The Union Cabinet approves introduction of Amendment Bill to replace Ordinance

As per a Press release dated 20 November 2019, the Union Cabinet has approved the introduction of the Taxation Laws (Amendment) Bill, 2019 (Amendment Bill) in order to replace the Taxation Laws (Amendment) Ordinance, 2019 (2019 Ordinance) earlier promulgated on 20 September 2019⁽¹⁾.  

It may be recalled that, as the Parliament was not in session and there was a need to provide fiscal stimulus to attract investments, generate employment and boost the economy, the President, in exercise of powers under Article 123(1) of Indian Constitution, had promulgated 2019 Ordinance to make certain amendments to Income Tax Act, 1961. As per constitutional process, an Ordinance promulgated under Article 123(1) has to be laid before both the Houses of Parliament and shall cease to operate:  

·         at the expiration of six weeks from reassembly of Parliament; or

·         if before expiration of the above period, resolutions disapproving 2019 Ordinance are passed by both the Houses, on the date on which resolutions are passed 

Accordingly, to effectuate the 2019 Ordinance, the Union Cabinet has approved the proposal for introducing the Amendment Bill in the Parliament for ratification.  

The 2019⁽¹⁾ Ordinance provides for a major reduction in corporate tax rates for existing and new domestic companies. The 2019 Ordinance also implements the withdrawal of higher surcharge for non-corporates on certain capital market transactions announced earlier on 24 August 2019 and also provides relief from buy-back tax for listed companies in respect of buybacks which were publicly announced prior to the Budget announcement on 5 July 2019.  

The fine print of the Amendment Bill is awaited for details of changes, if any, as compared to the 2019 Ordinance, in deference to various representations made by stakeholders.