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Budget 2023: Removal of exemption of news agency under clause (22B) of section 10

Clause (22B) of section 10 of the Act, inter-alia, provides exemption to any income of a notified news agency which is set up in India solely for collection and distribution of news. This is subject to condition that the news agency applies its income or accumulates it for application solely for collection and distribution of news and does not distribute its income in any manner to its members.

2. In accordance with the stated policy of the Government of phasing out of exemptions and deductions under the Act, the exemption available to news agencies under clause (22B) of section 10 of the Act is proposed to be withdrawn from the assessment year 2024-25.

3. In view of the above, it is proposed to insert fourth proviso to clause (22B) of section 10 of the Act so as to provide that nothing contained in clause (22B) of section 10 of the Act shall apply to any income of the news agency, of the previous year relevant to the assessment year beginning on or after the 1st day of April, 2024.

4. This amendment will take effect from 1st April, 2024 and will accordingly apply to assessment year 2024-25 and subsequent assessment years.

[Clause 5]

Extract of relevant clause of Finance Bill 2023

Clause 5 of the Bill seeks to amend section 10 of the Income-tax Act relating to incomes not included in total income.

It is proposed to amend the Explanation to clause (4D) of the said section to give reference of the International Financial Services Centres Authority (Fund Management) Regulations, 2022 in the definition of “specified fund”.

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.

Extract of Relevant Amendment Proposed by Finance Bill, 2023

5. Amendment of section 10.

In section 10 of the Income-tax Act,––

(a) in clause (4D), in the Explanation, in clause (c), in sub-clause (i), in item (I), after the words and figures “Securities and Exchange Board of India Act, 1992, or”, the words, brackets and figures “regulated under the International Financial Services Centres Authority (Fund Management) Regulations, 2022, made under the” shall be inserted;

(b) for clause (4E), the following shall be substituted with effect from the 1st day of April, 2024,––

“(4E) any income accrued or arisen to, or received by a non-resident as a result of––

(i) transfer of non-deliverable forward contracts or offshore derivative instruments or over-the-counter derivatives; or

(ii) distribution of income on offshore derivative instruments, entered into with an offshore banking unit of an International Financial Services Centre referred to in sub­section (1A) of section 80LA, which fulfils such conditions as may be prescribed:

Provided that the amount of distributed income referred to in sub-clause (ii) shall include only so much of the amount which is chargeable to tax in the hands of the offshore banking unit under section 115AD.”;

(c) in clause (10D),––

(i) in the second proviso, the words, brackets, figures and letter “or the Explanation to sub-section (2A) of section 88, as the case may be” shall be omitted;

(ii) for the sixth proviso, the following provisos shall be substituted with effect from the 1st day of April, 2024, namely:––

“Provided also that nothing contained in this clause shall apply with respect to any life insurance policy other than a unit linked insurance policy, issued on or after the 1st day of April, 2023, if the amount of premium payable for any of the previous years during the term of such policy exceeds five lakh rupees:

Provided also that if the premium is payable by a person for more than one life insurance policy other than unit linked insurance policy, issued on or after the 1st day of April, 2023, the provisions of this clause shall apply only with respect to those life insurance policies other than unit linked insurance policies, where the aggregate amount of premium does not exceed the amount referred to in the sixth proviso in any of the previous years during the term of any of those policies:

Provided also that the provisions of the fourth, fifth, sixth and seventh provisos shall not apply to any sum received on the death of a person:”;

(d) after clause (12B), the following shall be inserted, namely:––

‘(12C) any payment from the Agniveer Corpus Fund to a person enrolled under the Agnipath Scheme, or to his nominee.

Explanation.—For the purposes of this clause “Agniveer Corpus Fund” and “Agnipath Scheme” shall have the meanings respectively assigned to them in section 80CCH;’;

(e) in clause (22B), after the third proviso, the following proviso shall be inserted with effect from the 1st day of April, 2024, namely:––

“Provided also that nothing contained in this clause shall apply to any income of the news agency of the previous year relevant to the assessment year beginning on or after the 1st day of April, 2024;”;

(f) clause (23BBF) shall be omitted;

(g) in clause (23C),––

(I) with effect from the 1st day of October, 2023,––

(i) in the first proviso, for clause (iv), the following clause shall be substituted, namely:––

“(iv) in any other case, where activities of the fund or trust or institution or university or other educational institution or hospital or other medical institution have––

(A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought;

(B) commenced and no income or part thereof of the said fund or trust or institution or university or other educational institution or hospital or other medical institution has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) or section 11 or section 12 for any previous year ending on or before the date of such application, at any time after the commencement of such activities,”;

(ii) in the second proviso,––

(a) in clause (ii),––

(A) in the opening portion, after the word, brackets and figures “clause (iii)”, the words, brackets, letter and figures “or sub-clause (B) of clause (iv)” shall be inserted;

(B) in sub-clause (b), for item (B), the following item shall be substituted, namely:–

“(B) if he is not so satisfied, pass an order in writing,––

(I) in a case referred to in clause (ii) or clause (iii) of the first proviso, rejecting such application and also cancelling its approval;

(II) in a case referred to in sub-clause (B) of clause (iv) of the first proviso, rejecting such application, after affording it a reasonable opportunity of being heard;”;

(b) for clause (iii), the following clause shall be substituted, namely:––

“(iii) where the application is made under sub-clause (A) of clause (iv) of the said proviso or the application made under clause (iv) of the said proviso, as it stood immediately before its amendment by the Finance Act, 2023, pass an order in writing granting approval to it provisionally for a period of three years from the assessment year from which the approval is sought, and send a copy of such order to the fund or trust or institution or university or other educational institution or hospital or other medical institution:”;

(II) in the third proviso,––

(i) in Explanation 2,––

(a) in clause (i),––

(A) in the proviso, the word “and” shall be omitted;

(B) after the proviso, the following provisos shall be inserted, namely:––

“Provided further that the provisions of the first proviso shall apply only if there was no violation of the conditions specified in the twelfth, thirteenth and twenty-first provisos, and those specified in Explanation 2 and Explanation 3, of this clause, at the time the application was made from the corpus:

Provided also that the amount invested or deposited back shall not be treated as application for charitable or religious purposes under the first proviso unless such investment or deposit is made within a period of five years from the end of the previous year in which such application was made from the corpus:

Provided also that nothing contained in the first proviso shall apply where the application from the corpus is made on or before the 31st day of March, 2021;”;

(b) in clause (ii), after the proviso, the following provisos shall be inserted, namely:––

“Provided further that the provisions of the first proviso shall apply only if there was no violation of the conditions specified in the twelfth, thirteenth and twenty-first provisos, and those specified in Explanation 2 and Explanation 3, of this clause at the time the application was made from loan or borrowing:

Provided also that the amount repaid shall not be treated as application for charitable or religious purposes under the first proviso unless such repayment is made within a period of five years from the end of the previous year in which such application was made from loan or borrowing:

Provided also that nothing contained in the first proviso shall apply where the application from any loan or borrowing is made on or before the 31st day of March, 2021; and”;

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

“(iii) any amount credited or paid out of the income of any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), other than the amount referred to in the twelfth proviso, to any other fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), or trust or institution registered under section 12AB, as the case may be, shall be treated as application for charitable or religious purposes only to the extent of eighty-five per cent. of such amount credited or paid.”;

(ii) in Explanation 3, in clause (c), for the words “furnished on or before”, the words “furnished at least two months prior to” shall be substituted;

(III) in the fifteenth proviso, in Explanation 2,––

(A) in clause (d), for the words “attained finality.”, the words “attained finality; or” shall be substituted;

(B) after clause (d), the following clause shall be inserted, namely:––

“(e) the application referred to in the first proviso of this clause is not complete or it contains false or incorrect information.”;

(IV) in the nineteenth proviso, in the Explanation, with effect from the 1st day of April, 2024,––

(a) after the words, brackets and figures “notified under clause (46)”, the word, brackets, figures and letter “or (46A)” shall be inserted;

(b) for the words, brackets and figures “under clause (46)”, the words, brackets, figures and letter “under clause (46) or clause (46A)” shall be substituted;

(V) in the twentieth proviso, for the words “within the time allowed under that section”, the words, brackets and figures “within the time allowed under sub-section (1) or sub-section (4) of that section” shall be substituted;

(h) clause (23EB) shall be omitted;

(i) clause (26A) shall be omitted;

(j) clause (41) shall be omitted;

(k) in clause (46), for the words “, or a class thereof” at both the places where they occur, the words, figures and letter “other than those covered under clause (46A), or a class thereof” shall be substituted with effect from the 1st day of April, 2024;

(l) after clause (46), the following clause shall be inserted with effect from the 1st day of April, 2024, namely:––

“(46A) any income arising to a body or authority or Board or Trust or Commission, not being a company, which —

(a) has been established or constituted by or under a Central Act or State Act with one or more of the following purposes, namely:––

(i) dealing with and satisfying the need for housing accommodation;

(ii)planning, development or improvement of cities, towns and villages;

(iii) regulating, or regulating and developing, any activity for the benefit of the general public; or

(iv) regulating any matter, for the benefit of the general public, arising out of the object for which it has been created; and

(b) is notified by the Central Government in the Official Gazette for the purposes of this clause;”;

(m) clause (49) shall be omitted.

*****

Source : Finance Bill 2023 / Union Budget 2023

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