In force · As amended up to 2026-08
2. Meat and Poultry Product industries manufacturing or producing—
- (i) Meat Products (buffalo, sheep, goat and pork);
- (ii) Poultry production;
- (iii) Egg Powder Plant.
2. Definitions. —In this Part, unless the context otherwise requires,—
(a) "employer" means any person who maintains a provident fund for the benefit of his or its employees, being—
(i) a Hindu undivided family, company, firm or other association of persons, or
(ii) an individual engaged in a business or profession the profits and gains whereof are assessable to income-tax under the head "Profits and gains of business or profession";
(b) "employee" means an employee participating in a provident fund, but does not include a personal or domestic servant;
(c) "contribution" means any sum credited by or on behalf of any employee out of his salary, or by an employer out of his own moneys, to the individual account of an employee, but does not include any sum credited as interest;
(d) "balance to the credit of an employee" means the total amount to the credit of his individual account in a provident fund at any time;
(e) "annual accretion", in relation to the balance to the credit of an employee, means the increase to such balance in any year, arising from contributions and interest;
(f) "accumulated balance due to an employee" means the balance to his credit, or such portion thereof as may be claimable by him under the regulations of the fund, on the day he ceases to be an employee of the employer maintaining the fund;
2. Explanation renumbered as Explanation 1 thereof by Act 32 of 2003, s. 5 (w.e.f. 1-4-2004).
3. The proviso omitted by Act 5 of 1964, s. 5 (w.e.f. 1-4-1964).
4. Ins. by Act 11 of 1983, s. 4 (w.e.f. 1-4-1962).
5. Ins. by Act 67 of 1984, s. 3 (w.e.f. 1-4-1982).
6. Ins. by Act 28 of 2016, s. 5 (w.e.f. 1-4-2016).
7. Ins. by Act 32 of 2003, s. 5 (w.e.f. 1-4-2004).
1 [(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:
2. The third and fourth provisos omitted by s. 6, ibid . (w.e.f. 1-4-1989).
3. Subs. by s. 6, ibid., for "In this clause" (w.e.f. 1-4-1989).
4. Ins. by Act 15 of 1965, s. 3 (w.e.f. 1-4-1962).
5. Subs. by Act 20 of 1974, s. 3 for the certain words (w.e.f. 1-4-1962).
6. The proviso omitted by Act 4 of 1988, s. 6 (w.e.f. 1-4-1989).
7. Ins. by Act 33 of 1996, s. 4 (w.e.f. 1-4-1997).
8. Ins. by Act 14 of 1982, s. 4 (w.e.f. 1-4-1978).
9. Subs. by Act 67 of 1984, s. 4 for "on superannuation" (w.e.f. 1-4-1978).
10. Subs. by Act 27 of 1999, s. 6 for "eight months" (w.e.f. 1-4-1989).
the period of ten months immediately preceding his retirement[1] [whether on superannuation] or otherwise,[2] [subject to such limit 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 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 subclause[3] [shall not exceed the limit so specified]:
Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a
1. Ins. by Act 54 of 2003 s. 2, (w.e.f. 1-4-1962).
2. Ins. by Act 26 of 1974, s. 2 (w.e.f. 1-4-1973).
3. Ins. by Act 11 of 1983, s. 5 (w.e.f. 1-4-1983).
4. Ins. by Act 49 of 1991, s. 5 (w.e.f. 1-4-1991).
5. Ins. by Act 18 of 1992, s. 4 (w.e.f. 1-4-1992).
6. Subs. by Act 14 of 2001, s. 5, for "any moneys borrowed by it from sources outside India" (w.e.f. 1-4-2002).
7. Ins. by Act 66 of 1976, s. 5 (w.e.f. 1-6-1976).
8. Subs. by, Act 14 of 2001 s. 5, for "a loan agreement approved by the Central Government" (w.e.f. 1-4-2001).
9. Ins. by Act 49 of 1991, s. 5 (w.e.f. 1-4-1991).
10. The words figures and letters "before the 1st day of April, 2005" omitted by Act 18 of 2005, s. 4 (w.e.f. 1-4-2006).
11. Ins. by Act 38 of 1993, s. 3 (w.e.f. 1-4-1993).
12. Subs. by Act 22 of 2007, s. 6, for the Explanation (w.e.f. 1-4-2007).
2. Sub-clause (iiia) omitted by Act 10 of 2000, s. 11 (w.e.f 1-4-2001).
3. Ins. by Act 99 of 1976, s. 40 (w.e.f. 1-8-1976).
4. Subs. by Act 33 of 2009, s. 9, for "annuity; and" (w.e.f. 1-4-2010).
5. Subs. by s. 9, ibid ., for sub-clause (vi) (w.e.f. 1-4-2010).
6. Subs. by Act 28 of 2016, s. 9, for "one lakh and fifty thousand rupees" (w.e.f. 1-4-2017).
1[Provided that nothing in this clause shall apply to,—
(i) the value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer;
2[(ii) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family—
(a) in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees;
(b) in respect of the prescribed diseases or ailments, in any hospital approved by the[3] [Principal Chief Commissioner or Chief Commissioner] having regard to the prescribed guidelines:
Provided that, in a case falling in sub-clause (b), the employee shall attach with his return of income a certificate from the hospital specifying the disease or ailment for which medical treatment was required and the receipt for the amount paid to the hospital;]
2. Restored by Act 3 of 1989, s. 95 earlier omitted by Act 4 of 1988, s.10 (w.e.f. 1-4-1989). Original s. 35CCB was inserted by Act 14 of 1982, s. 9 (w.e.f. 1-6-1982).
3. Subs. by Act 12 of 1990, s. 12, for sub-section (1) (w.e.f. 1-4-1991).
4. Subs. by Act 20 of 2002, s. 17, for "Where an assessee incurs any expenditure" (w.e.f. 1-4-2003).
5. Ins. by Act 12 of 1990, s. 12 (w.e.f. 1-4-1991).
6. Ins. by Act 23 of 2012, s. 10 (w.e.f. 1-4-2013).
1[Provided that for the assessment year beginning on or after the 1st day of April, 2021, the provisions of this sub-section shall have effect as if for the words "a sum equal to one and one-half times of", the words "a sum equal to" had been substituted.]
(2) Where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provisions of this Act for the same or any other assessment year.]
2 [35CCD. Expenditure on skill development project. — (1) Where a company incurs any expenditure (not being expenditure in the nature of cost of any land or building) on any skill development project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then, there shall be allowed a deduction of a sum equal to one and one-half times of such expenditure.]
2. Explanation relettered as Explanation 1 thereof by s. 48, ibid. (w.e.f. 1-6-1999)
3. Ins. by s. 48, ibid . (w.e.f. 1-6-1999).
4. Ins. by Act 21 of 1998, s.33 (w.e.f. 1-4-1999).
Provided that the certificate specified in clause (b) shall be duly certified by the auditor auditing the accounts of the exporting assessee under the provisions of this Act or under any other law.]
(5) Where a deduction under this section is claimed and allowed in respect of profits of the business referred to in sub-section (1) for any assessment year, no deduction shall be allowed in relation to such profits under any other provision of this Act for the same or any other assessment year.
Explanation .—For the purposes of this section,—
(a) "convertible foreign exchange" shall have the meaning assigned to it in clause (a) of the Explanation to section 80HHC;
1[(b) "computer software" means,—
(i) any computer programme recorded on any disc, tape, perforated media or other information storage device; or
(ii) anycustomised 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 a place outside India by any means;]
2. The existing Explanation renumbered as Explanation 1 by s. 40, ibid (w.e.f. 1-4-1991).
3. Ins. by s. 40, ibid . (w.e.f. 1-4-1991).
4. Subs. by s. 40, ibid ., for "purposes of the proviso" (w.e.f. 1-4-1991).
5. Ins. by Act 32 of 1994, s. 32 (w.e.f. 1-4-1995).
6. Ins. by Act 49 of 1991, s. 41 (w.e.f. 1-4-1992).
(iii) the amount of income-tax with which the Offshore Fund would have been chargeable had its total income been reduced by the amount of income referred to in clause (a) and clause (b).
(2) Where the gross total income of the Offshore Fund,—
(a) consists only of income from units or income by way of long-term capital gains arising from the transfer of units, or both, no deduction shall be allowed to the assessee under sections 28 to 44C 1* or clause (i) or clause (iii) of section 57 or under Chapter VI-A 2[and nothing contained in the provisions of the second proviso to section 48 shall apply to income referred to in clause (b) of sub-section (1)];
(b) includes any income referred to in clause (a), the gross total income shall be reduced by the amount of such income and the deduction under Chapter VI-A shall be allowed as if the gross total income as so reduced were the gross total income of the assessee.
Explanation .—For the purposes of this section,—
2. Sub-clause (iv) omitted by s. 46, ibid (w.e.f. 1-4-2002).
3. Subs. by Act 32 of 2003, s. 51, for "dividends" (w.e.f. 1-4-2004).
1 [115ACA. Tax on income from Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer. —[2] [(1) Where the total income of an assessee, being an individual, who is a resident and an employee of an Indian company engaged in specified knowledge based industry or service, or an employee of its subsidiary engaged in specified knowledge based industry or service (hereafter in this section referred to as the resident employee), includes—
(a)[3] [income by way of dividends, other than dividends referred to in section 115-O], on Global Depository Receipts of an Indian company engaged in specified knowledge based industry or service, issued in accordance with such Employees' Stock Option Scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf and purchased by him in foreign currency; or
(b) income by way of long-term capital gains arising from the transfer of Global Depository Receipts referred to in clause (a),
the income-tax payable shall be the aggregate of—
2. The Explanation numbered as Explanation 1 by Act 18 of 2008, s. 23 (w.e.f. 1-4-2001).
3. Subs. by Act 7 of 2017, s. 47, for "net profit" (w.e.f. 1-4-2017).
4. Ins. by Act 20 of 2002, s. 52 (w.e.f. 1-4-2003).
5. Subs. by Act 21 of 2006, s. 24, for "section 10 (other than the provisions contained in clause (23G) thereof) or section 10A or section 10B or section 11 or section 12 apply," (w.e.f. 1-4-2007).
6. The words, figures and letters "section 10A or section 10B or" omitted by Act 22 of 2007, s. 34 (w.e.f. 1-4-2008).
7. Ins. by Act 20 of 2015, s. 30 (w.e.f. 1-4-2016).
8. Ins. by Act 28 of 2016, s. 55 (w.e.f. 1-4-2017).
9. Ins. by Act 21 of 2006, s. 24 (w.e.f. 1-4-2007).
1[(h) the amount of deferred tax and the provision therefor,
2[(i) the amount or amounts set aside as provision for diminution in the value of any asset,
3[(j) the amount standing in revaluation reserve relating to revalued asset on the retirement or disposal of such asset,
4[(k) the amount of gain on transfer of units referred to in clause (xvii) of section 47 computed by taking into account the cost of the shares exchanged with units referred to in the said clause or the carrying amount of the shares at the time of exchange where such shares are carried at a value other than the cost through[5] [statement of profit and loss], as the case may be;]
2. The word "quarterly" omitted by Act 33 of 2009, s. 53 (w.e.f. 1-10-2009).
3. Ins. by Act 21 of 1998, s. 41 (w.e.f. 1-8-1998).
4. Ins. by Act 18 of 2005, s. 41 (w.e.f. 1-4-2006).
5. The words "and issued in the form of a laminated card" omitted by Act 13 of 2018, s. 44 (w.e.f. 1-4-2018).
1[ 139AA.Quoting of Aadhaar number .—(1) Every person who is eligible to obtain Aadhaar number shall, on or after the 1st day of July, 2017, quote Aadhaar number—
(i) in the application form for allotment of permanent account number;
(ii) in the return of income:
Provided that where the person does not possess the Aadhaar Number, the Enrolment ID of Aadhaar application form issued to him at the time of enrolment shall be quoted in the application for permanent account number or, as the case may be, in the return of income furnished by him.
(2) Every person who has been allotted permanent account number as on the 1st day of July, 2017, and who is eligible to obtain Aadhaar number, shall intimate his Aadhaar number to such authority in such form and manner as may be prescribed, on or before a date to be notified by the Central Government in the Official Gazette:
Provided that in case of failure to intimate the Aadhaar number, the permanent account number allotted to the person shall be deemed to be invalid and the other provisions of this Act shall apply, as if the person had not applied for allotment of permanent account number.
2. The Explanation renumbered as Explanation 1 thereof by Act 23 of 2012, s. 77 (w.r.e.f. 1-4-1962).
3. Ins. by s. 77, ibid. (w.r.e.f. 1-4-1962).
4. Subs. by Act 32 of 2003, s. 80, for "other than interest on securities and salary" (w.e.f. 1-6-2003). Earlier the words "other than interest including interest on securities" substituted by Act 66 of 1976, s. 22, for "other than interest on securities" (w.e.f. 1-6-1976) and the word "dividend" was omitted by Act 49 of 1991, s. 56 (w.e.f. 1-10-1991).
5. Subs. by Act 4 of 1988, s. 2, for "Income-tax Officer" (w.e.f. 1-4-1988).
6. Subs. by Act 26 of 1988, s. 39, for "in the prescribed manner (w.r.e.f. 1-3-1988). Earlier the quoted words were substituted by Act 11 of 1987, s. 49 for "by general or special order" (w.e.f. 1-6-1987).
7. The proviso omitted by Act 49 of 1991, s. 56 (w.e.f. 1-10-1991). Earlier the proviso was inserted by Act 11 of 1987, s. 49 (w.e.f. 1-6-1987).
8. Ins. by Act 19 of 1970, s. 24 (w.e.f. 1-4-1970).
(5) The Board may, having regard to the convenience of assessees and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an application may be made for the grant of a certificate under sub-section (3) and the conditions subject to which such certificate may be granted and providing for all other matters connected therewith.]
2. The certain words omitted by Act 14 of 2001, s. 83 (w.e.f. 1-6-2001).
3. Ins. by Act 18 of 2008, s. 49 (w.e.f. 1-4-2008).
4. Subs. by Act 16 of 1981, s. 18, for sub-section (2) (w.e.f. 1-4-1981).
5. Subs. by Act 21 of 1998, s. 51, for "Central Legal Service" (w.e.f. 1-8-1998).
6. Subs. by s. 51, ibid ., for "Grade I" (w.e.f. 1-8-1998).
(ii) in computing the period during which a person has been an advocate, there shall be included any period during which the person has held judicial office or the office of a member of a Tribunal or any post, under the Union or a State, requiring special knowledge of law after he became an advocate.
(2A) An accountant member shall be a person who has for at least ten years been in the practice of accountancy as a chartered accountant under the Chartered Accountants Act, 1949 (38 of 1949), or as a registered accountant under any law formerly in force or partly as a registered accountant and partly as a chartered accountant, or who has been a member of the Indian Income-tax Service, Group A and has held the post of[1] [Additional Commissioner of Income-tax] or any equivalent or higher post for at least three years.]
2[(3) The Central Government shall appoint—
(a) a person who is a sitting or retired Judge of a High Court and who has completed not less than seven years of service as a Judge in a High Court; or
(b)[3] * one of the Vice-Presidents of the Appellate Tribunal,
2. Clasue (ee) renumbered as clause (e) thereof by Act 17 of 2013, s. 59 (w.e.f. 1-4-2016). Earlier clause (e) omitted by Act 18 of 2005, s. 64 (w.e.f. 1-4-2006) which was amended by Act 20 of 1967, s. 33 and the Third Schedule (w.e.f. 1-41968).
3. Ins. by s. 59, ibid. (w.e.f. 1-4-2016).
4. Ins. by Act 22 of 2007, s. 79 (w.r.e.f. 1-6-2006).
5. Ins. by Act 18 of 2008, s. 58 (w.e.f. 1-4-2008).
6. Ins. by Act 20 of 2015, s. 80 (w.e.f. 1-6-2015).
(j) the manner in which any document required to be filed under this Act may be verified;
(k) the procedure to be followed on applications for refunds;
1[(kk) the procedure to be followed in calculating interest payable by assessees or interest payable by Government to assessees under any provision of this Act, including the rounding off of the period for which such interest is to be calculated in cases where such period includes a fraction of a month, and specifying the circumstances in which and the extent to which petty amounts of interest payable by assessees may be ignored;]
(l) the regulation of any matter for which provision is made in section 230;
(m) the form and manner in which any appeal or cross-objection may be filed under this Act, the fee payable in respect thereof and the manner in which intimation of any such order as is referred to in clause (c) of sub-section (2) of section 249 may be served;
(g) "regulations of a fund" means the special body of regulations governing the constitution and administration of a particular provident fund; and
(h) "salary" includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.
2. The first proviso omitted by Act 22 of 1995, s. 7 (w.e.f. 1-4-1996).
3. Subs. by Act 49 of 1991, s. 11, for the second proviso (w.e.f. 1-4-1992).
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.
2[ Explanation 2A.--For the removal of doubts, it is hereby clarified 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 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 prescribed; or
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[3] [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.
4* * * *
*
Explanation .—For the purposes of sub-clause (ii),—
5* 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;
6*
* *
* *
7[(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,[8] [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
1[(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,[2] [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[3] [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[4] [items (f), (fa) and (g)], the expression "foreign currency" shall have the meaning assigned to it in the[[5]] [Foreign Exchange Management Act, 1999 (42 of 1999)];]
shall have the meaning assigned to it in the[[5]] [Foreign Exchange Management Act, 1999
6[(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;]
(iii) any portion of the premium paid by an employer in relation to an employee, to effect or to keep in force an insurance on the health of such employee under any scheme approved by the Central Government[4] [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),] for the purposes of clause ( ib sub-section (1) of section 36;
Development Authority Act, 1999 (41 of 1999),] for the purposes of clause (ib) of
(iv) any sum paid by the employer in respect of any premium paid by the employee to effect or to keep in force an insurance on his health or the health of any member of his family under any scheme approved by the Central Government[4] [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),] for the purposes of section 80D;
5* * * * *
(vi) any expenditure incurred by the employer on—
(1) medical treatment of the employee, or any member of the family of such employee, outside India;
(2)[6] [travel and stay] abroad of the employee or any member of the family of such employee for medical treatment;
(3) travel and stay abroad of one attendant who accompanies the patient in connection with such treatment,
1. Ins. by Act 49 of 1991, s. 9 (w.e.f. 1-4-1991).
3[Provided that for the assessment year beginning on or after the 1st day of April, 2021, the provisions of this sub-section shall have effect, as if for the words "an amount equal to one and one-half times of", the words "a sum equal to" had been substituted.]
(2) Where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provisions of this Act for the same or any other assessment year.]
4[35D. Amortisation of certain preliminary expenses. — (1) Where an assessee, being an Indian company or a person (other than a company) who is resident in India, incurs, after the 31st day of March, 1970, any expenditure specified in sub-section (2),—
- (i) before the commencement of his business, or
(ii) after the commencement of his business, in connection with the extension of his
5[undertaking] or in connection with his setting up a new 6[unit],
the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount equal to one-tenth of such expenditure for each of the ten successive previous years beginning with the previous year in which the business commences or, as the case may be, the previous year in which the extension of the[5] [undertaking] is completed or the new[6] [unit] commences production or operation:
(c) "export turnover" means the consideration in respect of computer software received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section (2), but does not include freight, telecommunication charges or insurance attributable to the delivery of the computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India;
1[(ca) "exporting company" means a company referred to in sub-section (1) making actual export of computer software;]
(d) "profits of the business" means the profits of the business as computed under the head "Profits and gains of business or profession" as reduced by—
(1) ninety per cent of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and
(2) the profits of any branch, office, warehouse or any other establishment of the assessee situate outside India;]
(e) "total turnover" shall not include—
(i) any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28;
(ii) any freight, telecommunication charges or insurance attributable to the delivery of the computer software outside India; and
(iii) expenses, if any, incurred in foreign exchange in providing the technical services outside India;]
(a) "overseas financial organisation" means any fund, institution, association or body, whether incorporated or not, established under the laws of a country outside India, which has entered into an arrangement for investment in India with any public sector bank or public financial institution or a mutual fund specified under clause (23D) of section 10 and such arrangement is approved by the 3[Securities and Exchange Board of India, established under the Securities and Exchange Board of India Act, 1992 (15 of 1992),] for this purpose;
(b) "unit" means unit of a mutual fund specified under clause (23D) of section 10 or of the Unit Trust of India;
(c) "foreign currency" shall have the meaning as in[4] [the Foreign Exchange Management Act, 1999 (42 of 1999)];
(d) "public sector bank" shall have the meaning assigned to it in clause (23D) of section 10;
(e) "public financial institution" shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956);
(f) "Unit Trust of India" means the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963)].
5 [115AC. Tax on income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer. —(1) Where the total income of an assessee, being a non- resident, includes—
(i) the amount of income-tax calculated on the[3] [income by way of dividends, other than dividends referred to in section 115-O], in respect of Global Depository Receipts referred to in clause (a), if any, included in the total income, at the rate of ten per cent;
dividends referred to in section 115-O], in respect of Global Depository Receipts referred to in
(ii) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause (b), if any, at the rate of ten per cent; and
(iii) the amount of income-tax with which the resident employee would have been chargeable had his total income been reduced by the amount of income referred to in clauses (a) and (b).
Explanation.— For the purposes of this sub-section,—
- (a) "specified knowledge based industry or service" means—
- (i) information technology software;
- (ii) information technology service;
- (iii) entertainment service;
(iv) pharmaceutical industry;
- (v) bio-technology industry; and
(vi) any other industry or service, as may be specified by the Central Government, by notification in the Official Gazette;
(b) "subsidiary" shall have the meaning assigned to it in section 4 of the Companies Act, 1956 (1 of 1956) and includes subsidiary incorporated outside India.]
(2) Where the gross total income of the resident employee—
if any amount referred to in clauses (a) to (i) is debited to the[5] [statement of profit and loss] or if any amount referred to in clause (j) is not credited to the[5] [statement of profit and loss], and as reduced by,—]]]
6[(i) the amount withdrawn from any reserve or provision (excluding a reserve created before the 1st day of April, 1997 otherwise than by way of a debit to the[5] [statement of profit and loss]), if any such amount is credited to the[5] [statement of profit and loss]:
Provided that where this section is applicable to an assessee in any previous year, the amount withdrawn from reserves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation or Explanation below the second proviso to section 115JA, as the case may be; or]
(ii) the amount of income to which any of the provisions of[7] [section 10 (other than the provisions contained in clause (38) thereof)] or[8] * section 11 or section 12 apply, if any such amount is credited to the[5] [statement of profit and loss]; or
9[(iia) the amount of depreciation debited to the 5[statement of profit and loss] (excluding the depreciation on account of revaluation of assets); or
(3) The provisions of this section shall not apply to such person or class or classes of persons or any State or part of any State, as may be notified by the Central Government in this behalf, in the Official Gazette.
Explanation .—For the purposes of this section, the expressions—
(i) "Aadhaar number", "Enrolment" and "resident" shall have the same meanings respectively assigned to them in clauses (a), (m) and (v) of section 2 of the Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 2016;
(ii) "Enrolment ID" means a 28 digit Enrolment Identification Number issued to a resident at the time of enrolment.]
1[(6) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, shall furnish the information relating to payment of such sum, in such form and manner, as may be prescribed.]
2[(7) Notwithstanding anything contained in sub-section (1) and sub-section (2), the Board may, by notification in the Official Gazette, specify a class of persons or cases, where the person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, shall make an application to the Assessing Officer to determine, by general or special order, the appropriate proportion of sum chargeable, and upon such determination, tax shall be deducted under sub-section (1) on that proportion of the sum which is so chargeable.]
to be the President thereof.]
4[(4) The Central Government may appoint one or more members of the Appellate Tribunal to be the Vice-President or, as the case may be, Vice-Presidents thereof.
5* * * * *
(5)[6] [The[7] * Vice-President] shall exercise such of the powers and perform such of the functions of the President as may be delegated to him by the President by a general or special order in writing.]
2 [(mm) the circumstances in which, the conditions subject to which and the manner in which, the 3[* or the Commissioner (Appeals)] may permit an appellant to produce evidence which he did not produce or which he was not allowed to produce before the[4] [Assessing Officer];]
5 4 [(mma) the form in which the statement under section 285B shall be delivered to the [Assessing Officer];]
(n) the maintenance of a register of persons other than legal practitioners or accountants as defined in sub-section (2) of section 288 practising before income-tax authorities and for the constitution of and the procedure to be followed by the authority referred to in sub-section (5) of that section;
(o) the issue of certificate verifying the payment of tax by assessees;
(p) any other matter which by this Act is to be, or may be, prescribed.
(3) In cases coming under clause (b) of sub-section (2), where the income liable to tax cannot be definitely ascertained, or can be ascertained only with an amount of trouble and expense to the assessee which in the opinion of the Board is unreasonable, the rules made under this section may—
(a) prescribe methods by which an estimate of such income may be made; and
(b) in cases coming under sub-clause (i) of clause (b) of sub-section (2) specify the proportion of the income which shall be deemed to be income liable to tax,
and an assessment based on such estimate or proportion shall be deemed to be duly made in accordance with the provisions of this Act.
6[(4) The power to make rules conferred by this section shall include the power to give retrospective effect, from a date not earlier than the date of commencement of this Act, to the rules or any of them and, unless the contrary is permitted (whether expressly or by necessary implication), no retrospective effect shall be given to any rule so as to prejudicially affect the interests of assessees.]
1. Ins. by Act 42 of 1970, s. 55 (w.e.f. 1-4-1971).
2. Ins. by Act 16 of 1972, s. 41 (w.e.f. 1-4-1972).
3. The words "Deputy Commissioner (Appeals) or the" omitted by Act 21 of 1998, s. 65 (w.e.f. 1-10-1998). Earlier the words "Deputy Commissioner (Appeals)" were substituted by Act 4 of 1988, s. 2, for "Appellate Assistant Commissioner" (w.e.f. 1-4-1988) and the words "or the Commissioner (Appeals)" were inserted by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978).
4. Subs. by Act 4 of 1988, s. 2, for "Income-tax Officer" (w.e.f. 1-4-1988).
5. Ins. by Act 41 of 1975, s. 79 (w.e.f. 1-4-1976).
6. Ins. by Act 26 of 1974, s. 14 (w.e.f. 18-8-1974).
2. I ns. by Act 7 of 2017, s. 22 (w.e.f 1-4-2018).
3. Ins. by Act 12 of 1990, s. 15 (w.e.f. 1-4-1991).
(b) systematic and continuous soliciting of business activities or engaging in interaction with such number of users as may be prescribed, in India through digital means:
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;
(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.]
1. Subs. by Act 13 of 2018, s. 4, for clause (a) (w.e.f. 1-4-2019).
2. Ins. by s. 4, ibid. (w.e.f. 1-4-2019).
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.]
1[ 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".
9[(ii) such amount, not being less than fifty thousand rupees, as the Central Government may, by notification 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.]
1. Subs. by Act 67 of 1984, s. 4 for "on superannuation"(w.e.f. 1-4-1978).
2. Subs. by Act 4 of 1988, s. 6, for "thirty thousand rupees, whichever is less" (w.e.f. 1-7-1986).
3. Subs. by s. 6, ibid ., for "shall not exceed thirty thousand rupees" (w.e.f. 1-7-1986).
[7] [(i) by Government on deposits made by an employee of the Central Government or a State Government[8] [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.]
9[10[ 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
11 [(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
12[(ba) the business of providing telecommunication services; or]
(c) mining; or
- (d) the construction of ships; or
13[(da) the business of ship-breaking; or]
14 [(e) the operation of ships or aircrafts or construction or operation of rail systems.]]
15[ 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.]
2. Subs. by Act 32 of 1994, s. 10, for sub-clause (ii) (w.r.e.f. 1-4-1993). Earlier substituted by Act 18 of 1992,
s. 8 (w.e.f. 1-4-1993).
3. Subs. by Act 25 of 2014, s. 4, for "Chief Commissioner" (w.e.f. 1-6-2013).
4. Ins. by Act 21 of 2006, s. 8 (w.e.f. 1-4-2007).
5. Clause (v) omitted by Act 13 of 2018, s. 8 (w.e.f. 1-4-2019).
6. Subs. by Act 38 of 1993, s. 8, for "travel or stay" (w.e.f. 1-4-1993).
1[subject to the condition that—
(A) the expenditure on medical treatment and stay abroad shall be excluded from perquisite only to the extent permitted by the Reserve Bank of India; and
(B) the expenditure on travel shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before including therein the said expenditure, does not exceed two lakh rupees;]
(vii) any sum paid by the employer in respect of any expenditure actually incurred by the employee for any of the purposes specified in clause (vi) subject to the conditions specified in or under that clause:
2[Provided further that for the assessment year beginning on the 1st day of April, 2002, nothing contained in this clause shall apply to any employee whose income under the head "Salaries" (whether due from, or paid or allowed by, one or more employers) exclusive of the value of all perquisites not provided for by way of monetary payment, does not exceed one lakh rupees.]
Explanation. —For the purposes of clause (2),—
7[Provided that where an assessee incurs after the 31st day of March, 1998, any expenditure specified in sub-section (2), the provisions of this sub-section shall have effect as if for the words "an amount equal to one-tenth of such expenditure for each of the ten successive previous years", the words "an amount equal to one-fifth of such expenditure for each of the five successive previous years" had been substituted.]
(2) The expenditure referred to in sub-section (1) shall be the expenditure specified in any one or more of the following clauses, namely :—
(a) expenditure in connection with—
- (i) preparation of feasibility report;
- (ii) preparation of project report;
1. Ins. by Act 28 of 2016, s. 19 (w.e.f. 1-4-2017).
2. Ins. by Act 23 of 2012, s. 10 (w.e.f. 1-4-2013).
3. Ins. by Act 28 of 2016, s. 20 (w.e.f. 1-4-2017).
4. Ins. by Act 42 of 1970, s. 8 (w.e.f. 1-4-1971).
5. Subs. by Act 18 of 2008, s. 8, for "industrial undertaking" (w.e.f. 1-4-2009).
6. Subs. by s. 8, ibid ., for "industrial unit" (w.e.f. 1-4-2009).
7. Ins. by Act 21 of 1998, s. 14 (w.e.f. 1-4-1999).
(iii) conducting market survey or any other survey necessary for the business of the assessee;
(iv) engineering services relating to the business of the assessee:
2 [(ea) "supporting software developer" means an Indian company or a person (other than a company) resident in India, developing and selling computer software to an exporting company for the purposes of export.]
1. Subs. by Act 10 of 2000, s. 36, for sub-clause (b) (w.e.f. 1-4-2001).
2. Ins. by Act 21 of 1998, s. 33 (w.e.f. 1-4-1999).
1 [80HHF. Deduction in respect of profits and gains from export or transfer of film software, etc. —(1) Where an assessee, being an Indian company[2] [or a person (other than a company) resident in India], is engaged in the business of export or transfer by any means out of India, of any film software, television software, music software, television news software, including telecast rights (hereafter in this section referred to as the software or software rights), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee,[3] [a deduction to the extent of profits, referred to in sub-section (1A),] derived by the assessee from such business.
4[(1A) For the purposes of sub-section (1), the extent of deduction of profits shall be an amount equal to—
(i) eighty per cent. of such profits for an assessment year beginning on the 1st day of April, 2001;
5[(ii) seventy per cent. thereof for an assessment year beginning on the 1st day of April, 2002;
(a) income by way of interest on bonds of an Indian company issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, or on bonds of a public sector company sold by the Government, and purchased by him in foreign currency; or
(b) income by way of dividends[6] [, other than dividends referred to in section 115-O,] on Global Depository Receipts—
(i) issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, against the initial issue of shares of an Indian company and purchased by him in foreign currency through an approved intermediary; or
(ii) issued against the shares of a public sector company sold by the Government and purchased by him in foreign currency through an approved intermediary; or
1. The words, brackets and figures "or sub-section (2) of section 48" omitted by Act 18 of 1992, s. 55 (w.e.f. 1-4-1993).
2. Ins. by s. 55, ibid . (w.e.f. 1-4-1993).
3. Subs. by Act 14 of 2001, s. 51, for "Central Government" (w.e.f. 1-6-2001).
4. Subs. by Act 17 of 2013, s. 4, for "the Foreign Exchange Regulation Act, 1973 (46 of 1973)" (w.e.f. 1-4-2013).
5. Subs. by Act 14 of 2001, s. 52, for section 115AC (w.e.f. 1-4-2002).
(a) consists only of[3] [income by way of dividends, other than dividends referred to in
section 115-O], in respect of Global Depository Receipts referred to in clause (a) of sub-section (1), no deduction shall be allowed to him under any other provision of this Act;
(b) includes any income referred to in clause (a) or clause (b) of sub-section (1), the gross total income shall be reduced by the amount of such income and the deduction under any provision of this Act shall be allowed as if the gross total income as so reduced were the gross total income of the assessee.
(3) Nothing contained in the first and second provisos to section 48 shall apply for the computation of long-term capital gains arising out of the transfer of long-term capital asset, being Global Depository Receipts referred to in clause (b) of sub-section (1).
1. Ins. by Act 27 of 1999, s. 59 (w.e.f. 1-4-2000).
2. Subs. by Act 14 of 2001, s. 53, for sub-section (1) (w.e.f. 1-4-2001).
3. Subs. by Act 32 of 2003, s. 52, for "income by way of dividends" (w.e.f. 1-4-2004).
Explanation.— For the purposes of this section,—
(a) "Global Depository Receipts" means any instrument in the form of a depository receipt or certificate (by whatever name called) created by the Overseas Depository Bank outside India and[1] [issued to investors against the issue of,—
(iib) the amount withdrawn from revaluation reserve and credited to the[5] [statement of profit and loss], to the extent it does not exceed the amount of depreciation on account of revaluation of assets referred to in clause (iia); or]
10[(iic) the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86, if any, such amount is credited to the[5] [statement of profit and loss]; or
(iid) the amount of income accruing or arising to an assessee, being a foreign company, from,—
(A) the capital gains arising on transactions in securities; or
(B) the interest, royalty or fees for technical services chargeable to tax at the rate or rates specified in Chapter XII,
1. Subs. by Act 18 of 2008, s. 23, for the portion beginning with the words "if any amount referred" and ending with the words "as reduced by—" (w.e.f. 1-4-2001).
2. Subs. by Act 33 of 2009, s. 46, for "if any amount referred to in clauses (a) to (h) is debited to the profit and loss account, and as reduced by—" (1-4-2001)
3. Subs. by Act 23 of 2012, s. 48, for "if any amount referred to in clauses (a) to (i) is debited to the profit and loss account, and as reduced by, —" (w.e.f. 1-4-2013).
4. Ins. by Act 20 of 2015, s. 30 (w.e.f. 1-4-2016).
5. Subs. by Act 7 of 2017, s. 47, for "profit or loss account" (w.e.f. 1-4-2017).
1[2[ 296. Rules and certain notifications to be placed before Parliament. —The Central Government shall cause every rule made under this Act ,[3] [the rules of procedure framed by the Settlement Commission under sub-section (7) of section 245F, the Authority for Advance Rulings under section 245V and the Appellate Tribunal under sub-section (5) of section 255] and[4] [every notification issued before the 1st day of June, 2007 under sub-clause (iv) of clause ( 23C section 10][5] [and every notification issued under sub-section (1C) of section 139][6] [or third proviso to sub-section (1) of section 153A or second proviso to sub-section (1) of section 153C] to be laid as soon as may be after the rule is made or the notification is issued before each House of Parliament while it is in session, for a total period of thirty days, which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or notification or both Houses agree that the rule or notification should not be made or issued, that rule or notification shall thereafter have effect, only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification.]]
2. The Explanation omitted by Act 11 of 1987, s. 19 (w.e.f. 1-4-1988).
3. Subs. by s. 19, ibid., for sub-section (2) (w.e.f. 1-4-1988).
Explanation 5.—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:]
2[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:]
3[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, made under the Securities and Exchange Board of India Act, 1992.]
4[ Explanation 6.—For the purposes of this clause, it is hereby declared that—
16[ Explanation 2.—For the purposes of this clause, the expression "interest" includes hedging transaction charges on account of currency fluctuation;]
1. Ins. by Act 11 of 1983, s. 5 (w.e.f. 1-4-1983). 2. Subs. by Act 10 of 2000, s. 5, for "being a company approved by the Central Government for the purposes of clause (viii) of sub-section (1) of section 36" (w.e.f. 1-4-2000). 3. Subs. by Act 32 of 2003, s. 6, for "a loan agreement approved by the Central Government" (w.e.f. 1-4-2004). 4. Subs. by Act 49 of 1991, s. 5 for "items (f) and (g)" (w.e.f. 1-4-1991). 5. Subs. by Act 17 of 2013, s. 4, for "the Foreign Exchange Regulation Act, 1973 (46 of 1973)" (w.e.f. 1-4-2013). 6. Ins. by Act 11 of 1987, s. 4 (w.e.f. 1-4-1987). 7. Ins. by Act 13 of 1989, s. 4 (w.e.f. 1-4-1990). 8. Ins. by Act 12 of 1990, s. 5 (w.e.f. 1-4-1991). 9. Ins. by Act 49 of 1991, s. 5 (w.e.f. 1-4-1991). 10. Explanation renumbered as Explanation 1 thereof by the Act 27 of 1999, s. 6 (w.e.f. 1-4-2000). 11. Ins. by Act 21 of 1998, s. 5 (w.e.f. 1-4-1999). 12. Ins. by 26 of 1997, s. 3 (w.e.f. 1-4-1998). 13. Ins. by Act 54 of 2003, s. 2 (w.e.f. 1-4-1991). 14. Subs. by Act 33 of 1996, s. 4, for clause (e) (w.e.f. 1-4-1997). 15. Subs. by Act 24 of 2001, s. 5, for Explanation IA (w.e.f. 1-4-2002). 16. Ins. by Act 27 of 1999, s. 6 (w.e.f. 1-4-2000)
1 [(v) interest on—
(i) "hospital" includes a dispensary or a clinic[3] [or a nursing home];
(ii) "family", in relation to an individual, shall have the same meaning as in clause (5) of section 10; and
(iii) "gross total income" shall have the same meaning as in clause (5) of section 80B;] 4* * * * *
(3) "profits in lieu of salary" includes—
(i) the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto;
(ii) any payment [other than any payment referred to in clause ( 10 ][5] [, clause (10A)] 6[, clause (10B)], clause (11), 7[clause (12) 8[ , clause (13)] or clause (13A)] of section 10], due to or received by an assessee from an employer or a former employer or from a provident or other fund[9] *, to the extent to which it does not consist of contributions by the assessee or[10] [interest on such contributions or 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 sub-clause, the expression "Keyman insurance policy" shall have the meaning assigned to it in clause (10D) of section 10;]
11[(iii) any amount due to or received, whether in lump sum or otherwise, by any assessee from any person—
(A) before his joining any employment with that person; or
Provided that the work in connection with the preparation of the feasibility report or the project report or the conducting of market survey or of any other survey or the engineering services referred to in this clause is carried out by the assessee himself or by a concern which is for the time being approved in this behalf by the Board;
(b) legal charges for drafting any agreement between the assessee and any other person for any purpose relating to the setting up or conduct of the business of the assessee;
(c) where the assessee is a company, also expenditure—
(i) by way of legal charges for drafting the Memorandum and Articles of Association of the company;
(ii) on printing of the Memorandum and Articles of Association;
(iii) by way of fees for registering the company under the provisions of the Companies Act, 1956 (1 of 1956);
(iv) in connection with the issue, for public subscription, of shares in or debentures of the company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus;
(d) such other items of expenditure (not being expenditure eligible for any allowance or deduction under any other provision of this Act) as may be prescribed.
(3) Where the aggregate amount of the expenditure referred to in sub-section (2) exceeds an amount calculated at two and one-half per cent—
(a) of the cost of the project, or
(iii) fifty per cent. thereof for an assessment year beginning on the 1st day of April, 2003;
(iv) thirty per cent. thereof for an assessment year beginning on the 1st day of April, 2004,]
and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year.
(2) The deduction specified in sub-section (1) shall be allowed only if the consideration in respect of the software or software rights referred to in that sub-section is 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.
(3) For the purposes of sub-section (1), profits derived from the business referred to in that subsection shall be the amount which bears to the profits of the business, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee.
(4) 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 setion 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.
6. Subs. by Act 32 of 2003, s. 50, for "dividends" (w.e.f. 1-4-2004). Earlier the words, figures and letter "other than dividends referred to in section 115-O" omitted by Act 20 of 2002, s. 45 (w.e.f. 1-4-2003).
(iii)[1] [issued or re-issued] in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, against the existing shares of an Indian company purchased by him in foreign currency through an approved intermediary; or
2* * * * *
(c) income by way of long-term capital gains arising from the transfer of bonds referred to in clause (a) or, as the case may be, Global Depository Receipts referred to in clause (b),
the income-tax payable shall be the aggregate of—
(i) the amount of income-tax calculated on the income by way of interest or dividends[3] [, other than dividends referred to in section 115-O ] , as the case may be, in respect of bonds referred to in clause (a) or Global Depository Receipts referred to in clause (b), if any, included in the total income, at the rate of ten per cent;
(ii) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause (c), if any, at the rate of ten per cent; and
(iii) the amount of income-tax with which the non-resident would have been chargeable had his total income been reduced by the amount of income referred to in clauses (a), (b) and (c).
(i) ordinary shares of issuing company, being a company listed on a recognised stock exchange in India; or
(ii) foreign currency convertible bonds of issuing company];
(b) "information technology service" means any service which results from the use of any information technology software over a system of information technology products for realising value addition;
(c) "information technology software" means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form and capable of being manipulated or providing inter-activity to a user, by means of an automatic data processing machine falling under heading information technology products but does not include non-information technology products;
(d) "Overseas Depository Bank" means a bank authorised by the issuing company to issue Global Depository Receipts against issue of Foreign Currency Convertible Bonds or ordinary shares of the issuing company.]
2 [115AD. Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer. —(1) Where the total income of a Foreign Institutional Investor includes—
3 4 [(a) [income other than income by way of dividends referred to in section 115-O] received in respect of securities (other than units referred to in section 115AB); or]
6. Subs. by Act 20 of 2002, s. 52, for clause (i) and the proviso (w.e.f. 1-4-2001).
7. Subs. by Act 21 of 2006, s. 24, for "section 10 (other than the provisions contained in clause (23G) thereof)"
(w.e.f. 1-4-2007).
8. The words, figures and letters "section 10A or section 10B or" omitted by Act 22 of 2007, s. 34 (w.e.f. 1-4-2008).
9. Ins. by Act 21 of 2006, s. 24 (w.e.f. 1-4-2007).
10. Ins. by Act 20 of 2015, s. 30 (w.e.f. 1-4-2016).
if such income is credited to the[1] [statement of profit and loss] and the income-tax payable thereon in accordance with the provisions of this Act, other than the provisions of this Chapter, is at a rate less than the rate specified in sub-section (1); or
(iie) the amount representing,—
(A) notional gain on transfer of a capital asset, being share of a special purpose vehicle to a business trust in exchange of units allotted by that trust referred to in clause (xvii) of section 47;
or
(B) notional gain resulting from any change in carrying amount of said units; or
(C) gain on transfer of units referred to in clause (xvii) of section 47,
if any, credited to the[1] [statement of profit and loss]; or
notification issued before the 1st day of June, 2007 under sub-clause (iv) of clause (23C) of
2. Restored by Act 3 of 1989, s. 95 (w.e.f. 1-4-1989). Earlier the words "(1) Subject to the provisions of sub-sections (2) and (3), where" substituted by Act 4 of 1988, s. 64 (w.e.f. 1-4-1989).
3. Subs. by Act 44 of 1980, s. 27, for the portion beginning with the words "tax shall be charged—" and ending with the words "more beneficial to the revenue" (w.e.f. 1-4-1980).
4. Subs. by s. 27, ibid ., for clause (i) (w.e.f. 1-4-1980).
(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);]
2[(vi) interest on Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 3[ or deposit certificates issued under the Gold Monetisation Scheme, 2015] notified by the Central Government;
4[(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;]
- (B) after cessation of his employment with that person.]
1. Subs. by Act 38 of 1993, s. 8, for certain words (w.e.f. 1-4-1993)
2. Ins. by Act 20 of 2002, s. 11 (w.e.f,. 1-4-2002).
3. Ins. by Act 18 of 1992, s. 8 (w.e.f. 1-4-1993).
(b) where the assessee is an Indian company, at the option of the company, of the capital employed in the business of the company,
the excess shall be ignored for the purpose of computing the deduction allowable under sub-section (1):
1[Provided that where the aggregate amount of expenditure referred to in sub-section (2) is incurred after the 31st day of March, 1998, the provisions of this sub-section shall have effect as if for the words "two and one-half per cent", the words "five per cent" had been substituted.]
Explanation .—In this sub-section—
(a) "cost of the project" means—
(i) in a case referred to in clause (i) of sub-section (1), the actual cost of the fixed assets, being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings (including expenditure on development of land and buildings), which are shown in the books of the assessee as on the last day of the previous year in which the business of the assessee commences;
(ii) in a case referred to in clause (ii) of sub-section (1), the actual cost of the fixed assets, being land, buildings, leaseholds, plant, machinery, furniture, fittings and railway sidings (including expenditure on development of land and buildings), which are shown in the books of the assessee as on the last day of the previous year in which the extension of the[2] [undertaking] is
1. Ins. by Act 21 of 1998, s. 14 (w.e.f. 1-4-1999).
(5) Where a deduction under this section is claimed and allowed in respect of profits of the business referred to in sub-section (1) for any assessment year, no deduction shall be allowed in relation to such profits under any other provision of this Act for the same or any other assessment year.
(6) Notwithstanding anything contained in this section, no deduction shall be allowed in respect of the software or software rights referred to in sub-section (1), if such business is prohibited by any law for the time being in force.
Explanation. —For the purposes of this section,—
(a) "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;
1. Ins. by Act 27 of 1999, s.49 (w.e.f. 1-4-2000).
2. Ins. by Act 10 of 2000, s. 37 (w.e.f. 1-4-2000).
3. Subs. by s. 37, ibid ., for "a deduction of the profits" (w.e.f. 1-4-2001).
4. Ins. by s. 37, ibid . (w.e.f. 1-4-2001).
5. Subs. by Act 14 of 2001, s. 43, for clauses (ii), (iii) and (iv) (w.e.f. 1-4-2002).
(b) "convertible foreign exchange" shall have the meaning assigned to it in clause (a) of the Explanation to section 80HHC;
(2) Where the gross total income of the non-resident—
(a) consists only of income by way of interest or dividends[2] [, other than dividends referred to in section 115-O ] in respect of bonds referred to in clause (a) of sub-section (1) or, as the case may be, Global Depository Receipts referred to in clause (b) of that sub-section, no deduction shall be allowed to him under sections 28 to 44C or clause (i) or clause (iii) of section 57 or under Chapter VIA;
(b) includes any income referred to in clause (a) or clause (b) or clause (c) of sub-section (1), the gross total income shall be reduced by the amount of such income and the deduction under Chapter VI-A shall be allowed as if the gross total income as so reduced, were the gross total income of the assessee.
(3) Nothing contained in the first and second provisos to section 48 shall apply for the computation of long-term capital gains arising out of the transfer of long-term capital asset, being bonds or Global Depository Receipts referred to in clause (c) of sub-section (1).
(4) It shall not be necessary for a non-resident to furnish under sub-section (1) of section 139 a return of his income if—
(a) his total income in respect of which he is assessable under this Act during the previous year consisted only of income referred to in clauses (a) and (b) of sub-section (1); and
(b) income by way of short-term or long-term capital gains arising from the transfer of such securities,
the income-tax payable shall be the aggregate of—
(i) the amount of income-tax calculated on the income in respect of securities referred to in clause (a), if any, included in the total income, at the rate of twenty per cent:
5[Provided that the amount of income-tax calculated on the income by way of interest referred to in section 194LD shall be at the rate of five per cent.;]
(ii) the amount of income-tax calculated on the income by way of short-term capital gains referred to in clause (b), if any, included in the total income, at the rate of thirty per cent:
6[Provided that the amount of income-tax calculated on the income by way of short-term capital gains referred to in section 111A shall be at the rate of[7] [fifteen per cent.];]
1. Subs. by Act 20 of 2015, s. 29, for "issued to non-resident inventors against the issue of ordinary shares or foreign currency convertible bonds of issuing company" (w.e.f. 1-4-2016).
2. Ins. by Act 38 of 1993, s. 21 (w.e.f. 1-4-1993).
3. Subs. by Act 21 of 1998, s. 38, for clasue (a) (w.e.f. 1-4-1999).
4. Subs. by Act 32 of 2003, s. 53, for "income" (w.e.f. 1-4-2004).
5. Ins. by Act 17 of 2013, s. 28 (w.e.f. 1-4-2014).
6. Ins. by Act 23 of 2004, s. 27 (w.e.f. 1-4-2005).
7. Subs. by Act 18 of 2008, s. 22, for "ten per cent." (w.e.f. 1-4-2009).
(iif) the amount of loss on transfer of units referred to in clause (xvii) of section 47 computed by taking into account the cost of the shares exchanged with units referred to in the said clause or the carrying amount of the shares at the time of exchange where such shares are carried at a value other than the cost through profit or loss account, as the case may be; or]
2[(iig) the amount of income by way of royalty in respect of patent chargeable to tax under section 115BBF;] or
3[(iih) the aggregate amount of unabsorbed depreciation and loss brought forward in case of a company against whom an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under section 7 or section 9 or section 10 of the Insolvency and Bankruptcy Code, 2016.
Explanation .--For the purposes of this clause, the expression "Adjudicating Authority" shall have the meaning assigned to it in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 and the loss shall not include depreciation; or;]
4[(iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account[3] [in case of a company other than the company referred to in clause (iih)].
Explanation .—For the purposes of this clause,—
(a) the loss shall not include depreciation;
(ii) in which search was conducted;
(c) "undisclosed income" means—
(i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has—
(A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or
(B) otherwise not been disclosed to the[3] [Principal Chief Commissioner or Chief Commissioner] or[4] [Principal Commissioner or Commissioner] before the date of search; or
(ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted.]
1. Ins. by Act 28 of 2016, s. 103 (w.e.f. 1-4-2017).
2. Ins. by Act 48 of 2016, s. 3 (w.e.f. 15-12-2016).
3. Subs. by Act 25 of 2014, s. 4, for "Chief Commissioner" (w.r.e.f. 1-6-2013).
4. Subs. by s. 4, ibid., for "Commissioner" (w.r.e.f. 1-6-2013).
2. Restored by Act 3 of 1989, s. 95 (w.e.f. 1-4-1989). Earlier sub-heading "A.—Assessment of firms" and sections 182 and 183 omitted by Act 4 of 1988, s. 67 (w.e.f. 1-4-1989).
3. Subs. by Act 18 of 1992, s. 66, for "sub-heading "B.—Registration of firms" and sections 184, 185 and 86" (w.e.f. 1-41993).
4. Subs. by Act 32 of 2003, s. 69, for sub-section (5) (w.e.f. 1-4-2004).
5. Subs. by s. 70, ibid ., for section 185 (w.e.f. 1-4-2004).
C.—Changes in constitution, succession and dissolution
187.Change in constitution of a firm. —(1) Where at the time of making an assessment under section 143 or section 144 it is found that a change has occurred in the constitution of a firm, the assessment shall be made on the firm as constituted at the time of making the assessment.
1* * * *
*
(2) For the purposes of this section, there is a change in the constitution of the firm—
(a) if one or more of the partners cease to be partners or one or more new partners are admitted, in such circumstances that one or more of the persons who were partners of the firm before the change continue as partner or partners after the change ; or
(b) where all the partners continue with a change in their respective shares or in the shares of some of them:
2 [Provided that nothing contained in clause (a) shall apply to a case where the firm is dissolved on the death of any of its partners.]
5[(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 (28 of 2005);]
6[(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[7] [[8] [, 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:
9[Provided that nothing contained in this clause shall apply to any such agreement entered into on or after the[10] [1st day of April, [2007].]
Explanation .—For the purposes of this clause, the expression "foreign enterprise" means a person who is a non-resident;]
(16) scholarships granted to meet the cost of education;
11[(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;[12] *
2. Subs. by Act 18 of 2008, s. 8, for "industrial undertaking" (w.e.f. 1-4-2009).
completed or, as the case may be, the new[1] [unit] commences production or operation, in so far as such fixed assets have been acquired or developed in connection with the extension of the 2[undertaking] or the setting up of the new 1[unit] of the assessee;
(b) "capital employed in the business of the company" means—
(i) in a case referred to in clause (i) of sub-section (1), the aggregate of the issued share capital, debentures and long-term borrowings as on the last day of the previous year in which the business of the company commences;
(ii) in a case referred to in clause (ii) of sub-section (1), the aggregate of the issued share capital, debentures and long-term borrowings as on the last day of the previous year in which the extension of the[2] [undertaking] is completed or, as the case may be, the new[1] [unit] commences production or operation, in so far as such capital, debentures and long-term borrowings have been issued or obtained in connection with the extension of the[2] [undertaking] or the setting up of the new[2] [unit] of the company;
- (c) "long-term borrowings" means—
(c) "export turnover" means the consideration in respect of the software or software rights specified in clauses (d), (e), (g), (h) and (i ), received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section (2), but does not include freight, telecommunication charges or insurance attributable to the delivery of such software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India;
(d) "film software" means a copy of a cinematograph film made by any process analogous to cinematography on acetate polyester or celluloid film positive, magnetic tape, digital media or other optical or magnetic devices and certified by the Board of film certification constituted by the Central Government under section 3 of the Cinematograph Act, 1952 (37 of 1952);
(e) "music software"includes series of sounds or music recorded on magnetic tape, cassette, compact discs and digital media which can be played or reproduced on any appropriate apparatus;
(f) "profits of the business" means the profits of the business as computed under the head "Profits and gains of business or profession" as reduced by—
(A) ninety per cent of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and
(b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.
(5) Where the assessee acquired Global Depository Receipts or bonds in an amalgamated or resulting company by virtue of his holding Global Depository Receipts or bonds in the amalgamating or demerged company, as the case may be, in accordance with the provisions of sub-section (1), the provisions of that sub-section shall apply to such Global Depository Receipts or bonds.
Explanation .—For the purposes of this section,—
(a) "approved intermediary" means an intermediary who is approved in accordance with such scheme as may be notified by the Central Government in the Official Gazette;
(b) "Global Depository Receipts" shall have the same meaning as in clause (a) of the Explanation to section 115ACA.]
1. Subs. by Act 20 of 2002, s. 46, for "re-issued" (w.e.f. 1-4-2002).
(iii) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause (b), if any, included in the total income, at the rate of ten per cent.;[1] *
2[Provided that in case of income arising from the transfer of a long-term capital asset referred to in section 112A, income-tax at the rate of ten per cent. shall be calculated on such income exceeding one lakh rupees; and]
(iv) the amount of income-tax with which the Foreign Institutional Investor would have been chargeable had its total income been reduced by the amount of income referred to in clause (a) and clause (b).
(2) Where the gross total income of the Foreign Institutional Investor—
(a) consists only of income in respect of securities referred to in clause (a) of sub-section (1), no deduction shall be allowed to it under sections 28 to 44C or clause (i) or clause (iii) of section 57 or under Chapter VIA;
(b) includes any income referred to in clause (a) or clause (b) of sub-section (1), the gross total income shall be reduced by the amount of such income and the deduction under Chapter VIA shall be allowed as if the gross total income as so reduced, were the gross total income of the Foreign Institutional Investor.
(b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil ; or]
5* * * * *
(vii) the amount of profits of sick industrial company for the assessment year commencing on and from the assessment year relevant to the previous year in which the said company has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and ending with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses.
Explanation .—For the purposes of this clause, "net worth" shall have the meaning assigned to it in clause (ga) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986); or
6[(viii) the amount of deferred tax, if any such amount is credited to the 1[statement of profit and loss].]
1. Subs. by Act 7 of 2017, s. 47, for "profit and loss account" (w.e.f. 1-4-2017).
2. Ins. by Act 28 of 2016, s. 55 (w.e.f. 1-4-2017).
3. Ins. by Act 13 of 2018, s. 37 (w.e.f. 1-4-2018).
4. Subs. by Act 20 of 2002, s. 52, for clause (iii) and the Explanation (w.e.f. 1-4-2001).
5. Clause (iv), clause (v) and clause (vi) omitted by Act 8 of 2011, s. 18 (w.e.f. 1-4-2005).
6. Ins. by Act 18 of 2008, s. 23 (w.e.f. 1-4-2001).
1[ 271AAC. Penalty in respect of certain income. —(1) The Assessing Officer may, notwithstanding anything contained in this Act other than the provisions of section 271AAB, direct that, in a case where the income determined includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D for any previous year, the assessee shall pay by way of penalty, in addition to tax payable under section 115BBE, a sum computed at the rate of ten per cent of the tax payable under clause (i) of sub-section (1) of section 115BBE:
Provided that no penalty shall be levied in respect of income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D to the extent such income has been included by the assessee in the return of income furnished under section 139 and the tax in accordance with the provisions of clause (i) of sub-section (1) of section 115BBE has been paid on or before the end of the relevant previous year.
(2) No penalty under the provisions of section 270A shall be imposed upon the assessee in respect of the income referred to in sub-section (1).
(3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section.]
1[ 2. Computation of profits of life insurance business. — The profits and gains of life insurance business shall be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938 (4 of 1938), in respect of the last inter-valuation period ending before the commencement of the assessment year, so as to exclude from it any surplus or deficit included therein which was made in any earlier inter-valuation period.]
3. [ Deductions.] Omitted by the Finance Act, 1976 (66 of 1976), s. 23 ( w.e.f. 1-4-1977) . Earlier, the rule was first amended by the Finance Act, 1966 (13 of 1966), s. 36 ( w.e.f . 1-4-1966) and by the Finance Act , 1965 (10 of 1965), s . 65 ( w.e.f . 1-4-1965).]
13[(ii) any allowance received by any person by reason of his membership of Parliament under the Members of Parliament (Constituency Allowance) Rules, 1986;
14[(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;]]]
1. Subs. by Act 22 of 1995, s. 4, for sub-clause (v) (w.e.f. 1-4-1995).
2. Ins. by Act 27 of 1999, s. 6 (w.e.f. 1-4-2000).
3. Ins. by Act 28 of 2016, s. 7 (w.e.f. 1-4-2016).
4. Subs. by Act 22 of 2007, s. 6, for sub-clause (vii) (w.e.f. 1-4-2008).
5. Ins. by Act 28 o 2005, s. 27 and the second Schedule (w.e.f. 10-2-2006).
6. Subs. by Act 22 of 1995, s. 4, for clause (15A) (w.e.f. 1-4-1996).
7. Ins. by 26 of 1997, s. 3 (w.e.f. 1-4-1998).
8. Subs. by Act 27 of 1999, s. 6"entered before the 1[st] day of April, 1997" (w.e.f. 1-4-2000).
9. Ins. by Act 23 of 2004, s. 5 (w.e.f. 1-4-2006).
10. Subs. by Act 21 of 2006, s. 4, for "the 1st day of April, 2006" (w.e.f. 1-4-2007).
11. Subs. by Act 46 of 1986, s. 3, for clause (17) (w.e.f. 1-4-1986).
(i) any moneys borrowed by the company from Government or the Industrial Finance Corporation of India or the Industrial Credit and Investment Corporation of India or any other financial institution[3] [which is eligible for deduction under clause (viii) of sub-section (1) of section 36] or any banking institution (not being a financial institution referred to above), or
(ii) any moneys borrowed or debt incurred by it in a foreign country in respect of the purchase outside India of capital plant and machinery, where the terms under which such moneys are borrowed or the debt is incurred provide for the repayment thereof during a period of not less than seven years.
(4) Where the assessee is a person other than a company or a co-operative society, no deduction shall be admissible under sub-section (1) unless the accounts of the assessee for the year or years in which the expenditure specified in sub-section (2) is incurred have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income for the first year in which the deduction under this section is claimed, 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.
(B) the profits of any branch, office, warehouse or any other establishment of the assessee situated outside India;
(g) "telecast rights" means a licence or contract to exhibit motion pictures or television programmes over a television network either through terrestrial transmission or through a satellite broadcast in a specified territory;
(h) "television news software" means a collection of sounds and images, reportage, data and voice of actualities broadcast either through terrestrial transmission, wire or satellite, live or pre-recorded on video cassettes or digital media;
voice of actualities broadcast either through terrestrial transmission, wire or satellite, live or
(i) "television software" means any programme or series of sounds and images recorded on film or tape or digital media or broadcast through terrestrial transmitter, satellite or any other means of diffusion;
(j) "total turnover" shall not include—
(A) any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28;
(B) any freight, telecommunication charges or insurance attributable to the delivery of the film software, music software, telecast rights, television news software, or television software as defined in clause (d), (e), (g), (h) or (i), as the case may be, outside India;
(C) expenses, if any, incurred in foreign exchange in providing the technical services outside India.]
(3) Nothing contained in the first and second provisos to section 48 shall apply for the computation of capital gains arising out of the transfer of securities referred to in clause (b) of sub-section (1).
Explanation .—For the purposes of this section,—
(a) the expression "Foreign Institutional Investor" means such investor as the Central Government may, by notification in the Official Gazette, specify in this behalf;
(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).]
1 [ Explanation 2.—For the purposes of clause (a) of Explanation 1, the amount of income-tax shall include—
(i) any tax on distributed profits under section 115-O or on distributed income under section 115R;
(ii) any interest charged under this Act;
(iii) surcharge, if any, as levied by the Central Acts from time to time;
(iv) Education Cess on income-tax, if any, as levied by the Central Acts from time to time; and
(v) Secondary and Higher Education Cess on income-tax, if any, as levied by the Central Acts from time to time.]
2[ Explanation 3.—For the removal of doubts, it is hereby clarified that for the purposes of this section, the assessee, being a company to which the[3] [second proviso to sub-section (1) of section 129 of the Companies Act, 2013 (18 of 2013)] is applicable, has, for an assessment year commencing on or before the 1st day of April, 2012, an option to prepare its[4] [statement of profit and loss] for the relevant previous year either in accordance with the provisions of[5] [Schedule III to the Companies Act, 2013 (18 of 2013)] or in accordance with the provisions of the Act governing such company.
6 [ Explanation 4.—For the removal of doubts, it is hereby clarified that the provisions of this section shall not be applicable and shall be deemed never to have been applicable to an assessee, being a foreign company, if—
1[ 80-I. Deduction in respect of profits and gains from industrial undertakings after a certain date, etc. —(1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel[2] [or the business of repairs to ocean-going vessels or other powered craft], to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent. thereof:
Provided that in the case of an assessee, being a company, the provisions of this sub-section[3] [shall have effect in relation to profits and gains derived from an industrial undertaking or a ship or the business of a hotel] as if for the words "twenty per cent.", the words "twenty-five per cent." had been substituted.
4[(1A) Notwithstanding anything contained in sub-section (1), in relation to any profits and gains derived by an assessee from—
(i) an industrial undertaking which begins to manufacture or produce articles or things or to operate its cold storage plant or plants; or
(ii) a ship which is first brought into use; or
- (iii) the business of a hotel which starts functioning,
THE SECOND SCHEDULE
PROCEDURE FOR RECOVERY OF TAX
1[[ See sections 222 and 276]]
(5) Where the undertaking of an Indian company which is entitled to the deduction under sub-section (1) is transferred, before the expiry of the period of ten years specified in sub-section (1), to another Indian company in a scheme of amalgamation,—
(i) no deduction shall be admissible under sub-section (1) in the case of the amalgamating company for the previous year in which the amalgamation takes place; and
(ii) the provisions of this section shall, as far as may be, apply to the amalgamated company as they would have applied to the amalgamating company if the amalgamation had not taken place.
4[(5A) Where the undertaking of an Indian company which is entitled to the deduction under subsection (1) is transferred, before the expiry of the period specified in sub-section (1), to another company in a scheme of demerger,—
(i) no deduction shall be admissible under sub-section (1) in the case of the demerged company for the previous year in which the demerger takes place; and
1. Subs. by Act of 18 of 2008, s. 8, for "industrial unit" (w.e.f. 1-4-2009).
2. Subs. by s. 8, ibid ., for "industrial undertaking" (w.e.f. 1-4-2009).
3. Subs. by Act 10 of 2000, s. 17, for "which is for the time being approved by the Central Government for the purposes of clause (viii) of sub-section (1) of section 36" (w.e.f. 1-4-2000).
4. Ins. by Act 27 of 1999, s. 19 (w.e.f. 1-4-2000).
(i) the assessee is a resident of a country or a specified territory with which India has an agreement referred to in sub-section (1) of section 90 or the Central Government has adopted any agreement under sub-section (1) of section 90A and the assessee does not have a permanent establishment in India in accordance with the provisions of such agreement; or
(ii) the assessee is a resident of a country with which India does not have an agreement of the nature referred to in clause (i) and the assessee is not required to seek registration under any law for the time being in force relating to companies.]
7[ Explanation 4A.—For the removal of doubts, it is hereby clarified that the provisions of this section shall not be applicable and shall be deemed never to have been applicable to an assessee, being a foreign company, where its total income comprises solely of profits and gains from business referred to in section 44B or section 44BB or section 44BBA or section 44BBB and such income has been offered to tax at the rates specified in those sections.]
[8] [[9] [ Explanation 5 ] .—For the purposes of sub-section (2), the expression "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).]
on or after the 1st day of April, 1990,[5] [but before the 1st day of April, 1991], there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty-five per cent. thereof:
Provided that in the case of an assessee, being a company, the provisions of this sub-section shall have effect in relation to profits and gains derived from an industrial undertaking or a ship or the business of a hotel as if for the words "twenty-five per cent.", the words "thirty per cent." had been substituted.]
(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;
(ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose;
2. Issue of notice. —[3] [When a certificate has been received by the Tax Recovery Officer from the 4[Assessing Officer]] for the recovery of arrears under this Schedule, the Tax Recovery Officer shall cause to be served upon the defaulter a notice requiring the defaulter to pay the amount specified in the certificate within fifteen days from the date of service of the notice and intimating that in default steps would be taken to realise the amount under this Schedule.
(ii) the provisions of this section shall, as far as may be, apply to the resulting company, as they would have applied to the demerged company, if the demerger had not taken place.]
(6) Where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure specified in sub-section (2), the expenditure in respect of which deduction is so allowed shall not qualify for deduction under any other provision of this Act for the same or any other assessment year.
10[(2A) For a company whose financial statements are drawn up in compliance to the Indian Accounting Standards specified in Annexure to the Companies (Indian Accounting Standards) Rules, 2015, the book profit as computed in accordance with Explanation 1 to sub-section (2) shall be further--
(a) increased by all amounts credited to other comprehensive income in the statement of profit and loss under the head "Items that will not be re-classified to profit or loss;
1. Ins. by Act 18 of 2008, s. 23 (w.e.f. 1-4-2001).
2. Ins. by Act 23 of 2012, s. 48 (w.e.f. 1-4-2013).
3. Subs. by Act 7 of 2017, s. 47, for "proviso to sub-section (2) of section 211 of the Companies Act, 1956 (1 of 1956)" (w.e.f. 1-4-2017).
4. Subs. by s. 47, ibid ., for "profit and loss account" (w.e.f. 1-4-2017).
5. Subs. by s. 47, ibid ., for "Part II and Part III of Schedule VI to the Companies Act, 1956 (1 of 1956)" (w.e.f. 1-4-2017).
6. Ins. by Act 28 of 2016, s. 55 (w.e.f. 1-4-2001).
7. Ins. by Act 13 of 2018, s. 37 (w.e.f. 1-4-2001).
8. Ins. by Act 20 of 2015, s. 30 (w.e.f. 1-4-2016).
(iii) it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India, and begins to manufacture or produce articles or things or to operate such plant or plants, at any time within the period of[6] [ten years] next following the 31st day of March, 1981, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking;
(iv) in a case where the industrial undertaking manufactures or produces articles or things, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power:
Provided that the condition in clause (i) 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:
1. Ins. by Act 44 of 1980, s. 16 (w.e.f. 1-4-1981).
2. Ins. by Act 11 of 1983, s. 25 (w.e.f. 1-4-1984).
3. Subs. by s. 25, ibid ., for "shall have effect" (w.e.f. 1-4-1984).
4. Ins. by Act 12 of 1990, s. 24 (w.e.f. 1-4-1990).
2. Approval and withdrawal of approval. —(1) The[2] [[3] [Principal Chief Commissioner or Chief Commissioner] or 4[Principal Commissioner or Commissioner]] may accord approval to any superannuation fund or any part of a superannuation fund which, in his opinion, complies with the requirements of rule 3, and may at any time withdraw such approval, if, in his opinion, the circumstances of the fund or part cease to warrant the continuance of the approval.
(2) The[2] [[3] [Principal Chief Commissioner or Chief Commissioner] or[4] [Principal Commissioner or Commissioner]] shall communicate in writing to the trustees of the fund the grant of approval with the date on which the approval is to take effect, and, where the approval is granted subject to conditions, those conditions.
(3) The[2] [[3] [Principal Chief Commissioner or Chief Commissioner or[4] [Principal Commissioner or Commissioner]] shall communicate in writing to the trustees of the fund any withdrawal of approval with the reasons for such withdrawal and the date on which the withdrawal is to take effect.
(4) The[2] [[3] [Principal Chief Commissioner or Chief Commissioner or[4] [Principal Commissioner or Commissioner]] shall neither refuse nor withdraw approval to any superannuation fund or any part of a superannuation fund unless he has given the trustees of that fund a reasonable opportunity of being heard in the matter.
5. Ins. by Act 49 of 1991, s. 31 (w.e.f. 1-4-1991).
6. Subs. by, s. 31, ibid ., for "fourteen years" (w.e.f. 1-4-1991). Earlier "fourteen years" was subs. for "nine years" by Act 12 of 1990 s. 24 (w.e.f. 1-4-1990) which was earlier subs. for "four years" by Act 32 of 1985, s. 20 (w.e.f. 1-4-1985).
Provided further that the condition in clause (iii) shall, in relation to a small-scale industrial undertaking, apply as if the words "not being any article or thing specified in the list in the Eleventh Schedule" had been omitted.
Explanation 1.—For the purposes of clause (ii) of this sub-section, any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely:—
(a) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India;
(b) such machinery or plant is imported into India from any country outside India; and
(c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee.
2. Approval and withdrawal of approval. —(1) The[1] [[2] [Principal Chief Commissioner or Chief Commissioner] or[3] [Principal Commissioner or Commissioner]] may accord approval to any gratuity fund which, in his opinion, complies with the requirements of rule 3 and may at any time withdraw such approval if, in his opinion, the circumstances of the fund cease to warrant the continuance of the approval.
(2) The[1] [[2] [Principal Chief Commissioner or Chief Commissioner] or[3] [Principal Commissioner or Commissioner]] shall communicate in writing to the trustees of the fund the grant of approval with the date on which the approval is to take effect and where the approval is granted subject to conditions, those conditions.
(3) The[1] [[2] [Principal Chief Commissioner or Chief Commissioner] or[3] [Principal Commissioner or Commissioner]] shall communicate in writing to the trustees of the fund any withdrawal of approval with the reasons for such withdrawal and the date on which the withdrawal is to take effect.
(4) The[1] [[2] [Principal Chief Commissioner or Chief Commissioner] or[3] [Principal Commissioner or Commissioner]] shall neither refuse nor withdraw approval to any gratuity fund unless he has given the trustees of that fund a reasonable opportunity of being heard in the matter.
Explanation 2.—Where in the case of an industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with.
Explanation 3.—For the purposes of this sub-section, "small-scale industrial undertaking" shall have the same meaning as in clause (b) of the Explanation below sub-section (8) of section 80HHA.
(3) This section applies to any ship, where all the following conditions are fulfilled, namely:—
(i) it is owned by an Indian company and is wholly used for the purposes of the business carried on by it;
(ii) it was not, previous to the date of its acquisition by the Indian company, owned or used in Indian territorial waters by a person resident in India; and
(iii) it is brought into use by the Indian company at any time within the period of[1] [ten years] next following the 1st day of April, 1981.
(4) This section applies to the business of any hotel, where all the following conditions are fulfilled, namely:—
2. Tobacco and tobacco preparations, such as, cigars and cheroots, cigarettes, biris, smoking mixtures for pipes and cigarettes, chewing tobacco and snuff.
3. Cosmetics and toilet preparations.
4. Tooth paste, dental cream, tooth powder and soap.
(i) the business of the hotel is not formed by the splitting up, or the reconstruction, of a business already in existence or by the transfer to a new business of a building previously used as a hotel or of any machinery or plant previously used for any purpose;
(ii) the business of the hotel is owned and carried on by a company registered in India with a paid-up capital of not less than five hundred thousand rupees;
(iii) the hotel is for the time being approved for the purposes of this sub-section by the Central Government;
(iv) the business of the hotel starts functioning after the 31st day of March, 1981, but[2] [before the 1st day of April,[3] [1991]].
1. Subs. by 49 of 1991, s. 31, for "fourteen years" (w.e.f. 1-4-1991). Earlier "fourteen years" was subs. for "nine years" by Act 12 of 1990 s. 24 (w.e.f. 1-4-1990) which was earlier substituted for "four years" by Act 32 of 1985, s. 20 (w.e.f. 1-4-1985).
2. Subs. by Act 12 of 1990, s. 24, for "before the first day of April, 1990" (w.e.f. 1-4-1990). Earlier "1990" was substituted for "1985" by 32 of 1985, s. 20 (w.e.f. 1-4-1985).
3. Subs. by Act 49 of 1991, s. 31, for "1995" (w.e.f. 1-4-1991).
1[(4A) This section applies to the business of repairs to ocean-going vessels or other powered craft which fulfils all the following conditions, namely:—
(i) the business is not formed by the splitting up, or the reconstruction, of a business already in existence;
(ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose;
(iii) it is carried on by an Indian company and the work by way of repairs to ocean-going vessels or other powered craft has been commenced by such company after the 31st day of March, 1983, but before the 1st day of April, 1988; and
(iv) it is for the time being approved for the purposes of this sub-section by the Central Government.]
(5) The deduction specified in sub-section (1) shall be allowed in computing the total income in respect of the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things, or to operate its cold storage plant or plants or the ship is first brought into use or the business of the hotel starts functioning[1] [or the company commences work by way of repairs to ocean-going vessels or other powered craft] (such assessment year being hereafter in this section referred to as the initial assessment year) and each of the seven assessment years immediately succeeding the initial assessment year:
Provided that in the case of an assessee, being a co-operative society, the provisions of this sub-section shall have effect as if for the words "seven assessment years", the words "nine assessment years" had been substituted:
1[Provided further that in the case of an assessee carrying on the business of repairs to ocean-going vessels or other powered craft, the provisions of this sub-section shall have effect as if for the words "seven assessment years", the words "four assessment years" had been substituted]:
2[Provided also that in the case of—
(i) an industrial undertaking which begins to manufacture or produce articles or things or to operate its cold storage plant or plants; or
(ii) a ship which is first brought into use; or
- (iii) the business of a hotel which starts functioning,
on or after the 1st day of April, 1990[3] [but before the 1st day of April, 1991], provisions of this sub-section shall have effect as if for the words "seven assessment years", the words "nine assessment years" had been substituted:
Provided also that in the case of an assessee, being a co-operative society, deriving profits and gains from an industrial undertaking or a ship or a hotel referred to in the third proviso, the provisions of that proviso shall have effect as if for the words "nine assessment years", the words "eleven assessment years" had been substituted.]
(6) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an industrial undertaking or a ship or the business of a hotel[1] [or the business of repairs to ocean-going vessels or other powered craft] to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under sub-section (1) for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such industrial undertaking or ship or the business of the hotel[1] [or the business of repairs to ocean-going
1. Ins. by Act 11 of 1983, s. 25 (w.e.f. 1-4-1984).
2. Ins. by Act 12 of 1990, s. 24 (w.e.f. 1-4-1990).
3. Ins. by Act 49 of 1991, s. 31 (w.e.f. 1-4-1991).
vessels or other powered craft] were the only source of income of the assessee during the previous years relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made.
(7) Where the assessee is a person other than a company or a co-operative society, the deduction under sub-section (1) from profits and gains derived from an industrial undertaking shall not be admissible unless the accounts of the industrial undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant.
(8) Where any goods held for the purposes of the business of the industrial undertaking or the hotel or the operation of the ship[1] [or the business of repairs to ocean-going vessels or other powered craft] are transferred to any other business carried on by the assessee, or where any goods held for the purposes of any other business carried on by the assessee are transferred to the business of the industrial undertaking or the hotel or the operation of the ship[1] [or the business of repairs to ocean-going vessels or other powered craft] and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the business of the industrial undertaking or the hotel or the operation of the ship[1] [or the business of repairs to ocean-going vessels or other powered craft] does not correspond to the market value of such goods as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of the industrial undertaking or the business of the hotel or the operation of the ship[1] [or the business of repairs to ocean-going vessels or other powered craft shall be computed as if the transfer, in either case, had been made at the market value of such goods as on that date:
Provided that where, in the opinion of the[2] [Assessing Officer], the computation of the profits and gains of the industrial undertaking or the business of the hotel or the operation of the ship[1] [or the business of repairs to ocean-going vessels or other powered craft] in the manner hereinbefore specified presents exceptional difficulties, the[2] [Assessing Officer] may compute such profits and gains on such reasonable basis as he may deem fit.
Explanation .—In this sub-section, "market value", in relation to any goods, means the price that such goods would ordinarily fetch on sale in the open market.
(9) Where it appears to the[2] [Assessing Officer] that, owing to the close connection between the assessee carrying on the business of the industrial undertaking or the hotel or the operation of the ship[1] [or the business of repairs to ocean-going vessels or other powered craft] to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in the business of the industrial undertaking or the hotel or the operation of the ship[1] [or the business of repairs to ocean-going vessels or other powered craft], the[2] [Assessing Officer] shall, in computing the profits and gains of the industrial undertaking or the hotel or the ship[1] [or the business of repairs to ocean-going vessels or other powered craft] for the purposes of the deduction under this section, take the amount of profits as may be reasonably deemed to have been derived therefrom.
(10) The Central Government may, after making such inquiry as it may think fit, direct, by notification in the Official Gazette, that the exemption conferred by this section shall not apply to any class of industrial undertakings with effect from such date as it may specify in the notification.]
1. Ins. by Act 11 of 1983, s. 25 (w.e.f. 1-4-1984).
2. Subs. by Act 4 of 1988, s. 2, for "Income-tax Officer" (w.e.f. 1-4-1988).
1 [80-IA. Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. —[2] [(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent. of the profits and gains derived from such business for ten consecutive assessment years.]
includes any profits and gains derived by an undertaking or an enterprise from any business referred to in
(2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park[3] [[4] [or develops a special economic zone referred to in clause (iii) of sub-section (4)]] or generates power or commences transmission or distribution of power[5] [or undertakes substantial renovation and modernisation of the existing transmission or distribution lines[6] *]:
7[Provided that where the assessee develops or operates and maintains or develops, operates and maintains any infrastructure facility referred to in clause (a) or clause (b) or clause (c) of the Explanation to clause (i) of sub-section (4), the provisions of this sub-section shall have effect as if for the words "fifteen years", the words "twenty years" had been substituted.]
8[(2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), the deduction in computing the total income of an undertaking providing telecommunication services, specified in clause (ii) of sub-section (4), shall be hundred per cent of the profits and gains of the eligible business for the first five assessment years commencing at any time during the periods as specified in sub-section (2) and thereafter, thirty per cent of such profits and gains for further five assessment years.]
(3) This section applies to[9] [an[10] [[11] [undertaking] referred to in clause (ii)[12] [or clause (iv)[13] *] of sub-section (4)] which fulfils all the following conditions, namely:—
(i) it is not formed by splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of an[10] [undertaking] which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such 10[undertaking] as is referred to in section 33B, in the circumstances and within the period specified in that section;
Source: India Code