Lok Sabha Passes Finance Bill, 2021 with 109 Proposed Amendments

Lok Sabha has passed the Finance Bill, 2021 on 23.03.2021. The Bill was introduced on 1st February 2021 by Finance Minister Nirmala Sitaramna after presenting the Union budget 2021. The Bill intends to give effect to the financial proposals of the Central Government for the financial year 2021-22 be taken into consideration.

The salient features of the bill include:

-Reduced compliance burden for senior citizens of age 75 years & above

-Tax incentives for Affordable Housing and Affordable Rental Housing Project

-Reduction in Time Limits of Reopening of Assessment 

-Setting up of Dispute Resolution Committee (DRC)

-Faceless Income Tax Appellate Tribunal (ITAT)

-Tax benefit for Start-ups

The Bill passed by the Loksabha on 23.03.2021 has 109 amendments out of which 49 amendments are related to Income Tax Act, 1961 as compared to the original Finance Bill, 2021 which was introduced in the Lok Sabha on February 01, 2021.

Some of the replies given by the Finance Minister during the discussion related to various provisions of the Finance Bill, 2021 is reproduced below.

No change in tax rates: FM stated that there was no change in the rate of income tax. However, there are certain changes being made in the Income Tax which are largely focused on the issue of ease of doing business, and compliance which will have to be brought down. 

Fake GST Invoices: FM made it clear that GST-related matters are not the matters of the Ministry of Finance, but they are the GST-Council matters in which all States Finance Ministers are members. 

On a query related to GST invoices, penalties for those companies which have fake GST invoice allegations, and whose properties are being attached, Fm answered that it was noticed that it was difficult to recover penalties levied on the persons who were involved in fake GST invoices. It was just becoming impossible. 

The proposed provision would ensure collection of this penalty and would help in discouraging the practice of fake invoices. Further, this provision would be applicable for only those big fraud cases where the amount of fake invoice is Rupees 2 crore or more. One need not be frightened if they did not have fake invoices. 

TCS on Sale of Goods: On a question about the new TCS provision which imposes a tax for sale over Rs. 50 lakh as being burdensome,FM said that the TCS is only at the rate of 0.1 per cent. It is not even one per cent; it is not even 0.5 per cent. It is 0.1 per cent. It applies only to those big taxpayers whose turnover was more than Rs. 10 crore in the year before. It was imposed last year, in the Finance Act of 2020. It is not now. It was imposed then and it is intended to widen the tax net. 

TCS is never an additional tax. It is levied but you can always reconcile with actually what you have to pay. So, if you have got something less which has been paid, you can always adjust this. This is not an additional tax. It is a tax collected but you can always adjust it to the tax due. So, credit for tax collected is allowed and hence it is not an additional tax. Therefore, it is not actually a burden. 

Reopening of assessment: On the question related to the increase in the period of reopening of cases from six years to ten years, the reply of the FM is given below.

What was six years was brought down to three years. There was this confusion about, whereas what was six-year limit has now gone up to ten-year limit. Members are conceding that where it was six years, we brought it down to three years which is good, but where it was six years, we took it up to ten years. No. We have not increased the number of years for which the scrutiny or assessment survey could be done. What was six years was brought down to three years. Already for ten years, when it can be opened up, we actually brought in a condition by saying, only where up to Rs. 50 lakh of undisclosed income is in question, and only in such cases, will it be opened and it can be opened for up to ten years. For that, even then, the opening can happen only with the approval of the Principal Commissioner. Otherwise, they cannot open it.

There are two conditions. One is, it should be Rs. 50 lakh or more of undisclosed income and if you have some proof in your hand, then you may open it. But even then, you will open only after taking the approval of the Principal Commissioner. Otherwise, you cannot touch it. That is what has been done. It is not to take it to ten years but actually give relief for less than Rs. 50 lakh even if it is undisclosed. There is a great relief in that. Only for Rs. 50 lakh and above questionable undisclosed income, we are saying that you could open it. So, there is no confusion there.

Again, for foreign assets reopening, there was a time limit of 16 years which has been reduced to three years. This must be restored to 16 years was the hon. Member’s comment. My reply on that point is, for foreign undisclosed assets, the Act on black money would be applicable and for action under that Act, there is no time limit. I cannot raise it from five years to ten years or 15 years to 16 years or anything like that. It is the Act on black money which governs there.

Equalisation Levy: On a question related to equalisation levy that tax on online transactions is an extra burden and discourages online transactions when the Government is very much in favour of digital transactions. FM replied, “We will never do anything to undermine it. But yet, equalisation levy is a tax which has been imposed to give level playing field between Indian businesses who pay tax in India and foreign e-commerce companies who do business in India but do not pay any income tax here. Let us be clear. We are only trying, through equalisation levy, to treat equally everybody who is operating in India. If they pay income tax here, the equalisation levy is not applicable on the e-commerce companies which are foreign. 

Hence, there is no extra burden on any company. Then, through the Government amendment that I am moving today, I intend to clarify that this equalisation levy is not applicable on consideration for goods which are owned by Indian residents. Thus, the concern raised by the hon. Member of Parliament regarding extra burden would not be there at all.”

Tax on employees contribution above Rs. 2.50 Lakh: I want to address the question of income tax imposed on Rs. 2.5 lakh employee contribution on the PF. I think this was responded to even during the Budget Discussion. I had said that this amount of Rs. 2.5 lakh actually covers majority of the people who normally invest money here; they get tax concession; they do not have to pay tax when they withdraw and so, that is fully justified. But there was this one per cent of people in the EPF contribution who were making contribution upto Rs. Five crore also, whereas this limit of Rs. 2.5 lakh is helpful to all the workers. But how many are there who deposit upto Rs. Five crore? They are hardly one per cent and this limit of Rs. 2.5 lakh is covering majority of the people; upto 92 per cent or 93 per cent of the people who are depositing money in the EPF are not affected and, therefore, I do not think this is going to affect the interest of the workers for whom assured interest and tax-free concession is provided under this scheme. The limit has been kept keeping in mind that small and medium tax payers are not impacted by this step. Through the Government amendment that I am bringing now, I intend to raise this limit to Rs. Five lakh. This is an addition which I want the hon. Member to understand. This amount is now being raised to Rs. Five lakh only in those cases where there is no contribution by the employer in that fund. Most often, contribution both from the employee as well as the employer are there. But in cases where there is only contribution made by the employee and there is no contribution from the employer, that amount is raised to Rs. Five lakh.

Then, there was a question about ULIP where insurance gets linked to the unit. We have segregated that because we wanted to bring in parity for investment with mutual funds related to units also. So, when units which are also like mutual funds and that gets linked to insurance, we have tried giving an equal treatment.

The amendments proposed in the Finance Bill, 2021 as passed by the Lok Sabha on 23.03.2021 are listed in the following table-

Sl No.	Text of Amendment
1	(29A) “liable to tax”, in relation to a person and with reference to a country, means that there is an income-tax liability on such person under the law of that country for the time being in force and shall include a person who has subsequently been exempted from such liability under the law of that country;’
2	4A. After section 9A of the Income-tax Act, the following section shall be inserted, namely:— Insertion of new section 9B  Income on receipt of capital asset or stock in trade by specified person from specified entity ‘9B. (1) Where a specified person receives during the previous year any capital asset or stock in trade or both froma specified entity in connection with the dissolution or reconstitution of such specified entity, then the specified entity shall be deemed to have transferred such capital asset or stock in trade or both, as the case may be, to the specifiedperson in the year in which such capital asset or stock in trade or both are received by the specified person. (2) Any profits and gains arising from such deemed transfer of capital asset or stock in trade or both, as the case may be, by the specified entity shall be— (i)deemed to be the income of such specified entity or the previous year in which s uch capital asset or stock in trade or both were received by the specified person; and  (ii)chargeable to income-tax as income of such specified entity under the head “Profits and gains of business or profession” or under the head "Capital gains", in accordance with the provisions of this Act. (3) For the purposes of this section, fair market value of the capital asset or stock in trade or both on the date of its receipt by the specified person shall be deemed to be the full value of the consideration received or accruing as a result of such deemed transfer of the capital asset or stock n trade or both by the specified entity. (4)If any difficulty arises in giving effect to the provisions of this section and sub-section (4) of section 45, the Board may, with the approval of the Central Government, issue guidelines for the purposes of removing the difficulty. (5) Every guideline issued b y the Board under sub- section (4) shall, as soon as may be after it is issued, be laid before each House of Parliament, and shall be binding on the income-tax authorities and on the assessee. Explanation.—For the purposes of this section,— (i) “reconstitution of the specified entity” means. where— (a)one or more of its partners or members, as the case may be, of such specified entity ceases to be partners or members; or (b)one or more new partners or members, as the case may be, are admitted in such specified entity in such circumstances that one or more of the persons who were partners or members, as the case may be, of the specified entity, before the change, continue as partner or partners or member or members after the change; or (c) all the partners or members, as the case may be, of such specified entity continue with a change in their respective share or in the shares of some of them, (ii) “specified entity” means a firm or other association of persons or body of individuals (not being a company or a cooperative society); (iii) “specified person” means a person, who is a partner of a firm or member of other association of persons or body of individuals (not being a company or a cooperative society) in any previous year.’.’.
3	Page 21, line 8 for “1992”, substitute “1992 or International Financial Services Centres Authority Act, 2019”.
4	Page 21, for lines 18 to 24, substitute-- “registration as a Category-I foreign portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992 and “”.
5	Page 21, line 42, for “royalty”, substitute “royalty or interest”.
6	Page 22, for lines 3 to 7, substitute— ‘section 80 LA, if the unit has commenced its operations on or before the 31st day of March, 2024. Explanation.—For the purposes of this clause, “aircraft” means an aircraft or a helicopter, or an engine of an aircraft or a helicopter, or any part thereof;’.
7	Page 23, for line 41, substitute— ‘manner as may be prescribed: Provided further that if the contribution by such person is in a fund in which there is no contribution by the employer of such person, the provisions o the first proviso shall have the effect as if for the words “two lakh and fifty thousand rupees”, the words “five lakh rupees” had been substituted; ‘’’.
8	Page 24, for line 10, substitute – ‘manner as may be prescribed: Provided further that if the contribution by such person is in a fund in which there is no contribution by the employer of such person, the provisions o the first proviso shall have the effect as if for the words “two lakh and fifty thousand rupees”, the words “five lakh rupees” had been substituted; ‘’’. Page 26 for line 9, substitute— ‘the words, brackets, letters and figures “or item (d) or item (e) or in an’. Page 26, line 36, for “item (b)”, substitute “item (b) or item (d) or item (e)”.  Page 27, line 3, for “item (b)”, substitute “item (b) or item (d) or item (e)”. Page 29, for lines 29 to 40, substitute— ' or received by, a non-resident or a specified fund, which is on account of transfer of share of a company resident in India, by the resultant fund or a specified fund to the extent attributable to units held by non-resident (not being a permanent establishment of anon-resident in India) in such manner as may be prescribed, andsuch shares were transferred from the original fund, or from its wholly owned special purpose vehicle, to the resultant fund in relocation, and where capital gains on such shares were not chargeable to tax if that relocation had not taken place. Explanation.—For the purposes of this clause,— (a) the expressions “original find”, “relocation” and “resultant fund” shall have the meanings respectively assigned to them in the Explanation to clause (viiac) and clause (viiad) of section 47; (b) the expression “specified fund” shall have the meaning assigned to it in clause (c) of the Explanation to clause (4D) of section 10; (g) after clause (48C), the following clauses shall be inserted with effect from the 1st day of April, 2022, namely:— “(48D) any income accruing or arising to an institution established for financing the infrastructure and development, set up under an Act of Parliament and notified by the Central Government for the purposes of this clause, for a period of ten consecutive assessment years beginning from the assessment year relevant to the previous year in which such institution is set up; (48E) any income accruing or arising to a developmental financing institution, licensed by the Reserve Bank of India under an Act of the Parliament 'referred to in class (48D), and notified by the Central Government for the purposes of this clause, for a period of five consecutive assessment years beginning from the assessment year relevant to the previous year in which the developmental financing institution is set up: Provided that the Central Government may, by issuing notification under this clause, extend the period of exemption under this clause for a further period, not exceeding five more consecutive assessment years, subject to fulfilment of such conditions as may be specified in the said notification;”; (h) in clause (50),—’.
9	Page 31, after line 38, insert – Amendment of section 43 ‘8A. In section 43 of the Income-tax Act, in clause (6), in sub-clause (c), in item (ii), for the words, brackets and figure “as further adjusted by the increase or the reduction referred to in item (i)”, the following words, brackets, figures and letters shall be substituted, namely:––  “as further adjusted by,–– (A) the increase or the reduction referred to in item (i), not being increase on account of acquisition of goodwill of a business or profession; (B) the reduction by an amount which is equal to the actual cost of the goodwill falling within that block as decreased by–– (a) the amount of depreciation actually allowed to the assessee under this Act or under the corresponding provisions of the Indian Income-tax Act, 1922 for such goodwill in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988; and (b) the amount of depreciation that would have been allowable to the assessee for such goodwill for any assessment year commencing on or after the 1st day of April, 1988 as if the goodwill was the only asset in the relevant block of assets, in respect of the previous year relevant to the assessment year commencing on the 1st day of April, 2021, in a case where the goodwill of a business or profession was part of the block of assets on which depreciation was obtained by the assessee for the immediate preceding previous year, so, however, that the amount of such reduction does not exceed the written down value.”.’.
10	Page 32, for lines 37 to 39, substitute— 11. In section 44AB of the Income-tax Act, in clause (a),–– (i) in the proviso, in long line, for the words “five crore rupees”, the words “ten crore rupees” shall be substituted; (ii) after the proviso, the following proviso shall be inserted, namely:–– “Provided further that for the purposes of this clause, the payment or receipt, as the case may be, by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the payment or receipt, as the case may be, in cash.”.’
11	Page 33, line 4, for “being an individual, Hindu undivided family or a”, substitute “being an individual or a”.
12	Page 34, for lines 24 to 42, substitute – ‘(b) for sub-section (4), the following sub-section shall be substituted, namely: - '(4) Notwithstanding anything contained in sub-section (1), where a specified person receives during the previous year any money or capital asset or both from a specified entity in connection with the reconstitution of such specified entity, then any profits or gains arising from receipt of such money by the specified person shall be chargeable to income-tax as income of such specified entity under the head "Capital gains" and shall be deemed to be the income of such specified entity of the previous year in which such money or capital asset or both were received by the specified person, and notwithstanding anything to the contrary contained in this Act, such profits or gains shall be determined in accordance with the following formula, namely: - A=B+C-D Where, A = income chargeable to income tax under this sub-section as income of the specified entity under the head “Capital gains"; B = value of any money received by the specified person from the specified entity on the date of such receipt; C = the amount of fair market value of the capital asset received by the specified person from the specified entity on the date of such receipt; and D = the amount of balance in the capital account (represented in any manner) of the specified person in the books of accounts of the specified entity at the time of its reconstitution: Provided that if the value of "A" in the above formula is negative, its value shall be deemed to be zero: Provided further that the balance in the capital account of the specified person in the books of account of the specified entity is to be calculated without taking into account the increase in the capital account of the specified person due to revaluation of any asset or due to self- generated goodwill or any other self-generated asset. Explanation 1.– For the purposes of this sub-section, (i) the expressions "reconstitution of the specified entity", "specified entity" and "specified person" shall have the meanings respectively assigned to them in section 9B; (ii) "self-generated goodwill” and “self-generated asset" mean goodwill or asset, as the case may be, which has been acquired without incurring any cost for purchase or which has been generated during the course of the business or profession. Explanation 2.– For the removal of doubts, it is clarified that when a capital asset is received by a specified person from a specified entity in connection with the reconstitution of such specified entity, the provisions of this sub-section shall operate in addition to the provisions of section 9B and the taxation under the said provisions thereof shall be worked out independently.’.’. Page 35, omit lines 1 to 40. Page 36, omit lines 1 to 12.
13	Page 37, for lines 19 to 27, substitute ‘(b) "relocation" means transfer of assets of the original fund, or of its wholly owned special purpose vehicle, to a resultant fund on or before the 31st day of March, 2023, where consideration for such transfer is discharged in the form of share or unit or interest in the resulting fund to,- (i) shareholder or unit holder or interest holder of the original fund, in the same proportion in which the share or unit or interest was held by such shareholder or unit holder or interest holder in such original fund, in lieu of their shares or units or interests in the original fund; or (ii) the original fund, in the same proportion as referred to in sub-clause (i), in respect of which the share or unit or interest is not issued by resultant fund to its shareholder or unit holder or interest holder;’. Page 37, line 37, for “1992”, substitute “1992” or International financial Services Centres Authority Act, 2019”. Page 37, for line 40, substitute– 'section 80LA; (viiae) any transfer of capital asset by India Infrastructure Finance Company Limited to an institution established for financing the infrastructure and development, set up under an Act of Parliament and notified by the Central Government for the purposes of this clause; (viiaf) any transfer of capital asset, under a plan approved by the Central Government, by a public sector company to another public sector company notified by the Central Government for the purpose of this clause or to the Central Government or to a State Government;’.’.’
14	Amendment made: Page 38, for lines 3 to 7, substitute - “(iii) in case of value of any money or capital asset received by a specified person from a specified entity referred to in sub-section (4) of section 45, the amount chargeable to income-tax as income of such specified entity under that sub-section which is attributable to the capital asset being transferred by the specified entity, calculated in the prescribed manner:”.
15	Amendment made: Page 38, line 11, for "clause (viiad) or”, substitute "clause (viiad) or clause (viiae) or clause (viiaf) or”.
16	New Clause 18 A  Amendment made:  Amendment of section 50B. Page 38, after line 21, insert - ‘18A. In section 50B of the Income-tax Act,- (a) for sub-section (2), the following sub-section shall be substituted, namely:- ‘(2) In relation to capital assets being an undertaking or division transferred by way of such slump sale,- (i) the "net worth" of the undertaking or the division, as the case may be, shall be deemed to be the cost of acquisition and the cost of improvement for the purposes of sections 48 and 49 and no regard shall be given to the provisions contained in the second proviso to section 48; (ii) fair market value of the capital assets as on the date of transfer, calculated in the prescribed manner, shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of such capital asset.’; (b) in Explanation 2, after clause (a), the following clause shall be inserted, namely: “(aa) in the case of capital asset being goodwill of a business or profession which has not been acquired by the assessee by purchase from a previous owner, nil;”.’.
17	Page 39, line 27, for “clause (viiad)”, substitute “clause (viiad) or clause  (viiae) or clause (viiaf)”.
18	Page 41, for lines 31 to 36, substitute— ‘(d) arising from the transfer of an asset, being an aircraft, which was leased by a unit referred to in clause (c) to a person, subject to the condition that the unit has commenced operation on or before the 31st day of March, 2024. Explanation. -- For the purposes of this clause, “aircraft" shall have the meaning assigned to it in the Explanation to clause (4F) of section 10.';'.
19	Page 42, for lines 25 to 31, substitute— Amendment of section 112A ‘29. In section 112A of the Income-tax Act, in the Explanation, in clause (a), (i) in the opening portion, after the word and figures "section 10", the words, brackets, figures and letter "or under a scheme of an insurance company comprising unit linked insurance policies to which exemption under clause (10D) of the said section does not apply on account of the applicability of the fourth and fifth proviso thereof" shall be inserted; (ii) after the proviso, the following proviso shall be inserted, namely: "Provided further that in case of a scheme of an insurance company comprising unit linked insurance policies to which exemption under clause (10D) of section 10 does not apply on account of the applicability of the fourth and fifth proviso thereof, the minimum requirement of ninety per cent. or sixty-five per cent., as the case may be, is required to be satisfied throughout the term of such insurance policy;"'.'.
20	New Clause 29A Amendment of section 115ACA Amendment made: Page 42, after line 31, insert— ‘29A. In section 115ACA of the Income-tax Act, in the Explanation, with effect from the 1st day of April, 2022,  (i) in clause (a), in the opening portion,-- (a) after the words "the Overseas Depository Bank outside India", the words "or in an International Financial Services Centre" shall be inserted; (b) after sub-clause (ii), the following sub-clause shall be inserted, namely:-- "(iii) ordinary shares of issuing company, being a company incorporated outside India, if such depository receipt or certificate is listed and traded on any International Financial Services Centre;"; (ii) after clause (c), the following clause shall be inserted, namely:-- '(ca) "International Financial Services Centre" shall have the meaning assigned to it in clause (9) of section 2 of the Special Economic Zone Act, 2005.'.'.
21	Clause 30 Amendments made: Page 42, omit lines 34 to 37.  Page 43, omit lines 1 to 3.  Page 43, line 7, for "in case of", substitute "where the specified fund is".  Page 43, line 12, for "Category - III", substitute "Category - I".  Page 43, omit lines 17 to 19.
22	Clause 31 Amendment made: Page 44, line 16, for "Assessing Officer", substitute— "Assessing Officer: Provided that the provisions of this sub-section shall apply only if the assessee has not utilised the credit of tax paid under this section in any subsequent assessment year under section 115JAA: Provided further that the provisions of this sub-section shall also apply to an assessment year beginning on or before the 1st day of April, 2020 and notwithstanding anything contained in any other provisions of this Act, no interest shall be payable to such assessee on the refund  arising on account of the provisions of this sub-section."
23	New Clause 31A Amendment of section 115UB Amendment made: Page 44, after line 16, insert— ‘31A. In section 115UB of the Income-tax Act, in Explanation 1; in clause (a), for the figures "1992", the figures and words "1992 or under the International Financial Services Centers Authority Act, 2019" shall be substituted with effect from the 1st day of April, 2022.
24	Clause 32 Amendments made: Page 44, line 25, for “the firm", substitute "the firm or the spouse of such partner (if the provisions of section 5A applies to such spouse),"  Page 44, lines 28 and 29, for "a return for any previous year at any time within", substitute "return for any previous year at any time, before".  Page 44, for lines 31 to 34, substitute— "(c) in sub-section (5), for the words "before the end", the words "before three months prior to the end" shall be substituted;'.
25	Clause 35 Amendment made: Page  45,  line  35,  for  “reassessment”,  substitute  “reassessment  or recomputation”.
26	Clause 36 Amendments made: Page 47, for lines 3 to 5, substitute–– “(ii) a survey is conducted under section 133A, other than under sub-section (2A) or sub-section (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or”. Page 47, line 9, for “requisitioned”, substitute “requisitioned under section 132 or section 132A”.  Page 47, line 15, for “requisitioned”, substitute “requisitioned under section 132 or section 132A”.
27	Clause 38 Amendment made: Page 50, for lines 7 and 8, substitute–– ‘limitation  under  this  sub-section  shall  be  deemed  to  be extended accordingly. Explanation.–For the purposes of clause (b) of this sub-section, “asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.’.
28	Clause 41 Amendment made: Page 50, for lines 30 to 37, substitute–– ‘41. In section 153 of the Income-tax Act,–– (i) in sub-section (1), after the second proviso, the following proviso shall be inserted, namely:–– ‘Provided also that in respect of an order of assessment relating to the assessment year commencing on or after the 1st day of April, 2021, the provisions of this sub-section shall have effect, as if for the words “twenty-one months”, the words “nine months” had been substituted.’; (ii) in Explanation 1,–– (a) in clause (viii), for the words “Authority for Advance Rulings”, the words “Authority for Advance Rulings or before the Board for Advance Rulings” shall be substituted;  (b) in clause (ix), for the words “Authority for Advance Rulings”, the words “Authority for Advance Rulings or before the Board for Advance Rulings” shall be substituted; (c) after the third proviso, the following provisos shall be inserted and shall be deemed to have been inserted with effect from the 1st day of February, 2021, namely:–– “Provided also that where the assessee exercises the option to withdraw the application under sub-section (1) of section 245M, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub- section (5) of the said section, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year: Provided also that for the purposes of determining the period of limitation under sections 149, 154 and 155, and for the purposes of payment of interest under section 244A, the provisions of the fourth proviso shall apply accordingly.”.’.
29	New Clause 42A Amendment made: Page 50, after line 41, insert–– ‘42A. In section 153B of the Income-tax Act, in the Explanation,–– (a)  in  clause  (vi),  for  the  words  “Authority  for  Advance Rulings”, the words “Authority for Advance Rulings or before the Board for Advance Rulings” shall be substituted; (b)  in  clause  (vii),  for  the  words  “Authority  for  Advance Rulings”, the words “Authority for Advance Rulings or before the Board for Advance Rulings” shall be substituted; (c) after the third proviso, the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day of February, 2021, namely:–– “Provided also that where the assessee exercises the option to withdraw the application under sub-section (1) of section 245M, the period of limitation available under this section  to  the  Assessing  Officer  for  making  an  order  of assessment or reassessment, as the case may be, shall, after the exclusion of the period under sub-section (5) of the said section, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year.”.’.
30	New Clauses 53A and 53B Amendment made: Page 55, after line 32, insert–– ‘53A. In section 234F of the Income-tax Act, for sub-section (1), the following sub-section shall be substituted, namely:–– “(1) Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of the said section, he shall pay, by way of a fee, a sum of five thousand rupees: Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.”; 53B.  After  section  234G  of  the  Income-tax  Act,  the  following section shall be inserted, namely:–– “234H. Without prejudice to the provisions of this Act, where a person is required to intimate his Aadhaar number under sub- section (2) of section 139AA and such person fails to do so on or before such date, as may be prescribed, he shall be liable to pay such fee, as may be prescribed, not exceeding one thousand rupees, at the time of making intimation under sub-section (2) of section 139AA after the said date.”.’.
31	Clause 71  Amendments made:  Page 65, for lines 23 and 24, substitute – “(4) Where an application for advance ruling under this Chapter is made before such date as the Central Government may, by”.  Page 65, line 27, for “or advance ruling”, substitute “or no advance ruling”.
32	New Clause 78A Amendment of  section 263 Amendment made:  Page 68, after line 38, insert “78A. In section 263 of the Income-tax Act, in sub-section (1), before Explanation, for the words "Principal Commissioner", the words "Principal Chief Commissioner or Chief Commissioner Principal or Commissioner" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of November, 2020.'.”
33	Clause 117 Amendment made: Page 83, for lines 31-36, substitute "subsidiary, unit or joint venture, -- (i) by way of strategic sale or disinvestment or demerger or any other scheme  of  arrangement  or  through  any  law,  to  another  Government company or to the Central Government or any State Government or to the development  financial  institution  established  by  any  law  made  by Parliament; or (ii) which is to be wound up, closed, struck-off, liquidated or otherwise shut down, to another Government company or to the Central Government or any State Government, after approval of the Central Government or the State Government, as the case may be, shall not be liable to duty under this Act.
34	Clause 120 Amendments made: Page 84, after line 33, insert ‘(1d) “Chief Executive" means -- (i) during the initial period, the Chairperson referred to in sub-clause (i) of clause (a) of sub-section (2) of section 4; (ii)  after  the  initial  period,  the  Chief  Executive  Officer  and  Managing Director; (le) "Chief Executive Officer and Managing Director" means the Chief Executive Officer and Managing Director referred to in clause (b) of sub- section (2) of section 4;.
35	Page 85, after line 27, insert (4e) "initial period" means the period of three years reckoned from the date on which the provisions of section 121 of the Finance Act, 2021  shall come into force;'.
36	Clause 121 Amendments made: Page 86, line 33, for "fifteen", substitute "eighteen". (71) Page 86, for lines 35 to 37, substitute -- “(a)  a  Chairperson  of  the  Board,  to  be  appointed  by  the  Central Government, who shall, -- (i) during the initial period, be a whole-time director of the Corporation, and (ii) after the initial period, be from amongst the nonexecutive directors nominated or to be nominated by the Central Government; (b) after the initial period, a Chief Executive Officer and Managing Director, who shall be a whole-time director of the Corporation to be appointed by the Central Government: Provided that where no Chief Executive Officer and Managing Director is appointed before expiry of the initial period, the individual holding office as Chairperson  shall  be  deemed  to  have  been  appointed  as  the  Chief Executive Officer and Managing! Director on and from the date of such expiry;”.  Page 87, line 4, for "(c) not more than two officers", substitute "(d) an officer Page 87, for lines 7 and 8, substitute "(e) an individual to be nominated by the Central Government, who has  special knowledge or”. Page 87, for lines 16 to 24, substitute "(f) where the total holding of members other than the Central Government in the paid-up equity capital of the Corporation is (a) not more than ten per cent., one individual, (b) more than ten per cent., two individuals, Who shall be elected by and from amongst such members and in such manner as may be specified by regulations, to be appointed by the Board; and”. (75) Page 87, line 26, for "three", substitute "nine".  Page 87, omit lines 28 to 39.  Page 88, omit lines 1 and 2.  Page 88, line 24, omit "clause (e) or”.  Page 89, line 18, after "India", insert "in the Department of Financial Services". Page 89, line 21, omit "longest or the second".  Page 90, omit lines 24 to 27.  Page 90, omit lines 32 and 33.  Page 90, for lines 34 to 36, substitute "(g) he attracts any disqualification for being a director of a company under the provisions of sub-section (2) of section 164 of the Companies Act, subject to such  exceptions  thereto  as  the  Central  Government  may  by  notification  specify;". Page 91, lines 7 and 11, for "Chairperson", substitute "Chief Executive".  (85) Page 94, for lines 6 to 11, substitute "Provided also that the requirement of approval under the first proviso shall not be applicable for transactions entered into between the Corporation and its wholly owned subsidiary, if any, whose financial statements are consolidated with the Corporation and placed before the members at the general meeting for adoption; (b)  a  Government  company,  or  the  Central  Government,  or  any  State Government,  or  any  combination  thereof,  in  respect  of  contracts  or  arrangements entered into between them.". Page 94, after line 30, insert "(2)  The  Board  shall  formulate  a  policy  on  materiality  of  related  party transactions and on dealing with related party transactions, including clear threshold limits, and shall review and update such policy at least once in every three years. Explanation.  –  For  the  removal  of  doubts,  it  is  hereby  clarified  that  a  transaction with a related party shall be considered material if the amount of the  transaction to be entered into, individually or taken together with previous  transactions during a financial year, exceeds such percentage of the annual consolidated  turnover  of  the  Corporation  as  per  its  last  audited  financial statements as may be specified in any regulation made by the Securities and  Exchange Board in this behalf.”.
37	Clause 122 Amendments made: Page 97, after line 16, insert— “Provided further that no shares shall be issued other than by way of rights issue unless authorised by a special resolution, except in the circumstances where the provisions of the second and third provisos to sub-section (1) of section 23A apply: Provided also that issue of shares to life insurance policyholders of the Corporation shall not be by preferential allotment or private placement.”.   Page 97, for lines 35 to 38, substitute— “(7) The Corporation may, by a special resolution, reduce its paid- up equity share capital in the following manner, namely:–– (a) giving of previous notice by the Corporation of the intended reduction to every member, and to such class or classes of  creditors  as  the  Central  Government  may,  by  notification, specify; (b) constitution of a committee which shall consist of a chairperson  who  has  been  a  judge  of  a  High  Court  or  the chairperson  of  a  tribunal  and  such  independent  experts  not exceeding  two  as  the  Board  may  appoint,  to  consider representations,  if  any,  that  may  be  made  by  members  and creditors referred to in clause (a) in respect of the intended reduction and to submit its recommendations to the Board; and (c) committee’s the consideration recommendations, making of recommendations by the Board for reduction, either as given in the notice or with such modifications as the Board may consider necessary, to the Central Government for its approval.”.
38	Page 98, line 18, for “Corporation may make”, substitute “Corporation may, at any time during the period of five years from the commencement of section  122 of the Finance Act, 2021, make”.
39	Page 99, after line 10, insert— “Provided that  and  subject  to  any  regulation  made  by  the Securities  and  Exchange  Board,  no  shares  issued  by  the Corporation against revaluation of assets or by utilisation of revaluation reserves or from unrealised profits shall be eligible for computation of minimum promoter’s contribution and for offer for sale in relation to a public issue by way of initial public offer.”.
40	Page 99, for lines 33 to 38, substitute–– “(3) No person, other than the Central Government, acting individually or with persons acting in concert with such person, or constituents of a group, shall hold equity share in excess of five per cent. of issued equity share capital of the Corporation, or such higher percentage as the Central Government may by notification specify.”
41	Page 99, omit lines 39 to 42. Page 100, omit lines 1 to 8.
42	Clause 123 Amendments made : Page 103, line 7, for “Chairperson”, substitute “Chief Executive”.  Page 103, line 19, for “Chairperson”, substitute “Chief Executive”.  Page 104, after line 5, insert— “Provided further that in the event of the Corporation applying to list its equity shares under any regulation made by the Securities and Exchange Board in this behalf, the Corporation shall ensure that the proportion of independent directors on the Nomination and Remuneration Committee shall be in accordance with the requirements as provided under those regulations.”. Page 104, after line 37, insert— “Provided further that in the event of the Corporation applying to list its equity shares under any regulation made by the Securities and Exchange Board in this behalf, the Corporation shall ensure that the proportion of independent directors on the Audit Committee shall be in accordance with the requirements as provided under those regulations.”. Page 105, line 8, for “approval”, substitute “prior approval”. Page 105, lines 12 and 13, for “such conditions as may be prescribed”, substitute “the conditions specified in sub-section (3)”. Page 105, omit lines 29 to 32. Page 106, for lines 3 to 8, substitute— “(3) The Audit Committee may grant omnibus approval for related party transactions proposed to be entered into by the Corporation, subject to the following conditions, namely:— (a) the Audit Committee shall lay down the criteria for granting omnibus approval in line with the policy referred to in sub-section (2) of section 4C including in respect of transactions which are repetitive in nature;  (b) the Audit Committee shall satisfy itself that omnibus approval is needed and that such approval is in the interest of the Corporation; (c) the omnibus approval shall specify the following, namely:— (i) the details regarding the name of the related party and the nature, period and the maximum amount of the transactions that shall be entered into;  (ii) the details regarding indicative base price or current contracted price, along with the formula, if any, for variation in the price; and  (iii) such other conditions as the Audit Committee may deem fit:  Provided that where the need for related party transaction cannot be foreseen and the said details are not available, the Audit Committee may grant omnibus approval for such transactions subject to their value not exceeding one crore rupees per transaction;  (d) the Audit Committee shall review on a quarterly basis, the details of related party transactions entered into by the Corporation pursuant to every omnibus approval given; and (e) omnibus approval shall be valid for a period not exceeding one year and shall require fresh approval after expiry of one year. (4) The Audit Committee may call for the comments of the auditors about internal control systems, the scope of audit including the observations of the auditors, and review of financial statements before their submission to the Board, and may also discuss any related issues with the auditors and the management of the Corporation.”.
43	Clause 124 Amendments made: Page 106, for lines 26 to 29, substitute–– “20.  (1)  The  Chief  Executive  shall,  subject  to  the superintendence, control and direction of the Board, be entrusted with substantial powers of management in respect of the whole of the affairs  of the Corporation.”. Page 106, line 30, – for "Chairperson" substitute – "Chief Executive" Page 106, line 36, – for "Chairperson" substitute – "Chief Executive" Page 106, line 39, – for "Chairperson" substitute – "Chief Executive" Page 106, line 41, – for "Chairperson" substitute – "Chief Executive”
44	Clause 127 Amendments made: Page 111, for lines 3 to 11, substitute— “Corporation   and   shall   be   in   conformity   with   applicable accounting  requirements  as  may  be  applicable  for  such  financial  statements:” Page 111, for lines 24 to 27, substitute—“consolidated  financial  statement  of  the  Corporation  in conformity with the requirements referred to in sub-section (1), and shall place the”. Page 111, for lines 32 and 33, substitute–– “salient features of the consolidated financial statement.”.      Page 111, line 44, for “standards referred to therein”, substitute “standards  applicable thereto”.         Page 112, lines 6 and 7, for “Chairperson, a Managing Director”, substitute  “two whole-time directors”.        Page 112, omit lines 21 to 27.   Page 114, line 4, for “standards”, substitute “requirements”.      Page 114, lines 38 and 39, for “the Chairperson, a Managing Director”, substitute “two whole-time directors”.     (115) Page 115, line 1, – for "Chairperson" substitute – "Chief Executive"                          Page 115, line 6, – for "Chairperson" substitute – Chief Executive"
45	Clause 133 Amendments made: Page 125, line 14, for “123”, substitute “124”. Page 125, after line 28, insert— “(6) All shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall be transferred by the Corporation in the name of the Investor Education and Protection Fund  along  with  a  statement  containing  such  details  as  may  be prescribed:  Provided that every claimant of such shares shall be entitled to claim the transfer thereof from the said Fund in accordance with such procedure  and  on  submission  of  such  documents  as  may  be prescribed.  Explanation—For the removal of doubts, it is hereby clarified that in case any dividend is paid or claimed for any year during the said period of seven consecutive years, the share shall not be transferred to the Investor Education and Protection Fund.”.
46	Clause 135 Page 126, omit lines 34 to 37.  (120) Page 127, after line 29, insert— “(hk) the details, procedure and documents under sub-section (6) of section 28C;”.
47	New Clauses 141A and 141B Amendment made: Page 131, after line 14, insert–– ‘PART VA AMENDMENT TO THE ECONOMIC OFFENCES (INAPPLICABILITY OF LIMITATION) ACT, 1974 Commencement of this Part. 141A. The provisions of this Part shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. 141B. In the Economic Offences (Inapplicability of Limitation) Act, 1974, in the Schedule, after serial number  21  and  the  entries  relating  thereto,  the following serial numbers and entries shall be inserted, namely:–– “22.   The   Prohibition   of   Benami   Property Transactions Act, 1988; 23. The Central Goods and Services Tax Act, 2017; 24. The Integrated Goods and Services Tax Act, 2017; 25. The Union Territory Goods and Services Tax Act, 2017; and 26. The Goods and Services (Compensation to States) Act, 2017.”.’.
48	New Clause 151A  Amendment made: Page 133, after line 22, insert–– ‘PART XA AMENDMENT TO THE UNIT TRUST OF INDIA (TRANSFER OF UNDERTAKING AND REPEAL) ACT, 2002 151A. In  the  Unit  Trust  of  India  (Transfer  of Undertaking and Repeal) Act, 2002, in section 13, in sub- section (1), for the words, figures and letters “the 31st day of March, 2021”, the words, figures and letters “the 31st day of March, 2023” shall be substituted with effect from the 1st day of April, 2021.’.
49	Clause 159 Amendments made: Page 136, line 15, for “owns the goods”, substitute “owns the goods, so however that it shall not include consideration for sale of such goods  which  are  owned  by  a  person  resident  in  India  or  by  a permanent establishment in India of a person non-resident in India, if sale of such goods is effectively connected with such permanent establishment”.  Page  136,  line  18,  for “e-commerce  operator”,  substitute “e- commerce operator, so however that it shall not include consideration for provision of services which are provided by a person resident in India or by permanent establishment in India of a person non-resident in India, if provision of such services is effectively connected with such permanent establishment”.
50	New Clause 161 Amendment made: Page 137, after line 28, insert–– ‘PART XV AMENDMENT TO THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF CERTAIN PROVISIONS) ACT, 2020 161. In the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, in section 4, with effect from the 1st day of April, 2021,–– (i) in clause (XIV),  in sub-clause (a), for item (ii), the following shall be substituted, namely:–– ‘(ii) for clause (i), after the long line, the following clause shall be substituted, namely:— “(i) the amount of income-tax calculated on the income in respect of securities referred to in clause (a), if any, included in the total income,— (A) at the rate of twenty per cent. in case of Foreign Institutional Investor;  (B) at the rate of ten per cent. in case of specified fund: Provided  that  the  amount  of  income-tax calculated on the income by way of interest referred to in section 194LD shall be at the rate of five per cent.;”;’ (ii) in clause (XXIV), after the portion beginning with “(9)  Notwithstanding  anything  contained  in  any  other provision of this Act, assessment made” and ending with “the procedure laid down under this section”, the following shall be inserted, namely:–– “(10) Notwithstanding anything contained in this section,  the  function  of  verification  unit  under  this section may also be performed by a verification unit located in any other faceless center set up under the provisions of this Act or under any scheme notified under the provisions of this Act; and the request for verification  may  also  be  assigned  by  the  National Faceless  Assessment  Centre  to  such  verification unit.”.’.
51	Amendment made:  Page 247, line 13, for “Nil”, substitute “Re.1 per tonne”.

Update 

Rajya Sabha  has passed the Finance Bill,  2021 on 24.03.2021 and returned the same to LokSabha

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