Question:Consider the following statements regarding the Finance Bill 2020 :
(a) Lok Sabha passed the Finance Bill 2020 with amendments on March 23 without any discussion.
(b) Equalisation levy of 2% is carried on non- resident e- commerce unless they have a PE in India.
(c) Non – resident Indians will be taxed on India – controlled income above 15 lakh
(d) All of these
Answer: (d)
Related facts:
- On March 23, 2020, Finance Minister Nirmala Sitaraman introduced the Finance Bill, 2020. The bill was introduced and passed in Lok Sabha without any discussion.
- The bill was hurriedly passed in the Lok Sabha without the customary discussion or reply by the Union finance minister and duly returned by the Rajya Sabha as the country headed for a lockdown to fight the coronavirus crisis.
- The amendments moved by finance minister Nirmala Sitharaman covered the taxation of petrol and diesel, definition of tax residence and clarifications related to dividend distribution tax (DDT).
Key changes:
- The government raises special additional excise duty, by up to Rs 18 a litre on petrol, up from Rs 10 now and up to Rs 12 a litre on diesel, up from Rs 4 now.
- The intention to raise the taxes on auto fuel comes at a time when the government is looking for resources to announce a financial package to fight the impact of the coronavirus crisis.
- In direct taxes, a key amendment that Finance minister introduced is to relax the provision relating to tax residence.
- The original Finance Bill had proposed to reduce the time Indian citizens or persons of Indian origin needed to spend in India to qualify as Indian tax resident, from 182 days to 120 days in the previous year. “The amended Bill now provides that the lower 120 day rule will not apply if the Indian-sourced income of such persons is less than Rs 15 lakh in the relevant financial year,”.
- The tax deducted at source (TDS) rate on payment of dividend to non-resident and foreign company has been set at 20%.
- The proposal for taxing dividends in the hands of shareholders by abolishing the dividend distribution tax (DDT) was also passed. While the new rule kicks into effect from April 1, 2020, the government has clarified that shareholders will have no tax liability if the company issuing the dividend has paid the DDT before April 1.
- Equalisation levy of 2% on non- resident e- commerce unless they have a PE in India.
- Tax exemption to Sovereign wealth fund extended to pension funds for infra investment.
- No 2% on withdrawal of over Rs 1 crore cash from banks,co- operative banks,PO.
- Tax on cash withdrawal of over Rs 20 lakh at the rate of 2%, if tax return not filed for 3 years with effect from July 1 2020.
- Tax on cash withdrawal of over Rs 1 crore at 5 percent ,if tax return not filed for 3 years with effect from July 1 2020.
Understanding the Concept:
- A Finance Bill, as the name suggests, concerns the country’s finances — it could be about taxes, government expenditures, government borrowings, revenues, etc. Since the Union Budget deals with these things, it is passed as a Finance Bill.
- The Constitution defines financial legislation into two categories: Money Bills and Financial Bills.
- Money Bills –Article 110
- Financial Bills (I)– Article 117 (1)
- Financial Bills (II)– Article 117 (3)
- All Money bills are Financial bills but all Financial bills are not Money bills.
- Only those financial bills are Money bills which contain exclusively those matters which are mentioned in Article 110 of the Constitution.
- Money bills are certified by the Speaker of Lok Sabha.
Financial Bills (I):
- A financial bill (I) contains not only any or all the matters mentioned in the Money Bill, but also other matters of general legislation. It is dealt under Article 117 (1) of the Constitution.
- It is similar to a money bill in two respects–
- Both of them can be introduced only in the Lok Sabha and not in the Rajya Sabha.
- Both of them can be introduced only on the recommendation of the President.
- In all other respects, a financial bill (I) is treated as an ordinary bill. ie.
- it can be either rejected or amended by the Rajya Sabha.
- In case of a disagreement between the two Houses over such a bill, the President can summon a joint sitting of the two Houses to resolve the deadlock.
- When the bill is presented to the President, he can either give his assent to the bill or withhold his assent to the bill or return the bill for reconsideration of the Houses.
Financial Bills (II):
- A financial bill (II) contains provisions involving expenditure from the Consolidated Fund of India, but does not include any of the matters mentioned in Article 110. It is dealt under Article 117 (3) of the Constitution.
- It is governed by the same legislative procedure which is applicable to an ordinary bill.
- Such Bills can be introduced in either House of Parliament. However, recommendation of the President is essential for consideration of these Bills by either House and unless such recommendation is received, neither House can pass the Bill.
- In other words, the recommendation of the President is not required at the introduction stage but is required at the consideration stage.
Links:
https://wap.business-standard.com/article-amp/economy-policy/from-finance-bill-to-termination-of-pregnancy-bills-passed-by-parliament-120032400268_1.html
https://www.thehindubusinessline.com/economy/budget/lok-sabha-passes-finance-bill-without-discussion/article31142748.ece/amp/
https://www.thehindubusinessline.com/economy/budget/lok-sabha-passes-finance-bill-without-discussion/article31142748.ece/amp/