Taxation Laws (Amendment) Act, 2016
IN the hullaballoo of GST an important tax legislation which received the assent of the President on 8th September went unnoticed. This Act amended the Income Tax Act and the First Schedule to the Customs Tariff Act.
Income Tax Act:
1. Definition of 'demerger': The definition of the term "demerger" contained in clause (19AA) of section 2 of the Income-tax Act did not include in its scope, the splitting up or the reconstruction of a company, which ceased to be a public sector company as a result of transfer of its shares by the Government, into separate companies, even if such split up or reconstruction has been made to give effect to the conditions attached to the transfer of shares by the Government. With a view to facilitate the splitting up or the reconstruction of erstwhile public sector companies and to give effect to the conditions attached to the transfer of shares by the Government, the scope of definition of the term "demerger" has been expanded.
2. Section 80JJAA: in the case of certain assessees, in computing profits and gains derived from business, deduction is allowed of an amount equal to thirty per cent of additional employee cost incurred in the course of such business in the previous year for the specified period, subject to the fulfillment of certain specified conditions. One of the conditions provides that the employee should be employed for a period of not less than two hundred and forty days during the previous year. In view of the seasonal nature of the business of manufacturing of apparel, the period of employment of an employee who is employed in this business is reduced from two hundred and forty days to one hundred and fifty days during the previous year. Section 80JJAA is so amended.
Customs Tariff Act First Schedule:
Imports of marble blocks/slabs and granite blocks/slabs are subject to a combination of non-tariff measures, namely, Quantitative Restriction (QR) and Minimum Import Price (MIP) and tariff measure, that is, customs duty at the rate of 10% levied under the First Schedule to the Customs Tariff Act, The present tariff rate of customs duty under the First Schedule as well as the effective rate for marble and travertine blocks/slabs and granite blocks/slabs is 10%. In order to have a greater flexibility in terms of tariffs, the First Schedule to the Customs Tariff Act is amended to increase the tariff rate of customs duty from 10% to the WTO bound rate of 40% on all goods falling under specified tariff items including goods, namely, rough marble and travertine blocks/slabs and granite blocks/slabs.
The Tariff Rate, though fixed at the maximum of 40%, the effective rate is continued at 10% by Notification No. , dated September 08 2016.