty-five years of service in Group A, or equivalent, with at least three years of experience in the administration of an existing law or the goods and services tax or in the field of finance and taxation in the State Government:

Provided that the State Government may, on the recommendations of the Council, by notification, relax the requirement of completion of twenty-five years of service in Group A, or equivalent, in respect of officers of such State where no person has completed twenty-five years of service in Group A, or equivalent, but has completed twenty-five years of service in the Government, subject to such conditions, and till such period, as may be specified in the notification.

(2) The President, Judicial Member, Technical Member (Centre) and Technical Member (State) shall be appointed or re-appointed by the Government on the recommendations of a Search-cum-Selection Committee constituted under sub-section (4):

Provided that in the event of the occurrence of any vacancy in the office of the President by reason of his death, resignation or otherwise, the Judicial Member or, in his absence, the senior-most Technical Member of the Principal Bench shall act as the President until the date on which a new President, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office:

Provided further that where the President is unable to discharge his functions owing to absence, illness or any other cause, the Judicial Member or, in his absence, the senior-most Technical Member of the Principal Bench, shall discharge the functions^–of the President until the date on which the President resumes his duties:

(3) While making selection for Technical Member (State) of a State Bench, first preference shall be given to officers who have worked in the State Government of the State to which the jurisdiction of the Bench extends.

(4) (a) The Search-cum-Selection Committee for Technical Member (State) of a State Bench shall consist of the following members, namely:

(i) the Chief Justice of the High Court in whose jurisdiction the State Bench is located, to be the Chairperson of the Committee;

(ii) the senior-most Judicial Member in the State, and where no Judicial Member is available, a retired Judge of the High Court in whose jurisdiction the State Bench is located, as may be nominated by the Chief Justice of such High Court;

(iii) Chief Secretary of the State in which the State Bench is located;

(iv) one Additional Chief Secretary or Principal Secretary or Secretary of the State in which the State Bench is located, as may be the nominated by such State Government, not in-charge of the Department responsible for administration of State tax; and

(v) Additional Chief Secretary or Principal Secretary or Secretary of the Department responsible for administration of State tax, of the State -in which the State Bench is located — Member Secretary; and

(b)  the Search-cum-Selection Committee for all other cases shall consist of the following members, namely:—

(i) the Chief Justice of India or a Judge of Supreme Court nominated by him, to be the Chairperson of the Committee;

(ii) Secretary of the Central Government nominated. by the Cabinet Secretary — Member;

(iii) Chief Secretary of a State to be nominated by^–the Council­- Member;

(iv) one Member, who—

(A) in case of appointment of a President of a Tribunal, shall be the outgoing President of the Tribunal; or

(B) in case of appointment of a Member of a Tribunal, shall be the sitting President of the Tribunal; or

(C) in case of the President of the Tribunal seeking re­appointment or where the outgoing President is unavailable or the removal of the President is being considered, shall be a retired Judge of the Supreme Court or a retired Chief

Justice of a High Court nominated by the Chief Justice of India; and

(v) Secretary of the Department of Revenue in the Ministry of Finance of the Central Government — Member Secretary.

(5) The Chairperson shall have the casting vote and the Member Secretary shall not have a vote.

(6) Notwithstanding anything contained in any judgment, order, or decree of any court or any law for the time being in force, the Committee shall recommend a panel of two names for appointment or re­appointment to the post of the President or a Member, as the case may be.

(7) No appointment or re-appointment of the Members of the Appellate Tribunal shall be invalid merely by reason of any vacancy or defect in the constitution of the Search-cum-Selection Committee.

(8) Notwithstanding anything contained in any judgment, order, or decree of any court or any law for the time being in force, the salary of the President and the Members of the Appellate Tribunal shall be such as may be prescribed and their allowances and other terms and conditions of service shall be the same -as applicable to Central Government officers carrying•the same pay:

Provided that neither the-salary and allowances nor other terms and conditions of service of the President or Members of the Appellate Tribunal shall be varied to their disadvantage after their appointment:

Provided further that, if the President or Member takes a house on rent, he may be reimbursed a house rent higher than the house rent allowance as are admissible to a Central Government officer holding the post carrying the same pay, subject to such limitations and conditions as may be prescribed.

(9) Notwithstanding anything contained in any judgment, order, or decree of any court or any law for the time being in force, the President of the Appellate Tribunal shall hold office for a. term of four years from the date on which he enters upon his office, or until he attains the age of sixty-seven years, whichever is earlier and shall be eligible for re­appointment for a period not exceeding two years.

(10) Notwithstanding anything contained in any judgment, order, or decree of any court or any law for the time being in force, the Judicial Member, Technical Member (Centre) or Technical Member(State) of the Appellate Tribunal shall hold office for a term of four years from the date on which he enters upon his office, or until he attains the age of sixty-five years, whichever is earlier and shall be eligible for re-appointment for a period not exceeding two years.

(11) The President or any Member may, by notice in writing under his hand addressed to the Government, resign from his office:

Provided that the President or Member shall continue to hold office until the expiry of three months from the date of receipt of such notice by the Government or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest.

(12) The Government may, on the recommendations of the Search-cum-Selection Committee, remove from the office President or a Member, who–

(a) has been adjudged an insolvent; or

(b) has been convicted of an offence which involves moral turpitude; or

(c) has become physically or mentally incapable of acting as such President or Member; or

(d) has acquired such financial or other interest as is likely to affect prejudicially his functions as such President or Member; or

(e) has so abused his position as to render his continuance in office prejudicial to the public interest:

Provided that the President or the Member shall not be removed on any of the grounds specified in clauses (d) and (e), unless he has been informed of the charges against him and has been given an opportunity of being heard.

(13) The Government, on the recommendations of the- Search-cum-Selection Committee, may suspend from office, the President or a Judicial or Technical Member in respect of whom proceedings for removal have been initiated under sub-section (12).

(14) Subject to the provisions of article 220 of the Constitution; :.the President or other Members, on ceasing to hold ^–their office, shall not be eligible to appear, act or plead before the Principal Bench or the State Bench in which he was the President or, as the case may be, a Member.”_,

(a)  in serial number 1, for the entry in column. (4) occurring against tariff item 2106 90 20, the entry “fifty-one per cent. of retail sale price per unit” shall be substituted;

(b)  in serial number 2, for the entry in column (4) occurring against Chapter 24, the entry “Four thousand one hundred and seventy rupees per thousand sticks or two hundred^. and ninety per cent. ad valorem or a combination thereof, but not exceeding four thousand one hundred and seventy rupees per thousand sticks plus two hundred and ninety per cent. ad valorem or hundred per cent. of retail sale price per unit” shall be substituted;

(c) the fallowing Explanation shall be inserted at the end, namely:—

(i) “retail sale price” means the maximum price at which the concerned goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale:

Provided that where the provisions of the Legal Metrology Act, 2009 or the rules made thereunder or any other law for the time being in force require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly;

(ii) where on the package of any concerned goods more than one retail sale price IS declared, the maximum of such retail sale prices shall be deemed to be the retail sale price;

(iii)  where the retail sale price, declared on the package of any concerned goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale priCe shall be deemed to be the retail sale price;

(iv) where different retail sale prices are declared on different packages for the sale of any concerned goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of determination of the rate of cess for the said good* intended to be sold in the area to which the retail sale price relates:’.

“PART VIII^.

AMENDMENTS TO THE FINANCE (NO. 2) ACT, 2004

[See section 126-(d)]

In the First Schedule to the Customs Tariff Act, in Chapter 90, —

(i)  for the entry in column (4) occurring against tariff item 9022 14 10, the entry “15%” shall be substituted;

(ii) for the entry in column (4) occurring against tariff item 9022 14 20, the entry “15%” shall be substituted;

(iii) for the entry in column. (4) occurring against tariff item 9022 14 90, the entry “15%” shall be substituted.”‘