Explanatory Notes to the Provisions of the Finance Act, 2011

Amendments at a Glance


Particulars/Paragraph number


Finance Act, 2011

First Schedule

Rate Structure


Income-tax Act, 1961


Definition of “charitable purpose


Exemption of certain perquisites of chairman and members of Union Public Service Commission

10(46), 139(4C)(g)

Provision relating to exemption of a specified income of certain bodies or authorities or trust or board or commission

10(47), 139(4C)(h), 115A, 194LB

Infrastructure Debt Fund


Weighted deduction for contribution made for approved scientific research programme


Investment-linked deduction in respect of specified business

80CCE, 36(1),40A(9)

Tax benefits for New Pension System (NPS)


Deduction for investment in long-term infrastructure bonds


Extension of sunset clause for tax holiday for power sector


Deduction in respect of pr
ofits and gains from undertakings engaged in commercial production of mineral oil

92C, 92CA, 92CA(7), 139

Rationalization of provision relating to Transfer Pricing


Tool box of counter measures in respect of transactions with persons located in a Non-co-operative jurisdiction


Taxation of certain foreign dividends at a reduced rate


Tax on Distributed Income to unit holders


Minimum Alternate Tax

115JB(6), 115-0(6), 10(34)

Provisions relating to Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) in case of Special Economic Zones

115JC, 115JD, 115JE, 115JF

Alternate Minimum Tax for certain Limited Liability Partnerships


Collection of information on requests received from tax authorities outside India

139, 296

Exemption to a class or classes of persons from furnishing a return of income


Centralized Processing of Returns


Extension of time-limit for assessments in case of exchange of information


Modification in the condition for filing an application before the Settlement Commission


Power of the Settlement Commission to rectify its orders


Omission of the requirement of quoting of Document Identification Number


Reporting requirement by certain non-residents

Fourth Schedule

Recognition to Provident Funds – Extension of time-limit for obtaining Exemption from EPFO


Wealth-tax Act, 1957


Procedure on receipt of an application for settlement of cases


Special Economic Zones Act, 2005

Second Schedule

Modifications to the Income-tax Act

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India has signed its third TIEA with British Virgin Islands

India has entered into its third Tax Information Exchange Agreement (TIEA) with the British Virgin Islands. The Agreement was signed on 9th February 2011 by the High Commissioner of India to United Kingdom on behalf of India and the Deputy Premier on behalf of British Virgin Islands. The agreement provides for sharing information, including exchange of banking and ownership information, and also of past information in criminal tax matters. Earlier, India had signed similar TIEAs with Isle of Man and Bermuda.

In order to further reduce litigation, the Central Board of Direct Taxes (CBDT) has enhanced the limits for filing appeals against taxpayers in the Income Tax Appellate Tribunal, High Court and Supreme Court, from tax effect of Rs.2 lakh, Rs.4 lakh and Rs.10 lakh, respectively, to Rs.3 lakh, Rs.10 lakh and Rs.25 lakh, respectively.

In order to speed up refunds, TDS claims in all tax returns (ITR-1 to ITR-6) will be accepted without verification if the difference between the amount claimed in the return and the amount reflected in the TDS return (AS-26 statement) does not exceed one lakh rupees. This will enable the Income Tax department clear nearly 95 percent refunds without verifying each TDS claim. Cases with zero-matching, invalid TAN and difference exceeding Rs. 1 lakh will, however, be cleared only after due verification. This precaution is necessary to avoid refund frauds.

Earlier, the Chairman CBDT had directed all Chief Commissioners to upload necessary data so that the refunds can be issued expeditiously. It will be for the first time that most income tax refunds of the current assessment year will be dispatched to the taxpayers within the current financial year itself.