Amendment of rule 17CB of the Income tax Rules, 1962

## Report on Income-tax Twenty-Eighth Amendment Rules, 2022 **1. Executive Summary:** This report analyzes the Income-tax Twenty-Eighth Amendment Rules, 2022, as notified by the Central Board of Direct Taxes (CBDT) on August 22, 2022. The amendment modifies the Income-tax Rules, 1962, specifically rule 17CB. The key change involves substituting the terms "trust or institution" with "specified person" wherever they occur in the rule and inserting a definition of "specified person" referencing section 115TD of the Income-tax Act, 1961. The amendment appears to broaden the scope of rule 17CB to include entities beyond just trusts and institutions, potentially impacting a wider range of organizations subject to income tax regulations. **2. Introduction:** The purpose of this report is to provide an informative analysis of the Income-tax Twenty-Eighth Amendment Rules, 2022, based solely on the provided text of the official notification. The report aims to clarify the key changes introduced by the amendment, its potential implications, and its likely intended audience. **3. Policy Overview:** * **Original Policy Being Amended:** The amendment modifies the Income-tax Rules, 1962, specifically rule 17CB. * **Core Objective(s):** The core objective, inferred from the amendment, is to broaden the applicability of rule 17CB by replacing "trust or institution" with "specified person," thereby expanding the scope of the rule. **4. Background and Rationale:** The amendment likely aims to address a perceived limitation in the original rule 17CB, which may have been too narrowly focused on "trusts or institutions." By expanding the scope to "specified persons," the amendment potentially seeks to cover other entities or individuals that should be subject to the provisions of rule 17CB. The insertion of the definition referencing section 115TD suggests the amendment is related to the taxation of accreted income of certain entities as described in that section. **5. Key Provisions / Changes:** This section details the changes introduced by the Income-tax Twenty-Eighth Amendment Rules, 2022: * **Specific Part of Original Policy Changed:** Rule 17CB of the Income-tax Rules, 1962. * **New Rule/Provision:** * Clause (i): The words "trust or institution" are replaced with "specified person" wherever they occur in rule 17CB. * Clause (ii): In the Explanation to rule 17CB, a new clause (ha) is inserted, defining "specified person" as having the same meaning as assigned to it in clause (iia) of the Explanation to section 115TD of the Income-tax Act, 1961. * **Difference/Effect of the Change:** * The substitution of "trust or institution" with "specified person" widens the applicability of rule 17CB beyond just those two types of entities. * The explicit definition of "specified person" by referencing section 115TD(iia) clarifies the scope of this expanded applicability. It links the amendment to the provisions concerning the taxation of accreted income as described in section 115TD. **6. Target Audience and Stakeholders:** Based on the provided text, the target audience and stakeholders include: * Entities previously subject to rule 17CB (trusts and institutions). * "Specified persons" as defined by section 115TD(iia) of the Income-tax Act, 1961. This potentially includes a broader range of organizations or individuals whose income might be subject to taxation under section 115TD. * Tax professionals and advisors who need to understand and implement these changes. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The Central Board of Direct Taxes (CBDT) is the responsible agency, as indicated by the notification. * **Timelines or Procedures:** The amendment came into force from the date of its publication in the Official Gazette, which is August 22, 2022. Further procedures and guidelines for implementation may be issued separately by the CBDT. * The implementation aspects are directly linked to correctly identifying "specified persons" as defined by section 115TD(iia) and applying the provisions of rule 17CB accordingly. **8. Expected Outcomes / Impact of Changes:** The likely intended outcome of these changes is to: * Ensure that all entities whose income falls under the purview of section 115TD are covered by rule 17CB. * Provide greater clarity and consistency in the application of income tax rules related to accreted income. * Potentially increase the tax base by including entities that may have previously been outside the scope of rule 17CB. **9. Conclusion:** The Income-tax Twenty-Eighth Amendment Rules, 2022, represents a significant change to rule 17CB of the Income-tax Rules, 1962. By substituting "trust or institution" with "specified person" and referencing section 115TD(iia), the amendment broadens the scope of the rule and clarifies its applicability to a wider range of entities. Stakeholders, particularly those potentially falling under the definition of "specified person," should carefully review the amendment and its implications for their tax obligations. This amendment is significant as it potentially impacts a broader range of organizations than previously covered under rule 17CB.

Key Entities Referenced