The Provisional Collection of Taxes Act, 2023 – Gist
The Provisional Collection of Taxes Act, 2023 is a legal framework that allows the Central Government to immediately enforce certain tax provisions (mainly related to customs or excise duties) proposed in a Bill introduced in Parliament. This enforcement is temporary and continues for a maximum of 75 days, unless the Bill becomes law earlier or is withdrawn.
The purpose is to prevent revenue loss by allowing the government to collect increased or new duties right after introducing the Bill, rather than waiting for the full legislative process to be completed.
Key Highlights:
- Immediate Tax Collection: The Act allows taxes on customs or excise duties proposed in a Bill to take immediate effect, helping to prevent delays in revenue collection.
- Government Declaration: The Central Government can insert a declaration in the Bill saying it is in the public interest to give immediate effect to tax provisions.
- Time Limit: These temporary tax provisions will automatically expire after 75 days if not enacted into law.
- Refunds: If the final law changes the proposed rates or if the provision is dropped, then extra tax collected is refunded.
- Repeal: This Act replaces the Provisional Collection of Taxes Act, 1931, modernising the system.
Section 1: Short Title
Original Law Text:
- Short title.— This Act may be called the Provisional Collection of Taxes Act, 2023.
Simple Explanation:
This section states the official name of the law as the Provisional Collection of Taxes Act, 2023. It is simply the title under which the law will be known and referred to.
Vital Pointers to Remember:
- This is the formal name of the Act.
- It helps identify and cite the Act correctly in legal and administrative contexts.
- No other information is given in this section—just the name.
Section 2: Definition
Original Law Text:
- Definition.— In this Act, a “declared provision” means a provision in a Bill in respect of which a declaration has been made under section 3.
Simple Explanation:
Here, the law defines what the term “declared provision” means. It refers to any tax-related clause in a Bill where the government has officially declared that the clause should take immediate effect, as explained in Section 3.
Vital Pointers to Remember:
- Declared provision = a tax clause in a Bill with a formal declaration for immediate effect.
- The declaration must be made following the process in Section 3.
- Only provisions with such a declaration fall under the scope of this Act.
Section 3: Power of Central Government to Make Declaration
Original Law Text:
- Where a Bill to be introduced in Parliament on behalf of the Government provides for the imposition or increase of a duty of customs or excise, with or without a change in tariff classification, the Central Government may include a declaration in the Bill stating it is in the public interest for that part of the Bill to take immediate effect under this Act.
Simple Explanation:
If the government introduces a Bill in Parliament that aims to raise or add customs or excise duties, they can declare that those parts of the Bill should start working immediately, without waiting for the Bill to be fully passed. This is allowed if it benefits the public interest.
Vital Pointers to Remember:
- Applies only to customs and excise duties.
- The government adds a declaration in the Bill for immediate application of the tax changes.
- The declaration must be seen as serving public interest.
Section 4: Effect of Declarations Under This Act, and Duration Thereof
Original Law Text:
4(1). A declared provision becomes law immediately after the day the Bill is introduced.
4(2). It stops being law when:
- (a) It becomes part of an actual law (with or without changes),
- (b) The government notifies it should stop (based on Parliament’s decision), or
- (c) 75 days pass from the day the Bill was introduced, and it’s not enacted yet.
Simple Explanation:
Once a Bill with a declared tax provision is introduced, that provision starts working right after the introduction day. But this effect is temporary. It stops either when:
- The Bill becomes a law (even if it’s been changed),
- The government issues a notification to end it (after Parliament agrees), or
- 75 days go by without the Bill becoming law.
Vital Pointers to Remember:
- Immediate effect after Bill introduction.
- Ends when: law is passed, government ends it, or 75 days are over.
- Ensures temporary enforcement of tax changes.
Section 5: Refunds To Be Made In Certain Cases
Original Law Text:
5(1). If a declared provision becomes law in an amended form before the 75 days are up, then extra duties collected (based on the original version) must be refunded, but only up to the difference in rates.
5(2). If the provision is cancelled or not enacted, then all extra duties collected under that provision must be refunded.
Simple Explanation:
If the temporary tax is later changed or removed, and it collected more money than legally needed, then the extra amount must be returned to the people or businesses who paid it. But refunds won’t be more than the rate difference between the declared and final law.
Vital Pointers to Remember:
- Refunds apply if:
- The law is changed, and the new rate is lower.
- The provision is dropped or expires.
- Refunds are limited to the difference in tax rates.
- Ensures fair treatment for taxpayers during the temporary period.
Section 6: Repeal
Original Law Text:
- The Provisional Collection of Taxes Act, 1931 (16 of 1931) is hereby repealed.
Simple Explanation:
The old 1931 Act dealing with provisional tax collection is now cancelled and replaced by this 2023 Act. This makes sure the law is modern and up to date.
Vital Pointers to Remember:
- Old Act of 1931 is officially abolished.
- The 2023 Act takes its place.
- Reflects an effort to modernise tax collection laws.