Download Taxation Laws (Amendment) Ordinance, 2019

The salient features of the Taxation Laws (Amendment) Ordinance, 2019, as explained by the Ministry of Finance, are as follows:

(i) Government brings in the Taxation Laws (Amendment) Ordinance 2019 to make certain amendments in the Income-tax Act,1961 and the Finance (No. 2) Act 2019 effective from Financial Year 2019-20.

(ii) New provision allows any domestic company option to pay #IncomeTax @22% wrt condition that they will not avail any exemption/incentive. Effective tax rate for these to be 25.17% incl surcharge & cess.Such companies shall not be required to pay Minimum Alternate Tax.

(iii) New provision to allow new domestic company incorporated on/after 1/10/19 making fresh investment in manufacturing,option to pay #IncomeTax @15%.Benefit available to companies that don’t avail exemption/incentive &commence production on/before31/3/2023

(iv) The effective tax rate for these companies shall be 17.01% inclusive of surcharge & cess. Also, such companies shall not be required to pay Minimum Alternate Tax.

(v) A company which does not opt for concessional tax regime & avails tax exemption/incentive shall continue to pay tax at the pre-amended rate. However, these companies can opt for the concessional tax regime after expiry of their tax holiday/exemption period

(vi) On exercising the option,the Company shall be liable to pay tax @22% & option once exercised cannot be subsequently withdrawn. To provide relief to companies which continue to avail exemptions/incentives,Minimum Alternate Tax has been reduced fr existing 18.5% to15%

(vii) Surcharge introduced by Finance(No.2) Act/19, shall not apply on capital gains arising on sale of equity share in a company/unit of equity oriented fund/unit of a business trust liable for securities transaction tax, in the hands of an individual, HUF, AOP, BOI & AJP

(viii) The enhanced surcharge shall also not apply to capital gains arising on sale of any security including derivatives, in the hands of Foreign Portfolio Investors (FPIs).

(ix) In order to provide relief to listed companies which have already made a public announcement of buy-back before 5th of July 2019, it is provided that tax shall not be charged on buy-back of shares in case of such companies.

(x) Govt to expand the scope of CSR 2% spending.This can be spent on incubators funded by Central/State Govt/agency or PSU of Central/State Govt making contributions to public funded Universities,IITs,National Labs & Autonomous Bodies conducting research in Sc/Tech etc.

Smt @nsitharaman announces major relief in corporate tax for domestic companies, in order to boost the Make in India initiative. pic.twitter.com/F1WvbEAmt8

— NSitharamanOffice (@nsitharamanoffc) September 20, 2019

MINISTRY OF LAW AND JUSTICE
(Legislative Department)
New Delhi, the 20th September, 2019/Bhadra 29,1941 (Saka)
THE TAXATION LAWS (AMENDMENT) ORDINANCE,
2019
No 15 OF 2019
Promulgated by the President in the Seventieth Year of the
Republic of India.
An Ordinance further to amend the Income-tax Act, 1961
and the Finance (No. 2) Act, 2019.
WHEREAS Parliament is not in session and the President is
satisfied that circumstances exist which render it necessary for
him to take immediate action;
Now, THEREFORE, in exercise of the powers conferred by
clause (1) of article 123 of the Constitution, the President is
pleased to promulgate the following Ordinance:-
CHAPTER I
PRELIMINARY
1. (1) This Ordinance may be called the Taxation Laws
(Amendment) Ordinance, 2019.
Short title and
commencement.
(2) Save as otherwise provided, this Ordinance shall come
into force at once.
2 THE GAZETTE OF INDIA EXTRAORDINARY
CHAPTER II
AMENDMENTS IN THE INCOME-TAX ACT, 1961
[PART 11-
Amendment of
section 92BA.
Amendment of
section 115BA.
Insertion of
new sections
115BAA and
115BAB.
Tax on income
of certain
domestic
companies.
2. In section 92BA of the Income-tax Act, 1961 (hereafter 43 of 1961.
in this Chapter referred to as the Income-tax Act), after clause
(v), the following clause shall be inserted with effect from the
1st day ofApril, 2020, namely:-
“(va) any business transacted between the persons
referred to in sub-section (4) of section 115BAB;”.
3. In section 115BAof the Income-tax Act with effect from
the 1st day ofApril, 2020,-
(a) for the marginal heading “Tax on income of certain
domestic companies”, the marginal heading “Tax on
income of certain domestic manufacturing companies”
shall be substituted;
(b) in sub-section (1), for the words “subject to the
other provisions of this Chapter”, the words, figures and
letters “subject to the other provisions ofthis Chapter, other
than those mentioned under section 115BAA and section
115BAB” shall be substituted;
(c) in sub-section (4), after the proviso, the following
proviso shall be inserted, namely:-
“Provided further that where the person exercises
option under section 115BAB, the option under this
section may be withdrawn.”.
4. After section 115BA of the Income-tax Act, the
following sections shall be inserted with effect from the 1st day
ofApril, 2020, namely:-
“1l5BAA. (1) Notwithstanding anything contained in
this Act but subject to the provisions of this Chapter, other
than those mentioned under section 115BA and section
115BAB, the income-tax payable in respect of the total
income of a person, being a domestic company, for any
previous year relevant to the assessment year beginning on
or after the 1st day of April, 2020, shall, at the option of
such person, be computed at the rate of twenty-two per
cent., if the conditions contained in sub-section (2) are
satisfied.
(2) For the purposes of sub-section (1), the following
conditions shall apply subject to the condition that the total
income of the company has been computed,-
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY
(i) without any deduction under the provisions of
section 10AA or clause (iia) of sub-section (1) of
section 32 or section 32AD or section 33AB or section
33ABA or sub-clause (ii) or sub-clause (iia) or subclause
(iii) of sub-section (1) or sub-section (2AA) or
sub-section (2AB) of section 35 or section 35AD or
section 35CCC or section 35CCD or under any
provisions of Chapter VI-A under the heading “c.Deductions
in respect of certain incomes” other than
the provisions of section 80JJAA;
(ii) without set off of any loss carried forward from
any earlier assessment year if such loss is attributable to
any of the deductions referred to in sub-clause (i); and
(iii) by claiming the depreciation, if any, under
section 32, other than clause (iia) of sub-section (1) of
the said section, determined in such manner as may be
prescribed.
(3) The loss referred to in sub-clause (ii) of sub-section
(2) shall be deemed to have been already given full effect
to and no further deduction for such loss shall be allowed
for any subsequent year.
(4) Nothing contained in this section shall apply unless
the option is exercised by the person in the prescribed
manner on or before the due date specified under subsection
(1) of section 139 for furnishing the returns of
income for any previous year relevant to the assessment
year commencing on or after 1st day of April, 2020 and
such option once exercised shall apply to subsequent
assessment years:
Provided that once the option has been exercised for
any previous year, it cannot be subsequently withdrawn
for the same or any other previous year.
115BAB. (1) Notwithstanding anything contained in
this Act but subject to the provisions of this Chapter, other
than those mentioned under section 115BA and section
115BAA, the income-tax payable in respect of the total
income of a person, being a domestic company, for any
previous year relevant to the assessment year beginning on
or after the 1st day of April, 2020, shall, at the option of
such person, be computed at the rate of fifteen per cent., if
the conditions contained in sub-section (2) are satisfied.
(2) For the purposes of sub-section (1), the following
conditions shall apply, namely:-
3
Tax on income
of certain new
domestic
manufacturing
companies.
4 THE GAZETTE OF INDIA EXTRAORDINARY
(a) the company has been set-up and registered on
or after the 1st day of October, 2019, and has
commenced manufacturing on or before the 31st day of
March, 2023, and,-
(i) is not formed by splitting up, or the
reconstruction, of a business already in existence:
Provided that this condition shall not apply
in respect of an undertaking which is formed as
a result of the re-establishment, reconstruction
or revival by the person of the business of any
such undertaking as is referred to in section
33B, in the circumstances and within the period
specified in the said section;
(ii) does not use any machinery or plant
previously used for any purpose.
Explanation I.-For the purposes of sub-clause
(ii), any machinery or plant which was used outside
India by any other person shall not be regarded as
machinery or plant previously used for any purpose,
if the following conditions are fulfilled, namely:-
(A) such machinery or plant was not, at any
time previous to the date of the installation by
the person, used in India;
(B) such machinery or plant is imported into
India from any country outside India; and
(C) no deduction on account of depreciation
in respect of such machinery or plant has been
allowed or is allowable under the provisions of
this Act in computing the total income of any
person for any period prior to the date of the
installation ofmachinery or plant by the person.
Explanation 2.-Where in the case of a person,
any machinery or plant or any part thereof
previously used for any purpose is put to use by the
company and the total value of such machinery or
plant or part thereof does not exceed twenty per
cent. of the total value of the machinery or plant
used by the company, then, for the purposes of subclause
(ii) of this clause, the condition specified
therein shall be deemed to have been complied
with;
[PART IlSEC.
1] THE GAZETTE OF INDIA EXTRAORDINARY
(iii) does not use any building previously used
as a hotel or a convention centre, as the case may
be.
Explanation.-For the purposes of this subclause,
the expressions “convention centre” and
“hotel” shall have the meanings respectively
assigned to them in clause (a) and clause (b) of subsection
(6) of section 80-ID;
(b) the company is not engaged in any business
other than the business of manufacture or production of
any article or thing and research in relation to, or
distribution of, such article or thing manufactured or
produced by it; and
(c) the total income of the company has been
computed,-
(i) without any deduction under the provisions
of section 10AA or clause (iia) of sub-section (1) of
section 32 or section 32AD or section 33AB or
section 33ABA or sub-clause (ii) or sub-clause (iia)
or sub-clause (iii) of sub-section (1) or sub-section
(2AA) or sub-section (2AB) of section 35 or section
35AD or section 35CCC or section 35CCD or under
any provisions of Chapter VI-A under the
heading “C.-Deductions in respect of certain
incomes” other than the provisions of section
80JJAA;
(ii) without set off of any loss carried forward
from any earlier assessment year if such loss is
attributable to any of the deductions referred to in
sub-clause (i); and
(iii) by claiming the depreciation under section
32, other than clause (iia) of sub-section (1) of the
said section, determined in such manner as may be
prescribed.
(3) The loss referred to in sub-clause (ii) of clause (c) of
sub-section (2) shall be deemed to have been already given
full effect to and no further deduction for such loss shall be
allowed for any subsequent year.
(4) Where it appears to the Assessing Officer that,
owing to the close connection between the company and
any other person, or for any other reason, the course of
business between them is so arranged that the business
5
6
Amendment of
section 115JB.
THE GAZETTE OF INDIA EXTRAORDINARY
transacted between them produces to the company more
than the ordinary profits which might be expected to arise,
the Assessing Officer shall, in computing the profits and
gains of such company for the purposes ofthis section, take
the amount of profits as may be reasonably deemed to have
been derived therefrom:
Provided that in case the aforesaid arrangement
involves a specified domestic transaction referred to in
section 92BA, the amount of profits from such transaction
shall be determined having regard to arm’s length price as
defined in clause (ii) of section 92F.
(5) Nothing contained in this section shall apply unless
the option is exercised by the person in the prescribed
manner on or before the due date specified under subsection
(1) of section 139 for furnishing the first of the
returns of income for any previous year relevant to the
assessment year commencing on or after 1st day of April,
2020 and such option once exercised shall apply to
subsequent assessment years:
Provided that once the option has been exercised for
any previous year, it cannot be subsequently withdrawn for
the same or any other previous year.
5. In section 115JB of the Income-tax Act, with effect from
the 1st day ofApril, 2020,-
(a) in sub-section (1), the following proviso shall be
inserted, namely:-
“Provided that for the previous year relevant to the
assessment year commencing on or after the 1st day of
April, 2020, the provisions of this sub-section shall
have effect as if for the words “eighteen and one-half
per cent.”, occurring at both the places, the words
“fifteen per cent.” had been substituted.”;
(b) for sub-section (5A), the following sub-section shall
be substituted, namely:-
“(5A) The provisions of this section shall not apply
to,-
(i) any income accruing or arising to a company
from life insurance business referred to in section
115B;
[PART 11-
SEC. 1]
15 of 1992.
THE GAZETTE OF INDIA EXTRAORDINARY
(ii) a person who has exercised the option
referred to under section 115BAA or section
115BAB.”.
6. In section 115QA of the Income-tax Act, in sub-section
(1), the following proviso shall be inserted and shall be deemed
to have been inserted with effect from the 5th day of July,
2019, namely:-
“Provided that the provisions of this sub-section shall
not apply to such buy-back of shares (being the spares
listed on a recognised stock exchange), in respect of which
public announcement has been made before 5th day of July,
2019 in accordance with the provisions of the Securities
and Exchange Board of India (Buy-back of Securities)
Regulations, 2018 made under the Securities and Exchange
Board of India Act, 1992 as amended from time to time.
CHAPTER III
AMENDMENTS IN THE FINANCE (No.2) Act, 2019
7. In section 2 of the Finance (No.2) Act, 2019 [hereafter in
this Chapter referred to as the Finance (No.2) Act], in subsection
(9), with effect from the 1st day ofApril, 2019,-
(a) in third proviso,-
(i) in clause (a) for the words “the Income-tax Act”,
the words, figures and letters “the Income-tax Act, not
having any income under section 115AD of the
Income-tax Act” shall be inserted and shall be deemed
to have been inserted;
(ii) after clause (a), the following clause shall be
inserted and shall be deemed to have been inserted,
namely:-
‘(aa) in the case of every association of persons
or body of individuals, whether incorporated or not,
having income under section 115AD of the Incometax
Act,-
(i) at the rate of ten per cent. of such
“advance tax”, where the total income exceeds
fifty lakh rupees, but does not exceed one crore
rupees;
(ii) at the rate of fifteen per cent. of such
“advance tax”, where the total income exceeds
one crore rupees but does not exceed two crore
7
Amendment of
section 115QA.
Amendment of
Act No. 23 of
2019.
8 . THE GAZETTE OF INDIA EXTRAORDINARY
rupees;
(iii) at the rate of twenty five per cent. of
such “advance tax”, where the total income
[excluding the income of the nature referred to
in clause (b) of sub-section (1) of section
115AD of the Income-tax Act] exceeds two
crore rupees but does not exceed five crore
rupees;
(iv) at the rate of thirty-seven per cent. of
such “advance tax”, where the total income
[excluding the income of the nature referred to
in clause (b) of sub-section (1) of section
115AD of the Income-tax Act] exceeds five
crore rupees;
(v) at the rate of fifteen per cent. of such
“advance tax”, where the total income
[including the income of the nature referred to
in clause (b) of sub-section (1) of section
115AD of the Income-tax Act] exceeds two
crore rupees but is not covered in sub-clauses
(iii) and (iv):
Provided that in case where the total income
includes any income chargeable under clause (b)
of sub-section (1) of section 115AD of the
Income-tax Act, the rate of surcharge on the
advance tax computed on that part of income
shall not exceed fifteen per cent.;’;
(b) in the fourth proviso, for the words, brackets
and letter “in (a) above”, the words, brackets and letters
“in (a) and (aa) above” shall be substituted;
(c) after the eighth proviso, the following proviso
shall be inserted, namely:-
“Provided also that in respect of any income
chargeable to tax under section 115BAA or section
115BAB of the Income-tax Act, the tax computed under
the first proviso shall be increased by a surcharge, for the
purposes of the Union, calculated at the rate of ten per
cent. of such “advance tax”.
8. In the First Schedule of the Finance (No.2) Act, with
effect from the 1st day ofApril, 2019,-
[PART 11-
Amendment of
Part II of First
Schedule.
SEC. 1] THE GAZETTE’OF INDIA EXTRAORDINARY
(A) in PART II, under the sub-heading “Surcharge on
income-tax”, in paragraph (i), in clause (a),-
(i) in sub-clauses I and II, after the words “aggregate
of such incomes”, the brackets, figures and letters
“(including the income under the provisions of section
l l lA and section 1I2A of the Income-tax Act)” shall be
inserted and shall be deemed to have been inserted;
(ii) in sub-clauses III and IV, after the words
“aggregate of such incomes” the brackets, figures and
letters “(excluding the income under the provisions of
section l l lA and section 1I2A of the Income-tax Act)”
shall be inserted and shall be deemed to have been
inserted.
(iii) after sub-clause IV, the following sub-clause shall
be inserted and shall be deemed to have been inserted,
namely:-
“V. at the rate of fifteen per cent. of such tax,
where the income or aggregate of such incomes
(including the income under the provisions of section
111A and section l12A of the Income-tax Act) paid or
likely to be paid and subject to the deduction exceeds
two crore rupees, but is not covered under sub-clauses
III and IV):
Provided that in case where the total income
includes any income chargeable under section l l lA
and section l12A of the Income-tax Act, the rate of
surcharge on the amount of income-tax deducted in
respect of that part of income shall not exceed fifteen
per cent.;’;
(B) in PART III, in Paragraph A, under the sub-heading
“Surcharge on income-tax”, after the opening portion,-
(i) in clauses (a) and (b), after the words “having a
total income”, the brackets, words, figures and letters
“(including the income under the provisions of section
l l lA and section l12A)” shall be inserted;
(ii) in clauses (c) and (d), after the words “having a
total income”, the brackets, words, figures and letters
“(excluding the income under the provisions of section
l l lA and section l12A)” shall be inserted;
(iii) after clause (d) and before the proviso, the
following clause shall be inserted, namely:-
9
10 THE GAZETTE OF INDIA EXTRAORDINARY
“(e) having a total income (including the income
. under the provisions of section lIlA and section
112A) exceeding two crore rupees, but is not covered
under clauses (c) and (d), shall be applicable at the
rate of fifteen per cent. of such income-tax:
Provided that in case where the total income
includes any income chargeable under section l l lA
and section 112A of the Income-tax Act, the rate of
surcharge on the amount of income-tax computed on
that part of income shall not exceed fifteen per
cent.;’;
RAM NATH KOVIND,
President.
DR. G. NARAYANARAJU
Secretary to the Govt. ofIndia~
[PART II-SEC. 1]
UPLOADED BYTHE MANAGER, GOVERNMENT OFINDIAPRESS,MINTOROAD, NEWDELHI-II 0002
ANDPUBLISHED BYTHECONTROLLER OF PUBLICATIONS, DELHI-II 0054.