Taxability of LPG Subsidy received
by Individual
Provision
in the Finance Bill, 2015, will not Affect the LPG Subsidy and Other Welfare Subsidies
Received by Individuals
Certain
doubts have been raised in a section of the media about the applicability of
the official amendment moved in the Finance Bill, 2015 in the Lok Sabha on 30th
April, 2015 with respect to definition of ‘income’.
Sub-section
(2) of section 145 provides that the Central Government may notify Income
Computation and Disclosure Standards (ICDS) for any class of assessees or for
any class of income. The Central Board of Direct Taxes (‘CBDT’) notified ICDS on 31.3.2015 vide
Notification number S.O. 892 (E) after wide consultations with the
stakeholders for which the draft was placed in the public domain. The ICDS is
applicable to persons having income chargeable under the head “Profits and
gains of business or profession” or “Income from other sources” and following
Mercantile System of Accounting. This is not applicable to individuals not
having any income chargeable under the head “Profits and gains of business or
profession” and receiving LPG subsidy or any other subsidy which is for the
welfare of the individual. The Finance Bill, 2015 proposes to align the
definition of Income with that provided in ICDS for this purpose. To restate
the position, the provision in the Finance Bill, 2015, will not affect the LPG subsidy
and other welfare subsidies received by individuals.
Extract of Clause (xviii) of Section
2 (24) as inserted vide official amendment to the Finance Bill
2015 as passed by the Lok Sabha related to Tax on Subsidy
“(xviii)
assistance in the form of a subsidy or grant or cash incentive or duty drawback
or waiver or concession or reimbursement (by whatever name called) by the
Central Government or a State Government or any authority or body or agency in
cash or kind to the assessee other than the subsidy or grant or reimbursement
which is taken into account for determination of the actual cost of the asset
in accordance with the provisions of Explanation 10 to clause (1) of section
43;”
