Finance Minister Nirmala Sitharaman introduced the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020 in the Lok Sabha for consideration on 18.09.2020. The bill will replace the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 which was promulgated in March this year to provide relaxations related to compliance by extending the time limit and payment of taxes under the Income Tax Act, 1961 and certain other specified laws. The bill seeks to amend various sections of the Income-tax Act and also incorporated the provisions of Notification No. 35/2020 dated 24.06.2020 and Notification No. 56/2020 dated 29.07.2020 issued by the CBDT under the Ordinance.
It is interesting to note that the 6-page Ordinance is now a 52-page Bill.
The specified laws include certain Finance Acts, Central Excise Act, 1944, Customs Act, 1962, Direct Taxes Vivad se Vishwas Act, 2020 and Prohibition of Benami Property Transactions Act, 1988. The ordinance which was brought earlier also extended the deadline for filing declaration and the disputed demand under the Vivad Se Vishwas Scheme.
The bill provides these relaxations in view of the spread of the coronavirus pandemic in India. The bill proposes amendments in the Income Tax Act to provide that donations to the PM CARES Fund will be eligible for 100 per cent deduction under section 80G without any qualifying limit.
Further, the migration of registration of Trust to the new section 12AB has been postponed and is made applicable from 1st April, 2021 in place of 1-6-2020, later extended to 1-10-2020.
This Bill seeks to replace the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 and further to amend the Income-tax Act, 1961, the Central Goods and Services Tax Act, 2017, the Finance (No.2) Act, 2019, the Direct Tax Vivad se Vishwas Act, 2020 and the Finance Act, 2020 which are administered by the Department of Revenue through two boards, namely, the Central Board of Direct Taxes and the Central Board of Indirect Taxes. Thus, no additional expenditure is contemplated on the enactment of the Bill.
1. The outbreak of Novel Corona Virus (COVID-19) pandemic across many countries of the world, including India, has caused immense loss to lives of people and given rise to unprecedented humanitarian and economic crisis in the country. Due to vagaries of pandemic, a national lockdown was imposed which had to be further extended. Due to very rapid spread of pandemic, social distancing had to be ensured immediately to prevent society at large from its disastrous consequences. This necessitated ease of compliance under certain tax and other laws.
2. As Parliament was not in session and in view of the urgency, the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (Ord. 2 of 2020) was promulgated on the 31st day of March, 2020 which, inter alia, relaxed certain provisions of the specified Acts relating to direct taxes, indirect taxes and prohibition of Benami property transactions. Further, certain notifications were also issued under the said Ordinance.
3. In view of stakeholders' representations received after enactment of the Finance Act, 2020, and due to need for further rationalisation of some provisions of certain Acts, further amendments are considered necessary to be incorporated in the proposed Bill replacing the Ordinance.
4. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020 which seeks to replace the said Ordinance, inter alia, provides for extension of various time limits for completion or compliance of actions under the specified Acts and reduction in interest, waiver of penalty and prosecution for delay in payment of certain taxes or levies during the specified period.
5. Further, the Bill proposes amendments to the Income-tax Act, 1961 which , inter alia, include providing of tax incentive for Category-III Alternative Investment Funds located in the International Financial Services Centre (IFSC) to encourage relocation of foreign funds to the IFSC, deferment of new procedure of registration and approval of certain entities introduced through the Finance Act, 2020, providing for deduction for donation made to the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) and exemption to its income, incorporation of Faceless Assessment Scheme, 2019 therein, empowering the Central Government to notify schemes for faceless processes under certain provisions by eliminating physical interface to the extent technologically feasible and to provide deduction or collection at source in respect of certain transactions at threefourth's rate for the period from 14th May, 2020 to 31st March, 2021.
6. The Bill also proposes to amend the Direct Tax Vivad se Viswas Act, 2020 to extend the date for payment without additional amount to 31st December, 2020 and to empower the Central Government to notify certain dates relating to filing of declaration and making of payment.
7. The Finance Act, 2020 is also proposed to be amended to clarify regarding capping of surcharge at 15 per cent. on dividend income of the Foreign Portfolio Investor.
8. The Bill also proposes to empower the Central Government to remove any difficulty up to a period of two years and provide for repeal and savings of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020.
9. The Bill seeks to achieve the aforesaid objectives.
Clause 4 of the Bill seeks to amend certain provisions relating to Income-Tax Act, 1961.
The proposed amendment to clause (4D) of section 10 provides for calculation of income of non-resident in the prescribed manner.
The proposed amendment of the clause (23C) of section 10 empowers the Board to prescribed form and manner for application for approval to funds or trust or institution or any university or other educational institutions or any hospital or other medical institutions.
The proposed insertion of new section 12AB relating to procedure for fresh registration empowers the Board to provide by rules the form and the manner in which the order under the said sub-section shall be passed. The proposed amendment to section 35 seeks to insert new proviso to subsection (1) which empowers the Board to provide by rules the form and manner of giving intimation by the research association, university, college or company, to the prescribed authority.
The proposed amendment to sub-section (5) of section 80G empowers the Board to provide by rules the statement, time period, form and manner of verification, particulars and time for delivery of correction statement for rectification of any mistake in the information furnished in the said statement. It further proposes to empower the Board to make rules with regard to the manner, particulars and time for certificate of donation. The proposed insertion of sub-section (1A) in section 115AD provides for calculation of income that is attributable to units held by non-resident in the prescribed manner.
The matters in respect of which rules may be made are matters of procedure and administrative detail and it is not practicable to provide for them in the Bill itself. The delegation of legislative power is, therefore, of a normal character.
Update: Lok Sabha passed Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020 on 19.09.2020.
Update: Rajya Sabha passed Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020 on 22.09.2020.
Download Copy of The Taxation And Other Laws (Relaxation And Amendment Of Certain Provisions) Bill, 2020 as introduced in Lok Sabha on 18th September 2020 in pdf format
 Bill, 2020 introduced in Lok Sabha){kind=link}
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