Rationalization of provisions of the Act to promote the growth of co-operative societies
Section 115JC of the Act, inter alia, provides for the alternate minimum tax (AMT) payable by co-operative societies, which is at the rate of 18.5%. However, vide the Taxation Laws (Amendment) Act, 2019, the Minimum Alternate Tax (MAT) rate for companies has been reduced to 15%. Therefore, in order to provide parity between co-operative societies and companies, it is proposed to modify sub-section (4) of section 115JC to reduce the AMT rate at which co-operative societies are liable to pay income-tax to 15%. Consequential amendment is also proposed in clause (b) of section 115JF in relation to the definition of “alternate minimum tax”.
2. These amendments will take effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years.
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Note on Clauses 29 and 30 of Finance Bill 2022
Clause 29 seeks to amend section 115JC of the Income-tax Act relating to special provisions for payment of tax by certain persons other than a company.
The provisions of the said section, inter alia, provide that where the regular income-tax payable for a previous year by a person, other than a company, is less than the alternate minimum tax payable for such previous year, the adjusted total income shall be deemed to be the total income of that person for such previous year and he shall be liable to pay income-tax on such total income at the rate of eighteen and one-half per cent.
Sub-section (4) of the said section provides that notwithstanding anything contained in sub-section (1) thereof, where the person referred to therein, is a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, it shall be liable to pay income-tax on such total income at the rate of nine per cent.
It is proposed to substitute the said sub-section (4), to provide that notwithstanding anything contained in sub-section (1) of the said section, where the person referred to therein, is a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, it shall be liable to pay income-tax on such total income at the rate of nine per cent. and where the person referred to therein, is a co-operative society, it shall be liable to pay income-tax on such total income at the rate of fifteen per cent.
This amendment will take effect from 1st April, 2023 and will, accordingly, apply in relation to the assessment year 2023-2024 and subsequent assessment years.
Clause 30 seeks to amend section 115JF of the Income-tax Act relating to interpretation in the Chapter XII-BA.
The said section provides for definitions of earlier terms and expressions used in the said Chapter.
Clause (b) of the said section provides for the definition of “alternate minimum tax”.
It is proposed to substitute the sub-clause (i) to provide that the rate of alternate minimum tax, in case of an assessee, being a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, shall be nine per cent., and in case of an assessee, being a co-operative society, fifteen per cent.
This amendment will take effect from 1st April, 2023 and will, accordingly, apply in relation to the assessment year 2023-2024 and subsequent assessment years.
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Extract of Clauses 29 and 30 of Finance Bill 2022
29. Amendment of section 115JC.
In section 115JC of the Income-tax Act, for sub-section (4), the following sub-section shall be substituted with effect from the 1st day of April, 2023, namely:––
‘(4) Notwithstanding anything contained in sub-section (1), where the person referred to therein, is a––
(i) unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, the provisions of sub-section (1) shall have effect as if for the words “eighteen and one-half per cent.”, the words “nine per cent.” had been substituted;
(ii) co-operative society, the provisions of sub-section (1) shall have effect as if for the words “eighteen and one-half per cent.”, the words “fifteen per cent.” had been substituted.’.
30. Amendment of section 115JF.
In section 115JF of the Income-tax Act, in clause (b), for sub-clause (i), the following sub-clauses shall be substituted with effect from the 1st day of April, 2023, namely:––
‘(i) in case of an assessee being a unit referred to in clause (i) of sub-section (4) of section 115JC, at the rate of nine per cent.;
(ia) in case of an assessee, being a co-operative society referred to in clause (ii) of sub-section (4) of section 115JC, at the rate of fifteen per cent.;’.
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RECOMMENDED BUDGET 2022 POSTS
