In exercise of the powers conferred by the proviso to article 309 of the Constitution, the President hereby makes the following rules

## Report on the Settlement Commission Incometax and Wealthtax Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members Amendment Rules, 2021 **1. Executive Summary:** This report analyzes the Settlement Commission Incometax and Wealthtax Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members Amendment Rules, 2021, based on the official gazette notification. This amendment impacts the terms of service for the Chairman, Vice-Chairmen, and Members of the Settlement Commission, specifically regarding premature termination of their office. The key finding is that the amendment allows for the cessation of their office on a date to be notified by the Central Government and provides for compensation of up to three months' pay and allowances in such cases. **2. Introduction:** This report aims to provide a comprehensive overview of the Settlement Commission Incometax and Wealthtax Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members Amendment Rules, 2021, as published in the Gazette of India. The analysis is based solely on the provided text of the notification and aims to inform affected industries about the specific changes implemented. **3. Policy Overview:** * **Original Policy:** Settlement Commission Incometax and Wealthtax Recruitment and Conditions of Service of Chairman, ViceChairmen and Members Rules, 2015. * **Core Objective(s):** Based on the text, the amendment's core objective is to facilitate the termination of service for existing Chairman, Vice-Chairmen and Members of the Settlement Commission, allowing for a defined cessation of the commission. **4. Background and Rationale:** The amendment appears to be necessitated by a decision to cease the operation of the Settlement Commission, as indicated by the reference to clause 56 of Finance Bill, 2021. This clause proposes to insert a proviso under section 245B of the Incometax Act, 1961 stating the Settlement Commission shall cease to operate on or after the 1st day of February, 2021. The amendment addresses the need to manage the transition for individuals currently holding positions within the commission due to its ceasing operations. **5. Key Provisions / Changes:** The amendment introduces the following key change to the original 2015 Rules: * **Specific Part Changed:** Rule 7 (Conditions of Service of Chairman, Vice-Chairmen and Members) is amended. * **New Rule/Provision:** A new proviso is inserted after the second proviso and before the Note in Rule 7: "Provided also that any person appointed as Chairman, ViceChairman or Member holding office as such immediately before the date to be notified by the Central Government in this behalf, shall on and from such date, cease to hold such office, and they shall be entitled to claim compensation not exceeding three months' pay and allowances for the premature termination of term of their office." * **Effect of Change:** This change provides a mechanism for the Central Government to terminate the services of existing Chairman, Vice-Chairmen, and Members of the Settlement Commission on a specified date. It also mandates compensation for the premature termination of their office, capped at three months' pay and allowances. **6. Target Audience and Stakeholders:** The primary target audience and stakeholders directly affected by this amendment are: * The Chairman, Vice-Chairmen, and Members of the Settlement Commission Incometax and Wealthtax. * The Central Government, specifically the Ministry of Finance, Department of Revenue, which is responsible for implementing the amendment. **7. Implementation Aspects (Inferred):** * **Responsible Agency:** The Central Government (Ministry of Finance, Department of Revenue) is responsible for notifying the date on which the Chairman, Vice-Chairmen, and Members will cease to hold office. * **Timeline:** The amendment is deemed to have come into force on February 1, 2021. The timing of the cessation of office is dependent on the date to be notified by the Central Government. * **Procedure:** Once the date is notified, the existing Chairman, Vice-Chairmen, and Members will cease to hold office and become eligible for compensation. **8. Expected Outcomes / Impact of Changes:** The likely intended outcome of these changes is to facilitate the orderly dissolution of the Settlement Commission following the decision to cease its operations. The amendment ensures that individuals holding positions within the commission are compensated for the premature termination of their service, mitigating potential legal challenges and ensuring a smooth transition. It also ensures a clear legal framework for winding down the commission's operations. **9. Conclusion:** The Settlement Commission Incometax and Wealthtax Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members Amendment Rules, 2021, provides a mechanism for terminating the services of existing personnel and compensating them for the premature end of their terms. This amendment is significant as it directly relates to the cessation of the Settlement Commission's operations, as indicated by reference to clause 56 of the Finance Bill, 2021. The amendment ensures a legally sound and financially responsible process for dissolving the commission.

Key Entities Referenced