Lok Sabha Passes Finance Bill 2021

LIVELAW NEWS NETWORK

23 March 2021 12:46 PM GMT

  • Lok Sabha Passes Finance Bill 2021

    The Lok Sabha on Tuesday passed the Finance Bill, 2021 to give effect to the financial proposals of the Central Government for the financial year 2021-2022. Apart from the Finance Act, the Bill also proposes to amend the Income Tax Act, 1961; Life Insurance Corporation Act, 1956; the Securities Contracts (Regulation) Act, 1956; the Central Sales Tax Act, 1956; the SEBI Act,...

    The Lok Sabha on Tuesday passed the Finance Bill, 2021 to give effect to the financial proposals of the Central Government for the financial year 2021-2022.

    Apart from the Finance Act, the Bill also proposes to amend the Income Tax Act, 1961; Life Insurance Corporation Act, 1956; the Securities Contracts (Regulation) Act, 1956; the Central Sales Tax Act, 1956; the SEBI Act, 1992; etc.

    Some major proposals under the Bill as summarised as follows:

    Relaxation filing return of income-tax for certain category of senior citizen from

    Tax rates, both corporate and individual, remain unchanged. However, there is a relief to Senior Citizens aged 75 year and above, who will not be required to file income tax returns in case of income only from pension or interest.

    As per the proposed Section 194P under the Income Tax Act, such senior citizen must be a resident of India having income of the nature of pension and no other income except interest received from any account maintained by such individual in the same specified bank in which he is receiving his pension income.

    Such senior citizen shall be required to furnish a Declaration to the Bank, which shall then, after giving effect to the deduction allowable under Chapter VI-A and rebate allowable under section 87A, compute the total income of such specified senior citizen for the relevant assessment year and deduct income-tax on such total income on the basis of the rates in force.

    Faceless proceedings before Income Tax Appellate Tribunal

    The Income-tax Settlement Commission shall cease to operate with effect from 1st February, 2021.

    Further, Section 255 is sought be amended for establishment of a Faceless, jurisdiction-less National Income Tax Appellate Tribunal, for the purposes of disposal of appeals.

    This, the Government said, shall impart greater efficiency, transparency and accountability by:

    • eliminating the interface between the Appellate Tribunal and parties to the appeal in the course of appellate proceedings to the extent technologically feasible
    • optimising utilisation of the resources through economies of scale and functional specialisation
    • introducing an appellate system with dynamic jurisdiction.

    This means that and the all communications between the Tribunal and the Appellant shall be electronic. Where personal hearing is needed, it shall be done through video-conferencing.

    Also Read : Union Budget : Impact Of Finance Bill 2021 On Judicial Precedents

    Constitution of Dispute Resolution Committee (DRC) for small and medium taxpayers

    Bill proposes to insert Section 245MA to the IT Act for constitution of Dispute Resolution Committees by the Central Government, for dispute resolution in the case of such persons as may be specified by the CBDT.

    Anyone with a taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakh shall be eligible to approach the Committee.

    The Dispute Resolution Committee shall have the powers to reduce or waive any penalty imposable under the IT Act or grant immunity from prosecution for any offence punishable under the Act in case of a person whose dispute is resolved.

    The Central Government may also make a scheme for the purposes of dispute resolution, so as to impart greater efficiency, transparency and accountability by:

    • eliminating the interface between the Dispute Resolution Committee and the assessee in the course of dispute resolution proceedings to the extent technologically feasible
    • optimising utilisation of the resources through economies of scale and functional specialisation
    • introducing a dispute resolution system with dynamic jurisdiction.

    The provision shall not be applicable in case of orders passed under Section 132 (Search), Section 132A (Requisition), Section 133A (Survey) or Section 90 & 90A (information received under an agreement).

    Income escaping assessment & search assessments

    The Bill proposes that an Assessing Officer, before issuing reassessment notice under Section 148, shall:

    • Conduct an enquiry with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment
    • Provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause in not less than 7 days but not exceeding 30 days, as to why a notice under section 148 should not be issued to him
    • Consider the assessee's reply
    • Decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148.

    Further amendments to Section 148 of the Act propose that the time period for re-opening of assessment in case of non-serious tax evasion shall be reduced to 3 years from 6 years.

    However, in case of serious tax fraud where there is evidence of concealment of income of 50 lakh or more in a year, assessment may be reopened in 10 years, after approval of Principal Chief Commissioner.

    Exemption from Audit

    Earlier, if the turnover of any assessee exceeded Rs. 1 crore, such assessee was liable to get their accounts audited. In February 2020, this threshold limit was raised to Rs. 5 crores.

    In the instant Bill, to further incentivise digital transactions and to reduce the compliance burden of persons who make 95% digital transactions, it is proposed to increase the monetary limit for tax audit from Rs. 5 crore to Rs. 10 crore under Section 44AB of the IT Act.

    Incentives for persons involved in business of developing rental housing project

    In Section 80-IBA of the Income-tax Act, a new sub-section is proposed to be inserted to provide 100% deduction on profits derived from the business of developing and building rental housing projects.

    Advance tax instalment for dividend income

    As per amendment proposed to Section 234C of the IT Act, advance tax liability on dividend income shall arise only after the declaration/payment of dividend.

    Agriculture Cess

    Clause 116 under the Bill proposes to introduce an Agriculture Infrastructure and Development Cess of ₹ 2.5 per litre applicable on petrol and ₹ 4 per litre applicable on diesel.

    Amendments to the LIC Act

    The proposed amendments to the LIC Act, 1956 will enable the listing of LIC on recognised stock exchanges and making of an initial public offer, through which Government may sell its shares in LIC.

    It is also proposed to insert new sections in the LIC Act to provide for disqualifications to be a director, disclosure of interest by director and senior management, related party transactions and adjudication of penalties for contravention or violation liable to penalty under the LIC Act, in order to bring the provisions relating to corporate governance in alignment with listing requirements.

    Also Read: Income-Tax Slabs Remain Unchanged; IT Relief For Senior Citizens Above 75 Years: Budget 2021 Highlights

    Objections raised during Parliamentary Debate

    MP Vinayak Raut of Shiv Sena party expressed concern over levy of agriculture cess. He apprehended that with the increase in prices of petrol and diesel, the input cost for farmers will also rise, which will ultimately prove detrimental to their economic interests.

    Dr. Amar Singh of the Congress party said that the proposed provisions for launching initial public offering (IPO) of LIC require a proper debate and such amendments to the LIC should have been brought separately, not by way of the Finance Bill.

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