The Lok Sabha on 10 August 2016 passed the Taxation Laws (Amendment) Bill, 2016. The Bill seeks to amend the Income Tax Act, 1961 and the Customs Tariff Act, 1975.
The Bill introduced in the Lok Sabha on the same day was passed by voice vote after a short debate.
Features of the Taxation Laws (Amendment) Bill, 2016
• Income Tax Act, 1961
a) Demerger of public sector companies: The Bill clarifies that the provisions of demerger will apply in case of demerger of a public sector company and the resultant company is no longer a public sector company. The Companies Act, 1956 allowed companies to demerge (split) into multiple companies. As a result of the demerger, the income, expenses, and profits of the parent company are transferred to the resultant companies. The Income Tax Act, 1961 takes into account these transfers from the parent company for taxation of resultant companies.
b) Deduction in respect of employment of new employees: The bill decreases the period of employment of an employee of the businesses which manufacture apparel from 240 days to 150 days. Earlier, the existing Income Tax Act, 1961 allows businesses to obtain a deduction on taxable income to the extent of 30% of the cost of recruiting a new employee. The Act requires that the employee should have been employed for a minimum of 240 days in the previous year.
• Customs Tariff Act, 1975: The Bill proposes to increase the existing customs duty on imports of granite and marble blocks used for certain purposes from 10 percent to 40 percent.
Earlier in June 2016, Union Cabinet had approved a special package for employment generation and promotion of exports in textile and apparel sector.
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Where: Lok Sabha
When: 10 August 2016