 bill no 215 of 2016 the taxation laws (amendment) bill, 2016 abill further to amend the income-tax act, 1961 and the customs tariff act, 1975be it enacted by parliament in the sixty-seventh year of the republic of india as follows:— chapter i preliminary51 (1) this act may be called the taxation laws (amendment) act, 2016short title and commencement(2) save as otherwise provided in this act, it shall come into force at once chapter ii direct tax income-tax1043 of 1961amendment of section 22 in the income-tax act, 1961 (hereinafter referred to as the principal act in this chapter), in section 2, in clause (19aa), after explanation 4, the following  explanation shall be inserted, with effect from the 1st day of  april, 2017, namely:—15"explanation 5—for the purposes of this clause, the reconstruction or splitting up of a company, which ceased to be a public sector company as a result of transfer of its shares by the central government, into separate companies, shall be deemed to be a demerger, if such reconstruction or splitting up has been made to give effect to any condition attached to the said transfer of shares and also fulfils such other conditions as may be notified by the central government in the official gazette"amendment of section 80 jjaa3 in the principal act, in section 80jjaa, in sub-section (2), in the explanation, after clause (ii), the following proviso shall be inserted, with effect from the 1st day of  april, 2017, namely:—5'provided that in the case of an assessee who is engaged in the business of manufacturing of apparel, the provisions of sub-clause (c) shall have effect as if for the words "two hundred and forty days", the words "one hundred and fifty days" had been substituted' chapter iii indirect tax customs tariff1051 of 19754 in the customs tariff act, 1975, in the first schedule,—amendmentof firstschedule(a) in chapter 25, for the entry "10%" in column (4) occurring against tariff items2515 11 00, 2515 12 10, 2515 12 20, 2515 12 90, 2516 11 00 and  2516 12 00, the entry "40%" shall respectively be substituted;15(b) in chapter 68, for the entry "10%" in column (4) occurring against tariff items6802 10 00, 6802 21 10, 6802 21 20, 6802 21 90, 6802 23 10, 6802 23 90, 6802 29 00, 6802 91 00, 6802 92 00 and 6802 93 00, the entry "40%" shall respectively be substituted statement  of  objects  and  reasonsthe existing provisions of the income-tax act, 1961 provide for tax neutrality in matters relating to transfer of capital asset, carry forward of loss, claim of certain deductions, etc, in case of demerger of entities  the definition of the term "demerger" contained in clause (19aa) of section 2 of the income-tax act, 1961, does not include in its scope, the splitting up or the reconstruction of a company, which ceased to be a public sector company as a result of transfer of its shares by the government, into separate companies, even if such split up or reconstruction has been made to give effect to the conditions attached to the said transfer of shares by the government2 with a view to facilitate the splitting up or the reconstruction of erstwhile public sector companies and to give effect to the conditions attached to the transfer of shares by the government, there is a need to bring these types of splitting up or the reconstruction within the scope of definition of the term "demerger"3 section 80jjaa of the income-tax act, 1961, was substituted by the finance act,2016, so as to provide that in the case of certain assessees, in computing profits and gains derived from business, deduction shall be allowed of an amount equal to thirty per cent of additional employee cost incurred in the course of such business in the previous year for the specified period, subject to the fulfillment of certain specified conditions one of the conditions provides that the employee should be employed for a period of not less than two hundred and forty days during the previous year in view of the seasonal nature of the business of manufacturing of apparel, there is a need to reduce the period of employment of an employee who is employed in this business from two hundred and forty days to one hundred and fifty days during the previous year4 presently, imports of marble blocks/slabs and granite blocks/slabs are subject to a combination of non-tariff measures, namely, quantitative restriction (qr) and minimum import price (mip) and tariff measure, that is, customs duty at the rate of  10% levied under the first schedule to the customs tariff act, 19755 the present tariff rate of customs duty under the first schedule to the customs tariff act, 1975 as well as the effective rate for marble and travertine blocks/slabs and granite blocks/slabs is 10% in order to have a greater flexibility in terms of tariffs, the bill seeks to amend the first schedule to the said act so as to increase the tariff rate of customs duty from 10% to the wto bound rate of 40% on all goods falling under specified tariff items including goods, namely, rough marble and travertine blocks/slabs and granite blocks/slabs6 the enactment of the proposed bill will enable the government to fix appropriate effective rate of customs duty on marble and travertine blocks/slabs and granite blocks/ slabs7 the bill seeks to achieve the above objectivesarun  jaitleynew delhi;the 8th august, 2016 president's recommendation under article 117 and 274 of the constitution of india ————[copy of letter no 354/72/2015-tru, dated 5th august, 2016 from shri arun jaitley, minister of finance and corporate affairs in the ministry of  finance to secretary- general, lok sabha]the president, have been informed of the subject matter of the taxation laws(amendment) bill, 2016, recommends under clauses (1) and (3) of article 117 read with clause (1) of article 274 of the constitution of india, introduction of the above bill in lok sabha annexure extracts from the income-tax act, 1961 (43 of 1961) [10] m c gonzalez-garcia, m c gonzalez-garcia, mdefinitions2 in this act, unless the context otherwise requires,— [10] m c gonzalez-garcia, m c gonzalez-garcia, m19aa "demerger", in relation to companies, means the transfer, pursuant to a scheme of arrangement under sections, 391 to 394 of the companies act, 1956 (1 of 1956), by a demerged company of its one or more undertakings to any resulting company in such a manner that— [10] m c gonzalez-garcia, m c gonzalez-garcia, mexplanation 4—for the purposes of this clause, the splitting up or the reconstruction of any authority or a body constituted or established under a central, state or provincial act, or a local authority or a public sector company, into separate authorities or bodies or local authorities or companies, as the case may be, shall be deemed to be a demerger if such split up or reconstruction may be notified in the official gazette, by the central government;           80jjaa(1)          (2) no deduction under sub-section (1) shall be allowed,—deduction in respect of employment of new employees(a) if the business is formed by splitting up, or the reconstruction, of an existing business:provided that nothing contained in this clause shall apply in respect of a business which is formed as a result of re-establishment, reconstruction or revival by the assessee of the business in the circumstances and within the period specified in section 33b;(b) if the business is acquired by the assessee by way of transfer from any other person or as a result of any business reorganisation;(c) unless the assessee furnishes along with the return of income the report of the accountant, as defined in the explanation to section 288 giving such particulars in the report as may be prescribedexplanation—for the purposes of this section,—(i) "additional employee cost" means the total emoluments paid or payable to additional employees employed during the previous year:provided that in the case of an existing business, the additional employee cost shall be nil, if—(a) there is no increase in the number of employees from the total number of employees employed as on the last day of the preceding year;(b) emoluments are paid otherwise than by an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account:provided furhter that in the first year of a new business, emoluments paid or payable to employees employed during that previous year shall be deemed to be the additional employee cost; (ii) "additional employee" means an employee who has been employed during the previous year and whose employment has the effect of increasing the total number of employees employed by the employer as on the last day of the preceding year, but does not include—(a) an employee whose total emoluments are more than twentyfive thousand rupees per month; or19 of 1952(b) an employee for whom the entire contribution is paid by the government under the employees' pension scheme notified in accordance with the provisions of the employees, provident funds and miscellaneous provisions act, 1952; or(c) an employee employed for a period of less than two hundred and forty days during the previous year; or(d) an employee who does not participate in the recognised provident fund;      extracts from the customs tariff act, 1975     the first schedule—import tariff(see section 2)     section v mineral products chapter 25salt; sulphur; earths and stone; plastering materials, lime and cement|                               |                     |             |                          |    ||--------------------------------|----------------------|--------------|---------------------------|-----|| tariff                         | description of goods | unit         | rate of duty              |     || item                           | standard             | preferential |                           |     || areas                          |                      |              |                           |     || (1)                            | (2)                  | (3)          | (4)                       | (5) ||                               |                     |             |                          |    || 2515                           | 11 00                |           | crude or roughly trimmed  | kg ||                               |                     |             |                          |    || 2515                           | 12 10                |           | blocks                    | kg || 2515                           | 12 20                |           | slabs                     | kg || 2515                           | 12 90                |           | other                     | kg ||                               |                     |             |                          |    || 2516                           | 11 00                |           | curde or roughly trimmed  | kg || 2516                           | 12 00                |           | merely cut, by sawing, or | kg || otherwise into blocks or slabs |                      |              |                           |     || of a rectangular (including    |                      |              |                           |     || square) shape                  |                      |              |                           |     ||                               |                     |             |                          |    | section xiii articles of stone, of plaster, of cement, of asbestos, of mica  and of similar materials; ceramic products; glass and glassware chapter 68articles of stone, of plaster, of cement, of asbestos, of mica and of similar materials    tariffdescription of goodsunitrate of dutyitemstandardpreferentialareas(1)(2)(3)(4)(5)    6802 10 00tiles, cubes and similar articles,kg10%-whether or not rectangular (including square), the largest surface area of which is capable of being enclosed in a square the side of which is less than 7 cm; artificially coloured granules, chippings and powder    680221 10    marble blocks or tileskg10%-680221 20    marble monumental stonekg10%-680221 90    otherkg10%-    680223 10     granite blocks or tileskg10%-680223 90     otherkg10%-680229 00    other stonekg10%-    680291 00    marble, travertine and alabaster kg10%-680292 00    other calcareous stonekg10%-680293 00   granitekg10%-    ———— a bill further to amend the income-tax act, 1961 and the customs tariff act, 1975————(shri arun jaitely, minister of  finance and corporate affairs)gmgipmrnd—2293ls(s3)—08-08-2016