Budget 2021- excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under Income Declaration Scheme (IDS) shall be refundable to the specified class of persons without payment of any interest.

The Income Declaration Scheme, 2016 (the Scheme) contained in Chapter-IX of the Finance Act, 2016 provided an opportunity to the persons who had not disclosed any income in the past to come clean and make payment of tax, surcharge and penalty as per the provisions of the Scheme. The Scheme commenced on 01.06.2016.

Section 187 of the Finance Act, 2016 inter alia, provides that the tax, surcharge and penalty payable under the Scheme shall be paid on or before the specified date and if the declarant failed to pay such amount, the declaration filed by the declarant shall be deemed invalid. Further, section 191 of the Finance Act, 2016, inter alia, provides that any amount of tax, surcharge and penalty paid in pursuance of a declaration made under the Scheme shall not be refundable. A proviso was inserted in section 191 of the Finance Act, 2016 vide Finance (No. 2) Act, 2019 empowering the Board to specify a class of persons to whom such tax paid in excess shall be refundable. It is now proposed to amend the proviso of section 191 of the Finance Act, 2016, so as to provide that the excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under the Scheme shall be refundable to the specified class of persons without payment of any interest.

This amendment will take effect retrospectively from 1st June, 2016.

[Clause 159]

Text of the Relevant Clause of the Finance Bill 2021

Clause 159 of the Bill seeks to amend sections 163, 164,165A and 191 of the Finance Act, 2016.

It is proposed to insert a proviso to sub-section (3) of section 163 of the said Act to provide that the consideration received or receivable for specified services and consideration received or receivable for e-commerce supply or services shall not include the consideration, which are taxable as royalty or fees for technical services in India under the Income-tax Act read with the agreement notified by the Central Government under section 90 or section 90A of the said Act.

It is further proposed to insert an Explanation in clause (cb) of section 164 of the said Act to provide that for the purpose of defining e-commerce supply or service, “online sale of goods” and “online provision of services” shall include one or more of the following online activities, namely:––

(a) acceptance of offer for sale;

(b) placing of purchase order;

(c) acceptance of the purchase order;

(d) payment of consideration; or

(e) supply of goods or provision of services, partly or wholly.

It is also proposed to amend sub-section (3) of section 165A of the said Act to provide that consideration received or receivable from e-commerce supply or services shall include–

(i) consideration for sale of goods irrespective of whether the e-commerce operator owns the goods;

(ii) consideration for provision of services irrespective of whether service is provided or facilitated by the e-commerce operator.

These amendments will take effect retrospectively from 1st April, 2020.

It is also proposed to amend section 191 of the Finance Act, 2016 relating to exemption from wealth-tax in respect of assets specified in declaration.

The said section, inter alia, provides that any excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under the Income Declaration Scheme, 2016 shall not be refundable. The proviso to the said section provides that the Central Government may, by notification, specify a class of persons to whom the excess amount so paid shall be refundable.

It is proposed to amend the said proviso to provide that such excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under the aforementioned Scheme shall be refundable to the specified class of persons without payment of any interest.

This amendment will take effect retrospectively from 1st June, 2016.

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