Home Taxes GST All Budget 2022 Changes – At One Place

All Budget 2022 Changes – At One Place

February 1, 2022

The provisions of Finance Bill, 2022 (hereafter referred to as “the Bill”), relating to direct taxes seek to amend the Income-tax Act, 1961 (hereafter referred to as ‘the Act’), to continue reforms in direct tax system through tax-incentives, removing difficulties faced by taxpayers and rationalization of various provisions.

With a view to achieving the above, the various proposals for amendments are organized under the following heads:-

(A) Rates of Income-Tax

(B) Promoting voluntary tax compliance and reducing litigation; (C) Socio economic welfare measures;

(D) Widening and deepening of tax base;

(E) Revenue mobilisation;

(F) Phasing out of exemptions; (G) Rationalisation measures.

DIRECT TAXES

A. RATES OF INCOME-TAX

Rates of income-tax in respect of income liable to tax for the assessment year 2022-23.

In respect of income of all categories of assessee liable to tax for the assessment year 2022-23, the rates of income-tax have either been specified in specific sections (like section 115BAA or section 115BAB for domestic companies, 115BAC for individual/HUF and 115BAD for cooperative societies) or have been specified in Part I of the First Schedule to the Bill. There is no change proposed in tax rates either in these specific sections or in the First Schedule. The rates provided in sections

115BAA or 115BAB or 115BAC or 115BAD for the assessment year 2022-23 would be same as already enacted. Similarly rates laid down in Part Ill of the First Schedule to the Finance Act, 2021, for the purposes of computation of “advance tax”, deduction of tax at source from “Salaries” and charging of tax payable in certain cases for the assessment year 2022-23 would now become part I of the first schedule. Part Ill would now apply for the assessment year 2023-24 and would remain unchanged.

(1) Tax rates under section 11 SBAC and section 11 SBAD-

An individual and HUF tax payers have an option to opt for taxation under section 115BAC of the Act and the resident co-operative society has an option to opt for taxation under the section 115BAD of the Act.

On satisfaction of certain conditions as per the provisions of section 115BAC, an individual or HUF, from assessment year 2021-22 onwards, has the option to pay tax in respect of the total income at following rates:

Total Income (Rs)	Rate
Upto 2,50,000	Nil
From 2,50,001 to 5,00,000	5 per cent.
From 5,00,001 to 7,50,000	10 per cent.
From 7,50,001 to 10,00,000	15 per cent.
From 10,00,001 to 12,50,000	20 per cent.
From 12,50,001 to 15,00,000	25 per cent.
Above 15,00,000	30 per cent.

Similarly, a co-operative society resident in India has the option to pay tax at 22 per cent for assessment year 2021-22 onwards as per the provisions of section 115BAD, subject to fulfilment of certain conditions.

(2) Tax rates under Part I of the first schedule applicable for the assessment

year 2022-23

Individual, HUF, association of persons, body of individuals, artificial juridical person.

Paragraph A of Part-I of First Schedule to the Bill provides following rates of income-tax:-

(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or HUF or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part I applies) are as under:-

Up to Rs. 2,50,000

Rs. 2,50,001 to Rs.5,00,000 Rs. 5,00,001 to Rs.10,00,000 Above Rs. 10,00,000

Nil.

5 percent. 20 percent. 30 percent.

Nil.

(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,-

Up to Rs. 3,00,000

Rs. 3,00,001 to Rs.5,00,000 Rs. 5,00,001 to Rs.10,00,000 Above Rs. 10,00,000

5 percent. 20 percent. 30 percent.

(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year,-

Up to Rs.5,00,000 Nil.

Rs. 5,00,001 to Rs.10,00,000 Above Rs 10,00,000

20 percent. 30 percent.

b. Co-operative Societies

In the case of co-operative societies, the rates of income-tax have been specified in Paragraph B of Part I of the First Schedule to the Bill. They remain unchanged at

(10% up to Rs 10,000; 20% between Rs 10,000 and Rs 20,000; and 30% in excess of Rs 20,000)

c. Firms

In the case of firms, the rate of income-tax has been specified in Paragraph C of Part I of the First Schedule to the Bill. They remain unchanged at 30%

d. Local authorities

The rate of income-tax in the case of every local authority has been specified in Paragraph D of Part I of the First Schedule to the Bill. They remain unchanged at 30%.

e. Companies

The rates of income-tax in the case of companies have been specified in Paragraph E of Part I of the First Schedule to the Bill. In case of domestic company, the rate of income-tax shall be twenty five per cent. of the total income, if the total turnover or gross receipts of the previous year 2019-20 does not exceed four hundred crore rupees and in all other cases the rate of Income-tax shall be thirty per cent. of the total income.

In the case of company other than domestic company, the rates of tax are the same as those specified for the FY 2020-21 .

(3) Surcharge on income-tax

The amount of income-tax shall be increased by a surcharge for the purposes of the Union,-

(a) in the case of every individual or HUF or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act, including an individual or HUF exercising option under section 115BAC, not having any income under section 115AD of the Act,-

(i) having a total income (including the income by way of dividend or income under the provisions of section 111 A and 112A of the Act) exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent. of such income- tax; and

(ii) having a total income (including the income by way of dividend or income under the provisions of section 111 A and 112A of the Act) exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent. of such income-tax;

(iii) having a total income (excluding the income by way of dividend or income under the provisions of section 111 A and 112A of the Act) exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent. of such income-tax;

(iv) having a total income (excluding the income by way of dividend or income under the provisions of section 111 A and 112A of the Act) exceeding five crore rupees, at the rate of thirty-seven per cent. of such income-tax;

(v) having a total income (including the income by way of dividend or income under the provisions of section 111 A and 112A of the Act) exceeding two crore rupees, but is not covered under clause (iii) or (iv) above, at the rate of fifteen per cent of such income tax:

Provided that in case where the total income includes any income by way of dividend or income chargeable under section 111 A and 112A of the Act, the rate of surcharge on the amount of income-tax computed in respect of that part of income shall not exceed fifteen percent;

However, surcharge shall be at the rates provided in (i) to (iv) above for all category of income without excluding dividend or capital gains in case if the income is taxable under section 115A, 115AB, 115AC, 115ACA and 115E.

(aa) in the case of individual or every association of person or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act having income under section 115AD of the Act,-

(i) having a total income exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent of such income-tax; and

(ii) having a total income exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent of such income-tax;

(iii) having a total income [excluding the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent. of such income-tax;

(iv) having a total income [excluding the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding five crore rupees, at the rate of thirty-seven per cent. of such income-tax;

(v) having a total income [including the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but is not covered in sub-clauses (iii) and (iv), at the rate of fifteen per cent. of such income-tax:

Provided that in case where the total income includes any income by way of dividend or income chargeable under clause (b) of sub-section (1) of section 115AD of the Act, the rate of surcharge on the income-tax calculated on that part of income shall not exceed fifteen percent;

(b) in the case of every co-operative society (except resident co-operative society opting under section 115BAD) or firm or local authority, at the rate of twelve per cent of such income-tax, where the total income exceeds one crore rupees;

(d) in the case of every domestic company, except such domestic company whose income is chargeable to tax under section 115BAA or section 115BAB of the Act,-

(i) at the rate of seven per cent. of such income-tax, where the total income exceeds one crore rupees but does not exceed ten crore rupees;

(ii) at the rate of twelve per cent. of such income-tax, where the total

income exceeds ten crore rupees;

(e) in the case of domestic company whose income is chargeable to tax under section 115BAA or 115BAB of the Act, at the rate of ten percent;

(f) in the case of every company, other than a domestic company,-

(i) at the rate of two per cent. of such income-tax, where the total income exceeds one crore rupees but does not exceed ten crore rupees;

(ii) at the rate of five per cent. of such income-tax, where the total income exceeds ten crore rupees;

(g) In other cases (including sections 92CE, 115-0, 115QA, 115R, 115TA or 115TD), the surcharge shall be levied at the rate of twelve percent.

(4) Marginal Relief-

Marginal relief has also been provided in all cases where surcharge is proposed to be imposed.

(5) Education Cess-

For assessment year 2022-23, “Health and Education Gess” is to be levied at the rate of four per cent. on the amount of income tax so computed, inclusive of surcharge wherever applicable, in all cases. No marginal relief shall be available in respect of such cess.

Rates for deduction of income-tax at source during the financial year (FY) 2022-23 from certain incomes other than “Salaries”.

The rates for deduction of income-tax at source during the FY 2022-23 under the provisions of section 193, 194A, 194B, 1948B, 194D, 194LBA, 194LBB, 194LBC and 195 have been specified in Part II of the First Schedule to the Bill. The rates will remain the same as those specified in Part II of the First Schedule to the Finance Act, 2021, for the purposes of deduction of income-tax at source during the FY 2021- 22. For sections specifying the rate of deduction of tax at source, the tax shall continue to be deducted as per the provisions of these sections.

Surcharge-

The amount of tax so deducted shall be increased by a surcharge,-

(i) at the rate of ten per cent. of such tax, where the income or aggregate of income (including the income by way of dividend or income under the provisions of sections 111 A, 112 and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds fifty lakh rupees but does not exceed one crore rupees;

(ii) at the rate of fifteen per cent. of such tax, where the income or aggregate of income (including the income by way of dividend or income under the provisions of sections 111 A, 112and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed two crore rupees;

(iii) at the rate of twenty-five per cent. of such tax, where the income or aggregate of income (excluding the income by way of dividend or income under the provisions of sections 111 A, 112 and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds two crore rupees but does not exceed five crore rupees;

(iv) at the rate of thirty-seven per cent. of such tax, where the income or aggregate of income (excluding the income by way of dividend or income under the provisions of sections 111 A, 112 and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds five crore rupees;

(v) at the rate of fifteen per cent. Of such tax, where the income or aggregate of income (including the income by way of dividend or income under the provisions of section 111A, 112 and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds two crore rupees, but is not covered under (iii) and (iv) above

Provided that in case where the total income includes any income by way of dividend or income chargeable under section 111A, 112 and section 112A of the Act, the rate of surcharge on the amount of income-tax

deducted in respect of that part of income shall not exceed fifteen per cent. (b) in the case of every co-operative society, being a non-resident, calculated

(i) at the rate of seven per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed ten crore rupees;

(ii) at the rate of twelve per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds ten crore rupees.

(c) in the case of every firm, being a non-resident at the rate of twelve per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees;

{d) in the case of every company, other than a domestic company, calculated,-

(i) at the rate of two per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed ten crore rupees;

(ii) at the rate of five per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds ten crore rupees.

No surcharge will be levied on deductions in other cases.

(2) Education Cess-

“Health and Education Cess” shall continue to be levied at the rate of four per cent. of income tax including surcharge wherever applicable, in the cases of persons not resident in India including company other than a domestic company.

Rates for deduction of income-tax at source from “Salaries”, computation of “advance tax” and charging of income-tax in special cases during the FY2022-23.

The rates for deduction of income-tax at source from “Salaries” or under section 9

194P of the Act during the FY 2022-23 and also for computation of “advance tax” payable during the said year in the case of all categories of assessee have been specified in Part Ill of the First Schedule to the Bill. These rates are also applicable for charging income-tax during the FY 2022-23 on current incomes in cases where accelerated assessments have to be made, for instance, provisional assessment of shipping profits arising in India to non-residents, assessment of persons leaving India for good during the financial year, assessment of persons who are likely to transfer property to avoid tax, assessment of bodies formed for a short duration, etc. There is no change in the tax rates from last year. The salient features of the rates specified in the said Part Ill are indicated in the following paragraphs-

A. Individual, HUF, association of persons, body of individuals, artificial juridical person.

Paragraph A of Part-Ill of First Schedule to the Bill provides following rates of income-tax:-

Upto Rs.2,50,000

Rs. 2,50,001 to Rs.5,00,000 Rs. 5,00,001 to Rs.10,00,000 Above Rs10,00,000

Nil.

5 percent. 20 percent. 30 percent.

Nil.

(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,-

Upto Rs.3,00,000

Rs. 3,00,001 to Rs.5,00,000

5 percent.

Rs. 5,00,001 to Rs.10,00,000 Above Rs10,00,000

20 percent. 30 percent.

(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year,-

Upto Rs.5,00,000 Nil.

Rs. 5,00,001 to Rs.10,00,000 Above Rs10,00,000

20 percent. 30 percent.

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph (including capital gains under section 111 A, 112 and 112A) as well as income tax computed under section 115BAC, shall be increased by a surcharge at the rate of,-

(a) having a total income (including the income by way of dividend or income under the provisions of sections 111 A, 112 and 112A of the Act) exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent. of such income-tax;

(b) having a total income (including the income by way of dividend or income under the provisions of sections 111 A, 112 and 112A of the Act) exceeding one crore rupees, at the rate of fifteen per cent. of such income-tax;

(c) having a total income (excluding the income by way of dividend or income under the provisions of sections 111 A, 112 and 112A of the Act) exceeding two crore rupees but not exceeding five crore rupees, at the rate of twentyfive per cent. of such income-tax;

(d) having a total income (excluding the income by way of dividend or income under the provisions of sections 111 A, 112 and 112A of the Act) exceeding five crore rupees, at the rate of thirty-seven per cent. of such income-tax;

(e) having a total income (including the income by way of dividend or income under the provisions of section 111 A, 112 and section 112A of the Act) exceeding two crore rupees, but is not covered under clauses (c) and (d), shall be applicable at the rate of fifteen per cent. of such income-tax:

Provided that in case where the total income includes any income by way of

dividend or income chargeable under section 111 A, section 112 and section 112A of the Act, the rate of surcharge on the amount of Income-tax computed in respect of that part of income shall not exceed fifteen percent..

Provided further that in case of an association of persons consisting of only companies as its members, the rate of surcharge on the amount of Income-tax shall not exceed fifteen per cent. .

Marginal relief is provided in cases of surcharge.

On satisfaction of certain conditions as per the provisions of section 115BAC, an individual or HUF has the option to pay tax in respect of the total income at following rates:

Total Income (Rs) Upto 2,50,000

From 2,50,001 to 5,00,000 From 5,00,001 to 7,50,000 From 7,50,001 to 10,00,000 From 10,00,001 to 12,50,000 From 12,50,001 to 15,00,000 Above 15,00,000

Rate Nil

5 per cent. 10 per cent. 15 per cent. 20 per cent. 25 per cent. 30 per cent.

B. Co-operative Societies

In the case of co-operative societies, the rates of income-tax have been specified in Paragraph B of Part Ill of the First Schedule to the Bill. These rates will continue to be the same as those specified for FY 2021-22. However, there is change in the rate of surcharge. The amount of income-tax shall be increased by a surcharge at the rate of seven per cent. of such income-tax in case the total income of a cooperative society exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of twelve per cent. of shall continue to be levied in case of a co-operative society having a total income exceeding ten crore rupees.

Marginal relief is provided in cases of surcharge.

On satisfaction of certain conditions, a co-operative society resident in India have the option to pay tax at 22 per cent. as per the provisions of section 115BAD. Surcharge would be at 10% on such tax.

C. Firms

In the case of firms, the rate of income-tax has been specified in Paragraph C of Part Ill of the First Schedule to the Bill. This rate will continue to be the same as that specified for FY 2021-22. The amount of income-tax shall be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of a firm having a total income exceeding one crore rupees. However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

Local authorities

The rate of income-tax in the case of every local authority has been specified in Paragraph D of Part 111 of the First Schedule to the Bill. This rate will continue to be the same as that specified for the FY 2021-22. The amount of income-tax shall be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of a local authority having a total income exceeding one crore rupees. However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

E. Companies

The rates of income-tax in the case of companies have been specified in Paragraph E of Part Ill of the First Schedule to the Bill. In case of domestic company, the rate of income-tax shall be twenty five per cent. of the total income, if the total turnover or gross receipts of the previous year 2020-21 does not exceed four hundred crore rupees and in all other cases the rate of Income-tax shall be thirty per cent. of the total income. However, domestic companies also have an option to opt for taxation under section 115BAA or section 115BAB of the Act on fulfillment of conditions contained therein. The tax rate is 15 per cent. in section 115BAB and 22

per cent. in section 115BAA. Surcharge is 10 per cent. in both cases.

In the case of company other than domestic company, the rates of tax are the same as those specified for the FY 2021-22.

Surcharge at the rate of seven per cent. shall continue to be levied in case of a domestic company (except those opting for taxation under section 115BAA and section 115BAB of the Act), if the total income of the domestic company exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of twelve per cent shall continue to be levied, if the total income of the domestic company (except those opting for taxation under section 115BAA and section 115BAB of the Act) exceeds ten crore rupees.

In case of companies other than domestic companies, the existing surcharge of two per cent shall continue to be levied, if the total income exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of five per cent shall continue to be levied, if the total income of the company other than domestic company exceeds ten crore rupees.

Marginal relief is provided in surcharge in all cases.

In other cases [including sub-section (2A) of section 92CE, sections 115-0, 115QA, 115R, 115TA or 115TD], the surcharge shall be levied at the rate of twelve percent.

For FY 2022-23, additional surcharge called the “Health and Education Cess on income-tax” shall be levied at the rate of four per cent on the amount of tax computed, inclusive of surcharge (wherever applicable), in all cases. No marginal relief shall be available in respect of such cess.

For two newly inserted provisions 115BBH and 1158BI tax rate is provided in the respective sections and surcharge shall be levied based on status of the taxpayer as is otherwise applicable to such taxpayer.

[Clause 2 & the First Schedule]

B. Promoting Voluntary Tax Compliance and Reducing Litigation

Provisions for filing of updated return

Section 139 of the Act is related to the provisions for filing of Income Tax Return by taxpayers.

2. Sub-section (1) of section 139 of the Act casts responsibility on the taxpayer to furnish a return within a definite time period or up to a particular date, that is, the due date which as per this section means:

(a) for an assessee who is a company or a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force, it is 31^stday of October of the assessment year;

(b) for an assessee who is required to furnish a report under section 92E, it is 30^thday of November of the assessment year; and

Alternatively, sub-section (4) of section 139 of the Act facilitates filing of a belated return after the expiry of due date, if such return is furnished before 3 months prior to the end of the relevant assessment year or before the completion of assessment, whichever is earlier. Similarly, sub-section (5) of section 139 of the Act provides the taxpayer an opportunity to revise the return filed under sub-section (1) or sub-section (4) in case of any omission or wrong statement, after due date, which is to be filed 3 months before the end of the assessment year or before the completion of assessment, whichever is earlier. Hence, the object of section 139 of the Act is to give reasonable time to the taxpayer to file a correct statement of his income within the duration specified under the Act.

3. This provision provides an additional time of approximately 5 months to an individual assessee, 2 months to a company/auditable case and 1 month to an assessee who enters into an international transaction or specified domestic transaction respectively, in a financial year to file belated or revised return. This additional timeline for filing a revised/belated return may not be adequate when we factor in utilization of huge information and data available coupled with the “nudge approach” that motivates the taxpayer towards the desired objective of voluntary tax compliance, starting with filing of correct tax returns.

4. Hence, it is proposed to introduce a new provision in section 139 of the Act for filing an updated return of income by any person, whether he has filed a return previously for the relevant assessment year, or not. The proposal for updated return over a period longer than that is provided in the existing provisions of Income-tax Act would on the one hand bring use of huge data with the IT Department to a logical conclusion resulting in additional revenue realization and on the other hand, it will facilitate ease of compliance to the taxpayer in a litigation free environment.

5. Hence, it is proposed that the taxpayers may be given some more time under the Act to file particulars of their income for a previous year in an updated return. A payment of additional tax by persons opting to furnish their returns in the newly provided timelines is also required. It is proposed that an amount equal to twenty five percent or fifty percent as additional tax on the tax and interest due on the additional income furnished would be required to be paid. The following amendments to the Act are proposed for incorporating the above provisions: –

I) A new sub-section (SA) in section 139 is proposed to be introduced to provide for furnishing of updated return under the new provisions.

in section 139, –

(a) It is proposed to insert sub-section (8A) in section 139 of the Act to provide that: (i) Any person, whether or not he has furnished a return under sub-section (1 ), sub-section (4) or sub-section (5), for an assessment year (herein referred to as the relevant assessment year), may furnish an updated return of his income or the income of any other person in respect of which he is assessable under the Act, for the previous year relevant to such assessment year, within twenty four months from the end of the assessment year. Such return shall be furnished in the prescribed form and manner and shall contain prescribed particulars.

(ii) The proposed sub-section (8A) of section 139 shall not apply, if the updated return, is a return of a loss or has the effect of decreasing the total tax liability determined on the basis of return furnished under sub-section (1 ), subsection (4) or sub-section (5) or results in refund or increases the refund due on

the basis of return furnished under sub-section (1 ), sub-section (4) or subsection (5), of such person under the Act for the relevant assessment year.

(iii) A person shall not be eligible to furnish an updated return under the

proposed sub-section (SA) of section 139, if: –

(a) search has been initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of such person, or

(b) a survey has been conducted under section 133A, other than subsection (2A) of that section, in the case such person, or

(c) a notice has been issued to the effect that any money, bullion, jewellery or valuable article or thing, seized or requisitioned under section 132 or section 132A in the case of any other person belongs to such person, or

(d) a notice has been issued to the effect that any books of account or documents, seized or requisitioned under section 132 or section 132A in the case of any other person, pertain or pertains to, or any other information contained therein, relate to, such person.

This provision is for the assessment year relevant to the previous year in which such search is initiated or survey is conducted or requisition is made and two assessment years preceding such assessment year.

(iv) Also, no updated return shall be furnished by any person for the relevant

assessment year, where,

(a) an updated return has been furnished by him under the proposed subsection (SA) of section 139 of the Act for the relevant assessment year, or (b) any proceeding for assessment or reassessment or recomputation or revision of income under the Act is pending or has been completed for the relevant assessment year in his case, or

(c) the Assessing Officer has information in respect of such person for the relevant assessment year in his possession under the Prevention of Money Laundering Act, 2002 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 or the Prohibition of Benami Property Transactions Act, 1988 or The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 and the same has been communicated to him, prior to the date of his filing of return under the proposed sub-section (SA) of section 139 of the Act, or

(d) information for the relevant assessment has been received under an agreement referred to in sections 90 or 90A of the Act in respect of such person and the same has been communicated to him, prior to the date of his filing of return under the proposed sub-section (8A) of section 139 of the Act, or

(e) any prosecution proceedings under Chapter XXII have been initiated for the relevant assessment year in respect of such person, prior to the date of his filing of return under the proposed sub-section(8A) of section 139 of the Act, or

(f) he is a person or belongs to a class of persons, as maybe notified by the Board in this regard.

b) It has also been proposed to amend sub-section (9) of section 139 to provide that a return filed under the proposed sub-section (8A) of the said section 139 shall be defective unless such return is accompanied by the proof of payment of tax as required under the proposed section 140B.

II) A new section 1408 has been proposed to provide for the tax required to be paid for opting to file a return under the proposed provisions i.e. sub-section (BA) of section 139 of the Act.

I. Where no return furnished earlier: where no return of income under sub-section (1) or sub-section (4) of section 139 has been furnished by an assessee, he shall before furnishing the return under sub-section (8A) of section 139, be liable to pay the tax due together with interest and fee payable under any provision of the Act for any delay in furnishing the return or any default or delay in payment of advance tax, along with the payment of additional tax. The tax payable shall be computed after taking into account the following:-

(i) the amount of tax, if any, already paid as advance tax;

(ii) any tax deducted or collected at source;

(iii) any relief of tax claimed under section 89;

(iv) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India;

(v) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section; and

(vi) any tax credit claimed to be set off in accordance with the provisions of section 115JAA or section 115JD.

Such updated return shall also be accompanied by proof of payment of such tax, additional tax, interest and fee.

II. In the case of an assessee, where, return of income under sub-section (1) or sub-section (4) or sub-section (5) of section 139 (referred to as earlier return) has been furnished by an assessee, he shall before furnishing the return under sub-section (8A) of section 139, be liable to pay the tax due together with interest and fee payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, along with the payment of additional tax, as reduced by the amount of interest paid under the provisions o the Act in the earlier return,. The tax payable shall be computed after taking into account the following:-

(i) the amount of relief or tax, referred to in sub-section (1) of section 140A, the

credit for which has been taken in the earlier return;

(ii) tax deducted or collected at source, in accordance with the provisions of Chapter XVII-B, on any income which is subject to such deduction or collection and which is taken into account in computing total income and which has not been claimed in the earlier return;

(iii) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India on such income which has not been claimed in the earlier return;

(iv) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section on such income which has not been claimed in the earlier return;

(v) any tax credit claimed, to be set off in accordance with the provisions of section 115JAA or section 115JD, which has not been claimed in the earlier return.

The aforesaid tax shall be increased by the amount of refund, if any, issued in respect of such earlier return.

The updated return, furnished under sub-section (8A) of section 139, shall be accompanied by proof of payment of such tax, additional tax, interest and fee.

Ill) The additional tax, payable at the time of furnishing the return under sub-section (8A) of section 139, shall be equal to twenty-five per cent of aggregate of tax and

interest payable, as determined in sub- paragraphs I or II above, if such return is furnished after expiry of the time available under sub-section (4) or sub-section (5) of section 139 and before completion of period of twelve months from the end of the relevant assessment year. However, if such return is furnished after the expiry of twelve months from the end of the relevant assessment year but before completion of the period of twenty-four months from the end of the relevant assessment year, the additional tax payable shall be fifty per cent of aggregate of tax and interest payable, as determined in sub- paragraphs I or II above.

It is also clarified that for the purposes of computation of “additional income-tax”, tax shall include surcharge and cess, by whatever name called, on such tax.

IV) It is further provided that notwithstanding anything contained in the Explanation 1 to section 234B, in the cases where an earlier return has been furnished, interest payable under section 234B shall be computed on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid falls short of the assessed tax, where, “assessed tax” means the tax on the total income as declared in the return to be furnished under sub-section (8A) of section 139, after taking into account the following:

(i) the amount of relief or tax, referred to in sub-section (1) of section 140A, the credit for which has been taken in the earlier return;

(ii) tax deducted or collected at source, in accordance with the provisions of Chapter XVII-B, on any income which is subject to such deduction or collection and which is taken into account in computing such total income and which has not been claimed in the earlier return;

(iii) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India on such income which has not been claimed in the earlier return;

(v) any tax credit claimed, to be set off in accordance with the provisions of section 115JAA or section 115JD, which has not been claimed in the earlier return. The aforesaid tax shall be increased by the amount of refund, if any, issued in respect of such earlier return.

V. where no earlier return has been furnished, the interest payable under section 234A shall be computed on the amount of the tax on the total income as declared in the return under sub-section (8A) of section 139. Further, interest payable under section 234C, where an earlier return has not been furnished, shall be computed after taking into account the income furnished in the return under sub-section (8A) of section 139 as the returned income. At the same time, for the computation of additional tax above, the interest payable shall be interest chargeable under any provision of the Income-tax Act, on the income as per return furnished under sub-section (8A) of section 139, as reduced by interest paid in the earlier return, if any. However, the interest paid in the earlier return shall be considered to be nil if no earlier return has been furnished.

VI. In view of the proposed sub-section (8A) of section 139 and new section

140B, consequential amendments in section 144, section 153, section 234A and section 234B and 276CC have also been made.

These amendments will take effect from 1st April, 2022.

[Clauses 38, 39,41, 48, 64, 65 and 81]

Litigation management when in an appeal by revenue an identical question of law is pending before jurisdictional High Court or Supreme Court.

Section 158M of the Act provides that where the Commissioner or Principal Commissioner is of the opinion that any question of law arising in the case of an assessee (relevant case) is identical with a question of law arising in his case for another assessment year (other case) which is pending in appeal before the Supreme Court against an order of High Court which was in favour of assessee, he may direct the Assessing Officer to make an application to the Appellate Tribunal stating that an appeal on the question of law in the relevant case may be filed when the decision on the question of law becomes final in the other case, subject to the acceptance of the same by the assessee.

2. If such a principle could be applied to cases where a question of law is common and where a decision of the jurisdictional High Court, on the same question of law is available, the filing of appeal in such cases can be avoided to reduce the amount of litigation.

3. Therefore, to provide a procedure when an appeal by revenue is pending on an identical question of law, it is proposed to insert a new section 158AB in the Act, to provide that where the collegium is of the opinion that any question of law arising in the case of an assessee for any assessment year (“relevant case”) is identical with a question of law already raised in his case or in the case of any other assessee for an assessment year, which is pending before the jurisdictional High Court under section 260A or the Supreme Court in an appeal under section 261 or in a special leave petition under article 136 of the Constitution, against the order of the Appellate Tribunal or the jurisdictional High Court, as the case may be, in favour of such assessee (“other case”), it may, decide and intimate the Commissioner or Principal Commissioner not to file any appeal, at this stage, to the Appellate Tribunal under sub-section (2) of section 253 or to the High Court under sub-section (2) of section 260A against the order of the Commissioner (appeals) or the Appellate Tribunal, as the case may be.

4. Further, the Commissioner or Principal Commissioner shall, on receipt of a communication from the collegium, direct the Assessing Officer to make an application to the Appellate Tribunal or jurisdictional High Court, as the case may be, in the prescribed form within sixty days from the date of receipt of the order of the Commissioner (Appeals) or within one hundred and twenty days from the date of receipt of the order of the Appellate Tribunal, as the case may be, stating that an appeal on the question of law arising in the relevant case may be filed when the decision on the question of law becomes final in the other case. The Commissioner or Principal Commissioner shall direct the Assessing Officer to make such an application only if an acceptance is received from the assessee to the effect that the question of law in the other case is identical to that arising in the relevant case, and in case no such acceptance is received, the Commissioner or Principal Commissioner shall proceed in accordance with the provisions contained in sub-section (2) of section 253 or in sub-section (2) of section 260A.

5. Furthermore, where the order of the Commissioner (Appeals) or the order of the Appellate Tribunal, as the case may be, in the relevant case is not in conformity with the final decision on the question of law in the other case as and when such order is received, the Commissioner or Principal Commissioner may direct the Assessing Officer to appeal to the Appellate Tribunal or the jurisdictional High Court, as the case may be, against such order.

6. It is also proposed that for the purposes of the proposed section, “collegium” shall comprise of two or more Chief Commissioners or Principal Commissioners or Commissioners of Income-tax, as specified by the Board in this regard.

7. In order to illustrate the point, it may be supposed that a question of law (01 )A1 has arisen in case of an assessee (A 1) and the A 1 has received a favourable decision on 01A1 from the Commissioner (Appeals). Further, in case of another assessee (A2), where Department’s appeal on identical question of law (01 )A2 is pending before the jurisdictional High Court or the Supreme Court and the collegium is of the opinion that 01A1 and 01A2 are identical questions of law. Then in this situation, provisions of proposed section 158AB can be invoked by Revenue to defer filing of appeal for decision on 01A1 to the higher appellate authority in ITAT till a decision on 01A2 is communicated to Assessing Officer having jurisdiction over the assessee, A 1. Such a decision on deferment will be subject to acceptance by the assessee A 1 that question of law in his case 01A1 is identical to 01A2 in the case of the assessee A2.

8. With the introduction of section 158AB, a sunset clause is proposed to be inserted in sub-section (1) of section 158AA to provide that no direction shall be given under the said sub-section on or after 1^stApril, 2022.

This amendment will take effect from 1^stApril, 2022.

[Clauses 51 and 52]

Amendment in section 245MA of the Act related to Dispute Resolution Committee

Finance Act, 2021 introduced a new chapter XIX-AA in the Act consisting of section 245MA for constituting Dispute Resolution Committee (“DRC”) for specified persons who may opt for dispute resolution under the said section and who fulfil specified conditions mentioned in the said section.

2. After the resolution of the dispute by the DRC the assessed income of the person who had applied to DRC has to be determined, which will be followed by, inter alia, initiation of penalty proceedings, if any and issuance of demand notice under section 156 of the Act. However, the existing provisions of the said section do not contain any provision which will enable the Assessing Officer to pass an order giving effect to the order or directions of the Dispute Resolution Committee under the said section.

3. Therefore, it is proposed to insert a new sub-section to this section to enable the Assessing Officer to pass an order giving effect to the resolution of dispute by the DRC. However, since DRC is an alternate dispute resolution mechanism itself, a taxpayer may opt for approaching either the Dispute Resolution Panel under section 144C of the Act or the DRC under section 245MA of the Act, and the AO shall pass the final order in conformity with the order by the DRC even in the case of an eligible assessee.

This amendment will take effect from 1^stApril, 2022.

[Clause 67]

Clarification regarding treatment of cess and surcharge

Section 40 of the Act specifies the amounts which shall not be deducted in computing the income chargeable under the head “Profits and gains of business or profession”. Sub-clause (ii) of clause (a) of section 40 of the Act provides that any sum paid on account of any rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits

or gains shall not be deducted in computing the income chargeable under the head “Profits and gains of business or profession”.

2. However, certain taxpayers are claiming deduction on account of ‘cess’ or ‘surcharge’ under section 40 of the Act claiming that ‘cess’ has not been specifically mentioned in the aforesaid provisions of section 40(a)(ii) and, therefore, cess is an allowable expenditure. This view has been upheld by Courts in a few judgments. Further, Courts are also relying upon the CBDT Circular No. 91/58/66-IT J(19) dated 18-05-1967.

3. The assessees rely upon the decision of the Hon’ble Bombay High Court in the case of “Sesa Goa Limited Vs. JCIT” (2020) 117 taxmann.com and further on the decision of the Hon’ble Rajasthan High Court in the case of “Chambal Fertilizers & Chemicals Ltd Vs. JCIT”: D.B Income-tax Appeal No. 52/2018 decided on 31-07-2018, wherein, the Hon’ble High Courts relied upon the aforesaid CBDT Circular Dt. 18-05- 1967 and in view of the interpretation made by the CBDT have held that ‘education cess’ can be claimed as an allowable deduction while computing the income chargeable under the heads “profits and gains of business or profession”. Based on these decisions ITAT in various judgments have followed the same reasoning and have allowed deduction on account of payment of “Gess”.

4. However, one of the latest judgments of ITAT Kolkata has discussed the two High Court judgments as well as other judgments vide order dated 26-10-2021 in the case of Mis. Kanoria Chemicals & Industries Ltd /TA No. 2184/Kol/2018 (TS-1129- ITAT2021 Kol) and has held that the “Gess” is not to be allowed as deduction. The relevant portion of the judgment is produced below:

“19. However, with due respect to the decisions of the Hon’ble Bombay High Court and Hon’ble Rajasthan High Court and of co-ordinate Benches of this Tribunal, we find that the issue is squarely covered by the decision of the Hon’ble Apex Court of the country in the case of “CIT Vs. K. Srinivasan” (1972) 83 /TR 346, wherein the following questions came for adjudication before the Hon’ble Apex Court:-” Whether the words “Income tax” in the Finance Act of 1964 in subs (2) and sub-s. (2)(b) of s. 2 would include surcharge and additional surcharge.”

20. The Hon’ble Supreme Court answered the question in favour of revenue observing as under:- “In our judgment it is unnecessary to express any opinion in the matter because the essential point for determination is whether surcharge is an additional mode or rate for charging income tax. The meaning of the word “surcharge” as given in the Webster’s New International Dictionary includes among others “to charge (one) too much or in addition” also “additional tax”. Thus the meaning of surcharge is to charge in addition or to subject to an additional or extra charge. If that meaning is applied to s. 2 of the Finance Act 1963 it would lead to the result that income tax and super tax were to be charged in four different ways or at four different rates which may be described as (i) the basic charge or rate (In part I of the First Schedule); (ii) Sur- charge; (iii) special surcharge and (iv) additional surcharge calculated in the manner provided in the Schedule. Read in this way the additional charges form a part of the income tax and super tax”

21. The Hon’ble Supreme Court, therefore, has decided the issue in favour of the revenue and held that surcharge and additional surcharge are part of the incometax. At this stage, it is pertinent to mention here that ‘education cess’ was brought in for the first time by the Finance Act, 2004, wherein it was mentioned as under:” An additional surcharge, to be called the Education Gess to finance the Government’s commitment to universalise quality basic education, is proposed to be levied at the rate of two per cent on the amount of tax deducted or advance tax paid, inclusive of surcharge.”

22. The provisions of the Finance Act 2011 relevant to the Assessment Year under consideration i.e. 2012-13 are also relevant. For the sake of ready reference, the same is reproduced hereunder:- 2(11) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by a surcharge for purposes of the Union calculated in the manner provided therein, shall be further increased by an additional surcharge for purposes of the Union, to be called the “Education Gess on income-tax”, calculated at the rate of two per cent. of such income-tax and surcharge, so as to fulfil the commitment of the Government to provide and finance universalised quality basic education.

23. A perusal of the aforesaid provisions of the Finance Act 2004 and Finance Act 2011 would show that it has been specifically provided that ‘education cess’ is an additional surcharge levied on the income-tax. Therefore, in the light of the decision of the Hon’ble Supreme Court in the case of “CIT Vs. K. Srinivasan” ( supra) the additional surcharge is part of the income-tax. The aforesaid decision of the Hon’ble Apex Court and the provisions of Finance Act, 2004 and the relevant provisions of section 2(11) & (12) of the subsequent Finance Acts have not been brought into the knowledge of the Hon’ble High Courts in the cases of “Sesa Goa Ltd” & “Chambal Fertilisers” (supra). Since the decision of the Hon’ble Supreme Court prevails over that of the Hon’ble High Courts, therefore, respectfully following the decision of the Hon’ble Supreme Court in the case of “CIT Vs. K. Srinivasan” (supra), this issue is decided against the assessee. The additional ground of assessee’s appeal is accordingly dismissed.”

5. Rajasthan High Court has also relied upon the circular dated 18.05.1967 issued

by CBDT, which is being reproduced as under:

“Interpretation of provision of s.40(a)(ii) of IT Act, 1961-Clarification regarding 18/05/1967 BUSINESS EXPENDITURE SECTION 40(a)(ii), Recently a case has come to the notice of the Board where the /TO has disallowed the ‘cess’ paid by the assessee on the ground that there has been no material change in the provisions of s.10(4) of the old Act and s.40(a)(ii) of the new Act.

2. The view of the /TO is not correct. Clause 40(a)(ii) of the IT Bill, 1961 as introduced in the Parliament stood as under:

“(ii) any sum paid on account of any cess, rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains”.

When the matter came up before the Select Committee, it was decided to omit the word ‘cess’ from the clause. The effect of the omission of the word ‘cess’ is that only taxes paid are to be disallowed in the assessments for the year 1962- 63 and onwards.

3. The Board desire that the changed position may please be brought to the notice of all the ITOs so that further litigation on this account may be avoided.”

6. In the above referred Circular issued by CBDT, ‘Gess’ is to be allowed under sub-clause (ii) of clause (a) of section 40 of the Act. However, it is to be noted that ‘Gess’ is imposed not only by the Central Government through Finance Act for a financial year, but also by various State Governments. It is pertinent to mention that in the above referred Circular of CBDT, there is no reference to the ‘Gess’ imposed by the Central Government through Finance Act for a particular year. This CBDT circular needs to be seen from the perspective that “Education Gess” imposed by Finance Act 2004 and subsequent Acts and then designated as “Education and Health Gess” are actually tax in the form of additional surcharge, as stated clearly in each of the relevant Finance Act imposing such “Gess”. It is only called “Gess” since they were imposed for a particular purpose of fulfilling the commitment of the Government to provide and finance quality health services and universalized quality basic education and secondary and higher education.

7. This circular was in reference to “Gess” imposed by State Government which is actually of the nature of “Gess” and not of the nature of “Additional Surcharge” being termed as “Gess” in the relevant Finance Act. When an additional surcharge is imposed by the Central Government and it is named as “Gess”, then its allowability needs to be examined whether an additional surcharge is allowed to be a deduction or not. Hon’ble Supreme Court in the case of K Srinivasan has held that “surcharge” and “additional surcharge” are tax. Hence, the additional surcharge named as “Cess”and imposed by the Central Government through the Finance Act is nothing but a tax and hence, needs to be disallowed under sub-clause (ii) of clause (a) of section 40 of the Act. The relevant part of Hon’ble Supreme Court judgment is as under:

7. The above legislative history of the Finance Acts, as also the practice, would appear to indicate that the term “Income tax” as employed in Section 2 includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Article 271 of the Constitution. The phraseology employed in the Finance Acts of 1940 and 1941 showed that only the rates of income tax and supertax were to be increased by a surcharge for the purpose of the Central Government. In the

Finance Act of 1958 the language used showed that income tax which was to be charged was to be increased by a surcharge for the purpose of the Union. The word “surcharge” has thus been used to either increase the rates of income tax and super tax or to increase these taxes. The scheme of the Finance Act of 1971 appears to leave no room for doubt that the term Income tax” as used in Section 2 includes surcharge.”

8. Since the judgments of Rajasthan High Court and Bombay High Court did not consider the judgment of Hon’ble Supreme Court discussed above, the judgments of these two High Courts appear to be per incuriam. It may be mentioned that in paragraph 578 at page 297 of Halsbury’s Laws of England, Fourth Edition, the rule of per incuriam is stated as follows:

”A decision is given per incuriam when the court has acted in ignorance of a previous decision of its own or of a court of co-ordinate jurisdiction which covered the case before it, in which case it must be decided which case to follow; or when it has acted in ignorance of a House of Lords decision, in which case it must follow that decision; or when the decision is given in ignorance of the terms of a statute or rule having statutory force.”

9. From the above discussion it may be seen that the interpretations of two High courts and various ITATs are against the intention of legislature and not in line with the judgment of Hon’ble Supreme Court. Hence, in order to make the intention of the legislation clear and to make it free from any misinterpretation, it is proposed to include an Explanation retrospectively in the Act itself to clarify that for the purposes of this sub-clause, the term “tax” includes and shall be deemed to have always included any surcharge or cess, by whatever name called, on such tax. Amendment is made retrospectively to make clear the position irrespective of the circular of the CBDT.

10. This amendment will take effect retrospectively from 1st April, 2005 and will accordingly apply in relation to the assessment year 2005-06 and subsequent assessment years.

[Clause 13]

Amendments related to successor entity subsequent to business reorganization

Chapter XV of the Act refers to liability in certain special cases. Section 170, inter-alia, governs the procedure of taxation in case of succession to business in the event of reorganization or restructuring of the business which is discussed as under.

2. Though section 170 provides for assessment in cases of succession otherwise than by death, in practice once an entity starts the process of reorganization by filing an application with the adjudicating authority or any High Court, the period of time involved in coming to a conclusion with respect to such reorganization is found to be a long-drawn process and is not time-bound. The reorganization often is from a preceding date. During the pendency of the court proceedings the income tax proceedings and assessments are carried on and often completed on the predecessor entities only. Courts have held such proceedings and consequent assessments illegal as the predecessor assessee ceases to exist in the midst of a perfectly valid and legal proceeding.

3. Hence, till the decision of the court is received, the proceedings of the Act have to be continued in the case of the predecessor only and such proceedings once completed, cannot become illegal as a result of subsequent order of any court. Therefore, with a view to clarify that such proceedings under the Act are valid, it is proposed to insert a sub-section (2A) to section 170, to provide that the assessment or other proceedings pending or completed on the predecessor in the event of a business reorganization, shall be deemed to have been made on the successor.

4. Further, it is seen that post such reorganization, the affairs of the successor entity go through a complete change with effect from the date from which such reorganization takes place. However, due to the indefinite timeline involved in issuing such orders, there is a gap between the effectivity of such order and the date on which such order is issued by the competent authority. This also affects the final accounts of such entities as they are unable to modify their already filed returns in accordance with the reorganization. Hence, in order to remove this anomaly, it is proposed to insert a new section 170A to the Act, to enable for the entities going through such business reorganization, for filing of modified returns for the period between the date of

effectivity of the order and the date of issuance of final order of the competent authority.

5. Further, it has been noted that in the cases of business reorganisation, instances have been found where the Court or Tribunal or an Adjudicating Authority, as defined in clause (1) of section (5) of the Insolvency and Bankruptcy Code, 2016, as the case may be, as a part of the restructuring process, recast the entire liability to ensure future viability of such sick entities and in the process, modify the demand created vide various proceedings in the past, by the Income Tax department as well, amongst other things.

6. However, it is observed that there is no procedure or mechanism provided in the Act to reduce such demands from the outstanding demand register. Hence, in order to remove this anomaly, it is proposed to insert a new section 156A to the Act to give effect to the orders of the competent authority and to modify such demands in accordance with such directions.

These amendments will take effect from 1^stApril, 2022.

[Clauses 50, 53 and 54]

Clarification in respect of disallowance under section 14A in absence of any exempt income during an assessment year

Section 14A of the Act provides that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income that does not form part of the total income as per the provisions of the Act (exempt income).

2. Over the years, disputes have arisen in respect of the issue whether disallowance under section 14A of the Act can be made in cases where no exempt income has accrued, arisen or received by the assessee during an assessment year.

3. CBDT issued Circular No. 5/2014, dated 11/02/2014, clarifying that Rule 8D read with section 14A of the Act provides for disallowance of the expenditure even where tax payer in a particular year has not earned any exempt income. However, still some courts have taken a view that if there is no exempt income during a year, no

disallowance under section 14A of the Act can be made for that year. Such an interpretation is not in line with the intention of the legislature. To illustrate, if during a previous year, an assessee incurs an expense of t1 lakh to earn non-exempt income of t1 .5 lakh and also incurs an expense of t20,000/- to earn exempt income which may or may not have accrued/received during the year. By holding that provisions of section 14A of the Act does not apply in this year as the exempt income was not accrued/received during the year, it amounts to holding that t20,000/- would be allowed as deduction against non-exempt income of t1 .5 Lakh even though this expense was not incurred wholly and exclusively for the purpose of earning nonexempt income. Such an interpretation defeats the legislative intent of both section 14A as well as section 37 of the Act.

4. In order to make the intention of the legislation clear and to make it free from any misinterpretation, it is proposed to insert an Explanation to section 14A of the Act to clarify that notwithstanding anything to the contrary contained in this Act, the provisions of this section shall apply and shall be deemed to have always applied in a case where exempt income has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such exempt income.

5. This amendment will take effect from 1^stApril, 2022.

6. It is also proposed to amend sub-section (1) of the said section, so as to include a non-obstante clause in respect of other provisions of the Income-tax Act and provide that no deduction shall be allowed in relation to exempt income, notwithstanding anything to the contrary contained in this Act.

7. This amendment will take effect from 1^stApril, 2022 and will accordingly apply

in relation to the assessment year 2022-23 and subsequent assessment years. [Clause 9]

Clarifications on allowability of expenditure under section 37

Section 37 of the Act provides for allowability of revenue and non-personal expenditure (other than those failing under sections 30 to 36) laid out or expended

wholly and exclusively for the purposes of business or profession. Explanation 1 of sub-section (1) of section 37 of the Act provides that if any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.

2. However, it is seen that certain taxpayers are claiming deductions on expenditure incurred in offering certain benefits or perquisite to a person which are not intended to be allowed under this section, like meeting his expenditure related to travel, hospitality, conference etc. In these cases acceptance of such benefit or perquisite by such person is in violation of a law or rule or regulation or guidelines, as the case may be, governing the conduct of such person.

3. CBDT, vide circular No. 5/2012 dated 1.8.2012, noted that the Indian Medical Council in exercise of its statutory powers amended the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (the regulations) on 10.12.2009 imposing a prohibition on the medical practitioner and their professional associations from taking any Gift, Travel facility, Hospitality, Cash or monetary grant from the pharmaceutical and allied health sector Industries. Accordingly, CBDT clarified that the claim of any expense incurred in providing above mentioned or similar benefits in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 shall be inadmissible under section subsection (1) of section 37 of Act being an expense prohibited by the law. This disallowance was directed to be made in the hands of such pharmaceutical or allied health sector Industries or other assessee which has provided aforesaid benefits and claimed it as a deductible expense in its accounts against income.

4. This circular was challenged in Himachal Pradesh High Court in the case of Confederation of Indian Pharmaceutical Industry Vs Central Board of Direct Taxes [(2013) 335 /TR 388 (HP)], in which the Hon’ble High Court rejected the petition and held that –

“The regulation of the Medical Council prohibiting medical practitioners from availing of freebies is a very salutary regulation which is in the interest of the patients and the public. This Court is not oblivious to the increasing complaints that the medical

practitioners do not prescribe generic medicines and prescribe branded medicines only in lieu of the gifts and other freebies granted to them by some particular pharmaceutical industries. Once this has been prohibited by the Medical Council under the powers vested in it, s. 37(1) comes into play. The Petitioner’s contention that the circular goes beyond the section is not acceptable. In case the assessing authorities are not properly understanding the circular then the remedy lies for each individual assessee to file an appeal but the circular which is totally in line with s. 37(1) cannot be said to be illegal. If the assessee satisfies the assessing authority that the expenditure is not in violation of the regulations framed by the medical council then it may legitimately claim a deduction, but it is for the assessee to satisfy the AO that the expense is not in violation of the Medical Council Regulations.”

5. After this there have been various judgments of Income-tax Appellate Tribunals. Some of these judgments have held that these expenses to be not allowable under sub-section (1) of section 37 the Act, while others holding it to be allowable. The latest judgment on this issue is from ITAT Mumbai in the case of Macleods Pharmaceuticals delivered on 14th October 2021 in ITA Nos. 5168 & 5169/Mum/2018. In this judgment ITAT held that the action of the assessing officer in disallowing the expenditure deserves to succeed and then explained as to why it is a fit case for the constitution of a special bench of three or more members. ITAT arrived at its recommendations based, inter-alia, on the followings:-

Honble Supreme Court, in the case of Keshavji Ravji& Co Vs CIT [(1990) 183 ITR 1 (SC)] has held that the burden that the Act itself through a correct interpretation of law envisages is equal to or higher than the burden envisaged by the CBDT circular, that burden of law cannot be negated because the circular also so states. Hence, the circular no 5 of 2012 is to be held as valid.
Once a judicial forum higher than this Tribunal, (i.e Himachal Pradesh High Court in the case of Confederation of Indian Pharmaceutical Industry) holds that the interpretation to the scope of Explanation to sub-section (1) of section 37, as given in the circular, is a correct legal interpretation, it cannot be open to us to discard the interpretation so approved to be correct legal interpretation.
In the case Kap Scan and Diagnostic Centre (P) Ltd. [(2012) 344 /TR 476 (P&H)J, the Hon’ble High Court of Punjab & Haryana held that payments which are opposed to public policy being in the nature of unlawful consideration cannot

equally be recognized. It cannot be held that businessmen are entitled to conduct their business even contrary to law and claim deductions of payments as business expenditure, notwithstanding that such payments are illegal or opposed to public policy or have pernicious consequences to the society as a whole. The Court further held that if demanding of such commission was bad, paying it was equally bad. Both were privies to a wrong. Therefore, such commission paid to private doctors was opposed to the public policy and should be discouraged. The payment of commission by the assessee for referring patients to it cannot by any stretch of imagination be accepted to be legal or as per public policy. Undoubtedly, it is not fair practice and has to be termed as against the public policy.

ITAT noted earlier coordinate bench judgment in the case of DCIT Vs PHL Pharma Pvt Ltd (2017) 163 /TD 10 (Mum), where it was held that the disallowance could not be sustained as the MCI guidelines bind only the medical professionals and not the pharmaceutical companies. ITAT noted that this judgment was not in line with earlier co-ordinate bench judgment In the case of Liva Healthcare Ltd, (2016) 161 /TD 63 (Mum) where the Hon’ble Mumbai ITAT has held that the CBDT circular dated 01.08.2012 is merely a clarification in nature and creates a bar on such illegal payments being against public policy, the said bar always existed in the statute by virtue of the existence of Explanation of Section 37 of the Act which was inserted by Finance Act, 1998 w.e.f. 01-04-1962. It was also noted that in Hon’ble AP High Court’s full bench decision in the case of CIT Vs B R Constructions (1993) 202 /TR 222 (AP- FC) their Lordships have observed that a “precedent ceases to be a binding precedent … (iii) when it is inconsistent with the earlier decisions of the same rank; and (iv) when it is rendered per incuriam”. Clearly, therefore, the decisions which disregard earlier binding decisions on the same issue, “cease to be a binding judicial precedent”.
ITAT also noted that Hon’ble Delhi High Court in the case of Max Hospital Vs Medical Council of India (WP No. 1334 of 2013; judgment dated 10th January 2014), in which it was held that the provisions of Medical Council of India only bind the medical professionals and not others, such as hospitals and pharmaceutical companies. ITAT explained that it was a case in which Ethics Committee of the Medical Council of India, upon a complaint alleging death of a patient due to medical negligence, passed an order punishing the erring doctors but this order also had certain adverse remarks against the Max Hospital as well.

Aggrieved by these observations, Max Hospital filed a writ petition contending that since the Medical Council of India (Professional Conduct, Etiquette and Ethics) Regulations, have been framed in exercise of the power conferred under Section 20-A read with Section 33 (m) of the Indian Medical Council Act, 1956, these regulations do not govern or have any concern with the facilities, infrastructure or running of the Hospitals and secondly, that the Ethics Committee of the MCI acting under the Regulations had no jurisdiction to pass any direction or judgment on the infrastructure of any hospital which power rests solely with the concerned State Govt. It was also contended that the Petitioner was not provided an opportunity of being heard and thus the principles of natural justice were violated. While dealing with these grievances, Hon’ble Delhi High Court has held, in its operative portion of the judgment- which was reproduced by the ITAT in entirety, as follows:

“8. It is clearly admitted by the Respondent that it has no jurisdiction to pass any order against the Petitioner hospital under the 2002 Regulations. In fact, it is stated that it has not passed any order against the Petitioner hospital. Thus, I need not go into the question whether the adequate infrastructure facilities for appropriate post-operative care were in fact in existence or not in the Petitioner hospital and whether the principles of natural justice had been followed or not while passing the impugned order. Suffice it to say that the observations dated 27.10.2012 made by the Ethics Committee do reflect upon the infrastructure facilities available in the Petitioner hospital and since it had no jurisdiction to go into the same, the observations were uncalled for and cannot be sustained.

9. Since the MCI had no jurisdiction to go into the infrastructure facilities, I need not also go into the aspect that in the year 2011, the facilities available in the hospital were inspected and were found to be in order.

10. The petition therefore has to succeed. I hereby issue a writ of certiorari quashing the adverse observations passed by the MCI against the Petitioner hospital highlighted in Para 1 above.”

ITAT thus held that in their humble understanding, the judgment of Delhi High Court does not negate, dilute, or even deal with, ratio decidendi of, or even casual observations in, Hon’ble HP High Court’s judgment in the case of Confederation

of Indian Pharmaceutical Industry (discussed earlier). These judgments are in altogether in different field.

ITAT thus noted that while Hon’ble HP High Court dealt with the interpretation of Explanation to sub-section (1) of section 37, Hon’ble Delhi High Court dealt with the powers of the MCI to pass an order against a Hospital in Delhi on the question of adequacy regarding infrastructure facilities by Hospitals in Delhi, and that too without affording an opportunity of hearing to the said hospital. Hon’ble Delhi High Court judgment in Max Hospitals case has no bearing on the question as to whether giving benefits to the medical professionals is in violation of law or not. ITAT further noted that it is also well settled in law, including by Hon’ble jurisdictional High Court in the case of CIT v. Sudhir Jayantilal Mulji (1995) 214 /TR 154 (Born), that a judicial precedent is only “an authority for what it actually decides and not what may come to follow from some observations which find place therein”.
On the coordinate bench judgment in the case of DCIT Vs PHL Pharma Pvt Ltd

(2017), ITAT noted the following:-

‘The more we ponder about the rationale of PHL Pharma decision (supra), the more convinced we are that this decision calls for reconsideration by a larger bench. In our humble understanding, conclusions arrived in the said decision do not reflect the correct legal position, and the same is the position with respect to a large number of other coordinate bench decisions following the said decision or following the line of reasoning in the said decision- as discussed above. However, in all fairness, while we may or may not agree with a coordinate bench decision, it cannot be open to us to disregard the same, lest such judicial inconsistency should shake public confidence in the administration of justice and lest one of the fundamental legitimate expectations of the stakeholders, i.e. those exercising judicial functions will follow the reason or ground of the judicial decision in the earlier cases on identical matters, will stand declined. “It is, however, equally true”, to borrow the words of Hon’ble Supreme Courts as articulated in the case of Union of India Vs Paras Laminates Pvt Ltd [(1990) 186 /TR 722 (SC)], “that it is vital to the administration of justice that those exercising judicial power must have the necessary freedom to doubt the correctness

of an earlier decision if and when subsequent proceedings being to light

what is perceived by them as an erroneous decision in the earlier case” and that “in such circumstances, it is but natural and reasonable and indeed efficacious that the case is referred to a larger bench”. Taking a cue from the path so guided by Hon ‘ble Supreme Court in the case of Paras Laminates (supra), we recommend constitution of a bench of three or more Members to consider the question as to whether or not an item of expenditure on account of freebies to medical professionals, which is hit by rule 6.8.1 of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002- as amended from time to time, read with section 20A of the Indian Medical Council Act 1956, can be allowed as a deduction under section 37(1) of the Income Tax Act, 1961 read with Explanation thereto, in the hands of the pharmaceutical companies.

6. Thus, the legal position is clear that the claim of any expense incurred in providing various benefits in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 shall be inadmissible under section sub-section (1) of section 37 of Act being an expense prohibited by the law. Delhi High Court decision which was relied upon by ITAT in some decisions was in completely different context as discussed by ITAT Mumbai in their judgment in the case of Macleods Pharmaceuticals. These ITAT decisions allowing such expenditure are clearly not in line with the intention of the legislation.

7. Further, some taxpayers are seen to be claiming deduction on expenses incurred for a purpose which is an offence under foreign law or for compounding of an offence for violation of foreign law, claiming that provisions of Explanation 1 to subsection (1) of section 37 of the Act applies only to offences which are prohibited by the domestic law of the country. In some case this view has also been accepted by the tribunal. These judgments are also against the intention of the legislation as the legislation does not say that the Explanation 1 applies only to the violation of domestic law.

8. In order to make the intention of the legislation clear and to make it free from any misinterpretation, it is proposed to insert another Explanation to sub-section (1) of section 37 to further clarify that the expression “expenditure incurred by an assessee

for any purpose which is an offence or which is prohibited by law”, under Explanation 1, shall include and shall be deemed to have always included the expenditure incurred by an assessee, –

for any purpose which is an offence under, or which is prohibited by, any law for the time being in force, in India or outside India; or
to provide any benefit or perquisite, in whatever form, to a person, whether or not carrying on a business or exercising a profession, and acceptance of such benefit or perquisite by such person is in violation of any law or rule or regulation or guidelines, as the case may be, for the time being in force, governing the conduct of such person; or
.

9. This amendment will take effect from 1st April, 2022.

[Clause 12]

Clarification regarding deduction on payment of interest only on actual payment

Section 43B of the Act provides for certain deductions to be allowed only on actual payment. Explanation 3C, 3CA and 30 of this section provides that a deduction of any sum, being interest payable on loan or borrowing from specified financial institution/NBFC/scheduled bank or a co-operative bank under clause (d), clause (da), and clause (e) of this section respectively, shall be allowed if such interest has been actually paid and any interest referred to in these clauses which has been converted into a loan or borrowing or advance shall not be deemed to have been actually paid.

2. However, certain taxpayers are claiming deduction under section 43B on account of conversion of interest payable on an existing loan into a debenture on the ground that such conversion is a constructive discharge of interest liability and, therefore, amounted to actual payment which has been upheld by several Courts.

3. Such interpretation is against the intent of legislation. The section was introduced to curb the mischief of claiming deduction by the assessee, without paying interest to financial institutions/NBFC/scheduled bank or a co-operative bank. Section 43B makes a departure from other sections in the Act, as indicated by its non-obstante

clause. Under the provisions of this section conversion of the outstanding interest liability into debentures is not an actual payment and cannot be claimed as deduction. In other words, a mercantile system of accounting cannot be looked at when a deduction is claimed under this section, as actual payment would have to be made.

4. In view of the above, it is proposed to amend Explanation 3C, Explanation 3CA and Explanation 3D of section 43B to provide that conversion of interest payable under clause (d), clause (da), and clause (e) of section 43B, into debenture or any other instrument by which liability to pay is deferred to a future date, shall also not be deemed to have been actually paid.

5. This amendment will take effect from 1st April, 2023 and will accordingly apply

in relation to the assessment year 2023-24 and subsequent assessment years. [Clause 14]

Consequence for failure to deduct/collect or payment of tax – Computation of interest

Section 201 of the of the Act deals with the consequences of persons who fail to deduct tax or after deducting, fail to deposit the same to the credit of the Central Government. Sub-section (1A) of the said section provides that if any person who is liable to deduct tax at source does not deduct it or after so deducting fails to pay the same to the credit of the Central Government, then he shall be liable to pay simple interest at the rates specified therein. Similarly, sub-section (7) of section 206C of the Act provides that if any person who is liable to collect tax at source does not collect it or after so collecting fails to pay the same to the credit of the Central Government, then he shall be liable to pay interest at rates specified therein.

2. It has been observed that computation of interest under the said provisions in case where the default for deduction/collection of tax or payment of tax continues is subject matter of frequent litigation.

3. In order to make the intention of the legislation clear and to make it free from

any misinterpretation, it is proposed to:

(i) amend sub-section (1A) of section 201 to provide that where any order is made by the Assessing Officer for the default under sub-section (1) of the said section, the interest shall be paid by the person in accordance with the order made by the Assessing Officer in this regard;

(ii) amend sub-section (7) of section 206C to provide that where any order is made by the Assessing Officer for the default under sub-section (6A) of the said section, the interest shall be paid by the person in accordance with the order made by the Assessing Officer in this regard.

4. These amendments will take effect from 1st April, 2022.

[Clauses 60 and 62 ]

C. Socio-economic welfare measures

Extension of the last date for commencement of manufacturing or production, under section 11 SBAB, from 31.03.2023 to 31.03.2024

Section 115BAB of the Income-tax Act provides for an option of concessional rate of taxation @ 15 % for new domestic manufacturing companies provided that they do not avail of any specified incentives or deductions and fulfil certain other conditions.

2. Sub-section (2) of section 115BAB of the Act contains the conditions required to be fulfilled by such companies. Clause (a) of said sub-section (2) provides that the new domestic manufacturing company is required to be set up and registered on or after 01.10.2019, and is required to commence manufacturing or production of an article or thing on or before 31s^tMarch, 2023.

3. The intent of the introduction of section 115BAB was to attract investment, create jobs and trigger overall economic growth. However, the cumulative impact of the persistence of the COVID-19 pandemic has resulted in some delay in setting up/registration of new domestic companies and the commencement of manufacturing or production by such companies, if they have been set up and registered.

4. In order to provide relief to such companies, it is proposed to amend section 115BAB so as to extend the date of commencement of manufacturing or production of an article or thing, from 31s^tMarch, 2023 to 31s^tMarch, 2024.

5. This amendment will take effect from 1^stApril, 2022 and will accordingly apply

in relation to the assessment year 2022-23 and subsequent assessment years. [Clause 26]

Extension of date of incorporation for eligible start up for exemption

The existing provisions of the section 80-IAC of the Act inter alia, provide for a deduction of an amount equal to one hundred percent of the profits and gains derived from an eligible business by an eligible start-up for three consecutive assessment years out of ten years, beginning from the year of incorporation, at the option of the assesses subject to the condition that,-

(i) the total turnover of its business does not exceed one hundred crore rupees,

(ii) it is holding a certificate of eligible business from the Inter-Ministerial Board of Certification, and

(iii) it is incorporated on or after 1^stday of April, 2016 but before 1^stday of April 2022.

2. Due to COVID pandemic there have been delays in setting up of such units. In order to factor in such delays and promote such eligible start-ups, it is proposed to amend the provisions of section 80-IAC of the Act to extend the period of incorporation of eligible start-ups to 31s^tMarch, 2023.

3. This amendment will take effect from 1st April, 2022 and will accordingly apply in

relation to the assessment year 2022-23 and subsequent assessment years.

[Clause 22]

Rationalization of provisions of the Act to promote the growth of co-operative societies

Section 115JC of the Act, inter alia, provides for the alternate minimum tax (AMT) payable by co-operative societies, which is at the rate of 18.5%. However, vide the Taxation Laws (Amendment) Act, 2019, the Minimum Alternate Tax (MAT) rate for companies has been reduced to 15%. Therefore, in order to provide parity between

co-operative societies and companies, it is proposed to modify sub-section (4) of section 115JC to reduce the AMT rate at which co-operative societies are liable to pay income-tax to 15%. Consequential amendment is also proposed in clause (b) of section 115JF in relation to the definition of “alternate minimum tax”.

2. These amendments will take effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. [Clauses 29 and 30]

Tax Incentives to International Financial Services Centre (IFSC)

Over the past few years several tax concessions have been provided to units located in International Financial Services Centre (IFSC) under the Act to make it a global hub of financial services sector.

2. In order to further incentivise operations from IFSC, it is proposed to provide

the following additional incentives:

(i) It is proposed to amend clause (4E) of section 10 of the Act to extend the exemption under the said clause to the income accrued or arisen to or received by a non-resident as a result of transfer of offshore derivative instruments or over-the-counter derivatives entered into with an Offshore Banking Unit of an International Financial Services Centre, referred to in subsection (1A) of section 80LA.

(ii) It is proposed to amend clause (4F) of section 10 to extend the exemption under the said clause to the income of a non-resident by way of royalty or interest, on account of lease of a ship in a previous year, paid by a unit of an International Financial Services Centre, as referred to in sub-section (1A) of section BOLA, if the unit has commenced its operations on or before the 31st March, 2024.

It is also proposed to define “ship” to mean a ship or an ocean vessel, an engine of a ship or an ocean vessel, or any part thereof.

(iii) It is proposed to insert clause (4G) in section 10 to provide exemption to any income received by a non-resident from portfolio of securities or financial products or funds, managed or administered by any portfolio manager on behalf of such non-resident, in an account maintained with an Offshore

Banking Unit, in any International Financial Services Centre, referred to in subsection (1A) of section BOLA, to the extent such income accrues or arises outside India and is not deemed to accrue or arise in India.

It is also proposed to provide that “portfolio manager” shall have the same meaning as assigned to it in clause (z) of sub-regulation (1) of regulation (2) of International Financial Services Centres Authority (Capital Market Intermediaries) Regulations, 2021 made under the International Financial Services Centres Authority Act, 2019;

(iv) It is proposed to amend the Explanation to clause (viib) of section 56 of the Act to provide that specified fund shall also include Category I or a Category II Alternative Investment Fund which is regulated under the International Financial Services Centres Authority Act, 2019.

(v) It is proposed to amend clause (d) of sub-section (2) of section BOLA of the Act to provide that in addition to the income arising from the transfer of an asset being an aircraft, the income arising from the transfer of an asset, being a ship, which was leased by a unit of the International Financial Services Centre to any person shall also be eligible for deduction under section (1A) of the said section, subject to the condition that the unit has commenced operation on or before the 31st day of March, 2024.

It is also proposed to provide that ship shall have the same meaning as provided under clause (4F) of section 10.

3. These amendments will take effect from 1^stApril, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. [Clauses 4, 16 and 23]

Incentives to National Pension System (NPS) subscribers for state government employees

Under the existing provisions of the Act, any contribution by the Central Government or any other employer to the account referred to in section BOCCD of the Act (NPS account), shall be allowed as a deduction to the assesses in the computation of his total income, if it does not exceed 14% of his salary where such contribution is made by the Central Government. This limit is presently 10% of his salary where such contribution is made by any other employer. The State Governments were given an

option to raise the contribution to 14% w.e.f 01.04.2019 on their own volition, based on their own internal approvals and notifications, without seeking the approval of the Pension Fund Regulatory and Development Authority

2. In order to ensure that the State Government employees also get full deduction of the enhanced contribution by the State Government, it is proposed to increase the limit of deduction under section 80CCD of the Act from the existing ten per cent to fourteen per cent in respect of contribution made by the State Government to the account of its employee.

3. This amendment will take effect retrospectively from 1st April, 2020 and will accordingly apply in relation to the assessment year 2020-21 and subsequent assessment years; so as to ensure no additional tax liability arises on any contribution made in excess of 10% during such time.

[Clause 20]

Condition of releasing of annuity to a disabled person

The existing provision of section 8000, inter alia, provide for a deduction to an individual or HUF, who is a resident in India, in respect of (a) expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or (b) amount paid to LIC or any other insurer or administrator or specified company in respect of a scheme for the maintenance of a disabled dependant.

2. Sub-section (2) of the aforesaid section provides that the deduction shall be allowed only if the payment of annuity or lump sum amount is made to the benefit of the dependant, in the event of the death of the individual or the member of the HUF in whose name subscription to the scheme has been made.

3. Sub-section (3) of the aforesaid section provides that if the dependant with disability, predeceases the individual or the member of the HUF, the amount deposited in such scheme shall be deemed to be the income of the assessee of the previous

year in which such amount is received by the assessee and shall accordingly be chargeable to tax as the income of that previous year.

4. In the Writ Petition No. 1107 of 2017 Ravi Agrawal versus Union of India and Another, Justice A.K. Sikri observed that that there could be harsh cases where handicapped dependants may need payment of annuity or lump sum basis even during lifetime of their parents/guardians. It was further observed that the Centre may take into consideration all the aspects, including those where a disabled dependant might need payment on annuity or lump sum basis even during the lifetime of the parents or guardians.

5. Therefore, in order to remove this genuine hardship, it is proposed to allow the deduction under the said section also during the lifetime, i.e., upon attaining age of sixty years or more of the individual or the member of the HUF in whose name subscription to the scheme has been made and where payment or deposit has been discontinued. Further, it is proposed that the provisions of sub-section (3) shall not apply to the amount received by the dependant, before his death, by way of annuity or lump sum by application of the condition referred to in the proposed amendment.

6. This amendment will take effect from 1st April, 2023 and will accordingly apply

in relation to the assessment year 2023-24 and subsequent assessment years. [Clause 21]

Exemption of amount received for medical treatment and on account of death due to COVID-19

Clause (x) of sub-section (2) of section 56 of the Income-tax Act, 1961 (the Act) inter alia, provides that where any person receives, in any previous year, from any person or persons any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum shall be the income of the person receiving such sum. However, certain exceptions have been provided in the clause for transaction specified therein.

2. Clause (2) of section 17 of the Act, inter alia, provides the definition of “perquisite”. However, certain exceptions have been provided which shall not include as perquisites.

3. The Finance Ministry has released a press statement dated: 25.06.2021 where it was announced that income-tax shall not be charged on the amount received by a taxpayer for medical treatment from employer or from any person for treatment of COVID-19 during FY 2019-20 and subsequent years. It was further announced that in order to provide relief to the family members of such taxpayer, income-tax exemption shall be provided to ex-gratia payment received by family members of a person from the employer of such person or from other person on the death of the person on account of COVID-19 during FY 2019-20 and subsequent years. Also, it was stated that the exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to Rs. 10 lakh in aggregate for the amount received from any other persons.

4. In order to provide the relief as stated in the press statement, it is proposed to amend clause (2) of section 17 and to insert a new sub-clause in the proviso to state that any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family in respect of any illness relating to COVID-19 subject to such conditions, as may be notified by the Central Government, shall not be forming part of “perquisite”.

5. Further, it is proposed to amend the proviso to Clause (x) of sub-section (2) of

section 56 and insert two new clauses in the proviso so as to provide that-

(i) any sum of money received by an individual, from any person, in respect of any expenditure actually incurred by him on his medical treatment or treatment of any member of his family, in respect of any illness related to COVID-19 subject to such conditions, as may be notified by the Central Government in this behalf, shall not be the income of such person;

(ii) any sum of money received by a member of the family of a deceased person, from the employer of the deceased person (without limit), or from any other person or persons to the extent that such sum or aggregate of such sums does not exceed ten lakh rupees, where the cause of death of such person is illness

relating to COVID-19 and the payment is, received within twelve months from the date of death of such person, and subject to such other conditions, as may be notified by the Central Government in this behalf, shall not be the income of such person.

6. Further, it is proposed to provide that for the purpose of both of the said clauses, “family” in relation to an individual shall have the same meaning as assigned to in the Explanation 1 to clause (5) of section 10.

7. These amendments will take effect retrospectively from 1st April, 2020 and will accordingly apply in relation to the assessment year 2020-21 and subsequent assessment years.

[Clauses 10 and 16 ]

Facilitating strategic disinvestment of public sector companies

Section 79 of the Act provides for carry forward and set-off of losses in case of certain companies. Sub-section (1) of the said section, inter-alia, provides that where a change in shareholding has taken place during the previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year, unless on the last day of the previous year, the shares of the company carrying not less than fifty-one per cent of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent of the voting power on the last day of year or years in which the loss was incurred. Sub-section (2) of the said section provides certain circumstances in which the provisions of sub-section (1) shall not apply.

2. It order to facilitate the strategic disinvestment of public sector companies, it is proposed to amend section 79 of the Act to provide that the provisions of sub-section (1) of section 79 shall not apply to an erstwhile public sector company subject to the condition that the ultimate holding company of such erstwhile public sector company, immediately after the completion of strategic disinvestment, continues to hold, directly or through its subsidiary or subsidiaries, at least fifty one per cent of the voting power of the erstwhile public sector company in aggregate.

2.1 It is further proposed to provide that if the above condition is not complied with in any previous year after the completion of strategic disinvestment, the provisions of sub-section (1) shall apply for such previous year and subsequent previous years.

2.2 The terms “erstwhile public sector company” and “strategic disinvestment” shall have the meaning assigned to in clause (ii) and (iii) of the Explanation to clause (d) of sub-section (1) of Section 72A respectively.

3. This amendment will take effect from 1^stday April, 2022 and will accordingly apply in relation to the assessment year 2022-23 and subsequent assessment years. [Clause 18]

D. Widening and deepening of tax base

Rationalization of provisions of section 206AB and 206CCA to widen and deepen tax-base

In order to widen and deepen the tax-base and to nudge taxpayers to furnish their return of income, Finance Act, 2021 inserted sections 206AB and 206CCA in the Act. The said sections provide for special provision for deduction and collection of tax at source respectively, in case of specified persons at higher rates specified therein.

2. “Specified person” has been defined to mean a person who has not filed the returns of income for both the two assessment years relevant to the two previous years immediately preceding the financial year in which tax is required to be deducted or collected, for which the time limit for filing return of income under sub-section (1) of section 139 has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years. Government has provided online utility to taxpayers to check whether the person is specified person or not.

3. Further, the provisions of section 206AB are not applicable in relation to transactions on which tax is to be deducted under sections 192, 192A, 194B, 1948B, 194LBC or 194N of the Act.

4. In order to ensure that all the persons in whose case significant amount of tax has been deducted do furnish their return of income, it is proposed to reduce two years requirement to one year by amending sections 206AB and 206CCA of the Act to provide that “specified person” to mean as a person who has not filed its return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is to be deducted or collected, as the case may be, and the amount of tax collected and deducted at source is Rs. 50,000 or more in the said previous year.

5. However, in order to reduce the additional burden on individual and Hindu undivided family (HUF) taxpayers covered under section 194-IA, 194-IB and 194M of the Act for whom simplified tax deduction system has been provided without requirement of TAN, it is proposed that the provisions of section 206AB will not apply in relation to transactions on which tax is to be deducted under the said sections of the Act.

6. In addition to above, it is also proposed to rectify a drafting error in sections 206AB and 206CCA wherein the terms “deductor” and “collectee” respectively were used incorrectly. Further, since the returns are now being furnished electronically, it is also proposed that in place of ‘filing’ of return, the term ‘furnishing’ of return may be substituted.

7. Further, as a consequential amendment in section 194-IB it is also proposed to

omit the reference of section 206AB from sub-section (4) of the said section.

8. These amendments will take effect from 1^stApril, 2022.

[Clauses 57, 61 and 63]

Rationalization of provisions of TDS on sale of immovable property

Section 194-IA of the Act provides for deduction of tax on payment on transfer of certain immovable property other than agricultural land. Sub-section (1) of the said section provides for deduction of tax by any person responsible for paying to a resident any sum by way of consideration for transfer of any immovable property (other than

agricultural land) at the time of credit or payment of such sum to the resident at the rate of one per cent. of such sum as income-tax thereon. Sub-section (2) provides that no deduction of tax shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.

2. As per the provisions of the said section, TDS is to be deducted on the amount of consideration paid by the transferee to the transferor. This section does not take into account the stamp duty value of the immovable property, whereas, as the provisions of section per 43CA and 50C of the Act, for the computation of income under the head “Profits and gains from business or profession” and “capital gains” respectively, the stamp duty value is also to be considered. Thus there is inconsistency in the provisions of section 194-IA and sections 43CA and 50C of the Act.

3. In order to remove inconsistency, it is proposed to amend section 194-IA of the Act to provide that in case of transfer of an immovable property (other than agricultural land), TDS is to be deducted at the rate of one per cent. of such sum paid or credited to the resident or the stamp duty value of such property, whichever is higher. In case the consideration paid for the transfer of immovable property and the stamp duty value of such property are both less than fifty lakh rupees, then no tax is to be deducted under section 194-IA.

3.1 Stamp duty value shall have the meaning assigned to it in clause (f) of the

Explanation to clause (vii) of sub-section (2) of section 56.

4. This amendment will take effect from 1^stApril, 2022.

[Clause 56]

TDS on benefit or perquisite of a business or profession

As per clause (iv) of section 28 of the Act, the value of any benefit or perquisite, whether convertible into money or not, arising from business or exercise of profession is to be charged as business income in the hands of the recipient of such benefit or perquisite. However, in many cases, such recipient does not report the receipt of benefits in their return of income, leading to furnishing of incorrect particulars of income.

2. Accordingly, in order to widen and deepen the tax base, it is proposed to insert a new section 194R to the Act to provide that the person responsible for providing to a resident, any benefit or perquisite, whether convertible into money or not, arising from carrying out of a business or exercising of a profession by such resident, shall, before providing such benefit or perquisite, as the case may be, to such resident, ensure that tax has been deducted in respect of such benefit or perquisite at the rate of ten per cent of the value or aggregate of value of such benefit or perquisite. For the purpose of this section, the expression ‘person responsible for providing’ has been proposed to mean a person providing such benefit or perquisite or in case of a company, the company itself including the principal officer thereof.

2.1 Further, in a case where the benefit or perquisite, as the case may be, is wholly in kind or partly in cash and partly in kind but such part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of such benefit or perquisite, the person responsible for providing such benefit of perquisite shall, before releasing the benefit or perquisite, ensure that tax has been paid in respect of the benefit or perquisite.

2.2 No tax is to be deducted if the value or aggregate value of the benefit or perquisite paid or likely to be paid to a resident does not exceed twenty thousand rupees during the financial year.

2.3 Further, the provisions of the said section shall not apply to an individual or a Hindu undivided family, whose total sales, gross receipts or turnover does not exceed one crore rupees in case of business or fifty lakh rupees in case of profession during the financial year immediately preceding the financial year in which such benefit or perquisite, as the case may be, is provided.

3. This amendment will take effect from 1^stJuly, 2022.

[Clause 58]

Widening the scope of reporting by producers of cinematograph films or persons engaged in specified activities

Under section 285B, the producer of cinematographic films is obliged to furnish within 30 days from the end of the financial year or from the date of completion of the film, whichever is earlier, a statement containing particulars of all payments over Rs. 50,000/- in the aggregate made by him or due from him to each person engaged by him.

2. It is proposed to widen the scope of section 285B to include persons engaged in specified activities to expand the reporting requirements in Form 52A. “Specified Activities” would mean event management, documentary production, production of programs for telecasting on television or over the top platforms or any other similar platform, sports event management, other performing arts or any other activity as the Central Government may, by notification in the Official Gazette, specify in this behalf.

3. This amendment will take effect from 1^stApril 2022.

[Clause 84]

Provisions pertaining to bonus stripping and dividend stripping to be made applicable to securities and units

Section 94 of the Act contains anti avoidance provisions to deal with transactions in securities and units of mutual fund which, inter-alia, include dividend stripping and bonus stripping.

2. However, the current provisions of sub-section (8) of section 94 of the Act do not apply to bonus stripping undertaken in case of securities. It is also not applicable to units of Infrastructure Investment Trust (lnvlT) or Real Estate Investment Trust (REIT) or Alternative Investment Funds (AIFs) as the definition of the term “unit” has not been modified subsequent to introduction of provisions relating to RETls, lnvlTs etc. Further, the current provisions of sub-section (7) of section 94 of the Act, i.e. provisions pertaining to dividend stripping, are not applicable to the units of new pooled investment vehicles such as lnvlT or REIT or AIFs.

3. In view of the above, it is proposed to amend sub-section (8) of section 94, pertaining to the prevention of tax evasion through bonus stripping, so as to make the said provision applicable to securities as well.

4. It is also proposed to amend the Explanation to the said section to modify the definition of unit, so as to include units of business trusts such as lnvlT, REIT and AIF, within the definition of units.

5. This amendment will take effect from 1^stApril, 2023 and will accordingly apply

in relation to the assessment year 2023-24 and subsequent assessment years. [Clause 25]

E. Revenue Mobilization

Scheme for taxation of virtual digital assets

Virtual digital assets have gained tremendous popularity in recent times and the volumes of trading in such digital assets has increased substantially. Further, a market is emerging where payment for the transfer of a virtual digital asset can be made through another such asset. Accordingly a new scheme to provide for taxation of such virtual digital assets has been proposed in the Bill.

2. The proposed section 115BBH seeks to provide that where the total income of an assessee includes any income from transfer of any virtual digital asset, the incometax payable shall be the aggregate of the amount of income-tax calculated on income of transfer of any virtual digital asset at the rate of 30% and the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the aggregate of the income from transfer of virtual digital asset.

2.1 However, no deduction in respect of any expenditure (other than cost of acquisition) or allowance or set off of any loss shall be allowed to the assessee under any provision of the Act while computing income from transfer of such asset.

2.2 Further, no set off of any loss arising from transfer of virtual digital asset shall be allowed against any income computed under any other provision of the Act and such loss shall not be allowed to be carried forward to subsequent assessment years.

2.3 This amendment will take effect from 1^stApril, 2023 and will accordingly apply

in relation to the assessment year 2023-24 and subsequent assessment years.

3. Further, in order to widen the tax base from the transactions so carried out in relation to these assets, it is proposed to insert section 194S to the Act to provide for deduction of tax on payment for transfer of virtual digital asset to a resident at the rate of one per cent of such sum. However, in case the payment for such transfer is-

(i) wholly in kind or in exchange of another virtual digital asset where there is no part in cash; or

(ii) partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of such transfer,

the person before making the payment shall ensure that the tax has been paid in respect of such consideration.

3.1 In case of specified persons, the provisions of section 203A and 206AB will not be applicable. Further, no tax is to be deducted in case the payer is the specified person and the value or the aggregate of such value of consideration to a resident is less than Rs. 50,000 during the financial year. In any other case, the said limit is proposed to be Rs. 10,000 during the financial year.

3.2 It is also proposed to provide that if tax has been deducted under section 194S, then no tax is to be collected or deducted in respect of the said transaction under any other provision of Chapter XVI I of the Act.

3.3 Furthermore, in any sum paid for transfer of virtual digital asset is credited to any account, whether called “Suspense Account” or by any other name, in the books of account of the person liable to pay such sum, such credit of the sum shall be deemed to be the credit of such sum to the account of the payee and the provisions of section 194S shall apply accordingly.

3.4 It is proposed to empower the Board to issue guidelines, with the prior approval of the Central Government, to remove any difficulty arising in giving effect to the provisions of the said section and every such guideline issued by the Board shall be laid before each House of Parliament, and shall be binding on the income-tax authorities and on the person responsible for paying the consideration on transfer of such virtual digital assets.

3.5 It is also proposed to provide that in case of a transaction where tax is deductible under section 194-0 along with the proposed section 194S, then the tax shall be deducted under section 194S and not section 194-0.

3.6 For the purposes of the said section, it is proposed to provide that ‘specified

person’ means a person:-

(i) being an individual or Hindu undivided family whose total sales, gross receipts or turnover from the business carried on by him or profession exercised by him does not exceed one crore rupees in case of business or fifty lakh rupees in case of profession, during the financial year immediately preceding the financial year in which such virtual digital asset is transferred;

(ii) being an individual or Hindu undivided family having income under any head other than the head ‘Profits and gains of business or profession’.

3.7 This amendment will take effect from 1^stof July, 2022.

4. Further, in order to provide for taxing the gifting of virtual digital assets, it is also proposed to amend Explanation to clause (x) of sub-section (2) of section 56 of the Act to inter-alia, provide that for the purpose of the said clause, the expression “property” shall have the meaning assigned to it in Explanation to clause (vii) and shall include virtual digital asset.

4.1 This amendment will take effect from 1^stApril, 2023 and will accordingly apply

in relation to the assessment year 2023-24 and subsequent assessment years.

5. To define the term “virtual digital asset”, a new clause (47 A) is proposed to be inserted to section 2 of the Act. As per the proposed new clause, a virtual digital asset is proposed to mean any information or code or number or token (not being Indian currency or any foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value which is exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account and includes its use in any financial transaction or investment, but not limited to, investment schemes and can be transferred, stored or traded electronically. Non fungible token and; any other token of similar nature are included in the definition.

5.1 Central Government may notify any other virtual digital asset as virtual digital asset by way of notification in the Official Gazette. The Non-fungible tokens means such digital assets as notified by the Central Government. Further, Central Government can notify such assets which shall not be considered as virtual digital assets for the purposes of the proposed section.

5.2 These amendments will take effect from 1^stApril, 2022.

[Clauses 3, 16, 28 and 59]

Withdrawal of concessional rate of taxation on dividend income under section 11588D

Section 115B8D of the Act provides for a concessional rate of tax of 15 % on the dividend income received by an Indian company from a foreign company in which the said Indian company holds 26 % or more in nominal value of equity shares (specified foreign company). This rate was aligned to the rate of tax provided under section 115-0 of the Act.

2. Finance Act, 2020 abolished the dividend distribution tax provided in section 115-0 to, inter-alia, provide that dividend shall be taxed in the hands of the shareholder at applicable rates plus surcharge and cess.

3. In order to provide parity in the tax treatment in case of dividends received by Indian companies from specified foreign companies vis a vis dividend received from domestic companies, it is proposed to amend section 115B8D of the Act to provide that the provisions of this section shall not apply to any assessment year beginning on or after the 1^stday of April, 2023.

4. This amendment will take effect from 1^stApril, 2023 and will accordingly apply

in relation to the assessment year 2023-24 and subsequent assessment years. [Clause27]

F. Phasing out exemptions

Withdrawal of exemption under clauses (8), (SA), (8B) and (9) of section 10 of the Income-tax Act, 1961- reg

Clause (8) of the section 10 of the Act provides for exemption to the income of an individual who is assigned duties in India in connection with any co-operative technical assistance programmes and projects. Such co-operative technical assistance programmes and projects are required to be in accordance with an agreement entered by the Central Government and the Government of a foreign state (the terms thereof provide for the exemption given by this clause).

2. Exemption is provided to both (i) the remuneration received by the individual from the foreign state for such duties and (ii) any other income accruing or arising outside India (which is not deemed to accrue or arise in India), in respect of which the individual is required to pay any income or social security tax to the Government of the foreign state.

3. Clause (8A) of the said section provides for exemption on the remuneration or fee received by a consultant, directly or indirectly out of the funds made available to an international organisation (agency) under a technical assistance grant agreement between the agency and the Government of a foreign state. The said clause also provides exemption to such consultant in respect of any income accruing or arising outside India (which is not deemed to accrue or arise in India), in respect of which the consultant is required to pay income or social security tax to the Government of the country of his or its origin.

4. For the purposes of this clause, if the consultant is an individual he must be a foreign citizen or in case he is an Indian citizen he should be not ordinarily resident in India. In case the consultant is not an individual, such person is required to be nonresident.

5. Consultant should be engaged by the agency for rendering technical services in India in connection with any technical assistance programme or project. Such technical assistance programme or projects are required to be in accordance with an

agreement entered into by the Central Government and the agency and the agreement relating to the engagement of the consultant is required to be approved by the prescribed authority.

6. Clause (8B) of the said section provides for exemption to an individual who is an employee of the consultant as referred to in clause (8A) of section 10 . Such individuals are those who are assigned duties in India in connection with any technical assistance programme and project. These technical assistance programmes and projects are required to be in accordance with an agreement entered into by the Central Government and the agency.

7. The exemption is provided to the remuneration received by such individual, directly or indirectly, for such duties from any consultant referred to in clause (8A) of section 10. Exemption is also provided to any income accruing or arising outside India (which is not deemed to accrue or arise in India), in respect of which the individual is required to pay income or social security tax to the country of his origin.

8. The individual must be the employee of the consultant. He may be a foreign citizen or if he is an Indian citizen, he is not ordinarily resident in India. It is also required that the contract of service of the employee is approved by the prescribed authority before the commencement of his service.

9. Clause (9) of the said section provides for exemption to the income of the family members of any individual or consultant as referred in clause (8), clause (8A) and clause (8B), who accompanies such individual or consultant to India. The exemption is provided to income accruing or arising outside India (which is not deemed to accrue or arise in India), in respect of which such member is required to pay any income or social security tax to the Government of that foreign state or country of origin of such member.

10. The exemptions as provided under the above-mentioned clauses have outlived their utility in the era of simplification of tax laws and where exemptions and tax incentives are being phased out as a matter of stated policy of the Government. Further, if under a tax treaty, India gets a right to tax a particular income and the other

country is expected to then relieve double taxation by exemption or credit method, providing exemption by India amounts to surrender of right of taxation by India in favour of the other country.

11. Accordingly, it is proposed to amend clauses (8), (8A), (8B) and (9) of section 10 of the Act to provide that the provisions of the said clauses shall not apply to remuneration, fee or income of the previous year relevant to the assessment year beginning on or after the 1^stday of April, 2023.

12. These amendments will take effect from 1^stApril, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. [Clause4]

G. Rationalization Measures

Amendment in the provisions of section 248 of Income-tax Act and insertion of new section 239A

Section 248 of the Act provides that in a case where, under an agreement or other arrangement, a person who has deducted tax on any income paid to a nonresident, other than interest, under section 195 of the Act, he may appeal to the Commissioner (Appeals) for a declaration that no tax was deductible on such income, if he claims that such tax is to be borne by him since no tax was required to be deducted on such income. Such appeal can be filed after making payment of tax so deducted to the credit of the Government account. Further, section 249 of the Act lays down that an appeal under section 248 of the Act should be filed within 30 days of making payment of such tax to the Government account.

2. To obtain a refund of the tax deducted and paid by a person, where it was not deductible, as per the provisions of section 248 of the Act, a taxpayer has no recourse to approach the Assessing Officer with such request. He has to necessarily enter the appellate process by filing an appeal before the Commissioner (Appeals). At the same time, the agreement or arrangement, under which the tax has been deducted and paid, is not brought on the record of the Assessing Officer or examined by him.

3. In view of the above, it is proposed that a new section 239A may be inserted in the Act to provide that such a person, who has made the deduction of tax under such an agreement or arrangement and borne the tax liability, when no tax deduction was required, may file an application for refund of such tax deducted before the Assessing Officer.

4. Such person can, if he is not satisfied with the order of the Assessing Officer, go into appeal against such order before the Commissioner (Appeals), under section 246A of the Act. Accordingly, the provisions of section 248 of the Act will not apply in cases where the date of tax payment, to the credit of Central Government is on or after 01.04.2022.

5. These amendments will take effect from P¹April, 2022.

[Clauses 66, 68 and 69]

Cash credits under section 68 of the Act

Section 68 of the Act provides that where any sum is found to be credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.

2. The onus of satisfactorily explaining such credits remains on the person in whose books such sum is credited. If such person fails to offer an explanation or the explanation is not found to be satisfactory then the sum is added to the total income of the person. Certain judicial pronouncements have created doubts about the onus of proof and the requirements of this section, particularly, in cases where the sum which is credited as loan or borrowing.

3. It is noticed that there is a pernicious practice of conversion of unaccounted money by crediting it to the books of assesses through a masquerade of loan or borrowing.

4. Vide Finance Act, 2012, it was provided that the nature and source of any sum, in the nature of share application money, share capital, share premium or any such amount by whatever name called, credited in the books of a closely held company shall be treated as explained only if the source of funds is also explained in the hands of the shareholder. However, in case of loan or borrowing, the judicial decisions have held that only identity and creditworthiness of creditor and genuineness of transactions for explaining the credit in the books of account is sufficient, and the onus does not extend to explaining the source of funds in the hands of the creditor.

5. It is proposed to amend the provisions of section 68 of the Act so as to provide that the nature and source of any sum, whether in form of loan or borrowing, or any other liability credited in the books of an assessee shall be treated as explained only if the source of funds is also explained in the hands of the creditor or entry provider. However, this additional onus of proof of satisfactorily explaining the source in the hands of the creditor, would not apply if the creditor is a well regulated entity, i.e., it is a Venture Capital Fund, Venture Capital Company registered with SEBI.

6. This amendment will take effect from 1st April, 2023 and will accordingly apply

in relation to the assessment year 2023-24 and subsequent assessment years. [Clause 17]

Alignment of the provisions relating to Offences and Prosecutions under Chapter XXII of the Act

Sections 269UC/UE/UL along with other provisions of Chapter XX-C have been made inapplicable with effect from 01.07.2002. Vide Finance Act, 2002, section 269UP was introduced providing that the provisions of the Chapter shall not apply to, or in relation to, the transfer of any immovable property effected on or after 01.07.2002. Consequently, prosecution provisions u/s 276AB are not relevant, as launching prosecution against offences committed more than twenty years ago, that is prior to 2002 would be beyond reasonable time.

2. Since such cases involve transfer of immovable property, it is not improbable that prosecution cases launched previously while the relevant provisions were still in

effect might be ongoing. Therefore, in order to take those cases to logical conclusion without any interpretational issue arising on applicability of the section or otherwise, it is proposed to amend section 276AB to align it with the provisions of the Act that have been made inapplicable, by providing a sunset clause. Hence, it is proposed that no fresh prosecution proceeding shall be initiated under this section on or after 1^stApril, 2022.

3. Section 2768 provides for prosecution for a term ranging from three months to seven years with fine for failure to pay tax to the credit of Central Government under Chapter XII-Dor XVII-B. Under this section, a person shall be punishable for failure to

a) deduct the tax as required under the provisions of Chapter XVII-B which deals with deduction of tax at source, or

b) to pay the tax, as required by or under(i) sub-section (2) of section 115-0 or

(ii) the second proviso to section 1948.

Section 1948 was amended vide Finance Act 1999 w.e.f. 01.04.2000 by which the first proviso to the section was omitted and the section currently has only one proviso. Therefore, to avoid ambiguity among the sections 2768 and 1948, it is proposed to substitute the sub-clause (ii) of clause (b) of section 2768 with “proviso to section 1948”.

Similar amendment is proposed in Section 271 C.

4. Sections 278A and 278AA are related to punishment with prosecution against persons for failure to pay tax to the credit of Central Government under Chapter XVIIB for tax deducted at source. However, similar provisions for offence with respect to tax collected at source under Chapter XVII-BB, providing for punishment with prosecution against persons failing to pay tax collected at source is not there under sections 278A and 278AA.Therefore, it is proposed to include section 27688 under sections 278A and 278AA owing to the similar nature of offences that are punishable under section 2768 and section 27688.

5. These amendments will take effect from 1 “April, 2022.

[Clauses 77,79, 80,, 82 and 83]

Faceless Schemes under the Act

The Central Government has undertaken a number of measures to make the processes under the Act, electronic, by eliminating person to person interface between the taxpayer and the Department to the extent technologically feasible, and provide for optimal utilisation of resources and a team-based assessment with dynamic jurisdiction. A series of futuristic reforms have been introduced in the domain of Direct Tax administration for the benefit of taxpayers and economy. This started with faceless assessment in electronic mode involving no human interface between taxpayers and tax officials. The faceless procedures are being introduced in a phased manner in the Act.

2. As part of this process of making the tax administration transparent and efficient, provisions for notifying faceless schemes under sections 92CA, 144C, 253 and 264A were introduced in the Act through Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from 01.11.2020 and under section 255, was inserted through Finance Act, 2021 with effect from 01.04.2021:

S.No.	Section	Scheme			Date of Limitation
1.	92CA	Faceless	determination	of	31^stday of March, 2022
		arm’s length price
2.	144C	Faceless Dispute Resolution	31^stday of March, 2022
		Panel
3.	253	Faceless appeal to Appellate	31^stday of March, 2022
		Tribunal
4.	255	Faceless	procedure	of	31^stday of March, 2023
		Appellate Tribunal

3. Section 92CA and section 144C are principally related to the transfer pricing functions and international taxation which are presently out of the regime of faceless assessment. New schemes for these two functions are a part of the assessment function and should follow the faceless assessment procedure, wherein certain modifications are proposed which will have an impact on the information technology structure. Therefore, notification at this time shall result in delay in stabilization of the systems.

4. As for notification of scheme under section 255, the Appellate Tribunal is deemed to be a civil court for all the purposes of section 195 of the Act and Chapter XXXV of the Code of Criminal Procedure, 1898. Therefore, a scheme governing the procedures to be followed by such a body needs to be formulated after due consultations with Ministry of Law & Justice. Similarly, the scheme under section 253 have to follow the scheme under section 255.

5. In light of the above limitations it is proposed to extend the date for issuing directions for the purposes of these sections 92CA, 144C, 253 and 255 till 31^stMarch, 2024.

6. These amendments will take effect from pt April, 2022.

[clause 24, 43, 70 and 71]

Amendment in Faceless Assessment under section 1448 of the Act

The Central Government has undertaken a number of measures to make the processes under the Act electronic, by eliminating person to person interface between the taxpayer and the Department to the extent technologically feasible, and provide for optimal utilisation of resources and a team-based assessment with dynamic jurisdiction. As part of this policy, vide Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, section 144B was inserted in the Act to provide the procedure for faceless assessment with effect from 01.04.2021 and the Faceless Assessment Scheme, 2019 ceased to operate from that date.

2. However, various difficulties are being faced by the administration and the taxpayers in the operation of the faceless assessment procedure. In view of the above, it is proposed that the existing provisions of the section 144B of the Act may be amended to streamline the process of faceless assessment in order to address the various legal and procedural problems being faced in the implementation of the said section.

3. Therefore, it is proposed to substitute section 144B of the Act so as to provide

that-

(a) the provisions of the proposed section shall apply for faceless assessment, reassessment or recomputation under sub-section (3) of section 143 or under section 144 or under section 147 of the Act, as the case may be, in the cases specified therein.

(b) the National Faceless Assessment Centre (NaFAC) shall assign the case selected for the purposes of faceless assessment to a specific Assessment Unit (AU) and intimate the assessee that assessment in his case shall be completed in accordance with the procedure laid down in the proposed section.

(c) the assessee shall be served a notice under sub-section (2) of section 143 or under sub-section (1) of section 142 of the Act, through the NaFAC. The assessee may file his response to the aforementioned notice under sub-section (3) of section 143, within the date specified in such notice in this regard, to the NaFAC, which shall forward the reply to the AU.

(d) Thereafter, the AU may make a request, through the NaFAC, for obtaining such further information, documents or evidence from the assessee or any other person, as it may specify and the NaFAC shall serve appropriate notice or requisition on the assessee or any other person for obtaining such information, documents or evidence. The AU may also make a request, through the NaFAC, for conducting enquiry or verification by Verification Unit (VU) and the request shall be assigned by the NaFAC to a VU through an automated allocation system. The AU may also similarly make a request in respect of determination of arm’s length price, valuation of property, withdrawal of registration, approval, exemption or any other technical matter by referring to the technical unit and the request shall be assigned by the NaFAC to a Technical Unit (TU) through an automated allocation system.

(e) The assessee or any other person, as the case may be, shall file his response in compliance to the said notice served by NaFAC, at the request of AU, to the NaFAC which shall forward the reply to the AU. If the assessee fails to comply with the said notice seeking information served by NaFAC, or the earlier notice under sub-section (2) of section 143 or under sub-section (1) of section 142, the NaFAC shall intimate the same to the AU. The AU shall serve upon the assessee, through NaFAC, a show cause notice under section 144 giving him the opportunity to explain as to why the assessment in his case should not be

completed to the best of its judgement. Further any report received by the NaFAC, from the VU or TU shall also be forwarded to the AU.

(f) The assessee shall file his response to the show-cause notice under section 144 of the Act, within the time specified in such notice, to the NaFAC which shall forward the same to the AU. If the assessee fails to respond, the NaFAC shall intimate the same to the AU.

(g) The AU shall, after taking into account all the relevant material available on the record, prepare in writing, an income or loss determination proposal where no variation prejudicial to assessee is proposed and send the same to the NaFAC. If a variation is being proposed then a show cause notice is served on the assessee stating the variations proposed to be made to the income of the assessee and calling upon him to submit as to why the proposed variation should not be made, through the NaFAC.

(h) The assessee shall file his reply to the show cause notice to the NaFAC, on date and time as specified, which shall forward the reply to the AU. If the assessee fails to respond within the specified time, the NaFAC shall intimate the same to the AU. After considering the response of the assessee or the intimation of failure of the assessee to file a response received from NaFAC and all relevant material available on the record, the AU shall prepare an income or loss determination proposal, in writing, and send the same to the NaFAC.

(i) Upon receipt of the income or loss determination proposal, with or without any variations proposed to the income of the assessee, as the case may be, the NaFAC may, on the basis of guidelines issued by the Board, convey to the AU to prepare draft order in accordance with such income or loss determination proposal, which shall thereafter prepare a draft order, or assign the income or loss determination proposal to a Review Unit (RU) through an automated allocation system, which shall conduct a review of such order, prepare a review report and send it to NaFAC.

The NaFAC shall forward the review report received from the RU to the AU which had proposed the income or loss determination proposal. The AU may accept or reject some or all of the modifications proposed in such review report, prepare a draft order accordingly, and send it to NaFAC. The AU shall record reasons in writing if it is rejecting the modifications proposed by the RU.

(k) The NaFAC shall, upon receiving draft order in a case of eligible assessee, where there is a proposal to make any variation which is prejudicial to the interest of such assessee under sub-section (1) of section 144C for reference to Dispute Resolution Panel, serve such draft order on the assessee. In any case, other than that of eligible assessee under section 144C, the NaFAC shall convey to the AU to complete the assessment in accordance with such draft order, which shall thereafter pass the final assessment order and initiate penalty proceedings, if any, and send it to the NaFAC. The NaFAC shall serve a copy of such final assessment order, notice for initiating penalty proceedings, if any and the demand notice, specifying the sum payable by, or refund of any amount due to the assessee on the basis of such assessment, to the assessee.

(I) An eligible assessee, as referred to in section 144C, shall, upon receiving the draft order as served on him above, shall file his acceptance of the variations proposed in such draft order or file objections, if any, to such variations, with the Dispute Resolution Panel, under section 144C and the NaFAC, within the period specified in sub-section (2) of section 144C.

(m) In case the variations proposed in the draft order are accepted by the assessee or not objected to within the time given in sub-section (2) of section 144C, the NaFAC shall intimate the AU of the same, which shall complete the assessment, on the basis of the draft order, within the time allowed under sub-section (4) of section 144C and initiate penalty proceedings, if any, and send the order to the NaFAC.

(n) Where the eligible assessee files objections with the Dispute Resolution Panel, against the variations proposed in the draft order in his case, the NaFAC shall send such intimation along with a copy of such objections to the AU. Upon receipt of the directions issued by the Dispute Resolution Panel in the case of an eligible assessee under section 144C, the NaFAC shall forward such directions to the AU. The AU shall complete the assessment within the time allowed in sub-section (13) of section 144C and initiate penalty proceedings, if any, in conformity with the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, and send a copy of such order to the NaFAC.

(o) The NaFAC shall, upon receipt of final assessment order, in the case of an eligible assessee under section 144C or in other cases, serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along

with the demand notice, specifying the sum payable by, or the amount of refund due to, the assessee on the basis of such assessment. The NaFACshall, after completion of assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over the said case for such action as may be required under the Income-tax Act.

(p) The proposed section also provides that faceless assessment shall be made in respect of persons or class of persons, or incomes or class of incomes, or cases or class of cases or such territorial area, as may be specified by the Board.

( q) The proposed section also provides that Board may, for the purposes of faceless assessment, set up the following Centre and units and specify their functions and jurisdiction, namely:-

(i) a National Faceless Assessment Centre to facilitate the conduct of

faceless assessment proceedings in a centralised manner;

(ii) assessment units (referred to as AU), as it may deem necessary to conduct the faceless assessment, to perform the function of making assessment, which includes identification of points or issues material for the determination of any liability (including refund) under the Act, seeking information or clarification on points or issues so identified, analysis of the material furnished by the assessee or any other person, and such other functions as may be required for the purposes of making faceless assessment and the term “assessment unit”, wherever used in this section, shall refer to an Assessing Officer having powers to the extent so assigned by the Board; ;

(iii) verification units (referred to as VU), as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of verification, which includes enquiry, cross verification, examination of books of account, examination of witnesses and recording of statements, and such other functions as may be required for the purposes of verification and the term “verification unit”, wherever used in this section, shall refer to an Assessing Officer having powers so assigned by the Board;:

Further, the function of verification unit under this section may also be performed by a verification unit located in any other faceless centre set up under the provisions of this Act or under any scheme notified under the provisions of

the Act and the request for verification may also be assigned through the National Faceless Assessment Centre to such verification unit.;

(iv) technical units (referred to as TU), as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of providing technical assistance which includes any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management or any other technical matter under this Act or an agreement entered into under sections 90 or 90A, which may be required in a particular case or a class of cases and the term “technical unit”, wherever used in this section, shall refer to an Assessing Officer having powers so assigned by the Board;

(v) review units (referred to as RU), as it may deem necessary to facilitate the conduct of faceless assessment, to perform the function of review of the income determination proposal assigned under sub-clause (b) of clause (xix) of sub-section (1 ), which includes checking whether the relevant and material evidence has been brought on record, relevant points of fact and law have been duly incorporated, the issues on which addition or disallowance should be made have been incorporated and such other functions as may be required for the purposes of review and the term “review unit”, wherever used in this section, shall refer to an Assessing Officer having powers so assigned by the Board.

(r) It is also proposed that the AU, VU, TU and the RU shall have the following

authorities, namely:-

(i) Additional Commissioner or Additional Director or Joint Commissioner

or Joint Director, as the case may be;

(ii) Deputy Commissioner or Deputy Director or Assistant Commissioner or

Assistant Director, or Income-tax Officer, as the case may be;

(iii) such other income-tax authority, ministerial staff, executive or

consultant, as considered necessary by the Board.

(s) The proposed section also provides that all communication, among the AU, RU, VU or TU or with the assessee or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making a faceless assessment shall be through the NaFAC, between the NaFAC and the assessee, or his authorised representative, or any other person and all internal communications between the NaFAC and various

units shall be exchanged exclusively by electronic mode. However, this provision shall not apply to the enquiry or verification conducted by the verification unit in the circumstances as may be specified by the Board in this regard.

(t) It is further proposed that for the purposes of faceless assessment, an electronic record shall be authenticated by the NaFAC by way of an electronic communication, by the AU or VU or TU or RU, as the case may be, by affixing digital signature and by the assessee or any other person, by affixing his digital signature or under electronic verification code, or by logging into his registered account in the designated portal. It is also proposed that every notice or order or any other electronic communication shall be delivered to the addressee, being the assessee, by way of placing an authenticated copy thereof in the registered account of the assessee or by sending an authenticated copy thereof to the registered email address of the assessee or his authorised representative or by uploading an authenticated copy on the assessee’s Mobile App, and followed by a real time alert.

(u) The proposed section further seeks to provide that the assessee shall file his response to any notice or order or any other electronic communication, through his registered account, and once an acknowledgement is sent by the NaFAC containing the hash result generated upon successful submission of response, the response shall be deemed to be authenticated. The time and place of dispatch and receipt of electronic record shall be determined in accordance with the provisions of section 13 of the Information Technology Act, 2000.

(v) A person shall not be required to appear either personally or through authorised representative in connection with any proceedings before any unit set up under the proposed section.

(w) Further, it is proposed that in a case where a variation is proposed in the income or loss determination proposal or the draft order, and an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per such income or loss determination proposal, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority of the relevant unit. Where the request for personal hearing has been received, the income-tax authority of relevant unit shall allow such hearing, through NaFAC, which shall

be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board. Any examination or recording of the statement of the assessee or any other person (other than the statement recorded in the course of survey under section 133A) shall be conducted by an income-tax authority in the relevant unit, exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board.

(x) It is proposed that the Board shall establish suitable facilities for video conferencing or video telephony including telecommunication application software which supports video conferencing or video telephony at such locations as may be necessary, so as to ensure that the assessee, or his authorised representative, or any other person is not denied the benefit of faceless assessment merely on the consideration that such assessee or his authorised representative, or any other person does not have access to video conferencing or video telephony at his end. The Principal Chief Commissioner or the Principal Director General, as the case may be, in charge of the NaFAC shall, with the prior approval of the Board, lay down the standards, procedures and processes in the specified manner for effective functioning of the NaFAC and the units set up, in an automated and mechanised environment.

(y) The proposed section also seeks to provide that if at any stage of the proceedings before it, the AU having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of accounts, multiplicity of transactions in the accounts or specialized nature of business activity of the assessee, and the interests of the revenue, is of the opinion that it is necessary to do so, it may, upon recording its reasons in writing, refer the case to the NaFAC stating that the provisions of sub-section (2A) of section 142 may be invoked in the case. The Principal Chief Commissioner or the Principal Director General, as the case may be, in charge of the NaFAC shall, in accordance with the procedure laid down by the Board in this regard, if he

considers appropriate that the provisions of sub-section (2A) of section 142 may be invoked in the case, forward the reference received from the AU to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner having jurisdiction over such case, and inform the AU accordingly. Such case shall also be taken up for transfer to the jurisdictional Assessing Officer with the approval of the Board. Where a reference has been received the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, having jurisdiction over such case, he shall direct the Assessing Officer having jurisdiction over such case to invoke the provisions of sub-section (2A) of section 142. However, where a reference has not been forwarded to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, having jurisdiction over such case, the AU shall proceed to complete the assessment in accordance with the procedure laid down in the proposed section.

(z) It is also proposed to provide that the Principal Chief Commissioner or the Principal Director General, as the case may be, in charge of National Faceless Assessment Centre may, at any stage of the assessment, if considered necessary, transfer the case, in addition to a case referred to in (y) to the Assessing Officer having jurisdiction over such case, with the prior approval of the Board. It is also proposed to define the terms such as electronic verification code, assessment unit, technical unit, verification unit, review unit etc used in the proposed section.

This amendment will take effect from 1st April, 2022.

(II) Sub-section (9) of section 144B of the Act provides that the assessment proceedings shall be void if the procedure mentioned in the section was not followed. The said sub-section refers to violation of the procedure laid down by the law whereas a large number of disputes have been raised under this subsection involving technical issues arising due to use of information technology, leading to unnecessary litigation. It is, therefore, proposed to omit this subsection i.e., sub-section (9) of section 144B from its date of inception.

This amendment will take effect retrospectively from 1st April, 2021.

[Clause 42]

Set off of loss in search cases – Amendment in the provisions of section 79A of the Act

Chapter VI of the Act deals with aggregation of income and set off or carry forward of loss. In Sections 70-80 of the Act there are specific provisions relating to set off or carry forward and set off of losses while computing the income under various heads and with respect to different classes of persons.

2. It is noticed that in some cases, assessees claim set off of losses or unabsorbed depreciation, against undisclosed income corresponding to difference in stock, undervaluation of stock, unaccounted cash payment etc. which is detected during the course of search or survey proceedings. Currently there is no provision in the Act to disallow such set-off and no distinction is made between undisclosed income which was detected owing to search & seizure or survey or requisition proceedings and income assessed in scrutiny assessment in the regular course of assessment though for incomes falling in section 68, section 69, section 69B etc., such restriction is there.

3. Allowing the adjustment of undisclosed income detected as a result of search or requisition or survey against the loss or unabsorbed depreciation is resulting in short levy of tax. The provision of non-adjustment of loss or unabsorbed depreciation against undisclosed income detected as a result of search or requisition or survey would help in ensuring that proper tax is paid on income detected due to a search or survey and also result in increased deterrence against tax evasion.

4. Therefore, it is proposed to insert a new section 79A in the Act to provide that notwithstanding anything contained in the Act, where consequent to a search initiated under section 132 or a requisition made under section 132A or a survey conducted under section 133A, other than under sub-section (2A) of section 133A, the total income of any previous year of an assessee includes any undisclosed income, no set off, against such undisclosed income, of any loss, whether brought forward or otherwise, or unabsorbed depreciation under sub-section (2) of section 32 shall be allowed to the assessee under any provision of this Act in computing his total income for such previous year.

5. Further, the term “undisclosed income” is proposed to be defined for the above

purpose as-

(i) any income of the previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132 or a requisition made under section 132A or a survey conducted under section 133A, other than that conducted under sub-section (2A) of section 133A, which has-

(a) not been recorded on or before the date of search or requisition or survey, in the books of account or other documents maintained in the normal course relating to such previous year; or

(b) not been disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search or requisition or survey, or

(ii) any income of the previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the previous year which is found to be false and would not have been found to be so, had the search not been initiated or the survey not been conducted or the requisition not been made.

6. This amendment will take effect from 1st April, 2022 and will accordingly apply

in relation to the assessment year 2022-23 and subsequent assessment years.

[Clause 19]

Rationalization of provisions relating to assessment and reassessment

The Finance Act, 2021 amended the procedure for assessment or reassessment of income in the Act with effect from the 1^stApril, 2021. The said amendment modified, inter alia, sections 147, section 148, section 149 and also introduced a new section 148A in the Act. In cases where search is initiated under section 132 of the Act or books of account, other documents or any assets are requisitioned under section 132A of the Act, on or after 1^stApril, 2021, assessment or reassessment is now made under sections 143 or 144 or 147 of the Act after the Finance Act, 2021.

2. As part of the government’s policy related to simplification of procedures under the Act, it is proposed to-

(i) insert a new proviso to the effect that requirement for approval to issue notice under section 148 shall not be required to be taken by the Assessing Officer if he has passed an order under 148A(d) with prior approval in that case stating that the income is escaping assessment.

(ii) to omit the requirement of approval of specified authority in clause (b) of section 148A.

These amendments will take effect from 1^stApril, 2022.

3. To correct the inadvertent drafting errors and align the provisions with the intent of the section, following amendments are proposed,

(i) in section 148 to omit the word flagged from clause (i) of Explanation 1,

(ii) in clause (ii) of Explanation 2 to section 148 to omit the reference of subsection (5) of section 133A made therein.

These amendments will take effect from 1^stApril, 2022.

(iii) in Explanation 2 of section 148 to omit the reference to three assessment years preceding the assessment year relevant to the year of search;

(iv) in section 153B by inserting sub-section (4) to provide that nothing contained in the said section shall apply to any search initiated under section 132 or requisition made under section 132A on or after the 1st day of April, 2021.

(v) in the first proviso of sub-section (1) of section 149 to provide that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of section 149 or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021.

These amendments will take effect retrospectively from 1^stApril, 2021.

4. In order to align the scheme of search assessments with the intent of the Act, it is proposed to-

(i) amend sub-section (8) of section 132 to make the provisions of that section also applicable to assessment or reassessment or recomputation under subsection (3) of 143 or section 144 or section 147, as the case may be,

(ii) amend clause (i) of sub-section (1) and sub-section (4) of section 132B to provide that these provisions shall also apply to assessment or reassessment or recomputation.

These amendments will take effect from 1^stApril, 2022.

(iii) insert a new section 148B to provide that no order of assessment or reassessment or recomputation under the Act shall be passed by an Assessing Officer below the rank of Joint Commissioner, except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, in respect of assessments consequent to search, survey and requisition to reduce avoidable inaccuracies.

This amendment will take effect from 1^stApril, 2022.

(iv) amend section 153, by inserting a new clause to provide for exclusion of the period of limitation for the purpose of assessment, reassessment or recomputation, ( not exceeding one hundred eighty days) commencing from the date on which a search is initiated under section 132 or a requisition is made under section 132A and ending on the date on which the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing seized under section 132 or requisitioned under section 132A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee, in whose case such search is initiated or such requisition is made or to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to or to whom any books of account or documents seized or requisitioned, pertains or pertain to, or any information contained therein, relates to ;

(v) amend section 153B, by inserting a new clause to provide for exclusion of the period ( not exceeding one hundred eighty days) commencing from the date on which a search is initiated under section 132 or a requisition is made under section 132A and ending on the date on which the books of account or other documents, or any money, bullion , jewellery or other valuable article or thing seized under section 132 or requisitioned under section 132A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee, in whose case such search is initiated under section 132 or such requisition is made under section 132A.

These amendments will take effect retrospectively from 1^stApril, 2021.

(vi) amend the definition of “specified date” in clause (a) Explanation to section 271AAB to make it also applicable to a notice issued under section 148 in case where search is initiated on or after pt April, 2021.

This amendment will take effect from 1^stApril, 2022.

5. In order to bring clarification in the existing provisions and to align them with the intent of the Act, it is proposed to-

(i) clarify what constitutes information under Explanation 1 to section 148 so as to include any audit objection, or any information received from a foreign jurisdiction under an agreement or directions contained in a court order, or information received under a scheme notified under section 135A etc.

(ii) to amend the clause (b) of sub-section ( 1) of the section 149 to provide that a notice under section 148 shall be issued only for the relevant assessment year after three years but prior to ten years from the end of the relevant assessment year where the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented,

(a) in the form of an asset; or

(b) expenditure in respect of a transaction or in relation to an event or occasion; or

which has escaped assessment amounts to or likely to amount to fifty lakh rupees or more.

(iii) insert a new sub-section (1A) in section 149 to provide that notwithstanding anything contained in sub-section (1) of the said section, where the income chargeable to tax represented in the form of an asset or expenditure in relation to an event or occasion of the value referred to in clause (b) of sub-section (1) of the said section, has escaped assessment and the investment in such asset or expenditure in relation to such event or occasion has been made or incurred, in more than one previous years relevant to the assessment years within the period referred to in clause (b) of sub-section ( 1) of the said section, notice under section 148 shall be issued for every such assessment year for assessment, reassessment or recomputation, as the case may be.

(iv) to provide that the provisions of the section 148A shall not apply in cases where the Assessing Officer has received any information regarding the scheme notified under section 135A, pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee.

These amendments will take effect from 1^stApril, 2022.

[Clauses 35, 36, 44, 45, 46, 47, 48, 49 and 73]

Rationalization of the provisions of sections 271AAB, 271AAC and 271AAD of the Act

Sections 271AAB, 271AAC and 271AAD of the Act under Chapter XXI contain provisions which give powers to the Assessing Officer to levy penalty in cases involving undisclosed income in cases where search has been initiated u/s 132 or otherwise, or for false entry etc. in books of account.

2. Under Chapter XXI of the Act which deals with penalties, Commissioner (Appeals) has concomitant powers with Assessing Officer to levy penalty in eligible cases under section 270A, section 271, section 271A, section 271AA, section 271G,

section 271 J which deal with deliberate concealment, non-disclosure and omission by an assessee to evade tax.

3. Similarly, sections 271MB, 271AAC, 271AAD penalise actions pertaining to undisclosed income, unexplained credits or expenditures, or deliberate falsification or omission in books of accounts. Therefore, in order to improve deterrence against noncompliance among tax payers, it is proposed to amend the sections 271MB, 271AAC and 271AAD by enabling the Commissioner (Appeals) to levy penalty under these sections to the along with Assessing Officer.

4. These amendments will take effect from 1 ^stApril, 2022.

[Clauses73, 74 and 75]

Amendment in the provisions of section 272A of the Act

Section 272A of the Act provides for penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections etc. At present, the amount of penalty for failures listed under sub-section (2) of section 272A is one hundred rupees for every day during which the failure continues.

2. Section 272A ensures compliance with various obligations under the Income-

tax Act by penalising non-compliance and acting as a deterrent.

3. However, the penalty of one hundred rupees had been commented upon by the CAG in their report on the entertainment sector as being too low. The penalty had not been increased since the section was introduced in 1999 and does not have an adequate deterrence value.

4. Therefore, it is proposed to increase the amount of penalty for failures listed under sub-section (2) of section 272A to five hundred rupees from the existing sum of one hundred rupees.

5. This amendments will take effect from 1s^tApril, 2022.

[Clause 78]

Amendment in the provisions of section 179 of the Act

Section 179 of the Act contains provisions which enables Income tax authorities to recover tax due from a private company from its directors, under certain circumstances where such tax cannot be recovered from the company itself. The section makes each director of the private company jointly and severally liable for the payment of such tax with certain conditions. However, the title of the section inadvertently refers to the liability of directors of private company in liquidation.

2. The liability of directors of a private company under this section is not conditional upon the company being in liquidation and the section makes no reference to liquidation. Therefore, to make the title of the section uniform with its provisions, it is proposed to amend the title of the section to “Liability of directors of private company”.

3. Further, Explanation to the section clarifies that the expression “tax due” in the section includes penalty, interest of any other sum payable under the Act. In order to avoid unnecessary litigation and to provide further clarity, it is also proposed to insert the word “fees” in the scope of the expression “tax due” under Explanation to the section.

4. This amendment will take effect from 1^stApril, 2022.

[Clause 55]

Rationalisation of the provision of Charitable Trust and Institutions

Income of any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 or any trust or institution registered u/s 12AA or 12AB of the Act is exempt subject to the fulfilment of the conditions provided under various sections. The exemption to these trusts or institutions is available under the two regimes

(i) Regime for any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause

(via) of clause (23C) of section 10 (hereinafter referred to as trust or institution under first regime); and

(ii) Regime for the trusts registered under section 12AN12AB (hereinafter

referred to as trust or institution under the second regime).

In the Finance Bill, it is proposed to rationalise the provisions of both the exemption regimes by-

(1) ensuring their effective monitoring and implementation;

(II) bringing consistency in the provisions of the two exemption regimes; and (Ill) providing clarity on taxation in certain circumstances.

2. Some consequential amendments are also proposed following the

amendments of past few years. All the proposals are discussed below:-

3. Ensuring effective monitoring and Implementation of two exemption regimes

3.1. Books of account to be maintained by the trusts or institutions under both the

regimes

a) Where the total income of any trust or institution under the second regime, as computed under this Act without giving effect to the provisions of section 11 and section 12 of the Act, exceeds the maximum amount which is not chargeable to income-tax in any previous year, it is required to get its accounts audited. Similar provision exists for the trusts or institutions under the first regime in the tenth proviso to clause (23C) of section 10 of the Act.

b) However, there is no specific provision under the Act providing for the books of accounts to be maintained by such trusts or institutions. In order to ensure proper implementation of both the exemption regimes, it is proposed to amend clause (b) of sub-section (1) of section 12A of the Act and tenth proviso to clause (23C) of section 10 of the Act to provide that where the total income of the trust or institution under both regimes, without giving effect to the provisions of clause (23C) of section 10 or section 11 and 12, exceeds the maximum amount which is not chargeable to tax, such trust

or institution shall keep and maintain books of account and other documents in such form and manner and at such place, as may be prescribed.

c) These amendments will take effect from 1^stApril, 2023 and will accordingly

apply to the assessment year 2023-24 and subsequent assessment years.

[Clauses 4 and 6 ]

3.2 Penalty for passing on unreasonable benefits to trustee or specified persons

a) Under section 13 of the Act, trusts or institution under the second regime are required not to pass on any unreasonable benefit to the trustee or any other specified person. In order to discourage such misuse of the funds of the trust or institution by specified persons, it is proposed to insert a new section 271AAE in the Act to provide for penalty on trusts or institution under both the regimes which is equal to amount of income applied by such trust or institution for the benefit of specified person where the violation is noticed for the first time during any previous year and twice the amount of such income where the violation is notice again in any subsequent year. The proposed section seeks to operate without prejudice to any other provision of chapter XXI. Thus, if any penalty is leviable under any of the other provisions of this chapter, in addition to the proposed penalty, that penalty would also be applicable.

b) The proposed new section seeks to provide that, if during any proceeding under the Act, it is found that a person, being any trust or institution under the first or the second regime, has violated the provisions of twenty-first proviso to clause (23C) of section 10 (proposed to be inserted by the Finance Bill and discussed in subsequent paragraphs) or clause (c) of sub-section (1) of section 13, as the case may be, the Assessing Officer may direct that such person shall pay by way of penalty,

a sum equal to the aggregate amount of income applied, directly or indirectly, by such person, for the benefit of any person referred to in sub-section (3) of section 13 where the violation is noticed for the first time during any previous year; and
a sum equal to two hundred percent of the aggregate amount of income of such person applied, directly or indirectly, by such person, for the benefit of any

person referred to in sub-section (3) of section 13, where violation is noticed again in any subsequent previous year.

c) These amendments will take effect from 1^stApril, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. [Clause 76]

3.3

Reference to the Principal Commissioner or Commissioner (PCIT/CIT) for the

cancellation of registration/approval:

a) The following issues related to the process of approval or registration, or

cancellation or withdrawal thereof, have been noticed, namely:-

i) Registration or approval of non-genuine trusts or institution under automated approval system:

First and second provisos to clause (23C) of section 10 of the Act were substituted by new provisos by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 w.e.f. 01.04.2021. These provisos provided that the application for the approval of any trust or institution under the first regime, shall be made to the jurisdictional Principal Commissioner or Commissioner and such Principal Commissioner or Commissioner shall grant approval after examination of the application. Earlier such applications were required to be filed before the prescribed authority. Similarly, provisions of clause (ac) of sub-section (1) of section 12A provide that application for the trusts or institution under the second regime shall be made to the principal Commissioner or Commissioner. The provisional registrations or provisional approval or re-registrations or approvals in certain cases, under these clauses, are granted in an automated manner and the respective rules have been amended accordingly. It is essential to ensure that non-genuine trusts or institutions do not get exemption provided by these provisions.

Differences in the provisions related to reference for the cancellation of trusts under the both the regimes:

Provisions of sub-section (3) of section 143 provide that no order under this subsection shall be made, denying the benefits of clause (23C) of section 10, unless the Assessing Officer has intimated the Central Government or prescribed authority the contravention of the provisions of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 and approval granted to such trust or institution has been rescinded. There is no such provision in cases of trusts or institutions under second regime.

iii) No time limit prescribed for the PCIT/CIT to decide on references for the withdrawal

of approval:

For the trusts or institutions under the first regime, the provisions for making reference by the Assessing Officer to the Principal Commissioner or Commissioner are contained in the first proviso to sub-section (3) of section 143 and the time limitation for the completion of assessment is extended as per the provisions of clause (iii) of Explanation 1 to section 153. Presently, there is no time limit for such Principal Commissioner or Commissioner to decide on such reference.

b) In order to address the above issues, it is proposed to amend the provisions of section 12AB and fifteenth proviso to clause (23C) of section 10 of the Act as follows:

(I) Sub-section (4) of section 12AB of the Act is proposed to be substituted with a new sub-section (4) to provide that where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) of section 12AB or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,

(a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year;

(b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year, or

(c) such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year,

the Principal Commissioner or Commissioner shall-

(i) call for such documents or information from the trust or institution or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation;

(ii) pass an order in writing cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violation have taken place;

(iii) pass an order in writing refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violation;

(iv) forward a copy of the order under clause (ii) or (iii), as the case may be, to the Assessing Officer and such trust or institution.

(II) The term “specified violation” is proposed to be defined by inserting an Explanation to sub-section (4) of section 12AB of the Act to mean the following violation :-

(a) where any income of the trust or institution under the second regime

has been applied other than for the objects for which it is established; or

(b) the trust of institution under the second regime has income from profits and gains of business whichis not incidental to the attainment of its objectives or separate books of account are not maintained by it in respect of the business which is incidental to the attainment of its objectives; or

(c) the trust or the institution under the second regime has applied any part of its income from the property held under a trust for private religious purposes which does not enure for the benefit of the public; or

(d) the trust or institution under the second regime established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste;

( e) any activity being carried outby the trust or the institution under the second regime,

(i) is not genuine; or

(ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or

(f) the trust or the institution under the second regime has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1) of section 12AB, and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality.

Ill) Sub-section (5) of section 12AB of the Act is proposed to be substituted with a new sub-section (5) to provide that that the order under clause (ii) or (iii) of subsection (4) shall be passed before expiry of the period of six months, calculated from the end of the quarter in which the first notice is issued by the Principal Commissioner or Commissioner, on or after the 1^stday of April, 2022, calling for any document or information, or for making any inquiry, under clause (i) of subsection (4);

IV) Similarly, the fifteenth proviso to clause (23C) of section 10 of the Act is proposed to be substituted to provide that where the fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via) of clause (23C) of the said section 10 is approved under said clause and subsequently-

(a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year;

(b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or

(c) such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year,

the Principal Commissioner or Commissioner shall-

(i) call for such documents or information from the fund or trust or institution or any university or other educational institution or any hospital or other medical institution or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence of any specified violation;

(ii) pass an order in writing cancelling the approval of such fund or trust or institution or any university or other educational institution or any hospital or

other medical institution, on or before the specified date, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years if he is satisfied that one or more specified violation has taken place;

(iii) pass an order in writing refusing to cancel the approval of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, on or before the specified date, if he is not satisfied about the occurrence of one or more specified violations;

(iv) forward a copy of the order under clause (ii) or (iii), as the case may be, to the Assessing Officer and such fund or trust or institution or any university or other educational institution or any hospital or other medical institution;

V) It is also proposed to insert an Explanation 1 to the fifteenth proviso to clause (23C) of section 10 of the Act to provide that for the purposes of this proviso, “specified date” shall mean the day on which the period of six months, calculated from the end of the quarter in which the first notice is issued by the Principal Commissioner or Commissioner, on or after the 1^stday of April, 2022, calling for any document or information, or for making any inquiry, under clause (i) expires.

VI) The term “specified violation” is also proposed to be defined by inserting an Explanation (Explanation 2) to the fifteenth proviso to clause (23C) of section 10 of the Act to mean the following: –

(a) where any income of trust or institution under the first regime has been

applied other than for the objects for which it is established; or

(b) the trust or institution under the first regime has income from profits and gains of business is not incidental to the attainment of its objectives or separate books of account are not maintained by it in respect of the business which is incidental to the attainment of its objectives; or

(A) is not genuine; or

(B) is not being carried out in accordance with all or any of the conditions subject to which it was notified or approved; or

(d) the trust or institution under the first regime has not complied with the requirement of any other law for the time being in force, and the order, direction or decree, by whatever name called, holding that such noncompliance has occurred, has either not been disputed or has attained finality.

Consequentially sub-section (3) of section 143 of the Act is proposed to be amended by deleting the reference to trusts or institution under the first regime in the first proviso and delete the existing third proviso.

It is also proposed to provide by inserting an Explanation (Explanation 3) to the fifteenth proviso to clause (23C) of section 10 of the Act that where a reference, under the first proviso to sub-section (3) of section 143, has been made on or before the 31^stMarch, 2022 by the Assessing Officer for the contravention of certain provisions of clause (23C) of section 10 of the Act, such references shall be dealt with in the manner provided under the said Explanation.

VII) It is proposed to insert another proviso in sub-section (3) of section 143 of the Act providing that where the Assessing Officer is satisfied that any trust or institution under first or second regime has committed any specified violation, as defined in the Explanation 2 to fifteenth proviso to clause (23C) of section 10 or Explanation to sub-section (4) of section 12AB, as the case may be, he shall,

(a) send a reference to the Principal Commissioner or Commissioner to withdraw the approval or registration, as the case may be; and

(b) no order making an assessment of the total income or loss of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution shall be made by him without giving effect to the order passed by the Principal Commissioner or Commissioner under clause (ii) or (iii) of the fifteenth proviso to clause (23C) of section 10 or clause (ii) or (iii) of sub-section (4) of section 12AB

Consequentially, it is also proposed to amend the provisions of clause (iii) of Explanation to section 153 by deleting the reference to trusts or institution under the first regime and to insert a new clause (xiii) to provide that the period commencing from the date on which the Assessing Officer makes a reference to the Principal Commissioner or Commissioner under the second proviso to sub-

section (3) of section 143 or is deemed to have been made under Explanation 3 to the fifteenth proviso to clause (23C) of section 10, and ending with the date on which the copy of the order under clause (ii) or (iii) of fifteenth proviso to clause (23C) of section 10 or clause (ii) or (iii) of sub-section (4) of section 12AB, as the case may be, is received by the Assessing Officer shall be excluded in computing the period of limitation.

These amendments will take effect from 1^stApril, 2022.

[Clauses 4, 7, 40 and 48]

Bringing consistency in the provisions of two exemption the regimes

As mentioned earlier, there is a requirement for alignment of certain provisions of the two regimes as they both intend to grant similar benefit.

4.1 Accumulation provisions

i) Under the existing provisions of the Act, a trust or institution is required to apply 85% of its income during any previous year. However, if it is not able to apply 85% of its income during the previous year, it is allowed to accumulate such income for a period not exceeding 5 years as per the following provisions, namely:

(I) sub-section (2) of section 11 of the Act for the trusts or institution under the second regime; and

(II) third proviso to clause (23C) of section 10 of the Act for trusts or institution under the first regime.

ii) However, the accumulation of income, as per the provisions of sub-section (2) of section 11 of the Act is allowed subject to the fulfilment of certain conditions while there are no such conditions specifically provided under the third proviso to clause (23C) of section 10 of the Act;

iii) Similarly, sub-section (3) of section 11 of the Act provides for the specific previous year in which the accumulated income will be subjected to tax in case of different types of violations. It, inter alia, provides that if the accumulated income is not applied within

5 years, it shall be taxed in the 6th year. While, on the other hand, there are no such specific provisions under clause (23C) of section 10 of the Act and therefore, if the accumulated income is not applied within 5 years, the same shall be taxed in the 5th year itself.

iv) In order to bring consistency in the two regimes, the following are proposed:-

A) It is proposed to amend the provisions of sub-section (3) of section 11 of the Act to provide that any income referred to in sub-section (2) which is not utilised for the purpose for which it is so accumulated or set apart shall be deemed to be the income of such person of the previous year being the last previous year of the period, for which the income is accumulated or set apart under clause (a) of subsection (2) of section 11, but not utilised for the purpose for which it is so accumulated or set apart.

B) It is proposed to insert Explanation 3 to the third proviso to clause (23C) of section 10 of the Act to provide that for the purposes of determining the amount of application under this proviso, where eighty-five per cent of the income referred to in clause (a) of the third proviso, is not applied, wholly and exclusively to the objects for which the trust or institution under the first regime is established, during the previous year but is accumulated or set apart, either in whole or in part, for application to such objects, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely:-

(a) such person furnishes a statement in the prescribed form and in the prescribed manner to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years; (b) the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5) of section 11; and

(c) the statement referred to in clause (a) of Explanation 3 is furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year;

C) It is proposed to insert a proviso to the proposed Explanation 3 to the third proviso to clause (23C) of section 10 of the Act to provide that in computing the period of five years referred to in sub-clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded.

D) It is also proposed to insert an Explanation (Explanation 4) to third proviso to clause (23C) of section 10 to provide that any income referred to in the proposed Explanation 3 shall be deemed to be the income of the previous year in which the following takes place-

(a) the income is applied for purposes other than wholly and exclusively to the objects for which the trust or institution under the first regime is established or ceases to be accumulated or set apart for application thereto, or

(b) the income ceases to remain invested or deposited in any of the forms or modes specified in sub-section (5) of section 11, or

(c) the income is not utilised for the purpose for which it is so accumulated or set apart during the period referred to in clause (a) of the proposed Explanation 3,

(d) the income is credited or paid to any trust or institution under the first or second regime.

For the circumstances referred to in clause (c), it is proposed that the income shall be deemed to be the income of previous year which is the last previous year of the period, for which the income is accumulated or set apart under sub-clause (a) of clause (iii) of the proposed Explanation 3, but not utilised for the purpose for which it is so accumulated or set apart.

E) It is proposed to insert an Explanation (Explanation 5) to third proviso to clause (23C) of section 10 of the Act to enable the Assessing Officer to allow trusts or institutions under the first regime in circumstances beyond their control to apply such accumulated income for such other purpose in India as is specified in the application by such person subsequent to fulfilment of specified conditions. These other purposes are required to be in conformity with the objects for which the trust

or institution under the first regime is established. If it is done, the provisions of Explanation 4 to third proviso to clause (23C) of section 10 shall apply as if the purpose specified by such person in the application under this Explanation were a purpose specified in the notice given to the Assessing Officer under clause (a) of the proposed Explanation 3 of the third proviso to clause (23C) of section 10.

F) It is proposed to insert a proviso to proposed Explanation 5 to third proviso to clause (23C) of section 10 of the Act to provide that the Assessing Officer shall not allow the application of any accumulated income, as referred to in the proposed Explanation 3, to be credited or paid to any trust or institution under the first or second regime, as referred to in clause (d) of proposed Explanation 4 to the third proviso to clause (23C) of section 10.

v) These amendments will take effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. [Clauses 4 and 5 ]

4.2 Bringing consistency in the provisions relating to payment to specified person

i) Under section 13 of the Act, trusts or institutions under the second regime are required not to pass on any unreasonable benefit to the trustee or any other specified person. It is proposed to insert twenty first proviso in clause (23C) of section 10 of the Act to provide that where the income or part of income or property of any trust or institution under the first regime, has been applied directly or indirectly for the benefit of any person referred to in sub-section (3) of section 13, such income or part of income or property shall be deemed to be the income of such person of the previous year in which it is so applied. The provisions of sub-section (2), (4) and (6) of section 13 of the Act shall also apply to trust or institution under the first regime.

ii) This amendment will take effect from 1st April, 2023 and will accordingly apply

in relation to the assessment year 2023-24 and subsequent assessment years. [Clause 4]

4.3 The provisions of section 115TD to apply to any trust or institution under the first regime.

i) Chapter XII-EB was introduced by the Finance Act, 2016. It provides for the taxation of accreted income of the trust in certain cases. A society or a company or a trust or an institution carrying on charitable activity may voluntarily wind up its activities and dissolve or may also merge with any other charitable or non-charitable institution, or it may convert into a non-charitable organization. In order to ensure that the intended purpose of exemption availed by trust or institution is achieved, a specific provision in the Act was brought about for imposing a levy in the nature of an exit tax which is attracted when the organisation is converted into a non-charitable organisation or gets merged with a non-charitable organisation or a charitable organisation with dissimilar objects or does not transfer the assets to another charitable organisation. Accordingly, a new Chapter XII-EB consisting of Sections 115TD, 115TE and 115TF was inserted in the Act.

ii) The provisions of the Chapter XII-EB have been made applicable to only the trusts or institutions under the second regime. However, the provisions are not applicable to any trust or institution under the first regime.

iii) Hence, it is proposed to amend the provisions of section 115TD, 115TE and 115TF of the Act to make them applicable to any trust or institution under the first regime as well.

iv) These amendments will take effect from 1^stApril, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. [Clauses 31, 32 and 33]

4.4 Filing of return by person claiming exemption under clause (23C) of section 10 of the Act

i) According to clause (ba) of sub-section (1) of section 12A of the Act, If a trust or institution under the second regime does not furnish return of income in accordance with the provisions of sub-section (4A) of section 139, within the time allowed under

that section, then provisions of sections 11 and 12 are not applicable. There is no similar provision in the other regime.

ii) Hence, it is proposed to insert twentieth proviso to clause (23C) of section 10 of the Act to provide that for the purpose of exemption under this clause, any trust or institution under the first regime is required to furnish the return of income for the previous year in accordance with the provisions of sub-section (4C) of section 139 of the Act, within the time allowed under that section.

This amendment will take effect from the 1^stApril, 2023, and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years.

[Clause 4]

5. Providing clarity on taxation in certain circumstances

There are various conditions prescribed for availing exemption under the two regimes. There is a need for clear provisions in the Act listing out how income is to be computed in case of non-compliance. Hence, it is proposed to provide for the same so that there is no dispute and the law is applied consistently.

5.1 Allowing certain expenditure in case of denial of exemption

i) Different provisions mandate denial of exemption to the trusts or institutions under both the regimes. Some of the provisions under which exemption is not available for its violation are as follows:

(a) Having commercial receipts in excess of 20% of the annual receipts in violation of the provisions of proviso to section 2(15);

(b) Not getting the books of account audited;

ii) There is presently lack of clarity on computation of taxable income in case of nonavailability of exemption in these cases. For example, if the exemption is denied to the

trust or institution for the late submission of the audit report, its entire receipts may be subjected to taxation and no deduction for any application may be allowed.

iii) In order to bring clarity in the computation of the income chargeable to tax in such cases, the following amendments are proposed: –

(a) It is proposed to insert sub-section (10) in section 13 of the Act to provide that where the provisions of sub-section (8) are applicable to any trust or institution under the second regime or such trust or institution violates the conditions prescribed under clause (b) or clause (ba) of sub-section (1) of section 12A, its income chargeable to tax shall be computed after allowing deduction for the expenditure ( other than capital expenditure) incurred in India, for the objects of the trust or institution, subject to fulfilment of the following conditions, namely:-

(i) such expenditure is not from the corpus standing to the credit of such trust or institution as on the last day of the financial year immediately preceding the previous year relevant to the assessment year for which the income is being computed;

(ii) such expenditure is not from any loan or borrowing;

(iii) claim of depreciation is not in respect of an asset, acquisition of which has been claimed as application of income in the same or any other previous year; and

(iv) such expenditure is not in the form of any contribution or donation to any person.

(b) It is also proposed to insert an Explanation to sub-section ( 10) to section 13 of the Act to provide that for the purposes of determining the amount of expenditure under this sub-section, the provisions of sub-clause (ia) of clause (a) of section 40 and sub-sections (3) and (3A) of section 40A, shall, mutatis mutandis, apply as they apply in computing the income chargeable under the head “Profits and gains of business or profession”.

(c) It is also proposed to insert sub-section (11) to section 13 of the Act to provide that for the purposes of computing income chargeable to tax, under sub-section

(10), no deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed to the assessee under any other provision of the Act.

(d) Similarly, it is proposed to insert twenty second proviso to clause (23C) of section 10 of the Act to provide that where any trust or institution under the first regime violates the provisions of the eighteenth proviso or violates the conditions prescribed under tenth or twentieth proviso, its income chargeable to tax shall be computed after allowing deduction for the expenditure (other than capital expenditure) incurred in India, for the objects of such trust or institution, subject to fulfilment of the following conditions:

(ii) such expenditure is not from any loan or borrowing;

(iii) claim of depreciation is not in respect of an asset, acquisition of which has been claimed as application of income in the same or any other previous year; and

(iv) such expenditure is not in the form of any contribution or donation

to any person.

( e) It is also proposed to insert an Explanation in the twenty second proviso to clause (23C) of section 10 of the Act to provide that for the purposes of determining the amount of expenditure under this proviso, the provisions of sub-clause (ia) of clause (a) of section 40 and sub-sections (3) and (3A) of section 40A, shall, mutatis mutandis, apply as they apply in computing the income chargeable under the head “Profits and gains of business or profession”.

(f) It is also proposed to insert twenty third proviso in clause (23C) of section 10 of the Act to provide that for the purposes of computing income chargeable to tax under twenty second proviso, no deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed to the assessee under any other provision of the Act.

These amendments will take effect from 1^stApril, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. [Clauses 4 and 8]

5.2 Taxation of certain income of the trusts or institutions under both the regimes at special rate

Following incomes of the trusts or institutions are chargeable to tax, under different provisions of the Act:-

(a) The trusts or institutions under the first or second regime are required not to pass on any unreasonable benefit to the trustee or any other specified person. For the trusts or institutions under the second regime, clause (c) of sub-section (1) of section 13 of the Act provides that the entire exemption shall be denied to the trust irrespective of the amount of benefit passed on. For trusts or institutions under the first regime similar provisions is proposed by way of insertion of twentieth proviso to clause (23C) of section 10 of the Act.

(b) It is mandatory for any trust or institution under the first regime, to keep their funds in the specified modes. Third proviso of clause (23C) of section 10 of the Act specifically provides that the funds of such trusts or institutions shall be maintained in these specified modes. For the trusts or institutions under the second regime, clause (d) of sub-section (1) of section 13 of the Act provides that the exemption shall be denied to the trust irrespective of the amount of investment in non-specified modes.

(c) Further, the trusts or institutions under both the regimes are required to apply at least 85% of their income during the year. Where the trust is not able to apply 85% of the income, it may accumulate such income for maximum 5 years. Sub-section (3) of section 11 of the Act specifically provides for the trusts or institutions under the second regime that such accumulated income, which could not be applied within the period of accumulation (maximum 5 years), shall be deemed to be the income of the trust. Similarly, for the trusts or institutions under the second regime, there is a specific provision under clause (2) of Explanation 1 to sub-section (1) of section 11 of the Act providing for the accumulation of income for a period of one year. Sub-

section (1 B) of section 11 of the Act provides that if the income accumulated under clause (2) of Explanation 1 to sub-section (1) of section 11 of the Act could not be applied within the time allowed; it shall be deemed to be the income of the trust.

(d) The trusts or institutions under thefirst regime are also required to apply at least 85% of their income during the year. Where such trust is not able to apply 85% of its income during the year and does not accumulate such income, entire income of such trust shall be subjected to tax where the trust is approved under the second proviso to clause (23C) of section 10 of the Act since third proviso to clause (23C) of section 10 of the Act mandates minimum 85% application of income unless such income is accumulated.

Denying exemption to the trust, for small amount of income applied in violation to the provisions referred in clause (a) and (b) above creates difficulties to the trusts or institutions under both the regimes as there is ambiguity about the manner of taxation of such income. Further, there is need for special provision to ensure that the income applied in violation is taxed at special rate without deduction. Accordingly, in order to rationalise the provisions, the following amendments are proposed:-

(a) It is proposed to amend clause (c) of sub-section (1) of section 13 of the Act to provide that only that part of income which has been applied in violation to the provisions of the said clause shall be liable to be included in total income.

(b) It is also proposed to insert twenty first proviso in clause (23C) of section 10 to specifically provide that where the income of any trust under the first regime, or any part of the such income or property, has been applied directly or indirectly for the benefit of any person referred to in sub-section (3) of section 13, such income or part of income or property shall be deemed to be income of such person of the previous year in which it is so applied. The provisions of sub-section (2), (4) and (6) of section 13 of the Act shall also apply to it.

(c) It is proposed to amend clause (d) of sub-section (1) of section 13 of the Act to provide that only the that part of income which has been invested in violation to the provisions of the said clause shall be liable to be included in total income. (d) It is proposed to insert Explanation 4 in third proviso to clause (23C) of section 10 of the Act to specifically provide that income accumulated which is not utilised

for the purpose for which it is so accumulated or set apart shall be deemed to be the income of such person of the previous year being the last previous year of the period, for which the income is accumulated or set apart.

(e) All the above income are also required to be taxed at special rate. Hence, it is proposed to insert new section 115B8I in the Act providing that where the total income of any assessee being a trust under the first or second regime, includes any income by way of any specified income, the income-tax payable shall be the aggregate of-

(i) the amount of income-tax calculated at the rate of thirty per cent on the aggregate of specified income; and

(ii) the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the aggregate of specified income referred to in clause (i).

(f) The sub-section (2) of this new section seeks to provide that no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of the Act in computing specified income.

(g) Explanation to the proposed section defines “specified income” to mean:-

(i) income accumulated or set apart in excess of fifteen percent of the income where such accumulation is not allowed under any specific provisions of the Act; or

(ii) deemed income referred to in Explanation 4 to third proviso to clause (23C) of section 10 or sub-section (3) of section 11 or sub-section (1 B) of section 11 ;or (iii) any income which is not exempt under clause (23C) of section 10 on account of violation of the provisions of clause (b) of third proviso of clause (23C) of section 10 or not to be excluded from total income under the provisions of clause (d) of sub-section (1) of section 13; or

(iv) any income which is deemed to be income under the twenty first proviso to clause (23C) of section 10 or which is not excluded from total income under clause (c) of sub-section (1) of section 13; or

(v) any income which is not excluded from total income under clause (c) of subsection ( 1 ) of section 11 .

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These amendments will take effect from 1^stApril, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. [Clauses 4 , 8 and 28 ]

5.3 Voluntary Contributions for the renovation and repair of temples, mosques, gurudwaras, churches etc notified under clause (b) of sub-section (2) of section 80G

i) Donations for the renovation and repair of temples, mosques, gurudwaras, churches etc notified under clause (b) of sub-section (2) of section 80G of the Act are received for specific purposes. However, it is not clear if such donations are treated as corpus donations or are required to be applied or can be accumulated for a maximum period of 5 years.

ii) In order to provide clarity, it is proposed to insert Explanation 3A in sub-section (1) of section 11 of the Act to provide that where the property held under a trust or institution includes any temple, mosque, gurdwara, church or other place notified under clause (b) of sub-section (2) of section 80G, any sum received by such trust or institution as a voluntary contribution for the purpose of renovation or repair of such temple, mosque, gurdwara, church or other place, may, at its option, be treated by such trust or institution as forming part of the corpus of the trust or the institution, subject to the condition that the trust or the institution,

(a) applies such corpus only for the purpose for which the voluntary contribution was made;

(b) does not apply such corpus for making contribution or donation to any person; and

(d) invests or deposits such corpus in the forms and modes specified under subsection (5) of section 11.

iii) It is also proposed to insert Explanation 3B in sub-section (1) of section 11 of the Act to provide that for the purposes of Explanation 3A, where any trust or institution has treated any sum received by it as forming part of the corpus and subsequently any of the conditions specified in clause (a), (b ), (c) or clause (d) thereof are violated, such

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sum shall be deemed to be the income of such trust or institution of the previous year during which the violation takes place.

iv) It is also proposed to insert Explanation 1A in the third proviso to clause (23C) of section 10 of the Act to provide that where the property held under a trust or institution referred to in sub-clause (v), includes any temple, mosque, gurdwara, church or other place notified under clause (b) of sub-section (2) of section 80G of the Act, any sum received by such trust or institution as a voluntary contribution for the purpose of renovation or repair of such temple, mosque, gurdwara, church or other place, may be treated by such trust or institution, at its option, as forming part of corpus of the trust or institution, subject to the condition that the trust or institution,

(a) applies such corpus only for the specific purpose for which the voluntary

donation was made;

(b) does not apply such corpus for making contribution or donation to any person; (c) maintains such corpus as separately identifiable; and

(d) invests or deposits such corpus in the forms and modes specified under subsection (5) of section 11.

v) It is also proposed to insert Explanation 1 B in the third proviso to clause (23C) of section 10 of the Act providing that for the purposes of Explanation 1 A, where any trust or institution referred to in sub-clause (v) has treated any sum received by it as forming part of the corpus and subsequently any of the conditions specified in clause (a), (b), (c) or clause (d) thereof are violated, such sum shall be deemed to be the income of such trust or institution of the previous year during which the violation takes place.

vi) These amendments will take effect retrospectively from 1s^tApril, 2021 and will accordingly apply in relation to the assessment year 2021-22 and subsequent assessment years.

[Clauses 4 and 5 ]

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5.4 Clarifying that application will be allowed only when its actually paid

Trust or institution under both the regimes are required to apply 85% of their income for the purposes specified. As is evident from the word” application”, it means actually paid. This is the position which has been held by different courts also. Accordingly it is being clarified by inserting Explanations “[Explanation 3 to clause (23C) of section 10 and Explanation to section 11] to provide that any sum payable by any trust under the first or second regime shall be considered as application of income in the previous year in which such sum is actually paid by it irrespective of the previous year in which the liability to pay such sum was incurred by such trust according to the method of accounting regularly employed by it. It is further proposed to insert proviso to the proposed Explanations [Explanation 3 to clause (23C) of section 10 and Explanation to section 11] to provide that where during any previous year, any sum has been claimed to have been applied by such trust, such sum shall not be allowed as application in any subsequent previous year.

These amendments will take effect from 1^stApril, 2022 and will accordingly apply to the assessment year 2022-23 and subsequent assessment years.

[Clauses 4 and 5]

6. Consequential Amendments

6.1 Reference to prescribed authority under clause (23C) of section 10

i) First and second proviso to clause (23C) of section 10 of the Act were substituted by new provisos by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from the 1^stApril, 2021 . These provisos provided that the application for the approval of any trust under the first regime, shall be filed before the jurisdictional Principal Commissioner or Commissioner and such Principal Commissioner or Commissioner shall grant approval after examination of the application. Earlier such applications were required to be filed before the prescribed authority. Accordingly necessary amendments were carried out. However, the reference to prescribed authority continues at certain places in the clause (23C) of section 10 of the Act.

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ii) It is, therefore, proposed to substitute the reference to prescribed authority with Principal Commissioner or Commissioner in sub-clause (iv), (v), (vi) and (via) and nineteenth proviso to clause (23C) of section 10 of the Act

iii) This amendment will take effect from 1^stApril, 2022.

[Clause 4]

6.2 Amendment to sub-section (1A) of section 35

i) Sub-section (1A) to section 35 of the Act was inserted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from the 1^stApril, 2021. It mandated the research association, university, college or other institution referred to in clause (ii) or clause (iii) or the company referred to in clause (iia) of sub-section (1) of section 35 of the Act to file the statement of donations received by these entities from the donors. However, an inadvertent drafting error has crept in in the sub-section. The present language reads that no deduction shall be allowed to the research association, university, college or other institution referred to in clause (ii) or clause (iii) or the company referred to in clause (iia) of sub-section (1) of section 35, if such statement of donations is not filed. However, that was not the intention of the law. The deduction claimed by the donor needs to be dis-allowed in such cases. In section 80G of the Act similar provisions were introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from the 1^stApril, 2021, whereby the deduction claimed by the donor under this section was disallowed in case the donee fails to furnish the statement of donations.

ii) Hence, it is proposed to amend sub-section (1A) of section 35 of the Act to provide that the deduction claimed by the donor with respect to the donation given to any research association, university, college or other institution referred to in clause (ii) or clause (iii) or the company referred to in clause (iia) of sub-section (1) of section 35 of the Act shall be disallowed unless such research association, university, college or other institution or company files the statement of donations.

iii) This amendment will take effect retrospectively from 1^stApril, 2021.

[Clause 11]

104

Amendment in the provisions of section 263 of the Act

Section 263 of the Act contains the provision for revision of order which is erroneous in so far as it is prejudicial to the interests of revenue. An order under section 263 of the Act can be passed within two years from the end of the financial year in which the order sought to be revised was passed.

2. As per provisions of section 92CA, if the Assessing Officer considers it necessary or expedient, he may, with the approval of the Principal Commissioner or Commissioner refer the computation of arm’s length price (ALP or specified domestic transaction entered into by an assessee, to the Transfer Pricing Officer (TPO). The TPO passes an order determining the ALP in an international transaction or specified domestic transaction under the provisions of section 92CA and send it to the Assessing Officer for final income determination. However, it is not clear as to who has the power under section 263 to revise the order of the TPO passed under section 92CA.

3. Therefore, it is proposed to amend the provisions of section 263 of the Act so as to provide that the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or Commissioner who is assigned the jurisdiction of transfer pricing may call for and examine the record of any proceeding under this Act, and if he considers that any order passed by the TPO, working under his jurisdiction, to be erroneous in so far as it is prejudicial to the interests of revenue, he may pass an order directing revision of the order of TPO. Consequential changes are also be made in the provisions of section 153 of the Act inter alia to provide two months’ time to the Assessing Officer to give effect to the order of TPO consequent to the directions in the revision order.

4. Further, in section 153 of the Act, it is proposed to

(i) provide that the provisions of sub-sections (3) and (5) of that section shall also be applicable to order passed by Transfer Pricing Officer under section 92CA, (ii) to insert sub-section (5A) to provide that where the Transfer Pricing Officer gives effect to an order or direction under section 263 by means of an order under section 92CA and forwards such order to the Assessing Officer, the

105

Assessing Officer shall proceed to modify the order of assessment or reassessment or recomputation, in conformity with such order of the Transfer Pricing Officer, within two months from the end of the month in which such order of the Transfer Pricing Officer is received by him,

(iii) provide that the said provisions of the sub-section (6) shall also be applicable to orders referred to in the sub-section (5A) inserted in the Act.

5. These amendments will take effect from 1^stof April, 2022.

[Clause 48 and 72]

Amendment in the provisions of section 119 of Income-tax Act

Section 119 of the Act empowers the Board to issue orders, instructions and directions to other income-tax authorities for proper administration of the Act. Clause (a) of sub-section (2) of the said section gives powers to the Board to provide relaxation of provisions of certain sections of the Act such as 115P, 115S, 115WD, , 139, 1211, 234A, 234B, 234C, 234E, etc.by way of general or special orders, in respect of any class of incomes or class of cases, for the purpose of proper administration of the work of assessment or collection of revenue or initiation of proceedings for the imposition of penalties and such other issues, in public interest.

2. Section 234F of the Act which falls under Chapter XVII-F provides that in case a person fails to furnish return of income under section 139 within the prescribed time, he shall be liable to pay a fee of five thousand rupees. Currently this section is not expressly mentioned in clause (a) of sub-section (2) of section 119 of the Act.

3. While this section acts as a deterrent against those who do not comply with obligations imposed under the Act, it also leads to an unintended consequence of levying fee on persons who face genuine difficulties in filing return of income within the specified time, like members of the armed forces stationed in remote regions with no access to the requisite infrastructure.

4. Therefore, considering the genuine hardships faced by certain classes of persons in filing return of income and not to impose a fee for a default which is beyond their control, it is proposed to insert section 234F and include it in the list of sections

106

mentioned in clause (a) of sub-section (2) of section 119 of the Act, so as to enable the Board to issue such orders or instructions, as deemed fit.

5. This amendment will take effect from 1^stApril, 2022.

[Clause 34]

Income-tax authorities for the purposes of section 133A of the Act

Section 133A of the Act enables an income-tax authority to enter any place of business or profession or charitable activity within his jurisdiction to verify the books of account or other documents, cash, stock or other valuable article or thing, which may be useful for or relevant to any proceeding under this Act. Explanation to section 133A provides the definition of an income tax authority for the purposes of this section.

2. Through Taxation and Other Laws (Amendment and Relaxation of Certain Provisions) Act, 2020, the Explanation was amended to provide that any the incometax authority who is subordinate to the Principal Director General of Income-tax (Investigation) or the Director General of Income-tax (Investigation) or the Principal Chief Commissioner of Income-tax (TDS) or the Chief Commissioner of Income-tax (TDS), as the case may be shall only be considered as Income-tax authorities for the purposes of section 133A.

3. It is proposed to amend the Explanation to section 133A of the Act to provided that income tax authority shall be sub-ordinate to Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner, as the case may be, specified by the Board ..

5. This amendment will take effect from 1st April, 2022.

[Clause 37]

Reduction of Goodwill from block of assets to be considered as ‘transfer’

From the assessment year 2021-2022, goodwill of a business or profession is not considered as a depreciable asset and there would not be any depreciation on goodwill of a business or profession in any situation. In case where goodwill is purchased by an assessee, the purchase price of the goodwill will continue to be

107

considered as cost of acquisition for the purpose of computation of capital gains under section 48 of the Act subject to the condition that in case depreciation was obtained by the assessee in relation to such goodwill prior to the assessment year 2021-22, then the depreciation so obtained by the assessee shall be reduced from the amount of the purchase price of the goodwill.

2. When the amendment was carried out through the Finance Act 2021, consequential amendment was carried out in section 50 of the Act by insertion of a proviso to clause (2) of that section. A further consequential amendment required is being proposed now.

3. Accordingly, it is proposed to clarify that for the purposes of section 50 of the Act, reduction of the amount of goodwill of a business or profession, from the block of asset in accordance with sub item (B) of item (ii) of sub-clause (c) of clause (6) of section 43, shall be deemed to be transfer

4. Since the amendment to the effect that goodwill of a business or profession is not a depreciable asset has been made applicable from assessment year 2021-2022 the above amendment will take effect retrospectively from 1st April 2021 and will accordingly apply in relation to the assessment year 2021-22 and subsequent assessment years.

[Clause 15]

Definition of the term “slump sale”:

Slump sale is defined in clause (42C) of section 2 of the Act, as the transfer of one or more undertaking, by any means, for a lump sum consideration without values being assigned to individual assets and liabilities in such sales. Vide the Finance Act, 2021, the definition of “slump sale” was amended to expand its scope to cover all forms of transfer under slump sale. However, inadvertently, in the last sentence there is reference to the word “sales” instead of “transfer”.

2. Therefore, it is proposed to carry out consequential amendment by amending the provision of clause (42C) of section 2 of the Act, to substitute the word “sales” with the word “transfer”.

108

3. This amendment will take effect retrospectively from the 1st April, 2021 and will accordingly apply in relation to the assessment year 2021-22 and subsequent assessment years.

[Clause 3]

109

EXPLANATORY MEMORANDUM TO THE FINANCE BILL, 2022

CUSTOMS

Note:

(a) “Basic Customs Duty” means the customs duty levied under the Customs Act, 1962. (b) “Agriculture Infrastructure and Development Cess” means a duty of customs that is levied under Section 124 of the Finance Act, 2021.

( c) “Road and Infrastructure Cess” means an additional duty of customs that is levied under Section 111 of the Finance Act, 2018 respectively.

(d) “Health Cess” means a duty of customs that is levied under Section 141 of the Finance Act, 2020.

( e) “Social Welfare Surcharge” means a duty of customs that is levied under Section 110 of the Finance Act, 2018.

(f) Clause Nos. in square brackets [ ] indicate the relevant clause of the Finance Bill, 2022.

(g) Amendments carried out through the Finance Bill, 2022, will come into effect on the date of its enactment, unless otherwise specified.

I. AMENDMENTS IN THE CUSTOMS ACT, 1962

		Clause of the
S.No.	Amendment	Finance Bill,
		2022
1.	Clause (34) of section 2 contains definition of “proper officer”. This	[85]
	section is being modified to specifically state that assignment of
	functions to an officer of Customs by the Board or the Principal
	Commissioner of Customs or the Commissioner of Customs shall be
	done under the newly inserted sub-sections (IA) and (lB) of Section 5
	in the Customs Act, 1962 (52 of 1962).
2.	Section 3 is being amended to specifically include the officers of DRI,	[86]
	Audit and Preventive formation in the class of Officers. This amendment
	has been made to remove any ambiguity as regards the class of officers
	of Customs.
3.	Sub-Section (lA) and l(B) to Section 5: Sub-section (IA) and (lB)	[87]
	have been inserted in section 5 of the Act to explicitly provide power of
	assignment of function to officers of customs by the Board or as the case
	may be by the Principal Commissioner of Customs or Commissioner of
	Customs. This amendment has been necessitated to correct the infirmity

observed by the Courts in recent judgments that the Act required explicit provision conferring powers for assignment of function to officers of Customs as “proper officers” for the purposes of the Act, besides the definition clause (34) in section 2 of the Customs Act

4. I Sub-section (4) to Section 5 is being inserted to delineate the criteria which the Board may adopt while imposing limitations or conditions under sub-section (1) or while assigning functions under sub-section (IA) to the officer of Customs. For instance, one of the limitations/ conditions that the Board currently imposes on “officers of Customs” is that they are required to operate within a specified territorial jurisdiction. However, with the launch of faceless assessments and other trade facilitation initiatives wherein, for instance, a need is felt for the development of industry-specific expertise in assessments the Board may need to confine jurisdiction to certain goods or class of goods.

5. I Sub-section (5) to Section 5 is being inserted to ensure that wherever necessary, for the proper management of work, two or more officers of customs, can concurrently exercise powers and functions (for example in the case of faceless assessment)

6. I Section 14 is being amended to include provisions for rules enabling the Board to specify the additional obligations of the importer in respect of a class of imported goods whose value is not being declared correctly, the criteria of selection of such goods, and the checks in respect of such goods. This amendment is a measure to address the issue of undervaluation in imports.

7. I Section 28E is being amended to omit the Explanation under clause ( c) and omit clause (h).

8. I Section 28H is being amended to make provisions for prescribing appropriate fees by Board relating to application for advance Ruling and also give flexibility to the applicant to withdraw his application at any time before a ruling is pronounced from the current 30 days’ time period. Consequently, the sub-section (3) is being omitted.

9. I Sub-section (7) under section 281 is being substituted so as to remove the word “Members” and also make changes accordingly.

10.1 Sub-section (2) under Section 28J is being substituted so that advance ruling under sub-section (1) of Section 28J is now valid for a period of three years or till there is a change in law or facts on the basis of which the advance ruling has been pronounced, whichever is earlier.

A proviso is also being inserted to provide that the advance rulings in force on the date on which the Finance Bill, 2022 receives assent of the President, the said period of three years shall be reckoned from the date

[87] [87] [88] [89] [90] [91] [92]

	on which the Finance Bill receives assent of the President.
11.	Section ll0AA is being inserted with a view to affirm the principle that,	[93]
	wherever, an original function duly exercised by an officer of competent
	jurisdiction, is the subject matter of a subsequent inquiry, investigation ,
	audit or any other specified purpose by any other officer of customs,
	then, notwithstanding, such inquiry, investigation, audit or any other
	purpose, the officer, who originally exercised such jurisdiction shall
	have the sole authority to exercise jurisdiction for further action like re-
	assessment, adjudications, etc. consequent to the completion of such
	inquiry, investigation, audit or any other purpose.
12.	Section 135AA is being inserted to protect the import and export data	[94]
	submitted to Customs by importers or exporters in their declarations by
	making the publishing of such information unless provided by the law,
	as an offence under Customs Act.

II. OTHER LEGISLATIVE AMENDMENTS PERTAINING TO CUSTOMS

		Clause of the
S.No.	Amendment	Finance Bill,
		2022
1.	A clause [] has been inserted in the Finance Bill, 2022. This clause seeks	[96]
	to give validation to any action taken or functions performed before the
	date of commencement of the Finance Act, 2022, under certain Chapters
	of the Customs Act by any officer of Customs, as specified in Section 3
	of the Customs Act, as amended, where such action was in pursuance of
	their appointment and assigning of functions by the Central government
	or the Board under the Customs Act.

III. AMENDMENTS IN THE FIRST SCHEDULE TO THE CUSTOMS TARIFF

ACT, 1975

						AMENDMENTS
A.	Tariff rate changes for Basic Customs Duty [to be effective	Rate of Duty
	from 02.02.2022,	unless	otherwise specified]	*	[Clause
	[97(a)] of the Finance Bill, 2022]
	* Will come into effect immediately owing to a declaration
	under the Provisional Collection of Taxes Act, 1931.
S. No.	Heading,	Commodity						From	To
	sub-
	heading or
	tariff item
		Edible Oils
1.	1516 30 00	Microbial fats and oils and their fractions		30%	100%
		MSME sector
2.	6601	Umbrellas							10%	20%
		Gems and Jewellery Sector
3.	7117	Imitation Jewellery					20%	20% or
											Rs.
											400/kg.,
											whichever
											is higher
		Electrical and electronic items
4.	8518 21,	Single or multiple loudspeakers, whether or not	15%	20%
	8518 22,	mounted in their enclosures
	8518 29	Note: Effective BCD rate on these goods, other
		than hearable devices would continue to be
		‘15% ‘. BCD rates on hearable devices will be
		governed	by	the	Phased	Manufacturing
		Program[PMP] as mentioned at V below.
5.	8518 30	Headphones	and earphones,	whether or not	15%	20%
		combined with a microphone, and sets consisting
		of a microphone and one or more loudspeakers
		Note: Effective BCD rate on these goods, other
		than hearable devices would continue to be
		‘15% ‘. BCD rates on hearable devices will be
		governed	by	the	Phased	Manufacturing

Program[PMPJ as mentioned at V below.

9028 30 10 I Smart Meters

Note: Effective BCD rate on these goods would continue to be ‘15%’ till 31.03.2022

9028 90 10 I Printed Circuit Board Assembly of Smart Meters Note: Effective BCD rate on these goods would continue to be ‘7.5%’ till 31.03.2022

Solar Energy Sector

8541 42 00 I Solar Cells ( other than those exclusively used with ITA-1 items)

Note: Effective BCD rate on these goods would continue to be ‘Nil’ till 31.03.2022.

8541 43 00 I Solar Modules ( other than those exclusively used with ITA-1 items)

Note: Effective BCD rate on these goods would continue to be ‘Nil’ till 31.03.2022.

15%

10%

20%

25%

20%

25%

40%

Tariff rate changes (without any change in the effective rates of Basic Customs Duty) [to be effective from 01.05.2022, unless otherwise specified] * [Clause [97(b)] of the Finance Bill, 2022]

Note:

1. The current applied rate of Basic Customs Duty on these commodities operates through their respective exemption/concessional notification(s). Such corresponding entries would be omitted from the concerned notification(s) with effect from the l” day of May, 2022, as the same would operate through the Customs Tariff Act, 1975, in the manner as detailed below [except S. No. 38 of the list below}. It is an exercise for simplification of the Customs tariff structure and Effective basic customs duty rate (and applicable cesses) of these items would remain unchanged.

2. Heading and sub-heading referred in column (2) shall include all tariff items under such heading or sub-heading.

Rate of Duty

I Pure-bred breeding horses

S. No.	I Chapter,	I Commodity	I	From	I	To
	heading,
	sub-
	heading, or
	tariff item
		I Pure-bred breeding horses
1.	I 0101 21 oo	I	30%		Free
2.	I 0508 oo 10	I Coral, unworked or simply prepared but not I	30%		Free
		otherwise worked
		5

3.	0511 10 00	Bovine semen	30%	5%
4.	0801 31 00	Cashew nuts, in shell	30%	2.5%
5.	0802 51 00,	Pistachios, in shell and shelled	30%	10%
	0802 52 00
6.	0804 10 20,	Soft dates (khayzur or wet dates), hard dates	30%	20%
	0804 10 30	( chhohara or kharek dates)
7.	0805 10 00,	Oranges, Lemon and limes	40%	30%
	0805 50 00,
8.	0806 10 00	Fresh grapes	35%	30%
9.	0808 30 00,	Fresh pears, Fresh quinces	35%	30%
	0808 40 00
10.	0904 11 10	Pepper, long	70%	30%
11.	0907	Cloves (whole fruit, cloves and stem)	70%	35%
12.	1001 19 00,	Wheat, other than seed quality	100%	40%
	1001 99 10
13.	1005	Maize (com)	70%160%	50%
14.	1007	Grain sorghum	80%	50%
15.	1008 21,	Millet (Jawar, Bajra, Ragi)	70%	50%
	1008 29
16.	1104 22 00	Other worked grains of oats	30%	15%
17.	1107 10 00	Malt, not roasted	40%	30%
18.	11081200	Maize (com) starch	50%	30%
19.	1207 91 00	Poppy seeds	70%	20%
20.	1209 91,	Vegetable seeds, fruit seeds for planting or	10%	5%
	1209 99	sowmg
21.	1401 10 00	Bamboos	30%	25%
22.	170211,	Lactose and lactose syrup	30%	25%
	1702 19
23.	1905 31 00,	Sweet Biscuits, Waffles and wafers	45%	30%
	1905 32
24.	2207 20 00	Ethyl alcohol and other spirits, denatured	30%	5%
25.	2309 10 00	Dog or cat food, put up for retail sale	30%	20%
26.	Chapter 23	Residues and waste from the food industries;	30%	15%
	(except	prepared animal fodder
	2309 10 00)

2709 00 90

27.	25 (except	Salt, Sulphur, Earth and stone, lime etc.	10%	5%
	2515, 2516,
	2523,2524
	and items at
	S. No. 28,
	29,30,31
	and32
	below)
28.	2503 00 10	Crude or unrefined sulphur	10%	2.5%
29.	2510	Rock phosphate	5%	2.5%
30.	2520 10 10,	Gypsum	10%	2.5%
	2520 10 20,
	2520 10 90
31.	2523 29	Portland Cement ( other than white Portland	10%	Free
		cement)
32.	2528	Boron Ores and concentrates	10%	2.5%
33.	2601 to	Ores and concentrates	5%/10%	2.5%
	2617
	[except
	items at S.
	No. 34 and
	35 below]
34.	2604 00 00	Nickel Ore and Concentrate	5%	Free
35.	2612 10 00	Uranium Ore and Concentrates	5%	Free
36.	2620 11 00,	Zinc slag, ash or residue	10%	5%
	2620 19
37.	2620 30	Copper slag, ash or residue	10%	5%
38.	2701, 2702,	Coal, Lignite, Peat	10%	5%
	2703	[These items would continue to attract Basic
		Customs Duty at the rate of 1 % through
		notification No. 50/2017-Cus}
39.	2704, 2705,	Coke, coal gas and Tar	10%	5%
	2706
40.	2707	Oils etc. from coal tar distillation	10%	2.5%
41.	2708	Pitch and pitch coke	10%	5%
42.	2709 00 90	Oil ( other than crude petroleum) obtained from	5%	Free
	Bituminous Crude

2710 12 50

High speed diesel (HSD)

Natural Gas in gaseous state

Ammonia, Titanium Dioxide etc.)

43.	2710 12 50	Aviation gasoline confirming to standard IS	10%	Free
	1604
44.	2710, 2711,	Petroleum	oils	and	oils	obtained	from	10%	5%
	2712,2713,	bituminous	minerals	(excluding	Naphtha),
	2714 or	petroleum gases, petroleum jelly, petroleum
	2715	bitumen and other residues of petroleum oil,
		asphalt.
45.	2710 12 21,	Light Naphtha, Heavy Naphtha, Full range	10%	2.5%
	2710 12 22,	Naphtha
	2710 12 29
46.	2710 12 41,	Motor Spirit commonly known as petrol		10%	2.5%
	2710 12 42,
	2710 12 49
47.	2710 19 44,								10%	2.5%
	2710 19 49,	High speed diesel (HSD)
	2710 20 10,
	2710 20 20
48.	2710 19 39	Aviation Turbine Fuel (ATF)				10%	5%
49.	2711 11 00	Liquefied natural gas (LNG)				10%	2.5%
50.	2711 12 00	Propane							10%	2.5%
51.	271113 00	Butanes							10%	2.5%
52.	2711 19 10,	Liquefied petroleum gases (LPG)			10%	5%
	2711 19 20
53.	27112100,	Natural Gas in gaseous state				10%	5%
	271129 00
54.	2713 12 10,	Calcined Petroleum Coke					10%	7.5%
	2713 12 90
55.	28 (except	Inorganic	Chemicals	(other	than	Chemical	10%	7.5%
	2801, 2802,	Elements,	Phosphoric	Acid,	Boric	Acids,
	2803, 2804,	Ammonia, Titanium Dioxide etc.)
	2805,2809
	20 10, 2810
	00 20,
	2814,
	2823 00 10,
	2837 11 00,
	2843 and
	items at S.
	No. 56 to 58

	below)
56.	2801 20 00	Iodine					5%	2.5%
57.	2825 40 00	Nickel oxide and hydroxide			10%	Free
58.	2844 20 00	All goods					10%	Free
59.	29 (except	Organic Chemicals ( except Mannitol, D-glucitol	10%	7.5%
	2905 43 00,	(Sorbitol) and 6-	Hexanelactum)
	2905 44 00,
	2933 71 00,
	and items at
	S. No. 60 to
	73 below)
60.	2901,2902	Cyclic and Acyclic Hydrocarbons ( other than o-	10%	2.5%
	(except	xylene, p-xylene and styrene)
	items listed
	at S. Nos.
	61,62,and
	63 below)
61.	2902 41 00	o-xylene					10%	Free
62.	2902 43 00	p-xylene					10%	Free
63.	2902 50 00	Styrene					10%	2%
64.	2903 or	Halogenated, Sulphonated, nitrated or nitrosated	10%	5%
	2904	derivatives of hydrocarbons ( other than methyl
	(except	chloride, methylene chloride, chloroform and
	items at S.	trichloroethylene)
	No. 65 and
	66 below)
65.	2903 15 00	Ethylene Dichloride (EDC)			10%	Free
66.	2903 21 00	Vinyl chloride monomer (VCM)		10%	2%
67.	2905 31 00	Mono ethylene glycol (MEG)			10%	5%
68.	2910 20 00	Methyl oxirane (propylene oxide)		10%	5%
69.	2917 36 00	Purified Terephthalic	Acid	(PTA),	Medium	10%	5%
		Quality Terephthalic Acid (MTA) and Qualified
		Terephthalic Acid (QTA)
70.	2917 37 00	Dimethyl terephthalate (DMT)			10%	5%
71.	2926 10 00	Acrylonitrile					10%	2.5%
72.	2933 71 00	Caprolactam					10%	5%

73. I 2905 43 00, I Mannitol, Sorbitol 2905 44 00,

74. I 31 I Fertilizers (other than Ammonium Sulphate,

30%

10%

20%

7.5%

(except 3102 21 00, 3102 30 00, 3102 50 00, 3104 30 00, 3105 20 00, 3105 30 00, 3105 40 00, 3105 51 00, 3105 59 00, 3105 60 00, 3105 90 10, 3105 90 90)

Ammonium Nitrate, Sodium nitrate, Potassium Sulphate, Minerals or Chemical fertilizers of NPK)

75. I 3201, 3202, Tanning agents, colouring materials, colour 3203, 3204, lakes, prepared pigments etc.

3205 00 00,

3206 , 3207

(except

3201 20 00, 3206 11, and 3206 19 00)

10%

7.5%

76. I 3201 20 00 I Wattle extract I 10%

77. I 3301 I Essential Oils I 30%

78. I 3403 I Lubricating preparations etc. I 10%

79. I 3501, 3502, I Casein, albumin, gelatin, peptones, dextrin I 30%/50%

3503, 3504,

3505,

80. I 3801, 3802, Miscellaneous Chemical Products like artificial I 10%

3803 00 00, graphite, activated carbon, tall oil, rosin, wood

3804, 3805, tar etc.

3806, 3807,

3809

(except

3809 10 00),

3810, 3812,

3815,3816

00 00, 3817,

2.5%

20%

7.5%

20%

7.5%

	3821 00 00
81.	3809 10 00	Finishing agents with a basis of amylaceous	30%	20%
			substances
82.	3823 11 00,	Industrial monocarboxylic fatty acids and fatty	30%	7.5%
	3823 12 00,	alcohols
	3823 13 00,
	3823 19 00
	or 3823 70
83.	3824		Prepared binders for foundry moulds, Mixtures	10%	7.5%
	(except		containing halogenated derivatives of methane,
	3824 60 and	ethane or propane, not elsewhere specified or
	3824 99 00)	included
	and 3827
84.	3901	to	Plastics in primary forms ( except polymers of	10%	7.5%
	3915		vinyl chloride, polyamides)
	(except
	3904,	3906
	90 70,	and
	3908)
85.	3906 90 70	Sodium polyacrylate	10%	5%
86.	4001 21,		Natural rubber in forms other than latex	25%	25% or
	4001 22,				Rs. 30/-
	4001 29				per kg,
					whichever
					is lower
87.	5002		Raw Silk, (not thrown)	30%	15%
88.	5003 to		Silk Waste and Silk Yam	25%	15%
	5006
89.	5007		Woven fabrics of silk or of silk waste	25%	20%
90.	5101		Wool, not carded or combed	25%/30%	2.5%
91.	5102		Fine or coarse animal hair	25%	5%
92.	5103 10 10,	Wool waste	25%	5%
	5103 20 10,
	5103 20 20,
	5103 20 90
93.	51031090,	Waste of coarse animal hair	25%	10%
	5103 30 00
94.	5104		Gametted stock of wool or of fine or coarse	20%	10%
			animal hair
95.	5105 10 00,	Wool and fine or coarse animal hair, carded or	20%	10%

	5105 21 00,	combed
	51052990,
	51053100,
	5105 39 00,
	5105 40 00
96.	5105 29 10	Wool tops		20%	2.5%
97.	5106, 5107,	Wool yarn, not put up for retail sale	20%	10%
	5108
98.	5109,5110	Wool yarn, put up for retail sale	25%	10%
99.	511111	Woven fabrics of carded wool or of carded fine	25% or	10% or
		animal hair, of weight, not exceeding 300g/sq.	Rs. 135	Rs. 115
		m.		per sq. m.,	per sq. m.,
				whichever	whichever
				is higher	is higher
100.	511119	Woven fabrics of carded wool or of carded fine	25% or	10% or
		animal hair, of weight, exceeding 300g/sq. m.	Rs. 150	Rs. 125
				per sq. m.,	per sq. m.,
				whichever	whichever
				is higher	is higher
101.	5111 20	Woven fabrics of carded wool or of carded fine	25% or	10% or
		animal hair, mixed mainly or solely with man-	Rs. 80 per	Rs. 65 per
		made filaments		sq. m.,	sq. m.,
				whichever	whichever
				is higher	is higher
102.	5111 30	Woven fabrics of carded wool or of carded fine	25% or	10% or
		animal hair, mixed mainly or solely with man-	Rs. 75 per	Rs. 65 per
		made staple fibres		sq. m.,	sq. m.,
				whichever	whichever
				is higher	is higher
103.	5111 90	Other woven fabrics of carded wool or of carded	25% or	10% or
		fine animal hair		Rs. 90 per	Rs. 75 per
				sq. m.,	sq. m.,
				whichever	whichever
				is higher	is higher
104.	511211	Woven fabrics of combed wool or of combed	25% or	10% or
		fine animal hair,	of weight, not exceeding	Rs. 125	Rs. 105
		300g/sq. m.		per sq. m.,	per sq. m.,
				whichever	whichever
				is higher	is higher
105.	511219	Woven fabrics of combed wool or of combed	25% or	10% or
		fine animal hair, of weight, exceeding 300g/sq.	Rs. 155	Rs. 130
		m.		per sq. m.,	per sq. m.,
				whichever	whichever
				is higher	is higher

106.

107.

108.

109.

110.

111.

112.

113.

114.

115.

116.

5112 20

511230

5112 90

5113

5201

5202

5204, 5205, 5206

5207

520811, 5208 12, 5208 13, 5208 19, 5208 21, 5208 22, 5208 23, 5208 29, 5208 31, 5208 32, 5208 33

5208 41

5208 43

Woven fabrics of combed wool or of combed fine animal hair, mixed mainly or solely with man-made filaments

Woven fabrics of carded wool or of carded fine animal hair, mixed mainly or solely with manmade staple fibres

Other woven fabrics of carded wool or of carded fine animal hair

Woven fabrics of coarse animal hair or of horse hair

Cotton, not carded or combed

Cotton waste

Cotton sewing thread, Cotton yam (not put up for retail sale)

Cotton yam (put up for retail sale)

Woven fabrics of cotton, contammg 85% or more by weight of cotton, weighing not more than 200g/sq. m.

Woven fabrics of cotton, contammg 85% or more by weight of cotton, weighing not more than 200g/sq. m., of yam of different colours

Woven fabrics of cotton, contammg 85% or more by weight of cotton, weighing not more than 200g/sq. m., 3-thread or 4-thread twill, including cross twill

25% or Rs. 85 per sq. m., whichever is higher

25% or Rs. 110 per sq. m., whichever is higher

25% or Rs. 135 per sq. m., whichever is higher

25% or Rs. 60 per sq. m., whichever is higher

25%

20%

25%

25% or Rs. 9 per sq. m., whichever is higher

25%

10% or Rs. 70 per sq. m., whichever is higher

10% or Rs. 90 per sq. m., whichever is higher

10% or Rs. 115 per sq. m., whichever is higher

10% or Rs. 60 per sq. m., whichever is higher

10%

10% or Rs. 9 per sq. m., whichever is higher

10%

117.

118.

119.

120.

121.

122.

123.

124.

125.

5208 51

5209 11, 5209 12, 5209 21, 5209 22, 5209 29, 5209 19 00

5209 42 00

5210 11, 5210 21, 5210 29, 5210 31, 5210 32

5210 41

5211 11, 5211 12, 5211 19 00, 5211 20

5211 42 00

5212 11 00, 5212 12 00, 5212 13 00, 5212 14 00

5212 15 00

Woven fabrics of cotton, contammg 85% or more by weight of cotton, weighing not more than 200g/sq. m., plain weave, weighing not more than 1 00g/sq. m.

Woven fabrics of cotton, contammg 85% or more by weight of cotton, weighing more than 200g/sq. m.

Woven fabrics of cotton, contammg 85% or more by weight of cotton, weighing more than 200g/sq. m., Denim

Woven fabrics of cotton, contammg less than 85% by weight of cotton, mixed mainly or solely with man-made fibres, weighing not more than 200g/sq. m.

Woven fabrics of cotton, contammg less than 85% by weight of cotton, mixed mainly or solely with man-made fibres, weighing not more than 200g/sq. m., of yams of different colours

Woven fabrics of cotton, contammg less than 85% by weight of cotton, mixed mainly or solely with man-made fibres, weighing more than 200g/sq. m.

Woven fabrics of cotton, contammg less than 85% by weight of cotton, mixed mainly or solely with man-made fibres, weighing more than 200g/sq. m., Denim

Other woven fabrics of cotton, weighing not more than 200g/sq. m., unbleached, bleached, dyed, of yams of different colours

Other woven fabrics of cotton, printed

25% or Rs. 27 per sq. m., whichever is higher

25%

25% or Rs. 25 per sq. m., whichever is higher

25%

25% or Rs. 15 per sq. m., whichever is higher

25%

25% or Rs. 18 per sq. m., whichever is higher

25%

25% or Rs. 165 per kg.,

whichever is higher

10% or Rs. 27 per sq. m., whichever is higher

10%

10% or Rs. 25 per sq. m., whichever is higher

10%

10% or Rs. 15 per sq. m., whichever is higher

10%

10% or Rs. 18 per sq. m., whichever is higher

10%

10% or Rs. 165 per kg.,

whichever is higher

126. I 5212 21 00, I Other woven fabrics of cotton, weighing more 5212 22 00,

25%

10%

	5212 23 00	than 200g/sq. m., unbleached, bleached, dyed
127.	5212 24 00	Other woven fabrics of cotton, weighing more	25% or	10% or
		than 200g/sq. m., of yarns of different colours	Rs. 20 per	Rs. 20 per
			sq. m.,	sq. m.,
			whichever	whichever
			is higher	is higher
128.	5212 25 00	Other woven fabrics of cotton, weighing more	25% or	10% or
		than 200g/sq. m., printed	Rs. 165	Rs. 165
			per kg.,	per kg.,
			whichever	whichever
			is higher	is higher
129.	5301	Flax, raw or processed, but not spun; flax tow	25%130%	Free
		and waste
130.	5303 10 10	Raw jute	25%	5%
131.	5303 10 90,	Jute and other textile bast fibres	25%	10%
	5303 90 10,
	5303 90 90
132.	5305, 5306,	Coconut, Abaca, Ramie and other vegetable	25%	10%
	5307, 5308,	textile fibres, Flax yarn, Jute yarn, paper yarn,
	5309	flax fabric
133.	5310 10,	Woven fabrics of jute or of other textile bast	25%	10%
	5310 90	fibres
134.	5311	Woven fabrics of other vegetable textile fibres or	25%	10%
		paper yarn
135.	5401	Sewing thread of man-made filaments, whether	20%	5%
		or not put up for retail sale
136.	5402	Synthetic filament yarn, not put up for retail sale,	20%	5%
		including synthetic monofilament of less than 67
		decitex
137.	5403	Artificial filament yarn, not put up for retail sale,	20%	5%
		including artificial monofilament of less than 67
		decitex
138.	5404	Synthetic monofilament of 67 decitex or more	20%	5%
139.	5405	Artificial monofilament of 67 decitex or more	20%	5%
140.	5406	Man-made filament yarn	20%	5%
141.	5407 10 11,	Woven fabrics of synthetic filament yam	25% or	20% or
	5407 10 12,		Rs. 115	Rs. 115
	5407 10 13,		per kg.,	per kg.,
	5407 10 14,		whichever	whichever
	5407 10 15,		is higher	is higher
	5407 10 16,
	5407 10 19,
	5407 10 22,

5407 10 23, 5407 10 24, 5407 10 25, 5407 10 29, 5407 10 31, 5407 10 33, 5407 10 34, 5407 10 35, 5407 10 36, 5407 10 39, 5407 10 43, 5407 10 44, 54071045, 5407 10 46, 5407 10 49, 5407 10 91, 5407 10 92, 5407 10 93, 5407 10 94, 5407 10 95, 5407 10 96, 5407 10 99

142. I 5407 10 21, I Parachute fabrics, polyester suitings, Tent 5407 10 26, Fabrics 5407 10 32, 5407 10 41, 5407 10 42

143.

144.

145.

146.

147.

5407 20, 5407 30

5407 41 11, 5407 41 13, 5407 41 19, 5407 41 23, 5407 41 29

5407 41 12, 5407 41 14, 5407 41 21, 5407 41 22, 5407 41 24

5407 51

5407 54

Woven fabrics obtained from strip or the like

Nylon brasso, Nylon taffeta, Other woven fabrics, containing 85% or more by weight of filaments of nylon or other polyamides

Nylon georgette, Nylon sarees, bleached Nylon brasso

Other woven fabrics, containing 85% or more by weight of textured polyester filaments, unbleached or bleached

Other woven fabrics, containing 85% or more by weight of textured polyester filaments, printed

25% or	10% or
Rs. 115	Rs. 115
per kg.,	per kg.,
whichever	whichever
is higher	is higher
25%	20%
25% or	20% or
Rs. 30 per	Rs. 20 per
sq. m.,	sq. m.,
whichever	whichever
is higher	is higher
25% or	10% or
Rs. 30 per	Rs. 20 per
sq. m.,	sq. m.,
whichever	whichever
is higher	is higher
25% or	20% or
Rs. 11 per	Rs. 11 per
sq. m.,	sq. m.,
whichever	whichever
is higher	is higher
25% or	20% or
Rs. 20 per	Rs. 20 per
sq. m.,	sq. m.,

148.

5407 71

whichever is higher

Other woven fabrics, containing 85% or more by 25% or

weight of synthetic filaments, unbleached or Rs. 10 per

bleached sq. m.,

whichever is higher

20% or Rs. 10 per sq. m., whichever is higher

149.

150.

151.

152.

5407 72 00

5407 81 11, 5407 81 12, 5407 81 13, 5407 81 14, 5407 81 19, 5407 81 22, 5407 81 23, 5407 81 29

5407 81 15, 5407 81 16, 5407 81 21, 5407 81 24, 5407 81 25, 5407 81 26

5407 91

Other woven fabrics, containing 85% or more by weight of synthetic filaments, dyed

Nylon georgette, Nylon sarees, Polyester shirtings, Polyester suitings (unbleached), Other woven fabrics, containing 85% or more by weight of synthetic filaments mixed mainly or solely with cotton

Terylene and dacron sarees, Polyester dhoti, bleached nylon georgette, Polyester suitings (bleached)

Other woven fabrics, unbleached or bleached

25% or Rs. 24 per sq. m., whichever is higher

25% or Rs. 10 per sq. m., whichever is higher

25% or Rs. 15 per sq. m., whichever is higher

20% or Rs. 24 per sq. m., whichever is higher

20% or Rs. 10 per sq. m., whichever is higher

10% or Rs. 10 per sq. m., whichever is higher

20% or Rs. 15 per sq. m., whichever is higher

153.

154.

5408 10 00, 5408 21

5408 31

Woven fabrics obtained from high tenacity yam I 25%

of viscose rayon, containing 85% or more by

weight of artificial filament or strip or the like, unbleached or bleached

Other woven fabrics, unbleached or bleached I 25% or

Rs. 25 per sq. m., whichever is higher

20%

20% or Rs. 25 per sq. m., whichever is higher

155.

5408 32

Dyed fabrics of rayon

25% or Rs. 44 per sq. m., whichever is higher

20% or Rs. 44 per sq. m., whichever is higher

156.

157.

158.

159.

160.

161.

162.

163.

164.

165.

5408 33 00

5408 34

5501,5502

5503 20 00

5503 40 00, 5503 90 10, 5503 90 20, 5503 90 90

5504 90 10, 5504 90 20, 5504 90 30, 5504 90 90

5505, 5506, 5507, 5508, 5509,5510

5511

5512 11, 5512 21, 5512 91

5513 11, 5513 12, 5513 13, 5513 19

Dyed fabrics of rayon, of yams of different colours

Printed fabrics of rayon

Synthetic and artificial filament tow

Synthetic staple fibres, not carded, combed or otherwise processed for spinning, of polyesters

Synthetic staple fibres, not carded, combed or otherwise processed for spinning, of polypropylene and others

Other artificial staple fibres, not carded, combed or otherwise processed for spinning

Man-made fibre waste, synthetic staple fibres, artificial staple fibres, sewing thread of manmade staple fibres, yam of synthetic staple fibres, yam of artificial staple fibres

Yam of man-made staple fibres, put up for retail sale

Woven fabrics of synthetic staple fibres, containing 85% or more by weight of synthetic staple fibres (unbleached or bleached), containing 85% or more by weight of acrylic or modacrylic staple fibres (unbleached or bleached), other

Woven fabrics of synthetic staple fibres, containing less than 85% by weight of synthetic staple fibres, mixed mainly or solely with cotton, of a weight not exceeding 170g/sq. m. ( of polyester staple fibres, plain weave; 3 thread or 4

25% or Rs. 10 per sq. m., whichever is higher

25% or Rs. 11 per sq. m., whichever is higher

20%

25% or Rs. 31 per kg., whichever is higher/ 25% or Rs. 30 per kg., whichever is higher

25%

20% or Rs. 10 per sq. m., whichever is higher

20% or Rs. 11 per sq. m., whichever is higher

10%

20%

166.

167.

168.

169.

170.

171.

172.

173.

174.

55132900

5513 31 00

55134900

551411, 5514 12, 5514 19

5514 30 13

5514 30 19

5514 41 00

5514 42 00

551443 00

thread twill; other woven fabric of polyester staple fibres; other woven fabrics)

Other Woven fabrics of synthetic staple fibres, containing less than 85% by weight of synthetic staple fibres, mixed mainly or solely with cotton, of a weight not exceeding 170g/sq. m.

Other Woven fabrics of synthetic staple fibres, containing less than 85% by weight of synthetic staple fibres, mixed mainly or solely with cotton, of a weight not exceeding 170g/sq. m., printed

Woven fabrics of synthetic staple fibres, containing less than 85% by weight of such fibres, mixed mainly or solely with cottons, of a weight exceeding 170g/sq. m. ( of polyester staple fibres, plain weave; ; 3 thread or 4 thread twill; other woven fabric of polyester staple fibres; other woven fabrics)

Other Woven fabrics of synthetic staple fibres, containing less than 85% by weight of such fibres, mixed mainly or solely with cottons, of a weight exceeding 170g/sq. m., of polyester staple fibres

Other Woven fabrics of synthetic staple fibres, containing less than 85% by weight of such fibres, mixed mainly or solely with cottons, of a weight exceeding 170g/sq. m.

Other Woven fabrics of synthetic staple fibres, containing less than 85% by weight of such fibres, mixed mainly or solely with cottons, of a weight exceeding 170g/sq. m., printed

Other Woven fabrics of synthetic staple fibres, containing less than 85% by weight of such fibres, mixed mainly or solely with cottons, of a weight exceeding 170g/sq. m., 3 thread or 4 thread twill

Other woven fabrics of polyester staple fibres

25% or Rs. 185 per kg.,

whichever is higher

25% or Rs. 21 per sq. m., whichever is higher

25% or Rs. 185 per kg.,

whichever is higher

25%

25% or Rs. 180 per kg.,

whichever is higher

25% or Rs. 31 per sq. m., whichever is higher

25% or Rs. 26 per sq. m., whichever is higher

25% or Rs. 140 per kg.,

whichever is higher

25% or Rs. 3112.er

20% or Rs. 185 per kg.,

whichever is higher

20% or Rs. 21 per sq. m., whichever is higher

20% or Rs. 185 per kg.,

whichever is higher

20%

20% or Rs. 180 per kg.,

whichever is higher

20% or Rs. 31 per sq. m., whichever is higher

20% or Rs. 26 per sq. m., whichever is higher

20% or Rs. 140 per kg.,

whichever is higher

20%or Rs.3112.er

175.

5515 11

sq. m., whichever is higher

Other woven fabrics of synthetic staple fibres, of 25% or

polyester staple fibres, mixed mainly or solely Rs. 40 per

with viscose rayon staple fibres sq. m.,

whichever is higher

sq. m., whichever is higher

20% or Rs. 40 per sq. m., whichever is higher

176.

5515 12

Other woven fabrics of synthetic staple fibres, of polyester staple fibres, mixed mainly or solely with

25% or Rs. 95 per kg., whichever is higher

20% or Rs. 95 per kg., whichever is higher

177.

5515 13

Other woven fabrics of synthetic staple fibres, of 25% or

polyester staple fibres, mixed mainly or solely Rs. 75 per

with viscose rayon staple fibres sq. m.,

whichever is higher

20% or Rs. 75 per sq. m., whichever is higher

178.

179.

180.

181.

182.

183.

5515 19

5515 22 10, 55152220

55152230

5515 22 40

5515 22 90

5515 29 10, 55152920

Other woven fabrics of synthetic staple fibres, of polyester staple fibres

Other woven fabrics of synthetic staple fibres, of acrylic or modacrylic staple fibres, mixed mainly or solely with wool or fine animal hair, bleached or unbleached

Other woven fabrics of synthetic staple fibres, of acrylic or modacrylic staple fibres, mixed mainly or solely with wool or fine animal hair, dyed

Other woven fabrics of synthetic staple fibres, of acrylic or modacrylic staple fibres, mixed mainly or solely with wool or fine animal hair, printed

Other woven fabrics of synthetic staple fibres, of acrylic or modacrylic staple fibres, mixed mainly or solely with wool or fine animal hair, other

Other woven fabrics of synthetic staple fibres, of acrylic or modacrylic staple fibres, other,

25% or Rs. 45 per sq. m., whichever is higher

25% or Rs. 140 per kg.,

whichever is higher

25% or Rs. 140 per kg.,

whichever is higher

25% or Rs. 140 per kg.,

whichever is higher

25% or Rs. 140 per kg.,

whichever is higher

25% or Rs. 30 per sg.m.,

20% or Rs. 45 per sq. m., whichever is higher

10% or Rs. 140 per kg.,

whichever is higher

20% or Rs. 140 per kg.,

whichever is higher

10% or Rs. 140 per kg.,

whichever is higher

20% or Rs. 140 per kg.,

whichever is higher

10% or Rs. 30 per sg.m.,

		bleached or unbleached				whichever	whichever
								is higher	is higher
184.	5515 29 30,	Other woven fabrics of synthetic staple fibres, of	25% or	20% or
	55152940,	acrylic or modacrylic staple fibres, other, dyed,	Rs. 30 per	Rs. 30 per
	55152990	printed or other					sq. m.,	sq. m.,
								whichever	whichever
								is higher	is higher
185.	5515 99	Other woven fabrics of synthetic staple fibres,	25% or	20% or
		mixed mainly or solely with man-made filaments	Rs. 35 per	Rs. 35 per
								sq. m.,	sq. m.,
								whichever	whichever
								is higher	is higher
186.	5516 11	Woven	fabrics	of	artificial	staple	fibres,	25%	20%
		containing 85% or more by weight of artificial
		staple fibres, unbleached or bleached
187.	5516 12 00	Woven	fabrics	of	artificial	staple	fibres,	25% or	20% or
		containing 85% or more by weight of artificial	Rs. 35 per	Rs. 35 per
		staple fibres, dyed					sq. m.,	sq. m.,
								whichever	whichever
								is higher	is higher
188.	5516 13 00	Woven	fabrics	of	artificial	staple	fibres,	25% or	20% or
		containing 85% or more by weight of artificial	Rs. 40 per	Rs. 40 per
		staple fibres, of yams of different colours		sq. m.,	sq. m.,
								whichever	whichever
								is higher	is higher
189.	5516 14	Woven	fabrics	of	artificial	staple	fibres,	25% or	20% or
		containing 85% or more by weight of artificial	Rs. 12 per	Rs. 12 per
		staple fibres, printed				sq. m.,	sq. m.,
								whichever	whichever
								is higher	is higher
190.	551621	Woven	fabrics	of	artificial	staple	fibres,	25%	20%
		containing less than 85% by weight of artificial
		staple fibres, unbleached or bleached
191.	5516 24 00	Woven	fabrics	of	artificial	staple	fibres,	25% or	20% or
		containing less than 85% by weight of artificial	Rs. 12 per	Rs. 12 per
		staple fibres, printed				sq. m.,	sq. m.,
								whichever	whichever
								is higher	is higher
192.	55163110	Woven	fabrics	of	artificial	staple	fibres,	25%	20%
		containing less than 85% by weight of artificial
		staple fibres, mixed mainly or solely with wool
		or fine animal hair, unbleached
193.	55163120	Woven	fabrics	of	artificial	staple	fibres,	25%	10%
		containing less than 85% by weight of artificial
		staple fibres, mixed mainly or solely with wool

		or fine animal hair, bleached
194.	5516 32 00,	Woven	fabrics	of	artificial	staple	fibres,	25%	20%
	5516 33 00,	containing less than 85% by weight of artificial
	55163400	staple fibres, mixed mainly or solely with wool
		or fine animal hair, dyed, of yams of different
		colours, printed
195.	5516 41,	Woven	fabrics	of	artificial	staple	fibres,	25%	20%
	5516 42 00	containing less than 85% by weight of artificial
		staple fibres, mixed mainly or solely with cotton,
		unbleached, bleached or dyed
196.	551643 00,	Woven	fabrics	of	artificial	staple	fibres,	25% or	20% or
	5516 44 00	containing less than 85% by weight of artificial	Rs. 12 per	Rs. 12 per
		staple fibres, mixed mainly or solely with cotton,	sq. m.,	sq. m.,
		of yams of different colours, printed		whichever	whichever
										is higher	is higher
197.	5516 91 10,	Woven	fabrics	of	artificial	staple	fibres,	25%	20%
	5516 91 20,	containing less than 85% by weight of artificial
	5516 92 00	staple fibres, other, unbleached, bleached or
		dyed
198.	55169300	Woven	fabrics	of	artificial	staple	fibres,	25% or	20% or
		containing less than 85% by weight of artificial	Rs. 21 per	Rs. 21 per
		staple fibres, other, of yams of different colours	sq. m.,	sq. m.,
										whichever	whichever
										is higher	is higher
199.	5516 94 00	Woven	fabrics	of	artificial	staple	fibres,	25% or	20% or
		containing less than 85% by weight of artificial	Rs. 40 per	Rs. 40 per
		staple fibres, other, printed			sq. m.,	sq. m.,
										whichever	whichever
										is higher	is higher
200.	5601 21,	Wadding of textile materials and articles thereof,	25%	10%
	5601 22 00,	of cotton
	5601 29 00
201.	5601 30 00	Textile flock and dust and mill neps		25%	20%
202.	5602	Felt,	whether	or	not	impregnated,	coated,	25%	10%
		covered or laminated
203.	5603 11 00,	Nonwovens of man-made filaments, weighing	25%	20%
	5603 22 00	upto 70g/sq. m.
204.	5603 13 00	Nonwovens of man-made filaments, weighing	25%	10%
		more than 70g/sq. m. and less than 150g/sq. m.
205.	5603 14 00	Nonwovens of man-made filaments, weighing	25%	20%
		more than 70g/sq. m.
206.	5603 91 00	Other Nonwovens, weighing not more than	25%	10%
		25g/sq. m.

207.	5603 92 00	Other Nonwovens, weighing more than 25g/sq.	25%	20%
		m. and less than 70g/sq. m.
208.	5603 93	Other Nonwovens, weighing more than 70g/sq.	25%	10%
		m. and less than 150g/sq. m.
209.	5603 94	Other Nonwovens, weighing more than 150g/sq.	25%	20%
		m.
210.	5604, 5605,	Rubber	thread	and	cord,	metallized	yam,	20%	10%
	5606,5607	Gimped yam, Twine, cordage, ropes etc.
211.	5608,5609	Knotted netting of twine, cordage , rope etc.,	25%	10%
		articles of yam, strip or the like of heading 5404
		or 5405 of the First Schedule of the Customs
		Tariff Act, 1975
212.	5701	Carpets	and	other	textile	floor	covermgs,	25%	20%
		knotted, whether or not made up
213.	5702 10 00,	Kelem, Schumacks, Karamanie; floor coverings	25%	20%
	5702 20 10,	of	coconut	fibres	(coir);	others,	of	pile
	5702 20 20,	construction, not made up, of wool or fine
	5702 20 90,	animal hair
	5702 31
214.	5702 32	Others, of pile construction, not made up, of	25% or	20% or
		man-made textile material				Rs. 105	Rs. 105
										per sq. m.,	per sq. m.,
										whichever	whichever
										is higher	is higher
215.	5702 39,	Others, of pile construction, not made up, of	25%	20%
	5702 41	other	textile	material;	Others,	of	pile
		construction, made up, of wool or fine animal
		hair
216.	5702 42	Others, of pile construction, made up, of man-	25% or	20% or
		made textile materials					Rs. 80 per	Rs. 80 per
										sq. m.,	sq. m.,
										whichever	whichever
										is higher	is higher
217.	5702 49	Others, of pile construction, made up, of other	25%	20%
		textile materials
218.	5702 50 21,	Others, not of pile construction, not made up, of	25% or	20% or
	5702 50 22,	man-made textile materials				Rs. 105	Rs. 105
	5702 50 29									per sq. m.,	per sq. m.,
										whichever	whichever
										is higher	is higher
219.	5702 50 31,	Others, not of pile construction, not made up, of	25%	20%
	5702 50 32,	other textile materials
	5702 50 33,
	5702 50 39

220.	57029110	Others, not of pile construction, made up, of	25%	20%
		wool or fine animal hair (carpets)
221.	5702 91 20	Others, not of pile construction, made up, of	25%	10%
		wool or fine animal hair ( druggets)
222.	5702 91 30,	Others, not of pile construction, made up, of	25%	20%
	5702 91 90	wool or fine animal hair (mats and mattings and
		others)
223.	5702 92	Others, not of pile construction, made up, of	25% or	20% or
		man-made textile materials		Rs. 110	Rs. 110
					per sq. m.,	per sq. m.,
					whichever	whichever
					is higher	is higher
224.	5702 99	Others, not of pile construction, made up, of	25%	20%
		other textile materials
225.	5703 10	Carpets and other textile floor coverings, tufted,	25%	20%
		whether or not made up, of wool or fine animal
		hair
226.	5703 21 00,	Carpets and other textile floor coverings, tufted,	25% or	20% or
	5703 29 10,	whether or not made up, of nylon or other	Rs. 70 per	Rs. 70 per
	5703 29 20,	polyamides or others			sq. m.,	sq. m.,
	5703 29 90				whichever	whichever
					is higher	is higher
227.	5703 31 00,	Carpets and other textile floor coverings, tufted,	25% or	20% or
	5703 39 10,	whether or not made up, of other man-made	Rs. 55 per	Rs. 55 per
	5703 39 20,	textile materials or others			sq. m.,	sq. m.,
	5703 39 90				whichever	whichever
					is higher	is higher
228.	5703 90	Carpets and other textile floor coverings, tufted,	25%	20%
		whether or not made	up,	of other textile
		materials
229.	5704 10 00,	Carpets and other textile floor coverings, of felt,	25%	20%
	5704 20 10	not tufted or flocked, whether or not made up
		(Tiles)
230.	5704 20 20	Carpets and other textile floor coverings, of felt,	25%	10%
		not tufted or flocked, whether or not made up
		(Woolen Tiles)
231.	5704 20 90	Carpets and other textile floor coverings, of felt,	25%	20%
		not tufted or flocked, whether or not made up,
		other tiles
232.	5704 90	Other Carpets and other textile floor coverings,	25% or	20% or
		of felt, not tufted or flocked, whether or not	Rs. 35 per	Rs. 35 per
		made up			sq. m.,	sq. m.,
					whichever	whichever
					is higher	is higher

233.

234.

235.

236.

237.

238.

239.

240.

241.

242.

5705

5801 10 00

5801 21 00

5801 23 00

58012600

5801 27 10

5801 27 20

5801 27 90

58013100

5801 32 00

Other Carpets and other textile floor coverings, whether or not made up

Woven pile fabrics and chennile fabrics, other than fabrics of Heading 5802 or 5806 of the First Schedule of the Customs Tariff Act, 1975, of wool or fine animal hair

Woolen pile fabrics and chennile fabrics, other than fabrics of Heading 5802 or 5806 of the First Schedule of the Customs Tariff Act, 1975, of cotton, uncut weft pile fabrics

Woven pile fabrics and chennile fabrics, other than fabrics of Heading 5802 or 5806 of the First Schedule of the Customs Tariff Act, 197 5, other weft pile fabrics

Woven pile fabrics and chennile fabrics, other than fabrics of Heading 5802 or 5806 of the First Schedule of the Customs Tariff Act, 1975, chennile fabrics

Warp pile fabrics, ‘epingle’, (uncut)

Woven pile fabrics and chennile fabrics, other than fabrics of Heading 5802 or 5806 of the First Schedule of the Customs Tariff Act, 1975, warp pile fabrics, cut

Other Warp pile fabrics

Woven pile fabrics and chennile fabrics, other than fabrics of Heading 5802 or 5806 of the First Schedule of the Customs Tariff Act, 1975, of man-made fibres, uncut weft pile fabrics

Cut corduroy of man-made fibres

25%

25% or Rs. 210 per sq. m., whichever is higher

25% or Rs. 80 per sq. m., whichever is higher

25% or Rs. 180 per sq. m., whichever is higher

25% or Rs. 135 per sq. m., whichever is higher

25% or Rs. 120 per sq. m., whichever is higher

25% or Rs. 135 per sq. m., whichever is higher

25% or Rs. 75 per sq. m., whichever is higher

25% or Rs. 180

20%

10% or Rs. 210 per sq. m., whichever is higher

10% or Rs. 80 per sq. m., whichever is higher

10% or Rs. 180 per sq. m., whichever is higher

10% or Rs. 135 per sq. m., whichever is higher

10% or Rs. 120 per sq. m., whichever is higher

10% or Rs. 135 per sq. m., whichever is higher

20% or Rs. 75 per sq. m., whichever is higher

20% or Rs. 180

per sq. m., I per sq. m., whichever whichever

			is higher	is higher
243.	5801 33 00	Woven pile fabrics and chennile fabrics, other	25% or	20% or
		than fabrics of Heading 5802 or 5806 of the First	Rs. 150	Rs. 150
		Schedule of the Customs Tariff Act, 1975, of	per sq. m.,	per sq. m.,
		man-made fibres, other weft pile fabrics	whichever	whichever
			is higher	is higher
244.	5801 36	Woven pile fabrics and chennile fabrics, other	25% or	20% or
		than fabrics of Heading 5802 or 5806 of the First	Rs. 130	Rs. 130
		Schedule of the Customs Tariff Act, 1975, of	per sq. m.,	per sq. m.,
		man-made fibres, chennile fabrics	whichever	whichever
			is higher	is higher
245.	5801 37 10	Warp pile fabrics, uncut	25% or	20% or
			Rs. 140	Rs. 140
			per sq. m.,	per sq. m.,
			whichever	whichever
			is higher	is higher
246.	5801 37 20	Warp pile fabrics, cut	25% or	20% or
			Rs. 68 per	Rs. 68 per
			sq. m.,	sq. m.,
			whichever	whichever
			is higher	is higher
247.	5801 37 90	Other Warp pile fabrics	25% or	20% or
			Rs. 140	Rs. 140
			per sq. m.,	per sq. m.,
			whichever	whichever
			is higher	is higher
248.	5801 90	Warp pile fabrics, of other textile materials	25% or	10% or
			Rs. 35 per	Rs. 35 per
			sq. m.,	sq. m.,
			whichever	whichever
			is higher	is higher
249.	5802 10 10	Unbleached terry toweling and similar woven	25%	10%
		terry fabrics, of cotton
250.	5802 10 20,	Terry toweling and similar woven terry fabrics,	25% or	10% or
	5802 10 30,	of cotton, bleached, piece dyed, yam dyed,	Rs. 60 per	Rs. 60 per
	5802 10 40,	printed, of handloom and others	sq. m.,	sq. m.,
	5802 10 50,		whichever	whichever
	5802 10 60,		is higher	is higher
	5802 10 90
251.	5802 20 00	Terry toweling and similar woven terry fabrics,	25%	10%
		of other textile materials
252.	5802 30 00	Tufted textile fabrics	25% or	10% or
			Rs. 150	Rs. 150
			per kg.,	per kg.,
			whichever	whichever

										is higher	is higher
253.	5803	Gauze, other than narrow fabrics of heading	25%	10%
		5806 of the First Schedule of the Customs Tariff
		Act, 1975
254.	5804 10,	Tulles	and	other	net	fabrics	( of cotton);	25% or	10% or
	5804 29 10,	Mechanically	made	lace	of	other	textile	Rs. 200	Rs. 200
	5804 29 90	materials							per kg.,	per kg.,
	5804 30 00									whichever	whichever
										is higher	is higher
255.	5804 21 00	Mechanically made lace, of man-made fibres	25% or	20% or
										Rs. 200	Rs. 200
										per kg.,	per kg.,
										whichever	whichever
										is higher	is higher
256.	5805	Hand-woven tapestries, flanders etc.		25%	10%
257.	5806 10 00,	Narrow woven fabrics other than goods of	25%	10%
	5806 20 00,	Heading 5807 of the First Schedule of the
	5806 3110,	Customs Tariff Act, 1975
	5806 31 20,
	5806 31 90,
	5806 39 10,
	5806 39 20,
	5806 39 30,
	5806 39 90,
	5806 40 00
258.	5806 32 00	Other woven fabrics, of man-made fibres		25%	20%
259.	5807, 5808,	Labels, badges, braids, Woven fabrics of metal	25%	10%
	5809, 5810,	threads etc.
	5811
260.	5901	Textile fabrics, coated with gum or amylaceous	25%	10%
		substances
261.	5902,5903	Tyre cord fabric, Textile fabrics etc.		25%	20%
262.	5904, 5905,	Linoleum, Textile wall coverings, rubberized	25%	10%
	5906, 5907,	textile fabrics etc.
	5908,5909
263.	5910	Transmission or conveyor belts or belting etc.	25%	20%
264.	5911	Textile products and articles for technical use	25%	10%
265.	6001 10 10,	Pile fabrics							25%	10%
	6001 10 20,
	6001 10 90,
	6001 21 00,
	6001 29 00,
	6001 91 00,

	6001 99
266.	6001 22 00	Looped pile fabrics of man-made fibres			25%	20%
267.	6002	Knitted or crocheted fabrics of a width not	25%	10%
		exceeding 30cm, containing by weight 5% or
		more elastomeric yam or rubber thread
268.	6003 10 00,	Knitted or crocheted fabrics of a width not	25%	10%
	6003 20 00,	exceeding 30cm, other than those of heading
	6003 90 00	6001 or 6002 of the First Schedule of the
		Customs Tariff Act, 1975, of wool or cotton or
		others
269.	6003 30 00,	Knitted or crocheted fabrics of a width not	25%	20%
	6003 40 00	exceeding 30cm, other than those of heading
		6001 or 6002 of the First Schedule of the
		Customs Tariff Act,	1975, of synthetic or
		artificial fibres
270.	6004	Knitted	or	crocheted	fabrics	of	a	width	25%	20%
		exceeding 30cm, containing by weight 5% or
		more elastomeric yam or rubber thread, other
		than those of heading 6001 of the First Schedule
		of the Customs Tariff Act, 1975
271.	6005	Warp knit fabrics					25%	20%
272.	6006 10 00,	Other knitted or crocheted fabrics, of wool,	25%	10%
	6006 21 00,	cotton or others
	6006 22 00,
	6006 23 00,
	6006 24 00,
	6006 90 00
273.	6006 31 00,	Other knitted or crocheted fabrics, of synthetic	25%	20%
	6006 32 00,	or artificial fibres
	6006 33 00,
	6006 34 00,
	6006 41 00,
	6006 42 00,
	6006 43 00,
	6006 44 00
274.	6101 90	Men’s or boy’s overcoats etc. of other textile	25%	20%
		materials
275.	6102 90	Women’s or girl’s overcoats etc. of other textile	25%	20%
		materials
276.	6103	Men’s or boy’s suits, ensembles etc.			25%	20%
	(except
	6103 29 10,
	6103 29 20)
277.	6104 13 00,	Suits of synthetic fibres, Ensembles, Jackets and	25%	20%

6104 22 00, I blazers of women’s 6104 23 00,

6104 29 10,

6104 29 20,

6104 29 90,

6104 31 00,

6104 32 00,

6104 33 00,

6104 39 10,

6104 39 20,

6104 39 90

278.

279.

280.

281.

282.

283.

284.

285.

6104 41 00, 6104 43 00, 6104 44 00

6104 42 00

6104 49

6104 51 00, 6104 52 00, 6104 53 00, 6104 59 10, 6104 59 20, 6104 59 90

6104 61 00, 6104 69

6105 10, 6105 20

6105 90 10, 6105 90 90, 6106 10 00

6106 20

Women’s dresses of wool, synthetic fibre or artificial fibre

Women’s dresses of cotton

Women’s dresses of other textile materials

Skirts and divided skirts

Trousers, bib and brace overalls, breeches and shorts, of wool or fine animal hair or other textile materials

Men’s or boy’s shirts, knitted or crocheted, of cotton or man-made fibres

Men’s or boy’s shirts, knitted or crocheted, of other textile materials; Women’s or girls blouses, shirts and shirt blouses, knitted or crocheted, of cotton

Women’s or girls blouses, shirts and shirt blouses, knitted or crocheted, of man-made fibres

25% or Rs. 255 per piece, whichever is higher

25%

25% or Rs. 220 per piece, whichever is higher

25% or Rs. 110 per piece, whichever is higher

25%

25% or Rs. 83 per piece, whichever is higher

25% or Rs. 90 per piece, whichever is higher

25% or Rs. 25 per piece, whichever IS

20% or Rs. 255 per piece, whichever is higher

20%

20% or Rs. 220 per piece, whichever is higher

20% or Rs. 110 per piece, whichever is higher

20%

20% or Rs. 83 per piece, whichever is higher

20% or Rs. 90 per piece, whichever is higher

20% or Rs. 25 per piece, whichever is higher

286.

287.

288.

289.

290.

291.

292.

293.

294.

6106 90

6107 11 00

6107 12

6107 19, 6107 21 00, 6107 22, 6107 29, 6107 91, 6107 99, 6108 11, 6108 19

6108 21 00, 6108 22 10, 6108 22 20

6108 29 10, 6108 29 90, 61083100, 6108 32 10, 61083220

6108 39 10

6108 39 90

6108 91 00

Women’s or girls blouses, shirts and shirt blouses, knitted or crocheted, of other textile materials

Men’s or boy’s underpants, briefs, of cotton

Men’s or boy’s underpants, briefs, nightshirts, pyjamas etc., of man-made fibres

Men’s or boy’s underpants, briefs, of other textile materials; Night shirts and pyjamas of cotton; of man-made fibres, of other textile materials; Men’s or boy’s bathrobes, dressing gowns etc., of cotton or other textile materials; Women’s or girl’s slips and petticoats, of manmade fibres or other textile materials

Women’s or girl’s briefs and panties, of cotton or man-made fibres

Women’s or girl’s briefs and panties, of other textile materials; Women’s or girl’s night dresses and pyjamas, of cotton or man-made fibres

Women’s or girl’s night dresses and pyjamas, of silk

Women’s or girl’s night dresses and pyjamas, of other textile materials

Women’s or girl’s bathrobes, dressing gowns etc., of cotton

higher20 % or Rs. 25 per piece, whichever

is higher

25% or Rs. 135 per piece, whichever is higher

25% or Rs. 24 per piece, whichever is higher

25% or Rs. 30 per piece, whichever is higher

25%

25% or Rs. 25 per piece, whichever is higher

25%

25% or Rs. 65 per .2_iece,

20% or Rs. 135 per piece, whichever is higher

20% or Rs. 24 per piece, whichever is higher

20% or Rs. 30 per piece, whichever is higher

20%

20% or Rs. 25 per piece, whichever is higher

20%

10%

20%

20% or Rs. 65 per .2_iece,

						whichever	whichever
						is higher	is higher
295.	6108 92	Women’s or girl’s bathrobes, dressing gowns	25% or	20% or
		etc., of man-made fibres			Rs. 60 per	Rs. 60 per
						piece,	piece,
						whichever	whichever
						is higher	is higher
296.	6108 99 10,	Women’s or girl’s bathrobes, dressing gowns	25%	20%
	6108 99 90	etc., of silk or other textile materials
297.	6108 99 20	Women’s or girl’s bathrobes, dressing gowns	25%	10%
		etc., of wool or fine animal hair
298.	6109 10 00	T-shirts, singlets and others vests, knitted or	25%	20%
		crocheted, of cotton
299.	6109 90	T-shirts, singlets and others vests, knitted or	25% or	20% or
		crocheted, of other textile materials		Rs. 50 per	Rs. 50 per
						piece,	piece,
						whichever	whichever
						is higher	is higher
300.	6110 11,	Jersey’s, pullovers, cardigans etc., of wool or	25% or	20% or
	6110 12 00,	fine animal hair or of cashmere goats		Rs. 275	Rs. 275
	6110 19 00					per piece,	per piece,
						whichever	whichever
						is higher	is higher
301.	61102000	Jersey’s, pullovers, cardigans etc., of cotton	25% or	20% or
						Rs. 85 per	Rs. 85 per
						piece,	piece,
						whichever	whichever
						is higher	is higher
302.	6110 30	Jersey’s, pullovers, cardigans etc., of man-made	25% or	20% or
		fibres				Rs. 110	Rs. 110
						per piece,	per piece,
						whichever	whichever
						is higher	is higher
303.	6110 90 00	Jersey’s, pullovers,	cardigans	etc.,	of other	25% or	20% or
		textile materials				Rs. 105	Rs. 105
						per piece,	per piece,
						whichever	whichever
						is higher	is higher
304.	6111	Babies garments and clothing accessories	25%	20%
305.	6112 11 00,	Track suits, ski suits and swimwear, knitted or	25%	20%
	6112 12 00,	crocheted
	6112 19 20,
	6112 19 30,
	6112 19 90,
	6112 20,

	6112 31 00,
	6112 39,
	6112 41 00,
	6112 49 20,
	6112 49 90
306.	6112 19 10,	Track suits, of silk; Ski suits, of silk; Women’s	25%	10%
	61122010,	or girl’s swimwear, of silk
	6112 49 10
307.	6113 00 00,	Pantyhose, tights, other garments etc.			25%	20%
	6114, 6115,
	6116,6117
308.	6201 20 10	Men’s or boy’s overcoats, car-coats, raincoats,	25% or	20% or
		capes, cloaks and other similar articles, of wool	Rs. 385	Rs. 385
		and fine animal hair					per piece,	per piece,
									whichever	whichever
									is higher	is higher
309.	6201 20 90	Other than men’s or boy’s overcoats, car-coats,	25% or	20% or
		raincoats,	capes,	cloaks	and	other	similar	Rs. 220	Rs. 220
		articles, of wool and fine animal hair			per piece,	per piece,
									whichever	whichever
									is higher	is higher
310.	6201 90	Men’s or boy’s overcoats, car-coats, raincoats,	25%	20%
		capes, cloaks and other similar articles, of other
		textile materials
311.	6202 20 10	Women’s	or	girl’s	overcoats,	car-coats,	25% or	20% or
		raincoats,	capes,	cloaks	and	other	similar	Rs. 385	Rs. 385
		articles, of wool and fine animal hair			per piece,	per piece,
									whichever	whichever
									is higher	is higher
312.	6202 20 90	Other than women’s or girl’s overcoats, car-	25% or	20% or
		coats, raincoats, capes, cloaks and other similar	Rs. 220	Rs. 220
		articles, of wool and fine animal hair			per piece,	per piece,
									whichever	whichever
									is higher	is higher
313.	6202 90	Women’s	or	girl’s	overcoats,	car-coats,	25%	20%
		raincoats,	capes,	cloaks	and	other	similar
		articles, of other textile materials
314.	6203 22 00	Men’s ensemble of cotton					25% or	20% or
									Rs. 145	Rs. 145
									per piece,	per piece,
									whichever	whichever
									is higher	is higher
315.	6203 23 00	Men’s ensemble of synthetic fibres			25% or	20% or
									Rs. 145	Rs. 145
									per piece,	per piece,

			whichever	whichever
			is higher	is higher
316.	6203 29	Men’s ensemble of other textile materials	25% or	20% or
			Rs. 145	Rs. 145
			per piece,	per piece,
			whichever	whichever
			is higher	is higher
317.	6203 41 00	Men’s trousers, bib and brace overalls, breeches	25% or	20% or
		and shorts, of wool and fine animal hair	Rs. 285	Rs. 285
			per piece,	per piece,
			whichever	whichever
			is higher	is higher
318.	6203 42	Men’s trousers, bib and brace overalls, breeches	25% or	20% or
		and shorts, of cotton	Rs. 135	Rs. 135
			per piece,	per piece,
			whichever	whichever
			is higher	is higher
319.	6204 21 00,	Women’s Ensembles	25%	20%
	6204 22,
	6204 29
320.	6204 41	Women’s dresses of wool or fine animal hair	25% or	20% or
			Rs. 350	Rs. 350
			per piece,	per piece,
			whichever	whichever
			is higher	is higher
321.	6204 42	Women’s dresses of cotton	25% or	20% or
			Rs. 116	Rs. 116
			per piece,	per piece,
			whichever	whichever
			is higher	is higher
322.	6204 43	Women’s dresses of synthetic fibres	25% or	20% or
			Rs. 145	Rs. 145
			per piece,	per piece,
			whichever	whichever
			is higher	is higher
323.	6204 49	Women’s dresses of other textile materials	25% or	20% or
			Rs. 145	Rs. 145
			per piece,	per piece,
			whichever	whichever
			is higher	is higher
324.	6204 51 00	Skirts and divided skirts of wool or of fine	25% or	20% or
		animal hair	Rs. 485	Rs. 485
			per piece,	per piece,
			whichever	whichever
			is higher	is higher

325.	6204 52 00,	Skirts and divided skirts of cotton, synthetic	25%	20%
	6204 53 00,	fibres, other textile materials
	6204 59
326.	6204 61	Women’s	trousers, bib	and brace,	overalls,	25% or	20% or
		breeches and shorts, of wool and fine animal hair	Rs. 285	Rs. 285
							per piece,	per piece,
							whichever	whichever
							is higher	is higher
327.	6204 62	Women’s trousers, bib	and brace,	overalls,	25% or	20% or
		breeches and shorts, of cotton		Rs. 135	Rs. 135
							per piece,	per piece,
							whichever	whichever
							is higher	is higher
328.	6204 63 00	Women’s trousers,	bib	and brace,	overalls,	25%	20%
		breeches and shorts, of synthetic fibres
329.	6205 20	Men’s or boy’s shirts, of cotton		25% or	20% or
							Rs. 85 per	Rs. 85 per
							piece,	piece,
							whichever	whichever
							is higher	is higher
330.	6205 90	Men’s or boy’s shirts, of other textile materials	25% or	20% or
							Rs. 95 per	Rs. 95 per
							piece,	piece,
							whichever	whichever
							is higher	is higher
331.	6206 10	Women’s or girl’s blouses, shirts and shirt	25%	20%
		blouses, of silk or silk waste
332.	6206 20 00	Women’s or girl’s blouses, shirts and shirt	25% or	20% or
		blouses, of wool or fine animal hair		Rs. 135	Rs. 135
							per piece,	per piece,
							whichever	whichever
							is higher	is higher
333.	6206 30	Women’s or girl’s blouses, shirts and shirt	25% or	20% or
		blouses, of cotton				Rs. 95 per	Rs. 95 per
							piece,	piece,
							whichever	whichever
							is higher	is higher
334.	6206 40 00	Women’s or girl’s blouses, shirts and shirt	25% or	20% or
		blouses, of man-made fibres		Rs. 120	Rs. 120
							per piece,	per piece,
							whichever	whichever
							is higher	is higher
335.	6206 90 00	Women’s or girl’s blouses, shirts and shirt	25%	20%
		blouses, of other textile materials

336.

337.

338.

6207 11 00

6207 19 10, 6207 19 20, 6207 19 90

6207 19 30

Men’s underpants or briefs, of cotton

Men’s underpants or briefs, of synthetic fibres or wool, or other textile material

Men’s underpants or briefs, of silk

25% or Rs. 28 per piece, whichever is higher

25% or Rs. 30 per piece, whichever is higher

20% or Rs. 28 per piece, whichever is higher

20% or Rs. 30 per piece, whichever is higher

10% or Rs. 30 per piece, whichever is higher

339.

340.

6207 21 10, 6207 21 90, 6207 22 00, 6207 29 00, 6207 91 10, 6207 91 20, 6207 91 90

6207 99

Men’s night shirts and pyjamas, of cotton; I 25%

Dressing gowns etc.

Other Men’s articles, of other textile materials I 25% or

Rs. 70 per piece, whichever is higher

20%

20% or Rs. 70 per piece, whichever is higher

341.

342.

6208 11 00

6208 19

Slips and petticoats, of man-made fibres

Slips and petticoats, of other textile materials

25% or Rs. 80 per piece, whichever is higher

25% or Rs. 60 per piece, whichever is higher

20% or Rs. 80 per piece, whichever is higher

20% or Rs. 60 per piece, whichever is higher

343.

344.

6208 21 10, 6208 21 90, 6208 22 00, 6208 29 10, 6207 29 20, 6208 29 90

6208 91

Women’s night dresses and pyjamas, of cotton I 25%

or other textile materials

Other women’s articles, of cotton I 25% or

Rs. 95 per .2_iece,

20%

20% or Rs. 95 per .2_iece,

345.

346.

347.

6208 92

6208 99 10, 6208 99 20, 6208 99 90, 6209 20 10, 6209 20 90, 6209 30 00, 6209 90 10, 6209 90 90

6210 20

Other women’s articles, of man-made fibres

Other women’s articles, of other textile materials; Babies garments and clothing accessones

Other garments of the type described in CTSH 6201

whichever is higher

25% or Rs. 65 per piece, whichever is higher

25%

25% or Rs. 365 per piece, whichever is higher

whichever is higher

20% or Rs. 65 per piece, whichever is higher

20%

20% or Rs. 365 per piece, whichever is higher

348. I 6210 30

Other garments of the type described in CTSH 6202

25% or Rs. 305 per piece, whichever is higher

20% or Rs. 305 per piece, whichever is higher

349.

350.

351.

352.

6210 40 10

6210 40 90, 6210 50 00

6211 11 00, 6211 12 00, 62112000

6211 32 00, 62113300

Other men’s or boy’s garments, bullet proof jackets etc

Other men’s or boy’s garments; Other women’s or girl’s garments

Swim-wear; ski suits

Other garments, men’s or boy’s, of cotton or of man-made fibres

25% or Rs. 65 per piece, whichever is higher

25%

25% or Rs. 135 per piece, whichever is higher

20% or Rs. 65 per piece, whichever is higher

20%

20% or Rs. 135 per piece, whichever is higher

353. I 6211 39

Other garments, men’s or boy’s, of other textile materials

25%

20%

354.

355.

356.

357.

6212

6213

6214 10 10, 6214 10 20

6214 10 30

Brassieres, Girdles, Corsettes etc

Handkerchiefs

Scarves of silk measuring 60 ems or less; Shawls, scarves exceeding 60 ems and the likes, of silk or silk waste

Shawls, scarves etc. of silk or silk waste, handloom

25% or Rs. 30 per piece, whichever is higher

25%

25% or Rs. 390 per piece, whichever is higher

20% or Rs. 30 per piece, whichever is higher

20%

20% or Rs. 390 per piece, whichever is higher

10% or Rs. 390 per piece, whichever is higher

358. I 6214 10 90 I Others, of silk or silk waste

25% or Rs. 390 per piece, whichever is higher

359. I 6214 20

Shawls, scarves etc. of wool or fine animal hair

25% or Rs. 180 per piece, whichever is higher

20% or Rs. 180 per piece, whichever is higher

360.

361.

362.

363.

6214 90 10

6214 90 21, 6214 90 22

6214 90 29

6214 90 31, 6214 90 32

Shawls, scarves etc., Abrabroomal, cotton

Chadars, cotton, grey, white bleached

Chadars, cotton, others

Odhani, cotton, grey, white bleached

25% or Rs. 75 per piece, whichever is higher

25% or Rs. 75 per piece, whichever

20% or Rs. 75 per piece, whichever is higher

10% or Rs. 75 per piece, whichever is higher

20% or Rs. 75 per piece, whichever is higher

10% or Rs. 75 per piece, whichever

			is higher	is higher
364.	6214 90 39	Odhani, cotton, others	25% or	20% or
			Rs. 75 per	Rs. 75 per
			piece,	piece,
			whichever	whichever
			is higher	is higher
365.	6215	Ties, Bow Ties and cravats	25% or	20% or
			Rs. 55 per	Rs. 55 per
			piece,	piece,
			whichever	whichever
			is higher	is higher
366.	6216,6217	Gloves, Mittens, Mitts; Other made up clothing	25%	20%
		accessones
367.	6301 10 00	Electric Blankets	25%	10%
368.	6301 20 00	Blankets ( other than electric blankets), travelling	25% or	10% or
		rugs, of wool or fine animal hair	Rs. 275	Rs. 275
			per piece,	per piece,
			whichever	whichever
			is higher	is higher
369.	63013000	Blankets ( other than electric blankets), travelling	25%	10%
		rugs, of cotton
370.	63014000,	Blankets ( other than electric blankets), travelling	25%	20%
	6301 90	rugs, of synthetic fibres; other blankets and
		travelling rugs
371.	6302 10	Bed linen, knitted or crocheted	25%	10%
372.	6302 21	Other bed linen, printed, of cotton	25% or	10% or
			Rs. 108	Rs. 108
			per kg.,	per kg.,
			whichever	whichever
			is higher	is higher
373.	6302 22 00,	Other bed linen, printed, of man-made fibres or	25%	10%
	6302 29 00	of other textile materials
374.	6302 31 00	Other bed linen, of cotton	25% or	10% or
			Rs. 96 per	Rs. 96 per
			kg.,	kg.,
			whichever	whichever
			is higher	is higher
375.	6302 32 00,	Other bed linen, table linen etc. of different	25%	10%
	6302 39 00,	textile materials
	6302 40,
	630251,
	6302 53 00,
	6302 59 00,
	6302 60,

	6302 91,
	6302 93 00,
	6302 99 00
376.	6303, 6304,	Curtains, other furnishing articles, sacks and	25%	10%
	6305, 6306,	bags etc.
	6307, 6308,
	6309
377.	6310	Used or new rags, scrap, twine etc.	25%	20%
378.	6815 91 00,	Articles of stone containing magnesite, magnesia	10%	7.5%
		etc.
379.	6901, 6902,	Bricks of siliceous fossil meals, refractory bricks	10%	7.5%
	or 6903	or other refectory ceramic goods
380.	7001 00 10	Cullet and other waste and scrap of glass	10%	5%
381.	7015 10 10	Rough ophthalmic blanks, for manufacture of	10%	5%
		optical lenses
382.	7101 10 10	Unworked natural pearls	10%	5%
383.	7101 21 00	Unworked cultured pearls	10%	5%
384.	71103100,	Rhodium	12.5%	2.5%
	7110 39 00
385.	7201, 7202,	Pig iron, Ferro Alloys, Ferrous Products, etc.	15%	5%
	7203, 7205
386.	7202 60 00	Ferro-nickel	15%	2.5%
387.	7404	Copper waste and scrap	5%	2.5%
388.	7411 or	Copper tubes and pipes, or fittings	10%	7.5%
	7412
389.	75	Nickel and articles thereof	5%	Free
390.	7602	Aluminium scrap	5%	2.5%
391.	8105 20 10	Cobalt mattes and other intermediate products of	5%	2.5%
		cobalt metallurgy
392.	81101000,	Unwrought antimony, powders, waste and scrap	5%	2.5%
	8110 20 00
393.	8407 21 00	Outboard motors	15%	5%
394.	8419 19 20	Specified non-electric instantaneous or storage	10%	7.5%
		water heaters
395.	8421 39 20,	Air separators, purifiers, cleaners, etc.	15%	7.5%
	8421 39 90

396.	8502	Specified	electrical generating sets and rotary	10%	7.5%
	(except	convertors
	8502 11 00,
	8502 20 10,
	8502 40 00)
397.	8503 00 10,	Parts of electric motors or generators		10%	7.5%
	8503 00 21
	or
	8503 00 29
398.	8504 10 10,	Ballasts for discharge lamps or tubes		10%	7.5%
	8504 10 20
	or
	8504 10 90
399.	8546	Electrical insulators of any material		10%	7.5%
400.	8547	Insulating fittings for electrical machines etc.	10%	7.5%
401.	8802 11 00,	Helicopters					10%	2.5%
	8802 12 00
402.	8807 10 00,	Parts of balloons, gliders, manned or unmanned	3%	2.5%
	8807 20 00,	aircraft etc.
	8807 30 00
403.	8902 00 10	Trawlers and other fishing vessels		10%	Free
404.	8905 10 00	Dredgers					10%	Free
405.	8907 10 00	Inflatable Rafts				10%	Free
406.	8908 00 00	Vessels and other floating structures for break up	10%	2.5%
407.	9018 32 30,	Specific instruments and appliances used in	10%	5%
	90185020,	medical, surgical, dental or veterinary sciences
	9018 90 21,	like tonometer, tubular needles for medical
	9018 90 24,	sutures etc.
	9018 90 43,
	9018 90 95,
	90189096,
	9018 90 97,
	9018 90 98
408.	9018 (other	Other medical equipment and medical related	10%	7.5%
	than items	goods used in medical,	surgical, dental or
	in entry at	veterinary sciences	like	catheters,	cannulae,
	Sr. No. 407.	defibrillator etc.
	above and
	9018 90 99)

409.

410.

411.

412.

413.

414.

9019 (except 9019 10 20)

9020

9021

9030 31 00, 90309010

9108, 9110 or 9114 30 10

9506 91

Mechano-therapy appliances such as massage apparatus, psychological aptitude testing apparatus etc.

Breathing appliance other than protective masks not having replaceable filters or mechanical parts

Orthopedic appliances like crutches, surgical belts and trusses, splints etc.

Multimeters with/without recording device

Watch dials and watch movements

Articles and equipment for general physical exercise, gymnastics or athletics

10%

20%

7.5%

10%

Tariff rate changes (with change in the effective rates of Basic Customs Duty w.e.f. 02.02.2022, unless otherwise specified) [Clause [97(b)] of the Finance Bill, 2022, and relevant notifications]

Note:

1. The Basic Customs Duty rates are being rationalized on the following items.

2. These changes are being incorporated in the First Schedule of the Customs Tariff Act, 1975.The changes in the tariff schedule shall commence from 01.05.2022.

3. Therefore, during the period from 02.02.2022 till 30.04.2022, these rates shall operate through notifications as mentioned below.

4. Note specific to items at S. Nos. 1 to 6: –

(i) Applicable BCD rates for items at S. No. 1 to 6 would operate vide relevant entries in notification No. 50/2017 – Customs,for the period 02.02.2022 till 30.04.2022;

(ii) With effect from 01.05.2022, the relevant entries in notification No. 50/2017-Customs shall be omitted and the Basic Customs Duty rates on these items would operate through the First Schedule of the Customs Tariff Act, 1975.

Rate of duty

S. No. I Chapter, heading, subheading or tariff item

Commodity

From

(1)

(2) (3)

0307 32 00 I Frozen Mussels

0307 43 20 I Frozen Squids

1301 90 13 I Asafoetida

[The current applicable Basic Customs Duty is 20% vide S. No. 51 of notification No. 50/2017- Customs}

1801 00 00 I Cocoa Beans, whole or broken, raw or roasted

2905 11 00 I Methyl alcohol (methanol)

[The current applicable Basic Customs Duty is 5% vide S. No. 200 of notification No. 50/2017- Customs]

2915 21 00 I Acetic acid

[The current applicable Basic Customs Duty is 7.5% vide S. No. 185 of notification No. 50/2017- Customs}

(4)

30%

10%

(5)

15%

2.5%

Note for S. No. 7 to S. No. 95:

ll.

lll.

lV.

For S. Nos. 7 to 66, the current effective rate has been prescribed vide notification No. 14/2006-Customs, dated 1-3-2006.

For S. Nos. 67 to 95, the current effective rate has been prescribed vide notification No. 82/2017-Customs, dated 27-10-2017.

For the period 02-02-2022 to 30-04-2022, the effective rate for S. Nos. 7 to 95 is being prescribed vide notification No. 82/2017-Customs, dated 27-10-2017.

I” May, 2022 onwards notification No. 82/2017-Customs, dated 27-10-2017 will be rescinded, and Basic Customs Duty rates on these items would operate through the Customs Tariff Act, 1975, in the manner as detailed below.

5208 39

5208 42

Other Woven fabrics of cotton, containing 85% or more by weight of cotton, weighing not more than 200g/sq. m.

Woven fabrics of cotton, contammg 85% or more by weight of cotton, weighing not more than 200g/sq. m., plain weave, weighing more than 1 00g/sq. m.

25% or	10% or
Rs. 150	Rs. 150
per kg.,	per kg.,
whichever	whichever
is higher	is higher
25% or	10% or
Rs. 37 per	Rs. 22 per
sq. m.,	sq. m.,
whichever	whichever
is higher	is higher

10.

11.

5208 49

5208 52

5208 59

Other Woven fabrics of cotton, containing 85% or more by weight of cotton, weighing not more than 200g/sq. m.

Other Woven fabrics of cotton, containing 85% or more by weight of cotton, weighing not more than 200g/sq. m., plain weave, weighing not more than 1 00g/sq. m.

Other Woven fabrics of cotton, containing 85% or more by weight of cotton, weighing not more than 200g/sq. m.

25% or Rs. 200 per kg.,

whichever is higher

25% or Rs. 23 per sq. m., whichever is higher

25% or Rs. 50 per sq. m., whichever is higher

10% or Rs. 143 per kg.,

whichever is higher

10% or Rs. 14 per sq. m., whichever is higher

10% or Rs. 30 per sq. m., whichever is higher

12. I 5209 31, Woven fabrics of cotton, contammg 85% or 5209 32, more by weight of cotton, weighing more than 5209 39 200g/sq. m., dyed, plain weave, 3-thread or 4- thread twill, including cross twill, other fabrics

25% or Rs. 150 per kg.,

whichever is higher

10% or Rs. 150 per kg.,

whichever is higher

13.

14.

15.

5209 41

5209 43

5209 49

Woven fabrics of cotton, contammg 85% or more by weight of cotton, weighing more than 200g/sq. m., of yams of different colours, plain weave

Woven fabrics of cotton, contammg 85% or more by weight of cotton, weighing more than 200g/sq. m., other fabrics of 3-thread or 4-thread twill, including cross-twill

Woven fabrics of cotton, contammg 85% or more by weight of cotton, weighing more than 200g/sq. m., other fabrics of yams of different colours

25% or Rs. 32 per sq. m., whichever is higher

25% or Rs. 30 per sq. m., whichever is higher

25% or Rs.150 per kg., whichever is higher

10% or Rs. 30 per sq. m., whichever is higher

10% or Rs. 28 per sq. m., whichever is higher

10% or Rs.150 per kg.,

whichever is higher

16.

5209 51, I Woven fabrics of cotton, containing 85% or 5209 52 more by weight of cotton, weighing more than 200g/sq. m., printed plain weave or 3-thread or 4-thread twill, including cross-twill

25% or Rs. 30 per sq. m., whichever is higher

10% or Rs. 24 per sq. m., whichever is higher

than 200g/sq. m., printed plain weave or other I sq. m., printed fabrics whichever is higher

17.

18.

19.

20.

5209 59

5210 39

5210 49

5210 51,

5210 59

Woven fabrics of cotton, contammg 85% or more by weight of cotton, weighing more than 200g/sq. m., printed other fabrics

Woven fabrics of cotton, contammg less than 85% by weight of cotton, weighing not more than 200g/sq. m., other dyed fabrics

Woven fabrics of cotton, contammg less than 85% by weight of cotton, weighing not more than 200g/sq. m., other fabrics of yams of different colours

Woven fabrics of cotton, contammg less than 85% by weight of cotton, weighing not more

25% or Rs. 38 per sq. m., whichever is higher

25% or Rs. 150 per kg.,

whichever is higher

25% or Rs. 185 per kg.,

whichever is higher

25% or Rs. 15 per

10% or Rs. 30 per sq. m., whichever is higher

10% or Rs. 150 per kg.,

whichever is higher

10% or Rs. 132 per kg.,

whichever is higher

10% or Rs. 12 per sq. m., whichever is higher

with man-made fibres, weighing more than per kg., 200g/sq. m., dyed plain weave, dyed 3-thread or whichever 4-thread twill, including cross-twill, other dyed is higher fabrics

21. I 5211 5211 5211 39

31, I Woven fabrics of cotton, containing less than 32, 85% by weight of cotton, mixed mainly or solely

25% or Rs. 150

10% or Rs. 150 per kg.,

whichever is higher

Woven fabrics of cotton, containing less than I 25% or 85% by weight of cotton, mixed mainly or solely Rs. 44 per

Woven fabrics of cotton, containing less than I 25% or 85% by weight of cotton, mixed mainly or solely Rs. 40 per

22.

23.

5211 41

5211 43

with man-made fibres, weighing more than 200g/sq. m., of yams of different colours, plain weave

with man-made fibres, weighing more than 200g/sq. m., other fabrics of yams of different colours, 3-thread or 4-thread twill, including cross-twill

sq. m., whichever is higher

10% or Rs. 35 per sq. m., whichever is higher

10% or Rs. 32 per sq. m., whichever is higher

24. I 5211 49

Woven fabrics of cotton, contammg less than 85% by weight of cotton, mixed mainly or solely

25% or Rs. 150

10% or Rs. 150

with man-made fibres, weighing more than I per kg., I per kg., 200g/sq. m., other fabrics of yams of different whichever whichever

colours

is higher

25.

5211 51, Woven fabrics of cotton, contammg less than 25% or

5211 52 and 85% by weight of cotton, mixed mainly or solely Rs. 18 per

5211 59 with man-made fibres, weighing more than sq. m., 200g/sq. m., printed plain weave or 3-thread or whichever 4-thread twill, including cross-twill or other is higher fabrics

10% or Rs. 12 per sq. m., whichever is higher

Other woven fabrics, containing 85% or more by I 25% or weight of filaments of nylon or other Rs. 67 per

Other woven fabrics, containing 85% or more by I 25% or weight of filaments of nylon or other Rs. 58 per

26.

27.

28.

29.

30.

31.

5407 42

5407 43 00

5407 44 10, 5407 44 30, 5407 44 40, 5407 44 90

5407 44 20

5407 52

5407 53 00

Other woven fabrics, containing 85% or more by weight of filaments of nylon or other polyamides, dyed

polyamides, of yam of different colours

polyamides, printed

Other woven fabrics, containing 85% or more by weight of filaments of nylon or other polyamides, printed Nylon georgette

Other woven fabrics, containing 85% or more by weight of textured polyester filaments, dyed

Other woven fabrics, containing 85% or more by weight of textured polyester filaments, of yams of different colours

25% or Rs. 60 per sq. m., whichever is higher

sq. m., whichever is higher

25% or Rs. 58 per sq. m., whichever is higher

25% or Rs. 38 per sq. m., whichever is higher

25% or Rs. 50 per sq. m., whichever is higher

20% or Rs. 36 per sq. m., whichever is higher

20% or Rs. 40 per sq. m., whichever is higher

20% or Rs. 35 per sq. m., whichever is higher

10% or Rs. 35 per sq. m., whichever is higher

20% or Rs. 23 per sq. m., whichever is higher

20% or Rs. 30 per sq. m., whichever is higher

32. I 5407 61

Other woven fabrics, containing 85% or more by weight of non-textured polyester filaments

25% or Rs. 150 per kg.,

20% or Rs. 150 per kg.,

Other woven fabrics, containing 85% or more by I 25% or weight of textured polyester filaments, other Rs. 60 per

Other woven fabrics, containing 85% or more by I 25% or weight of synthetic filaments, of yams of Rs. 60 per

33.

34.

35.

5407 69 00

5407 73 00

5407 74 00

fabrics

different colours

Other woven fabrics, containing 85% or more by weight of synthetic filaments, printed

whichever is higher

sq. m., whichever is higher

25% or Rs. 38 per sq. m., whichever is higher

whichever is higher

20% or Rs. 36 per sq. m., whichever is higher

20% or Rs. 23 per sq. m., whichever is higher

36.

5407 82 10, Other woven fabrics, containing less than 85% 5407 82 20, by weight of synthetic filaments, mixed mainly 5407 82 30, or solely with Cotton, dyed

5407 82 40,

5407 82 60,

5407 82 90

25% or Rs. 42 per sq. m., whichever is higher

20% or Rs. 25 per sq. m., whichever is higher

37.

38.

5407 82 50

5407 83 00

Other woven fabrics, containing less than 85% 25% or

by weight of synthetic filaments, mixed mainly Rs. 42 per

or solely with Cotton, dyed Terylene and dacron sq. m.,

sarees whichever

is higher

Other woven fabrics, containing less than 85% 25% or

by weight of synthetic filaments, mixed mainly Rs. 67 per

or solely with Cotton, of yams of different sq. m.,

colours whichever

is higher

10% or Rs. 25 per sq. m., whichever is higher

20% or Rs. 40 per sq. m., whichever is higher

Other woven fabrics, containing less than 85% I 25% or by weight of synthetic filaments, mixed mainly Rs. 38 per

39.

5407 84 10, 5407 84 20, 5407 84 30, 5407 84 40, 407 84 60, 5407 84 70, 5407 84 90

or solely with Cotton, printed

sq. m., whichever is higher

20% or Rs. 23 per sq. m., whichever is higher

40.

5407 84 50

Other woven fabrics, containing less than 85% 25% or

by weight of synthetic filaments, mixed mainly Rs. 38 per

or solely with Cotton, printed Terylene and sq. m.,

Dacron sarees whichever

is higher

10% or Rs. 23 per sq. m., whichever is higher

41.

5407 92 00

Other woven fabrics, dyed

25% or Rs. 67 per sq. m., whichever is higher

20% or Rs. 40 per sq. m., whichever is higher

42.

5407 93 00

Other woven fabrics, of yams of different I 25% or

colours Rs. 45 per

sq. m., whichever is higher

20% or Rs. 27 per sq. m., whichever is higher

43.

44.

45.

5407 94 00

5408 22

5408 23 00

Other woven fabrics, printed

Other woven fabrics, containing 85% or more by weight of artificial filament or strip or the like, dyed

Other woven fabrics, containing 85% or more by weight of artificial filament or strip or the like, of yams of different colours

25% or Rs. 67 per sq. m., whichever is higher

25% or Rs. 45 per sq. m., whichever is higher

25% or Rs. 47 per sq. m., whichever is higher

20% or Rs. 40 per sq. m., whichever is higher

20% or Rs. 27 per sq. m., whichever is higher

20% or Rs. 28 per sq. m., whichever is higher

46.

47.

5408 24 11, Other woven fabrics, containing 85% or more by 5408 24 14, weight of artificial filament or strip or the like, 5408 24 16, of rayon

5408 24 17,

5408 24 19,

5408 24 90

5408 24 12, Other woven fabrics, containing 85% or more by 5408 24 13, weight of artificial filament or strip or the like, 5408 24 15, of rayon

5408 24 18

25% or Rs. 87 per sq. m., whichever is higher

25% or Rs. 87 per sq. m., whichever

20% or Rs. 52 per sq. m., whichever is higher

10% or Rs. 52 per sq. m., whichever

48.

49.

50.

5512 19

551229

5512 99

Woven fabrics of synthetic staple fibres, containing 85% or more by weight of polyester staple fibres, other

Woven fabrics of synthetic staple fibres, containing 85% or more by weight of acrylic or modacrylic staple fibres, other

Other Woven fabrics of synthetic staple fibres, containing 85% or more by weight of synthetic staple fibres

is higher

25% or Rs. 42 per sq. m., whichever is higher

25% or Rs. 47 per sq. m., whichever is higher

25% or Rs. 65 per kg., whichever is higher

is higher

20% or Rs. 25 per sq. m., whichever is higher

20% or Rs. 28 per sq. m., whichever is higher

20% or Rs. 54 per kg., whichever is higher

51. I 5513 21 00 I Woven fabrics of polyester staple fibres, I 25% or

containing less than 85% by weight of such Rs. 150

fibres, mixed mainly or solely with cotton, of a per kg.,

weight not exceeding 170 g/sq. m., dyed plain whichever

weave is higher

20% or Rs. 107 per kg.,

whichever is higher

52. I 5513 23 00 I Other Woven fabrics of polyester staple fibres, I 25% or containing less than 85% by weight of such Rs. 125

53. I 5513 39 00 I Other Woven fabrics of polyester staple fibres, I 25% or containing less than 85% by weight of such Rs. 125 fibres, mixed mainly or solely with cotton, of a I per kg. or weight not exceeding 170 g/sq. m., other woven Rs. 25 per

Other Woven fabrics of polyester staple fibres, I 25% or containing less than 85% by weight of such Rs. 25 per

54.

5513 41 00

fibres, mixed mainly or solely with cotton, of a weight not exceeding 170 g/sq. m., dyed

fabrics of yarns of different colours

fibres, mixed mainly or solely with cotton, of a weight not exceeding 170 g/sq. m., printed plain weave of polyester staple fibres

per kg. or Rs. 25 per sq. m., whichever is highest

sq. m., whichever is highest

sq. m., whichever is higher

20% or Rs. 125 per kg. or Rs. 25 per sq. m.,

whichever is highest

20% or Rs. 125 per kg. or Rs. 25 per sq. m.,

whichever is highest

20% or Rs. 15 per sq. m., whichever is higher

55. I 5514 21 00 I Woven fabrics of synthetic staple fibres, I 25% or containing less than 85% by weight of such Rs. 100

56. I 5514 22 00 I Woven fabrics of synthetic staple fibres, I 25% or containing less than 85% by weight of such Rs. 140

fibres, mixed mainly or solely with Cotton, of a per kg., weight exceeding 170g/sq. m., other woven whichever fabrics of polyester staple fibre, dyed is higher

fibres, mixed mainly or solely with Cotton, of a per kg., weight exceeding 170g/sq. m., other dyed woven whichever fabrics is higher

fibres, mixed mainly or solely with Cotton, of a weight exceeding 170g/sq. m., dyed plain weave of polyester staple fibre

fibres, mixed mainly or solely with Cotton, of a weight exceeding 170g/sq. m., 3-thread or 4- thread twill, including cross twill of polyester staple fibre, dyed

57. I 5514 23 00 I Woven fabrics of synthetic staple fibres, containing less than 85% by weight of such

58. I 5514 29 00 I Woven fabrics of synthetic staple fibres, containing less than 85% by weight of such

per kg. or Rs. 30 per sq. m., whichever is highest

per kg., whichever is higher

25% or Rs. 160

25% or Rs. 170

20% or Rs. 100 per kg. or Rs. 30 per sq. m.,

whichever is highest

20% or Rs. 100 per kg.,

whichever is higher

20% or Rs. 114 per kg.,

whichever is higher

20% or Rs. 121 per kg.,

whichever is higher

fibres, mixed mainly or solely with Cotton, of a sq. m., weight exceeding 170g/sq. m., of yams of whichever different colours, of polyester staple fibres is higher

59.

55143011

Woven fabrics of synthetic staple fibres, containing less than 85% by weight of such

25% or Rs. 64 per

20% or Rs. 45 per sq. m., whichever is higher

60.

5514 30 12

Woven fabrics of synthetic staple fibres, 25% or

containing less than 85% by weight of such Rs. 43 per

fibres, mixed mainly or solely with Cotton, of a sq. m.,

weight exceeding 170g/sq. m., of yams of whichever

different colours, 3-thread or 4-thread twill, is higher

including cross twill

20% or Rs. 26 per sq. m., whichever is higher

61. I 5514 49 00 I Other woven fabrics of synthetic staple fibres, I 25% or

containing less than 85% by weight of such Rs. 160

fibres, mixed mainly or solely with Cotton, of a per kg.,

weight exceeding 170g/sq. m., of yams of whichever

different colours is higher

20% or Rs. 114 per kg.,

whichever is higher

62.

5515 21

Other woven fabrics of acrylic or modacrylic I 25% or staple fibres, mixed mainly or solely with man- Rs. 79 per

20% or Rs. 55 per

63.

5515 91

made filaments

Other woven fabrics, mixed mainly or solely with man-made filaments

sq. m., whichever is higher

25% or Rs. 57 per sq. m., whichever is higher

sq. m., whichever is higher

20% or Rs. 40 per sq. m., whichever is higher

staple fibres, mixed mainly or solely with man- per kg., made filaments, dyed or of yams of different whichever colours is higher

64. I 5516 22 00, I Woven fabrics of artificial staple fibres,

5516 23 00 containing less than 85% by weight of artificial

25% or Rs. 150

20% or Rs. 150 per kg.,

whichever is higher

65.

5801 22

Woven pile fabrics and chennile fabrics, other 25% or

than fabrics of Heading 5802 or 5806 of First Rs. 75 per

Schedule of Customs Tariff Act, 1975, cut sq. m.,

corduroy whichever

is higher

10% or Rs. 70 per sq. m., whichever is higher

66. I 5802 30 00 I Tufted textile fabrics

25% or Rs. 150 per kg.,

whichever is higher

10% or Rs. 150 per kg.,

whichever is higher

67. I 6001 92 00 I Pile fabrics, other than long-pile fabrics or I 25% or

looped pile fabrics, of man-made fibres Rs. 100

per kg., whichever is higher

20%

68.

69.

6101 20 00

6101 30

Men’s or boys overcoats, car coats, capes etc., of cotton

Men’s or boys overcoats, car coats, capes etc., of man-made fibres

25% or Rs. 540 per piece, whichever is higher

25% or Rs. 530 per piece, whichever is higher

20%

70. I 6103 29 10, I Men’s suits of silk or of artificial fibres 6103 29 20

25%

20%

71. I 6104 19

Women’s suits of other textile materials

25% or Rs. 460 per piece, whichever is higher

20%

72.

73.

6104 62 00, 6104 63 00

6201 30 10

Women’s trousers, bib and brace overalls, breeches and shorts, of cotton or of synthetic fibres

Men’s or boys overcoats, car coats, raincoats etc., of cotton

25% or Rs. 98 per piece, whichever is higher

25% or Rs. 385 per piece, whichever is higher

20%

74. I 6201 30 90 I Other than Men’s or boys overcoats, car coats, raincoats etc., of cotton

25% or Rs. 210 per piece, whichever is higher

20%

75.

6201 40 10

Men’s or boys overcoats, car coats, capes etc., of man-made fibres

25% or Rs. 320 per piece, whichever is higher

20%

76. I 6201 40 90 I Other than Men’s or boys overcoats, car coats, capes etc., of man-made fibres

77. I 6202 30 10 I Women’s or girls overcoats, car coats, raincoats etc., of cotton

25% or Rs. 180 per piece, whichever is higher

25% or Rs. 210 per piece, whichever is higher

20%

78. I 6202 30 90 I Other than Women’s or girls overcoats, car 25% or

coats, raincoats etc., of cotton Rs. 160

per piece, whichever is higher

20%

79.	6202 40 10	Women’s or girls overcoats, car coats, capes	25% or	20%
		etc., of man-made fibres	Rs. 385
			per piece,
			whichever
			is higher
80.	6202 40 90	Other than women’s or girls overcoats, car coats,	25% or	20%
		capes etc., of man-made fibres	Rs. 220
			per piece,
			whichever
			is higher
81.	6203 11 00	Men’s Suits of wool or fine animal hair	25% or	20%
			Rs. 1100
			per piece,
			whichever
			is higher
82.	6203 12 00	Men’s Suits of synthetic fibres	25% or	20%
			Rs. 720
			per piece,
			whichever
			is higher
83.	6203 19	Men’s Suits of other textile materials	25% or	20%
			Rs. 1100
			per piece,
			whichever
			is higher
84.	6203 31	Men’s jackets and blazers, of wool or fine	25% or	20%
		animal hair	Rs. 815
			per piece,
			whichever
			is higher
85.	6203 32 00	Men’s jackets and blazers, of cotton	25% or	20%
			Rs. 440
			per piece,
			whichever
			is higher
86.	6203 33 00	Men’s jackets and blazers, of synthetic fibres	25% or	20%
			Rs. 320
			per piece,
			whichever
			is higher

87.	I 6203 39	I Men’s jackets and blazers, of other textile		25% or	20%
		materials		Rs. 755
				per piece,
				whichever
				is higher
88.	I 6203 43 oo,	Men’s trousers, bib and brace overalls, breeches		25% or	20%
	6203 49	and shorts, of synthetic fibres or of other textile		Rs. 110
		materials		per piece,
				whichever
				is higher
89.	I 6204 11 00, I Women’s suits of wool or of fine animal hair or		25% or	20%
	6204 13 00 synthetic fibre		Rs. 550
				per piece,
				whichever
				is higher
90.	I 6204 19	Women’s suits of other textile materials		25% or	20%
				Rs. 500
				per piece,
				whichever
				is higher
91.	I 6204 31 10,	Women’s jackets and blazers, of wool or fine		25% or	20%
	6204 31 90	animal hair		Rs. 370
				per piece,
				whichever
				is higher
			I
92.	I 6204 32 oo	I Women’s jackets and blazers, of cotton	25% or	20%
				Rs. 650
				per piece,
				whichever
				is higher
93.	I 6204 33 oo	I Women’s jackets and blazers, of synthetic fibres		25% or	20%
				Rs. 390
				per piece,
				whichever
				is higher
94.	I 6204 39	I Women’s jackets and blazers, of other textile		25% or	20%
		materials		Rs. 350
				per piece,
				whichever
				is higher

95. I 6204 69

96. I 7204

97. I 9801

Women’s trousers, bib and brace overalls, breeches and shorts, of other textile materials

Ferrous waste and scrap

[This item will attract “nil” rate till 31.3.2023, vide S. No. 368 of notification No. 50/2017- Customs.]

Project Imports

[Effective BCD rate on these items would continue to be ‘Nil I 2.5% I 5% (as applicable)’ vide S. Nos. 597 to 606 of notification No. 50/2017- Customs till 30.09.2023 for the project imports registered till 30.09.2022. For other project imports 7.5% BCD rate will be applicable from 01.10.2022.All project imports will attract 7.5% BCD rate after 30.09.2023]

25% or Rs. 135 per piece, whichever is higher

15%

10%

20%

2.5%

7.5%

New entries added to the First Schedule (to be effective from 01-05-2022 unless otherwise specified) [Clause 97(b) of the Finance Bill, 2022]

Amendments have been proposed in the Finance Bill, 2022, to align the Indian Tariff with the Complementary Amendments to the HS-2022 published by WCO, as signatory to HS Convention. These complementary amendments include minor changes across chapters in the Tariff, all aimed at bringing greater clarity to the HS. Further, New Tariff entries are being introduced by accommodating the requests from different Ministries and Departments. These new entries will help-

to identify new categories of Fuels being introduced in the Country;
to give a fillip to identification and exports of Handicrafts;
to clarify the manner of determination of Fe content in iron ore being exported;
to provide greater clarity on the goods being exempted through different notifications of the Government.

IV. PRUNING AND REVIEW OF CUSTOMS DUTY CONCESSIONS/

EXEMPTIONS

Review of concessional rates of BCD prescribed to Capital Goods and Project Imports vide notification No. 50/2017 – Customs dated 30.6.2017:

The Customs duty rate structure on capital goods and project imports has been comprehensively reviewed and exemption on capital goods/ project imports are being phased out in a gradual manner. However, certain exemptions on capital goods would continue. Accordingly, the BCD exemption hitherto available on certain goods are being withdrawn by omitting the following entries of notification No. 50/2017- Customs dated 30.6.2017, from the dates mentioned against each entry.

S. No. of

S. No. I notification No. 50/2017

Description/ HS Code

(1)

Textile Sector

(2)

(3)

399

[ exemption 1s being phased out as per details in column (3)]

400

[w.e.f 1.4.2023]

432

[ exemption 1s being phased out as per details in column (3)]

Goods ( other than old and used) for use in man-made or synthetic fiber or yam industry (84 or any other Chapter)

Concessional BCD rate to be withdrawn for Spindles, Yam guides, Ballon Control Rings and Travellers [w.e.f 1.4.2022]
Concessional BCD rate to be withdrawn for the remaining items such as Machinery for continuous polymerization plant, Machinery for synthetic fibre plant, Machinery for synthetic filament yam plant, Machinery for Regular/HWM Viscose Staple Fibre Plant, Machinery for Lyocell Fiber Plant, in this entry [w.e.f 1.4.2023]

Goods such as Machinery for garment sector, Machinery for manufacture of technical textiles, Woollen machinery items, Machinery for manufacture of non-wovens textiles, Machinery for manufacture of denim fabrics, Machinery for use with shuttleless looms etc. as specified in List 12 to the notification No. 50/2017-Customs, and parts for their manufacture for use in textiles industry

Goods ( other than old and used) for use in the textile industry

Concessional BCD rate to be withdrawn for item no. 1, List 25: Effluent treatment unit with biopaq reactor, activate sludge process, activated carbon, ultrafiltration ozonisation facilities [w.e.f 1.4.2022]
Concessional BCD rate to be withdrawn for item no. 3, List

S. No. of

S. No. I notification No. 50/2017

Description/ HS Code

(1)

(2)

433

[w.e.f 1.4.2022]

434

[w.e.f 1.4.2023]

460

[w.e.f 1.4.2023]

461

[ exemption 1s being phased out as per details in column (3)]

(3)

25: Effluent treatment unit with automatic sensing devices, automatic controlled chemical dosing, dissolved air floatation (DAF), reverse osmosis, sludge dewatering, decanters, ultrafilters, vacuum filters to deliver water for reuse [w.e.f 1.4.2022]

Concessional BCD rate to be withdrawn for the remaining items such as singeing machines, yam drying machines, knitting machines etc., in this entry. [w.e.f 1.4.2023]

Machinery or equipment for effluent treatment plant for handloom sector or handicraft sector

Machinery for use in the silk textile industry

Shuttle less looms and parts for their manufacture for use in the textile industry

Machineries such as Knitting, weaving machines

Concessional BCD rate to be withdrawn for Card Clothing (HS Code 8448 31 00) used in textile machinery i.e., Carding Machine [w.e.f 1.4.2022]
Concessional BCD rate to be withdrawn for the remaining items, such as machines for extruding, drawing, texturing, textiles machines, machines for preparing textile fibers, textile spinning machines, textile twisting machines, textile winding machines, weaving machines, knitting machines, auxiliary machines etc., in entry. [w.e.f 1.4.2023]

Power Sector

397

[ exemption 1s being phased out as per details in column (3)]

Goods specified in List 10 required for use in high voltage power transmission project

Concessional BCD rate to be withdrawn for 13 items [List 10 in the notification] that include Transformers, Reactor, Circuit Breaker etc. [w.e.f 1.4.2022]
Concessional BCD rate to be withdrawn for the remaining items such as High Voltage DC Divider and CT, High Voltage DC Reactor, High TRV Circuit Breaker for High Voltage DC application, Optical Current Transformer etc. in this entry. [w.e.f 1.4.2023]

S. No. of

S. No. I notification No. 50/2017

Description/ HS Code

(1)

10.

11.

12.

(2)

405

[ exemption 1s being phased out as per details in column (3)]

406

[w.e.f 1.4.2023]

413

[w.e.f 1.4.2022]

414

[w.e.f 1.4.2022]

(3)

Wind operated electricity generators, its parts and raw material, thereof

Concessional BCD rate to be withdrawn for item No. (1) & (3) of this entry that include wind operated electricity generators (WOEG) upto 30 kW, wind operated battery chargers upto 30kW and blades for the rotors of WOEG [w.e.f 1.4.2022]
Concessional BCD rate to be withdrawn for the remaining items, such as parts of wind operated electricity generators including special bearings, gear box, yaw components, wind turbine controllers etc. and parts thereof and parts of blades, raw materials of blades etc. in this entry. [w.e.f 1.4.2023]

Permanent magnets for manufacture of PM synchronous generators above 500KW for use in wind operated electricity generators

All goods, for renovation or modernization of a power generation plant (other than captive power generation plant)

All goods, imported by a manufacturer-supplier for the manufacture and supply of machinery and equipment to a power generation plant ( other than captive power generation plant)

Petroleum Sector

13.

14.

403

[w.e.f 1.4.2023]

409

[ exemption 1s being phased out as per details in column (3)]

Parts and raw materials for manufacture of goods to be supplied in connection with the purposes of off- shore oil exploration or exploitation

Goods specified in List 13 required for setting up crude petroleum refinery

Concessional BCD rate to be withdrawn for 11 items of List 13 that include utility systems, water treatment systems, air handling systems, boilers etc. [w.e.f 1.4.2022]
Concessional BCD rate to be withdrawn for the remaining items such as all types of Refinery Process Units, All types of Hydrogen Generation, Recovery and Purification Plants, All types of Process Subsystems, All types of Effluent Solids/Liquids/Gaseous Processing etc. in this S. No. [w.e.f 1.4.2023]

[w.e.f 1.4.2022]

[w.e.f 1.4.2023]

	S. No. of
S.No.	notification No.		Description/ HS Code
	50/2017
(1)	(2)		(3)
15.	410	Kits and its parts required for the conversion of motor- spirit or
	[w.e.f 1.4.2022]	diesel driven vehicles into Compressed Natural Gas driven or
	Propane driven or Liquefied Petroleum Gas driven vehicles
Leather Sector
16.	396	Machinery or equipment for effluent treatment plant for leather
	[w.e.f 1.4.2022]	industry
17.	439	292 goods specified in List 27 to notification No. 50/2017-
	[w.e.f 1.4.2023]	Customs, designed for use in the leather industry or the
	footwear industry, like Air blast dust removing machine,
		Automatic Drying machine etc.
Food Packaging Sector
18.	455	Machinery for filling, closing, sealing or labelling bottles, cans,
	[w.e.f 1.4.2023]	boxes, bags or other containers
19.	458	Machinery for the industrial preparation or manufacture of food
	[w.e.f 1.4.2023]	or drink, other than machinery for the extraction or preparation
	of animal or fixed vegetable fats or oils
Other Sectors
20.	393	(i)	Cricket bat and hockey stick splice joining machine
	[w.e.f 1.4.2023]	(ii)	Rugby ball or soccer ball stitching Machine
		(iii)	Moulds for soccer ball, basketball and volley ball
21.	394	Bacteria removing clarifier
	[w.e.f 1.4.2023]
22.	395	Marine seawater pumps with fibre impellers and Automatic
	[w.e.f 1.4.2023]	fish/prawn feeder
23.	407	Goods required for, –
	[w.e.f 1.4.2023]	(a) the substitution of ozone depleting substances (ODS);
		(b) the setting up of new capacity with non – ODS technology.
24.	408	Goods required for renovation, modernization or maintenance
	[w.e.f 1.4.2023]	of a fertilizer plant
25.	436	Spares, supplied with outboard motors for maintenance of such
	[w.e.f 1.4.2023]	outboard motors

[w.e.f 2.2.2022]

[w.e.f 1.4.2023]

S. No. of

S.No.

notification No.

Description/ HS Code

50/2017

(1)

(2)

(3)

26.

440

Fogging machines

imported by a Municipal

Committee,

[w.e.f 1.4.2023]

District Board etc.

27.

443

Goods to be imported by or on behalf of security printing and

[w.e.f 2.2.2022]

minting corporation of India limited (SPMCIL) that include

Plant

machinery

equipment,

spares

and

consumables for printing of banknotes, etc.

28.

444

Geothermal ground source heat pumps

[w.e.f 1.4.2023]

29.

445

Goods for making of gem and jewellery –

[w.e.f 1.4.2023]

( 1) Automatic Chain Making machine,

(2) chain twisting machine,

(3) Spiral making machine,

(4) Rolling machine (combined Profile Groovers/Strip Making)

(5) Automatic Investing Machine/casting Machine

30.

448

Specific agricultural implements and parts used for their

[w.e.f 1.4.2023]

manufacture

that

include

paddy

transplanter,

sugarcane

harvester, cotton picker etc.

31.

469

Atmospheric water generator

[w.e.f 1.4.2023]

32.

470

Machinery for making wooden fiberboards

[w.e.f 1.4.2023]

Project Imports

33.

597,

598,

599,

Project Imports for project such as

600,

601,

602,

(i)

Power Projects, including Nuclear and Solar Power

603,

604,

605,

(ii)

Coal Projects

606

(iii)

Gas Projects

(iv)

Iron Ore Projects

(v)

Water Supply Projects

(vi)

Mandi and Warehousing Projects for Food Grains

(vii) Other Projects

b. New projects registered after 30^thSeptember 2022 under

project imports will attract 7.5% BCD rate with change in

BCD Tariff rate to 7.5%.

Existing projects registered till 30^thSeptember 2022 under

	S. No. of
S.No.	notification No.			Description/ HS Code
	50/2017
(1)	(2)				(3)
		project imports will be grandfathered till 30^thSeptember
		2023	attracting	old	BCD	rates	of 0%/2.5%/5%	as
		applicable.
		d. After 30^thSeptember 2023, all projects registered under
		project imports will attract 7.5% BCD rate.

Review of concessional rates of BCD prescribed in notification No. 50/2017 – customs dated 30.06.2017: The BCD exemption hitherto available on certain goods are being withdrawn by omitting some of the entries of notification No. 50/2017- Customs dated 30.6.2017 as shown below. Additionally, modifications have also been made with respect to some of the entries of notification No. 50/2017-Customs dated 30.6.2017, wherein end-dates have been prescribed, and partial changes has been made to the exemptions. These changes are detailed below.

S.No.	S. No. of	Description
	notification No.
	50/ 2017
Entries to be immediately omitted
1.	4	Atlantic Salmon
2.	26	Hazelnuts or filberts, shelled and in-shell
3.	28	Other nuts, shelled and in-shell
4.	33	Durians, other fresh fruits like Pomegranates, Tamarind,
		Sapota, Custard- apple, Bore, Lichi, etc. other than currants
		and gooseberries
5.	50	Seed Lac
6.	52	DammarBatu
7.	82	Crude glycerin for use in the manufacture of soaps
8.	96	Tapioca and substitutes therefor prepared from starch
9.	122	Silica Sands
10.	124	Marble, travertine, granite other than rough marble and
		travertine blocks and marble slabs
11.	151	Kerosene imported by the Indian IOCL. BPCL, HPCL and
		IBP Company Limited for ultimate sale through the Public
		Distribution System
12.	159	Bio-based asphalt sealer and preservation agent; Millings
		remover and crack filler; Asphalt remover and corrosion
		protectant;	Sprayer	system	for bio-based Asphalt	and

S.No.	S. No. of	Description
	notification No.
	50/ 2017
		condition no. 14
13.	171	The goods specified in List 7, for the manufacture of laser
		and laser-based instrumentation and condition No. 17
14.	173	Goods used in manufacture of telecommunication	grade
		impregnated glass reinforcement roving, namely: E-glass
		roving/	yam,	liquid	absorbent	polymer,	polyurethane
		polymer and vinyl polymer
15.	175	Common Salt (including Rock salt, Sea salt and Table salt)
16.	187	Raw materials intermediates and consumables supplied by
		UNICEF for manufacture of DTP vaccines and condition
		No. 19
17.	233	Myrobalan fruit extract
18.	234	Triband Phosphor
19.	235	Ceramic Colours
20.	236	Glass frit and other glass, in the form of powder, granules or
		flakes
21.	241	Vinyl Polyethylene Glycol for use in manufacture of Poly
		Carboxylate Ether
22.	242	The following goods for use in the manufacture of Plasma
		Volume Expanders, namely: Hydroxyethyl starch and
		Dextran
23.	277	Mica glass tape for use in manufacture of insulated wire and
		cables
24.	293	Grape guard paper (paper used for packaging grapes)
25.	324	Mono filament	long	line	system	for tuna fishing	and
		condition No. 34
26.	327	Samples of hand knotted carpets and condition No. 36
27.	328	Polyester Tyre Cord Fabric
28.	332	Parts of Umbrella
29.	216 & 481	Artificial Kidney (Dialyzer)
30.	216A & 481A	Parts for manufacture of Artificial Kidney
31.	402	Goods, for use in the manufacture of static converters of
		automatic data processing machines: PCBA, Transformer,
		Battery and Copper enameled wires
32.	424	Listed goods for paging goods and its parts
33.	425	Listed goods for Public Mobile Radio Trunked Service
		(PMR TS) and its parts
34.	431	Goods used for Research and development in Agro-

S.No.	S. No. of	Description
	notification No.
	50/ 2017
		Chemical Sector Unit
35.	449	Goods for use in the manufacture of refrigerator compressor
		namely: –
		(i) C-Block compressor;
		(ii) Crankshafts.
36.	450	Over Load Protector (OLP) and positive thermal coefficient
		for use in the manufacture of refrigerator compressor
37.	501	Recorded magnetic tapes and floppy diskettes, imported by
		the University Grants Commission for use in Computers
38.	588	Synthetic tracks and equipment to lay synthetic tracks.
39.	589	(i)Asphalt resurfacer;
		(ii) Acrylic resurfacer;
		(iii) Cushion coat;
		(iv) Acrylic colour concentrate;
		(v) Acrylic marking paint; and
		(vi) Polytan in powder or granule form
40.	590	Requisites for games and sports
Entries where End-dates are prescribed
41.	289	Wood in chips for use in manufacture of paper, paperboard
		& newsprint *[End-date of 31.03.2023 is prescribed]*
42.	430	Goods used for Research and Development purpose in
		pharmaceutical and bio- technology sector. *[End-date of*
		*31.03.2023 is prescribed]*
43.	479	Mono or Bi polar Membrane electrolysers and parts;
		Membrane and parts; Parts, other than those for caustic soda
		unit or caustic potash unit *[End-date of 31.03.2024 is*
		*prescribed]*
44.	594	Snow-skis and other snow-ski Equipment; Water-skis, surf-
		boards, sailboards and other water-sport equipment *[End-*
		*date of 31.03.2023 is prescribed]*
Section 25 (4A) of the Customs Act, inserted *vide* Finance Act, 2021, prescribes that
where any exemption is granted subject to any condition under sub-section (1), such
exemption shall, unless otherwise specified or varied or rescinded, be valid up to 31st
day of March falling immediately after two years from the date of such grant or
variation. Accordingly, conditional exemptions will have validity in terms of this sub-
section. Therefore, entry being impacted on account of this clause have been identified
and an explanation has been inserted in the notification No. 50 /2017-Customs.
[ “Explanation: Under the provisions of sub-section (4A) of section 25 of the Customs Act,

S.No.	S. No. of	Description
	notification No.
	50/ 2017
1962, it is hereby specified that the conditional exemptions granted under the S. Nos. of the
Table to the notification, mentioned under column (2) of the Table below, for which period of
validity is not specified otherwise, shall unless varied or rescinded, be valid up to the date
mentioned in the corresponding entry in column (3) of the said Table .…. “]
The following entries, unless varied, will have validity up to 31.03.2023.
45.	16, 90, 133, 139, 150, 155, 164, 165, 168, 183, 184, 188,204,213,237,238,253,
	254,255,258,259,260,261,269,271,276,277A,279,280, 325,333,334,339,
	340,341, 341A, 353, 364A, 374,375,378,379,380,381,387,392,415, 415A,
	416,417,418,419,420,421,426,428,429,441,462,463,464,471,472,475,
	478, 482, 489B, 495, 497, 504, 509, 510, 511, 512, 512A, 516, 519, 534, 535,
	535A, 536,538,540,542,543,544,546,549,550,559,565,566,567,568,570,
	575,577,578A,579,580,581,583,593,612
The following entries [having been reviewed in this exercise done this year], unless varied,
will have validity up to 31.03.2024.
46.	17, 80A, 104, 172, 191, 257, 257A, 257B, 257C, 264A, 290, 292, 293A, 296A,
	326,329,345A,354,355,356,357,422,423,442,446,451,465,517,591
Entries omitted being in the nature of technical change
47.	31	Dried Grapes (Raisins, Other)
48.	161	Electrical Energy originating from Nepal and Bhutan
49.	192	Alkyl esters of long chain fatty acids obtained from
		vegetable oils, commonly known as bio- diesels
50.	215	The Blood group sera, namely: -Anti C., anti E., anti c., anti
		e., anti M., anti N., anti Le., anti-Pl., anti S., antihuman
		globulin sera, anti F., anti ke11, anti ce11ane, anti Jka., and
		anti I
51.	224	Potassium Nitrate, in a form indicative of its use for
		manurial purpose
52.	248	Dipping oil, Paclobutrazol (Cultar)
53.	466	Parts/ sub-parts, components or accessories for use in the
		manufacture of tablet computer.
54.	485	Deflection components for use in colour monitors for
		computers or for use in PCBs of colour monitors for
		computers
55.	496	Stepper Motors for use in the manufacture of goods fa11ing
		under heading 84 71
56.	505	Parts of Set-top box for use in its manufacture
57.	506	Parts/sub-parts, components for use in manufacture of
		broadband modem

S.No.

58.

59.

S. No. of notification No. 50/ 2017

507

508

Description

Other than PCBA, charger.

Parts/ sub-parts, components and accessories for use m manufacture of routers other than PCBA, charger.

Parts/ sub-parts, components and accessories for use m manufacture of set top boxes for gaining access to internet other than PCBA, charger.

Entries with partial changes

60. I 15 I Frozen Semen and Frozen semen equipment

[Exemption to continue only for bovine semen]

61.

62.

63.

104

132

166

List of specified goods used in the processing of sea-foods

[Exemption to continue for selected items and accordingly, exemption has been continued for 16 items and 4 new items has been added to the list]

List A items:

1.	Aluminous cement
2.	Silicon metal (99%)
3.	Micro/fumed silica
4.	Brown fused alumina
5.	Sintered/tabular alumina
6.	Fused zirconia
7.	Sodium hexameta phosphate
8.	Silicon carbide
9.	Boron carbide

Reactive alumina
Fused silica; and

List B items: Phenolic resin

[Exemption to continue for list A with end-date of 31.03.2023 and discontinue for list B immediately]

(A) Drugs, medicines, diagnostic kits or equipment specified in List 3.

(B) Bulk drugs used in the manufacture of drugs or medicines at (A)

[Exemptions under List-3 is being rationalized]

S.No.

64.

65.

S. No. of notification No. 50/ 2017

167

404

Description

Note: Items included in List 3 under S. No. 166 provides for a conditional concessional rate of 5% on the imports of drugs, medicines, diagnostic kits, etc. along with bulk drugs used in the manufacture of such drugs or medicines. The items in the said list has been reviewed. Accordingly, 35 items have been removed from the List and 1 item [influenza vaccine] in the List would be omitted after 18 months. For further details, please refer to notification No. 02/2022 – Customs dated the J5¹February, 2022.

(A) Lifesaving drugs/medicines including their salts and esters and diagnostic test kits specified in List 4.

(B) Bulk drugs used in the manufacture of drugs or medicines at (A).

[Exemptions under List-4 is being rationalized in the manner as detailed in the Note at S. No. 63 above; Entry at S. No. 167 (CJ has been omitted as a similar exemption is available under S. No. 607 (b) of notification No. 50/2017 – Customs]

Note: Items included in List 4 under S. No. 167 provides for customs duty exemption on the imports of Lifesaving drugs/medicines, diagnostic kits, etc. along with bulk drugs used in the manufacture of such goods. The items in the said list has been reviewed. Accordingly, 3 items in List 4 [Diagnostic agent for detection of Hepatitis B antigen, Diagnostic kits for detection of HIV antibodies, Enzyme Linked Immuno absorbent Assay kits (ELISA kits)} have been transferred to List 3, 2 bulk drugs [bulk drug substance for poliomyelitis vaccine (inactivated and live) and Monocomponent Insulin} that are currently included in List 4 would be transferred to List 3 after 2-3 years, and 36 items from List 4 have been omitted. For further details, please refer to notification No. 02/2022 – Customs dated the JS! February, 2022.

Goods required in connection with Petroleum operations.

[Rationalization of the exemption provided for goods used in petroleum operations as specified in List 33 under S. No.

S.No.

66.

S. No. of notification No. 50/ 2017

513

Description

404, and simplification of the associated condition no. 48 for availing such exemption and disposal of such goods]

Note: A definition has been provided for a licensee, lessee, contractor or sub-contractor for the purpose of this entry. Also, the requirement of producing a certificate from Directorate General of Hydrocarbons (DGH) for import or each transaction under this entry has been dispensed with. Further, the list of items falling under List 33 has been pruned down and have been made more specific by prescribing the concerned HS Codes.

Parts or components for use in manufacture of populated printed circuit board of various telecom and electronics related products, and its sub-parts.

[ Exemption to continue for Digital Video Recorder(DVR)/Network Video Recorder(NVR) falling under tariff item 8521 90 90; CCTV Camera/IP Camera falling under tariff item 8525 20 80; Reception apparatus for television but not designed to incorporate a video display falling under tariff item 8528 71 00]

Customs duty exemptions which have been granted through certain other standalone notifications, have also been reviewed:

dated 28.02.1999

S. No.	Notification No.	Amendment
I.	The following notifications have been modified in the manner as detailed below:
		39/1996-Customs	This notification prescribes concessional rate of customs
		dated 23.07.1996	duty on items relating to Defence and internal security
			forces. Upon review of exemption, entries under S. Nos.
1.		14, 15, 17, 18, 19, 24, 29, 30, 31, 31A, 31B, 32, 33, 35,
	36, 38, 39, 40, 41, 42, 43 have been omitted.
			*[Sunset date of 31.03.2023* has been prescribed for the
			remaining entries as per Section 25(4A) of the Customs
			Act, 1962]
			This notification prescribes concessional rate of customs
			duty on items relating to import of raw materials and parts
		25/1999-Customs	for use in manufacture of electronic items.
2.	dated 28.02.1999
		Upon review of exemption, it has been pruned to remove
			redundant exemption entries and exemptions related to
			obsolete items and accordingly, more than 125 entries

			have been omitted.
			*[Sunset*	*date*	*of 31.03.2024*	been	applied for	the
			remaining entries}
			This notification prescribes concessional rate of customs
			duty on import of items relating to capital goods used in
		25/2002-Customs	manufacture of electronic items.
3.	dated 01.03.2002
			*[Sunset date of 31.03.2024* been applied for the all
			entries]
		27/2011-Customs	This notification prescribes concessional rate of customs
4.	dated 01.03.2011	duty on export of goods. Upon review of the exemption,
	the entries under S. Nos. 20B, 63 and 64 have been
			omitted as these entries have become obsolete .
		37/2017-Customs	This notification prescribes concessional rate of customs
		dated 30.06.2017	duty on import of items relating to internal security
5.		agencies. Upon review of exemption entries, the entries
			under S. Nos. 6 and 7 have been omitted as their validity
			has expired.
II.	The following obsolete/expired notifications have been rescinded as detailed
	below:
S.No.	Notification No.	Description
1.	190/1978-Customs	These notification provides for additional duty of customs
dated 22.09.1978	on import of transformer oil equivalent to such portion of
		191/1978-Customs	the excise duty leviable on the raw material commonly
2.		known as transformer oil base stock or transformer oil
		dated 22.09.1978	feedstock.
		10/1995-Customs	This notification prescribes concessional rate of customs
3.	dated 7.3.1995	duty on import inputs imported for manufacturing of Iron
			& Steel intermediates.
		26/ 1999-Customs	This notification prescribes concessional rate of basic
4.	dated 28.2.1999	customs duty on import of kerosene imported by a
	manufacturer of linear alkyl benzene for extracting N-
			Paraffin.
		27 /2004-Customs	This notification prescribes concessional rate of customs
5.	dated 23.01.2004	duty on import of specified goods imported for use in
			manufacture of certain chemicals.
		14/2006-Customs	This notification prescribes concessional rate of customs
		dated 01.03.2006	duty on import of specified varieties of woven fabrics
6.		falling under Chapters 52, 54, 55 and 58.
			The entries of this notification have been merged in
			notification No. 82/2017-Customs.
7.	48/2006-Customs	This notification prescribes concessional rate of customs
		dated 26.05.2006	duty on import of woven fabrics of carded/combed wool

10.

12.

14.

15.

		or fine animal hair.
		The entries of this notification have been merged in
		notification No. 82/2017-Customs.
	90/2007-Customs	This notification prescribes concessional rate of additional
8.	dated 26.07.2007	duty of customs on import of items related to Electronics
		and Information Technology goods.
	08/2011-Customs	This notification prescribes exemption from the whole of
	dated 14.02.2011	the additional duty of customs, leviable thereon under sub-
9.		section ( 1) of section 3 of the said Customs Tariff Act, on
	jute products imported from Bangladesh or Nepal.
		The notification has been rescinded as post introduction of
		GST, the jute products attract integrated tax on imports.
	24/2011-Customs	This notification exempts Basic Customs Duty on copper
10.	dated 1.03.2011	concentrate as is equivalent to the duty of customs leviable
	on the value of Gold and silver contained in such copper
		concentrate.
	49/2013-Customs	This notification prescribed concessional rate of customs
11.	dated 29.11.2013	duty on import of Anti-Tuberculosis Drugs, Diagnostics
		and Equipment and had lapsed on l ” April, 2016.
	23/2014-Customs	This notification prescribed concessional rate of customs
12.	dated 11.07.2014	duty on import of Drugs & equipment imported for
	National AIDS Control Programme and had lapsed on l “
		April, 2015.
	37/2015-Customs	This notification prescribed concessional rate of customs
13.	dated 10.06.2015	duty on import of Anti-Retroviral Drugs (ARV Drugs) and
		had lapsed on l ” April, 2016.
14.	11/2016-Customs	This notification prescribes concessional rate of customs
dated 01.03.2016	duty on import of software recorded media.
	20/2020-Customs	This notification prescribes concessional rate of customs
15.	dated 9.04.2020	duty	on	import	of	Face	Masks,	Surgical	Masks,
	Ventilators, COVID-19 Testing Kits, etc. and had lapsed
		on 30^thSeptember, 2020.
	40/2020-Customs	This notification prescribes concessional rate of customs
16.	dated 28.10.2020	duty on import of Potatoes under Tariff Rate Quota (TRQ)
		and had lapsed on 3 pt January, 2021.

Inclusion of End-date as per Section 25(4A) of the Customs Act, 1962, in certain stand-alone notifications:

Notification No./

S. No. I Entry of the

notification No.

Amendment

146/94-Customs dated 13.07.1994

14 7 /94-Customs dated 13.07.1994

50/96-Customs dated 23.07.1996

30/2004-Customs dated 28.01.2004

81/2005-Customs dated 08.09.2005

5/2017-Customs dated 02.02.2017

16/2017-Customs dated 20.04.2017

Serial No. 2

This notification prescribes concessional rate of customs duty on specified sports goods, equipment and requisites imported by National Sports Federation