New Delhi, Aug 10 (IANS): The Lok Sabha on Wednesday passed the Taxation Laws (Amendment) Bill, 2016, that seeks to amend the Income Tax Act, 1961, and Customs Tariff Act, 1975.

Answering queries posed by several members, including Congress' Deepender Singh Hooda and Trinamool Congress' Sugata Bose, Union Finance Minister Arun Jaitley said the new bill will address various issues of demerger of companies and related matters.

In regard to the direct taxes, the bill seeks to widen the scope of definition of demerger under the Income Tax law to include the splitting up of or the reconstruction of a public sector company, which ceases to be so as a result of transfer of its shares.

In regard to indirect taxes, the draft legislation seeks to increase the tariff rate of customs duty from current 10 per cent to the WTO-bound rate of 40 per cent on rough marbles and granite blocks/slabs.

"The enactment of the proposed bill will enable the government to fix appropriate effective rate of customs duty on marble and travertine blocks/slabs and granite blocks/slabs," said the statement of objective for the bill.

The Companies Act, 1956, allows companies to demerge (split) into multiple companies. As a result of the demerger, the income, expenses and profits of the parent company are transferred to the resultant companies.

The Income Tax Act, 1961 takes into account these transfers from the parent company for taxation of resultant companies. Now the new bill clarifies that these provisions will apply in case a public sector company demerges, and the resultant company is no longer a public sector company.