 thb pi:n£lw'b billimi(as introduced in lok sabra) la, • j,   bill no 1 of 1971 the finance bill, 1971r a to continue for the finqllcial year 1971-72 tile uisrinr rilles of income-tilt with certain liodifications qiid to provide for the continuclllce of the provisions reltina to srecial and regultory duties of cwstoils and excise and of certain collllllitlients uncler tile general agreeltlent on tariffs and trade and dte discontin  ce of the duty 011 slit for tile said year rf it enacted by parliament in the twenty-aecom year of tile republic of india as follows:-1 (1) 'ibis act may be called the finance act, 1171 !lion tide ilad commencemeat (2) sections 2,5 and 8 shall be deemed to baye come into 5 force on the 1st day of apru, 1971 2 the provisions of section 2 of, and the first scbec'de to the income-tax 19 of 1970 finance act, 1970, shall apply in relation to mcome-tax for the assessment year or, as the case may be, the fi_ncial year commencing on the 1st day of aprll 1971, as they apply in relation to 10 income-tax for the assessment year or, as the case may be, the financfal year commencing on the 1st day of aprll, 1970, with the following modificatiods, namely:-( ii) in section 2 - -15 (i) for the f!iures "1170", wherever they occur the fllures "1171" shall be substituted; (u) for aub-section (3) the following sub-section shall be irlbstituted, uamely:-"(3) in cases to which chapter:xu or sectlon 164 of the ldcome-tax act, 1961 (hereinafter referred to 43 of 1961 as the lddome-tax act) applies, the tax chargeable 5 shall be determidbd as proy1ded 1n that chapter or that section, and with referedce to the rate imposed by sub-section (1) or the rates as specified in that chaptsr or section, a8 the cue may be "; (iii) in sm-aection (5), the fouowldg provlao lihall be 10 mserted at the end, aamely:-'provided that in respect of any ldoome chargeable to tax udder seot1on 164 of the lddome-tax act at the rate of idxty-flve per cent  , "advadce tax" shall be computed at that rate '; 15 (b) in the first schedule-(i) in part 1,-( 1) for parasraph a, the followidg paragrap, shall be substituted, namely:-20 "paraaraph a in the case of every individual or hindu undivided famuy or unregistered firm or other association of pers<llls or body of individuals, whether incorporated or not, or every artlflclal juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the 25 income-tax act, not beldg a case to which any other paragrap, of this part applles,-| rates         | of        ||---------------|-----------|| inco"e~t4r   |           || (1)           |           || where         | the       || ii            |           || does          |           || dot           |           || exceed        | rs       || 5,            | 000       || nil;          |           || 30            |           || (2)           |           || where         | the       || exceeds       | rs5,ooo  || exceed        | rsi0,ooo || 10            |           || per           | cent     || amoudl        |           || by            |           || which         |           || the           |           || total1nccmje |           || elldeeds      |           || rs5,000:     |           |(3) where the total income rs500 plus 17 per exceeds rs 10,000 but does not cem of the amount exceed rsis,ooo by which the total income exceeds s rs10,ooo; (4) where the tota11ncome rs 1,350 plus 23 exceeds r8 15, 000 but doe8 not per cent of the exceed rs20,ooo amoum by which the total income 10 exoeeds rs 1s, 000; (5) where the total income rs2,500 plus 30 exceeds rs20,ooo but does not per cent of the exoeed rs25,ooo amoum by which the total income 15 exceeds rs20, 000; (6) where the total income rs 4, 000 plu~ 40 exceeds rs25, 000 but does not per cent of the exceed rs 30,000 amoum by which the total income 20 exceeds rs25,ooo; (1) where the total income rs 6, 000 plus 50 exceeds rs 30,000 but does not per cent of the exceed rs40,ooo amount by which the total income 25 exceeds rs 30, 000; (8) where the tota11ncome rs11,ooo plus 60 exceeds rs 40, 000 but does not per cent of the exceed as 60,000 amount by which the total income 30 exceeds rs40, 000; (9) where the total income rs23,ooo plus 70 exceeds rs 60,000 but does not per cent of the exceed rs80,ooo amount by which the total income 35 exceeds rs 60,000; vo) where the total income rs 37,000 plus 75 exceeds rs 80, 000 but does not per cent of the exceed rs1,oo,ooo amount by which the total income 40 exceeds rs 80, 000; (11) where the total1doome qlc8eds ba1,oo, 000 but does dot exceed ra2,00,ooo | ra                  | 52,000    ||----------------------|-----------|| plus                 | 80        || per                  | oeat    || of                   |           || the                  |           || amowlt               |           || by                   |           || which                |           || the                  |           || total                |           || idcome               |           || exoeedllra100,ooo: |           || 5                    |           || (12)                 |           || wbere                | the       || total                |           || idcome               |           || elld8ede             |           || ra2,oo,ooo          |           || ba1,32,ooo          |           || plus                 |           || 85                   |           || per                  | cent     || of                   |           || the                  |           || amoudt               |           || by                   |           || which                | the       || total                |           || 1dcome               |           || exceedb              | 10        || b82,oo,ooo:         |           |proridbd that far tile purpo_s of thu paragraph, ia the cue of a hlncu uadlvided family which at any time durlac the preyiou ,ear _ut1es either of the fcilowijii two coddltiou, umely:-15 () that it baa atleut two members entitled to claim partition who are dot leu than eighteen ,ears of ace, or (b) that it haa at 1eut two members entitled to claim partition who are iiot lideally deloedded 20 ode from the other and who are dot lideally desoeoded from any other l!ring member of the famby,-(i) do idcome-taxllball be paymle on a total idcome dot ---cidc bs 7 ,000; 25 (ii) where tile total :laaome ~ct e 7000 bat does dot aoeed a 7, ho, the idcolde-tax payable tilereoll un dot aceed forty per cent of the amount by which 1:be total idoome 8lrdeedll be 7,000 30 'lbe amoudt of 1dcame-tax oomputed in accordance with the preceding prorislone of th1a paragraph shall be ldcreaaed by a surcharge for purposes of the union calculated at the rate of ted per cent of 8uch mcome-tax "i (2) in parqrapb c, the following explanation shall 35 be 1daerted at the edd, namely:-, explanation -for the purposes of this paragraph, "registered firm" idcludel an ldlregistered flrm assessed  a registered firm udder clause (b) of _cuon 183 of the income-tax act ' ;  (ii) ill part m-5 (1) in the openjdg portion, after the words 'as the case may be, ''advance tax" ' the brackets, words and filures '(not being "advance tax" in respect of any income cbarpable to tax under section 164 of the income-tax act at the rate of 81xty-f:l:ve per oent vsball be lnserted; 10 (2) in paragra}il a, for tbe figures "1971" oocurrida in the proviso, the figures "1972" shall be subetltuted; (3) in paragraph c the fdlowldg erpllllcltion shall be inserted at tbe end, namely:-15 i explanation  _ for the purposes of this paragraph, "registered firm" includes an unregistered flrm assessed as a registered firm under olause (b) of section 183 of the income-tax act ' speci iii duti es of customs i (1) in the case of goods chargeable with a duty of customs 32 of 1934 which is specified in the first schedule to the indian 'rariff act, 1934 (hereinafter referred to as the tariff act), or in that sche-20 dule as amended from time to time, or in that scbedule read with any notification of the central government for the time being in force, there shall be levied and collected as an additiclll to, and in the sblde manner is, the total amount so chaqeable, a special duty of customs equal to 10 per cent of 8uch amount: 25 provided tbat in computldg the total amount so chll1'leaj:ie, my duty chargeable under 8ection 2a of the tariff act or 8ecticlll 4 of thts act 8hall not be included (2) sub-secticlll (1) shall cease to have effect after the 31st day of march, 1972, except as respects things done or omitted to 30 be done before such cesseri and section 6 of the general clauses 10 of 1897 act, 1897, shall apply upon sucb oesser as if the said sub-section had then been repealed by a central act regulatory duties of customs t (1) with a view to regulating or bringing greater economy in imports, there shall be levied and collected, with effect from such 35 date, and at such rate, as may be specified in this behalf by the central government by notification in the official gazette, on all or any of the goods mentioned in the first schedule to the tariff act or in that schedule as ameddad from ume to time, a regulatory duty of customs not axceedtdc -(ii) 25 per cent of the rate, if any, spectfied in the said first schedule read with ady dotiflcatioll issued under secticll 3a or sub-section (1) of secticll 4, of the tariff act; or 5 (b) 10 per cent of tile value of the good8  determided in accordbdce with tie prov1siou of secticll 14 of the customs act 1962 52 of 1962 whichever is highel': provided that cufferent dates add d1fferedt rues may be 10 specified by the central gcwel'lldlent for d1fferedt k1dda of good8 (2) sub-aectim (1) shall come into force m tile 16th day of may 1971 and cease to have effect after the 15th day of mq 1972 except  respects thldgs done or omitted to be doll8 before such cesser; and sectlcll 6 of the general clauses act, 1897 &hau 15 10 of 1897 lippiy upcli1 such cesser as if the sald sub-sectim had then been repealed by a central act (3) the regulatory duty of customs leviable udder this section in respect of ady goods referred to in sub-sectim (1) shall be 1d addtt10d to ady other duty of customs chargeable (xl such goods 20 udder the customs act 1962 52 of 1962 (4) the provtaiona of the customs act 1962, and the rules 52 of 1962 add regulattoas made tbereudder, 1dcludidg those reluidg to refunds and exempticl18 fred duties, shall, as far 88 mq be, apply in relauoil to the levy and collection of the regulatory duty of cus- 25 toms leviable under this sectlod in respect of any goods  tiley apply in relation to the levy and collectioll of the duties of customs on such goods under that act or those rules and regulatlcl18 (5) every notification tasued under sub-section (1) shall, 88 sool1 as may be after it is tasued, be placed before each house of 30 pal'liament amendment of •• in the idd1an tariff (amendment) act, 1949 in sectiods 4 act 10f 1949 and 5, for tile figures "1971" the figures "1972" shall be substituted special duties of excise on certain soods i (1) when goods of the description mentloned in tb1s secuon 35 chargeable with a duty of excise under the central excises add salt act, 1944, 88 amedded from tlme to tlme (hereinafter referred 1 of 1944 to as the central excises act) read with any notification for the ume betnc in force issued by the central government in relation to the duty so chargeable, are assessed to duty, there shall be levied and collected -(a) as respects goods comprised in items nob 6, 8,9,14d, 5 22 a, 23a except bub-item (l) thereof, 23b, 28,29, bub-items (2) and (3) of item no 31 and item no 32 of the first schedule to the central excises act, a special duty of excise equal to 10 per cent of the total amount so chargeable on such goods; (b) as respects goods comprised in items nos 2, 3( 1), sub-10 items i ii(2) and d(l) of item no4, items nos 13, 14, 14f,15, 15a, 15b, l6,16a, 17 , 18a(2),21, 22, 23, 23a( 1),27,30, 3l( 1), 33, sub-items (1), (ja) and (4) of item no 34 and sub-items il( 1) and n(2) of item no37 of that schedule, a speoial duty of excise equal to 20 per cent of the total amount so chargeable 15 on such goods; and (e) as respects goods comprised in sub-item n(o of item no4 and items nos 18, 18a( i), l8b, 20, 29a, 33a and sub-items (2) and (3) of item no 34 of that schedule, a special duty of exoise equal to 33l per cent of the total amount so charge-20 able on such goods (2) sub-sectloll (1) shall cease to have effect after the 31st day of march, 1972, except as respeots thidgs done or omitted to be done before such oesser; and section 6 of the general clauses 10 of 1897 act, lfj97, shall apply upon such cesser as if the said sub-secticm 25 had then been repealed by a central act (j) '!be duties of excise referred to in sub-section (1) in respect of the goods specified therein shall be in additicm to the duties of excise chargeable on such goods udder the central excises act or any other law for the time being in force and such 30 special duties shall be levied for purposes of the union and the proceeds thereof shall not be distributed among the states (4) the provisions of the central excises act and the rules made thereunder, including those relating to refunds and exemptions from duties, shall, as far as may be, apply in relation to the 35 levy and collection of the duties of exoise leviable under this section in respect of any goods as they apply in relation to the levy and colleotion of the duties of exoise on suoh goods wlder that aot or those rules regulatory duties of excise 7 (1) with a view to regu1at1dg or bringing greater economy in 40 oollsumption, there shall be levied and collected, with effect from such date, and at such rate, as may be specified in this behalf by the central government by notification in the official gazette, on all or any of the loads mentiolled in the first schedule to the central excises act, a regulatory duty of excibe which bhall not exceed 15 per cent of the value of the goods as determined in accordance with the provisions of bection " of the central excises 5 act: provided that different dates and different rates may be specifled by the central government for different kinds of goods (2) sub-secticllj (1) shall come into force clij the 18th day of may, 1971, and cease to have effect after the 15th day of may, 10 1972, except as respects thlugs done or omitted to be done before such cesser; and secticllj 6 of the general clauses act, 1897, shall 10 of 1897 apply upon such cesser as if the sald sub-secticllj had then been repealed by a central act (3) the duties of excise referred to in bub-bectlon (1) in 15 respect of the goods specified therein shall be in additicllj to the duties of excise chargtlable on such goods under the cedtral excises act or any other law for the time being ill force and buch re-julatory duties shall be levied for purposes of the union and the proceeds thereof shall not be dtstrlbtued among the states 20 (4) the provisions of the central excises act and the rules made thereunder, 1dc1ud1dc those relatidg to retund8 and exempti0d8 from duties, shall, as far as may be, apply in relation to the levy add couecticllj of the regulatory duties of excise leviable under this ijection in respect of uy coods 88 they apply in relat:lcllj to the 25 levy aod co11ectloo of the duties of excise on such goods 1iilcier that act or those rules (5) every nouficatioll1ssued under sub-section (1) shall, as sood as may be after it is issued, be placed before each bouse of parliament 30 discontinu-8dce of salt duty •• for the year begiimtdc on the 1st day of april, 1971, no duty udder the central excises act or the tariff act shall be levied in respect of salt manufactured ill, or imported into, lddta  declaration under die provisional collection of taxts act, 1931 35it is hereby declared that it is expedient in the public interest that the provisions of clause 3, clause 5 and clause 6 of ws bill shall have immediate effect under the provisional collection of taxes act, 1931 16 of 193l  statement of objects and reasonsthe object of this short blllis to continue the existing tax structure for the financial year 1971-72, subject to certain modifications in relation to income-tax 2 clause 2 of the bill deals with income-tax the rates of income-tax and surcharges which were specified in part m of the first schedule to the finance act 1970, for the purpose of deduction of tax at source from salaries during the financial year 1970-719 for computing the "advance tax" payable during that financial year in relation to current incomes, and for certain special purposes, are proposed to be continued for the purpose of assessments for the assessment year 1971-72 further, the same rates are proposed to be continued also for the purpose of deduction of tax at source from salaries during the financial year 1971-72, for computing the "advance tax" payable during that financial year on current incomes, and also for the said special purposes accordingly, clause 2 of the b1l1 proposes to apply to the financial year 1971-72, the provisions of section 2 of, and the first schedule to, the finance act, 1970, with consequential modifications and certain other modlflcations which have become necessary as a result of the amendments made in 1970 to section 164 and section 183 of the income-tax act '!be modificat10ns proposed as a result of these amendments are the following:-(1) sub-section (3) of section 2 of the finance act, 1970, is being substituted by·a new sub-section (3) so as to make it clear that in cases to which chapter xu or section 164 of the income-tax act applies the tax chargeable for the assessment year 1971-72 shall be determined as provided in that chapter or that section and with reference to the rates imposed by sub-section (1) or the rates as specified in that chapter or section, as the case may be (u) a proviso is proposed to be inserted at the end of sub-section (5) of section 2 of the finance act, 1970, so as to make it clear that in respect of any income which is chargeable to tax under section 164 of the income-tax act at the rate of 65 per cent •• "advance tax" payable during the flnancial year 1971-72 shall be computed at the sald rate of 65 per cent instead of the rates specified in part m of the first schedule to the finance act, 1970 a consequential change is also being made in the opening portion of part m of the first schedule to the finance act, 1970 (111) an explanation 1s be1ng added at the end of paragraph c of part i as well as of part m of the first schedule to the finance act, 1970, so as to make it clear that income-tax and surcharges at the rates specified in that paragraph wlll be chargeable also in the case of an unregistered firm assessed as a registered firm 1mder section 183(b) of the income-tax act the modifications at (i) and (11) above are proposed in the context of the amendment of section 164 of the income-tax act by the finance act, 1970, for charging tax on the income of a discretionary trust at the nat rate of 65 per cent or at the rate which would have been applicable if such income were the total income of an association of persons, whichever is higher the modlflcatlon at (ill) above is proposed in the context of the amendment of section 183(b) of the income-tax act, by the taxation laws (amendment) act, 1970, under which an unregistered firm may be assessed as a registered firm and subjected to the tax chargeable on registered firms at the rates specified in paragraph c and its partners charged to tax on their respect! ve shares in the total inoome of the firm, where this course is beneficial to the revenue 3 clauses 3,4,5,6,7 and 8 deal with indirect taxes and are on the same lines as sections 29,30,31,33,34 and 36,respectively, of the filwlce act, 1970 clause 3 seeks to levy up to the 31st march, 1972, a special duty of customs clause 4 seeks to provide for levy of regulatory duties of customs up to the 15th may, 1972, on a flexible basis within the specified ceiling rates, for regulating or brlnglng greater economy in lmports clause 5 seeks to oontlnue for another year the provisions of the lddlan tariff (ameddment) act, 1949 clause 6 seeks to continue up to the 31st march, 1972 the exlstlng special duties of excise clause 7 seeks to provide for levy of regulatory duties of excise up to the 15th may, 1972, on a flexible basis within the specified celung rate, for regulating or brlnglng greater eoonomy in consumption c1ause 8 provides tha~ salt shall be duty free for another year new delhi; yb chavan the 24th minch, 1971  president's recommendation under articles 117 and 274 of the coletitution of india(copy of letter no f3(30)-b/71, dated the 24th maroh1971 from shr1 y b chavan, midibter of ftnaace to the secretary, lok sabha) the president, havidg been informed of fhe subject matter of the proposed bill, recommends under article 117(1) and (3) read with artlcle 274(1) of the constitution of india, the introduction of the finance bill 1971 to fhe lok 8abha and also recommends to the !ok 8abha the consideration of the bid 2 '!be bill will be introduced in the lok sabha immediately after the presentation of the budget on the 24th march, 1971  financial memcltandumas this b1ll seeks to continue the existing tax structure for the financial year 1971-72,subject to certain modifications in relation to income-tax the bllllf enacted and brought into operation would not involve any additional expenditure from the consolidated fund of indil  memorandum regarding delegated legislationclause 4 of the b111 enables the central government to levy by notjllcatlon a regulatory dufiy of customs at such rate as may be specified in the notlflcatlon, but subject to the maxlmmn laid down in the said clause 'l1l1s power w111 be exercised with a view to regulatlng or bringing greater economy in imports simllarly, clause 7 of the blll enables the central government to levy by notlflcation a regulatory duty of excise at such rate as may be specified in the notification, but subject to the maximum laid down in the said clause this power wul be exercised with a view to regulating or bringing greater economy in consumption the exercise of the powers conferred by clauses 4 and 7 w1l1 depend upon the circumstances prevailing at the time of the notification n is not possible to visualise at this stage what those circumstancea would be it is accordingly felt that power in this regard should vest in the central government bavlng regard to the circumstances under which powers under clauses 4 and 7 wul be exercised by the central government, the powers delegated to it are of a normal character  billto continue for the financial year 1971-72 the existlng rates of income-tax with certain modifications and to provide for the continuance of the provisions relating to special and regulatory duties of customs and excise and of certain commitments under the general agreement on tariffs and trade and the discontinuance of the duty on salt for the said year (gri yb chczvan, minister of finance) 