CA Sanjeev Singhal
The Lok Sabha on Thursday, the 24th of July, 2014 approved of certain changes made in the Finance (Bill) No. 2, 2014. The Finance Bill as approved by the Lok Sabha has clarified certain doubts on the taxability of unlisted shares and units of Mutual Funds during the transition period between April 1, 2014 and July 10, 2014 and has introduced new provisions to give effect to the statement given by the Hon’ble Finance Minister on the floor of the house. Mr. Arun Jaitley in his budget speech given on July 10, 2014 in the Parliament had said as under:
“I propose to enable resident taxpayers to obtain an advance ruling in respect of their income tax liability above a defined threshold. I also propose to strengthen the Authority for Advance Rulings by constituting additional benches. I further propose to enlarge the scope of the Income-tax Settlement Commission so that taxpayers may approach the Commission for settlement of disputes.”
The list of changes made in the Finance Bill are as under:
1) Unlisted securities and units of MF transferred between 01-04-14 and 10-07-14 shall be deemed to be long-term capital assets, if held for more than 12 months.
2) Long-term Capital Gains on Units of Mutual Funds transferred between 01-04-14 and 10-07-14 shall be taxable at 10% without indexation.
3) A third proviso has been inserted in Section 92C to provide that where more than one price is determined by the most appropriate method, the arm’s length price shall be computed in such manner as may be prescribed. Accordingly, the provisions of first and second proviso (arithmetic mean and tolerable range) shall not apply.
4) Taxpayers can approach Settlement Commission even for pending re-assessment cases.
5) Resident taxpayers can approach Authority for Advance Ruling.
6) Changes are aimed at strengthening Authority for Advance Ruling.