Executive Summary:
The Taxation Laws Amendment Act, 2016, Act No. 47 of 2016, was approved by the President of India on September 8, 2016, and is published for general information. The Act amends the Income-Tax Act, 1961, and the Customs Tariff Act, 1975. Some amendments are effective from April 1, 2017, while others come into force immediately.
Key Points / Main Content:
Direct Tax (Income-tax Act, 1961 Amendments):
* **Section 2 Amendment:** Explanation 5 is inserted in clause 19AA, effective April 1, 2017, to define the reconstruction or splitting of a company (formerly a public sector company due to share transfer by the Central Government) into separate companies as a demerger under specific conditions, including fulfilling conditions notified by the Central Government in the Official Gazette.
* **Section 80JJAA Amendment:** A proviso is inserted in subsection 2, in the Explanation, after clause ii, effective April 1, 2017, stating that for businesses manufacturing apparel, the "two hundred and forty days" requirement in sub-clause (c) is substituted with "one hundred and fifty days".
Indirect Tax (Customs Tariff Act, 1975 Amendments):
* **First Schedule Amendment:**
* In Chapter 25, the entry "10" in column 4 is substituted with "40" for tariff items 2515 11 00, 2515 12 10, 2515 12 20, 2515 12 90, 2516 11 00 and 2516 12 00.
* In Chapter 68, the entry "10" in column 4 is substituted with "40" for tariff items 6802 10 00, 6802 21 10, 6802 21 20, 6802 21 90, 6802 23 10, 6802 23 90, 6802 29 00, 6802 91 00, 6802 92 00 and 6802 93 00.
Impact Analysis:
Central Government:
* Impact: Responsible for notifying conditions in the Official Gazette related to the demerger of reconstructed or split companies.
* Action Required: Define and notify conditions for demerger related to the transfer of shares of former public sector companies.
Businesses Manufacturing Apparel:
* Impact: Benefit from a reduced employment period requirement (150 days instead of 240 days) for availing benefits under Section 80JJAA of the Income-tax Act.
* Action Required: Adapt hiring practices to meet the 150-day employment requirement to qualify for benefits.
Tax Assessees:
* Impact: Need to be aware of changes in the definition of demerger and the conditions attached to it.
* Action Required: Understand the new definition of demerger and ensure compliance with the conditions specified by the Central Government.
Businesses dealing with specific Customs Tariff Items:
* Impact: Changes in the Customs Tariff Act will affect the tariff applicable to goods under the mentioned tariff items.
* Action Required: Update their systems to reflect the change from "10" to "40" in column 4 of the First Schedule for the specified tariff items in Chapters 25 and 68.
Key Entities Referenced
Ministry of Law and Justice: The government ministry responsible for the publication of the Act.
Parliament: The legislative body that enacted the Taxation Laws Amendment Act, 2016.
President: The head of state who gave assent to the Taxation Laws Amendment Act, 2016.
Taxation Laws Amendment Act, 2016: The title of the Act being analyzed.
Income-Tax Act, 1961: An existing law that the Taxation Laws Amendment Act, 2016 amends.
Customs Tariff Act, 1975: Another existing law that the Taxation Laws Amendment Act, 2016 amends.
Central Government: The Government of India, which has the authority to transfer shares of public sector companies and notify conditions in the Official Gazette.
New Delhi: The location where the Act was published and where the Ministry of Law and Justice is located.
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MINISTRY OF LAW AND JUSTICE
(Legislative Department)
New Delhi, the 8th September, 2016/Bhadra 17, 1938 (Saka)
The following Act of Parliament received the assent of the President on the
8th September, 2016, and is hereby published for general information:—
THE TAXATION LAWS (AMENDMENT) ACT, 2016
(NO. 47 OF 2016)
[8th September, 2016.]
An Act further to amend the Income-Tax Act, 1961 and the Customs Tariff
Act, 1975.
BE it enacted by Parliament in the Sixty-seventh Year of the Republic of India
as follows:—
CHAPTER I
PRELIMINARY
1. (1) This Act may be called the Taxation Laws (Amendment) Act, 2016. Short title and
commencement.
(2) Save as otherwise provided in this Act, it shall come into force at once.
CHAPTER II
DIRECT TAX
Income-tax
43 of 1961. 2. In the Income-tax Act, 1961 (hereinafter referred to as the principal Act in this Amendment
of section 2.
Chapter), in section 2, in clause (19AA), after Explanation 4, the following Explanation
shall be inserted, with effect from the 1st day of April, 2017, namely:—
"Explanation 5.—For the purposes of this clause, the reconstruction or splitting
up of a company, which ceased to be a public sector company as a result of transfer of2 THE GAZETTE OF INDIA EXTRAORDINARY [PART II— SEC. 1]
its shares by the Central Government, into separate companies, shall be deemed to be
a demerger, if such reconstruction or splitting up has been made to give effect to any
condition attached to the said transfer of shares and also fulfils such other conditions
as may be notified by the Central Government in the Official Gazette.”.
Amendment 3. In the principal Act, in section 80JJAA, in sub-section (2), in the Explanation, after
of section clause (ii), the following proviso shall be inserted, with effect from the 1st day of April, 2017,
80 JJAA. namely:—
‘Provided that in the case of an assessee who is engaged in the business of
manufacturing of apparel, the provisions of sub-clause (c) shall have effect as if for the
words “two hundred and forty days”, the words “one hundred and fifty days” had
been substituted.’.
CHAPTER III
INDIRECT TAX
Customs tariff
Amendment 4. In the Customs Tariff Act, 1975, in the First Schedule,— 51 of 1975.
of First
(a) in Chapter 25, for the entry “10%” in column (4) occurring against tariff items
Schedule.
2515 11 00, 2515 12 10, 2515 12 20, 2515 12 90, 2516 11 00 and 2516 12 00, the entry “40%”
shall respectively be substituted;
(b) in Chapter 68, for the entry “10%” in column (4) occurring against tariff items
6802 10 00, 6802 21 10, 6802 21 20, 6802 21 90, 6802 23 10, 6802 23 90, 6802 29 00, 6802 91 00,
6802 92 00 and 6802 93 00, the entry “40%” shall respectively be substituted.
————
DR. G. NARAYANA RAJU,
Secretary to the Govt. of India.
————
CORRIGENDA
In the ENFORCEMENT OF SECURITY INTEREST AND RECOVERY OF DEBTS
LAWS AND MISCELLANEOUS PROVISIONS (AMENDMENT) ACT, 2016 (44 of 2016)
as published in the Gazette of India, Extraordinary, Part II, Section 1, Issue No. 51, dated the
16th August, 2016,—
Page No. Line(s) No. For Read
2 35 “35 51 of 1993.” “51 of 1993.”
(in the marginal heading)
7 38 “further” “also”
8 6 “sub-sections” “sub-section”
9 8 “the words” “the words, figures and letters”
20 42 “sections” “section”
PRINTED BY THE GENERAL MANAGER, GOVERNMENT OF INDIA PRESS, MINTO ROAD, NEW DELHI
AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS, DELHI—2016.
GMGIPMRND—2627GI(S3)—09-09-2016.