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Explaining Changes to Finance Bill, 2022 as passed by Loksabha with Government Amendments

explaining-changes-to-finance-bill-2022-as-passed-by-loksabha-with-government-amendments

Loksabha passed the Finance Bill, 2022 on 25th March, 2022 after 39 changes were made to the original Finance Bill, 2022 (which was introduced in the Loksabha on 1st February 2022) by way of government amendments. Out of these 39 changes, 32 amendments are related to Income-tax Act, 1961 (‘Act’). These changes are proposed by the government and hence called government amendments.



    The amendments proposed by the government are in the nature of new amendments added as well as modifying the amendments in the original Bill.


    In this article, the full list of amendments proposed by the government to the original Finance Bill, 2022 is enumerated.


    Now, each of the amendments to the original Finance Bill, 2022 is discussed and analysed in detail.



    Read Also: The Finance Act, 2022 is notified on 31st March, 2022.


    Key Summary of the changes proposed by the government amendments to the original Finance Bill, 2022


    The key summary of the changes proposed by the government amendments to the original Finance Bill, 2022 are highlighted below-


    Amendment Sl. No. 1: Definition of ‘Books of accounts’


    This amendment proposes to amend clause 3 of the original Finance Bill, 2022. Clause 3 of the Bill proposes to amend definition section 2 of the Act. This change is a new amendment to the original Finance Bill, 2022.


    Clause (12A) of section 2 of the Act defines Books of accounts to mean 


    This implies only the books of accounts can be only stored in a local computer. This does not cover data saved in a web server or remote server or in cloud storage. With the evolution and development in the data storage segment, the definition of Books is proposed to be amended to provide for the maintenance of books in any digital form including present electronic form. It will not be necessary to keep the print-out of the books stored in digital or electronic mode.


    Thus any books maintained in electronic form or digital form are also included and will be considered as books in addition to traditional modes of maintenance of books of accounts.


    The proposed amendment reads as follows-


    Page 20, after line 4, insert-


    '(a) in clause (12A), for the words “in the written form or as printouts of data stored in”, the words “in the written form or in electronic form or in digital form or as print-outs of data stored in such electronic form or in digital form or in” shall be substituted;'


    The new definition of books or books of accounts after the proposed amendment by Finance Bill, 2022 reads as follows-

     

    (12A) "books or books of account" includes ledgers, day-books, cash books, account-books and other books, whether kept in the written form or as print-outs of data stored in in the written form or in electronic form or in digital form or as print-outs of data stored in such electronic form or in digital form or in a floppy, disc, tape or any other form of electro-magnetic data storage device;


    Hence, henceforth books can be maintained in any of the following modes-

    1. In written form

    2. In electronic form

    3. In digital form

    4. As print-outs of data stored in data storage devices


    This does not seem to be a major nature of amendment because the existing definition of bookkeeping also covers the proposed amended definition of bookkeeping in digital form. However, it has brought more clarification and removed any ambiguity, if any.


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


    Amendment Sl. No. 2: Exemption to Specified fund


    This amendment proposes to amend clause 4 of the original Finance Bill, 2022. Clause 4 of the Bill proposes to amend section 10 of the Act. This change is a new amendment to the original Finance Bill, 2022.


    Clause (4D) of section 10 provides for exemption to any income of a specified fund accrues or arising -

    (i) as a result of transfer of capital asset on a recognised stock exchange located in any International Financial Services Centre (IFSC) and where the consideration for such transaction is paid or payable in convertible foreign exchange or 

    (ii) as a result of transfer of securities (other than shares in a company resident in India) or 

    (iii) from securities issued by a non-resident (not being a permanent establishment of a non-resident in India) and where such income otherwise does not accrue or arise in India or 

    (iv) from a securitisation trust which is chargeable under the head "Profits and gains of business or profession", to the extent such income accrued or arisen to, or is received, is attributable to units held by non-resident (not being the permanent establishment of a non-resident in India) or is attributable to the investment division of offshore banking unit, as the case may be, computed in the prescribed manner.


    One of the conditions for availing exemption by the specified fund is that all the units are held by non-residents. This, however, does not include units held by a sponsor or manager.


    Accordingly, the unitholder must remain non-resident both at the time of issue of units and thereafter also. If any of the unitholders subsequently becomes resident, the exemption is withdrawn.


    Finance Bill, 2022 (as passed by Loksabha) amended clause (4D) of section 10 of the Act to provide that in case of small unitholders (who hold upto 5% of the aggregate units of the fund), any of them can become resident in any subsequent year without disturbing the applicability of the exemption.


    A new proviso is added below the item (III) of sub-clause (i) of clause (c) of the Explanation to clause (4D) to provide that the condition specified in item (III) [condition as to the holding of all the units by non-residents] shall not apply if any non-resident unitholder(s) becomes resident under section 6(1) or deemed resident under section 6(1A) in any previous year subsequent to the previous year in which such unit(s) was issued and the aggregate value and number of units held by such resident unitholder(s) does not exceed 5%  of the total units issued.


    The Board shall have the power to prescribe any other conditions in this regard.


    The proposed amendment reads as follows-


    Page 21, after line 5, insert-


    (i) in clause (4D), in the Explanation, in clause (c), in subclause (i), in this item for the words "non-residents; or”, the following shall be substituted, namely: - "non- residents:


    Provided that the condition specified in this item shall not `` apply where any unit holder or holders, being -nonresident during the previous year when such unit or units were issued, becomes resident under clause (1) or clause (1A) of section 6 in any previous year subsequent to that year, if the aggregate value and number of the units held by such resident unitholder or unitholders do not exceed five per cent of the total units issued and fulfill such other conditions as may be prescribed; or"


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


    Amendment Sl. No. 3: Provisionally approved trust etc u/s 10(23C)


    This amendment proposes to amend clause 4 of the original Finance Bill, 2022. Clause 4 of the Bill proposes to amend section 10 of the Act. This change modifies the amendment to the original Finance Bill, 2022.


    Section 10(23C) has been amended to prescribe for cancellation of a trust or institutions on the occurrence of any ‘specified violation’ by the PCIT/CIT. The original amendment proposed for cancellation of registration of the trust or institution in such a case only in case of approved trusts or institutions. This power of cancellation of registration was not extended to provisionally approved trust.


    The amendment to the Finance Bill, 2022 as passed by Loksabha proposes to extend the power of PCIT/CIT to cancel the provisionally approved trust or institution under section 10(23C).


    The proposed amendment reads as follows-


    Page 27, line 6, after "approved", insert "or provisionally approved".


    This amendment applies to-

    - a fund or institution referred to in section 10(23C)(iv) or 

    - a trust or institution referred to in section 10(23C)(v) or 

    - any university or other educational institution referred to in section 10(23C)(vi) or 

    - any hospital or other medical institution referred to in section 10(23C)(via)


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


    Amendment Sl. No. 4: Simultaneous approved u/s 10(23C) and notified u/s 10(46)


    This amendment proposes to amend clause 4 of the original Finance Bill, 2022. Clause 4 of the Bill proposes to amend section 10 of the Act. This change is a new amendment to the original Finance Bill, 2022.


    This amendment seeks to insert an Explanation below the 19th Proviso to section 10(23C). The original Finance Bill, 2022 already substituted the existing nineteenth proviso. 


    The new explanation clarifies that where - 

    - a fund or institution referred to in section 10(23C)(iv) or 

    - a trust or institution referred to in section 10(23C)(v) or 

    - any university or other educational institution referred to in section 10(23C)(vi) or 

    - any hospital or other medical institution referred to in section 10(23C)(via)

    is approved or provisionally approved under section 10(23C) and also notified under section 10(46) of the Act, then such trust or intuition or fund shall be deemed to be covered under section 10(46) and the approval or provisional approval under section 10(23C) shall become inoperative.


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


    The proposed amendment reads as follows-


    Page 29 for line 34, substitute-


    "thereof for that previous year.


    Explanation. - Where, on or after the 1st day of April, 2022 any fund or institution referred to in sub-clause (iv) or any 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 subclause (via) is notified under clause (46) of section 10; the approval or provisional approval granted to such fund or institution or trust or university or other educational institution or hospital or other medical institution shall become inoperative from the date of notification of such fund or institution or trust or university or other educational institution or hospital or other medical institution, as the case may be, under clause (46) of the said section:",


    Amendment Sl. No. 5: Application of income for related person


    This amendment proposes to amend clause 4 of the original Finance Bill, 2022. Clause 4 of the Bill proposes to amend section 10 of the Act. This change modifies the amendment to the original Finance Bill, 2022.


    This amendment seeks to correct an unintended error in the expression used in the proposed amendment to section 10(23C).


    The amendment to the original Bill provides that a trust or institution or a fund approved under section 10(23C) applies any income or any part of the income for the benefit of any related person as referred to in section 13(3) of the Act, then such income or part of the income shall be treated as income of such related person.


    The law intends to make the disallowance and tax the same in the hands of the trust or institution or fund and not in the hands of the trustee or other related person.


    The new proposed government amendment corrects the same by substituting the relevant words and expressions contained in line no. 11 on page 30 of the original Bill to provide that such income or any part of the income shall be deemed to be the income of such fund or institution or trust or university or other educational institution or hospital or other medical institution.


    This is applicable for 

    - a fund or institution referred to in section 10(23C)(iv) or 

    - a trust or institution referred to in section 10(23C)(v) or 

    - any university or other educational institution referred to in section 10(23C)(vi) or 

    - any hospital or other medical institution referred to in section 10(23C)(via)


    This amendment shall take effect from 1st April, 2023 or assessment year 2023-24.


    The proposed amendment reads as follows-


    Page 30, for line 11, substitute


    'section, be deemed to be the income of such fund or institution or trust or university or other educational institution or hospital or other medical institution of’.


    Amendment Sl. No. 6: Tax on amount received by a related person


    This amendment proposes to amend clause 16 of the original Finance Bill, 2022. Clause 16 of the Bill proposes to amend section 56 of the Act. This change is a new amendment to the original Finance Bill, 2022.


    The new amendment proposes to amend section 56(2)(x) of the Act. 


    This section provides that if a person receives any amount or property from any other person without consideration, commonly known as a gift, in excess of Rs. 50,000 in a financial year then such receipt shall be taxed in the hands of the recipient. 


    The first proviso to this clause provides for certain exceptions where the provisions of this clause shall not apply. One of the circumstances is that these provisions of taxation of receipt of property in the hands of the recipient shall not apply where the property is received from any trust or institution or fund approved under section 10(23C) or section 12AB. These exceptions are provided in items (VI) and (VII) of the first proviso to clause (x) of section 56(2).


    The new amendment seeks to insert a second proviso to this clause to provide that the exception or exemption provided in items (VI) and (VII) shall not apply where the property is received by any related person referred to in section 13(3).


    In other words, if the gift is received by any trustee or any other related person as specified in section 13(3) then such recipient will be liable to tax in respect of receipt of such gift if it exceeds Rs. 50,000. Such a person will not be exempt from the applicability of the provisions of section 56(2)(x).


    This amendment shall take effect from 1st April, 2023 and shall apply from the assessment year 2023-24.


    The proposed amendment reads as follows-


    Page 40, after line 4, insert-


    ‘(ii) in sub-clause (c), after the proviso occurring after item (B) and before the Explanation, the following proviso shall be inserted with effect from the 1st day of April, 2023, namely: - 


    "Provided further that clauses (VI) and (VII) of the first proviso shall not apply where any sum of money or any property has been received by any person referred to in subsection (3) of section 13.";'.


    Amendment Sl. No. 7: Section 115BBH made Non-obstante


    This amendment proposes to amend clause 28 of the original Finance Bill, 2022. Clause 28 of the Bill proposes to insert a new section 115BBH related to special provisions for taxation of the virtual digital asset. This change modifies the amendment to the original Finance Bill, 2022.


    Section 115BBH proposes to tax the virtual digital assets which includes crypto, NFT, etc. The provisions as proposed in the original Bill did not contain any non-obstante clause to make this provision exclusive to other provisions of the Act.


    This amendment has modified the provisions of section 155BBH and inserted a new line at the beginning of the provision to provide that the provisions of section 115BBH shall prevail irrespective of any other provisions contained in any other provisions of the Act.


    This amendment shall take effect from 1st April, 2023 and shall apply from the assessment year 2023-24.


    The proposed amendment reads as follows-


    Page 45, line 9, after "asset,", insert "notwithstanding anything contained in any other provision of this Act,"


    Thus, the opening portion of section 115BBH(1) reads as follows-


    ‘115BBH. (1) Where the total income of an assessee includes any income from the transfer of any virtual digital asset, notwithstanding anything contained in any other provision of this Act, the income-tax payable shall be the aggregate of–

    ….

    ….


    Amendment Sl. No. 8: No deduction for cost of acquisition for VDA


    This amendment proposes to amend clause 28 of the original Finance Bill, 2022. Clause 28 of the Bill proposes to insert a new section 115BBH related to special provisions for taxation of the virtual digital asset. This change modifies the amendment to the original Finance Bill, 2022.


    Section 115BBH proposes to tax the virtual digital assets which includes crypto, NFT, etc. Sub-section (2) of this section restricts deduction of any expenditure other than cost of acquisition in computing the income from transfer of virtual digital assets.


    It was apprehended that deduction for cost of acquisition will be allowed from computing income from transfer of VDA only when the same is incurred. In case there is no cost of acquisition, the computation mechanism will fail.


    This amendment has modified the provisions of section 115BBH and proposed to provide that deduction for cost of acquisition will be allowed if there is any cost incurred. Thus, if no cost is incurred or there is no cost of acquisition, then no deduction for cost of acquisition will be allowed.


    Basically, this amendment is clarificatory in nature.

    This amendment shall take effect from 1st April, 2023 and shall apply from the assessment year 2023-24.


    The proposed amendment reads as follows-


    Page 45, lines 19 and 20, for "(other than cost of acquisition)", substitute "(other than cost of acquisition, if any)".


    Section 115BBH(2)(a) now reads as follows-


    (2) Notwithstanding anything contained in any other provision of this Act,–


    (a) no deduction in respect of any expenditure (other than cost of acquisition) (other than cost of acquisition, if any) or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing the income referred to in clause (a) of sub-section (1); and


    ….

    ….


    Amendment Sl. No. 9: No set-off of loss from VDA with income from same or other VDA


    This amendment proposes to amend clause 28 of the original Finance Bill, 2022. Clause 28 of the Bill proposes to insert a new section 115BBH related to special provisions for taxation of the virtual digital asset. This change modifies the amendment to the original Finance Bill, 2022.


    Section 115BBH proposes to tax the virtual digital assets which includes crypto, NFT, etc. Sub-section (2) of this section restricts set-off of loss from transfer of VDA from any other income.


    It was apprehended that set-off of loss from transfer of one VDA shall be allowed to be set-off with income from transfer of same or other VDA.


    Government had clarified that it had no intention of allowing a set-off of loss from transfer of VDA even against the income from the same source.


    This amendment is in line with the intention of the government and has modified the provisions of section 115BBH and proposed to provide that no set off of loss from transfer of the virtual digital asset shall be allowed against income computed under any provision of the Act to the assessee. Thus, loss from VDA cannot be set-off from profit from the same or any other VDA. Further, such loss from VDA cannot be carried forward.


    This amendment shall take effect from 1st April, 2023 and shall apply from the assessment year 2023-24.


    The proposed amendment reads as follows-


    Page 45, line 26, omit "other".


    Section 115BBH(2)(b) now reads as follows-


    (2) Notwithstanding anything contained in any other provision of this Act,– 


    (a) ……..


    (b) no set off of loss from transfer of the virtual digital asset computed under clause (a) of sub-section (1) shall be allowed against income computed under any other provision of this Act to the assessee and such loss shall not be allowed to be carried forward to succeeding assessment years. 



    Amendment Sl. No. 10: Transfer u/s 2(47) to apply for VDA even if not held as capital asset


    This amendment proposes to amend clause 28 of the original Finance Bill, 2022. Clause 28 of the Bill proposes to insert a new section 115BBH related to special provisions for taxation of the virtual digital asset. This change modifies the amendment to the original Finance Bill, 2022.


    Section 115BBH proposes to tax the income from transfer of virtual digital assets which includes crypto, NFT, etc.


    The meaning of transfer is contained in section 2(47) of the Act. This definition applies only where any asset is held as a capital asset. If any asset is not held as a capital asset, then the definition of transfer as contained in section 2(47) shall not apply.


    For example, in case an asset is held as stock-in-trade then the meaning of transfer shall not be determined by section 2(47).


    The definition of ‘transfer’ in section 2(47) is not limited to transfer by way of sale. Rather it covers many other cases i.e. transfer by way of exchange, relinquishment, extinguishment, etc. The meaning of transfer as per section 2(47) is very wide compared to the meaning of transfer as it is generally understood.


    This amendment has inserted a new sub-section (3) to section 115BBH to provide that the meaning of transfer as defined u/s 2(47) shall apply to virtual digital assets even if the VDAs are not held as capital assets.


    This amendment shall take effect from 1st April, 2023 and shall apply from the assessment year 2023-24.


    The proposed amendment reads as follows-


    Page 45, after line 29, insert-


    ‘(3) For the purposes of this section, the word "transfer" as defined in clause (47) of section 2, shall apply to any virtual digital asset, whether capital asset or not.'


    Amendment Sl. No. 11: Non-obstante clause to section 115BBI


    This amendment proposes to amend clause 28 of the original Finance Bill, 2022. Clause 28 of the Bill proposes to insert a new section 115BBI related to special provisions for taxation in case disallowed income of a trust or institution approved under section 10(23C) or 11 of the Act. This change modifies the amendment to the original Finance Bill, 2022.


    Section 115BBI proposes to provide for a special rate of tax on the specified income of a trust or institution approved under section 10(23C) or 11 of the Act. Specified income is listed in the Explanation to this section which primarily covers disallowed application of income or deemed income.


    Even though section 115BBI is placed in Chapter XII of the Act, the provisions as proposed in the original Bill did not contain any non-obstante clause to provide for overriding effect to other provisions of the Act.


    This amendment has modified the provisions of section 155BBI and inserted a new line at the beginning of the provision to provide that the provisions of section 115BBI shall prevail irrespective of any other provisions contained in any other provisions of the Act.


    This amendment shall take effect from 1st April, 2023 and shall apply from the assessment year 2023-24.


    The proposed amendment reads as follows-


    Page 45, line 38, for "specified income", substitute "specified income, notwithstanding anything contained in any other provision of this Act".


    Thus, the opening portion of section 115BBI(1) reads as follows-


    115BBI. (1) Where the total income of an assessee, being a person in receipt of income on behalf of any fund or institution referred to in sub-clause (iv) or any 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 section 10 or any trust or institution referred to in section 11, includes any income by way of any specified income, notwithstanding anything contained in any other provision of this Act, the income-tax payable shall be the aggregate of—

    ….

    ….


    Amendment Sl. No. 12: Filing of updated Return in case of search and survey


    This amendment proposes to amend clause 38 of the original Finance Bill, 2022. Clause 38 of the Bill proposes to insert a new sub-section (8A) to section 139 related to filing of updated return. This change modifies the amendment to the original Finance Bill, 2022.


    The second proviso to section 139(8A) provides that where search is initiated or survey is conducted or requisition is made then such person shall not be eligible to furnish updated return for that assessment year in which search, survey or requisition takes place as well for last two assessment years.


    The proposed amendment has now tightened the provisions to make such a person ineligible to furnish updated return for any assessment year. Such a person is debarred from furnishing any updated return for any preceding assessment year if search is initiated or survey is conducted or requisition is made.


    The proposed amendment reads as follows-


    Page 52, line 33, for "two assessment years", substitute "any assessment year".


    Thus, the second proviso to section 115BBI now reads as follows-


    Provided further that a person shall not be eligible to furnish an updated return under this sub-section, where– 


    (a) a search has been initiated under section 132 or books of account or 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 sub-section (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, 


    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 any assessment year preceding such assessment year: 


    Amendment Sl. No. 13: Filing of updated Return in case of Loss Return


    This amendment proposes to amend clause 38 of the original Finance Bill, 2022. Clause 38 of the Bill proposes to insert a new sub-section (8A) to section 139 related to the filing of an updated return. This change modifies the amendment to the original Finance Bill, 2022.


    The proposed amendment proposes to insert fourth proviso to section 139(8A) related to a person who has filed a timely return of loss under section 139(1) for any previous year.


    The fourth proviso to section 139(8A) provides that where a return of loss is furnished within the due date specified under section 139(1) and verified in the prescribed manner, such person is eligible to furnish an updated return of income for that previous year.


    In case of belated filing of return of loss under section 139(4), the updated return cannot be furnished. Further, the updated return cannot be filed for a reduction in the amount of loss compared to the amount of loss claimed in the original return. 


    The proposed amendment reads as follows-


    Page 53, for line 31, substitute-


    "regard:


    Provided also that if any person has sustained a loss in any previous year and has furnished a return of loss in the prescribed form within the time allowed under sub-section (1) and verified in the prescribed manner and containing such other particulars as may be prescribed, he shall be allowed to furnish an updated return where such updated return is a return of income:


    A new fifth proviso is proposed to be inserted in section 139(8A) to provide for the filing of updated return for each subsequent previous year for reducing the amount of carried forward loss or unabsorbed depreciation or MAT credit under section 115JAA.


    The proposed amendment reads as follows-


    Provided also that if the loss or any part thereof carried forward under Chapter VI or unabsorbed depreciation carried forward under sub-section (2) of section 32 or tax credit carried forward under section 115JAA or under section 115JD is to be reduced for any subsequent previous year as a result of furnishing of return of income under this sub-section for a previous year, an updated return shall be furnished for each such subsequent year.”


    Amendment Sl. No. 14: Extension of time limit for completion of assessment


    This amendment proposes to amend clause 48 of the original Finance Bill, 2022. Clause 48 of the Bill proposes to amend section 153 of the Act to provide for a new date of completion of assessment when an updated return is furnished as per the provisions of section 139(8A). This change modifies the amendment to the original Finance Bill, 2022.


    Section 153(1) of the Act provides for the time limit for completion of assessment under section 143 or section 144, section 147 and others. Presently, the time limit is prescribed as under-


    Assessment Year

    Time Limit for completion of assessment

    Relevant provisions

    Upto AY 2017-18

    21 months from the end of the relevant AY

    Sec. 153(1)

    AY 2018-19

    18 months from the end of the relevant AY

    First proviso to Sec. 153(1)

    AY 2019-20

    12 months from the end of the relevant AY

    Second proviso to Sec. 153(1)

    AY 2020-21

    12 months from the end of the relevant AY

    Second proviso to Sec. 153(1)

    AY 2021-22 & onwards

    9 months from the end of the relevant AY

    Third proviso to Sec. 153(1)


    The proposed amendment to section 153 proposes to substitute the second proviso to section 153(1) with retrospective effect from 01.04.2021.


    As per the proposed amendment, the time limit for completion of the assessment under section 143 or section 144 under the second proviso to section 153(1) shall be as under-



    Assessment Year

    Time Limit for completion of assessment

    Relevant provisions

    AY 2019-20

    12 months from the end of the relevant AY

    Amended Second proviso to Sec. 153(1)

    AY 2020-21

    18 months from the end of the relevant AY

    Amended Second proviso to Sec. 153(1)


    Consequently, there is no change in time limit for completion of assessment under second proviso to section 153(1) for assessment year 2019-20. However, in case of assessment year 2020-21, the time limit is extended by 6 more months from 31.03.2022 to 30.09.2022.


    This amendment shall take retrospective effect from 1st April, 2021.


    Now, the assessment under section 143 or section 144 can be completed by 30th September, 2022 instead of 31st March, 2022. It should be noted that there is no change in time limit for completion of assessment under section 147 since it is covered by section 153(2) and not section 153(1).



    Finally, the chart for time limit for completion of assessment under section 153(1) after the amendment reads as follows-


    Assessment Year

    Time Limit for completion of assessment

    Relevant provisions

    Upto AY 2017-18

    21 months from the end of the relevant AY

    Sec. 153(1)

    AY 2018-19

    18 months from the end of the relevant AY

    First proviso to Sec. 153(1)

    AY 2019-20

    12 months from the end of the relevant AY

    Second proviso to Sec. 153(1)

    AY 2020-21

    12 18 months from the end of the relevant AY

    Second proviso to Sec. 153(1)

    AY 2021-22 & onwards

    9 months from the end of the relevant AY

    Third proviso to Sec. 153(1)


    The proposed amendment reads as follows-


    Page 73, after line 31, insert-


    ‘(a) in sub-section (1), for the second proviso, the following proviso shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2021, namely: —


    “Provided further that in respect of an order of assessment relating to the assessment year commencing on the—


    (i) 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words “twenty-one months”, the words “twelve months” had been substituted;


    (ii) 1st day of April, 2020, the provisions of this sub-section shall have effect, as if for the words “twenty-one months”, the words “eighteen months” had been substituted:”;’.


    Amendment Sl. No. 15: Extension of time limit for completion of assessment in case of search or requisition


    This amendment proposes to amend clause 49 of the original Finance Bill, 2022. Clause 49 of the Bill proposes to amend section 153B of the Act to provide that the assessment provisions in case of search and requisition as per section 153B shall not apply on or after 1st April, 2021. This change modifies the amendment to the original Finance Bill, 2022.


    Section 153B provides for the time limit for completion of assessment in case of search or requisition case.


    The changes by the proposed amendment by the government propose to extend the time limit to 30th September, 2022 in a case where the last of the authorisations for search under section 132 or requisition under section 132A was executed during the financial year commencing on the 1st day of April, 2020 and other cases, the assessment in such cases for the assessment year commencing on the 1st day of April, 2021 shall be made on or before the 30th day of September, 2022.


    This amendment shall take retrospective effect from 1st April, 2021.


    The proposed amendment reads as under-


    Page 75, after line 33, insert—


    ‘(a) in sub-section (1), after the fifth proviso, the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2021, namely: —


    “Provided also that in a case where the last of the authorisations for search under section 132 or requisition under section 132A was executed during the financial year commencing on the 1st day of April, 2020 or in case of other person referred to in section 153C, the books of account or document or assets seized or requisitioned were handed over under section 153C to the Assessing Officer having jurisdiction over such other person during the financial year commencing on the 1st day of April, 2020, the assessment in such cases for the assessment year commencing on the 1st day of April, 2021 shall be made on or before the 30th day of September, 2022.”;’.


    Amendment Sl. No. 16: Deduction for Surcharge or Cess


    This amendment proposes to insert a new clause 49A in the original Finance Bill, 2022. This change is a new amendment to the original Finance Bill, 2022.


    Clause 49A proposes to insert sub-section (18) to section 155 of the Act. Section 155 of the Act provides for an extension of the time limit for passing rectification orders under section 154 under various specified circumstances.


    The proposed section 155(18) provides for passing a rectification order under section 154 in a case where a deduction for surcharge or cess which is not allowable under section 40 has been claimed and allowed in any previous year. This sub-section proposes that such claim of deduction for surcharge or cess shall be deemed to be under-reported income for that previous year in which deduction was so claimed under section 270A.


    The Assessing Officer shall recompute the total income of the assessee of such previous year and shall pass an order under section 154. In this case, the period of limitation of 4 years of passing a rectification order under section 154(7) shall be computed from the end of the previous year commencing on the 1st day of April 2021.


    Thus, the rectification order under section 155(18) can be passed by the AO till 31st March 2026.


    In this case, where the deduction for surcharge or cess is disallowed by the AO, the assessee has to pay the tax due thereon as well as the penalty under section 270A.


    An exception is provided in this sub-section by way of a proviso which provides that if the assessee makes an application to the AO in the prescribed form and within the prescribed time for the recomputation of income after disallowing the deduction for surcharge or cess and pays the tax due thereon, then no such penalty under section 270A will be levied.


    The proposed amendment reads as follows-


    New Clause 49 A


    Page 76, after line 20, insert—


    Amendment of Section 155.


    ‘49A. In section 155 of the Income-tax Act, after sub-section (17) and before the Explanation, the following sub-section shall be inserted, namely: —


    ‘(18) Where any deduction in respect of any surcharge or cess, which is not allowable as deduction under section 40, has been claimed and allowed in the case of an assessee in any previous year, such claim shall be deemed to be under-reported income of the assessee for such previous year for the purposes of sub-section (3) of section 270A, notwithstanding anything contained in subsection (6) of section 270A, and the Assessing Officer shall recompute the total income of the assessee for such previous year and make necessary amendment; and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of section 154 being reckoned from the end of the previous year commencing on the 1st day of April 2021:


    Provided that in a case where the assessee makes an application to the Assessing Officer in the prescribed form and within the prescribed time, requesting for recomputation of the total income of the previous year without allowing the claim for deduction of surcharge or cess and pays the amount due thereon within the specified time, such claim shall not be deemed to be under-reported income for the purposes of sub-section (3) of section 270A.’.’.


    Amendment Sl. No. 17: Repetitive Appeal to ITAT and High Court


    This amendment proposes to amend clause 52 of the original Finance Bill, 2022. This change modifies the amendment proposed in the original Finance Bill, 2022.


    Clause 52 introduces a new section 158AB in the Act to provide for avoidance of repetitive appeal in a case of an assessee wherein the question of law arising from an order of Commissioner(Appeals) or the ITAT for a particular assessment year is identical to a question of law that is pending before jurisdictional High Court or the Supreme Court in assessee’s own case for any other assessment year or any other assessee’s case for any assessment year.


    Under such circumstances, the Principal Commissioner or Commissioner shall direct the Assessing Officer not to file appeal before the ITAT or High Court, instead he shall file an application to the ITAT within 60 days or jurisdictional High Court within 120 days that appeal on the question of law in the assessee’s case may be filed when the decision on such question of law becomes final in other case.


    However, this provision does not override the provisions of section 253(3) or section 260(2)(a) that provides for filing of appeal before ITAT within 60 days or jurisdictional High Court within 120 days.


    The proposed amendment in section 158AB proposed to insert non-obstante clause in seb-section (2) of section 158AB to override the time-limit provided in section 253(3) or section 260(2)(a) that provides for filing of appeal before ITAT within 60 days or jurisdictional High Court within 120 days. Hence, once an application is filed under section 158BA(2) to the ITAT or jurisdictional High Court, the time-limit as specified in section 253(3) or section 260(2)(a) shall not apply and will not become time-barred if appeal is filed after the question of law is as aforesaid is finally decided.


    For this purpose, the following amendment is proposed by the government to clause 52 or section 158AB(2) of the original Finance Bill, 2022 and the proposed amendment reads as follows-


    Page 77, line 30, after’ “sub-section (1)”, insert “, notwithstanding anything contained in sub-section (3) of section 253 or clause (a) of sub-section (2) of section 260A”.


    Amendment Sl. No. 18: Extension of time-limit to file application to ITAT and High Court to avoid Repetitive Appeals


    This amendment proposes to amend clause 52 of the original Finance Bill, 2022. This change modifies the amendment proposed in the original Finance Bill, 2022.


    Clause 52 introduces a new section 158AB in the Act to provide for avoidance of repetitive appeal in a case of an assessee wherein the question of law arising from an order of Commissioner(Appeals) or the ITAT for a particular assessment year is identical to a question of law that is pending before jurisdictional High Court or the Supreme Court in assessee’s own case for any other assessment year or any other assessee’s case for any assessment year.


    The proposed section 158AB(2) of the original Finance Bill, 2022 provides that the Principal Commissioner or Commissioner shall direct the Assessing Officer not to file appeal before the ITAT or High Court, instead he shall file an application to the ITAT within 60 days or jurisdictional High Court within 120 days that appeal on the question of law in the assessee’s case may be filed when the decision on such question of law becomes final in other case.


    The proposed amendment in section 158AB proposed to increase the time limit to file the said application by the assessing officer to ITAT from 60 days to 120 days. Thus, the application to the ITAT and jurisdictional High Court shall be filed within 120 days to the effect that appeal on the question of law in the assessee’s case may be filed when the decision on such question of law becomes final in other case.


    For this purpose, the following amendment is proposed by the government to clause 52 or section 158AB(2) of the original Finance Bill, 2022 and the proposed amendment reads as follows-


    Page 77, for lines 33 to 36, substitute—


    “prescribed within a period of one hundred and twenty days from the date of receipt of the order of the Commissioner (Appeals) or of the Appellate Tribunal, as the case may”.


    Amendment Sl. No. 19: Filing of appeal if no acceptance is received from assessee


    This amendment proposes to amend clause 52 of the original Finance Bill, 2022. This change modifies the amendment proposed in the original Finance Bill, 2022.


    Clause 52 introduces a new section 158AB in the Act to provide for avoidance of repetitive appeal in a case of an assessee wherein the question of law arising from an order of Commissioner(Appeals) or the ITAT for a particular assessment year is identical to a question of law that is pending before jurisdictional High Court or the Supreme Court in assessee’s own case for any other assessment year or any other assessee’s case for any assessment year.


    This proposed amendment proposes to amend section 158AB(3) proposed in the original Finance Bill, 2022. Section 158AB(3) provides that application under section 158AB(2) shall be filed by the assessing officer only if an acceptance is received from the assessee to the effect that the question of law in the other case is identical to the question of law in his case. If no acceptance is received from the assessee, then the Principal Commissioner or Commissioner shall proceed in accordance with the provisions of section 253(2) or section 260A(2).


    However, in such a case, the filing of appeal shall be subject to the time limit of 60 days or 120 days as specified in section 253(3) or section 260A(2)(a).


    The proposed amendment in section 158AB proposes to overcome this situation so that the filing of appeal in case of non-acceptance by the assessee shall not be treated as time-barred. For this purpose, the government has proposed to amend section 158AB(3) by inserting a non-obstante clause to provide that the Principal Commissioner or Commissioner shall proceed in accordance with the provisions contained in section 253(2) or section 260A(2) irrespective of the provisions contained in section section 253(3) or section 260A(2)(a).


    For this purpose, the following amendment is proposed to the clause 52 [or section 158AB(3)] of the original Finance Bill, 2022 and the proposed amendment reads as follows-


    Page 78, for lines 9 and 10,' substitute “Commissioner shall, notwithstanding anything contained in sub-section (3) of section 253 or clause (a) of sub-section (2) of section 260A, proceed in accordance with the provisions contained in sub-section (2) of section 253 or in clause (c) of.”


    Amendment Sl. No. 20: Applicability of Chapter XX where appeal is filed after the question of law is finally decided against the appeal on hold


    This amendment proposes to amend clause 52 of the original Finance Bill, 2022. This change modifies the amendment proposed in the original Finance Bill, 2022.


    Clause 52 introduces a new section 158AB in the Act to provide for avoidance of repetitive appeal in a case of an assessee wherein the question of law arising from an order of Commissioner(Appeals) or the ITAT for a particular assessment year is identical to a question of law that is pending before jurisdictional High Court or the Supreme Court in assessee’s own case for any other assessment year or any other assessee’s case for any assessment year.


    This proposed amendment proposes to amend section 158AB(4) proposed in the original Finance Bill, 2022. Section 158AB(4) provides that where the order of the Commissioner (Appeals) or the order of the Appellate Tribunal which is kept on hold in order to avoid repetition of appeal is not in conformity with the final decision on the question of law in the other case, the Principal Commissioner or 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.


    The savings clause provides that all other provisions of Part B of Chapter XX shall apply accordingly. This Part-B deals with the appeals to the ITAT. The reference to Part-CC of Chapter XX, which deals with appeal to the High Court, is missed in the provision.


    The proposed amendment in section 158AB(4) proposes to insert the reference to Part-CC of Chapter XX in the savings clause of section 158AB(4).


    For this purpose, the following amendment is proposed to the clause 52 [or section 158AB(4)] of the original Finance Bill, 2022 and the proposed amendment reads as follows-


    Page 78, line 20, after “Part B”, insert “and Part CC”.


    Amendment Sl. No. 21: Time limit for filing of appeal before ITAT or High Court after the question of law is finally decided against the appeal on hold


    This amendment proposes to amend clause 52 of the original Finance Bill, 2022. This change modifies the amendment proposed in the original Finance Bill, 2022.


    Clause 52 introduces a new section 158AB in the Act to provide for avoidance of repetitive appeal in a case of an assessee wherein the question of law arising from an order of Commissioner(Appeals) or the ITAT for a particular assessment year is identical to a question of law that is pending before jurisdictional High Court or the Supreme Court in assessee’s own case for any other assessment year or any other assessee’s case for any assessment year.


    This proposed amendment proposes to amend section 158AB(5) proposed in the original Finance Bill, 2022. 


    Section 158AB(5) provides for filing an appeal before the ITAT or jurisdictional High Court within 60 days from the date of communication of the order of the High Court or Supreme Court to the Principal Commissioner or Commissioner.


    The proposed amendment in section 158AB(5) proposes to extend the time limit to file the appeal before the High Court to 120 days in line with section 260A(2)(a) for filing of appeal under normal circumstances. The appeal before ITAT shall be required to be filed within 60 days.


    For this purpose, the following amendment is proposed to the clause 52 [or section 158AB(5)] of the original Finance Bill, 2022 and the proposed amendment reads as follows-


    Page 78, line 23, after “sixty days”, insert “to the Appellate Tribunal or one hundred and twenty days to the High Court as the case may be,”


    Amendment Sl. No. 22: Communication of order to jurisdictional Principal Commissioner or Commissioner


    This amendment proposes to amend clause 52 of the original Finance Bill, 2022. This change modifies the amendment proposed in the original Finance Bill, 2022.


    Clause 52 introduces a new section 158AB in the Act to provide for avoidance of repetitive appeal in a case of an assessee wherein the question of law arising from an order of Commissioner(Appeals) or the ITAT for a particular assessment year is identical to a question of law that is pending before jurisdictional High Court or the Supreme Court in assessee’s own case for any other assessment year or any other assessee’s case for any assessment year.


    This proposed amendment proposes to amend section 158AB(5) proposed in the original Finance Bill, 2022. 


    Section 158AB(5) provides for filing an appeal before the ITAT or jurisdictional High Court within 60 days from the date of communication of the order of the High Court or Supreme Court to the Principal Commissioner or Commissioner.


    The proposed amendment in section 158AB(5) proposes to substitute the Principal Commissioner or Commissioner with the Principal Commissioner or Commissioner having jurisdiction over the relevant case.


    For this purpose, the following amendment is proposed to the clause 52 [or section 158AB(5)] of the original Finance Bill, 2022 and the proposed amendment reads as follows-


    Page 78, for lines 25 to 27, substitute — “other case is communicated to the Principal Commissioner or the Commissioner (having jurisdiction over the relevant case), in accordance with the procedure specified by the Board in this behalf.”.


    Amendment Sl. No. 23 & 24: Validity of proceedings on predecessor in case of succession


    This amendment proposes to amend clause 53 of the original Finance Bill, 2022. This change modifies the amendment proposed in the original Finance Bill, 2022.


    Clause 53 introduces a new sub-section (2A) to section 170 to provide that the assessment or other proceedings pending or completed on the predecessor then the same shall be deemed to have been made on the successor where there is a business reorganisation.


    The term ‘business reorganisation’ was defined to mean amalgamation or merger or demerger of business of one or more persons.


    The proposed amendment to clause 53 replaces the words ‘business reorganisation’ with ‘succession’. Thus, as per substituted section 170(2A), where there is succession, the assessment or reassessment or any other proceedings, made or initiated on the predecessor during the course of pendency of such succession, shall be deemed to have been made or initiated on the successor and all the provisions of this Act shall apply accordingly on the successor.


    Further, the original Finance Bill contains the word ‘made’ in section 170(2A) which signifies only the assessment or reassessment or other proceedings completed on the predecessor shall continue with the successor. The wording suggests that in case there are ongoing or pending proceedings which were initiated but not completed, the same shall not apply on the successor.


    The proposed amendment in the Finance Bill proposes to insert the word ‘initiated’ in addition to the word ‘made’ for assessment or reassessment or other proceedings on the predecessor company. Thus, any completed or pending proceedings on the predecessor shall be deemed to be made or initiated against the successor in case of succession.


    Consequently, the definition of the expression ‘business reorganisation’ is omitted from the Explanation appended to this sub-section. Modification is also carried out in the definition of the term ‘pendency’ to cover ‘succession’ and omit the expression ‘business reorganisation’. This consequential amendment is proposed in Amendment Sl. No. 24.


    For this purpose, the following amendment is proposed to the clause 53 [or section 170(2A)] of the original Finance Bill, 2022 and the proposed amendment reads as follows-


    Page 78, for lines 37 to 41, substitute —


    “sections (1) and (2), where there is succession, the assessment or reassessment or any other proceedings, made or initiated on the predecessor during the course of pendency of such succession, shall be deemed to have been made or initiated on the successor and all the provisions of”.


    The following consequential amendment is proposed to the clause 53 [or section 170(2A)] of the original Finance Bill, 2022 and the proposed amendment reads as follows-


    Page 79, for lines 1 to 9, substitute —


    ‘Explanation,- For the purposes of this sub-section, the tern “pendency '' means the period commencing from the date of filing of application for such succession of business before the High Court or’.


    Amendment Sl. No. 25: Filing of modified return in case of business reorganisation


    This amendment proposes to amend clause 54 of the original Finance Bill, 2022. This change modifies the amendment proposed in the original Finance Bill, 2022.


    Clause 54 inserts a new section 170A to provide for filing of modified return in case of business reorganisation. In the original clause, the term ‘business reorganisation’ imports the meaning from the Explanation as found in section 170(2A).


    The amendment Sl. No. 23 & 24, as discussed above, proposes to omit the definition of ‘business reorganisation’ from the said sub-section.


    Hence, the term ‘business reorganisation’ is defined in section 170A itself. The text of the definition is same as the previous one which is omitted now.


    Further, the term ‘successor’ is defined in section 170A to mean all resulting companies in a business reorganisation, whether or not the company was in existence prior to such business reorganisation.


    The proposed amendment to clause 54 or section 170A reads as follows-


    Page 79, for lines 33 to 35, substitute—


    ‘Explanation. - In this section, the expressions-


    (i) “business reorganisation” means the reorganisation of business involving the amalgamation or de-merger or merger of business of one or more persons;


    (ii) “successor” means all resulting companies in a business reorganisation, whether or not the company was in existence prior to such business reorganisation.’.


    Amendment Sl. No. 26, 27 & 28: TDS on business benefits or perquisites 


    This amendment proposes to amend clause 58 of the original Finance Bill, 2022. This change modifies the amendment proposed in the original Finance Bill, 2022.


    Clause 58 inserts a new section 194R for deduction of tax on the amount of benefit or perquisite provided to a resident in the course of carrying on business  or exercising profession.


    There are three changes proposed in the original Bill in respect to section 194R.


    Amendment Sl No. 26: In the proposed section 194R in the original Bill, there is no sub-section for section 194R. Since some other provisions are proposed in this section vide amendment sl. No.28 discussed below, a sub-section number (1) is added to main section 194R.


    Hence, the existing section 194R now reads as section 194R(1).


    The proposed amendment to clause 58 or section 194R reads as follows-


    Page 80, line 18, for “194R” substitute “194R(1)”


    Amendment Sl No. 27: In the proposed section 194R in the original Bill, the first proviso to section 194R [now section 194R(1)] provides for deduction of tax on the amount of benefits or perquisites provided in kind. 


    There was a lacuna in the drafting of the proviso. It states that the deductor shall ensure that tax has been paid in respect of benefits or perquisites provided in kind before releasing such benefits or perquisites.


    Since the provision is related to deduction of tax, there cannot be any payment of tax. The deductor has to ensure that tax has been duly deducted thereon. The position is now cleared.


    The proposed amendment vide Sl. No. 27 proposes to insert the text “required to be deducted”.


    The proposed amendment to clause 58 or section 194R reads as follows-


    Page 80, line 32, after “ensure that tax”, insert “required to be deducted”.


    After the above amendment, first proviso to section 194R [now section 194R(1)] reads as follows-


    Provided that 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 or perquisite shall, before releasing the benefit or perquisite, ensure that tax required to be deducted has been paid in respect of the benefit or perquisite:”


    The pre-amended provisions was that tax should be paid before providing the benefits or perquisites in kind. This is not a charge of tax but a provision to deduct tax. Hence, the requirement of deduction of tax is added in the proviso.


    Payment of tax signifies the recipient of the benefit or perquisites shall pay the tax on such income. Suppose, if the recipient is taxed at 30%, then, as per pre-amended provisions, he shall make the payment of tax @ 30% on such benefits or perquisites, instead of TDS @ 10% on the amount of such benefits or perquisites in kind.


    In other words, this proviso requires that the TDS amount on the benefit or perquisite in kind shall be collected by or paid to the deductor before release of the same.


    The proposed amendment vide Sl. No. 28 proposes to insert sub-section (2) and sub-section (3) to section 194R.


    Sub-section (2) is proposed to empower the CBDT to issue guidelines for removing any difficulty arises to give effect to the provisions of this section.


    Sub-section (3) is proposed that such guidelines so issued shall be laid before the Parliament and shall be binding on the income-tax authorities and the deductor.


    The proposed amendment to clause 58 or section 194R reads as follows-


    Page 80, line 32, after “ensure that tax”, insert “Page 81, after line 5, insert—


    ‘(2) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty.


    (3) Every guideline issued by the Board under sub-section (2) shall, as soon as may be after it is issued, be laid before each House of Parliament, and shall be binding on the income-tax authorities and on the person providing any such benefit or perquisite.’


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


    Amendment Sl. No. 29, 30, 31 & 32: TDS on Virtual digital Assets (VDA)


    This amendment proposes to amend clause 59 of the original Finance Bill, 2022. This change modifies the amendment proposed in the original Finance Bill, 2022.


    Clause 59 inserts a new section 194S for deduction of tax on virtual digital assets (VDA).


    There are four changes proposed in the original Bill in respect to section 194S.


    Amendment Sl No. 29: In the proposed section 194S, it was provided that any person responsible for paying to a resident any sum by way of consideration for transfer of a virtual digital asset, shall deduct TDS @ 1%.


    The proposed amendment to the original Bill proposes to replace the expression ‘a resident’ with ‘any resident’. Hence, after the proposed amendment, section 194S shall read as ‘any person responsible for paying to a resident any resident any sum by way of consideration…’.


    The proposed amendment to clause 59 or section 194S reads as follows-


    Page 81, line 14, for “a resident”, substitute “any resident”.


    Amendment Sl No. 30: In the proposed section 194S in the original Bill, the first proviso to section 194S provides for deduction of tax on the amount of consideration is in kind or exchanged with another VDA. 


    There was a lacuna in the drafting of the proviso. It states that the deductor shall ensure that tax has been paid in respect of such consideration in kind before releasing the consideration.


    Since the provision is related to deduction of tax, there cannot be any payment of tax. The deductor has to ensure that tax has been duly deducted thereon. The position is now cleared.


    The proposed amendment vide Sl. No. 30 proposes to insert the text “required to be deducted”.


    The proposed amendment to clause 59 or section 194S reads as follows-


    Page 81, line 28, after “ensure that tax”, insert “required to be deducted”


    After the above amendment, first proviso to section 194S reads as follows-


    Provided that in a case where the consideration for transfer of virtual digital asset is–

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

    (b) 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 responsible for paying such consideration shall, before releasing the consideration, ensure that tax required to be deducted has been paid in respect of such consideration for the transfer of virtual digital asset.”


    The pre-amended provisions were that tax should be paid before releasing the consideration in kind. This is not a charge of tax but a provision to deduct tax. Hence, the requirement of deduction of tax is added in the proviso.


    Payment of tax signifies the recipient shall pay the tax on such income. Suppose, if the recipient is taxed at 30%, then, as per pre-amended provisions, he shall make the payment of tax @ 30% on such consideration in kind, instead of TDS @ 10% on the amount of such consideration in kind.


    In other words, this proviso requires that the TDS amount on the consideration in kind shall be collected by or paid to the deductor before release of the same.


    The proposed amendment vide Sl. No. 31 proposes to substitute sub-section (4) to provide for deduction of tax on VDA under this section even if the same is liable for deduction under any other provisions of the Act.


    This sub-section has now been rephrased and specifically refers to section 194-O.


    The proposed amended sub-section (4) of Section 194S provides for deduction of tax under section 194S(1) for payment on transfer of VDA irrespective of whatever contained in section 194-O. Thus , in case of TDS on VDA, the provisions of section 194S shall apply.


    The proposed amendment to clause 59 or section 194S(4) reads as follows-


    Page 82, for lines 5 to 8, substitute –


    ‘(4) Notwithstanding anything contained in section 194-0, in case of a transaction to which the provisions of the said section are also applicable along with the provisions of this section, then, tax shall be deducted under sub-section (1).”.


    This amendment is actually reproduction of existing sub-section (8) which is omitted vide Amendment Sl. No. 32 which reads as follows-

    Page 82, omit lines 24 to 27


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


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