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Finance (No. 2) Bill, 2004
[As introduced in Lok Sabha]
1. Page 4, for lines 20 to 43, substitute-
"(xiii) any sum referred to in clause (v) of sub-section (2) of section 56;".
2. Page 5, for lines 2 to 23, substitute-
'(a) in clause (4), in sub-clause (ii), after the proviso, the following proviso shall be inserted with effect from the 1st day of April, 2006, namely:-
"Provided further that nothing contained in this sub-clause shall apply to any income by way of interest paid or credited on or after the 1st day of April, 2005 to the Non-Resident (External) Account of such individual;";
(b) in clause (6BB), for the words, figures and letters "an agreement entered after the 31st day of March, 1997 but before the 1st day of April, 1999 and approved by the Central Government in this behalf", the words, figures and letters "an agreement entered into after the 31st day of March, 1997 but before the 1st day of April, 1999, or entered into after the 31st day of March, 2005 and approved by the Central Government in this behalf" shall be substituted with effect from the 1st day of April, 2006;
(c) in clause (15),-
(A) after sub-clause (iiib), the following sub-clause shall be inserted with effect from the 1st day of April, 2005, namely:-
"(iiic) interest payable to the European Investment Bank, on a loan granted by it in pursuance of the framework-agreement for financial co-operation entered into on the 25th day of November, 1993 by the Central Government with that Bank;";
(B) in sub-clause (iv), in item (fa), after the words "by a scheduled bank", the words, figures and letters "before the 1st day of April, 2005" shall be inserted with effect from the 1st day of April, 2006;
(d) in clause (15A), before the Explanation, the following proviso shall be inserted with effect from the 1st day of April, 2006, namely:-
"Provided that nothing contained in this clause shall apply to any such agreement entered into on or after the 1st day of April, 2005.";'.
3. Page 6, for lines 9 to 21, substitute-
'(38) any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund where-
(a) the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and
(b) such transaction is chargeable to securities transaction tax under that Chapter.
Explanation.-For the purposes of this clause, "equity oriented fund" means a fund-
(i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than fifty per cent of the total proceeds of such fund; and
(ii) which has been set up under a scheme of a Mutual Fund specified under clause (23D):
Provided that the percentage of equity share holding of the fund shall be computed with reference to the annual average of the monthly averages of the opening and closing figures.".
4. Page 7, for lines 19 to 37, substitute-
'11. Amendment of section 40.-In section 40 of the Income-tax Act, in clause (a), for sub-clause (i), the following shall be substituted, namely:-
(i) any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable,-
(A) outside India; or
(B) in India to a non-resident, not being a company or to a foreign company,
on which tax is deductible at source under Chapter XVIIB and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200:
Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.
Explanation.-For the purposes of this sub-clause,-
(A) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;
(B) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;
(ia) any interest, commission or brokerage, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVIIB and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200:
Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.
Explanation.-For the purposes of this sub-clause,-
(i) "commission or brokerage" shall have the same meaning as in clause (i) of the Explanation to section 194H;
(ii) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;
(iii) "professional services" shall have the same meaning as in clause (a) of the Explanation to section 194J;
(iv) "work" shall have the same meaning as in Explanation III to section 194C;
(ib) any sum paid on account of securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004;'.
5. Page 7, after line 37, insert-
'11A. Amendment of section 48.-In section 48 of the Income-tax Act, after the fourth proviso and before the Explanation, the following proviso shall be inserted with effect from the 1st day of April, 2005, namely:-
"Provided also that no deduction shall be allowed in computing the income chargeable under the head "Capital gains" in respect of any sum paid on account of securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004.".'.
6. Page 7, for line 40, substitute-
'(v) where any sum of money exceeding twenty-five thousand rupees is received without consideration by an individual or a Hindu undivided family from any person on or after the 1st day of September, 2004, the whole of such sum:
Provided that this clause shall not apply to any sum of money received-
(a) from any relative; or
(b) on the occasion of the marriage of the individual; or
(c) under a will or by way of inheritance; or
(d) in contemplation of death of the payer.
Explanation .-For the purposes of this clause, "relative" means
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the individual;
(iv) brother or sister of either of the parents of the individual;
(v) any lineal ascendant or descendant of the individual;
(vi) any lineal ascendant or descendant of the spouse of the individual;
(vii) spouse of the person referred to in clauses (ii) to (vi).'.
7. Page 9, for lines 34 to 37, substitute-
"(a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,-
(i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008;
(ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004, within four years from the end of the financial year in which the housing project is approved by the local authority.".
8. Page 9, for lines 46 to 49, substitute-
"Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf;".
9. Page 10, for lines 1 and 2, substitute-
'(e) in sub-section (11A), for the words "an undertaking deriving profit from", the words "an undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables or from" shall be substituted;'.
10. Page, 10, line 28, for "fruits and vegetables", substitute "fruits or vegetables".
11. Page 11, line 6, for "88C and 88D", substitute "88C, 88D and 88E".
12. Page 11, line 8, for 'letter "or section 88D", substitute 'letters "or section 88D or section 88E".'.
13. Page 11, for lines 15 to 18, substitute-
"88D. Rebate of income-tax in case of certain individuals.-An assessee, being an individual resident in India,-
(a) whose total income does not exceed one hundred thousand rupees, shall be entitled to a deduction from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax;
(b) whose total income exceeds one hundred thousand rupees and the income-tax payable on such total income (as computed before allowing the deductions under this Chapter) exceeds the amount by which such total income is in exceeds of one hundred thousand rupees, shall be entitled to a deduction from the amount of income-tax on his total income, of an amount equal to the amount by which the income-tax payable on such total income is in excess of the amount by which the total income exceeds one hundred thousand rupees.".
14. Page 11, after line 18, insert
'21A. Insertion of new section 88E.-After section 88D of the Income-tax Act, as so inserted, the following section shall be inserted with effect from the 1st day of April, 2005, namely:-
"88E. Rebate in respect of securities transaction tax.-(1) Where total income of an assessee in a previous year includes any income, chargeable under the head "Profits and gains of business or profession", arising from taxable securities transactions, he shall be entitled to a deduction, from the amount of income-tax on such income arising from such transactions, computed in the manner provided in sub-section (2), of an amount equal to the securities transaction tax paid by him in respect of the taxable securities transactions entered into in the course of his business during that previous year:
Provided that no deduction under this sub-section shall be allowed unless the assessee furnishes alongwith the return of income, evidence of payment of securities transaction tax in the prescribed form:
Provided further that the amount of deduction under this sub-section shall not exceed the amount of income-tax on such income computed in the manner provided in sub-section (2).
(2) For the purposes of sub-section (1), the amount of income-tax on the income arising from the taxable securities transactions, referred to in that sub-section, shall be equal to the amount calculated by applying the average rate of income-tax on such income.
Explanation.-For the purposes of this section, the expressions "taxable securities transaction" and "securities transaction tax" shall have the same meanings respectively assigned to them under Chapter VII of the Finance (No. 2) Act, 2004.".'.
15. Page 12, for lines 3 to 19, substitute-
'111A. Tax on short term capital gains in certain cases.-(1) Where the total income of an assessee includes any income chargeable under the head "Capital gains", arising from the transfer of a short-term capital asset, being an equity share in a company or a unit of an equity oriented fund and-
(a) the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and
(b) such transaction is chargeable to securities transaction tax under that Chapter,
the tax payable by the assessee on the total income shall be the aggregate of-
(i) the amount of income-tax calculated on such short-term capital gains at the rate of ten per cent; and
(ii) the amount of income-tax payable on the balance amount of the total income as if such balance amount were the total income of the assessee:
Provided that in the case of an individual or a Hindu undivided family being a resident, where the total income as reduced by such short-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such short-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such short-term capital gains shall be computed at the rate of ten per cent.
(2) Where the gross total income of an assessee includes any short-term capital gains referred to in sub-section (1), the deduction under Chapter VIA shall be allowed from the gross total income as reduced by such capital gains.
(3) Where the total income of an assessee includes any short-term capital gains referred to in sub-section (1), the rebate under section 88 shall be allowed from the income-tax on the total income as reduced by such capital gains.
Explanation.-For the purposes of this section, the expression "equity oriented fund" shall have the meaning assigned to it in the Explanation to clause (38) of section 10.'.
16. Page 13, for line 33, substitute-
"(a) it is an Indian company;".
17. Page 13, line 36, for "operating qualifying ships", substitute "operating ships"
18. Page 13, for lines 44 to 46, substitute-
"115VD. For the purposes of this Chapter, a ship is a qualifying ship if-
(a) it is a sea going ship or vessel of fifteen net tonnage or more;
(b) it is a ship registered under the Merchant Shipping Act, 1958 (44 of 1958), or a ship registered outside India in respect of which a licence has been issued by the Director-General of Shipping under section 406 or section 407 of the Merchant Shipping Act, 1958 (44 of 1958); and
(c) a valid certificate in respect of such ship indicating its net tonnage is in force,-
but does not include-".
19. Page 20, for lines 39 to 44, substitute-
"(3) For the purposes of sub-section (2), the average of net tonnage shall be computed in such manner as may be prescribed in consultation with the Director-General of Shipping.".
20. Page 22, after line 28, insert-
'28A. Amendment of section 119.-In section 119 of the Income-tax Act, in sub-section (2), in clause (a), after the bracket and words "(whether by way of relaxation of any of the provisions of sections", the figures and letters "115P, 115S," shall be inserted with effect from the 1st day of October, 2004.'.
21. Page 27, after line 52, insert-
'55A. Amendment of section 273B.-In section 273B of the Income-tax Act, for the word, figures and letter "section 271F," the words, figures and letters "section 271F, section 271FA," shall be substituted with effect from the 1st day of April, 2005.'.
22. Page 28, for lines 11 to 14, substitute-
"Explanation.-For the purposes of establishing the charge under this section, it shall not be necessary to prove that the second person has actually evaded any tax, penalty or interest chargeable or imposable under this Act.".
23. Page 28, after line 22, insert-
'57A. Amendment of section 279.-In section 279 of the Income-tax Act, in sub-section (1), for the words and figures "section 277 or section 278", the words, figures and letter "section 277, section 277A or section 278" shall be substituted with effect from the 1st day of October, 2004.'.
24. Page 28, for lines 41 to 48, substitute-
"who is responsible for registering, or maintaining books of account or other documents containing a record of any specified financial transaction, under any law for the time being in force, shall furnish an annual information return, in respect of such specified financial transaction which is registered or recorded by him during any financial year beginning on or after the 1st day of April, 2004 and information relating to which is relevant and required for the purposes of this Act, to the prescribed income-tax authority or such other authority or agency as may be prescribed.".
25. Page 29, for lines 1 to 13, substitute-
'(3) For the purposes of sub-section (1), "specified financial transaction" means any-
(a) transaction of purchase, sale or exchange of goods or property or right or interest in a property; or
(b) transaction for rendering any service; or
(c) transaction under a works contract; or
(d) transaction by way of an investment made or an expenditure incurred; or
(e) transaction for taking or accepting any loan or deposit,
which may be prescribed:
Provided that the Board may prescribe different values for different transactions in respect of different persons having regard to the nature of such transactions:
Provided further that the value or, as the case may be, the aggregate value of such transactions during a financial year so prescribed shall not be less than fifty thousand rupees.'.
26. Page 30, after line 5, insert-
'61A. Insertion of new section 122A.-After section 122 of the Customs Act, the following section shall be inserted, namely:-
'122A. Adjudication Procedure.-(1) The adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an opportunity of being heard to a party in a proceeding, if the party so desires.
(2) The adjudicating authority may, if sufficient cause is shown, at any stage of proceeding referred to in sub-section (1), grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party during the proceeding.".
27. Page 30, after line 5, insert-
61B. Amendment of Section 128.-In section 128 of the Customs Act, after sub-section (1), the following sub-section shall be inserted, namely:-
"(1A) The Commissioner (Appeals) may, if sufficient cause is shown at any stage of hearing of an appeal, grant time, from time to time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.".
28. Page 30, after line 25, insert-
"Provided that no such fee shall be payable in the case of an application filed by or on behalf of the Commissioner of Customs under this sub-section.".
29. Page 30, before line 26, insert-
'62A. Amendment of Section 129B.-In section 129B of the Customs Act, after sub-section (1), the following sub-section shall be inserted, namely:-
"(1A) The Appellate Tribunal may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.".
30. Page 30, after line 30, insert-
'63A. Amendment of section 142.-In section 142 of the Customs Act, in sub-section (1), the following proviso shall be inserted at the end, namely:-
"Provided that where the person (hereinafter referred to as predecessor), by whom any sum payable under this Act including the amount required to be paid to the credit of the Central Government under section 28B is not paid, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by the proper officer, after obtaining written approval from the Commissioner of Customs, for the purposes of recovering the amount so payable by such predecessor at the time of such transfer or otherwise disposal or change."'.
31. Page 31, after line 15, insert-
'65A. Amendment of section 3.-In section 3 of the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the Customs Tariff Act), in sub-section (2), in clause (ii), the following amendments shall be made and shall be deemed to have been made on and from the 9th day of July, 2004, namely:-
(a) in sub-clause (d), the word "and", occurring at the end, shall be omitted;
(b) after sub-clause (d), the following sub-clause shall be inserted, namely:-
"(dd) the Education Cess on imported goods referred to in section 84 of the Finance (No. 2) Act, 2004; and "'.
32. Page 31, in line 16, omit ", 1975 (hereinafter referred to as the Customs Tariff Act)".
33. Page 32, after line 35, insert-
"Provided that no such fee shall be payable in the case of an application filed by or on behalf of the Commissioner of Central Excise under this sub-section.".
34. Page 40, after line 43, insert-
"Provided that no such fee shall be payable in the case of an application filed by the Commissioner of Central Excise or Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, under this sub-section.".
35. Page 42, for lines 19 and 20, substitute-
'(5) "equity oriented fund" means a fund-
(i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than fifty per cent of the total proceeds of such fund; and
(ii) which has been set up under a scheme of a Mutual Fund:
Provided that the percentage of equity share holding of the fund shall be computed with reference to the annual average of the monthly averages of the opening and closing figures;
(6) "Mutual Fund" means a Mutual Fund specified under clause (23D) of section 10 of the Income-tax Act, 1961 (43 of 1961);'.
36. Page 42, line 21, for "(6)", substitute "(7)".
37. Page 42, line 23, for "(7)", substitute "(8)".
38. Page 42, line 25, for "(8)", substitute "(9)".
39. Page 42, line 26, for "(9)", substitute "(10)".
40. Page 42, omit line 25 and 29.
41. Page 42, for lines 34 and 35, substitute-
'(13) "taxable securities transaction" means a transaction of-
(a) purchase or sale of an equity share in a company or a derivative or a unit of an equity oriented fund, entered into in a recognised stock exchange; or
(b) sale of a unit of an equity oriented fund to the mutual Fund;'.
42. Page 42, for lines 39 to 41, substitute-
88. "Charge of securities transaction tax.-On and from the commencement of this Chapter, there shall be charged a securities transaction tax in respect of the taxable securities transaction specified in column (2) of the Table below, at the rate specified in the corresponding entry in column (3) of the said Table, on the value of such transaction and such tax shall be payable by the purchaser or the seller, specified in the corresponding entry in column (4) of the said Table:
|
Sl. No. |
Taxable securities transaction |
Rate |
Payable by |
|
(1) |
(2) |
(3) |
(4) |
|
1. |
Purchase of an equity share in a company or a unit of an equity oriented fund, where-
(a) the transaction of such purchase is entered into in a recognised stock exchange; and
(b) the contract for the purchase of such share or unit is settled by the actual delivery or transfer of such share or unit. |
0.075 per cent |
Purchaser |
|
2. |
Sale of an equity share in a company or a unit of an equity oriented fund, where-
(a) the transaction of such sale is entered into in a recognised stock exchange; and
(b) the contract for the sale of such share or unit is settled by the actual delivery or transfer of such share or unit. |
0.075 per cent |
Seller |
|
3. |
Sale of an equity share in a company or a unit of an equity oriented fund, where-
(a) the transaction of such sale is entered into in a recognised stock exchange; and
(b) the contract for the sale of such share or unit is settled otherwise than by the actual delivery or transfer of such share or unit. |
0.015 per cent |
Seller |
|
4. |
Sale of a derivative, where the transaction of such sale is entered into in a recognised stock exchange. |
0.01 per cent |
Seller |
|
5. |
Sale of unit of an equity oriented fund to the Mutual Fund. |
0.15 per cent |
Seller". |
43. Page 42, for line 42 to 48, substitute-
89.'Value of taxable securities transaction.-The value of taxable securities transaction,-
(a) in the case of a taxable securities transaction relating to a derivative, being "option in securities", shall be the aggregate of the strike price and the option premium of such "option in securities";
(b) In the case of a taxable securities transaction relating to a derivative, being "futures", shall be the price at which such "futures" is traded; and
(c) in the case of any other taxable securities transaction, shall be the price at which such securities are purchased or sold:
Provided that the Board may, having regard to the manner in which taxable securities transactions are settled in a recognised stock exchange or such other factors which may be relevant for the purposes of determining the price of such securities, specify, by rules made by it, the method of determining the price of such securities for the purposes of this clause.'.
44. Page 43, for lines 1 to 9, substitute-
90. "Collection and recovery of securities transaction tax.-(1) Every recognised stock exchange shall collect the securities transaction tax from every person, being a purchaser or a seller, as the case may be, who enters into a taxable securities transaction in that stock exchange, at the rates specified in section 88.
(2) The prescribed person in the case of every Mutual Fund shall collect the securities transaction tax from every person who sells a unit to that Mutual Fund, at the rate specified in section 88.
(3) The securities transaction tax collected during any calendar month in accordance with the provisions of such-section (1) or sub-section (2), shall be paid by every recognised stock exchange or by the prescribed person in the case of every Mutual Fund, as the case may be, to the credit of the Central Government by the seventh day of the month immediately following the said calendar month.
(4) Any recognised stock exchange or the prescribed person in the case of any Mutual Fund, who fails to collect the tax in accordance with the provisions of sub-section (1) or sub-section (2), shall notwithstanding such failure be liable to pay the tax to the credit of the Central Government in accordance with the provisions of sub-section (3).".
45. Page 43, for lines 10 to 15, substitute-
"91. "Recognised stock exchange or Mutual Fund to furnish prescribed return.-(1) Every recognised stock exchange or the prescribed person in the case of very Mutual Fund (hereafter in this Chapter referred to as assessee) shall, within the prescribed time after the end of each financial year, prepare and deliver or cause to be delivered to the Assessing Officer or to any other authority or agency authorised by the Board in this behalf, a return in such form and verified in such manner and setting forth such particulars as may be prescribed, in respect of all taxable securities transactions entered into during such financial year in that stock exchange or, as the case may be, in respect of all taxable securities transactions, being sale of units to such Mutual Fund during such financial year.".
46. Page 43, line 25, omit "being a recognised stock exchange,".
47. Page 43, line 34, omit "entered into in the recognised stock exchange".
48. Page 43, line 38, omit "being a recognised stock exchange,".
49. Page 44, line 1, for "recognised stock exchange", substitute "assessee".
50. Page 44, line 9, omit "recognised".
51. Page 44, line 10, for "stock exchange", substitute "assessee".
52. Page 44, Line 19, for "(2)", substitute "(3)".
53. Page 44, Line 22, for "(3)", substitute "(4)".
54. Page 44, Line 26, for "(2)", substitute "(3)".
55. Page 45, Line 36, for "(2)", substitute "(3)".
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