New Amendments done in Finance Bill, 2020 passed without debate in Lok Sabha

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Update: Finance Bill, 2020 received assent from President on 27.03.2020 and is now an Act.

Finance Bill, 2020 was presented in before the Lok sabha on 01.02.2020. However the same was passed by Lok Sabha on 23.02.2020 and amid Corona Virus, Finance Bill was passed without any debate.

Various amendments have been made between the Finance Bill presented and Finance Bill passed in Lok sabha which are mentioned below:

Old Amendment For section 6:

“(a) in clause (1), in Explanation 1, in clause (b), for the words “one hundred and eighty two days”, the words “one hundred and twenty days” shall be substituted;”

New Amendment For section 6:

“(a) in clause (1), in Explanation 1, in clause (b), for the words “substituted” occurring at the end, the words ‘substituted and in case of the citizen or person of Indian origin having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, for the words “sixty days” occurring therein, the words “one hundred and twenty days” had been substituted,”

Comment: Thus now according to above amendment the words 120 days shall be substituted for 60 only if a person total income from India is more than 15 lakh wherein a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship. For all other its 182 days.

Old Amendment For section 6:

“(1A) Notwithstanding anything contained in clause (1), an individual, being a citizen of India, shall be deemed to be resident in India in any previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.”;”

New Amendment For section 6:

“(1A) Notwithstanding anything contained in clause (1), an individual, being a citizen of India, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year shall be deemed to be resident in India in that previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.”

Comment: Now only those people will be deemed to be resident in India whose total income is above Rs. 15 lakh other than income from other sources if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.

[After the above amendment also the following press release shall prevail: Therefore CBDT vide Press release Dated 02.02.2020 clarified that “The new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries. In some section of the media the new provision is being interpreted to create an impression that those Indians who are bonafide workers in other countries, including in Middle East, and who are not liable to tax in these countries will be taxed in India on the income that they have earned there. This interpretation is not correct.”]

Old amendment For section 6:

“for clause (6), the following clause shall be substituted, namely:

(6) A person is said to be “not ordinarily resident” in India in any previous year, if such person is

(a) an individual who has been a non resident in India in seven out of the ten previous years preceding that year;

or

(b) a Hindu undivided family whose manager has been a non resident in India in seven out of the ten previous years preceding that year.’.”

New Amendment For section 6:

in clause (6), in sub clause (b), for the words ‘‘days or less’’ occurring at the end, the following shall be substituted, namely:

‘‘days or less; or

(d) a citizen of India, or a person of Indian origin, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, as referred to in clause (b) of Explanation 1 to clause (1), who has been in India for a period or periods amounting in all to one hundred and twenty days or more but less than one hundred and eighty two days; or

(e) a citizen of India who is deemed to be resident in India under clause (1A).

Explanation. For the purposes of this section, the expression “income from foreign sources” means income which accrues or arises outside India (except income derived from a business controlled in or a profession set up in India).”

Comment: Thus, now the old clause 6 has not been substituted instead 2 new sub clause have been added after the above amendment one would be “not an ordinary resident” if he stays in India for more than 120 days but less than 182 days. Also he would be not an ordinary resident if he is a deemed citizen under clause 1A.

Old Amendment For section 80M:

“80M. (1) Where the gross total income of a domestic company in any previous year includes any income by way of dividends from any other domestic company, there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of such domestic company, a deduction of an amount equal to so much of the amount of income by way of dividends received from such other domestic company as does not exceed the amount of dividend distributed by the first mentioned domestic company on or before the due date.”

New Amendment For section 80M:

“80M. (1) Where the gross total income of a domestic company in any previous year includes any income by way of dividends from any other domestic company or a foreign company or a business trust, there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of such domestic company, a deduction of an amount equal to so much of the amount of income by way of dividends received from such other domestic company or foreign company or business trust as does not exceed the amount of dividend distributed by it on or before the due date.”

Comment: Thus now along with dividend received from other domestic company dividend from foreign company and business trust shall also be eligible for such deduction.

Amendment to Section 115BAC:

Comment: After amendment to section 115BAC now even individual professional can take benefit of lower tax rate in section 115BAC.

Old Amendment For section 194J sub section 1:

“in the long line, for the words “ten per cent. of such sum”, the words and brackets “two per cent. of such sum in case of fees for technical services (not being a professional service) and ten per cent. of such sum in other cases.”

New Amendment For section 194J sub section 1:

in the long line, for the words “ten per cent. of such sum”, the words and brackets “two per cent. of such sum in case of fees for technical services (not being a professional service) or royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic films and ten per cent of such sum in other cases,” shall be substituted;

Comment: Now it has been clarified that two percent TDS shall be deducted in case of technical service as well as royalty where royalty is in nature of consideration of sale, distribution or exhibition of cinematographic films. However the amendment has not been properly implemented in the new Finance Bill, let’s hope that this will be amended when final bill is drafted and made public.

Do share to bring this thing to notice.

Section 194N has been redrafted and you can read it HERE.

There is another typographical error in line item 44 of page 43 of the new Finance Bill wherein it has been mentioned that section 194O shall be inserted after section 194A instead of section 194N.

Old Amendment to section 206C sub section 1G:

“being an authorised dealer, who receives an amount, or an aggregate of amounts, of seven lakh rupees or more in a financial year for remittance out of India from a buyer, being a person remitting such amount out of India under the Liberalised Remittance Scheme of the Reserve Bank of India.

..

.

Provided that…”

New Amendment to section 206C sub section 1G:

“being an authorised dealer, who receives an amount, for remittance out of India from a buyer, being a person remitting such amount out of India under the Liberalised Remittance Scheme of the Reserve Bank of India;

..

.

Provided that the authorised dealer shall not collect the sum, if the amount or aggregate of the amounts being remitted by a buyer is less than seven lakh rupees in a financial year and is for a purpose other than purchase of overseas tour program package:

Provided further that the sum to be collected by an authorised dealer from the buyer shall be equal to five per cent. of the amount or aggregate of the amounts in excess of seven lakh rupees remitted by the buyer in a financial year, where the amount being remitted is for a purpose other than purchase of overseas tour program package:

Provided also that the authorised dealer shall collect a sum equal to one half per cent. of the amount or aggregate of the amounts in excess of seven lakh rupees remitted by the buyer in a financial year, if the amount being remitted out is a loan obtained from any financial institution as defined in section 80E, for the purpose of pursuing any education:

Provided also that the authorised dealer shall not collect the sum on an amount in respect of which the sum has been collected by the seller:”

Comment: Thus now the minimum limit of seven lakh has been shifted from sub section to proviso and it shall be applicable only if the amount being remitted is for purpose other than tour package and if the amount remitted is loan as defined u/s 80E then the TCS shall be collected at the rate of 0.5% on amount exceeding Rs. 7 lakh.

Old Amendment to section 206C sub section 1H:

“Every person, being a seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, other than the goods covered in sub section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 per cent. of the sale consideration exceeding fifty lakh rupees as income-tax:

..

..

“buyer” means a person who purchases any goods, but does not include,

..

..

any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein;”

New Amendment to section 206C sub section 1H:

“Every person, being a seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, other than the goods being exported out of India or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 per cent. of the sale consideration exceeding fifty lakh rupees as income-tax:

..

..

“buyer” means a person who purchases any goods, but does not include,

..

..

a person importing goods into India or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein;”

Comment: Thus as per the above amendment now no TCS needs to collected on export sales and such sale would not be a part of sale as mentioned above.

This were the major changes done in the final Finance Bill passed in Lok Sabha on 23.03.2020.

You can read the entire list of amendments HERE.

You can read the Amended Finance Bill HERE.

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