The Lok Sabha on Monday passed the new Income Tax Bill, replacing the earlier draft with a fresh version that incorporates most of the recommendations of the Select Committee.
The new Bill removes the provisions for levying Alternate Minimum Tax (AMT) on LLPs and eases restrictions placed on charitable trusts. Provisions relating to transfer pricing and the definition of “Associated Enterprise” have also been relaxed.
It also introduces income-tax exemptions for specific payouts under the new Unified Pension Scheme, including exemptions for partial withdrawals and lump-sum receipts. This move is aimed at enhancing the attractiveness and utility of the pension system for subscribers.
One of the most crucial amendments in the updated Bill is the revision of Clause 263, which deals with eligibility for claiming income-tax refunds, according to Amit Maheshwari, Tax Partner at AKM Global.
The original draft had included a provision that could have been interpreted to mean that a taxpayer could only claim a refund if their tax return was filed on or before the statutory due date. This marked a significant departure from the established legal position, where refunds could be claimed even for belatedly filed returns. “Recognizing the potential for this to cause undue hardship and create ambiguity, the newly introduced Bill has completely omitted this restrictive clause,” Maheshwari said.
According to Dinesh Kanabar, CEO of Dhruva Advisors, the new Bill also seeks to reinstate capital gains tax reinvestment provisions and the option for charitable trusts to spend monies in the succeeding year. On the issue of LLPs, he welcomed the removal of AMT. “Apparently, this was an error in drafting the earlier Bill, and I am glad that the error has been rectified as suggested by the Select Committee,” he said.
Kanabar also highlighted clarifications relating to the standard deduction in computing income from house property after deducting municipal taxes, as well as the deduction of pre-construction interest for let-out properties.