Overview on Income Tax (23rd Amendment) Rules, 2020

The Central Board of Direct Taxes has the power conferred upon them by Income Tax Act. Section 295(1) of Income Tax Act, 1962 has laid down the rules that CBDT (Central Board of Direct Taxes) can make changes in the rules and provisions of Income Tax Rules, 1962. This new rule is known as Income Tax (23rd Amendment) Rules, 2020 and will be effective from 1^st April, 2021

Amendments made in Income Tax (23^rd Amendment ) Rules, 2020

The Income Tax (23^rd Amendment) Rules, 2020 were made in the Rule 67(2) of Income Tax Rules, 1962 are-

• In the fifth proviso, the letter ‘A’ shall be substituted for letters ‘AA’;
• In the eight proviso, the letter ‘A’ shall be substituted for letters ‘AA’;
• In the eleventh proviso, the letter ‘A’ shall be substituted for letters ‘AA’ occurring at both the places.

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Rule 67 before Income Tax (23rd Amendment) Rules, 2020

Rule 67 talks about Investment of Funds Money and how the amount has to be invested is explained below. Rule 67 is further divided into two sub-rules.

Sub-Rule (1)

Rule 67 (1) talks about all the money contributed in a provident fund whether by the employer or employees after 31^st October of FY & it has to be transferred after that particular date from any employees individual account in any recognized provident fund sustained by the former employer. The fund has to be deposited in Savings Bank Account of the Post Office or in a current account or a Savings Bank Account in any scheduled bank, to such extent that the amount are not deposited and should be invested in the manner prescribed in Rule 67 (2).

Sub-Rule (2)

The manners in which the investments of funds money are to be deposited are explained in this clause. Table has been provided for the same.

For the purposes of Rule 67(2), following points should be considered—

1. Fresh accretions to the funds should be the sum of un-invested funds from the past and reduced by obligatory outgoing during the Financial Year;
2. ‘Government securities^[1]’ should have the meaning provided in Section 2(b) of the Securities Contracts (Regulation) Act, 1956;
3. ‘Infrastructure’ should be used for the purpose as given in the above Table;
4. ‘Public Financial Institutions’ should have the meaning provided in Section 2 of the Companies Act, 2013;
5. ‘Public Sector Company’ should have the meaning provided in Section 2(36A) of the Income tax Act;
6. ‘Securities’ have the meaning provided in Section 2 of the Securities Contracts (Regulation) Act, 1956.

Conclusion

The principal rules regarding the amendments were published in the Gazette of India Extraordinary, Part-II, Section-3 (ii) vide number S.O. 969 (E), dated 26^th March, 1962 and the last amendment was done recently on 1^st October,2020 vide notification number G.S.R No.610 (E).

According to the Memorandum Vide Notification No. 84 /2020, dated 22 October, 2020, an amendment was made in Rule 67 of the Income tax Rules, 1962. The amendment is known as Income Tax (23rd Amendment) Rules, 2020 and it will be effective from 1^st April, 2021 & is applicable for the Assessment Year 2021-22.

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