The Government has notified the Finance Act, 2021.
The government notified that Sections 2 to 88 shall come into force on 1 April 2021 and sections 108 to 123 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
The Equalisation Levy was introduced on non-resident e-commerce operators on consideration received from e-commerce supply or services, by Finance Act 2020, from April 1, 2020. E-commerce supply or service was very widely defined to include “online sale of goods” and “online provision of services”. Finance Bill 2021 sought to provide an explanation to include any of the following activities for the transaction to be considered as the online sale of goods or online provision of services – acceptance of offer for sale, placing of a purchase order, acceptance of purchase order, payment of consideration, supply of goods or provision of services. Another amendment was also proposed to include consideration received or receivable from e-commerce supply or services irrespective of whether the e-commerce supply or services irrespective of whether the e-commerce operator owns the goods.
In the case of slump sale transactions, under the existing provisions (section 50B), the actual consideration of the slump sale transaction is respected and considered as the full value of consideration for computing capital gains. In other words, there was no need for arriving at Fair Market Value or requirement of a valuation exercise.
An amendment has now been made to provide that FMV of the undertaking/division on the date of transfer (to be determined based on the rules, which may be prescribed later) as a full value of consideration. Accordingly, FMV will have to be considered irrespective of the transaction value actually received by the seller.
It would be important to note that this amendment would be applicable from AY 2021-22 and hence, any slump sale transaction done during FY 2020-21 (from April 1, 2020) would be affected.
The provisions relating to taxability of receipt of capital assets or stock in trade at the time of reconstitution or dissolution of partnership firms which was proposed in the original Bill stand revamped. The entire clauses have now been rewritten with an introduction of additional Section 9B. The new section has been inserted to provide that receipt of a capital asset or stock–in trade by a partner/member (in case of Association of Persons / Body of Individuals) on dissolution or reconstitution of firm/AOP/BOI shall be deemed to be transferred in the hands of such firm/AOP/BOI and profits/gains arising on such transfer based on FMV of such asset shall be taxable as business income or capital gains.
The Finance Act 2021 said that no exemption shall be available for the interest income accrued during the previous year in the recognized and statutory provident fund to the extent it relates to the contribution made by the employees over Rs 2.5 lakh in the previous year. Now, this condition is further relaxed to provide that in a case where there is no contribution by the employer to such fund, the threshold will be Rs 5 lakh instead of Rs 2.5 lakh.
There are a few changes about other aspects relating to the definition of the term ‘liable to tax’; threshold limits for a tax audit; tax incentives to International Financial Services Centres; concessional withholding tax on interest to Foreign Portfolio Investors, etc.
Subscribe Taxscan Premium to view the Judgment
Support our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
