BRC ENTERPRISES Was formed by BONGARALA RAVICHANDRAN and it commenced business operations from NOV 6Th of 2021 at Kakinada….
On BRC Profile page, you can find a quick description of the
Company’s mission and what it does. In just a few words, BRC Enterprises
explains that the company’s goal is to help and you will get complete solution
for your needs.
You’re ready to start a business, but you need inspiration.
And you need to know exactly what’s involved. You’re not alone. Many people are
drawn to the idea of owning a business, gaining independence and reaping
financial rewards; yet they’re unsure of how to best get started. Every line of
business has its own unique characteristics – from the education, training and
skills required to be successful to the startup investment costs. This e-book
walks through a long list of business startup opportunities and explains the
key information you should know to pursue each one. Keep in mind that it’s
essential to find a business opportunity you’re passionate about – regardless
of the startup requirements and costs – as you’ll likely be working on it
around the clock, at least in the beginning. And don’t forget that every
business needs certain basics, such as software for accounting and bookkeeping
as well as insurance, which you can further examine once you begin planning for
your business. For now, explore your options and thoroughly research any new
business opportunity before you dive in.
SOCIAL MEDIA MANAGER
You’ll need to know all the latest trends and tricks for
building and engaging an audience through social media – whether through
Facebook, Twitter, Pinterest, LinkedIn or other social sites – as well as how
to use analytics to gauge how well your social campaigns perform. Being active
and building a large following on social media sites is a good first step.
Doing What You Love
Starting a successful new business takes time. Lots of time.
So as you begin to think about compelling new business ideas none are more
important to consider than those related to your areas of passion. If you’re
going to invest the long hours it takes to plan and successfully run a new
business it is absolutely critical that you are passionate and get excited
about the business concept you ultimately embrace. Your passion naturally
translates into every aspect of your business. If you lack passion for the new
business, your planning effort will almost certainly be stunted. Dispassion
about your business will ooze out in nearly every area of your business –
making it even harder for you to generate investment funding, hire good
employees, and earn revenue. In a competitive marketplace, dispassion can
nearly condemn a new business to failure even before it starts.
Can’t Find It? Create It! Why Frustration is Good....?
Look around where you are. You are surrounded by business
ideas. They are absolutely everywhere. Do you see them around you? No? That’s
ok, most people don’t at first. But that doesn’t change the fact that they are
all around you right this very moment. The problem is that most good business
ideas are hidden. If you seek business ideas directly they will often remain
hidden. The trick is that you need to know what to look for. The best business
ideas represent solutions to problems that make things better, easier, faster,
or more efficient. Problems can take the form of frustrations, annoyances,
dissatisfaction, or even anger – generally things that most people try to
resist or avoid. Collectively you can refer to each of these symptoms as pain
points. Pain points are the catalysts for great business ideas. Since each of
us has an unlimited supply of pain points each of us has an unlimited supply of
business ideas all around us. If a person has a big enough pain point he or she
will do anything to find a solution to relieve the pain. That person is also
known as a customer and that solution can form the foundation of a new
business.
My promise to a CLIENTS, Present and Future is to be a Confident. A Complete SOLUTIONS for your NEEDS...........
Our Company’s Services Are as follows below :-
Subsidy Schemes
Manufacturers
Tourism
Resorts
Services and Etc.,
Project Reports
Tourism Projects
Business Projects
Resorts Projects &
Etc.,
MSME Registrations
GST Registrations
Labour License &
Etc.,
Personal Loans
Pre – Owned Cars
Insurance
Health Insurance
Life Insurance
General Insurance
Income Tax Returns
(ITR) WITHOUT P&L BALANCE SHEET
Income Tax returns are a form through which you
report the income you earned from various sources and therefore you pay the
taxes to the Income Tax Department. However, the income tax act authorizes
certain eligible persons to file their income tax once a year. Therefore,
filing an Income Tax Return Legitimize your incomes. Moreover, your Income Tax
returns play a vital role in the time of applying loan, credit card, etc.,
PF
Withdrawal by Employee
Employee Provident Fund (EPF) members can withdraw the entire sum
amount accumulated in their PF account after they retire. Here, we help you in
offering the service of registering PF Withdrawal by Employee.
Company
Annual Filings
Company Annual Filings refers to the filing of Audited Annual
Financial Accounts of the Company along with Directors Report and Annual Return
of Company with Registrar of Companies.
Company ROC
Filings
All the companies incorporated in India need to file the Audited
Financial Statement and annual returns as per the Companies Act. If they fail
to comply with the regulations then they could result in penalties and fines
for the company.
Changes in
Partnership Registration
A partnership firm is the easiest and most important form of
Startup Partnership registration. Because this form does
Partnership
Firm Registration
A partnership firm is the easiest and most important form of
Startup Partnership registration. Because this form does
GST
Registration
Under the GST regime, every company that supplies goods and
services has to register under GST. Businesses whose turnover exceeds 40 Lakhs,
is required to register as a normal taxable person. And for certain businesses
GST registration is mandatory. Hence, this process is called GST registration.
Once you apply for GST number, you will receive a unique GSTIN (Goods and
Service Tax identification number). One of the advantages that you get with GST
registration is that you will get a legal identity as a supplier.
GST Returns
(Composition)
All the registered businesses have to file GST returns monthly,
quarterly, or annually. This document mentions all the details related to GST
invoices, receipts, and payments for a particular period. However, any type of
regular business has to file 2 monthly returns and 1 annual return. Also, there
are types of GST Returns
GST Returns
(Regular)
All the registered businesses have to file GST returns quarterly,
or annually. This document mentions all the details related to GST invoices,
receipts, and payments for a particular period. However, any type of regular
business has to file Quaterly returns and annual return
Cancellation
of GST Registration
we offer Cancellation of GST
Registration
GSTR 9
The GSTR 9 is an annual return form format for all the regular
taxpayers registered under GST.
FSSAI or
Food License
FSSAI stands for the Food Safety and Standards Authority. Food
License registration is required to run a food business. So, one has to
register under FSSAI, for manufacturing, distributing, transporting, retail
business of food products.
Imports and
Exports Code (IEC)
Imports and Exports code is an important business identification
number which is mandatory for export from Indian or Import to India. Therefore,
no exports or imports should be done by any person without obtaining an IEC
(Import & Exports code)
ISO
Certification
ISO certification services company in India provides ISO
certification ISO 9001, 14001, 45001,22000, 27001.
MSME or
Udyog Aadhar or Udyam Registration
MSME stands for Micro, Small, and Medium enterprises. So According
to the Micro, Small, and medium enterprises development act, the enterprises
are classified into two categories - A Manufacturing enterprises and Service
enterprises. Hence, Udayam Registration is the new process of MSME/Udyog Aadhar
Registration launched by the Micro, Small, and Medium enterprises.
PF &
ESI Registration
Provident fund registration is mandatory if the number of employees
exceeds 20. However, our BRC will help
you with PF registration. Because, every company has to offer a PF to its
employees. The application of the PF registration is made with Digital
signature of the director of the company. & ESI Stands for Employee State
Insurance. This is managed by an Employee State Insurance Corporation. Hence,
this scheme is started for the workers to provide them with a huge variety of
medical, monetary, and other benefits from the employer. So, any company having
more than 10 employees with a maximum salary of 15,000/- has to mandatorily
register for ESI.
Private
Security Agency Licence (PSARA)
PSARA is mandatory for all the Private Security Agencies. The
demand for private security services has increased steadily among the public to
protect themselves against the different acts.
Professional
Tax Registration
Professional Tax is a tax imposed by the state governments in
India. However, it is issued on persons earning income from salary or
professionals such as CA, Doctor, Lawyer etc., and from the company LLP,
directors, and designated partners and Proprietor who have crossed the
Specified turnover.
RERA
Registration for Agent
RERA - Real Estate Regulatory Authority was introduced to ensure
regulate and govern real estate at the state level. RERA ensures greater
transparency by reducing the chances of fraud and delays.
Shop and
Establishment (Labour License)
Labour License is crucial to ever entity for the welfare of
employees. Consequently, the respective state government has made it mandatory.
The vital aims and objectives of the Labour registrations are maintaining a
peaceful environment in the labor sector, decent working conditions, and
healthy relations between employees and employers. Hence, every commercial
establishment must register under the shop and commercial establishments Act
1960.
Society
Registration
BRC Enterprises offers you the fastest and easiest online society
registration services. Registration can be done very easily. We deliver the
services to amend registered Society.
TAN
The TAN number is required for filing TDS returns. Also, the TAN
numbers should be acquired by everyone who is in charge of deducting and
gathering taxes. However, Tax deducted at TDS guarantees that the government
Preparation
of Project
We are one of the most efficient financial, legal and accounting
services offering qualitative services. Along with these we also provide
preparation of project services for our clients.
Trade
License
A trade license is a way to determine specific businesses from a
particular locality. However, it is determined to ensure that the citizen is
negatively affected by any health hazard and a Nuisance by the improper
carrying of trade. Hence, the trade license is to ensure that the manner and
locality in which the company is being carried out is according to the rules
and safety guidelines.
Trade Mark
Registration
Trademarks are the special signs that are used to identify goods
and services from a certain company. Trademarks can be designs, pictures, or
even expressions. So, to get the protection from Trademark rights one has to
register the trademark. One of the main advantages of registering a trademark
is that it prevents others from copying your mark and misrepresenting other
products with your mark.
Weights
& Measures Registration
Weights and Measures registration is crucial for any company. Our
goal is to provide prompt, responsive services to all of the businesses.
Income Tax
Returns (ITR) WITH P&L BALANCE SHEET
Income Tax returns are a form through which you report the income
you earned from various sources and therefore you pay the taxes to the Income
Tax Department. However, the income tax act authorizes certain eligible persons
to file their income tax once a year. Therefore, filing an Income Tax Return
Legitimize your incomes. Moreover, your Income Tax returns play a vital role in
the time of applying loan, credit card, etc.,
PF &
ESI Returns
We help our clients in registering their firm under Employee State
Insurance Act and obtaining the required code numberBRC Enterprises offers you PF
& ESI returns services for all the companies.
PF Returns
PF & ESI returns must be filed by all the persons and
employers on a monthly basis who are having PF & ESI Registration. However,
PF Return has introduced for encouraging savings among the employees and benefits
them during retirement
Professional
Tax Returns for Employees
Profession Tax (PT) is a tax levied on the employment and
Profession by respective State Government in India. Professional Tax Employee
Registration is a must for all the employers.
Professional
Tax Returns for Owners
A company working in different states is required to register for
professional tax in all the states.
Tax Audit
(Income Tax Returns) ITR
Income Tax audit is aimed at evaluating whether an individual or
company has accurately filed the income tax returns of an assessment year. The
tax audit process simplifies the computation of tax returns.
TDS Returns
The TAN number is required for filing TDS returns. Also, the TAN
numbers should be acquired by everyone who is in charge of deducting and
gathering taxes. However, Tax deducted at TDS guarantees that the government
Advance Tax
for Income Tax
Advance tax is tax payable by individuals who have sources of
income other than their salary….
DSC Class-3
Protecting your data is our top priority. A DSC can provide
security for your business needs. A Digital Signature Certificate (DSC) is a
secured computerized key that checks the character of the holder, which is
given by a Certifying Authority (CA). which normally incorporates your
character (name, nation email, APNIC account name, and your public key).
No Income
Certificate Or Income Certificate
Income certificate is issued by the Government as a proof of all
source information with respect to the income of a person. Hence we help you in
registering for No income certificate or Income certificate services.
Preparation
of Form 16
Form 16 also known as TDS deduction certificate. Form 16 is the
certificate of deduction of tax at source and issued on deduction of tax by the
employer on behalf of the employees.
CMA Data
Preparation
CMA Data Preparation, CMA Report stands for Credit Monitoring
Arrangement Data. CMA data is required for Project Loans, Term Loans and
Working Capital Limits. As per the regulation, a company is required to provide
CMA Data getting the loan from the bank and every year.
& LEGAL SERVICES
For More Details 9966175777, 9441136781
KEY POINT: Generating new business ideas is a highly
iterative process. By looking at each idea again from a fresh perspective you
can always improve it. Always! The idea you thought of today can be targeted to
a better niche, packaged with a better feature, or bundled with a better
service to better solve customer problems. Discuss your ideas with a trusted
friend. It can be a powerful way to take a good idea today and turn it into a
compelling business idea tomorrow. So keep looking at, thinking about, and
talking through your ideas. You may be able to start your new business sooner
than you think.
Ok, Now What?
So now that you have a compelling new business idea or two, pause for a moment to see how far you have come. You have now gone through a series of steps to help you generate a good number of business ideas and quickly evaluate them. You have finally scrambled over the obstacle that thwarts so many others. What should you do now? Celebrate, of course. Then the hard work really kicks in. But before you invest what could be a substantial amount of money or time to launch any idea here is a sampling of questions you would be wise to consider for each of your top ideas:
• Who would your primary competitors be and what would your competitive advantage be?
• Would this competitive advantage be sustainable? • How would people learn about your product or service?
• How would people purchase your product or service?
• Who would be the key members of your management team, what are their backgrounds, and what skill gaps would still need to be addressed?
• How much money would you need to get started and how much money would you need to cover your expenses during each of the first few years?
• How much revenue would you expect to generate during each of the first few years? • How long would it take you to reach profitability?
• Is there a way you can start small focusing on a targeted niche, as a proof of concept, to reduce any potential risk?
INCOME-TAX ACT, 1961*
[43 OF 1961]
[AS AMENDED BY FINANCE ACT, 2022]
An Act to consolidate and amend the law relating to
income-tax and super-tax
BE
it enacted by Parliament in the Twelfth Year of the Republic of India as
follows :—
CHAPTER I
PRELIMINARY
Short title, extent and commencement.
1. (1) This Act may be
called the Income-tax Act, 1961.
(2)
It extends to the whole of India.
(3)
Save as otherwise provided in this Act, it shall come into force on the 1st day
of April, 1962.
Definitions.
2. In this Act, unless the context
otherwise requires,—
(1)
"advance tax" means the advance tax payable in accordance with the
provisions of Chapter XVII-C;
(1A) 1"agricultural income"2 means—
(a) any rent or
revenue derived from land which is situated in India and is used for
agricultural purposes;
(b) any income
derived from such land by—
(i)
agriculture; or
(ii) the
performance by a cultivator or receiver of rent-in-kind of any process
ordinarily employed by a cultivator or receiver of rent-in-kind to render the
produce raised or received by him fit to be taken to market; or
(iii) the sale
by a cultivator or receiver of rent-in-kind of the produce raised or received
by him, in respect of which no process has been performed other than a process
of the nature described in paragraph (ii) of this sub-clause;
(c) any income
derived from any building owned and occupied by the receiver of the rent or
revenue of any such land, or occupied by the cultivator or the receiver of
rent-in-kind, of any land with respect to which, or the produce of which, any
process mentioned in paragraphs (ii) and (iii) of sub-clause (b)
is carried on :
Provided that—
(i) the
building is on or in the immediate vicinity of the land, and is a building
which the receiver of the rent or revenue or the cultivator, or the receiver of
rent-in-kind, by reason of his connection with the land, requires as a dwelling
house, or as a store-house, or other out-building, and
(ii) the land is either assessed to land revenue in India or is subject to a local rate assessed and collected by officers of the Government as such or where the land is not so assessed to land revenue or subject to a local rate, it is not situated—
(A) in any area
which is comprised within the jurisdiction of a municipality (whether known as
a municipality, municipal corporation, notified area committee, town area
committee, town committee or by any other name) or a cantonment board and which
has a population of not less than ten thousand; or
(B) in any area
within the distance, measured aerially,—
(I) not
being more than two kilometres, from the local limits of any municipality or
cantonment board referred to in item (A) and which has a population of
more than ten thousand but not exceeding one lakh; or
(II) not
being more than six kilometres, from the local limits of any municipality or
cantonment board referred to in item (A) and which has a population of
more than one lakh but not exceeding ten lakh; or
(III) not being
more than eight kilometres, from the local limits of any municipality or
cantonment board referred to in item (A) and which has a population of
more than ten lakh.
Explanation 1.—For the removal of doubts, it is hereby
declared that revenue derived from land shall not include and shall be deemed
never to have included any income arising from the transfer of any land
referred to in item (a) or item (b) of sub-clause (iii) of
clause (14) of this section.
Explanation 2.—For the removal of doubts, it is hereby
declared that income derived from any building or land referred to in
sub-clause (c) arising from the use of such building or land for any
purpose (including letting for residential purpose or for the purpose of any
business or profession) other than agriculture falling under sub-clause (a)
or sub-clause (b) shall not be agricultural income.
Explanation 3.—For the purposes of this clause, any income
derived from saplings or seedlings grown in a nursery shall be deemed to be
agricultural income.
Explanation 4.—For the purposes of clause (ii) of the
proviso to sub-clause (c), "population" means the population
according to the last preceding census of which the relevant figures have been
published before the first day of the previous year;
(1B)
"amalgamation", in relation to companies, means the merger of one or
more companies with another company or the merger of two or more companies to
form one company (the company or companies which so merge being referred to as
the amalgamating company or companies and the company with which they merge or
which is formed as a result of the merger, as the amalgamated company) in such
a manner that—
(i) all
the property of the amalgamating company or companies immediately before the
amalgamation becomes the property of the amalgamated company by virtue of the
amalgamation;
(ii) all
the liabilities of the amalgamating company or companies immediately before the
amalgamation become the liabilities of the amalgamated company by virtue of the
amalgamation;
(iii)
shareholders holding not less than three-fourths in value of the shares in the
amalgamating company or companies (other than shares already held therein
immediately before the amalgamation by, or by a nominee for, the amalgamated
company or its subsidiary) become shareholders of the amalgamated company by
virtue of the amalgamation,
otherwise than as a result of the acquisition
of the property of one company by another company pursuant to the purchase of
such property by the other company or as a result of the distribution of such
property to the other company after the winding up of the first-mentioned
company;
(1C)
"Additional Commissioner" means a person appointed to be an
Additional Commissioner of Income-tax under sub-section (1) of section
117;
(1D)
"Additional Director" means a person appointed to be an Additional
Director of Income-tax under sub-section (1) of section
117;
(2)
"annual value", in relation to any property, means its annual value
as determined under section
23;
(3) [***]
(4)
"Appellate Tribunal" means the Appellate Tribunal constituted
under section
252 ;
(5)
"approved gratuity fund" means a gratuity fund which has been and
continues to be approved by the Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner or Commissioner in accordance with the
rules contained in Part C of the Fourth Schedule ;
(6)
"approved superannuation fund" means a superannuation fund or any
part of a superannuation fund which has been and continues to be approved by
the Principal Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner in accordance with the rules contained in Part B
of the Fourth Schedule ;
(7)
"assessee" means a person by whom any tax or any other sum of money
is payable under this Act, and includes—
(a) every
person in respect of whom any proceeding under this Act has been taken for the
assessment of his income or assessment of fringe benefits or of the income of
any other person in respect of which he is assessable, or of the loss sustained
by him or by such other person, or of the amount of refund due to him or to
such other person ;
(b) every
person who is deemed to be an assessee under any provision of this Act ;
(c) every
person who is deemed to be an assessee in default under any provision of this
Act ;
(7A)
"Assessing Officer" means the Assistant Commissioner or Deputy
Commissioner or Assistant Director or Deputy Director or the Income-tax Officer
who is vested with the relevant jurisdiction by virtue of directions or orders
issued under sub-section (1) or sub-section (2) of section
120 or any other
provision of this Act, and the Additional Commissioner or Additional Director
or Joint Commissioner or Joint Director who is directed under clause (b)
of sub-section (4) of that section to exercise or perform all or any of the
powers and functions conferred on, or assigned to, an Assessing Officer under
this Act ;
(8)
"assessment" includes reassessment ;
(9)
"assessment year" means the period of twelve months commencing on the
1st day of April every year ;
(9A)
"Assistant Commissioner" means a person appointed to be an Assistant
Commissioner of Income-tax or a Deputy Commissioner of Income-tax under
sub-section (1) of section
117 ;
(9B)
"Assistant Director" means a person appointed to be an Assistant
Director of Income-tax under sub-section (1) of section
117 ;
(10)
"average rate of income-tax" means the rate arrived at by dividing
the amount of income-tax calculated on the total income, by such total income ;
(11)
"block of assets" means a group of assets falling within a class of
assets comprising—
(a) tangible
assets, being buildings, machinery, plant or furniture ;
(b) intangible
assets, being know-how, patents, copyrights, trade-marks, licences, franchises
or any other business or commercial rights of similar nature, 3[not being goodwill of a business or
profession,]
in respect of which the same percentage of
depreciation is prescribed ;
(12)
"Board" means the Central Board of Direct Taxes constituted under the
Central Boards of Revenue Act, 1963 (54 of 1963) ;
(12A)
"books or books of account" includes ledgers, day-books, cash books,
account-books and other books, whether kept 4[in the written form or in electronic form or in digital form or
as print-outs of data stored in such electronic form or in digital form or in] a floppy, disc, tape or any other form of electro-magnetic
data storage device;
(13)
"business" includes any trade, commerce or manufacture or any
adventure or concern in the nature of trade, commerce or manufacture;
(13A) "business
trust" means a trust registered as,—
(i) an
Infrastructure Investment Trust under the Securities and Exchange Board of
India (Infrastructure Investment Trusts) Regulations, 2014 made under the
Securities and Exchange Board of India Act, 1992 (15 of 1992); or
(ii) a
Real Estate Investment Trust under the Securities and Exchange Board of India
(Real Estate Investment Trusts) Regulations, 2014 made under the Securities and
Exchange Board of India Act, 1992 (15 of 1992), 5[***]
6[***];
(14) "capital
asset" means—
(a) property of
any kind held by an assessee, whether or not connected with his business or
profession;
(b) any
securities held by a Foreign Institutional Investor which has invested in such
securities in accordance with the regulations made under the Securities and
Exchange Board of India Act, 1992 (15 of 1992);
7[(c) any unit linked insurance policy
to which exemption under clause (10D) of section
10 does not apply
on account of the applicability of the fourth and fifth provisos thereof,]
but does not include—
(i) any
stock-in-trade [other than the securities referred to in sub-clause (b)],
consumable stores or raw materials held for the purposes of his business or
profession ;
(ii) personal
effects, that is to say, movable property (including wearing apparel and furniture)
held for personal use by the assessee or any member of his family dependent on
him, but excludes—
(a) jewellery;
(b)
archaeological collections;
(c) drawings;
(d) paintings;
(e) sculptures;
or
(f) any work of
art.
Explanation 1.—For the purposes of this sub-clause,
"jewellery" includes—
(a) ornaments
made of gold, silver, platinum or any other precious metal or any alloy
containing one or more of such precious metals, whether or not containing any
precious or semi-precious stone, and whether or not worked or sewn into any
wearing apparel;
(b) precious or
semi-precious stones, whether or not set in any furniture, utensil or other
article or worked or sewn into any wearing apparel;
(iii)
agricultural land in India, not being land situate—
(a) in any area
which is comprised within the jurisdiction of a municipality (whether known as
a municipality, municipal corporation, notified area committee, town area
committee, town committee, or by any other name) or a cantonment board and
which has a population of not less than ten thousand ; or
(b) in any area
within the distance, measured aerially,—
(I) not
being more than two kilometres, from the local limits of any municipality or
cantonment board referred to in item (a) and which has a population of
more than ten thousand but not exceeding one lakh; or
(II) not
being more than six kilometres, from the local limits of any municipality or
cantonment board referred to in item (a) and which has a population of
more than one lakh but not exceeding ten lakh; or
(III) not being
more than eight kilometres, from the local limits of any municipality or
cantonment board referred to in item (a) and which has a population of
more than ten lakh.
Explanation.—For the purposes of this sub-clause, "population"
means the population according to the last preceding census of which the
relevant figures have been published before the first day of the previous year;
(iv) 6½ per
cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, or National Defence Gold
Bonds, 1980, issued by the Central Government;
(v) Special
Bearer Bonds, 1991, issued by the Central Government ;
(vi) Gold
Deposit Bonds issued under the Gold Deposit Scheme, 1999 or deposit
certificates issued under the Gold Monetisation Scheme, 2015 notified by the
Central Government.
Explanation 1.—For the removal of doubts, it is hereby
clarified that "property" includes and shall be deemed to have always
included any rights in or in relation to an Indian company, including rights of
management or control or any other rights whatsoever.
Explanation 2.—For the purposes of this clause—
(a) the
expression "Foreign Institutional Investor" shall have the meaning
assigned to it in clause (a) of the Explanation to section
115AD;
(b) the
expression "securities" shall have the meaning assigned to it in
clause (h) of section 2 of the Securities Contracts (Regulation) Act,
1956 (42 of 1956);
(15)
"charitable purpose" includes relief of the poor, education, yoga,
medical relief, preservation of environment (including watersheds, forests and
wildlife) and preservation of monuments or places or objects of artistic or
historic interest, and the advancement of any other object of general public
utility:
Provided that the advancement of any other object of
general public utility shall not be a charitable purpose, if it involves the
carrying on of any activity in the nature of trade, commerce or business, or
any activity of rendering any service in relation to any trade, commerce or
business, for a cess or fee or any other consideration, irrespective of the
nature of use or application, or retention, of the income from such activity,
unless—
(i) such
activity is undertaken in the course of actual carrying out of such advancement
of any other object of general public utility; and
(ii) the
aggregate receipts from such activity or activities during the previous year,
do not exceed twenty per cent of the total receipts, of the trust or
institution undertaking such activity or activities, of that previous year;
(15A)
"Chief Commissioner" means a person appointed to be a Chief
Commissioner of Income-tax 8[or a Director General of Income-tax] or a
Principal Chief Commissioner of Income-tax 8[or a Principal Director General of
Income-tax] under sub-section (1) of section
117;
(15B)
"child", in relation to an individual, includes a step-child and an
adopted child of that individual;
(16)
"Commissioner" means a person appointed to be a Commissioner of
Income-tax or a Director of Income-tax or a Principal Commissioner of Income-tax
or a Principal Director of Income-tax under sub-section (1) of section
117;
(16A)
"Commissioner (Appeals)" means a person appointed to be a
Commissioner of Income-tax (Appeals) under sub-section (1) of section
117 ;
(17)
"company" means—
(i) any
Indian company, or
(ii) any
body corporate incorporated by or under the laws of a country outside India, or
(iii) any
institution, association or body which is or was assessable or was assessed as
a company for any assessment year under the Indian Income-tax Act, 1922 (11 of
1922) or which is or was assessable or was assessed under this Act as a company
for any assessment year commencing on or before the 1st day of April, 1970, or
(iv) any
institution, association or body, whether incorporated or not and whether
Indian or non-Indian, which is declared by general or special order of the
Board to be a company :
Provided that such institution, association or body shall be deemed
to be a company only for such assessment year or assessment years (whether
commencing before the 1st day of April, 1971 or on or after that date) as may
be specified in the declaration ;
(18) "company
in which the public are substantially interested"—a company is said to be
a company in which the public are substantially interested—
(a) if it
is a company owned by the Government or the Reserve Bank of India or in which
not less than forty per cent of the shares are held (whether singly or taken
together) by the Government or the Reserve Bank of India or a corporation owned
by that bank ; or
(aa) if it is a
company which is registered under section 25 of the Companies Act, 1956 (1 of
1956)9 ; or
(ab) if it is a
company having no share capital and if, having regard to its objects, the
nature and composition of its membership and other relevant considerations, it
is declared by order of the Board to be a company in which the public are
substantially interested :
Provided that such company shall be deemed to be a company in which
the public are substantially interested only for such assessment year or
assessment years (whether commencing before the 1st day of April, 1971, or on
or after that date) as may be specified in the declaration ; or
(ac) if it is a
mutual benefit finance company, that is to say, a company which carries on, as
its principal business, the business of acceptance of deposits from its members
and which is declared by the Central Government under section 620A10 of the Companies Act, 1956 (1 of 1956),
to be a Nidhi or Mutual Benefit Society ; or
(ad) if it is a
company, wherein shares (not being shares entitled to a fixed rate of dividend
whether with or without a further right to participate in profits) carrying not
less than fifty per cent of the voting power have been allotted unconditionally
to, or acquired unconditionally by, and were throughout the relevant previous
year beneficially held by, one or more co-operative societies ;
(b) if it is a
company which is not a private company as defined in the Companies Act, 1956 (1
of 1956)10a, and the conditions specified either in item
(A) or in item (B) are fulfilled, namely :—
(A) shares in
the company (not being shares entitled to a fixed rate of dividend whether with
or without a further right to participate in profits) were, as on the last day
of the relevant previous year, listed in a recognised stock exchange in India
in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of
1956), and any rules made thereunder ;
(B) shares in
the company (not being shares entitled to a fixed rate of dividend whether with
or without a further right to participate in profits) carrying not less than
fifty per cent of the voting power have been allotted unconditionally to, or
acquired unconditionally by, and were throughout the relevant previous year
beneficially held by—
(a) the
Government, or
(b) a
corporation established by a Central, State or Provincial Act, or
(c) any company
to which this clause applies or any subsidiary company of such company if the
whole of the share capital of such subsidiary company has been held by the
parent company or by its nominees throughout the previous year.
Explanation.—In its application to an Indian company whose business consists
mainly in the construction of ships or in the manufacture or processing of
goods or in mining or in the generation or distribution of electricity or any
other form of power, item (B) shall have effect as if for the words
"not less than fifty per cent", the words "not less than forty
per cent" had been substituted ;
(19) "co-operative
society" means a co-operative society registered under the Co-operative
Societies Act, 1912 (2 of 1912), or under any other law for the time being in
force in any State for the registration of co-operative societies ;
(19A)
"Deputy Commissioner" means a person appointed to be a Deputy
Commissioner of Income-tax under sub-section (1) of section
117 ;
(19AA)
"demerger", in relation to companies, means the transfer, pursuant to
a scheme of arrangement under sections 391 to 39411 of the Companies Act, 1956 (1 of 1956),
by a demerged company of its one or more undertakings to any resulting company
in such a manner that—
(i) all
the property of the undertaking, being transferred by the demerged company,
immediately before the demerger, becomes the property of the resulting company
by virtue of the demerger;
(ii) all the
liabilities relatable to the undertaking, being transferred by the demerged
company, immediately before the demerger, become the liabilities of the
resulting company by virtue of the demerger;
(iii) the
property and the liabilities of the undertaking or undertakings being
transferred by the demerged company are transferred at values appearing in its
books of account immediately before the demerger:
Provided that the provisions of this sub-clause shall not apply
where the resulting company records the value of the property and the
liabilities of the undertaking or undertakings at a value different from the
value appearing in the books of account of the demerged company, immediately
before the demerger, in compliance to the Indian Accounting Standards specified
in Annexure to the Companies (Indian Accounting Standards) Rules, 2015;
(iv) the
resulting company issues, in consideration of the demerger, its shares to the
shareholders of the demerged company on a proportionate basis except where the
resulting company itself is a shareholder of the demerged company;
(v) the
shareholders holding not less than three-fourths in value of the shares in the
demerged company (other than shares already held therein immediately before the
demerger, or by a nominee for, the resulting company or, its subsidiary) become
shareholders of the resulting company or companies by virtue of the demerger,
otherwise than as a result of the acquisition
of the property or assets of the demerged company or any undertaking thereof by
the resulting company;
(vi) the
transfer of the undertaking is on a going concern basis;
(vii) the
demerger is in accordance with the conditions, if any, notified under
sub-section (5) of section 72A by the Central Government in this behalf.
Explanation 1.—For the purposes of this clause,
"undertaking" shall include any part of an undertaking, or a unit or
division of an undertaking or a business activity taken as a whole, but does
not include individual assets or liabilities or any combination thereof not
constituting a business activity.
Explanation 2.—For the purposes of this clause, the
liabilities referred to in sub-clause (ii), shall include—
(a) the
liabilities which arise out of the activities or operations of the undertaking;
(b) the
specific loans or borrowings (including debentures) raised, incurred and
utilised solely for the activities or operations of the undertaking; and
(c) in cases,
other than those referred to in clause (a) or clause (b), so much
of the amounts of general or multipurpose borrowings, if any, of the demerged
company as stand in the same proportion which the value of the assets
transferred in a demerger bears to the total value of the assets of such
demerged company immediately before the demerger.
Explanation 3.—For determining the value of the property
referred to in sub-clause (iii), any change in the value of assets
consequent to their revaluation shall be ignored.
Explanation 4.—For the purposes of this clause, the splitting
up or the reconstruction of any authority or a body constituted or established
under a Central, State or Provincial Act, or a local authority or a public
sector company, into separate authorities or bodies or local authorities or
companies, as the case may be, shall be deemed to be a demerger if such split
up or reconstruction fulfils such conditions as may be notified in the Official
Gazette, by the Central Government.
Explanation 5.—For the purposes of this clause, the
reconstruction or splitting up of a company, which ceased to be a public sector
company as a result of transfer of its shares by the Central Government, into
separate companies, shall be deemed to be a demerger, if such reconstruction or
splitting up has been made to give effect to any condition attached to the said
transfer of shares and also fulfils such other conditions as may be notified by
the Central Government in the Official Gazette.
12-13[Explanation 6.—For the purposes
of this clause, the reconstruction or splitting up of a public sector company
into separate companies shall be deemed to be a demerger, if such
reconstruction or splitting up has been made to transfer any asset of the
demerged company to the resulting company and the resulting company—
(i) is a
public sector company on the appointed day indicated in such scheme, as may be
approved by the Central Government or any other body authorised under the
provisions of the Companies Act, 2013 (18 of 2013) or any other law for the
time being in force governing such public sector companies in this behalf; and
(ii) fulfils
such other conditions as may be notified by the Central Government in the
Official Gazette in this behalf;]
(19AAA) "demerged
company" means the company whose undertaking is transferred, pursuant to a
demerger, to a resulting company;
(19B)
"Deputy Commissioner (Appeals)" means a person appointed to be a
Deputy Commissioner of Income-tax (Appeals) or an Additional Commissioner of
Income-tax (Appeals) under sub-section (1) of section
117 ;
(19C)
"Deputy Director" means a person appointed to be a Deputy Director of
Income-tax under sub-section (1) of section
117 ;
(20) "director",
"manager" and "managing agent", in relation to a company,
have the meanings respectively assigned to them in the Companies Act, 195614 (1 of 1956) ;
(21)
"Director General or Director" means a person appointed to be a
Director General of Income-tax or a Principal Director General of Income-tax
or, as the case may be, a Director of Income-tax or a Principal Director of
Income-tax, under sub-section (1) of section
117, and includes a
person appointed under that sub-section to be an Additional Director of
Income-tax or a Joint Director of Income-tax or an Assistant Director or Deputy
Director of Income-tax;
(22)
"dividend" includes—
(a) any
distribution by a company of accumulated profits, whether capitalised or not,
if such distribution entails the release by the company to its shareholders of
all or any part of the assets of the company ;
(b) any
distribution to its shareholders by a company of debentures, debenture-stock,
or deposit certificates in any form, whether with or without interest, and any
distribution to its preference shareholders of shares by way of bonus, to the
extent to which the company possesses accumulated profits, whether capitalised
or not ;
(c) any
distribution made to the shareholders of a company on its liquidation, to the
extent to which the distribution is attributable to the accumulated profits of
the company immediately before its liquidation, whether capitalised or not ;
(d) any
distribution to its shareholders by a company on the reduction of its capital,
to the extent to which the company possesses accumulated profits which arose
after the end of the previous year ending next before the 1st day of April,
1933, whether such accumulated profits have been capitalised or not ;
(e) any payment
by a company, not being a company in which the public are substantially
interested, of any sum (whether as representing a part of the assets of the
company or otherwise) made after the 31st day of May, 1987, by way of advance
or loan to a shareholder, being a person who is the beneficial owner of shares
(not being shares entitled to a fixed rate of dividend whether with or without
a right to participate in profits) holding not less than ten per cent of the
voting power, or to any concern in which such shareholder is a member or a
partner and in which he has a substantial interest (hereafter in this clause
referred to as the said concern) or any payment by any such company on behalf,
or for the individual benefit, of any such shareholder, to the extent to which
the company in either case possesses accumulated profits;
but "dividend" does not include—
(i) a
distribution made in accordance with sub-clause (c) or sub-clause (d)
in respect of any share issued for full cash consideration, where the holder of
the share is not entitled in the event of liquidation to participate in the
surplus assets ;
(ia) a
distribution made in accordance with sub-clause (c) or sub-clause (d)
in so far as such distribution is attributable to the capitalised profits of
the company representing bonus shares allotted to its equity shareholders after
the 31st day of March, 1964, and before the 1st day of April, 1965;
(ii) any advance
or loan made to a shareholder or the said concern by a company in the ordinary
course of its business, where the lending of money is a substantial part of the
business of the company ;
(iii) any
dividend paid by a company which is set off by the company against the whole or
any part of any sum previously paid by it and treated as a dividend within the
meaning of sub-clause (e), to the extent to which it is so set off;
(iv) any
payment made by a company on purchase of its own shares from a shareholder in
accordance with the provisions of section 77A14a of the Companies Act, 1956 (1 of 1956);
(v) any
distribution of shares pursuant to a demerger by the resulting company to the
shareholders of the demerged company (whether or not there is a reduction of
capital in the demerged company).
Explanation 1.—The expression "accumulated
profits", wherever it occurs in this clause, shall not include capital
gains arising before the 1st day of April, 1946, or after the 31st day of
March, 1948, and before the 1st day of April, 1956.
Explanation 2.—The expression "accumulated
profits" in sub-clauses (a), (b), (d) and (e), shall include
all profits of the company up to the date of distribution or payment referred
to in those sub-clauses, and in sub-clause (c) shall include all profits
of the company up to the date of liquidation, but shall not, where the
liquidation is consequent on the compulsory acquisition of its undertaking by
the Government or a corporation owned or controlled by the Government under any
law for the time being in force, include any profits of the company prior to
three successive previous years immediately preceding the previous year in
which such acquisition took place.
Explanation 2A.—In the case of an amalgamated company, the
accumulated profits, whether capitalised or not, or loss, as the case may be,
shall be increased by the accumulated profits, whether capitalised or not, of
the amalgamating company on the date of amalgamation.
Explanation 3.—For the purposes of this clause,—
(a)
"concern" means a Hindu undivided family, or a firm or an association
of persons or a body of individuals or a company ;
(b) a
person shall be deemed to have a substantial interest in a concern, other than
a company, if he is, at any time during the previous year, beneficially
entitled to not less than twenty per cent of the income of such concern ;
(22A)
"domestic company" means an Indian company, or any other company
which, in respect of its income liable to tax under this Act, has made the
prescribed arrangements for the declaration and payment, within India, of the
dividends (including dividends on preference shares) payable out of such income
;
(22AA)
"document" includes an electronic record as defined in clause (t)
of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of
2000);
(22AAA) "electoral
trust" means a trust so approved by the Board in accordance with the
scheme made in this regard by the Central Government;
(22B)
"fair market value", in relation to a capital asset, means—
(i) the
price that the capital asset would ordinarily fetch on sale in the open market
on the relevant date ; and
(ii) where the
price referred to in sub-clause (i) is not ascertainable, such price as
may be determined in accordance with the rules made under this Act ;
(23) (i)
"firm" shall have the meaning assigned to it in the Indian
Partnership Act, 1932 (9 of 1932), and shall include a limited liability
partnership as defined in the Limited Liability Partnership Act, 2008 (6 of
2009);
(ii) "partner" shall have the
meaning assigned to it in the Indian Partnership Act, 1932 (9 of 1932), and
shall include,—
(a) any person
who, being a minor, has been admitted to the benefits of partnership; and
(b) a partner
of a limited liability partnership as defined in the Limited Liability
Partnership Act, 2008 (6 of 2009);
(iii) "partnership" shall
have the meaning assigned to it in the Indian Partnership Act, 1932 (9 of
1932), and shall include a limited liability partnership as defined in the
Limited Liability Partnership Act, 2008 (6 of 2009);
(23A)
"foreign company" means a company which is not a domestic company;
(23B)
"fringe benefits" means any fringe benefits referred to in section
115WB;
(23C)
"hearing" includes communication of data and documents through
electronic mode;
(24)
"income" includes—
(i)
profits and gains ;
(ii)
dividend ;
(iia) voluntary
contributions received by a trust created wholly or partly for charitable or
religious purposes or by an institution established wholly or partly for such
purposes or by an association or institution referred to in clause (21)
or clause (23)15, or by a fund or trust or institution
referred to in sub-clause (iv) or sub-clause (v) or by any
university or other educational institution referred to in sub-clause (iiiad)
or sub-clause (vi) or by any hospital or other institution referred to
in sub-clause (iiiae) or sub-clause (via) of clause (23C)
ofsection
10 or by an
electoral trust.
Explanation.—For the purposes of this sub-clause, "trust" includes
any other legal obligation ;
(iii) the value
of any perquisite or profit in lieu of salary taxable under clauses (2)
and (3) of section
17 ;
(iiia) any
special allowance or benefit, other than perquisite included under sub-clause (iii),
specifically granted to the assessee to meet expenses wholly, necessarily and
exclusively for the performance of the duties of an office or employment of
profit ;
(iiib) any
allowance granted to the assessee either to meet his personal expenses at the
place where the duties of his office or employment of profit are ordinarily
performed by him or at a place where he ordinarily resides or to compensate him
for the increased cost of living ;
(iv) the value
of any benefit or perquisite, whether convertible into money or not, obtained
from a company either by a director or by a person who has a substantial
interest in the company, or by a relative of the director or such person, and
any sum paid by any such company in respect of any obligation which, but for
such payment, would have been payable by the director or other person aforesaid
;
(iva) the value
of any benefit or perquisite, whether convertible into money or not, obtained
by any representative assessee mentioned in clause (iii) or clause (iv)
of sub-section (1) ofsection
160 or by any person
on whose behalf or for whose benefit any income is receivable by the
representative assessee (such person being hereafter in this sub-clause
referred to as the "beneficiary") and any sum paid by the
representative assessee in respect of any obligation which, but for such
payment, would have been payable by the beneficiary ;
(v) any
sum chargeable to income-tax under clauses (ii) and (iii)
of section
28 or section
41 or section
59 ;
(va) any sum
chargeable to income-tax under clause (iiia) of section
28 ;
(vb) any sum
chargeable to income-tax under clause (iiib) of section
28 ;
(vc) any sum
chargeable to income-tax under clause (iiic) of section
28 ;
(vd) the value
of any benefit or perquisite taxable under clause (iv) of section
28 ;
(ve) any sum
chargeable to income-tax under clause (v) of section
28 ;
(vi) any
capital gains chargeable under section
45 ;
(vii) the
profits and gains of any business of insurance carried on by a mutual insurance
company or by a co-operative society, computed in accordance with section
44 or any surplus
taken to be such profits and gains by virtue of provisions contained in the
First Schedule ;
(viia) the
profits and gains of any business of banking (including providing credit
facilities) carried on by a co-operative society with its members;
(viii) [Omitted
by the Finance Act, 1988, w.e.f. 1-4-1988. Original sub-clause (viii)
was inserted by the Finance Act, 1964, w.e.f. 1-4-1964;]
(ix) any
winnings from lotteries, crossword puzzles, races including horse races, card
games and other games of any sort or from gambling or betting of any form or
nature whatsoever.
Explanation.—For the purposes of this sub-clause,—
(i)
"lottery" includes winnings from prizes awarded to any person by draw
of lots or by chance or in any other manner whatsoever, under any scheme or
arrangement by whatever name called;
(ii) "card
game and other game of any sort" includes any game show, an entertainment
programme on television or electronic mode, in which people compete to win
prizes or any other similar game ;
(x) any sum
received by the assessee from his employees as contributions to any provident
fund or superannuation fund or any fund set up under the provisions of the
Employees' State Insurance Act, 1948 (34 of 1948), or any other fund for the
welfare of such employees ;
(xi) any sum
received under a Keyman insurance policy including the sum allocated by way of
bonus on such policy.
Explanation.—For the purposes of this clause*, the expression "Keyman insurance
policy" shall have the meaning assigned to it in the Explanation to
clause (10D) of section
10 ;
(xii) any sum
referred to in clause (va) of section
28;
(xiia) the fair
market value of inventory referred to in clause (via) of section
28;
(xiii) any sum
referred to in clause (v) of sub-section (2) of section
56;
(xiv) any
sum referred to in clause (vi) of sub-section (2) of section
56;
(xv) any
sum of money or value of property referred to in clause (vii) or clause
(viia) of sub-section (2) of section
56;
(xvi) any
consideration received for issue of shares as exceeds the fair market value of
the shares referred to in clause (viib) of sub-section (2) of section
56;
(xvii) any sum
of money referred to in clause (ix) of sub-section (2) of section
56;
(xviia) any sum
of money or value of property referred to in clause (x) of sub-section
(2) of section
56;
(xviib) any
compensation or other payment referred to in clause (xi) of sub-section
(2) of section
56;
(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,—
(a) 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; or
(b) the subsidy
or grant by the Central Government for the purpose of the corpus of a trust or
institution established by the Central Government or a State Government, as the
case may be;
(25)
"Income-tax Officer" means a person appointed to be an Income-tax
Officer under section
117 ;
(25A)
"India" means the territory of India as referred to in article 1 of
the Constitution, its territorial waters, seabed and subsoil underlying such
waters, continental shelf, exclusive economic zone or any other maritime zone
as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic
Zone and other Maritime Zones Act, 1976 (80 of 1976), and the air space above
its territory and territorial waters;
(26)
"Indian company" means a company formed and registered under the
Companies Act, 195616 (1 of 1956), and includes—
(i) a
company formed and registered under any law relating to companies formerly in
force in any part of India (other than the State of Jammu and Kashmir and the
Union territories specified in sub-clause (iii) of this clause) ;
(ia)
a corporation established by or under a Central, State or Provincial Act ;
(ib) any
institution, association or body which is declared by the Board to be a company
under clause (17) ;
(ii) in
the case of the State of Jammu and Kashmir, a company formed and registered
under any law for the time being in force in that State ;
(iii) in the
case of any of the Union territories of Dadra and Nagar Haveli, Goa†, Daman and Diu, and Pondicherry, a company
formed and registered under any law for the time being in force in that Union
territory :
Provided that the registered or, as the case may be, principal
office of the company, corporation, institution, association or body in all
cases is in India ;
(26A)
"infrastructure capital company" means such company which makes
investments by way of acquiring shares or providing long-term finance to any
enterprise or undertaking wholly engaged in the business referred to in
sub-section (4) of section
80-IA or sub-section
(1) of section
80-IAB or an
undertaking developing and building a housing project referred to in
sub-section (10) of section
80-IB or a project for
constructing a hotel of not less than three-star category as classified by the
Central Government or a project for constructing a hospital with at least one
hundred beds for patients;
(26B)
"infrastructure capital fund" means such fund operating under a trust
deed registered under the provisions of the Registration Act, 1908 (16 of 1908)
established to raise monies by the trustees for investment by way of acquiring
shares or providing long-term finance to any enterprise or undertaking wholly
engaged in the business referred to in sub-section (4) of section
80-IA or sub-section
(1) of section
80-IAB or an
undertaking developing and building a housing project referred to in
sub-section (10) of section
80-IB or a project for
constructing a hotel of not less than three-star category as classified by the
Central Government or a project for constructing a hospital with at least one
hundred beds for patients;
(27) [***]
(28)
"Inspector of Income-tax" means a person appointed to be an Inspector
of Income-tax under sub-section (1) of section
117 ;
(28A)
"interest" means interest payable in any manner in respect of any
moneys borrowed or debt incurred (including a deposit, claim or other similar
right or obligation) and includes any service fee or other charge in respect of
the moneys borrowed or debt incurred or in respect of any credit facility which
has not been utilised ;
(28B)
"interest on securities" means,—
(i) interest on
any security of the Central Government or a State Government ;
(ii) interest
on debentures or other securities for money issued by or on behalf of a local
authority or a company or a corporation established by a Central, State or
Provincial Act ;
(28BB)
"insurer" means an insurer, being an Indian insurance company, as
defined under clause (7A) of section 2 of the Insurance Act, 1938 (4 of
1938), which has been granted a certificate of registration under section 3 of
that Act;
(28C)
"Joint Commissioner" means a person appointed to be a Joint
Commissioner of Income-tax or an Additional Commissioner of Income-tax under
sub-section (1) of section
117;
(28D)
"Joint Director" means a person appointed to be a Joint Director of
Income-tax or an Additional Director of Income-tax under sub-section (1)
of section
117;
(29)
"legal representative" has the meaning assigned to it in clause (11)
of section 2 of the Code of Civil Procedure, 1908 (5 of 1908) ;
17[(29A) "liable to tax", in
relation to a person and with reference to a country, means that there is an
income-tax liability on such person under the law of that country for the time
being in force and shall include a person who has subsequently been exempted
from such liability under the law of that country;]
18[(29AA)] "long-term capital
asset" means a capital asset which is not a short-term capital asset ;
(29B)
"long-term capital gain" means capital gain arising from the transfer
of a long-term capital asset ;
(29BA)
"manufacture", with its grammatical variations, means a change in a
non-living physical object or article or thing,—
(a) resulting
in transformation of the object or article or thing into a new and distinct
object or article or thing having a different name, character and use; or
(b) bringing
into existence of a new and distinct object or article or thing with a
different chemical composition or integral structure;
(29C)
"maximum marginal rate" means the rate of income-tax (including
surcharge on income-tax, if any) applicable in relation to the highest slab of
income in the case of an individual, association of persons or, as the case may
be, body of individuals as specified in the Finance Act of the relevant year;
(29D)
"National Tax Tribunal" means the National Tax Tribunal established
under section 3 of the National Tax Tribunal Act, 2005;
(30)
"non-resident" means a person who is not a "resident", and
for the purposes of sections
92, 93 and 168, includes a person who is not ordinarily
resident within the meaning of clause (6) ofsection
6 ;
(31)
"person" includes—
(i) an
individual,
(ii) a
Hindu undivided family,
(iii) a
company,
(iv) a firm,
(v) an
association of persons or a body of individuals, whether incorporated or not,
(vi) a local
authority, and
(vii) every
artificial juridical person, not falling within any of the preceding
sub-clauses.
Explanation.—For the purposes of this clause, an association of persons or a
body of individuals or a local authority or an artificial juridical person
shall be deemed to be a person, whether or not such person or body or authority
or juridical person was formed or established or incorporated with the object
of deriving income, profits or gains;
(32)
"person who has a substantial interest in the company", in relation
to a company, means a person who is the beneficial owner of shares, not being
shares entitled to a fixed rate of dividend whether with or without a right to
participate in profits, carrying not less than twenty per cent of the voting
power ;
(33)
"prescribed" means prescribed by rules made under this Act ;
(34)
"previous year" means the previous year as defined in section
3 ;
(34A)"Principal
Chief Commissioner of Income-tax" means a person appointed to be a
Principal Chief Commissioner of Income-tax under sub-section (1) of section
117;
(34B)
"Principal Commissioner of Income-tax" means a person appointed to be
a Principal Commissioner of Income-tax under sub-section (1) of section
117;
(34C)
"Principal Director of Income-tax" means a person appointed to be a
Principal Director of Income-tax under sub-section (1) of section
117;
(34D)
"Principal Director General of Income-tax" means a person appointed
to be a Principal Director General of Income-tax under sub-section (1) of section
117;
(35)
"principal officer", used with reference to a local authority or a
company or any other public body or any association of persons or any body of
individuals, means—
(a) the
secretary, treasurer, manager or agent of the authority, company, association
or body, or
(b) any person
connected with the management or administration of the local authority,
company, association or body upon whom the Assessing Officer has served a
notice of his intention of treating him as the principal officer thereof ;
(36)
"profession" includes vocation ;
(36A)
"public sector company" means any corporation established by or under
any Central, State or Provincial Act or a Government company as defined in
section 61719 of the Companies Act, 1956 (1 of 1956) ;
(37)
"public servant" has the same meaning as in section 21 of the Indian
Penal Code (45 of 1860) ;
(37A)
"rate or rates in force" or "rates in force", in relation
to an assessment year or financial year, means—
(i) for
the purposes of calculating income-tax under the first proviso to sub-section
(5) of section
132, or computing the
income-tax chargeable under sub-section (4) of section
172 or sub-section
(2) of section
174 or section
175 or sub-section
(2) of section
176 or deducting
income-tax under section
192 from income
chargeable under the head "Salaries" or computation of the
"advance tax" payable under Chapter XVII-C in a case not falling
under section
115A or section
115B or section
115BB or section
115BBB or section
115E orsection
164 or section
164A or section
167B, the rate or rates of
income-tax specified in this behalf in the Finance Act of the relevant year,
and for the purposes of computation of the "advance tax" payable
under Chapter XVII-C in a case falling under section
115A or section
115B or section
115BB or section
115BBB or section
115E or section
164 or section
164A or section
167B, the rate or rates
specified in section
115A or section
115B or section
115BB or section
115BBB or section
115E or section
164 or section
164A or section
167B, as the case may be,
or the rate or rates of income-tax specified in this behalf in the Finance Act
of the relevant year, whichever is applicable ;
(ii) for
the purposes of deduction of tax under sections
193, 194, 194A, 194B, 194BB and 194D, the rate or rates of income-tax specified in
this behalf in the Finance Act of the relevant year ;
(iii) for the purposes of deduction of
tax under section
194LBA or section
194LBB or section
194LBC or section
195, the rate or rates of
income-tax specified in this behalf in the Finance Act of the relevant year or
the rate or rates of income-tax specified in an agreement entered into by the
Central Government under section
90, or an agreement
notified by the Central Government under section
90A, whichever is
applicable by virtue of the provisions of section
90, or section
90A, as the case may be;
(38)
"recognised provident fund" means a provident fund which has been and
continues to be recognised by the Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner or Commissioner in accordance with the
rules contained in Part A of the Fourth Schedule, and includes a provident fund
established under a scheme framed under the Employees' Provident Funds Act,
1952 (19 of 1952) ;
(39) [Omitted
by the Finance Act, 1992, w.e.f. 1-4-1993;]
(40)
"regular assessment" means the assessment made under sub-section (3)
of section
143 or section
144 ;
(41)
"relative", in relation to an individual, means the husband, wife,
brother or sister or any lineal ascendant or descendant of that individual ;
(41A) "resulting
company" means one or more companies (including a wholly owned subsidiary
thereof) to which the undertaking of the demerged company is transferred in a
demerger and, the resulting company in consideration of such transfer of
undertaking, issues shares to the shareholders of the demerged company and
includes any authority or body or local authority or public sector company or a
company established, constituted or formed as a result of demerger;
(42)
"resident" means a person who is resident in India within the meaning
of section
6 ;
(42A)
"short-term capital asset" means a capital asset held by an assessee
for not more than thirty-six months immediately preceding the date of its
transfer :
Provided that in the case of a security (other than a unit) listed
in a recognized stock exchange in India or a unit of the Unit Trust of India
established under the Unit Trust of India Act, 1963 (52 of 1963) or a unit of
an equity oriented fund or a zero coupon bond, the provisions of this clause
shall have effect as if for the words "thirty-six months", the words "twelve
months" had been substituted:
Provided further that in case of a share of a company
(not being a share listed in a recognised stock exchange) or a unit of a Mutual
Fund specified under clause (23D) of section
10, which is transferred
during the period beginning on the 1st day of April, 2014 and ending on the
10th day of July, 2014, the provisions of this clause shall have effect as if
for the words "thirty-six months", the words "twelve
months" had been substituted:
Provided also that in the case of a share of a company (not
being a share listed in a recognised stock exchange in India), or an immovable
property, being land or building or both, the provisions of this clause shall
have effect as if for the words "thirty-six months", the words
"twenty-four months" had been substituted.
Explanation 1.—(i) In determining the period for
which any capital asset is held by the assessee—
(a) in the case
of a share held in a company in liquidation, there shall be excluded the period
subsequent to the date on which the company goes into liquidation ;
(b) in the case
of a capital asset which becomes the property of the assessee in the
circumstances mentioned in sub-section (1) of section
49, there shall be
included the period for which the asset was held by the previous owner referred
to in the said section ;
(ba) in
the case of a capital asset referred to in clause (via) of section
28, the period shall be
reckoned from the date of its conversion or treatment;
(c) in the case
of a capital asset being a share or shares in an Indian company, which becomes
the property of the assessee in consideration of a transfer referred to in
clause (vii) ofsection
47, there shall be
included the period for which the share or shares in the amalgamating company
were held by the assessee ;
(d) in the case
of a capital asset, being a share or any other security (hereafter in this
clause referred to as the financial asset) subscribed to by the assessee on the
basis of his right to subscribe to such financial asset or subscribed to by the
person in whose favour the assessee has renounced his right to subscribe to
such financial asset, the period shall be reckoned from the date of allotment
of such financial asset ;
(e) in the case
of a capital asset, being the right to subscribe to any financial asset, which
is renounced in favour of any other person, the period shall be reckoned from
the date of the offer of such right by the company or institution, as the case
may be, making such offer ;
(f) in the case
of a capital asset, being a financial asset, allotted without any payment and
on the basis of holding of any other financial asset, the period shall be
reckoned from the date of the allotment of such financial asset ;
(g) in
the case of a capital asset, being a share or shares in an Indian company,
which becomes the property of the assessee in consideration of a demerger,
there shall be included the period for which the share or shares held in the
demerged company were held by the assessee ;
(h) in
the case of a capital asset, being trading or clearing rights of a recognised
stock exchange in India acquired by a person pursuant to demutualisation or
corporatisation of the recognised stock exchange in India as referred to in
clause (xiii) of section
47, there shall be
included the period for which the person was a member of the recognised stock
exchange in India immediately prior to such demutualisation or corporatisation;
(ha) in
the case of a capital asset, being equity share or shares in a company allotted
pursuant to demutualisation or corporatisation of a recognised stock exchange
in India as referred to in clause (xiii) of section
47, there shall be
included the period for which the person was a member of the recognised stock
exchange in India immediately prior to such demutualisation or corporatisation;
(hb) in the
case of a capital asset, being any specified security or sweat equity shares
allotted or transferred, directly or indirectly, by the employer free of cost
or at concessional rate to his employees (including former employee or
employees), the period shall be reckoned from the date of allotment or transfer
of such specified security or sweat equity shares;
(hc) in
the case of a capital asset, being a unit of a business trust, allotted
pursuant to transfer of share or shares as referred to in clause (xvii)
of section
47, there shall be
included the period for which the share or shares were held by the assessee;
(hd) in
the case of a capital asset, being a unit or units, which becomes the property
of the assessee in consideration of a transfer referred to in clause (xviii)
of section
47, there shall be
included the period for which the unit or units in the consolidating scheme of
the mutual fund were held by the assessee;
(he) in the
case of a capital asset, being share or shares of a company, which is acquired
by the non-resident assessee on redemption of Global Depository Receipts
referred to in clause (b) of sub-section (1) of section
115AC held by such
assessee, the period shall be reckoned from the date on which a request for
such redemption was made;
(hf) in the
case of a capital asset, being equity shares in a company, which becomes the
property of the assessee in consideration of a transfer referred to in clause (xb)
of section
47, there shall be
included the period for which the preference shares were held by the assessee;
(hg) in the
case of a capital asset, being a unit or units, which becomes the property of
the assessee in consideration of a transfer referred to in clause (xix)
of section
47, there shall be
included the period for which the unit or units in the consolidating plan of a
mutual fund scheme were held by the assessee;
20[(hh) in the case of a capital asset,
being a unit or units in a segregated portfolio referred to in sub-section
(2AG) of section
49, there shall be
included the period for which the original unit or units in the main portfolio
were held by the assessee;]
(ii) In respect of capital assets other
than those mentioned in clause (i), the period for which any capital
asset is held by the assessee shall be determined subject to any rules21 which the Board may make in this behalf.
Explanation 2.—For the purposes of this clause, the
expression "security" shall have the meaning assigned to it in clause
(h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42
of 1956).
Explanation 3.—For the purposes of this clause, the
expressions "specified security" and "sweat equity shares"
shall have the meanings respectively assigned to them in the Explanation to
clause (d) of sub-section (1) of section
115WB.
Explanation 4.—For the purposes of this clause, the
expression "equity oriented fund" shall have the meaning assigned to
it in clause (a) of the Explanation to section
112A;
(42B)
"short-term capital gain" means capital gain arising from the
transfer of a short-term capital asset ;
(42C) "slump
sale" means the transfer of one or more 22[undertaking, by any means,] for a lump sum
consideration without values being assigned to the individual assets and
liabilities in such 23[transfer].
Explanation 1.—For the purposes of this clause,
"undertaking" shall have the meaning assigned to it in Explanation
1 to clause (19AA).
Explanation 2.—For the removal of doubts, it is hereby
declared that the determination of the value of an asset or liability for the
sole purpose of payment of stamp duty, registration fees or other similar taxes
or fees shall not be regarded as assignment of values to individual assets or
liabilities.
24[Explanation 3.—For the purposes of
this clause, "transfer" shall have the meaning assigned to it in
clause (47);]
(43)
"tax" in relation to the assessment year commencing on the 1st day of
April, 1965, and any subsequent assessment year means income-tax chargeable
under the provisions of this Act, and in relation to any other assessment year
income-tax and super-tax chargeable under the provisions of this Act prior to
the aforesaid date and in relation to the assessment year commencing on the 1st
day of April, 2006, and any subsequent assessment year includes the fringe
benefit tax payable under section
115WA ;
(43A) "tax
credit certificate" means a tax credit certificate granted to any person
in accordance with the provisions of Chapter XXII-B and any scheme made
thereunder ;
(43B) [***]
(44) "Tax
Recovery Officer" means any Income-tax Officer who may be authorised by
the Principal Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner, by general or special order in writing, to
exercise the powers of a Tax Recovery Officer and also to exercise or perform
such powers and functions which are conferred on, or assigned to, an Assessing
Officer under this Act and which may be prescribed;
(45)
"total income" means the total amount of income referred to in section
5, computed in the
manner laid down in this Act ;
(46) [***]
(47)
"transfer", in relation to a capital asset, includes,—
(i) the
sale, exchange or relinquishment of the asset ; or
(ii) the
extinguishment of any rights therein ; or
(iii) the
compulsory acquisition thereof under any law ; or
(iv) in a case
where the asset is converted by the owner thereof into, or is treated by him
as, stock-in-trade of a business carried on by him, such conversion or
treatment ; or
(iva) the
maturity or redemption of a zero coupon bond; or
(v) any
transaction involving the allowing of the possession of any immovable property
to be taken or retained in part performance of a contract of the nature
referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ;
or
(vi) any
transaction (whether by way of becoming a member of, or acquiring shares in, a
co-operative society, company or other association of persons or by way of any
agreement or any arrangement or in any other manner whatsoever) which has the
effect of transferring, or enabling the enjoyment of, any immovable property.
Explanation 1.—For the purposes of sub-clauses (v)
and (vi), "immovable property" shall have the same meaning as
in clause (d) of section
269UA.
Explanation 2.—For the removal of doubts, it is hereby
clarified that "transfer" includes and shall be deemed to have always
included disposing of or parting with an asset or any interest therein, or
creating any interest in any asset in any manner whatsoever, directly or
indirectly, absolutely or conditionally, voluntarily or involuntarily, by way
of an agreement (whether entered into in India or outside India) or otherwise,
notwithstanding that such transfer of rights has been characterised as being
effected or dependent upon or flowing from the transfer of a share or shares of
a company registered or incorporated outside India;
25[(47A) "virtual
digital asset" means—
(a) any information or code or number or
token (not being Indian currency or foreign currency), generated through
cryptographic means or otherwise, by whatever name called, providing a digital
representation of value exchanged with or without consideration, with the
promise or representation of having inherent value, or functions as a store of
value or a unit of account including its use in any financial transaction or
investment, but not limited to investment scheme; and can be transferred,
stored or traded electronically;
(b) a non-fungible token or any other token
of similar nature, by whatever name called;
(c) any other digital asset, as the Central
Government may, by notification in the Official Gazette specify:
Provided that the Central Government may, by notification in the
Official Gazette, exclude any digital asset from the definition of virtual
digital asset subject to such conditions as may be specified therein.
Explanation.—For the purposes of this
clause,—
(a) "non-fungible token" means
such digital asset as the Central Government may, by notification in the
Official Gazette, specify;
(b) the expressions "currency",
"foreign currency" and "Indian currency" shall have the
same meanings as respectively assigned to them in clauses (h), (m)
and (q) of section 2 of the Foreign Exchange Management Act, 1999 (42 of
1999);]
(48) "zero
coupon bond" means a bond—
(a) issued by
any infrastructure capital company or infrastructure capital fund or 26[infrastructure debt fund or] public
sector company or scheduled bank on or after the 1st day of June, 2005;
(b) in respect
of which no payment and benefit is received or receivable before maturity or
redemption from infrastructure capital company or infrastructure capital fund
or 26[infrastructure debt fund or] public
sector company or scheduled bank; and
(c) which the
Central Government may, by notification27 in the Official Gazette, specify in this
behalf.
28[Explanation 1].—For the purposes of this
clause, the expression "scheduled bank" shall have the meaning assigned
to it in clause (ii) of the Explanation to sub-clause (c)
of clause (viia) of sub-section (1) of section
36.
29[Explanation 2.—For the purposes of this
clause, the expression "infrastructure debt fund" shall mean the
infrastructure debt fund notified by the Central Government in the Official
Gazette under clause (47) of section
10.]
"Previous year" defined.
3. For the purposes of
this Act, "previous year" means the financial year immediately
preceding the assessment year :
Provided that, in the case
of a business or profession newly set up, or a source of income newly coming
into existence, in the said financial year, the previous year shall be the
period beginning with the date of setting up of the business or profession or,
as the case may be, the date on which the source of income newly comes into
existence and ending with the said financial year.
CHAPTER II
BASIS OF CHARGE
Charge of income-tax.
4. (1) Where any Central
Act enacts that income-tax shall be charged for any assessment year at any rate
or rates, income-tax at that rate or those rates shall be charged for that year
in accordance with, and subject to the provisions (including provisions for the
levy of additional income-tax) of, this Act in respect of the total income of
the previous year of every person :
Provided that where by
virtue of any provision of this Act income-tax is to be charged in respect of
the income of a period other than the previous year, income-tax shall be
charged accordingly.
(2)
In respect of income chargeable under sub-section (1), income-tax shall be
deducted at the source or paid in advance, where it is so deductible or payable
under any provision of this Act.
Scope of total income.
5. (1) Subject to the
provisions of this Act, the total income of any previous year of a person who
is a resident includes all income from whatever source derived which—
(a) is received or is deemed to be received in
India in such year by or on behalf of such person ; or
(b) accrues or arises or is deemed to accrue or
arise to him in India during such year ; or
(c) accrues or arises to him outside India during
such year :
Provided that,
in the case of a person not ordinarily resident in India within the meaning of
sub-section (6)* of section 6, the
income which accrues or arises to him outside India shall not be so included
unless it is derived from a business controlled in or a profession set up in
India.
(2)
Subject to the provisions of this Act, the total income of any previous year of
a person who is a non-resident includes all income from whatever source derived
which—
(a) is received or is deemed to be received in
India in such year by or on behalf of such person ; or
(b) accrues or arises or is deemed to accrue or
arise to him in India during such year.
Explanation 1.—Income accruing
or arising outside India shall not be deemed to be received in India within the
meaning of this section by reason only of the fact that it is taken into
account in a balance sheet prepared in India.
Explanation 2.—For the removal
of doubts, it is hereby declared that income which has been included in the
total income of a person on the basis that it has accrued or arisen or is
deemed to have accrued or arisen to him shall not again be so included on the
basis that it is received or deemed to be received by him in India.
Apportionment of income between spouses governed by Portuguese Civil
Code.
5A. (1) Where the husband
and wife are governed by the system of community of property (known under the
Portuguese Civil Code of 1860 as "COMMUNIAO DOS BENS") in force in
the State of Goa and in the Union territories of Dadra and Nagar Haveli and
Daman and Diu, the income of the husband and of the wife under any head of
income shall not be assessed as that of such community of property (whether
treated as an association of persons or a body of individuals), but such income
of the husband and of the wife under each head of income (other than under the
head "Salaries") shall be apportioned equally between the husband and
the wife and the income so apportioned shall be included separately in the
total income of the husband and of the wife respectively, and the remaining
provisions of this Act shall apply accordingly.
(2)
Where the husband or, as the case may be, the wife governed by the aforesaid
system of community of property has any income under the head
"Salaries", such income shall be included in the total income of the
spouse who has actually earned it.
Residence in India.
6. For the purposes of
this Act,—
(1) An individual is said to be resident in India
in any previous year, if he—
(a) is in India in that year for a period or
periods amounting in all to one hundred and eighty-two days or more ; or
(b) [***]
(c) having within the four years preceding that
year been in India for a period or periods amounting in all to three hundred
and sixty-five days or more, is in India for a period or periods amounting in
all to sixty days or more in that year.
Explanation 1.—In
the case of an individual,—
(a) being a citizen of India, who leaves India in
any previous year as a member of the crew of an Indian ship as defined in
clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of
1958), or for the purposes of employment outside India, the provisions of
sub-clause (c) shall apply in relation to that year as if for the words
"sixty days", occurring therein, the words "one hundred and
eighty-two days" had been substituted ;
(b) being a citizen of India, or a person of
Indian origin within the meaning of Explanation to clause (e)
of section 115C, who, being outside India, comes on a visit to India in
any previous year, the provisions of sub-clause (c) shall apply in
relation to that year as if for the words "sixty days", occurring therein,
the words "one hundred and eighty-two days" had been
substituted 30[and in case of 31[such person] having total income, other than the income from
foreign sources, exceeding fifteen lakh rupees during the previous year, for
the words "sixty days" occurring therein, the words "one hundred
and twenty days" had been substituted.]
Explanation 2.—For
the purposes of this clause, in the case of an individual, being a citizen of
India and a member of the crew of a foreign bound ship leaving India, the
period or periods of stay in India shall, in respect of such voyage, be
determined in the manner and subject to such conditions as may be prescribed.32
33[(1A) Notwithstanding anything contained in clause
(1), an individual, being a citizen of India, having total income, other
than the income from foreign sources, exceeding fifteen lakh rupees during the
previous year shall be deemed to be resident in India in that previous year, if
he is not liable to tax in any other country or territory by reason of his
domicile or residence or any other criteria of similar nature.]
34[Explanation.—For the removal of doubts, it is
hereby declared that this clause shall not apply in case of an individual who
is said to be resident in India in the previous year under clause (1).]
(2) A Hindu undivided family, firm or other
association of persons is said to be resident in India in any previous year in
every case except where during that year the control and management of its
affairs is situated wholly outside India.
(3) A company is said to be a resident in India in
any previous year, if—
(i) it is an Indian company; or
(ii) its place of effective management, in that
year, is in India.
Explanation.—For
the purposes of this clause "place of effective management" means a
place where key management and commercial decisions that are necessary for the
conduct of business of an entity as a whole are, in substance made.
(4) Every other person is said to be resident in
India in any previous year in every case, except where during that year the
control and management of his affairs is situated wholly outside India.
(5) If a person is resident in India in a previous
year relevant to an assessment year in respect of any source of income, he
shall be deemed to be resident in India in the previous year relevant to the
assessment year in respect of each of his other sources of income.
(6) A person is said to be "not
ordinarily resident" in India in any previous year if such person is—
(a) an individual who has been a
non-resident in India in nine out of the ten previous years preceding that
year, or has during the seven previous years preceding that year been in India
for a period of, or periods amounting in all to, seven hundred and twenty-nine
days or less; or
(b) a Hindu undivided family whose
manager has been a non-resident in India in nine out of the ten previous years
preceding that year, or has during the seven previous years preceding that year
been in India for a period of, or periods amounting in all to, seven hundred
and twenty-nine days or less 35[; or
(c) a citizen of India, or a person of Indian
origin, having total income, other than the income from foreign sources,
exceeding fifteen lakh rupees during the previous year, as referred to in
clause (b) of Explanation1 to clause (1), who
has been in India for a period or periods amounting in all to one hundred and
twenty days or more but less than one hundred and eighty-two days; or
(d) a citizen of India who is deemed to be
resident in India under clause (1A).
Explanation.—For
the purposes of this section, the expression "income from foreign
sources" means income which accrues or arises outside India (except income
derived from a business controlled in or a profession set up in India)] 36[and which is not deemed to accrue or arise in India].
Income deemed to be received.
7. The following incomes
shall be deemed to be received in the previous year :—
(i) the annual accretion in the previous
year to the balance at the credit of an employee participating in a recognised
provident fund, to the extent provided in rule 6 of Part A of the Fourth
Schedule ;
(ii) the transferred balance in a recognised
provident fund, to the extent provided in sub-rule (4) of rule 11 of Part A of
the Fourth Schedule ;
(iii) the contribution made, by the
Central Government or any other employer in the previous year, to the account
of an employee under a pension scheme referred to in section 80CCD.
Dividend income.
8. For the purposes of
inclusion in the total income of an assessee,—
(a) any dividend declared by a company or
distributed or paid by it within the meaning of sub-clause (a) or
sub-clause (b) or sub-clause (c) or sub-clause (d) or
sub-clause (e) of clause (22) ofsection 2 shall
be deemed to be the income of the previous year in which it is so declared,
distributed or paid, as the case may be ;
(b) any interim dividend shall be deemed to be the
income of the previous year in which the amount of such dividend is
unconditionally made available by the company to the member who is entitled to
it.
Income deemed to accrue or arise in India.
9. (1) The following
incomes shall be deemed to accrue or arise in India :—
37(i) all income accruing or arising, whether
directly or indirectly, through or from any business connection in India, or
through or from any property in India, or through or from any asset or source
of income in India, or through the transfer of a capital asset situate in
India.
Explanation 1.—For
the purposes of this clause—
(a) in the case of a business 38[, other than the business having business connection
in India on account of significant economic presence,] of which all the
operations are not carried out in India, the income of the business deemed
under this clause to accrue or arise in India shall be only such part of the
income as is reasonably attributable to the operations carried out in India ;
(b) in the case of a non-resident, no income shall
be deemed to accrue or arise in India to him through or from operations which
are confined to the purchase of goods in India for the purpose of export ;
(c) in the case of a non-resident, being a person
engaged in the business of running a news agency or of publishing newspapers,
magazines or journals, no income shall be deemed to accrue or arise in India to
him through or from activities which are confined to the collection of news and
views in India for transmission out of India ;
(d) in the case of a non-resident, being—
(1) an individual who is not a citizen of India ;
or
(2) a firm which does not have any partner who is
a citizen of India or who is resident in India ; or
(3) a company which does not have any shareholder
who is a citizen of India or who is resident in India,
no income shall be deemed to accrue or arise in India to
such individual, firm or company through or from operations which are confined
to the shooting of any cinematograph film in India;
(e) in the case of a foreign company engaged
in the business of mining of diamonds, no income shall be deemed to accrue or
arise in India to it through or from the activities which are confined to the
display of uncut and unassorted diamond in any special zone notified by the
Central Government in the Official Gazette in this behalf.
Explanation 2.—For
the removal of doubts, it is hereby declared that "business
connection" shall include any business activity carried out through a
person who, acting on behalf of the non-resident,—
(a) has and habitually exercises in India, an
authority to conclude contracts on behalf of the non-resident or habitually
concludes contracts or habitually plays the principal role leading to
conclusion of contracts by that non-resident and the contracts are—
(i) in the name of the non-resident; or
(ii) for the transfer of the ownership of,
or for the granting of the right to use, property owned by that non-resident or
that non-resident has the right to use; or
(iii) for the provision of services by the
non-resident; or
(b) has no such authority, but habitually
maintains in India a stock of goods or merchandise from which he regularly
delivers goods or merchandise on behalf of the non-resident; or
(c) habitually secures orders in India, mainly or
wholly for the non-resident or for that non-resident and other non-residents
controlling, controlled by, or subject to the same common control, as that
non-resident:
Provided that
such business connection shall not include any business activity carried out
through a broker, general commission agent or any other agent having an
independent status, if such broker, general commission agent or any other agent
having an independent status is acting in the ordinary course of his business :
Provided further that
where such broker, general commission agent or any other agent works mainly or
wholly on behalf of a non-resident (hereafter in this proviso referred to as
the principal non-resident) or on behalf of such non-resident and other
non-residents which are controlled by the principal non-resident or have a
controlling interest in the principal non-resident or are subject to the same
common control as the principal non-resident, he shall not be deemed to be a
broker, general commission agent or an agent of an independent status.
39[Explanation 2A.—For the removal of doubts, it is
hereby declared that the significant economic presence of a non-resident in
India shall constitute "business connection" in India and
"significant economic presence" for this purpose, shall mean—
(a)
transaction in respect of any goods, services or property carried out by a
non-resident with any person in India including provision of download of data or
software in India, if the aggregate of payments arising from such transaction
or transactions during the previous year exceeds such amount as may be
prescribed40; or
(b)
systematic and continuous soliciting of business activities or engaging in
interaction with such number of users in India, as may be prescribed40:
Provided that
the transactions or activities shall constitute significant economic presence
in India, whether or not—
(i) the
agreement for such transactions or activities is entered in India; or
(ii) the
non-resident has a residence or place of business in India; or
(iii) the
non-resident renders services in India:
Provided further that only so much of income as is attributable to the
transactions or activities referred to in clause (a) or clause (b) shall be deemed to accrue or
arise in India.]
Explanation 3.—Where
a business is carried on in India through a person referred to in clause (a)
or clause (b) or clause (c) of Explanation 2, only so
much of income as is attributable to the operations carried out in India shall
be deemed to accrue or arise in India.
41[Explanation 3A.—For the removal of doubts, it is
hereby declared that the income attributable to the operations carried out in
India, as referred to in Explanation 1, shall include income from—
(i) such advertisement which targets a customer
who resides in India or a customer who accesses the advertisement through
internet protocol address located in India;
(ii) sale of data collected from a person who
resides in India or from a person who uses internet protocol address located in
India; and
(iii) sale of goods or services using data
collected from a person who resides in India or from a person who uses internet
protocol address located in India:]
42[Provided that the provisions contained in
this Explanation shall also apply to the income attributable
to the transactions or activities referred to in Explanation 2A.]
Explanation 4.—For
the removal of doubts, it is hereby clarified that the expression "through"
shall mean and include and shall be deemed to have always meant and included
"by means of", "in consequence of" or "by reason
of".
Explanation 5.43—For the removal
of doubts, it is hereby clarified that an asset or a capital asset being any
share or interest in a company or entity registered or incorporated outside
India shall be deemed to be and shall always be deemed to have been situated in
India, if the share or interest derives, directly or indirectly, its value
substantially from the assets located in India:
Provided that
nothing contained in this Explanation shall apply to an asset
or capital asset, which is held by a non-resident by way of investment,
directly or indirectly, in a Foreign Institutional Investor as referred to in
clause (a) of the Explanation to section 115AD for
an assessment year commencing on or after the 1st day of April, 2012 but before
the 1st day of April, 2015:
Provided further that
nothing contained in this Explanation shall apply to an asset
or capital asset, which is held by a non-resident by way of investment,
directly or indirectly, in Category-I or Category-II foreign portfolio investor
under the Securities and Exchange Board of India (Foreign Portfolio Investors)
Regulations, 2014 44[prior to
their repeal], made under the Securities and Exchange Board of India Act, 1992
(15 of 1992):
44[Provided also that nothing contained in
this Explanation shall apply to an asset or a capital asset,
which is held by a non-resident by way of investment, directly or indirectly,
in Category-I foreign portfolio investor under the Securities and Exchange
Board of India (Foreign Portfolio Investors) Regulations, 2019, made under the
Securities and Exchange Board of India Act, 1992 (15 of 1992):]
45[Provided also that nothing contained in this Explanation shall
apply to—
(i) an
assessment or reassessment to be made under section 143, section 144, section 147 or section 153A or section 153C;
or
(ii) an order
to be passed enhancing the assessment or reducing a refund already made or
otherwise increasing the liability of the assessee under section 154;
or
(iii) an order
to be passed deeming a person to be an assessee in default under sub-section
(1) of section 201,
in respect of income accruing or arising through or from
the transfer of an asset or a capital asset situate in India in consequence of
the transfer of a share or interest in a company or entity registered or
incorporated outside India made before the 28th day of May, 2012:
Provided also that
where—
(i) an
assessment or reassessment has been made under section 143, section 144, section 147 or section 153A or section 153C;
or
(ii) an order
has been passed enhancing the assessment or reducing a refund already made or
otherwise increasing the liability of the assessee under section 154;
or
(iii) an order
has been passed deeming a person to be an assessee in default under sub-section
(1) of section 201;
or
(iv) an order
has been passed imposing a penalty under Chapter XXI or under section 221,
in respect of income accruing or arising through or from
the transfer of an asset or a capital asset situate in India in consequence of
the transfer of a share or interest in a company or entity registered or
incorporated outside India made before the 28th day of May, 2012 and the person
in whose case such assessment or reassessment or order has been passed or made,
as the case may be, fulfils the specified conditions, then, such assessment or
reassessment or order, to the extent it relates to the said income, shall be
deemed never to have been passed or made, as the case may be:
Provided also that
where any amount becomes refundable to the person referred to in fifth proviso
as a consequence of him fulfilling the specified conditions, then, such amount
shall be refunded to him, but no interest under section 244A shall
be paid on that amount.
Explanation.—For the purposes of fifth and sixth
provisos, the specified conditions shall be as provided hereunder:—
(i) where the
said person has filed any appeal before an appellate forum or any writ petition
before the High Court or the Supreme Court against any order in respect of said
income, he shall either withdraw or submit an undertaking to withdraw such
appeal or writ petition, in such form and manner as may be prescribed46;
(ii) where the
said person has initiated any proceeding for arbitration, conciliation or
mediation, or has given any notice thereof under any law for the time being in
force or under any agreement entered into by India with any other country or
territory outside India, whether for protection of investment or otherwise, he
shall either withdraw or shall submit an undertaking to withdraw the claim, if
any, in such proceedings or notice, in such form and manner as may be prescribed46;
(iii) the said
person shall furnish an undertaking, in such form and manner as may be
prescribed, waiving his right, whether direct or indirect, to seek or pursue
any remedy or any claim in relation to the said income which may otherwise be
available to him under any law for the time being in force, in equity, under
any statute or under any agreement entered into by India with any country or
territory outside India, whether for protection of investment or otherwise; and
(iv) such other
conditions as may be prescribed.]
Explanation 6.—For
the purposes of this clause, it is hereby declared that—
(a) the share or interest,
referred to in Explanation 5, shall be deemed to derive its value
substantially from the assets (whether tangible or intangible) located in
India, if, on the specified date, the value of such assets—
(i) exceeds the amount of ten crore rupees;
and
(ii) represents at least fifty per cent of the
value of all the assets owned by the company or entity, as the case may be;
(b) the value of an asset shall be the fair market
value as on the specified date, of such asset without reduction of liabilities,
if any, in respect of the asset, determined in such manner as may be
prescribed;
(c) "accounting period" means each
period of twelve months ending with the 31st day of March:
Provided that
where a company or an entity, referred to in Explanation 5,
regularly adopts a period of twelve months ending on a day other than the 31st
day of March for the purpose of—
(i) complying with the provisions of the tax laws
of the territory, of which it is a resident, for tax purposes; or
(ii) reporting to persons holding the share or
interest,
then, the period of twelve months ending with the other
day shall be the accounting period of the company or, as the case may be, the
entity:
Provided further that
the first accounting period of the company or, as the case may be, the entity
shall begin from the date of its registration or incorporation and end with the
31st day of March or such other day, as the case may be, following the date of
such registration or incorporation, and the later accounting period shall be
the successive periods of twelve months:
Provided also that
if the company or the entity ceases to exist before the end of accounting
period, as aforesaid, then, the accounting period shall end immediately before
the company or, as the case may be, the entity, ceases to exist;
(d) "specified date" means the—
(i) date on which the accounting period of
the company or, as the case may be, the entity ends preceding the date of
transfer of a share or an interest; or
(ii) date of transfer, if the book value of the
assets of the company or, as the case may be, the entity on the date of
transfer exceeds the book value of the assets as on the date referred to in
sub-clause (i), by fifteen per cent.
Explanation 7.—
For the purposes of this clause,—
(a) no income shall be deemed to accrue or arise
to a non-resident from transfer, outside India, of any share of, or interest
in, a company or an entity, registered or incorporated outside India, referred
to in the Explanation 5,—
(i) if such company or entity directly owns
the assets situated in India and the transferor (whether individually or along
with its associated enterprises), at any time in the twelve months preceding
the date of transfer, neither holds the right of management or control in
relation to such company or entity, nor holds voting power or share capital or
interest exceeding five per cent of the total voting power or total share
capital or total interest, as the case may be, of such company or entity; or
(ii) if such company or entity indirectly owns the
assets situated in India and the transferor (whether individually or along with
its associated enterprises), at any time in the twelve months preceding the
date of transfer, neither holds the right of management or control in relation
to such company or entity, nor holds any right in, or in relation to, such
company or entity which would entitle him to the right of management or control
in the company or entity that directly owns the assets situated in India, nor
holds such percentage of voting power or share capital or interest in such
company or entity which results in holding of (either individually or along
with associated enterprises) a voting power or share capital or interest
exceeding five per cent of the total voting power or total share capital or
total interest, as the case may be, of the company or entity that directly owns
the assets situated in India;
(b) in a case where all the assets owned,
directly or indirectly, by a company or, as the case may be, an entity referred
to in the Explanation 5, are not located in India, the income
of the non-resident transferor, from transfer outside India of a share of, or
interest in, such company or entity, deemed to accrue or arise in India under
this clause, shall be only such part of the income as is reasonably
attributable to assets located in India and determined in such manner as may be
prescribed;
(c) "associated enterprise" shall have
the meaning assigned to it in section 92A;
(ii) income which falls under the head
"Salaries", if it is earned in India.
Explanation.—For
the removal of doubts, it is hereby declared that the income of the nature
referred to in this clause payable for—
(a) service rendered in India; and
(b) the rest period or leave period
which is preceded and succeeded by services rendered in India and forms part of
the service contract of employment,
shall be regarded as income earned in India ;
(iii) income chargeable under the head
"Salaries" payable by the Government to a citizen of India for
service outside India ;
(iv) a dividend paid by an Indian company outside
India ;
(v) income by way of interest payable by—
(a) the Government ; or
(b) a person who is a resident, except where the
interest is payable in respect of any debt incurred, or moneys borrowed and
used, for the purposes of a business or profession carried on by such person
outside India or for the purposes of making or earning any income from any
source outside India ; or
(c) a person who is a non-resident, where the
interest is payable in respect of any debt incurred, or moneys borrowed and
used, for the purposes of a business or profession carried on by such person in
India.
Explanation.—For
the purposes of this clause,—
(a) it is hereby declared that in the case of a
non-resident, being a person engaged in the business of banking, any interest
payable by the permanent establishment in India of such non-resident to the
head office or any permanent establishment or any other part of such
non-resident outside India shall be deemed to accrue or arise in India and shall
be chargeable to tax in addition to any income attributable to the permanent
establishment in India and the permanent establishment in India shall be deemed
to be a person separate and independent of the non-resident person of which it
is a permanent establishment and the provisions of the Act relating to
computation of total income, determination of tax and collection and recovery
shall apply accordingly;
(b) "permanent establishment" shall have
the meaning assigned to it in clause (iiia) of section 92F;
(vi) income by way of royalty payable by—
(a) the Government ; or
(b) a person who is a resident, except where the
royalty is payable in respect of any right, property or information used or
services utilised for the purposes of a business or profession carried on by
such person outside India or for the purposes of making or earning any income
from any source outside India ; or
(c) a person who is a non-resident, where the
royalty is payable in respect of any right, property or information used or
services utilised for the purposes of a business or profession carried on by such
person in India or for the purposes of making or earning any income from any
source in India :
Provided that
nothing contained in this clause shall apply in relation to so much of the
income by way of royalty as consists of lump sum consideration for the transfer
outside India of, or the imparting of information outside India in respect of,
any data, documentation, drawing or specification relating to any patent,
invention, model, design, secret formula or process or trade mark or similar
property, if such income is payable in pursuance of an agreement made before
the 1st day of April, 1976, and the agreement is approved by the Central
Government :
Provided further that
nothing contained in this clause shall apply in relation to so much of the
income by way of royalty as consists of lump sum payment made by a person, who
is a resident, for the transfer of all or any rights (including the granting of
a licence) in respect of computer software supplied by a non-resident
manufacturer along with a computer or computer-based equipment under any scheme
approved under the Policy on Computer Software Export, Software Development and
Training, 1986 of the Government of India.
Explanation 1.—For
the purposes of the first proviso, an agreement made on or after the 1st day of
April, 1976, shall be deemed to have been made before that date if the
agreement is made in accordance with proposals approved by the Central
Government before that date; so, however, that, where the recipient of the
income by way of royalty is a foreign company, the agreement shall not be
deemed to have been made before that date unless, before the expiry of the time
allowed under sub-section (1) or sub-section (2) of section 139 (whether
fixed originally or on extension) for furnishing the return of income for the
assessment year commencing on the 1st day of April, 1977, or the assessment
year in respect of which such income first becomes chargeable to tax under this
Act, whichever assessment year is later, the company exercises an option by
furnishing a declaration in writing to the Assessing Officer (such option being
final for that assessment year and for every subsequent assessment year) that
the agreement may be regarded as an agreement made before the 1st day of April,
1976.
Explanation 2.—For
the purposes of this clause, "royalty" means consideration (including
any lump sum consideration but excluding any consideration which would be the
income of the recipient chargeable under the head "Capital gains")
for—
(i) the transfer of all or any rights
(including the granting of a licence) in respect of a patent, invention, model,
design, secret formula or process or trade mark or similar property ;
(ii) the imparting of any information
concerning the working of, or the use of, a patent, invention, model, design,
secret formula or process or trade mark or similar property ;
(iii) the use of any patent, invention, model,
design, secret formula or process or trade mark or similar property ;
(iv) the imparting of any information concerning
technical, industrial, commercial or scientific knowledge, experience or skill
;
(iva) the use or right to use any industrial,
commercial or scientific equipment but not including the amounts referred to
in section 44BB;
(v) the transfer of all or any rights (including
the granting of a licence) in respect of any copyright, literary, artistic or
scientific work including films or video tapes for use in connection with
television or tapes for use in connection with radio broadcasting 47[***] ; or
(vi) the rendering of any services in connection
with the activities referred to in sub-clauses (i) to (iv), (iva)
and (v).
Explanation 3.—For
the purposes of this clause, "computer software" means any computer
programme recorded on any disc, tape, perforated media or other information
storage device and includes any such programme or any customized electronic
data.
Explanation 4.—For
the removal of doubts, it is hereby clarified that the transfer of all or any
rights in respect of any right, property or information includes and has always
included transfer of all or any right for use or right to use a computer
software (including granting of a licence) irrespective of the medium through
which such right is transferred.
Explanation 5.—For
the removal of doubts, it is hereby clarified that the royalty includes and has
always included consideration in respect of any right, property or information,
whether or not—
(a) the possession or control of such right,
property or information is with the payer;
(b) such right, property or information is used directly
by the payer;
(c) the location of such right, property or
information is in India.
Explanation 6.—For
the removal of doubts, it is hereby clarified that the expression
"process" includes and shall be deemed to have always included
transmission by satellite (including up-linking, amplification, conversion for
down-linking of any signal), cable, optic fibre or by any other similar
technology, whether or not such process is secret;
(vii) income by way of fees for technical services
payable by—
(a) the Government ; or
(b) a person who is a resident, except where the
fees are payable in respect of services utilised in a business or profession
carried on by such person outside India or for the purposes of making or
earning any income from any source outside India ; or
(c) a person who is a non-resident, where the fees
are payable in respect of services utilised in a business or profession carried
on by such person in India or for the purposes of making or earning any income
from any source in India :
Provided that
nothing contained in this clause shall apply in relation to any income by way
of fees for technical services payable in pursuance of an agreement made before
the 1st day of April, 1976, and approved by the Central Government.
Explanation 1.—For
the purposes of the foregoing proviso, an agreement made on or after the 1st
day of April, 1976, shall be deemed to have been made before that date if the
agreement is made in accordance with proposals approved by the Central
Government before that date.
Explanation 2.—For
the purposes of this clause, "fees for technical services" means any
consideration (including any lump sum consideration) for the rendering of any
managerial, technical or consultancy services (including the provision of
services of technical or other personnel) but does not include consideration
for any construction, assembly, mining or like project undertaken by the
recipient or consideration which would be income of the recipient chargeable
under the head "Salaries";
(viii) income arising outside India, being any sum
of money referred to in sub-clause (xviia) of clause (24)
of section 2, paid on
or after the 5th day of July, 2019 by a person resident in India to a
non-resident, not being a company, or to a foreign company.
(2)
Notwithstanding anything contained in sub-section (1), any pension payable
outside India to a person residing permanently outside India shall not be
deemed to accrue or arise in India, if the pension is payable to a person
referred to in article 314 of the Constitution or to a person who, having been
appointed before the 15th day of August, 1947, to be a Judge of the Federal
Court or of a High Court within the meaning of the Government of India Act,
1935, continues to serve on or after the commencement of the Constitution as a
Judge in India.
Explanation.—For the removal of
doubts, it is hereby declared that for the purposes of this section, income of
a non-resident shall be deemed to accrue or arise in India under clause (v)
or clause (vi) or clause (vii) of sub-section (1) and shall be
included in the total income of the non-resident, whether or not,—
(i) the non-resident has a residence or
place of business or business connection in India; or
(ii) the non-resident has rendered services in
India.
Certain activities not to constitute business connection in India.48
9A. (1) Notwithstanding
anything contained in sub-section (1) of section 9 and subject to the provisions of this section, in
the case of an eligible investment fund, the fund management activity carried
out through an eligible fund manager acting on behalf of such fund shall not
constitute business connection in India of the said fund.
(2)
Notwithstanding anything contained in section 6, an eligible investment fund shall not be said to be
resident in India for the purpose of that section merely because the eligible
fund manager, undertaking fund management activities on its behalf, is situated
in India.
(3)
The eligible investment fund referred to in sub-section (1), means a fund
established or incorporated or registered outside India, which collects funds
from its members for investing it for their benefit and fulfils the following
conditions, namely:—
(a) the fund is not a person resident in India;
(b) the fund is a resident of a country or a
specified territory with which an agreement referred to in sub-section (1)
of section 90 or sub-section (1) of section 90A has been entered into or is established or
incorporated or registered in a country or a specified territory notified by
the Central Government in this behalf;
(c) the aggregate participation or investment in
the fund, directly or indirectly, by persons resident in India does not exceed
five per cent of the corpus of the fund:
49[Provided that for the purposes of
calculation of the said aggregate participation or investment in the fund, any
contribution made by the eligible fund manager during the first three years of
operation of the fund, not exceeding twenty-five crore rupees, shall not be
taken into account;]
(d) the fund and its activities are subject to
applicable investor protection regulations in the country or specified
territory where it is established or incorporated or is a resident;
(e) the fund has a minimum of twenty-five members
who are, directly or indirectly, not connected persons;
(f) any member of the fund along with connected
persons shall not have any participation interest, directly or indirectly, in
the fund exceeding ten per cent;
(g) the aggregate participation interest, directly
or indirectly, of ten or less members along with their connected persons in the
fund, shall be less than fifty per cent;
(h) the fund shall not invest more
than twenty per cent of its corpus in any entity;
(i) the fund shall not make any investment in its
associate entity;
(j) the monthly average of the corpus of the fund
shall not be less than one hundred crore rupees:
Provided that
if the fund has been established or incorporated in the previous year, the
corpus of fund shall not be less than one hundred crore rupees at the end of a
period of 50[twelve months from the last day of the month of its
establishment or incorporation]:
Provided further that
nothing contained in this clause shall apply to a fund which has been wound up
in the previous year;
(k) the fund shall not carry on or
control and manage, directly or indirectly, any business in India;
(l) the fund is neither engaged in any activity
which constitutes a business connection in India nor has any person acting on
its behalf whose activities constitute a business connection in India other
than the activities undertaken by the eligible fund manager on its behalf;
(m) the remuneration paid by the fund to an
eligible fund manager in respect of fund management activity undertaken by him
on its behalf is not less than the amount calculated in such manner as may be
prescribed :
Provided that the
conditions specified in clauses (e), (f) and (g) shall not
apply in case of an investment fund set up by the Government or the Central
Bank of a foreign State or a sovereign fund, or such other fund as the Central
Government may subject to conditions, if any, by notification in the Official
Gazette, specify in this behalf.
(4)
The eligible fund manager, in respect of an eligible investment fund, means any
person who is engaged in the activity of fund management and fulfils the
following conditions, namely:—
(a) the person is not an employee of the eligible
investment fund or a connected person of the fund;
(b) the person is registered as a fund manager or
an investment advisor in accordance with the specified regulations;
(c) the person is acting in the ordinary course of
his business as a fund manager;
(d) the person along with his connected persons
shall not be entitled, directly or indirectly, to more than twenty per cent of
the profits accruing or arising to the eligible investment fund from the
transactions carried out by the fund through the fund manager.
(5)
Every eligible investment fund shall, in respect of its activities in a
financial year, furnish within ninety days from the end of the financial year,
a statement in the prescribed form51, to the prescribed income-tax authority containing
information relating to the fulfilment of the conditions specified in this
section and also provide such other relevant information or documents as may be
prescribed.
(6)
Nothing contained in this section shall apply to exclude any income from the
total income of the eligible investment fund, which would have been so included
irrespective of whether the activity of the eligible fund manager constituted
the business connection in India of such fund or not.
(7)
Nothing contained in this section shall have any effect on the scope of total
income or determination of total income in the case of the eligible fund
manager.
(8)
The provisions of this section shall be applied in accordance with such
guidelines and in such manner as the Board may prescribe in this behalf.
52[(8A) The Central Government may, by notification in
the Official Gazette, specify that any one or more of the conditions specified
in clauses (a) to (m) of sub-section (3) or clauses (a) to
(d) of sub-section (4) shall not apply or shall apply with such
modifications, as may be specified in such notification, in case of an eligible
investment fund and its eligible fund manager, if such fund manager is located
in an International Financial Services Centre, as defined in clause (a)
of the Explanation to section 80LA, and has commenced its operations on or before the 31st
day of March, 2024.]
(9)
For the purposes of this section,—
(a) "associate" means an entity in which
a director or a trustee or a partner or a member or a fund manager of the
investment fund or a director or a trustee or a partner or a member of the fund
manager of such fund, holds, either individually or collectively, share or
interest, being more than fifteen per cent of its share capital or interest, as
the case may be;
(b) "connected person" shall have the
meaning assigned to it in clause (4) of section 102;
(c) "corpus" means the total amount of
funds raised for the purpose of investment by the eligible investment fund as
on a particular date;
(d) "entity" means any entity in which
an eligible investment fund makes an investment;
(e) "specified regulations" means the
Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993* or
the Securities and Exchange Board of India (Investment Advisers) Regulations,
2013, or such other regulations made under the Securities and Exchange Board of
India Act, 1992 (15 of 1992), which may be notified by the Central Government
under this clause.
53[Income on receipt of capital asset or stock in trade
by specified person from specified entity.
9B. (1) Where a specified
person receives during the previous year any capital asset or stock in trade or
both from a specified entity in connection with the dissolution or
reconstitution of such specified entity, then the specified entity shall be
deemed to have transferred such capital asset or stock in trade or both, as the
case may be, to the specified person in the year in which such capital asset or
stock in trade or both are received by the specified person.
(2)
Any profits and gains arising from such deemed transfer of capital asset or
stock in trade or both, as the case may be, by the specified entity shall be—
(i) deemed to be the income of such
specified entity of the previous year in which such capital asset or stock in
trade or both were received by the specified person; and
(ii) chargeable to income-tax as income of such
specified entity under the head "Profits and gains of business or
profession" or under the head "Capital gains", in accordance
with the provisions of this Act.
(3)
For the purposes of this section, fair market value of the capital asset or
stock in trade or both on the date of its receipt by the specified person shall
be deemed to be the full value of the consideration received or accruing as a
result of such deemed transfer of the capital asset or stock in trade or both
by the specified entity.
(4)
If any difficulty arises in giving effect to the provisions of this section and
sub-section (4) of section 45, the Board may, with the approval of the Central
Government, issue guidelines for the purposes of removing the difficulty.
(5)
Every guideline issued by the Board under sub-section (4) shall, as soon as may
be after it is issued, be laid before each House of Parliament, and shall be
binding on the income-tax authorities and on the assessee.
Explanation.—For
the purposes of this section,—
(i) "reconstitution of the specified
entity" means, where—
(a) one or more of its partners or members, as the
case may be, of such specified entity ceases to be partners or members; or
(b) one or more new partners or members, as the
case may be, are admitted in such specified entity in such circumstances that
one or more of the persons who were partners or members, as the case may be, of
the specified entity, before the change, continue as partner or partners or
member or members after the change; or
(c) all the partners or members, as the case may
be, of such specified entity continue with a change in their respective share
or in the shares of some of them;
(ii) "specified entity" means a firm or
other association of persons or body of individuals (not being a company or a
co-operative society);
(iii) "specified person" means a person,
who is a partner of a firm or member of other association of persons or body of
individuals (not being a company or a co-operative society) in any previous
year.]
INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME
Incomes not included
in total income.
10. In computing the total income of a
previous year of any person, any income falling within any of the following
clauses shall not be included—
(1)
agricultural income ;
(2) subject to
the provisions of sub-section (2) of section
64, any sum received by
an individual as a member of a Hindu undivided family, where such sum has been
paid out of the income of the family, or, in the case of any impartible estate,
where such sum has been paid out of the income of the estate belonging to the
family ;
(2A) in the case
of a person being a partner of a firm which is separately assessed as such, his
share in the total income of the firm.
Explanation.—For the purposes of this clause, the share of a partner in the
total income of a firm separately assessed as such shall, notwithstanding
anything contained in any other law, be an amount which bears to the total
income of the firm the same proportion as the amount of his share in the
profits of the firm in accordance with the partnership deed bears to such
profits ;
(3) [***]
(4) (i)
in the case of a non-resident, any income by way of interest on such securities
or bonds as the Central Government may, by notification in the Official
Gazette, specify in this behalf, including income by way of premium on the
redemption of such bonds :
Provided that the Central Government shall not specify, for the
purposes of this sub-clause, such securities or bonds on or after the 1st day
of June, 2002;
(ii) in the case of an individual, any
income by way of interest on moneys standing to his credit in a Non-Resident
(External) Account in any bank in India in accordance with the Foreign Exchange
Management Act, 1999 (42 of 1999), and the rules made thereunder :
Provided that such individual is a person resident outside India as
defined in clause (w) of section
2 of the said Act
or is a person who has been permitted by the Reserve Bank of India to maintain
the aforesaid Account ;
(4B) in the
case of an individual, being a citizen of India or a person of Indian origin,
who is a non-resident, any income from interest on such savings certificates
issued before the 1st day of June, 2002 by the Central Government as that
Government may, by notification in the Official Gazette, specify in this behalf
:
Provided that the individual has subscribed to such certificates in
convertible foreign exchange remitted from a country outside India in
accordance with the provisions of the Foreign Exchange Management Act, 1999 (42
of 1999), and any rules made thereunder.
Explanation.—For the purposes of this clause,—
(a) a person
shall be deemed to be of Indian origin if he, or either of his parents or any
of his grandparents, was born in undivided India ;
(b)
"convertible foreign exchange" means foreign exchange which is for
the time being treated by the Reserve Bank of India as convertible foreign
exchange for the purposes of the Foreign Exchange Management Act, 1999 (42 of
1999), and any rules made thereunder ;
(4C) any income
by way of interest payable to a non-resident, not being a company, or to a
foreign company, by any Indian company or business trust in respect of monies
borrowed from a source outside India by way of issue of rupee denominated bond,
as referred to in clause (ia) of sub-section (2) of section
194LC, during the period
beginning from the 17th day of September, 2018 and ending on the 31st day of
March, 2019;
(4D)54 any income accrued or arisen to, or
received by a specified fund as a result of transfer of capital asset referred
to in clause (viiab) of section
47, on a recognised
stock exchange located in any International Financial Services Centre and where
the consideration for such transaction is paid or payable in 55[convertible foreign exchange or as a result
of transfer of securities (other than shares in a company resident in India) or
any income from securities issued by a non-resident (not being a permanent
establishment of a non-resident in India) and where such income otherwise does
not accrue or arise in India or any income from a securitisation trust which is
chargeable under the head "Profits and gains of business or
profession", to the extent such income accrued or arisen to, or is
received, is attributable to units held by non-resident (not being the
permanent establishment of a non-resident in India) 56[or is attributable to the investment
division of offshore banking unit, as the case may be,] computed in the
prescribed manner].
Explanation.—For the purposes of this clause, the
expression—
(a)
"convertible foreign exchange" means foreign exchange which is for
the time being treated by the Reserve Bank of India as convertible foreign
exchange for the purposes of the Foreign Exchange Management Act, 1999 (42 of
1999) and the rules made thereunder;
57[(aa) "investment division of
offshore banking unit" means an investment division of a banking unit of a
non-resident located in an International Financial Services Centre, as referred
to in sub-section (1A) of section
80LA and which has
commenced its operations on or before the 31st day of March, 2024;]
(b)
"manager" shall have the meaning assigned to it in clause (q)
of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of
India (Alternative Investment Fund) Regulations, 2012, made under the
Securities and Exchange Board of India Act, 1992 (15 of 1992);
58[(ba) "permanent
establishment" shall have the same meaning assigned to it in clause (iiia)
of section
92F;
(bb)
"securities" shall have the same meaning as assigned to it in clause
(h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42
of 1956) and shall also include such other securities or instruments as may be
notified by the Central Government in the Official Gazette in this behalf;
(bc)
"securitisation trust" shall have the same meaning assigned to it in
clause (d) of the Explanation to section
115TCA;]
59[(c) "specified
fund" means,—
(i) a fund established or
incorporated in India in the form of a trust or a company or a limited
liability partnership or a body corporate,—
(I) which has been granted a
certificate of registration as a Category III Alternative Investment Fund and
is regulated under the Securities and Exchange Board of India (Alternative
Investment Fund) Regulations, 2012, made under the Securities and Exchange
Board of India Act, 1992 (15 of 1992) or International Financial Services
Centres Authority Act, 2019 (50 of 2019);
(II) which is located in any International
Financial Services Centre; and
(III) of which all the units other than unit
held by a sponsor or manager are held by 60[non-residents; or]
(ii) investment division of an offshore
banking unit, which has been—
(I) granted a certificate of registration as
a Category-I foreign portfolio investor under the Securities and Exchange Board
of India (Foreign Portfolio Investors) Regulations, 2019 made under the
Securities and Exchange Board of India Act, 1992 (15 of 1992) and which has
commenced its operations on or before the 31st day of March, 2024; and
(II) fulfils such conditions including
maintenance of separate accounts for its investment division, as may be
prescribed;]
(d)
"sponsor" shall have the meaning assigned to it in clause (w)
of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of
India (Alternative Investment Fund) Regulations, 2012, made under the
Securities and Exchange Board of India Act, 1992 (15 of 1992);
(e)
"trust" means a trust established under the Indian Trusts Act, 1882
(2 of 1882) or under any other law for the time being in force;
(f)
"unit" means beneficial interest of an investor in the fund and shall
include shares or partnership interests;
61[(4E) any income accrued or arisen
to, or received by a non-resident as a result of transfer of non-deliverable
forward contracts 62[or offshore derivative instruments or over-the-counter
derivatives,] entered into with an offshore banking
unit of an International Financial Services Centre as referred to in
sub-section (1A) of section
80LA, which fulfils such
conditions as may be prescribed63;
(4F) any income of a non-resident by way of
royalty or interest , on account of lease of an aircraft 64[or a ship] in a previous year, paid by a unit of an
International Financial Services Centre as referred to in sub-section (1A)
of section
80LA, if the unit has
commenced its operations on or before the 31st day of March, 2024.
Explanation.—For the purposes of this
clause, "aircraft" means an aircraft or a helicopter, or an engine of
an aircraft or a helicopter, or any part thereof;]
Following Explanation shall
be substituted for the existing Explanation to clause (4F)
of section 10 by the Finance Act, 2022, w.e.f. 1-4-2023:
Explanation.—For the purposes of this
clause,—
(i) "aircraft" means an aircraft
or a helicopter, or an engine of an aircraft or a helicopter, or any part
thereof;
(ii) "ship" means a ship or an
ocean vessel, engine of a ship or ocean vessel, or any part thereof;
Following clause (4G) shall be inserted
after clause (4F) of section 10 by the Finance Act, 2022, w.e.f.
1-4-2023:
(4G) any income received by a non-resident
from portfolio of securities or financial products or funds, managed or
administered by any portfolio manager on behalf of such non-resident, in an
account maintained with an Offshore Banking Unit in any International Financial
Services Centre, as referred to in sub-section (1A) of section
80LA, to the extent such
income accrues or arises outside India and is not deemed to accrue or arise in
India.
Explanation.—For the purposes of this
clause, "portfolio manager" shall have the same meaning as assigned
to it in clause (z) of sub-regulation (1) of regulation 2 of the
International Financial Services Centres Authority (Capital Market
Intermediaries) Regulations, 2021, made under the International Financial
Services Centres Authority Act, 2019 (50 of 2019);
(5) in the case
of an individual, the value of any travel concession or assistance received by,
or due to, him,—
(a) from his
employer for himself and his family, in connection with his proceeding on leave
to any place in India ;
(b) from his
employer or former employer for himself and his family, in connection with his
proceeding to any place in India after retirement from service or after the
termination of his service,
subject to such conditions as may be
prescribed65 (including conditions as to number of
journeys and the amount which shall be exempt per head) having regard to the
travel concession or assistance granted to the employees of the Central
Government :
Provided that the amount exempt under this clause shall in no case exceed the amount ofexpenses actually incurred for the purpose of such travel:
66[Provided further that for the
assessment year beginning on the 1st day of April, 2021, the value in lieu of
any travel concession or assistance received by, or due to, such individual
shall also be exempt under this clause subject to the fulfilment of such
conditions (including the condition of incurring such amount of such
expenditure within such period), as may be prescribed.]
67[Explanation 1].—For the
purposes of this clause, "family", in relation to an individual, means—
(i) the
spouse and children of the individual ; and
(ii) the
parents, brothers and sisters of the individual or any of them, wholly or
mainly dependent on the individual.
68[Explanation 2.—For the removal of
doubts, it is hereby clarified that where an individual claims exemption and
the exemption is allowed under the second proviso in connection with the
prescribed expenditure, no exemption shall be allowed under this clause in
respect of such prescribed expenditure to any other individual;]
(5A) [Omitted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(5B) [Omitted
by the Finance Act, 2002, w.e.f. 1-4-2003;]
(6) in the case
of an individual who is not a citizen of India,—
(i) [***]
(ii) the remuneration
received by him as an official, by whatever name called, of an embassy, high
commission, legation, commission, consulate or the trade representation of a
foreign State, or as a member of the staff of any of these officials, for
service in such capacity :
Provided that the remuneration received by him as a trade
commissioner or other official representative in India of the Government of a
foreign State (not holding office as such in an honorary capacity), or as a
member of the staff of any of those officials, shall be exempt only if the
remuneration of the corresponding officials or, as the case may be, members of
the staff, if any, of the Government resident for similar purposes in the
country concerned enjoys a similar exemption in that country :
Provided further that such members of the staff are
subjects of the country represented and are not engaged in any business or
profession or employment in India otherwise than as members of such staff ;
(iii) to (v) Sub-clause
(ii) substituted for sub-clauses (ii) to (v) by the
Finance Act, 1988, w.e.f. 1-4-1989;
(vi) the
remuneration received by him as an employee of a foreign enterprise for
services rendered by him during his stay in India, provided the following
conditions are fulfilled—
(a) the foreign
enterprise is not engaged in any trade or business in India ;
(b) his stay in
India does not exceed in the aggregate a period of ninety days in such previous
year ; and
(c) such
remuneration is not liable to be deducted from the income of the employer
chargeable under this Act ;
(via) [Omitted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(vii) [Omitted
by the Finance Act, 1993, w.e.f. 1-4-1993;]
(viia) [Omitted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(viii) any
income chargeable under the head "Salaries" received by or due to any
such individual being a non-resident as remuneration for services rendered in
connection with his employment on a foreign ship where his total stay in India
does not exceed in the aggregate a period of ninety days in the previous year ;
(ix) [Omitted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(x) [Omitted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(xi) the
remuneration received by him as an employee of the Government of a foreign State
during his stay in India in connection with his training in any establishment
or office of, or in any undertaking owned by,—
(i) the
Government ; or
(ii) any
company in which the entire paid-up share capital is held by the Central
Government, or any State Government or Governments, or partly by the Central
Government and partly by one or more State Governments ; or
(iii) any
company which is a subsidiary of a company referred to in item (ii) ; or
(iv) any
corporation established by or under a Central, State or Provincial Act ; or
(v) any society
registered under the Societies Registration Act, 1860 (14 of 1860), or under
any other corresponding law for the time being in force and wholly financed by
the Central Government, or any State Government or State Governments, or partly
by the Central Government and partly by one or more State Governments ;
(6A) where in
the case of a foreign company deriving income by way of royalty or fees for
technical services received from Government or an Indian concern in pursuance
of an agreement made by the foreign company with Government or the Indian
concern after the 31st day of March, 1976 but before the 1st day of June, 2002
and,—
(a) where the
agreement relates to a matter included in the industrial policy, for the time
being in force, of the Government of India, such agreement is in accordance
with that policy ; and
(b) in any
other case, the agreement is approved by the Central Government,
the tax on such income is payable, under the
terms of the agreement, by Government or the Indian concern to the Central
Government, the tax so paid.
Explanation.—For the purposes of this clause and clause (6B),—
(a) "fees
for technical services" shall have the same meaning as in Explanation
2 to clause (vii) of sub-section (1) of section
9 ;
(b)
"foreign company" shall have the same meaning as in section
80B ;
(c)
"royalty" shall have the same meaning as in Explanation 2 to
clause (vi) of sub-section (1) of section
9;
(6B) where in
the case of a non-resident (not being a company) or of a foreign company
deriving income (not being salary, royalty or fees for technical services) from
Government or an Indian concern in pursuance of an agreement entered into
before the 1st day of June, 2002 by the Central Government with the Government
of a foreign State or an international organisation, the tax on such income is
payable by Government or the Indian concern to the Central Government under the
terms of that agreement or any other related agreement approved before that
date by the Central Government, the tax so paid;
(6BB) where in
the case of the Government of a foreign State or a foreign enterprise deriving
income from an Indian company engaged in the business of operation of aircraft,
as a consideration of acquiring an aircraft or an aircraft engine (other than
payment for providing spares, facilities or services in connection with the
operation of leased aircraft) on lease under an agreement entered into after
the 31st day of March, 1997 but before the 1st day of April, 1999, or entered
into after the 31st day of March, 2007 and approved by the Central Government
in this behalf and the tax on such income is payable by such Indian company
under the terms of that agreement to the Central Government, the tax so paid.
Explanation.—For the purposes of this clause, the expression "foreign
enterprise" means a person who is a non-resident;
(6C) any income
arising to such foreign company, as the Central Government may, by notification
in the Official Gazette, specify in this behalf, by way of royalty or fees for
technical services received in pursuance of an agreement entered into with that
Government for providing services in or outside India in projects connected
with security of India ;
(6D) any
income arising to a non-resident, not being a company, or a foreign company, by
way of royalty from, or fees for technical services rendered in or outside
India to, the National Technical Research Organisation;
(7) any
allowances or perquisites paid or allowed as such outside India by the
Government to a citizen of India for rendering service outside India ;
(8) in the case
of an individual who is assigned to duties in India in connection with any
co-operative technical assistance programmes and projects in accordance with an
agreement entered into by the Central Government and the Government of a
foreign State (the terms whereof provide for the exemption given by this
clause)—
(a) the
remuneration received by him directly or indirectly from the Government of that
foreign State for such duties, and
(b) any other
income of such individual which accrues or arises outside India, and is not
deemed to accrue or arise in India, in respect of which such individual is
required to pay any income or social security tax to the Government of that
foreign State ;
Following proviso shall be inserted in clause
(8) of section 10 by the Finance Act, 2022, w.e.f. 1-4-2023 :
Provided that nothing contained in this clause shall apply to
such remuneration and income of the previous year relevant to the assessment
year beginning on or after the 1st day of April, 2023;
(8A) in the
case of a consultant—
(a) any
remuneration or fee received by him or it, directly or indirectly, out of the
funds made available to an international organisation hereafter referred to in
this clause and clause (8B) as the agency under a technical assistance
grant agreement between the agency and the Government of a foreign State ; and
(b) any other
income which accrues or arises to him or it outside India, and is not deemed to
accrue or arise in India, in respect of which such consultant is required to
pay any income or social security tax to the Government of the country of his
or its origin.
Following proviso shall be inserted in clause
(8A) of section 10 by the Finance Act, 2022, w.e.f. 1-4-2023 :
Provided that nothing contained in this clause shall apply to
such remuneration, fee and income of the previous year relevant to the
assessment year beginning on or after the 1st day of April, 2023.
Explanation.—In this clause, "consultant" means—
(i) any
individual, who is either not a citizen of India or, being a citizen of India,
is not ordinarily resident in India ; or
(ii) any other
person, being a non-resident,
engaged by the agency for rendering technical
services in India in connection with any technical assistance programme or
project, provided the following conditions are fulfilled, namely :—
(1) the
technical assistance is in accordance with an agreement entered into by the
Central Government and the agency ; and
(2) the
agreement relating to the engagement of the consultant is approved by the
prescribed authority69 for the purposes of this clause ;
(8B) in the
case of an individual who is assigned to duties in India in connection with any
technical assistance programme and project in accordance with an agreement
entered into by the Central Government and the agency—
(a) the
remuneration received by him, directly or indirectly, for such duties from any
consultant referred to in clause (8A) ; and
(b) any other
income of such individual which accrues or arises outside India, and is not
deemed to accrue or arise in India, in respect of which such individual is
required to pay any income or social security tax to the country of his origin,
provided the following conditions are fulfilled, namely :—
(i) the
individual is an employee of the consultant referred to in clause (8A)
and is either not a citizen of India or, being a citizen of India, is not
ordinarily resident in India ; and
(ii) the
contract of service of such individual is approved by the prescribed authority69 before the commencement of his service
;]
Following proviso shall be inserted in clause
(8B) of section 10 by the Finance Act, 2022, w.e.f. 1-4-2023 :
Provided that nothing contained in this clause shall
apply to such remuneration and income of the previous year relevant to the
assessment year beginning on or after the 1st day of April, 2023;
(9) the income
of any member of the family of any such individual as is referred to in clause
(8) or clause (8A) or, as the case may be, clause (8B)
accompanying him to India, which accrues or arises outside India, and is not
deemed to accrue or arise in India, in respect of which such member is required
to pay any income or social security tax to the Government of that foreign
State or, as the case may be, country of origin of such member;
Following proviso shall be inserted in clause
(9) of section 10 by the Finance Act, 2022, w.e.f. 1-4-2023:
Provided that nothing contained in this clause shall apply to
such income of the previous year relevant to the assessment year beginning on
or after the 1st day of April, 2023;
(10) (i)
any death-cum-retirement gratuity received under the revised Pension
Rules of the Central Government or, as the case may be, the Central Civil
Services (Pension) Rules, 1972, or under any similar scheme applicable to the
members of the civil services of the Union or holders of posts connected with
defence or of civil posts under the Union (such members or holders being
persons not governed by the said Rules) or to the members of the all-India
services or to the members of the civil services of a State or holders of civil
posts under a State or to the employees of a local authority or any payment of
retiring gratuity received under the Pension Code or Regulations applicable to
the members of the defence services ;
(ii) any gratuity received under the
Payment of Gratuity Act, 1972 (39 of 1972), to the extent it does not exceed an
amount calculated in accordance with the provisions of sub-sections (2) and (3)
of section
4 of that Act ;
(iii) any other gratuity received by an
employee on his retirement or on his becoming incapacitated prior to such
retirement or on termination of his employment, or any gratuity received by his
widow, children or dependants on his death, to the extent it does not, in
either case, exceed one-half month's salary for each year of completed service,
calculated on the basis of the average salary for the ten months immediately
preceding the month in which any such event occurs, subject to such limit70 as the Central Government may, by
notification in the Official Gazette, specify in this behalf having regard to
the limit applicable in this behalf to the employees of that Government :
Provided that where any gratuities referred to in this clause are
received by an employee from more than one employer in the same previous year,
the aggregate amount exempt from income-tax under this clause shall not exceed
the limit so specified :
Provided further that where any such gratuity or
gratuities was or were received in any one or more earlier previous years also
and the whole or any part of the amount of such gratuity or gratuities was not
included in the total income of the assessee of such previous year or years,
the amount exempt from income-tax under this clause shall not exceed the limit
so specified as reduced by the amount or, as the case may be, the aggregate
amount not included in the total income of any such previous year or years.
Explanation.—In this clause, and in clause (10AA), "salary"
shall have the meaning assigned to it in clause (h) of rule 2 of Part A
of the Fourth Schedule ;
(10A) (i)
any payment in commutation of pension received under the Civil Pensions (Commutation)
Rules of the Central Government or under any similar scheme applicable to the
members of the civil services of the Union or holders of posts connected with
defence or of civil posts under the Union (such members or holders being
persons not governed by the said Rules) or to the members of the all-India
services or to the members of the defence services or to the members of the
civil services of a State or holders of civil posts under a State or to the
employees of a local authority or a corporation established by a Central, State
or Provincial Act ;
(ii) any payment in commutation of
pension received under any scheme of any other employer, to the extent it does
not exceed—
(a) in a case
where the employee receives any gratuity, the commuted value of one-third of
the pension which he is normally entitled to receive, and
(b) in any
other case, the commuted value of one-half of such pension,
such commuted value being determined having
regard to the age of the recipient, the state of his health, the rate of
interest and officially recognised tables of mortality ;
(iii) any payment in commutation of
pension received from a fund under clause (23AAB) ;
(10AA) (i)
any payment received by an employee of the Central Government or a State
Government as the cash equivalent of the leave salary in respect of the period
of earned leave at his credit at the time of his retirement whether on
superannuation or otherwise ;
(ii) any payment of the nature referred
to in sub-clause (i) received by an employee, other than an employee of
the Central Government or a State Government, in respect of so much of the
period of earned leave at his credit at the time of his retirement whether on
superannuation or otherwise as does not exceed ten months, calculated on the
basis of the average salary drawn by the employee during the period of ten
months immediately preceding his retirement whether on superannuation or
otherwise, subject to such limit as the Central Government may, by notification
in the Official Gazette, specify in this behalf having regard to the limit71 applicable in this behalf to the
employees of that Government :
Provided that where any such payments are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this sub-clause shall not exceed the limit so specified :
Provided further that where any such payment or payments
was or were received in any one or more earlier previous years also and the
whole or any part of the amount of such payment or payments was or were not
included in the total income of the assessee of such previous year or years,
the amount exempt from income-tax under this sub-clause shall not exceed the
limit so specified, as reduced by the amount or, as the case may be, the
aggregate amount not included in the total income of any such previous year or
years.
Explanation.—For the purposes of sub-clause (ii),—
the entitlement to earned leave of an employee
shall not exceed thirty days for every year of actual service rendered by him
as an employee of the employer from whose service he has retired ;
(10B) any
compensation received by a workman under the Industrial Disputes Act, 1947 (14
of 1947), or under any other Act or Rules, orders or notifications issued
thereunder or under any standing orders or under any award, contract of service
or otherwise, at the time of his retrenchment :
Provided that the amount exempt under this clause shall not exceed—
(i) an amount
calculated in accordance with the provisions of clause (b) of section
25F of the Industrial Disputes Act, 1947 (14 of 1947) ; or
(ii) such
amount, not being less than fifty thousand rupees, as the Central Government
may, by notification72 in the Official Gazette, specify in this
behalf,
whichever is less :
Provided further that the preceding proviso shall not
apply in respect of any compensation received by a workman in accordance with
any scheme which the Central Government may, having regard to the need for
extending special protection to the workmen in the undertaking to which such
scheme applies and other relevant circumstances, approve in this behalf.
Explanation.—For the purposes of this clause—
(a)
compensation received by a workman at the time of the closing down of the
undertaking in which he is employed shall be deemed to be compensation received
at the time of his retrenchment ;
(b)
compensation received by a workman, at the time of the transfer (whether by
agreement or by operation of law) of the ownership or management of the
undertaking in which he is employed from the employer in relation to that
undertaking to a new employer, shall be deemed to be compensation received at
the time of his retrenchment if—
(i) the
service of the workman has been interrupted by such transfer ; or
(ii) the
terms and conditions of service applicable to the workman after such transfer
are in any way less favourable to the workman than those applicable to him
immediately before the transfer ; or
(iii) the new
employer is, under the terms of such transfer or otherwise, legally not liable
to pay to the workman, in the event of his retrenchment, compensation on the
basis that his service has been continuous and has not been interrupted by the
transfer ;
(c) the
expressions "employer" and "workman" shall have the same
meanings as in the Industrial Disputes Act, 1947 (14 of 1947);
(10BB) any
payments made under the Bhopal Gas Leak Disaster (Processing of Claims) Act,
1985 (21 of 1985), and any scheme framed thereunder except payment made to any
assessee in connection with the Bhopal Gas Leak Disaster to the extent such
assessee has been allowed a deduction under this Act on account of any loss or
damage caused to him by such disaster ;
(10BC) any
amount received or receivable from the Central Government or a State Government
or a local authority by an individual or his legal heir by way of compensation
on account of any disaster, except the amount received or receivable to the
extent such individual or his legal heir has been allowed a deduction under
this Act on account of any loss or damage caused by such disaster.
Explanation.—For the purposes of this clause, the expression
"disaster" shall have the meaning assigned to it under clause (d)
of section 2 of the Disaster Management Act, 2005 (53 of 2005);
(10C) any
amount received or receivable by an employee of—
(i) a
public sector company ; or
(ii) any
other company ; or
(iii) an
authority established under a Central, State or Provincial Act ; or
(iv) a local
authority ; or
(v) a
co-operative society ; or
(vi) a
University established or incorporated by or under a Central, State or
Provincial Act and an institution declared to be a University under section 3
of the University Grants Commission Act, 1956 (3 of 1956) ; or
(vii) an Indian
Institute of Technology within the meaning of clause (g) of section 3 of
the Institutes of Technology Act, 1961 (59 of 1961) ; or
(viia)
any State Government; or
(viib) the
Central Government; or
(viic) an
institution, having importance throughout India or in any State or States, as
the Central Government may, by notification in the Official Gazette, specify in
this behalf; or
(viii)
such institute of management as the Central Government may, by notification in
the Official Gazette, specify in this behalf,
on his voluntary retirement or termination of
his service, in accordance with any scheme or schemes of voluntary retirement
or in the case of a public sector company referred to in sub-clause (i),
a scheme of voluntary separation, to the extent such amount does not exceed
five lakh rupees :
Provided that the schemes of the said companies or authorities or
societies or Universities or the Institutes referred to in sub-clauses (vii)
and (viii), as the case may be, governing the payment of such amount are
framed in accordance with such guidelines (including inter alia criteria
of economic viability) as may be prescribed73:
Provided further that where exemption has been allowed to
an employee under this clause for any assessment year, no exemption thereunder
shall be allowed to him in relation to any other assessment year :
Provided also that where any relief has been allowed
to an assessee under section
89 for any
assessment year in respect of any amount received or receivable on his
voluntary retirement or termination of service or voluntary separation, no
exemption under this clause shall be allowed to him in relation to such, or any
other, assessment year;
(10CC) in the
case of an employee, being an individual deriving income in the nature of a
perquisite, not provided for by way of monetary payment, within the meaning of
clause (2) of section
17, the tax on such
income actually paid by his employer, at the option of the employer, on behalf
of such employee, notwithstanding anything contained in section 200 of the
Companies Act, 1956 (1 of 1956);
(10D) any
sum received under a life insurance policy, including the sum allocated by way
of bonus on such policy, other than—
(a) any sum
received under sub-section (3) of section
80DD or sub-section
(3) of section 80DDA*; or
(b) any
sum received under a Keyman insurance policy; or
(c) any
sum received under an insurance policy issued on or after the 1st day of April,
2003 but on or before the 31st day of March, 2012 in respect of which the
premium payable for any of the years during the term of the policy exceeds
twenty per cent of the actual capital sum assured ; or
(d) any sum
received under an insurance policy issued on or after the 1st day of April,
2012 in respect of which the premium payable for any of the years during the
term of the policy exceeds ten per cent of the actual capital sum assured:
Provided that the provisions of sub-clauses (c)
and (d) shall not apply to any sum received on the death of a person:
Provided further that for the purpose of calculating the actual
capital sum assured under sub-clause (c), effect shall be given to
the Explanation to sub-section (3) of section
80C or the Explanation to
sub-section (2A) of section
88, as the case may be :
Provided also that where the policy, issued on or
after the 1st day of April, 2013, is for insurance on life of any person, who
is—
(i) a
person with disability or a person with severe disability as referred to
in section
80U; or
(ii) suffering
from disease or ailment as specified in the rules made under section
80DDB,
the provisions of this sub-clause shall have
effect as if for the words "ten per cent", the words "fifteen
per cent" had been substituted:
74[Provided also that nothing
contained in this clause shall apply with respect to any unit linked insurance
policy, issued on or after the 1st day of February, 2021, if the amount of
premium payable for any of the previous year during the term of such policy
exceeds two lakh and fifty thousand rupees:
Provided also that if the premium is payable, by a
person, for more than one unit linked insurance policies, issued on or after
the 1st day of February, 2021, the provisions of this clause shall apply only
with respect to those unit linked insurance policies, where the aggregate
amount of premium does not exceed the amount referred to in fourth proviso in
any of the previous year during the term of any of those policies:
Provided also that the provisions of the fourth and
fifth provisos shall not apply to any sum received on the death of a person:
Provided also that if any difficulty arises in giving
effect to the provisions of this clause, the Board may, with the previous
approval of the Central Government, issue guidelines for the purpose of
removing the difficulty and every guideline issued by the Board under this
proviso shall be laid before each House of Parliament, and shall be binding on
the income-tax authorities and the assessee.]
Explanation 1.—For the purposes of this clause,
"Keyman insurance policy" means a life insurance policy taken by a
person on the life of another person who is or was the employee of the
first-mentioned person or is or was connected in any manner whatsoever with the
business of the first-mentioned person and includes such policy which has been
assigned to a person, at any time during the term of the policy, with or
without any consideration.
Explanation 2.—For the purposes of sub-clause (d),
the expression "actual capital sum assured" shall have the meaning
assigned to it in the Explanation to sub-section (3A) of section
80C.
75[Explanation 3.— For the purposes
of this clause, "unit linked insurance policy" means a life insurance
policy which has components of both investment and insurance and is linked to a
unit as defined in clause (ee) of regulation 3 of the Insurance
Regulatory and Development Authority of India (Unit Linked Insurance Products)
Regulations, 2019 issued by the Insurance Regulatory and Development Authority
under the Insurance Act, 1938 (4 of 1938) and the Insurance Regulatory and
Development Authority Act, 1999 (41 of 1999);]
(11) any
payment from a provident fund to which the Provident Funds Act, 1925 (19 of
1925), applies or from any other provident fund set up by the Central
Government and notified by it in this behalf in the Official Gazette:
76[Provided that the provisions
of this clause shall not apply to the income by way of interest accrued during
the previous year in the account of a person to the extent it relates to the
amount or the aggregate of amounts of contribution made by that person exceeding
two lakh and fifty thousand rupees in any previous year in that fund, on or
after the 1st day of April, 2021 and computed in such manner as may be
prescribed77 :
Provided further that if the contribution by such person is in
a fund in which there is no contribution by the employer of such person, the
provisions of the first proviso shall have the effect as if for the words
"two lakh and fifty thousand rupees", the words "five lakh
rupees" had been substituted;]
(11A) any
payment from an account, opened in accordance with the Sukanya Samriddhi
Account Rules, 201478 made under the Government Savings Bank
Act, 1873 (5 of 1873);
(12) the
accumulated balance due and becoming payable to an employee participating in a
recognised provident fund, to the extent provided in rule 8 of Part A of the
Fourth Schedule :
79[Provided that the provisions
of this clause shall not apply to the income by way of interest accrued during
the previous year in the account of a person to the extent it relates to the
amount or the aggregate of amounts of contribution made by that person
exceeding two lakh and fifty thousand rupees in any previous year in that fund,
on or after the 1st day of April, 2021 and computed in such manner as may be
prescribed 79a :
Provided further that if the contribution by such person is in
a fund in which there is no contribution by the employer of such person, the
provisions of the first proviso shall have the effect as if for the words
"two lakh and fifty thousand rupees", the words "five lakh
rupees" had been substituted;]
(12A) any
payment from the National Pension System Trust to an assessee on closure of his
account or on his opting out of the pension scheme referred to in section
80CCD, to the extent it
does not exceed sixty per cent of the total amount payable to him at the time
of such closure or his opting out of the scheme;
(12B) any
payment from the National Pension System Trust to an employee under the pension
scheme referred to in section
80CCD, on partial
withdrawal made out of his account in accordance with the terms and conditions,
specified under the Pension Fund Regulatory and Development Authority Act, 2013
(23 of 2013) and the regulations made thereunder, to the extent it does not
exceed twenty-five per cent of the amount of contributions made by him;
(13) any
payment from an approved superannuation fund made—
(i) on
the death of a beneficiary; or
(ii) to
an employee in lieu of or in commutation of an annuity on his retirement at or
after a specified age or on his becoming incapacitated prior to such
retirement; or
(iii) by way of
refund of contributions on the death of a beneficiary ; or
(iv) by way of
refund of contributions to an employee on his leaving the service in connection
with which the fund is established otherwise than by retirement at or after a
specified age or on his becoming incapacitated prior to such retirement, to the
extent to which such payment does not exceed the contributions made prior to
the commencement of this Act and any interest thereon; or
(v) by way of
transfer to the account of the employee under a pension scheme referred to
in section
80CCD and notified by
the Central Government;
(13A) any
special allowance specifically granted to an assessee by his employer to meet
expenditure actually incurred on payment of rent (by whatever name called) in
respect of residential accommodation occupied by the assessee, to such extent
as may be prescribed80 having regard to the area or place in
which such accommodation is situate and other relevant considerations.
Explanation.—For the removal of doubts, it is hereby declared that nothing
contained in this clause shall apply in a case where—
(a) the
residential accommodation occupied by the assessee is owned by him ; or
(b) the
assessee has not actually incurred expenditure on payment of rent (by whatever
name called) in respect of the residential accommodation occupied by him ;
(14) (i)
any such special allowance or benefit, not being in the nature of a perquisite
within the meaning of clause (2) of section
17, specifically granted
to meet expenses wholly, necessarily and exclusively incurred in the
performance of the duties of an office or employment of profit, as may be
prescribed81, to the extent to which such expenses are
actually incurred for that purpose ;
(ii) any such allowance granted to the
assessee either to meet his personal expenses at the place where the duties of
his office or employment of profit are ordinarily performed by him or at the
place where he ordinarily resides, or to compensate him for the increased cost
of living, as may be prescribed82 and to the extent as may be prescribed:
Provided that nothing in sub-clause (ii) shall apply to any
allowance in the nature of personal allowance granted to the assessee to
remunerate or compensate him for performing duties of a special nature relating
to his office or employment unless such allowance is related to the place of
his posting or residence ;
(14A) [***]
(15) (i)
income by way of interest, premium on redemption or other payment on such
securities, bonds, annuity certificates, savings certificates, other
certificates issued by the Central Government and deposits as the Central
Government may, by notification in the Official Gazette, specify in this
behalf, subject to such conditions and limits as may be specified in the said
notification ;
(iib) in the case of an individual or a
Hindu undivided family, interest on such Capital Investment Bonds as the
Central Government may, by notification in the Official Gazette, specify in
this behalf :
Provided that the Central Government shall not specify, for the
purposes of this sub-clause, such Capital Investment Bonds on or after the 1st
day of June, 2002;
(iic) in the case of an individual or a
Hindu undivided family, interest on such Relief Bonds as the Central Government
may, by notification in the Official Gazette, specify in this behalf ;
(iid) interest on such bonds, as the
Central Government may, by notification in the Official Gazette, specify,
arising to—
(a) a
non-resident Indian, being an individual owning the bonds ; or
(b) any
individual owning the bonds by virtue of being a nominee or survivor of the
non-resident Indian ; or
(c) any
individual to whom the bonds have been gifted by the non-resident Indian :
Provided that the aforesaid bonds are purchased by a non-resident
Indian in foreign exchange and the interest and principal received in respect
of such bonds, whether on their maturity or otherwise, is not allowable to be
taken out of India :
Provided further that where an individual, who is a
non-resident Indian in any previous year in which the bonds are acquired,
becomes a resident in India in any subsequent year, the provisions of this
sub-clause shall continue to apply in relation to such individual :
Provided also that in a case where the bonds are
encashed in a previous year prior to their maturity by an individual who is so
entitled, the provisions of this sub-clause shall not apply to such individual
in relation to the assessment year relevant to such previous year :
Provided also that the Central Government shall not
specify, for the purposes of this sub-clause, such bonds on or after the 1st
day of June, 2002.
Explanation.—For the purposes of this sub-clause, the expression
"non-resident Indian" shall have the meaning assigned to it in clause
(e) of section
115C;
(iii) interest on securities held by
the Issue Department of the Central Bank of Ceylon constituted under the Ceylon
Monetary Law Act, 1949;
(iiia) interest payable to any bank
incorporated in a country outside India and authorised to perform central
banking functions in that country on any deposits made by it, with the approval
of the Reserve Bank of India, with any scheduled bank.
Explanation.—For the purposes of this sub-clause, "scheduled bank"
shall have the meaning assigned to it in clause (ii) of the Explanation to
clause (viia) of sub-section (1) of section
36;
(iiib) interest payable to the Nordic
Investment Bank, being a multilateral financial institution constituted by the
Governments of Denmark, Finland, Iceland, Norway and Sweden, on a loan advanced
by it to a project approved by the Central Government in terms of the
Memorandum of Understanding entered into by the Central Government with that
Bank on the 25th day of November, 1986;
(iiic) interest payable to the European
Investment Bank, on a loan granted by it in pursuance of the framework-agreement
for financial co-operation entered into on the 25th day of November, 1993 by
the Central Government with that Bank;
(iv) interest payable—
(a) by
Government or a local authority on moneys borrowed by it before the 1st day of
June, 2001 from, or debts owed by it before the 1st day of June, 2001 to,
sources outside India;
(b) by an
industrial undertaking in India on moneys borrowed by it under a loan agreement
entered into before the 1st day of June, 2001 with any such financial
institution in a foreign country as may be approved in this behalf by the
Central Government by general or special order ;
(c) by an
industrial undertaking in India on any moneys borrowed or debt incurred by it
before the 1st day of June, 2001 in a foreign country in respect of the
purchase outside India of raw materials or components or capital plant and
machinery, to the extent to which such interest does not exceed the amount of
interest calculated at the rate approved by the Central Government in this
behalf, having regard to the terms of the loan or debt and its repayment.
Explanation 1.—For the purposes of this item,
"purchase of capital plant and machinery" includes the purchase of
such capital plant and machinery under a hire-purchase agreement or a lease
agreement with an option to purchase such plant and machinery.
Explanation 2.—For the removal of doubts, it is hereby
declared that the usance interest payable outside India by an undertaking
engaged in the business of ship-breaking in respect of purchase of a ship from
outside India shall be deemed to be the interest payable on a debt incurred in
a foreign country in respect of the purchase outside India;
(d) by the
Industrial Finance Corporation of India established by the Industrial Finance
Corporation Act, 1948 (15 of 1948), or the Industrial Development Bank of India
established under the Industrial Development Bank of India Act, 1964 (18 of
1964), or the Export-Import Bank of India established under the Export-Import
Bank of India Act, 1981 (28 of 1981), or the National Housing Bank established
under section 3 of the National Housing Bank Act, 1987 (53 of 1987), or the
Small Industries Development Bank of India established under section 3 of the
Small Industries Development Bank of India Act, 1989 (39 of 1989), or the
Industrial Credit and Investment Corporation of India a company formed and
registered under the Indian Companies Act, 1913 (7 of 1913), on any moneys
borrowed by it from sources outside India before the 1st day of June, 2001, to
the extent to which such interest does not exceed the amount of interest
calculated at the rate approved by the Central Government in this behalf,
having regard to the terms of the loan and its repayment;
(e) by any
other financial institution established in India or a banking company to which
the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or
banking institution referred to in section 51 of that Act), on any moneys
borrowed by it from sources outside India before the 1st day of June, 2001
under a loan agreement approved by the Central Government where the moneys are
borrowed either for the purpose of advancing loans to industrial undertakings in
India for purchase outside India of raw materials or capital plant and
machinery or for the purpose of importing any goods which the Central
Government may consider necessary to import in the public interest, to the
extent to which such interest does not exceed the amount of interest calculated
at the rate approved by the Central Government in this behalf, having regard to
the terms of the loan and its repayment;
(f) by an
industrial undertaking in India on any moneys borrowed by it in foreign
currency from sources outside India under a loan agreement approved by the
Central Government before the 1st day of June, 2001 having regard to the need
for industrial development in India, to the extent to which such interest does
not exceed the amount of interest calculated at the rate approved by the
Central Government in this behalf, having regard to the terms of the loan and
its repayment;
(fa) by a
scheduled bank to a non-resident or to a person who is not ordinarily resident
within the meaning of sub-section (6)† of section
6 on deposits in
foreign currency where the acceptance of such deposits by the bank is approved
by the Reserve Bank of India.
Explanation.—For the purposes of this item, the expression "scheduled
bank" means the State Bank of India constituted under the State Bank of
India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of
India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank
constituted under section 3 of the Banking Companies (Acquisition and Transfer
of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or
any other bank being a bank included in the Second Schedule to the Reserve Bank
of India Act, 1934 (2 of 1934), but does not include a co-operative bank;
(g) by a public
company formed and registered in India with the main object of carrying on the
business of providing long-term finance for construction or purchase of houses
in India for residential purposes, being a company eligible for deduction under
clause (viii) of sub-section (1) of section
36 on any moneys
borrowed by it in foreign currency from sources outside India under a loan
agreement approved by the Central Government before the 1st day of June, 2003,
to the extent to which such interest does not exceed the amount of interest
calculated at the rate approved by the Central Government in this behalf,
having regard to the terms of the loan and its repayment.
Explanation.—For the purposes of items (f), (fa) and (g),
the expression "foreign currency" shall have the meaning assigned to
it in the Foreign Exchange Management Act, 1999 (42 of 1999);
(h) by any
public sector company in respect of such bonds or debentures and subject to
such conditions, including the condition that the holder of such bonds or
debentures registers his name and the holding with that company, as the Central
Government may, by notification in the Official Gazette, specify in this
behalf;
(i) by
Government on deposits made by an employee of the Central Government or a State
Government or a public sector company, in accordance with such scheme as the
Central Government may, by notification in the Official Gazette, frame in this
behalf, out of the moneys due to him on account of his retirement, whether on
superannuation or otherwise.
Explanation 1.—For the purposes of this sub-clause, the
expression "industrial undertaking" means any undertaking which is
engaged in—
(a) the
manufacture or processing of goods; or
(aa) the
manufacture of computer software or recording of programme on any disc, tape,
perforated media or other information device; or
(b) the
business of generation or distribution of electricity or any other form of
power; or
(ba) the
business of providing telecommunication services; or
(c) mining; or
(d) the
construction of ships; or
(da) the
business of ship-breaking; or
(e) the
operation of ships or aircrafts or construction or operation of rail systems.
Explanation 1A.—For the purposes of this sub-clause, the
expression "interest" shall not include interest paid on delayed
payment of loan or on default if it is in excess of two per cent per annum over
the rate of interest payable in terms of such loan.
Explanation 2.—For the purposes of this clause, the
expression "interest" includes hedging transaction charges on account
of currency fluctuation;
(v) interest on—
(a) securities
held by the Welfare Commissioner, Bhopal Gas Victims, Bhopal, in the Reserve
Bank's SGL Account No. SL/DH 048;
(b) deposits
for the benefit of the victims of the Bhopal gas leak disaster held in such
account, with the Reserve Bank of India or with a public sector bank, as the
Central Government may, by notification in the Official Gazette, specify,
whether prospectively or retrospectively but in no case earlier than the 1st
day of April, 1994 in this behalf.
Explanation.—For the purposes of this sub-clause, the expression
"public sector bank" shall have the meaning assigned to it in
the Explanation to clause (23D);
(vi) interest on Gold Deposit Bonds
issued under the Gold Deposit Scheme, 1999 or deposit certificates issued under
the Gold Monetisation Scheme, 2015 notified by the Central Government;
(vii) interest on bonds—
(a) issued by a
local authority or by a State Pooled Finance Entity; and
(b) specified
by the Central Government by notification in the Official Gazette.
Explanation.—For the purposes of this sub-clause, the expression "State
Pooled Finance Entity" shall mean such entity which is set up in
accordance with the guidelines for the Pooled Finance Development Scheme
notified by the Central Government in the Ministry of Urban Development;
(viii) any income by way of interest
received by a non-resident or a person who is not ordinarily resident, in India
on a deposit made on or after the 1st day of April, 2005, in an Offshore
Banking Unit referred to in clause (u) of section 2 of the Special
Economic Zones Act, 2005;
(ix) any income by way of interest
payable to a non-resident by a unit located in an International Financial
Services Centre in respect of monies borrowed by it on or after the 1st day of
September, 2019.
Explanation.—For the purposes of this sub-clause,—
(a)
"International Financial Services Centre" shall have the meaning
assigned to it in clause (q) of section 2 of the Special Economic Zones
Act, 2005 (28 of 2005);
(b)
"unit" shall have the meaning assigned to it in clause (zc) of
section 2 of the Special Economic Zones Act, 2005 (28 of 2005);
(15A) any
payment made, by an Indian company engaged in the business of operation of
aircraft, to acquire an aircraft or an aircraft engine (other than a payment
for providing spares, facilities or services in connection with the operation
of leased aircraft) on lease from the Government of a foreign State or a
foreign enterprise under an agreement, not being an agreement entered into
between the 1st day of April, 1997 and the 31st day of March, 1999, and
approved by the Central Government in this behalf :
Provided that nothing contained in this clause shall apply to any
such agreement entered into on or after the 1st day of April, 2007.
Explanation.—For the purposes of this clause, the expression "foreign enterprise" means aperson who is a non-resident;
(16)
scholarships granted to meet the cost of education;
(17) any income
by way of—
(i)
daily allowance received by any person by reason of his membership of
Parliament or of any State Legislature or of any Committee thereof;
(ii) any
allowance received by any person by reason of his membership of Parliament
under the Members of Parliament (Constituency Allowance) Rules, 1986;
(iii) any
constituency allowance received by any person by reason of his membership of
any State Legislature under any Act or rules made by that State Legislature;
(17A) any
payment made, whether in cash or in kind,—
(i) in
pursuance of any award instituted in the public interest by the Central
Government or any State Government or instituted by any other body and approved
by the Central Government in this behalf; or
(ii) as a
reward by the Central Government or any State Government for such purposes as
may be approved by the Central Government in this behalf in the public
interest;
(18) any
income by way of—
(i) pension
received by an individual who has been in the service of the Central Government
or State Government and has been awarded "Param Vir Chakra" or
"Maha Vir Chakra" or "Vir Chakra" or such other gallantry
award as the Central Government may, by notification in the Official Gazette,
specify in this behalf;
(ii) family
pension received by any member of the family of an individual referred to in
sub-clause (i).
Explanation.—For the purposes of this clause, the
expression "family" shall have the meaning assigned to it in
the Explanation to clause (5);
(18A) [Omitted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(19) family
pension received by the widow or children or nominated heirs, as the case may
be, of a member of the armed forces (including para-military forces) of the
Union, where the death of such member has occurred in the course of operational
duties, in such circumstances and subject to such conditions, as may be
prescribed83;
(19A) the
annual value of any one palace in the occupation of a Ruler, being a palace,
the annual value whereof was exempt from income-tax before the commencement of
the Constitution (Twenty-sixth Amendment) Act, 1971, by virtue of the
provisions of the Merged States (Taxation Concessions) Order, 1949, or the Part
B States (Taxation Concessions) Order, 1950, or, as the case may be, the Jammu
and Kashmir (Taxation Concessions) Order, 1958:
Provided that for the assessment year commencing on the 1st day of
April, 1972, the annual value of every such palace in the occupation of such
Ruler during the relevant previous year shall be exempt from income-tax;
(20) the income
of a local authority which is chargeable under the head "Income from house
property", "Capital gains" or "Income from other
sources" or from a trade or business carried on by it which accrues or
arises from the supply of a commodity or service (not being water or
electricity) within its own jurisdictional area or from the supply of water or
electricity within or outside its own jurisdictional area.
Explanation.—For the purposes of this clause, the
expression "local authority" means—
(i)
Panchayat as referred to in clause (d) of article 243 of the
Constitution; or
(ii)
Municipality as referred to in clause (e) of article 243P of the
Constitution; or
(iii) Municipal
Committee and District Board,
legally entitled to, or entrusted by the
Government with, the control or management of a Municipal or local fund; or
(iv) Cantonment
Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924);
(20A) [***]
(21) 84any income of a research association for the
time being approved for the purpose of clause (ii) or clause (iii)
of sub-section (1) of section
35:
Provided that the research association—
(a)
applies its income, or accumulates it for application, wholly and exclusively
to the objects for which it is established, and the provisions of sub-section
(2) and sub-section (3) ofsection
11 shall apply in
relation to such accumulation subject to the following modifications, namely :—
(i) in
sub-section (2),—
(1) the words,
brackets, letters and figure "referred to in clause (a) or clause (b)
of sub-section (1) read with the Explanation to that
sub-section" shall be omitted;
(2) for the
words "to charitable or religious purposes", the words "for the
purposes of scientific research or research in social science or statistical
research" shall be substituted;
(3) the
reference to "Assessing Officer" in clause (a) thereof shall
be construed as a reference to the "prescribed authority" referred to
in clause (ii) or clause (iii) of sub-section (1) of section
35;
(ii) in
sub-section (3), in clause (a), for the words "charitable or
religious purposes", the words "the purposes of scientific research
or research in social science or statistical research" shall be
substituted; and
(b) does not
invest or deposit its funds, other than—
(i) any
assets held by the research association where such assets form part of the
corpus of the fund of the association as on the 1st day of June, 1973;
(ii) any
assets (being debentures issued by, or on behalf of, any company or
corporation), acquired by the research association before the 1st day of March,
1983;
(iii) any
accretion to the shares, forming part of the corpus of the fund mentioned in
sub-clause (i), by way of bonus shares allotted to the research
association;
(iv) voluntary
contributions received and maintained in the form of jewellery, furniture or
any other article as the Board may, by notification in the Official Gazette,
specify,
for any period during the previous year
otherwise than in any one or more of the forms or modes specified in
sub-section (5) of section
11:
Provided further that the exemption under this clause
shall not be denied in relation to voluntary contribution, other than voluntary
contribution in cash or voluntary contribution of the nature referred to in
clause (b) of the first proviso to this clause, subject to the condition
that such voluntary contribution is not held by the research association,
otherwise than in any one or more of the forms or modes specified in
sub-section (5) of section
11, after the expiry of
one year from the end of the previous year in which such asset is acquired or
the 31st day of March, 1992, whichever is later:
Provided also that nothing contained in this clause
shall apply in relation to any income of the research association, being
profits and gains of business, unless the business is incidental to the
attainment of its objectives and separate books of account are maintained by it
in respect of such business:
Provided also that where the research association is
approved by the Central Government and subsequently that Government is
satisfied that—
(i) the
research association has not applied its income in accordance with the
provisions contained in clause (a) of the first proviso; or
(ii) the
research association has not invested or deposited its funds in accordance with
the provisions contained in clause (b) of the first proviso; or
(iii) the
activities of the research association are not genuine; or
(iv) the
activities of the research association are not being carried out in accordance
with all or any of the conditions subject to which such association was
approved,
it may, at any time after giving a reasonable
opportunity of showing cause against the proposed withdrawal to the concerned
association, by order, withdraw the approval and forward a copy of the order
withdrawing the approval to such association and to the Assessing Officer;
(22) 85[Omitted by the Finance (No. 2) Act, 1998,
w.e.f. 1-4-1999;]
(22A) [Omitted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(22B) any
income of such news agency set up in India solely for collection and
distribution of news as the Central Government may, by notification in the
Official Gazette, specify in this behalf:
Provided that the news agency applies its income or accumulates it
for application solely for collection and distribution of news and does not
distribute its income in any manner to its members:
Provided further that any notification issued by the
Central Government under this clause shall, at any one time, have effect for
such assessment year or years, not exceeding three assessment years (including
an assessment year or years commencing before the date on which such
notification is issued) as may be specified in the notification:
Provided also that where the news agency has been specified,
by notification, by the Central Government and subsequently that Government is
satisfied that such news agency has not applied or accumulated or distributed
its income in accordance with the provisions contained in the first proviso, it
may, at any time after giving a reasonable opportunity of showing cause,
rescind the notification and forward a copy of the order rescinding the
notification to such agency and to the Assessing Officer;
(23) [Omitted
by the Finance Act, 2002, w.e.f. 1-4-2003;]
(23A) any
income (other than income chargeable under the head "Income from house
property" or any income received for rendering any specific services or
income by way of interest or dividends derived from its investments) of an
association or institution established in India having as its object the
control, supervision, regulation or encouragement of the profession of law,
medicine, accountancy, engineering or architecture or such other profession as
the Central Government may specify in this behalf, from time to time, by
notification in the Official Gazette:
Provided that—
(i) the
association or institution applies its income, or accumulates it for
application, solely to the objects for which it is established; and
(ii) the
association or institution is for the time being approved for the purpose of
this clause by the Central Government by general or special order:
Provided further that where the association or institution has
been approved by the Central Government and subsequently that Government is
satisfied that—
(i) such
association or institution has not applied or accumulated its income in
accordance with the provisions contained in the first proviso; or
(ii) the
activities of the association or institution are not being carried out in
accordance with all or any of the conditions subject to which such association
or institution was approved,
it may, at any time after giving a reasonable
opportunity of showing cause against the proposed withdrawal to the concerned
association or institution, by order, withdraw the approval and forward a copy
of the order withdrawing the approval to such association or institution and to
the Assessing Officer;
(23AA) any
income received by any person on behalf of any Regimental Fund or Non-Public
Fund established by the armed forces of the Union for the welfare of the past
and present members of such forces or their dependants;
(23AAA) any
income received by any person on behalf of a fund established, for such
purposes as may be notified by the Board in the Official Gazette, for the
welfare of employees or their dependants and of which fund such employees are
members if such fund fulfils the following conditions, namely :—
(a) the fund—
(i)
applies its income or accumulates it for application, wholly and exclusively to
the objects for which it is established; and
(ii) invests
its funds and contributions and other sums received by it in the forms or modes
specified in sub-section (5) of section
11;
(b) the fund is
approved by the Principal Commissioner or Commissioner in accordance with the
rules86 made in this behalf:
Provided that any such approval shall at any one time have effect
for such assessment year or years not exceeding three assessment years as may
be specified in the order of approval;
(23AAB) any
income of a fund, by whatever name called, set up by the Life Insurance
Corporation of India on or after the 1st day of August, 1996 or any other
insurer under a pension scheme,—
(i) to
which contribution is made by any person for the purpose of receiving pension
from such fund;
(ii)
which is approved by the Controller of Insurance or the Insurance Regulatory
and Development Authority established under sub-section (1) of section 3 of the
Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), as the
case may be.
Explanation.—For the purposes of this clause, the
expression "Controller of Insurance" shall have the meaning assigned
to it in clause (5B) of section 2 of the Insurance Act, 1938 (4 of
1938);
(23B) any
income of an institution constituted as a public charitable trust or registered
under the Societies Registration Act, 1860 (21 of 1860), or under any law
corresponding to that Act in force in any part of India, and existing solely
for the development of khadi or village industries or both, and not for
purposes of profit, to the extent such income is attributable to the business
of production, sale, or marketing, of khadi or products of village industries:
Provided that—
(i) the
institution applies its income, or accumulates it for application, solely for
the development of khadi or village industries or both; and
(ii) the
institution is, for the time being, approved for the purpose of this clause by
the Khadi and Village Industries Commission:
Provided further that the Commission shall not, at any
one time, grant such approval for more than three assessment years beginning
with the assessment year next following the financial year in which it is
granted:
Provided also that where the institution has been approved
by the Khadi and Village Industries Commission and subsequently that Commission
is satisfied that—
(i) the
institution has not applied or accumulated its income in accordance with the
provisions contained in the first proviso; or
(ii) the
activities of the institution are not being carried out in accordance with all
or any of the conditions subject to which such institution was approved,
it may, at any time after giving a reasonable
opportunity of showing cause against the proposed withdrawal to the concerned
institution, by order, withdraw the approval and forward a copy of the order
withdrawing the approval to such institution and to the Assessing Officer.
Explanation.—For the purposes of this clause,—
(i)
"Khadi and Village Industries Commission" means the Khadi and Village
Industries Commission established under the Khadi and Village Industries
Commission Act, 1956 (61 of 1956);
(ii)
"khadi" and "village industries" have the meanings
respectively assigned to them in that Act;
(23BB) any
income of an authority (whether known as the Khadi and Village Industries Board
or by any other name) established in a State by or under a State or Provincial
Act for the development of khadi or village industries in the State.
Explanation.—For the purposes of this clause, "khadi" and
"village industries" have the meanings respectively assigned to them
in the Khadi and Village Industries Commission Act, 1956 (61 of 1956);
(23BBA) any
income of any body or authority (whether or not a body corporate or corporation
sole) established, constituted or appointed by or under any Central, State or
Provincial Act which provides for the administration of any one or more of the
following, that is to say, public religious or charitable trusts or endowments
(including maths, temples, gurdwaras, wakfs, churches, synagogues, agiaries or
other places of public religious worship) or societies for religious or
charitable purposes registered as such under the Societies Registration Act,
1860 (21 of 1860), or any other law for the time being in force:
Provided that nothing in this clause shall be construed to exempt
from tax the income of any trust, endowment or society referred to therein;
(23BBB) any
income of the European Economic Community derived in India by way of interest,
dividends or capital gains from investments made out of its funds under such
scheme as the Central Government may, by notification in the Official Gazette,
specify in this behalf.
Explanation.—For the purposes of this clause, "European Economic
Community" means the European Economic Community established by the Treaty
of Rome of 25th March, 1957;
(23BBC) any
income of the SAARC Fund for Regional Projects set up by Colombo Declaration
issued on the 21st day of December, 1991 by the Heads of State or Government of
the Member Countries of South Asian Association for Regional Cooperation
established on the 8th day of December, 1985 by the Charter of the South Asian
Association for Regional Cooperation;
(23BBD) any
income of the Secretariat of the Asian Organisation of the Supreme Audit
Institutions registered as "ASOSAI-SECRETARIAT" under the Societies
Registration Act, 1860 (21 of 1860) for ten previous years relevant to the
assessment years beginning on the 1st day of April, 2001 and ending on the 31st
day of March, 2011;
(23BBE) any
income of the Insurance Regulatory and Development Authority established under
sub-section (1) of section 3 of the Insurance Regulatory and Development
Authority Act, 1999 (41 of 1999);
(23BBF) any
income of the North-Eastern Development Finance Corporation Limited, being a
company formed and registered under the Companies Act, 1956 (1 of 1956)87 :
Provided that in computing the total income of the
North-Eastern Development Finance Corporation Limited, the amount to the extent
of—
(i)
twenty per cent of the total income for assessment year beginning on the 1st
day of April, 2006;
(ii)
forty per cent of the total income for assessment year beginning on the 1st day
of April, 2007;
(iii) sixty per
cent of the total income for assessment year beginning on the 1st day of April,
2008;
(iv) eighty per
cent of the total income for assessment year beginning on the 1st day of April,
2009;
(v) one
hundred per cent of the total income for assessment year beginning on the 1st
day of April, 2010 and any subsequent assessment year or years,
shall be included in such total income;
(23BBG) any
income of the Central Electricity Regulatory Commission constituted under
sub-section (1) of section 76 of the Electricity Act, 2003 (36 of 2003);
(23BBH) any
income of the Prasar Bharati (Broadcasting Corporation of India) established
under sub-section (1) of section 3 of the Prasar Bharati (Broadcasting
Corporation of India) Act, 1990 (25 of 1990);
(23C) any
income received by any person on behalf of—
(i) the Prime
Minister's National Relief Fund 88[or the Prime Minister's Citizen Assistance
and Relief in Emergency Situations Fund (PM CARES FUND)]; or
(ii) the Prime
Minister's Fund (Promotion of Folk Art); or
(iii) the Prime
Minister's Aid to Students Fund; or
(iiia)
the National Foundation for Communal Harmony; or
(iiiaa) the
Swachh Bharat Kosh, set up by the Central Government; or
(iiiaaa) the
Clean Ganga Fund, set up by the Central Government; or
(iiiaaaa) the
Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund in
respect of any State or Union territory as referred to in sub-clause (iiihf)
of clause (a) of sub-section (2) of section
80G; or
(iiiab) any
university or other educational institution existing solely for educational
purposes and not for purposes of profit, and which is wholly or substantially
financed by the Government89; or
(iiiac) any
hospital or other institution for the reception and treatment of persons
suffering from illness or mental defectiveness or for the reception and
treatment of persons during convalescence or of persons requiring medical
attention or rehabilitation, existing solely for philanthropic purposes and not
for purposes of profit, and which is wholly or substantially financed by the
Government90.
Explanation.—For the purposes of sub-clauses (iiiab)
and (iiiac), any university or other educational institution, hospital
or other institution referred therein, shall be considered as being
substantially financed by the Government for any previous year, if the Government
grant to such university or other educational institution, hospital or other
institution exceeds such percentage of the total receipts including any
voluntary contributions, as may be prescribed90, of such university or other educational
institution, hospital or other institution, as the case may be, during the
relevant previous year; or
(iiiad) any
university or other educational institution existing solely for educational
purposes and not for purposes of profit if the aggregate annual 91[receipts of the person from such
university or universities or educational institution or educational
institutions do not exceed five crore rupees]; or
(iiiae) any
hospital or other institution for the reception and treatment of persons
suffering from illness or mental defectiveness or for the reception and
treatment of persons during convalescence or of persons requiring medical
attention or rehabilitation, existing solely for philanthropic purposes and not
for purposes of profit, if the aggregate annual 92[receipts of the person from such hospital
or hospitals or institution or institutions do not exceed five crore rupees.]
93[Explanation.—For the purposes of
sub-clauses (iiiad) and (iiiae), it is hereby clarified that if
the person has receipts from university or universities or educational
institution or institutions as referred to in sub-clause (iiiad), as
well as from hospital or hospitals or institution or institutions as referred
to in sub-clause (iiiae), the exemptions under these clauses shall not
apply, if the aggregate of annual receipts of the person from such university
or universities or educational institution or institutions or hospital or
hospitals or institution or institutions, exceed five crore rupees; or]
(iv) any other
fund or institution established for charitable purposes which may be approved
by the 94[Principal Commissioner or Commissioner], having regard to the objects of the fund or institution and
its importance throughout India or throughout any State or States; or
(v) any trust (including any other legal obligation) or institution wholly for public religious purposes or wholly for public religious and charitable purposes, which may be approved by the 94[Principal Commissioner or Commissioner], having regard to the manner in which the affairs of the trust or institution are administered and supervised for ensuring that the income accruing thereto is properly applied for the objects thereof;
(vi) any
university or other educational institution existing solely for educational
purposes and not for purposes of profit, other than those mentioned in
sub-clause (iiiab) or sub-clause (iiiad) and which may be
approved by the 94[Principal Commissioner or Commissioner]; or
(via) any
hospital or other institution for the reception and treatment of persons
suffering from illness or mental defectiveness or for the reception and
treatment of persons during convalescence or of persons requiring medical
attention or rehabilitation, existing solely for philanthropic purposes and not
for purposes of profit, other than those mentioned in sub-clause (iiiac)
or sub-clause (iiiae) and which may be approved by the 95[Principal Commissioner or Commissioner]:
96[Provided that the exemption to
the fund or trust or institution or university or other educational institution
or hospital or other medical institution referred to in sub-clause (iv)
or sub-clause (v) or sub-clause (vi) or sub-clause (via),
under the respective sub-clauses, shall not be available to it unless such fund
or trust or institution or university or other educational institution or hospital
or other medical institution makes an application in the prescribed form and
manner to the Principal Commissioner or Commissioner, for grant of approval,—
(i)
where such fund or trust or institution or university or other educational
institution or hospital or other medical institution is approved under the
second proviso [as it stood immediately before its amendment by the Taxation
and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020],
within three months from the 1st day of April, 2021;
(ii)
where such fund or trust or institution or university or other educational
institution or hospital or other medical institution is approved and the period
of such approval is due to expire, at least six months prior to expiry of the
said period;
(iii) where
such fund or trust or institution or university or other educational
institution or hospital or other medical institution has been provisionally
approved, at least six months prior to expiry of the period of the provisional
approval or within six months of commencement of its activities, whichever is
earlier;
(iv) in any
other case, at least one month prior to the commencement of the previous year
relevant to the assessment year from which the said approval is sought,
and the said fund or trust or institution or
university or other educational institution or hospital or other medical
institution is approved under the second proviso:
Provided further that the Principal Commissioner or
Commissioner, on receipt of an application made under the first proviso,
shall,—
(i)
where the application is made under clause (i) of the said proviso, pass
an order in writing granting approval to it for a period of five years;
(ii)
where the application is made under clause (ii) or clause (iii)
of the said proviso,—
(a) call for
such documents or information from it or make such inquiries as he thinks
necessary in order to satisfy himself about—
(A) the
genuineness of activities of such fund or trust or institution or university or
other educational institution or hospital or other medical institution; and
(B) the
compliance of such requirements of any other law for the time being in force by
it as are material for the purpose of achieving its objects; and
(b) after
satisfying himself about the objects and the genuineness of its activities
under item (A), and compliance of the requirements under item (B),
of sub-clause (a),—
(A) pass an
order in writing granting approval to it for a period of five years;
(B) if he is
not so satisfied, pass an order in writing rejecting such application and also
cancelling its approval after affording it a reasonable opportunity of being
heard;
(iii) where the
application is made under clause (iv) of the said proviso, pass an order
in writing granting approval to it provisionally for a period of three years
from the assessment year from which the registration is sought, and send a copy
of such order to the fund or trust or institution or university or other
educational institution or hospital or other medical institution:]
Provided also that the fund or trust or institution 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)—
(a) applies its
income, or accumulates it for application, wholly and exclusively to the
objects for which it is established and in a case where more than fifteen per cent
of its income is accumulated on or after the 1st day of April, 2002, the period
of the accumulation of the amount exceeding fifteen per cent of its income
shall in no case exceed five years; and
(b) does not
invest or deposit its funds, other than—
(i) any
assets held by the fund, trust or institution or any university or other
educational institution or any hospital or other medical institution where such
assets form part of the corpus of the fund, trust or institution or any
university or other educational institution or any hospital or other medical
institution as on the 1st day of June, 1973;
(ia) any asset,
being equity shares of a public company, held by any university or other
educational institution or any hospital or other medical institution where such
assets form part of the corpus of any university or other educational
institution or any hospital or other medical institution as on the 1st day of
June, 1998;
(ii) any assets
(being debentures issued by, or on behalf of, any company or corporation),
acquired by the fund, trust or institution or any university or other
educational institution or any hospital or other medical institution before the
1st day of March, 1983;
(iii) any
accretion to the shares, forming part of the corpus mentioned in sub-clause (i)
and sub-clause (ia), by way of bonus shares allotted to the fund, trust
or institution or any university or other educational institution or any
hospital or other medical institution;
(iv) voluntary
contributions received and maintained in the form of jewellery, furniture or
any other article as the Board may, by notification in the Official Gazette,
specify,
for any period during the previous year
otherwise than in any one or more of the forms or modes specified in
sub-section (5) of section
11.
97[98[Explanation 1].—For the removal of doubts, it
is hereby clarified that for the purposes of this proviso, the income of the
funds or trust or institution or any university or other educational
institution or any hospital or other medical institution, shall not include
income in the form of voluntary contributions made with a specific direction
that they shall form part of the corpus of such fund or trust or institution or
any university or other educational institution or any hospital or other
medical institution 99[subject to the condition that such
voluntary contributions are invested or deposited in one or more of the forms
or modes specified in sub-section (5) of section
11 maintained
specifically for such corpus].]
1[Explanation 1A.—For the purposes of this proviso, where the
property held under a trust or institution referred to in clause (v)
includes any temple, mosque, gurdwara, church or other place notified under
clause (b) of sub-section (2) of section
80G, any sum received by
such trust or institution as a voluntary contribution for the purpose of
renovation or repair of such temple, mosque, gurdwara, church or other place,
may, at its option, be treated by such trust or institution as forming part of
the corpus of that trust or institution, subject to the condition that the
trust or institution,—
(a) applies such corpus only for the purpose
for which the voluntary contribution was made;
(b) does not apply such corpus for making
contribution or donation to any person;
(c) maintains such corpus as separately
identifiable; and
(d) invests or deposits such corpus in the
forms and modes specified under sub-section (5) of section
11.
Explanation 1B.—For the purposes of Explanation
1A, where any trust or institution referred to in sub-clause (v)
has treated any sum received by it as forming part of the corpus, and
subsequently any of the conditions specified in clause (a) or clause (b)
or clause (c) or clause (d) of the said Explanation is
violated, such sum shall be deemed to be the income of such trust or
institution of the previous year during which the violation takes place.]
2[Explanation 2.—For the purposes of determining
the amount of application under this proviso,—
(i) application for charitable or religious
purposes from the corpus as referred to in Explanation 1, shall not
be treated as application of income for charitable or religious purposes:
Provided that the amount not so treated as application or part
thereof, shall be treated as application for charitable or religious purposes
in the previous year in which the amount, or part thereof, is invested or
deposited back, into one or more of the forms or modes specified in sub-section
(5) of section
11 maintained
specifically for such corpus, from the income of that year and to the extent of
such investment or deposit; and
(ii) application for charitable or religious
purposes, from any loan or borrowing, shall not be treated as application of
income for charitable or religious purposes:
Provided that the amount not so treated as application or part
thereof, shall be treated as application for charitable or religious purposes
in the previous year in which the loan or borrowing, or part thereof, is repaid
from the income of that year and to the extent of such repayment:]
Following Explanations 3, 4 and 5 shall
be inserted after Explanation 2 to third proviso to section
10(23C) by the Finance Act, 2022, w.e.f. 1-4-2023:
Explanation 3.—For the purposes of
determining the amount of application under this proviso, where eighty-five per
cent of the income referred to in clause (a) of this proviso is not
applied wholly and exclusively to the objects for which the 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) is established, during the
previous year but is accumulated or set apart, either in whole or in part, for
application to such objects, such income so accumulated or set apart shall not
be included in the total income of the previous year of the person in receipt
of the income, if the following conditions are complied with, namely:—
(a) such person furnishes a statement in
such form and manner, as may be prescribed, to the Assessing Officer stating
the purpose for which the income is being accumulated or set apart and the
period for which the income is to be accumulated or set apart, which shall in
no case exceed five years;
(b) the money so accumulated or set apart is
invested or deposited in the forms or modes specified in sub-section (5)
of section
11; and
(c) the statement referred to in clause (a)
is furnished on or before the due date specified under sub-section (1) of section
139 for furnishing
the return of income for the previous year:
Provided that in computing the period of five years referred to in
clause (a), the period during
which the income could not be applied for the purpose for which it is so
accumulated or set apart, due to an order or injunction of any court, shall be
excluded.
Explanation 4.—Any income referred to in Explanation
3, which—
(a) is applied for purposes other than
wholly and exclusively to the objects for which the 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) is established or ceases
to be accumulated or set apart for application thereto; or
(b) ceases to remain invested or deposited
in any of the forms or modes specified in sub-section (5) of section
11; or
(c) is not utilised for the purpose for
which it is so accumulated or set apart during the period referred to in clause
(a) of Explanation 3; or
(d) is credited or paid to any trust or institution
registered under section
12AA or section
12AB or to 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),
shall be deemed to be the income of such
person of the previous year—
(i) in which it is so applied or ceases to
be so accumulated or set apart under clause (a); or
(ii) in which it ceases to remain so
invested or deposited under clause (b); or
(iii) being the last previous year of the
period, for which the income is accumulated or set apart under clause (a)
of Explanation 3, but not utilised for the purpose for which it is
so accumulated or set apart under clause (c); or
(iv) in which it is credited or paid to any
fund or institution or trust or any university or other educational institution
or any hospital or other medical institution under clause (d).
Explanation 5.—Notwithstanding anything
contained in Explanation 4, where due to circumstances beyond
the control of the person in receipt of the income, any income invested or
deposited in accordance with the provisions of clause (b) of Explanation
3 cannot be applied for the purpose for which it was accumulated or set
apart, the Assessing Officer may, on an application made to him in this behalf,
allow such person to apply such income for such other purpose in India as is
specified in the application by that person and as is in conformity with the
objects for which the 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) is established; and thereupon the provisions of Explanation
4 shall apply as if the purpose specified by that person in the
application under thisExplanation were a purpose specified in the
notice given to the Assessing Officer under clause (a) of Explanation
3:
Provided that the Assessing Officer shall not allow application of
such income by way of payment or credit made for the purposes referred to in
clause (d) of Explanation
4:
Provided also that the exemption under sub-clause (iv)
or sub-clause (v) shall not be denied in relation to any funds invested
or deposited before the 1st day of April, 1989, otherwise than in any one or
more of the forms or modes specified in sub-section (5) of section
11 if such funds do
not continue to remain so invested or deposited after the 30th day of March,
1993 :
Provided also that the exemption under sub-clause (vi)
or sub-clause (via) shall not be denied in relation to any funds
invested or deposited before the 1st day of June, 1998, otherwise than in any
one or more of the forms or modes specified in sub-section (5) of section
11 if such funds do
not continue to remain so invested or deposited after the 30th day of March,
2001:
Provided also that the exemption under sub-clause (iv)
or sub-clause (v) or sub-clause (vi) or sub-clause (via)
shall not be denied in relation to voluntary contribution, other than voluntary
contribution in cash or voluntary contribution of the nature referred to in
clause (b) of the third proviso to this sub-clause, subject to the
condition that such voluntary contribution is not held by the trust or
institution or any university or other educational institution or any hospital
or other medical institution, otherwise than in any one or more of the forms or
modes specified in sub-section (5) of section
11, after the expiry of
one year from the end of the previous year in which such asset is acquired or
the 31st day of March, 1992, whichever is later:
Provided also that nothing contained in sub-clause (iv)
or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall
apply in relation to any income of the fund or trust or institution or any
university or other educational institution or any hospital or other medical
institution, being profits and gains of business, unless the business is
incidental to the attainment of its objectives and separate books of account
are maintained by it in respect of such business:
3[Provided also that any approval
granted under the second proviso shall apply in relation to the income of the
fund or trust or institution or university or other educational institution or
hospital or other medical institution,—
(i)
where the application is made under clause (i) of the first proviso,
from the assessment year from which approval was earlier granted to it;
(ii)
where the application is made under clause (iii) of the first proviso,
from the first of the assessment years for which it was provisionally approved;
(iii) in any
other case, from the assessment year immediately following the financial year
in which such application is made:
Provided also that the order under clause (i),
sub-clause (b) of clause (ii) and clause (iii) of the
second proviso shall be passed, in such form and manner as may be prescribed,
before expiry of the period of three months, six months and one month,
respectively, calculated from the end of the month in which the application was
received:
Provided also that where the total income, of the fund
or trust or institution 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),
without giving effect to the provisions of the said sub-clauses, exceeds the
maximum amount which is not chargeable to tax in any previous year, such trust
or institution or any university or other educational institution or any
hospital or other medical institution shall get its accounts audited in respect
of that year by an accountant as defined in the Explanation below
sub-section (2) of 4[section
288 before the
specified date referred to in section
44AB and furnish by
that date], the report of such audit in the prescribed form5 duly signed and verified by such
accountant and setting forth such particulars as may be prescribed:]
Following tenth proviso shall be substituted
for the existing tenth proviso to clause (23C) of section 10 by the
Finance Act, 2022, w.e.f. 1-4-2023 :
Provided also that where the total income of the
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),
without giving effect to the provisions of the said sub-clauses, exceeds the
maximum amount which is not chargeable to tax in any previous year, such fund
or institution or trust or any university or other educational institution or
any hospital or other medical institution shall—
(a) keep and maintain books of account and
other documents in such form and manner and at such place, as may be
prescribed; and
(b) get its accounts audited in respect of
that year by an accountant as defined in the Explanation below
sub-section (2) of section
288 before the
specified date referred to in section
44ABand furnish by that
date, the report of such audit in the prescribed form duly signed and verified
by such accountant and setting forth such particulars as may be prescribed:
Provided also that any amount of donation received by the
fund or institution in terms of clause (d) of sub-section (2) of section
80G in respect of
which accounts of income and expenditure have not been rendered to the
authority prescribed under clause (v) of sub-section (5C) of that
section, in the manner specified in that clause, or which has been utilised for
purposes other than providing relief to the victims of earthquake in Gujarat or
which remains unutilised in terms of sub-section (5C) of section
80G and not
transferred to the Prime Minister's National Relief Fund on or before the 31st
day of March, 2004 shall be deemed to be the income of the previous year and
shall accordingly be charged to tax:
Provided also that any amount credited or paid out of income
of any fund or trust or institution or any university or other educational
institution or any hospital or other medical institution referred to 6[in sub-clause (iv) or sub-clause (v)
or sub-clause (vi) or sub-clause (via), to any other fund or
trust or institution 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) or
trust or institution registered under section
12AA 7[or section
12AB], being voluntary
contribution made with a specific direction that they shall form part of the
corpus,] shall not be treated as application of income to the objects for which
such fund or trust or institution or university or educational institution or
hospital or other medical institution, as the case may be, is established:
Provided also that for the purposes of determining the
amount of application under item (a) of the third proviso, the
provisions of sub-clause (ia) of clause (a) of section
40 and sub-sections
(3) and (3A) of section
40A, shall, mutatis
mutandis, apply as they apply in computing the income chargeable under the
head "Profits and gains of business or profession":
Provided also that where the fund or trust or institution 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) does not apply its income
during the year of receipt and accumulates it, any payment or credit out of
such accumulation to any trust or institution registered under section
12AA 8[or section
12AB] or to any fund or
trust or institution 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)
shall not be treated as application of income to the objects for which such
fund or trust or institution or university or educational institution or
hospital or other medical institution, as the case may be, is established :
9[Provided also that where the fund or institution
referred to in sub-clause (iv) or trust or institution referred to in sub-clause
(v) or any university or other educational institution referred to in
sub-clause (vi) or any hospital or other medical institution referred to
in sub-clause (via) is approved or provisionally approved under the said
clause and subsequently—
(a) the Principal Commissioner or
Commissioner has noticed occurrence of one or more specified violations during
any previous year; or
(b) the Principal Commissioner or
Commissioner has received a reference from the Assessing Officer under the
second proviso to sub-section (3) of section
143 for any previous
year; or
(c) such case has been selected in
accordance with the risk management strategy, formulated by the Board from time
to time, for any previous year,
the Principal Commissioner or Commissioner
shall—
(i) call for such documents or information
from the fund or institution or trust or any university or other educational
institution or any hospital or other medical institution, or make such inquiry
as he thinks necessary in order to satisfy himself about the occurrence of any
specified violation;
(ii) pass an order in writing cancelling the
approval of such fund or institution or trust or any university or other
educational institution or any hospital or other medical institution, on or
before the specified date, after affording a reasonable opportunity of being
heard, for such previous year and all subsequent previous years, if he is
satisfied that one or more specified violation has taken place;
(iii) pass an order in writing refusing to
cancel the approval of such fund or institution or trust or any university or
other educational institution or any hospital or other medical institution, on
or before the specified date, if he is not satisfied about the occurrence of
one or more specified violations;
(iv) forward a copy of the order under
clause (ii) or clause (iii), as the case may be, to the Assessing
Officer and such fund or institution or trust or any university or other
educational institution or any hospital or other medical institution.
Explanation 1.—For the purposes of this
proviso, "specified date" shall mean the day on which the period of
six months, calculated from the end of the quarter in which the first notice is
issued by the Principal Commissioner or Commissioner, on or after the 1st day
of April, 2022, calling for any document or information, or for making any
inquiry, under clause (i) expires.
Explanation 2.—For the purposes of this
proviso, the following shall mean "specified violation",—
(a) where any income of the fund or
institution or trust or any university or other educational institution or any
hospital or other medical institution has been applied other than for the
objects for which it is established; or
(b) the fund or institution or trust or any
university or other educational institution or any hospital or other medical
institution has income from profits and gains of business, which is not
incidental to the attainment of its objectives or separate books of account are
not maintained by it in respect of the business which is incidental to the
attainment of its objectives; or
(c) any activity of the fund or institution
or trust or any university or other educational institution or any hospital or
other medical institution—
(A) is not genuine; or
(B) is not being carried out in accordance
with all or any of the conditions subject to which it was notified or approved;
or
(d) the fund or institution or trust or any
university or other educational institution or any hospital or other medical
institution has not complied with the requirement of any other law for the time
being in force, and the order, direction or decree, by whatever name called,
holding that such non-compliance has occurred, has either not been disputed or
has attained finality.
Explanation 3.—For the purposes of clause (b)
of this proviso, where the Assessing Officer has intimated the Central
Government or the prescribed authority under the first proviso of sub-section
(3) of section
143 about the
contravention of the provisions of sub-clause (iv) or sub-clause (v) or sub-clause
(vi) or sub-clause (via) of this clause by any fund or
institution or trust or university or other educational institution or any
hospital or other medical institution in respect of an assessment year, and the
approval granted to such fund or institution or trust or university or other
educational institution or any hospital or other medical institution has not
been withdrawn, or the notification issued in its case has not been rescinded,
on or before the 31st day of March, 2022, such intimation shall be deemed to be
a reference received by the Principal Commissioner or Commissioner as on the
1st day of April, 2022, and the provisions of clause (b) of the second
proviso to sub-section (3) of section
143 shall apply
accordingly for such assessment year:]
10[***]
Provided also that any anonymous donation referred to
in section
115BBC on which tax is
payable in accordance with the provisions of the said section shall be included
in the total income :
11[Provided also that all
applications made under the first proviso [as it stood before its amendment by
the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions)
Act, 2020] pending before the Principal Commissioner or Commissioner, on which
no order has been passed before the 1st day of April, 2021, shall be deemed to
be applications made under clause (iv) of the first proviso on that
date:]
Provided also that the income of a trust or
institution referred to in sub-clause (iv) or sub-clause (v)
shall be included in its total income of the previous year if the provisions of
the first proviso to clause (15) of section
2 become applicable
to such trust or institution in the said previous year, whether or not any
approval granted or notification issued in respect of such trust or institution
has been withdrawn or rescinded :
12[Provided also that where the fund or institution
referred to in sub-clause (iv)
or the trust or institution referred to in sub-clause (v) or any
university or other educational institution referred to in sub-clause (vi)
or any hospital or other medical institution referred to in sub-clause (via)
has been approved by the Principal Commissioner or Commissioner, and the
approval is in force for any previous year, then, nothing contained in any
other provision of this section, other than clause (1) thereof, shall operate
to exclude any income received on behalf of such fund or institution or trust
or university or other educational institution or hospital or other medical
institution, as the case may be, from the total income of the person in receipt
thereof for that previous year.
Explanation.—Where, on or after the 1st day
of April, 2022, any fund or institution referred to in sub-clause (iv)
or any trust or institution referred to in sub-clause (v) or any
university or other educational institution referred to in sub-clause (vi)
or any hospital or other medical institution referred to in sub-clause (via)
is notified under clause (46) of section
10, the approval or
provisional approval granted to such fund or institution or trust or university
or other educational institution or hospital or other medical institution shall
become inoperative from the date of notification of such fund or institution or
trust or university or other educational institution or hospital or other
medical institution, as the case may be, under clause (46) of the said section:]
Following provisos shall be inserted after the
nineteenth proviso to clause (23C) of section 10 by the Finance Act,
2022, w.e.f. 1-4-2023:
Provided also that the 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) shall furnish the return
of income for the previous year in accordance with the provisions of
sub-section (4C) of section
139, within the time
allowed under that section:
Provided also that where the income or part of
income or property 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), has been applied directly or indirectly for the
benefit of any person referred to in sub-section (3) of section
13, such income or part
of income or property shall, after taking into account the provisions of
sub-sections (2), (4) and (6) of the said section, be deemed to be the income
of such fund or institution or trust or university or other educational
institution or hospital or other medical institution of the previous year in
which it is so applied:
Provided also that where 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) violates the conditions of
the tenth proviso or twentieth proviso, or where the provisions of the
eighteenth proviso are applicable, its income chargeable to tax shall be
computed after allowing deduction for the expenditure (other than capital
expenditure) incurred in India, for the objects of the fund or institution or
trust or the university or other educational institution or the hospital or
other medical institution, subject to fulfilment of the following conditions,
namely:—
(a) such expenditure is not from the corpus standing to the credit of the fund or institution or trust or the university or other educational institution or the hospital or other medical institution as on the end of the financial year immediately
preceding the previous
year relevant to the assessment year for which the income is being computed;
(b) such expenditure is not from any loan or
borrowing;
(c) claim of depreciation is not in respect
of an asset, acquisition of which has been claimed as application of income in
the same or any other previous year; and
(d) such expenditure is not in the form of
any contribution or donation to any person.
Explanation.—For the purposes of
determining the amount of expenditure under this proviso, the provisions of
sub-clause (ia) of clause (a) of section
40 and sub-sections
(3) and (3A) ofsection
40A shall, mutatis mutandis, apply as they
apply in computing the income chargeable under the head "Profits and gains
of business or profession":
Provided also that for the purposes of computing
income chargeable to tax under the twenty-second proviso, no deduction in
respect of any expenditure or allowance or set-off of any loss shall be allowed
to the assessee under any other provision of this Act.
13[Explanation 1].—In this clause, where any
income is required to be applied or accumulated, then, for such purpose the
income shall be determined without any deduction or allowance by way of
depreciation or otherwise in respect of any asset, acquisition of which has
been claimed as an application of income under this clause in the same or any
other previous year.
14[Explanation 2.—For the purposes of this
clause, it is clarified that the calculation of income required to be applied
or accumulated during the previous year shall be made without any set off or
deduction or allowance of any excess application of any of the year preceding
to the previous year.]
15[Explanation 3.—For the purposes of this clause, any sum
payable by 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) shall be considered as application of income during the
previous year in which such sum is actually paid by it (irrespective of the
previous year in which the liability to pay such sum was incurred by the fund
or institution or trust or any university or other educational institution or
any hospital or other medical institution according to the method of accounting
regularly employed by it):
Provided that where during any previous year any sum has been
claimed to have been applied by the fund or institution or trust or any
university or other educational institution or any hospital or other medical
institution, such sum shall not be allowed as application in any subsequent
previous year;]
(23D) 16[***] any income of—
(i) a
Mutual Fund registered under the Securities and Exchange Board of India Act,
1992 (15 of 1992) or regulations made thereunder;
(ii) such
other Mutual Fund set up by a public sector bank or a public financial
institution or authorised by the Reserve Bank of India and subject to such
conditions as the Central Government may, by notification in the Official
Gazette, specify in this behalf.
Explanation.—For the purposes of this clause,—
(a) the
expression "public sector bank" means the State Bank of India
constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary
bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of
1959), a corresponding new Bank constituted under section 3 of the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or
under section 3 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1980 (40 of 1980) [and a bank included in the category
"other public sector banks" by the Reserve Bank of India];
(b) the
expression "public financial institution" shall have the meaning
assigned to it in section 4A of the Companies Act, 1956 (1 of 1956)17;
(c) the
expression "Securities and Exchange Board of India" shall have the
meaning assigned to it in clause (a) of sub-section (1) of section 2 of
the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(23DA) any
income of a securitisation trust from the activity of securitisation.
Explanation.—For the purposes of this clause,—
(a)
"securitisation" shall have the same meaning as assigned to it,—
(i) in
clause (r) of sub-regulation (1) of regulation 218 of the Securities and Exchange Board of
India (Public Offer and Listing of Securitised Debt Instruments) Regulations,
2008 made under the Securities and Exchange Board of India Act, 1992 (15 of
1992) and the Securities Contracts (Regulation) Act, 1956 (42 of 1956); or
(ia) in clause
(z) of sub-section (1) of section 2 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (54 of 2002); or
(ii) under the
guidelines on securitisation of standard assets issued by the Reserve Bank of
India;
(b)
"securitisation trust" shall have the meaning assigned to it in
the Explanation below section
115TCA;
(23E) [Omitted by the Finance Act, 2002,
w.e.f. 1-4-2003;]
(23EA) any
income, by way of contributions received from recognised stock exchanges and
the members thereof, of such Investor Protection Fund set up by recognised
stock exchanges in India, either jointly or separately, as the Central
Government may, by notification in the Official Gazette, specify in this
behalf:
Provided that where any amount standing to the credit
of the Fund and not charged to income-tax during any previous year is shared,
either wholly or in part, with a recognised stock exchange, the whole of the
amount so shared shall be deemed to be the income of the previous year in which
such amount is so shared and shall accordingly be chargeable to income-tax;
(23EB) any
income of the Credit Guarantee Fund Trust for Small Industries, being a trust
created by the Government of India and the Small Industries Development Bank of
India established under sub-section (1) of section 3 of the Small Industries
Development Bank of India Act, 1989 (39 of 1989), for five previous years
relevant to the assessment years beginning on the 1st day of April, 2002 and
ending on the 31st day of March, 2007;
(23EC) any
income, by way of contributions received from commodity exchanges and the
members thereof, of such Investor Protection Fund set up by commodity exchanges
in India, either jointly or separately, as the Central Government may, by
notification in the Official Gazette, specify in this behalf:
Provided that where any amount standing to the credit of the said
Fund and not charged to income-tax during any previous year is shared, either
wholly or in part, with a commodity exchange, the whole of the amount so shared
shall be deemed to be the income of the previous year in which such amount is
so shared and shall accordingly be chargeable to income-tax.
Explanation.—For the purposes of this clause, "commodity exchange"
shall mean a "registered association" as defined in clause (jj)
of section 2 of the Forward Contracts (Regulation) Act, 1952 (74 of 1952);
(23ED) any
income, by way of contributions received from a depository, of such Investor
Protection Fund set up in accordance with the regulations by a depository as
the Central Government may, by notification in the Official Gazette, specify in
this behalf:
Provided that where any amount standing to the credit of the Fund
and not charged to income-tax during any previous year is shared, either wholly
or in part with a depository, the whole of the amount so shared shall be deemed
to be the income of the previous year in which such amount is so shared and
shall, accordingly, be chargeable to income-tax.
Explanation.—For the purposes of this clause,—
(i) "depository"
shall have the same meaning as assigned to it in clause (e) of
sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996);
(ii)
"regulations" means the regulations made under the Securities and
Exchange Board of India Act, 1992 (15 of 1992) and the Depositories Act, 1996
(22 of 1996);
(23EE) any
specified income of such Core Settlement Guarantee Fund, set up by a recognised
clearing corporation in accordance with the regulations, as the Central
Government may, by notification in the Official Gazette, specify in this
behalf:
Provided that where any amount standing to the credit
of the Fund and not charged to income-tax during any previous year is shared,
either wholly or in part with the specified person, the whole of the amount so
shared shall be deemed to be the income of the previous year in which such
amount is so shared and shall, accordingly, be chargeable to income-tax.
Explanation.—For the purposes of this clause,—
(i)
"recognised clearing corporation" shall have the same meaning as
assigned to it in clause (o) of sub-regulation (1) of regulation 2 of
the Securities Contracts (Regulation) (Stock Exchanges and Clearing
Corporations) Regulations, 201219 made under the Securities and Exchange
Board of India Act, 1992 (15 of 1992) and the Securities Contracts (Regulation)
Act, 1956 (42 of 1956);
(ii)
"regulations" means the Securities Contracts (Regulation) (Stock
Exchanges and Clearing Corporations) Regulations, 2012* made under the Securities and Exchange
Board of India Act, 1992 (15 of 1992) and the Securities Contracts (Regulation)
Act, 1956 (42 of 1956);
(iii)
"specified income" shall mean,—
(a) the income
by way of contribution received from specified persons;
(b) the income
by way of penalties imposed by the recognised clearing corporation and credited
to the Core Settlement Guarantee Fund; or
(c) the income
from investment made by the Fund;
(iv) "specified
person" shall mean,—
(a) any
recognised clearing corporation which establishes and maintains the Core
Settlement Guarantee Fund;
(b) any
recognised stock exchange, being a shareholder in such recognised clearing
corporation, or a contributor to the Core Settlement Guarantee Fund; and
(c) any
clearing member contributing to the Core Settlement Guarantee Fund;
(23F) any
income by way of dividends or long-term capital gains of a venture capital fund
or a venture capital company from investments made by way of equity shares in a
venture capital undertaking :
Provided that such venture capital fund or venture capital company
is approved for the purposes of this clause by the prescribed authority20 in accordance with the rules21 made in this behalf and satisfies the
prescribed conditions :
Provided further that any approval by the prescribed
authority shall, at any one time, have effect for such assessment year or
years, not exceeding three assessment years, as may be specified in the order
of approval :
Provided also that nothing contained in this clause shall
apply in respect of any investment made after the 31st day of March, 1999.
Explanation.—For the purposes of this clause,—
(a)
"venture capital fund" means such fund, operating under a trust deed
registered under the provisions of the Registration Act, 1908 (16 of 1908),
established to raise monies by the trustees for investments mainly by way of
acquiring equity shares of a venture capital undertaking in accordance with the
prescribed guidelines;
(b)
"venture capital company" means such company as has made investments
by way of acquiring equity shares of venture capital undertakings in accordance
with the prescribed guidelines;
(c)
"venture capital undertaking" means such domestic company whose
shares are not listed in a recognised stock exchange in India and which is
engaged in the business of generation or generation and distribution of electricity
or any other form of power or engaged in the business of providing
telecommunication services or in the business of developing, maintaining and
operating any infrastructure facility or engaged in the manufacture or
production of such articles or things (including computer software) as may be
notified by the Central Government in this behalf; and
(d) "infrastructure
facility" means a road, highway, bridge, airport, port, rail system, a
water supply project, irrigation project, sanitation and sewerage system or any
other public facility of a similar nature as may be notified by the Board in this
behalf in the Official Gazette and which fulfils the conditions specified in
sub-section (4A) of section
80-IA;
(23FA) any
income by way of dividends, other than dividends referred to
in section
115-O, or long-term capital
gains of a venture capital fund or a venture capital company from investments
made by way of equity shares in a venture capital undertaking :
Provided that such venture capital fund or venture
capital company is approved, for the purposes of this clause, by the Central
Government on an application made to it in accordance with the rules22 made in this behalf and which satisfies
the prescribed conditions :
Provided further that any approval by the Central Government
shall, at any one time, have effect for such assessment year or years, not
exceeding three assessment years, as may be specified in the order of approval
:
Provided also that nothing contained in this clause
shall apply in respect of any investment made after the 31st day of March,
2000.
Explanation.—For the purposes of this clause,—
(a) "venture
capital fund" means such fund, operating under a trust deed registered
under the provisions of the Registration Act, 1908 (16 of 1908), established to
raise monies by the trustees for investments mainly by way of acquiring equity
shares of a venture capital undertaking in accordance with the prescribed
guidelines;
(b) "venture
capital company" means such company as has made investments by way of
acquiring equity shares of venture capital undertakings in accordance with the
prescribed guidelines; and
(c) "venture
capital undertaking" means such domestic company whose shares are not
listed in a recognised stock exchange in India and which is engaged in the—
(i) business
of—
(A) software;
(B) information
technology;
(C) production
of basic drugs in the pharmaceutical sector;
(D)
bio-technology;
(E) agriculture
and allied sectors; or
(F) such other
sectors as may be notified by the Central Government in this behalf; or
(ii) production
or manufacture of any article or substance for which patent has been granted to
the National Research Laboratory or any other scientific research institution
approved by the Department of Science and Technology;
(23FB) any
income of a venture capital company or venture capital fund from investment in
a venture capital undertaking :
Provided that nothing contained in this clause shall
apply in respect of any income of a venture capital company or venture capital
fund, being an investment fund specified in clause (a) of the Explanation
1 to section
115UB, of the previous year
relevant to the assessment year beginning on or after the 1st day of April,
2016.
Explanation.—For the purposes of this clause,—
(a)
"venture capital company" means a company which—
(A) has
been granted a certificate of registration, before the 21st day of May, 2012,
as a Venture Capital Fund and is regulated under the Securities and Exchange
Board of India (Venture Capital Funds) Regulations, 1996 (hereinafter referred
to as the Venture Capital Funds Regulations) made under the Securities and
Exchange Board of India Act, 1992 (15 of 1992); or
(B) has been
granted a certificate of registration as Venture Capital Fund as a sub-category
of Category I Alternative Investment Fund and is regulated under the Securities
and Exchange Board of India (Alternative Investment Funds) Regulations, 2012
(hereinafter referred to as the Alternative Investment Funds Regulations) made
under the Securities and Exchange Board of India Act, 1992 (15 of 1992), and
which fulfils the following conditions, namely:—
(i) it
is not listed on a recognised stock exchange;
(ii) it
has invested not less than two-thirds of its investible funds in unlisted
equity shares or equity linked instruments of venture capital undertaking; and
(iii) it
has not invested in any venture capital undertaking in which its director or a
substantial shareholder (being a beneficial owner of equity shares exceeding
ten per cent of its equity share capital) holds, either individually or
collectively, equity shares in excess of fifteen per cent of the paid-up equity
share capital of such venture capital undertaking;
(b)
"venture capital fund" means a fund—
(A) operating
under a trust deed registered under the provisions of the Registration Act,
1908 (16 of 1908), which—
(I) has
been granted a certificate of registration, before the 21st day of May, 2012,
as a Venture Capital Fund and is regulated under the Venture Capital Funds
Regulations; or
(II) has been
granted a certificate of registration as Venture Capital Fund as a sub-category
of Category I Alternative Investment Fund under the Alternative Investment
Funds Regulations and which fulfils the following conditions, namely:—
(i) it
has invested not less than two-thirds of its investible funds in unlisted
equity shares or equity linked instruments of venture capital undertaking;
(ii) it
has not invested in any venture capital undertaking in which its trustee or the
settler holds, either individually or collectively, equity shares in excess of
fifteen per cent of the paid-up equity share capital of such venture capital
undertaking; and
(iii) the
units, if any, issued by it are not listed in any recognised stock exchange; or
(B) operating
as a venture capital scheme made by the Unit Trust of India established under
the Unit Trust of India Act, 1963 (52 of 1963);
(c)
"venture capital undertaking" means—
(i) a
venture capital undertaking as defined in clause (n) of regulation 2 of
the Venture Capital Funds Regulations; or
(ii) a venture
capital undertaking as defined in clause (aa) of sub-regulation (1) of
regulation 2 of the Alternative Investment Funds Regulations;
(23FBA) any
income of an investment fund other than the income chargeable under the head
"Profits and gains of business or profession";
(23FBB) any
income referred to in section
115UB, accruing or arising
to, or received by, a unit holder of an investment fund, being that proportion
of income which is of the same nature as income chargeable under the head
"Profits and gains of business or profession".
Explanation.—For the purposes of clauses (23FBA) and (23FBB), the
expression "investment fund" shall have the meaning assigned to it in
clause (a) of the Explanation 1 to section
115UB;
23[(23FBC) any income accruing or arising
to, or received by, a unit holder from a specified fund or on transfer of units
in a specified fund.
Explanation.—For the purposes of this clause, the
expressions—
(a)
"specified fund" shall have the same meaning as assigned to it in
clause (c) of the Explanation to clause (4D);
(b)
"unit" means beneficial interest of an investor in the fund and shall
include shares or partnership interests;]
(23FC) any
income of a business trust by way of—
(a)
interest received or receivable from a special purpose vehicle; or
(b)
dividend 24[received or receivable from a special purpose
vehicle].
Explanation.—For the purposes of this clause, the
expression "special purpose vehicle" means an Indian company in which
the business trust holds controlling interest and any specific percentage of
shareholding or interest, as may be required by the regulations under which
such trust is granted registration;
(23FCA) any
income of a business trust, being a real estate investment trust, by way of
renting or leasing or letting out any real estate asset owned directly by such
business trust.
Explanation.—For the purposes of this clause, the expression "real
estate asset" shall have the same meaning as assigned to it in clause (zj)
of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of
India (Real Estate Investment Trusts) Regulations, 2014 made under the
Securities and Exchange Board of India Act, 1992 (15 of 1992);
(23FD) any
distributed income, referred to in section
115UA, received by a unit
holder from the business trust, not being that proportion of the income which
is of the same nature as the income referred to 25-26[in sub-clause (a) of clause (23FC)
or sub-clause (b) of said clause (in a case where the special purpose
vehicle has exercised the option under section
115BAA)] or clause (23FCA);
27[(23FE) any income of a specified
person in the nature of dividend, interest or long-term capital gains arising
from an investment made by it in India, whether in the form of debt or share
capital or unit, if the investment—
(i) is made on
or after the 1st day of April, 2020 but on or before the 31st day of March,
2024;
(ii) is held
for at least three years; and
(iii) is in—
(a) a
business trust referred to in sub-clause (i) of clause (13A)
of section
2; or
(b) a
company or enterprise or an entity carrying on the business of developing, or
operating and maintaining, or developing, operating and maintaining any
infrastructure facility as defined in the Explanation to
clause (i) of sub-section (4) of section 80-IA or such other business as
the Central Government may, by notification in the Official Gazette, specify in
this behalf; or
(c) a
Category-I or Category-II Alternative Investment Fund regulated under the
Securities and Exchange Board of India (Alternative Investment Fund)
Regulations, 2012, made under the Securities and Exchange Board of India Act,
1992 (15 of 1992), having 28[not less than fifty per cent] investment in
one or more of the company or enterprise or entity referred to in item (b) 29[or item (d) or item (e) or in
an Infrastructure Investment Trust referred to in sub-clause (i) of
clause (13A) of section
2; or]
29[(d) a domestic company, set up and
registered on or after the 1st day of April, 2021, having minimum seventy-five
per cent investments in one or more of the companies or enterprises or entities
referred to in item (b); or
(e) a
non-banking financial company registered as an Infrastructure Finance Company
as referred to in notification number RBI/2009-10/316 issued by the Reserve
Bank of India or in an Infrastructure Debt Fund, a non-banking finance company,
as referred to in the Infrastructure Debt Fund - Non-Banking Financial
Companies (Reserve Bank) Directions, 2011, issued by the Reserve Bank of India,
having minimum ninety per cent lending to one or more of the companies or
enterprises or entities referred to in item (b):]
Provided that if any difficulty arises regarding interpretation or
implementation of the provisions of this clause, the Board may, with the
approval of the Central Government, issue guidelines for the purpose of
removing the difficulty:
Provided further that every guideline issued under the
first proviso, shall be laid before each House of Parliament and shall be
binding on the income-tax authority and the specified person:
Provided also that where any income has not been
included in the total income of the specified person due to the provisions of
this clause, and subsequently during any previous year the specified person
fails to satisfy any of the conditions of this clause so that the said income
would not have been eligible for such non-inclusion, such income shall be
chargeable to income-tax as the income of the specified person of that previous
year:
30[Provided also that in case a
Category-I or Category-II Alternative Investment Fund referred to in item (c)
of sub-clause (iii) has investment of less than one hundred per cent in
one or more of the companies or enterprises or entities referred to in item (b)
or item (d) or item (e) of the said sub-clause or in an
Infrastructure Investment Trust referred to in item (c) of the said
sub-clause, income accrued or arisen or received or attributable to such
investment, directly or indirectly, which is exempt under this clause shall be
calculated proportionately to that investment made in one or more of the
companies or enterprises or entities referred to in item (b) or item (d)
or item (e) of the said sub-clause or in the Infrastructure Investment
Trust referred to in item (c) of the said sub-clause, in such manner as
may be prescribed:
Provided also that in case a domestic company referred
to in item (d) of sub-clause (iii) has investment of less than
one hundred per cent in one or more of the companies or enterprises or entities
referred to in item (b) of the said sub-clause, income accrued or arisen
or received or attributable to such investments, directly or indirectly, which
is exempt under this clause shall be calculated proportionately to the
investment made in one or more of the companies or enterprises or entities
referred to in item (b) of the said sub-clause, in such manner as may be
prescribed:
Provided also that in case a non-banking finance
company registered as an Infrastructure Finance Company or Infrastructure Debt
Fund, referred to in item (e) of sub-clause (iii), has lending of
less than one hundred per cent in one or more of the companies or enterprises
or entities referred to in item (b) of the said sub-clause, income
accrued or arisen or received or attributable to such lending, directly or
indirectly, which is exempt under this clause shall be calculated
proportionately to the lending made in one or more of the companies or
enterprises or entities referred to in item (b) of the said sub-clause,
in such manner as may be prescribed:
Provided also that in case a sovereign wealth fund or
pension fund has loans or borrowings, directly or indirectly, for the purposes
of making investment in India, such fund shall be deemed to be not eligible for
exemption under this clause.]
31[Explanation 1].—For the purposes of
this clause, "specified person" means—
(a)
a wholly owned subsidiary of the Abu Dhabi Investment Authority which—
(i)
is a resident of the United Arab Emirates; and
(ii)
makes investment, directly or indirectly, out of the fund owned by the
Government of the 32[Abu Dhabi];
(b)
a sovereign wealth fund which satisfies the following conditions, namely:—
(i)
it is wholly owned and controlled, directly or indirectly, by the Government of
a foreign country;
(ii) it
is set up and regulated under the law of such foreign country;
(iii) the earnings of the said fund are credited either to the account of the Government of that foreign country or to any other account designated by that Government so that no portion of the earnings inures any benefit to any private person;
(iv) the asset
of the said fund vests in the Government of such foreign country upon
dissolution:
33[Provided that the provisions of
sub-clauses (iii) and (iv) shall not apply to any payment made to
creditors or depositors for loan taken or borrowing for the purposes other than
for making investment in India;]
(v) it
does not 34[participate in the day to day operations of
investee but the monitoring mechanism to protect the investment with the
investee including the right to appoint directors or executive director shall
not be considered as participation in the day to day operations of the
investee]; and
(vi) it
is specified by the Central Government, by notification in the Official
Gazette, for this purpose 35[and fulfils conditions specified in such
notification];
(c)
a pension fund, which—
(i)
is created or established under the law of a foreign country including the laws
made by any of its political constituents being a province, State or local
body, by whatever name called;
(ii) is
not liable to tax in such foreign country 36[or if liable to tax, exemption from taxation
for all its income has been provided by such foreign country];
(iii) satisfies
such other conditions as may be prescribed37; 38[***]
39[(iiia) it does not participate in the
day to day operations of investee but the monitoring mechanism to protect the
investment with the investee including the right to appoint directors or
executive director shall not be considered as participation in day to day
operations of the investee; and]
(iv) is
specified by the Central Government, by notification in the Official Gazette,
for this purpose 40[and fulfils conditions specified in such
notification41].]
42[Explanation 2.— For the purposes of
this clause,—
(i)
"investee" means a business trust, or a company, or an enterprise, or
an entity, or a Category I or Category II Alternative Investment Fund, or an
Infrastructure Investment Trust or a domestic company, or an Infrastructure
Finance Company or an Infrastructure Debt Fund referred to in item (e)
of sub-clause (iii), in which the sovereign wealth fund or the pension
fund, as the case may be, has made the investment, directly or indirectly,
under the provisions of this clause;
(ii)
"loan and borrowing" means—
(a) any
loan taken or borrowing by a sovereign wealth fund from, or any deposit or
investment made in a sovereign wealth fund by, any person other than the
Government of the country in which the sovereign wealth fund is set up;
(b) any
loan taken or borrowing by a pension fund from or any deposit or investment
made in a pension fund by, any person but shall not include the deposit or
investment which represents statutory obligations and defined contributions of
one or more funds or plans established for providing retirement, social security,
employment, disability, death benefits or any similar compensation to the
participants or beneficiaries of such funds or plans, as the case may be.
Explanation 3.—For the purposes of this clause, the Central
Government may prescribe that the method of calculation of "fifty per
cent" referred to in item (c) or "seventy-five per cent"
referred to in item (d) or "ninety per cent" referred to in
item (e), of sub-clause (iii) shall be such as may be
prescribed;]
43[(23FF)44 any income of the nature of capital
gains, arising or received by a non-resident or a specified fund, which is on
account of transfer of share of a company resident in India, by the resultant
fund or a specified fund to the extent attributable to units held by
non-resident (not being a permanent establishment of a non-resident in India)
in such manner as may be prescribed44, and such shares were transferred from the
original fund, or from its wholly owned special purpose vehicle, to the
resultant fund in relocation, and where capital gains on such shares were not
chargeable to tax if that relocation had not taken place.
Explanation.—For the purposes of this
clause,—
(a) the expressions "original
fund", "relocation" and "resultant fund" shall have
the meanings respectively assigned to them in the Explanation to
clause (viiac) and clause (viiad) ofsection
47;
(b) the expression "specified
fund" shall have the meaning assigned to it in clause (c) of
the Explanation to clause (4D) of section
10;]
(23G) [Omitted
by the Finance Act, 2006, w.e.f. 1-4-2007;]
(24) any income
chargeable under the heads "Income from house property" and
"Income from other sources" of—
(a)
a registered union within the meaning of the Trade Unions Act, 1926 (16 of
1926), formed primarily for the purpose of regulating the relations between
workmen and employers or between workmen and workmen;
(b)
an association of registered unions referred to in sub-clause (a);
(25) (i)
interest on securities which are held by, or are the property of, any provident
fund to which the Provident Funds Act, 1925 (19 of 1925), applies, and any
capital gains of the fund arising from the sale, exchange or transfer of such
securities;
(ii) any income received by the
trustees on behalf of a recognised provident fund;
(iii) any income received by the
trustees on behalf of an approved superannuation fund;
(iv) any income received by the
trustees on behalf of an approved gratuity fund;
(v) any income received—
(a) by
the Board of Trustees constituted under the Coal Mines Provident Funds and
Miscellaneous Provisions Act, 1948 (46 of 1948), on behalf of the
Deposit-linked Insurance Fund established under section 3G of that Act; or
(b)
by the Board of Trustees constituted under the Employees' Provident Funds and
Miscellaneous Provisions Act, 1952 (19 of 1952), on behalf of the
Deposit-linked Insurance Fund established under section 6C of that Act;
(25A) any
income of the Employees' State Insurance Fund set up under the provisions of
the Employees' State Insurance Act, 1948 (34 of 1948);
(26) in the
case of a member of a Scheduled Tribe as defined in clause (25) of
article 366 of the Constitution, residing in any area specified in Part I or
Part II of the Table appended to paragraph 20 of the Sixth Schedule to the
Constitution or in the States of Arunachal Pradesh, Manipur, Mizoram, Nagaland
and Tripura or in the areas covered by notification No. TAD/R/35/50/109, dated
the 23rd February, 1951, issued by the Governor of Assam under the proviso to
sub-paragraph (3) of the said paragraph 20 [as it stood immediately before the
commencement of the North-Eastern Areas (Reorganisation) Act, 1971 (81 of 1971)
or in the Ladakh region of the State of Jammu and Kashmir, any income which
accrues or arises to him,—
(a)
from any source in the areas or States aforesaid, or
(b)
by way of dividend or interest on securities;
(26A) any
income accruing or arising to any person from any source in the district of
Ladakh or outside India in any previous year relevant to any assessment year
commencing before the 1st day of April, 1989, where such person is resident in
the said district in that previous year :
Provided that this clause shall not apply in the case of any such
person unless he was resident in that district in the previous year relevant to
the assessment year commencing on the 1st day of April, 1962.
Explanation 1.—For the purposes of this clause, a person
shall be deemed to be resident in the district of Ladakh if he fulfils the
requirements of sub-section (1)45 or sub-section (2) or sub-section (3) or
sub-section (4) of section
6, as the case may be,
subject to the modifications that—
(i)
references in those sub-sections to India shall be construed as references to
the said district; and
(ii)
in clause (i) of sub-section (3), reference to Indian company shall be
construed as reference to a company formed and registered under any law for the
time being in force in the State of Jammu and Kashmir and having its registered
office in that district in that year.
Explanation 2.—In this clause, references to the district of
Ladakh shall be construed as references to the areas comprised in the said
district on the 30th day of June, 1979;
(26AA) [***]
(26AAA) in case
of an individual, being a Sikkimese, any income which accrues or arises to him—
(a)
from any source in the State of Sikkim; or
(b)
by way of dividend or interest on securities:
Provided that nothing contained in this clause shall apply to a
Sikkimese woman who, on or after the 1st day of April, 2008, marries an
individual who is not a Sikkimese.
Explanation.—For the purposes of this clause, "Sikkimese" shall
mean—
(i)
an individual, whose name is recorded in the register maintained under the
Sikkim Subjects Regulation, 1961 read with the Sikkim Subject Rules, 1961
(hereinafter referred to as the "Register of Sikkim Subjects"),
immediately before the 26th day of April, 1975; or
(ii)
an individual, whose name is included in the Register of Sikkim Subjects by
virtue of the Government of India Order No. 26030/36/90-I.C.I., dated the 7th
August, 1990 and Order of even number dated the 8th April, 1991; or
(iii) any other
individual, whose name does not appear in the Register of Sikkim Subjects, but
it is established beyond doubt that the name of such individual's father or
husband or paternal grand-father or brother from the same father has been
recorded in that register;
(26AAB) any
income of an agricultural produce market committee or board constituted under
any law for the time being in force for the purpose of regulating the marketing
of agricultural produce;
(26B) any
income of a corporation established by a Central, State or Provincial Act or of
any other body, institution or association (being a body, institution or
association wholly financed by Government) where such corporation or other body
or institution or association has been established or formed for promoting the
interests of the members of the Scheduled Castes or the Scheduled Tribes or
backward classes or of any two or all of them.
Explanation.—For the purposes of this clause,—
(a)
"Scheduled Castes" and "Scheduled Tribes" shall have the
meanings respectively assigned to them in clauses (24) and (25)
of article 366 of the Constitution;
(b)
"backward classes" means such classes of citizens, other than the
Scheduled Castes and the Scheduled Tribes, as may be notified—
(i)
by the Central Government; or
(ii)
by any State Government,
as the case may be, from time to time;
(26BB) any
income of a corporation established by the Central Government or any State
Government for promoting the interests of the members of a minority community.
Explanation.—For the purposes of this clause, "minority community"
means a community notified as such by the Central Government in the Official
Gazette in this behalf;
(26BBB) any
income of a corporation established by a Central, State or Provincial Act for
the welfare and economic upliftment of ex-servicemen being the citizens of
India.
Explanation.—For the purposes of this clause, "ex-serviceman"
means a person who has served in any rank, whether as combatant or
non-combatant, in the armed forces of the Union or armed forces of the Indian
States before the commencement of the Constitution (but excluding the Assam
Rifles, Defence Security Corps, General Reserve Engineering Force, Lok Sahayak Sena,
Jammu and Kashmir Militia and Territorial Army) for a continuous period of not
less than six months after attestation and has been released, otherwise than by
way of dismissal or discharge on account of misconduct or inefficiency, and in
the case of a deceased or incapacitated ex-serviceman includes his wife,
children, father, mother, minor brother, widowed daughter and widowed sister,
wholly dependant upon such ex-serviceman immediately before his death or
incapacitation;
(27) any income
of a co-operative society formed for promoting the interests of the members of
either the Scheduled Castes or Scheduled Tribes or both referred to in clause (26B)
:
Provided that the membership of the co-operative society consists
of only other co-operative societies formed for similar purposes and the
finances of the society are provided by the Government and such other
societies;
(28) [***]
(29) [Omitted
by the Finance Act, 2002, w.e.f. 1-4-2003;]
(29A) any
income accruing or arising to—
(a)
the Coffee Board constituted under section 4 of the Coffee Act, 1942 (7 of
1942) in any previous year relevant to any assessment year commencing on or
after the 1st day of April, 1962 or the previous year in which such Board was
constituted, whichever is later;
(b)
the Rubber Board constituted under sub-section (1) of section 4 of the Rubber
Board Act, 1947 (24 of 1947) in any previous year relevant to any assessment
year commencing on or after the 1st day of April, 1962 or the previous year in
which such Board was constituted, whichever is later;
(c)
the Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953) in
any previous year relevant to any assessment year commencing on or after the
1st day of April, 1962 or the previous year in which such Board was
constituted, whichever is later;
(d)
the Tobacco Board constituted under the Tobacco Board Act, 1975 (4 of 1975) in
any previous year relevant to any assessment year commencing on or after the
1st day of April, 1975 or the previous year in which such Board was
constituted, whichever is later;
(e)
the Marine Products Export Development Authority established under section 4 of
the Marine Products Export Development Authority Act, 1972 (13 of 1972) in any
previous year relevant to any assessment year commencing on or after the 1st
day of April, 1972 or the previous year in which such Authority was
constituted, whichever is later;
(f)
the Agricultural and Processed Food Products Export Development Authority
established under section 4 of the Agricultural and Processed Food Products
Export Development Act, 1985 (2 of 1986) in any previous year relevant to any
assessment year commencing on or after the 1st day of April, 1985 or the
previous year in which such Authority was constituted, whichever is later;
(g)
the Spices Board constituted under sub-section (1) of section 3 of the Spices
Board Act, 1986 (10 of 1986) in any previous year relevant to any assessment
year commencing on or after the 1st day of April, 1986 or the previous year in
which such Board was constituted, whichever is later;
(h)
the Coir Board established under section 4 of the Coir Industry Act, 1953 (45
of 1953);
(30) 46in the case of an assessee who carries on the
business of growing and manufacturing tea in India, the amount of any subsidy
received from or through the Tea Board under any such scheme for replantation
or replacement of tea bushes or for rejuvenation or consolidation of areas used
for cultivation of tea as the Central Government may, by notification in the
Official Gazette, specify:
Provided that the assessee furnishes to the Assessing Officer,
along with his return of income47 for the assessment year concerned or within
such further time as the Assessing Officer may allow, a certificate from the
Tea Board as to the amount of such subsidy paid to the assessee during the
previous year.
Explanation.—In this clause, "Tea Board" means the Tea Board
established under section 4 of the Tea Act, 1953 (29 of 1953);
(31) in the
case of an assessee who carries on the business of growing and manufacturing
rubber, coffee, cardamom or such other commodity in India, as the Central
Government may, by notification in the Official Gazette, specify in this
behalf, the amount of any subsidy received from or through the concerned Board
under any such scheme for replantation or replacement of rubber plants, coffee
plants, cardamom plants or plants for the growing of such other commodity or
for rejuvenation or consolidation of areas used for cultivation of rubber,
coffee, cardamom or such other commodity as the Central Government may, by
notification in the Official Gazette, specify:
Provided that the assessee furnishes to the Assessing Officer,
along with his return of income48 for the assessment year concerned or
within such further time as the Assessing Officer may allow, a certificate from
the concerned Board, as to the amount of such subsidy paid to the assessee
during the previous year.
Explanation.—In this clause, "concerned Board" means,—
(i)
in relation to rubber, the Rubber Board constituted under section 4 of the
Rubber Act, 1947 (24 of 1947),
(ii)
in relation to coffee, the Coffee Board constituted under section 4 of the
Coffee Act, 1942 (7 of 1942),
(iii) in
relation to cardamom, the Spices Board constituted under section 3 of the
Spices Board Act, 1986 (10 of 1986),
(iv) in
relation to any other commodity specified under this clause, any Board or other
authority established under any law for the time being in force which the
Central Government may, by notification in the Official Gazette, specify in
this behalf;
(32) in the
case of an assessee referred to in sub-section (1A) of section
64, any income
includible in his total income under that sub-section, to the extent such
income does not exceed one thousand five hundred rupees in respect of each
minor child whose income is so includible;
(33) any income
arising from the transfer of a capital asset, being a unit of the Unit Scheme,
1964 referred to in Schedule I to the Unit Trust of India (Transfer of
Undertaking and Repeal) Act, 2002 (58 of 2002) and where the transfer of such
asset takes place on or after the 1st day of April, 2002;
(34) any income
by way of dividends referred to in section
115-O :
Provided that nothing in this clause shall apply to any income by way
of dividend chargeable to tax in accordance with the provisions of section
115BBDA:
49[Provided further that nothing
contained in this clause shall apply to any income by way of dividend received
on or after the 1st day of April, 2020 other than the dividend on which tax
under section
115-O and section
115BBDA, wherever applicable,
has been paid;]
(34A) any
income arising to an assessee, being a shareholder, on account of buy back of
shares by the company as referred to in section
115QA;
(35) any income
by way of,—
(a)
income received in respect of the units of a Mutual Fund specified under clause
(23D); or
(b)
income received in respect of units from the Administrator of the specified
undertaking; or
(c)
income received in respect of units from the specified company:
Provided that this clause shall not apply to any income
arising from transfer of units of the Administrator of the specified
undertaking or of the specified company or of a mutual fund, as the case may
be:
50[Provided further that nothing
contained in this clause shall apply to any income in respect of units received
on or after the 1st day of April, 2020.]
Explanation.—For the purposes of this clause,—
(a)
"Administrator" means the Administrator as referred to in clause (a)
of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal)
Act, 2002 (58 of 2002);
(b)
"specified company" means a company as referred to in clause (h)
of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal)
Act, 2002 (58 of 2002);
(35A) any
income by way of distributed income referred to in section
115TA received from a
securitisation trust by any person being an investor of the said trust :
Provided that nothing contained in this clause shall apply to any
income by way of distributed income referred to in the said section, received
on or after the 1st day of June, 2016.
Explanation.—For the purposes of this clause, the expressions
"investor" and "securitisation trust" shall have the
meanings respectively assigned to them in the Explanation below section
115TCA;
(36) any income
arising from the transfer of a long-term capital asset, being an eligible
equity share in a company purchased on or after the 1st day of March, 2003 and
before the 1st day of March, 2004 and held for a period of twelve months or
more.
Explanation.—For the purposes of this clause,
"eligible equity share" means,—
(i) any
equity share in a company being a constituent of BSE-500 Index of the Stock
Exchange, Mumbai as on the 1st day of March, 2003 and the transactions of
purchase and sale of such equity share are entered into on a recognised stock
exchange in India;
(ii)
any equity share in a company allotted through a public issue on or after the
1st day of March, 2003 and listed in a recognised stock exchange in India
before the 1st day of March, 2004 and the transaction of sale of such share is
entered into on a recognised stock exchange in India;
(37) in the
case of an assessee, being an individual or a Hindu undivided family, any
income chargeable under the head "Capital gains" arising from the transfer
of agricultural land, where—
(i)
such land is situate in any area referred to in item (a) or item (b)
of sub-clause (iii) of clause (14) of section
2;
(ii) such
land, during the period of two years immediately preceding the date of
transfer, was being used for agricultural purposes by such Hindu undivided
family or individual or a parent of his;
(iii)
such transfer is by way of compulsory acquisition under any law, or a transfer
the consideration for which is determined or approved by the Central Government
or the Reserve Bank of India;
(iv) such
income has arisen from the compensation or consideration for such transfer
received by such assessee on or after the 1st day of April, 2004.
Explanation.—For the purposes of this clause, the expression
"compensation or consideration" includes the compensation or
consideration enhanced or further enhanced by any court, Tribunal or other
authority;
(37A) any
income chargeable under the head "Capital gains" in respect of
transfer of a specified capital asset arising to an assessee, being an
individual or a Hindu undivided family, who was the owner of such specified
capital asset as on the 2nd day of June, 2014 and transfers that specified
capital asset under the Land Pooling Scheme (herein referred to as "the
scheme") covered under the Andhra Pradesh Capital City Land Pooling Scheme
(Formulation and Implementation) Rules, 2015 made under the provisions of the
Andhra Pradesh Capital Region Development Authority Act, 2014 (Andhra Pradesh
Act 11 of 2014) and the rules, regulations and Schemes made under the said Act.
Explanation.—For the purposes of this clause, "specified capital
asset" means,—
(a)
the land or building or both owned by the assessee as on the 2nd day of June,
2014 and which has been transferred under the scheme; or
(b)
the land pooling ownership certificate issued under the scheme to the assessee
in respect of land or building or both referred to in clause (a); or
(c)
the reconstituted plot or land, as the case may be, received by the assessee in
lieu of land or building or both referred to in clause (a) in accordance
with the scheme, if such plot or land, as the case may be, so received is
transferred within two years from the end of the financial year in which the
possession of such plot or land was handed over to him;
(38) any
income arising from the transfer of a long-term capital asset, being an equity
share in a company or a unit of an equity oriented fund or a unit of a business
trust where—
(a)
the transaction of sale of such equity share or unit is entered into on or
after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into
force; and
(b)
such transaction is chargeable to securities transaction tax under that Chapter
:
Provided that the income by way of long-term capital gain of a
company shall be taken into account in computing the book profit and income-tax
payable under section
115JB :
Provided also* that nothing contained in sub-clause (b)
shall apply to a transaction undertaken on a recognised stock exchange located
in any International Financial Services Centre and where the consideration for
such transaction is paid or payable in foreign currency:
Provided also that nothing contained in this clause shall
apply to any income arising from the transfer of a long-term capital asset,
being an equity share in a company, if the transaction of acquisition, other
than the acquisition notified by the Central Government in this behalf, of such
equity share is entered into on or after the 1st day of October, 2004 and such
transaction is not chargeable to securities transaction tax under Chapter VII
of the Finance (No. 2) Act, 2004 (23 of 2004):
Provided also that nothing contained in this clause
shall apply to any income arising from the transfer of long-term capital asset,
being an equity share in a company or a unit of an equity oriented fund or a
unit of a business trust, made on or after the 1st day of April, 2018.
Explanation.—For the purposes of this clause,—
(a) "equity oriented fund" means a fund—
(i)
where the investible funds are invested by way of equity shares in domestic
companies to the extent of more than sixty-five per cent of the total proceeds
of such fund; and
(ii)
which has been set up under a scheme of a Mutual Fund specified under clause (23D):
Provided that the percentage of equity shareholding of
the fund shall be computed with reference to the annual average of the monthly
averages of the opening and closing figures;
(b)
"International Financial Services Centre" shall have the same meaning
as assigned to it in clause (q) of section 2 of the Special Economic
Zones Act, 2005 (28 of 2005);
(c)
"recognised stock exchange" shall have the meaning assigned to it in
clause (ii) of the Explanation 1 to *sub-section (5) of section
43;
(39) any
specified income, arising from any international sporting event held in India,
to the person or persons notified by the Central Government in the Official
Gazette, if such international sporting event—
(a)
is approved by the international body regulating the international sport
relating to such event;
(b)
has participation by more than two countries;
(c)
is notified by the Central Government in the Official Gazette for the purposes
of this clause.
Explanation.—For the purposes of this clause, "the specified
income" means the income, of the nature and to the extent, arising from
the international sporting event, which the Central Government may notify in
this behalf;
(40) any income
of any subsidiary company by way of grant or otherwise received from an Indian
company, being its holding company engaged in the business of generation or
transmission or distribution of power if receipt of such income is for
settlement of dues in connection with reconstruction or revival of an existing
business of power generation:
Provided that the provisions of this clause shall apply if
reconstruction or revival of any existing business of power generation is by
way of transfer of such business to the Indian company notified under
sub-clause (a) of clause (v) of sub-section (4) of section
80-IA;
(41) any income
arising from transfer of a capital asset, being an asset of an undertaking
engaged in the business of generation or transmission or distribution of power
where such transfer is effected on or before the 31st day of March, 2006, to
the Indian company notified under sub-clause (a) of clause (v) of
sub-section (4) of section
80-IA;
(42) any
specified income arising to a body or authority which—
(a)
has been established or constituted or appointed under a treaty or an agreement
entered into by the Central Government with two or more countries or a
convention signed by the Central Government;
(b)
is established or constituted or appointed not for the purposes of profit;
(c)
is notified by the Central Government in the Official Gazette for the purposes
of this clause.
Explanation.—For the purposes of this clause, "specified income"
means the income, of the nature and to the extent, arising to the body or
authority referred to in this clause, which the Central Government may notify
in this behalf;
(43) any amount
received by an individual as a loan, either in lump sum or in instalment, in a
transaction of reverse mortgage referred to in clause (xvi) of section
47;
(44) any income
received by any person for, or on behalf of, the New Pension System Trust
established on the 27th day of February, 2008 under the provisions of the
Indian Trusts Act, 1882 (2 of 1882);
(45) 51[***]
(46) any
specified income arising to a body or authority or Board or Trust or Commission
(by whatever name called) , or a class thereof which—
(a)
has been established or constituted by or under a Central, State or Provincial
Act, or constituted by the Central Government or a State Government, with the
object of regulating or administering any activity for the benefit of the
general public;
(b)
is not engaged in any commercial activity; and
(c)
is notified by the Central Government in the Official Gazette for the purposes
of this clause.
Explanation.—For the purposes of this clause, "specified income"
means the income, of the nature and to the extent arising to a body or
authority or Board or Trust or Commission (by whatever name called), or a class
thereof referred to in this clause, which the Central Government may, by
notification in the Official Gazette, specify in this behalf;
(47) any income
of an infrastructure debt fund, set up in accordance with the guidelines as may
be prescribed52, which is notified by the Central Government
in the Official Gazette for the purposes of this clause;
(48) any income
received in India in Indian currency by a foreign company on account of sale of
crude oil, any other goods or rendering of services, as may be notified by the
Central Government in this behalf, to any person in India:
Provided that—
(i)
receipt of such income in India by the foreign company is pursuant to an
agreement or an arrangement entered into by the Central Government or approved
by the Central Government;
(ii)
having regard to the national interest, the foreign company and the agreement
or arrangement are notified by the Central Government in this behalf; and
(iii)
the foreign company is not engaged in any activity, other than receipt of such
income, in India;
(48A) any
income accruing or arising to a foreign company on account of storage of crude
oil in a facility in India and sale of crude oil therefrom to any person
resident in India:
Provided that—
(i)
the storage and sale by the foreign company is pursuant to an agreement or an
arrangement entered into by the Central Government or approved by the Central
Government; and
(ii)
having regard to the national interest, the foreign company and the agreement
or arrangement are notified by the Central Government in this behalf;
(48B) any
income accruing or arising to a foreign company on account of sale of leftover
stock of crude oil, if any, from the facility in India after the expiry of the
agreement or the arrangement referred to in clause (48A) or on
termination of the said agreement or the arrangement, in accordance with the
terms mentioned therein, as the case may be, subject to such conditions as may
be notified by the Central Government in this behalf;
53[(48C) any income accruing or arising
to the Indian Strategic Petroleum Reserves Limited, being a wholly owned
subsidiary of the Oil Industry Development Board under the Ministry of
Petroleum and Natural Gas, as a result of arrangement for replenishment of
crude oil stored in its storage facility in pursuance of directions of the
Central Government in this behalf:
Provided that nothing contained in this clause shall apply to an
arrangement, if the crude oil is not replenished in the storage facility within
three years from the end of the financial year in which the crude oil was
removed from the storage facility for the first time;]
54[(48D) any income accruing or
arising to an institution established for financing the infrastructure and
development, set up under an Act of Parliament and notified by the Central
Government for the purposes of this clause, for a period of ten consecutive
assessment years beginning from the assessment year relevant to the previous
year in which such institution is set up;
(48E) any income accruing or arising to a
developmental financing institution, licensed by the Reserve Bank of India
under an Act of the Parliament referred to in clause (48D) and notified
by the Central Government for the purposes of this clause, for a period of five
consecutive assessment years beginning from the assessment year relevant to the
previous year in which the developmental financing institution is set up :
Provided that the Central Government may, by issuing
notification under this clause, extend the period of exemption under this
clause for a further period, not exceeding five more consecutive assessment
years, subject to fulfilment of such conditions as may be specified in the said
notification;]
(49) any income
of the National Financial Holdings Company Limited, being a company set up by
the Central Government, of any previous year relevant to any assessment year
commencing on or before the 1st day of April, 2014;
(50) any income
arising from any specified service provided on or after the date on which the
provisions of Chapter VIII of the Finance Act, 2016 comes into force 55[or arising from any e-commerce supply or
services made or provided or facilitated on or after the 1st day of
April, 56[2020]] and chargeable to equalisation levy
under that Chapter.
57[Explanation 1.—For the removal of
doubts it is hereby clarified that the income referred to in this clause shall
not include and shall be deemed never to have been included any income which is
chargeable to tax as royalty or fees for technical services in India under this
Act read with the agreement notified by the Central Government under section
90 or section
90A.
Explanation 2.—For the purposes of this clause,—
(i)
"e-commerce supply or services" shall have the meaning assigned to it
in clause (cb) of section 164 of the Finance Act, 2016 (28 of 2016);
(ii)
"specified service" shall have the meaning assigned to it in clause (i)
of section 164 of the Finance Act, 2016 (28 of 2016).]
Special provision in respect of newly established undertakings in free
trade zone, etc.
10A. (1) Subject to the
provisions of this section, a deduction of such profits and gains as are
derived by an undertaking from the export of articles or things or computer
software for a period of ten consecutive assessment years beginning with the
assessment year relevant to the previous year in which the undertaking begins
to manufacture or produce such articles or things or computer software, as the
case may be, shall be allowed from the total income of the assessee :
Provided that where in
computing the total income of the undertaking for any assessment year, its
profits and gains had not been included by application of the provisions of
this section as it stood immediately before its substitution by the Finance
Act, 2000, the undertaking shall be entitled to deduction referred to in this
sub-section only for the unexpired period of the aforesaid ten consecutive
assessment years :
Provided further that
where an undertaking initially located in any free trade zone or export
processing zone is subsequently located in a special economic zone by reason of
conversion of such free trade zone or export processing zone into a special
economic zone, the period of ten consecutive assessment years referred to in
this sub-section shall be reckoned from the assessment year relevant to the
previous year in which the undertaking began to manufacture or produce such
articles or things or computer software in such free trade zone or export
processing zone :
Provided also that for the
assessment year beginning on the 1st day of April, 2003, the deduction under
this sub-section shall be ninety per cent of the profits and gains derived by
an undertaking from the export of such articles or things or computer software
:
Provided also that no
deduction under this section shall be allowed to any undertaking for the
assessment year beginning on the 1st day of April, 2012 and subsequent years.
(1A)
Notwithstanding anything contained in sub-section (1), the deduction, in
computing the total income of an undertaking, which begins to manufacture or
produce articles or things or computer software during the previous year
relevant to any assessment year commencing on or after the 1st day of April,
2003, in any special economic zone, shall be,—
(i) hundred per cent of profits
and gains derived from the export of such articles or things or computer
software for a period of five consecutive assessment years beginning with the
assessment year relevant to the previous year in which the undertaking begins
to manufacture or produce such articles or things or computer software, as the
case may be, and thereafter, fifty per cent of such profits and gains for
further two consecutive assessment years, and thereafter;
(ii) for the next three
consecutive assessment years, so much of the amount not exceeding fifty per
cent of the profit as is debited to the profit and loss account of the previous
year in respect of which the deduction is to be allowed and credited to a
reserve account (to be called the "Special Economic Zone Re-investment
Allowance Reserve Account") to be created and utilised for the purposes of
the business of the assessee in the manner laid down in sub-section (1B) :
Provided that no deduction
under this section shall be allowed to an assessee who does not furnish a
return of his income on or before the due date specified under sub-section (1)
of section 139.
(1B)
The deduction under clause (ii) of sub-section (1A) shall be allowed
only if the following conditions are fulfilled, namely:—
(a) the amount credited to the
Special Economic Zone Re-investment Allowance Reserve Account is to be
utilised—
(i) for the purposes of
acquiring new machinery or plant which is first put to use before the expiry of
a period of three years next following the previous year in which the reserve
was created; and
(ii) until the acquisition
of new machinery or plant as aforesaid, for the purposes of the business of the
undertaking other than for distribution by way of dividends or profits or for
remittance outside India as profits or for the creation of any asset outside
India;
(b) the particulars, as may be
prescribed58 in
this behalf, have been furnished by the assessee in respect of new machinery or
plant along with the return of income for the assessment year relevant to the
previous year in which such plant or machinery was first put to use.
(1C)
Where any amount credited to the Special Economic Zone Re-investment Allowance
Reserve Account under clause (ii) of sub-section (1A),—
(a) has been utilised for any
purpose other than those referred to in sub-section (1B), the amount so
utilised; or
(b) has not been utilised before
the expiry of the period specified in sub-clause (i) of clause (a)
of sub-section (1B), the amount not so utilised,
shall
be deemed to be the profits,—
(i) in a case referred to in clause (a),
in the year in which the amount was so utilised; or
(ii) in a case referred to in clause (b),
in the year immediately following the period of three years specified in
sub-clause (i) of clause (a) of sub-section (1B),
and
shall be charged to tax accordingly.
(2)
This section applies to any undertaking which fulfils all the following
conditions, namely :—
(i) it has begun or begins to
manufacture or produce articles or things or computer software during the
previous year relevant to the assessment year—
(a) commencing on or after the 1st day
of April, 1981, in any free trade zone; or
(b) commencing on or after the 1st day
of April, 1994, in any electronic hardware technology park, or, as the case may
be, software technology park;
(c) commencing on or after the 1st day
of April, 2001 in any special economic zone;
(ii) it is not formed by the splitting up,
or the reconstruction, of a business already in existence :
Provided that
this condition shall not apply in respect of any undertaking which is formed as
a result of the re-establishment, reconstruction or revival by the assessee of
the business of any such undertakings as is referred to in section 33B, in
the circumstances and within the period specified in that section;
(iii) it is not formed by the transfer to a new
business of machinery or plant previously used for any purpose.
Explanation.—The provisions
of Explanation 1 and Explanation 2 to
sub-section (2) of section 80-I shall
apply for the purposes of clause (iii) of this sub-section as they apply
for the purposes of clause (ii) of that sub-section.
(3)
This section applies to the undertaking, if the sale proceeds of articles or
things or computer software exported out of India are received in, or brought
into, India by the assessee in convertible foreign exchange, within a period of
six months from the end of the previous year or, within such further period as
the competent authority may allow in this behalf.
Explanation 1.—For the purposes
of this sub-section, the expression "competent authority" means the
Reserve Bank of India or such other authority as is authorised under any law
for the time being in force for regulating payments and dealings in foreign
exchange.
Explanation 2.—The sale
proceeds referred to in this sub-section shall be deemed to have been received
in India where such sale proceeds are credited to a separate account maintained
for the purpose by the assessee with any bank outside India with the approval
of the Reserve Bank of India.
(4)
For the purposes of sub-sections (1) and (1A), the profits derived from export
of articles or things or computer software shall be the amount which bears to
the profits of the business of the undertaking, the same proportion as the
export turnover in respect of such articles or things or computer software
bears to the total turnover of the business carried on by the undertaking.
(5)
The deduction under this section shall not be admissible for any assessment
year beginning on or after the 1st day of April, 2001, unless the assessee
furnishes in the prescribed form, 59[***] the report of an accountant, as defined in
the Explanation below sub-section (2) of section 288 60[before the specified date referred to in section 44AB],
certifying that the deduction has been correctly claimed in accordance with the
provisions of this section.
(6)
Notwithstanding anything contained in any other provision of this Act, in
computing the total income of the assessee of the previous year relevant to the
assessment year immediately succeeding the last of the relevant assessment
years, or of any previous year, relevant to any subsequent assessment year,—
(i) section 32, section 32A, section 33, section 35 and
clause (ix) of sub-section (1) of section 36 shall
apply as if every allowance or deduction referred to therein and relating to or
allowable for any of the relevant assessment years ending before the 1st day of
April, 2001, in relation to any building, machinery, plant or furniture used
for the purposes of the business of the undertaking in the previous year
relevant to such assessment year or any expenditure incurred for the purposes
of such business in such previous year had been given full effect to for that
assessment year itself and accordingly sub-section (2) of section 32, clause
(ii) of sub-section (3) of section 32A,
clause (ii) of sub-section (2) of section 33,
sub-section (4) of section 35 or
the second proviso to clause (ix) of sub-section (1) of section 36, as the
case may be, shall not apply in relation to any such allowance or deduction;
(ii) no loss referred to in sub-section (1)
of section 72 or
sub-section (1) or sub-section (3) of section 74, in so
far as such loss relates to the business of the undertaking, shall be carried
forward or set off where such loss relates to any of the relevant assessment
years ending before the 1st day of April, 2001;
(iii) no deduction shall be allowed under section 80HH or section 80HHA or section 80-I or section 80-IA or section 80-IB in
relation to the profits and gains of the undertaking; and
(iv) in computing the depreciation allowance
under section 32, the
written down value of any asset used for the purposes of the business of the
undertaking shall be computed as if the assesse had claimed and been actually
allowed the deduction in respect of depreciation for each of the relevant
assessment year.
(7)
The provisions of sub-section (8) and sub-section (10) of section 80-IA shall,
so far as may be, apply in relation to the undertaking referred to in this
section as they apply for the purposes of the undertaking referred to in section 80-IA.
(7A)
Where any undertaking of an Indian company which is entitled to the deduction
under this section is transferred, before the expiry of the period specified in
this section, to another Indian company in a scheme of amalgamation or
demerger,—
(a) no deduction shall be admissible under
this section to the amalgamating or the demerged company for the previous year
in which the amalgamation or the demerger takes place; and
(b) the provisions of this section shall, as
far as may be, apply to the amalgamated or the resulting company as they would
have applied to the amalgamating or the demerged company if the amalgamation or
demerger had not taken place.
(7B)
The provisions of this section shall not apply to any undertaking, being a Unit
referred to in clause (zc) of section 2 of the Special Economic Zones
Act, 2005, which has begun or begins to manufacture or produce articles or
things or computer software during the previous year relevant to the assessment
year commencing on or after the 1st day of April, 2006 in any Special Economic
Zone.
(8)
Notwithstanding anything contained in the foregoing provisions of this section,
where the assesse, before the due date for furnishing the return of income
under sub-section (1) of section 139,
furnishes to the Assessing Officer a declaration in writing that the provisions
of this section may not be made applicable to him, the provisions of this
section shall not apply to him for any of the relevant assessment years.
(9)
[Omitted by the Finance Act, 2003, w.e.f. 1-4-2004.]
(9A)
[Omitted by the Finance Act, 2003, w.e.f. 1-4-2004.]
Explanation 1.— [Omitted
by the Finance Act, 2003, w.e.f. 1-4-2004.]
Explanation 2.—For the purposes
of this section,—
(i) "computer software"
means—
(a) any computer programme recorded on
any disc, tape, perforated media or other information storage device; or
(b) any customized electronic data or
any product or service of similar nature, as may be notified by the Board,
which is transmitted or exported from India to any place
outside India by any means;
(ii) "convertible foreign
exchange" means foreign exchange which is for the time being treated by
the Reserve Bank of India as convertible foreign exchange for the purposes of
the Foreign Exchange Management Act, 1999 (42 of 1999), and any rules made
thereunder or any other corresponding law for the time being in force;
(iii) "electronic hardware technology park"
means any park set up in accordance with the Electronic Hardware Technology
Park (EHTP) Scheme notified by the Government of India in the Ministry of
Commerce and Industry;
(iv) "export turnover" means the
consideration in respect of export by the undertaking of articles or things or
computer software received in, or brought into, India by the assessee in
convertible foreign exchange in accordance with sub-section (3), but does not
include freight, telecommunication charges or insurance attributable to the
delivery of the articles or things or computer software outside India or
expenses, if any, incurred in foreign exchange in providing the technical
services outside India;
(v) "free trade zone" means the
Kandla Free Trade Zone and the Santacruz Electronics Export Processing Zone and
includes any other free trade zone which the Central Government may, by
notification in the Official Gazette, specify for the purposes of this section;
(vi) "relevant assessment year" means
any assessment year falling within a period of ten consecutive assessment years
referred to in this section;
(vii) "software technology park" means
any park set up in accordance with the Software Technology Park Scheme notified
by the Government of India in the Ministry of Commerce and Industry;
(viii) "special economic zone" means a
zone which the Central Government may, by notification in the Official Gazette,
specify as a special economic zone for the purposes of this section.
Explanation 3.—For the removal
of doubts, it is hereby declared that the profits and gains derived from on
site development of computer software (including services for development of
software) outside India shall be deemed to be the profits and gains derived
from the export of computer software outside India.
Explanation 4.—For the purposes
of this section, "manufacture or produce" shall include the cutting
and polishing of precious and semi-precious stones.
Special provisions in respect of newly established Units in Special
Economic Zones.
10AA. (1) Subject to the
provisions of this section, in computing the total income of an assessee, being
an entrepreneur as referred to in clause (j) of section 2 of the Special
Economic Zones Act, 2005, from his Unit, who begins to manufacture or produce
articles or things or provide any services during the previous year relevant to
any assessment year commencing on or after the 1st day of April, 2006, but
before the first day of April, 2021, the following deduction shall be allowed—
(i) hundred per cent of profits and gains
derived from the export, of such articles or things or from services for a
period of five consecutive assessment years beginning with the assessment year
relevant to the previous year in which the Unit begins to manufacture or
produce such articles or things or provide services, as the case may be, and
fifty per cent of such profits and gains for further five assessment years and
thereafter;
(ii) for the next five consecutive
assessment years, so much of the amount not exceeding fifty per cent of the profit
as is debited to the profit and loss account of the previous year in respect of
which the deduction is to be allowed and credited to a reserve account (to be
called the "Special Economic Zone Re-investment Reserve Account") to
be created and utilized for the purposes of the business of the assessee in the
manner laid down in sub-section (2).
Explanation.—For
the removal of doubts, it is hereby declared that the amount of deduction under
this section shall be allowed from the total income of the assessee computed in
accordance with the provisions of this Act, before giving effect to the
provisions of this section and the deduction under this section shall not
exceed such total income of the assessee.
(2)
The deduction under clause (ii) of sub-section (1) shall be allowed only
if the following conditions are fulfilled, namely :—
(a) the amount credited to the Special
Economic Zone Re-investment Reserve Account is to be utilised—
(i) for the purposes of acquiring
machinery or plant which is first put to use before the expiry of a period of
three years following the previous year in which the reserve was created; and
(ii) until the acquisition of the machinery
or plant as aforesaid, for the purposes of the business of the undertaking
other than for distribution by way of dividends or profits or for remittance
outside India as profits or for the creation of any asset outside India;
(b) the particulars, as may be specified by
the Central Board of Direct Taxes in this behalf, under clause (b) of
sub-section (1B) of section 10A have been furnished by the assessee in respect of
machinery or plant along with the return of income61 for the assessment year relevant to the previous
year in which such plant or machinery was first put to use.
(3)
Where any amount credited to the Special Economic Zone Re-investment Reserve
Account under clause (ii) of sub-section (1),—
(a) has been utilised for any purpose other
than those referred to in sub-section (2), the amount so utilised; or
(b) has not been utilised before the expiry
of the period specified in sub-clause (i) of clause (a) of
sub-section (2), the amount not so utilised,
shall
be deemed to be the profits,—
(i) in a case referred to in clause (a),
in the year in which the amount was so utilised; or
(ii) in a case referred to in clause (b),
in the year immediately following the period of three years specified in sub-clause
(i) of clause (a) of sub-section (2),
and
shall be charged to tax accordingly :
Provided that where in
computing the total income of the Unit for any assessment year, its profits and
gains had not been included by application of the provisions of sub-section
(7B) of section 10A, the undertaking, being the Unit shall be entitled to
deduction referred to in this sub-section only for the unexpired period of ten consecutive
assessment years and thereafter it shall be eligible for deduction from income
as provided in clause (ii) of sub-section (1).
Explanation.—For the removal of
doubts, it is hereby declared that an undertaking, being the Unit, which had
already availed, before the commencement of the Special Economic Zones Act,
2005, the deductions referred to in section 10A for ten consecutive assessment
years, such Unit shall not be eligible for deduction from income under this
section :
Provided further that where
a Unit initially located in any free trade zone or export processing zone is
subsequently located in a Special Economic Zone by reason of conversion of such
free trade zone or export processing zone into a Special Economic Zone, the
period of ten consecutive assessment years referred to above shall be reckoned
from the assessment year relevant to the previous year in which the Unit began
to manufacture, or produce or process such articles or things or services in
such free trade zone or export processing zone :
Provided also that where a
Unit initially located in any free trade zone or export processing zone is
subsequently located in a Special Economic Zone by reason of conversion of such
free trade zone or export processing zone into a Special Economic Zone and has
completed the period of ten consecutive assessment years referred to above, it
shall not be eligible for deduction from income as provided in clause (ii)
of sub-section (1) with effect from the 1st day of April, 2006.
(4)
This section applies to any undertaking, being the Unit, which fulfils all the
following conditions, namely:—
(i) it has begun or begins to
manufacture or produce articles or things or provide services during the
previous year relevant to the assessment year commencing on or after the 1st
day of April, 2006 in any Special Economic Zone;
(ii) it is not formed by the splitting up,
or the reconstruction, of a business already in existence:
Provided that
this condition shall not apply in respect of any undertaking, being the Unit,
which is formed as a result of the re-establishment, reconstruction or revival
by the assessee of the business of any such undertaking as is referred to
in section 33B, in the circumstances and within the period specified in
that section;
(iii) it is not formed by the transfer to a
new business, of machinery or plant previously used for any purpose.
Explanation.—The provisions
of Explanations 1 and 2 to sub-section (3)
of section 80-IA shall apply for the purposes of clause (iii)
of this sub-section as they apply for the purposes of clause (ii) of
that sub-section.
(5)
Where any undertaking being the Unit which is entitled to the deduction under
this section is transferred, before the expiry of the period specified in this
section, to another undertaking, being the Unit in a scheme of amalgamation or
demerger,—
(a) no deduction shall be admissible under
this section to the amalgamating or the demerged Unit, being the company for
the previous year in which the amalgamation or the demerger takes place; and
(b) the provisions of this section shall, as
they would have applied to the amalgamating or the demerged Unit being the
company as if the amalgamation or demerger had not taken place.
(6)
Loss referred to in sub-section (1) of section 72 or sub-section (1) or sub-section (3) of section 74, in so far as such loss relates to the business of the
undertaking, being the Unit shall be allowed to be carried forward or set off.
(7)
For the purposes of sub-section (1), the profits derived from the export of
articles or things or services (including computer software) shall be the
amount which bears to the profits of the business of the undertaking, being the
Unit, the same proportion as the export turnover in respect of such articles or
things or services bears to the total turnover of the business carried on by
the undertaking :
Provided that the
provisions of this sub-section [as amended by section 6 of the Finance (No. 2)
Act, 2009 (33 of 2009)] shall have effect for the assessment year beginning on
the 1st day of April, 2006 and subsequent assessment years.
(8)
The provisions of sub-sections (5)62 and (6) of section 10A shall apply to the articles or things or services
referred to in sub-section (1) as if—
(a) for the figures, letters and word
"1st April, 2001", the figures, letters and word "1st April,
2006" had been substituted;
(b) for the word "undertaking",
the words "undertaking, being the Unit" had been substituted.
(9)
The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, apply in relation to the
undertaking referred to in this section as they apply for the purposes of the
undertaking referred to in section 80-IA.
(10)
Where a deduction under this section is claimed and allowed in respect of
profits of any of the specified business, referred to in clause (c) of
sub-section (8) of section 35AD, for any assessment year, no deduction shall be allowed
under the provisions of section 35AD in relation to such specified business for the same
or any other assessment year.
Explanation 1.—For the purposes
of this section,—
(i) "export turnover" means
the consideration in respect of export by the undertaking, being the Unit of
articles or things or services received in, or brought into, India by the
assessee but does not include freight, telecommunication charges or insurance
attributable to the delivery of the articles or things outside India or
expenses, if any, incurred in foreign exchange in rendering of services
(including computer software) outside India;
(ii) "export in relation to the Special
Economic Zones" means taking goods or providing services out of India from
a Special Economic Zone by land, sea, air, or by any other mode, whether
physical or otherwise;
(iii) "manufacture" shall have the same
meaning as assigned to it in clause (r) of section 2 of the Special
Economic Zones Act, 2005;
(iv) "relevant assessment year" means
any assessment year falling within a period of fifteen consecutive assessment
years referred to in this section;
(v) "Special Economic Zone" and
"Unit" shall have the same meanings as assigned to them under clauses
(za) and (zc) of section 2 of the Special Economic Zones Act,
2005.
Explanation 2.—For the removal
of doubts, it is hereby declared that the profits and gains derived from on
site development of computer software (including services for development of
software) outside India shall be deemed to be the profits and gains derived
from the export of computer software outside India.
Special provisions in respect of newly established hundred per cent
export-oriented undertakings.
10B. (1) Subject to the
provisions of this section, a deduction of such profits and gains as are
derived by a hundred per cent export-oriented undertaking from the export of
articles or things or computer software for a period of ten consecutive
assessment years beginning with the assessment year relevant to the previous
year in which the undertaking begins to manufacture or produce articles or
things or computer software, as the case may be, shall be allowed from the
total income of the assessee :
Provided that where in
computing the total income of the undertaking for any assessment year, its
profits and gains had not been included by application of the provisions of
this section as it stood immediately before its substitution by the Finance
Act, 2000, the undertaking shall be entitled to the deduction referred to in
this sub-section only for the unexpired period of aforesaid ten consecutive
assessment years :
Provided further that for
the assessment year beginning on the 1st day of April, 2003, the deduction
under this sub-section shall be ninety per cent of the profits and gains
derived by an undertaking from the export of such articles or things or
computer software:
Provided also that no
deduction under this section shall be allowed to any undertaking for the
assessment year beginning on the 1st day of April, 2012 and subsequent years :
Provided also that no
deduction under this section shall be allowed to an assessee who does not
furnish a return of his income on or before the due date specified under
sub-section (1) of section 139.
(2)
This section applies to any undertaking which fulfils all the following
conditions, namely :—
(i) it manufactures or produces any
articles or things or computer software;
(ii) it is not formed by the splitting up,
or the reconstruction, of a business already in existence :
Provided that
this condition shall not apply in respect of any undertaking which is formed as
a result of the re-establishment, reconstruction or revival by the assessee of
the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in
that section;
(iii) it is not formed by the transfer to a new
business of machinery or plant previously used for any purpose.
Explanation.—The provisions
of Explanation 1 and Explanation 2 to
sub-section (2) of section 80-I shall apply for the purposes of clause (iii)
of this sub-section as they apply for the purposes of clause (ii) of
that sub-section.
(3)
This section applies to the undertaking, if the sale proceeds of articles or
things or computer software exported out of India are received in, or brought
into, India by the assessee in convertible foreign exchange, within a period of
six months from the end of the previous year or, within such further period as
the competent authority may allow in this behalf.
Explanation 1.—For the purposes
of this sub-section, the expression "competent authority" means the
Reserve Bank of India or such other authority as is authorised under any law
for the time being in force for regulating payments and dealings in foreign
exchange.
Explanation 2.—The sale
proceeds referred to in this sub-section shall be deemed to have been received
in India where such sale proceeds are credited to a separate account maintained
for the purpose by the assessee with any bank outside India with the approval
of the Reserve Bank of India.
(4)
For the purposes of sub-section (1), the profits derived from export of
articles or things or computer software shall be the amount which bears to the
profits of the business of the undertaking, the same proportion as the export
turnover in respect of such articles or things or computer software bears to
the total turnover of the business carried on by the undertaking.
(5)
The deduction under sub-section (1) shall not be admissible for any assessment
year beginning on or after the 1st day of April, 2001, unless the assessee
furnishes in the prescribed form, along with the return of income, the report
of an accountant, as defined in the Explanation below
sub-section (2) of section 288, certifying that the deduction has been correctly
claimed in accordance with the provisions of this section.
(6)
Notwithstanding anything contained in any other provision of this Act, in
computing the total income of the assessee of the previous year relevant to the
assessment year immediately succeeding the last of the relevant assessment years,
or of any previous year, relevant to any subsequent assessment year,—
(i) section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if every allowance or deduction
referred to therein and relating to or allowable for any of the relevant
assessment years ending before the 1st day of April, 2001, in relation to any
building, machinery, plant or furniture used for the purposes of the business
of the undertaking in the previous year relevant to such assessment year or any
expenditure incurred for the purposes of such business in such previous year
had been given full effect to for that assessment year itself and accordingly
sub-section (2) of section 32, clause (ii) of sub-section (3) of section 32A, clause (ii) of sub-section (2) of section 33, sub-section (4) of section 35 or the second proviso to clause (ix) of
sub-section (1) of section 36, as the case may be, shall not apply in relation to any
such allowance or deduction;
(ii) no loss referred to in sub-section (1)
of section 72 or sub-section (1) or sub-section (3) of section 74, in so far as such loss relates to the business of the
undertaking, shall be carried forward or set-off where such loss relates to any
of the relevant assessment years ending before the 1st day of April, 2001;
(iii) no deduction shall be allowed under section 80HH or section 80HHA or section 80-I or section 80-IA or section 80-IB in relation to the profits and gains of the
undertaking; and
(iv) in computing the depreciation allowance
under section 32, the written down value of any asset used for the
purposes of the business of the undertaking shall be computed as if the
assessee had claimed and been actually allowed the deduction in respect of
depreciation for each of the relevant assessment year.
(7)
The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, apply in relation to the
undertaking referred to in this section as they apply for the purposes of the
undertaking referred to in section 80-IA.
(7A)
Where any undertaking of an Indian company which is entitled to the deduction
under this section is transferred, before the expiry of the period specified in
this section, to another Indian company in a scheme of amalgamation or
demerger—
(a) no deduction shall be admissible under
this section to the amalgamating or the demerged company for the previous year
in which the amalgamation or the demerger takes place; and
(b) the provisions of this section shall, as
far as may be, apply to the amalgamated or resulting company as they would have
applied to the amalgamating or the demerged company if the amalgamation or the
demerger had not taken place.
(8)
Notwithstanding anything contained in the foregoing provisions of this section,
where the assessee, before the due date for furnishing the return of income
under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in
writing that the provisions of this section may not be made applicable to him,
the provisions of this section shall not apply to him for any of the relevant
assessment year.
(9)
[Omitted by the Finance Act, 2003, w.e.f. 1-4-2004.]
(9A)
[Omitted by the Finance Act, 2003, w.e.f. 1-4-2004.]
Explanation 1.— [Omitted
by the Finance Act, 2003, w.e.f. 1-4-2004.]
Explanation 2.—For the purposes
of this section,—
(i) "computer software"
means—
(a) any computer programme recorded on
any disc, tape, perforated media or other information storage device; or
(b) any customized electronic data or
any product or service of similar nature as may be notified by the Board,
which is transmitted or exported from India to any place
outside India by any means;
(ii) "convertible foreign exchange"
means foreign exchange which is for the time being treated by the Reserve Bank
of India as convertible foreign exchange for the purposes of the Foreign
Exchange Management Act, 1999 (42 of 1999), and any rules made thereunder or
any other corresponding law for the time being in force;
(iii) "export turnover" means the
consideration in respect of export by the undertaking of articles or things or
computer software received in, or brought into, India by the assessee in
convertible foreign exchange in accordance with sub-section (3), but does not
include freight, telecommunication charges or insurance attributable to the
delivery of the articles or things or computer software outside India or
expenses, if any, incurred in foreign exchange in providing the technical
services outside India;
(iv) "hundred per cent export-oriented
undertaking" means an undertaking which has been approved as a hundred per
cent export-oriented undertaking by the Board appointed in this behalf by the
Central Government in exercise of the powers conferred by section 14 of the
Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules
made under that Act;
(v) "relevant assessment years"
means any assessment years falling within a period of ten consecutive
assessment years, referred to in this section.
Explanation 3.—For the removal
of doubts, it is hereby declared that the profits and gains derived from on
site development of computer software (including services for development of
software) outside India shall be deemed to be the profits and gains derived
from the export of computer software outside India.
Explanation 4.—For the purposes
of this section, "manufacture or produce" shall include the cutting
and polishing of precious and semi-precious stones.
Special provisions in respect of export of certain articles or things.
10BA. (1) Subject to the
provisions of this section, a deduction of such profits and gains as are
derived by an undertaking from the export out of India of eligible articles or
things, shall be allowed from the total income of the assessee :
Provided that where in
computing the total income of the undertaking for any assessment year,
deduction under section 10A or section 10B has been claimed, the undertaking shall not be
entitled to the deduction under this section :
Provided further that no
deduction under this section shall be allowed to any undertaking for the
assessment year beginning on the 1st day of April, 2010 and subsequent years.
(2)
This section applies to any undertaking which fulfils the following conditions,
namely :—
(a) it manufactures or produces the eligible
articles or things without the use of imported raw materials;
(b) it is not formed by the splitting up, or
the reconstruction, of a business already in existence :
Provided that
this condition shall not apply in respect of any undertaking which is formed as
a result of the re-establishment, reconstruction or revival by the assessee of
the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in
that section;
(c) it is not formed by the
transfer to a new business of machinery or plant previously used for any
purpose.
Explanation.—The
provisions of Explanation 1 and Explanation 2 to
sub-section (2) of section 80-I shall apply for the purposes of this clause as they
apply for the purposes of clause (ii) of sub-section (2) of that
section;
(d) ninety per cent or more of
its sales during the previous year relevant to the assessment year are by way of
exports of the eligible articles or things;
(e) it employs twenty or more workers during
the previous year in the process of manufacture or production.
(3)
This section applies to the undertaking, if the sale proceeds of the eligible
articles or things exported out of India are received in or brought into, India
by the assessee in convertible foreign exchange, within a period of six months
from the end of the previous year or, within such further period as the
competent authority may allow in this behalf.
Explanation.—For the purposes
of this sub-section, the expression "competent authority" means the
Reserve Bank of India or such other authority as is authorised under any law
for the time being in force for regulating payments and dealings in foreign
exchange.
(4)
For the purposes of sub-section (1), the profits derived from export out of
India of the eligible articles or things shall be the amount which bears to the
profits of the business of the undertaking, the same proportion as the export
turnover in respect of such articles or things bears to the total turnover of
the business carried on by the undertaking.
(5)
The deduction under sub-section (1) shall not be admissible, unless the
assessee furnishes in the prescribed form, along with the return of income, the
report of an accountant, as defined in the Explanation below
sub-section (2) of section 288, certifying that the deduction has been correctly
claimed in accordance with the provisions of this section.
(6)
Notwithstanding anything contained in any other provision of this Act, where a
deduction is allowed under this section in computing the total income of the
assessee, no deduction shall be allowed under any other section in respect of
its export profits.
(7)
The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, apply in relation to the
undertaking referred to in this section as they apply for the purposes of the
undertaking referred to in section 80-IA.
Explanation.—For the purposes
of this section,—
(a) "convertible foreign exchange"
means foreign exchange which is for the time being treated by the Reserve Bank
of India as convertible foreign exchange for the purposes of the Foreign
Exchange Management Act, 1999 (42 of 1999), and any rules made thereunder or
any other corresponding law for the time being in force;
(b) "eligible articles or things"
means all hand-made articles or things, which are of artistic value and which
requires the use of wood as the main raw material;
(c) "export turnover" means the
consideration in respect of export by the undertaking of eligible articles or
things received in, or brought into, India by the assessee in convertible
foreign exchange in accordance with sub-section (3), but does not include
freight, telecommunication charges or insurance attributable to the delivery of
the articles or things outside India;
(d) "export out of India" shall
not include any transaction by way of sale or otherwise, in a shop, emporium or
any other establishment situate in India, not involving clearance of any
customs station as defined in the Customs Act, 1962 (52 of 1962).
Meaning of computer programmes in certain cases.
10BB. The profits and
gains derived by an undertaking from the production of computer programmes
under section 10B, as it stood prior to its substitution by section 7 of the
Finance Act, 2000 (10 of 2000), shall be construed as if for the words
"computer programmes", the words "computer programmes or
processing or management of electronic data" had been substituted in that
section.
Special provision in respect of certain industrial undertakings in
North-Eastern Region.
10C. (1) Subject to the
provisions of this section, any profits and gains derived by an assessee from
an industrial undertaking, which has begun or begins to manufacture or produce
any article or thing on or after the 1st day of April, 1998 in any Integrated
Infrastructure Development Centre or Industrial Growth Centre located in the
North-Eastern Region (hereafter in this section referred to as the industrial
undertaking) shall not be included in the total income of the assessee.
(2)
This section applies to any industrial undertaking which fulfils all the
following conditions, namely :—
(i) it is not formed by the splitting
up, or the reconstruction of, a business already in existence :
Provided that
this condition shall not apply in respect of any industrial undertaking which
is formed as a result of the re-establishment, reconstruction or revival by the
assessee of the business of any such industrial undertaking as is referred to
in section 33B, in
the circumstances and within the period specified in that section ;
(ii) it is not formed by the transfer to a
new business of machinery or plant previously used for any purpose.
Explanation.—The provisions
of Explanation 1 and Explanation 2 to sub-section
(3) of section 80-IA shall
apply for the purposes of clause (ii) of this sub-section as they apply
for the purposes of clause (ii) of that sub-section.
(3)
The profits and gains referred to in sub-section (1) shall not be included in
the total income of the assessee in respect of ten consecutive assessment years
beginning with the assessment year relevant to the previous year in which the
industrial undertaking begins to manufacture or produce articles or things.
(4)
Notwithstanding anything contained in any other provision of this Act, in
computing the total income of the assessee of any previous year relevant to any
subsequent assessment year,—
(i) section 32, section 35 and
clause (ix) of sub-section (1) of section 36 shall
apply as if deduction referred to therein and relating to or allowable for any
of the relevant assessment years, in relation to any building, machinery, plant
or furniture used for the purposes of the business of the industrial
undertaking in the previous year relevant to such assessment year or any
expenditure incurred for the purposes of such business in such previous year
had been given full effect to for that assessment year itself and, accordingly,
sub-section (2) of section 32,
sub-section (4) of section 35 or
the second proviso to clause (ix) of sub-section (1) of section 36, as the
case may be, shall not apply in relation to any such deduction;
(ii) no loss referred to in sub-section (1)
of section 72 or
sub-section (1) or sub-section (3) of section 74, in so
far as such loss relates to the business of the industrial undertaking, shall
be carried forward or set off where such loss relates to any of the relevant
assessment years;
(iii) no deduction shall be allowed under section 80HH or
section 80HHA or section 80-I or section 80-IA or section 80-IB or section 80JJA in
relation to the profits and gains of the industrial undertakings; and
(iv) in computing the depreciation allowance
under section 32, the
written down value of any asset used for the purposes of the business of the
industrial undertaking shall be computed as if the assessee had claimed and
been actually allowed the deduction in respect of depreciation for each of the
relevant assessment years.
(5)
The provisions of sub-section (8) and sub-section (10) of section 80-IA shall,
so far as may be, apply in relation to the industrial undertaking referred to
in this section as they apply for the purposes of the industrial undertaking
referred to in section 80-IA or section 80-IB, as
the case may be.
(6)
Notwithstanding anything contained in the foregoing provisions of this section,
where the assessee before the due date for furnishing the return of his income
under sub-section (1) of section 139,
furnishes to the Assessing Officer a declaration in writing that the provisions
of this section may not be made applicable to him, the provisions of this
section shall not apply to him in any of the relevant assessment years :
Provided that no deduction
under this section shall be allowed to any undertaking for the assessment year
beginning on the 1st day of April, 2004 and subsequent years.
Explanation.—For the purposes
of this section,—
(i) "Integrated Infrastructure
Development Centre" means such centres located in the States of the
North-Eastern Region, which the Central Government, may, by notification in the
Official Gazette, specify for the purposes of this section;
(ii) "Industrial Growth Centre"
means such centres located in the States of the North-Eastern Region, which the
Central Government may, by notification in the Official Gazette, specify for
the purposes of this section;
(iii) "North-Eastern Region" means
the region comprising the States of Arunachal Pradesh, Assam, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim and Tripura;
(iv) "relevant assessment years" means
the ten consecutive years beginning with the year in which the industrial
undertaking begins to manufacture or produce articles or things.
Income from property held for charitable or religious purposes.
6311. (1)
Subject to the provisions of sections 60 to 63, the following income shall not be included in the total
income of the previous year of the person in receipt of the income—
(a) income derived from property held under
trust wholly for charitable or religious purposes, to the extent to which such
income is applied to such purposes in India; and, where any such income is
accumulated or set apart for application to such purposes in India, to the
extent to which the income so accumulated or set apart is not in excess of
fifteen per cent of the income from such property;
(b) income derived from property held under
trust in part only for such purposes, the trust having been created before the
commencement of this Act, to the extent to which such income is applied to such
purposes in India; and, where any such income is finally set apart for
application to such purposes in India, to the extent to which the income so set
apart is not in excess of fifteen per cent of the income from such property;
(c) income derived from property held under
trust—
(i) created on or after the 1st day of
April, 1952, for a charitable purpose which tends to promote international
welfare in which India is interested, to the extent to which such income is
applied to such purposes outside India, and
(ii) for charitable or religious
purposes, created before the 1st day of April, 1952, to the extent to which
such income is applied to such purposes outside India:
Provided that
the Board, by general or special order, has directed in either case that it
shall not be included in the total income of the person in receipt of such
income;
(d) income in the form of voluntary contributions
made with a specific direction that they shall form part of the corpus of the
trust or institution 64[,subject to the condition that such voluntary
contributions are invested or deposited in one or more of the forms or modes
specified in sub-section (5) maintained specifically for such corpus].
Explanation 1.—For the purposes
of clauses (a) and (b),—
(1) in computing the fifteen per cent of the
income which may be accumulated or set apart, any such voluntary contributions
as are referred to in section 12 shall be deemed to be part of the income;
(2) if, in the previous year, the income
applied to charitable or religious purposes in India falls short of eighty-five
per cent of the income derived during that year from property held under trust,
or, as the case may be, held under trust in part, by any amount—
(i) for the reason that the whole or
any part of the income has not been received during that year, or
(ii) for any other reason,
then—
(a) in the case referred to in
sub-clause (i), so much of the income applied to such purposes in India
during the previous year in which the income is received or during the previous
year immediately following as does not exceed the said amount, and
(b) in the case referred to in
sub-clause (ii), so much of the income applied to such purposes in India
during the previous year immediately following the previous year in which the
income was derived as does not exceed the said amount,
may,
at the option of the person in receipt of the income (such option to be
exercised before the expiry of the time allowed under sub-section (1) of section 139 for furnishing the return of income, in such form
and manner as may be prescribed65) be deemed to be income applied to such purposes during
the previous year in which the income was derived; and the income so deemed to
have been applied shall not be taken into account in calculating the amount of
income applied to such purposes, in the case referred to in sub-clause (i),
during the previous year in which the income is received or during the previous
year immediately following, as the case may be, and, in the case referred to in
sub-clause (ii), during the previous year immediately following the
previous year in which the income was derived.
Explanation 2.—Any amount
credited or paid, out of income referred to in clause (a) or clause (b)
read with Explanation 1, 66[to any fund or trust or institution 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 or other trust or institution registered
under section 12AA 67[or section 12AB, as the case may be], being contribution
with a specific direction that it shall form part of the corpus], shall not be
treated as application of income for charitable or religious purposes.
Explanation 3.—For the purposes
of determining the amount of application under clause (a) or clause (b),
the provisions of sub-clause (ia) of clause (a) of section 40 and sub-sections (3) and (3A) of section 40A, shall, mutatis mutandis, apply as they
apply in computing the income chargeable under the head "Profits and gains
of business or profession".
68[Explanation 3A.—For
the purposes of this sub-section, where the property held under a trust or
institution includes any temple, mosque, gurdwara, church or other place
notified under clause (b) of sub-section (2) of section 80G, any sum received by such trust or institution as
voluntary contribution for the purpose of renovation or repair of such temple,
mosque, gurdwara, church or other place, may, at its option, be treated by such
trust or institution as forming part of the corpus of the trust or the
institution, subject to the condition that the trust or the institution,—
(a) applies
such corpus only for the purpose for which the voluntary contribution was made;
(b) does
not apply such corpus for making contribution or donation to any person;
(c) maintains
such corpus as separately identifiable; and
(d) invests
or deposits such corpus in the forms and modes specified under sub-section (5)
of section 11.
Explanation
3B.—For the purposes of Explanation 3A, where any trust or
institution has treated any sum received by it as forming part of the corpus,
and subsequently any of the conditions specified in clause (a) or
clause (b) or clause (c) or clause (d)
of the said Explanation is violated, such sum shall be deemed
to be the income of such trust or institution of the previous year during which
the violation takes place.]
69[Explanation 4.—For the purposes of determining the
amount of application under clause (a) or clause (b),—
(i)
application for charitable or religious purposes from the corpus as referred to
in clause (d) of this sub-section, shall not be treated as application
of income for charitable or religious purposes:
Provided that
the amount not so treated as application, or part thereof, shall be treated as
application for charitable or religious purposes in the previous year in which
the amount, or part thereof, is invested or deposited back, into one or more of
the forms or modes specified in sub-section (5) maintained specifically for
such corpus, from the income of that year and to the extent of such investment
or deposit; and
(ii)
application for charitable or religious purposes, from any loan or borrowing,
shall not be treated as application of income for charitable or religious
purposes:
Provided that
the amount not so treated as application, or part thereof, shall be treated as
application for charitable or religious purposes in the previous year in which
the loan or borrowing, or part thereof, is repaid from the income of that year
and to the extent of such repayment.
Explanation 5.—For
the purposes of this sub-section, it is hereby clarified that the calculation
of income required to be applied or accumulated during the previous year shall
be made without any set off or deduction or allowance of any excess application
of any of the year preceding the previous year.]
(1A)
For the purposes of sub-section (1),—
(a) where a capital asset, being property
held under trust wholly for charitable or religious purposes, is transferred
and the whole or any part of the net consideration is utilised for acquiring
another capital asset to be so held, then, the capital gain arising from the
transfer shall be deemed to have been applied to charitable or religious
purposes to the extent specified hereunder, namely:—
(i) where the whole of the net
consideration is utilised in acquiring the new capital asset, the whole of such
capital gain;
(ii) where only a part of the net
consideration is utilised for acquiring the new capital asset, so much of such
capital gain as is equal to the amount, if any, by which the amount so utilised
exceeds the cost of the transferred asset;
(b) where a capital asset, being property held
under trust in part only for such purposes, is transferred and the whole or any
part of the net consideration is utilised for acquiring another capital asset
to be so held, then, the appropriate fraction of the capital gain arising from
the transfer shall be deemed to have been applied to charitable or religious
purposes to the extent specified hereunder, namely:—
(i) where the whole of the net
consideration is utilised in acquiring the new capital asset, the whole of the
appropriate fraction of such capital gain;
(ii) in any other case, so much of the
appropriate fraction of the capital gain as is equal to the amount, if any, by
which the appropriate fraction of the amount utilised for acquiring the new
asset exceeds the appropriate fraction of the cost of the transferred asset.
Explanation.—In this
sub-section,—
(i) "appropriate fraction" means
the fraction which represents the extent to which the income derived from the
capital asset transferred was immediately before such transfer applicable to
charitable or religious purposes;
(ii) "cost of the transferred
asset" means the aggregate of the cost of acquisition (as ascertained for
the purposes of sections 48 and 49) of the capital asset which is the subject of the
transfer and the cost of any improvement thereto within the meaning assigned to
that expression in *sub-clause (b) of †clause
(1) of section 55;
(iii) "net consideration" means the full
value of the consideration received or accruing as a result of the transfer of
the capital asset as reduced by any expenditure incurred wholly and exclusively
in connection with such transfer.
(1B)
Where any income in respect of which an option is exercised under clause (2)
of the Explanation‡ to
sub-section (1) is not applied to charitable or religious purposes in India
during the period referred to in sub-clause (a) or, as the case may be,
sub-clause (b), of the said clause, then, such income shall be deemed to
be the income of the person in receipt thereof—
(a) in the case referred to in sub-clause (i)
of the said clause, of the previous year immediately following the previous
year in which the income was received; or
(b) in the case referred to in sub-clause (ii)
of the said clause, of the previous year immediately following the previous
year in which the income was derived.
(2)
Where eighty-five per cent of the income referred to in clause (a) or
clause (b) of sub-section (1) read with the Explanation‡ to
that sub-section is not applied, or is not deemed to have been applied, to
charitable or religious purposes in India during the previous year but is
accumulated or set apart, either in whole or in part, for application to such
purposes in India, such income so accumulated or set apart shall not be
included in the total income of the previous year of the person in receipt of
the income, provided the following conditions are complied with, namely:—
(a) such person furnishes a statement in the
prescribed form and in the prescribed70 manner to the Assessing Officer, stating the
purpose for which the income is being accumulated or set apart and the period
for which the income is to be accumulated or set apart, which shall in no case
exceed five years;
(b) the money so accumulated or set apart is
invested or deposited in the forms or modes specified in sub-section (5);
(c) the statement referred to in clause (a)
is furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the
previous year:
Provided that in computing
the period of five years referred to in clause (a), the period during
which the income could not be applied for the purpose for which it is so accumulated
or set apart, due to an order or injunction of any court, shall be excluded.
Explanation.—Any amount
credited or paid, out of income referred to in clause (a) or clause (b)
of sub-section (1), read with the Explanation to that
sub-section, which is not applied, but is accumulated or set apart, to any
trust or institution registered under section 12AA 71[or section 12AB] or to 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, shall not be treated as application of income for
charitable or religious purposes, either during the period of accumulation or
thereafter.
(3)
Any income referred to in sub-section (2) which—
(a) is applied to purposes other than
charitable or religious purposes as aforesaid or ceases to be accumulated or
set apart for application thereto, or
(b) ceases to remain invested or deposited
in any of the forms or modes specified in sub-section (5), or
(c) is not utilised for the purpose for
which it is so accumulated or set apart during the period referred to in clause
(a) of that sub-section 72[or in the year
immediately following the expiry thereof]*,
(d) is credited or paid to any trust or
institution registered under section 12AA 73[or section 12AB] or to 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,
74[shall be
deemed to be the income of such person of the previous year in which it is so
applied or ceases to be so accumulated or set apart or ceases to remain so
invested or deposited or credited or paid or, as the case may be, of the
previous year immediately following the expiry of the period aforesaid].
(3A)
Notwithstanding anything contained in sub-section (3), where due to
circumstances beyond the control of the person in receipt of the income, any
income invested or deposited in accordance with the provisions of clause (b)
of sub-section (2) cannot be applied for the purpose for which it was
accumulated or set apart, the Assessing Officer may, on an application made to
him in this behalf, allow such person to apply such income for such other
charitable or religious purpose in India as is specified in the application by
such person and as is in conformity with the objects of the trust; and
thereupon the provisions of sub-section (3) shall apply as if the purpose
specified by such person in the application under this sub-section were a
purpose specified in the notice given to the Assessing Officer under clause (a)
of sub-section (2):
Provided that the
Assessing Officer shall not allow application of such income by way of payment
or credit made for the purposes referred to in clause (d) of sub-section
(3) of section 11:
Provided further that in
case the trust or institution, which has invested or deposited its income in
accordance with the provisions of clause (b) of sub-section (2), is
dissolved, the Assessing Officer may allow application of such income for the
purposes referred to in clause (d) of sub-section (3) in the year in
which such trust or institution was dissolved.
(4)
For the purposes of this section "property held under trust" includes
a business undertaking so held, and where a claim is made that the income of
any such undertaking shall not be included in the total income of the persons
in receipt thereof, the Assessing Officer shall have power to determine the
income of such undertaking in accordance with the provisions of this Act
relating to assessment; and where any income so determined is in excess of the
income as shown in the accounts of the undertaking, such excess shall be deemed
to be applied to purposes other than charitable or religious purposes.
(4A)
Sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A) shall
not apply in relation to any income of a trust or an institution, being profits
and gains of business, unless the business is incidental to the attainment of
the objectives of the trust or, as the case may be, institution, and separate
books of account are maintained by such trust or institution in respect of such
business.
(5)
The forms and modes of investing or depositing the money referred to in clause
(b) of sub-section (2) shall be the following, namely :—
(i) investment in savings certificates
as defined in clause (c) of section 2 of the Government Savings
Certificates Act, 1959 (46 of 1959*),
and any other securities or certificates issued by the Central Government under
the Small Savings Schemes of that Government;
(ii) deposit in any account with the Post
Office Savings Bank;
(iii) deposit in any account with a scheduled bank
or a co-operative society engaged in carrying on the business of banking
(including a co-operative land mortgage bank or a co-operative land development
bank).
Explanation.—In
this clause, "scheduled bank" means the State Bank of India
constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary
bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of
1959*), a corresponding new bank constituted under section 3
of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
(5 of 1970), or under section 3 of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a
bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2
of 1934);
(iv) investment in units of the Unit Trust of
India established under the Unit Trust of India Act, 1963 (52 of 1963);
(v) investment in any security for money
created and issued by the Central Government or a State Government;
(vi) investment in debentures issued by, or on
behalf of, any company or corporation both the principal whereof and the
interest whereon are fully and unconditionally guaranteed by the Central
Government or by a State Government;
(vii) investment or deposit in any public sector
company:
Provided that
where an investment or deposit in any public sector company has been made and
such public sector company ceases to be a public sector company,—
(A) such investment made in the shares of
such company shall be deemed to be an investment made under this clause for a
period of three years from the date on which such public sector company ceases
to be a public sector company;
(B) such other investment or deposit shall
be deemed to be an investment or deposit made under this clause for the period
up to the date on which such investment or deposit becomes repayable by such
company;
(viii) deposits with or investment in any bonds
issued by a financial corporation which is engaged in providing long-term
finance for industrial development in India and which is eligible for deduction
under clause (viii) of sub-section (1) of section 36;
(ix) deposits with or investment in any bonds
issued by a public company formed and registered in India with the main object
of carrying on the business of providing long-term finance for construction or
purchase of houses in India for residential purposes and which is eligible for
deduction under clause (viii) of sub-section (1) of section 36;
(ixa) deposits with or investment in any bonds
issued by a public company formed and registered in India with the main object
of carrying on the business of providing long-term finance for urban
infrastructure in India.
Explanation.—For
the purposes of this clause,—
(a) "long-term finance" means any
loan or advance where the terms under which moneys are loaned or advanced
provide for repayment along with interest thereof during a period of not less
than five years;
(b) "public company" shall have
the meaning assigned to it in section 375 of the Companies Act, 1956 (1 of 1956);
(c) "urban infrastructure" means a
project for providing potable water supply, sanitation and sewerage, drainage,
solid waste management, roads, bridges and flyovers or urban transport;
(x) investment in immovable property.
Explanation.—"Immovable
property" does not include any machinery or plant (other than machinery or
plant installed in a building for the convenient occupation of the building)
even though attached to, or permanently fastened to, anything attached to the
earth;
(xi) deposits with the Industrial Development Bank
of India established under the Industrial Development Bank of India Act, 1964
(18 of 1964);
(xii) any other form or mode of investment or
deposit as may be prescribed.76
(6)
In this section where any income is required to be applied or accumulated or
set apart for application, then, for such purposes the income shall be
determined without any deduction or allowance by way of depreciation or
otherwise in respect of any asset, acquisition of which has been claimed as an
application of income under this section in the same or any other previous
year.
(7)
Where a trust or an institution has been granted registration 77[under section 12AA or section 12AB] or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance
(No. 2) Act, 1996 (33 of 1996)] and the said registration is in force for any
previous year, then, nothing contained in section 10 [other than 78[clause (1), clause (23C) and clause (46)]
thereof] shall operate to exclude any income derived from the property held
under trust from the total income of the person in receipt thereof for that
previous year:
79[Provided that such registration shall become
inoperative from the date on which the trust or institution is approved under
clause (23C) of section 10 or is notified under clause (46) of the said
section, as the case may be, or the date on which this proviso has come into
force, whichever is later:
Provided further that the
trust or institution, whose registration has become inoperative under the first
proviso, may apply to get its registration operative 80[under section 12AA] 81[or section 12AB] subject to the condition that on doing so, the approval
under clause (23C) of section 10 or notification under clause (46) of the
said section, as the case may be, to such trust or institution shall cease to
have any effect from the date on which the said registration becomes operative
and thereafter, it shall not be entitled to exemption under the respective
clauses.]
81a[Explanation.—For
the purposes of this section, any sum payable by any trust or institution shall
be considered as application of income in the previous year in which such sum
is actually paid by it (irrespective of the previous year in which the liability
to pay such sum was incurred by the trust or institution according to the
method of accounting regularly employed by it):
Provided that where
during any previous year, any sum has been claimed to have been applied by the
trust or institution, such sum shall not be allowed as application in any
subsequent previous year.]
Income of trusts or institutions from contributions.
12.(1) Any voluntary
contributions received by a trust created wholly for charitable or religious
purposes or by an institution established wholly for such purposes (not being
contributions made with a specific direction that they shall form part of the
corpus of the trust or institution) shall for the purposes of section 11 be deemed to be income derived from property held
under trust wholly for charitable or religious purposes and the provisions of
that section and section 13 shall apply accordingly.
(2)
The value of any services, being medical or educational services, made
available by any charitable or religious trust running a hospital or medical
institution or an educational institution, to any person referred to in clause
(a) or clause (b) or clause (c) or clause (cc) or
clause (d) of sub-section (3) of section 13, shall be deemed to be income of such trust or
institution derived from property held under trust wholly for charitable or
religious purposes during the previous year in which such services are so
provided and shall be chargeable to income-tax notwithstanding the provisions
of sub-section (1) of section 11.
Explanation.—For the purposes
of this sub-section, the expression "value" shall be the value of any
benefit or facility granted or provided free of cost or at concessional rate to
any person referred to in clause (a) or clause (b) or clause (c)
or clause (cc) or clause (d) of sub-section (3) of section 13.
(3)
Notwithstanding anything contained in section 11, any amount of donation received by the trust or
institution in terms of clause (d) of sub-section (2) of section 80G in respect of which accounts of income and
expenditure have not been rendered to the authority prescribed under clause (v)
of sub-section (5C) of that section, in the manner specified in that clause, or
which has been utilised for purposes other than providing relief to the victims
of earthquake in Gujarat or which remains unutilised in terms of sub-section
(5C) of section 80G and not transferred to the Prime Minister's
National Relief Fund on or before the 31st day of March, 2004 shall be deemed
to be the income of the previous year and shall accordingly be charged to tax.
Conditions for applicability of sections 11 and 12.
12A.82 (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any
trust or institution unless the following conditions are fulfilled, namely:—
(a) the person in receipt of the income has made
an application for registration of the trust or institution in the prescribed
form83 and in the prescribed manner to the Principal
Commissioner or Commissioner before the 1st day of July, 1973, or before the
expiry of a period of one year from the date of the creation of the trust or
the establishment of the institution, whichever is later and such trust or
institution is registered under section 12AA :
Provided that
where an application for registration of the trust or institution is made after
the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust
or institution,—
(i) from the date of the creation of
the trust or the establishment of the institution if the Principal Commissioner
or Commissioner is, for reasons to be recorded in writing, satisfied that the
person in receipt of the income was prevented from making the application
before the expiry of the period aforesaid for sufficient reasons;
(ii) from the 1st day of the financial
year in which the application is made, if the Principal Commissioner or
Commissioner is not so satisfied:
Provided further that
the provisions of this clause shall not apply in relation to any application
made on or after the 1st day of June, 2007;
(aa) the person in receipt of the income has made
an application for registration of the trust or institution on or after the 1st
day of June, 2007 in the prescribed form and manner to the Principal
Commissioner or Commissioner and such trust or institution is registered
under section 12AA;
(ab) the person in receipt of the income has made
an application for registration of the trust or institution, in a case where a
trust or an institution has been granted registration under section 12AA or has
obtained registration at any time under section 12A [as it stood before its
amendment by the Finance (No. 2) Act, 1996 (33 of 1996)], and, subsequently, it
has adopted or undertaken modifications of the objects which do not conform to
the conditions of registration, in the prescribed form and manner, within a
period of thirty days from the date of said adoption or modification, to the
Principal Commissioner or Commissioner and such trust or institution is
registered under section 12AA;
84[(ac) notwithstanding anything contained in
clauses (a) to (ab), the person in receipt of the income has made
an application in the prescribed form and manner to the Principal Commissioner
or Commissioner, for registration of the trust or institution,—
(i) where the trust or institution is
registered under section 12A [as it stood immediately before its amendment by
the Finance (No. 2) Act, 1996 (33 of 1996)] or under section 12AA [as it stood
immediately before its amendment by the Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three months
from the first day of April, 2021;
(ii) where the trust or institution is
registered under section 12AB and the period of the said registration is due to
expire, at least six months prior to expiry of the said period;
(iii) where the trust or institution has
been provisionally registered under section 12AB, at least six months prior to expiry of period of the
provisional registration or within six months of commencement of its
activities, whichever is earlier;
(iv) where registration of the trust or
institution has become inoperative due to the first proviso to sub-section (7)
of section 11, at least six months prior to the commencement of the
assessment year from which the said registration is sought to be made
operative;
(v) where the trust or institution has
adopted or undertaken modifications of the objects which do not conform to the
conditions of registration, within a period of thirty days from the date of the
said adoption or modification;
(vi) in any other case, at least one month
prior to the commencement of the previous year relevant to the assessment year
from which the said registration is sought,
and such trust or institution is registered under section 12AB;]
(b) where the total income of the trust or
institution as computed under this Act without giving effect to the provisions
of section 11 and section 12 exceeds the maximum amount which is not chargeable
to income-tax in any previous year, the accounts of the trust or institution
for that year have been audited by an accountant as defined in the Explanation below
sub-section (2) ofsection 288 85[before the specified date referred to in section 44AB and the person in receipt of the income furnishes
by that date] the report of such audit in the prescribed form86 duly signed and verified by such accountant and
setting forth such particulars as may be prescribed;
Following clause (b) shall be substituted for the
existing clause (b) of sub-section (1) of section 12A by the Finance
Act, 2022, w.e.f. 1-4-2023:
(b) where the
total income of the trust or institution as computed under this Act without
giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable
to income-tax in any previous year,—
(i)
the books of account and other documents have been kept and maintained in such
form and manner and at such place, as may be prescribed; and
(ii)
the accounts of the trust or institution for that year have been audited by an
accountant defined in the Explanation below sub-section (2) of
section 288 before the specified date referred to in section 44AB and the
person in receipt of the income furnishes by that date the report of such audit
in the prescribed form duly signed and verified by such accountant and setting
forth such particulars, as may be prescribed;
(ba) the person in receipt of the income has
furnished the return of income for the previous year in accordance with the
provisions of sub-section (4A) of section 139, within the time allowed under
that section.
(c) [***]
(2)
Where an application has been made on or after the 1st day of June, 2007, the
provisions of sections 11 and 12 shall apply in relation to the income of such trust
or institution from the assessment year immediately following the financial
year in which such application is made:
87[***]
88[Provided that the provisions of sections 11 and 12 shall apply to a trust or institution, where the
application is made under—
(a) sub-clause (i) of clause (ac)
of sub-section (1), from the assessment year from which such trust or
institution was earlier granted registration;
(b) sub-clause (iii) of clause (ac)
of sub-section (1), from the first of the assessment year for which it was
provisionally registered:
Provided further that
where registration has been granted to the trust or institution under section 12AA or section 12AB], then, the provisions of sections 11 and 12 shall apply in respect of any income derived from
property held under trust of any assessment year preceding the aforesaid
assessment year, for which assessment proceedings are pending before the
Assessing Officer as on the date of such registration and the objects and
activities of such trust or institution remain the same for such preceding
assessment year:
89[Provided also] that no action under section 147 shall be taken by the Assessing Officer in case of
such trust or institution for any assessment year preceding the aforesaid
assessment year only for non-registration of such trust or institution for the
said assessment year:
Provided also that
provisions contained in the first and second proviso shall not apply in case of
any trust or institution which was refused registration or the registration
granted to it was cancelled at any time under 90[section 12AA or section 12AB].
Procedure for registration.
12AA. (1) The Principal
Commissioner or Commissioner, on receipt of an application for registration of
a trust or institution made under clause (a) or clause (aa) or
clause (ab) of sub-section (1) of section 12A, shall—
(a) call for such documents or information
from the trust or institution as he thinks necessary in order to satisfy
himself about,—
(i) the genuineness of activities of
the trust or institution; and
(ii) the compliance of such requirements of
any other law for the time being in force by the trust or institution as are
material for the purpose of achieving its objects,
and may also make such inquiries as he may deem necessary
in this behalf; and
(b) after satisfying himself about the objects of
the trust or institution and the genuineness of its activities as required
under sub-clause (i) of clause (a) and compliance of the
requirements under sub-clause (ii) of the said clause, he—
(i) shall pass an order in writing
registering the trust or institution;
(ii) shall, if he is not so satisfied,
pass an order in writing refusing to register the trust or institution,
and
a copy of such order shall be sent to the applicant :
Provided that no order
under sub-clause (ii) shall be passed unless the applicant has been
given a reasonable opportunity of being heard.
(1A)
All applications, pending before the Principal Chief Commissioner or Chief
Commissioner on which no order has been passed under clause (b) of
sub-section (1) before the 1st day of June, 1999, shall stand transferred on
that day to the Principal Commissioner or Commissioner and the Principal Commissioner
or Commissioner may proceed with such applications under that sub-section from
the stage at which they were on that day.
(2)
Every order granting or refusing registration under clause (b) of
sub-section (1) shall be passed before the expiry of six months from the end of
the month in which the application was received under clause (a) or
clause (aa) or clause (ab) of sub-section (1) of section 12A.
(3)
Where a trust or an institution has been granted registration under clause (b)
of sub-section (1) or has obtained registration at any time under section 12A
[as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of
1996)] and subsequently the Principal Commissioner or Commissioner is satisfied
that the activities of such trust or institution are not genuine or are not
being carried out in accordance with the objects of the trust or institution,
as the case may be, he shall pass an order in writing cancelling the
registration of such trust or institution:
Provided that no order
under this sub-section shall be passed unless such trust or institution has
been given a reasonable opportunity of being heard.
(4)
Without prejudice to the provisions of sub-section (3), where a trust or an
institution has been granted registration under clause (b) of
sub-section (1) or has obtained registration at any time under section 12A [as
it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]
and subsequently it is noticed that—
(a) the activities of the trust or the
institution are being carried out in a manner that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of
the income of such trust or institution due to operation of sub-section (1)
of section 13; or
(b) the trust or institution has not
complied with the requirement of any other law, as referred to in sub-clause (ii)
of clause (a) of sub-section (1), and the order, direction or decree, by
whatever name called, holding that such non-compliance has occurred, has either
not been disputed or has attained finality,
then,
the Principal Commissioner or the Commissioner may, by an order in writing,
cancel the registration of such trust or institution:
Provided that the
registration shall not be cancelled under this sub-section, if the trust or
institution proves that there was a reasonable cause for the activities to be
carried out in the said manner.
91-92[(5) Nothing contained in this section shall apply on or
after the 1st day of April, 2021.]
91-92[Procedure for fresh registration.93
12AB. (1) The Principal
Commissioner or Commissioner, on receipt of an application made under clause (ac)
of sub-section (1) of section 12A, shall,—
(a) where the application is made under
sub-clause (i) of the said clause, pass an order in writing registering
the trust or institution for a period of five years;
(b) where the application is made under
sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or
sub-clause (v) of the said clause,—
(i) call for such documents or
information from the trust or institution or make such inquiries as he thinks
necessary in order to satisfy himself about—
(A) the genuineness of activities of the
trust or institution; and
(B) the compliance of such requirements of
any other law for the time being in force by the trust or institution as are
material for the purpose of achieving its objects;
(ii) after satisfying himself about the
objects of the trust or institution and the genuineness of its activities under
item (A) and compliance of the requirements under item (B), of
sub-clause (i),—
(A) pass an order in writing registering the trust
or institution for a period of five years; or
(B) if he is not so satisfied, pass an order
in writing rejecting such application and also cancelling its registration
after affording a reasonable opportunity of being heard;
(c) where the application is made under
sub-clause (vi) of the said clause, pass an order in writing
provisionally registering the trust or institution for a period of three years
from the assessment year from which the registration is sought,
and
send a copy of such order to the trust or institution.
(2)
All applications, pending before the Principal Commissioner or Commissioner on
which no order has been passed under clause (b) of sub-section (1)
of section 12AA before the date on which this section has come into
force, shall be deemed to be applications made under sub-clause (vi) of
clause (ac) of sub-section (1) of section 12A on that date.
(3)
The order under clause (a), sub-clause (ii) of clause (b)
and clause (c), of sub-section (1) shall be passed, in such form and
manner as may be prescribed, before expiry of the period of three months, six
months and one month, respectively, calculated from the end of the month in
which the application was received.
94[(4) Where
registration or provisional registration of a trust or an institution has been
granted under clause (a) or clause (b)
or clause (c) of sub-section (1) or clause (b)
of sub-section (1) ofsection 12AA, as the case may be, and subsequently,—
(a) the
Principal Commissioner or Commissioner has noticed occurrence of one or more
specified violations during any previous year; or
(b) the
Principal Commissioner or Commissioner has received a reference from the
Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or
(c) such
case has been selected in accordance with the risk management strategy,
formulated by the Board from time to time, for any previous year,
the Principal Commissioner or Commissioner shall—
(i) call
for such documents or information from the trust or institution, or make such
inquiry as he thinks necessary in order to satisfy himself about the occurrence
or otherwise of any specified violation;
(ii) pass
an order in writing, cancelling the registration of such trust or institution,
after affording a reasonable opportunity of being heard, for such previous year
and all subsequent previous years, if he is satisfied that one or more specified
violations have taken place;
(iii) pass
an order in writing, refusing to cancel the registration of such trust or
institution, if he is not satisfied about the occurrence of one or more
specified violations;
(iv) forward
a copy of the order under clause (ii) or clause (iii), as the
case may be, to the Assessing Officer and such trust or institution.
Explanation.—For
the purposes of this sub-section, the following shall mean "specified
violation",—
(a) where
any income derived from property held under trust, wholly or in part for
charitable or religious purposes, has been applied, other than for the objects
of the trust or institution; or
(b) the
trust or institution has income from profits and gains of business which is not
incidental to the attainment of its objectives or separate books of account are
not maintained by such trust or institution in respect of the business which is
incidental to the attainment of its objectives; or
(c) the
trust or institution has applied any part of its income from the property held
under a trust for private religious purposes, which does not enure for the
benefit of the public; or
(d) the
trust or institution established for charitable purpose created or established
after the commencement of this Act, has applied any part of its income for the
benefit of any particular religious community or caste; or
(e) any
activity being carried out by the trust or institution—
(i) is
not genuine; or
(ii) is
not being carried out in accordance with all or any of the conditions subject
to which it was registered; or
(f) the
trust or institution has not complied with the requirement of any other law, as
referred to in item (B) of sub-clause (i) of clause (b) of
sub-section (1), and the order, direction or decree, by whatever name called,
holding that such non-compliance has occurred, has either not been disputed or
has attained finality.
(5) The order under clause (ii)
or clause (iii) of sub-section (4), as the case may be, shall be passed
before the expiry of a period of six months, calculated from the end of the
quarter in which the first notice is issued by the Principal Commissioner or
Commissioner, on or after the 1st day of April, 2022, calling for any document
or information, or for making any inquiry, under clause (i) of
sub-section (4).]]
Section 11 not to apply in certain cases.
13. (1) Nothing contained
in section 11 or section 12 shall operate so as to exclude from the total
income of the previous year of the person in receipt thereof—
(a) any part of the income from the property
held under a trust for private religious purposes which does not enure for the
benefit of the public;
(b) in the case of a trust for charitable
purposes or a charitable institution created or established after the
commencement of this Act, any income thereof if the trust or institution is
created or established for the benefit of any particular religious community or
caste;
(bb) [***]
(c) in the case of a trust for charitable or
religious purposes or a charitable or religious institution, any income
thereof—
(i) if such trust or institution has
been created or established after the commencement of this Act and under the
terms of the trust or the rules governing the institution, any part of such
income enures, or
(ii) if any part of such income or any
property of the trust or the institution (whenever created or established) is
during the previous year used or applied,
directly or indirectly for the benefit of any person
referred to in sub-section (3) 95-96[, such part of
income as referred to in sub-clauses (i)
and (ii)] :
Provided that
in the case of a trust or institution created or established before the
commencement of this Act, the provisions of sub-clause (ii) shall not
apply to any use or application, whether directly or indirectly, of any part of
such income or any property of the trust or institution for the benefit of any
person referred to in sub-section (3), if such use or application is by way of
compliance with a mandatory term of the trust or a mandatory rule governing the
institution :
Provided further that
in the case of a trust for religious purposes or a religious institution
(whenever created or established) or a trust for charitable purposes or a
charitable institution created or established before the commencement of this
Act, the provisions of sub-clause (ii) shall not apply to any use or
application, whether directly or indirectly, of any part of such income or any
property of the trust or institution for the benefit of any person referred to
in sub-section (3) in so far as such use or application relates to any period
before the 1st day of June, 1970;
(d) in the case of a trust for charitable or
religious purposes or a charitable or religious institution, any income
thereof, if for any period during the previous year—
(i) any funds of the trust or
institution are invested or deposited after the 28th day of February, 1983
otherwise than in any one or more of the forms or modes specified in
sub-section (5) of section 11; or
(ii) any funds of the trust or
institution invested or deposited before the 1st day of March, 1983 otherwise
than in any one or more of the forms or modes specified in sub-section (5) ofsection 11 continue to remain so invested or deposited after
the 30th day of November, 1983; or
(iii) any shares in a company, other than—
(A) shares in a public sector company;
(B) shares prescribed as a form or mode of
investment under clause (xii) of sub-section (5) of section 11,
are held by the trust or institution after the 30th day
of November, 1983 95-96[, to the
extent of such deposits or investments referred to in sub-clauses (i), (ii) and (iii)]:
Provided that
nothing in this clause shall apply in relation to—
(i) any assets held by the trust or
institution where such assets form part of the corpus of the trust or
institution as on the 1st day of June, 1973;
(ia) any accretion to the shares, forming
part of the corpus mentioned in clause (i), by way of bonus shares
allotted to the trust or institution;
(ii) any assets (being debentures
issued by, or on behalf of, any company or corporation) acquired by the trust
or institution before the 1st day of March, 1983;
(iia) any asset, not being an investment or
deposit in any of the forms or modes specified in sub-section (5) of section 11, where such asset is not held by the trust or
institution, otherwise than in any of the forms or modes specified in
sub-section (5) of section 11, after the expiry of one year from the end of the
previous year in which such asset is acquired or the 31st day of March, 1993,
whichever is later;
(iii) any funds representing the profits and
gains of business, being profits and gains of any previous year relevant to the
assessment year commencing on the 1st day of April, 1984 or any subsequent
assessment year.
Explanation.—Where
the trust or institution has any other income in addition to profits and gains
of business, the provisions of clause (iii) of this proviso shall not
apply unless the trust or institution maintains separate books of account in
respect of such business.
Explanation.—For the purposes
of sub-clause (ii) of clause (c), in determining whether any part
of the income or any property of any trust or institution is during the
previous year used or applied, directly or indirectly, for the benefit of any
person referred to in sub-section (3), in so far as such use or application
relates to any period before the 1st day of July, 1972, no regard shall be had
to the amendments made to this section by section 7 [other than sub-clause (ii) of clause (a)
thereof] of the Finance Act, 1972.
(2)
Without prejudice to the generality of the provisions of clause (c) and
clause (d) of sub-section (1), the income or the property of the trust
or institution or any part of such income or property shall, for the purposes
of that clause, be deemed to have been used or applied for the benefit of a
person referred to in sub-section (3),—
(a) if any part of the income or property of
the trust or institution is, or continues to be, lent to any person referred to
in sub-section (3) for any period during the previous year without either
adequate security or adequate interest or both;
(b) if any land, building or other property
of the trust or institution is, or continues to be, made available for the use
of any person referred to in sub-section (3), for any period during the
previous year without charging adequate rent or other compensation;
(c) if any amount is paid by way of salary,
allowance or otherwise during the previous year to any person referred to in
sub-section (3) out of the resources of the trust or institution for services
rendered by that person to such trust or institution and the amount so paid is
in excess of what may be reasonably paid for such services;
(d) if the services of the trust or
institution are made available to any person referred to in sub-section (3)
during the previous year without adequate remuneration or other compensation;
(e) if any share, security or other property
is purchased by or on behalf of the trust or institution from any person
referred to in sub-section (3) during the previous year for consideration which
is more than adequate;
(f) if any share, security or other property
is sold by or on behalf of the trust or institution to any person referred to
in sub-section (3) during the previous year for consideration which is less
than adequate;
(g) if any income or property of the trust
or institution is diverted during the previous year in favour of any person
referred to in sub-section (3):
Provided that
this clause shall not apply where the income, or the value of the property or,
as the case may be, the aggregate of the income and the value of the property,
so diverted does not exceed one thousand rupees;
(h) if any funds of the trust or institution
are, or continue to remain, invested for any period during the previous year
(not being a period before the 1st day of January, 1971), in any concern in
which any person referred to in sub-section (3) has a substantial interest.
(3)
The persons referred to in clause (c) of sub-section (1) and sub-section
(2) are the following, namely :—
(a) the author of the trust or the founder
of the institution;
(b) any person who has made a substantial
contribution to the trust or institution, that is to say, any person whose
total contribution up to the end of the relevant previous year exceeds fifty
thousand rupees;
(c) where such author, founder or person is
a Hindu undivided family, a member of the family;
(cc) any trustee of the trust or manager (by
whatever name called) of the institution;
(d) any relative of any such author,
founder, person, member, trustee or manager as aforesaid;
(e) any concern in which any of the persons
referred to in clauses (a), (b), (c), (cc) and (d)
has a substantial interest.
(4)
Notwithstanding anything contained in clause (c) of sub-section (1) but
without prejudice to the provisions contained in clause (d) of that
sub-section, in a case where the aggregate of the funds of the trust or
institution invested in a concern in which any person referred to in
sub-section (3) has a substantial interest, does not exceed five per cent of
the capital of that concern, the exemption under section 11 or section 12 shall not be denied in relation to any income other
than the income arising to the trust or the institution from such investment,
by reason only that the funds of the trust or the institution have been
invested in a concern in which such person has a substantial interest.
(5)
Notwithstanding anything contained in clause (d) of sub-section (1),
where any assets (being debentures issued by, or on behalf of, any company or
corporation) are acquired by the trust or institution after the 28th day of
February, 1983 but before the 25th day of July, 1991, the exemption under section 11 or section 12 shall not be denied in relation to any income other
than the income arising to the trust or the institution from such assets, by
reason only that the funds of the trust or the institution have been invested
in such assets if such funds do not continue to remain so invested in such
assets after the 31st day of March, 1992.
(6)
Notwithstanding anything contained in sub-section (1) or sub-section (2), but
without prejudice to the provisions contained in sub-section (2) of section 12, in the case of a charitable or religious trust running
an educational institution or a medical institution or a hospital, the
exemption under section 11 or section 12 shall not be denied in relation to any income,
other than the income referred to in sub-section (2) of section 12, by reason only that such trust has provided educational
or medical facilities to persons referred to in clause (a) or clause (b)
or clause (c) or clause (cc) or clause (d) of sub-section
(3).
(7)
Nothing contained in section 11 or section 12 shall operate so as to exclude from the total
income of the previous year of the person in receipt thereof, any anonymous
donation referred to insection 115BBC on which tax is payable in accordance with the
provisions of that section.
(8)
Nothing contained in section 11 or section 12 shall operate so as to exclude any income from the
total income of the previous year of the person in receipt thereof if the
provisions of the first proviso* to
clause (15) of section 2 become applicable in the case of such person in the
said previous year.
(9)
Nothing contained in sub-section (2) of section 11 shall operate so as to exclude any income from the
total income of the previous year of a person in receipt thereof, if—
(i) the statement referred to in clause (a)
of the said sub-section in respect of such income is not furnished on or before
the due date specified under sub-section (1) of section 139 for furnishing the return of income for the
previous year; or
(ii) the return of income for the previous
year is not furnished by such person on or before the due date specified under
sub-section (1) of section 139 for furnishing the return of income for the said
previous year.
Following sub-sections (10) and (11) shall be inserted after
sub-section (9) of section 13 by the Finance Act, 2022, w.e.f. 1-4-2023:
(10) Where the provisions of sub-section (8) are applicable to any
trust or institution or it violates the conditions specified under clause (b) or clause (ba) of sub-section (1) of section 12A, its income chargeable to tax shall be computed after
allowing deduction for the expenditure (other than capital expenditure)
incurred in India, for the objects of the trust or institution, subject to fulfilment
of the following conditions, namely:—
(a) such
expenditure is not from the corpus standing to the credit of the trust or
institution as on the end of the financial year immediately preceding the
previous year relevant to the assessment year for which income is being
computed;
(b) such
expenditure is not from any loan or borrowing;
(c) claim
of depreciation is not in respect of an asset, acquisition of which has been
claimed as application of income, in the same or any other previous year; and
(d) such
expenditure is not in the form of any contribution or donation to any person.
Explanation.—For
the purposes of determining the amount of expenditure under this sub-section,
the provisions of sub-clause (ia) of clause (a) of section 40 and sub-sections (3) and (3A) ofsection 40A, shall, mutatis
mutandis, apply as they apply in computing the income chargeable under
the head "Profits and gains of business or profession".
(11) For the purposes of computing income chargeable to tax under
sub-section (10), no deduction in respect of any expenditure or allowance or
set-off of any loss shall be allowed to the assessee under any other provision
of this Act.
Explanation 1.—For the purposes
of sections 11, 12, 12A 97[, 12AA, 12AB] and this section, "trust" includes any other
legal obligation and for the purposes of this section "relative", in
relation to an individual, means—
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the
individual;
(iv) any lineal ascendant or descendant of the
individual;
(v) any lineal ascendant or descendant of
the spouse of the individual;
(vi) spouse of a person referred to in sub-clause
(ii), sub-clause (iii), sub-clause (iv) or sub-clause (v);
(vii) any lineal descendant of a brother or sister
of either the individual or of the spouse of the individual.
Explanation 2.—A trust or
institution created or established for the benefit of Scheduled Castes,
backward classes, Scheduled Tribes or women and children shall not be deemed to
be a trust or institution created or established for the benefit of a religious
community or caste within the meaning of clause (b) of sub-section (1).
Explanation 3.—For the purposes
of this section, a person shall be deemed to have a substantial interest in a
concern,—
(i) in a case where the concern is a
company, if its shares (not being shares entitled to a fixed rate of dividend
whether with or without a further right to participate in profits) carrying not
less than twenty per cent of the voting power are, at any time during the
previous year, owned beneficially by such person or partly by such person and
partly by one or more of the other persons referred to in sub-section (3);
(ii) in the case of any other concern, if
such person is entitled, or such person and one or more of the other persons
referred to in sub-section (3) are entitled in the aggregate, at any time
during the previous year, to not less than twenty per cent of the profits of
such concern.
Special provision relating to incomes of political parties.
13A. Any income of a
political party which is chargeable under the head "Income from house
property" or "Income from other sources" or "Capital
gains" or any income by way of voluntary contributions received by a
political party from any person shall not be included in the total income of
the previous year of such political party :
Provided that—
(a) such political party keeps and maintains
such books of account and other documents as would enable the Assessing Officer
to properly deduce its income therefrom;
(b) in respect of each such voluntary
contribution other than contribution by way of electoral bond in excess of
twenty thousand rupees, such political party keeps and maintains a record of
such contribution and the name and address of the person who has made such
contribution;
(c) the accounts of such political party are
audited by an accountant as defined in the Explanation below
sub-section (2) of section 288; and
(d) no donation exceeding two
thousand rupees is received by such political party otherwise than by an
account payee cheque drawn on a bank or an account payee bank draft or use of
electronic clearing system through a bank account or through such other
electronic mode as may be prescribed98 or through electoral bond.
Explanation.—For the purposes
of this proviso, "electoral bond" means a bond referred to in
the Explanation to sub-section (3) of section 31 of the
Reserve Bank of India Act, 1934 (2 of 1934):
Provided further that if
the treasurer of such political party or any other person authorised by that
political party in this behalf fails to submit a report under sub-section (3)
of section 29C of the Representation of the People Act, 1951 (43 of 1951) for a
financial year, no exemption under this section shall be available for that
political party for such financial year:
Provided also that such
political party furnishes a return of income for the previous year in
accordance with the provisions of sub-section (4B) of section 139 on
or before the due date under that section.
Explanation.—For the purposes
of this section, "political party" means a political party registered
under section 29A of the Representation of the People Act, 1951 (43 of 1951).
Special provisions relating to voluntary contributions received by
electoral trust.
13B. Any voluntary
contributions received by an electoral trust shall not be included in the total
income of the previous year of such electoral trust, if—
(a) such electoral trust distributes to any
political party, registered under section 29A of the Representation of the
People Act, 1951 (43 of 1951), during the said previous year, ninety-five per
cent of the aggregate donations received by it during the said previous year
along with the surplus, if any, brought forward from any earlier previous year;
and
(b) such electoral trust functions in accordance with the rules99 made by the Central Government.
