download finance act 2011 8 of 2011 assented by the president on 8-4-2011

8/6/2019 Download Finance Act 2011 8 of 2011 Assented by the President on 8-4-2011

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*Relevan t Extra cts.

Assented by the President on 8-4-2011.

ACT

FI NANCE ACT

*Fina n ce Act, 2011

[8 OF 2011]

An Act to give effect to th e fin ancial proposals of th e Cen tral

Govern m en t for the fin ancial year 2011-2012.

BE it ena cted by Par liam ent in th e Sixty-second Year of the Repu blic

of Ind ia as fo llows:

CHAPTER I

PRELIMINARY

Short title and comm encem ent.

1. (1) This Act m ay b e ca lled t he F inan ce Act, 2011.

(2) Save as o ther wise provided in th is Act, sections 2 to 35 shall be d eem ed t o ha ve

com e into force on t he 1st d ay of April, 2011.

CHAPTER II

RATES OF INCOME-TAX

Income-tax.

2. (1) Su bject t o the pr ovision s of su b-sections (2)and (3), for the assessm ent year

com m encing on th e 1st day of April, 2011, incom e-tax sha ll be ch arged at th e

rat es specified in Part I of the First Sched u le and such tax shall be increa sed by

a sur charge, for pur poses of the Union, calculated in each case in the m ann er

provided therein.

(2) In the ca ses to which Par agra ph A of Part I of the First Sch edu le applies, wh ere

the a ssessee has, in the previous year , an y net agr icu ltu ral incom e exceeding five

thou sand ru pees, in a ddition to total incom e, and the total incom e exceeds one

lakh sixty thousa nd r up ees, then ,

(a) the net agr icultural income shall be taken into account, in the m anner

provided in clause (b)[tha t is to say, as if the net a gricultura l incom e

were comprised in the total income after the first one lakh sixty

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thou sand r upees of the total incom e bu t without being liable to tax],

only for the purpose of charging income-tax in respect of the total

incom e; an d

(b) the income-tax chargeable shall be calculated a s follows:

(i) the tota l income an d the n et agr icultural income shall be

aggregated and th e am oun t of incom e-tax shall be determ ined

in respect of th e aggregate incom e at the r ates specified in the

said Paragraph A, as if such aggregate income were the total

income;

(ii) the net agr icultural income shall be increased by a sum of one

lakh sixty thousan d ru pees, and the am oun t of incom e-tax shall

be deter mined in respect of the net agricultural incom e as so

incr eased a t the r ates specified in the sa id Pa ragr aph A, as if the

net agricultural incom e as so increased were the total incom e;

(iii) the amou nt of income-tax determined in accordance with sub-

clause (i)shall be redu ced by the am oun t of incom e-tax deter-

m ined in accord ance w ith su b-clause (ii)and th e sum so arrived

at sha ll be th e incom e-tax in respec t of the tota l incom e:

Provided that in the case of every woman , resident in India and b elow th e age of

sixty-five years at a nytime d ur ing the previous year , referr ed to in item (II)of

Para graph A of Part I of the First Sched ule, the p rovisions of th is sub -section shall

have effect as if for th e wor ds one lakh sixty thou sand ru pees, the w ord s one

lakh n inety thou sand r upees had been su bstituted:

Provided further tha t in the ca se of every individua l, being a r esiden t in India,

wh o is of the age of sixty-five years or m ore a t an y tim e du ring the previous year ,

referred to in item (III) of Paragraph A of Part I of the First Schedule, the

provisions o f this sub -section shall have effect as if for th e wo rd s one lakh sixty

thou sand ru pees, the w ords two lakh forty thou sand ru pees had been su bsti-

tuted.

(3) In cases to which the provisions of Chapter XII or Chapter XII-A or section

115JB or su b-section (1A) of section 161 or section 164 or section 164A or section

167B of the Incom e-tax Act, 1961 (43 of 1961) (her einafter r eferred to a s the

Incom e-tax Act) apply, the ta x char geable shall be d eterm ined as provided in that

Chapter or that section, and w ith r eference to the rates imposed by sub-section

(1)or th e rates as specified in tha t Chapter or sect ion, as the case m ay be:Provided that the amount of income-tax computed in accordance with the

provisions of section 111A or section 112 sha ll be increased by a sur char ge, for

pu rposes of th e Union, as pr ovided in Pa ragr aph A, B, C, D or E, as the ca se m ay

be, of Part I of the First Sch edu le:

Provided further that in respect of any incom e chargeable to tax un der sections

115A, 115AB, 115AC, 115ACA, 115AD, 115B, 115BB, 115BBA, 115BBC, 115E and

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115JB of the Income-tax Act, the a mou nt of income-tax compu ted u nder this

sub-section shall be increased by a surcharge, for purposes of the Union,

calculated,

(a) in the case of a dom estic compan y, at the rate of seven and on e-half

per cent of such income-tax where the total income exceeds one

crore rupees;

(b) in the case of every company, other than a domestic company, a t the

rate of two a nd one-half per cent of such income-tax where the total

incom e exceeds one crore ru pees:

Pro vided also that in th e case of every compa ny having total incom e char geable

to tax un der section 115JB of the Incom e-tax Act, and such incom e exceeds one

crore ru pees, the total amou nt payable as incom e-tax and su rchar ge on such

incom e-tax shall not exceed the total amou nt payab le as income-tax on a total

incom e of one crore ru pees by mor e than the am oun t of incom e that exceeds one

crore rupees.

(4) In cases in wh ich ta x has to be cha rged an d paid u nd er section 115-O or sub -

section (2)of section 115R of the Incom e-tax Act, the ta x shall be ch arged and

paid at the rates as specified in those sections and shall be increased by a

sur cha rge, for pu rposes of the Union, calculated at t he ra te of five per cent of

such tax.

(5) In cases in wh ich t ax ha s to b e de du cted u nd er sections 193, 194, 194A, 194B,

194BB, 194D and 195 of the Incom e-tax Act, at t he r ates in force, the d edu ctions

shall be m ad e at the r ates specified in Part II of the First Sched u le and shall be

increased by a surcharge, for purposes of the Union, calculated in cases

wherever pr escribed, in th e m ann er provided th erein.

(6) In cases in wh ich t ax ha s to b e ded u cted u nd er sections 194C, 194E, 194EE,

194F, 194G, 194H, 194-I, 194J, 194LA, 194LB, 196B, 196C an d 196D of t he Inco m e-

tax Act, the d edu ctions shall be m ad e at the r ates specified in th ose sections an d

shall be increased by a su rch arge, for pu rposes of the Union, in th e case of every

compa ny, other th an a dom estic compa ny, calculated at the rate of two per cen t

of such tax, where the income or th e aggregate of such incom es paid or likely to

be paid and su bject to the dedu ction exceeds one crore ru pees.

(7) In cases in which ta x has to be collected un der the p roviso to section 194B of

the Incom e-tax Act, the co llection shall be m ade at th e ra tes specified in Par t II

of the First Schedule, and shall be increased b y a su rchar ge, for pu rposes of theUnion, calculated, in cases wh erever pr escribed, in the m an ner pr ovided t her ein.

(8) In cases in wh ich ta x has to b e collected u nd er section 206C of the Incom e-

tax Act, the collection shall be m ad e at th e ra tes specified in th at section an d sha ll

be increased by a surcharge, for purposes of the Union, in the case of every

compa ny, other th an a dom estic compa ny, calculated at the rate of two per cen t

of such tax, where th e am oun t or the aggregate of such am oun ts collected and

sub ject to the collection exceeds one crore r up ees.

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(9) Subject t o th e pr ovisions of su b-section (10), in cases in which incom e-tax has

to be ch arged u nder sub-section (4)of section 172 or su b-section (2) of section

174 or section 174A or section 175 or sub -section (2) of section 176 of the Incom e-

tax Act or deducted from, or paid on, income chargeable under the head

Salaries u nd er section 192 of the said Act o r in w hich th e ad vance tax payab leun der Chapter XVII-C of the said Act ha s to be compu ted at the ra te or r ates in

force, such incom e-tax or, as the ca se m ay be, ad vance t ax shall be so ch arged ,

deducted or computed at the rate or rates specified in Part III of the First

Schedu le and such ta x shall be increased b y a surch arge, for purposes of the

Union, calculated in such cases and in su ch m ann er as pr ovided therein:

Provided tha t in cases to w hich the provisions of Chapte r XII or Chap ter XII-A

or sect ion 115JB or section 115JC or su b-section (1A)of section 161 or section 164

or sec tion 164A or sec tion 167B of the Incom e-tax Act ap ply, ad van ce ta x sha ll

be com puted with reference to the rates imposed by this sub-section or th e rates

as specified in tha t Chapter or section, as the ca se ma y be:

Provided further that th e am oun t of advance tax compu ted in accordan ce with

the provisions of section 111A or section 112 of the Income-tax Act shall be

increased by a surcha rge, for pur poses of the Union, as provided in Par agraph

E of Part III of the First Schedu le perta ining to the ca se of a com pan y:

Provided also that in respect of any income cha rgeable to tax und er sections

115A, 115AB, 115AC, 115ACA, 115AD, 115B, 115BB, 115BBA, 115BBC, 115BBD,

115E and 115JB of the Incom e-tax Act, ad vance ta x com pu ted u nd er th e first

proviso shall be increased by a surcharge, for purposes of the Union, calcu-

lated,

(a) in the case of every domestic compa ny, at the rate of five per cent of

such advance tax where the tota l incom e exceeds one cr ore r upees;

(b) in the case of every company, other than a domestic company, a t the

rate of two per cent of such advance tax where the total incom e

exceeds one crore r upees:

Pro vided also that in th e case of every compa ny having total incom e char geable

to tax un der section 115JB of the Incom e-tax Act, and such incom e exceeds one

crore ru pees, the total am oun t payable as advance ta x on such incom e and

surcha rge thereon , shall not exceed th e total am oun t payable as advance tax

on a total incom e of one crore ru pees by m ore than th e amou nt of incom e that

exceeds one crore rupees.

(10) In cases to w hich Par agra ph A of Part III of the First Sch edu le applies, whe re

the assessee has, in the previous year or, if by virtue of any provision of the

Incom e-tax Act, incom e-tax is to be ch arged in respect of the incom e of a period

other th an the pr evious year, in su ch oth er period, any net agricultural incom e

exceeding five thou sand rupees, in a ddition to total incom e and the tota l incom e

exceeds one lakh eighty th ousand ru pees, then, in charging incom e-tax u nder

su b-section (2)of section 174 or section 174A or sect ion 175 or sub -section (2)of

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section 176 of the said Act or in computing the advance tax payable under

Chapter XVII-C of the sa id Act, at the rat e or rat es in force,

(a) the net agr icultural income shall be taken into account, in the m anner

provided in clause (b)[tha t is to say, as if the net a gricultura l incom e

were com prised in the total incom e after th e first one lakh eighty

thou sand r upees of the total incom e bu t without being liable to tax],

only for th e pur pose of charging or compu ting such incom e-tax or, as

the ca se m ay be, adva nce ta x in respect of th e tota l incom e; an d

(b) such income-tax or, as the case m ay be, advance ta x shall be so

cha rged or com pu ted as follows:

(i) the tota l income an d the n et agr icultural income shall be

aggregated and the a mou nt of income-tax or advance tax shall

be determ ined in respect of the aggregate incom e at the r ates

specified in th e said Par agra ph A, as if suc h a ggregate incom e

were the total incom e;

(ii) the net agr icultural income shall be increased by a sum of one

lakh eighty thou sand r upees, and the am oun t of incom e-tax or

ad vance ta x shall be d eterm ined in r espect of the n et agricul-

tural income as so increased at the rates specified in the said

Paragraph A, as if the net a gricultural incom e wer e the total

income;

(iii) the am oun t of incom e-tax or advance tax determ ined in

accorda nce with sub-clau se (i)shall be reduced by the amou nt

of incom e-tax or, as the case m ay be, ad vance ta x deter m ined

in a ccordan ce with sub-clau se (ii)and th e sum so arrived at shallbe the income-tax or, as the case may be, advance tax in

respect of the tota l incom e:

Provided that in the case of every woman , resident in India and below th e age of

sixty years at any time during the previous year, referred to in item (II) of

Para graph A of Par t III of the First Sched ule, the provisions of t his sub-section

shall have effect as if for the w ord s one lakh eighty thou sand ru pees, the w ord s

one lakh ninety thou sand r upees had been su bstituted :

Provided further tha t in the ca se of every individua l, being a r esiden t in India,

who is of the age of sixty years or m ore bu t less than eighty years at any time

du ring the previous year, referred to in item (III)of Para graph A of Part III of theFirst Sch edu le, the provisions of t his sub-section sh all ha ve effect as if for t he

words one lakh eighty thousand rupees, the words two lakh fifty thousand

ru pees had been su bstituted:

Pro vided also tha t in the ca se of every ind ividu al, being a r esiden t in India, who

is of the a ge of eighty years or m ore at any time d ur ing the previous year, referred

to in item (IV)of Para graph A of Part III of the First Sched ule, the provisions of

this sub-section sh all ha ve effect as if for th e wor ds one lakh eighty th ou sand

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ru pees, the w ord s five lakh ru pees had been sub stitu ted.

(11) The a m ou nt of incom e-tax a s specified in su b-sections (1) to (10)and as

incr eased b y the app licab le sur cha rge, for pu rposes of the Un ion, calculated in

the manner provided therein, shall be further increased by an additional

sur cha rge, for pu rposes of the Union, to be called th e Edu cation Cess on incom e-

tax, calculated at the ra te of two per cent of such incom e-tax and surcha rge so

as to fulfil the com m itm ent of the Governm ent to pro vide an d fina nce u niversalised

qu ality basic edu cation:

Provided tha t no thing conta ined in th is sub -section shall apply to cases in w hich

tax is to be deducted or collected under the sections of the Income-tax Act

m entioned in su b-sections (5), (6),(7)and (8), if the income su bjected to dedu ction

of tax at sou rce or collection of tax a t sour ce is paid to a d omestic compan y and

any oth er person who is resident in India.

(12) The a m ou nt o f incom e-tax as specified in su b-sections (1) to (10)and as

incr eased b y the app licab le sur cha rge, for pu rposes of the Un ion, calculated in

the m anner provided therein, shall also be increased by an additional surcha rge,

for pu rposes of the Union, to be ca lled the Second ary an d Higher Ed uca tion Cess

on incom e-tax, calculated a t the ra te of one per cen t of such incom e-tax an d

surcharge so as to fulfil the commitment of the Government to provide and

finan ce secondary and higher ed ucation:

Provided tha t no thing conta ined in th is sub -section shall apply to cases in w hich

tax is to be deducted or collected under the sections of the Income-tax Act

m ent ioned in su b-sections (5), (6), (7)and (8), if the income su bjected to dedu ction

of tax at sou rce or collection of tax a t sour ce is paid to a d omestic compan y and

any oth er person who is resident in India.

(13) For th e pu rposes of this section a nd the First Sche du le,

(a) domestic company means an Indian com pany or any other com-

pan y which, in r espect of its incom e liable to incom e-tax u nd er th e

Income-tax Act, for the a ssessment year comm encing on the 1st da y

of April, 2011, has m ad e the prescr ibed a rra ngem ents for th e decla-

rat ion an d paym ent w ithin India of the d ividen ds (includ ing dividen ds

on preference shar es) payable out of such income;

(b) insura nce comm ission m eans any remun eration or reward, whether

by way of commission or otherwise, for soliciting or procuring

insurance business (including business relating to the continuance,ren ewa l or r evival of policies of insu ran ce);

(c) net agricultur al incom e, in r elation to a person, means the tota l

amount of agricultural income, from whatever source derived, of

that person com puted in accord ance with the ru les contained in Part

IV of the First Sched ule;

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(d) all other wor ds and expressions used in this section and the First

Schedule but not defined in this sub-section and defined in the

Income-tax Act shall have the meanings, respectively, assigned to

them in th at Act.

CHAPTER III

DIRECT TAXES

In com e-tax

Am endm ent of section 2.

3. In section 2 of th e Incom e-tax Act, in clause (15 ), in th e second proviso, for th e

wor ds ten lakh ru pees, the wor ds twen ty-five lakh r up ees shall be sub stitu ted

with effect fr om th e 1st da y of April, 2012.


4. In section 10 of the Incom e-tax Act,

(a) in c la u se (34 ), theExplanation [as so inserted b y the Special Econom ic

Zone s Act, 2005] (28 of 2005) sha ll be o m itted w ith effect fr om th e 1st

day o f Jun e, 2011;

(b) a ft er cla use (44), the following clause sha ll be insert ed a nd shall be

deem ed to have b een inserted with effect from the 1st da y of April,

2008, namely:

(45) any allowance or perqu isite, as ma y be notified by the Central

Government in the Official Gazette in this behalf, paid to the

Chairm an or a retired Chairma n or any other mem ber or retiredm em ber of the Union Pu blic Ser vice Comm ission;;

(c) a ft er cla use (45 )as so insert ed, the following sha ll be inserted with

effect from the 1st d ay of Ju ne, 2011, nam ely:

(46) any specified incom e arising to a body or authority or Board or

Tru st or Com m ission (by wh atever n am e called) which

(a) has been established or constituted by or un der a Centra l,

State or Provincial Act, or constituted by the Central

Government or a State Government, with the object of

regu lating or ad m inistering an y activity for the be nefit of

the gener al pu blic;

(b) is not engaged in any com m ercial activity; and

(c) is notified by the Central Governm ent in the Official

Gazette for the pu rposes of this clau se.

Explanation. For the purposes of this clause, specified in-

come m eans the income, of the natur e and to the extent ar ising

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to a b ody or au thority or Board or Tru st or Comm ission (by

whatever name called) referred to in this clause, which the

Central Governm ent m ay, by notification in th e Official Gazette,

specify in th is be ha lf;

(47) any income of an infrastructur e debt fund, se t up in accordance

with the gu idelines as m ay be p rescribed, which is notified b y the

Central Governm ent in the Official Gazette for th e pur poses of

th is clau se..


5. In section 35 of th e Inco m e-tax Act, in su b-section (2AA), in clau se (a), for the

wor ds one an d thr ee-fou rth , the w ord two shall be su bstituted with effect

from th e 1st da y of April, 2012.

Am endm ent of section 35AD.

6. In section 35AD of the Inco m e-tax Act,

(a) in sub-section (5), with e ffect fro m th e 1st da y of April, 2012,

(i) in c la u se (ac), the word and occurring at the end shall be

omitted;

(ii) a ft er c la use (ac),the following c lau ses sha ll be inserte d, nam ely:

(ad) on or after the 1st day of April, 2011, where the specified

business is in the nature of developing and building a

hou sing project under a schem e for affordable housing

framed by the Central Government or a State Govern-

m ent, as the ca se ma y be, and notified by th e Board in thisbehalf in a ccordan ce with the gu idelines as m ay be pr e-

scribed;

(ae ) on or after the 1st day of April, 2011, in a new plant or in

a n ewly installed ca pacity in a n existing plant for p rod uc-

tion of fertilizer; and;

(iii) in c la u se (b), for the wo rd s, br ackets an d letters and clause (ac ),

the words, brackets and letters clause (ac), clause (ad) and

clause (ae)shall be substituted;

(b) in sub-section (8), in clau se (c),

(i) in sub-c lause (iv ), for t he wor ds new hote l, the wor d hotel

shall be sub stitu ted;

(ii) in sub -c la use (v ), for the wor ds new hospital, the w ord hospi-

tal shall be su bstituted ;

(iii) a f te r sub-c lause (vi), the following su b-clau ses shall be inserted

with effec t from th e 1st da y of Apr il, 2012, na m ely:

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(vii) developing and building a hou sing project under a scheme

for affordable housing fram ed by the Central Governm ent

or a State Governmen t, as the case m ay be, and notified by

the Boar d in this beh alf in accor da nce with the gu idelines

as ma y be prescribed;

(viii) prod uct ion of fertilizer in India;.


7. In section 36 of the Income-tax Act, in sub-section (1), after clause (iv ), the

following sh all be inser ted with effect fr om th e 1st da y of April, 2012, na m ely:

(iv a) any sum paid by the assessee as an employer by way of contr ibution

towards a pension scheme, as referred to in section 80CCD, on

accoun t of an em ployee to the extent it does not exceed ten per cent

of the salary of the em ployee in the pr eviou s year.

Explanation.For the pu rposes o f th is clause, salary includ es d ear-ness allowa nce, if the term s of employmen t so provide, bu t exclud es

all other allowances and perquisites;.

Am endm ent of section 40A.

8. In section 40A of the Income-tax Act, in sub-section (9), after the words,

brackets an d figur es un der clause (iv ), the wo rds, bra ckets, figur es an d letter

or clau se (iv a) sha ll be inser ted with e ffect from th e 1st d ay of April, 2012.

Am endm ent of section 80CCE.

9. In section 80CCE of the Income-tax Act, for the word, figures and letters

section 80CCD, th e wor ds, br ack ets, figu res an d letter s su b-section (1) ofsection 80CCD sha ll be su bst itute d w ith effect from th e 1st da y of April, 2012.

Am endm ent of section 80CCF.

10. In section 80CCF of the Incom e-tax Act, after the wor ds, figur es an d letters

previous year relevant to the a ssessment year b eginn ing on the 1st d ay of April,

2011, the w ord s, figur es and letters or to the a ssessment year b eginn ing on th e

1st d ay of April, 2012 sha ll be insert ed with effect fr om th e 1st d ay of April, 2012.

Am endm ent of section 80-IA.

11. In section 80-IA of th e Incom e-tax Act, in su b-section (4), in clau se (iv ), for the

wor ds, figur es an d letters the 31st day of Ma rch , 2011, wh erever they o ccu r, the

wor ds, figur es an d letters the 31st da y of March, 2012 shall be su bstituted with

effect from th e 1st da y of April, 2012.

Am endm ent of section 80-IB.

12. In section 80-IB of the Inco m e-tax Act, in su b-section (9), in clau se (ii), the

following proviso shall be inserted with effect from the 1st day of April, 2012,

namely:

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Provided tha t th e pro visions of th is clau se shall not apply to blocks licensed

un der a contract aw ard ed after the 31st day of March, 2011 un der th e New

Exploration Licencing Policy ann ou nced b y the Governm ent of India vide

Resolution No. O-19018/ 22/ 95-ONG.DO.VL, dat ed the 10th Fe bru ary, 1999

or in pur suance of any law for the time b eing in force or by th e Central ora State Governm ent in any other m anner ;.

Am endm ent of section 92C.

13. In section 92C of the Inco m e-tax Act, in sub -section (2), in the second proviso,

for the w ord s five per cen t of the latter , the w ord s such percen tage of the latter ,

as may be notified by the Central Government in the Official Gazette in this

beh alf shall be sub stitu ted with effect from the 1st da y of April, 2012.

Am endm ent of section 92CA.

14. In section 92CA of the Incom e-tax Act, with effect from the 1st d ay of Ju ne,

2011,(i) after su b-section (2), the following sub-section sha ll be inserted,

namely:

(2A) Wh ere an y other intern ational tran saction [other tha n an inter -

national transaction referred under sub-section (1)], comes to the

notice of the Transfer Pricing Officer during the course of the

proceed ings befor e him, the pr ovisions of th is Chapter shall apply as

if such o ther intern ational transa ction is an inter nat iona l tra nsact ion

referr ed t o h im un der sub -section (1).;

(ii) in sub-section (7), after the w ord an d figures section 133, the w ord s,

figu res a nd letter or sec tion 133A sha ll be inser ted .

Insertion of n ew section 94A.

15. After sect ion 94 of th e Incom e-tax Act, the following section sh all be inserted

with effect from the 1st d ay of Ju ne, 2011, nam ely:

94A. S pecial m easu res in respect of transaction s w ith p erson s located in

n otified jurisdictional area.(1) The Central Government may, having

regard to the lack of effective exchange of inform ation with any cou ntry

or terr itory ou tside India, specify by n otification in the Official Gazette su ch

cou ntr y or territory as a notified jurisdictiona l are a in relation to tran sac-

tions entered into b y any assessee.

(2) Notwithstan ding an ything to th e con tra ry con tained in t his Act, if an

assessee enters into a transaction where on e of the parties to the tran sac-

tion is a per son located in a n otified ju risdictional area, then

(i) all the parties to the transaction shall be deem ed to be associated

enter prises within th e m ean ing of section 92A;

(ii) any transaction in the na tur e of purchase, sale or lease of tangible or

inta ngible proper ty or pr ovision of service or lending or bor row ing

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money or any other transaction having a bearing on the profits,

incom e, losses or assets of the assessee includ ing a m ut u al agreem ent

or arr angem ent for allocation or a pportionm ent of, or an y contribu -

tion to, any cost or expense incu rred or to be incurred in conn ection

with a b enefit, service or fa cility provided or to b e provided b y or tothe assessee shall be deem ed to be an intern ational transaction within

the m ean ing of section 92B,

and the provisions of sections 92, 92A, 92B, 92C [except the second

proviso to sub-section (2)], 92CA, 92CB, 92D, 92E and 92F shall apply

accordingly.

(3) Notwithstanding anything to the contrary contained in this Act, no

deduction,

(a) in respect of any payment m ade to an y finan cial institution located in

a n otified jurisdictional area shall be allowed un der this Act, unless

the assessee furnishes an authorisation in the prescribed form

auth orising the Board or any other incom e-tax au thority acting on its

beh alf to seek relevant inform ation from the said financial institution

on b eha lf of such a ssessee; an d

(b) in respect of any other expenditure or allowance (including deprecia-

tion) arising from the tr an saction with a per son located in a no tified

jurisdictiona l area shall be allowed u nd er an y other p rovision of this

Act, un less the assessee maintains such other d ocum ents and fur-

nishes such inform ation as m ay be prescr ibed , in this beha lf.

(4) Notwithstan ding anyth ing to the contr ary con tained in this Act, wh ere,

in a ny previous year, the a ssessee has r eceived or credited any su m froman y person located in a not ified jur isdictiona l area and the a ssessee does

not offer any explanation abou t the sour ce of the said sum in the h and s of

such person or in th e han ds of the beneficial owner (if such person is not

the b eneficial owner of the said sum ) or the explanation offered by the

assessee, in the opinion of the Assessing Officer, is not satisfactory, then,

such su m shall be deem ed to be the income of the assessee for that pr evious

year.

(5) Notwithstan ding anyth ing con tained in an y other provisions of th is Act,

where any person located in a notified jurisdictional area is entitled to

receive any sum or income or a m oun t on which tax is deductible und er

Chapter XVII-B, the t ax shall be dedu cted a t the highest of the following

ra tes, nam ely:

(a) a t the rate or ra tes in force;

(b) at th e rate specified in the r elevant provisions of this Act;

(c) a t the rate of th ir ty pe r cent .

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(6) In this section,

(i) person located in a notified jur isdictiona l are a shall includ e,

(a) a person wh o is resident of the notified jurisdictional area;

(b) a person, not being an individu al, which is established in the

notified jurisdictional area; or

(c) a perm anent establishmen t of a person not falling in sub-clau se

(a)or sub -clause (b), in the n otified jurisdictional area ;

(ii) perm anent establishmen t shall have the same m eaning as defined

in clau se (iiia)of section 92F;

(iii ) transaction shall have the sam e m eaning as defined in clause (v )of

sect ion 92F..

Am endm ent of section 115A.

16. In section 115A of th e Incom e-tax Act, in su b-section (1), in clau se (a), with

effect from t he 1st da y of Ju ne, 2011,

(a) in sub-c lause (ii), after the words foreign currency, the words,

bra ckets, figur es and letter not b eing inter est of the natu re referr ed

to in clau se (iia) sha ll be insert ed;

(b) a f te r sub-c lause (ii), the following sub-clause shall be inserted,

namely:

(iia) interest received from an infrastructure debt fund referred to

in clau se (47)of section 10; or;

(c) a ft er it em (B), the following item shall be inserted , nam ely:

(BA) the amou nt of income-tax calculated on the amount of income

by wa y of interest referred to in sub-clau se (iia), if an y, includ ed

in t he to tal incom e, at t he r ate o f five per c ent;;

(d) in it em (D), after th e word , br ackets an d figur es sub -clause (ii), the

wor d, brack ets, figur es an d letter , sub -clause (iia)shall be inserted .

Insertion of new section 115BB D.

17. After section 115BBC of the Income-tax Act, the following section shall be

insert ed w ith effect from th e 1st da y of April, 2012, na m ely:

115BBD. Tax on certain dividend s received from foreign com panies.(1)Where the total incom e of an assessee, being an Indian compa ny, for the

previous year relevant to th e assessment year beginning on the 1st day of

April, 2012 includ es an y incom e b y wa y of dividen ds d eclared, distribu ted

or pa id b y a specified foreign com pan y, the incom e-tax pa yable shall be th e

aggregate of

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(a) the amou nt of income-tax calculated on the income by way of such

dividen ds, at th e ra te of fifteen per cent; an d

(b) the am ount of income-tax with which the assessee would have been

chargeable had its total income been reduced by the aforesaid

incom e by way of dividen ds.

(2) Notwithstan ding anyth ing contained in this Act, no d edu ction in r espect

of any expenditure or allowance shall be allowed to the assessee und er an y

provision of th is Act in com pu ting its incom e by wa y of dividen ds refer red

to in su b-section (1).

(3) In this section,

(i) dividen ds shall have the sa m e m ean ing as is given to dividen d in

clause (22)of section 2 bu t sha ll not includ e sub -clause (e)thereof;

(ii) specified foreign com pany m eans a foreign com pany in which the

Indian compa ny holds twenty-six per cent or m ore in nom inal valueof the equ ity shar e capital of the com pan y..

Am endm ent of section 115JB.

18. In section 115JB of the Income-tax Act,

(i) in su b-section (1), with effect from the 1st day o f April, 2012,

(a) for th e wor ds, figur es an d letters the 1st d ay of April, 2011, the

words, figures and letters the 1st day of April, 2012 shall be

substituted;

(b) for the words eighteen per cent, at both th e places where they

occur, the words eighteen and one-half per cent shall besubstituted;

(ii) after sub-section (2), inExplanation 1, clause (iv ), clau se (v ) and clause

(v i) shall be om itted an d shall be deem ed to h ave been om itted with

effect fr om th e 1st da y of Apr il, 2005;

(iii) in sub -section (6) [as so inserte d by the Special Econo m ic Zones Act,

2005 (28 of 2005)], th e following p ro viso sh all be insert ed w ith effect

from th e 1st da y of April, 2012, na m ely:

Provided tha t th e provisions of th is sub -section sh all cease to h ave

effect in respect of an y previou s year relevant to the a ssessmen t year

com m encing on or a fter t he 1st da y of April, 2012..

Insertion of new Cha pter XII-BA.

19. After Chapter XII-B of the Income-tax Act, the following Chapter shall be

insert ed w ith effect from th e 1st da y of April, 2012, na m ely:

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CHAPTER XII-BA

SPECIAL PROVISIONS RELATING TO CERTAIN LIMITED

LIABILITY PARTNERSHIPS

115JC. S pecial provision s for paym en t of tax by certain lim ited liabilitypartnerships.(1) Notwithstan ding an ything con tained in this Act, wher e

the regular income-tax payable for a previous year by a limited liability

partnership is less than the alternate minimum tax payable for such

previous year, the adjusted tota l incom e shall be d eemed to be th e total

incom e of the lim ited liability part ner ship for such pr eviou s year an d it shall

be liable to pay income-tax on such total incom e at the r ate of eighteen a nd

one-half per cen t.

(2) Adjusted total incom e refer red to in sub -section (1) shall be th e tota l

income before giving effect to this Cha pter a s incr eased b y

(i) dedu ctions claim ed, if any, un der an y section includ ed in ChapterVI-A under the heading C. Deductions in respect of certain

in com es;and

(ii) dedu ction claim ed, if any, un der section 10AA.

(3) Every limited liability partnership to which this section applies shall

obtain a report, in such form as ma y be prescribed, from a n accou ntant

certifying that th e adjusted total incom e and th e alternate m inimum tax

have been compu ted in accordan ce with the provisions of this Chapter and

furnish such report on or before the du e date of filing of return u nder su b-

section (1) of section 139.

115JD.Tax credit for alternate m inim um tax. (1)The credit for tax paid bya lim ited liability par tner ship un der section 115JC sha ll be allowed to it in

accor da nce w ith th e provisions of this section.

(2) The tax cred it of an assessm ent year to be a llowed un der su b-section (1)

shall be the excess of alternate m inimu m tax paid over the regular income-

tax payable of that year.

(3) No inter est shall be pa yable on ta x cred it allowed un der sub -section (1).

(4) The amount of tax credit determined under sub-section (2) shall be

carried forward and set off in accordance with the provisions of sub-

sections (5) and (6) bu t such ca rry forw ard shall not b e allowed b eyond th e

tenth assessment year imm ediately succeeding the assessm ent year forwh ich ta x credit becom es allowa ble und er sub -section (1).

(5) In any assessment year in which the regular income-tax exceeds the

alterna te m inimum tax, the ta x credit shall be allowed to be set off to th e

extent of the excess of regular income-tax over the alternate m inimu m tax

an d the b alance of the ta x credit, if any, shall be car ried forwa rd .

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(6) If the am oun t of regular income-tax or the alternate m inimum tax is

redu ced or increased as a r esult of any order passed und er this Act, the

amount of tax credit allowed under this section shall also be varied

accordingly.

115JE. Application of other provisions of this Act.Save as otherwise

provided in this Chapter, all other provisions of this Act shall apply to a

lim ited liability par tner ship referred to in this Chapter.

115JF.Interpretation in this Chapter.In th is Chapter

(a) accoun tant shall have the same m eaning as in the Explanation

below su b-section (2)of section 288;

(b) alternate minimu m tax means the amou nt of tax compu ted on

adjusted total incom e at a rate of eighteen a nd on e-half per cent;

(c) lim ited liability part ner ship shall ha ve the sam e m ean ing as assigned

to it in clau se (n )of sub -section (1)of section 2 of th e Lim ited LiabilityPar tn ersh ip Act, 2008 (6 of 2009);

(d) regular incom e-tax m eans the income-tax payable for a previous

year by a limited liability partnership on its total income in accor-

dan ce with th e provisions of th is Act oth er th an the pr ovisions of this

Chapter..

Am endm ent of section 115-O.

20. In section 115-O of the Incom e-tax Act, in su b-section (6) [as so inser ted by

th e Spe cial Econo m ic Zones Act, 2005 (28 of 2005)], th e following p ro viso sh all

be inserted with effect from the 1st d ay of Ju ne, 2011, nam ely:

Provided tha t th e provisions of th is sub -section shall cease to h ave effect

from the 1st da y of Ju ne, 2011..

Am endm ent of section 115R .

21. In section 115R of th e Incom e-tax Act, in sub -section (2), with effect from th e

1st da y of Ju ne, 2011,

(a) in cla u se (i), for th e wor ds incom e distributed , the w ord s incom e

distributed to any person being an individu al or a H indu un divided

fam ily shall be su bstituted ;

(b) a ft er cla use (i), the following clause shall be inserted , nam ely:

(ia) thir ty per cent on income distr ibuted to an y other person by a

m oney ma rket m utu al fun d or a liquid fund;;

(c) in cla u se (iii), for th e wor ds twen ty per c ent, the wor ds thirty per

cent shall be su bstituted .

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22. In section 131 of the Incom e-tax Act, with effect from the 1st d ay of Ju ne,

2011,

(i) after su b-section (1A), the following sub -section shall be inserted ,namely:

(2) For th e pu rpose of m aking an inqu iry or investigation in respect

of any person or class of persons in r elation to an agreemen t referred

to in section 90 or section 90A, it shall be com peten t for a ny incom e-

tax authority not below the rank of Assistant Commissioner of

Incom e-tax, as m ay be n otified b y the Boar d in this beha lf, to exercise

the power s conferred u nder sub-section (1) on the income-tax au-

thorities referred to in that sub-section, notwithstanding that no

proceedings with respect to such person or class of persons are

pend ing befor e it or an y other incom e-tax au thor ity.;

(ii) in su b-section (3), after th e wor ds, brackets, figure and letter or su b-

section (1A), th e wo rd s, br ack ets a nd figu re or su b-section (2)shall

be inserted.


23. In section 133 of the Incom e-tax Act, after the second proviso, the following

proviso sha ll be inserted w ith effect from t he 1st da y of June, 2011, na m ely:

Pr ovided also that for the pu rposes of an a greement referred to in section

90 or section 90A, an incom e-tax a u thor ity not ified u nd er su b-section (2) of

section 131 may exercise all the powers conferred under this section,

notwithstanding that no proceedings are pend ing before it or any otherincome-tax authority..


24. In section 139 of the Incom e-tax Act,

(a) in su b-section (1), in Explanation 2 ,

(i) in c la u se (a), in su b-clau se (i), after t he w ord s a com pan y, the

words, bra ckets and letters other th an a compa ny referred to

in clau se (aa)shall be inserted ;

(ii) a ft er cla use (a), the following clau se sha ll be insert ed, nam ely:

(aa) in the case of an assessee being a compa ny, which is

required to furnish a r eport referred to in section 92E, the

30th da y of Novem ber o f the assessme nt year ;;

(b) after su b-section (1B), the following sub-section sha ll be inserted w ith

effect from the 1st d ay of Ju ne, 2011, na m ely:

(1C) Notwithstand ing anything contained in sub-section (1), the Cen-

tral Government may, by notification in the Official Gazette,

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exempt an y class or classes of persons from the requ irem ent of

furnishing a r eturn of incom e having regard to su ch cond itions

as m ay b e specified in tha t n otification.;

(c) in su b-section (4C), with effect from the 1st da y of June, 2011,

(i) a ft er cla use (f)an d b efore th e w ord s shall, if the total incom e,

the following clau ses shall be inserted , nam ely:

(g) body or author i ty or Board or Trust or Comm ission (by

wha tever nam e called) referred to in clause (46)of section

10;

(h ) infrastructur e debt fund referred to in c lause (47) of

sec tion 10,;

(ii) after the word s m edical institution or trad e union, the word s

or body or authority or Board or Trust or Commission or

infrastru cture debt fund shall be inserted.


25. In section 143 of the In com e-tax Act, in sub -section (1B), for th e wor ds, figu res

an d letter s th e 31st da y of Mar ch , 2011, th e wor ds, figu res an d letter s th e 31st

da y of March , 2012 shall be sub stitu ted.

Amendment of section 153.

26. In section 153 of th e Incom e-tax Act, in Explanation 1, with effect from th e

1st da y of Ju ne, 2011,

(a) in cla u se (vii), for the word, figures and letter section 245R,, the

wor ds, figur es an d letter section 245R, or shall be su bstituted ;

(b) a ft er cla use (v ii) and before the words shall be excluded, the

following clause shall be inserted, namely:

(viii) the per iod comm encing from the date on which a reference for

exchange of information is made by an authority competent

un der an a greement referred to in section 90 or section 90A and

ending with th e date on which the information so requested is

received by the Com m issioner or a per iod of six mon ths, wh ich-

ever is less,.

Am endm ent of section 153B .

27. In section 153B of the Inc om e-tax Act, in su b-section (1), in the Explanation,

with effect from the 1st d ay of Ju ne, 2011,

(a) in cla u se (v ii), for th e wo rd s by th e Com m issioner ,, the wor ds by th e

Comm issioner ; or shall be su bstituted ;

(b) a ft er cla use (v ii) and before the words shall be excluded, the

following clause shall be inserted, namely:

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(viii) the per iod comm encing from the date on which a reference for

exchange of information is made by an authority competent

un der an a greement referred to in section 90 or section 90A and

ending with th e date on which the information so requested is

received by the Com m issioner or a per iod of six mon ths, wh ich-ever is less,.

Insertion of new section 194LB .

28. After section 194LA of the Income-tax Act, the following section shall be

insert ed with effect from the 1st da y of June 2011, na m ely:

194LB.In com e by way of interest from infrastructure debt fu n d. Where

any income by way of interest is payable to a non-resident, not being a

compa ny, or to a foreign com pany, by an infrastructu re debt fund referred

to in clause (47) of section 10, the person responsible for making the

paymen t shall, at the time of credit of such income to th e account of the

payee or at th e tim e of payment thereof in cash or by issue of a chequ e or

draft or by any other mode, whichever is earlier, deduct income-tax

ther eon a t the rat e of five per cen t..

Am endm ent of section 245C.

29. In section 245C of the Inco m e-tax Act, in sub -section (1), with effect from the

1st day of Ju ne, 2011

(a) in the proviso, af ter c lause (i), the following clause sh all be inserted ,

namely:

(ia)in a case where

(A) the applicant is related to the person referred to in clau se (i)who

ha s filed a n ap plication (hereafter in th is sub -section referre d to

as specified person); and

(B) the proceedings for assessment or re-assessment for any of the

assessment years referred to in clau se (b)of sub-section (1)of

section 153A or clau se (b)of sub-section (1)of sect ion 153B in

case of the a pplican t, being a person referr ed to in section 153A

or section 153C, ha ve been initiated ,

the additional amount of income-tax payable on the income

disclosed in the application exceeds t en lakh ru pees,;

(b) after the proviso, the followingExplanation shall be inserte d, nam ely:

Exp lanation . For th e pu rposes of clau se (ia),

(a) the applicant, in relation to the specified person referred to in

clause (ia), means,

(i) where the specified person is an individu al, any relative of

the specified per son;

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(ii) where the specified person is a compa ny, firm , association

of persons or H indu u nd ivided fa m ily, an y director of the

compa ny, partner of the firm , or m em ber of the associa-

tion or fam ily, or a ny relative of such director, partn er or

member ;

(iii) any individu al who ha s a substantial interest in the bu si-

ness or profession of the specified per son, or any r elative

of such individu al;

(iv ) a compa ny, firm , association of persons or Hindu un di-

vided fam ily having a substa ntial inter est in th e bu siness

or profession of the specified person or any director,

partner or m emb er of such compa ny, firm , association or

fam ily, or an y relative of su ch director , par tner or m em -

ber;

(v ) a compa ny, firm , association of persons or Hindu un di-

vided family of which a director, partner or m emb er, as the

case m ay be, ha s a substa ntial inter est in the b usiness or

profession of the specified person; or a ny director , par tner

or m emb er of su ch com pany, firm , association or family or

any relative of such director, partner or m emb er;

(vi) any person who carries on a business or profession,

(A) where th e specified person being an individu al, or

any re lative of such specified per son, has a su bstan -

tial interest in the business or profession of that

person ; or

(B) where the specif ied person being a com pany, f irm,

association of per sons or H indu u nd ivided fam ily, or

any director of such com pany, partner of such firm

or member of the association or family, or any

relative of such director, partner or m emb er, has a

sub stant ial inter est in th e bu siness or pr ofession of

that person;

(b) a person shall be deemed to have a substantia l interest in a

business or profession, if

(A) in a case where the bu siness or profession is carried on bya com pany, such person is, at an y tim e du ring the previous

year, the beneficial owner of shares (not being shares

entitled to a fixed rate of dividen d, wh ether with or withou t

a right to participate in profits) carrying not less than

twenty per cent of the voting power; and

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(B) in any other case, such person is, at any tim e dur ing the

previous year , ben eficially entitled to not less than twen ty

per c ent o f the pr ofits of such bu siness or profession..

Amend ment of section 245D.

30. In section 245D of the Inco m e-tax Act, afte r su b-section (6A), the following

sub -section shall be inserted with effect from the 1st day of Ju ne, 2011, na m ely:

(6B) The Sett lem ent Comm ission m ay, at a ny time within a per iod of six

m onths from the da te of the ord er, with a view to r ectifying any m istake

apparen t from th e record, am end an y order passed by it un der sub -section

(4):

Provided that an am endm ent w hich has the effect of m odifying the liability

of the applicant shall not be made under this sub-section unless the

Settlemen t Comm ission has given n otice to the applicant and the Com mis-

sioner of its intention to do so and has allowed the applicant and theComm issioner an op portu nity of being hear d..

Om ission of section 282B .

31. Section 282B of the Incom e-tax Act sha ll be om itted.

Insertion of new section 285 .

32. After sec tion 284 of the Incom e-tax Act, th e following sect ion sha ll be inser ted

with effect from the 1st day of Ju ne, 2011, nam ely:

285. Su bm ission of statem ent by a n on -residen t havin g liaison office.

Every per son, being a non -resident having a liaison o ffice in India set u p in

accorda nce with the guidelines issued by the Reserve Bank of India un derth e For eign Excha nge Man agem ent Act, 1999 (42 of 1999), sha ll, in respe ct

of its activities in a financial year, prepare and deliver or cause to be

delivered to the Assessing Officer having jurisdiction, within sixty days

from the end of such financial year, a statement in such form and

conta ining such pa rticulars as m ay be prescr ibed ..


33. In section 296 of the Incom e-tax Act, after t he w ord s and figur es of section

10, the w ord s, bra ckets, figur es an d letter and every not ification issued u nd er

sub -section (1C) of section 139 shall be inserted with effect from the 1st da y of

June, 2011.

Am endm ent of Fourth Schedule.

34. In the Fou rth Sched ule to th e Incom e-tax Act, in Pa rt A, in r ule 3, in sub -ru le

(1), in th e first proviso, for th e figur es, letters a nd wor ds 31st day of Decem ber ,

2010, th e figu res, letter s and w or ds 31st day of March , 2012 sha ll be

substituted and shall be deem ed to ha ve been sub stituted with effect from the

1st day of Jan ua ry, 2011.

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Wealth-tax

Am endm ent of section 22D of Act 27 of 1957.

35. In section 22D of the Wealth-tax Act, 1957, after sub-section (6A), the

following sub -section shall be inserted with effect from the 1st d ay of Ju ne, 2011,namely:

(6B) The Sett lem ent Comm ission m ay, at a ny time within a per iod o f six

m onths from the da te of the ord er, with a view to r ectifying any m istake

apparen t from th e record, am end an y order passed by it un der sub -section

(4):

Provided that an am endm ent w hich has the effect of m odifying the liability

of the applicant shall not be made under this sub-section unless the

Settlemen t Comm ission has given n otice to the a pplicant and the Com m is-

sioner of its intention to do so and has allowed the applicant and the

Comm issioner an op portu nity of being hear d..

** ** **

CHAPTER IV

INDIR ECT TAXES

** ** **

EXCISE

Am endm ent of section 4A

59. In section 4A of the Cent ra l Excise Act, 1944 (1 of 1944) (here inafter refer redto as the Central Excise Act), in sub-section (1), for the words and figures

Standards of Weights and Measures Act, 1976, (60 of 1976) the words and

figu res Legal Metr ology Act, 2009 (1 of 2010) sha ll be su bst itute d a nd sha ll be

deem ed to ha ve been sub stituted with effect from th e 1st day of March, 2011.

Sub stitution of new section for section 11A

60. For section 11A of the Central Excise Act, the following section shall be

sub stitu ted, nam ely :

11A.Recovery of du ties not levied or not paid or short-levied or sh ort-paid

or erroneou sly refun ded.(1) Wh ere a ny d u ty of excise ha s not been levied

or paid or ha s been shor t-levied or shor t-paid or er ron eou sly refun ded , forany rea son, other th an the r eason of frau d or collusion or an y wilful mis-

statemen t or suppression of facts or contravention of any of the provisions

of this Act or of the ru les mad e thereu nder with intent to evade pa yment

of du ty,

(a) the Central Excise Officer shall, within one year from th e relevant date, serve

notice on the person cha rgeable with the d uty which has not been so levied

or paid or wh ich ha s been so short-levied or shor t-paid or to whom the refu nd

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has erron eously been m ade, requiring him to show cau se why he should not

pay the a mou nt specified in the n otice;

(b) the person chargeable with du ty may, before service of notice und er clause

(a), pay o n t he ba sis of,

(i) his own ascertainment of such duty; or

(ii) duty ascertained by the Central Excise Officer,

the amount of duty along with interest payable thereon under section

11AA.

(2) The person who h as paid the d uty u nder clau se (b) of sub -section (1),

shall inform the Central Excise Officer of su ch pa yme nt in wr iting, wh o, on

receipt of su ch inform ation, shall not serve an y notice un der clau se (a) of

tha t sub -section in respect of the du ty so paid or an y penalty leviab le un der

the provisions of this Act or th e ru les ma de ther eun der.

(3) Whe re th e Centra l Excise Officer is of the opinion that the a m ou nt pa id

under c lause (b) of sub-section (1) falls short of the amount actuallypayab le, then , he sha ll proce ed to issue th e notice as provided for in clau se

(a) of that sub-section in respect of such amount which falls short of the

am oun t actu ally payable in the m ann er specified u nder that su b-section

and the period of one year shall be com puted from th e date of receipt of

inform ation un der su b-section (2).

(4) Wh ere an y du ty of excise has not b een levied or pa id or has been short -

levied or shor t-paid or err oneou sly refund ed, by the rea son of

(a) fr au d ; o r

(b) collus ion; or

(c) any wilful mis-statement; or(d) suppression of facts; or

(e) contravention of any of the provisions of this Act or of the rules ma de

thereu nder with intent to evade payment of duty,

by an y person ch ar geable with the d u ty, the Centr al Excise Officer sha ll,

within five years from the relevant date, serve notice on such person

requiring him to show ca use wh y he should not pay th e am oun t specified

in the notice along with inter est payab le ther eon u nd er section 11AA an d

a pen alty equivalent to t he du ty specified in the n otice.

(5) Wh ere, du ring the cou rse of a ny a ud it, investigation or verification, it is

found that any du ty has n ot been levied or paid or short-levied or short-paid

or erron eously refunded for the reason m entioned in clause (a) or clau se

(b) or clau se (c) or clau se (d) or clau se (e) of sub-section (4) but the deta ils

relating to the transactions are available in the specified record, then in

such cases, the Centra l Excise Officer shall within a period o f five years

from the relevant date, serve a n otice on th e person cha rgeable with th e

duty requiring him to show cause why he should not pay the amount

specified in the notice along with interest u nd er section 11AA an d pen alty

equivalent to fifty per cent of such du ty.

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(6) Any person chargeable with duty under sub-section (5), may, before

service of show ca use n otice on him, pay the d ut y in full or in par t, as m ay

be accepted b y him along with th e interest payable thereon u nder section

11AA and penalty equal to one per cent of such duty per month to be

calculated from th e mon th following the m onth in which such du ty waspayable, bu t not exceeding a ma xim um of twenty-five per cent of th e du ty,

an d inform the Centra l Excise Officer of such p aym ent in writing.

(7) The Centr al Excise Officer, on r eceipt of inform ation u nd er su b-section

(6) shall

(i) not serve any notice in respect of the am ount so paid and all proceedings in

respect of the said duty shall be deem ed to be concluded wh ere it is found b y

the Central Excise Officer th at the am ount of duty, interest an d pena lty as

provided u nd er su b-section (6) ha s been fu lly paid;

(ii) proceed for recovery of such am ount if found to be short-paid in the ma nner

specified u nder sub-section (1) and the per iod of on e year shall be com puted

from th e date of receipt of such information.

(8) In computing the period of one year referred to in clause ( a) of sub-

section (1) or five year s refer red to in su b-section (4) or su b-section (5), th e

period du ring which there was any stay by an order of the court or Tribuna l

in r espect of payment of su ch d uty shall be exclud ed.

(9) Where any appellate au thority or Tribu nal or cou rt concludes tha t the

notice issued u nd er sub -section (4) is not sustainab le for the reason tha t the

cha rges of frau d or collusion or an y wilful mis-statem ent or su ppression of

facts or con tra vention of any of the pr ovisions of this Act or of th e ru les

made thereunder with intent to evade payment of duty has not been

established against the per son to w hom the n otice was issued, the Central

Excise Officer sha ll deter m ine th e du ty of excise payab le by su ch per sonfor the period of on e year, deeming as if the n otice were issued u nder clause

(a) of su b-section (1).

(10) The Centr al Excise Officer shall, after allowing th e con cern ed person

an opportun ity of being heard, and after considering the representation, if

any, m ade by such person, determ ine the am oun t of duty of excise due

from such person not being in excess of the am oun t specified in the notice.

(11) The Central Excise Officer shall determine the amount of duty of

excise u nd er sub -section (10)

(a) within six month s from the da te of notice in respect of cases falling und er sub-

section (1);

(b) within one year from the date of notice in respect of cases falling und er sub-

section (4) or sub-section (5).

(12) Wh ere the a ppellate au thor ity m odifies the am ou nt of du ty of excise

deter m ined by the Cent ral Excise Officer un der sub -section (10), then the

am oun t of pena lties and interest u nder this section sha ll stand m odified

accor dingly, taking into a ccou nt th e am ou nt of du ty of excise so mod ified.

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(13) Where the am oun t as m odified by th e appellate au thority is mor e than

the amount determined under sub-section (10) by the Central Excise

Officer, the tim e within which the interest or pena lty is payable un der t his

Act shall be cou nted from the da te of the ord er of the a ppellate au thority

in respect of such increased am oun t.(14) Wh ere an ord er det erm ining the du ty of excise is passed by the Centr al

Excise Officer u nd er th is section, the person liable to pay the said du ty of

excise shall pay the am oun t so determ ined a long with the interest due on

such a mou nt wh ether or n ot the am oun t of interest is specified separately.

Explanation.For the pu rposes of t his section an d section 11AC,

(a) refun d includes rebate of du ty of excise on excisable goods exported out of

India or on excisable materials used in the m anu facture of goods which ar e

exported out of India;

(b) relevant date means,

(i) in the case of excisable goods on which duty of excise has not been leviedor paid or has b een shor t-levied or short-paid, and n o periodical return as

requ ired by th e pro visions of this Act ha s been filed, the last da te on w hich

such return is required to be filed under this Act and the rules made

thereunder;

(ii) in the case of excisable goods on which duty of excise has not been levied

or paid or ha s been short-levied or short-paid and the r eturn has been

filed on d ue da te, the date on which such retu rn ha s been filed;

(iii) in any other ca se, the date on wh ich du ty of excise is required to be paid

und er this Act or the rules ma de thereu nder;

(iv ) in a case where duty of excise is provisionally assessed un der th is Act or

the rules made thereu nder , the date of adjustment of duty after the finalassessmen t thereof;

(v ) in the case of excisable goods on which du ty of excise has been errone-

ously refun ded, the date of such r efund;

(c) specified records mea ns records including compu terised records m ain-

tained by the person cha rgeable with the d uty in accordan ce with an y law for

the time being in force..

Sub stitution of new section for sections 11AA an d 11AB

61. For section s 11AA an d 11AB of the Cent ra l Excise Act, the following section

shall be sub stitu ted, nam ely :

11AA.In terest on delayed paym en t of du ty.(1) Notwithstand ing an ythingcontained in any judgment, decree, order or direction of the Appellate

Tribu nal or any cou rt or in an y other provision of this Act or th e ru les ma de

ther eu nd er, the person , wh o is liab le to pa y du ty, shall, in add ition to th e

du ty, be liable to p ay interest a t th e ra te specified in su b-section (2), whe ther

such paym ent is m ade volun tarily or after determ ination of the amou nt of

du ty und er section 11A.

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(2) Interest, at su ch r ate n ot below ten per cen t an d n ot exceeding thirty-six

per cent per ann um , as the Central Governm ent m ay, by notification in the

Official Gazette, fix, shall be paid in ter m s of section 11A after the du e da te

by the person liable to pay d uty a nd such interest shall be ca lculated from

the date on w hich such du ty becomes due up to the date of actual paymentof the amou nt due.

(3) Notwithstan ding an ything con tained in sub -section (1), no interest sh all

be payable where,

(a) the duty becomes payable consequent to the issue of an order, instruction or

direction b y the Board und er section 37B; and

(b) such a mou nt of du ty is volun tarily paid in full, within forty-five days from th e

date of issue of such order, instruction or direction, without reserving an y

right to appeal against the said payment at any subsequent stage of such

payment..

Sub stitution of new section for section 11 AC

62. For section 11AC of the Central Excise Act, the following section shall be

sub stitu ted, nam ely :

11AC. Pen alty for short-levy or n on -levy of du ty in certain cases.(1) The

amount of penalty for non-levy or short-levy or non-payment or short

paymen t or erroneou s refun d sha ll be as follows :

(a) where an y duty of excise has not been levied or paid or short-levied or short-

paid or err oneously refunded, by reason of fraud or collusion or an y wilful

mis-statemen t or suppression of facts, or con travention of an y of the provi-

sions of this Act or of the r ules made thereu nder with intent to evade pa yment

of duty, the person who is liable to pay du ty as determ ined u nder sub-section

(10) of section 11A sha ll also be liable to p ay a pena lty equa l to the d uty sodetermined;

(b) where d etails of any transaction available in the specified recor ds, reveal that

any du ty of excise has not b een levied or pa id or short-levied or short -paid or

erroneously refunded as referred to in sub-section (5) of section 11A, the

person who is liable to pay duty as determined under sub-section (10) of

section 11A shall also be liable to pay a pena lty equal to fifty per cen t of the

duty so determ ined;

(c) where an y duty as determined un der sub -section (10) of section 11A and th e

interest payable thereon under section 11AA in respect of transactions

referred to in clause (b) is paid within thirty days of the dat e of comm un ication

of order of the Central Excise Officer wh o ha s determ ined su ch du ty, the

amount of penalty liable to be paid by such person shall be twenty-five per

cent of the duty so determined;

(d) where the appellate authori ty modifies the amou nt of duty of excise deter-

mined by th e Centra l Excise Officer un der sub -section (10) of section 11A,

then, the amount of penalties and interest payable shall stand modified

accordingly and after taking into accou nt the am oun t of du ty of excise so

modified, the person who is liable to pay duty as determined under sub-

section (10) of section 11A shall also be liab le to pay su ch a m ou nt of p ena lty

or interest so mo dified.

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Explanation.For th e rem oval of dou bts, it is hereb y declared th at in a case

wh ere a n otice has been served un der su b-section (4) of section 11A and

subsequent to issue of such notice, the Central Excise Officer is of the

opinion that the tr ansactions in r espect of which notice was issued have

been r ecord ed in specified recor ds an d the ca se falls und er su b-section (5),pena lty equ al to fifty per cen t of the du ty shall be leviab le.

(2) Where th e am oun t as m odified by th e appellate au thority is mor e than

the amount determined under sub-section (10) of section 11A by the

Central Excise Officer, the time within which the interest or penalty is

payable under this Act shall be cou nted from the da te of the order of the

appellate au thor ity in respect of such incr eased a m ou nt..

Insertion of new section 11E

63. After section 11DDA of th e Centr al Excise Act, the following section sh all be

inserted, namely :

11E.Liability un der Act to be first ch arge.Notwithstan ding anyth ing tothe contr ary contained in any Central Act or Sta te Act, any am oun t of du ty,

penalty, interest, or a ny other sum payable by an a ssessee or an y other

person u nder this Act or th e ru les ma de ther eund er shall, save as otherwise

provided in section 529A of the Companies Act, 1956, (1 of 1956) the

Recover y of Debts Due to Ban ks an d th e Financial Institutions Act, 1993 (51

of 1993) an d th e Secu ritisation an d Reco nstr uct ion of Finan cial Assets and

the Enfor cem ent of Secu rity Interest Act, 2002, (54 of 2002) be the first

cha rge on th e proper ty of the assessee or th e person, as the case m ay be..

Am endm ent of section 12

64. In section 12 of th e Centra l Excise Act, after th e wo rd an d figure section 3,

the w ord s, figur e an d letter and section 3A shall be inserted an d sha ll be d eem edto ha ve been inserted with effect from the 10th d ay of May, 2008 :

Provided that the provisions of the Customs Act, 1962 (52 of 1962) relating to

offences and pena lties shall not a pply for th e m atter s covered b y section 3A for

the period beginning on the 10th day of May, 2008 and ending immediately

before the day on which the Finance Bill, 2011 receives the assent of the

President.

Insertion of new section 12F

65. After section 12E of the Central Excise Act, the following section shall be

inserted, namely :

12F. Power of search and seizu re.(1) Wh ere th e Joint Comm issioner of

Central Excise or Add itional Com m issioner of Central Excise ha s reason s

to believe that a ny docu m ents or b ooks or things, wh ich in his opinion shall

be u seful for or r elevant to a ny proceed ings un der th is Act, are secr eted in

an y place, he m ay au thor ise in writing an y Central Excise Officer to search

and seize or may himself search and seize such docu m ents or books or

things.

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(2) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974)

relating to search a nd seizure, sha ll, so far as m ay be, apply to search an d

seizur e un der th is section as th ey apply to search an d seizure u nder that

Code..

Insertion of new section 35R

66. After section 35Q of the Central Excise Act, the following section shall be

inserted an d shall be deem ed to have been inserted with effect from th e 20th da y

of Octob er, 2010, na m ely:

35R. Appeal not to be filed in certain cases.(1) The Central Board of

Excise and Custom s ma y, from time to time, issue ord ers or instru ctions or

directions fixing su ch m oneta ry lim its, as it ma y deem fit, for th e pu rposes

of regu lating th e filing of a ppeal, application, revision or referen ce b y the

Centra l Excise Officer u nd er th e provisions of th is Chapter.

(2) Wh ere, in pu rsu anc e of the ord ers or instru ctions or directions, issued

u nd er su b-section (1), the Central Excise Officer h as n ot filed a n a ppeal,application, revision or reference against any decision or order passed

u nd er th e pro visions of th is Act, it shall not p reclud e such Central Excise

Officer from filing a ppeal, application, revision or referen ce in a ny ot her

case involving th e sam e or similar issues or qu estions of law.

(3) Notwithstan ding the fact th at n o a ppeal, application, revision or r efer-

ence ha s been filed b y the Central Excise Officer pu rsuan t to the ord ers or

instruc tions or d irections issued un der sub -section (1), no p erson, being a

party in appeal, application, revision or reference shall contend that the

Centra l Excise Officer h as acqu iesced in the d ecision on the d ispu ted issue

by not filing appeal, application, revision or reference.

(4) The Appellate Tribunal or court hearing such appeal, application,revision or reference shall have regard to the circum stances un der which

appea l, application, revision or referen ce w as n ot filed b y the Centra l Excise

Officer in pursuance of the orders or instructions or directions issued

u nd er su b-section (1).

(5) Every ord er or instru ction or direction issued b y the Central Board of

Excise and Cu stom s on or after t he 20th da y of October , 2010, bu t before

the d ate on wh ich th e Fina nce Bill, 2011 receives the assent of th e President,

fixing mo net ar y limits for filing of appea l, app licat ion, revision or r efer enc e

shall be deemed to have been issued under sub-section (1) and the

pr ovision s of su b-sections (2), (3) and (4) sha ll app ly acco rd ingly..

Am endm ent of section 38

67. In section 38 of the Central Excise Act, in sub-section (2), after the words,

br ack ets, figu res a nd letter su b-section (1) of section 5A, th e wor d, figure a nd

letter , section 5B sha ll be insert ed .

Am endm ent of rule 3 of CENV AT Credit Ru les, 2004

68. (1) In t he CENVAT Credit Ru les, 2004, m ad e by the Central Govern m ent in

exercise of the pow ers con ferred by section 37 of th e Centra l Excise Act, 1944 (1

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of 1944), as pu blished in th e Official Gazette vide notification of the Govern m ent

of India in the Ministry of Finance (Department of Revenue) number G.S.R.

600(E), da ted th e 10th Septem ber , 2004, ru le 3 shall stand am end ed an d sha ll be

deemed to have been amended retrospectively, in the manner specified in

colum n (2) of the Eighth Sch edu le, on a nd fr om the d ate specified in colum n (3)

of that Sched u le, against the r ule specified in colum n (1) of tha t Sched ule.

(2) Notwithstanding anything contained in an y judgm ent, decree or or der of any

court, Tribunal or other authority, any action taken or anything done or

purpor ted to h ave been ta ken or done, on and from the 18th da y of April, 2006,

relating to the pr ovisions as a m end ed b y sub-section (1), shall be d eem ed to b e

and deem ed a lways to h ave be en, for a ll purposes, as validly and effectively taken

or don e as if the am endm ents m ade b y sub-section (1) had been in force at all

material times.

(3) For t he pu rposes of sub -section (1), the Centr al Governm ent sh all have a nd

shall be deem ed to h ave the power to m ake ru les with r etrospective effect as if the Central Government had the power to m ake ru les und er section 37 of the

Centr al Excise Act, 1944 (1 of 1944), ret rosp ectively, at all ma ter ial tim es.

Am endm ent of n otifications issued un der section 5A of Central E xcise Act

69. (1) The n otifications of th e Govern m ent o f India in t he Ministry of Finance

(Departm ent of Reven ue ) num ber G.S.R. 679(E), dat ed the 25th August, 2003,

nu m ber G.S.R. 60(E), dat ed t he 21st Janu ary, 2004 and nu m ber G.S.R. 419(E),

dat ed t he 9th Ju ly, 2004 (her einafter r eferred to a s the said notifications), issued

u nd er su b-section (1) of section 5A of th e Cent ra l Excise Act, 1944 (1 of 1944),

shall stand am ended a nd shall be deem ed to ha ve been am ended r etrospectively,

in th e m ann er specified in colum n (3) of the Ninth Schedu le, on a nd from thecorr espond ing date specified in colum n (4) of that Sch edu le, against each o f the

notifications specified in co lu m n (2) of tha t Sch edu le.

(2) Where a m anu facturer avails the ben efit of exemption provided u nder the

said not ifications a s am end ed by su b-section (1), he shall, within a period of six

m onth s from th e dat e on wh ich th e Fina nce Bill, 2011 receives the assen t of the

President, provide deta ils relating to the investm ents m ade in term s of condition

(B) specified in n otificat ions nu m be r G.S.R. 679(E), dated the 25th August, 2003

and nu m ber G.S.R. 60(E), dat ed th e 21st Janu ary, 2004, as sub sequen tly am end ed

by n u m ber G.S.R. 419(E), da ted the 9th Ju ly, 2004, to th e Investm ent Appra isal

Committee.(3) The Investm ent Appraisal Com m ittee sh all, on r eceipt of details un der sub -

section (2) an d on being satisfied tha t th e investmen t, as specified in con dition (B)

referr ed to in sub -section (2), has b een m ad e, issue th e certificate in accor dan ce

with cond ition (E) specified in t he sa id n otifications as soon a s possible bu t n ot

later t ha n the 31st day of Decemb er, 2012.

(4) Any am ou nt lying or rem aining un u tilised in the escrow a ccou nt [referred to

in notificat ion nu m ber G.S.R. 419(E), da ted t he 9th Ju ly, 2004] on or a fter th e 31st

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day of Decemb er, 2012 shall stand forfeited an d b e appropr iated to the a ccount

of the Central Governm ent.

(5) Recover y of any du ty along with applicab le interest wh ich h as not b een pa id

bu t wa s liab le to be pa id as if the ben efits un der the said not ifications had not

been m ade available on a ccount of non-issue of certificate b y the Investment

Appraisal Com m ittee or on any other accoun t, shall be m ade w ithin a period of

one year from the 31st day of Decemb er, 2012 and the pr ovisions of the Central

Excise Act, 1944 (1 of 1944) sha ll ap ply for su ch r ecover y.

(6) No suit or other procee dings shall be institu ted, mainta ined or con tinued in

any cour t, Tribu nal or any other au thority for any action taken or an ything done

or om itted to be d one, in r espect of the said notifications an d n o enforcem ent

shall be m ade b y any court of any decree or ord er relating to such a ction taken

or anything done or om itted to be don e as if the am endm ents ma de in the said

notifications ha d bee n in force at a ll m ater ial times.

(7) For t he pu rposes of su b-section (1), the Centr al Governm ent sh all have a nd

shall be deemed to have the power to amend the said notifications with

retrospective effect as if the Central Governm ent ha d th e power to a m end th e

said no tifications un der sub -section (1) of section 5A of the Centra l Excise Act,

1944 (1 of 1944), ret ro spect ively, at all ma ter ial tim es.

Explanation.For the removal of doubts, it is hereby declared that no act or

om ission on the par t of any person shall be pu nishable as an offence wh ich wou ld

not have been so punishable if the said notifications had not been amended

retrospectively.

** ** **

CHAPTER V

SERV ICE TAX

Am endm ent of Act 32 of 1994

71. In th e Fina nce Act, 1994,

(A) in section 65, save as otherwise provided, with effect from such d ate as the

Centra l Governm ent m ay, by not ification in the Official Gazette, appoint,

(1) cla use (9) shall be om itted ;

(2) fo r cla u se (25a), th e follow ing clau ses sha ll be su bstitu ted , na m ely:

(25a) clinical establishment means

(i) a hospital, ma ternity home, nursing home, dispensary, clinic, sanatorium

or an institut ion, by wha tever n am e called, owned, established , ad minis-

tered or m ana ged by any person or body of persons, whether incorpo-

rated or not, having in its establishment the facility of central air-

conditioning either in whole or in par t of its prem ises and having more

than twenty-five beds for in-patient treatm ent at any time du ring the

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financial year, offering services for diagnosis, treatment or care for

illness, disease, injury, deformity, abnormality or pregnancy in any

system of m edicine; or

(ii) an enti ty owned, established, administered or man aged by any person or

body of persons, whether incorpor ated or not, either a s an independen tentity or as a part of any clinical establishmen t r eferred to in sub -clause

(i), which ca rr ies out diagnosis of diseases th rou gh pat hological, ba cterio-

logica l, gene tic, ra diological, ch em ical, biological invest igations or oth er

diagnostic or investigative services with the aid of laboratory or other

med ical equipmen t,

but does not include an establishmen t, owned or contr olled by

(a) the Governm ent ; o r

(b ) a local author ity;

(25aa) club or a ssociation m ean s any per son or b ody of person s providing

services, facilities or ad vanta ges, prima rily to its me m ber s, for a sub scription

or any other am ount, but does not include

(i) any body established or constituted by or under any law for the t ime

being in for ce; or

(ii) any person or body of persons engaged in the activities of trad e unions,

prom otion of agriculture, horticulture or animal hu sbandr y; or

(iii) any person or body of persons engaged in any activity having objectives

which are in th e na ture of pub lic service an d a re of a ch aritable, religious

or po litical natu re; or

(iv ) any person or body of persons associated with press or med ia;;

(3) in cla u se (27), the portion beginning with the words but does not

include and ending with the words time being in force shall be

omitted;

(4) in cla u se (104c), for th e wo rds opera tional assistance for m ark eting,

the words operational or administrative assistance in any manner

shall be sub stitu ted;

(5) in cla u se (105),

(a) fo r sub -c la use (zo), the following su b-clau se shall be sub stitu ted,

namely:

(zo) to any person, by any other person, in relation to any service for

repair, reconditioning, restoration or decoration or any other

similar services, of any motor vehicle other than three wheeler

scooter auto-rickshaw and motor vehicle meant for goods car-

riage;;

(b) fo r sub -c la use (zx), the following su b-clau se sha ll be su bstituted ,

namely:

(zx) to a pol icy holder or any person, by an insurer , inc luding

re-insu rer car rying on life insura nce b usiness;;

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(c) in sub-c lause (zzze), after the wor ds to its me m ber s,, the wor ds

or a ny oth er per son shall be inserted ;

(d) fo r sub -c la use (zzzzm ), th e follow ing sub -clau se sha ll be su bst i-

tu ted, nam ely:

(zzzzm )(i) to any per son, by a bu siness ent ity, in relation to ad vice,

consultancy or assistance in any bra nch of law, in an y man ner;

(ii) to an y business entity, by an y person, in re lation to r epre senta -

tional services before any cou rt, Tribu nal or auth ority;

(iii) to any business entity, by an arbitral Tribunal, in respect of

arbitration.

Explanation.For t he pu rposes of th is item, the expressions ar bi-

tra tion and arb itral tribun al shall have the m ean ings respectively

assigned to them in the Arbitrat ion a nd Conciliation Act, 1996 (26

of 1996);;

(e) fo r sub -c la use (zzzzo), th e following su b-clau se sha ll be su bst i-

tu ted, nam ely:

(zzzzo) to any person ,

(i) by a clinical establishmen t; or

(ii) by a doctor, not being an em ployee of a clinical establishmen t, who

provides services from such prem ises for diagnosis, treatm ent or

care for illness, disease, injury, deformity, abnormality or preg-

na ncy in an y system of m edicine;;

(f) a f te r sub-c lause (zzzzu ), the following sub-clauses shall be

inserted, namely:

(zzzzv) to any person, by a r estaura nt, by whatever nam e called, having

the fa cility of air-conditioning in any par t of the esta blishm ent, at any

time during the financial year, which has licence to serve alcoholic

bever ages, in r elation to serving of food or bever age, includ ing alcoholic

bever ages or b oth, in its premises;

(zzzzw ) to any per son by a hote l, inn, guest h ou se, club or cam p-site, by

whatever n am e called, for providing of accom mod ation for a continu-

ou s period of less than thr ee m onth s;;

(B) in section 66, with effect from such da te as the Central Governm ent m ay,

by n otification in th e Official Gazette, appoint, for the wor d, bra ckets an d

letters and (zzzzu ), the brackets, letters and word , (zzzzu ), (zzzzv ) and

(zzzzw ) sha ll be su bst itut ed;

(C) in section 70, in su b-section (1), for the w ord s two th ou sand ru pees, the

wor ds twen ty thou sand r up ees shall be sub stitu ted;

(D) in sect ion 73,

(i) sub-section (1A) shall be om itted;

(ii)

download finance act 2011 8 of 2011 assented by the president on 8-4-2011

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