It is proposed to insert a new clause in section 10 of the Income-tax Act to provide exemption from income-tax to any specified income of a body, authority, board, trust or commission which is set up or constituted by a Central, State or Provincial Act or constituted by the Central Government or a State Government with the object of regulating or administering an activity for the benefit of the general public, provided
(i) it is not engaged in any commercial activity, and
(ii) is notified by the Central Government in this behalf.
The nature and extent of income to be exempted will also be specified by the Central Government while notifying such entity.
A consequential amendment is proposed in section 139 of the Act to provide for filing of the return of income by such notified entity.
These amendments are proposed to take effect from 1st June 2011.
[Clauses 4, 23 ]
Note to the Clause 4
Clause 4 of the Bill seeks to amend section 10 of the Income-tax Act relating to incomes not included in total income.
The Explanation to clause (34) of the aforesaid section was inserted by way of a modification vide section 27 of the Special Economic Zones Act, 2005 read with the Second Schedule thereof.
The existing provisions contained in the Explanation to clause (34) of the aforesaid section clarify that the dividend referred to in section 115-0 shall not be included in the total income of the assessee, being a Developer or entrepreneur.
Sub-clause (a) of this clause of the Bill seeks to omit the Explanation to clause (34) of the aforesaid section.
This amendment will take effect from 1st June, 2011.
Under the existing provisions contained in the Income-tax Act, any perquisites or allowances received by an employee is taxable under the head “salary” unless it is specifically exempted under the Act.
Sub-clause (b) seeks to insert a new clause (45) in the said section so as to provide exemption to any allowance or perquisite, as may be notified by the Central Government in the Official Gazette in this behalf, paid to the Chairman or a retired Chairman or any other member or retired member of the Union Public Service Commission.
This amendment will take effect retrospectively from 1st April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent years.
The existing provisions contained in section 10 provide that income mentioned in any of the clauses of the said section shall not be included in the total income of the previous year of any person.
Sub-clause (c) seeks to insert a new clause (46) in the said section so as to provide that any specified income arising to a body or authority or Board or Trust or Commission (by whatever name called) which is constituted or established by or under a Central, State or Provincial Act or has been constituted by the Central Government or a State Government with the object of regulating or administering an activity for the benefit of general public shall be exempt if it is not engaged in commercial activity and is specified by the Central Government by notification in the Official Gazette in this behalf. The proposed Explanation enables the Central Government to notify the nature and extent of the income of the body or authority or Board or Trust or Commission which shall constitute the specified income.
Sub-clause (c) also seeks to insert a new clause (47) in section 10 so as to enable the Central Government to notify any infrastructure debt fund which is set up in accordance with the guidelines as may be prescribed and the income of such notified fund will be exempt from income-tax.
These amendments will take effect from 1st June, 2011.
Clause 4 as Provided in Finance Bill 2011
4. In section 10 of the Income-tax Act,
(a) in clause (34), the Explanation [as so inserted by the Special Economic Zones Act, 2005] shall be omitted with effect from the 1st day of June, 2011;
(b) after clause (44), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2008, namely:
“(45) any allowance or perquisite, as may be notified by the Central Government in the Official Gazette in this behalf, paid to the Chairman or a retired Chairman or any other member or retired member of the Union Public Service Commission;”;
(c) after clause (45) as so inserted, the following shall be inserted with effect from the 1st day of June, 2011, namely:
‘(46) any specified income arising to a body or authority or Board or Trust or Commission (by whatever name called) which
(a) has been established or constituted by or under a Central, State or Provincial Act, or constituted by the Central Government or a State Government, with the object of regulating or administering any activity for the benefit of the general public;
(b) is not engaged in any commercial activity; and
(c) is notified by the Central Government in the Official Gazette for the purposes of this clause.
Explanation.— For the purposes of this clause, “specified income” means the income, of the nature and to the extent arising to a body or authority or Board or Trust or Commission (by whatever name called) referred to in this clause, which the Central Government may, by notification in the Official Gazette, specify in this behalf;
(47) any income of an infrastructure debt fund, set up in accordance with the guidelines as may be prescribed, which is notified by the Central Government in the Official Gazette for the purposes of this clause.’.
Note to the Clause 23
Clause 23 of the Bill seeks to amend section 139 of the Income-tax Act relating to return of income.
Under the existing provisions contained in clause (a) of Explanation 2 to sub-section (1) of the said section, the due date for filing return of income, in the case of a company; or a person (other than a company) whose accounts are required to be audited under the Income-taxAct or under any other law for the time being in force; or a working partner of a firm whose accounts are required to be audited under the Income-tax Act or under any other law for the time being in force, shall be the 30th day of September of the assessment year.
Section 92E of the Income-tax Act contains provisions for furnishing a report from an accountant by a person entering into international transactions.
It is proposed to amend sub-clause (i) of clause (a) to the said Explanation 2 and to insert a new clause (aa) after the said clause (a) so as to provide that for filing a return of income in case of an assessee being a company, which is required to furnish a report referred to in the said section 92E, the due date shall be the 30th day of November of the assessment year.
This amendment will take effect retrospectively from 1st April, 2011.
Under the existing provisions contained in sub-section (1) of the aforesaid section, every person, if his total income or the total income of any other person in respect of which he is assessableunder the Income-tax Act during the previous year exceeds the maximum amount which is not chargeable to income-tax, shall furnish a return of his income or the income of such other person during the previous year.
It is proposed to insert a new sub-section (1C) in the aforesaid section so as to empower the Central Government to exempt by notification in the Official Gazette any class or classes of persons from the requirement of furnishing a return of income having regard to such conditions as may be specified in that notification.
This amendment will take effect from 1st June, 2011.
Under the existing provisions contained in sub-section (4C) of section 139, every entity referred to therein shall, if the total income in respect of such entity (without giving effect to the provisions of section 10) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year.
It is proposed to amend the aforesaid sub-section to insert therein new clauses (g) and (h) in order to require that any body or authority or Board or Trust or Commission referred to in clause (46) of section 10 and infrastructure debt fund referred to in clause (47) of section 10, respectively, shall also furnish a return of income.
This amendment will take effect from 1st June, 2011.
Clause 23 as Provided in Finance Bill 2011
Amendment of section 139.
23. In section 139 of the Income-tax Act,—
(a) in sub-section (1), in Explanation 2,—
(i) in clause (a), in sub-clause (i), after the words “a company”, the words, brackets and letters “other than a company referred to in clause (aa)” shall be inserted;
(ii) after clause (a), the following clause shall be inserted, namely:
“(aa) in the case of an assessee being a company, which is required to furnish a report referred to in section 92E, the 30th day of November of the assessment year;”;
(b) after sub-section (1B), the following sub-section shall be inserted with effect from the 1st day of June, 2011, namely:
“(IC) Notwithstanding anything contained in sub-section (1), the Central Government may, by notification in the Official Gazette, exempt any class or classes of persons from the requirement of furnishing a return of income having regard to such conditions as may be specified in that notification.”;
(c) in sub-section (4C), with effect from the 1st day of June, 2011,
(i) after clause (t) and before the words “shall, if the total income”, the following clauses shall be inserted, namely:
“(g) body or authority or Board or Trust or Commission (by whatever name called) referred to in clause (46) of section 10;
(h) infrastructure debt fund referred to in clause (47) of section 10,”;
(ii) after the words “medical institution or trade union”, the words “or body or authority or Board or Trust or Commission or infrastructure debt fund” shall be inserted.
Dear Sir/ madam
whether any notification has been issued by CG related to specified income and entity till date. If yes kindly provide the same to us.
Aman