Issue/Justification

The Finance (No.2) Act, 2014 had substituted Section 115BBC(1)(ii) w.e.f 1-4-2015 to provide income tax payable shall include the amount of income tax with which the assessee would have been chargeable had his total income been reduced by the anonymous donations received in excess of 5% of donations received or Rs.1,00,000 as the case may be.

Further, section 13(7) provides that nothing contained in sections 11 and 12 shall operate so as to exclude from the total income of the previ year of the person in receipt thereof, any anonymous donation referred to in section 115BBC on which tax is payable in accordance with the provisions of that section.

Section 13(7) refers to the anonymous donations on which tax is payable in accordance with the provisions of section 115BBC. Since the income tax payable under section 115BBC in aggregate of tax payable on such donations (115BBC(1)(i)) and tax payable on other income (115BBC(1)(ii)), the language of section 13(7) needs to be amended to include reference of tax payable in accordance with the provisions of section 115BBC(1)(i).

Suggestion

Section 13(7) may be reworded as follows:-

“Nothing contained in section 11 and 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof, any anonymous donation referred to in section 115BBC on which tax is payable in accordance with the provisions of clause (i) of sub-section (1) of that section.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)

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