Laying before Parliament.

534

The Central Government shall cause––

• (a) every rule made under this Act;
• (b) rules of procedure framed by the Appellate Tribunal under section 364; or
• (c) every notification issued under sections 263(3) and 264 and Chapter XIII-G, to be laid, as soon as may be after it is made or issued, before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in such rule, or notification or both Houses agree that the rule, should not be made or the notification should not be issued, the rule or notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification.

Explanation

Section Summary:

Section 534 of the Income Tax Act mandates that the Central Government must present every rule, procedure, or notification issued under specific sections of the Act to both Houses of Parliament. These must be laid before Parliament within 30 days of being made or issued, either in one session or across multiple sessions. If both Houses agree to modify or annul the rule or notification, it will take effect only in the modified form or be rendered ineffective. However, any actions taken under the rule or notification before such modification or annulment remain valid.

Key Changes:

This section formalizes the process of parliamentary oversight for rules, procedures, and notifications issued under the Income Tax Act. It ensures that such rules and notifications are subject to scrutiny and potential modification or annulment by Parliament. This is a procedural safeguard to maintain checks and balances in the rule-making process.

Practical Implications:

1. For Taxpayers and Businesses: While this section primarily affects the rule-making process, it indirectly impacts taxpayers and businesses by ensuring that rules and notifications are subject to parliamentary review. This could lead to more transparent and well-considered tax regulations.
2. For the Central Government: The government must ensure timely submission of rules and notifications to Parliament, which may require coordination and adherence to strict timelines.
3. For Parliament: This section empowers Parliament to review and potentially modify or annul tax-related rules and notifications, ensuring legislative oversight.

Critical Concepts:

• Laying before Parliament: This refers to the process of presenting rules, procedures, or notifications to both Houses of Parliament for review.
• Modification or Annulment: Parliament has the authority to change or cancel a rule or notification. If modified, the rule or notification takes effect in the revised form. If annulled, it becomes ineffective.
• Validity of Previous Actions: Any actions taken under a rule or notification before its modification or annulment remain legally valid.

Compliance Steps:

1. For the Central Government:
   • Ensure that every rule, procedure, or notification issued under the specified sections is promptly laid before Parliament.
   • Monitor the parliamentary review process and implement any modifications or annulments as decided by Parliament.
2. For Taxpayers and Businesses:
   • Stay informed about any changes to rules or notifications that may arise from parliamentary review, as these could impact compliance requirements or tax liabilities.

Examples:

• Scenario 1: The Central Government issues a new rule under Section 263(3) related to tax exemptions for startups. This rule is laid before Parliament within 30 days. During the review, Parliament decides to modify the rule to include additional eligibility criteria. The modified rule takes effect, and startups must now meet the new criteria to claim the exemption.
• Scenario 2: A notification under Chapter XIII-G is issued, introducing a new tax deduction for renewable energy investments. Parliament reviews the notification and decides to annul it. The notification becomes ineffective, and no further deductions can be claimed under it. However, any deductions already claimed before the annulment remain valid.

This section ensures that tax-related rules and notifications are subject to democratic oversight, promoting transparency and accountability in the tax system.