THE FINANCE BILL, 2019 AS INTRODUCED IN LOK SABHA ON 1ST FEBRUARY, 2019 VIDE BILL No. 5 OF 2019
1. The object of this Bill is to continue the existing rates of income-tax for the financial year 2019-2020 and to provide certain relief to taxpayers and to make amendments in certain enactments.
2. Clause 2 of the Bill seeks to provide for the rates of income-tax. The rates of income-tax which were specified in Part III of the First Schedule to the Finance Act, 2018 for the purposes of charging income-tax in certain cases, deduction of tax at source from salaries during the financial year 2018-2019, computation of “advance tax” payable during that financial year in relation to current incomes and for certain special purposes, are proposed to be continued for the purposes of assessment for the assessment year 2019-2020. Further, the same rates are proposed to be continued also for the purposes of charging income-tax in certain cases, deduction of tax at source from salaries during the financial year 2019-2020, computation of “advance tax” payable during that financial year in relation to current incomes, and also for the said special purposes.
3. The rates for deduction of tax at source during the financial year 2018-2019 from incomes other than salaries specified in Part II of the First Schedule to the Finance Act, 2018, are also proposed to be continued for deduction of tax at source from such incomes during the financial year 2019-2020.
4. It accordingly proposes to apply the provisions of section 2 of, and the First Schedule to, the Finance Act, 2018, with consequential and other necessary modifications, to the assessment year 2019-2020 or, as the case may be, the financial year 2019-2020.
5. Clause 3 of the Bill seeks to amend section 16 of the Income-tax Act to provide relief to the salaried taxpayers by way of increasing the amount of deduction from salary income, from existing forty thousand rupees to fifty thousand rupees.
6. Clause 4 of the Bill seeks to amend section 23 of the Income-tax Act so as to provide relief to the taxpayer by allowing him an option to claim nil annual value in respect of any two houses, declared as self-occupied, instead of one such house as currently provided. It further seeks to provide relief to the taxpayers that notional rent in respect of unsold inventory shall not be charged to tax up to two years, instead of existing one year, from the end of the financial year in which the certificate of completion is obtained from the competent authority.
7. Clause 5 of the Bill seeks to amend section 24 of the Income-tax Act to provide that the monetary limit of deduction on account of interest payable on borrowed capital shall continue to apply to the aggregate of the amounts of deduction in case of more than one self-occupied houses.
8. Clause 6 of the Bill seeks to amend section 54 of the Income-tax Act so as to provide relief to the taxpayers having long-term capital gains up to two crore rupees, arising from transfer of a residential house, by affording the assessee a one time opportunity, at his option, to utilise the said amount for the purchase or construction of two residential houses in India instead of one residential house as currently provided.
9. Clause 7 of the Bill seeks to amend section 80-IBA of the Income-tax Act so as to augment the supply of affordable houses by extending the time limit from 31st March, 2019 to 31st March, 2020 for obtaining approval of the housing project for availing deduction.
10. Clause 8 of the Bill seeks to amend section 87A of the Income-tax Act to provide relief to the individual taxpayers by increasing the maximum amount of tax rebate to twelve thousand five hundred rupees from existing two thousand five hundred rupees. The tax rebate shall now be admissible to taxpayers having total income up to five hundred thousand rupees, instead of existing three hundred fifty thousand rupees.
11. Clause 9 of the Bill seeks to amend section 194A of the Income-tax Act so as to ease the burden of compliance by way of increasing the threshold limit from ten thousand rupees to forty thousand rupees, for deduction of tax at source on interest income, other than interest on securities, paid by a banking company, co-operative society or a post office.
12. Clause 10 of the Bill seeks to amend section 194-I of the Income-tax Act to rationalise the threshold limit from one hundred and eighty thousand rupees to two hundred and forty thousand rupees, for deduction of tax at source on rental income.
13. Clauses 11 to 21 of the Bill seek to amend the Indian Stamp Act, 1899 for levy and administration of stamp duty on securities market instruments by the States at one place through one agency, viz., through Stock Exchanges or its Clearing Corporation or Depositories on one instrument, and for appropriately sharing the same with respective State Governments based on State of domicile of the ultimate buying client.
14. Clause 22 of the Bill seeks to amend sub-section (3) of section 8 of the Prevention of Money-laundering Act, 2002 so as to extend the time limit of ninety days for which the attachment shall remain valid during the period of investigation to three hundred and sixty-five days and also to provide that in computing the period of three hundred and sixty-five days, the period during which the investigation is stayed by any court shall be excluded.
FULL TEXT OF THE FINANCE BILL 2019 IS AS FOLLOWS-
THE FINANCE BILL, 2019
A
BILL
to continue the existing rates of income-tax for the financial year 2019-2020 and to provide for certain relief to taxpayers and to make amendments in certain enactments.
BE it enacted by Parliament in the Seventieth Year of the Republic of India as follows:—
CHAPTER I
PRELIMINARY
1. Short title and commencement.
(1) This Act may be called the Finance Act, 2019.
(2) Save as otherwise provided in this Act, sections 2 to 10 shall come into force on the 1st day of April, 2019.
CHAPTER II
RATES OF INCOME-TAX
2. Income-tax.
The provisions of section 2 of, and the First Schedule to, the Finance Act, 2018, shall apply in relation to income-tax for the assessment year or, as the case may be, the financial year commencing on the 1st day of April, 2019, as they apply in relation to income-tax for the assessment year, or as the case may be, the financial year commencing on the 1st day of April, 2018, with the following modifications, namely:––
(a) in section 2,––
(i) in sub-section (1), for the figures “2018”, the figures “2019” shall be substituted;
(ii) in sub-section (3), for the first proviso, the following proviso shall be substituted, namely:––
“Provided that the amount of income-tax computed in accordance with the provisions of section 111A or section 112 or section 112A of the Income-tax Act shall be increased by a surcharge, for the purposes of the Union, as provided in Paragraph A, B, C, D or E, as the case may be, of Part I of the First Schedule:”;
(iii) for sub-section (11) and sub-section (12), the following sub-section shall be substituted, namely:––
‘(11) The amount of income-tax as specified in sub-sections (1) to (3) and as increased by the applicable surcharge, for the purposes of the Union, calculated in the manner provided therein, shall be further increased by an additional surcharge, for the purposes of the Union, to be called the “Health and Education Cess on income-tax”, calculated at the rate of four per cent. of such income-tax and surcharge so as to fulfil the commitment of the Government to provide and finance quality health services and universalised quality basic education and secondary and higher education.’;
(iv) sub-section (13) and sub-section (14) shall be renumbered as sub-section (12) and sub-section (13), respectively;
(v) in sub-section (13) as so renumbered, in clause (a), for the figures “2018”, the figures “2019” shall be substituted;
(b) in the First Schedule,––
(i) for Part I, the following Part I shall be substituted, namely:––
“PART I
INCOME-TAX
Paragraph A
(I) In the case of every individual other than the individual referred to in items (II) and (III) of this Paragraph or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, not being a case to which any other Paragraph of this Part applies,—
Rates of income-tax
| (1) where the total income does not exceed Rs.2,50,000 | Nil; |
| (2) where the total income exceeds Rs.2,50,000 but does not exceed Rs.5,00,000 | 5 per cent. of the amount by which the total income exceeds Rs.2,50,000; |
| (3) where the total income exceeds Rs. 5,00,000 but does not exceed Rs.10,00,000 | Rs.12,500 plus 20 per cent. of the amount by which the total income exceeds Rs.5,00,000; |
| (4) where the total income exceeds Rs.10,00,000 | Rs.1,12,500 plus 30 per cent. of the amount by which the total income exceeds Rs.10,00,000. |
(II) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,—
Rates of income-tax
| (1) where the total income does not exceed Rs.3,00,000 | Nil; |
| (2) where the total income exceeds Rs.3,00,000 but does not exceed Rs.5,00,000 | 5 per cent. of the amount by which the total income exceeds Rs.3,00,000; |
| (3) where the total income exceeds Rs.5,00,000 but does not exceed Rs.10,00,000 | Rs.10,000 plus 20 per cent. of the amount by which the total income exceeds Rs.5,00,000; |
| (4) where the total income exceeds Rs.10,00,000 | Rs.1,10,000 plus 30 per cent. of the amount by which the total income exceeds Rs.10,00,000. |
(III) In the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year,—
Rates of income-tax
| (1) where the total income does not exceed Rs.5,00,000 | Nil; |
| (2) where the total income exceeds Rs.5,00,000 but does not exceed Rs.10,00,000 | 20 per cent. of the amount by which the total income exceeds Rs.5,00,000; |
| (3) where the total income exceeds Rs.10,00,000 | Rs.1,00,000 plus 30 per cent. of the amount by which the total income exceeds Rs.10,00,000. |
Surcharge on income-tax
The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section 111A or section 112 or section 112A of the Income-tax Act, shall be increased by a surcharge for the purposes of the Union, calculated, in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act,—
(a) having a total income exceeding fifty lakh rupees but not exceeding one crore rupees, at the 45 rate of ten per cent. of such income-tax; and
(b) having a total income exceeding one crore rupees, at the rate of fifteen per cent. of such income-tax:
Provided that in the case of persons mentioned above having total income exceeding,—
(a) fifty lakh rupees but not exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees;
(b) one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
Paragraph B
In the case of every co-operative society,—
Rates of income-tax
| (1) where the total income does not exceed Rs.10,000 | 10 per cent. of the total income; |
| 15 (2) where the total income exceeds Rs.10,000 but does not exceed Rs.20,000 | Rs.1,000 plus 20 per cent. of the amount by which the total income exceeds Rs.10,000; |
| (3) where the total income exceeds Rs.20,000 | Rs.3,000 plus 30 per cent. of the amount by which the total income exceeds Rs.20,000. |
Surcharge on income-tax
The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section 111A or section 112 or section 112A of the Income-tax Act, shall, in the case of every co-operative society, having a total income exceeding one crore rupees, be increased by a surcharge for the purposes of the Union calculated at the rate of twelve per cent. of such income-tax:
Provided that in the case of every co-operative society mentioned above having total income exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
Paragraph C
In the case of every firm,—
Rate of income-tax
On the whole of the total income 30 per cent.
Surcharge on income-tax
The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section 111A or section 112 or section 112A of the Income-tax Act, shall, in the case of every firm, having a total income exceeding one crore rupees, be increased by a surcharge for the purposes of the Union calculated at the rate of twelve per cent. of such income-tax:
Provided that in the case of every firm mentioned above having total income exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
Paragraph D
In the case of every local authority,—
Rate of income-tax
On the whole of the total income 30 per cent.
Surcharge on income-tax
The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section 111A or section 112 or section 112A of the Income-tax Act, shall, in the case of every local authority, having a total income exceeding one crore rupees, be increased by a surcharge for the purposes of the Union calculated at the rate of twelve per cent. of such income-tax:
Provided that in the case of every local authority mentioned above having total income exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
Paragraph E
In the case of a company,—
Rates of income-tax
I. In the case of a domestic company,—
| (i) where its total turnover or the gross receipt in the previous year 2016-2017 does not exceed two hundred and fifty crore rupees | 25 per cent. of the total income; |
| (ii) other than that referred to in item (i) | 30 per cent. of the total income. |
II. In the case of a company other than a domestic company,—
| (i) on so much of the total income as consists of,—
(a) royalties received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961 but before the 1st day of April, 1976; or (b) fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 29th day of February, 1964 but before the 1st day of April, 1976, and where such agreement has, in either case, been approved by the Central Government |
50 per cent.; |
| (ii) on the balance, if any, of the total income | 40 per cent. |
Surcharge on income-tax
The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section 111A or section 112 or section 112A of the Income-tax Act, shall be increased by a surcharge for the purposes of the Union calculated,––
(i) in the case of every domestic company,––
(a) having a total income exceeding one crore rupees but not exceeding ten crore rupees, at the rate of seven per cent. of such income-tax; and
(b) having a total income exceeding ten crore rupees, at the rate of twelve per cent. of such 40 income-tax;
(ii) in the case of every company other than a domestic company,––
(a) having a total income exceeding one crore rupees but not exceeding ten crore rupees, at the rate of two per cent. of such income-tax; and
(b) having a total income exceeding ten crore rupees, at the rate of five per cent. of such income-tax:
Provided that in the case of every company having a total income exceeding one crore rupees but not exceeding ten crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees:
Provided further that in the case of every company having a total income exceeding ten crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of ten crore rupees by more than the amount of income that exceeds ten crore rupees.”;
(ii) in Part III, in Paragraph E, in sub-paragraph I, in clause (i), for the words and figures “previous year 2016-2017”, the words and figures “previous year 2017-2018” shall be substituted;
(iii) in Part IV, in Rule 8,––
(A) for sub-rules (1) and (2), the following sub-rules shall be substituted, namely:––
“(1) Where the assessee has, in the previous year relevant to the assessment year commencing on the 1st day of April, 2019, any agricultural income and the net result of the computation of the agricultural income of the assessee for any one or more of the previous years relevant to the assessment years commencing on the 1st day of April, 2011 or the 1st day of April, 2012 or the 1st day of April, 2013 or the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April, 2017 or the 1st day of April, 2018, is a loss, then, for the purposes of sub-section (2) of section 2 of this Act,––
(i) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2011, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2012 or the 1st day of April, 2013 or the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April, 2017 or the 1st day of April, 2018,
(ii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2012, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2013 or the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April, 2017 or the 1st day of April, 2018,
(iii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2013, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April, 2017 or the 1st day of April, 2018,
(iv) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2014, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April, 2017 or the 1st day of April, 2018,
(v) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2015, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2016 or the 1st day of April, 2017 or the 1st day of April, 2018,
(vi) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2016, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2017 or the 1st day of April, 2018,
(vii) the loss so computed for the previous year relevant to the assessment year 10 commencing on the 1st day of April, 2017, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2018,
(viii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2018,
shall be set off against the agricultural income of the assessee for the previous year relevant to the assessment year commencing on the 1st day of April, 2019.
(2) Where the assessee has, in the previous year relevant to the assessment year commencing on the 1st day of April, 2020, or, if by virtue of any provision of the Income-tax Act, income-tax is to be charged in respect of the income of a period other than the previous year, in such other period, any agricultural income and the net result of the computation of the agricultural income of the assessee for any one or more of the previous years relevant to the assessment years commencing on the 1st day of April, 2012 or the 1st day of April, 2013 or the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April, 2017 or the 1st day of April, 2018 or the 1st day of April, 2019, is a loss, then, for the purposes of sub-section (10) of section 2 of this Act,––
(i) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2012, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2013 or the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April, 2017 or the 1st day of April, 2018 or the 1st day of April, 2019,
(ii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2013, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2014 or the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April, 2017 or the 1st day of April, 2018 or the 1st day of April, 2019,
(iii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2014, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2015 or the 1st day of April, 2016 or the 1st day of April, 2017 or the 1st day of April, 2018 or the 1st day of April, 2019,
(iv) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2015, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2016 or the 1st day of April, 2017 or the 1st day of April, 2018 or the 1st day of April, 2019,
(v) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2016, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2017 or the 1st day of April, 2018 or the 1st day of April, 2019,
(vi) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2017, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2018 or the 1st day of April, 2019,
(vii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2018, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 2019,
(viii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 2019,
shall be set off against the agricultural income of the assessee for the previous year relevant to the assessment year commencing on the 1st day of April, 2020.”;
(B) for sub-rule (4), the following sub-rule shall be substituted, namely:––
“(4) Notwithstanding anything contained in this rule, no loss which has not been determined by the assessing officer under the provisions of these rules or the rules contained in the First Schedule to the Finance Act, 2011 (8 of 2011) or the First Schedule to the Finance Act, 2012 (23 of 2012) or the First Schedule to the Finance Act, 2013 (17 of 2013) or the First Schedule to the Finance (No. 2) Act, 2014 (25 of 2014) or the First Schedule to the Finance Act, 2015 (20 of 2015) or the First Schedule to the Finance Act, 2016 (28 of 2016) or the First Schedule to the Finance Act, 2017 (7 of 2017) or the First Schedule to the Finance Act, 2018 (13 of 2018) shall be set off under sub-rule (1) or, as the case may be, sub-rule (2).”.
CHAPTER III
DIRECT TAXES
Income-tax
3. Amendment of section 16.
In section 16 of the Income-tax Act, 1961 (hereafter in this Chapter referred to as the Income-tax Act), in clause (ia) [as inserted by section 7 of the Finance Act, 2018], for the words “forty thousand”, the words “fifty thousand” shall be substituted with effect from the 1st day of April, 2020.
4. Amendment of section 23.
In section 23 of the Income-tax Act, with effect from the 1st day of April, 2020,––
(a) in sub-section (4),––
(i) in the opening portion, for the words “one house”, the words “two houses” shall be substituted;
(ii) in clause (a), for the word “one”, the word “two” shall be substituted;
(iii) in clause (b), for the words “other than the house”, the words “other than the house or houses” shall be substituted;
(b) in sub-section (5), for the words “one year”, the words “two years” shall be substituted.
5. Amendment of section 24.
In section 24 of the Income-tax Act, with effect from the 1st day of April, 2020,––
(a) in the first proviso, after the words “the amount of deduction”, the words “or, as the case may be, the aggregate of the amounts of deduction” shall be inserted;
(b) in the second proviso, after the words “the amount of deduction”, the words “or, as the case may be, the aggregate of the amounts of deduction” shall be inserted; 10
(c) after the Explanation to the third proviso, the following proviso shall be inserted, namely:––
“Provided also that the aggregate of the amounts of deduction under the first and second provisos shall not exceed two lakh rupees.”.
6. Amendment of section 54.
In section 54 of the Income-tax Act, in sub-section (1), after clause (ii), the following provisos shall be inserted with effect from the 1st day of April, 2020, namely:––
‘Provided that where the amount of the capital gain does not exceed two crore rupees, the assessee, may at his option, purchase or construct two residential houses in India, and where such an option has been exercised,––
(a) the provisions of this sub-section shall have effect as if for the words “one residential house in India”, the words “two residential houses in India” had been substituted;
(b) any reference in this sub-section and sub-section (2) to “new asset” shall be construed as a reference to the two residential houses in India:
Provided further that where during any assessment year, the assessee has exercised the option referred to in the first proviso, he shall not be subsequently entitled to exercise the option for the same or any other assessment year.’.
7. Amendment of section 80-IBA.
In section 80-IBA of the Income-tax Act, in sub-section (2), in clause (a), for the figures “2019”, the figures “2020” shall be substituted with effect from the 1st day of April, 2020.
8. Amendment of section 87A.
In section 87A of the Income-tax Act, with effect from the 1st day of April, 2020,––
(a) for the words “three hundred fifty thousand”, the words “five hundred thousand” shall be substituted;
(b) for the words “two thousand and five hundred”, the words “twelve thousand and five hundred” shall be substituted.
9. Amendment of section 194A.
In section 194A of the Income-tax Act, in sub-section (3), in clause (i), for the words “ten thousand” wherever they occur, the words “forty thousand” shall be substituted.
10. Amendment of section 194-I.
In section 194-I of the Income-tax Act, in the first proviso, for the words “one hundred and eighty 35 thousand rupees”, the words “two hundred and forty thousand rupees” shall be substituted.
CHAPTER IV
MISCELLANEOUS
PART I
AMENDMENTS TO THE INDIAN STAMP ACT, 1899
11. Commencement of this Part.
The provisions of this Part shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
12. Amendment of section 2.
In section 2 of the Indian Stamp Act, 1899 (hereafter in this Part referred to as the principal Act),––
(a) for clause (1), the following clauses shall be substituted, namely:––
‘(1) “allotment list” means a list containing details of allotment of the securities intimated by the issuer to the depository under sub-section (2) of section 8 of the Depositories Act, 1996;
(1A) “banker” includes a bank and any person acting as a banker;’;
(b) in clause (5), the following long line shall be added at the end, namely:––
“but does not include a debenture;”;
(c) after clause (7), the following clauses shall be inserted, namely:––
‘(7A) “clearance list” means a list of transactions of sale and purchase relating to contracts traded on the stock exchanges submitted to a clearing corporation in accordance with the law for the time being in force in this behalf;
(7B) “clearing corporation” means an entity established to undertake the activity of clearing and settlement of transactions in securities or other instruments and includes a clearing house of a recognised stock exchange;’;
(d) after clause (10), the following clauses shall be inserted, namely:––
‘(10A) “debenture” includes––
(i) debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not;
(ii) bonds in the nature of debenture issued by any incorporated company or body corporate;
(iii) certificate of deposit, commercial usance bill, commercial paper and such other debt instrument of original or initial maturity upto one year as the Reserve Bank of India may specify from time to time;
(iv) securitised debt instruments; and
(v) any other debt instruments specified by the Securities and Exchange Board of India from time to time;
(10B) “depository” includes––
(a) a depository as defined in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996; and
(b) any other entity declared by the Central Government, by notification in the Official Gazette, to be a depository for the purposes of this Act;’;
(e) in clause (12), the words and figures “and includes attribution of electronic record within the meaning of section 11 of the Information Technology Act, 2000” shall be inserted at the end.
(f) for clause (14), the following clause shall be substituted, namely:—
‘(14) “instrument” includes—
(a) every document, by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded;
(b) a document, electronic or otherwise, created for a transaction in a stock exchange or depository by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded; and
(c) any other document mentioned in Schedule I,
but does not include such instruments as may be specified by the Government, by notification in the Official Gazette;’;
(g) after clause (15), the following clause shall be inserted, namely:—
‘(15A) “issuer” means any person making an issue of securities;’;
(h) for clause (16A), the following clauses shall be substituted, namely:—
‘(16A) “marketable security” means a security capable of being traded in any stock exchange in India;
(16B) “market value”, in relation to an instrument through which—
(a) any security is traded in a stock exchange, means the price at which it is so traded;
(b) any security which is transferred through a depository but not traded in the stock exchange, means the price or the consideration mentioned in such instrument;
(c) any security is dealt otherwise than in the stock exchange or depository, means the price or consideration mentioned in such instrument;’;
(i) after clause (23), the following clause shall be inserted, namely:—
‘(23A) “securities” includes—
(i) securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956;
(ii) a “derivative” as defined in clause (a) of section 45U of the Reserve Bank of India Act, 1934;
(iii) a certificate of deposit, commercial usance bill, commercial paper, repo on corporate bonds and such other debt instrument of original or initial maturity upto one year as the Reserve Bank of India may specify from time to time; and
(iv) any other instrument declared by the Central Government, by notification in the Official Gazette, to be securities for the purposes of this Act;’;
(j) after clause (26), the following clause shall be inserted, namely:—
‘(27) “stock exchange” includes—
(i) a recognised stock exchange as defined in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956; and
(ii) such other platform for trading or reporting a deal in securities, as may be specified by the Central Government, by notification in the Official Gazette, for the purposes of this Act.’.
13. Amendment of section 4.
In section 4 of the principal Act, after sub-section (2), the following sub-section shall be inserted, namely:—
“(3) Notwithstanding anything contained in sub-sections (1) and (2), in the case of any issue, sale or transfer of securities, the instrument on which stamp-duty is chargeable under section 9A shall be the principal instrument for the purpose of this section and no stamp-duty shall be charged on any other instruments relating to any such transaction.”.
14. Substitution of new section for section 8A.
For section 8A of the principal Act, the following section shall be substituted, namely:—
‘8A. Notwithstanding anything contained in this Act or any other law for the time being in force,—
Securities dealt in depository not liable to stamp-duty.
(a) an issuer, by the issue of securities to one or more depositories, shall, in respect of such issue, be chargeable with duty on the total amount of securities issued by it and such securities need not be stamped;
(b) the transfer of registered ownership of securities from a person to a depository or from a
depository to a beneficial owner shall not be liable to duty.
Explanation.—For the purposes of this section, the expression “beneficial ownership” shall have the same meaning as assigned to it in clause (a) of sub-section (1) of section 2 of the Depositories Act, 1996.’.
15. Insertion of new Part AA.
In Chapter II of the principal Act, after Part A relating to ‘Of the liability of instruments to duty’, the following Part shall be inserted, namely:—
“AA.––Of the liability of instruments of transaction in stock exchanges and depositories to duty
9A. (1) Notwithstanding anything contained in this Act,—
Instruments chargeable with duty for transactions in stock exchanges and depositories.
(a) when the sale of any securities, whether delivery based or otherwise, is made through a 15 stock exchange, the stamp-duty on each such sale in the clearance list shall be collected on behalf of the State Government by the stock exchange or a clearing corporation authorised by it, from its buyer on the market value of such securities at the time of settlement of transactions in securities of such buyer, in such manner as the Central Government may, by rules, provide;
(b) when any transfer of securities for a consideration, whether delivery based or otherwise, is made by a depository otherwise than on the basis of any transaction referred to in clause (a), the stamp-duty on such transfer shall be collected on behalf of the State Government by the depository from the transferor of such securities on the consideration amount specified therein, in such manner as the Central Government may, by rules, provide;
(c) when pursuant to issue of securities, any creation or change in the records of a depository is made, the stamp-duty on the allotment list shall be collected on behalf of the State Government by the depository from the issuer of securities on the total market value of the securities as contained in such list and in such manner as the Central Government may, by rules, provide.
(2) Notwithstanding anything contained in this Act, the instruments referred to in sub-section (1) shall be chargeable with duty as provided therein at the rate specified in Schedule I and such instruments need not be stamped.
(3) From the date of commencement of this Part, no stamp-duty shall be charged or collected by the State Government on any note or memorandum or any other document, electronic or otherwise, associated with the transactions mentioned in sub-section (1).
(4) The stock exchange or a clearing corporation authorised by it or the depository, as the case may be, shall, within three weeks of the end of each month and in accordance with the rules made in this behalf by the Central Government, in consultation with the State Government, transfer the stamp-duty collected under this section to the State Government where the residence of the buyer is located and in case the buyer is located outside India, to the State Government having the registered office of the trading member or broker of such buyer and in case where there is no such trading member of the buyer, to the State Government having the registered office of the participant:
Provided that before such transfer, the stock exchange or the clearing corporation authorised by it or the depository shall be entitled to deduct such percentage of stamp-duty towards facilitation charges as may be specified in such rules.
Explanation.––The term “participant” shall have the same meaning as assigned to it in clause (g) of section 2 of the Depositories Act, 1996.
(5) Every stock exchange or the clearing corporation authorised by it and depository shall submit to the Government details of the transactions referred to in sub-section (1) in such manner as the Central Government may, by rules, provide.
9B. Notwithstanding anything contained in this Act,––
Instruments chargeable with duty for transactions otherwise than through stock exchanges and depositories.
(a) when any issue of securities is made by an issuer otherwise than through a stock exchange or depository, the stamp-duty on each such issue shall be payable by the issuer, at the place where its registered office is located, on the total market value of the securities so issued at the rate specified in Schedule I;
(b) when any sale or transfer or reissue of securities for consideration is made otherwise than through a stock exchange or depository, the stamp-duty on each such sale or transfer or reissue shall be payable by the seller or transferor or issuer, as the case may be, on the consideration amount specified in such instrument at the rate specified in Schedule I.”.
16. Amendment of section 21.
In section 21of the principal Act,––
(a) for the words “the value of such stock or security according to the average price or the value thereof on the day of the date of the instrument.”, the words “the market value of such stock or security:” shall be substituted;
(b) the following proviso shall be inserted, namely:––
“Provided that the market value for calculating the stamp-duty shall be, in the case of––
(i) options in any securities, the premium paid by the buyer;
(ii) repo on corporate bonds, interest paid by the borrower; and
(iii) swap, only the first leg of the cash flow.”.
17. Amendment of section 29.
In section 29 of the principal Act,––
(i) in clause (a),––
(a) the words, figures and brackets “No. 27 (Debenture)” shall be omitted;
(b) the words, figures, brackets and letter “No. 62 (a) (Transfer of shares in an incorporated Company or other body corporate)” shall be omitted;
(c) the words, figures, brackets and letter “No. 62 (b) (Transfer of debentures, being marketable securities, whether the debenture is liable to duty or not, except debentures provided for by section 8)” shall be omitted;
(ii) in clause (e), after the word “exchange”, the words “including swap” shall be inserted;
(iii) in clause (f), the word “and” shall be omitted;
(iv) after clause (g), the following clauses shall be inserted, namely:––
“(h) in the case of sale of security through stock exchange, by the buyer of such security;
(i) in the case of sale of security otherwise than through a stock exchange, by the seller of such security;
(j) in the case of transfer of security through a depository, by the transferor of such security;
(k) in the case of transfer of security otherwise than through a stock exchange or depository, by the transferor of such security; 35
(l) in the case of issue of security, whether through a stock exchange or a depository or otherwise, by the issuer of such security; and
(m) in the case of any other instrument not specified herein, by the person making, drawing or executing such instrument.”.
18. Insertion of new section 62A.
After section 62 of the principal Act, the following section shall be inserted, namely:––
Penalty for failure to comply with provisions of section 9A.
“62A. (1) Any person who,––
(a) being required under sub-section (1) of section 9A to collect duty, fails to collect the same; or
(b) being required under sub-section (4) of section 9A to transfer the duty to the State Government within fifteen days of the expiry of the time specified therein, fails to transfer within such time,
shall be punishable with fine which shall not be less than one lakh rupees, but which may extend up to one per cent. of the collection or transfer so defaulted.
(2) Any person who,––
(a) being required under sub-section (5) of section 9A to submit details of transactions to the Government, fails to submit the same; or
(b) submits a document or makes a declaration which is false or which such person knows or believes to be false,
shall be punishable with fine of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less.
19. Insertion of new section 73A.
After section 73 of the principal Act, the following section shall be inserted, namely:––
Power of Central Government to make rules.
“73A. (1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of Part AA of Chapter II.
(2) Without prejudice to the generality of the provisions of sub-section (1), the Central Government may make rules for all or any of the following matters, namely:––
(a) the manner of collection of stamp-duty on behalf of the State Government by the stock exchange or the clearing corporation authorised by it, from its buyer under clause (a) of sub-section (1) of section 9A;
(b) the manner of collection of stamp-duty on behalf of the State Government by the depository from the transferor under clause (b) of sub-section (1) of section 9A;
(c) the manner of collection of stamp-duty on behalf of the State Government by the depository from the issuer under clause (c) of sub-section (1) of section 9A;
(d) the manner of transfer of stamp-duty to the State Government under sub-section (4) of section 9A;
(e) any other matter which has to be, or may be, provided by rules.”.
20. Amendment of section 76.
In section 76 of the principal Act, after sub-section (2), the following sub-section shall be inserted, namely:––
“(2A) Every rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.”.
21. Amendment of Schedule I.
In Schedule I of the principal Act,––
(i) in Article 19, in column (1),––
(a) after the words “CERTIFICATE OR OTHER DOCUMENT”, the brackets, words, figures and letter “(except the certificate or other document covered under Articles 27 and 56A)” shall be inserted;
(b) the words, brackets and figures “See also LETTER OF ALLOTMENT OF SHARES (No. 36)” shall be omitted;
(ii) for Article 27 and the entries relating thereto, the following Article and entries shall be substituted, namely:––
| (1) | (2) |
| “27. DEBENTURE—[as defined by section 2 (10A)] (see sections 9A and 9B) | |
| (a) in case of issue of debenture; | 0.005% |
| (b) in case of transfer and re-issue of debenture. | 0.0001%”; |
(iii) in Article 28, for the entry in column (1), after the words “DELIVERY ORDER IN RESPECT OF GOODS,”, the brackets and words “(excluding delivery order in respect of settlement of transactions in securities in stock exchange)” shall be inserted;
(iv) in Article 36, for the entry in column (1), the following entry shall be substituted, namely:––
“36. LETTER OF ALLOTMENT in respect of any loan to be raised by any company or proposed company.”;
(v) after Article 56 and the entry relating thereto, the following Article and entries shall be inserted, namely:––
| (1) | (2) |
| “56A. SECURITY OTHER THAN DEBENTURES (see sections 9A and 9B)–– |
|
| (a) issue of security other than debenture; | 0.005% |
| (b) transfer of security other than debenture on delivery basis; | 0.015% |
| (c) transfer of security other than debenture on non-delivery basis; | 0.003% |
| (d) derivatives–– | |
|
(i) futures (equity and commodity) |
0.002% |
|
(i) options (equity and commodity) |
0.003% |
|
(ii) currency and interest rate derivatives |
0.0001% |
|
(iii) other derivatives |
0.002% |
| (e) Government securities | 0% |
| (f) repo on corporate bonds | 0.00001%”; |
(vi) in Article 62, items (a) and (b) and the entries relating thereto shall be omitted.
PART II
AMENDMENT TO THE PREVENTION OF MONEY-LAUNDERING ACT, 2002
22. Amendment of section 8 of Act 15 of 2003.
In section 8 of the Prevention of Money-laundering Act, 2002, in sub-section (3), with effect from such date as the Central Government may, by notification in the Official Gazette, appoint,––
(i) in clause (a), for the words “ninety days”, the words “three hundred and sixty-five days” shall be substituted;
(ii) after clause (b), the following Explanation shall be inserted, namely:––
“Explanation.––For the purposes of computing the period of three hundred and sixty-five days under clause (a), the period during which the investigation is stayed by any court under any law for the 40 time being in force shall be excluded.”.
STATEMENT OF OBJECTS AND REASONS
The object of this Bill is to continue the existing rates of income-tax for the financial year 2019-2020 and to provide certain relief to taxpayers and to make amendments in certain enactments.
2. Clause 2 of the Bill seeks to provide for the rates of income-tax. The rates of income-tax which were specified in Part III of the First Schedule to the Finance Act, 2018 for the purposes of charging income-tax in certain cases, deduction of tax at source from salaries during the financial year 2018-2019, computation of “advance tax” payable during that financial year in relation to current incomes and for certain special purposes, are proposed to be continued for the purposes of assessment for the assessment year 2019-2020. Further, the same rates are proposed to be continued also for the purposes of charging income-tax in certain cases, deduction of tax at source from salaries during the financial year 2019-2020, computation of “advance tax” payable during that financial year in relation to current incomes, and also for the said special purposes.
3. The rates for deduction of tax at source during the financial year 2018-2019 from incomes other than salaries specified in Part II of the First Schedule to the Finance Act, 2018, are also proposed to be continued for deduction of tax at source from such incomes during the financial year 2019-2020.
4. It accordingly proposes to apply the provisions of section 2 of, and the First Schedule to, the Finance Act, 2018, with consequential and other necessary modifications, to the assessment year 2019-2020 or, as the case may be, the financial year 2019-2020.
5. Clause 3 of the Bill seeks to amend section 16 of the Income-tax Act to provide relief to the salaried taxpayers by way of increasing the amount of deduction from salary income, from existing forty thousand rupees to fifty thousand rupees.
6. Clause 4 of the Bill seeks to amend section 23 of the Income-tax Act so as to provide relief to the taxpayer by allowing him an option to claim nil annual value in respect of any two houses, declared as self-occupied, instead of one such house as currently provided. It further seeks to provide relief to the taxpayers that notional rent in respect of unsold inventory shall not be charged to tax up to two years, instead of existing one year, from the end of the financial year in which the certificate of completion is obtained from the competent authority.
7. Clause 5 of the Bill seeks to amend section 24 of the Income-tax Act to provide that the monetary limit of deduction on account of interest payable on borrowed capital shall continue to apply to the aggregate of the amounts of deduction in case of more than one self-occupied houses.
8. Clause 6 of the Bill seeks to amend section 54 of the Income-tax Act so as to provide relief to the taxpayers having long-term capital gains up to two crore rupees, arising from transfer of a residential house, by affording the assessee a one time opportunity, at his option, to utilise the said amount for the purchase or construction of two residential houses in India instead of one residential house as currently provided.
9. Clause 7 of the Bill seeks to amend section 80-IBA of the Income-tax Act so as to augment the supply of affordable houses by extending the time limit from 31st March, 2019 to 31st March, 2020 for obtaining approval of the housing project for availing deduction.
10. Clause 8 of the Bill seeks to amend section 87A of the Income-tax Act to provide relief to the individual taxpayers by increasing the maximum amount of tax rebate to twelve thousand five hundred rupees from existing two thousand five hundred rupees. The tax rebate shall now be admissible to taxpayers having total income up to five hundred thousand rupees, instead of existing three hundred fifty thousand rupees.
11. Clause 9 of the Bill seeks to amend section 194A of the Income-tax Act so as to ease the burden of compliance by way of increasing the threshold limit from ten thousand rupees to forty thousand rupees, for deduction of tax at source on interest income, other than interest on securities, paid by a banking company, co-operative society or a post office.
12. Clause 10 of the Bill seeks to amend section 194-I of the Income-tax Act to rationalise the threshold limit from one hundred and eighty thousand rupees to two hundred and forty thousand rupees, for deduction of tax at source on rental income.
13. Clauses 11 to 21 of the Bill seek to amend the Indian Stamp Act, 1899 for levy and administration of stamp duty on securities market instruments by the States at one place through one agency, viz., through Stock Exchanges or its Clearing Corporation or Depositories on one instrument, and for appropriately sharing the same with respective State Governments based on State of domicile of the ultimate buying client.
14. Clause 22 of the Bill seeks to amend sub-section (3) of section 8 of the Prevention of Money-laundering Act, 2002 so as to extend the time limit of ninety days for which the attachment shall remain valid during the period of investigation to three hundred and sixty-five days and also to provide that in computing the period of three hundred and sixty-five days, the period during which the investigation is stayed by any court shall be excluded.
PIYUSH GOYAL.
NEW DELHI;
The 30th January, 2019.
PRESIDENT’S RECOMMENDATION UNDER ARTICLES 117 AND 274 OF THE CONSTITUTION OF INDIA
[Copy of letter No. 2(5)-B(D)2019, dated the 30th January, 2019 from Shri Piyush Goyal, Minister of Finance, to the Secretary-General, Lok Sabha.]
The President, having been informed of the subject matter of the proposed Bill, recommends under clauses (1) and (3) of article 117, read with clause (1) of article 274, of the Constitution of India, the introduction of the Finance Bill, 2019 to the Lok Sabha and also recommends to the Lok Sabha the consideration of the Bill.
2. The Bill will be introduced in the Lok Sabha immediately after the presentation of the Budget on the 1st February, 2019.
LOK SABHA
A
BILL
to continue the existing rates of income-tax for the financial year 2019-2020 and to provide for certain relief to taxpayers and to make amendments in certain enactments.
(Shri Piyush Goyal,
Minister of Finance.)
It is a election Budget
slab for income tax 2018-19