Taxation Laws (Amendment) Bill enacted

Taxation Laws (Amendment) Bill enacted; powers to make provisional attachment of property for recovery of arrears come into force


By TIOL News Service

NEW DELHI, JULY 14, 2006 : AS reported by us yesterday, the Taxation Laws (Amendment) Act, 2006 (29 of 2006) has got the Presidential assent and got enacted today. All its provisions came into force from July 14, 2006. This Act amends provisions of both direct as well as indirect taxes, with the objective to simplify procedures, widening of taxbase and plugging of loopholes resulting in revenue leakage.

The Act makes amendments to the Income-tax Act so as to streamline the approval and monitoring process for certain charitable entities and scientific research associations; prescribes filing of return by certain charitable entities with aggregate annual receipts below Rs one crore and certain donee research institutions, require payment exceeding Rs 20,000/- by way of an account payee cheque or account payee bank draft, mandate TDS on renting of plant and machinery, equipment, royalty and non-compete fee and provide exemption to North-Eastern Development Finance Corporation Limited with phased withdrawal over five years beginning assessment year 2006-2007.

Further, amendments have been made to exclude any sum received from a charitable entity or a local authority without consideration from the ambit of ‘Income from other sources’, and to aggregate the said sums received without consideration, and to enhance the existing limit of Rs 25, 000 to Rs 50,000 for the purpose of inclusion as ‘Income from other sources’. Amendments have also been made to provide that in case of withdrawal of approval for certain donee entities, deduction to the donor shall not be denied.

Besides, other amendments such as, disallowance of deduction for certain payments on which TDS not made, rounding off of demands or refunds to the nearest multiple of ten rupees, rectification of order in certain cases involving receipt of foreign exchange, empowering the Tax Recovery Officer to exercise limited powers of the Assessing Officer, allowing for revision of penalty orders on receipt of appellate orders regarding assessment and mandatory auditing of accounts of certain charitable entities have been carried out.

The Act also makes amendments in the Customs Act, 1962, and Central Excise Act, 1944 which provides an optional scheme for settlement of disputes at the earliest and encouraging voluntary payment of tax dues, simplified and time bound Customs assessment in case of contrary claims by assessee by issue of speaking order within 15 days of assessment to provide certainty and room for appeal. Publication of names of tax evaders, provisional attachment of property during the pendency of proceedings have been introduced as measures to curb evasion of Customs and Central Excise duty and to facilitate recovery of amounts due as revenue to the government