MM TAX CLUB

          Clause (viib) of sub-section (2) of section 56 of the Income-tax Act, 1961 (the Act), prior to amendment vide Finance Act 2023, inter alia, provided that where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the fair market value of the shares, it shall be chargeable to income-tax under the head 'Income from other sources' . Rule II UA of the Income-tax Rules, 1962 (the Rules) provides the method for computation of the fair market value of unquoted equity shares for the purposes of the Clause (viib) of sub-section (2) of section 56 of the Act.

2. In the Finance Act, 2023, an amendment was introduced in this provision to bring the consideration received from non-residents within the ambit of Clause (viib) of sub-section (2) of section 56 of the Income-tax Act, 1961.

3. As a result of the above amendment, representations were received from various stakeholders raising their concerns that genuine non-resident investors may have to face undue hardship in matters related to valuation of shares etc. In view of this, rule II UA of the Rules is proposed to be amended.

 4. The draft notification with proposed amendment to rule II UA of the Rules is enclosed. It is requested that all the stakeholders as well as the general public may provide suggestions/ comments on the same and send them at the email address ustpI2@nic.in latest by 5th June, 2023.

Draft Rule can be read as under;

          In exercise of the powers conferred by sub-clause (i) of clause (a) of the Explanation to clause (viib) of sub-section (2) of section 56 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. Short title and commencement: - (I) These rules may be called the Income tax ... . .. (Amendment), Rules, 2023.

(2) They shall come into force from the date of publ ication of the notification in the Official Gazette.

2. In the Income-tax Rules, 1962, in rule II UA,-

(i) For sub-rule (2), the following sub-rule shall be substituted, namely:-

" (2) Notwithstanding anything contained in sub-clause (b) of clause (c) of sub rule (I), the fair market value of un quoted equity shares for the purposes of sub clause (i) of clause (a) of the Explanation to clause (viib) of sub-section (2) of section 56 shall be the value, on the valuation date, of such unquoted equity shares as determined in the following manner :-

(i) under clause (a) or clause (b) or clause(c) or clause (e), at the option of the assessee, where the consideration received by the assessee is from a resident;

And

(ii) under clause (a), clause (b) ,clause (c), clause (d) or clause (e) at the option of the assessee, where the consideration received by the assessee is from a non-resident, namely:-

(a) the fair market value of un quoted equity shares =(A- L)x [PV/PE].

where,

 A       =       book value of the assets in the balance-sheet as reduced by any amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Income tax Act and any amount shown in the balance-sheet as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset;

L        =       book value of liabilities shown in the balance-sheet, but not including the following amounts, namely:-

(i) the paid-up capital in respect of equity shares;

(ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company;

 (iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation;

(iv) any amount representing provision for taxation, other than amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Income-tax Act, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;

(v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities;

(vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares;

PE           =             total amount of paid up equity share capital as shown in the balance-sheet;

PV      =       the paid up value of such equity shares; or

(b)          the fair market value of the un quoted equity shares determined by a merchant banker as per the Discounted Free Cash Flow method.

(c) where any consideration is received by a venture capital undertaking for issue of shares, from a venture capital fund or a venture capital company or a specified fund, the price of the equity shares corresponding to such consideration may, at the option of such undertaking, be taken as the fair market value of the equity shares to the extent the consideration from such fair market value does not exceed the aggregate consideration that is received from a venture capital fund or a venture capital company or a specified fund;

Provided that the consideration has been received by the undertaking from a venture capital fund or a venture capital company or a specified fund, within a period of ninety days of the date of issue of shares which are the subject matter of valuation.

 Explanation: for the purposes of this clause, "venture capital undertaking", "venture capital fund" , "venture capital company" and "specified fund" shall have the same meaning as respectively assigned to them in the Explanation to clause (viib) of sub-section (2) of section 56.

Illustration: If a venture capital undertaking receives a consideration of Rs50000 from a venture capital company for issue of 100 shares at the rate of Rs.500 per share, then such an undertaking can issue 100 shares at this rate to any other investor within a period of 90 days of the receipt of consideration from venture capital company.

(d) the fair market value of the unquoted equity shares determined by a merchant banker in accordance with any of the following methods:

(i) Comparable Company Multiple Method;

(ii) Probability Weighted Expected Return Method;

(iii) Option Pricing Method;

(iv) Milestone Analysis Method;

(v) Replacement Cost Methods;

(e) where any consideration is received by a company for issue of shares, from any entity notified under clause (ii) of the first proviso to clause (viib) of subsection (2) of section 56, the price of the equity shares corresponding to such consideration may, at the option of such company, be taken as the fair market value of the equity shares to the extent the consideration from such fair market value does not exceed the aggregate consideration that is received from the notified entity:

Provided that the consideration has been received by the company from the entity notified under clause (ii) of the first proviso to clause (viib) of subsection (2) of section 56, within a period of ninety days of the date of issue of shares which are the subject matter of valuation."

(ii) after sub-rule 2, the following sub-rules shall be inserted, namely:-

"(3) Where the date of valuation report by the merchant banker for the purposes of sub rule (2) is not more than ninety days prior to the date of issue of shares which are the subject matter of valuation, such date may, at the option of the assessee, be deemed to be the valuation date.

(4) Where the issue price of the shares exceeds the value of shares as determined in accordance with –

(i) clause (a) or (b) of sub-rule (2), for consideration received from a resident, by an amount not exceeding ten percent of the valuation price, the issue price shall be deemed to be the fair market value of such shares.

(ii) clause (a) or (b) or (d) of sub-rule (2), for consideration received from a non- resident, by an amount not exceeding ten percent of the valuation price, the issue price shall be deemed to be the fair market value of such shares."

SB Order No. 12 12023 Dated:25.05.2023

Revision of Know Your Customer (KYC) / Anti Money Laundering (AML) / Combating the Financing of Terrorism (CFT) norms in respect of POSB

Master Circular No. I on AML/CFT norms applicable for Small Savings Schemes has been circulated in SB Order No.l4D0l2 dated 09.10.2012.

2. Department Economic Affairs, Ministry of Finance has notified Govt. Savings Promotion General Rules 2018 (GSPR 2018) and National Savings Schemes Rules 2019 which have been implemented from 18.12.2019. GSPR 2018 prescribes the mandatory documents and other optional documents to be obtained from the depositors.

3. After implementation of CBS, the process of reporting of transactions has also got changed.

4. Further, in order to comply with the guidelines of Financial Intelligent Unit - India (FIU-IND) and Financial Action Task Force (FATF), it has been decided to issue revised guidelines on AML/CFT norms to be followed in the post offices in respect of National (Small) Savings Schemes and accordingly, Master Circular No. 2 of KYC I Al\il- I CFT norms is attached herewith. This will supersede all previous orders issued on the subject,

5. Appendix I of POSB (CBS) Manual (Connected up to 31.12.2021) is amended and the contents of Master Circular No. 2 which is attached herewith shall be the amended text.

6. This may be circulated to all the Offices for information and necessary actions.

7. This is issued with the approval of competent authority.

Introduction

1. Know Your Customer (KYC) Norms/Anti Money Laundering (AML) Measure/Combating Financing of Terrorism (CFT)/Obligations under PMLA, 2002 (amended from time to time)

The objective of KYC/AMUCFT guidelines is to prevent money laundering or terrorist financing activities by use of Post Office Savings Bank intentionally or unintentionally by criminal elements. KYC procedures also enable to post office Savings Banks to know/understand their customers better which in tum help them manage their risks prudently.

1. Definition of Customer

For the purpose of KYC policy, a customer is defined as:

 . An individual that maintains an account and/or has a cash certificate or has a business relationship with the Post Office Savings Bank.

. An individual on whose behalf the account is maintained (i.e beneficial owner).

2. Guidelines

2.1 General

All Post Office Savings Banks should keep in mind that information collected from the customer for the purpose of opening of account or purchase of savings certificates is to be treated as confidential and details thereof are not to be divulged for cross selling or any other purposes.

 2.2 KYC Policy

Under PMLA provisions, Post Office Savings Bank declares its KYC Policy on the following four elements:

 (a) Customer Acceptance Policy.

(b) Risk Management

(c) Customer Identification Procedure.

(d) Monitoring of Transactions; Record keeping and Reporting.

2.3 Customer Acceptance Policy (CAP)

(i) No account is opened in anonymous or fictitious name,/benami.

(ii) Not to open an account or close an existing account where the Post Office Savings Bank is unable to apply appropriate Customer Due Diligence measures i.e unable to verify the identity and/or obtain documents required as prescribed due to non- cooperation of the customer or non-reliability of data/information furnished by the customer. However, the customer should not be harassed and any decision to close the account should be taken by head of the Postal Division by giving suitable notice to the customer.

2.4 Categorization of Customers i,e. Risk categorization.

2.4.1 All customers according to the amount involved at the time of opening of account or purchase of Savings Certificates or credit into an existing account have been categorized with the perspective of risk involved. The categorization is as under:

(i) Low Risk

                Where the customer opens account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instrument with an amount up to (50,000/and balance in all accounts and savings certificates does not exceed Rs.50,000/-

(ii) Medium Risk

          Where the customer opens account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instrument with an amount exceeding t 50,000/- but up to Rs.10 lakh and balance in all accounts and savings certificates does not exceed Rs.10 lakh.

(iii) High Risk

          Where the customer opens account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instrument with an amount exceeding Rs.10 lakh and balance in all accounts and certificates does not exceed Rs.10 lakh.

Note l: Politically Exposed Persons (PEPs) are individuals who are or have been entrusted with prominent public functions by a foreign country, including the Heads of State/Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials. The accounts related to Politically Exposed Persons (PEPs) residing outside India shall fall under High Rlsk Category.

For full Customer identification Procedure, click on below link.

Banks will be required to notify the income tax department about large cash deposits of ₹2,000 currency notes above a threshold as part of the statement of financial transactions (SFT) they are mandated to submit to the tax authority annually.

However, the exact currency denomination of the deposits does not need to be specified.

This would bring large cash deposits made during the ongoing phasing out of ₹2,000 notes under the radar of tax officials, who routinely comb through the data to detect tax evasion, two people informed about the development said on the condition of anonymity. The reporting thresholds stand at ₹10 lakh for term and savings deposits and ₹50 lakh for current account deposits.

To be sure, this reporting system has been in existence for a long time and is not a new provision in the wake of RBI’s decision to recall ₹ ₹2,000 notes, said a third person, who also spoke on condition of anonymity.

“Everyone may keep some funds in cash for a rainy day. But, can there be a genuine reason for anyone to maintain large piles of cash, especially high-denomination notes, instead of trying to earn interest? That behaviour should merit an explanation, especially if the deposit is disproportionate to the income reported in the tax return. So, that question will be asked," one of the two people cited above said on the condition of anonymity. The third person, who is knowledgeable about the working of the tax department, said it might be premature to speculate whether large cash deposits in the wake of the withdrawal of ₹2,000 notes reported by banks will attract scrutiny. “Let people exercise their right to deposit or exchange the cash. It is not the right thing to spook the public," the person said.

An email sent to the spokespeople for finance ministry and the Central Board of Direct Taxes (CBDT) on Wednesday seeking comments for the story remained unanswered.

The tax department has been emphasizing voluntary tax compliance, encouraging taxpayers to disclose any transaction that may not have been reported by updating their tax returns. The e-verification scheme launched in 2021 and the scheme to update tax returns introduced in 2022 enable assessees to update their returns for previous years and add back any erroneously omitted income or to come clean on under-reporting of earnings.

Sudhir Kapadia, partner, tax and regulatory services at EY said that those who have legitimate funds in cash need not worry about depositing to banks. "As per existing rules, unusually high cash deposits get reported to the department irrespective of the currency denomination. Nothing in the RBI's announcement of withdrawal of ₹2000 note changes that position."

As a measure of caution, some banks are insisting that people who make repeated attempts to exchange ₹2,000 notes at the counter furnish their IDs, bankers said. Reserve Bank of India governor Shatikanta Das is expected to meet senior officials of private sector banks next week on governance issues where the progress of ₹2,000 note exchanges and deposits would also be discussed, and problems faced in the process would be addressed, a banker said on the condition of anonymity.

Income Tax Department releases Excel utility of Form ITR-3 for Financial Year 2022-23 and A.Y 2023-24.

ITR-3 Return Form applicable “For individuals and HUFs having income from profits and gains of business or profession.”

To more about applicability of ITR return Form, ITR-1 to ITR-7, click on below link for the detailed video;

Circular No. 6 of 2023 dated May 24, 2023

Income of any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 of the Income-tax Act, 1961 ("the Act") or any trust or institution registered under section 12AA or section 12AB of the Act (hereinafter referred to as "the trust") is exempt subject to the fulfilment of the conditions provided under relevant sections of the Act. Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 amended the provisions related to application by a trust for registration or approval by amending the first and second proviso to clause (23C) of section 10, clause (ac) of sub-section (1) of section 12A of the Act, inserting section 12AB of the Act and amending the first and second proviso to sub-section (5) of section 80G of the Act. The amended provisions provide for the following:

(a) All the existing trusts were required to apply for registration/approval on or before 30.06.2021. However, on consideration of difficulties in the electronic filing of Form No. 10A, the Central Board of Direct Taxes (the Board) in exercise of the powers conferred upon it under Section 119 of the Act extended the due date for filing Form No. 10A in such cases to 31.08.2021 vide Circular No.12 of 2021 dated 25.06.2021, to 31.03.2022 vide Circular No. 16 of 2021 dated 29.08.2021 and further till 25.11.22 vide Circular No. 22 of 2022 dated 01.11.2022. Such registration/approval shall be valid for a period of 5 years. Thus, existing trusts are required to apply for fresh registration/approval and once the registration/approval is granted it is valid for five years.

(b) New trusts are required to apply for provisional registration/approval at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration/approval is sought. Such provisional registration/approval is valid for a maximum period of three years.

(c) Provisionally registered/approved trusts will again need to apply for regular registration/approval in Form No. 10AB at least six months prior to the expiry of the period of provisional registration/approval or within six months of the commencement of activities, whichever is earlier. This registration/approval is valid for a period of five years. On consideration of difficulties in electronic filing of Form No.10AB, the Board in exercise of its powers under section 119 of Act extended the due date for electronic filing of Form No. 10AB to 30.09.2022 vide Circular No 8 of 2022 dated 31.03.2022.

(d) The trusts once approved/registered for five years are required to apply at least six months prior to the expiry of the period of five years. (e) The deduction under section 80G of the Act in respect of a donation made by a donor to a fund or institution referred to in sub-clause (iv) of clause (a) of sub-section (2) of section 80G, shall be allowed to the donor only if a statement of such donations is furnished by the donce in Form 10BD. The certificate of such donation is required to be provided in Form No. 10BE. Further, Form No. 10BD and Form No. 10BE are required to be furnished on or before the 31st May, immediately following the financial year in which the donation is received.

Representations received from stakeholders requesting for clarity on provisions related to trusts are dealt with as under:

Clarification regarding application of section 115TD for failure to apply to registration/approval

Finance Act, 2023 has, inter-alia, amended section 115TD of the Act, so as to provide that the accreted income of the trusts not applying for registration/ approval, within the specified time, shall be made liable to tax in accordance with the provisions of section 115TD of the Act. This amendment has come into effect from 01.04.2023 and therefore applies to assessment year 2023-24 and subsequent assessment years.

Representations have been received stating that several trusts have not been able to apply for registration/ approval within the required time due to genuine hardship. This has also led to rejection of applications simply on the ground that these were delayed. As mentioned in para 1(a) above, the last date for filing an application by the existing trusts seeking registration/ approval was extended to 25.11.2022 vide Circular No. 22 of 2022 dated 01.11.2022. Further, as stated in 1(c) above, the due date for furnishing application for registration/approval by the provisionally registered/approved trusts was extended till 30.09.2022. These trusts shall be subject to tax under section 115TD of the Act in accordance with the provisions of the said section, as amended by the Finance Act, 2023 if the application is not made by 25.11.2022 or 30.09.2022, as the case may be.

In order to mitigate genuine hardship in such cases, the Board, in the exercise of the power under section 119 of the Act, extends the due date of making an application in,-

(i) Form No. 10A, in case of an application under clause (i) of the first proviso to clause (23C) of section 10 or under sub-clause (i) of clause (ac) of sub-section (1) of section 12A or under clause (i) of the first proviso to sub-section (5) of section 80G of the Act, till 30.09.2023 where the due date for making such application has expired prior to such date:

(ii) Form No. 10AB, in case of an application under clause (iii) of the first proviso to clause (23C) of section 10 or under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. till 30.09.2023 where the due date for making such application has expired prior to such date.

In view of the above, trusts may now apply for registration/approval under clause (i) or clause (iii) of the first proviso to clause (23C) of section 10 or sub-clause (1) or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act by 30.09.2023 and where such application is made by the said date and registration/approval is granted, the provisions of clause (iii) of sub-section (3) of section 115TD of the Act shall not apply on account of delay in making application in accordance with the provisions of clause (i) or (iii) of the first proviso to clause (23C) of section 10 or sub-clause (i) or (iii) of clause (ac) of sub-section (1) of section 12A of the Act.

It may be also noted that the extension of due date as mentioned in paragraph 5(ii) shall also apply in case of all pending applications under clause (iii) of the first proviso to clause (23C) of section 10 or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act, as the case may be. Hence, in cases where the trust has already made an application in Form No. 10AB under the said provisions but such application has been furnished after 30.09.2022 and where the Principal Commissioner or Commissioner has not passed an order before the issuance of this Circular, the pending application in Form No. 10AB may be treated as a valid application. Further, in cases where the trust had already made an application in Form No. 10AB, and where the Principal Commissioner or Commissioner has passed an order rejecting such application, on or before the issuance of this Circular, solely on account of the fact that the application was furnished after the due date, the trust may furnish a fresh application in Form No. 10AB within the extended time provided in paragraph 5(ii) i.e. 30.09.2023.

It is also clarified that where trusts have missed the deadline of 25.11.2022, as mentioned in para 1(a) above, for making an application for registration/ approval in Form No. 10A, and have subsequently furnished Form No. 10A seeking provisional registration/approval, the relevant functionality on the e-filing portal may be used for surrendering the Form No. 10A seeking provisional registration/approval and such trusts can make a new application in Form No. 10A for registration/ approval within the extended period up to 30.09.2023, as mentioned in paragraph 5(i).

Extension of due date for furnishing of Form No. 10BD.

In view of extension provided to funds or institutions seeking approval under sub-section (5) of section 80G of the Act, as discussed in paragraph 5(1), in the exercise of the power under section 119 of the Act, the Board also extends the due date for furnishing of statement of donation in Form No. 10BD and the certificate of donation in Form No. 1OBE in respect of the donations received during the financial year 2022-23 to 30.06.2023.

Clarification regarding applicability of provisional registration

Eighth proviso to clause (23C) of section 10 of the Act, inter-alla, provides that in the case of a trust referred to under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10 of the Act seeking provisional approval, such approval shall be from the assessment year immediately following the financial year in which the application is made. However, the first proviso to clause (23C) of section 10 provides that the application for provisional approval is required to be made at least one month prior to the commencement of the previous year relevant to the assessment year from which approval is sought.

Similarly, clause (ac) of sub-section (1) of section 12A of the Act provides that the trusts seeking provisional registration are required to make an application at least one month prior to the commencement of the previous year relevant to the assessment year from which registration is sought. However, sub-section (2) of section 12A, inter-alia, provides that the provisional registration shall be applicable from the assessment year immediately following the financial year in which the application for such registration is made. On the same lines, the first proviso to sub-section (5) of section 80G of the Act provides that application for provisional approval by a fund or institution is required to be made at least one month prior to the commencement of the previous year relevant to the assessment year from which approval is sought. However, the fourth proviso to sub-section (5) of section 80G, inter-alia, provides that the provisional approval granted under the second proviso shall be applicable from the assessment year immediately following the financial year in which the application for such registration is made.

With a view to bring consistency, it is hereby clarified that in case of trusts, funds or institutions seeking provisional approval or provisional registration as referred to in para 10 and 11, the said provisional approval or provisional registration shall be effective from the assessment year relevant to the previous year in which the application is made and shall be valid for a period of three assessment years subject to the provisions of clause (iii) of the first proviso to clause (23C) of section 10 or in sub-clause (iii) clause (ac) of sub-section (1) of section 12A or clause (iii) of the first proviso to sub-section (5) of section 80G of the Act, as the case may be.

Clarification regarding denial of exemption in case where the statement of accumulation is not filed by the due date.

Finance Act, 2023 has amended sub-section (2) of section 11 of the Act to provide that statement of accumulation as referred to in clause (a) of said sub-section [Form No. 10] is required to be furnished at least two months prior to the due date of furnishing return of income under sub-section (1) of section 139. Similarly, the provisions of Explanation 3 to the third proviso to clause (23C) of section 10 of the Act have also been amended. Further, the due date for furnishing the option for deemed application of income in Form No. 9A under clause (2) of the Explanation 1 to sub- section (1) of section 11 of the Act has also been amended to be at least two months prior to the due date of furnishing return of income, under sub-section (1) of section 139.

Representations have been received that the trusts may not be able to furnish Form No. 10 and Form No. 9A before the finalisation of their computation of income. Since the computation of income is finalised at the time of furnishing of return of income, therefore, the trusts should be allowed to furnish Form No. 10 and Form No. 9A by the due date of furnishing their income tax return.

It is clarified that the statement of accumulation in Form No. 10 and Form No. 9A is required to be furnished at least two months prior to the due date of furnishing return of income so that it may be taken into account while auditing the books of account. However, the accumulation/deemed application shall not be denied to a trust as long as the statement of accumulation/deemed application is furnished on or before the due date of furnishing the return as provided in sub-section (1) of section 139 of the Act.

Clarification regarding audit report to be furnished in Form No. 10B.

One of the conditions required to be fulfilled by the trusts to be eligible to claim exemption, under the relevant provisions of the Act, is that where the total income of any trust, as computed under the Act, without giving effect to the provisions of section 11 and section 12 of the Act or the provisions of the sub-clauses (iv), (v), (vi) and (via) of clause (23C) of section 10 of the Act, as the case may be, exceeds the maximum amount which is not chargeable to income-tax in any previous year, it is required to get its accounts audited.

In order to rationalise the provisions related to audit report of trusts and in view of the significant amendments made to the taxation of trusts over the past few years, revised audit report in Form No. 10B and Form No. 10BB have been notified vide Notification No. 7 of 2023 dated 21.02.2023 so as to provide that the report of audit of the accounts of a trust, shall be furnished in-

(a) Form No. 10B where,

(i) the total income of trust, exceeds Rs five crores during the previous year; or

(ii) such trust has received any foreign contribution during the previous year; or (iii) such trust has applied any part of its income outside India during the previous year;

(b) Form No. 10BB in other cases.

With regard to the above it may be noted that Form No. 10B and Form No. 10BB requires the auditor to bifurcate certain payments or application in electronic modes and non-electronic modes. The Notes to the said Forms provide that electronic modes shall be the following modes referred in rule 6ABBA of the Income-tax Rules, 1962:

(a) Credit Card;

(b) Debit Card;

(c) Net Banking:

(d) IMPS (Immediate Payment Service);

(e) UPI (Unified Payment Interface);

(i) RTGS (Real Time Gross Settlement);

(g) NEFT (National Electronic Funds Transfer); and

(h) BHIM (Bharat Interface for Money) Aadhar Pay.

It has been represented that the above description of electronic modes does not include account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account.

It is hereby clarified that for the purposes of Form No. 10B and Form No. 10BB electronic modes referred to in para 18 are in addition to the account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account.