The Central Government has made revisions to the income tax act, which have been officially documented as the Finance Act, 2023. Certain amendments will come into effect starting from July 1st, 2023.
The following are the new changes to come into force on July 1st 2023:
Section 194LC – Income by way of interest from Indian company
The Section states that any income by way of interest received in respect of monies borrowed by it in foreign currency from a source outside India under a loan agreement or by way of issue of long-term infrastructure bonds.
The new change has added a provision that “Provided further that in case of income by way of interest referred to in clause (ic) of sub-section (2), the income-tax shall be deducted at the rate of nine per cent.”
Also inserted new clause (ic) to Subsection (2) of Section 194LC of the Income Tax Act that “in respect of money borrowed by it from a source outside India by way of issuance of any long-term bond or rupee denominated bond on or after the 1st day of July, 2023, which is listed only on a recognised stock exchange located in an International Financial Services Centre; and”
Section 206C – Profit and gains from the business of trading in alcoholic liquor, forest produce, scrap etc.
The new changes have been made to Section 206(1G) of the Income Tax Act. The changes are:
(i) in clause (a), the words “out of India” at both the places where they occur shall be omitted;
(ii) in the long line, for the word “five”, the word “twenty” shall be substituted;
(iii) in the first proviso, for the words “and is for a purpose other than purchase of overseas tour program package”, the words “and is for the purposes of education or medical treatment” shall be substituted;
(iv) in the second proviso, for the words “is for a purpose other than purchase of overseas tour program package”, the words “is for the purposes of education or medical treatment” shall be substituted.
Section 206CC – Requirement to furnish Permanent Account Number by Collectee
According to the section, anny person paying any sum or amount on which tax is collectible at source under Chapter XVII-BB (collectee) shall furnish his Permanent Account Number to the person responsible for collecting such tax (collector).
The new provision under Subsection (1) of Section 206C was inserted with effect from July 1st 2023 which stated that “Provided that the rate of tax collection at source under this section shall not exceed twenty per cent.”
Section 206CCA – Special Provision for Collection of tax at source for non-filers of income tax return
This section pertains to the collection of tax at source for individuals who have not filed their income tax returns. In such cases, the tax can be collected at a rate that is twice the rate specified in the applicable provisions of the act or at a fixed rate of 5 percent.
However, the government has inserted a new provision under the Subsection (1) of the Section 206CCA which mentions that ““Provided that the rate of tax collection at source under this section shall not exceed twenty per cent.”
Also, new proviso has been added to subsection (3) of Section 206CCA. According to the amendment “in sub-section (3), for the proviso, the following proviso shall be substituted, namely:— “Provided that the specified person shall not include—
(i) a non-resident who does not have a permanent establishment in India; or
(ii) a person who is not required to furnish the return of income for the assessment year relevant to the said previous year and is notified by the Central Government in the Official Gazette in this behalf.”
Section 271C – Penalty for failure to deduct tax at source
The new change is that if any person fails to ‘pay or ensure payment of, the whole’ or any part of the tax as required by or under shall be liable to pay a penalty of equal pay to the amount of tax.
The change is that in clause (b) of Subsection (1) of Section 271C of the Income Tax Act, “for the words “pay the whole”, the words “pay or ensure payment of, the whole” shall be substituted.”
Also, the other changes are:
“(iii) the first proviso to sub-section (1) of section 194R; or (iv) the proviso to sub-section (1) of section 194S; or”;
(IV) after sub-clause (iv) as inserted by the Finance Act, 2023, the following sub-clause shall be inserted with effect from the 1st day of July, 2023, namely:—
“(v) sub-section (2) of section 194BA
All these above Sections shall come into force on 1st July 2023. The taxpayers are requested to note these changes and act accordingly to avoid the penalties.
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