CBDT issues Notification No. 101/2022 dated 22.08.2022 in G.S.R. 647(E) through Income-tax (28th Amendment) Rules, 2022 to amend Rule 17CB of the Income-tax Rules, 1962 (‘Rule’) to include specified persons in place of ‘trusts or institutions’ in order to incorporate the amendments introduced by the Finance Act, 2022 in section 115TD of the Income-tax Act, 1961 (‘Act’).
Section 115TD is amended with effect from 1st April 2023 (Assessment Year 2023-24) to make this section applicable to any trust or institution approved under section 10(23C) (iv)/(v)/(vi)/(via) in addition to a trust or institution registered under section 12AA or section 12AB of the Act.
Section 115TD was introduced by the Finance Act of 2016 to provide for the taxation of accreted income of the trust in certain cases.
A trust or an institution carrying on a 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 into the Act.
The provisions of Chapter XII-EB have been made applicable to only the trusts or institutions registered under section 12AA or section 12AB of the Act. However, these provisions are not applicable to any trust or institution approved under section 10(23C) (iv)/(v)/(vi)/(via).
The amendment has been carried out by replacing the words “trust or institution” with the words “specified person” in section 115TD.
“Specified person” has been defined in section 115TD as follows:
(a) 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
(b) a trust or institution registered under section 12AA or section 12AB.
Rule 17CB prescribes the method of valuation of accreted income for the purposes of section 115TD.
With this notification, Rule 17CB has been amended to substitute the words “trust or institution” with the words “specified person” wherever they occur in the Rule.
Further, an Explanation has been added to define the meaning of ‘specified person”. The explanation in the Rule refers to the definition of ‘specified person’ as assigned to it in clause (iia) of the Explanation to section 115TD.
Read the full text of CBDT Notification No. 101/2022 dated 22.08.2022 on Including Specified Persons in Rule 17CB for Section 115TD
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 22nd August, 2022
INCOME-TAX
G.S.R. 647(E).—In exercise of the powers conferred by sub-section (2) of section 115TD read with section 295, of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. Short title and commencement.—(1) These rules may be called the Income-tax (Twenty Eighth Amendment) Rules, 2022.
(2) They shall come into force from the date of its publication in the Official Gazette.
2. In the Income-tax Rules, 1962, in rule 17CB,—
(i) for the words “trust or institution” wherever they occur, the words “specified person” shall be substituted;
(ii) in Explanation, after clause (h), the following clause shall be inserted, namely:- ‘(ha) “specified person” shall have the same meaning as assigned to it in clause (iia) of the Explanation to section 115TD;’.
[Notification No. 101/2022/F.No. 370142/37/2022-TPL]
NEHA SAHAY, Under Secy.
Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Subsection (ii) vide number S.O. 969 (E) dated the 26th March, 1962 and last amended vide notification number G.S.R 636(E) dated 18th August, 2022.
Download CBDT Notification No. 101/2022 dated 22.08.2022 on Including Specified Persons in Rule 17CB for Section 115TD in PDF format
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