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Government Amends Rule to Wind-up Settlement Commission

government-amends-rule-to-wind-up-settlement-commission

The Government on 31st March 2021 notified amendment to the Settlement Commission (Income-tax and Wealth-tax) (Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members) Rules, 2015 vide Notification No. G.S.R. 245 (E). for winding up the Income Tax Settlement Commission.

Finance Bill, 2021 has proposed to constitute Dispute Resolution Committee (“DRC”) as per section 245MA for small and medium taxpayers and to abolish the age-old Settlement Commission with immediate effect. The interesting fact of DRC is that it is introduced as a faceless institution. Anyone with a taxable income as per return up to Rs. 50 lakh and disputed income up to Rs. 10 lakh shall be eligible to approach the Committee. The Income-tax Settlement Commission (“ITSC”) is discontinued from 1st February 2021. All the pending applications as on date shall be decided by an Interim Board.



Clause 56 of the Finance Bill, 2021 states that the Income-tax Settlement Commission shall cease to operate on or after the 1st day of February 2021. 


Now, the finance ministry has notified the rule for winding up of the Income-tax Settlement Commission, handling income tax and wealth tax disputes from effective 1 February 2021 and making the way for a new dispute resolution system for small taxpayers.



The ministry has notified the terms for scrapping the Commission by compensating its chairman, vice-chairman and members. They will be entitled to compensation of three months' pay and allowances for the premature termination of the term of their office, according to Settlement Commission (Income-tax and Wealth-tax) (Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members) Amendment Rules, 2021 so notified.


Read the full text of Notification No. G.S.R. 245 (E) dated 31.03.2021 for winding up Income Tax Settlement Commission


MINISTRY OF FINANCE 

(Department of Revenue) 


NOTIFICATION 


New Delhi, the 31st March, 2021 


G.S.R. 245 (E).—In exercise of the powers conferred by the proviso to article 309 of the Constitution, the President hereby makes the following rules to amend the Settlement Commission (Income-tax and Wealth-tax) (Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members) Rules, 2015 namely:


1. Short title and commencement - (1) These rules may be called the Settlement Commission (Income-tax and Wealth-tax) (Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members) Amendment Rules, 2021. 


(2) They shall be deemed to have come into force on the 1st February, 2021. 


2. In the Settlement Commission (Income-tax and Wealth-tax) (Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members) Rules, 2015, in rule 7, after second proviso and before Note, the following Proviso shall be inserted namely: - 


“Provided also that any person appointed as Chairman, Vice-Chairman or Member holding office as such immediately before the date to be notified by the Central Government in this behalf, shall on and from such date, cease to hold such office, and they shall be entitled to claim compensation not exceeding three months' pay and allowances for the premature termination of term of their office”.


[F. No. Q-21013/1/2021-AAR] 

ARVIND SARAN, Director 


Note: The Principal Rules were published in Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 30th March, 2015 vide G.S.R. 235(E), dated 27.03.2015.


Explanatory Memememorandum: The Settlement Commission (Income-tax and Wealth-tax) (Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members) Amendment Rules, 2021 is being given retrospective effect from the 1st February, 2021 in pursuance of clause 56 of Finance Bill, 2021 proposing to insert a proviso under section 245B of the Income-tax Act, 1961 to the effect that Settlement Commission shall cease to operate on or after the 1st day of February, 2021. Therefore, it is certified that no person’s interest will be adversely affected by this notification. 


Download Copy of Notification No. G.S.R. 245 (E) dated 31.03.2021 for winding up Income Tax Settlement Commission in pdf format



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