Income Tax Act 2025

INCOME-TAX ACT, 2025

[30 OF 2025]*

[AS AMENDED BY FINANCE ACT, 2026]

An Act to consolidate and amend the law relating to income-tax BE it enacted by Parliament in the Seventy-sixth Year of the Republic of India as follows:—

INCOME-TAX ACT, 2025

[30 OF 2025]*

[AS AMENDED BY FINANCE ACT, 2026]

An Act to consolidate and amend the law relating to income-tax

BE it enacted by Parliament in the Seventy-sixth Year of the Republic of India as follows:—

CHAPTER I

PRELIMINARY

1. (1) This Act may be called the Income-tax Act, 2025.
2. (2) It extends to the whole of India.
3. (3) Save as otherwise provided in this Act, it shall come into force on the 1st April, 2026.

In this Act, unless the context otherwise requires,—

1. (1) "accountant" shall have the meaning assigned to it in section 515(3)(b);
2. (2) "Additional Commissioner" means a person appointed to be an Additional Commissioner of Income-tax under section 237(1);
3. (3) "Additional Director" means a person appointed to be an Additional Director of Income-tax under section 237(1);
4. (4) "advance tax" means the advance tax payable as per Chapter XIX-C;
5. (5) "agricultural income" means—
   • (a) any rent or revenue derived from a land which is situated in India and is used for agricultural purposes;
   • (b) any income derived from such land by—
   • (i) agriculture; or
   • (ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market; or
   • (iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in item (ii);
   • (c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent-in-kind, of any such land with respect to which, or the produce of which, any process mentioned in sub-clause (b)(ii) and (iii) is carried on, where such building—
   • (i) is on or in the immediate vicinity of such land and that land is assessed to land revenue in India, or is subject to a local rate assessed and collected by officers of the Government as such, or where the land is not so assessed to land revenue or subject to a local rate it is not situated in any area as specified in clause (22)(iii)(A) or (B); and
   • (ii) is required as a dwelling house, or as a store-house, or other out-building, by the receiver of the rent or revenue or the cultivator, or the receiver of rent-in-kind, by reason of his connection with the land;
   • (d) any income derived from saplings or seedlings grown in a nursery,

but shall not include—

1. (i) the income derived from any building or land referred to in sub-clause (c) arising from the use of such building or land for any purpose (including letting for residential purpose or for the purpose of any business or profession) other than agriculture falling under sub-clause (a) or (b); or
   • (ii) any income arising from the transfer of any land referred to in clause (22)(iii)(A) or (B);
2. (6) "amalgamation", in relation to companies, means the merger of one or more companies with another company or the merger of two or more companies to form one company (the company or companies which so merge being referred to as the amalgamating company or companies and the company with which they merge or which is formed as a result of such merger being referred to as the amalgamated company) in such a manner that—
   • (a) all the property of the amalgamating company or companies immediately before the amalgamation become the property of the amalgamated company by virtue of the amalgamation;
   • (b) all the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation;
   • (c) the shareholders holding not less than three-fourths in value of the shares in the amalgamating company or companies (other than shares already held therein immediately before the amalgamation by, or by a nominee for, the amalgamated company or its subsidiary) become shareholders of the amalgamated company by virtue of the amalgamation,

otherwise than as a result of the acquisition of the property of one company by another company pursuant to the purchase of such property by the other company or as a result of the distribution of such property to the other company after the winding up of the first-mentioned company;

1. (7) "annual value", in relation to any property, means its annual value as determined under section 21;
2. (8) "Appellate Tribunal" means the Appellate Tribunal constituted under section 361;
3. (9) "approved gratuity fund" means a gratuity fund, which is approved and continues to be approved by the approving authority as per Part B of Schedule XI;
4. (10) "approved superannuation fund" means a superannuation fund or any part of a superannuation fund, which is approved and continues to be approved by the approving authority as per Part B of Schedule XI;
5. (11) "assessee" means a person by whom any tax or any other sum of money is payable under this Act, and includes—
   • (a) every person in respect of whom any proceeding under this Act has been taken—
   • (i) for the assessment of his income or of the loss sustained by him or refund due to him; or
   • (ii) for the assessment of the income of any other person in respect of which he is assessable, or of the loss sustained by such other person or refund due to such other person;
   • (b) every person who is deemed to be an assessee under this Act;
   • (c) every person who is deemed to be an assessee in default under this Act;
6. (12) "Assessing Officer" means—
   • (a) the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer, who is vested with the relevant jurisdiction by virtue of directions or orders issued under section 241(1) or (2) or (3), or any other provision of this Act; and
   • (b) the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, who is directed under section 241(5)(b) to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act;
7. (13) "assessment" includes reassessment and recomputation;
8. (14) "Assistant Commissioner" means a person appointed to be an Assistant Commissioner of Income-tax or a Deputy Commissioner of Income-tax under section 237(1);
9. (15) "Assistant Director" means a person appointed to be an Assistant Director of Income-tax or a Deputy Director of Income-tax under section 237(1);
10. (16) "average rate of income-tax" means the rate arrived at by dividing the amount of income-tax calculated on the total income, by such total income;
11. (17) "block of assets" means a group of assets falling within a class of assets comprising of—
    • (a) tangible assets, being buildings, machinery, plant or furniture;
    • (b) intangible assets, being know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature, not being goodwill of a business or profession,

in respect of which the same percentage of depreciation is prescribed;

1. (18) "Board" means the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963);
2. (19) "books or books of account" includes ledgers, day-books, cash books, account-books and other books, whether kept—
   • (a) in written form; or
   • (b) in electronic or any digital form, or on cloud based storage, or on any electromagnetic data storage device, such as floppy, disc, tape, portable data storage device, external hard drives, or memory cards; or
   • (c) as print-outs of data stored in electronic or digital form or on storage devices mentioned in sub-clause (b);
3. (20) "business" includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture;
4. (21) "business trust" means a trust registered as—
   • (a) an Infrastructure Investment Trust under the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) ; or
   • (b) a Real Estate Investment Trust under the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992);
5. (22) "capital asset" means—
   • (a) property of any kind held by an assessee, whether or not connected with his business or profession;
   • (b) any securities held by—
   • (i) a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992); or
   • (ii) an investment fund specified in section 224(10)(a) which has invested such securities in accordance with the provisions of the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or under the International Financial Services Centres Authority Act, 2019 (50 of 2019);
   • (c) any unit linked insurance policy to which exemption under Schedule II (Table: Sl. No. 2) does not apply,

but does not include—

1. (i) any stock-in-trade, other than the securities referred to in sub-clause (b), consumable stores or raw materials held for business or profession;
   • (ii) personal effects;
   • (iii) agricultural land in India, not being a land situated—
   • (A) in any area comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or
   • (B) in any area within the distance as specified in column C of the following Table, measured aerially from the local limits of any municipality or cantonment board referred to in item (A) and having population as referred to in column B of the said Table:—

TABLE

1. (iv) Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 or deposit certificates issued under the Gold Monetisation Scheme, 2015 as may be notified by the Central Government,

where,—

1. (A) "Foreign Institutional Investor" shall have the meaning assigned to it in section 210(6)(a);
   • (B) "personal effects" means any movable property (including wearing apparel and furniture) held for personal use by the assessee or any family member dependent on him, but excludes—
   • (I) jewellery, which includes—
   • (a) ornaments made of gold, silver, platinum, or any other precious metal or any alloy of such precious metals, with or without precious or semi-precious stones, and whether or not worked or sewn into any wearing apparel; or
   • (b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel; or
   • (II) archaeological collections; or
   • (III) drawings; or
   • (IV) paintings; or
   • (V) sculptures; or
   • (VI) any work of art;
   • (C) "population" shall mean the population according to the last preceding census of which the relevant figures have been published before the first day of the tax year;
   • (D) "property" includes any rights in or in relation to an Indian company, including rights of management or control or any other rights; and
   • (E) "securities" shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
2. (23) "charitable purpose" includes—
   • (a) relief of the poor;
   • (b) education;
   • (c) yoga;
   • (d) medical relief;
   • (e) preservation of environment (including watersheds, forests and wildlife);
   • (f) preservation of monuments or places or objects of artistic or historic interest;
   • (g) the advancement of any other object of general public utility;
3. (24) "Chief Commissioner" means a person appointed to be a Chief Commissioner of Income-tax or a Director General of Income-tax or a Principal Chief Commissioner of Income-tax or a Principal Director General of Income-tax under section 237(1);
4. (25) "child", in relation to an individual, includes a step-child and an adopted child of that individual;
5. (26) "Commissioner" means a person appointed to be a Commissioner of Income-tax or a Director of Income-tax or a Principal Commissioner of Income-tax or a Principal Director of Income-tax under section 237(1);
6. (27) "Commissioner (Appeals)" means a person appointed to be a Commissioner of Income-tax (Appeals) under section 237(1);
7. (28) "company" means—
   • (a) any Indian company; or
   • (b) any body corporate incorporated by or under the laws of a country outside India; or
   • (c) any institution, association or body which is or was assessable or was assessed as a company under the Income-tax Act, 1961, as it stood immediately before its repeal by this Act (herein referred to as the Income-tax Act, 1961) (43 of 1961); or
   • (d) any institution, association or body, whether incorporated or not and whether Indian or non-Indian, which is declared by order of the Board to be a company for such period as specified in such declaration;
8. (29) "company in which the public are substantially interested" means—
   • (a) a company owned by the Government or the Reserve Bank of India or in which at least 40% of the shares of the company are held (individually or collectively) by the Government or the Reserve Bank of India or a corporation owned by that bank; or
   • (b) a company which is registered under section 8 of the Companies Act, 2013 (18 of 2013); or
   • (c) a company having no share capital and if, having regard to its objects, the nature and composition of its membership and other relevant considerations, the Board by order declares it to be such a company for the period as specified in the declaration; or
   • (d) a mutual benefit finance company, that is to say, a company which carries on, as its principal business, the business of acceptance of deposits from its members and which is declared by the Central Government under section 406 of the Companies Act, 2013 (18 of 2013), to be a Nidhi or Mutual Benefit Society; or
   • (e) a company, wherein shares (excluding those entitled to a fixed rate of dividend, with or without a further right to participate in profits) carrying not less than 50% of the voting power, have been unconditionally, allotted to or acquired by, and were beneficially held throughout the relevant tax year by, one or more co-operative societies; or
   • (f) a company which is not a private company as defined in the Companies Act, 2013 (18 of 2013), and either of the following conditions is fulfilled:—
   • (i) shares in the company (not being shares entitled to a fixed rate of dividend, with or without a further right to participate in profits) were, as on the last day of the relevant tax year, listed in a recognised stock exchange in India as per the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;
   • (ii) shares in the company (not being those entitled to a fixed rate of dividend, with or without a further right to participate in profits) carrying not less than 50% of the voting power, have been unconditionally, allotted to or acquired by, and were beneficially held throughout the relevant tax year by—
   • (A) the Government; or
   • (B) a corporation established by a Central Act or State Act or Provincial Act; or
   • (C) any company to which this clause applies or any subsidiary company of such company, if the entire share capital of such subsidiary company has been held by the parent company or by its nominees throughout the tax year,

so, however, that in respect of an Indian company whose business consists mainly in the construction of ships or in the manufacture or processing of goods or in mining or in the generation or distribution of electricity or any other form of power, the expression "not less than 50%" shall be read as if the expression "not less than 40%" had been substituted;

1. (30) "convertible foreign exchange" means foreign exchange which is treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Management Act, 1999 (42 of 1999), and any rules made thereunder or any other corresponding law;
2. (31) "co-operative bank" shall have the same meaning as specified in Part V of the Banking Regulation Act, 1949 (10 of 1949);

"co-operative society" means a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or the Multi-State Co-operative Societies Act, 2002 (39 of 2002), or under any other law in force in any State or Union territory for the registration of co-operative societies;]

1. (33) "currency" shall have the same meaning as assigned to it in section 2(h) of the Foreign Exchange Management Act, 1999 (42 of 1999);
2. (34) "demerged company" means the company whose undertaking is transferred, pursuant to a demerger, to a resulting company;
3. (35) "demerger", in relation to companies, means the transfer, pursuant to a scheme of arrangement under sections 230 to 232 of the Companies Act, 2013 (18 of 2013), by a demerged company of its one or more undertakings to any resulting company in such a manner that—
   • (a) all the property of the undertaking, being transferred by the demerged company, immediately before the demerger, becomes the property of the resulting company by virtue of the demerger;
   • (b) all the liabilities relatable to the undertaking, being transferred by the demerged company, immediately before the demerger, become the liabilities of the resulting company by virtue of the demerger;
   • (c) the property and the liabilities of the undertaking or undertakings being transferred by the demerged company are transferred at values appearing in its books of account immediately before the demerger, except in compliance to the Indian Accounting Standards specified in Annexure to the Companies (Indian Accounting Standards) Rules, 2015 made under the Companies Act, 2013 (18 of 2013);
   • (d) the resulting company issues, in consideration of the demerger, its shares to the shareholders of the demerged company on a proportionate basis, except where the resulting company itself is a shareholder of the demerged company;
   • (e) the shareholders holding not less than three-fourths in value of the shares in the demerged company (other than shares already held therein immediately before the demerger, or by a nominee for, the resulting company or, its subsidiary) become shareholders of the resulting company or companies by virtue of the demerger, otherwise than as a result of the acquisition of the property or assets of the demerged company or any undertaking thereof by the resulting company;
   • (f) the transfer of the undertaking is on a going concern basis; and
   • (g) the demerger is as per the conditions, if any, notified under section 116(7) by the Central Government,

where,—

1. (i) "undertaking" shall include any part of an undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combination thereof not constituting a business activity;
   • (ii) "liabilities relatable to the undertaking", referred to in sub-clause (b), shall include—
   • (A) the liabilities which arise out of the activities or operations of the undertaking;
   • (B) the specific loans or borrowings (including debentures) raised, incurred and utilised solely for the activities or operations of the undertaking; and
   • (C) the amount "N", being the amount of general or multipurpose borrowings of the undertaking, as computed below, in cases other than those referred to in item (A) or (B),—

where,—

K = the amount of general or multipurpose borrowings of the demerged company;

L = the value of the assets transferred in a demerger; and

M = the total value of the assets of such demerged company immediately before the demerger;

1. (iii) any change in the value of assets consequent to their revaluation shall be ignored for determining the value of the property referred to in sub-clause (c);
   • (iv) the splitting up or the reconstruction of any authority or a body constituted or established under a Central Act or State Act or Provincial Act, or a local authority or a public sector company, into separate authorities or bodies or local authorities or companies, as the case may be, shall be deemed to be a demerger if it fulfils such conditions as the Central Government may, by notification, specify;
   • (v) the reconstruction or splitting up of a company, which ceased to be a public sector company as a result of transfer of its shares by the Central Government, into separate companies, shall be deemed to be a demerger, if it has been made to give effect to any condition attached to the said transfer of shares and also fulfils such other conditions as the Central Government may, by notification, specify;
   • (vi) the reconstruction or splitting up of a public sector company into separate companies shall be deemed to be a demerger, if it has been made to transfer any asset of the demerged company to the resulting company and the resulting company—
   • (A) is a public sector company on the appointed day indicated in such scheme approved by the Central Government or any other body authorised under the Companies Act, 2013 (18 of 2013) or any other applicable law governing such public sector companies; and
   • (B) fulfils such other conditions as the Central Government may, by notification, specify in this behalf;
2. (36) "Deputy Commissioner" means a person appointed to be a Deputy Commissioner of Income-tax under section 237(1);
3. (37) "Deputy Director" means a person appointed to be a Deputy Director of Income-tax under section 237(1);
4. (38) "director" and "manager", in relation to a company, shall have the same meanings as respectively assigned to them in section 2(34) and (53) of the Companies Act, 2013 (18 of 2013);
5. (39) "Director General or Director" means a person appointed to be a Director General of Income-tax or a Director of Income-tax, under section 237(1), and includes a Principal Director General or a Principal Director or an Additional Director or a Joint Director or a Deputy Director or an Assistant Director;
6. (40) "dividend" includes—
   • (a) any distribution by a company of accumulated profits, whether capitalised or not, if such distribution entails the release by the company to its shareholders of all or any part of the assets of the company;
   • (b) any distribution to its shareholders by a company of debentures, debenture-stock, or deposit certificates in any form, with or without interest, and any distribution to its preference shareholders of shares by way of bonus, to the extent to which the company possesses accumulated profits, whether capitalised or not;
   • (c) any distribution made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalised or not;
   • (d) any distribution to its shareholders by a company on the reduction of its capital, to the extent to which the company possesses accumulated profits, whether capitalised or not;
   • (e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise),—
   • (i) as an advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend, with or without a right to participate in profits) holding not less than 10% of the voting power; or
   • (ii) as an advance or loan to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (herein referred to as the said concern); or
   • (iii) made on behalf, or for the individual benefit, of any such shareholder,

to the extent to which the company in either case possesses accumulated profits;

1. (f) 2[***]

but does not include—

1. (i) a distribution made under sub-clause (c) or (d) in respect of any share issued for full cash consideration, where the holder of the share is not entitled in the event of liquidation to participate in the surplus assets;
   • (ii) any advance or loan made to a shareholder or the said concern by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company;
   • (iii) any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of sub-clause (e), to the extent to which it is so set off;
   • (iv) any distribution of shares pursuant to a demerger by the resulting company to the shareholders of the demerged company (whether or not there is a reduction of capital in the demerged company);

any advance or loan between two group entities, where,—

1. (A) one of the group entities is a "Finance Company" or a "Finance Unit";
   • (B) the other group entity to the transaction is located in a country or territory outside India; and
   • (C) the parent entity or the principal entity of such group is listed on the stock exchange in a country or territory outside India,

for the purposes of items (B) and (C), the country or territory outside India shall be specified by the Central Government, by notification,]

where,—

1. (A) "accumulated profits" for the purposes of—
   • (I) sub-clauses (a), (b), (d) and (e), shall include all profits of the company up to the date of distribution or payment referred to in those sub-clauses;
   • (II) sub-clause (c), shall include all profits of the company up to the date of liquidation, but shall not, where the liquidation is consequent on the compulsory acquisition of its undertaking by the Government or a corporation owned or controlled by the Government under any law in force, include any profits of the company before three successive tax years immediately preceding the tax year in which such acquisition took place;
   • (B) in respect of an amalgamated company, the accumulated profits, whether capitalised or not, or loss, as the case may be, shall be increased by the accumulated profits, whether capitalised or not, of the amalgamating company on the date of amalgamation;
   • (C) "concern" means a Hindu undivided family or a firm or an association of persons or a body of individuals or a company;
   • (D) a person shall be deemed to have a substantial interest in a concern, other than a company, if he is, at any time during the tax year, beneficially entitled to not less than 20% of the income of such concern;
   • (E) for the purposes of sub-clause (v),—
   • (I) "Finance Company" and "Finance Unit" shall have the same meaning as respectively assigned to them in regulation 2(1)(e) and (f) of the International Financial Services Centres Authority (Finance Company) Regulations, 2021 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019), and is set up as a global or regional corporate treasury centre for undertaking treasury activities or treasury services as per the relevant regulations made by the International Financial Services Centres Authority established under section 4 of the said Act;

"group entity" shall have the same meaning as assigned to the expression "group entities" in clause (m) of sub-regulation (1) of regulation 2 of the International Financial Services Authority (Payment Services) Regulations, 2024 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019);

1. (III) "parent entity" or "principal entity" in relation to one or more other group entities, shall be an entity of which other group entities are subsidiary and such entity,—
   • (a) exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiaries; or
   • (b) controls the composition of the Board of Directors;]
2. (41) "document" includes an electronic record as defined in section 2(1)(t) of the Information Technology Act, 2000 (21 of 2000);
3. (42) "domestic company" means—
   • (i) an Indian company; or
   • (ii) any other company which has made the prescribed arrangements within India for the declaration and payment of the dividends (including dividends on preference shares) payable out of its income liable to tax under this Act;
4. (43) "electoral trust" means a trust so approved by the Board as per the scheme made by the Central Government;
5. (44) "fair market value", in relation to a capital asset, means—
   • (a) the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date; and
   • (b) where the price referred to in sub-clause (a) is not ascertainable, such price as determined in the manner, as may be prescribed;
6. (45) "firm" shall have the same meaning as assigned to it in section 4 of the Indian Partnership Act, 1932 (9 of 1932), and shall include a "limited liability partnership" as defined in section 2(1)(n) of the Limited Liability Partnership Act, 2008 (6 of 2009);
7. (46) "foreign company" means a company which is not a domestic company;
8. (47) "foreign currency" shall have the same meaning as assigned to it in section 2(m) of the Foreign Exchange Management Act, 1999 (42 of 1999);
9. (48) "hearing" includes communication of data and documents through electronic mode;
10. (49) "income" includes—
    • (a) profits and gains;
    • (b) dividend;
    • (c) voluntary contributions received by—
    • (i) a registered non-profit organisation; or
    • (ii) an association referred to in Schedule III (Table: Sl. No. 23); or
    • (iii) any University or other educational institution or any hospital or other institution referred to in Schedule VII (Table: Sl. No. 19); or
    • (iv) an electoral trust;
    • (d) the value of any perquisite or profit in lieu of salary taxable under sections 17 and 18;
    • (e) any special allowance or benefit, other than perquisite included under sub-clause (d), specifically granted to the assessee to meet expenses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit;
    • (f) any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at a place where he ordinarily resides or to compensate him for the increased cost of living;
    • (g) the value of any benefit or perquisite, whether convertible into money or not, obtained from a company, either by a director or by a person who has a substantial interest in the company, or by a relative of the director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by the director or that person;
    • (h) the value of any benefit or perquisite, whether convertible into money or not, obtained by any representative assessee mentioned in section 303(1)(c) or (d) or by any person on whose behalf or for whose benefit any income is receivable by the representative assessee (such person being herein referred to as the beneficiary), and any sum paid by the representative assessee in respect of any obligation which, but for such payment, would have been payable by the beneficiary;
    • (i) any sum chargeable to income-tax under—
    • (A) section 26(2)(b) or (c) or (d) or section 38 or 95;
    • (B) section 26(2)(e) or (g);
    • (j) the value of any benefit or perquisite taxable under section 26(2)(f);
    • (k) any capital gains chargeable under section 67;
    • (l) the profits and gains of any business of insurance carried on by a mutual insurance company or by a co-operative society, computed as per section 55 or any surplus taken to be such profits and gains as per Schedule XIV;
    • (m) the profits and gains of any business of banking (including providing credit facilities) carried on by a co-operative society with its members;
    • (n) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature;
    • (o) any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees;
    • (p) any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy;
    • (q) any sum referred to in section 26(2)(h);
    • (r) the fair market value of inventory referred to in section 26(2)(j);
    • (s) any sum referred to in section 92(2)(k) or (l);
    • (t) any sum of money referred to in section 92(2)(h);
    • (u) any sum of money or value of property referred to in section 92(2)(m);
    • (v) any compensation or other payment referred to in section 92(2)(j);
    • (w) assistance in the form of a subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement (by whatever name called) by the Central Government or a State Government or any authority or body or agency, in cash or kind, to the assessee other than—
    • (i) the subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset as per section 39(1)(d) and (3); or
    • (ii) the subsidy or grant by the Central Government for the purpose of the corpus of a trust or institution established by the Central Government or a State Government,

where,—

1. (A) "card game and other game of any sort" includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game;
   • (B) "Keyman insurance policy" shall have the meaning assigned to it in Schedule II (Note 1);
   • (C) "lottery" includes winnings from prizes awarded to any person by draw of lots or by chance or in any other manner, under any scheme or arrangement, called by any name;
2. (50) "Income Computation and Disclosure Standards" means such standards as may be notified under section 276(2);
3. (51) "Income-tax Officer" means a person appointed to be an Income-tax Officer under section 237(1);
4. (52) "India" means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 (80 of 1976), and the air space above its territory and territorial waters;
5. (53) "Indian company" means a company formed and registered under the Companies Act, 2013 (18 of 2013) and includes—
   • (a) company formed and registered under any law relating to companies formerly or currently in force in any part of India; or
   • (b) corporation established by or under a Central Act or State Act or Provincial Act; or
   • (c) institution or association or body which is declared by the Board to be a company under clause (28),

the registered or principal office of which is in India;

1. (54) "Indian currency" shall have the same meaning as assigned to it in section 2(q) of the Foreign Exchange Management Act, 1999 (42 of 1999);
2. (55) "infrastructure capital company" means a company which makes investments by acquiring shares or providing long-term finance to—
   • (a) any enterprise or undertaking wholly engaged in the business referred to in section 80-IA(4) or 80-IAB(1) of the Income-tax Act, 1961 (43 of 1961); or
   • (b) an undertaking developing and building—
   • (i) a housing project referred to in section 80-IB(10) of the Income-tax Act, 1961 (43 of 1961); or
   • (ii) a project for constructing a hotel of not less than three star category as classified by the Central Government; or
   • (iii) a project for constructing a hospital with at least one hundred beds for patients;
3. (56) "infrastructure capital fund" means a fund operating under a trust deed registered under the Registration Act, 1908 (16 of 1908) established to raise moneys by the trustees for investment by acquiring shares or providing long-term finance to enterprises or undertakings referred to in clause (55);
4. (57) "Inspector of Income-tax" means a person appointed to be an Inspector of Income-tax under section 237(1);
5. (58) "insurer" means an insurer, being an Indian insurance company, as defined under section 2(7A) of the Insurance Act, 1938 (4 of 1938), which has been granted a certificate of registration under section 3 of that Act;
6. (59) "interest" means interest payable in any manner for moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes service fee or any other charges for the moneys borrowed or debt incurred or for any credit facility that has not been utilised;
7. (60) "interest on securities" means—
   • (a) interest on any security of the Central Government or a State Government;
   • (b) interest on debentures or other securities for money issued by or on behalf of a local authority or a company or a corporation established by a Central Act or State Act or Provincial Act;
8. (61) "International Financial Services Centre" shall have the same meaning as assigned to it in section 2(q) of the Special Economic Zones Act, 2005 (28 of 2005);
9. (62) "Joint Commissioner" means a person appointed to be a Joint Commissioner of Income-tax or an Additional Commissioner of Income-tax under section 237(1);
10. (63) "Joint Commissioner (Appeals)" means a person appointed to be a Joint Commissioner of Income-tax (Appeals) or an Additional Commissioner of Income-tax (Appeals) under section 237(1);
11. (64) "Joint Director" means a person appointed to be a Joint Director of Income-tax or an Additional Director of Income-tax under section 237(1);
12. (65) "legal representative" shall have the same meaning as assigned to it in section 2(11) of the Code of Civil Procedure, 1908 (5 of 1908);
13. (66) "liable to tax", in relation to a person and with reference to a country, means that there is an income-tax liability on such person under the law of that country for the time being in force and shall include a person who has subsequently been exempted from such liability under the law of that country;
14. (67) "long-term capital asset" means a capital asset which is not a short-term capital asset;
15. (68) "long-term capital gain" means capital gains arising from the transfer of a long-term capital asset;
16. (69) "manufacture", with its grammatical variations and cognate expressions, means a change in a non-living physical object or article or thing—
    • (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or
    • (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure;
17. (70) "maximum marginal rate" means the rate of income-tax (including surcharge on income-tax) applicable in relation to the highest slab of income for an individual, association of persons or, as the case may be, body of individuals, as specified in the Finance Act of the relevant year;
18. (71) "non-banking financial company" shall have the same meaning as assigned to it in section 45-I(f) of the Reserve Bank of India Act, 1934 (2 of 1934);
19. (72) "non-resident" means a person who is not a "resident", and for the purposes of sections 161, 174 and 312, includes a person who is not ordinarily resident as per section 6(13);
20. (73) "notification" means a notification published in the Official Gazette and the expression "notify" with its grammatical variations and cognate expressions shall be construed accordingly;
21. (74) "partner" shall have the same meaning as assigned to it in section 4 of the Indian Partnership Act, 1932 (9 of 1932), and shall include—
    • (a) any person who, being a minor, has been admitted to the benefits of partnership; and
    • (b) a partner of a limited liability partnership as defined in section 2(1)(q) of the Limited Liability Partnership Act, 2008 (6 of 2009);
22. (75) "partnership" shall have the same meaning as assigned to it in section 4 of the Indian Partnership Act, 1932 (9 of 1932), and shall include a "limited liability partnership" as defined in section 2(1)(n) of the Limited Liability Partnership Act, 2008 (6 of 2009);
23. (76) "Permanent Account Number (PAN)" means a unique number consisting of ten alphanumeric characters, allotted by the Assessing Officer to a person for the purpose of identification under this Act, and includes a Permanent Account Number allotted under the new series;
24. (77) "person" includes—
    • (a) an individual;
    • (b) a Hindu undivided family;
    • (c) a company;
    • (d) a firm;
    • (e) an association of persons or a body of individuals, whether incorporated or not;
    • (f) a local authority; and
    • (g) every artificial juridical person, not falling within any of the preceding sub-clauses,

whether or not such an association of persons or a body of individuals or a local authority or an artificial juridical person was formed or established or incorporated with the object of deriving income, profits, or gains;

1. (78) "person of Indian origin" means an individual who or either of his parents or any of his grand-parents, was born in undivided India;
2. (79) "person who has a substantial interest in the company", in relation to a company means a person who is the beneficial owner of shares, not being shares entitled to a fixed rate of dividend, whether with or without a right to participate in profits, carrying not less than 20% of the voting power;
3. (80) "prescribed" means prescribed by rules made under this Act;
4. (81) "Principal Chief Commissioner" means a person appointed to be a Principal Chief Commissioner of Income-tax under section 237(1);
5. (82) "Principal Commissioner" means a person appointed to be a Principal Commissioner of Income-tax under section 237(1);
6. (83) "Principal Director" means a person appointed to be a Principal Director of Income-tax under section 237(1);
7. (84) "Principal Director General" means a person appointed to be a Principal Director General of Income-tax under section 237(1);
8. (85) "principal officer", with reference to a local authority or a company or any other public body or any association of persons or any body of individuals, means—
   • (a) the secretary, treasurer, manager or agent of the authority, company, association or body; or
   • (b) any person connected with the management or administration of the local authority, company, association or body upon whom the Assessing Officer has served a notice of his intention of treating him as the principal officer thereof;
9. (86) "profession" includes vocation;
10. (87) "public sector bank" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980) and a bank included in the category "other public sector banks" by the Reserve Bank of India;
11. (88) "public sector company" means any corporation established by or under any Central Act or State Act or Provincial Act or a Government company as defined in section 2(45) of the Companies Act, 2013 (18 of 2013);
12. (89) "public servant" shall have the same meaning as assigned to it in section 2(28) of the Bharatiya Nyaya Sanhita, 2023 (45 of 2023);
13. (90) "rate or rates in force" or "rates in force", in relation to a tax year, for the purposes of—
    • (a) (i) computing the income-tax chargeable under section 316(5) or 317(2) or 319 or 320(2); or

(ii) deducting income-tax under section 392(1) to (6) from income chargeable under the head "Salaries"; or

(iii) computing the advance tax payable under Chapter XIX-C in a case not falling under section 207 or 194(1) (Table: Sl. No. 1) or 194(1)(Table: Sl. No. 6) or 214 or 307 or 308 or 311; or

(iv) deducting tax under section 393(1) [Table: Sl. No. 1(i)], [Table: Sl. No. 5(i)], [Table: Sl. No. 5(ii)], [Table: Sl. No. 5(iii)] and (Table: Sl. No. 7) or in section 393(3)(Table: Sl. No. 1), (Table: Sl. No. 2) and (Table: Sl. No. 3), means the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year;

1. (b) computing the advance tax payable under Chapter XIX-C in a case falling under section 207 or 194(1) (Table: Sl. No. 1) or 194(1) (Table: Sl. No. 6) or 214 or 307 or 308 or 311 the rate or rates specified in the said respective section, or the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant tax year, whichever is applicable;
   • (c) deducting tax under section 393(2) (Table: Sl. No. 6), (Table: Sl. No. 7), (Table: Sl. No. 8), (Table: Sl. No. 9) and (Table: Sl. No. 17), the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant tax year or the rate or rates of income-tax specified in an agreement entered into by the Central Government under section 159(1), or an agreement notified by the Central Government under section 159(2), whichever is applicable;
2. (91) "recognised provident fund" means a provident fund which has been and continues to be recognised by the approving authority as per Part A of the Schedule XI, and includes a provident fund established under a scheme framed under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952);
3. (92) "recognised stock exchange" means a recognised stock exchange as referred to in section 2(f) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions, as may be prescribed, and notified by the Central Government for this purpose;
4. (93) "regular assessment" means the assessment made under section 270(10) or 271;
5. (94) "relative", in relation to an individual, means the husband, wife, brother, sister or any lineal ascendant (maternal as well as paternal) or descendant of that individual;
6. (95) "Reserve Bank of India" means the Bank constituted under section 3(1) of the Reserve Bank of India Act, 1934 (2 of 1934);
7. (96) "resident" means a person who is resident in India as per section 6;
8. (97) "resulting company" means one or more companies (including a wholly owned subsidiary thereof) to which the undertaking of the demerged company is transferred in a demerger and, the resulting company in consideration of such transfer of undertaking, issues shares to the shareholders of the demerged company and includes any authority or body or local authority or public sector company or a company established, constituted or formed as a result of demerger;
9. (98) "scheduled bank" shall have the same meaning as assigned to it in section 2(e) of the Reserve Bank of India Act, 1934 (2 of 1934);
10. (99) "Securities and Exchange Board of India" shall have the same meaning as assigned to it in section 2(1)(a) of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
11. (100) "senior citizen" means an individual resident in India who is of the age of sixty years or more at any time during the relevant tax year;
12. (101) (a) "short-term capital asset" means a capital asset held by an assessee for not more than twenty-four months immediately preceding the date of its transfer; and

(b) where the capital asset is a—

1. (i) security listed in a recognised stock exchange in India; or
   • (ii) unit of the Unit Trust of India; or
   • (iii) unit of an equity-oriented fund; or
   • (iv) zero-coupon bond,

the provisions of sub-clause (a) shall have effect, as if for the words "twenty-four months", the words "twelve months" had been substituted; and

(c) in determining the period for which capital asset is held by the assessee,—

1. (A) in the case of a share held in a company in liquidation, there shall be excluded the period subsequent to the date on which the company goes into liquidation;
   • (B) there shall be included the period for which—
   • (I) the asset was held by the previous owner referred to in section 73(1)(Table: Sl. No. 1), for a capital asset which becomes the property of the assessee in the circumstances mentioned in the said section;
   • (II) the share or shares in the amalgamating company were held by the assessee, for a capital asset being a share or shares in an Indian company, which becomes the property of the assessee in consideration of a transfer referred to in section 70(1)(f);
   • (III) the share or shares held in the demerged company were held by the assessee, for a capital asset being a share or shares in an Indian company, which becomes the property of the assessee in consideration of a demerger;
   • (IV) the person was a member of a recognised stock exchange in India immediately before its demutualisation or corporatisation, for a capital asset, being trading or clearing rights of that recognised stock exchange, acquired by a person pursuant to such demutualisation or corporatisation of that recognised stock exchange;
   • (V) the person was a member of a recognised stock exchange in India immediately before its demutualisation or corporatisation, for a capital asset being equity share or shares in a company allotted pursuant to such demutualisation or corporatisation of that recognised stock exchange;
   • (VI) the share or shares were held by the assessee, for a capital asset being a unit of a business trust, allotted pursuant to transfer of share or shares as referred to in section 70(1)(zi);
   • (VII) the unit or units in the consolidating scheme of a mutual fund were held by the assessee, for a capital asset being a unit or units, which becomes the property of the assessee in consideration of a transfer referred to in section 70(1)(zj);
   • (VIII) the preference shares were held by the assessee, for a capital asset being equity shares in a company, which becomes the property of the assessee in consideration of a transfer referred to in section 70(1)(zb);
   • (IX) the unit or units in the consolidating plan of a mutual fund scheme were held by the assessee, for a capital asset being a unit or units, which becomes the property of the assessee in consideration of a transfer referred to in section 70(1)(zk);
   • (X) the original unit or units in the main portfolio were held by the assessee, for a capital asset being a unit or units in a segregated portfolio referred to in section 73(1) (Table: Sl. No. 11);
   • (XI) gold was held by the assessee before conversion into the Electronic Gold Receipt, for a capital asset being Electronic Gold Receipt issued in respect of such gold deposited as referred to in section 70(1)(y);
   • (XII) Electronic Gold Receipt was held by the assessee before its conversion into gold for a capital asset being gold released in respect of such Electronic Gold Receipt as referred to in section 70(1)(y);
   • (C) there shall be reckoned, the period from—
   • (I) the date of its conversion or treatment, for a capital asset referred to in section 26(2)(j);
   • (II) the date of allotment of a share or any other security (herein referred to as the financial asset), for a capital asset being such financial asset subscribed to by the assessee on the basis of his right to subscribe to such financial asset or subscribed to by the person in whose favour the assessee has renounced his right to subscribe to such financial asset;
   • (III) the date of the offer of the right to subscribe to any financial asset which is renounced in favour of any other person by the company or institution, as the case may be, making such offer, for a capital asset, being such right;
   • (IV) the date of the allotment of a financial asset allotted without any payment and on the basis of holding of any other financial asset, for a capital asset being such financial asset;
   • (V) the date of allotment or transfer of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer free of cost or at concessional rate to his employees (including former employee or employees), for a capital asset being such specified security or sweat equity shares;
   • (VI) the date on which a request for the redemption was made, for a capital asset, being share or shares of a company, which is acquired by the non-resident assessee on redemption of Global Depository Receipts referred to in section 209(1)(Table: Sl. No. 2) held by such assessee;
   • (D) for capital assets other than those mentioned in items (A) to (C), the said period shall be determined in such manner, as may be prescribed,

where,—

1. (A) "equity oriented fund" shall have the meaning assigned to it in section 198(8);
   • (B) "security" shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
   • (C) "specified security" means the securities as defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and, where employees' stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme;
   • (D) "sweat equity shares" means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called;
2. (102) "short-term capital gain" means capital gains arising from the transfer of a short-term capital asset;
3. (103) (a) "slump sale" means the transfer of one or more undertaking, by any means, for a lump sum consideration without values being assigned to the individual assets and liabilities in such transfer;

(b) for the purpose of sub-clause (a)—

1. (i) "undertaking" shall have the meaning assigned to it in clause (35)(i); and
   • (ii) the determination of the value of an asset or liability for the sole purpose of payment of stamp duty, registration fees or other similar taxes or fees shall not be regarded as assignment of values to individual assets or liabilities;
2. (104) "Special Economic Zone" shall have the same meaning as assigned to it in section 2(za) of the Special Economic Zones Act, 2005 (28 of 2005);
3. (105) "stamp duty value" means the value adopted or assessed or assessable by any authority of the Central Government or State Government for the payment of stamp duty in respect of an immovable property, where the expression "assessable" shall mean the value which any authority of that Government would have adopted or assessed as if it were referred to such authority for the purposes of payment of stamp duty, irrespective of anything to the contrary contained in any other law in force;
4. (106) "tax" means income-tax chargeable under this Act;
5. (107) "Tax Recovery Officer" means an Income-tax Officer authorised in writing by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, to exercise—
   • (a) the powers of a Tax Recovery Officer; and
   • (b) the powers and functions conferred on, or assigned to, an Assessing Officer under this Act, and as may be prescribed;
6. (108) "total income" means the total amount of income referred to in section 5, computed in the manner as laid down in this Act;
7. (109) "transfer" in relation to a capital asset, includes—
   • (a) the sale, exchange or relinquishment of the asset; or
   • (b) the extinguishment of any rights therein; or
   • (c) the compulsory acquisition thereof under any law in force; or
   • (d) where the asset is converted by the owner into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; or
   • (e) the maturity or redemption of a zero coupon bond; or
   • (f) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner) which has the effect of transferring, or enabling the enjoyment of, any immovable property; or
   • (g) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882); or
   • (h) disposing of, or parting with, an asset or any interest therein, or creating any interest in any asset in any manner, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, irrespective of whether such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India,

where, the expression "immovable property" means—

1. (i) any land or any building or part of a building, and includes, where any land or any building or part of a building is to be transferred together with any machinery, plant, furniture, fittings or other things, such machinery, plant, furniture, fittings or other things also, such that the land, building, part of a building, machinery, plant, furniture, fittings and other things include any rights therein;
   • (ii) any rights in or with respect to any land or any building or a part of a building (whether or not including any machinery, plant, furniture, fittings or other things therein), which has been constructed or which is to be constructed, accruing or arising from any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement of whatever nature), not being a transaction by way of sale, exchange or lease of such land, building or part of a building;
2. (110) "Valuation Officer" means a person appointed by the Central Government as a Valuation Officer who shall exercise powers as specified in section 269(3), and includes a Regional Valuation Officer, a District Valuation Officer and an Assistant Valuation Officer;
3. (111) "virtual digital asset" means—
   • (a) any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, called by any name, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme; and can be transferred, stored or traded electronically;
   • (b) a non-fungible token or any other token of similar nature, by whatever name called;
   • (c) any other digital asset, as the Central Government may, by notification, specify;
   • (d) any crypto-asset being a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions, whether or not such asset is included in sub-clause (a) or (b) or (c),

where,—

1. (i) "non-fungible token" means such digital asset as the Central Government may, by notification, specify;
   • (ii) the Central Government may, by notification, exclude any digital asset from this definition, subject to such conditions as specified therein;
2. (112) "zero coupon bond" means a bond—
   • (a) issued by any infrastructure capital company or infrastructure capital fund or infrastructure debt fund or public sector company or scheduled bank on or after the 1st June, 2005;
   • (b) for which no payment and benefit is received or receivable before maturity or redemption from infrastructure capital company or infrastructure capital fund or infrastructure debt fund or public sector company or scheduled bank; and
   • (c) which the Central Government may, by notification, specify,

where, the expression "infrastructure debt fund" means the infrastructure debt fund notified by the Central Government under Schedule VII (Table: Sl. No. 46).

1. (1) For the purposes of this Act, "tax year" means the twelve months period of the financial year commencing on the 1st April.
2. (2) In the case of a business or profession newly set up, or a source of income newly coming into existence in any financial year, the tax year shall be the period beginning with—
   • (a) the date of setting up of such business or profession; or
   • (b) the date on which such source of income newly comes into existence,

and ending with the said financial year.

CHAPTER II

BASIS OF CHARGE

1. (1) Where any Central Act enacts that income-tax shall be charged for any tax year at any rate or rates, income-tax for such tax year shall be charged at that rate or those rates in accordance with and subject to the provisions of this Act.
2. (2) The charge of income-tax under sub-section (1) shall be on the total income of the tax year of every person as per the provisions of this Act.
3. (3) Income-tax shall also include any additional income-tax, by whatever name called, levied under this Act.
4. (4) If this Act provides that income-tax is to be charged in respect of income of a period other than the tax year, it shall be charged accordingly.
5. (5) For the income chargeable under this section, income-tax shall be deducted or collected at source or paid in advance as provided under this Act.

1. (1) Subject to the provisions of this Act, the total income of any tax year of a person, who is a resident, includes all income from whatever source derived, which—
   • (a) is received or deemed to be received in India in that year by or on behalf of such person;
   • (b) accrues or arises, or is deemed to accrue or arise, to such person in India in that year; or
   • (c) accrues or arises to such person outside India in that year, but when such person is "not ordinarily resident" in India under section 6(13), such income shall be included only when it is derived from a business controlled in or a profession set up in India.
2. (2) Subject to the provisions of this Act, the total income of a tax year of a person, who is a non-resident, includes all income from whatever source derived, which—
   • (a) is received or deemed to be received in India in that year by or on behalf of such person; or
   • (b) accrues or arises, or is deemed to accrue or arise, to such person in India in that year.
3. (3) Income accruing or arising outside India shall not be deemed to be received in India under this section by reason only of the fact that it is taken into account in a balance sheet prepared in India.
4. (4) If an income has been included in a person's total income on the basis that it—
   • (a) has accrued or arisen; or
   • (b) is deemed to have accrued or arisen,

to such person, it shall not again be included on the basis that it is received or deemed to be received by that person in India.

1. (1) For the purposes of this Act, residential status in India in a tax year of a person shall be determined as per the provisions of this section.
2. (2) An individual shall be resident in India in a tax year, if he—
   • (a) is in India for a total period of one hundred and eighty-two days or more in that tax year; or
   • (b) is in India cumulatively for sixty days or more during that year and has been in India cumulatively for three hundred and sixty-five days or more in the four years preceding such tax year.
3. (3) The provisions of sub-section (2)(b) shall not apply in the case of an individual who is a citizen of India and leaves India in any tax year—
   • (a) as a member of the crew of an Indian ship, as defined in section 3(18) of the Merchant Shipping Act, 1958 (44 of 1958); or
   • (b) for the purposes of employment outside India.
4. (4) The provisions of sub-section (2)(b) shall not apply, subject to the provisions of sub-section (5), in the case of an individual—
   • (a) who is a citizen of India or a person of Indian origin; and
   • (b) who being outside India, comes on a visit to India in any tax year.
5. (5) Where the person referred to in sub-section (4) has a total income exceeding fifteen lakh rupees during the tax year referred therein (other than the income from foreign sources), sub-section (2)(b) shall apply as if the words "sixty days" had been substituted with "one hundred and twenty days".
6. (6) For the purposes of sub-section (2), if the individual is—
   • (a) a citizen of India; and
   • (b) a member of the crew of a foreign-bound ship leaving India,

the total number of days in India, in respect of that voyage, shall be determined in such manner and subject to such conditions, as may be prescribed.

1. (7) Irrespective of the provisions of sub-sections (2) to (6), an individual shall be deemed to be resident in India for a tax year, if he—
   • (a) is a citizen of India;
   • (b) is not liable to tax in any other country or territory due to his domicile, residence, or similar criteria; and
   • (c) has total income exceeding fifteen lakh rupees during such tax year (other than the income from foreign sources).
2. (8) Sub-section (7) shall not apply to an individual, who is resident in India for a tax year under sub-sections (2) to (6).
3. (9) A Hindu undivided family, firm or other association of persons shall be resident in India in any tax year unless the control and management of its affairs is situated wholly outside India during such tax year.
4. (10) (a) A company is said to be a resident in India in any tax year, if—
   • (i) it is an Indian company; or
   • (ii) its place of effective management is in India in that tax year;
   • (b) for the purposes of this sub-section, "place of effective management" means a place where key management and commercial decisions necessary for the conduct of business of the company as a whole are, in substance, made.
5. (11) Every other person is resident in India in any tax year unless during that tax year the control and management of the affairs of such person is situated wholly outside India.
6. (12) If a person is resident in India in a tax year for any source of income, he shall be deemed to be resident in India in that tax year for each of his other sources of income.
7. (13) A person is not ordinarily resident in India in any tax year, if that person is—
   • (a) an individual who has been, or a Hindu undivided family, whose manager has been—
   • (i) a non-resident in India in nine out of the ten tax years preceding that year; or
   • (ii) in India cumulatively for seven hundred and twenty-nine days or less in seven tax years preceding that year; or
   • (b) a citizen of India or a person of Indian origin,—
   • (i) whose total income excluding income from foreign sources exceeds fifteen lakh rupees during the tax year, as mentioned in sub-section (5); and
   • (ii) who has been in India cumulatively for one hundred and twenty days or more but less than one hundred and eighty-two days during the tax year; or
   • (c) a citizen of India who is deemed to be resident in India under sub-section (7).
8. (14) For the purposes of this section, "income from foreign sources" means the income, which accrues or arises outside India (except income derived from a business controlled in or a profession set up in India) and which is not deemed to accrue or arise in India.

1. (1) The following incomes shall be deemed to be received in the tax year:—
   • (a) the annual accretion in that year to the balance at the credit of an employee participating in a recognised provident fund, to the extent provided in paragraph 6 of Part A of Schedule XI;
   • (b) the transferred balance in a recognised provident fund, to the extent provided in paragraph 11(4) and (5) of Part A of Schedule XI;
   • (c) the contribution made by the Central Government or any other employer in that year to the account of an employee under a pension scheme mentioned in section 124.
2. (2) For inclusion in the total income of an assessee,—
   • (a) any dividend declared by a company or distributed or paid by it within the meaning of section 2(40)(a) to 4[(e)] shall be deemed to be the income of the tax year in which it is so declared, distributed or paid, as the case may be;
   • (b) any interim dividend shall be deemed to be the income of the tax year in which the amount of such dividend is unconditionally made available by the company to the member who is entitled to it.

1. (1) Where a specified person receives during the tax year any capital asset or stock-in-trade, or both, from a specified entity in connection with the dissolution or reconstitution of such specified entity, then the specified entity shall be deemed to have transferred such capital asset or stock-in-trade, or both, to the specified person in the year in which such capital asset or stock-in-trade, or both, are received by the specified person.
2. (2) Any profits and gains arising from the deemed transfer mentioned in sub-section (1) by the specified entity shall be—
   • (i) deemed to be the income of such specified entity of the tax year in which such capital asset or stock-in-trade, or both, were received by the specified person; and
   • (ii) chargeable to income-tax as income of such specified entity under the head "Profits and gains of business or profession" or under the head "Capital gains".
3. (3) For the purposes of this section, fair market value of the capital asset or stock-in-trade, or both, on the date of its receipt by the specified person shall be deemed to be the full value of the consideration received or accruing as a result of such deemed transfer mentioned in sub-section (1).
4. (4) If any difficulty arises in giving effect to the provisions of this section and section 67(10), the Board may, with the previous approval of the Central Government, issue guidelines for removing the difficulty.
5. (5) Every guideline issued by the Board under sub-section (4) shall be laid 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 such guideline or both Houses agree that the guideline, should not be issued, the guideline 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 guideline.
6. (6) For the purposes of this section,—
   • (a) "specified entity" means a firm or other association of persons or body of individuals (not being a company or a co-operative society);
   • (b) "specified person" means a person, who is a partner of a firm or member of other association of persons or body of individuals (not being a company or a co-operative society) in any tax year;
   • (c) "reconstitution of the specified entity" means, where—
   • (i) one or more of its partners or members, of such specified entity ceases to be partners or members; or
   • (ii) one or more new partners or members are admitted in such specified entity in such circumstances that one or more of the persons who were partners or members, of the specified entity, before the change, continue as partner or partners or member or members after the change; or
   • (iii) all the partners or members, of such specified entity continue with a change in their respective share or in the shares of some of them.

1. (1) The income referred to in sub-sections (2) to (8) shall be deemed to accrue or arise in India.
2. (2) The income accruing or arising, directly or indirectly, through or from—
   • (a) any asset or source of income in India; or
   • (b) any property in India; or
   • (c) any business connection in India; or
   • (d) the transfer of a capital asset situated in India,

shall be deemed to accrue or arise in India.

1. (3) Any income falling under the head "Salaries" shall be deemed to accrue or arise in India, if it is—
   • (a) earned in India, and any income payable for,—
   • (i) services rendered in India; and
   • (ii) the rest period or leave period which is preceded and succeeded by services rendered in India and forms part of the service contract of employment,

shall be regarded as income earned in India;

1. (b) payable by the Government to an Indian citizen for services rendered outside India.
2. (4) Any dividend paid by an Indian company outside India shall be deemed to accrue or arise in India.
3. (5) (a) Income by way of interest payable by—
   • (i) the Government;
   • (ii) a resident, except where it is payable in respect of any debt incurred, or moneys borrowed and used, for the purpose of—
   • (A) a business or profession carried on by such resident outside India; or
   • (B) making or earning any income by such resident from any source outside India; or
   • (iii) a non-resident, if it is in respect of any debt incurred, or moneys borrowed and used, for the purposes of a business or profession carried on by such non-resident in India,

shall be deemed to accrue or arise in India;

1. (b) for the purposes of clause (a),—
   • (i) any interest payable by the permanent establishment in India of a non-resident person engaged in the business of banking, to the head office or any other permanent establishment or any other part of such non-resident outside India shall be deemed to accrue or arise in India and shall be chargeable to tax in addition to any income attributable to such permanent establishment in India;
   • (ii) such permanent establishment in India shall—
   • (A) be deemed to be a person separate from, and independent of, the non-resident person of which it is a permanent establishment; and
   • (B) the provisions of this Act relating to computation of total income, determination of tax and collection and recovery shall apply, accordingly;
   • (iii) "permanent establishment" shall have the meaning assigned to it in section 173(c).
2. (6) (a) Income by way of royalty payable by—
   • (i) the Government;
   • (ii) a resident, except where the royalty is payable in respect of any right, property or information used or services utilised for the purposes of—
   • (A) a business or profession carried on by such resident outside India; or
   • (B) making or earning any income by such resident from any source outside India; or
   • (iii) a non-resident, if the royalty is payable in respect of any right, property or information used or services utilised for the purposes of—
   • (A) a business or profession carried on by such non-resident in India; or
   • (B) making or earning any income by such non-resident from any source in India,

shall be deemed to accrue or arise in India;

1. (b) in this sub-section, "royalty" means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains") for the following—
   • (i) the transfer or grant of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property;
   • (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property;
   • (iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property;
   • (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill;
   • (v) the use or right to use any industrial, commercial or scientific equipment except the amounts referred in section 61(2) (Table: Sl. No. 5);
   • (vi) the transfer or grant of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including—
   • (A) films or video tapes for use in connection with television; or
   • (B) tapes for use in connection with radio broadcasting;
   • (vii) the rendering of services in connection with the activities referred to in sub-clauses (i) to (vi);
   • (c) for the purposes of clause (b),—
   • (i) the transfer or grant of all or any rights in respect of any right, property or information includes transfer or grant of all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which that right is transferred;
   • (ii) royalty includes consideration in respect of any right, property or information, whether or not—
   • (A) the possession or control of that right, property or information is with the payer;
   • (B) that right, property or information is used directly by the payer;
   • (C) the location of that right, property or information is in India;
   • (iii) the expression "process" includes transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar technology, whether or not that process is secret;
   • (iv) the expression "computer software" means any computer programme recorded on any disc, tape, perforated media or other information storage device and includes any such programme or any customised electronic data.
2. (7) (a) Income by way of fees for technical services payable by—
   • (i) the Government;
   • (ii) a resident, except where it is payable in respect of services utilised for—
   • (A) a business or profession carried on by such resident outside India; or
   • (B) making or earning any income by such resident from any source outside India; or
   • (iii) a non-resident, if it is payable in respect of services utilised for—
   • (A) a business or a profession carried on by such non-resident in India; or
   • (B) making or earning any income by such non-resident from any source in India,

shall be deemed to accrue or arise in India;

1. (b) in this sub-section, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration—
   • (i) for any construction, assembly, mining or like project undertaken by the recipient; or
   • (ii) which would be income of the recipient chargeable under the head "Salaries".
2. (8) Income arising outside India, in the nature of a sum referred to in section 2(49)(u), paid by a person resident in India,—
   • (a) to a non-resident, not being a company, or to a foreign company; or
   • (b) to a person not ordinarily resident in India under section 6(13),

shall be deemed to accrue or arise in India.

1. (9) (a) For the purposes of this section, "business connection" in India shall include—
   • (i) any business carried out in India in the case of which all or part of operation are carried out in India; or
   • (ii) a significant economic presence in India;
   • (b) in clause (a), a business carried out in India shall include—
   • (i) business activity carried out through a person who, acting on behalf of the non-resident,—
   • (A) has and habitually exercises in India, an authority to conclude contracts on behalf of the non-resident or habitually concludes contracts or habitually plays the principal role leading to conclusion of contracts by that non-resident and the contracts are—
   • (I) in the name of the non-resident; or
   • (II) for the transfer of the ownership of, or for the granting of the right to use, property owned by that non-resident or that non-resident has the right to use; or
   • (III) for the provision of services by the non-resident; or
   • (B) has no such authority, but habitually maintains in India a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the non-resident; or
   • (C) habitually secures orders in India, mainly or wholly for the non-resident, or for that non-resident and other non-residents controlling, controlled by, or subject to the same common control, as that non-resident;
   • (ii) a business activity carried out through a person who is a broker, general commission agent or any other agent, through whom such activity is carried out, and who is working mainly or wholly on behalf of—
   • (A) a non-resident (referred to as the principal non-resident); or
   • (B) such non-resident and other non-residents who—
   • (I) are controlled by the principal non-resident; or
   • (II) have a controlling interest in the principal non-resident; or
   • (III) are subject to the same common control as the principal non-resident,

and such person shall not be deemed as having an independent status;

1. (c) in clauses (a) and (b), a business carried out in India shall not include any business activity or operations of the non-resident—
   • (i) 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 is acting in the ordinary course of his business; or
   • (ii) which are confined to any of the following—
   • (A) the purchase of goods in India for the purposes of export out of India; or
   • (B) the collection of news and views in India for transmission out of India, in the case where such non-resident is engaged in the business of running a news agency or of publishing newspapers, magazines or journals; or
   • (C) the display of uncut and unassorted diamond in any special zone notified by the Central Government, in the case where such non-resident is a foreign company engaged in the business of mining of diamonds; or
   • (D) the shooting of any cinematographic film in India, in the case where such non-resident is a person being—
   • (I) an individual who is not an Indian citizen; or
   • (II) a firm which does not have a partner who is an Indian citizen or who is resident in India; or
   • (III) a company which does not have a shareholder who is an Indian citizen or who is resident in India;
   • (d) a non-resident shall have a significant economic presence in India, where there is—
   • (i) transaction in respect of any goods, services or property carried out by such non-resident with any person in India including provision of download of data or software in India, if the aggregate of payments arising from such transaction or transactions during the tax year exceeds such amount as may be prescribed; or
   • (ii) systematic and continuous soliciting of business activities or engaging in interaction with such number of users in India, as may be prescribed,

irrespective of whether the agreement for such transactions or activities is entered in India, or the non-resident has a residence or place of business in India, or the non-resident renders any services in India;

1. (e) the provisions of clause (d) shall not apply to the transactions or activities which are confined to the purchase of goods in India for the purpose of export;
   • (f) in this section, only the income which is reasonably attributable to—
   • (i) operations carried out in India, when all operations of the business are not carried out in India;
   • (ii) transactions or activities referred to in clause (d),

shall be deemed to accrue or arise in India from any business connection;

1. (g) the income attributable to operations of any business or significant economic presence in this section shall also include income from—
   • (i) such advertisement which targets a customer who resides in India or a customer who accesses the advertisement through internet protocol address located in India;
   • (ii) sale of data collected from a person who resides in India or from a person who uses internet protocol address located in India; and
   • (iii) sale of goods or services using data collected from a person who resides in India or from a person who uses internet protocol address located in India.
2. (10) In sub-section (2),—
   • (a) an asset or a capital asset, being any share of, or interest in, a company or entity registered or incorporated outside India shall be deemed to be situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets (whether tangible or intangible) located in India;
   • (b) the share or interest, referred to in clause (a), shall be deemed to derive its value substantially from the assets (whether tangible or intangible) located in India, if on the specified date, the value of such assets,—
   • (i) exceeds the amount of ten crore rupees; and
   • (ii) represents at least 50% of the value of all the assets owned by the company or entity, as the case may be;
   • (c) the value of an asset shall be the fair market value on the specified date of such asset without reduction of liabilities, if any, in respect of the asset, determined in the manner, as may be prescribed;
   • (d) the expression "specified date" in clause (c) means—
   • (i) the date on which the accounting period of the company or, as the case may be, the entity ends preceding the date of transfer of a share or an interest; or
   • (ii) the date of transfer, if the book value of the assets of the company or, as the case may be, the entity on the date of transfer exceeds the book value of the assets as on the date referred to in sub-clause (i), by 15%;
   • (e) the expression "accounting period" in clause (d) means—
   • (i) each period of twelve months ending with the 31st March;
   • (ii) each period of twelve months ending with a date other than the 31st March, in a case where a company or an entity, referred to in clause (a), regularly adopts a period of twelve months ending on a day other than the 31st March for—
   • (A) complying with the provisions of the tax laws of the territory, of which it is a resident, for tax purposes; or
   • (B) reporting to persons holding the share or interest;
   • (iii) the period beginning with the date of registration or incorporation of a company or entity and ending with the 31st March or such other day referred to in sub-clause (ii), in a case where a company or entity comes into existence and the later accounting period shall be the successive periods of twelve months; or
   • (iv) the period beginning with the 1st April or such other day as applicable in sub-clause (ii) and ending with the date immediately preceding the date on which the company or entity ceases to exist, in a case where the company or the entity ceases to exist before the end of the accounting period;
   • (f) in case of assets mentioned in clause (a), if—
   • (i) there is a transfer outside India of any share of, or interest in, a company or an entity registered or incorporated outside India by a non-resident transferor; and
   • (ii) all the assets owned, directly or indirectly, by that company or entity are not located in India,

then, the income referred to in sub-section (2) shall be only such part of the income as is reasonably attributable to assets located in India and determined in the manner, as may be prescribed;

1. (g) the income referred to in sub-section (2) shall not include income from transfer, outside India, of any share of, or interest in, a company or an entity registered or incorporated outside India,—
   • (i) if such share of, or interest in, a company or an entity registered or incorporated outside India is held by a non-resident by way of investment, directly or indirectly,—
   • (A) in Category I or Category II foreign portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014, prior to their repeal, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992);
   • (B) in Category I foreign portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992);
   • (ii) if such company or entity directly owns the assets situated in India and the transferor (whether individually or along with its associated enterprises), at any time in the twelve months preceding the date of transfer,—
   • (A) does not hold the right of management or control in relation to such company or the entity; and
   • (B) does not hold voting power or share capital or interest exceeding 5% of the total voting power or total share capital or total interest, as the case may be, of such company or entity; or
   • (iii) if such company or entity indirectly owns the assets situated in India and the transferor (whether individually or along with its associated enterprises), at any time in the twelve months preceding the date of transfer,—
   • (A) does not hold the right of management or control in relation to such company or the entity;
   • (B) does not hold any right in, or in relation to, such company or entity which would entitle it to the right of management or control in the company or entity which directly owns the assets situated in India; and
   • (C) does not hold such percentage of voting power or share capital or interest in such company or entity which results in holding of (either individually or along with associated enterprises) a voting power or share capital or interest exceeding 5% of the total voting power or total share capital or total interest, as the case may be, of the company or entity, which directly owns the assets situated in India;
   • (iv) in this clause, "associated enterprises" shall have the meaning assigned to it in section 162.
2. (11) In sub-sections (5), (6) and (7), income of a non-resident shall be deemed to accrue or arise in India and shall be included in his total income, whether or not,—
   • (a) the non-resident has a residence or place of business or business connection in India; or
   • (b) the non-resident has rendered services in India.
3. (12) (a) In this section, the fund management activity carried out by an eligible investment fund through an eligible fund manager acting on behalf of such fund, shall not constitute business connection in India of that fund;
   • (b) the eligible investment fund mentioned in clause (a) shall not be said to be resident in India under section 6 merely because the eligible fund manager, undertaking fund management activities on its behalf, is situated in India;
   • (c) nothing contained in this section shall apply to exclude any income from the total income of the eligible investment fund, which would have been so included irrespective of whether the activity of the eligible fund manager constituted the business connection in India of such fund or not;
   • (d) nothing contained in this section shall have any effect on the scope of total income or determination of total income in the case of the eligible fund manager;
   • (e) the conditions for being an eligible investment fund or an eligible fund manager, or furnishing of requisite statements shall be as per the provisions of Schedule I;
   • (f) the Central Government may, by notification, specify that any one or more of the conditions as referred to in clause (e) shall not apply, or shall apply, with such modifications, as specified, in case of an eligible investment fund and its eligible fund manager, if—
   • (i) the eligible fund manager is located in an International Financial Services Centre; and
   • (ii) has commenced its operations on or before the 31st March, 2030.
4. (13) For the purposes of this section, the expression "through" shall mean and include "by means of", "in consequence of" or "by reason of".

If a husband and wife are governed by the community of property system (known as "COMMUNIAO DOS BENS" under the Portuguese Civil Code of 1860) in force in the State of Goa and the Union Territories of Dadra and Nagar Haveli and Daman and Diu, then—

1. (a) their income under any head of income shall not be assessed together as that of such community of property (whether treated as an association of persons or a body of individuals);
   • (b) the income mentioned in clause (a) under each head of income other than "Salaries" shall be divided equally between the husband and the wife;
   • (c) the income so divided shall be included separately in the total income of the husband and the wife respectively, and the remaining provisions of this Act shall apply accordingly; and
   • (d) where either the husband or the wife, has any income under the head "Salaries", that income shall be included in the total income of the spouse who has actually earned it.

CHAPTER III

INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME

A.—Incomes not to be included in total income

1. (1) In computing the total income of any person for a tax year under this Act, any income enumerated in Schedules II, III, IV, V and VI shall not be included, subject to fulfilment of conditions specified therein.
2. (2) Wherever the conditions referred to in the Schedules referred in sub-section (1) are not satisfied in any tax year in respect of any income enumerated in the said Schedules, such income shall be charged to tax under this Act on the total income for that tax year.
3. (3) The persons enumerated in Schedule VII shall, subject to fulfilment of the conditions specified therein, not be chargeable to tax under this Act on the total income for a tax year.
4. (4) Wherever the conditions referred to in Schedule VII are not satisfied in respect of the persons enumerated in the said Schedule in any tax year, the income of such person shall be charged to tax under the provisions of this Act for that tax year.
5. (5) The Central Government may make rules or issue notifications for the purposes of this section as specified in Schedules II, III, IV, V, VI and VII.

B.—Incomes not to be included in total income of political parties and electoral trusts

1. (1) In computing the total income of any political party or an electoral trust for a tax year under this Act, any income enumerated in Schedule VIII shall not be included, subject to fulfilment of conditions specified therein.
2. (2) Wherever the conditions referred to in Schedule VIII are not satisfied in any tax year in respect of any income enumerated in the said Schedule, such income shall be charged to tax under this Act for that tax year.
3. (3) The Central Government may make rules or issue notifications for the purposes of this section as specified in Schedule VIII.

CHAPTER IV

COMPUTATION OF TOTAL INCOME

A.—Heads of income

Save as otherwise provided in this Act, all incomes shall, for the purposes of charge of income-tax and computation of total income, be classified under the following heads of income:—

1. (a) Salaries;
   • (b) Income from house property;
   • (c) Profits and gains of business or profession;
   • (d) Capital gains; and
   • (e) Income from other sources.

1. (1) Irrespective of anything to the contrary contained in this Act, for the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income.
2. (2) Where the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with—
   • (a) the correctness of the claim of expenditure incurred by the assessee; or
   • (b) the claim made by the assessee that no expenditure has been incurred,

in relation to income which does not form part of the total income under this Act, he shall determine such amount of expenditure in accordance with any method, as may be prescribed.

1. (3) Irrespective of anything to the contrary contained in this Act, the provisions of this section shall apply in a case where any expenditure has been incurred during any tax year in relation to income which does not form part of the total income under this Act, but such income has not accrued or arisen or has not been received during that tax year.

B.—Salaries

1. (1) The following income shall be chargeable to income-tax under the head "Salaries":—
   • (a) any salary due from an employer to an assessee in the tax year, whether paid or not;
   • (b) any salary paid or allowed to him in the tax year by or on behalf of an employer though not due or before it became due to him;
   • (c) any arrears of salary paid or allowed to him in the tax year by or on behalf of an employer, if not charged to income-tax for any earlier tax year.
2. (2) For the purposes of sub-section (1), employer includes former employer.
3. (3) If any salary paid in advance is included in the total income of any person for any tax year, it shall not be included again in the total income of such person when the salary becomes due.
4. (4) Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as salary for the purposes of this section.

For the purposes of this Part, "salary" includes—

1. (a) wages;
   • (b) any annuity or pension;
   • (c) any gratuity;
   • (d) any fees or commission;
   • (e) perquisites;
   • (f) profits in lieu of, or in addition to, any salary or wages;
   • (g) any advance of salary;
   • (h) any payment received by an employee in respect of any period of leave not availed of by him;
   • (i) the annual accretion to the balance at the credit of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax as per paragraph 6 of Part A of Schedule XI;
   • (j) the aggregate of all sums that are comprised in the transferred balance as referred to in paragraph 11(2) of Part A of Schedule XI of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under sub-paragraphs (4) and (5) thereof;
   • (k) the contribution made by the Central Government or any other employer in any tax year, to the account of an employee under a pension scheme referred to in section 124; and
   • (l) the contribution made by the Central Government in any tax year, to the Agniveer Corpus Fund account of an individual enrolled in the Agnipath Scheme referred to in section 125.

1. (1) For the purposes of this Part, "perquisite" includes—
   • (a) the value of rent-free accommodation provided to the assessee by his employer computed in such manner as may be prescribed;
   • (b) the value of any accommodation, computed in such manner as may be prescribed, provided to the assessee by his employer at a concessional rate which is in excess of rent recoverable from or payable by the assessee;
   • (c) the value of any benefit or amenity granted or provided free of cost or at concessional rate in the following cases:—
   • (i) by a company to an employee, who is a director thereof or who has a substantial interest in the company;
   • (ii) by any employer (including a company) to an employee [other than employee referred in sub-clause (i)] whose income under the head "Salaries" by way of monetary payment (from one or more employers) exceeds such amount as may be prescribed;
   • (d) the value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the current employer, or former employer, free of cost or at concessional rate to the assessee;
   • (e) the value of any other benefit or amenity, as may be prescribed;
   • (f) any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee;
   • (g) any sum payable by the employer to effect an assurance on the life of the assessee or to effect a contract for an annuity, whether directly or through a fund, other than—
   • (i) a recognised provident fund; or
   • (ii) an approved superannuation fund; or
   • (iii) a Deposit-linked Insurance Fund established under—
   • (A) section 3G of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948); or
   • (B) section 6C of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952);
   • (h) aggregate amount of any contribution, in excess of Rs. 750000 in a tax year, made to the account of the assessee by the employer—
   • (i) in a recognised provident fund;
   • (ii) in the scheme referred to in section 124(1); and
   • (iii) in an approved superannuation fund;
   • (i) the annual accretion by way of interest, dividend or any other amount of similar nature during the tax year to the balance at the credit of the fund or scheme referred to in clause (h), computed in such manner, as may be prescribed (to the extent it relates to the contribution referred to in the said clause in any tax year).
2. (2) Nothing in sub-section (1) shall apply to—
   • (a) the value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer;
   • (b) 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—
   • (i) 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;
   • (ii) in respect of the prescribed diseases or ailments, in any hospital approved by the Principal Chief Commissioner or Chief Commissioner having regard to such guidelines as may be issued in this behalf;
   • (c) 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, for the purposes of section 30(c), by the—
   • (i) Central Government; or
   • (ii) Insurance Regulatory and Development Authority established under section 3(1) of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);
   • (d) 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 for the purposes of section 126, by the—
   • (i) Central Government; or
   • (ii) Insurance Regulatory and Development Authority established under section 3(1) of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);
   • (e) any expenditure incurred by the employer for the use of any vehicle for journey by the assessee from his residence to his office or other place of work, or from such office or place to his residence;
   • (f) any expenditure incurred by the employer, or any sum paid by the employer in respect of any expenditure actually incurred by the employee, on—
   • (i) medical treatment of the employee or any family member of such employee outside India;
   • (ii) travel and stay abroad for the employee or any member of the family of such employee for medical treatment;
   • (iii) travel and stay abroad of one attendant who accompanies the patient in connection with such treatment.
3. (3) For the purposes of sub-section (2)(f),—
   • (a) the expenditure on medical treatment and stay abroad shall be excluded from the 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 such amount as may be prescribed.
4. (4) For the purposes of this section,—
   • (a) "fair market value" means the value determined in accordance with the method, as may be prescribed;
   • (b) "family", in relation to an individual, shall have the meaning assigned to it in Schedule III (Note 2);
   • (c) "gross total income" shall have the meaning assigned to it in section 122(10);
   • (d) "hospital" includes a dispensary or a clinic or a nursing home;
   • (e) "option" means a right but not an obligation, granted to an employee to apply for the specified security or sweat equity shares at a predetermined price;
   • (f) "specified security" means the securities as defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and, where employees' stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme;
   • (g) "sweat equity shares" means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called;
   • (h) the value of any specified security or sweat equity shares shall be the fair market value of the specified security or sweat equity shares, on the date on which the option is exercised by the assessee, as reduced by the amount actually paid by, or recovered from, the assessee in respect of such security or shares.

1. (1) For the purposes of this Part, "profits in lieu of salary" includes,—
   • (a) the amount of any compensation due to, or received by, an assessee from his employer or former employer at or in connection with the—
   • (i) termination of his employment; or
   • (ii) modification of the terms and conditions relating thereto;
   • (b) any amount due to, or received, whether in lump sum or otherwise, by any assessee from any person—
   • (i) before his joining any employment with that person; or
   • (ii) after cessation of his employment with that person;
   • (c) any payment due to or received by an assessee—
   • (i) from an employer or a former employer; or
   • (ii) from a provident or other fund, to the extent to which it does not consist of contributions by the assessee or interest on such contributions; or
   • (iii) any sum received under a Keyman insurance policy as defined in Schedule II (Note 1), including the sum allocated by way of bonus on such policy.
2. (2) The payment referred in sub-section (1)(c) shall not include any payment referred to in—
   • (a) Schedule II (Table: Sl. No. 3);
   • (b) Schedule II (Table: Sl. No. 4);
   • (c) Schedule II (Table: Sl. No. 8); and
   • (d) Schedule III (Table: Sl. No. 11).

1. (1) The income chargeable under the head "Salaries" shall be computed after making the deductions in respect of sums of the nature mentioned in column B of the following Table, not exceeding the amount as mentioned in column C thereof:—

TABLE

2.

Standard deduction.

1. (a) Rs. 75000 or the salary, whichever is less, where income-tax is computed under section 202(1);
   • (b) Rs. 50000 or the salary, whichever is less, in any other case.

6.

Any other gratuity received by an employee—

1. (i) on his retirement; or
   • (ii) on his becoming incapaci-tated before such retire-ment; or
   • (iii) on termination of his employment.

Amount being minimum of—

1. (a) actual gratuity received;
   • (b) amount specified by the Central Government, by notification, having regard to the limit applicable in this behalf to the employees of the Central Government; and
   • (c) half month's salary for each completed year of service, calculated as under:—

where,—

A = average salary for ten months immediately preceding the month when any such event occurs;

B = number of such completed years.

7.

Payment in commutation of pension received—

1. (a) under the Civil Pensions (Commutation) Rules of the Central Government; or
   • (b) under any similar scheme applicable to—
   • (i) the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union, [such members or holders not covered under (a)];
   • (ii) the members of the all-India services;
   • (iii) the members of the defence services;
   • (iv) the members of the civil services of a State, or the holders of civil posts under a State; or
   • (v) the employees of a local authority or a corporation established by a Central Act or State Act or Provincial Act.

Entire amount.

8.

Payment in commutation of pension is received under any scheme from any other employer.

The commuted value shall be deter-mined having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality, and—

1. (a) where the employee has received gratuity, the commuted value of one-third of the pension, which he is normally entitled to receive; and
   • (b) in any other case, the commuted value of one-half of such pension.

10.

Compensation received by a workman at the time of his retrenchment—

1. (a) under the Industrial Disputes Act, 1947 (14 of 1947); or
   • (b) under any other Act or rules, orders or notifications issued thereunder; or
   • (c) under any standing orders; or
   • (d) under any award, contract of service or other-wise.

Minimum of—

1. (a) compensation received;
   • (b) amount calculated as per provisions of section 25F(b) of the Industrial Disputes Act, 1947 (14 of 1947);
   • (c) such amount, not being less than Rs. 50000, as may be notified by the Central Government.

11.

In case of compensation referred to in Sl. No. 10, where such compensation received is in accordance with any scheme which the Central Government may approve in this behalf, having regard to—

1. (a) the need for extending special protection to the workmen in the undertaking to which such scheme applies; and
   • (b) other relevant circum-stances.

Compensation received.

12.

Amount received or receivable on voluntary retirement or termination of service under a scheme or schemes of voluntary retirement, by an employee as referred to in sub-section (2)(h).

Minimum of—

1. (a) compensation received; and
   • (b) Rs. 500000.

14.

Payment of the nature referred against serial number 13 received by an employee who is not a Central Government or State Government employee.

Amount being minimum of—

1. (a) the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement, whether on superannuation or otherwise (entitlement of earned leave shall not exceed thirty days for every year of actual service);
   • (b) amount "A",

where,—

A=10 x B;

B = average monthly salary for the ten months immediately preceding his retirement whether on superannuation or otherwise;

1. (c) amount as the Central Government may, by notification, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government; and
   • (d) actual payment received.
2. (2) For the purposes of the Table referred to in sub-section (1),—
   • (a) in respect of the entries against serial number 6 thereof, if gratuity or gratuities was or were received from one or more than one employer in the same tax year (whether or not any gratuity or gratuities was or were received in any earlier tax year), the aggregate amount of deduction shall not exceed—

A - B, where,—

A = the limit specified by the Central Government, by notification; and

B = the aggregate amount of gratuity or gratuities which was or were received in any one or more earlier tax years and allowed as an exemption or a deduction (whether whole or part) from the total income of any such tax year or years;

1. (b) in respect of the entries against serial numbers 6 and 14 thereof, "Salary" includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites;
   • (c) in respect of the entries against serial numbers 10 and 11 thereof, the following amounts shall be deemed to be compensation received at the time of retrenchment:—
   • (i) compensation received by a workman at the time of the closing down of the undertaking in which he is employed;
   • (ii) compensation received by a workman, at the time of the transfer (whether by agreement or by operation of law) of the ownership or management of the undertaking in which he is employed, from the employer in relation to that undertaking to a new employer, if—
   • (A) the service of the workman has been interrupted by such transfer; or
   • (B) the terms and conditions of service applicable to the workman after such transfer are in any way less favourable to the workman than those applicable to him immediately before such transfer; or
   • (C) the new employer is, under the terms of such transfer or otherwise, legally not liable to pay to the workman, in the event of his retrenchment or compensation on the basis that his service has been continuous and has not been interrupted by such transfer;
   • (d) in respect of the entries against serial numbers 10 and 11 thereof, the expressions "employer" and "workman" shall have the same meanings as respectively assigned to them in the Industrial Disputes Act, 1947 (14 of 1947);
   • (e) the provisions of the entries against serial number 12 thereof shall be subject to the following conditions:—
   • (i) the applicable schemes of the said companies or authorities or societies or Universities or the institutes referred to in clauses (h)(vii) and (x), governing the payment of such amount are made as per such guidelines (including, inter alia, criteria of economic viability) as may be issued in this behalf;
   • (ii) where deduction has been allowed to an employee in respect of the said item for any tax year, no deduction thereunder shall be allowed to him in relation to any other tax year; and
   • (iii) where any relief under section 157 has been allowed to an assessee for any tax year in respect of any amount referred to in the said item, such amount shall not be allowed as a deduction from the compensation received or receivable in any tax year;
   • (f) in respect of the entries against serial number 14 thereof, if any payment on account of cash equivalent of leave salary is received from one or more than one employer in the same tax year (whether or not any such payment or payments was or were received in any earlier tax year), the aggregate amount of deduction shall not exceed—

A - B, where,—

A = the limit specified by the Central Government, by notification; and

B = the aggregate amount of payment or payments which was received in any one or more earlier tax years and allowed as an exemption or a deduction (whether whole or part) from total income of any such tax year or years;

1. (g) the death-cum-retirement gratuity referred to in sub-section (1) (Table: Sl. No. 3) shall be as—
   • (A) received under the revised pension rules of the Central Government, or the Central Civil Services (Pension) Rules, 2021; or
   • (B) received under any similar scheme applicable—
   • (i) to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said rules);
   • (ii) to the members of the all-India services;
   • (iii) to the members of the civil services of a State or holders of civil posts under a State; or
   • (iv) to the employees of a local authority;
   • (h) the schemes of voluntary retirement or termination of service as referred to in sub-section (1) (Table: Sl. No. 12) shall be for the employees of—
   • (i) a public sector company (under a scheme of voluntary separation); or
   • (ii) any other company; or
   • (iii) an authority established under a Central Act or State Act or Provincial Act; or
   • (iv) a local authority; or
   • (v) a co-operative society; or
   • (vi) a University established or incorporated by or under a Central Act or State Act or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act, 1956 (3 of 1956); or
   • (vii) an Indian Institute of Technology within the meaning of section 3(g) of the Institutes of Technology Act, 1961 (59 of 1961); or
   • (viii) the Central or any State Government; or
   • (ix) an institution, having importance throughout India or in any State or States, as the Central Government may, by notification, specify in this behalf; or
   • (x) such institute of management, as the Central Government may, by notification, specify in this behalf.

C.—Income from house property

1. (1) The annual value of property consisting of any buildings or lands appurtenant thereto, owned by the assessee shall be chargeable to income-tax under the head "Income from house property".
2. (2) The provisions of sub-section (1) shall not apply to such portions of the property, as the assessee may occupy for his business or profession, the profits of which are chargeable to income-tax.

1. (1) For the purposes of section 20, the annual value of any property shall be deemed to be the higher of the following:—
   • (a) the sum for which it might reasonably be expected to let from year to year; or
   • (b) the actual rent received or receivable by the owner, if the property or any part of it is let.
2. (2) If the property or any part of it is let and was vacant for the whole or any part of the tax year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in sub-section (1)(a), the annual value of such property shall be deemed to be the amount so received or receivable.
3. (3) The annual value of the property shall be reduced by the taxes (including service taxes) levied by a local authority in respect of such property, actually paid during the tax year by the owner, irrespective of when such taxes became payable.
4. (4) The rent which cannot be realised by the owner shall not be included in computing the actual rent received or receivable, subject to the rules as may be made in this behalf.
5. (5) Where a property is held as stock-in-trade and is not let wholly or partly at any time during the tax year, the annual value of such property or part thereof shall be 5[nil up to] two years from the end of the financial year in which the certificate for completion of construction is obtained from the competent authority.
6. (6) The annual value of the property consisting of a house or any part thereof shall be taken as nil, if the owner occupies it for his own residence or cannot actually occupy it due to any reason.
7. (7) The provisions of sub-section (6)—
   • (a) shall apply only in respect of two of such houses as specified by the assessee in this behalf;
   • (b) shall not apply, if the house or any part thereof is actually let during any time of the tax year, or if the owner derives any other benefit from it.

1. (1) The income under the head "Income from house property" shall be computed after making the following deductions:—
   • (a) 30% of the annual value as determined under section 21;
   • (b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital;
   • (c) where the capital referred to in clause (b) is borrowed during any period prior to the tax year in which the property has been acquired or constructed, the amount of any interest payable for the said prior period in five equal instalments for the said tax year and for each of the four immediately succeeding tax years.
2. (2) In case of property or properties referred to in section 21(6), the aggregate amount of deduction under 6[sub-section (1)(b) and (c)] shall not exceed—
   • (a) Rs. 200000, subject to the following conditions:—
   • (i) the property has been acquired or constructed with borrowed capital and such acquisition or construction is completed within five years from the end of tax year in which capital was borrowed;
   • (ii) the assessee furnishes a certificate from the person to whom interest is payable on such capital; and
   • (b) Rs. 30000 in any other case.
3. (3) The deduction under section 22(1)(c) shall be computed after reducing the interest referred to in the said section by any amount already allowed as a deduction under any other provisions of this Act.
4. (4) The certificate referred to in sub-section (2) shall specify—
   • (a) the amount of interest payable on capital borrowed; and
   • (b) the interest payable on any new loan, where subsequent to the capital borrowed, the assessee has taken any such loan for repayment of whole or any part of such capital.
5. (5) The aggregate of the amounts of deduction under sub-section (2) in respect of properties of the nature referred to in section 21(6) shall not exceed Rs. 200000.
6. (6) Any interest chargeable under this Act which is payable outside India shall not be allowed as a deduction under this section, if—
   • (a) tax has not been paid or deducted on such interest under Chapter XIX-B; and
   • (b) in respect of such interest, there is no agent in India as per section 306.

1. (1) The amount of arrears of rent received by an assessee from a tenant, or the unrealised rent realised subsequently from a tenant, shall be deemed to be the income from house property in respect of the tax year in which such rent is received or realised.
2. (2) The amount deemed to be income from house property under sub-section (1) shall be included in the total income of the assessee under the head "Income from house property", whether the assessee is the owner of the property or not in that tax year.
3. (3) A sum equal to 30% of the arrears of rent or the unrealised rent referred to in sub-section (1) shall be allowed as deduction.

1. (1) For property co-owned with definite and ascertainable share, the co-owners shall not be assessed as an association of persons and their income computed separately under this Part as per their respective share shall be included in their total income.
2. (2) The relief available under section 21(6) shall be provided as if each co-owner is individually entitled to the said relief.

For the purposes of sections 20 to 24, the "owner" in relation to a property or any part thereof shall include—

1. (a) an individual who transfers without adequate consideration, any property to the spouse (except under an agreement to live apart), or to a minor child (other than a married daughter);
   • (b) the holder of an impartible estate, and he shall be deemed to be an individual owner in respect of all the properties comprised in the estate;
   • (c) a member of a co-operative society, company or other association of persons to whom a building or part thereof is allotted or leased under a house building scheme of the society, company or association;
   • (d) a person who is allowed to take or retain possession of any building or part thereof in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882);
   • (e) a person who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) in or with respect to any building or its part—
   • (i) by virtue of transfer of such property by way of sale or exchange or original or extendible lease for a term of not less than twelve years; or
   • (ii) accruing or arising from any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement of whatever nature), not being a transaction by way of sale, exchange or lease which has the effect of enabling the enjoyment of such property.

D.—Profits and gains of business or profession

1. (1) The incomes referred to in sub-section (2) shall be chargeable to income-tax under the head "Profits and gains of business or profession".
2. (2) The income under sub-section (1) shall include—
   • (a) the profits and gains of any business or profession carried on by the assessee at any time during the tax year;
   • (b) any compensation or other payment, due to, or received, by any person by whatever name called,—
   • (i) wholly or substantially managing the affairs—
   • (A) of an Indian company; or
   • (B) in India, of any other company; or
   • (ii) holding any agency in India for any part of business activities of any other person; or
   • (iii) for any contract relating to business,

in connection with termination of management, office, agency or contract, as the case may be, or modification of terms and conditions relating thereto;

1. (c) any compensation or payment, due to, or received by, any person for vesting of the management of any property or business, in the Government including any corporation owned or controlled by the Government under any law in force;
   • (d) income derived by a trade, professional or similar association from specific services performed for its members;
   • (e) profits on sale of import licence, cash assistance against export, duty drawback or duty remission or any other export incentive, received or receivable;
   • (f) the value of any benefit or perquisite arising from business or the exercise of a profession, whether—
   • (i) convertible into money or not; or
   • (ii) in cash or in kind or partly in cash and partly in kind;
   • (g) any interest, salary, bonus, commission or remuneration, by whatever name called, which is due to, or received by, a partner of a firm from such firm to the extent allowed under section 35(e) as a deduction in computing the income of the firm;
   • (h) any sum, received or receivable, in cash or in kind—
   • (i) under an agreement for not carrying out any activity in relation to any business or profession, not being—
   • (A) any sum received on account of transfer of the right to manufacture, produce or process any article or thing or right to carry on any business or profession which is chargeable under the head "Capital gains";
   • (B) any sum received as compensation from the multilateral fund of the Montreal Protocol on Substances that Deplete the Ozone layer under the United Nations Environment Programme, as per the terms of agreement entered into with the Government of India; or
   • (ii) under an agreement for not sharing any know-how, patent, copyright, trade-mark, licence, franchise or any other business or commercial right of similar nature, or information or technique likely to assist in the manufacture or processing of goods or provision for services;
   • (i) any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy;
   • (j) the fair market value of inventory as on the date on which it is converted into, or treated as, a capital asset determined in the manner, as may be prescribed; and
   • (k) any sum which is received or receivable in cash or kind, when—
   • (i) a capital asset other than land or goodwill or financial instrument, is demolished, destroyed, discarded or transferred; and
   • (ii) the whole of the expenditure on it has been allowed as a deduction under section 35AD of the Income-tax Act, 1961 (43 of 1961) or section 46 of this Act.
2. (3) Where speculative transactions carried on by an assessee are of such nature to constitute a business, the business (herein referred to as speculation business) shall be deemed to be distinct and separate from any other business.
3. (4) Any income from letting out of a residential house or a part of it by the owner shall not be included in income under sub-section (1) and shall be chargeable only under the head "Income from house property".

The income referred to in section 26 shall be computed as per the provisions of sections 28 to 60, except section 58.

1. (1) The following amounts shall be allowed as deduction in respect of premises, machinery, plant or furniture used for the purposes of the business or profession:—
   • (a) any premium paid in respect of insurance against risk of damage or destruction thereof;
   • (b) land revenue, local rates or municipal taxes paid;
   • (c) rent paid, when the premises are occupied by the assessee as a tenant;
   • (d) amount paid on account of current repairs to the premises, not being in the nature of capital expenditure, when the premises are occupied by the assessee otherwise than as a tenant;
   • (e) amount paid on account of cost of repairs, not being in the nature of capital expenditure, when the premises are occupied by the assessee as a tenant and where he has undertaken to bear the cost of repairs to the premises; and
   • (f) the amount paid on account of current repairs to machinery, plant or furniture, not being in the nature of capital expenditure.
2. (2) In case where the premises, building, machinery, plant or furniture is partly used or not wholly and exclusively used for the purposes of the business or profession, the deduction allowable under sub-section (1) shall be restricted to the fair proportionate part thereof as determined by the Assessing Officer, having regard to the usage for the purposes of the business or profession.

1. (1) The following sums, in the case of an assessee being an employer, shall be allowed as deduction in computing income chargeable under section 26:—
   • (a) any sum paid by way of contribution towards a recognised provident fund or an approved superannuation fund, subject to—
   • (i) such limits, as may be prescribed, for recognising the provident fund or approving the superannuation fund; and
   • (ii) such conditions, as the Board may specify, for cases where the contributions are not made annually either as fixed amounts, or annual contributions fixed on some definite basis by reference to the income chargeable under the head "Salaries" or the contributions or to the number of members of the fund;
   • (b) any sum paid by way of contribution towards a pension scheme referred to in section 124, for an employee up to 14% of the salary of the employee in the tax year, where such salary includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites;
   • (c) any sum paid by way of contribution towards an approved gratuity fund created by the assessee for the exclusive benefit of his employees under an irrevocable trust;
   • (d) irrespective of anything contained in sub-section (2), any provision made for the purpose of making contribution towards approved gratuity fund or for the purpose of payment of any gratuity that has become payable during the tax year;

the amount of contribution received from an employee to which the provisions of section 2(49)(o) apply, if it is credited by the assessee to the account of the employee in the relevant fund or funds, on or before the due date of filing of return of income under section 263(1) for the tax year.]

1. (2) (a) Subject to the provisions of sub-section (1)(d), no deduction shall be allowed for any provision made for the payment of gratuity to the employees on their retirement or termination for any reason; and
   • (b) in case deduction has been allowed for any provision made under sub- section (1)(d), then no deduction shall be allowed on actual payment made from such provision.
2. (3) No deduction shall be allowed in respect of any sum paid by the assessee as an employer towards setting up or formation of, or as contribution to, any fund, trust, company, association of persons, body of individuals, society registered under the Societies Registration Act, 1860 (21 of 1860), or other institution for any purpose, except where such sum is so paid, for the purposes and to the extent provided by or under sub-section (1)(a) or (b) or (c), or as required by or under any other law in force.

The following sums shall be allowed as deduction in computing income chargeable under section 26, being premium paid:—

1. (a) by any assessee in respect of insurance against risk of damage or destruction of stocks or stores used for the purposes of business or profession;
   • (b) by a federal milk co-operative society to effect or to keep in force an insurance on the life of the cattle owned by a member of a co-operative society, being a primary society engaged in supplying milk raised by its members to such federal milk co-operative society;
   • (c) by the assessee as an employer, through any mode of payment other than cash, to effect or to keep in force an insurance on the health of its employees under a scheme framed in this behalf by—
   • (i) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central Government; or
   • (ii) any other insurer and approved by the Insurance Regulatory and Development Authority established under section 3(1) of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).

1. (1) The amount mentioned in column C of the Table below, in respect of any provision for bad and doubtful debts made by the assessee specified in column B thereof, shall be allowed as a deduction in computation of income chargeable under section 26.

TABLE

1. (a) A scheduled bank, other than a bank incorporated by or under the laws of a country outside India; or
   • (b) a non-scheduled bank; or
   • (c) a co-operative bank, other than—
   • (i) a primary agricultural credit society; or
   • (ii) a primary co-operative agricultural and rural development bank.
   • (a) not more than 8.5% of the total income of the tax year computed before making any deduction under this clause and Chapter VIII, and an additional amount up to 10% of the aggregate average advances made by rural branches computed in the manner as may be prescribed;
   • (b) for an assessee mentioned in clauses (a) and (b) of column B, at its option, an additional amount in excess of clause (a) of this column but not more than the income from redemption of securities as per a scheme framed by the Central Government, when such income has been disclosed in the return of income under the head "Profits and gains of business or profession".
   • (a) A bank incorporated by or under the laws of a country outside India; or
   • (b) a public financial institution or a State Financial Corporation or a State Industrial Investment Corporation; or
   • (c) a non-banking financial company.
2. (2) Any amount of bad debt, or part of it, in the tax year in which such amount is written off as irrecoverable in the accounts of the assessee, shall be allowed as deduction in computation of income chargeable under section 26, subject to the following conditions:—
   • (a) it has been taken into account in computing the income of the assessee of the tax year in which it is written off, or any earlier tax year, or represents the money lent in the ordinary course of the business of banking or money lending which is carried on by the assessee;
   • (b) if the amount ultimately recovered on any such debt or part of debt is less than the difference between the debt or part and the amount so deducted, the deficiency shall be deductible in the tax year in which the ultimate recovery is made; and
   • (c) where it relates to an assessee to which sub-section (1) applies,—
   • (i) only that amount which exceeds the credit balance in the provision for bad and doubtful debts account made under that sub-section shall be allowed as deduction;
   • (ii) such amount shall be allowed only when the assessee has debited any amount of bad debt or part thereof in that tax year to the provision for bad and doubtful debts account made under that sub-section; and
   • (iii) the aforesaid account shall be only one such account under sub-section (1) and such account shall be related to all types of advances, including advances made by rural branches.
3. (3) For the purposes of sub-section (2),—
   • (a) any bad debt or part of it written off as irrecoverable shall not include any provision for bad and doubtful debt;
   • (b) any amount of bad debt or part of it, which has been taken into account in computing the income of the assessee of the tax year in which the amount of bad debt or part of it becomes irrecoverable or of an earlier tax year as per income computation and disclosure standards notified under section 276(2) without recording it in the accounts, shall be allowed as a deduction in computing the income of the assessee of the tax year in which it becomes irrecoverable and such bad debt or part of it shall be deemed to be written off as irrecoverable in the accounts for the purposes of sub-section (2).

The following amounts shall be allowed as deduction in computing income chargeable under section 26:—

1. (a) bonus or commission paid to an employee for services rendered, but only when such amount would not have been payable to the employee as profits or dividend if it had not been paid as bonus or commission;
   • (b) interest paid in respect of capital borrowed for the purposes of business or profession, where—
   • (i) such interest shall not include interest on capital borrowed for acquisition of an asset, whether capitalised in the books of account or not, for any period beginning from the date the capital was borrowed for acquisition of the asset till the date that asset was first put to use;
   • (ii) recurring subscriptions paid periodically by shareholders or subscribers in Mutual Benefit Societies fulfilling the conditions as may be prescribed, shall be deemed to be capital borrowed;
   • (c) contribution paid by a public financial institution to the credit guarantee fund trust for small industries as the Central Government may, by notification, specify;
   • (d) the pro rata amount of discount on a zero coupon bond having regard to the period of life of such bond calculated in the manner, as may be prescribed, where—
   • (i) "discount" means the difference between the amount received or receivable by the infrastructure capital company or infrastructure capital fund or public sector company or scheduled bank issuing the bond, and the amount payable on maturity or redemption of such bond;
   • (ii) "period of life of bond" means the period commencing from the date of issue of the bond and ending on the date of the maturity or redemption of such bond;
   • (e) the amount carried to a special reserve created and maintained by a specified entity, subject to the following conditions:—
   • (i) such amount shall not exceed 20% of the profits derived from an eligible business computed under the head "Profits and gains of business or profession" before any deductions under this clause; and
   • (ii) when the aggregate of such amounts carried to such reserve account from time to time exceeds twice the amount of paid-up share capital and of general reserves of the specified entity, no deduction shall be allowable on such excess,

and for the purposes of this clause,—

1. (A) "specified entity" means—
   • (I) a public financial institution as specified in section 2(72) of the Companies Act, 2013 (18 of 2013);
   • (II) a financial corporation which is a public sector company;
   • (III) a banking company;
   • (IV) a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank;
   • (V) a housing finance company; and
   • (VI) any other financial corporation including a public company;
   • (B) "eligible business" means,—
   • (I) in respect of any of the specified entities referred to in clause (e)(A)(I) to (IV), the business of providing long-term finance for—
   • (a) industrial or agricultural development;
   • (b) development of infrastructure facility in India; or
   • (c) development of housing in India;
   • (II) in respect of the specified entity referred to in clause (e)(A)(V), the business of providing long-term finance for the construction or purchase of houses in India for residential purposes; and
   • (III) in respect of the specified entity referred to in clause (e)(A)(VI), the business of providing long-term finance for development of infrastructure facility in India;
   • (C) "infrastructure facility" means—
   • (I) an infrastructure facility as defined in Explanation to section 80-IA(4)(i) of the Income-tax Act, 1961 (43 of 1961) or any other public facility of a similar nature as may be notified by the Board in this behalf and which fulfils the conditions as may be prescribed;
   • (II) an undertaking referred to in section 80-IA(4)(ii) or (iii) or (iv) or (vi) of the Income-tax Act, 1961 (43 of 1961); and
   • (III) an undertaking referred to in section 80-IB(10) of the Income-tax Act, 1961 (43 of 1961);
   • (f) any expenditure, not being capital expenditure, incurred by a corporation or a body corporate, by whatever name called, if,—
   • (i) it is constituted or established by a Central Act or State Act or Provincial Act;
   • (ii) it is notified by the Central Government for the purposes of this clause having regard to the objects and purposes of the Act referred to in sub-clause (i); and
   • (iii) the expenditure is incurred for the objects and purposes authorised by the Act under which it is constituted or established;
   • (g) the expenditure incurred by a co-operative society engaged in the business of manufacture of sugar, on purchase of sugarcane at a price equal to or less than the price fixed or approved by the Government;
   • (h) marked to market loss or other expected loss as computed as per the income computation and disclosure standards notified under section 276(2);
   • (i) any expenditure bona fide incurred by a company for the purpose of promoting family planning amongst its employees, subject to the following conditions:—
   • (A) if such expenditure or any part of it is of capital nature, one-fifth of it shall be deducted for the tax year in which it was incurred and the balance shall be deducted in equal instalments for each of the four immediately succeeding tax years;
   • (B) the provisions of sections 33(11) and 112(3) shall apply to deduction under this clause as they apply in relation to deductions allowable in respect of depreciation;
   • (C) the provisions of sections 38(1)(c), 39(4) (Table: Sl. No. 9), 45(6) and (10), shall apply to an asset representing capital expenditure for promoting family planning, to the extent they apply to an asset representing capital expenditure on scientific research;
   • (j) the amount being difference between the actual cost of animals used for the purposes of the business or profession otherwise than as stock-in-trade and the amount realised from the carcasses or animals, where such animals have died or become permanently useless; and
   • (k) the amount paid as securities transaction tax or commodities transaction tax, if—
   • (i) the taxable securities transactions or taxable commodities transactions are entered into the course of the business during the tax year; and
   • (ii) the income arising from such taxable securities transactions or taxable commodities transactions is included in the income computed under the head "Profits and gains of business or profession".

1. (1) A deduction in respect of depreciation of—
   • (a) buildings, machinery, plant or furniture, being tangible assets;
   • (b) know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st April, 1998, not being goodwill of a business or profession,

owned wholly or partly by the assessee and used wholly and exclusively for the purposes of the business or profession, shall be allowed, as per the provisions of this section.

1. (2) In case of assets referred to in sub-section (1) of an undertaking engaged in generation or generation and distribution of power, the deduction in respect of depreciation shall be such percentage of its actual cost to the assessee, as may be prescribed.
2. (3) (a) In case of any block of assets, deduction in respect of depreciation shall be such percentage of its written down value, as may be prescribed;
   • (b) when any building, machinery, plant or furniture is partly, or not wholly and exclusively, used for the purposes of the business or profession, the deduction under clause (a) shall be restricted to the fair proportionate part thereof as determined by the Assessing Officer, having regard to the usage of such building, machinery, plant or furniture for the purposes of the business or profession;
   • (c) when deduction of actual cost in respect of any machinery or plant has been allowed under section 54, no deduction under this sub-section shall be allowed.
3. (4) The deduction under this section shall be restricted to 50% of the prescribed rate, if such asset, being asset referred to in sub-sections (2) and (3) is—
   • (a) acquired by the assessee during the tax year; and
   • (b) put to use for the purposes of business or profession for less than one hundred and eighty days in that tax year.
4. (5) The aggregate deduction in respect of depreciation allowable to the predecessor and successor in cases of succession under section 70(1)(zd) or (ze) or (zf), or section 313, or to the amalgamating and the amalgamated company in the case of amalgamation, or to the demerged and resulting company in the case of demerger, as the case may be, for any tax year, shall not exceed the deduction calculated at the prescribed rates under this section as if the succession, amalgamation or demerger had not taken place, and such deduction shall be allowed on pro rata basis based on number of days for which assets were used by the following:—
   • (a) predecessor and successor, in case of such succession; or
   • (b) amalgamating company and the amalgamated company in case of an amalgamation; or
   • (c) demerged company and the resulting company in case of a demerger.
5. (6) Where a building, not owned by the assessee, is held on lease or by any other right of occupancy is used for the purposes of business or profession of the assessee, and if any capital expenditure is incurred by the assessee for the purposes of business or profession on construction of any structure or any work by way of renovation, extension or improvement to such building, then such structure or work shall be treated as a building owned by the assessee for the purposes of this section.
6. (7) The provisions of this section shall apply whether or not the assessee has claimed deduction for depreciation in computing his total income.
7. (8) In addition to deduction under sub-section (3), additional deduction in respect of depreciation for any new machinery or plant shall be allowed, when—
   • (a) the assessee is engaged in the business of manufacture or production of any article or thing or in the business of generation, transmission or distribution of power;
   • (b) the assessee acquires and installs the new machinery or plant;
   • (c) the new machinery or plant is first put to use by the assessee for the purposes of business; and
   • (d) the new machinery or plant (not being a ship or an aircraft)—
   • (i) was not used either within or outside India by any other person before its installation by the assessee;
   • (ii) is not installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house;
   • (iii) is not in the nature of any office appliances or road transport vehicle; or
   • (iv) is not an asset on which the whole of the actual cost is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income under the head "Profits and gains of business or profession" of any tax year.
8. (9) The additional deduction in respect of depreciation referred to in sub-section (8) shall be—
   • (a) 20% of the actual cost of the new machinery or plant in the tax year when it is acquired and put to use, subject to the provisions of clause (b); or
   • (b) 10% of the actual cost, if the new machinery or plant is acquired and put to use for less than one hundred and eighty days in the relevant tax year, and 10% of the actual cost shall be allowed in the immediately succeeding tax year.
9. (10) The difference between the written down value and the moneys payable including the scrap value, if any, for any tangible asset in respect of which depreciation is claimed and allowed under sub-section (2), shall be allowed as deduction when—
   • (a) such asset is sold, discarded, demolished or destroyed in the tax year not being the tax year in which it is first put into use;
   • (b) the moneys payable including the scrap value, if any, is less than its written down value; and
   • (c) such deficiency is actually written off in the books of account of the assessee.
10. (11) (a) Where the profits and gains chargeable for the tax year before allowing the deduction under sub-sections (1) to (10) is less than such allowable deduction, then—
    • (i) if such profits and gains is not a loss, the deduction under sub-sections (1) to (10) shall be allowed to the extent of the available profits and gains;
    • (ii) if such profits and gains is a loss, no deduction under sub-sections (1) to (10) shall be allowed;
    • (b) the amount of deduction which has not been allowed under clause (a) shall be added to the allowable deduction under this section, whether available or not, for the succeeding tax year and the total amount shall be deemed to be eligible for deduction in that year, and so on for the succeeding tax years; and
    • (c) the provisions of this sub-section shall be subject to the provisions of sections 112(3) and 113(4).
11. (12) For the purposes of this section,—
    • (a) "assets" mean—
    • (i) tangible assets, being buildings, machinery, plant or furniture;
    • (ii) intangible assets being—
    • (A) know-how; or
    • (B) patents; or
    • (C) copyrights; or
    • (D) trademarks; or
    • (E) licences; or
    • (F) franchises; or
    • (G) any other similar business or commercial rights, but not being goodwill of a business or profession;
    • (b) "know-how" means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil-well or other sources of mineral deposits (including searching for discovery or testing of deposits for the winning of access thereto);
    • (c) "sold" includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is an Indian company or in a scheme of amalgamation of a banking company, as referred to in section 5(c) of the Banking Regulation Act, 1949 (10 of 1949) with a banking institution as referred to in section 45(15) of the said Act, sanctioned and brought into force by the Central Government under section 45(7) of that Act, of any asset by the banking company to the banking institution;
    • (d) "written down value of the block of assets" shall have the same meaning as in section 41(1)(c).

1. (1) Any expenditure (not being an expenditure of the nature specified in sections 28 to 33, 44 to 49, 51 and 52 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession".
2. (2) For the purposes of sub-section (1), an expenditure laid out or expended wholly and exclusively for business or profession by the assessee shall not include any of the following:—
   • (a) an expenditure incurred for any purpose which is an offence or is prohibited by law; or
   • (b) an expenditure incurred on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013); or
   • (c) an expenditure incurred on advertisement in any souvenir, brochure, tract, pamphlet or the like, published by a political party.
3. (3) The expenditure mentioned in sub-section (2)(a) shall include expenditure incurred for—
   • (a) any purpose which is an offence under, or is prohibited by, any law in force in or outside India; or
   • (b) providing a benefit or perquisite in any form to a person, who may or may not be carrying on a business or exercising a profession, when its acceptance by the person is in violation of any law or rule or regulation or guideline governing the conduct of that person; or
   • (c) compounding an offence under any law in force in or outside India; or
   • (d) settling proceedings initiated in relation to contravention under any law notified by the Central Government in this behalf.

Irrespective of any other provision of Chapter IV-D, the following amounts shall not be allowed as deduction in computing the income chargeable under the head "Profits and gains of business or profession":—

1. (a) any amount on account of—
   • (i) tax paid on income; or
   • (ii) tax paid by employer referred to in Schedule III (Table: Sl. No. 10); or
   • (iii) tax paid in any other country for which relief is eligible under section 159 or 160,

and shall include any surcharge or cess on such tax, by whatever name called;

1. (b) (i) 30% of any sum payable to a resident, on which tax is deductible at source under Chapter XIX-B and during the tax year, such tax has not been deducted or, after deduction, has not been paid up to the due date specified in section 263(1), so, however, that—
   • (A) where in respect of any such sum, tax is deducted in any subsequent year, or is deducted during the tax year but paid after the due date specified in section 263(1), 30% of such sum shall be allowed as a deduction in computing the income of the tax year, in which such tax has been paid;
   • (B) where the assessee is required to and fails to deduct whole or any part of the tax under Chapter XIX-B on any such sum but he is not deemed to be an assessee in default under section 398(2), then for the purposes of this sub-clause, the assessee shall be deemed to have deducted and paid the tax on such sum on the date on which the return has been filed by the payee referred to in section 398(2);

(ii) any interest, royalty, fees for technical services or other sum chargeable under this Act which is payable—

1. (A) outside India; or
   • (B) in India to a non-resident (which is not a company) or to a foreign company,

on which tax is deductible at source under Chapter XIX-B and during the tax year, such tax, has not been deducted or after deduction, has not been paid up to the due date specified in section 263(1), so, however, that —

1. (I) where in respect of any such sum, tax is deducted in any sub- sequent year, or is deducted during the tax year but paid after the due date specified in section 263(1), such sum shall be allowed as a deduction in computing the income of the tax year, in which such tax has been paid;
   • (II) where the assessee is required to and fails to deduct whole or any part of the tax under Chapter XIX-B on any such sum but he is not deemed to be an assessee in default under section 398(2), then for the purposes of this sub-clause the assessee shall be deemed to have deducted and paid the tax on such sum on the date on which the return has been filed by the payee as referred to in section 398(2);
   • (iii) any payment to a provident or other fund established for the benefit of employees of the assessee, unless the assessee has made effective arrangements to secure that tax shall be deducted at source under Chapter XIX-B from any payments made from the fund which are chargeable to tax under the head "Salaries";
   • (c) any payment chargeable under the head "Salaries", payable outside India or to a non-resident on which tax is deductible at source under Chapter XIX-B and such tax has not been deducted or, after deduction, has not been paid;
   • (d) any amount—
   • (i) paid by way of royalty, licence fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called, which is levied exclusively on; or
   • (ii) which is appropriated, directly or indirectly, from,

a State Government undertaking by the State Government;

1. (e) the expenditure incurred by a firm, assessable as such—
   • (i) in the nature of salary, bonus, commission or remuneration, by whatever name called (herein referred as remuneration) to a partner, who is not a working partner; or
   • (ii) on the remuneration to a working partner, and interest to any partner, if it is—
   • (A) not authorised by the partnership deed applicable for the period for which such remuneration or interest is paid; or
   • (B) authorised by and is as per the terms of partnership deed but relates to the period prior to the date of such partnership deed, or which was not authorised by the earlier partnership deed; or
   • (iii) on the aggregate remuneration to all working partners as authorised by the partnership deed, exceeding the amount computed as under:—
   • (A) on the first Rs. 600000 of the book profit or in case of a loss, Rs. 300000 or at the rate of 90% of the book profit, whichever is higher;
   • (B) on the balance of the book profit, at the rate of 60%; or
   • (iv) on interest to any partner as authorised by the partnership deed, exceeding 12% simple interest per annum, so, however, that—
   • (A) where an individual is a partner in a firm, on behalf, or for the benefit, of any other person (such partner and the other person being herein referred to as "partner in a representative capacity" and "person so represented", respectively),—
   • (I) interest paid by the firm to such individual otherwise than as partner in a representative capacity, shall not be taken into account for the purposes of this clause;
   • (II) interest paid by the firm to such individual as partner in a representative capacity and interest paid by the firm to the person so represented shall be taken into account for the purposes of this clause;
   • (B) where an individual is a partner in a firm otherwise than as partner in a representative capacity, interest paid by the firm to such individual shall not be taken into account for the purposes of this clause, if such interest is received by him on behalf, or for the benefit, of any other person;
   • (v) in this clause—
   • (A) "book profit" means the net profit, as shown in the profit and loss account for the relevant tax year, computed as per Chapter IV-D as increased by the aggregate amount of the remuneration to all the partners of the firm, if such amount has been deducted while computing the net profit;
   • (B) "working partner" means an individual who is actively engaged in conducting the affairs of the business or profession of the firm of which he is a partner;
   • (f) the expenditure incurred by an association of persons or a body of individuals (other than a company, or a co-operative society or society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India) in the nature of interest, salary, bonus, commission or remuneration, by whatever name called, made to a member of such association or body, provided that—
   • (i) where the interest has been paid by the association or the body to its member and such member has also paid interest to the association or the body, then only such excess interest, if any, paid by the association or body shall not be allowed under this clause;
   • (ii) where an individual is a member of an association or a body on behalf, or for benefit of any other person, such member and any other person shall be referred as "representative member" and "person so represented", respectively, then, the provisions of this clause—
   • (A) shall not be applicable in respect of interest paid to or received from, such individual otherwise than in his capacity as a representative member;
   • (B) shall be applicable in respect of interest paid to or received from, an individual in his capacity as a representative member and, the person so represented;
   • (C) shall not be applicable in respect of interest paid to a member, otherwise than as representative member, on behalf or for the benefit of any other person.

1. (1) The provisions of this section shall have effect irrespective of anything to the contrary contained in any other provision of this Act relating to computation of income under the head "Profits and gains of business or profession".
2. (2) If the assessee incurs any expenditure for which payment has been or is to be made to any "specified person", which in the opinion of the Assessing Officer is excessive or unreasonable having regard to the—
   • (a) fair market value of the goods, services or facilities; or
   • (b) legitimate needs of the business or profession of the assessee; or
   • (c) benefit derived by or accruing to the assessee therefrom,

so much of the expenditure as considered excessive or unreasonable by him shall not be allowed as a deduction.

1. (3) For the purposes of sub-section (2) and this sub-section,—
   • (a) "specified person" shall mean the following,—
   • (i) in relation to an assessee mentioned in column B of the Table below, the person referred to in column C thereof:—

TABLE

1. (ii) any person being an individual or company or firm or association of persons or Hindu undivided family having substantial interest in the business or profession of the assessee, or any director, partner, member thereof or any relatives of such individual, director, partner, member or any other company in which the first mentioned company has substantial interest;
   • (iii) a company, firm, association of persons, or Hindu undivided family whose director, partner or member has substantial interest in the business or profession of the assessee, or any director, partner or member thereof and their relatives, as the case may be;
   • (iv) any person carrying on a business or profession, where assessee, being—
   • (A) an individual or his relative; or
   • (B) a company, its directors or their relatives; or
   • (C) a firm, its partners or their relatives; or
   • (D) an association of persons, its members or their relatives; or
   • (E) a Hindu undivided family, its members or their relatives,

has substantial interest in the business or profession of such person;

1. (b) a person is deemed to have "substantial interest in the business or profession" if—
   • (i) in a case where the business or profession is carried on by a company, such person is, at any time during the tax year, the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) carrying not less than 20% of the voting power; and
   • (ii) in any other case, such person is, at any time during the tax year, beneficially entitled to not less than 20% of the profits of such business or profession.
2. (4) Where in respect of any expenditure incurred by the assessee, any payment or aggregate of payments made in a day to a person exceeds Rs. 10000 and is not made through specified banking or online mode, then the expenditure by way of such payments shall not be allowed as a deduction.
3. (5) Where any deduction was made in any preceding tax year for a liability incurred for any expenditure and payment in respect of such liability is made during a subsequent tax year and if such payment or aggregate of payments made in a day to a person exceeds Rs. 10000 and is not made through specified banking or online mode, such payment shall be deemed to be the income under the head "Profits and gains of business or profession" in such subsequent tax year.
4. (6) For the purposes of sub-sections (4) and (5), the figures "Rs. 10000" shall be read as "Rs. 35000" in case the payment is made for plying, hiring or leasing of goods carriages.
5. (7) The provisions of sub-sections (4) and (5) shall not be applicable in cases and circumstances, as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors.
6. (8) Nothing (with reference to mode of payment) contained in any other law in force or in any contract, shall apply in respect of any payment which has been made through specified banking or online mode, in compliance of sub-sections (4) to (7), and no plea shall be allowed to be raised, in any suit or other proceeding on the ground that the payment was not made or tendered in cash or in mode other than through specified banking or online mode.
7. (9) No deduction or allowance shall be allowed in respect of marked to market loss or other expected loss, except as allowable under section 32(1)(h).

1. (1) The sums payable, as specified in sub-section (2), which are otherwise allowable as a deduction under this Act, shall be allowed as a deduction while computing the income chargeable under section 26 only in the tax year in which such sums are actually paid irrespective of—
   • (a) any provision to the contrary in this Act; or
   • (b) method of accounting regularly followed; or
   • (c) the tax year in which the liability was incurred.
2. (2) The sums payable for the purposes of sub-section (1), shall be—
   • (a) tax, duty, cess, surcharge or fee, by whatever named called, levied under any law in force;
   • (b) contribution of the employer to a provident fund or superannuation fund or gratuity fund or any fund for the welfare of employees;
   • (c) amount payable by employer in lieu of any leave at the credit of the employee;
   • (d) any sum referred to in section 32(a);
   • (e) interest on loans or advances or borrowings from specified financial entities as per the terms and conditions of the agreement governing such loans or advances or borrowings;
   • (f) amount payable to the Indian Railways for use of railway assets; or
   • (g) amount payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).
3. (3) In case the amounts specified in sub-section (2), except the sum referred to in clause (g) thereof, are paid after the end of the tax year in which the liability was incurred, but on or before the due date of filing of return of income under section 263(1) for such tax year, the deduction towards such sum shall be allowed in such tax year.
4. (4) If interest on loans or advances or borrowings specified in sub-section (2)(e) is converted into a loan or advance or debenture or any other instrument by which the liability to pay is deferred to a future date, then it shall not be deemed to have been actually paid.
5. (5) If a deduction in respect of any sum payable under sub-section (2) has already been allowed in any tax year when such liability was incurred, it shall not be allowed again in any subsequent tax year when it is paid.
6. (6) The provisions of this section shall not apply to a sum received by the assessee from any employee as contribution towards any of the funds referred to in section 2(49)(o).
7. (7) For the purposes of this section, "specified financial entities" means a public financial institution or State Financial Corporation or State Industrial Investment Corporation or such class of non-banking financial companies as may be notified by the Central Government or a scheduled bank or a co-operative bank (other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank).
8. (8) For the purposes of sub-section (2)(a), "the sum payable" means a sum for which the assessee has incurred liability in the tax year even though such sum might not have been payable within that year under the relevant law.

1. (1) The following sums shall be deemed to be profits and gains of business or profession and shall be chargeable to income-tax, in the manner specified below, subject to the provisions of sub-section (2):—
   • (a) where an allowance or deduction has been allowed in respect of any loss, expenditure or trading liability incurred by the assessee during any tax year, then,—
   • (i) the value of any benefit accruing to the assessee by way of cessation or remission of such trading liability, including a unilateral act of write-off of such liability in his accounts, in a subsequent tax year in which such benefit accrues; or
   • (ii) any amount obtained by the assessee, whether in cash or other- wise, in respect of such loss or expenditure incurred, in subsequent tax year in which the amount is obtained,

whether the business or profession in respect of which the allowance or deduction was made is in existence in such subsequent tax year or not;

1. (b) in a case where any tangible asset [as referred to in section 33(12)(a) (i)], which is owned by assessee, is sold, discarded, demolished or destroyed, and the moneys payable for such asset, together with the scrap value [A] exceeds the written down value of such assets [C], the sum as computed below, in the tax year in which the moneys payable for such asset becomes due—
   • (i) where the moneys payable for such asset together with the scrap value [A] is less than the actual cost of such asset [B], then—

[A] – [C]; or

1. (ii) in any other case,—

[B] – [C];

1. (c) in a case where an asset representing expenditure of a capital nature on scientific research, referred to in section 45(1)(a)(i) is sold, without having been used for other purposes, and the sale proceeds together with the total deductions allowed under that section exceed the amount of capital expenditure, the excess or the amount of deduction so made, whichever is less, in the tax year in which the asset was sold;
   • (d) in a case where a deduction has been allowed for a bad debt (or part of it) under the provisions of section 31(2), and any amount subsequently recovered exceeds the difference between such debt and the amount allowed, then the amount in excess, in the tax year in which recovery is made;
   • (e) in a case where a deduction has been allowed for any special reserve created and maintained under the provisions of section 32(e), any amount subsequently withdrawn from such reserve, in the tax year in which the amount is withdrawn.
2. (2) The provisions of sub-section (1) shall apply subject to fulfilment of the following conditions:—
   • (a) in respect of sub-section (1)(a), only when an allowance or deduction has been made in assessment for any tax year towards the trading liability, loss or expenditure incurred;
   • (b) in respect of sub-section (1)(b), only when the asset owned by the assessee, has been used for the purpose of business or profession, and depreciation has been claimed and allowed thereon under section 33(2);
   • (c) in respect of sub-section (1)(c), only when the asset has not been used for other purposes.
3. (3) Where the business or profession referred to in this section is no longer in existence and there is income chargeable to tax under sub-section (1)(a), (c), (d) or (e), in respect of that business or profession, any loss, not being a loss sustained in speculation business, which arose in that business or profession during the tax year in which it ceased to exist and which could not be set off against any other income of that tax year shall, so far as may be, be set off against the income chargeable to tax under the said clauses of that sub-section.
4. (4) In respect of sums referred to in sub-section (1)(a), if the benefit referred therein accrues to, or amount referred therein is obtained, by the successor in business, the value of the benefit or the amount shall be chargeable to income-tax as income in the hands of successor in business.
5. (5) The provisions of sub-section (1)(b), (c), (d) and (e) shall apply in a tax year even if the business is no longer in existence.
6. (6) For the purposes of this section,—
   • (a) "sold" includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is an Indian company;
   • (b) "successor in business" means—
   • (i) the amalgamated company, where there has been an amalgamation;
   • (ii) the resulting company, where there has been a demerger;
   • (iii) where the assessee is succeeded by any other person in that business or profession, that other person;
   • (iv) where a firm carrying on a business or profession is succeeded by another firm, that other firm.

1. (1) The actual cost of an asset used for the purposes of the business or profession shall be the actual cost to the assessee, as reduced by the following amounts:—
   • (a) part of cost of asset, if any, met by any other person or authority, directly or indirectly;
   • (b) goods and services tax paid in respect of which credit of input tax has been claimed and allowed under the relevant law;
   • (c) duty of excise or additional duty leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975) in respect of which a claim of credit has been made and allowed under the Central Excise Rules, 1944;
   • (d) subsidy, grant or reimbursement, by whatever name called, if any, relatable to the acquisition of the asset, received, directly or indirectly, by the assessee from—
   • (i) the Central Government;
   • (ii) a State Government;
   • (iii) any authority established under any law; or
   • (iv) any other person.
2. (2) The payment or aggregate of payments exceeding Rs. 10,000 in a day for acquisition of an asset or part thereof, made to a person in a mode otherwise than by specified banking or online mode, shall be excluded from the actual cost of that asset.
3. (3) In a case where the subsidy, grant or reimbursement referred to in sub-section (1)(d) is not directly relatable to the asset acquired, the amount of reduction under sub-section (1)(d) shall be determined as under:—

where,—

A = total amount of subsidy, grant or reimbursement not directly relatable to the asset;

B = cost of the asset acquired for which actual cost is to be determined;

C = cost of all the assets in respect of or in reference to which the subsidy or grant or reimbursement is so received.

1. (4) In circumstances specified under column B of the Table below, the actual cost of the asset shall be as specified in column C thereof.

TABLE

Sl. No.

Specified circumstances

Determination of actual cost

A

B

C

1.

Where capital asset is transferred by an amalgamating company to an amalgamated company being an Indian company in a scheme of amalgamation.

Actual cost to amalgamated company shall be the same as it would have been if the amalgamating company had continued to hold such capital asset for the purpose of its own business.

2.

Where capital asset is transferred by a demerged company to a resulting company being an Indian company in a demerger.

Actual cost to resulting company shall be the same as it would have been, if the demerged company had continued to hold such asset for the purpose of its own business, which shall not exceed the written down value of such capital asset in the hands of demerged company.

3.

Where inventory is converted into or treated as a capital asset.

Fair Market Value of such inventory as on date of conversion, as determined in the manner as may be prescribed.

4.

Where asset is acquired by the assessee by way of gift or inheritance.

Actual cost to the previous owner as reduced by—

1. (a) depreciation actually allowed in respect of tax year commencing on 1st April, 1986 or any earlier tax year; and
   • (b) depreciation allowable for tax year commencing on or after 1st April, 1987 under this Act or under the Income-tax Act, 1961(43 of 1961), as if such asset was the only asset in the relevant block of asset.

5.

Where a building, being the property of the assessee, is put to use for the purpose of business or profession during the tax year.

Actual cost of the building as reduced by the depreciation—

1. (a) that would have been allowable had the building been used for the purpose of business or profession from the date of acquisition; and
   • (b) calculated at the rate in force on the date on which such asset was put to use for the purpose of business or profession.

6.

Where capital asset is transferred by—

1. (a) a holding company to its subsidiary company; or
   • (b) a subsidiary company to its holding company,

and the conditions of section 70(1)(c) and (d), as the case may be, are satisfied.

Actual cost to the transferee company shall be the same as it would have been, if the transferor company had continued to hold such asset for the purpose of its own business.

7.

Where an asset, which previously belonged to the assessee and had been used by him for the purpose of his business or profession, is reacquired by the assessee.

1. (a) Actual cost of the asset in the hands of assessee, when it was first acquired, as reduced by—
   • (i) depreciation actually allowed in respect of tax year commencing on 1st April, 1986 or any earlier tax year; and
   • (ii) depreciation allowable for tax year commencing on or after 1st April, 1987 under this Act or under the Income-tax Act, 1961 (43 of 1961), as if such asset was the only asset in the relevant block of asset; or
   • (b) actual price for which such asset is reacquired by the assessee,

whichever is lower.

8.

Where an asset is acquired by the assessee from previous owner and subsequently asset is given back to the previous owner by way of lease, hire or otherwise, and—

1. (a) the asset was being used for the purpose of business or profession by the previous owner; and
   • (b) depreciation has been claimed by the previous owner.

Actual cost of asset to the assessee shall be the written down value of the asset in the hands of the previous owner at the time of transfer by the previous owner.

9.

Where an asset is used in business after it ceases to be used for scientific research related to that business and a deduction is allowable under section 33(3).

Actual cost of asset as reduced by deduction allowed for the capital asset under section 45(1)(a)(i) or under section 35(1)(iv) of the Income-tax Act, 1961 (43 of 1961).

10.

Where the assessee had acquired an asset outside India, as a non-resident, and the asset is brought by him to India and put to use in his business or profession in India.

Actual cost of the asset as reduced by the depreciation—

1. (a) that would have been allowable had the asset been used for the purpose of business or profession in India since the date of its acquisition; and
   • (b) calculated at the rate in force.

11.

Where capital asset is acquired under the scheme of corporatisation of a recognised stock exchange approved by the Securities and Exchange Board of India.

Actual cost of the asset, as if there was no corporatisation.

12.

1. (a) Where deduction under section 46 was allowed or allowable in respect of the capital asset—
   • (i) to the assessee; or
   • (ii) to any person and the assessee acquires or receives such asset through special modes of acquisition from such person.
   • (a) Actual cost shall be deemed to be nil.
   • (b) Where deduction allowed under section 46 in respect of a capital asset becomes deemed income as per section 46(9)(b).
   • (b) Actual cost of the asset as reduced by the depreciation,—
   • (i) that would have been allowable had the asset been used for the purpose of business since date of acquisition; and
   • (ii) calculated at the rate in force.

13.

Where any amount is paid or payable as interest in connection with the acquisition of an asset.

Actual cost shall not include so much of such amount as is relatable to any period after such asset is first put to use.

1. (5) Irrespective of anything contained in sub-section (4), other than serial number 8 of the Table in the said sub-section, in a case where the asset is acquired by the assessee, its actual cost shall be such amount as may be determined by the Assessing Officer having regard to all the circumstances of the case, where—
   • (a) the asset was used by any other person for the purposes of his business, before such acquisition; and
   • (b) the Assessing Officer is satisfied that the main purpose of the transfer of the asset, directly or indirectly, was to reduce tax liability (by claiming depreciation on enhanced actual cost).
2. (6) The determination of actual cost under sub-section (5) shall be made with the prior approval of the Joint Commissioner.
3. (7) For the purposes of this section, "special modes of acquisition" means acquisition—
   • (a) by way of a gift or will or an irrevocable trust; or
   • (b) upon distribution on the liquidation of a company; or
   • (c) by such mode of transfer as is referred to in section 70(1)(a), (c), (d), (e), (j), (zd), (ze) and (zf).

1. (1) For the purposes of computation of income under the head "Profits and gains of business or profession", cost of acquisition of an asset which becomes property of—
   • (a) an amalgamated company under a scheme of amalgamation; or
   • (b) an assessee, under a gift, or will, or an irrevocable trust, or on total or partial partition of a Hindu undivided family,

when sold as stock-in-trade shall be the sum of—

1. (i) cost of acquisition of the said asset in the hands of the amalgamating company in case of clause (a), or the transferor or donor in case of clause (b);
   • (ii) any cost of improvement made;
   • (iii) any expenditure incurred by the amalgamating company or transferor or donor, as the case may be, wholly and exclusively in connection with such transfer.
2. (2) This section shall not apply to an asset referred to in section 67(6).

1. (1) For the purposes of computation of income under the head "Profits and gains of business or profession", written down value means—
   • (a) in case the asset is acquired in the tax year, the actual cost to the assessee;
   • (b) in case the asset is acquired before the tax year, actual cost to the assessee less depreciation actually allowed under this Act or under the Income-tax Act, 1961 (43 of 1961);
   • (c) in case of block of assets, the written down value computed in the following manner:

[(A – D) + B – C] – E, where

A = the written down value of the block of assets in the immediately preceding tax year;

B = actual cost of any asset falling within that block, acquired during the tax year;

C = moneys payable together with scrap value, if any, in respect of any asset falling within the block, which is sold, transferred, demolished, destroyed or discarded during the tax year, where "C" shall not exceed (A – D) + B;

D = depreciation actually allowed in respect of block of assets in relation to the said immediately preceding tax year;

E = in the case of a slump sale, the actual cost of the asset falling within that block as reduced by—

1. (i) depreciation actually allowed in respect of tax year commencing on 1st April, 1986 or any earlier tax year; and
   • (ii) depreciation allowable for tax year commencing on or after 1st April, 1987 under this Act or under the Income-tax Act, 1961 (43 of 1961), as if such asset was the only asset in the relevant block of asset.
2. (2) Where any block of asset is transferred by—
   • (a) a holding company to its subsidiary company and the conditions of section 70(1)(c) are satisfied;
   • (b) a subsidiary company to its holding company and the conditions of section 70(1)(d) are satisfied; or
   • (c) amalgamating company to the amalgamated company being an Indian company,

then the actual cost of the block of assets, irrespective of anything contained in section 39, in the hands of transferee company or amalgamated company, as the case may be, shall be the same as written down value of the block of assets as in the case of the transferor company or the amalgamating company in the immediately preceding tax year as reduced by depreciation actually allowed in respect of that block of asset in relation to that tax year.

1. (3) Where any asset, forming part of a block of assets is transferred by a demerged company to a resulting company, the written down value of block of assets of demerged company for the immediately preceding tax year, shall be reduced by the written down value of the assets transferred to the resulting company pursuant to such demerger.
2. (4) Where any asset, forming part of a block of assets is transferred by a demerged company to a resulting company then the actual cost of the block of assets, irrespective of anything contained in section 39, for resulting company shall be the written down value of the assets transferred from the demerged company immediately before such demerger.
3. (5) Where any block of assets is transferred by a private company or unlisted public company to a limited liability partnership and the conditions in section 70(1)(ze) are satisfied, then the actual cost of the block of assets, irrespective of anything contained in section 39, in the hands of limited liability partnership shall be written down value in the hands of said company as on the date of conversion of the company into limited liability partnership.
4. (6) Where any asset forming part of the block of assets is transferred to a company under the scheme of corporatisation of a recognised stock exchange in India approved by the Securities and Exchange Board of India, the written down value of the block of assets in the hands of such company, shall be the written down value of the assets transferred immediately before such transfer.
5. (7) In a case of succession in business or profession under section 313, where an assessment is made in the hands of successor under section 313(2), the written down value of any asset or block of assets shall be the amount which would have been taken as its written down value, if the assessment had been made directly on the person succeeded to.
6. (8) For the purposes of this section, any allowance in respect of any depreciation carried forward under section 33(11) shall be deemed to be the depreciation actually allowed.
7. (9) Where an assessee was not required to compute his total income for the purposes of this Act for any tax year or tax years preceding the tax year under consideration,—
   • (a) the actual cost of an asset shall be adjusted by the amount attributable to the revaluation of such asset, if any, in the books of account;
   • (b) the total amount of depreciation on such asset provided in the books of account of the assessee in respect of such tax year or tax years preceding the tax year under consideration shall be deemed to be the depreciation actually allowed under this Act for the purposes of this clause; and
   • (c) the depreciation actually allowed under clause (b) shall be adjusted by the amount of depreciation attributable to such revaluation of the asset.
8. (10) For the purposes of this section, where the income of an assessee is derived, in part from agriculture and in part from business chargeable to income-tax under the head "Profits and gains of business or profession", for computing the written down value of assets acquired before the tax year, the total amount of depreciation shall be computed as if the entire income is derived from the business of the assessee under the head "Profits and gains of business or profession" and the depreciation so computed shall be deemed to be the depreciation actually allowed under this Act or under the Income-tax Act, 1961 (43 of 1961).
9. (11) For the purposes of this section, the term "sold" shall have the meaning assigned to it in section 38(6)(a).

1. (1) Irrespective of anything contained in any other provision of this Act, where at the time of making payment during the tax year, there is a variation in liability of an assessee as expressed in Indian currency, due to change in rate of exchange, in relation to an asset acquired for the purpose of business or profession from a country outside India, it shall be dealt with in the manner specified in sub-sections (2) and (3).
2. (2) For this section, the liability shall exclude any part met directly or indirectly by any other person or authority and the "variation in liability" shall be computed as—

A = B – C where,—

A = variation in liability;

B = payment expressed in Indian currency at the time when it is made—

1. (a) towards the whole or part of the cost of asset; or
   • (b) towards repayment of the whole or part of the moneys borrowed, directly or indirectly, along with interest in foreign currency, specifically for acquiring such asset;

C = liability, corresponding to the amount referred in B, in Indian currency at the time of acquisition of such asset.

1. (3) The variation in liability shall be added or reduced from the—
   • (a) actual cost of the asset as referred in section 39; or
   • (b) expenditure of capital nature referred to in section 32(i) or 45(1)(a) (i); or
   • (c) cost of acquisition of a capital asset (not being a capital asset referred to in section 74) for the purpose of section 72,

and the amount arrived at after such addition or deduction shall be taken to be the actual cost of the asset or the amount of expenditure of a capital nature or, as the case may be, the cost of acquisition of the capital asset.

1. (4) Where the assessee has entered into a contract with an authorised dealer as defined in section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999), for providing him with a specified sum in a foreign currency on or after a stipulated future date at the rate of exchange specified in the contract to enable him to meet the whole or any part of the said liability, the amount, if any, to be added to, or deducted from, the actual cost of the asset or the amount of expenditure of a capital nature or, as the case may be, the cost of acquisition of the capital asset under this section shall, in respect of so much of the sum specified in the contract as is available for discharging the said liability, be computed with reference to the rate of exchange specified therein.

1. (1) Subject to the provisions of section 42, any gain or loss arising on account of change in foreign exchange rates on foreign currency transactions shall be treated as income or loss, as the case may be, and shall be computed as per the income computation and disclosure standards notified under section 276(2).
2. (2) The provisions of sub-section (1) shall be applicable to all foreign currency transactions, including those relating to—
   • (a) monetary items and non-monetary items;
   • (b) translation of financial statements of foreign operations;
   • (c) forward exchange contracts; and
   • (d) foreign currency translation reserves.

1. (1) If an assessee, being an Indian company or a person (other than a company), who is resident in India, incurs any expenditure specified in sub-section (2)—
   • (a) before the commencement of its business; or
   • (b) after the commencement of its business, in connection with the extension of its undertaking or in connection with its setting up a new unit,

the assessee shall be allowed a deduction of an amount equal to one-fifth of such expenditure for each of the five successive tax years beginning with—

1. (i) the tax year in which the business commences, for clause (a); or
   • (ii) the tax year in which the extension of the undertaking is completed or the new unit commences production or operation, for clause (b).
2. (2) The expenditure referred to in sub-section (1) shall be—
   • (a) the expenditure in connection with—
   • (i) preparation of feasibility report;
   • (ii) preparation of project report;
   • (iii) conducting market survey or any other survey necessary for the business;
   • (iv) engineering services relating to the business;
   • (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;
   • (c) in addition to expenditure in clauses (a) and (b), if the assessee is a company,—
   • (i) legal charges for drafting and printing of the Memorandum and Articles of Association of the company;
   • (ii) fees for registering the company under the provisions of the Companies Act, 2013 (18 of 2013);
   • (iii) expenditure 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; and
   • (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. (3) In relation to expenditure specified in sub-section (2)(a), the assessee shall furnish a statement containing the particulars of the expenditure in such form and manner, as may be prescribed.
4. (4) The allowable deduction under sub-section (1) in respect of aggregate of expenditure referred to in sub-section (2) shall be restricted to 5%—
   • (a) of the cost of the project; or
   • (b) of the capital employed in the business of the company, where the assessee is an Indian company, at its option.
5. (5) For the purposes of this section,—
   • (a) "cost of the project" means 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) and—
   • (i) for cases under sub-section (1)(a), the actual cost as shown in the books of the assessee as on the last day of the tax year in which the business commences;
   • (ii) for cases under sub-section (1)(b), the actual cost as shown in the books of the assessee as on the last day of the tax year in which either the extension of the undertaking is completed, or the new unit commences production or operations, as the case may be, in so far as such fixed assets have been acquired or developed in connection with the extension of the undertaking or setting up of new unit;
   • (b) "capital employed in the business of the company" means—
   • (i) in cases under sub-section (1)(a), the aggregate of the issued share capital, debentures and long-term borrowings as on the last day of the tax year in which the business of the company commences;
   • (ii) in a case under sub-section (1)(b), the aggregate of the issued share capital, debentures and long-term borrowings as on the last day of the tax year in which the extension of the undertaking is completed or, as the case may be, the new 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 undertaking or the setting up of the new unit of the company;
   • (c) "long-term borrowings" means—
   • (i) any moneys borrowed by the company from Government or Industrial Finance Corporation of India Limited or any other financial institution which is eligible for deduction under section 32(e) 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 tenure of moneys borrowed or debt is not less than seven years.
6. (6) If the assessee is a person, other than a company or a co-operative society, no deduction shall be admissible under sub-section (1) unless,—
   • (a) 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 before the specified date referred to in section 63; and
   • (b) the assessee furnishes for the first year in which the deduction under this section is claimed, the report of such audit by such date in such form duly signed and verified by such accountant and setting forth such particulars, as may be prescribed.
7. (7) If an undertaking of Indian company entitled for deduction under sub-section (1) is transferred before expiry of five years specified in the said sub-section, in a scheme of amalgamation, to another Indian company, then—
   • (a) no deduction under sub-section (1) shall be allowed to the amalgamating company for the tax year in which amalgamation takes place; and
   • (b) all provisions of this section shall continue to apply to the amalgamated company as they would have applied to the amalgamating company, as if the amalgamation had not taken place.
8. (8) If an undertaking of Indian company entitled for deduction under sub-section (1) is transferred before five years specified in the said sub-section, in a scheme of demerger to another company, then—
   • (a) no deduction under sub-section (1) shall be allowed to the demerged company for the tax year in which demerger takes place; and
   • (b) all provisions of this section shall continue to apply to the resulting company as they would have applied to the demerged company, as if the demerger had not taken place.
9. (9) If a deduction under this section is claimed and allowed for any tax year in respect of any expenditure referred to in sub-section (2), deduction shall not be allowed for such expenditure under any other provision of this Act for the same or any other tax year.

1. (1) (a) A deduction shall be allowed for any expenditure, being in the nature of—
   • (i) capital expenditure, but not on acquisition of land which is acquired as such or as part of any property; or
   • (ii) revenue expenditure,

incurred on scientific research related to the business of the assessee subject to provisions of this section.

1. (b) A deduction shall also be allowed under this sub-section in respect of the aggregate of expenditure (not being in the nature of capital expenditure), related to business, incurred on—
   • (i) salary to an employee engaged in such scientific research; or
   • (ii) purchase of materials used in such scientific research,

where such expenditure is incurred within three years immediately preceding the commencement of business, to the extent certified by the prescribed authority as incurred on such research and such expenditure shall be deemed to have been incurred in the tax year in which the business is commenced.

1. (c) For the purposes of this sub-section, the aggregate of capital expenditure incurred within three years immediately preceding the commencement of business shall be deemed to have been incurred in the tax year in which the business is commenced.
2. (2) (i) A deduction shall be allowed in respect of any expenditure on scientific research incurred (not being expenditure in the nature of cost of any land or building) by a company engaged in the business of—
   • (A) bio-technology; or
   • (B) manufacture or production of any article or thing, which is not specified in Schedule XIII,

on in-house research and development facility as approved by the prescribed authority, subject to the conditions and manner, as may be prescribed.

1. (ii) No deduction shall be allowed under this sub-section to a company approved under sub-section (3)(b)(ii).
   • (iii) No deduction shall be allowed in respect of the expenditure mentioned in clause (i) under any other provision of this Act.
   • (iv) The expenditure under clause (i) shall be allowed subject to such conditions and on furnishing of documents in such form and manner, as may be prescribed.
   • (v) For the purposes of this sub-section, "expenditure on scientific research", in relation to drugs and pharmaceuticals, shall include expenditure incurred on clinical drug trial, obtaining approval from any regulatory authority under any Central Act or State Act or Provincial Act and filing an application for a patent under the Patents Act, 1970 (39 of 1970).
2. (3) A deduction shall be allowed for any sum, paid to—
   • (a) (i) a research association having the object of undertaking scientific research or to a University, college or institution to be used for scientific research; or

(ii) a research association having the object of undertaking research in social science or statistical research or to a University, college or institution to be used for research in social science or statistical research;

1. (b) a company which is—
   • (i) registered in India having the main object of scientific research and development; and
   • (ii) approved by such authority, for the purposes of this clause in such manner and subject to such conditions, as may be prescribed;
   • (c) (i) a national laboratory; or

(ii) a University; or

(iii) an Indian Institute of Technology; or

(iv) a specified person, with a specific direction that the said sum shall be used for scientific research undertaken under a programme approved in this behalf by the prescribed authority.

1. (4) For the purposes of sub-section (3),—
   • (a) the expenditure shall be allowed subject to such conditions and on furnishing of documents in such form and manner, as may be prescribed; and
   • (b) in respect of clause (a) of the said sub-section, only such association, University, college or other institution shall be eligible for deduction, which for the time being is approved in the manner and subject to such conditions, as may be prescribed, and is specified by the Central Government, by notification.
2. (5) The deduction for any sum under sub-section (3) shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee, the approval granted to such entities or the programme undertaken by entities as mentioned in sub-section (3)(c), has been withdrawn.
3. (6) Where a deduction is allowed for any tax year under this section in respect of expenditure, represented wholly or partly by an asset, no deduction shall be allowed under section 33(3) for the same or any other tax year in respect of that asset.
4. (7) The provisions of section 33(11) in respect of depreciation shall apply in relation to deductions allowable for capital expenditure under sub-section (1).
5. (8) No deduction in respect of the sum mentioned in sub-section (3)(c) shall be allowed under any other provision of this Act.
6. (9) If any question arises under this section as to whether, and if so, to what extent any activity constitutes or constituted scientific research, or any asset is or was being used, for scientific research, the Board shall refer the question to—
   • (a) the Central Government, when such question relates to any activity under sub-section (3)(a), and its decision shall be final;
   • (b) the prescribed authority, when such question relates to any other activity other than the activity specified in clause (a), whose decision shall be final.
7. (10) When an amalgamating company, in a scheme of amalgamation, sells or otherwise transfers to the amalgamated company (being an Indian company) any asset representing capital expenditure on scientific research, the provisions of this section shall apply to the amalgamated company as they would have applied to the amalgamating company if the latter had not so sold or otherwise transferred the asset.
8. (11) For the purposes of this section,—
   • (a) "National Laboratory" means a scientific laboratory functioning at the national level under the aegis of the Indian Council of Agricultural Research, the Indian Council of Medical Research, the Council of Scientific and Industrial Research, the Defence Research and Development Organisation, the Department of Electronics, the Department of Bio-Technology or the Department of Atomic Energy and which is approved as a National Laboratory by such authority and in such manner, as may be prescribed;
   • (b) "salary" has the meaning assigned to it in section 16 read with section 18 subject to the following modifications:
   • (i) in section 16, clauses (e) and (j) shall be omitted;
   • (ii) in section 18, the references to "assessee" shall be construed as references to "employee of former employee" and the reference to "his employer or former employer" and "an employer or a former employer" shall be construed as reference to "the assessee";
   • (c) "specified person" means such person approved by the prescribed authority; and
   • (d) "land", for the purpose of sub-section (1)(a)(i), includes any interest in land.

1. (1) An assessee, at his option, shall be allowed a deduction of the whole of the capital expenditure incurred, wholly and exclusively, for the purposes of any specified business carried on by him during the tax year in which such expenditure is incurred.
2. (2) Where the expenditure referred to in sub-section (1) is incurred prior to the commencement of its operations and such expenditure is capitalised in the books of account as on the date of commencement of its operations, it shall be allowed during the tax year in which such business is commenced.
3. (3) This section shall apply to the specified business fulfilling all of the following conditions:—
   • (a) it is not set up by splitting up, or the reconstruction, of an already existing business;
   • (b) it is not set up by the transfer of machinery or plant previously used for any purpose to the specified business;
   • (c) if the business is of the nature referred to in sub-section (11)(d)(iii) and such business—
   • (i) is owned by a company formed and registered in India under the Companies Act, 2013 (18 of 2013) or by a consortium of such companies or by an authority or a board or a corporation established or constituted under any Central Act or State Act;
   • (ii) has been approved by the Petroleum and Natural Gas Regulatory Board established under section 3(1) of the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006) and notified by the Central Government in this behalf;
   • (iii) has made not less than such proportion of its total pipeline capacity as specified by regulations made by the Petroleum and Natural Gas Regulatory Board established under section 3(1) of the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006) available for use on common carrier basis by any person other than the assessee or an associated person; and
   • (iv) fulfils any other condition as may be prescribed;
   • (d) if the business is of the nature referred to in sub-section (11)(d)(xiv), such business,—
   • (i) is owned by a company registered in India or by a consortium of such companies or by an authority or a board or corporation or any other body established or constituted under any Central Act or State Act;
   • (ii) entity referred to in sub-clause (i) has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for developing or operating and maintaining or developing, operating and maintaining a new infrastructure facility.
4. (4) No deduction shall be allowed under the provisions of Chapter VIII-C in relation to such specified business for the same or any other tax year, if a deduction under sub-section (1) is claimed and allowed.
5. (5) No deduction in respect of the expenditure referred to in sub-section (1) shall be allowed to the assessee under any other section in any tax year or under this section in any other tax year, if the deduction has been claimed and allowed to him under this section.
6. (6) The provisions of this section shall apply to the specified business referred to in column B of the Table below if it commences its operations as specified in column C thereof.

TABLE

1. (7) Where the assessee builds a hotel of two star or above category as classified by the Central Government and subsequently, transfers the hotel operation thereof to another person while retaining its ownership, the assessee shall be deemed to be carrying on the specified business referred to in sub-section (11)(d)(iv).
2. (8) The provisions contained in sections 122(6) and 140(8) and (13) shall, so far as may be, apply to this section in respect of goods or services or assets held for the purposes of the specified business.
3. (9) Any asset for which a deduction is claimed and allowed under this section—
   • (a) shall be used only for the specified business for a period of eight years beginning with the tax year in which such asset is acquired or constructed;
   • (b) is used for the purpose other than specified business during the period referred to in clause (a), and is not chargeable to tax under section 26(2)(k), then the total amount of deduction so claimed and allowed in one or more tax years, as reduced by the amount of depreciation allowable under section 33, as if no deduction under this section was allowed, shall be deemed to be the income chargeable under the head "Profits and gains of business or profession" of the tax year in which the asset is so used.
4. (10) The provisions of sub-section (9)(b) shall not apply to a company which has become a sick industrial company under section 17(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), as it stood before its repeal by the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (1 of 2004) during the period specified in sub-section (9)(a).
5. (11) For the purposes of this section,—
   • (a) "associated person", in relation to the assessee, means a person,—
   • (i) who participates, directly or indirectly, or through one or more intermediaries in the management or control or capital of the assessee;
   • (ii) who holds, directly or indirectly, shares carrying at least 26% of the voting power in the capital of the assessee;
   • (iii) who appoints more than half of the board of directors or members of the governing board, or one or more executive directors or executive members of the governing board of the assessee; or
   • (iv) who guarantees at least 10% of the total borrowings of the assessee;
   • (b) "cold chain facility" means a chain of facilities for storage or transportation of agricultural and forest produce, meat and meat products, poultry, marine and dairy products, products of horticulture, floriculture and apiculture and processed food items under scientifically controlled conditions including refrigeration and other facilities necessary for the preservation of such produce;
   • (c) "infrastructure facility" means—
   • (i) a road including toll road, a bridge or a rail system;
   • (ii) a highway project including housing or other activities being an integral part of the highway project;
   • (iii) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system;
   • (iv) a port, airport, inland waterway, inland port or navigational channel in the sea;
   • (d) "specified business" means any one or more of the following businesses:—
   • (i) setting up and operating a cold chain facility;
   • (ii) setting up and operating a warehousing facility for storage of agricultural produce;
   • (iii) laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network;
   • (iv) building and operating, anywhere in India, a hotel of two star or above category as classified by the Central Government;
   • (v) building and operating, anywhere in India, a hospital with at least 100 beds for patients;
   • (vi) developing and building a housing project under a scheme for slum redevelopment or rehabilitation framed by the Central Government or a State Government and which is notified by the Board in this behalf in accordance with the guidelines as may be prescribed;
   • (vii) developing and building a housing project under a scheme for affordable housing framed by the Central Government or a State Government and which is notified by the Board in this behalf in accordance with the guidelines as may be prescribed;
   • (viii) production of fertilizer in India;
   • (ix) setting up and operating an inland container depot or a container freight station notified or approved under the Customs Act, 1962 (52 of 1962);
   • (x) bee-keeping and production of honey and beeswax;
   • (xi) setting up and operating a warehousing facility for storage of sugar;
   • (xii) laying and operating a slurry pipeline for the transportation of iron ore;
   • (xiii) setting up and operating a semi-conductor wafer fabrication manufacturing unit which is notified by the Board in this behalf in accordance with the guidelines as may be prescribed;
   • (xiv) developing, or maintaining and operating, or developing, maintaining and operating, a new infrastructure facility;
   • (e) 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—
   • (i) such machinery or plant was not, at any time before the date of the installation by the assessee, used in India;
   • (ii) such machinery or plant is imported into India; and
   • (iii) no deduction of depreciation for 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 before the date of installation of the machinery or plant by the assessee;
   • (f) if any machinery or plant or its part previously used for any purpose is transferred to the specified business and its total value does not exceed 20% of the total value of the machinery or plant used in such business, then the conditions specified in sub-section (3)(b) shall be deemed to be complied with;
   • (g) any expenditure of capital nature shall not include any expenditure—
   • (i) for which the payment or aggregate of payments made to a person in a day, is not through specified banking or online mode, exceeds Rs. 10000; or
   • (ii) incurred on the acquisition of any land or goodwill or financial instrument.

1. (1) Any expenditure (excluding cost of any land or building) incurred, on—
   • (a) agricultural extension project by any assessee; or
   • (b) any skill development project by a company,

shall be allowed as a deduction, in the tax year in which such expenditure is incurred provided such project is notified by the Board as per the guidelines issued by it.

1. (2) If a deduction under this section is claimed and allowed for any tax year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed for such expenditure under any other provision of this Act for the same or any other tax year.

1. (1) Where an assessee is carrying on business of growing and manufacturing tea or coffee or rubber in India, such assessee shall be allowed a deduction on the basis of deposits into the special account or deposit account and computed as per the provisions of the Schedule IX.
2. (2) Any amount withdrawn or utilised or released from the aforesaid accounts at the time of closure or otherwise shall be charged to tax as per the provisions of the Schedule IX.
3. (3) Where any asset acquired as per the special scheme or the deposit scheme, as referred to in the Schedule IX, is sold or otherwise transferred in any tax year, it shall be charged to tax in accordance with the provisions of the said Schedule.

1. (1) An assessee carrying on a business of prospecting, extracting, or producing petroleum or natural gas, or both, in India, and who has an agreement with the Central Government for this business, shall be allowed a deduction on the basis of deposit to special account or site restoration account and computed as per the provisions of the Schedule X.
2. (2) Any amount withdrawn or transferred from the aforesaid accounts at the time of closure or otherwise shall be charged to tax in the year in which the amount is transferred or withdrawn as per the provisions of the Schedule X.
3. (3) Where any asset acquired as per the special scheme, or the deposit scheme, as referred to in Schedule X, is sold or otherwise transferred in any tax year, it shall be charged to tax in accordance with the provisions of the said Schedule.

1. (1) Irrespective of anything to the contrary contained in this Act, if, during the tax year, the amount received by a specified association from its members falls short of the expenditure incurred by such association solely for the protection or advancement of common interest of its members, then the amount so falling short shall be allowed as deduction from the income of such association under the head "Profits and gains of business or profession" and the remaining amount, if any, shall be allowed deduction from its income under any other head.
2. (2) For the purposes of sub-section (1),—
   • (a) "specified association" means any trade, professional or similar association, not covered in Schedule III (Table: Sl. No. 24), whose income or its part is not distributed to its members (other than as grants to any associations or institutions affiliated to it);
   • (b) the amount received by the specified association from its members shall include amount by way of subscription or otherwise, and shall not include any remuneration received by the association for rendering any specific services to such members;
   • (c) expenditure incurred by specified association shall not include—
   • (i) expenditure deductible under any other provision of this Act; and
   • (ii) any capital expenditure.
3. (3) The effect of other provisions of this Act relating to carry forward and set off of brought forward losses or allowances shall be given before allowing deduction under sub-section (1).
4. (4) The maximum allowable deduction under this section shall not exceed 50% of the total income as computed before allowing deduction under this section.

1. (1) An assessee, being an Indian company or a person (other than a company) who is resident in India, who is engaged in any operations relating to prospecting for, or extraction or production of, any mineral, shall be allowed a deduction of an amount equal to one-tenth of the amount of expenditure referred to in sub-section (2), in each of the relevant tax years.
2. (2) The expenditure referred to in sub-section (1) is the expenditure incurred by the assessee at any time during the year of commercial production and any one or more of the four tax years immediately preceding that year, wholly and exclusively on any operations relating to prospecting for any mineral or group of associated minerals specified in Part A or Part B, respectively, of the Schedule XII or on the development of a mine or other natural deposit of any such mineral or group of associated minerals.
3. (3) The expenditure under sub-section (2) shall be reduced by such expenditure which is met directly or indirectly by any other person or authority and any sale, salvage, compensation or insurance moneys realised by the assessee in respect of any property or rights brought into existence as a result of the expenditure.
4. (4) The following expenditure shall be excluded from the expenditure referred to in sub-section (2):—
   • (a) any expenditure on the acquisition of the site of the source of any mineral or group of associated minerals referred to in the said sub-section or of any rights in or over such site; or
   • (b) any expenditure on the acquisition of the deposits of such mineral or group of associated minerals or of any rights in or over such deposits; or
   • (c) any expenditure of a capital nature in respect of any building, machinery, plant or furniture for which allowance by way of depreciation is admissible under section 33.
5. (5) The deduction to be allowed under sub-section (1) for any relevant tax year shall be—
   • (a) an amount equal to one-tenth of the expenditure specified in sub-section (2) as reduced by the expenditure mentioned in sub-sections (3) and (4) (such one-tenth being herein referred to as the instalment); or
   • (b) such amount as is sufficient to reduce to nil the income (as computed before making the deduction under this section) of that tax year arising from the commercial exploitation [whether or not such commercial exploitation is as a result of the operations or development referred to in sub-sections (2) and (3)] of any mine or other natural deposit of the mineral or any one or more of the minerals in a group of associated minerals under this section in respect of which the expenditure was incurred,

whichever is less.

1. (6) If any part of the instalment for a relevant tax year is not fully allowed, it shall be carried forward to the subsequent tax year, becoming part of the instalment of that tax year and such carrying forward may continue for each following tax year, but no instalment shall be carried forward beyond the tenth tax year from the tax year in which commercial production began.
2. (7) 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,—
   • (a) the accounts of the assessee for the tax year or years in which the expenditure specified in sub-section (2) are incurred have been audited by an accountant, before the specified date referred to in section 63; and
   • (b) the assessee furnishes for the first tax year in which the deduction under this section is claimed, the report of such audit, by such date, in such form and duly signed and verified by such accountant, as may be prescribed.
3. (8) If an undertaking of an Indian company, entitled for deduction under sub- section (1), is transferred before ten years specified in the said sub-section in a scheme of amalgamation or demerger, to another Indian company, then,—
   • (a) no deduction shall be allowed to the amalgamating or demerged company for the year in which such amalgamation or demerger takes place; and
   • (b) all the provisions of this section shall continue to apply to the amalgamated or resulting company as it would have applied to the amalgamating or demerged company, as if the amalgamation or demerger had not taken place.
4. (9) If a deduction under this section is claimed and allowed for any tax year in respect of any expenditure referred to in sub-section (2), deduction shall not be allowed for such expenditure under any other provision of this Act for the same or any other tax year.
5. (10) For the purposes of this section,—
   • (a) "operation relating to prospecting" means any operation undertaken for the purposes of exploring, locating or proving deposits of any mineral and includes any such operation which proves to be infructuous or abortive;
   • (b) "year of commercial production" means the tax year in which as a result of any operation relating to prospecting, commercial production of any mineral or any one or more of the minerals in a group of associated minerals specified in Part A or Part B, respectively, of Schedule XII, commences;
   • (c) "relevant tax years" means the ten tax years beginning with the year of commercial production.

1. (1) Where an expenditure of the nature specified in column B of the Table given below is incurred during the tax year, a deduction or part thereof shall be allowed in equal instalments in each of the successive tax years as mentioned in column D of the said Table, beginning from the initial tax year specified in column C thereof.

TABLE

Sl. No.

Nature of expenditure

Initial tax year

Number of tax years over which deduction of expenditure is allowable in equal instalments

A

B

C

D

1.

Expenditure incurred by an Indian company, wholly and exclusively for the purposes of amalgamation or demerger of an undertaking.

Tax year in which such amalgamation or demerger takes place.

Five tax years.

2.

Amount paid to an employee in connection with his voluntary retirement as per any scheme of voluntary retirement.

Tax year in which such payment is made.

Five tax years.

3.

Capital expenditure incurred and actually paid for acquiring any right to use spectrum for telecommunication services (spectrum fee).

Tax year in which,—

1. (a) the business to operate telecom services is commenced; or
   • (b) spectrum fee is actually paid,

whichever is later.

Number of years commencing from the initial tax year and ending in the tax year up to which the spectrum for which the fee is paid remains in force.

4.

Capital expenditure incurred and actually paid for acquiring any right to operate telecommunication services (herein referred to as licence fee).

Tax year in which,—

1. (a) the business to operate telecom services is commenced; or
   • (b) licence fee is actually paid,

whichever is later.

Number of years commencing from the initial tax year and ending in the tax year up to which the licence for which the fee is paid remains in force.

1. (2) Where the licence or spectrum referred to in sub-section (1) (Table: Sl. No. 3 or 4)—
   • (a) is transferred, and the proceeds of the transfer (so far as they consist of capital sums) are less than the expenditure though incurred, but remaining unallowed, a deduction equal to such expenditure remaining unallowed, as reduced by the proceeds of the transfer, shall be allowed in respect of the tax year in which the licence or spectrum is transferred;
   • (b) is transferred, whether in whole or in part, and the proceeds of the transfer (so far as they consist of capital sums) exceed the amount of the expenditure though incurred, but remaining unallowed, so much of the excess as does not exceed the difference between the expenditure incurred to obtain the licence or spectrum and the amount of such expenditure remaining unallowed, shall be chargeable to income-tax as profits and gains of the business in the tax year in which the licence or spectrum has been transferred;
   • (c) is transferred under clause (b) in a tax year in which the business is no longer in existence, the provisions of said clause shall apply as if the business is in existence in that tax year;
   • (d) is transferred, whether in whole or in part, and the proceeds of the transfer (so far as they consist of capital sums) are equal or greater than the amount of expenditure incurred remaining unallowed, no deduction for such expenditure shall be allowed under sub-section (1) in respect of the tax year in which the licence or spectrum is transferred or in respect of any subsequent tax year or years;
   • (e) is sold or otherwise transferred by the amalgamating company or demerged company, as the case may be, in a scheme of amalgamation or demerger, to the amalgamated company or resulting company, being an Indian company,—
   • (i) the provisions of clauses (a), (b), (c) and (d) shall not apply to the amalgamating or demerged company; and
   • (ii) all the provisions of this section shall continue to apply to the amalgamated or resulting company as it would have applied to the amalgamating or demerged company, as if the transfer had not taken place.
2. (3) Where a part of licence or spectrum referred to in sub-section (1) (Table: Sl. No. 3 or 4) is transferred in a tax year and sub-section (2)(b) and (c) does not apply, the deduction to be allowed under sub-section (1) for the expenditure though incurred but remaining unallowed shall be arrived at by—
   • (a) subtracting the proceeds of transfer (so far as they consist of capital sums) from the expenditure remaining unallowed; and
   • (b) dividing the remainder by the number of relevant tax years which have not expired at the beginning of the tax year during which the licence or spectrum is transferred.
3. (4) No deduction shall be allowed—
   • (a) for depreciation under section 33(1) to (10) in respect of expenditure mentioned in sub-section (1) (Table: Sl. No. 3 or 4), where deduction under this section is claimed and allowed for any tax year;
   • (b) under any other provision of this Act in respect of the expenditure mentioned in sub-section (1) (Table: Sl. No. 1 or 2).
4. (5) In case any deduction has been claimed and granted in respect of an expenditure referred to in sub-section (1) (Table: Sl. No. 3) in a tax year and subsequently there is failure on part of the assessee to comply with any of the provisions of this section, then,—
   • (a) the deduction shall be deemed to have been wrongly allowed;
   • (b) the Assessing Officer may, irrespective of any other provisions of this Act, recompute the total income of the assessee for the said tax year by making necessary rectification;
   • (c) the provisions of section 287 shall, so far as may be, apply; and
   • (d) the period of four years specified in section 287(8) shall be counted from the end of the tax year in which such failure takes place.
5. (6) Where a specified business reorganisation takes place before the expiry of the period specified in sub-section (1) (Table: Sl. No. 2.D), in case of an expenditure referred against serial number 2 thereof, then,—
   • (a) the provisions of this section, as far as may be, shall continue to apply to the successor entity as they would have applied to the predecessor entity if such reorganisation had not taken place; and
   • (b) no deduction shall be allowed to the predecessor entity under this section for the tax year in which such reorganisation takes place.
6. (7) For the purposes of this section,—
   • (a) "actually paid" means the actual payment of expenditure irrespective of the tax year in which the liability for the expenditure was incurred according to the method of accounting regularly employed by the assessee or payable in such manner, as may be prescribed;
   • (b) "equal instalments" shall be calculated by taking numerator as 1 and denominator as the tax years mentioned in column D of the Table in sub-section (1);
   • (c) "specified business reorganisation" means—
   • (i) amalgamation of an Indian company and its undertaking with another Indian company; or
   • (ii) demerger of an undertaking of an Indian company to another company; or
   • (iii) succession of a firm or proprietorship concern to a company fulfilling conditions as laid down in section 70(1)(zd); or
   • (iv) conversion of a private company or unlisted public company to a limited liability partnership fulfilling conditions laid down in section 70(1)(ze).

1. (1) In case of transfer of an asset (other than a capital asset), being land or building or both, if the consideration received or accrued from such transfer is less than the stamp duty value, then such stamp duty value for computing profits and gains from transfer of such asset shall be deemed to be the full value of consideration.
2. (2) The provisions of sub-section (1) shall not apply if the stamp duty value does not exceed 110% of the consideration received or accrued and in such a case, the consideration received or accrued shall be deemed to be the full value of consideration.
3. (3) If the date of agreement fixing the value of consideration for transfer of asset and date of registration for transfer of such asset are different, then the stamp duty value as on date of agreement may be taken to be the full value of consideration under sub-section (1).
4. (4) The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by specified banking or online mode on or before the date of agreement for transfer of such asset.
5. (5) For the determination of the stamp duty value under sub-section (1), the provisions of section 78(2) and (3)shall apply.

1. (1) Where the assessee undertakes specified oil exploration business, then deduction specified in sub-sections (3) and (4) shall be allowed while computing the income under the head "Profits and gains of business or profession".
2. (2) For the purposes of this section, "specified oil exploration business" means business consisting of prospecting for or extraction or production of mineral oils where the following conditions are fulfilled:—
   • (a) the Central Government has entered into an agreement with the assessee;
   • (b) such agreement is entered for association or participation of the Central Government or any person authorised by it; and
   • (c) such agreement is laid before each House of Parliament.
3. (3) The deduction referred to in sub-section (1) shall be—
   • (a) for the period before the beginning of commercial production, expenditure towards infructuous or abortive exploration incurred in respect of any surrendered area;
   • (b) for the period after the commencement of commercial production, expenditure (whether before or after such production) in respect of drilling or exploration activities or services or in respect of physical assets used in that connection;
   • (c) for the tax year of commencement of commercial production and such succeeding tax years as specified in the agreement, towards depletion of mineral oil in the mining area.
4. (4) The deductions referred to in sub-section (1) shall be—
   • (a) either in lieu of, or in addition to, any allowance admissible under this Act as specified in the agreement; and
   • (b) computed and made in the manner specified in the agreement and the other provisions of this Act shall be deemed to have been modified to such extent.
5. (5) Where the business or any interest therein as referred to in sub-section (1) is wholly or partly transferred as per the provisions of the agreement, the profit shall be charged to tax or deduction shall be allowed in the following manner:—
   • (a) where A is less than C, then (C–A) shall be allowed as deduction in the tax year in which such business or interest is transferred;
   • (b) where A is greater than C,—
   • (i) but less than B, then (A–C) shall be the profit chargeable under the head "Profits and gains of business or profession" for the tax year in which such transfer takes place;
   • (ii) in any other case, only (B–C) shall be the profit chargeable under the said head for the tax year in which such transfer takes place; and
   • (iii) no deduction shall be allowed for the expenditure incurred remaining unallowed in the tax year in which such transfer takes place or any subsequent tax year,

where,—

A = proceeds of the transfer (so far as they consist of capital sums);

B = total amount of expenditure incurred in connection with the business or to obtain interest therein;

C = amount of expenditure incurred remaining unallowed.

1. (6) If the business or interest therein is no longer in existence in the year of transfer, the provisions of sub-section (5) shall apply as if such business is in existence during the said year.
2. (7) Where the business or interest therein is sold or otherwise transferred in a scheme of amalgamation or demerger and the amalgamated entity or the resulting entity being an Indian company, then the provisions of sub-section (5) shall—
   • (a) not apply to the amalgamating or demerged company; and
   • (b) continue to apply to the amalgamated or resulting company as it would have applied to the amalgamating or demerged company as if the transfer had not taken place.

Irrespective of anything to the contrary contained in the provisions of this Act for computing income under the head "Income from house property", "Capital gains" or "Income from other sources", or in section 390(5) and (6), or in sections 26 to 54, the profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a co-operative society, shall be computed as per the provisions of Schedule XIV.

1. (1) Irrespective of anything to the contrary contained in this Act, the interest income in relation to bad or doubtful debts of a specified financial institution shall be chargeable to tax under the head "Profits and gains of business or profession" in the tax year in which such interest is—
   • (a) credited to the profit and loss account; or
   • (b) actually received,

whichever is earlier.

1. (2) For the purposes of this section,—
   • (a) "specified financial institution" means—
   • (i) a public financial institution; or
   • (ii) a scheduled bank; or
   • (iii) a co-operative bank, other than—
   • (A) a primary agricultural credit society; or
   • (B) a primary co-operative agricultural and rural development bank; or
   • (iv) a State Financial Corporation; or
   • (v) a State Industrial Investment Corporation; or
   • (vi) any such class of non-banking financial companies, as may be notified by the Central Government;
   • (b) "bad or doubtful debts" shall be such categories of debts, as may be prescribed, having regard to the guidelines issued in relation to such debts by the Reserve Bank of India.

1. (1) The profits and gains arising from a construction contract or a contract for providing services, shall be determined on the basis of percentage of completion method, subject to provisions of sub-section (2), as per the income computation and disclosure standards notified under section 276(2).
2. (2) For the purposes of sub-section (1), the profits and gains arising from a contract for providing services shall be determined—
   • (a) on the basis of project completion method, if the duration of such contract is not more than ninety days;
   • (b) on the basis of straight line method, if the contract involves indeterminate number of acts over a specified period of time.
3. (3) For the purposes of percentage of completion method, project completion method or straight line method under this section,—
   • (a) the contract revenue shall include retention money;
   • (b) the contract costs shall not be reduced by any incidental income in the nature of interest, dividends or capital gains.

1. (1) The provisions of sections 26 to 54, to the extent contrary to this section, shall not apply to the manner of computation of profits and gains of the specified business or profession in sub-section (2).
2. (2) The profits and gains of any specified business or profession as mentioned in column B of the Table below, carried on by an assessee specified in column C of the said Table, having total turnover or gross receipts of business or profession during the tax year specified in column D and computed in the manner specified in column E thereof, shall be deemed to be the profits and gains of such business or profession chargeable to tax under the head "Profits and gains of business or profession".

TABLE

Sl. No.

Specified business or profession

Assessee

Total turnover or, as the case may be, gross receipts of business or profession during tax year

Manner of computation

A

B

C

D

E

1.

Any business other than the business specified against serial number 2.

Eligible assessee.

1. (a) Does not exceed two crore rupees; or
   • (b) does not exceed three crore rupees, where the amount or aggregate of amounts received, in cash, does not exceed 5% of the total turnover or gross receipts.
   • (A) The aggregate of—
   • (i) 6% of total turnover or gross receipts which is received by specified banking or online mode during the tax year or before the due date specified in section 263(1)in respect of that tax year;
   • (ii) 8% of total turnover or gross receipts as reduced by the turnover or gross receipts covered in (i); or
   • (B) profit claimed to have been actually earned,

whichever is higher.

2.

Business of plying, hiring or leasing goods carriage.

An assessee, who owns not more than ten goods carriages at any time during the tax year.

1. (A) The aggregate of income from goods carriage:—
   • (i) being a heavy goods vehicle, calculated at the rate of Rs. 1000 per ton of gross vehicle weight or unladen weight, as the case may be, for each vehicle, for every month or part of a month during which such vehicle is owned by the assessee in the tax year;
   • (ii) being a vehicle other than heavy goods vehicle, calculated at the rate of Rs. 7,500 for each goods carriage for every month or part of a month during which the vehicle is owned by the assessee in the tax year; or
   • (B) profit claimed to have been actually earned,

whichever is higher.

3.

Specified profession as referred to in section 62(4).

Specified assessee.

1. (a) Does not exceed fifty lakh rupees; or
   • (b) does not exceed seventy-five lakh rupees,

where the amount or aggregate of amounts received in cash does not exceed 5% of the gross receipts.

50% of the gross receipts or profit claimed to have been actually earned, whichever is higher.

1. (3) Any assessee mentioned in column C of the Table in sub-section (2), who claims that—
   • (a) the profits or gains actually earned from the specified business or profession are lower than the profits or gains computed in the manner mentioned in column E of the said Table; and
   • (b) whose total income exceeds the maximum amount which is not chargeable to tax,

shall be required to—

1. (i) keep and maintain such books of account and other documents as required under section 62; and
   • (ii) get the accounts audited and furnish a report of such audit as required under section 63.
2. (4) Any loss, allowance or deduction allowable under the provisions of this Act, shall not be allowed against the income computed in the manner specified in sub-section (2).
3. (5) For the purposes of sub-section (2) (Table: Sl. No. 2), where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in section 35(e).
4. (6) The written down value of any asset used for the purposes of specified business or profession shall be computed as if the assessee mentioned in column C of the Table in sub-section (2) had claimed and was actually allowed deduction in respect of depreciation thereon for each of the relevant tax years.
5. (7) Where an eligible assessee declares profit for any tax year as per the provisions of sub-section (2) (Table: Sl. No. 1) and he declares profit for any of the five tax years succeeding such tax year in contravention of the provisions of sub-section (1), then he shall not be eligible to claim the benefit of the provisions of this section for five tax years subsequent to the tax year in which the profit has not been declared as per the provisions of the said sub-section.
6. (8) Irrespective of anything contained in foregoing provision of this section, where provisions of sub-section (7) are applicable to an eligible assessee and his total income exceeds the maximum amount which is not chargeable to income-tax, he shall be required to keep and maintain such books of account and other documents as required under section 62 and get them audited and furnish a report of such audit as required under section 63.
7. (9) For the purposes of sub-section (2) (Table: Sl. Nos. 1 and 3), the receipt of amount or aggregate of amounts by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the receipt in cash.
8. (10) The provisions of sections 62 and 63 shall not apply in so far as they relate to the business referred to in sub-section (2) (Table: Sl. No. 2) and in computing the monetary limits under those sections, the gross receipts or, as the case may be, the income from the said business shall be excluded.
9. (11) For the purposes of this section,—
   • (a) "eligible assessee" means an individual, a Hindu undivided family, or a firm other than a limited liability partnership, who is resident in India, and who—
   • (i) 8[***]
   • (ii) has not claimed any deduction under Chapter VIII-C for the relevant tax year;
   • (iii) does not carry on specified profession as defined in section 62(4);
   • (iv) does not earn any income in the nature of commission or broke- rage;
   • (v) does not carry on any agency business;
   • (b) "specified assessee" means an individual or a firm, other than a limited liability partnership, who is a resident in India;
   • (c) "limited liability partnership" shall have the same meaning as assigned to it in section 2(1)(n) of the Limited Liability Partnership Act, 2008 (6 of 2009);
   • (d) the expressions "goods carriage", "gross vehicle weight" and "unladen weight" shall have the same meaning as respectively assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988);
   • (e) "heavy goods vehicle" means any goods carriage, the gross vehicle weight of which exceeds 12,000 kilograms; and
   • (f) an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on instalments and for which the whole or part of the amount payable is still due, shall be deemed to be the owner of such goods carriage.

1. (1) Income in the nature of royalty or fees for technical services received by a specified assessee during a tax year, shall be computed under the head "Profits and gains of business or profession" under this Act, if the following conditions are satisfied:—
   • (a) income is received from the Government or an Indian concern;
   • (b) income is in pursuance to an agreement made by the specified assessee with the Government or the Indian concern;
   • (c) the specified assessee carries on business in India through a permanent establishment, or performs professional services from a fixed place of profession, situated in India; and
   • (d) the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed place of profession.
2. (2) No deduction shall be allowed against the income computed under sub-section (1) in respect of the following amounts:—
   • (a) any expenditure or allowance which is not wholly and exclusively incurred for the business of such permanent establishment or fixed place of profession in India; or
   • (b) amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to its head office or to any of its other offices.
3. (3) The provisions of section 61 in so far as it relates to business referred to in section 61(2) (Table: Sl. No. 5), shall not apply in respect of the income referred to in this section.
4. (4) The specified assessee shall keep and maintain books of account and other documents as per the provisions of section 62, get his accounts audited on or before the specified date referred to in section 63 by an accountant, and furnish report of audit in the prescribed form, duly signed and verified by the accountant.
5. (5) For the purposes of this section, the expression "specified assessee" means a non-resident (not being a company) or a foreign company.

1. (1) Irrespective of anything to the contrary contained in sections 26 to 54, in the case of a non-resident assessee, deduction of head office expenditure incurred by such assessee as is attributable to his business or profession in India, shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession" subject to provisions of sub-section (2).
2. (2) The deduction allowable under sub-section (1) shall be restricted—
   • (a) if the adjusted total income of the assessee is a loss, to an upper monetary limit of 5% of the average adjusted total income of the assessee; or
   • (b) in any other case, to an upper monetary limit of 5% of the adjusted total income of the assessee.
3. (3) For the purposes of this section,—
   • (a) "adjusted total income" means the total income computed under this Act, without giving effect to the allowance referred to in this section or in section 33(11) or the deduction referred to in section 32(i)(A) or any loss carried forward under section 111(1) or 112(1) or 113(2) or 115(2) or the deductions under Chapter VIII;
   • (b) "average adjusted total income" means,—
   • (i) if the assessee is assessable for each of the three tax years immediately preceding the relevant tax year, the arithmetic mean of his adjusted total income over those three tax years;
   • (ii) if the assessee is assessable only for two of the said three tax years, the arithmetic mean of his adjusted total income over those two tax years;
   • (iii) if the assessee is assessable only for one of the said three tax years, his adjusted total income for that tax year;
   • (c) "head office expenditure" means executive and general administration expenditure incurred by the assessee outside India, including expenditure incurred in respect of—
   • (i) rent, rates, taxes, repairs or insurance of any premises outside India used for the business or profession;
   • (ii) salary, wages, annuity, pension, fees, bonus, commission, gratuity, perquisites or profits in lieu of, or in addition to, salary, whether paid or allowed to any employee or other person employed in, or managing the affairs of, any office outside India;
   • (iii) travelling by any employee or other person employed in, or managing the affairs of, any office outside India; and
   • (iv) such other matters connected with executive and general administration, as may be prescribed.

1. (1) The provisions of sections 26 to 54, to the extent contrary to this section, shall not apply to the manner of computation of profits and gains of the specified business in sub-section (2).
2. (2) The profits and gains of any specified business as mentioned in column B of the Table below, carried on by a specified assessee as mentioned in column C of the said Table during a tax year, shall be computed in the manner specified in column D thereof, and shall be deemed to be the profits and gains of such business of such assessee chargeable to tax for the said tax year under the head "Profits and gains of business or profession".

TABLE

Sl. No.

Specified business

Specified assessee

Profits and gains of business or profession

A

B

C

D

1.

Business of operation of ships, other than cruise ships referred to in Serial number 2.

Non- resident.

7.5% of (A+B), where,—

A = sum on account of carriage of passengers, livestock, mail or goods shipped at any port in India, whether paid or payable, in or outside India, to the assessee or any other person on his behalf (including demurrage, handling or other similar charges);

B = sum on account of carriage of passengers, livestock, mail or goods shipped at any port outside India, whether received or deemed to be received in India, by the assessee or any other person on his behalf (including demurrage, handling or other similar charges).

2.

Business of operation of cruise ships (subject to the conditions as may be prescribed).

Non-resident.

20% of (A+B), where,—

A = sum on account of carriage of passengers, paid or payable to the assessee or any other person on his behalf;

B = sum on account of carriage of passengers received or deemed to be received by the assessee or any other person on his behalf.

3.

Business of operation of aircraft.

Non-resident.

5% of (A+B), where,—

A = sum on account of carriage of passengers, livestock, mail or goods from any place in India, paid or payable (in or outside India) to the assessee or any other person on his behalf;

B = sum on account of carriage of passengers, livestock, mail or goods from any place outside India, received or deemed to be received in India, by the assessee or any other person on his behalf.

4.

Business of civil construction or erection or testing or commissioning, of plant or machinery, in connection with a turnkey power project, approved by the Central Government.

Foreign company.

10% of the amount towards such civil construction, erection, testing, or commissioning, paid or payable, to the assessee or to any other person on his behalf, whether in or outside India.

5.

Business of providing services or facilities (including supply of plant and machinery on hire) for prospecting, extraction or production of mineral oils.

Non-resident.

10% of (A+B), where,—

A = sum on account of business of providing services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of mineral oils in India, paid or payable (in or outside India), to the assessee or any other person on his behalf;

B = sum on account of business of providing services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of mineral oils outside India, received or deemed to be received in India, by the assessee or any other person on his behalf.

6.

Business of providing services or technology in India, for the purposes of setting up an electronics manufacturing facility or in connection with manufacturing or producing electronic goods, article or thing in India to a resident company.

Non-resident.

25% of (A + B), where,—

A = the amount paid or payable to the non-resident assessee or to any person on his behalf on account of providing services or technology;

B = the amount received or deemed to be received by the non-resident assessee or on behalf of non-resident assessee on account of providing services or technology.

1. (3) For the purposes of sub-section (2) (Table: Sl. Nos. 4 and 5) the specified assessee may claim that the profits actually earned from the specified business are lower than the business profits computed under sub-section (2), if,—
   • (a) he keeps and maintains such books of account and other documents as required under section 62; and
   • (b) gets his accounts audited and furnish a report of such audit as required under section 63.
2. (4) Any loss, allowance or deduction allowable under the provisions of this Act shall not be allowed against the income computed in the manner specified in sub-section (2).
3. (5) The written down value of any asset used for the purposes of specified business or profession shall be computed, as if the assessee mentioned in column C of the Table in sub-section (2) had claimed and was actually allowed depreciation thereon for each of the relevant tax years.
4. (6) For the purposes of sub-section (2) (Table: Sl. No. 5) the provisions of this section shall not apply where the provisions of section 54 or 59 or 207 or 527 apply for the purposes of computing profits and gains or any other income referred to in the said sections.
5. (7) For the purposes of sub-section (2) (Table: Sl. No. 5), "plant" includes ships, aircrafts, vehicles, drilling units, scientific apparatuses and equipments used for the purposes of the specified business.
6. (8) For the purposes of sub-section (2) (Table: Sl. No. 6), resident company shall satisfy the following:—
   • (a) it is establishing or operating electronics manufacturing facility or a connected facility for manufacturing or producing electronic goods, article or thing in India, under a scheme notified by the Central Government in the Ministry of Electronics and Information Technology; and
   • (b) it satisfies the conditions as may be prescribed in this behalf.
7. (9) The provisions of sections 59 and 207 shall not apply to amounts referred to in sub-section (2) (Table: Sl. No. 6).

1. (1) (a) Any person carrying on specified profession; or
   • (b) any person carrying on, business; or any profession [not being a profession referred to in clause (a)] and satisfying the conditions referred to in sub-section (2),

shall keep and maintain such books of account and other documents to enable the Assessing Officer to compute his total income under this Act.

1. (2) The conditions in respect of persons referred to in sub-section (1)(b) shall be the following:—
   • (a) where the income from business or profession exceeds Rs. 120000 or its total sales, turnover or gross receipts from such business or profession exceeds ten lakh rupees in any one of the three years immediately preceding the tax year; or
   • (b) where business or profession is newly set up in the tax year, the income from business or profession is likely to exceed Rs. 120000 or its total sales, turnover or gross receipts from such business or profession is likely to exceed ten lakh rupees during such tax year; or
   • (c) where during the tax year, the assessee referred to in section 58(2) or 61(2) (Table: Sl. Nos. 4 and 5), has claimed income from business or profession to be lower than the deemed profits as referred to in section 58(2) or section 61(2); or
   • (d) in case of an individual or Hindu undivided family, clauses (a) and (b) shall be modified to the extent of income from such business or profession exceeding Rs. 250000 and its total sales, turnover or gross receipts from such business or profession exceeding twenty-five lakh rupees.
2. (3) For the purposes of this section, the Board may prescribe—
   • (a) the books of account and other documents (including inventories, wherever necessary) to be kept and maintained;
   • (b) particulars to be contained therein;
   • (c) the form, manner and place at which they shall be kept and maintained; and
   • (d) the period for which such books of account and other documents are to be retained.
3. (4) For the purposes of this section, the expression "specified profession" means—
   • (a) legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, information technology or company secretary; or
   • (b) any other profession, as may be notified by the Board in this behalf.

1. (1) Every person, carrying on the business or profession fulfilling any of the conditions specified in column B of the Table below, shall get his accounts of the tax year audited by an accountant, before the specified date.

TABLE

Sl. No.

Conditions for getting books of account audited

A

B

1.

Every person—

1. (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any tax year, subject to the provisions of clause (b);
   • (b) in case of a person whose—
   • (i) aggregate of all amounts received including amount received for sales, turnover or gross receipts during the tax year, in cash, does not exceed 5% of the said amount; and
   • (ii) aggregate of all payments made including amount incurred for expenditure, in cash, during the tax year does not exceed 5% of the said payment,

clause (a) shall have effect as if for the words "one crore rupees", the words "ten crore rupees" had been substituted;

1. (c) carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any tax year.

2.

If the person is carrying on business or profession, referred to in section 58(2) or 61(2) (Table: Sl. Nos. 4 and 5) and the profits and gains from such business or profession are claimed to be lower than the deemed profits as referred to in the said sections.

1. (2) The provisions of this section shall not apply where profits and gains of business or profession, declared by the assessee are as per section 58(2) or 61(2).
2. (3) The assessee shall furnish by the specified date, the report of such audit in such form, duly signed and verified by the accountant and setting forth such particulars, as may be prescribed.
3. (4) Where a person is required, by or under any other law, to get his accounts audited, then it shall be sufficient compliance of this section, if such person—
   • (a) gets the accounts of such business or profession audited under such law before the specified date; and
   • (b) furnishes by that specified date the report of such audit along with the report of the accountant in the form as may be prescribed.
4. (5) For the purposes of this section,—
   • (a) "specified date" in relation to the accounts of the assessee of the tax year, means the date one month prior to the due date for furnishing the return of income under section 263(1);
   • (b) the payment or receipt, as the case may be, by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the payment or receipt, as the case may be, in cash.

1. (1) The deduction under section 33 or 44 or 52(1) (Table: Sl. No. 1 or 2) shall, in a case where business reorganisation of a co-operative bank has taken place during the tax year, be allowed as per provisions of this section.
2. (2) The amount of deduction allowable to the predecessor co-operative bank or to the successor co-operative bank or to the converted banking company under section 33 or 44 or 52(1) (Table: Sl. No. 1 or 2)shall be determined as per the formula—
   • (i) for predecessor co-operative bank:—
   • (ii) for successor co-operative bank or converted banking company:—

where,—

A = the amount of deduction allowable to the predecessor co-operative bank, if the business reorganisation had not taken place;

B = the number of days comprised in the period beginning with the 1st day of the tax year and ending on the day immediately preceding the date of business reorganisation; and

C = the total number of days in the tax year in which the business reorganisation has taken place.

D = the number of days comprised in the period beginning with the date of business reorganisation and ending on the last day of the tax year.

1. (3) The provisions of section 44 or 52(1) (Table: Sl. No. 1 or 2) shall, in a case where an undertaking of the predecessor co-operative bank entitled to the deduction under the said section is transferred before the expiry of the period specified therein to a successor co-operative bank or to a converted banking company on account of business reorganisation, apply to the successor co-operative bank or to the converted banking company in the tax years subsequent to the year of business reorganisation as they would have applied to the predecessor co-operative bank, as if the business reorganisation had not taken place.

For the purposes of section 64,—

1. (a) "amalgamation" means the merger of an amalgamating co-operative bank with an amalgamated co-operative bank, if—
   • (i) all the assets and liabilities of the amalgamating co-operative bank or banks immediately before the merger (other than the assets transferred, by sale or distribution on winding up, to the amalgamated co-operative bank) become the assets and liabilities of the amalgamated co-operative bank;
   • (ii) the members holding 75% or more voting rights in the amalgamating co-operative bank become members of the amalgamated co-operative bank; and
   • (iii) the shareholders holding 75% or more in value of the shares in the amalgamating co-operative bank (other than the shares held by the amalgamated co-operative bank or its nominee or its subsidiary, immediately before the merger) become shareholders of the amalgamated co-operative bank;
   • (b) "amalgamating co-operative bank" means—
   • (i) a co-operative bank which merges with another co-operative bank; or
   • (ii) every co-operative bank merging to form a new co-operative bank;
   • (c) "amalgamated co-operative bank" means—
   • (i) a co-operative bank with which one or more amalgamating co-operative banks merge; or
   • (ii) a co-operative bank formed as a result of merger of two or more amalgamating co-operative banks;
   • (d) "business reorganisation" means reorganisation of business involving the amalgamation or demerger of a co-operative bank or conversion of a primary co-operative bank;
   • (e) "conversion" means transition of a primary co-operative bank to a banking company under the scheme of the Reserve Bank of India as may be notified vide its circular number DCBR. CO. LS. PCB. Cir. No. 5/07.01.000/2018-19, dated 27th September, 2018;
   • (f) "converted banking company" means a banking company formed as a result of conversion from primary co-operative bank;
   • (g) "demerger" means the transfer by a demerged co-operative bank of one or more of its undertakings to any resulting co-operative bank, in such manner that—
   • (i) all the assets and liabilities of the undertaking or undertakings immediately before the transfer become the assets and liabilities of the resulting co-operative bank;
   • (ii) the assets and the liabilities are transferred to the resulting co-operative bank at values (other than change in the value of assets consequent to their revaluation) appearing in its books of account immediately before the transfer;
   • (iii) the resulting co-operative bank issues, in consideration of the transfer, its membership to the members of the demerged co-operative bank on a proportionate basis;
   • (iv) the shareholders holding 75% or more in value of the shares in the demerged co-operative bank (other than shares already held by the resulting bank or its nominee or its subsidiary immediately before the transfer), become shareholders of the resulting co-operative bank, otherwise than as a result of the acquisition of the assets of the demerged co-operative bank or any undertaking thereof by the resulting co-operative bank;
   • (v) the transfer of the undertaking is on a going concern basis; and
   • (vi) the transfer is as per the conditions specified by the Central Government, by notification, having regard to the necessity to ensure that the transfer is for genuine business purposes;
   • (h) "demerged co-operative bank" means the co-operative bank whose undertaking is transferred, pursuant to a demerger, to a resulting bank;
   • (i) "predecessor co-operative bank" means the amalgamating co-operative bank or the demerged co-operative bank, or the primary co-operative bank, which has been succeeded as a result of conversion;
   • (j) "primary co-operative bank" shall have the meaning assigned to it in clause (ccv) of section 56 of the Banking Regulation Act, 1949 (10 of 1949);
   • (k) "resulting co-operative bank" means—
   • (i) one or more co-operative banks to which the undertaking of the demerged co-operative bank is transferred in a demerger; or
   • (ii) any co-operative bank formed as a result of demerger;
   • (l) "successor co-operative bank" means the amalgamated co-operative bank or the resulting bank.

For the purposes of Part D of this Chapter,—

1. (1) "agreement", for the purposes of section 26(2)(h), includes any arrangement or understanding or action in concert,—
   • (A) whether or not such arrangement, understanding or action is formal or in writing; or
   • (B) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings;
2. (2) "banking company" means a company to which the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act;
3. (3) "commission or brokerage" shall have the meaning assigned to it in section 402(7);

"commodities transactions tax" and "commodity derivative" shall have the same meanings as respectively assigned to them in Chapter VII of the Finance Act, 2013 (17 of 2013);]

1. (5) "fees for technical services" shall have the meaning assigned to it in section 9(7)(b);
2. (6) "housing finance company" means a public company formed or 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;
3. (7) "Indian Institute of Technology" shall have the same meaning as that of "Institute" defined in section 3(g) of the Institutes of Technology Act, 1961 (59 of 1961);
4. (8) "Keyman insurance policy" shall have the meaning assigned to it in Schedule II (Note 1);
5. (9) "limited liability partnership" shall have the same meaning as assigned to it in section 2(1)(n) of the Limited Liability Partnership Act, 2008 (6 of 2009);
6. (10) "long-term finance", for the purposes of section 32(e), means any loan or advance where the terms under which moneys are loaned or advanced provide for repayment along with interest thereof during a period of not less than five years;
7. (11) "micro enterprise" shall be an enterprise classified as such under the notification in this behalf by the Central Government under the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006);
8. (12) "mineral oil" includes petroleum and natural gas;
9. (13) "moneys payable" in respect of any tangible asset [as referred to in section 33(12)(a)(i)] includes—
   • (a) any insurance, salvage or compensation moneys payable in respect thereof;
   • (b) where the asset is sold, the price for which it is sold;
10. (14) "non-scheduled bank" means a banking company as defined in section 5(c) of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank;
11. (15) "paid" means, except for section 37, actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under the head "Profits and gains of business or profession";
12. (16) "permanent establishment" shall have the meaning assigned to it in section 173(c);
13. (17) "plant" includes ships, vehicles, books, scientific apparatus and surgical equipment used for the business or profession but does not include tea bushes or livestock or buildings or furniture and fittings;
14. (18) "predecessor entity" means—
    • (a) the amalgamating Indian company in the case of amalgamation;
    • (b) the demerged Indian company, in the case of demerger;
    • (c) a firm, in the case of a succession of a firm by a company as referred to in section 70(1)(zd);
    • (d) a private company or unlisted public company, in case of conversion as referred to in section 70(1)(ze);
15. (19) "primary agricultural credit society" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949);
16. (20) "primary co-operative agricultural and rural development bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities;
17. (21) "professional services" shall have the meaning assigned to it in section 402(28);
18. (22) "public company" shall have the same meaning as assigned to it in section 2(71) of the Companies Act, 2013 (18 of 2013);
19. (23) "public financial institution" shall have the same meaning as assigned to it in section 2(72) of the Companies Act, 2013 (18 of 2013);
20. (24) "rate of exchange" means the rate of exchange determined or recognised by the Central Government for the conversion of Indian currency into foreign currency or foreign currency into Indian currency;
21. (25) "royalty" shall have the same meaning as assigned to it in section 9(6)(b);
22. (26) "rural branch" means a branch of a scheduled bank or a non-scheduled bank situated in a place which has a population of not more than ten thousand according to the last preceding census, of which the relevant figures have been published before the first day of the tax year;
23. (27) "scientific research" means—
    • (a) any activity for the extension of knowledge in the fields of natural or applied science including agriculture, animal husbandry or fisheries; and
    • (b) the references to expenditure incurred on scientific research shall include all expenditure incurred for the prosecution, or the provision of facilities for the prosecution, of scientific research, but does not include any expenditure incurred in the acquisition of rights in, or arising out of, scientific research,

and the references to scientific research related to a business or class of business shall include any scientific research—

1. (i) which may lead to or facilitate an extension of that business or, all businesses of that class;
   • (ii) of a medical nature which has a special relation to the welfare of workers employed in that business or, all businesses of that class;
2. (28) "securities transaction tax" shall have the meaning assigned to it under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004);
3. (29) "service", for the purposes of section 26(2)(h), means a service of any description which is made available to potential users and includes the provision of services in connection with business of any industrial or commercial nature such as—
   • (a) accounting;
   • (b) banking;
   • (c) communication;
   • (d) conveying of news or information;
   • (e) advertising;
   • (f) entertainment;
   • (g) amusement;
   • (h) education;
   • (i) financing;
   • (j) insurance;
   • (k) chit funds;
   • (l) real estate;
   • (m) construction;
   • (n) transport;
   • (o) storage;
   • (p) processing;
   • (q) supply of electrical or other energy; and
   • (r) boarding and lodging;
4. (30) "small enterprise" shall be an enterprise classified as such under the notification in this behalf by the Central Government under the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006);
5. (31) "speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips, other than the following transactions:—
   • (a) a specified derivative transaction as defined in clause (33);
   • (b) a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchandising business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured, or merchandise sold by him;
   • (c) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations;
   • (d) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage, to guard against loss which may arise in the ordinary course of his business as such member;
6. (32) "Specified Banking or Online Mode" shall mean transaction by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode, as may be prescribed;
7. (33) "specified derivative transaction" means any transaction in respect of trading in derivatives referred to in section 2(ac) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); or in respect of trading in commodity derivatives (other than agricultural commodity derivatives) which is chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013 (17 of 2013) or in respect of trading in agricultural commodity derivatives, if such transactions are—
   • (a) is carried out—
   • (i) through a stock broker or such other intermediary registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye-laws made or directions issued under those Acts; or
   • (ii) by banks or mutual funds,

electronically on screen-based systems of a recognised stock exchange; and

1. (b) supported by a time stamped contract note issued by the intermediary to every client indicating in the contract note—
   • (i) the unique client identity number allotted under any law in force; and
   • (ii) the Permanent Account Number allotted under this Act;
2. (34) "State Government undertaking" includes—
   • (a) a corporation established by or under any State Act;
   • (b) a company in which more than 50% of the paid-up equity share capital is held by the State Government;
   • (c) a company in which more than 50% of the paid-up equity share capital is held by the entity referred to in clause (a) or (b) (whether singly or taken together);
   • (d) a company or corporation in which the State Government has the right to appoint the majority of the directors or to control the management or policy decisions, directly or indirectly, including by virtue of its shareholding or management rights or shareholders agreements or voting agreements or in any other manner;
   • (e) an authority, a board or an institution or a body established or constituted by or under any State Act, or owned or controlled by the State Government;
3. (35) "State Industrial Investment Corporation" means a Government company within the meaning of section 2(45) of the Companies Act, 2013 (18 of 2013), engaged in the business of providing long-term finance for industrial projects;
4. (36) "State Financial Corporation" means a Financial Corporation established under section 3 or 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951 (63 of 1951);
5. (37) "successor entity" means—
   • (a) the amalgamated Indian company, in the case of amalgamation;
   • (b) the resulting Indian company, in the case of demerger;
   • (c) a company, in case of a succession of a firm by a company as referred to in section 70(1)(zd);
   • (d) a limited liability partnership, in case of conversion of private company or unlisted public company to a limited liability partnership, as referred to in section 70(1)(ze);
6. (38) "taxable commodities transaction" shall have the meaning assigned to it under Chapter VII of the Finance Act, 2013 (17 of 2013);
7. (39) "taxable securities transaction" shall have the meaning assigned to it under Chapter VII of the Finance Act, 2004 (13 of 2004);
8. (40) "University" shall have the meaning assigned to it in section 70(2) (Table: Sl. No. 7).

E.—Capital gains

1. (1) Any profits or gains arising from the transfer of a capital asset effected in a tax year shall, save as otherwise provided in sections 82, 83, 84, 85, 86, 87, 88 and 89, be chargeable to income-tax under the head "Capital gains" and shall be deemed to be the income of the tax year in which the transfer took place.
2. (2) Irrespective of anything contained in sub-section (1), if a person receives during any tax year any money or other assets under an insurance from an insurer on account of damage to, or destruction of, any capital asset, as a result of circumstances mentioned in sub-section (3), then,—
   • (a) any profits or gains arising from receipt of such money or other assets shall be chargeable to income-tax under the head "Capital gains" and shall be deemed to be the income of such person of the tax year in which such money or other asset was received; and
   • (b) for the purposes of section 72, the value of any money or the fair market value of other assets on the date of such receipt shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of such capital asset.
3. (3) The following shall be the circumstances referred to in sub-section (2):—
   • (a) flood, typhoon, hurricane, cyclone, earthquake or any other convulsion of nature; or
   • (b) riot or civil disturbance; or
   • (c) accidental fire or explosion; or
   • (d) action by an enemy or action taken in combating an enemy (whether with or without a declaration of war).
4. (4) In sub-section (2), "insurer" shall have the same meaning as assigned to it in section 2(9) of the Insurance Act, 1938 (4 of 1938).
5. (5) Irrespective of anything contained in sub-section (1), if any profits or gains arises to a person from receipt of any amount, including a bonus, under a unit linked insurance policy to which the exemption specified at Schedule II (Table: Sl. No. 2)does not apply, then,—
   • (a) such profits and gains shall be chargeable to income-tax under the head "Capital gains" and shall be deemed to be the income of such person in the tax year in which such amount was received; and
   • (b) the income taxable shall be calculated in such manner, as may be prescribed.
6. (6) Irrespective of anything contained in sub-section (1), if the profits or gains arising from the transfer by way of conversion of a capital asset into, or its treatment by the owner as, stock-in-trade of a business carried on by him, then,—
   • (a) such profits and gains shall be chargeable to income-tax as his income in the tax year in which such stock-in-trade is sold or otherwise transferred by him; and
   • (b) for the purposes of section 72, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of such capital asset.
7. (7) If any person, at any time during the tax year, had any beneficial interest in any securities and any profits or gains arise from transfer made by the depository or participant of such beneficial interest in respect of securities, then,—
   • (a) such profits and gains shall be chargeable to income-tax as the income of the beneficial owner of the tax year in which such transfer took place;
   • (b) such profits and gains shall not be regarded as income of the depository who is deemed to be the registered owner of securities by virtue of section 10(1) of the Depositories Act, 1996 (22 of 1996); and
   • (c) for the purposes of section 72 and section 2(101)(b), the cost of acquisition and the period of holding of any securities shall be determined on the basis of the first-in-first-out method.
8. (8) In sub-section (7), "beneficial owner", "depository"and "security" shall have the same meanings as respectively assigned to them in section 2(1)(a), (e) and (l) of the Depositories Act, 1996 (22 of 1996).
9. (9) If any profits or gains arise from the transfer of a capital asset by a person, to a firm or other association of persons or body of individuals (not being a company or co-operative society) in which he is or becomes a partner or member, by way of capital contribution or otherwise, then,—
   • (a) such profits and gains shall be chargeable to tax as his income of the tax year of such transfer; and
   • (b) for the purposes of section 72 the amount recorded in the books of account of the firm, association or body as the value of the capital asset shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of such capital asset.
10. (10) Irrespective of anything contained in sub-section (1), if a specified person receives during the tax year, any money or capital asset, or both, from a specified entity in connection with the reconstitution of such specified entity, then,—
    • (a) any profits or gains arising from such receipt shall be deemed as income of the specified entity of the tax year of such receipt by the specified person and chargeable to income-tax under the head "Capital gains"; and
    • (b) such profits or gains shall be determined irrespective of anything to the contrary contained in this Act as follows:—

A = B + C – D, where,

A = income chargeable to income-tax under this sub-section as income of the specified entity under the head "Capital gains";

B = value of any money received by the specified person from the specified entity on the date of such receipt;

C = amount of fair market value of the capital asset received by the specified person from the specified entity on the date of such receipt; and

D = amount of balance in the capital account (represented in any manner) of the specified person in the books of account of the specified entity at the time of its reconstitution;

1. (c) for the purposes of clause (b),—
   • (i) if the value of "A" as computed is negative, such value shall be deemed to be zero;
   • (ii) the balance in the capital account of the specified person in the books of account of the specified entity shall be calculated without considering any increase in the capital account of the specified person due to revaluation of any asset or due to self-generated goodwill or any other self-generated asset; and
   • (d) the provisions of this sub-section shall operate in addition to the provisions of section 8 and the taxation under the said section shall be worked out independently, when a capital asset is received by a specified person from a specified entity in connection with the reconstitution of such specified entity.
2. (11) In sub-section (10),—
   • (a) "reconstitution of the specified entity", "specified entity" and "specified person" shall have the meanings respectively assigned to them in section 8;
   • (b) "self-generated goodwill" and "self-generated asset" mean goodwill or asset, as the case may be, which has been acquired without incurring any cost for purchase or which has been generated during the course of the business or profession.
3. (12) Irrespective of anything contained in sub-section (1), if the capital gain arises from the transfer of a capital asset by way of compulsory acquisition under any law, or a transfer the consideration for which was determined or approved by the Central Government or the Reserve Bank of India, and the compensation or the consideration for such transfer is enhanced or further enhanced by any court, tribunal or other authority, the capital gain shall be dealt with in the following manner:—
   • (a) the capital gains computed with reference to the compensation awarded in the first instance or as the case may be, consideration determined or approved by the Central Government or the Reserve Bank of India in the first instance, shall be chargeable as income under the head "Capital gains" of the tax year in which such compensation or part thereof, or such consideration or part thereof, was first received;
   • (b) the amount by which the compensation or consideration is enhanced or further enhanced by the court, tribunal or other authority shall be deemed to be income chargeable under the head "Capital gains" of the tax year in which such amount is received;
   • (c) any compensation as referred to in clause (b) received in pursuance of an interim order of a court, tribunal or other authority shall be deemed as income chargeable under the head "Capital gains" of the tax year in which the final order of such court, tribunal or other authority is made; and
   • (d) the capital gain assessed for any tax year under clause (a) or (b) shall be recomputed where the compensation or consideration referred to in clauses (a) to (c) is reduced by any court, tribunal or other authority, and such reduced value shall be taken to be the full value of the consideration.
4. (13) In relation to the amount referred to in sub-section (12)(b) and (c),—
   • (a) the cost of acquisition and the cost of improvement shall be taken as nil; and
   • (b) in a case, where the enhanced compensation or consideration is received by any other person due to the death of the person who made the transfer, or for any other reason, such amount shall be deemed as the income chargeable to tax under the head "Capital gains" in the hands of such other person.
5. (14) Irrespective of anything contained in sub-section (1), if the capital gains arises to a person (being an individual or a Hindu undivided family), from the transfer of a capital asset, being land or building or both, under a specified agreement, then,—
   • (a) such capital gains shall be chargeable to income-tax for the tax year in which the certificate of completion for the whole or part of the project is issued by the competent authority; and
   • (b) for the purposes of section 72, the stamp duty value, on the date of issue of the said certificate, of the share of such person, being land or building or both, in the project, as increased by any consideration received in cash or by a cheque or draft or by any other mode shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of such capital asset.
6. (15) In sub-section (14),—
   • (a) "competent authority" means the authority empowered to approve the building plan under any law;
   • (b) "specified agreement" means a registered agreement in which a person owning land or building, or both, agrees to allow another person to develop a real estate project on such land or building, or both, in consideration of a share, being land or building or both, in such project, whether with or without payment of part of the consideration in cash.
7. (16) The provisions of sub-section (14) shall not apply, if the person transfers his share in the project on or before the date of issue of the certificate of completion, and then,—
   • (a) the capital gains shall be deemed to be the income of the tax year of such transfer; and
   • (b) the provisions of this Act, other than sub-section (14), shall apply for the purpose of determination of full value of consideration.
8. (17) Irrespective of anything contained in sub-section (1), the difference between the repurchase price of the units referred to in section 80CCB(2) of the Income-tax Act, 1961 (43 of 1961) and the capital value of such units shall be deemed to be the capital gains arising to the assessee in the tax year in which—
   • (a) such repurchase takes place; or
   • (b) the plan referred to in that section is terminated.
9. (18) For the purposes of sub-section (17), "capital value of such units" means any amount invested by the assessee in the units referred to in section 80CCB(2) of the Income-tax Act, 1961 (43 of 1961).

1. (1) Irrespective of anything contained in section 67, where the assets of a company are distributed to its shareholders on its liquidation, such distribution shall not be regarded as a transfer by the company for the purposes of the said section.
2. (2) If a shareholder, on the liquidation of a company, receives any money or other assets from the company, then,—
   • (a) such shareholder shall be chargeable to income-tax under the head "Capital gains", in respect of the money so received or the market value of the other assets on the date of distribution, as reduced by the amount assessed as dividend within the meaning of section 2(40)(c); and
   • (b) the sum so arrived at shall be deemed to be the full value of the consideration for the purposes of section 72.

1. (1) If a shareholder or a holder of other specified securities receives any consideration from any company for the purchase of its own shares or other specified securities held by such shareholder or holder of other specified securities, then, subject to the provisions of section 72, the difference between the cost of acquisition and the value of consideration so received shall be deemed to be the "Capital gains" arising to such shareholder or the holder of other specified securities, as the case may be, in the year in which the company purchases the shares or other specified securities.

10[(2) In respect of capital gains referred to in sub-section (1), where a company purchases its own shares or other specified securities in accordance with the provisions of section 68 of the Companies Act, 2013 (18 of 2013) and the shareholder or holder of other specified securities is a promoter, the aggregate income-tax payable on such capital gains shall be—

1. (a) the income-tax payable on such capital gains in accordance with the provisions of this Act; and
   • (b) an additional income-tax in respect of capital gains specified in column B of the Table below, computed at the rate specified in column C or column D of the said Table:

TABLE

1. (3) For the purposes of this section,—
   • (a) in the case of a company whose shares are listed on a recognised stock exchange in India, 'promoter' shall have the same meaning as assigned to it in regulation 2(k) of the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992);
   • (b) in any other case, "promoter" means,––
   • (i) a "promoter" as defined in section 2(69) of the Companies Act, 2013 (18 of 2013); or
   • (ii) a person who holds, directly or indirectly, more than 10% of the shareholding in the company;
   • (c) "specified securities" shall have the same meaning as assigned to it in Explanation 1 to section 68 of the Companies Act, 2013 (18 of 2013).]

1. (1) The provisions of section 67 shall not apply to transfer—
   • (a) by way of distribution of capital assets on the total or partial partition of a Hindu undivided family;
   • (b) of a capital asset by an individual or a Hindu undivided family, under a will or a gift or an irrevocable trust;
   • (c) of a capital asset, not being stock-in-trade, by a company to its subsidiary company, if—
   • (i) the parent company or its nominees hold the whole of the share capital of the subsidiary company; and
   • (ii) the subsidiary company is an Indian company;
   • (d) of a capital asset, not being stock-in-trade, by a subsidiary company to the holding company, if—
   • (i) the whole of the share capital of the subsidiary company is held by the holding company; and
   • (ii) the holding company is an Indian company;
   • (e) in a scheme of amalgamation, of a capital asset by the amalgamating company to the amalgamated company, if the amalgamated company is an Indian company;
   • (f) by a shareholder, in a scheme of amalgamation, of a capital asset being a share or shares held by him in the amalgamating company, if—
   • (i) the transfer is made in consideration of allotment to him of any share or shares in the amalgamated company except when the shareholder itself is the amalgamated company; and
   • (ii) the amalgamated company is an Indian company;
   • (g) in a scheme of amalgamation, to him of a capital asset being a share or shares held in an Indian company by the amalgamating foreign company to the amalgamated foreign company, if—
   • (i) at least 25% of the shareholders of the amalgamating foreign company continue to remain shareholders of the amalgamated foreign company; and
   • (ii) such transfer does not attract tax on capital gains in the country, in which the amalgamating company is incorporated;
   • (h) in a scheme of amalgamation, of a capital asset, being a share of a foreign company, referred to in section 9(10)(a), which derives directly or indirectly, its value substantially from the share or shares of an Indian company, held by the amalgamating foreign company to the amalgamated foreign company, if—
   • (i) at least 25% of the shareholders of the amalgamating foreign company continue to remain shareholders of the amalgamated foreign company; and
   • (ii) such transfer does not attract tax on capital gains in the country in which the amalgamating company is incorporated;
   • (i) of a capital asset by a banking company to a banking institution under a scheme of amalgamation of a banking company with a banking institution sanctioned and brought into force by the Central Government under section 45(7) of the Banking Regulation Act, 1949 (10 of 1949);
   • (j) in a demerger, of a capital asset by the demerged company to the resulting company, if the resulting company is an Indian company;
   • (k) of shares by the resulting company or issue of shares by such company, in a scheme of demerger to the shareholders of the demerged company, if the transfer or issue is made in consideration of demerger of the undertaking;
   • (l) of a capital asset in a demerger, being a share or shares held in an Indian company, by the demerged foreign company to the resulting foreign company, if—
   • (i) the shareholders holding not less than 75% in value of the shares of the demerged foreign company continue to remain shareholders of the resulting foreign company; and
   • (ii) such transfer does not attract tax on capital gains in the country, in which the demerged foreign company is incorporated,

and in such a case the provisions of sections 230 to 232 of the Companies Act, 2013 (18 of 2013) shall not apply;

1. (m) of a capital asset in a demerger, being a share of a foreign company, referred to in section 9(10)(a), which derives directly or indirectly, its value substantially from the share or shares of an Indian company, held by the demerged foreign company to the resulting foreign company, if—
   • (i) the shareholders, holding not less than 75% in value of the shares of the demerged foreign company, continue to remain shareholders of the resulting foreign company; and
   • (ii) such transfer does not attract tax on capital gains in the country in which the demerged foreign company is incorporated,

and in such a case the provisions of sections 230 to 232 of the Companies Act, 2013 (18 of 2013) shall not apply;

1. (n) in a business reorganisation, of a capital asset by the predecessor co-operative bank to the successor co-operative bank or to the converted banking company;
   • (o) by a shareholder, in a business reorganisation, of capital asset being share or shares held by him in the predecessor co-operative bank, if the transfer is made in consideration of the allotment to him of any share or shares in the successor co-operative bank or the converted banking company;
   • (p) of a capital asset, being bonds or Global Depository Receipts as referred to in section 209(1), made outside India by a non-resident to another non-resident;
   • (q) made outside India, of a capital asset, being rupee denominated bond of an Indian company issued outside India, by a non-resident to another non-resident;
   • (r) of a capital asset made by a non-resident on a recognised stock exchange located in any International Financial Services Centre, where the consideration for such transaction is paid or payable in foreign currency, and such capital asset is—
   • (i) bond or Global Depository Receipt referred to in section 209(1); or
   • (ii) rupee denominated bond of an Indian company; or
   • (iii) derivative; or
   • (iv) such other securities as may be notified by the Central Government;
   • (s) of a capital asset, being a Government security carrying a periodic payment of interest, made outside India through an intermediary dealing in settlement of securities, by a non-resident to another non-resident;
   • (t) in a relocation, of a capital asset by the original fund to the resulting fund;
   • (u) by a shareholder or unit holder or interest holder, in a relocation, of a capital asset being share or unit or interest held by him in the original fund in consideration for the share or unit or interest in the resultant fund;
   • (v) of a capital asset by India Infrastructure Finance Company Limited to an institution established for financing the infrastructure and development, set up under an Act of Parliament and notified by the Central Government for the purposes of this clause;
   • (w) of a capital asset, under a plan approved by the Central Government, by a public sector company, to—
   • (i) another public sector company notified by the Central Government for the purposes of this clause; or
   • (ii) the Central Government; or
   • (iii) a State Government;

by way of redemption, of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015 or any subsequent Sovereign Gold Bond Scheme, if held by an individual from the date of original issue till maturity;]

1. (y) of a capital asset, being conversion of gold into Electronic Gold Receipt issued by a Vault Manager, or conversion of Electronic Gold Receipt into gold;
   • (z) by way of conversion of bonds or debentures, debenture-stock or deposit certificates in any form, of a company into shares or debentures of that company;
   • (za) by way of conversion of bonds referred to in section 209(1) (Table: Sl. No. 1) into shares or debentures of any company;
   • (zb) by way of conversion of preference shares of a company into equity shares of that company;
   • (zc) of a capital asset, being any work of art, archaeological, scientific or art collection, book, manuscript, drawing, painting, photograph or print, to—
   • (i) the Government; or
   • (ii) a University; or
   • (iii) the National Museum, National Art Gallery or National Archives; or
   • (iv) such other public museum or institution as may be notified by the Central Government to be of national importance or of renown throughout any State;
   • (zd) of a capital asset or intangible asset by a firm to a company as a result of succession of the firm by a company in the business carried on by the firm, if—
   • (i) all the assets and liabilities of the firm relating to the business immediately before the succession become the assets and liabilities of the company;
   • (ii) all the partners of the firm, immediately before the succession, become the shareholders of the company in the same proportion in which their capital accounts stood in the books of the firm on the date of the succession;
   • (iii) the partners of the firm do not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of allotment of shares in the company; and
   • (iv) the aggregate of the shareholding of the partners in the company is not less than 50% of the total voting power and such shareholding continues to not less than 50% for five years from the date of succession;
   • (ze) of a capital asset or intangible asset by a private company or unlisted public company (herein referred to as the company) to a limited liability partnership or transfer of a share or shares held in the company by a shareholder as a result of conversion of the company into a limited liability partnership under the provisions of section 56 or 57 of the Limited Liability Partnership Act, 2008 (6 of 2009), if—
   • (i) all the assets and liabilities of the company, immediately before the conversion, become the assets and liabilities of the limited liability partnership;
   • (ii) all the shareholders of the company, immediately before the conversion, become the partners of the limited liability partnership and their capital contribution and profit sharing ratio in the limited liability partnership are in the same proportion as their shareholding in the company on the date of conversion;
   • (iii) the shareholders of the company do not receive any consideration or benefit, directly or indirectly, other than by way of share in profit and capital contribution in the limited liability partnership;
   • (iv) the aggregate of the profit sharing ratio of the shareholders of the company in the limited liability partnership shall not be less than 50% at any time during five years from the date of conversion;
   • (v) the total sales, turnover or gross receipts in the business of the company in any of the three tax years preceding the tax year in which the conversion takes place does not exceed sixty lakh rupees;
   • (vi) the total value of the assets, as appearing in the books of account of the company in any of the three tax years preceding the tax year in which the conversion takes place does not exceed five crore rupees; and
   • (vii) no amount is paid, either directly or indirectly, to any partner out of balance of accumulated profit standing in the accounts of the company on the date of conversion for three years from the date of conversion;
   • (zf) of a capital asset or intangible asset (by way of sale or otherwise) by a sole proprietorship concern to a company in case of succession of the sole proprietorship concern by the company in the business carried on by it, if—
   • (i) all the assets and liabilities related to the business of the sole proprietary concern, immediately before the succession, become the assets and liabilities of the company;
   • (ii) the shareholding of the sole proprietor in the company is not less than 50% of the total voting power and such shareholding continues to be not less than 50% for five years from the date of the succession; and
   • (iii) the sole proprietor does not receive any consideration or benefit, directly or indirectly, except through allotment of shares in the company;
   • (zg) in a scheme for lending of any securities under an agreement or arrangement, entered into by the assessee with the borrower of such securities and which is subject to the guidelines issued by the Securities and Exchange Board of India or the Reserve Bank of India;
   • (zh) of a capital asset in a transaction of reverse mortgage under a scheme notified by the Central Government;
   • (zi) of a capital asset, being share or shares of a special purpose vehicle to a business trust in exchange of units allotted by that trust to the transferor;
   • (zj) of a capital asset by a unit holder, being a unit or units, held by him in the consolidating scheme of a mutual fund, in consideration of the allotment to the unit holder of a capital asset, being a unit or units, in the consolidated scheme of the mutual fund subject to the condition that the consolidation is of two or more schemes—
   • (i) of an equity-oriented fund; or
   • (ii) of a fund other than equity-oriented fund;
   • (zk) of a capital asset by a unit holder, being a unit or units, held by him in the consolidating plan of a mutual fund scheme, in consideration of the allotment to the unit holder of a capital asset, being a unit or units, in the consolidated plan of that scheme of the mutual fund;
   • (zl) of a capital asset, being an interest in a joint venture, held by a public sector company, in exchange for shares of a company incorporated outside India by the government of a foreign State, as per the laws of that foreign State.
2. (2) In sub-section (1), the definitions mentioned in column C of the Table below shall apply to the corresponding clauses of the said sub-section mentioned in column B of the said Table:

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1. (1) The profits or gains arising from the transfer of capital asset not charged under section 67 by virtue of section 70(1)(c) and (d) shall, irrespective of anything contained in the said clauses, be deemed to be income chargeable under the head "Capital gains" of the tax year in which such transfer took place, if at any time before the expiry of eight years from the date of such transfer,—
   • (a) the transferee company converts the capital asset into, or treats it as, stock-in-trade of its business; or
   • (b) the parent company or its nominees or the holding company, ceases or cease to hold the whole of the share capital of the subsidiary company.
2. (2) If any of the conditions laid down in section 70(zd) or (zf) are not complied with, the profits or gains arising from the transfer of such capital asset or intangible asset not charged under section 67 by virtue of such conditions shall be deemed to be the profits and gains chargeable to tax under the head "Capital gains" of the successor company for the tax year in which such conditions are not complied with.
3. (3) If any of the conditions laid down in section 70(ze) are not complied with, the profits or gains arising from the transfer of such capital asset or intangible assets or share or shares not charged under section 67 by virtue of such conditions shall be deemed to be the profits and gains chargeable to tax under the head "Capital gains" of the successor limited liability partnership or the shareholder of the predecessor company, for the tax year in which such conditions are not complied with.

1. (1) Income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset, the following amounts:—
   • (a) expenditure incurred wholly and exclusively in connection with such transfer; and
   • (b) the cost of acquisition of the asset and the cost of any improvement thereto.
2. (2) For the purposes of item B of the formula in section 197(3), the provisions of sub-section (1) shall have effect as if for the words "cost of acquisition" and "cost of any improvement", the words "indexed cost of acquisition" and "indexed cost of any improvement" had respectively been substituted.
3. (3) In computing the income chargeable under the head "Capital gains", the following amounts shall not be allowed as a deduction:—
   • (a) the interest claimed as deduction under section 22(1)(b) or under Chapter VIII;
   • (b) any sum paid as securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004).
4. (4) If a unit holder receives any amount from a business trust with respect to a unit that is not in the nature of income under Schedule V (Table: Sl. No. 3 or 4) and is not chargeable to tax under section 92(2)(k) or 223(2), then,—
   • (a) such amount shall be reduced from the cost of acquisition of such unit; and
   • (b) if the transaction of transfer of a unit is not considered as transfer under section 70 and cost of acquisition of such unit is determined under section 73, the amount received with respect to such unit before as well as after such transaction, shall be reduced from the cost of acquisition.
5. (5) In case of value of any money or capital asset received by a specified person from a specified entity, as referred to in section 67(10), the specified entity, in addition to deductions under sub-section (1), shall also be entitled to a deduction calculated in such manner, as may be prescribed for computing the amount chargeable to income-tax in its hands under that sub-section which is attributable to the transfer of such capital asset.
6. (6) In the case of an assessee, who is a non-resident, capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company (other than equity shares referred to in section 198) shall be computed—
   • (a) by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures; and
   • (b) the capital gains so computed in such foreign currency shall be reconverted into Indian currency, so, however, that the said manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from every re-investment thereafter in, and sale of, shares in, or debentures of, an Indian company.
7. (7) In the case of an assessee who is a non-resident, any gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company held by the assessee, shall be ignored for computing the full value of consideration under this section.
8. (8) For the purposes of this section,—
   • (a) "Cost Inflation Index", in relation to a tax year, means such Index as the Central Government may, having regard to 75% of average rise in the Consumer Price Index (urban) for the immediately preceding tax year to such tax year, by notification, specify, in this behalf;
   • (b) "indexed cost of acquisition" means an amount which bears to the cost of acquisition, the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on 1st April, 2001, whichever is later;
   • (c) "indexed cost of any improvement" means an amount which bears to the cost of improvement, the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the year in which the improvement to the asset took place; and
   • (d) the conversion of Indian currency into foreign currency and the reconversion of foreign currency into Indian currency shall be at such rate of exchange as may be prescribed in this behalf.

1. (1) In the case of a capital asset specified in column B of the Table below, the cost of acquisition of the asset shall be deemed to be the cost as mentioned in column C of the said Table.

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1. (2) For the purposes of the Table in sub-section (1), in respect of the entries against—
   • (a) serial number 1, "previous owner of the property" for any capital asset owned by an assessee, means the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in column B thereof;
   • (b) serial numbers 11 and 12, "main portfolio", "segregated portfolio" and "total portfolio" shall have the same meanings as respectively assigned to them in the Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/160, dated the 28th December, 2018, issued by the Securities and Exchange Board of India;
   • (c) serial numbers 14 and 15, "net worth" means the total of the paid-up share capital and general reserves as appearing in the books of account of the demerged company immediately before the demerger;
   • (d) serial numbers 2, 14 and 15, the provisions as contained therein, shall, as far as may be, also apply in relation to business reorganisation of a co-operative bank as referred to in section 64.

1. (1) Irrespective of anything contained in section 2(101), for a capital asset forming part of a block of assets on which depreciation has been allowed under the Indian Income-tax Act, 1922 (11 of 1922) or under the Income-tax Act, 1961 (43 of 1961) or under this Act, the provisions of sections 72 and 73 shall be subject to the provisions of sub-sections (2) and (3).
2. (2) If, during the tax year, the full value of consideration received or accruing for the transfer of one or more assets in a block of assets exceeds the total of the following:—
   • (a) expenditure incurred wholly and exclusively in connection with such transfer;
   • (b) the written down value of the block of assets at the start of the tax year; and
   • (c) the actual cost of any asset falling within the block of assets acquired during the tax year,

such excess shall be deemed to be capital gains arising from the transfer of short-term capital assets.

1. (3) If any block of assets ceases to exist for the reason that all the assets in that block are transferred during the tax year, then,—
   • (a) the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the tax year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the tax year; and
   • (b) the income received or accruing as a result of such transfer or transfers shall be deemed to be capital gains arising from the transfer of short- term capital assets.

If depreciation has been obtained under section 33(2) for a capital asset in any tax year, the provisions of sections 72 and 73 shall apply subject to the modification that the written down value, as defined in section 41, of the asset, as adjusted, shall be taken as the cost of acquisition of the asset.

1. (1) Irrespective of anything contained in section 2(101) or section 72, the gains on the transfer or redemption or maturity, of a capital asset as mentioned in sub-section (2) shall be treated as short-term capital gains and shall be computed as per sub-section (3).
2. (2) For the purposes of sub-section (1), the capital asset shall be—
   • (a) a unit of a Specified Mutual Fund acquired on or after the 1st April, 2023 or a Market Linked Debenture; or
   • (b) an unlisted bond or an unlisted debenture which is transferred or redeemed or matures on or after the 23rd July, 2024.
3. (3) For the purposes of sub-section (1), the short-term capital gains shall be computed as per the following formula:—

X = A – B – C, where,—

X = short-term capital gains;

A = full value of consideration received or accruing as a result of the transfer or redemption or maturity of the debenture or unit or bond;

B = the cost of acquisition of the debenture or unit or bond; and

C = the expenditure incurred wholly and exclusively in connection with such transfer or redemption or maturity.

1. (4) In computing capital gains under sub-section (3), no deduction shall be allowed for any sum paid as securities transaction tax as per Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004).
2. (5) For the purposes of this section,—
   • (a) "Market Linked Debenture" means a security, by whatever name called, which has an underlying principal component in the form of a debt security and where the returns are linked to market returns on other underlying securities or indices, and include any security classified or regulated as a market linked debenture by the Securities and Exchange Board of India;
   • (b) "Specified Mutual Fund" means a Mutual Fund, by whatever name called, which invests more than 65% of its total proceeds in debt and money market instruments or a fund which invests 65% or more of its total proceeds in units of such Mutual Fund, subject to the following:—
   • (i) the percentage of investment in debt and money market instruments or in units of a fund shall be computed with reference to the annual average of the daily closing figures;
   • (ii) "debt and money market instruments" shall include any securities, by whatever name called, classified or regulated as debt and money market instruments by the Securities and Exchange Board of India.

1. (1) Any profits or gains arising from the slump sale effected in the tax year shall be chargeable to income-tax as long-term capital gains and shall be deemed to be the income of the tax year in which the transfer took place, subject to the provisions of sub-section (2).
2. (2) The profits and gains arising from a slump sale involving the transfer of a capital asset, being one or more undertakings or divisions owned and held by an assessee for thirty-six months or less, immediately before the date of its transfer, shall be treated as short-term capital gains.
3. (3) In relation to capital assets, being an undertaking or division transferred by way of slump sale,—
   • (a) the "net worth" of the undertaking or division shall be deemed to be the cost of acquisition and the cost of improvement for sections 72 and 73; and
   • (b) the fair market value of the capital assets on the date of transfer, calculated in such manner, as may be prescribed, shall be deemed to be the full value of the consideration received or accruing as a result of such transfer.
4. (4) Every assessee, in the case of a slump sale, shall furnish in the prescribed form a report of an accountant, before the specified date referred to in section 63, and the report shall—
   • (a) include the computation of the net worth of the undertaking or division; and
   • (b) certify that the net worth has been correctly arrived at as per the provisions of this section.
5. (5) For the purposes of this section,—
   • (a) the "net worth" shall be the "aggregate value of total assets" of the undertaking or division, as reduced by the value of its liabilities as appearing in the books of account, and for computing net worth, any change in the value of assets due to revaluation shall be ignored;
   • (b) the "aggregate value of total assets" shall,—
   • (i) for depreciable assets, be the written down value of the block of assets determined under section 41(1)(c);
   • (ii) for capital asset being goodwill of a business or profession, which was not acquired by the assessee by purchase from a previous owner, be nil;
   • (iii) for capital assets for which the entire expenditure has been allowed or is allowable as a deduction under section 46, be nil; and
   • (iv) for other assets, be the book value.

1. (1) If the consideration received or accruing from the transfer of a capital asset, being land or building or both, is less than the stamp duty value, then, for the purposes of section 72, the stamp duty value shall be deemed to be the full value of the consideration received or accruing as a result of such transfer, subject to the following:—
   • (a) the stamp duty value on the date of agreement may be taken as the full value of consideration, if—
   • (i) the date of the agreement fixing the consideration and the date of registration for the transfer of the capital asset are not the same; and
   • (ii) part or full consideration is received on or before the date of the agreement in "specified banking or online mode" as defined in section 66(32);
   • (b) if the stamp duty value does not exceed 110% of the consideration recei- ved or accruing from such transfer, such consideration shall be deemed to be the full value of the consideration for section 72.
2. (2) Without prejudice to the provisions of sub-section (1), the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer, and the provisions of section 269(3) to (8), shall, with necessary modifications, apply in relation to such reference, where—
   • (a) the assessee claims that the stamp duty value exceeds the fair market value of the property as on the date of transfer; and
   • (b) the stamp duty value has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court.
3. (3) If the value determined by the Valuation Officer on a reference made under sub-section (2) exceeds the stamp duty value, such stamp duty value shall be taken as the full value of consideration.

1. (1) If the consideration received or accruing from the transfer of a capital asset, being share of a company other than a quoted share, is less than the fair market value of such share determined in the manner as may be prescribed, the value so determined shall be deemed to be the full value of consideration received or accruing as a result of such transfer for the purposes of section 72.
2. (2) The provisions of sub-section (1) shall not apply to any consideration received or accruing as a result of transfer by such class of persons and subject to such conditions, as may be prescribed.
3. (3) For the purposes of this section, the expression "quoted share" means the share quoted on any recognised stock exchange with regularity from time to time, where the quotation of such share is based on current transaction made in the ordinary course of business.

If the consideration received or accruing from the transfer of a capital asset is not ascertainable or cannot be determined, its fair market value on the date of transfer shall be deemed to be the full value of consideration received or accruing as a result of such transfer for the purposes of computing income under the head "Capital gains".

Where any capital asset was, on any previous occasion, the subject of negotiations for its transfer, any advance or other money received and retained by the assessee in respect of such negotiations—

1. (a) shall be deducted from the cost for which the asset was acquired or the written down value or the fair market value, as the case may be, in computing the cost of acquisition;
   • (b) shall not be deducted from the said cost, where such advance or other money has been included in the total income of the assessee for any tax year as per the provisions of section 92(2)(h) of this Act or section 56(2)(ix) of the Income-tax Act, 1961 (43 of 1961).

1. (1) Where an individual or Hindu undivided family—
   • (a) has long-term capital gains arising from the transfer of a capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (original asset); and
   • (b) has within one year before or two years after the date of such transfer purchased, or has within three years after that date constructed, one residential house in India (new asset),

then, instead of the capital gain being charged to income-tax as income of the tax year in which the transfer took place, it shall be dealt with as follows:—

1. (i) if the capital gains exceeds the cost of the new asset, such excess shall be charged under section 67, and for computing capital gains arising from the transfer of the new asset within three years of its purchase or construction, the cost shall be nil; or
   • (ii) if the capital gains is equal to or less than the cost of the new asset, no capital gains shall be charged under section 67 and for computing capital gains from the transfer of the new asset within three years of its purchase or construction, the cost shall be reduced by the amount of the capital gains.
2. (2) If the capital gains referred to in sub-section (1) is not used by the assessee to purchase the new asset within one year before the date of transfer of the original asset, or is not utilised for the purchase or construction of the new asset before filing the return of income under section 263, then—
   • (a) the unutilised amount shall be deposited in a specified bank or institution and utilised as per the scheme notified by the Central Government;
   • (b) such deposit shall be made before the filing of the return and not later than the due date applicable in the case of the assessee for filing the return of income under section 263(1); and
   • (c) the proof of deposit shall be submitted along with such return.
3. (3) For the purposes of sub-section (1), the amount, already utilised for purchasing or constructing the new asset, together with the deposited amount under sub-section (2) shall, subject to sub-section (7), be deemed to be the cost of the new asset.
4. (4) If the amount deposited under sub-section (2) is not fully utilised for purchasing or constructing the new asset within the period specified in sub-section (1), then,—
   • (a) the unutilised amount shall be charged to tax under section 67 as the income of the tax year in which the period of three years from the date of the transfer of the original asset expires; and
   • (b) the assessee shall be entitled to withdraw such unutilised amount in accordance with the scheme referred to in sub-section (2).
5. (5) If the capital gains under sub-section (1) does not exceed two crore rupees, the assessee may, at his option, purchase or construct two residential houses in India, and where such option has been exercised,—
   • (a) for the purposes of sub-section (1)(b), "one residential house in India" shall be read as "two residential houses in India"; and
   • (b) for the purposes of sub-sections (1)(b) and (2), "new asset" shall mean two residential houses in India.
6. (6) If during any tax year, the assessee has exercised the option mentioned in sub-section (5), he shall not be entitled to exercise such option for the same tax year or any other tax year.
7. (7) If the cost of new asset exceeds ten crore rupees, the amount exceeding ten crore rupees shall not be taken into account for the purposes of sub-section (1).
8. (8) If the capital gains on the transfer of original asset exceeds ten crore rupees, the amount exceeding ten crore rupees shall not be taken into account for the purposes of sub-section (2).

1. (1) Where an assessee, being an individual or a Hindu undivided family,—
   • (a) has capital gains arising from the transfer of a capital asset, being land, which was used by the assessee or his parent, or the Hindu undivided family for agricultural purposes (original asset), in two years immediately preceding the date of transfer; and
   • (b) has, within two years after that date, purchased any other land for being used for agricultural purposes (new asset),

then, instead of the capital gains being charged to income-tax as income of the tax year in which the transfer took place, it shall be dealt with as follows:—

1. (i) if the capital gains exceed the cost of the new asset, such excess shall be charged under section 67, and for computing any capital gains arising from the transfer of the new asset within three years of its purchase, the cost shall be nil; or
   • (ii) if the capital gains is equal to or less than the cost of the new asset, no capital gains shall be charged under section 67, and for computing any capital gains arising from the transfer of the new asset within three years of its purchase, the cost shall be reduced by the amount of the capital gains.
2. (2) If the capital gains referred to in sub-section (1) is not utilised by the assessee to purchase the new asset before filing the return of income under section 263, then—
   • (a) the unutilised amount shall be deposited in a specified bank or institution and utilised as per the scheme notified by the Central Government;
   • (b) such deposit shall be made before the filing of the return and not later than the due date applicable in the case of the assessee for filing the return of income under section 263(1); and
   • (c) the proof of deposit shall be submitted along with such return.
3. (3) For the purposes of sub-section (1), the amount already utilised for purchasing the new asset together with the deposited amount under sub-section (2), shall be deemed to be the cost of the new asset.
4. (4) If the amount deposited under sub-section (2) is not fully utilised for purchase of the new asset within the period specified in sub-section (1), then,—
   • (a) the unutilised amount shall be charged under section 67 as the income of the tax year in which two years from the date of the transfer of the original asset expires; and
   • (b) the assessee shall be entitled to withdraw such unutilised amount in accordance with the scheme referred to in sub-section (2).

1. (1) Where an assessee has—
   • (a) capital gains arising from the transfer by way of compulsory acquisition under any law, of a capital asset being land or building or any right in land or building, forming part of an industrial undertaking belonging to him, which was being used by the assessee for the business of the said undertaking in the two years immediately preceding the date of transfer (original asset); and
   • (b) within three years after that date, purchased any other land or building or any right in any other land or building or constructed any other building for shifting or re-establishing the said undertaking or setting up another industrial undertaking (new asset),

then, instead of the capital gain being charged to income-tax as income of the tax year in which the transfer took place, it shall be dealt with as follows:—

1. (i) if the capital gains exceeds the cost of new asset, such excess shall be charged under section 67, and for computing any capital gains arising from the transfer of the new asset within three years of its purchase or construction, the cost shall be nil; or
   • (ii) if the capital gains is equal to or less than the cost of new asset, no capital gains shall be charged under section 67 and for computing capital gains from the transfer of the new asset within three years of its purchase or construction, the cost shall be reduced by the amount of the capital gains.
2. (2) If the capital gains referred to in sub-section (1) is not utilised by the assessee to purchase the new asset before filing the return of income under section 263, then—
   • (a) the unutilised amount shall be deposited in a specified bank or institution and utilised as per the scheme notified by the Central Government;
   • (b) such deposit shall be made before the filing of the return not later than the due date applicable in the case of the assessee for filing the return of income under section 263(1); and
   • (c) the proof of deposit shall be submitted along with such return.
3. (3) For the purposes of sub-section (1), the amount already utilised for purchas- ing or constructing the new asset together with the deposited amount under sub- section (2), shall be deemed to be the cost of the new asset.
4. (4) If the amount deposited under sub-section (2) is not fully utilised for the purchase or construction of the new asset within the period specified in sub-section (1), then,—
   • (a) the unutilised amount shall be charged under section 67 as the income of the tax year in which three years from the date of the transfer of the original asset expires; and
   • (b) the assessee shall be entitled to withdraw such unutilised amount in accordance with the scheme referred to in sub-section (2).

1. (1) Where an assessee has—
   • (a) long-term capital gains arising from the transfer of land or building, or both, (original asset); and
   • (b) within six months after the date of such transfer, invested whole or part of the capital gains in a long-term specified asset (new asset),

then, the capital gains shall be dealt with as follows:—

1. (i) if the capital gains exceed the investment in the new asset, the amount of capital gains as exceeds such investment shall be charged under section 67; or
   • (ii) if the capital gains are equal to or less than the investment in the new asset, the whole of such capital gains shall not be charged under section 67.
2. (2) For the purposes of sub-section (1), investment made in the long-term specified asset from capital gain arising from transfer of one or more original asset shall not exceed fifty lakh rupees,—
   • (a) during any tax year; or
   • (b) in the year of transfer of the original asset or assets and in the subsequent tax year.
3. (3) If the new asset is transferred or converted (otherwise than by transfer) into money within five years of its acquisition, the capital gains not charged under section 67 as per sub-section (1), shall be deemed to be income chargeable as long-term capital gains in the tax year of its transfer or conversion.
4. (4) Any loan or advance taken on the security of the new asset shall be deemed to have converted the new asset into money on the date of such loan or advance.
5. (5) Where the investment in the new asset has been taken into account for sub-section (1), no deduction under section 123 for any tax year shall be allowed for such investment.
6. (6) For the purposes of sub-section (1), "long-term specified asset" means any bond, redeemable after five years and issued on after the 1st April 2018, by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 (68 of 1988) or by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 2013 (18 of 2013) or any other bond as may be notified by the Central Government for the purposes of this section.

1. (1) If an individual or a Hindu undivided family has—
   • (a) capital gains arising from the transfer of any long-term capital asset, not being a residential house (original asset); and
   • (b) within one year before, or two years after, the date of such transfer, purchased, or has within three years after that date constructed, one residential house in India (new asset),

then, the capital gains shall be dealt with as follows:—

1. (i) if the net consideration is more than the cost of the new asset, so much of the capital gains as bears to the whole of the capital gains, the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 67; or
   • (ii) if the net consideration is equal to or less than the cost of the new asset, no capital gains shall be charged under section 67.
2. (2) If the net consideration referred to in sub-section (1) is not utilised by the assessee to purchase the new asset within one year before the date of transfer of the original asset, or is not utilised for the purchase or construction of the new asset before filing the return of income under section 263, then,—
   • (a) the unutilised amount shall be deposited in a specified bank or institution and utilised as per the scheme notified by the Central Government;
   • (b) such deposit shall be made before the filing of the return and not later than the due date applicable in the case of the assessee for filing the return of income under section 263; and
   • (c) the proof of deposit shall be submitted along with such return.
3. (3) For the purposes of sub-section (1), the amount already utilised for purchasing or constructing the new asset together with the deposited amount under sub-section (2) shall, subject to sub-section (8), be deemed to be the cost of the new asset.
4. (4) If the amount deposited under sub-section (2) is not wholly or partly utilised for purchasing or constructing the new asset within the period specified in sub-section (1), then,—
   • (a) the amount determined as per the following formula shall be charged under section 67 as income of the tax year in which three years from the date of the transfer of the original asset expires:—

X – Y, where,—

X = the capital gains not charged under section 67 as per sub-section (1).

Y = the capital gains that would not have been charged under section 67, if the cost of the new asset had been taken to be the amount actually utilised for purchase or construction of the new asset;

1. (b) the assessee shall be entitled to withdraw such unutilised amount in accordance with the scheme referred to in sub-section (2).
2. (5) The provisions of sub-section (1) shall not apply, if—
   • (a) the assessee—
   • (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or
   • (ii) purchases any residential house, other than the new asset, within one year of transfer of the original asset; or
   • (iii) constructs any residential house, other than the new asset, within three years of transfer of the original asset; and
   • (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".
3. (6) If the assessee purchases, within two years after the date of transfer of the original asset, or constructs, within three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the capital gains not charged under section 67 on the basis of cost of such new asset as per sub-section (1), shall be charged as long-term capital gains of the tax year in which such residential house is purchased or constructed.
4. (7) If the new asset is transferred within three years from the date of purchase or its construction, the capital gains not charged under section 67 on the basis of cost of such new asset as per sub-section (1) shall be charged as long-term capital gains of the tax year in which such new asset is transferred.
5. (8) If the cost of the new asset exceeds ten crore rupees, the amount exceeding ten crore rupees, shall not be taken into account for the purposes of sub-section (1).
6. (9) If the net consideration on the transfer of original asset exceeds ten crore rupees, the amount exceeding ten crore rupees, shall not be taken into account for the purposes of sub-section (2).
7. (10) For the purposes of this section, "net consideration"means the full value of the consideration received or accruing as a result of the transfer of the original asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.

1. (1) If the assessee has—
   • (a) capital gains arising from the transfer of capital asset, being machinery or plant or building or land or any rights in building or land used for the business of an industrial undertaking situated in an urban area, effected in the case of shifting of an industrial undertaking situated in an urban area (original asset) to any area [other than an urban area (new area)]; and
   • (b) within one year before or three years after the date of such transfer,—
   • (i) purchased new machinery or plant for business of the industrial undertaking in the new area;
   • (ii) acquired building or land or constructed building for his business in the said area;
   • (iii) shifted the original asset and transferred the establishment of such undertaking to such area; and
   • (iv) incurred expenses on such other purpose as specified in a scheme notified by the Central Government for this section,

then, instead of the capital gains being charged to income-tax as income of the tax year in which the transfer took place, it shall be dealt with as follows:—

1. (A) if the cost and expenses incurred on all or any of the purposes mentioned in sub-clauses (i) to (iv) referred to as "new asset",—
   • (I) is less than the capital gains, the difference shall be charged under section 67 as the income of the tax year; or
   • (II) is equal to or more than the capital gain, no capital gain shall be charged under section 67; and
   • (B) for computing any capital gain arising from transfer of the new asset within three years of its being purchased, acquired, constructed or transferred, the cost shall be nil in case of sub-clause (A)(II) or shall be reduced by the amount of the capital gain in case of sub-clause (A)(I).
2. (2) If the capital gain is not used by the assessee for the new asset within one year before the date of transfer of the original asset, or before filing the return of income under section 263, then—
   • (a) the unutilised amount shall be deposited in a specified bank or institution and utilised as per the scheme notified by the Central Government;
   • (b) such deposit shall be made before the filing of the return and not later than the due date applicable in the case of the assessee for filing the return of income under section 263(1); and
   • (c) the proof of deposit shall be submitted along with such return.
3. (3) For the purposes of sub-section (1), the amount already utilised for purchasing or constructing the new asset together with the deposited amount under sub-section (2) shall be deemed to be the cost of the new asset.
4. (4) If the amount deposited under sub-section (2) is not wholly or partly utilised for the new asset within the period specified in sub-section (1), then,—
   • (a) the unutilised amount shall be charged under section 67 as the income of the tax year in which the period of three years from the date of the transfer of the original asset expires; and
   • (b) the assessee shall be entitled to withdraw such unutilised amount in accordance with the scheme referred to in sub-section (2).
5. (5) For the purposes of this section, the expression "urban area" means any area within the limits of a municipal corporation or municipality, declared to be an urban area by the Central Government for the purposes of this section, having regard to—
   • (a) the population;
   • (b) concentration of industries; and
   • (c) need for proper planning of the area and other relevant factors.

1. (1) Irrespective of anything contained in section 87, if the assessee has—
   • (a) capital gains arising from the transfer of a capital asset, being machinery or plant or building or land or any rights in building or land used for the business of an industrial undertaking situated in an urban area, effected in the course of or in consequence of shifting of such industrial undertaking (original asset) to any Special Economic Zone in any urban or any other area; and
   • (b) has within one year before or three years after the date of such transfer,—
   • (i) purchased machinery or plant for the business of the industrial undertaking in such Special Economic Zone;
   • (ii) acquired building or land or constructed building for his business in such Special Economic Zone;
   • (iii) shifted the original asset and transferred the establishment of such undertaking to such Special Economic Zone; and
   • (iv) incurred expenses on such other purposes specified by a scheme notified by the Central Government in this behalf,

then, instead of capital gain being charged to income-tax as income of the tax year in which the transfer took place, it shall be dealt with as follows:—

1. (A) if the cost and expenses incurred in on all or any of the purposes mentioned sub-clauses (i) to (iv) referred to as "new asset",—
   • (I) is less than the capital gains, the difference shall be charged under section 67 as the income of the tax year; or
   • (II) is equal to or more than the capital gains, no capital gain shall be charged under section 67;
   • (B) for computing any capital gain arising from transfer of the new asset within three years of its being purchased, acquired, constructed or transferred, the cost shall be nil in case of sub-clause (A)(II), or shall be reduced by the amount of the capital gain in case of sub-clause (A)(I).
2. (2) If the capital gain referred to in sub-section (1) is not utilised by the assessee for the new asset within one year before the transfer of the original asset, or before filing the return of income under section 263, then,—
   • (a) the unutilised amount shall be deposited in a specified bank or institution and utilised as per the scheme notified by the Central Government;
   • (b) such deposit shall be made before the filing of the return and not later than the due date applicable in the case of the assessee for filing the return of income under section 263(1); and
   • (c) the proof of deposit shall be submitted along with such return.
3. (3) For the purposes of sub-section (1), the amount already utilised for purchasing or constructing the new asset together with the deposited amount under sub-section (2) shall be deemed to be the cost of the new asset.
4. (4) If the amount deposited under sub-section (2) is not wholly or partly utilised for the new asset within the period specified in sub-section (1), then,—
   • (a) the unutilised amount shall be charged under section 67 as the income of the tax year in which the period of three years from the date of the transfer of the original asset expires; and
   • (b) the assessee shall be entitled to withdraw such unutilised amount in accordance with the scheme referred to in sub-section (2).
5. (5) For the purpose of this section, the expression "urban area" shall have the meaning assigned to it in section 87.

Irrespective of anything contained in sections 82, 83, 84, 85 and 86,—

1. (a) if the transfer of the original asset mentioned in those sections is by way of compulsory acquisition under any law; and
   • (b) if the compensation awarded for such acquisition is not received by the assessee on the date of transfer, then, the period available to him under those sections for acquisition of the new asset or investment or deposit of capital gain in specified bank or institution shall be reckoned from the date of receipt of compensation.

1. (1) For the purposes of sections 72 and 73, "cost of improvement",—
   • (a) in relation to a capital asset being goodwill or any intangible asset of a business, or a right to manufacture, produce or process any article or thing, or right to carry on any business or profession, or any other right, shall be taken to be nil; and
   • (b) in relation to any other capital asset,—
   • (i) if the capital asset became the property of the previous owner or the assessee before the 1st April, 2001, means all expenditure of a capital nature incurred on or after the said date in making any additions or alterations to the capital asset by the previous owner or the assessee; and
   • (ii) in any other case, means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset by the assessee after it became his property, and, where the capital asset became the property of the assessee by any of the modes specified in section 73 (Table: Sl. No. 1), by the previous owner.
2. (2) For the purposes of sub-section (1)(b), the cost of improvement does not include any expenditure which is deductible in computing the income chargeable under the head "Income from house property", "Profits and gains of business or profession" or "Income from other sources".
3. (3) For the purposes of sections 72 and 73, "cost of acquisition" of a capital asset (being goodwill of a business or profession, or a trade mark or brand name associated with a business or profession, or any other intangible asset, or a right to manufacture, produce or process any article or thing, or a right to carry on any business or profession, or tenancy rights, or stage carriage permits, or loom hours, or any other right) means—
   • (a) the purchase price, if acquisition of such asset by the assessee is by purchase from the previous owner; and
   • (b) the purchase price for the previous owner, in the case covered in section 73 (Table: Sl. No. 1), where such asset was acquired by purchase by the previous owner as defined in sub-section (2) of the said section; and
   • (c) nil, in any other case.
4. (4) For the purposes of sub-section (3)(a) or (b), if—
   • (a) the capital asset is goodwill of a business or profession; and
   • (b) the assessee has obtained a deduction on account of depreciation under section 32(1) of the Income-tax Act, 1961 (43 of 1961) in a tax year preceding the tax year commencing on the 1st April, 2020,

then the total amount of depreciation obtained before the tax year commencing on the 1st April, 2020 shall be reduced from the amount of purchase price.

1. (5) For the purposes of sections 72 and 73, and subject to the provisions of sub- section (9)(a) and (b), "cost of acquisition" shall be as per sub-section (6), in a case where, by virtue of holding a capital asset, being a share or any other security, within the meaning of section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) (herein referred to as the financial asset), the assessee—
   • (a) becomes entitled to subscribe to any additional financial asset; or
   • (b) is allotted any additional financial asset without any payment.
2. (6) In a case referred to in sub-section (5), "cost of acquisition", in relation to—
   • (a) the original financial asset, on the basis of which the assessee becomes entitled to any additional financial asset, means the amount actually paid for acquiring the original financial asset;
   • (b) any right to renounce the said entitlement to subscribe to the financial asset, when such right is renounced by the assessee in favour of any person, shall be taken to be nil in the case of such assessee;
   • (c) the financial asset, to which the assessee has subscribed on the basis of the said entitlement, means the amount actually paid by him for acquiring such asset;
   • (d) the financial asset allotted to the assessee without any payment and on the basis of holding of any other financial asset, shall be taken to be nil; and
   • (e) any financial asset purchased by any person in whose favour the right to subscribe to such asset has been renounced, means the total amount of the purchase price paid by him to the person renouncing such right and the amount paid by him to the company or institution, for acquiring such financial asset.
3. (7) For the purposes of sections 72 and 73, "cost of acquisition", subject to sub-section (9)(a) and (b), in relation to a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust referred to in section 198, acquired before the 1st February, 2018, shall be higher of—
   • (a) the cost of acquisition of such asset; and
   • (b) lower of—
   • (i) the fair market value of such asset; and
   • (ii) the full value of consideration received or accruing as a result of the transfer of the capital asset.
4. (8) For the purposes of sub-section (7),—
   • (a) "Cost Inflation Index", shall have the meaning assigned to it in section 72(8)(a);
   • (b) "fair market value" means,—
   • (i) in a case where the capital asset is listed on any recognised stock exchange as on the 31st January, 2018, the highest price of the capital asset quoted on such exchange on that date;
   • (ii) in a case where there is no trading in such asset on such exchange on the 31st January, 2018, as mentioned in sub-clause (i) the highest price of such asset on such exchange on a date immediately preceding the 31st January, 2018 when such asset was traded on such exchange shall be the fair market value;
   • (iii) if the capital asset is a unit which is not listed on a recognised stock exchange as on the 31st January, 2018, the net asset value of such unit as on that date;
   • (iv) if the capital asset is an equity share in a company which is—
   • (A) not listed on a recognised stock exchange as on the 31st January, 2018 but listed on such exchange on the date of transfer;
   • (B) not listed on a recognised stock exchange as on the 31st January, 2018, or which became the property of the assessee in consideration of share which is not listed on such exchange as on the 31st January, 2018 by way of transaction not regarded as transfer mentioned in section 70, but listed on such excha- nge subsequent to the date of transfer (where such transfer is in respect of sale of unlisted equity shares under an offer for sale to the public included in an initial public offer);
   • (C) listed on a recognised stock exchange on the date of transfer and which became the property of the assessee in consideration of share which is not listed on such exchange as on the 31st January, 2018 by way of transaction not regarded as transfer mentioned in section 70,

an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the tax year 2017-18 bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st April, 2001, whichever is later.

1. (9) For the purposes of sections 72 and 73, cost of acquisition in relation to any other capital asset,—
   • (a) if the capital asset became the property of the assessee before the 1st April, 2001, subject to sub-section (10), shall be the cost of acquisition of the asset to the assessee or its fair market value on the 1st April, 2001, at the option of the assessee;
   • (b) if the capital asset became the property of the assessee by any of the modes specified in section 73 (Table: Sl. No. 1), and the capital asset became the property of the previous owner before the 1st April, 2001, subject to sub-section (10), shall be the cost of the capital asset to the previous owner or its fair market value on the 1st April, 2001, at the option of the assessee;
   • (c) if the capital asset became the property of the assessee on the distribution of the capital assets of a company on its liquidation and the assessee has been assessed to income-tax under the head "Capital gains" in respect of that asset under section 68, means the fair market value of the asset on the date of distribution;
   • (d) if the capital asset, being a share or a stock of a company, became the property of the assessee on—
   • (i) the consolidation and division of all or any of the share capital of the company into shares of larger amount than its existing shares; or
   • (ii) the conversion of any shares of the company into stock; or
   • (iii) the re-conversion of any stock of the company into shares; or
   • (iv) the sub-division of any of the shares of the company into shares of smaller amount; or
   • (v) the conversion of one kind of shares of the company into another kind,

means the cost of acquisition of the asset calculated with reference to the cost of acquisition of the shares or stock from which such asset is derived.

1. (10) In case of a capital asset referred to in sub-section (9)(a) and (b), being land or building, or both, the fair market value of such asset on the 1st April, 2001 for the said sub-section (9)(a) and (b) shall not exceed the stamp duty value, wherever available, of such asset as on the 1st April, 2001.
2. (11) If the cost for which the previous owner acquired the property cannot be ascertained, the cost of acquisition to the previous owner shall be the fair market value on the date on which the capital asset became the property of the previous owner.
3. (12) For the purposes of sections 72 and 73, cost of acquisition in relation to a capital asset—
   • (a) being equity share or shares allotted to a shareholder of a recognised stock exchange in India under a scheme for demutualisation or corporatisation approved by the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), shall be the cost of acquisition of his original membership of the exchange;
   • (b) bring trading or clearing rights of the recognised stock exchange acquired by a shareholder who has been allotted equity share or shares under such scheme of demutualisation or corporatisation, shall be deemed to be nil.

1. (1) For ascertaining the fair market value of a capital asset for this Chapter, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer,—
   • (a) if the value of the asset claimed by the assessee is as per the estimate by a registered valuer, but the Assessing Officer is of the opinion that the value so claimed is at variance with its fair market value;
   • (b) in any other case, if the Assessing Officer is of the opinion that—
   • (i) the fair market value of the asset exceeds the value claimed by the assessee by more than the percentage of value of such asset or amount, as may be prescribed; or
   • (ii) having regard to the nature of the asset and other relevant circumstances, it is necessary so to do.
2. (2) The provisions of section 269(3) to (8) shall, with necessary modifications, apply in relation to such reference made under sub-section (1).

F.—Income from other sources

1. (1) Income of every kind which is not to be excluded from the total income under this Act, shall be chargeable to income-tax under the head "Income from other sources", if it is not chargeable to income-tax under any of the heads specified in section 13(a) to (d).
2. (2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes shall be chargeable to income-tax under the head "Income from other sources":—
   • (a) any dividend;
   • (b) any winning from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature;
   • (c) any sum received by the assessee from employees as contributions to any provident fund, superannuation fund, any fund set up under the Employees' State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees, if the income is not chargeable to income-tax under the head "Profits and gains of business or profession";
   • (d) any sum received under a Keyman insurance policy, as defined in Schedule II (Note 1) including the bonus allocated on such policy, if such income is not chargeable to income-tax under the head "Profits and gains of business or profession" or under the head "Salaries";
   • (e) any income by way of interest on securities, if the income is not chargeable to income-tax under the head "Profits and gains of business or profession";
   • (f) any income from machinery, plant or furniture belonging to the assessee and let on hire, if the income is not chargeable to income-tax under the head "Profits and gains of business or profession";
   • (g) any income from letting on hire of machinery, plant or furniture, belonging to the assessee and also buildings, where the letting of the buildings is inseparable from the letting of such machinery, plant or furniture, if the income is not chargeable to income-tax under the head "Profits and gains of business or profession";
   • (h) any sum of money received as an advance or otherwise during negotiations for the transfer of a capital asset, if—
   • (i) such sum is forfeited; and
   • (ii) the negotiations do not result in transfer of such capital asset;
   • (i) any income by way of interest received on compensation or on enhanced compensation referred to in section 278(1);
   • (j) any compensation or other payment, due to or received by any person, by whatever name called, in connection with the termination of his employment, or the modification of its terms and conditions;
   • (k) any specified sum received by a unit holder from a business trust during the tax year with respect to a unit held by him at any time during such tax year, the computation of which shall be—

specified sum = A – B – C (which shall be deemed to be zero, if the sum of B and C is greater than A), where—

A = aggregate of the sum distributed by the business trust with respect to such unit, during the tax year or during any earlier tax year or years, to such unit holder, who holds such unit on the date of distribution of sum or to any other unit holder who held such unit at any time prior to the date of such distribution, which is—

1. (a) not in the nature of income referred to in Schedule V (Table: Sl. No. 3 or 4); and
   • (b) not chargeable to tax under section 223(2);

B = amount at which such unit was issued by the business trust; and

C = amount charged to tax under this clause in any earlier tax year;

1. (l) where any sum, including bonus allocated, is received, during a tax year, under a life insurance policy, other than—
   • (a) sums received under a unit linked insurance policy; or
   • (b) income referred to in clause (d),

and such sum is not to be excluded from the total income of that tax year under Schedule II (Table: Sl. No. 2), the sum exceeding the aggregate of the premium paid, during the term of such life insurance policy, and not claimed as a deduction under this Act, computed in such manner, as may be prescribed;

1. (m) where any person receives in any tax year, from any person or persons—
   • (i) any sum of money without consideration, the total of which exceeds Rs. 50000, the whole of such sum;
   • (ii) any immovable property—
   • (A) without consideration, the stamp duty value of which exceeds Rs. 50000, the stamp duty value of such property;
   • (B) for a consideration, the stamp duty value of such property that exceeds such consideration, if this excess amount is more than the higher of the following amounts:—
   • (I) Rs. 50000; or
   • (II) 10% of the consideration;
   • (iii) any property, other than immovable property,—
   • (A) without consideration, the aggregate fair market value of which exceeds Rs. 50000, the whole of the aggregate fair market value of such property;
   • (B) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding Rs. 50000, the aggregate fair market value of such property as exceeds such consideration.
2. (3) The provisions of sub-section (2)(m) shall not apply to any sum of money or any property received—
   • (a) from any relative; or
   • (b) on the occasion of marriage of the individual; or
   • (c) under a will or by way of inheritance; or
   • (d) in contemplation of death of the payer or donor; or
   • (e) from any local authority as defined in Schedule III (Note 6); or
   • (f) from or by any registered non-profit organisation as defined in section 355(g), except when received by any person referred to in section 355(h); or
   • (g) by way of a transaction not regarded as transfer under section 70(1)(a), (c), (d), (e), (f), (g), (i), (j), (k), (l), (n), (o), (t), (u), (v) or (w); or
   • (h) from an individual by a trust created or established solely for the benefit of relative of the individual; or
   • (i) from such class of persons and subject to such conditions, as may be prescribed.
3. (4) For the purposes of sub-section (2)(m)(ii),—
   • (a) if the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement shall apply, provided the consideration, in whole or in part, has been paid in specified banking or online mode as defined in section 66(32) on or before the date of agreement for transfer of such immovable property;
   • (b) if the stamp duty value of immovable property is disputed by the assessee on the grounds mentioned in section 78(2), the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of sections 78(2) and 288(1) (Table: Sl. No. 8) shall, as far as may be, apply to the stamp duty value of such property as they apply for valuation of capital asset under those sections.
4. (5) For the purposes of this section,—
   • (a) "assessable" shall have the meaning assigned to it in section 2(105);
   • (b) "card game and other game of any sort" includes any game show, an entertainment programme on television or electronic mode, where people compete to win prizes or any similar game;
   • (c) "fair market value" of a property, other than an immovable property, means the value determined by such method as may be prescribed;
   • (d) "jewellery" shall have the meaning assigned to it in section 2(22);
   • (e) "lottery" includes winnings from prizes awarded by draw of lots, by chance, or in any other manner under any scheme or arrangement by whatever named called;
   • (f) "property" means the following capital asset of the assessee:—
   • (i) immovable property being land or building or both;
   • (ii) shares and securities;
   • (iii) jewellery;
   • (iv) archaeological collections;
   • (v) drawings;
   • (vi) paintings;
   • (vii) sculptures;
   • (viii) any work of art;
   • (ix) bullion; or
   • (x) virtual digital asset;
   • (g) "relative" means—
   • (i) in case of an individual—
   • (A) spouse;
   • (B) brother or sister;
   • (C) brother or sister of the spouse;
   • (D) brother or sister of either of the parents;
   • (E) any lineal ascendant (maternal as well as paternal) or descendant;
   • (F) any lineal ascendant (maternal as well as paternal) or descendant of the spouse;
   • (G) spouse of the person referred to in items (B) to (F); and
   • (ii) for a Hindu undivided family, any member thereof;
   • (h) "unit linked insurance policy" shall have the meaning assigned to it in Schedule II (Note 1).

1. (1) The income chargeable under the head "Income from other sources" shall be computed after making the following deductions:—

for interest on securities, any reasonable sum paid as commission or remuneration to a banker or any other person for the purpose of realising such interest on behalf of the assessee;]

1. (b) for income of the nature referred to in section 92(2)(c), so far as may be, an amount as per section 29(1)(e);
   • (c) for income of the nature referred to in section 92(2)(f) and (g), so far as may be, an amount as per section 28(1)(a), (b), (d), section 33, and subject to the provisions of section 28(2);
   • (d) for income in the nature of family pension (a regular monthly amount payable by the employer to a family member of an employee upon the death of such employee),—
   • (i) an amount equal to one-third of such income or Rs. 25000, whichever is less, where income-tax is computed under section 202(1); and
   • (ii) an amount equal to one-third of such income or Rs. 15000, whichever is less, in any other case;
   • (e) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for making or earning such income;
   • (f) for income of the nature referred to in section 92(2)(i), an amount equal to 50% of such income and no other deduction shall be allowed under this section;
   • (g) for income in the nature of commutation of pension received from a fund as specified in Schedule VII (Table: Sl. No. 3), the entire amount;
   • (h) for income in the nature of gratuity as referred in section 19(2)(g), received on the death of the employee, the entire amount.

10c[(2) Irrespective of anything contained in sub-section (1), in respect of any dividend income or income from units of a Mutual Fund specified under Schedule VII (Table: Sl. No. 20 or 21) or income from units of a specified company as referred to in section 2(h) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002), no deduction shall be allowed.]

94 . (1) Irrespective of anything contained in section 93, the following amounts shall not be deductible in computing the income of any assessee chargeable under the head "Income from other sources":—

1. (a) any personal expenses of the assessee; or
   • (b) any interest chargeable under this Act, payable outside India, on which tax has not been paid or deducted under Chapter XIX-B; or
   • (c) any payment chargeable under the head "Salaries", if it is payable outside India, unless tax has been paid or deducted under Chapter XIX-B.
2. (2) The provisions of sections 29, 35(b)(i), and 36 shall apply in computing the income chargeable under the head "Income from other sources" as they apply in computing the income chargeable under the head "Profits and gains of business or profession".
3. (3) For an assessee, being a foreign company, the provisions of section 59 shall apply in computing the income chargeable under the head "Income from other sources", as they apply in computing the income chargeable under the head "Profits and gains of business or profession".
4. (4) In computing the income from winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort, or from gambling or betting of any form or nature, no deduction for any expenditure or allowance related to such income shall be allowed under this Act.
5. (5) Sub-section (4) shall not apply in computing the income of an assessee, being the owner of horses maintained for running in horse races, from the activity of owning and maintaining such horses.
6. (6) For the purposes of this section, the expression "horse race" means a horse race upon which wagering or betting may be lawfully made.

95 . The provision of section 38(1), (2), (3) and (4) shall apply in computing the income of an assessee under section 92, as they apply in computing the income of an assessee under the head "Profits and gains of business or profession".

CHAPTER V

INCOME OF OTHER PERSONS INCLUDED IN TOTAL INCOME OF ASSESSEE

All income arising to any person by virtue of a transfer,—

1. (a) whether revocable or not, and whether effected before or after the commencement of this Act; and
   • (b) where there is no transfer of assets from which such income arises,

shall be chargeable to income-tax as the income of the transferor and shall be included in his total income.

1. (1) All income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income-tax as income of the transferor and shall be included in his total income.
2. (2) The provisions of sub-section (1) shall not apply,—
   • (a) where a transfer is by way of trust which is not revocable during the lifetime of the beneficiary and in case of any other transfer, is not revocable during the lifetime of the transferee; and
   • (b) the transferor does not derive any direct or indirect benefit from such income in cases referred to in clause (a).
3. (3) Irrespective of the provisions of sub-section (2), all income arising to any person by virtue of such transfer shall be chargeable to income-tax as income of the transferor as and when the power to revoke such transfer arises, and shall then be included in his total income.

For the purposes of sections 96 and 97, and this section,—

1. (a) "transfer" includes any settlement, trust, covenant, agreement or arrangement;
   • (b) a transfer shall be deemed to be revocable, if—
   • (i) it contains any provision for the direct or indirect re-transfer of the whole or any part of the income or assets to the transferor; or
   • (ii) it, in any way, gives the transferor a right to re-assume power directly or indirectly over the whole or any part of the income or assets.

1. (1) The total income of any individual, for a tax year, shall include the income arising directly or indirectly,—
   • (a) to the spouse of such individual,—
   • (i) by way of salary, commission, fees or any other form of remuneration, whether in cash or kind, from a concern in which such individual has a substantial interest but shall not include income solely attributable to the application of technical or professional knowledge, experience and technical or professional qualification of the spouse;
   • (ii) from assets transferred directly or indirectly to him or her by such individual otherwise than for adequate consideration or in connection with an agreement to live apart, subject to the provisions of section 25(a);
   • (b) to the son's wife of such individual from assets transferred directly or indirectly on or after the 1st June, 1973, to her by such individual, otherwise than for adequate consideration;
   • (c) to the minor child of the such individual, but shall not include income accruing or arising—
   • (i) on account of work done by such child; or
   • (ii) from activities where his skill, talent, specialised knowledge or experience is applied; or
   • (iii) where such minor child is suffering from disability of the nature specified in section 154;
   • (d) to any person or association of persons from assets transferred directly or indirectly, otherwise than for adequate consideration to the person or association of persons by such individual, to the extent to which the income from such assets is for the immediate or deferred benefit of his or her spouse or his son's wife, as the case may be, other than the assets transferred before 1st June 1973, to the extent to which the income from such assets is for the immediate or deferred benefit of his son's wife.
2. (2) If the asset transferred under 11[sub-section (1)(a)(ii) or (b)] is invested by the spouse or son's wife, in any business or in the nature of capital contributed as a partner in a firm, or, as the case may be, for being admitted to the benefits of partnership in a firm, then, the income to be included in the hands of the individual for the tax year shall be as follows:—

where ,—

A = Income to be included in the hands of individual for the tax year;

B = Income and interest or both, arising to the spouse or son's wife from the business or the firm, as applicable during the tax year;

C = Value of such assets invested, or contributed as capital by the spouse or son's wife as on the first day of the tax year;

D = Total investment or total capital contribution, as the case may be, by the spouse or son's wife as on the first day of the tax year.

1. (3) Where a property owned by an individual is converted into property belonging to the Hindu undivided family of which he is a member, through—
   • (a) the act of impressing such separate property with the character of pro- perty belonging to the family; or
   • (b) throwing it into the common stock of the family; or
   • (c) transfer, directly or indirectly to the family,

without adequate consideration, then, irrespective of any other provision of this Act or any other law in force for computing the total income of such individual,—

1. (i) the individual shall be deemed to have transferred such property, through the family, to the members of such family for being held jointly, and the income derived from such property or part thereof, shall be deemed to be income of the individual;
   • (ii) where the property so converted has been the subject-matter of partition (whether partial or total) amongst the member of the family, the income derived from such property as is received by the spouse of the individual on partition, shall be deemed to arise to the spouse from assets transferred indirectly to the spouse and the provisions of sub-section (1)(a) shall apply,

and the income referred to in clauses (i) and (ii) shall, on being included in the total income of the individual, be excluded from the total income of the family or the spouse.

1. (4) The provisions of sub-section (3) shall not apply where the property of the individual has been converted into property belonging to the family on or before the 31st December, 1969.
2. (5) For the purposes of this section,—
   • (a) for sub-section (1)(a)(i),—
   • (i) the income referred to in that clause shall be included in the hands of either of the spouse whose total income before such inclusion is greater; and
   • (ii) such income, once included in the total income of either spouse, for a tax year, shall not be included in the income of the other spouse for any succeeding tax year, unless the Assessing Officer is so satisfied, after giving the other spouse an opportunity of being heard;
   • (iii) an individual shall be deemed to have a substantial interest in a concern,—
   • (A) in case where the concern is a company, if its shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than 20% of the voting power are, at any time during the tax year, owned beneficially by the individual or jointly with one or more of his relatives;
   • (B) in any other case, if such person is entitled, or such person and one or more of his relatives are jointly entitled, to at least 20% of the profits of such concern at any time during the tax year;
   • (b) for sub-section (1)(c), income of minor child shall be included—
   • (i) in the income of that parent whose total income before such inclusion is greater, in case where the marriage of his parents subsists; or
   • (ii) in the income of the parent who maintains such child during the tax year, in case where marriage of his parents does not subsist,

and such income, once included in the total income of either of the parent, for a tax year, shall not be included in the income of the other parent for any succeeding tax year, unless the Assessing Officer is so satisfied, after giving the other parent an opportunity of being heard;

1. (c) for sub-section (3), "property" includes—
   • (i) interest in property; or
   • (ii) movable or immovable property; or
   • (iii) proceeds of sale of such property and any money, property or investment representing such proceeds; or
   • (iv) where property is converted into any other property by any method, such other property;
   • (d) for this section, "income" includes loss.

Where, income of a person, other than the assessee, arising from any asset, or income from membership of a firm, is included in the total income of the assessee under this Chapter or under section 25(a), then, irrespective of anything to the contrary contained in any other law in force,—

1. (a) such person, in whose name such asset stands, or who is a member of the firm, shall be liable to pay, that portion of the tax levied on the assessee which is attributable to the income so included, upon service of notice of demand by the Assessing Officer in this behalf;
   • (b) where any such asset is held jointly by more than one person, they shall be jointly and severally liable to pay such tax; and
   • (c) the provisions of Chapter XIX-D shall apply accordingly.

CHAPTER VI

AGGREGATION OF INCOME

In computing the total income of an assessee, there shall be included all income on which no income-tax is payable under Chapter XVII-A4.

1. (1) Where any sum is found credited in the books of an assessee maintained for any tax year, and—
   • (a) the assessee offers no explanation about the nature and source of such credit; or
   • (b) the explanation offered about the nature and source of such credit by assessee is not satisfactory in the opinion of the Assessing Officer,

then, the sum so credited shall be charged to income-tax as income of the assessee of that tax year.

1. (2) For the purposes of sub-section (1), where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, the explanation offered by such assessee shall be deemed to be not satisfactory, unless,—
   • (a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and
   • (b) such explanation in the opinion of the Assessing Officer has been found to be satisfactory.
2. (3) For the purposes of sub-section (1), where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount, by whatever name called, the explanation offered by such assessee company shall be deemed to be not satisfactory, unless—
   • (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and
   • (b) such explanation, in the opinion of the Assessing Officer has been found to be satisfactory.
3. (4) Nothing contained in sub-section (2) or (3) shall apply if the person, in whose name the sum referred to in those sub-sections is recorded, is a venture capital fund or a venture capital company as referred to in Schedule V (Table: Sl. No. 6).

Where in any tax year, any investment has been made by the assessee which is not recorded in the books of account, if any, maintained by such assessee for any source of income, or, the Assessing Officer finds that the amount of such investment exceeds the amount recorded in such books of account and—

1. (a) the assessee offers no explanation about the nature and source of such investment, or such excess amount, as the case may be; or
   • (b) the explanation offered about the nature and source of such investment by the assessee, is not satisfactory in the opinion of the Assessing Officer,

then, the value of such investment, or such excess amount, as the case may be, shall be deemed to be the income of the assessee of that tax year.

1. (1) Where in any tax year, any asset has been found to be owned by or belonging to the assessee which is not recorded in the books of account, if any, maintained by such assessee for any source of income, or the Assessing Officer finds that the amount expended in acquiring such asset exceeds the amount recorded in such books of account and—
   • (a) the assessee offers no explanation about the nature and source of acquisition of such asset, or such excess amount, as the case may be; or
   • (b) the explanation offered about the nature and source of acquisition of such asset by the assessee, is not satisfactory in the opinion of the Assessing Officer,

then, the value of such asset, or such excess amount, as the case may be, shall be deemed to be the income of the assessee of the tax year in which such asset has been found to be owned by, or belonging to, the assessee.

1. (2) For the purposes of this section, "asset" includes money, bullion, jewellery, virtual digital asset or other valuable article.

1. (1) Where any expenditure has been incurred by the assessee in any tax year, and—
   • (a) the assessee offers no explanation about the source of such expenditure or part thereof; or
   • (b) the explanation offered about the source of such expenditure by the assessee is not satisfactory in the opinion of the Assessing Officer,

then, the amount covered by such expenditure or part thereof, shall be deemed to be the income of the assessee for that tax year.

1. (2) Irrespective of any other provision of this Act, the amount deemed as income in sub-section (1) shall not be allowed as a deduction under this Act.

1. (1) Where any amount (including interest thereof) is borrowed or repaid through a negotiable instrument or on a hundi, otherwise than an account payee cheque, or through any mode as specified by the Board in this behalf, the amount so borrowed or repaid (including interest paid on the borrowed amount) shall be deemed to be the income of the person borrowing or repaying, as the case may be, for the tax year in which the amount was borrowed or repaid.
2. (2) Where the amount borrowed under sub-section (1) has been deemed to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under that sub-section on repayment of such amount.

Income referred to in sections 102, 103, 104, 105 and 106 shall be charged to tax as per the provisions of section 195.

CHAPTER VII

SET OFF, OR CARRY FORWARD AND SET OFF OF LOSSES

1. (1) Unless provided otherwise in this Act, for any tax year, if net result of computation from any source under any head of income (other than "Capital gains") is a loss, then assessee shall be entitled to set off such loss against his income from any other source under the same head for that tax year.
2. (2) Where the net result of computation of income made for any tax year under sections 72 to 90 in respect of—
   • (a) any short-term capital asset is a loss, such loss shall be set off against the income, computed in respect of any other capital asset for that year;
   • (b) any long-term capital asset is a loss, such loss shall be set off against the income computed in respect of any other long-term capital asset for that year.

1. (1) Subject to the provisions of this Chapter, for any tax year, if income computed under any head of income (other than "Capital gains") is a loss, such loss shall be set off against income of the assessee under any other head, including "Capital gains", if any, assessable for that tax year, subject to the following conditions:—
   • (a) loss under the head "Profits and gains of business or profession" shall not be set off against income assessable under the head "Salaries"; and
   • (b) loss under the head "Income from house property" shall be set off to the extent of Rs. 200000 against income under any other head.
2. (2) For any tax year, the loss under the head "Capital gains" shall not be set off against income under any other head.

1. (1) Where for any tax year, loss computed under the head "Income from house property" cannot be wholly set off against the income under any other head as per section 109, so much of the loss not so set off or the whole loss, as the case may be, shall be carried forward to the following tax year and—
   • (a) be set off only against the income from house property, if any, assessable for that tax year; and
   • (b) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following tax year and so on.
2. (2) No loss shall be carried forward under this section for more than eight tax years immediately succeeding the tax year for which the loss was first computed.

1. (1) (a) Where for any tax year, loss computed under the head "Capital gains" cannot be wholly set off against the income under the head "Capital gains" as per section 108, so much of the loss not so set off or the whole loss, as the case may be, shall be carried forward to the following tax year and shall be set off in the following manner—
   • (i) if such loss relates to a short-term capital asset, it shall be set off only against the income under the head "Capital gains", if any, assessable for that tax year in respect of any other capital asset;
   • (ii) if such loss relates to a long-term capital asset, it shall be set off only against the income under the head "Capital gains", if any, assessable for that tax year in respect of any other long-term capital asset; and
   • (b) if the loss cannot be wholly so set off under clause (a), the amount of loss not so set off shall be carried forward to the following tax year and so on.
2. (2) No loss shall be carried forward under this section for more than eight tax years immediately succeeding the tax year for which the loss was first computed.

1. (1) Where for any tax year, loss computed under the head "Profits and gains of business or profession" (not being a loss sustained in a speculation business) cannot be wholly set off against the income under any other head as per section 109, so much of the loss not so set off or the whole loss, as the case may be, shall be carried forward to the following tax year and—
   • (i) be set off against the profits and gains, if any, of any business or profession carried on by him for that tax year; and
   • (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following tax year and so on.
2. (2) No loss shall be carried forward under this section for more than eight tax years immediately succeeding the tax year for which the loss was first computed.
3. (3) Where any allowance of part thereof under section 33(11) or 45(7) is to be carried forward, effect shall first be given to the provision of this section.

1. (1) Any loss, computed in respect of a speculation business carried on by the assessee shall be set off only against profits and gains of another speculation business.
2. (2) Where for any tax year, loss computed in respect of a speculation business cannot be wholly set off under sub-section (1), so much of the loss not so set off or the whole loss, as the case may be, shall be carried forward to the following tax year and—
   • (i) be set off against the profits and gains, if any, of any speculation business carried on by him for such tax year; and
   • (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following tax year and so on.
3. (3) No loss shall be carried forward under this section for more than four tax years immediately succeeding the tax year for which the loss was first computed.
4. (4) Where any allowance of part thereof under section 33(11) or 45(7) related to the speculation business is to be carried forward, effect shall first be given to the provision of this section.
5. (5) In this section, where any part of the business of the assessee (being a company) consists of purchase and sale of shares of other companies, then the assessee shall be deemed to be carrying on a speculation business, to the extent to which its business consists of purchase and sale of such shares.
6. (6) The provisions of sub-section (5) shall not apply to an assessee, being a company, if—
   • (a) its gross total income consists mainly of income which is chargeable under the heads "Income from house property", "Capital gains" or "Income from other sources"; or
   • (b) its principal business is of trading in shares or banking or the granting of loans and advances.

1. (1) Any loss, computed in respect of a specified business, referred to in section 46, shall be set off only against profits and gains of another specified business.
2. (2) Where for any tax year, loss computed in respect of a specified business cannot be wholly set off under sub-section (1), so much of the loss not so set off or the whole loss, as the case may be, shall be carried forward to the following tax year and—
   • (i) be set off against the profits and gains, if any, of any specified business carried on by him for such tax year; and
   • (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following tax year and so on.

1. (1) Any loss incurred by the assessee in specified activity in any tax year shall be set off only against income from specified activity.
2. (2) Where for any tax year, loss computed in respect of a specified activity cannot be wholly set off under sub-section (1), so much of the loss not so set off or the whole loss, as the case may be, shall be carried forward to the following tax year and—
   • (i) be set off against the income, if any, of the specified activity carried on by him for such tax year; and
   • (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following tax year and so on.
3. (3) No loss shall be carried forward under this section for more than four tax years immediately succeeding the tax year for which the loss was first computed.
4. (4) For the purposes of this section—
   • (a) "horse race" means a horse race upon which wagering or betting may be lawfully made;
   • (b) "income by way of stake money" means the gross amount of prize money received on a race horse or race horses by the owner thereof on account of the horse or horses or any one or more of the horses winning a particular position in horse race;
   • (c) "loss incurred by the assessee in specified activity" means the amount by which the income by way of stake money, if any, falls short of the expenditure, not being capital expenditure, incurred wholly and exclusively for maintaining race horses;
   • (d) "race horses" means horses owned and maintained by assessee for running in a horse race;
   • (e) "specified activity" means the activity of owning and maintaining race horses.

1. (1) Where there has been an amalgamation of,—
   • (a) a company owning an industrial undertaking or a ship or a hotel with another company; or
   • (b) a banking company referred to in section 5(c) of the Banking Regulation Act, 1949 (10 of 1949) with a specified bank; or
   • (c) one or more public sector company with one or more other public sector company; or
   • (d) an erstwhile public sector company with one or more company or companies, if the share purchase agreement entered into under strategic disinvestment restricted immediate amalgamation of the said public sector company and the amalgamation is carried out within five years from the end of the tax year in which the restriction on amalgamation in the share purchase agreement ends,

then, irrespective of anything contained in any other provision of this Act, the accumulated loss and unabsorbed depreciation of the amalgamating company shall be deemed to be the loss or, allowance for unabsorbed depreciation of the amalgamated company for the tax year in which the amalgamation was effected, and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly.

1. (2) The accumulated loss and the unabsorbed depreciation of the amalgamating company, in case of an amalgamation referred to in sub-section (1)(d), which is deemed to be the loss or, as the case may be, the unabsorbed depreciation of the amalgamated company, shall not exceed the accumulated loss and unabsorbed depreciation of the public sector company as on the date on which it ceases to be a public sector company due to such strategic disinvestment.
2. (3) For the purposes of sub-section (1)(d),—
   • (a) "control" shall have the same meaning as assigned to it in section 2(27) of the Companies Act, 2013 (18 of 2013);
   • (b) "erstwhile public sector company" means a company which was a public sector company in earlier tax years and ceases to be so due to strategic disinvestment by the Government;
   • (c) (i) "strategic disinvestment" means sale of shareholding by the Central Government or State Government or a public sector company, in a public sector company or in a company, which results in—
   • (A) reduction of its shareholding to below 51%; and
   • (B) transfer of control to the buyer;
   • (ii) for clause (c)(i)(A), the reduction of shareholding shall apply only where shareholding of the Central Government or the State Government or the public sector company exceeded 51% before the sale of shareholding;
   • (iii) the transfer of control referred to in clause (c)(i)(B) may be effected by the Central Government or the State Government or the public sector company or any two or all of them.
3. (4) Irrespective of anything contained in sub-sections (1), (2) and (3), the accumulated loss shall not be set off or carried forward and the unabsorbed depreciation shall not be allowed in the assessment of the amalgamated company unless,—
   • (a) the amalgamating company—
   • (i) has been engaged in the business, in which the accumulated loss occurred or depreciation remains unabsorbed, for three or more years;
   • (ii) has held continuously as on the date of the amalgamation, at least three-fourths of the book value of fixed assets held by it two years preceding the date of amalgamation;
   • (b) the amalgamated company—
   • (i) holds continuously for a minimum of five years from the date of amalgamation at least three-fourths of the book value of fixed assets of the amalgamating company acquired in a scheme of amalgamation;
   • (ii) continues the business of the amalgamating company for a minimum of five years from the date of amalgamation;
   • (iii) fulfils such other conditions as may be prescribed to ensure the revival of the business of the amalgamating company or to ensure that the amalgamation is for genuine business purpose.
4. (5) If any of the conditions laid down in sub-section (4) are not complied with, the set off of loss or allowance of depreciation made in any tax year in the hands of the amalgamated company shall be deemed to be the income of the amalgamated company chargeable to tax for the year in which the non-compliance occurs.
5. (6) Irrespective of anything contained in any other provisions of this Act, in the case of a demerger, the accumulated loss and the allowance for unabsorbed depreciation of the demerged company shall,—
   • (a) if directly relatable to the undertakings transferred to the resulting company, be allowed to be carried forward and set off in the hands of the resulting company;
   • (b) if not directly relatable to the undertakings transferred to the resulting company, be apportioned between the demerged company and the resulting company in the same proportion in which the assets of the undertakings have been retained by the demerged company and transferred to the resulting company, and shall be allowed to be carried forward and set off in the hands of the demerged company or the resulting company, as applicable.
6. (7) The Central Government may, by notification, specify such conditions to ensure that the demerger is for genuine business purposes.
7. (8) If there has been reorganisation of business where, a firm is succeeded by a company fulfilling the conditions laid down in section 70(1)(zd) or a proprietary concern is succeeded by a company fulfilling the conditions laid down in section 70(1)(zf), then, irrespective of anything contained in any other provision of this Act, the accumulated loss and the unabsorbed depreciation of the predecessor firm or the proprietary concern, shall be deemed to be the loss or allowance for depreciation of the successor company for the tax year in which business reorganisation was effected and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly, subject to provisions of sub-section (9).
8. (9) If any of the conditions laid down in section 70(1)(zd) or (zf), as the case may be, are not complied with, the set off of loss or allowance of depreciation made in any tax year in the hands of the successor company, shall be deemed to be the income of the company chargeable to tax in the year in which the non-compliance occurs.
9. (10) If there has been reorganisation of business whereby a private company or unlisted public company is succeeded by a limited liability partnership fulfilling the conditions laid down in section 70(1)(ze), then, irrespective of anything contained in any other provision of this Act, the accumulated loss and the unabsorbed depreciation of the predecessor company, shall be deemed to be the loss or allowance for depreciation of the successor limited liability partnership for the tax year in which business reorganisation was effected and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly, subject to provisions of sub-section (11).
10. (11) If any of the conditions laid down in section 70(1)(ze) are not complied with, the set off of loss or allowance of depreciation made in any tax year in the hands of the successor limited liability partnership, shall be deemed to be the income of the limited liability partnership chargeable to tax in the year in which the non-compliance occurs.
11. (12) For any amalgamation referred to in sub-section (1) or reorganisation of business referred to in sub-section (8) or (10) effected on or after the 1st April, 2025, any loss forming part of the accumulated loss of the predecessor entity, being—
    • (i) the amalgamating company; or
    • (ii) the firm or proprietary concern; or
    • (iii) the private company or unlisted public company,

as the case may be, which is deemed to be the loss of the successor entity, being—

1. (a) the amalgamated company; or
   • (b) the successor company; or
   • (c) the successor limited liability partnership,

as the case may be, shall be carried forward for not more than eight tax years immediately succeeding the tax year for which such loss was first computed for the original predecessor entity.

1. (13) For the purposes of this section,—
   • (a) "accumulated loss" means so much of the loss of the predecessor firm or the proprietary concern or the private company or unlisted public company before conversion into limited liability partnership or the amalgamating company or the demerged company, under the head "Profits and gains of business or profession" (excluding loss in a speculation business) which would have been eligible for carry forward and set off to such predecessor entity under section 112, had the reorganisation of business or conversion or amalgamation or demerger not occurred;
   • (b) "industrial undertaking" means any undertaking which is engaged in—
   • (i) the manufacture or processing of goods; or
   • (ii) the manufacture of computer software; or
   • (iii) the business of generation or distribution of electricity or any other form of power; or
   • (iv) the business of providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services; or
   • (v) mining; or
   • (vi) the construction of ships, aircrafts or rail systems;
   • (c) "original predecessor entity" means predecessor entity in respect of the first amalgamation for sub-section (1) or first reorganisation of business for sub-sections (8) and (10), as the case may be;
   • (d) "specified bank" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955) or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980);
   • (e) "unabsorbed depreciation" means so much of the allowance for depreciation of the predecessor firm or the proprietary concern or the private company or unlisted public company before conversion into limited liability partnership or the amalgamating company or the demerged company, which remains to be allowed and which would have been allowed to such predecessor entity under this Act, had the reorganisation of business or conversion or amalgamation or demerger not occurred.

1. (1) Irrespective of anything contained in section 2(6)(a) to (c) or section 116, where there has been an amalgamation of,—
   • (a) one or more banking company with—
   • (i) any other banking institution under a scheme sanctioned and brought into force by the Central Government under section 45(7) of the Banking Regulation Act, 1949 (10 of 1949); or
   • (ii) any other banking institution or a company following a strategic disinvestment, wherein the amalgamation occurs within five years from the end of the tax year during which such disinvestment is carried out; or
   • (b) one or more corresponding new bank or banks with any other corresponding new bank under a scheme brought into force by the Central Government under section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or under section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or both; or
   • (c) one or more Government company or companies with any other Government company under a scheme sanctioned and brought into force by the Central Government under section 16 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972),

the accumulated loss and unabsorbed depreciation of such banking company or companies or amalgamating corresponding new bank or banks or amalgamating Government company or companies, shall be deemed to be the loss or, allowance for depreciation of the banking institution or company or amalgamated corresponding new bank or amalgamated Government company for the tax year in which the scheme of amalgamation was brought into force and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly.

1. (2) Where any scheme of amalgamation as referred to in sub-section (1) is brought into force on or after the 1st April, 2025, any loss forming part of the accumulated loss of the predecessor entity, being—
   • (i) the banking company or companies;
   • (ii) the amalgamating corresponding new bank or banks; or
   • (iii) the amalgamating Government company or companies,

as the case may be, which is deemed to be the loss of the successor entity, being—

1. (a) the banking institution or company; or
   • (b) the amalgamated corresponding new bank or banks; or
   • (c) the amalgamated Government company or companies,

as the case may be, shall be carried forward in the hands of the successor entity for not more than eight tax years immediately succeeding the tax year for which such loss was first computed for original predecessor entity.

1. (3) For the purposes of this section,—
   • (a) "accumulated loss" means so much of the loss of the amalgamating banking company or companies or amalgamating corresponding new bank or banks or amalgamating Government company or companies under the head "Profits and gains of business or profession" (excluding losses of a speculation business) which such predecessor entity would have been entitled to carry forward and set off under section 112 had the amalgamation not occurred;
   • (b) "banking company" shall have the same meaning as assigned to it in section 5(c) of the Banking Regulation Act, 1949 (10 of 1949);
   • (c) "banking institution" shall have the same meaning as assigned to it in section 45(15) of the Banking Regulation Act, 1949 (10 of 1949);
   • (d) "corresponding new bank" shall have the same meaning as assigned to it in section 2(d) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or section 2(b) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980);
   • (e) "general insurance business" shall have the same meaning as assigned to it in section 3(g) of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972);
   • (f) "Government company" means a Government company as defined in section 2(45) of the Companies Act, 2013 (18 of 2013), engaged in the general insurance business and established under section 4 or 5 or 16 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972);
   • (g) "original predecessor entity" means predecessor entity in respect of the first amalgamation;
   • (h) "strategic disinvestment" shall have the meaning assigned to it in section 116(3)(c)(i);
   • (i) "unabsorbed depreciation" means the allowance for depreciation of the amalgamating banking company or companies or amalgamating corresponding new bank or banks or amalgamating Government company or companies which remains to be allowed and which would have been allowed to such predecessor entity, had the amalgamation not occurred.

1. (1) The assessee, being a successor co-operative bank, shall, in a case where the amalgamation has taken place during the tax year, be allowed to set off the accumulated loss and the unabsorbed depreciation, if any, of the predecessor co-operative bank as if the amalgamation had not taken place, and all the other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly.
2. (2) In case of a co-operative bank where demerger takes place during the tax year, and where the accumulated loss or unabsorbed depreciation of the demerged co-operative bank—
   • (a) is directly relatable to the undertaking transferred, the whole of such accumulated loss or unabsorbed depreciation shall be allowed to be carried forward and set off against the income of the resulting co-operative bank; and
   • (b) is not directly relatable to the undertaking transferred, then such accumulated loss or unabsorbed depreciation shall first be apportioned between the demerged co-operative bank and the resulting co-operative bank in the same proportion in which assets of the undertaking are distributed between the demerged co-operative bank and the resulting co-operative bank, and be allowed to be carried forward and set off against their respective incomes.
3. (3) The provisions of this section shall apply, if—
   • (a) the predecessor co-operative bank—
   • (i) has been engaged in the business of banking for three or more years; and
   • (ii) has held at least three-fourths of the book value of fixed assets as on the date of the business reorganisation, continuously for two years before the date of business reorganisation;
   • (b) the successor co-operative bank,—
   • (i) holds at least three-fourths of the book value of fixed assets of the predecessor co-operative bank acquired through business reorganisation, continuously for a minimum five years immediately succeeding the date of business reorganisation;
   • (ii) continues the business of the predecessor co-operative bank for a minimum five years from the date of business reorganisation; and
   • (iii) fulfils such other conditions, as may be prescribed, to ensure the revival of the business of the predecessor co-operative bank or to ensure that the business reorganisation is for genuine business purpose.
4. (4) The Central Government may, by notification, specify such other conditions as it may consider necessary, other than the condition referred to in sub-section (3)(b)(iii), for the purposes of ensuring that the business reorganisation is for genuine business purposes.
5. (5) In a case where any of the conditions referred to in sub-section (3) or notified under sub-section (4) are not complied with, the set off of accumulated business loss or unabsorbed depreciation made in any tax year in the hands of the successor co-operative bank shall be deemed to be the income of the successor co-operative bank chargeable to tax for the year in which such conditions are not complied with.
6. (6) The period commencing from the beginning of the tax year and ending on the date immediately preceding the date of business reorganisation, and the period commencing from the date of such business reorganisation and ending with the tax year, shall be deemed to be two different tax years for the purposes of set off and carry forward of loss and allowance for depreciation.
7. (7) For the purposes of this section,—
   • (a) "accumulated loss" means so much of the loss of amalgamating co-operative bank or demerged co-operative bank as referred to in section 112 in the hands of predecessor co-operative bank, which such predecessor co-operative bank would have been entitled to carry forward and set off under the said section, as if the business reorganisation had not taken place;
   • (b) "amalgamated co-operative bank", "amalgamating co-operative bank", "amalgamation", "business reorganisation", "demerged co-operative bank", "demerger", "predecessor co-operative bank", "successor co-operative bank" and "resulting co-operative bank" shall have the meanings respectively assigned to them in section 65;
   • (c) "unabsorbed depreciation" means so much of the allowance for depreciation in the hands of amalgamating co-operative bank or demerged co-operative bank, which remains to be allowed and which would have been allowed to such banks, if the business reorganisation had not taken place.

1. (1) In case of change in constitution of a firm during a tax year, nothing in this Chapter shall entitle the firm to have carried forward and set off so much of the loss proportionate to the share of a retired or deceased partner as exceeds his share of profits, if any, in the firm in respect of the tax year.
2. (2) If any person carrying on any business or profession has been succeeded in such capacity by another person, otherwise than by inheritance, nothing in this Chapter shall entitle any person other than the person incurring the loss to have it carried forward and set off against his income.
3. (3) Irrespective of anything contained in this Chapter, in case of a change in shareholding during the tax year of a company (not being a company in which the public are substantially interested),—
   • (a) no loss incurred in any year prior to the tax year shall be carried forward and set off against the income of the tax year unless on the last day of the tax year, the shares of the company carrying not less than 51% of the voting power were beneficially held by the persons who beneficially held shares of the company carrying not less than 51% of the voting power on the last day of the year or years in which the loss was incurred; and
   • (b) regardless of the change in percentage of shareholding, where the company is an eligible start up referred to in section 140, the loss incurred in any year prior to the tax year shall be allowed to be carried forward and set off against the income of the tax year, if—
   • (i) all the shareholders of such company who held shares carrying voting power on the last day of the year or years in which the loss was incurred, continue to hold those shares on the last day of such tax year; and
   • (ii) such loss has been incurred during the period of ten years beginning from the year in which such company is incorporated.
4. (4) The provisions of sub-section (3) shall not apply—
   • (a) where a change in the voting power and shareholding takes place in the tax year referred to in that sub-section due to death of shareholder or transfer of shares by way of gift to any relative of the shareholder; or
   • (b) where change in shareholding of Indian company, being a subsidiary of foreign company, takes place due to amalgamation or demerger of the foreign company and 51% of the shareholders of amalgamating or demerged foreign company are shareholders of amalgamated or resulting foreign company; or
   • (c) where change in shareholding takes place in a tax year consequent to a resolution plan approved under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and a reasonable opportunity of being heard was afforded to the jurisdictional Principal Commissioner or Commissioner; or
   • (d) to a company, its subsidiary and subsidiary of such subsidiary, if—
   • (i) the Board of Directors of such company were suspended by the Tribunal on an application moved by the Central Government under section 241 of the Companies Act, 2013 (18 of 2013) and new directors were appointed by the Central Government under section 242 of the said Act; and
   • (ii) the change in shareholding of such company and its subsidiary, and subsidiary of such subsidiary has taken place consequent to a resolution plan approved by the Tribunal under section 242 of the Companies Act, 2013 (18 of 2013) and a reasonable opportunity of being heard was afforded to the jurisdictional Principal Commissioner or Commissioner; or
   • (e) to a company to the extent that a change in the shareholding has taken place during the tax year on account of relocation referred to in section 70(2) (Table: Sl. No. 5.C); or
   • (f) to an erstwhile public sector company where ultimate holding company of such company, immediately after the completion of strategic disinvestment, continues to hold, directly or through its subsidiary or subsidiaries, at least 51% of the voting power of such company in aggregate.
5. (5) Irrespective of anything contained in sub-section (4), if the conditions specified in sub-section (4)(f) is not complied with in any tax year after the completion of strategic disinvestment, the provisions of sub-section (3) shall apply for such tax year and subsequent tax years.
6. (6) For the purposes of this section,—
   • (a) a company shall be a subsidiary of another company, if such other company holds more than half in nominal value of the equity share capital of the company;
   • (b) the expression "erstwhile public sector company" shall have the meaning assigned to it in section 116(3)(b);
   • (c) "strategic disinvestment" shall have the meaning assigned to it in section 116(3)(c)(i);
   • (d) "Tribunal" shall have the same meaning as assigned to it in section 2(90) of the Companies Act, 2013 (18 of 2013).

1. (1) Irrespective of anything contained in any other provision of this Act, any loss, whether brought forward or otherwise or unabsorbed depreciation, shall not be allowed to be set off against any undisclosed income which is included in the total income of any tax year, consequent to a search conducted under section 247 or a requisition under section 248 or a survey conducted under section 253, not being a survey under section 253(4).
2. (2) For the purposes of this section, the expression "undisclosed income" for any tax year shall have the meaning as referred to in section 301.

Irrespective of anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed under section 263(1), shall be carried forward and set off under section 111(1) or 112(1) or 113(2) or 114(2) or 115(2).

CHAPTER VIII

A.—General

1. (1) In computing the total income of an assessee, the deductions specified in this Chapter shall be allowed from his gross total income, as per and subject to the provisions of this Chapter.
2. (2) The aggregate amount of the deductions under this Chapter shall not, in any case, exceed the gross total income of the assessee.
3. (3) If the deduction under section 133 or 135 or 137 or 138 or 141 or 142 or 143 is admissible in computing the total income of an association of persons or a body of individuals, no deduction under the same section shall be made in relation to the share of income of a member of such association of persons or body of individuals in computing the total income of such member.
4. (4) Irrespective of anything to the contrary contained in any of the provisions of Part C of this Chapter, where, in the case of an assessee, any amount of profits and gains of an undertaking or unit or enterprise or eligible business is claimed and allowed as a deduction under those provisions for any tax year,—
   • (a) deduction in respect of, and to the extent of, such profits and gains shall not be allowed under any other provision of this Act for such tax year; and
   • (b) shall in no case exceed the profits and gains of such undertaking or unit or enterprise or eligible business, as the case may be.
5. (5) Deduction under the provisions of Part C of this Chapter shall not be allowed to an assessee, who fails to—
   • (a) furnish a return of income on or before the due date specified under section 263(1); or
   • (b) make a claim of deduction in a return furnished under section 263(1).
6. (6) For the purposes of any deduction under this Chapter, irrespective of anything to the contrary contained in Part C of this Chapter, if any goods or services held for the purposes of—
   • (a) the undertaking, unit, enterprise or eligible business carried on by the assessee are transferred to any other business carried on by the assessee; or
   • (b) any other business carried on by the assessee are transferred to the undertaking or unit or enterprise or eligible business of the assessee,

and the consideration, if any, for such transfer as recorded in the accounts of the undertaking or unit or enterprise or eligible business does not correspond to the market value of such goods or services as on the date of transfer, then the profits and gains of such undertaking or unit or enterprise or eligible business carried on by the assessee shall be computed as if the transfer, in clause (a) or (b), had been made at the market value of such goods or services as on that date.

1. (7) For the purposes of sub-section (6), "market value",—
   • (a) in relation to any goods or services sold or supplied, means the price that such goods or services would fetch if these were sold by the undertaking or unit or enterprise or eligible business in the open market, subject to statutory or regulatory restrictions, if any;
   • (b) in relation to any goods or services acquired, means the price that such goods or services would cost if these were acquired by the undertaking or unit or enterprise or eligible business from the open market, subject to statutory or regulatory restrictions, if any; and
   • (c) in relation to any goods or services sold, supplied or acquired, means the arm's length price of such goods or services as defined in section 173(a), if it is a specified domestic transaction referred to in section 164.
2. (8) Where a deduction under Part C of this Chapter, is claimed and allowed in respect of profits of a specified business as referred to in section 46(11)(d) for any tax year, no deduction shall be allowed for such specified business under section 46 for the same or any other tax year.
3. (9) Where any deduction is required to be made or allowed under Part C of this Chapter, in respect of any income of the nature specified in that section and included in the gross total income of the assessee, then, irrespective of anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed under the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income.
4. (10) For the purposes of this Chapter, the expression "gross total income" means the total income computed as per the provisions of this Act, before making deduction under this Chapter.

B.—Deductions in respect of certain payments

An individual or a Hindu undivided family, shall be allowed a deduction of the whole of the amount paid or deposited in the tax year, being the aggregate of the sums enumerated in Schedule XV, as does not exceed Rs. 150000, while computing the total income for that year, subject to the conditions specified in that Schedule.

1. (1) Where in the case of an assessee, being an individual employed by any employer, if the employer makes any contribution in his account under a pension scheme notified by the Central Government, the assessee shall be allowed a deduction in the computation of his total income, of the whole of the amount contributed by such employer as does not exceed—
   • (a) 14%, where such contribution is made by the employer being the Central Government or the State Government; and
   • (b) 10%, where such contribution is made by an employer other than an employer referred to in clause (a),

of his salary in the tax year.

1. (2) Where the total income of the assessee is chargeable to tax under section 202(1), the provisions of sub-section (1) shall have effect as if for "10%" referred to in clause (b) of that sub-section, "14%" had been substituted.
2. (3) An assessee referred to in sub-section (1), or any other assessee, being an individual, shall be allowed a deduction not exceeding Rs. 50000, in computation of his total income of the whole of the amount paid or deposited in the tax year by such individual in his account under a pension scheme notified or as may be notified by the Central Government.
3. (4) The deduction under sub-section (3) shall also be allowed where any payment or deposit is made to the account of a minor under the said pension scheme, by the assessee, being the parent or guardian of such minor, subject to the condition that the aggregate amount of deduction under sub-section (3) and this sub-section shall not exceed Rs. 50000.
4. (5) No deduction under sub-sections (3) and (4) shall be allowed in respect of the amount on which a deduction has been claimed and allowed under section 123.
5. (6) Any amount standing to the credit of the assessee or a minor, in his account or the account of a minor, as the case may be, referred to in sub-sections (1), (3) and (4) and paragraph 1(y) of Schedule XV, in respect of which a deduction has been allowed together with the amount accrued thereon, received by the assessee or his nominee, in whole or in part, in any tax year,—
   • (a) on account of closure or his opting out of the pension scheme referred to in sub-sections (1) and (3); or
   • (b) as pension received from the annuity plan purchased or taken on such closure or opting out,

the whole of the amount referred to in clause (a) or (b) shall be deemed to be the income of the individual or his nominee, in the tax year in which such amount is received, and shall accordingly be charged to tax as income of that tax year.

1. (7) The amount received by the nominee, on the death of the assessee, under the circumstances referred to in sub-section (6)(a), shall not be deemed to be the income of the nominee.
2. (8) The amount received by a person, being the parent or guardian or nominee of a minor on account of closure of the pension scheme, due to the death of the minor, referred to in sub-section (4), shall not be deemed to be the income of such person.
3. (9) For the purposes of this section, the assessee shall not be deemed to have received any amount in the tax year, if such amount is used for purchasing an annuity plan in the same tax year.
4. (10) Where any amount paid or deposited by the assessee has been allowed as a deduction under sub-section (3), no deduction with reference to such amount shall be allowed under section 123 for that tax year.
5. (11) Any amount standing to the credit of the assessee, being a subscriber to Unified Pension Scheme, in his account referred to in sub-sections (1) and (3), and paragraph 1(y) of Schedule XV, in respect of which a deduction has been allowed together with the amount accrued thereon, received by the assessee or his nominee, in whole or in part, in any tax year on account of his superannuation or voluntary retirement or retirement under Fundamental Rules 56(j) (which is not treated as penalty under the Central Civil Services (Classification, Control and Appeal) Rules, 1965), the whole of the amount shall be deemed to be the income of the assessee or his nominee, as the case may be, in the tax year in which such amount is received, and shall accordingly be charged to tax as income of that tax year.
6. (12) For the purposes of sub-section (11), the assessee shall be deemed not to have received any amount in the tax year if such amount is transferred to pool corpus from individual corpus on account of his superannuation or voluntary retirement or retirement under Fundamental Rules 56(j) (which is not treated as penalty under the Central Civil Services (Classification, Control and Appeal) Rules, 1965), as may be applicable.
7. (13) For the purposes of this section,—
   • (a) "pool corpus" and "individual corpus" shall have the same meaning as in Notification F. No. FX-1/3/2024-PR of the Department of Financial Services, dated the 24th January, 2025.
   • (b) "salary" includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.

1. (1) An assessee, being an individual who has enrolled in the Agnipath Scheme and subscribes to the Agniveer Corpus Fund on or after the 1st November, 2022, shall be allowed a deduction in the computation of his total income, of the whole of the amount paid or deposited in his account in the said Fund during the tax year.
2. (2) Where the Central Government makes any contribution to the account of an assessee in the Fund referred to in sub-section (1), the assessee shall be allowed a deduction in the computation of his total income of the whole of the amount so contributed.
3. (3) For the purposes of this section,—
   • (a) "Agnipath Scheme" means the scheme for enrolment in the Indian Armed Forces introduced vide letter No. 1(23)2022/D(Pay/Services), dated the 29th December, 2022, of the Government of India in the Ministry of Defence;
   • (b) "Agniveer Corpus Fund" means a fund in which consolidated contributions of all the Agniveers and matching contributions of the Central Government along with interest on both these contributions are held.

1. (1) An assessee, being an individual or a Hindu undivided family, shall be allowed a deduction of a sum as specified in sub-sections (2) to (8), payment of which is made by any mode as specified in sub-section (9), out of his income chargeable to tax in the tax year.
2. (2) In the case of an assessee, being an individual, the sum referred to in sub-section (1), shall be the aggregate of the whole of the amount paid—
   • (a) to effect or keep in force an insurance on the health (herein referred to as health insurance) of the assessee or his family, or any contributions made to the Central Government Health Scheme or such other scheme, as may be notified by the Central Government in this behalf, or any payment made for preventive health check-up of the assessee or his family, up to Rs. 25000 in aggregate;
   • (b) to effect or to keep in force the health insurance, or any payment made for preventive health check-up, for the parent or parents of the assessee, up to Rs. 25000 in aggregate;
   • (c) on account of medical expenditure incurred on the health of the assessee or any member of his family, up to Rs. 50000 in aggregate; and
   • (d) on account of medical expenditure incurred on the health of any parent of the assessee, up to Rs. 50000 in aggregate.
3. (3) The deduction in respect of amounts referred to in sub-section (2)(a) or (2)(b), which are paid on account of preventive health check-up, shall be allowed up to Rs. 5000 in aggregate.
4. (4) The amount of sum referred to in sub-section (2) shall not exceed Rs. 50000 in aggregate of the sum specified under sub-section (2)(a) and (c) or aggregate of the sum specified under sub-section (2)(b) and (d).
5. (5) In the case of an assessee, being a Hindu undivided family, the sum referred to in sub-section (1), shall be the aggregate of the whole of the amount paid—
   • (a) to effect or keep in force an insurance on the health of any member of such Hindu undivided family, up to Rs. 25000 in the aggregate; and
   • (b) on account of medical expenditure incurred on the health of any member of such Hindu undivided family, up to Rs. 50000 in the aggregate.
6. (6) The amount of sum under sub-section (5) shall not exceed Rs. 50000 in the aggregate of the sum specified under sub-section (5)(a) and (b).
7. (7) For the purposes of this section, where the amount is paid on account of medical expenditure incurred on the health of a senior citizen under sub-section (2)(c) or (d) or (5)(b), deduction shall be allowed, if no amount has been paid to effect or to keep in force the health insurance of such person.
8. (8) Where the sum specified in sub-section (2)(a) or (b) or (5)(a) is paid to effect or keep in force the health insurance of any person specified therein, and—
   • (a) such person is a senior citizen, the amount of sum as provided in such clauses, shall be substituted with Rs. 50000 for Rs. 25000; and
   • (b) such sum is paid in lump sum in the tax year for more than a year, a deduction shall be allowed for each of the relevant tax year equal to the appropriate fraction of such amount.
9. (9) For the purposes of deduction under sub-section (1), the payment shall be made by any mode,—
   • (a) including cash, in respect of any sum paid on account of preventive health check-up; or
   • (b) other than cash in all other cases not falling under clause (a).
10. (10) For the purposes of this section,—
    • (a) "appropriate fraction" means the fraction where the numerator is one, and the denominator is the total number of relevant tax years;
    • (b) "family" means the spouse and dependant children of the assessee;
    • (c) "relevant tax year" means the tax year beginning with the tax year in which such lump sum amount is paid and the subsequent tax year or years during which the health insurance remains in force.
11. (11) The health insurance referred to in this section shall be as per the scheme made in this behalf by—
    • (a) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central Government in this behalf; or
    • (b) any other insurer and approved by the Insurance Regulatory and Development Authority established under section 3(1) of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).

1. (1) An assessee being an individual or a Hindu undivided family, who is a resident in India, shall be allowed a deduction up to Rs. 75000 from his gross total income of a tax year, subject to the provisions of this section, if during that year he has—
   • (a) incurred expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or
   • (b) paid or deposited any amount under a scheme framed by the Life Insurance Corporation or any other insurer or the Administrator, or the specified company, for the maintenance of a dependant, being a person with disability, subject to the conditions specified in sub-section (2) and approved by the Board in this behalf.
2. (2) The deduction under sub-section (1)(b) shall be allowed only if the following conditions are fulfilled:—
   • (a) the scheme referred to in sub-section (1)(b) provides for payment of an annuity or lump sum amount for the benefit of a dependant, being a person with disability—
   • (i) on the death of the individual or the member of the Hindu undivided family, in whose name the scheme was subscribed; or
   • (ii) on attaining the age of sixty years or more by such individual or the member of the Hindu undivided family, and the payment or deposit to such scheme has been discontinued;
   • (b) the assessee nominates the dependant, being a person with disability or any other person or a trust to receive the payments on behalf of and for the benefit of such dependant.
3. (3) If the dependant as referred to in sub-section (1) is a person with severe disability, the amount of deduction as referred to in sub-section (1) shall be substituted with "Rs. 125000" for "Rs. 75000".
4. (4) In the event of death of the dependant, being a person with disability, before the individual or the member of the Hindu undivided family mentioned in sub-section (2), the amount paid or deposited under sub-section (1)(b) shall be deemed to be the income of the assessee of the tax year in which it is received and shall accordingly be chargeable to tax.
5. (5) The provisions of sub-section (4) shall not apply to the amount received by the dependant, being a person with disability, before his death, as an annuity or lump sum by application of the condition referred to in sub-section (2)(a)(ii).
6. (6) The assessee claiming deduction under this section, shall furnish a copy of the medical certificate issued by the medical authority in such form and manner as may be prescribed, along with the return of income under section 263 for the tax year in which the deduction is claimed.
7. (7) If the certificate referred to in sub-section (6), specifies that the condition of disability requires reassessment of its extent after a period stipulated in it, the deduction under this section shall not be allowed for any tax year succeeding the tax year in which the said certificate expires, unless a new certificate is obtained from the medical authority in such form and manner as may be prescribed, and a copy thereof is submitted along with the return of income under section 263.
8. (8) The dependant mentioned in this section shall not include a person who has claimed deduction under section 154 in computing his total income for the tax year.
9. (9) For the purposes of this section,—
   • (a) "Administrator" means the Administrator as referred to in section 2(a) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);
   • (b) "dependant" means—
   • (i) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;
   • (ii) in the case of a Hindu undivided family, a member of the Hindu undivided family,

dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance;

1. (c) "disability" shall have the same meaning as assigned to it in section 2(i) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) and includes "autism", "cerebral palsy" and "multiple disability" respectively referred to in section 2(a), (c) and (h) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);
   • (d) "Life Insurance Corporation" means the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956);
   • (e) "medical authority" means the medical authority as referred to in section 2(p) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) or such other medical authority as may, by notification, be specified by the Central Government for certifying "autism", "cerebral palsy", "multiple disabilities", "person with disability" and "severe disability" respectively referred to in section 2(a), (c), (h), (j) and (o) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);
   • (f) "person with disability" means a person as referred to in section 2(t) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) or section 2(j) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);
   • (g) "person with severe disability" means—
   • (i) a person with 80% or more of one or more disabilities, as referred to in section 56(4) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996); or
   • (ii) a person with severe disability referred to in section 2(o) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);
   • (h) "specified company" means a company as referred to section 2(h) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002).

1. (1) An assessee who is resident in India, shall be allowed a deduction of the amount actually paid during the tax year or a sum of Rs. 40000, whichever is less, from income chargeable to tax of that tax year, for the medical treatment of such disease or ailment as may be prescribed—
   • (a) for himself or a dependant, in case the assessee is an individual; or
   • (b) for any member of a Hindu undivided family, in case the assessee is a Hindu undivided family.
2. (2) A deduction shall be allowed under this section only if the assessee obtains the prescription for the medical treatment from a neurologist, oncologist, urologist, haematologist, immunologist, or any other specialist, as may be prescribed.
3. (3) The deduction under this section shall be reduced by any amount received under an insurance from an insurer, or reimbursed by an employer, for the medical treatment of the person as referred to in sub-section (1)(a) or (b).
4. (4) If the amount actually paid is in respect of the assessee or his dependant or any member of a Hindu undivided family of the assessee and who is senior citizen, the amount of deduction as referred to in sub-section (1) shall be substituted with "Rs. 100000" for "Rs. 40000".
5. (5) For the purposes of this section,—
   • (a) "dependant" shall have the meaning as assigned to it in section 127(9);
   • (b) "insurer" shall have the meaning assigned to it in section 2(9) of the Insurance Act, 1938 (4 of 1938).

1. (1) An assessee, being an individual, shall be allowed a deduction of amount paid as interest during a tax year, subject to the provisions of this section, on a loan taken by him from any financial institution or any approved charitable institution, if the—
   • (a) loan taken is for the purpose of pursuing higher education of himself or his relative; and
   • (b) payment is made out of his income chargeable to tax.
2. (2) The deduction referred to in sub-section (1) shall be allowed in computing the total income in respect of the initial tax year and seven tax years immediately succeeding the initial tax year, or until the interest referred to in sub-section (1) is fully paid by the assessee, whichever is earlier.
3. (3) For the purposes of this section,—
   • (a) "approved charitable institution" means a registered non-profit organisation where it was approved earlier under the provisions of section 10(23C) of the Income-tax Act, 1961 (43 of 1961), or an institution referred to in section 80G(2)(a) of the said Act;
   • (b) "financial institution" means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act) or any other financial institution which the Central Government may, by notification, specify;
   • (c) "higher education" means any course of study pursued after passing the Senior Secondary Examination or its equivalent from a school, board, or University recognised by the Central Government or State Government, local authority, or by any authority authorised by the Central Government or State Government or local authority to do so;
   • (d) "initial tax year" means the tax year in which the assessee starts paying the interest on the loan;
   • (e) "relative", in relation to an individual, means the spouse and children of that individual, or the student for whom the individual is the legal guardian.

1. (1) An assessee, being an individual, shall be allowed a deduction of interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property as per the provisions of this section.
2. (2) The deduction under sub-section (1) shall not exceed Rs. 50000 and shall be allowed in computing the total income of the individual for the tax year beginning on the 1st April, 2016 and subsequent tax years.
3. (3) The deduction under sub-section (1) shall be subject to the following conditions:—
   • (a) the loan has been sanctioned by the financial institution during the period beginning on the 1st April, 2016 and ending on the 31st March, 2017;
   • (b) the amount of loan sanctioned for acquisition of the residential house property does not exceed thirty-five lakh rupees;
   • (c) the value of residential house property does not exceed fifty lakh rupees; and
   • (d) the assessee does not own any residential house property on the date of sanction of loan.
4. (4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other tax year.
5. (5) For the purposes of this section,—
   • (a) "financial institution" means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or any bank or banking institution referred to in section 51 of that Act or a housing finance company;
   • (b) "housing finance company" means a public company formed or 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.

1. (1) An assessee, being an individual not eligible to claim deduction under section 130, shall be allowed a deduction of interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property, subject to a maximum limit of Rs. 150000 in a tax year and on fulfilment of conditions specified in sub-section (2), for the tax year beginning on the 1st April, 2019 and subsequent tax years.
2. (2) The conditions referred in sub-section (1) shall be the following:—
   • (a) the loan has been sanctioned by the financial institution during the period beginning on the 1st April, 2019 and ending on the 31st March, 2022;
   • (b) the stamp duty value of residential house property does not exceed forty-five lakh rupees; and
   • (c) the assessee does not own any residential house property on the date of sanction of loan.
3. (3) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other tax year.
4. (4) For the purposes of this section, the expression "financial institution" shall have the meaning assigned to it in section 130(5)(a).

1. (1) An assessee, being an individual, shall be allowed a deduction of interest payable on loan taken by him from any financial institution for the purpose of purchase of an electric vehicle, as per the provisions of this section.
2. (2) The deduction under sub-section (1) shall be subject to the condition that the loan has been sanctioned by the financial institution during the period beginning on the 1st April, 2019 and ending on the 31st March, 2023.
3. (3) The deduction under sub-section (1) shall not exceed Rs. 150000 and shall be allowed in computing the total income of the individual for the tax year beginning on the 1st April, 2019 and subsequent tax years.
4. (4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other tax year.
5. (5) For the purposes of this section,—
   • (a) "electric vehicle" means a vehicle powered exclusively by an electric motor, whose traction energy is supplied exclusively by traction battery installed in the vehicle and has such electric regenerative braking system, which during braking provides for the conversion of vehicle kinetic energy into electrical energy;
   • (b) "financial institution" means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or any bank or banking institution referred to in section 51 of that Act and includes a non-banking financial company.

1. (1) In computing the total income of an assessee, there shall be deducted, as per and subject to the provisions of this section,—
   • (a) the whole of the aggregate of the sum or the sums paid by the assessee, in the tax year as donations to—
   • (i) the National Defence Fund set up by the Central Government; or
   • (ii) the Prime Minister's National Relief Fund or the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND); or
   • (iii) the Prime Minister's Armenia Earthquake Relief Fund; or
   • (iv) the Africa (Public Contributions-India) Fund; or
   • (v) the National Children's Fund; or
   • (vi) the National Foundation for Communal Harmony; or
   • (vii) a University or any educational institution of national eminence as may be approved by the prescribed authority in this behalf; or
   • (viii) any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat; or
   • (ix) any Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district for improving primary education in villages and towns having a population up to one lakh according to the last census of which figures are published before the first day of the relevant tax year, in such district and for literacy and post-literacy activities; or
   • (x) the National Blood Transfusion Council or any State Blood Transfusion Council which has its sole object the control, supervision, regulation or encouragement in India of the services related to operation and requirements of blood banks; or
   • (xi) any fund set up by a State Government to provide medical relief to the poor; or
   • (xii) the Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependants; or
   • (xiii) the Andhra Pradesh Chief Minister's Cyclone Relief Fund, 1996; or
   • (xiv) the National Illness Assistance Fund; or
   • (xv) the Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund, if the fund meets all the following conditions:—
   • (A) it is the only fund of its kind established in the State or the Union territory;
   • (B) it is under the overall control of the Chief Secretary or the Department of Finance of the respective State or the Union territory;
   • (C) it is administered in a manner specified by the State Government or the Lieutenant Governor; or
   • (xvi) the National Sports Development Fund set up by the Central Government; or
   • (xvii) the National Cultural Fund set up by the Central Government; or
   • (xviii) the Fund for Technology Development and Application set up by the Central Government; or
   • (xix) the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities constituted under section 3(1) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999); or
   • (xx) the Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under section 135(5) of the Companies Act, 2013 (18 of 2013); or
   • (xxi) the Clean Ganga Fund, set up by the Central Government, where such assessee is a resident and such sum is other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under section 135(5) of the Companies Act, 2013 (18 of 2013); or
   • (xxii) the National Fund for Control of Drug Abuse constituted under section 7A of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985); or
   • (xxiii) the Government or to any such local authority, institution or association as may be approved in this behalf by the Central Government, to be utilised for the purpose of promoting family planning; or
   • (xxiv) the Indian Olympic Association or any other association or institution established in India, as the Central Government may, having regard to the guidelines issued in this behalf, by notification, specify for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India, by an assessee being a company;
   • (b) an amount equal to 50% of the aggregate of the sums paid as donation by an assessee during the tax year to—
   • (i) the Prime Minister's Drought Relief Fund;
   • (ii) any fund or any institution to which this section applies, if:—
   • (A) it is established in India for a charitable purpose; and
   • (B) it is a registered non-profit organisation or an institution or fund mentioned in Schedule VII (Table: Sl. No. 1) and approved under section 354;
   • (iii) the Government or any local authority, to be utilised for any charitable purpose other than the purpose of promoting family planning;
   • (iv) an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both;
   • (v) a corporation established by the Central Government or any State Government for promoting the interests of the members of such minority community, as may be notified by the Central Government;
   • (vi) any entity, for the renovation or repair of any temple, mosque, gurudwara, church or other place which is notified by the Central Government to be of historic, archaeological or artistic importance or to be a place of public worship of renown throughout any State or States.
2. (2) Where the aggregate of the sums referred to in sub-section (1)(a)(xxiii) and (xxiv), and sub-section (1)(b)(ii) to (vi) exceeds 10% of the adjusted gross total income, then the amount in excess of 10% of the adjusted gross total income shall be ignored for the purpose of computing the aggregate of the sums in respect of which deduction is to be allowed under sub-section (1).
3. (3) Where deduction under this section is claimed and allowed for any tax year in respect of any sum specified in sub-section (1), the sum 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 tax year.
4. (4) The deduction under this section shall be allowed only for donation made as a sum of money.
5. (5) Any deduction for a donation over Rs. 2000 shall be allowed only if the payment is made by a mode other than cash.
6. (6) Any claim of deduction by the assessee in his return of income filed for any tax year in case of a donation made to an institution or fund referred in sub-section (1)(b)(ii), shall be allowed—
   • (a) only on the basis of the information relating to such donation furnished by such institution or fund to the prescribed authority or person authorised by such authority; and
   • (b) subject to verification as per the risk management strategy formulated by the Board from time to time.
7. (7) For the purposes of this section,—
   • (a) "adjusted gross total income" means gross total income as reduced by any portion thereof on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter;
   • (b) "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature;
   • (c) "National Blood Transfusion Council" means a society registered under the Societies Registration Act, 1860 (21 of 1860) and has an officer of the rank of an Additional Secretary to the Government of India or higher to deal with the AIDS Control Project as its Chairman;
   • (d) "State Blood Transfusion Council" means a society registered, in consultation with the National Blood Transfusion Council, under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India and has a Secretary to the Government of that State dealing with the Department of Health, as its Chairman;
   • (e) an association or institution having as its object the control, supervision, regulation or encouragement in India of such games or sports as may be notified by the Central Government, shall be deemed to be an institution established in India for a charitable purpose.

1. (1) In computing the total income of an assessee, subject to other provisions of this section, there shall be deducted any expenditure incurred by him towards payment of rent (by whatever name called) in respect of any furnished or unfurnished accommodation occupied by him for the purposes of his own residence.
2. (2) The deduction under sub-section (1) shall be allowable on payment of such rent exceeding 10% of his total income, subject to a maximum of Rs. 5000 per month, or 25% of total income for tax year, whichever is less.
3. (3) For the purposes of deduction under sub-section (1), such other conditions or limitations having regard to the area or place in which such accommodation is situated and other relevant consideration, as may be prescribed, shall be taken into account.
4. (4) No deduction under this section shall be allowed to an assessee in any case, where—
   • (a) any residential accommodation is—
   • (i) owned by the assessee or by his spouse or minor child or, where such assessee is a member of a Hindu undivided family, by such family at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession; or
   • (ii) owned by the assessee at any other place, being accommodation in the occupation of the assessee, the value of which is to be determined under section 21(6) or (7)(a); or
   • (b) the assessee has any income falling in Schedule III (Table: Sl. No. 11).
5. (5) For the purposes of this section, the expressions "10% of his total income" and "25% of his total income" shall mean 10% or 25%, as the case may be, of the total income of the assessee before allowing deduction for any expenditure under this section.

1. (1) In computing the total income of an assessee, there shall be deducted, as per the provisions of this section, any sum paid by the assessee in the tax year to,—
   • (a) a research association which has as its object the undertaking of scientific research, or a University, college or other institution approved for the purposes of section 45(3)(a)(i) to be used for scientific research;
   • (b) a research association which has as its object the undertaking of research in social science or statistical research, or a University, college or other institution approved for the purposes of section 45(3)(a)(ii) to be used for research in social science or statistical research.
2. (2) Deduction for contributions made as per sub-section (1) shall not be allowed, if—
   • (a) the gross total income of the assessee includes income which is chargeable under the head "Profits and gains of business or profession"; or
   • (b) the contribution is made in cash exceeding Rs. 2000.
3. (3) Deduction under sub-section (1)(a) and (b) shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee, approval to such association, University, college, other institution referred therein has been withdrawn.
4. (4) The claim of the assessee for a deduction in respect of any sum referred to in sub-section (1) in the return of income for any tax year filed by him, shall be allowed on the basis of information relating to such sum furnished by the payee to the prescribed income-tax authority or the person authorised by such authority, subject to verification as per the risk management strategy formulated by the Board from time to time.
5. (5) Where a deduction for any tax year has been claimed and allowed in respect of any payment of the nature referred to in this section, no deduction in respect of such payment shall be allowed under any other provision of this Act in any tax year.

1. (1) An assessee, being an Indian company, shall be allowed a deduction for the amount contributed by it, other than by way of cash, during a tax year to a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951) or an electoral trust.
2. (2) For the purposes of this section, the term "contribute", with its grammatical variations and cognate expressions shall have the same meaning as assigned to it in section 182 of the Companies Act, 2013 (18 of 2013).

An assessee, (other than a local authority and an artificial juridical person wholly or partly funded by the Government), shall be allowed a deduction for the amount contributed by him, other than by way of cash, during a tax year to a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951), or an electoral trust.

C.—Deductions in respect of certain incomes

In respect of any tax year, where—

1. (a) 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 section 80-IA of the Income-tax Act, 1961 (43 of 1961); and
   • (b) such assessee is eligible to claim a deduction from the profits and gains derived from such business for such tax year under the provisions of the said section, as if the said Act had not been repealed,

there shall be allowed, in computing the total income of the assessee, a deduction from the profits and gains derived from such business, subject to the conditions that—

1. (i) the amount of deduction is calculated as per the provisions of section 80-IA of the Income-tax Act, 1961 (43 of 1961); and
   • (ii) the deduction under this Act shall be allowed only for such tax years, as would have been allowed under section 80-IA of the Income-tax Act, 1961 (43 of 1961), as if the said Act had not been repealed.

In respect of any tax year, where—

1. (a) the gross total income of an assessee, being a Developer, includes any profits and gains derived by an undertaking or an enterprise from any business of developing a Special Economic Zone, notified on or after the 1st April, 2005 under the Special Economic Zones Act, 2005 (28 of 2005) referred to in section 80-IAB of the Income-tax Act, 1961 (43 of 1961); and
   • (b) such assessee is eligible to claim a deduction from the profits and gains derived from such business for such tax year under the provisions of the said section, as if the said Act had not been repealed,

there shall be allowed, in computing the total income of the assessee, a deduction from the profits and gains derived from such business, subject to the conditions that—

1. (i) the amount of deduction is calculated as per the provisions of section 80-IAB of the Income-tax Act, 1961 (43 of 1961); and
   • (ii) the deduction under this Act shall be allowed only for such tax years, as would have been allowed under section 80-IAB of the Income-tax Act, 1961 (43 of 1961), as if the said Act had not been repealed.

1. (1) Where the gross total income of an assessee, being an eligible start-up, includes any profits and gains derived from eligible business, there shall, as per 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 100% of the profits and gains derived from such business for three consecutive tax years.
2. (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any three consecutive tax years out of ten years beginning from the year in which the eligible start-up is incorporated.
3. (3) This section applies to a start-up which fulfils the following conditions:—
   • (a) it is not formed by splitting up, or the reconstruction, of a business already in existence;
   • (b) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose.
4. (4) Where the business of any undertaking carried on in India is discontinued in any tax year by reason of extensive damage to, or destruction of, any building, machinery, plant or furniture owned by the assessee and used for the purposes of such business as a direct result of—
   • (a) flood, typhoon, hurricane, cyclone, earthquake or other convulsion of nature; or
   • (b) riot or civil disturbance; or
   • (c) accidental fire or explosion; or
   • (d) action by an enemy or action taken in combating an enemy (whether with or without a declaration of war),

and thereafter, at any time before the expiry of three years from the end of such tax year, the business of such undertaking is re-established, reconstructed or revived by the assessee, the condition referred to in sub-section (3)(a) shall not apply to such undertaking which is so re-established, reconstructed or revived.

1. (5) For the purposes of sub-section (3)(b), 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 all the following conditions are fulfilled:—
   • (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; 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. (6) Where in the case of a start-up, 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 20% of the total value of the machinery or plant used in the business, then, for the purposes of sub-section (3)(b), the condition specified therein shall be deemed to have been complied with.
3. (7) Irrespective of anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the tax year immediately succeeding the initial tax year or any subsequent tax year, be computed as if such eligible business was the only source of income of the assessee during the initial tax year and to every subsequent tax year up to and including the tax year for which the determination is to be made.
4. (8) The deduction under sub-section (1) from profits and gains derived from an eligible business shall not be admissible unless the accounts of the eligible business for the tax year for which the deduction is claimed have been audited by an accountant, before the specified date referred to in section 63 and the assessee furnishes by that date the report of such audit in the prescribed form duly signed and verified by such accountant.
5. (9) In a case where, any goods or services held—
   • (i) for the purposes of the eligible business are transferred to any other business carried on by the assessee; or
   • (ii) for the purposes of any other business carried on by the assessee are transferred to the eligible business,

and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods or services as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date.

1. (10) For the purposes of sub-section (9), where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit.
2. (11) For the purposes of sub-section (9), "market value", in relation to any goods or services, means—
   • (i) the price that such goods or services would ordinarily fetch in the open market; or
   • (ii) the arm's length price as defined in section 173(a), where the transfer of such goods or services is a specified domestic transaction referred to in section 164.
3. (12) Where any amount of profits and gains of an undertaking or of an enterprise in the case of an assessee is claimed and allowed under this section for any tax year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of Part C of this Chapter and shall in no case exceed the profits and gains of such eligible business of undertaking or enterprise, as the case may be.
4. (13) Where it appears to the Assessing Officer that owing to the close connection between the assessee carrying on the eligible business 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 such eligible business, the Assessing Officer shall, in computing the profits and gains of such eligible business for the purposes of the deduction under this section, take the amount of profits as may be reasonably deemed to have been derived therefrom.
5. (14) Where the arrangement as mentioned in sub-section (13) involves a specified domestic transaction referred to in section 164, the amount of profits from such transaction shall be determined having regard to arm's length price as defined in section 173(a).
6. (15) The Central Government may, after making such inquiry as it may think fit, direct, by notification, that the exemption conferred by this section shall not apply to any class of industrial undertaking or enterprise with effect from such date as it may specify in the notification.
7. (16) For the purposes of this section,—
   • (a) "eligible business" means a business carried out by an eligible start-up engaged in innovation, development or improvement of products or processes or services or a scalable business model with a high potential of employment generation or wealth creation;
   • (b) "eligible start-up" means a company or a limited liability partnership engaged in eligible business which fulfils the following conditions:—
   • (i) it is incorporated on or after the 1st April, 2016 but before the 1st April, 2030;
   • (ii) the total turnover of its business does not exceed 12[three] hundred crore rupees in the tax year relevant to the tax year for which deduction under sub-section (1) is claimed; and
   • (iii) it holds a certificate of eligible business from the Inter-Ministerial Board of Certification as may be notified by the Central Government;
   • (c) "limited liability partnership" means a partnership referred to in section 2(1)(n) of the Limited Liability Partnership Act, 2008 (6 of 2009).

In respect of any tax year, where—

1. (a) the gross total income of an assessee, includes any profits and gains derived from any business referred to in section 80-IB of the Income- tax Act, 1961 (43 of 1961); and
   • (b) such assessee is eligible to claim a deduction from the profits and gains derived from such business for such tax year under the provisions of the said section, as if the said Act had not been repealed,

there shall be allowed, in computing the total income of the assessee, a deduction from the profits and gains derived from such business, subject to the conditions that—

1. (i) the amount of deduction is calculated as per the provisions of section 80-IB of the Income-tax Act, 1961 (43 of 1961); and
   • (ii) the deduction under this Act shall be allowed only for such tax years, as would have been allowed under section 80-IB of the Income-tax Act, 1961 (43 of 1961), as if the said Act had not been repealed.

In respect of any tax year, where—

1. (a) the gross total income of an assessee, includes any profits and gains derived from the business of developing and building housing projects or rental housing projects referred to in section 80-IBA of the Income-tax Act, 1961 (43 of 1961); and
   • (b) such assessee is eligible to claim a deduction from the profits and gains derived from such business for such tax year under the provisions of the said section, as if the said Act had not been repealed,

there shall be allowed, in computing the total income of the assessee, a deduction from the profits and gains derived from such business, subject to the conditions that—

1. (i) the amount of deduction is calculated as per the provisions of section 80-IBA of the Income-tax Act, 1961 (43 of 1961); and
   • (ii) the deduction under this Act shall be allowed only for such tax years, as would have been allowed under section 80-IBA of the Income-tax Act, 1961 (43 of 1961), as if the said Act had not been repealed.

1. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking, to which this section applies, from any business referred to in sub-section (2), there shall be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100% of the profits and gains derived from such business for ten consecutive tax years commencing with the initial tax year.
2. (2) This section applies to any undertaking which during the period beginning on the 1st April, 2007 and ending before the 1st April, 2017, has begun or begins, in any of the North-Eastern States,—
   • (a) to manufacture or produce any eligible article or thing; or
   • (b) to undertake substantial expansion to manufacture or produce any eligible article or thing; or
   • (c) to carry on any eligible business.
3. (3) This section applies to any undertaking which fulfils all the following conditions:—
   • (a) it is not formed by splitting up, or the reconstruction, of a business already in existence (other than an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 140(4), in the circumstances and within the period specified therein);
   • (b) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose.
4. (4) For the purposes of sub-section (3)(b), the provisions of section 140(5) and (6) shall apply.
5. (5) Irrespective of anything contained in any other provision of this Act, in computing the total income of the assessee, no deduction shall be allowed under any other section contained in this Chapter in relation to the profits and gains of the undertaking.
6. (6) Irrespective of anything contained in this Act, no deduction shall be allowed to any undertaking under this section, where the total period of deduction inclusive of the period of deduction under this section or under second proviso to section 80-IB(4) of the Income-tax Act, 1961 (43 of 1961) exceeds ten tax years.
7. (7) The provisions contained in section 140(7) to (15) shall, so far as may be, apply to the eligible undertaking under this section.
8. (8) For the purposes of this section,—
   • (a) "eligible article or thing" means the article or thing other than the following:—
   • (i) goods falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), which pertains to tobacco and manufactured tobacco substitutes;
   • (ii) pan masala as covered under Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);
   • (iii) plastic carry bags of less than twenty microns as specified by the Ministry of Environment and Forests vide notification numbers S.O. 705(E), dated the 2nd September, 1999 and S.O. 698(E), dated the 17th June, 2003; and
   • (iv) goods falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), produced by petroleum oil or gas refineries;
   • (b) "eligible business" means the business of—
   • (i) hotel (not below two star category);
   • (ii) adventure and leisure sports including ropeways;
   • (iii) providing medical and health services in the nature of nursing home with a minimum capacity of twenty-five beds;
   • (iv) running an old-age home;
   • (v) operating vocational training institute for hotel management, catering and food craft, entrepreneurship development, nursing and para-medical, civil aviation related training, fashion designing and industrial training;
   • (vi) running information technology related training centre;
   • (vii) manufacturing of information technology hardware; and
   • (viii) bio-technology;
   • (c) "initial tax year" means the tax year in which the undertaking begins to manufacture or produce articles or things, or completes substantial expansion;
   • (d) "North-Eastern States" means the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura;
   • (e) "substantial expansion" means increase in the investment in the plant and machinery by at least 25% of the book value of plant and machinery (before taking depreciation in any year), as on the first day of the tax year in which the substantial expansion is undertaken.

In respect of any tax year, where—

1. (a) in computing the total income of an assessee, being an entrepreneur as referred to in section 2(j) of the Special Economic Zones Act, 2005 (28 of 2005), who begins to manufacture or produce articles or things or provide any services, as referred to in section 10AA of the Income-tax Act, 1961 (43 of 1961); and
   • (b) such assessee is eligible to claim a deduction from the profits and gains derived from the export, of such articles or things or from services for such tax year under the provisions of the said section, if the said Act had not been repealed,

there shall be allowed, in computing the total income of the assessee, a deduction from the profits and gains derived from such business, subject to the conditions that—

1. (i) the amount of deduction is calculated as per the provisions of section 10AA of the Income-tax Act, 1961 (43 of 1961); and
   • (ii) the deduction under this Act shall be allowed only for such tax years, as would have been allowed under section 10AA of the Income-tax Act, 1961 (43 of 1961), as if the said Act had not been repealed.

If the gross total income of an assessee includes any profits and gains derived from the business of collecting and processing or treating of bio- degradable waste for,—

1. (a) generating power; or
   • (b) producing bio-fertilizers, bio-pesticides or other biological agents; or
   • (c) producing bio-gas; or
   • (d) making pellets or briquettes for fuel or organic manure,

there shall be allowed a deduction equal to the whole amount of such profits and gains for five consecutive tax years, beginning with the tax year in which such business commences.

1. (1) Subject to the conditions specified in sub-sections (2) and (3), if the gross total income of an assessee, to whom section 63 applies, includes any profits and gains derived from business, a deduction of an amount equal to 30% of additional employee cost incurred in the course of such business in the tax year shall be allowed.
2. (2) The deduction referred to in sub-section (1) shall be allowed for three consecutive tax years, beginning from the tax year in which the employment is provided.
3. (3) The deduction under sub-section (1) shall not be allowed, if—
   • (a) the business is formed by splitting up, or the reconstruction, of an existing business; or
   • (b) the business is acquired by the assessee through transfer from any other person or as a result of any business reorganisation; or
   • (c) the assessee does not furnish the report of an accountant, before the specified date as referred to in section 63, giving the particulars in the report, as may be prescribed.
4. (4) The condition referred to in sub-section (3)(a) shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 140(4), in the circumstances and within the period specified in said section.
5. (5) For the purposes of this section,—
   • (a) "additional employee cost" means—
   • (i) the total emoluments paid or payable to additional employees employed during the tax year; or
   • (ii) emoluments paid or payable to employees employed during the tax year, where that year is the first year of a new business,

and it shall be nil in the case of an existing business, if—

1. (A) there is no increase in the number of employees from the total number employed as on the last day of the preceding tax year; or
   • (B) emoluments are paid otherwise than by an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode, as may be prescribed;
   • (b) "additional employee" means an employee who has been employed during the tax year and whose employment increases the total number of employees employed by the employer as on the last day of the preceding tax year, but does not include any employee—
   • (i) whose total emoluments exceed Rs. 25000 per month;
   • (ii) for whom the Government pays the entire contribution under the Employees' Pension Scheme notified as per the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952);
   • (iii) employed for less than one hundred and fifty days in case of an assessee who is engaged in the business of manufacturing of apparel or footwear or leather products, except where such employee is employed for said number of days in the immediately succeeding tax year, he shall be deemed as an additional employee of the succeeding tax year and the provisions of this section shall apply accordingly;
   • (iv) employed for less than two hundred and forty days during the tax year in case of any other assessee, except where such employee is employed for said number of days in the immediately succeeding tax year, he shall be deemed as an additional employee of the succeeding tax year and the provisions of this section shall apply accordingly; and
   • (v) who does not participate in a recognised provident fund;
   • (c) "emoluments" means any sum paid or payable to an employee in lieu of his employment, by whatever name called, but does not include—
   • (i) employer contributions paid or payable to any pension or provident fund or any other fund for the benefit of the employee as mandated by any law; and
   • (ii) lump sum payments paid or payable to an employee at the time of termination of his service, superannuation, or voluntary retirement, such as gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension and the like.

1. (1) Where the following assessee has any income of the nature referred to in sub-section (3), there shall be allowed a deduction equal to 100% of such income:—
   • (a) a scheduled bank, or a bank incorporated under the laws of a country outside India, and having an Offshore Banking Unit in a Special Economic Zone; or
   • (b) a unit of an International Financial Services Centre.

13[(2) Irrespective of anything contained in section 80LA of the Income-tax Act, 1961 (43 of 1961), the deduction shall be allowed,—

1. (a) for an entity mentioned in sub-section (1)(a),—
   • (i) for twenty consecutive tax years beginning from the relevant tax year; and
   • (ii) in a case, where the tenth year, out of the period of ten consecutive years of deduction allowed under section 80LA(1) of the said Act has ended on the 31st March, 2025, for further ten consecutive years from the tax year beginning on the 1st April, 2026; and
   • (b) in the case of an entity mentioned in sub-section (1)(b), for twenty consecutive tax years out of twenty-five years beginning from the relevant tax year, at the option of an assessee.]
2. (3) The income referred to in sub-section (1) shall be the income from—
   • (a) an Offshore Banking Unit located in a Special Economic Zone; or
   • (b) the business activities referred to in section 6(1) of the Banking Regulation Act, 1949 (10 of 1949), with undertakings in a Special Economic Zone or entities that develop, develop and operate, or develop, operate and maintain Special Economic Zone; or
   • (c) the approved business activities of any Unit of an International Financial Services Centre set up in a Special Economic Zone; or
   • (d) transfer of an asset being, an aircraft or a ship, leased by a unit referred to in clause (c) if such unit commenced its business operations by 31st March, 2030.
3. (4) The deduction under this section shall be allowed only if the assessee submits along with the return of income—
   • (a) a report in the form as may be prescribed, from an accountant certifying the correctness of claim of deduction; and
   • (b) a copy of the—
   • (i) permission obtained under section 23(1)(a) of the Banking Regulation Act, 1949 (10 of 1949); or
   • (ii) permission or registration obtained under the International Financial Services Centres Authority Act, 2019 (50 of 2019).

14[(5) In respect of any Offshore Banking Unit or any other unit referred in sub-section (1), commencing operations on or after the 1st April, 2026, the deduction under sub-section (1) shall be available only if such unit is not formed by splitting up or reconstruction or reorganisation or transfer of a business already in existence in India.

1. (6) For the purposes of this section,—
   • (a) "relevant tax year" shall be,—
   • (i) in case of an entity referred to in sub-section (1)(a), the tax year in which permission under section 23(1)(a) of the Banking Regulation Act, 1949 (10 of 1949), or permission or registration under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or any other relevant law in force was obtained; or
   • (ii) in case of an entity referred to in sub-section (1)(b), the tax year in which permission under section 23(1)(a) of the Banking Regulation Act, 1949 (10 of 1949), or permission or registration under the Securities and Exchange Board of India Act, 1992 (15 of 1992), or permission or registration under the International Financial Services Centres Authority Act, 2019 (50 of 2019) was obtained;
   • (b) "Unit" shall have the same meaning as assigned to it in section 2(zc) of the Special Economic Zones Act, 2005 (28 of 2005);
   • (c) "aircraft" and "ship" shall have the meanings respectively assigned to them in Schedule VI (Note 3).]

1. (1) If the gross total income of a domestic company in any tax year includes any income by way of dividends from—
   • (a) any other domestic company; or
   • (b) a foreign company; or
   • (c) a business trust,

such domestic company shall be allowed a deduction of an amount equal to so much of the income by way of dividends received from the person mentioned in clause (a) or (b) or (c) as does not exceed the amount of dividend distributed by it at least one month before the due date for filing the return of income under section 263(1).

1. (2) Where any deduction, in respect of the amount of dividend distributed by the domestic company, has been allowed under sub-section (1) in any tax year, no deduction shall be allowed in respect of such amount in any other tax year.

1. (1) If the gross total income of an assessee, being a co-operative society, includes any income referred to in sub-section (2), the sums specified in the said sub-section shall, in accordance with and subject to the provisions of this section, be allowed as deduction in computing the total income of such assessee.
2. (2) The sums referred to in sub-section (1) shall be the following:—
   • (a) in the case of a co-operative society engaged in—
   • (i) carrying on the business of banking or providing credit facilities to its members; or
   • (ii) a cottage industry; or
   • (iii) the marketing of agricultural produce grown by its members; or
   • (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members; or
   • (v) the processing, without the aid of power, of the agricultural produce of its members; or
   • (vi) the collective disposal of the labour of its members; or
   • (vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members,

the whole of the amount of profits and gains of business attributable to any one or more of such activities;

1. (b) in the case of a co-operative society, being a primary society engaged in supplying milk, oilseeds, 15[cotton seed, cattle feed,] fruits, or vegetables raised or grown by its members to—
   • (i) a federal co-operative society, being a society, engaged in the business of supplying milk, oilseeds, 15[cotton seed, cattle feed,] fruits or vegetables; or
   • (ii) the Government or a local authority; or
   • (iii) a Government company, as defined in section 2(45) of the Companies Act, 2013 (18 of 2013), or a corporation established by or under a Central Act or State Act or Provincial Act, engaged in supplying milk, oilseeds, 15[cotton seed, cattle feed,] fruits or vegetables, as the case may be, to the public,

the whole of the amount of profits and gains of such business;

1. (c) in the case of a co-operative society engaged in activities other than those specified in clause (a) or (b), (either independently of, or in addition to, all or any of the activities so specified), that amount of profits and gains attributable to such activities as does not exceed—
   • (i) Rs. 100000, if the society is a consumers' co-operative society; and
   • (ii) Rs. 50000, in any other case;

in respect of any income derived by the co-operative society from its investments with any other co-operative society by way of—

1. (i) interest; or
   • (ii) dividends,

the whole of such income;]

1. (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing, or facilitating the marketing of commodities, the whole of such income;
   • (f) in the case of a co-operative society, not being—
   • (i) a housing society; or
   • (ii) an urban consumers' society (being a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area, or cantonment); or
   • (iii) a society carrying on transport business; or
   • (iv) a society engaged in performing manufacturing operations with the aid of power,

where the gross total income does not exceed Rs. 20000, the amount of income by way of interest on securities; any income from house property chargeable under section 20.

1. (3) In the case of a co-operative society as referred to in sub-section (2)(a)(vi) or (vii), provisions of sub-section (1) shall only apply when the rules and bye-laws of the society restrict the voting rights to the following classes of its members:—
   • (i) the individuals who contribute their labour or carry on fishing or allied activities;
   • (ii) the co-operative credit societies which provide financial assistance to the society;
   • (iii) the State Government.
2. (4) The deduction under sub-section (1) in relation to the sums specified in sub- section (2)(a) or (b) or (c) or sub-section (3), shall be allowed with reference to the income referred to in those sub-sections included in the gross total income after reducing the deduction under section 138, if the assessee is also entitled to such deduction.
3. (5) The provision of this section shall not apply to any co-operative bank which is not a primary agricultural credit society or a primary co-operative agricultural and rural development bank.

17[(6) For the purposes of this section,––

1. (a) "consumers' co-operative society" means a society for the benefit of the consumers;
   • (b) "primary agricultural credit society" has the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949); and
   • (c) "primary co-operative agricultural and rural development bank" means a society having an area of operation confined to a taluk, the principal object of which is to provide long-term credit for agricultural and rural development activities.]

18[Deduction in respect of income of federal co-operative.

1. (1) If the gross total income of an assessee being a federal co-operative, in any tax year, includes any income by way of dividends received from its investment with any company, a deduction shall be allowed from such income, to the extent of the amount which,—
   • (a) has arisen from such investment as recorded in its books of account on or before the 31st January, 2026; and
   • (b) has been distributed by it to its members at least one month before the due date for filing the return of income under section 263(1).
2. (2) The provisions of this section shall not apply to any tax year beginning on or after the 1st April, 2029.
3. (3) For the purposes of this section, "federal co-operative" means a "federal co-operative" as defined in section 3(k) of the Multi-State Co-operative Societies Act, 2002 (39 of 2002) and notified as such by the Central Government.]

1. (1) Where, in the case of an individual, being an author resident in India, the gross total income includes any income, derived by him in the exercise of his profession, on account of any lump sum consideration for the assignment or grant of any of his interests in the copyright of any book being a work of literary, artistic or scientific nature, or of royalty or copyright fees (whether receivable in lump sum or otherwise) in respect of such book, there shall, as per and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such income, computed in the manner specified in sub-section (2).
2. (2) The deduction under this section shall be equal to the whole of such income referred to in sub-section (1), or an amount of Rs. 300000, whichever is less.
3. (3) Where the income by way of such royalty or the copyright fee is not a lump sum consideration in lieu of all rights of the assessee in the book, so much of the income, before allowing expenses attributable to such income, as is in excess of 15% of the value of such books sold during the tax year shall be ignored for the purposes of deduction under this section.
4. (4) In respect of any income earned from any source outside India, so much of the income shall be taken into account for the purpose of this section as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within six months from the end of the tax year in which such income is earned or within such further period as the competent authority may allow in this behalf.
5. (5) Deduction under this section shall not be allowed unless the assessee furnishes a certificate in such form and manner, as may be prescribed, duly verified by any person responsible for making such payment to the assessee as referred to in sub-section (1), along with the return of income, setting forth such particulars as may be prescribed.
6. (6) Deduction under this section shall not be allowed in respect of any income earned from any source outside India, unless the assessee furnishes a certificate, in the prescribed form from the prescribed authority, along with the return of income in the prescribed manner.
7. (7) Where a deduction for any tax year has been claimed and allowed in respect of any income referred to in this section, no deduction in respect of such income shall be allowed under any other provision of this Act in any tax year.
8. (8) For the purposes of this section,—
   • (a) "author" includes a joint author;
   • (b) "books" shall not include brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, text-books for schools, tracts and other publications of similar nature, by whatever name called;
   • (c) "competent authority" means the Reserve Bank of India or such other authority as is authorised under any law in force for regulating payments and dealings in foreign exchange;
   • (d) "lump sum", in regard to royalties or copyright fees, includes an advance payment on account of such royalties or copyright fees which is not returnable.

1. (1) An assessee, being an individual, who is—
   • (a) resident in India;
   • (b) a patentee;
   • (c) in receipt of income by way of royalty in respect of a patent registered on or after the 1st April, 2003 under the Patents Act, 1970 (39 of 1970); and
   • (d) having gross total income for the tax year which includes royalty,

shall be allowed a deduction from such income computed in the manner specified in sub-sections (2) to (7).

1. (2) The deduction under this section shall be equal to the whole of such income referred to in sub-section (1) or Rs. 300000, whichever is less.
2. (3) Where a compulsory licence is granted in respect of any patent under the Patents Act, 1970 (39 of 1970), the income by way of royalty for the purpose of allowing deduction under this section shall not exceed the amount of royalty under the terms and conditions of a licence settled by the Controller under that Act.
3. (4) In respect of any income earned from any source outside India, so much of the income, shall be taken into account for the purpose of this section as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within six months from the end of the tax year in which such income is earned or within such further period as the competent authority referred to in section 151(8)(c) may allow in this behalf.
4. (5) No deduction under this section shall be allowed unless the assessee furnishes a certificate in the prescribed form, duly signed by the authority as may be prescribed, along with the return of income setting forth such particulars as may be prescribed.
5. (6) No deduction under this section shall be allowed in respect of any income earned from any source outside India, unless the assessee furnishes a certificate in such form, from the authority or authorities, as may be prescribed, along with the return of income.
6. (7) Where a deduction for any tax year has been claimed and allowed in respect of any income referred to in this section, no deduction in respect of such income shall be allowed under any other provision of this Act in any tax year.
7. (8) For the purposes of this section,—
   • (a) "Controller" means the authority as defined in section 2(1)(b) of the Patents Act, 1970 (39 of 1970);
   • (b) "lump sum" includes a non-returnable advance payment for royalties;
   • (c) "patent" means any patent granted, including a patent of addition, under the Patents Act, 1970 (39 of 1970);
   • (d) "patentee" means the true and first inventor recorded as the patentee under the Patents Act, 1970 (39 of 1970), including joint patentees recorded as such true and first inventors;
   • (e) "patent of addition" shall have the same meaning as assigned to it in section 2(1)(q) of the Patents Act, 1970 (39 of 1970);
   • (f) "patented article" and "patented process" shall have the same meanings as assigned to them in section 2(1)(o) of the Patents Act, 1970 (39 of 1970);
   • (g) "royalty" in respect of a patent, means consideration for—
   • (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent; or
   • (ii) the imparting of any information concerning the working of, or the use of, a patent; or
   • (iii) the use of any patent; or
   • (iv) the rendering of any services in connection with the activities referred to in sub-clauses (i) to (iii), but does not include any consideration,—
   • (A) which would be the income of the recipient chargeable under the head "Capital gains"; or
   • (B) for sale of product manufactured with the use of patented process or of the patented article for commercial use;
   • (h) "true and first inventor" shall have the same meaning as assigned to it in section 2(1)(y) of the Patents Act, 1970 (39 of 1970).

D.—Deductions in respect of other incomes

1. (1) An assessee who is—
   • (a) an individual, not being a senior citizen; or
   • (b) an individual, being a senior citizen; or
   • (c) a Hindu undivided family,

shall be allowed a deduction from the gross total income, subject to conditions specified in sub-section (2), where it includes income by way of interest on deposits with—

1. (i) a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act); or
   • (ii) a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or
   • (iii) a Post Office as defined in section 2(d) of the Post Office Act, 2023 (43 of 2023).
2. (2) The deduction under sub-section (1) shall be allowed for a tax year as follows:—
   • (a) in case of an assessee mentioned in sub-section (1)(a) or (c), the whole of the interest up to a maximum amount of Rs. 10000 on deposits in a savings account, excluding time deposits;
   • (b) in case of an assessee mentioned in sub-section (1)(b), the whole of the interest up to a maximum amount of Rs. 50000 on deposits in any account, including time deposits.
3. (3) Where the income referred to in sub-section (2)(a) is derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of such association or any individual of such body of individuals.
4. (4) Where the income referred to in sub-section (2)(b) is derived from any deposit held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of such association or any individual of such body of individuals.
5. (5) For the purposes of this section, the expression "time deposits" means the deposits repayable on expiry of fixed periods.

E.—Other deductions

1. (1) An individual, being resident in India, who is certified by a medical authority, at any time during the tax year, as a person with disability or person with severe disability, shall be allowed a deduction of Rs. 75000 or Rs. 125000, respectively, while computing his total income.
2. (2) The deduction under sub-section (1) shall be allowed only if all of the following conditions are fulfilled:—
   • (a) the individual furnishes a copy of the certificate issued by the medical authority;
   • (b) if the certificate specifies that the disability needs reassessment of its extent after a period stipulated in it, the deduction shall not be allowed for any tax year succeeding the tax year in which the certificate expires, unless a new disability certificate is obtained and furnished; and
   • (c) the certificate referred to in clauses (a) and (b) of this sub-section is furnished in the form and manner, as may be prescribed, along with the return of income under section 263 for the tax year in which the deduction is claimed.
3. (3) For the purposes of this section, "disability", "medical authority", "person with disability" or "person with severe disability" shall have the same meanings as provided in section 127.

CHAPTER IX

REBATES AND RELIEFS

A.—Rebates and reliefs

1. (1) In computing income-tax on the total income of an assessee with which he is chargeable for any tax year, there shall be allowed from income-tax (as computed before allowing the deductions under this Part), subject to the provisions of section 156, the deductions specified therein.
2. (2) The deduction under section 156, shall not, in any case, exceed income-tax (as computed before allowing the deductions under this Part) on the total income of the assessee with which he is chargeable for any tax year.

1. (1) An assessee, being an individual resident in India, shall be entitled to a deduction of 100% of income-tax payable or Rs. 12500, whichever is less, from the income-tax (computed before allowing the deduction under this section) chargeable on the total income for any tax year if such total income does not exceed Rs. 500000.
2. (2) Where the total income of a resident individual assessee for any tax year is chargeable to tax under section 202(1), then from income-tax (computed before allowing the deduction under this section) following deductions shall be allowed, if—
   • (a) the income does not exceed twelve lakh rupees, 100% of the income-tax payable or Rs. 60000, whichever is less;
   • (b) the total income exceeds twelve lakh rupees and the income-tax payable on such total income exceeds the amount by which the total income is in excess of twelve lakh rupees, an amount equal to the amount by which the income-tax payable on such total income is in excess of the amount by which the total income exceeds twelve lakh rupees.
3. (3) The deduction under sub-section (2), shall not exceed income-tax payable as per the rates provided in section 202(1).

1. (1) Where the total income of an assessee is assessed at a rate higher than the rate at which it would otherwise have been assessed, due to the following receipts,—
   • (a) a sum in the nature of arrear or advance salary; or
   • (b) salary for more than twelve months in any one tax year; or
   • (c) a payment in the nature of "profits in lieu of salary" under section 18(1); or
   • (d) arrears of "family pension" as defined in section 93(1)(d),

the Assessing Officer shall on an application made to him by the assessee in this behalf, grant such relief, as may be prescribed.

1. (2) No relief shall be granted on any income on which deduction has been claimed by the assessee in section 19(1)(Table: Sl. No. 12) for any amount mentioned therein, for such, or any other, tax year.

1. (1) The income accrued to a specified person in a specified account shall be taxed in such manner and in such tax year, as may be prescribed.
2. (2) For the purposes of this section,—
   • (a) "notified country" means a country as may be notified by the Central Government;
   • (b) "specified account" means an account maintained in a notified country by the specified person for his retirement benefits, the income from which is taxed by that notified country at the time of withdrawal or redemption and, not on accrual basis;
   • (c) "specified person" means a person resident in India having opened a specified account in a notified country while being non-resident in India and resident in that country.

B.—Double taxation relief

1. (1) The Central Government may enter into an agreement with the Government of—
   • (a) any other country; or
   • (b) any specified territory,

for the purposes mentioned in sub-section (3), and may, by notification, make such provisions as necessary for implementing the agreement.

1. (2) Any specified association in India may enter into an agreement with any specified association in the specified territory for the purposes mentioned in sub-section (3) and the Central Government may, by notification, make such provisions as may be necessary for adopting and implementing such agreement.
2. (3) The agreement mentioned in sub-section (1) or (2) may be entered for—
   • (a) the granting of relief in respect of—
   • (i) income on which income-tax under this Act and income-tax in that country or specified territory, as the case may be have been paid;
   • (ii) income-tax chargeable under this Act and under the corresponding law in force in that country or specified territory, as the case may be, to promote mutual economic relations, trade and investment; or
   • (b) the avoidance of double taxation of income under this Act and under the corresponding law in force in that country or specified territory, as the case may be, without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in the said agreement for the indirect benefit to residents of any other country or territory);
   • (c) exchange of information for—
   • (i) the prevention of evasion or avoidance of income-tax chargeable under this Act or under the corresponding law in force in that country or specified territory, as the case may be; or
   • (ii) investigation of cases of such evasion or avoidance; or
   • (d) recovery of income-tax under this Act and under the corresponding law in force in that country or specified territory, as the case may be.
3. (4) Where,—
   • (a) the Central Government has entered into an agreement with the Government of any country or specified territory, as the case may be, under sub-section (1); or
   • (b) a specified association in India has entered into an agreement with a specified association of any specified territory under sub-section (2) and such agreement has been notified under that sub-section,

for granting relief of tax, or avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee.

1. (5) The charge of tax,—
   • (a) in respect of a foreign company at a rate higher than the rate at which a domestic company is chargeable; or
   • (b) in respect of a company incorporated in the specified territory at a rate higher than the rate at which a domestic company is chargeable,

shall not be regarded as less favourable charge or levy of tax in respect of such foreign company or such company incorporated in the specified territory, as the case may be.

1. (6) Irrespective of anything contained in sub-section (4), the provisions of Chapter XI shall apply to the assessee, even if such provisions are not beneficial to him.
2. (7) Where, any—
   • (a) term used in an agreement entered into under sub-section (1) or (2), is defined under the said agreement, the said term shall have the same meaning as assigned to it in that agreement and where the term is not defined in that agreement, but defined in this Act, it shall have the same meaning as assigned to it in this Act and the explanation, if any, given to it by the Central Government; or
   • (b) term is used but not defined in this Act or in the agreement referred to in sub-section (1) or (2), it shall, unless the context otherwise requires, and is not inconsistent with the provisions of this Act or the said agreement, have the same meaning as assigned to it in the notification issued by the Central Government in this behalf, and the meaning assigned to such term shall be deemed to have effect from the date on which that agreement came into force; or
   • (c) term is used in any agreement entered into under sub-section (1) or (2), and not defined under the said agreement or this Act, or in any notification issued under clause (b), then, unless the context otherwise requires, it shall have the same meaning as assigned to it—
   • (i) in any Act of the Central Government related to taxes; and
   • (ii) in any other case, in any other law of the Central Government,

and shall be deemed to have effect from the date on which the said agreement came into force.

1. (8) An assessee, not being a resident, shall be entitled to claim any relief under an agreement mentioned in sub-section (1) or (2), only when—
   • (a) a certificate of his being a resident in any country or specified territory, is obtained by him from the Government of that country or Government of that specified territory, as the case may be; and
   • (b) he provides such other documents and information, as may be prescribed.
2. (9) For the purposes of this section,—
   • (a) "specified associations" means any institution, association or body, whether incorporated or not—
   • (A) functioning under any law for the time being in force in India or the laws of the specified territory; and
   • (B) which may be notified as such by the Central Government for the purposes of this section;
   • (b) "specified territory" means any area outside India which may be notified as such by the Central Government.

1. (1) If any person who is resident in India in any tax year proves that, in respect of his income which accrued or arose during that tax year outside India (and which is not deemed to accrue or arise in India), he has paid in any country with which there is no agreement under section 159 for the relief or avoidance of double taxation, income-tax, by deduction or otherwise, under the law in force in that country, he shall be entitled to the deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income,—
   • (a) at the Indian rate of tax or the rate of tax of the said country, whichever is the lower; or
   • (b) at the Indian rate of tax if both the rates are equal.
2. (2) If any non-resident person is assessed on his share in the income of a registered firm assessed as resident in India in any tax year and such share includes any income accruing or arising outside India during that tax year (and which is not deemed to accrue or arise in India) in a country with which there is no agreement under section 159 for the relief or avoidance of double taxation and he proves that he has paid income-tax by deduction or otherwise under the law in force in that country in respect of the income so included he shall be entitled to a deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income so included,—
   • (a) at the Indian rate of tax or the rate of tax of the said country, whichever is the lower; or
   • (b) at the Indian rate of tax if both the rates are equal.
3. (3) For the purposes of this section,—
   • (a) "income-tax" in relation to any country includes any excess profits tax or business profits tax charged on the profits by the Government of any part of that country or a local authority in that country;
   • (b) "Indian income-tax" means income-tax charged as per this Act;
   • (c) "Indian rate of tax" means the rate determined by dividing Indian income-tax after deduction of any relief due under the provisions of this Act but before deduction of any relief due under this Part, by the total income; and
   • (d) "rate of tax of the said country" means income-tax and super-tax actually paid in the said country as per the corresponding laws in force in the said country after deduction of all relief due, but before deduction of any relief due in the said country in respect of double taxation, divided by the whole amount of the income as assessed in the said country.

CHAPTER X

SPECIAL PROVISIONS RELATING TO AVOIDANCE OF TAX

1. (1) Any income arising from an international transaction or a specified domestic transaction shall be determined having regard to the arm's length price.
2. (2) Any allowance for any expense or interest arising from an international transaction or a specified domestic transaction shall also be determined having regard to the arm's length price.
3. (3) If in an international transaction or specified domestic transaction, two or more associated enterprises enter into a mutual agreement or arrangement for—
   • (a) allocation or apportionment of any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises; or
   • (b) any contribution to any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises,

the cost or expense allocated or apportioned to, or, contributed by, any such enterprise shall be determined having regard to the arm's length price of such benefit, service or facility.

1. (4) The provisions of this section shall not apply if the determination under sub-section (1) or (2) or (3) has the effect of reducing the income chargeable to tax or increasing the loss, computed on the basis of entries made in the books of account in respect of the tax year in which the international transaction or specified domestic transaction was entered.

1. (1) For the purposes of this Chapter, the expression "associated enterprise", in relation to another enterprise, means an enterprise—
   • (a) which participates, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise in the following manner,—
   • (i) one or more persons who participate, directly or indirectly, or through one or more intermediaries, in management or control or capital of one enterprise, also participate, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise; or
   • (ii) one enterprise holds, at any time during the tax year, directly or indirectly, shares carrying not less than 26% of the voting power in the other enterprise; or
   • (iii) any person or enterprise holds, at any time during the tax year, directly or indirectly, shares carrying not less than 26% of the voting power in each of such enterprises; or
   • (b) which has advanced a loan to the other enterprise and such loan constitutes not less than 51% of the book value of the total assets of the other enterprise; or
   • (c) which guarantees not less than 10% of the total borrowings of the other enterprise; or
   • (d) whose more than half of the board of directors or members of the governing board, or one or more executive directors or executive members of the governing board, are appointed by the other enterprise; or
   • (e) whose more than half of the directors or members of the governing board, or one or more of the executive directors or members of the governing board, are appointed by the same person or persons, who has or have done so for the other enterprise; or
   • (f) in case of which, manufacturing or processing of goods or articles or business carried out by such enterprise is wholly dependent on the use of know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, or any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process, of which the other enterprise is the owner or in respect of which the other enterprise has exclusive rights; or
   • (g) in case of which, 90% or more of the raw materials and consumables required for the manufacture or processing of goods or articles carried out by such enterprise, are supplied by the other enterprise, or by persons specified by the other enterprise, and the prices and other conditions relating to the supply are influenced by such other enterprise; or
   • (h) in case of which, the goods or articles manufactured or processed by such enterprise, are sold to the other enterprise or to persons specified by the other enterprise, and the prices and other conditions relating thereto are influenced by such other enterprise; or
   • (i) which is controlled by an individual, and the other enterprise is also controlled by such individual or his relative or jointly by such individual and relative of such individual; or
   • (j) which is controlled by a Hindu undivided family, and the other enterprise is controlled by a member of such Hindu undivided family or by a relative of a member of such Hindu undivided family or jointly by such member and his relative; or
   • (k) which is a firm, association of persons or body of individuals, and the other enterprise holds not less than 10% interest in such firm, association of persons or body of individuals; or
   • (l) which has any relationship of mutual interest with the other enterprise, as may be prescribed.
2. (2) In relation to a specified domestic transaction entered into by an assessee, associated enterprise shall also include—
   • (a) other units or undertakings or businesses of such assessee in respect of a transaction referred to in section 122 or 140(9);
   • (b) any other person referred to in section 140(13) or 205(4) in respect of a transaction referred to therein; and

other units, undertakings, enterprises or business of such assessee, or other person referred to in section 140(13) in respect of transactions referred to in Chapter VIII, to which the provisions of section 140(9) or (13) of this Act or section 80-IA(8) or (10) of the Income-tax Act, 1961 (43 of 1961) are applicable.]

1. (1) For the purposes of this Chapter, the expression "international transaction" means a transaction between two or more associated enterprises, one of which is necessarily a non-resident, and includes—
   • (a) the purchase, sale, transfer, lease or use of tangible property, including building, transportation vehicle, machinery, equipment, tools, plant, furniture, commodity or any other article, product or thing;
   • (b) the purchase, sale, transfer, lease or use of intangible property, including the transfer of ownership or the provision of use of rights regarding land use, copyrights, patents, trademarks, licences, franchises, customer list, marketing channel, brand, commercial secret, know-how, industrial property right, exterior design or practical and new design or any other business or commercial rights of similar nature;
   • (c) capital financing, lending or borrowing of money, including,—
   • (i) any type of long-term or short-term borrowing, lending or guarantee; or
   • (ii) purchase or sale of marketable securities; or
   • (iii) any type of advance, payments or deferred payment or receivable or any other debt arising during the course of business;
   • (d) provision of services, including provision of market research, market development, marketing management, administration, technical service, repairs, design, consultation, agency, scientific research, legal or accounting service;
   • (e) a transaction of business restructuring or reorganisation, entered into by an enterprise with an associated enterprise, irrespective of the fact that it has any bearing on the profit, income, losses or assets of such enterprises at the time of the transaction or at any future date;
   • (f) a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises;
   • (g) any other transaction having a bearing on the profits, income, losses or assets of such enterprises.
2. (2) A transaction entered into by an enterprise with a person other than an associated enterprise ("other person") shall, for sub-section (1), be deemed to be an international transaction entered into between two associated enterprises, if—
   • (a) there exists a prior agreement in relation to the relevant transaction between such other person and the associated enterprise; or
   • (b) the terms of the relevant transaction are determined, in substance, between such other person and the associated enterprise,

and the enterprise or the associated enterprise or both of them are non-residents, irrespective of whether the other person is a non-resident or not.

1. (3) The expression "intangible property" shall include:—
   • (a) marketing related intangible assets, such as, trademarks, trade names, brand names, logos;
   • (b) technology related intangible assets, such as, process patents, patent applications, technical documentation such as laboratory notebooks, technical know-how;
   • (c) artistic related intangible assets, such as, literary works and copyrights, musical compositions, copyrights, maps, engravings;
   • (d) data processing related intangible assets, such as, proprietary computer software, software copyrights, automated databases, and integrated circuit masks and masters;
   • (e) engineering related intangible assets, such as, industrial design, product patents, trade secrets, engineering drawing and schematics, blueprints, proprietary documentation;
   • (f) customer related intangible assets, such as, customer lists, customer contracts, customer relationship, open purchase orders;
   • (g) contract related intangible assets, such as, favourable supplier, contracts, licence agreements, franchise agreements, non-compete agreements;
   • (h) human capital related intangible assets, such as, trained and organised work force, employment agreements, union contracts;
   • (i) location related intangible assets, such as, leasehold interest, mineral exploitation rights, easements, air rights, water rights;
   • (j) goodwill related intangible assets, such as, institutional goodwill, professional practice goodwill, personal goodwill of professional, celebrity goodwill, general business going concern value;
   • (k) methods, programmes, systems, procedures, campaigns, surveys, studies, forecasts, estimates, customer lists, or technical data;
   • (l) any other similar item that derives its value from its intellectual content rather than its physical attributes.

For the purposes of this Chapter, the expression "specified domestic transaction" in case of an assessee means any of the following transactions (not being an international transaction),—

1. (a) any transaction referred to in section 122;
   • (b) any transfer of goods or services referred to in section 140(9);
   • (c) any business transacted between the assessee and other person as referred to in section 140(13);
   • (d) any transaction, referred to in any other section under Chapter VIII 20[***], to which provisions of section 140(9) or (13) of this Act or section 80-IA(8) or (10) of the Income-tax Act, 1961 (43 of 1961) are applicable;
   • (e) any business transacted between the persons referred to in section 205(4);
   • (f) any other transaction as may be prescribed,

and where the aggregate of such transactions entered into by the assessee in a tax year exceeds a sum of twenty crore rupees.

1. (1) The arm's length price in relation to an international transaction or specified domestic transaction shall be determined by any of the following methods, being the most appropriate method—
   • (a) comparable uncontrolled price method;
   • (b) resale price method;
   • (c) cost plus method;
   • (d) profit split method;
   • (e) transactional net margin method;
   • (f) such other method as may be prescribed by the Board.
2. (2) The most appropriate method referred to in sub-section (1) shall be,—
   • (a) selected having regard to the nature of transaction or class of transaction or class of associated enterprise or functions performed by such enterprises or such other relevant factors as the Board may prescribe;
   • (b) applied for determination of arm's length price in such manner as may be prescribed.
3. (3) The arm's length price shall be—
   • (a) in case, only one price is determined by the most appropriate method,—
   • (i) the price determined by that method; or
   • (ii) the price at which the international transaction or specified domestic transaction has actually been undertaken, if the variation between the arm's length price so determined and price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed such percentage not exceeding 3% of the latter, notified by the Central Government in this behalf; or
   • (b) in case, more than one price is determined by the most appropriate method, the price determined in such manner as may be prescribed.
4. (4) The Assessing Officer, during the course of any proceeding for the assessment of income, may proceed to determine the arm's length price in relation to an international transaction or specified domestic transaction as per sub-sections (1), (2) and (3) if, on the basis of material or information or document in his possession, he is of the opinion that—
   • (a) the price charged or paid in an international transaction or specified domestic transaction has not been determined as per sub-sections (1), (2) and (3); or
   • (b) any information and document relating to an international transaction or specified domestic transaction has not been kept and maintained by the assessee as per section 171(1); or
   • (c) the information or data used in determination of the arm's length price by the assessee is not reliable or correct; or
   • (d) the assessee has failed to furnish, within the specified time, any information or document which he was required to furnish by a notice issued under section 171(2) and (3).
5. (5) The Assessing Officer, before determining the arm's length price under sub-section (4), shall issue a notice calling upon the assessee to show cause, on the date and time to be specified in the notice, why the arm's length price should not be determined on the basis of material or information or document in the possession of the Assessing Officer.
6. (6) The Assessing Officer, on determination of arm's length price under sub-section (4), may compute the total income of the assessee having regard to the arm's length price so determined.
7. (7) No deduction shall be allowed 21[***] under Chapter VIII in respect of income by which the total income of the assessee is enhanced after computation of income under sub-section (6).
8. (8) When the total income of an associated enterprise is computed under sub-section (6) on determination of the arm's length price paid to another associated enterprise from which tax has been deducted or was deductible under the provisions of Chapter XIX-B, the income of the other associated enterprise shall not be recomputed by reason of such determination of arm's length price in the case of the first mentioned enterprise.

1. (1) Where,—
   • (a) the assessee has entered into an international transaction or specified domestic transaction in any tax year; and
   • (b) the Assessing Officer considers it necessary or expedient so to do,

he may refer the determination of the arm's length price in relation to such transaction to the Transfer Pricing Officer, with the previous approval of the Principal Commissioner or Commissioner.

1. (2) No reference under sub-section (1) for computation of the arm's length price in relation to an international transaction or a specified domestic transaction shall be made, if the Transfer Pricing Officer has declared that option exercised by the assessee in sub-section (9) in relation to such transaction is valid for such tax year.
2. (3) If any reference for an international transaction or a specified domestic transaction under sub-section (1), in respect of a tax year, for which the option is declared valid under sub-section (9) is made before or after such declaration by the Transfer Pricing Officer, the provisions of sub-section (1) shall have the effect as if no reference is made for such transaction.
3. (4) Where a reference is made under sub-section (1), the Transfer Pricing Officer shall serve a notice on the assessee requiring him to produce or cause to be produced on a date specified therein, any evidence on which the assessee may rely in support of the determination made by him of the arm's length price in relation to such transaction.
4. (5) Where,—
   • (a) any international transaction or specified domestic transaction, other than an international transaction or a specified domestic transaction referred under sub-section (1); or
   • (b) any international transaction or a specified domestic transaction that the assessee has not included in the report under section 172,

comes to the notice of the Transfer Pricing Officer during the course of the proceedings before him, the provisions of this Chapter shall apply as if such transaction is a transaction referred to him under sub-section (1).

1. (6) On the date specified in the notice under sub-section (4), or as soon thereafter as may be,—
   • (a) after hearing such evidence as the assessee may produce, including any information or documents referred to in section 171(2);
   • (b) after considering such evidence as the Transfer Pricing Officer may require on any specified points; and
   • (c) after taking into account all relevant materials which he has gathered,

the Transfer Pricing Officer shall, by order in writing, determine the arm's length price in relation to the international transaction or specified domestic transaction as per section 165(4) and send a copy of his order to the Assessing Officer and to the assessee.

22[(7) Where a reference was made under sub-section (1), an order under sub-section (6) may be made at any time before one month prior to the month in which period of limitation referred to in section 286 or 296, for making the order of assessment or reassessment or recomputation or fresh assessment, expires and accordingly, where such period expires on—

1. (a) the 31st March of any year, the order under sub-section (6) shall be made on or before the 31st January of that year;
   • (b) the 31st December of any year, the order under sub-section (6) shall be made on or before the 31st October of that year.]
2. (8) If the period of limitation available to the Transfer Pricing Officer for making an order under sub-section (6) is less than sixty days in the circumstances referred to in section 286(3)(b) or (h), such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to have been extended accordingly.
3. (9) The arm's length price, being determined in relation to the international transaction or the specified domestic transaction under sub-section (6) for any tax year shall apply to similar international transaction or specified domestic transaction for the two consecutive tax years immediately following such tax year, on fulfilment of the following conditions namely:—
   • (a) the assessee exercises an option or options to the above effect for the said two consecutive tax years;
   • (b) such option or options are exercised in such form, manner and within such period as may be prescribed; and
   • (c) the Transfer Pricing Officer shall, within one month from the end of the month in which such option or options are exercised, by an order in writing, declare that such option or options are valid subject to the conditions, as may be prescribed.
4. (10) The provisions of sub-section (9) shall not apply to any proceedings under Chapter XVI-B.
5. (11) On receipt of the order under sub-section (6), the Assessing Officer shall compute the total income of the assessee under section 165(6) in conformity with the arm's length price as so determined by the Transfer Pricing Officer.
6. (12) Irrespective of anything contained in sub-section (11), where the Transfer Pricing Officer has declared an option exercised by the assessee as valid option under sub-section (9), he shall examine and determine the arm's length price in relation to such similar transaction for two consecutive tax years immediately following such tax year, in the order referred to in sub-section (6) and on receipt of such order, the Assessing Officer shall proceed to recompute the total income of the assessee for the said two consecutive tax years as per the provisions of section 288(2).
7. (13) For rectifying any mistake apparent from the record, the Transfer Pricing Officer,—
   • (a) may amend any order passed by him under sub-section (6), and the provisions of section 287 shall, so far as may be, apply accordingly; and
   • (b) shall send a copy of such order to the Assessing Officer who shall thereafter amend the order of assessment in conformity with such order of the Transfer Pricing Officer.
8. (14) The Transfer Pricing Officer may exercise all or any of the powers specified in section 246(1)(a) to (d) or 252(1)(a) or 253 for the purposes of determining the arm's length price under this section.
9. (15) If any difficulty arises in giving effect to the provisions of sub-sections (9) and (12), the Board may, with the prior approval of the Central Government, issue guidelines for the purpose of removing such difficulty.
10. (16) Every guideline issued by the Board under sub-section (15) shall be laid 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 such guideline or both Houses agree that the guideline, should not be issued, the guideline 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 guideline.
11. (17) For the purposes of this section, "Transfer Pricing Officer" means a Joint Commissioner or Deputy Commissioner or Assistant Commissioner authorised by the Board to perform all or any of the functions of an Assessing Officer specified in sections 165 and 171 in respect of any person or class of persons.

1. (1) The determination of—
   • (a) income referred to in section 9(2); or
   • (b) arm's length price under section 165 or 166,

shall be subject to safe harbour rules.

1. (2) For the purposes of sub-section (1), the Board may make rules for safe harbour.
2. (3) For the purposes of this section, "safe harbour" means circumstances in which the income-tax authorities shall accept,—
   • (a) the transfer price; or
   • (b) the income, deemed to accrue or arise under section 9(2),

declared by the assessee.

1. (1) The Board, with the approval of the Central Government, may enter into an advance pricing agreement with any person, determining the—
   • (a) arm's length price or specifying the manner in which the arm's length price is to be determined, in relation to an international transaction to be entered into by that person;
   • (b) income referred to in section 9(2), or specifying the manner in which the said income is to be determined, as is reasonably attributable to the operations carried out in India by or on behalf of that person, being a non-resident.
2. (2) The manner of determination of the arm's length price referred to in sub-section (1)(a) or the income referred to in sub-section (1)(b) may include, respectively,—
   • (a) the methods referred to in section 165(1); or
   • (b) the methods provided by rules made under this Act,

with such adjustments or variations, as may be necessary or expedient so to do.

1. (3) Irrespective of anything contained in section 165 or 166 or the methods provided by rules made under this Act,—
   • (a) the arm's length price of any international transaction; or
   • (b) the income referred to in sub-section (1)(b),

in respect of which the advance pricing agreement has been entered into, shall be determined as per the advance pricing agreement so entered.

1. (4) The agreement referred to in sub-section (1) shall be valid for such period not exceeding five consecutive tax years as specified in the agreement.
2. (5) The advance pricing agreement entered into shall be binding—
   • (a) on the person in whose case, and in respect of the transaction in relation to which, the agreement has been entered into; and
   • (b) on the Principal Commissioner or Commissioner, and the income-tax authorities subordinate to him, in respect of the said person and the said transaction.
3. (6) The agreement referred to in sub-section (1) shall not be binding if there is a change in law or facts having bearing on the agreement so entered.
4. (7) The Board may, with the approval of the Central Government, by an order, declare an agreement to be void ab initio, if it finds that the agreement has been obtained by the person by fraud or misrepresentation of facts.
5. (8) Upon declaring the agreement void ab initio,—
   • (a) all the provisions of this Act shall apply to the person as if such agreement had never been entered into; and
   • (b) irrespective of anything contained in the Act, the period beginning with the date of such agreement and ending on the date of order under sub-section (7) shall be excluded for the purpose of computing any period of limitation under this Act and if immediately after the exclusion of the aforesaid period, the period of limitation, referred to in any provision of this Act, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.
6. (9) The agreement referred to in sub-section (1), may, subject to such conditions, procedure and manner as may be prescribed, also provide for determining the—
   • (a) arm's length price or specify the manner in which the arm's length price shall be determined in relation to the international transaction entered into by the person;
   • (b) income referred to in section 9(2), or specifying the manner in which the said income is to be determined, as is reasonably attributable to the operations, transactions and activities carried out in India by or on behalf of that non-resident person,

during any period not exceeding four tax years preceding the first of the tax years referred to in sub-section (4) and the arm's length price of such international transaction or the income of such person shall be determined in accordance with the said agreement.

1. (10) Where an application is made by a person for entering into an agreement referred to in sub-section (1), the proceedings shall be deemed to be pending in the case of the person for the purposes of this Act till such agreement is entered into, or such proceedings are closed as may be prescribed.
2. (11) For the purposes of this section, the Board may prescribe a scheme specifying therein the manner, form, procedure and any other matter in respect of the advance pricing agreement.

23[(1) Irrespective of anything to the contrary contained in section 263, where an income is modified as a result of advance pricing agreement entered into with any person then, such person shall, or any other person being an associated enterprise may,—

1. (a) furnish a return or a modified return in accordance with and limited to the agreement; and
   • (b) the time period for furnishing such return or modified return shall be three months from the end of the month in which the agreement was entered into,

where the tax years relevant for such return or modified return shall be the years covered by such agreement.]

1. (2) Except as provided in this section, all other provisions of this Act shall apply accordingly as if the modified return is a return furnished under section 263.
2. (3) Where a modified return is furnished under sub-section (1), and assessment or reassessment proceedings, in respect of a tax year to which the agreement applies, were initiated before the filing of such return then,—
   • (a) if such proceedings have been completed before the filing of such return, the Assessing Officer shall pass an order modifying the total income of the relevant tax year; or
   • (b) if such proceedings are pending on the date of filing of modified return, the Assessing Officer shall proceed to complete them,

as per the agreement after taking into consideration the modified return so furnished.

1. (4) Irrespective of anything contained in section 275 or 286 or 296,—
   • (a) the order in respect of a case falling under sub-section (3)(a) shall be passed within one year from the end of the financial year in which the modified return under sub-section (1) is furnished;
   • (b) in respect of a case falling under sub-section (3)(b), the period of limitation as provided in section 275 or 286 or section 296 for completion of pending assessment or reassessment proceedings shall be extended by twelve months.
2. (5) For the purposes of this section,—
   • (a) "agreement" means an agreement referred to in section 168(1);
   • (b) the assessment or reassessment proceedings for a tax year shall be deemed to have been completed where—
   • (i) an assessment or reassessment order has been passed; or
   • (ii) no notice has been issued under section 270(8) till the expiry of the limitation period provided under the said section.

1. (1) An assessee shall make a secondary adjustment in every case where primary adjustment of one crore rupees or more to the transfer price—
   • (a) has been made by the assessee on his own in his return of income;
   • (b) made by the Assessing Officer has been accepted by him;
   • (c) is determined by an advance pricing agreement entered into by him under section 168;
   • (d) is made as per the safe harbour rules made under section 167; or
   • (e) is arising as a result of resolution of an assessment by way of the mutual agreement procedure under an agreement entered into under section 159 for avoidance of double taxation.
2. (2) The excess money or part thereof available with its associated enterprise shall be deemed to be an advance made by the assessee to such associated enterprise if—
   • (a) as a result of primary adjustment to the transfer price, there is an increase in the total income or reduction in the loss, as the case may be, of the assessee; and
   • (b) such excess money or part thereof is not repatriated to India within the time as may be prescribed.
3. (3) The excess money or part thereof referred to in sub-section (2) may be repatriated from any of the associated enterprises of the assessee which is not a resident in India.
4. (4) The interest on advance as referred to in sub-section (2) shall be computed in such manner as may be prescribed.
5. (5) Without prejudice to the provisions of sub-section (2), where the excess money or part thereof has not been repatriated within the prescribed time, the assessee may, at his option, pay additional income-tax at the rate of 18% on such excess money or part thereof, as the case may be.
6. (6) The tax on the excess money or part thereof so paid by the assessee under sub-section (5) shall be treated as the final payment of tax in respect of the excess money or part thereof not repatriated and no further credit thereof shall be claimed by the assessee or by any other person in respect of tax so paid.
7. (7) Deduction under any other provision of this Act shall not be allowed to the assessee in respect of the amount on which tax has been paid as per sub-section (5).
8. (8) In a case where the additional income-tax referred to in sub-section (5) is paid by the assessee, he shall not be required to make secondary adjustment under sub-section (1) and compute interest under sub-section (4) from the date of payment of such tax.
9. (9) For the purposes of this section,—
   • (a) "arm's length price" shall have the meaning assigned to it in section 173(a);
   • (b) "excess money" means the difference between the arm's length price determined in primary adjustment and the price at which the inter- national transaction has actually been undertaken;
   • (c) "primary adjustment" to a transfer price, means the determination of transfer price as per the arm's length principle resulting in an increase in the total income or reduction in the loss, as the case may be, of the assessee;
   • (d) "secondary adjustment" means an adjustment in the books of account of the assessee and its associated enterprise to reflect that the actual allocation of profits between the assessee and its associated enterprise are consistent with the transfer price determined as a result of primary adjustment, thereby removing the imbalance between cash account and actual profit of the assessee.

1. (1) Every person, who—
   • (a) has entered into an international transaction or specified domestic transaction; or
   • (b) is a constituent entity of an international group,

shall keep and maintain such information and document in respect thereof and for such period and in such manner, as may be prescribed.

1. (2) The Assessing Officer or the Commissioner (Appeals) may, during any proceeding under this Act, require any person referred to in sub-section (1)(a) to furnish any information or document referred therein within ten days from the date of receipt of a notice issued in this regard.
2. (3) For the purposes of sub-section (2), the Assessing Officer or the Commissioner (Appeals) may, on an application made by such person, extend the period of ten days by a further period not exceeding thirty days.
3. (4) Every person referred to in sub-section (1)(b) shall furnish the information and document referred to in sub-section (1) to the authority prescribed under section 511(1), in such manner, on or before such date, as may be prescribed.
4. (5) For the purposes of this section,—
   • (a) "constituent entity" shall have the meaning assigned to it in section 511(10)(d);
   • (b) "international group" shall have the meaning assigned to it in section 511(10)(g).

Every person who has entered into an international transaction or specified domestic transaction during a tax year shall obtain a report from an accountant and furnish such report on or before the specified date in the prescribed form duly signed and verified in the manner as may be prescribed by such accountant and setting forth such particulars as may be prescribed.

For the purposes of this section and sections 161, 162, 163, 165, 171 and 172, unless the context otherwise requires,—

1. (a) "arm's length price" means a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions;
   • (b) "enterprise" means a person (including a permanent establishment of such person) who is, or has been, or is proposed to be, engaged in any activity relating to—
   • (i) the production, storage, supply, distribution, acquisition or control of articles or goods; or
   • (ii) know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature; or
   • (iii) any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process of which the other enterprise is the owner or in respect of which the other enterprise has exclusive rights; or
   • (iv) provision of services of any kind; or
   • (v) carrying out any work in pursuance of a contract; or
   • (vi) investment or providing loan; or
   • (vii) business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate,

whether such activity or business is carried on, directly or through one or more of its units or divisions or subsidiaries, or whether such unit or division or subsidiary is located at the same place where the enterprise is located or at a different place or places;

1. (c) "permanent establishment", referred to in clause (b), includes a fixed place of business through which the business of the enterprise is wholly or partly carried on;
   • (d) "specified date" means the date one month before the due date for furnishing the return of income under section 263(1) for the relevant tax year;
   • (e) "transaction" includes an arrangement, understanding or action in concert,—
   • (i) whether or not such arrangement, understanding or action is formal or in writing; or
   • (ii) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceeding.

1. (1) Where there is a transfer of assets before and after the commencement of this Act, and by virtue or in consequence of it,—
   • (a) either alone; or
   • (b) in conjunction with associated operations,

any income becomes payable to a non-resident, the provisions of this section shall apply.

1. (2) If any person ("first mentioned person"), by means of any transfer referred to in sub-section (1), either alone or in conjunction with associated operations, acquires any rights,—
   • (a) by virtue of which he has, within the meaning of this section, power to enjoy, whether forthwith or in the future, any income of a non-resident; and
   • (b) such income would have been chargeable to income-tax if it were such first mentioned person's income,

then, that income shall, whether or not it would have been chargeable to income-tax under any other provisions of this Act, be deemed to be the income of such first mentioned person for all the purposes of this Act.

1. (3) If any such first mentioned person receives or is entitled to receive any capital sum,—
   • (a) the payment of which is in any way connected with the transfer or any associated operations; and
   • (b) whether before or after any such transfer,

then any income, which has become the income of a non-resident by virtue or in consequence of such transfer, either alone or in conjunction with associated operations, shall be deemed to be the income of such first mentioned person for all the purposes of this Act, whether or not it would have been chargeable to income-tax under any other provisions of this Act.

1. (4) Where any person has been charged to income-tax on any income deemed to be his under the provisions of this section and that income is subsequently received by him, whether as income or in any other form, it shall not again be deemed to form part of his income for the purposes of this Act.
2. (5) The provisions of this section shall not apply if the first mentioned person in sub-section (2) or (3) shows to the satisfaction of the Assessing Officer that—
   • (a) neither the transfer nor any associated operation had for its purpose or for one of its purposes the avoidance of liability to taxation; or
   • (b) the transfer and all associated operations were bona fide commercial transactions and were not designed for the purpose of avoiding liability to taxation.
3. (6) In this section,—
   • (a) references to assets representing any assets, income or accumulations of income include references to shares in or obligation of any company to which, or obligation of any other person to whom, those assets, that income or those accumulations are or have been transferred;
   • (b) any body corporate incorporated outside India shall be treated as if it were a non-resident;
   • (c) a person shall be deemed to have power to enjoy the income of a non-resident if—
   • (i) the income is in fact so dealt with by any person as to be calculated at some point of time and, whether in the form of income or not, to enure for the benefit of the first mentioned person in sub-section (2) or (3); or
   • (ii) the receipt or accrual of the income operates to increase the value to such first mentioned person of any assets held by him or for his benefit; or
   • (iii) such first mentioned person receives or is entitled to receive at any time any benefit provided or to be provided out of that income or out of moneys which are or shall be available for the purpose by reason of the effect or successive effects of the associated operations on that income and assets which represent that income; or
   • (iv) such first mentioned person has power by means of the exercise of any power of appointment or power of revocation or otherwise to obtain for himself, whether with or without the consent of any other person, the beneficial enjoyment of the income; or
   • (v) such first mentioned person is able, in any manner whatsoever and whether directly or indirectly, to control the application of the income;
   • (d) in determining whether a person has power to enjoy income, regard shall be had to the substantial result and effect of the transfer and any associated operations, and all benefits which may at any time accrue to such person as a result of the transfer and any associated operations shall be taken into account irrespective of the nature or form of the benefits.
4. (7) For the purposes of this section,—
   • (a) "assets" includes property or rights of any kind and "transfer" in relation to rights includes the creation of those rights;
   • (b) "associated operation" in relation to any transfer, means an operation of any kind effected by any person in relation to—
   • (i) any of the assets transferred; or
   • (ii) any assets representing, whether directly or indirectly, any of the assets transferred; or
   • (iii) the income arising from any such assets; or
   • (iv) any assets representing, whether directly or indirectly, the accumulations of income arising from any such assets;
   • (c) "benefit" includes a payment of any kind;
   • (d) "capital sum" means—
   • (i) any sum paid or payable by way of a loan or repayment of a loan; and
   • (ii) any other sum paid or payable otherwise than as income, being a sum, which is not paid or payable for full consideration in money or money's worth.

1. (1) Where the owner of any securities (herein referred to as "the owner") sells or transfers such securities and buys back or reacquires them or buys or acquires any similar securities, any interest that becomes payable in respect of such securities,—
   • (a) is receivable by a person other than the owner, shall be deemed, for all purposes of this Act, to be the income of the owner; and
   • (b) shall not be the income of the other person,

irrespective of whether it would have been chargeable to income-tax under any other provision of this Act.

1. (2) Where similar securities as referred to in sub-section (1) are bought or acquired, the owner shall not be under greater liability to income-tax than he would if the original securities had been bought back or reacquired.
2. (3) If any person has had a beneficial interest in any securities at any time during a tax year, and the result of any transaction relating to such securities or the income from it is that, in respect of such securities within such year,—
   • (a) either no income is received by him; or
   • (b) the income received by him is less than what would have been if the income from such securities had accrued from day to day and been apportioned accordingly,

the income from such securities for such year shall be deemed to be the income of such person.

1. (4) The provisions of sub-sections (1), (2) and (3) shall not apply if the owner, or the person who has had a beneficial interest in the securities, proves to the satisfaction of the Assessing Officer that—
   • (a) there has been no avoidance of income-tax; or
   • (b) the avoidance of income-tax was exceptional and not systematic and also that in any of the three preceding years any avoidance of income-tax by a transaction of the nature referred to in sub-section (1), (2) or (3) was not there in his case.
2. (5) If a person carrying on a business which consists wholly or partly in dealing in securities, buys or acquires any securities and sells back or retransfers the securities, then, if the result of the transaction is that interest in respect of the securities receivable by him is not deemed to be his income by reason of the provisions contained in sub-section (1), no account shall be taken of the transaction in computing the profits arising from or loss sustained in the business for any of the purposes of this Act.
3. (6) The provisions of sub-section (5) shall have effect, subject to any necessary modifications, as if references to selling back or retransferring the securities included references to selling or transferring similar securities.
4. (7) The Assessing Officer may, by notice in writing, require any person to provide within specified time, which shall not be less than twenty-eight days, details in respect of all securities of which such person was the owner or in which he had a beneficial interest at any time during the period specified in the notice, for the purposes of this section and for the purpose of discovering whether income-tax has been borne in respect of the interest on all those securities.
5. (8) If—
   • (a) any person buys or acquires any securities or unit within three months before the record date;
   • (b) such person sells or transfers—
   • (i) such securities within three months after such date; or
   • (ii) such unit within nine months after such date;
   • (c) the dividend or income on such securities or unit received or receivable by such person is exempt,

then, the loss, if any, arising to him on account of such purchase and sale of securities or unit, to the extent such loss does not exceed the dividend or income received or receivable on such securities or unit, shall be ignored for the purposes of computing his income chargeable to tax.

1. (9) If—
   • (a) any person buys or acquires any securities or unit within three months before the record date;
   • (b) such person is allotted additional securities or unit without any payment on the basis of holding of such securities or unit on such date;
   • (c) such person sells or transfers all or any of the securities or unit referred to in clause (a) within nine months after such date, while continuing to hold all or any of the additional securities or unit referred to in clause (b),

then, the loss, if any, arising to him on account of such purchase and sale of all or any of such securities or unit shall be ignored for the purposes of computing his income chargeable to tax.

1. (10) Irrespective of any other provision of this Act, loss ignored as per sub-section (9) shall be deemed to be the cost of purchase or acquisition of such additional securities or unit referred to in sub-section (9)(b) as are held by him on the date of such sale or transfer.
2. (11) For the purposes of this section,—
   • (a) "interest" includes a dividend;
   • (b) "record date" means such date as may be fixed by—
   • (i) a company;
   • (ii) a Mutual Fund or the Administrator of the specified undertaking or the specified company, where—
   • (A) "Administrator" means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);
   • (B) "specified company" means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002); or
   • (iii) a business trust defined in section 2(21); or
   • (iv) an Alternative Investment Fund defined in regulation 2(1)(b) of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992),

for the purposes of entitlement of the holder of the securities or units to receive dividend, income, or additional securities or units without any consideration;

1. (c) "securities" includes stocks and shares;
   • (d) securities shall be deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, irrespective of any difference in the total nominal amounts of the respective securities or in the form in which they are held or in the manner in which they can be transferred;
   • (e) "unit" shall mean,—
   • (i) a unit of a business trust defined in section 2(21);
   • (ii) a unit defined in section 208(3)(c); or
   • (iii) beneficial interest of an investor in an Alternative Investment Fund, referred to in clause (b)(iv), and shall include shares or partnership interests.

1. (1) The Central Government may, by notification specify any country or territory outside India, as a notified jurisdictional area in relation to transactions entered into by any assessee, having regard to the lack of effective exchange of information with such jurisdiction.
2. (2) Irrespective of anything contrary in this Act, if an assessee enters into a transaction where one of the parties to the transaction is a person located in a notified jurisdictional area, then,—
   • (a) all the parties to the transaction shall be deemed to be associated enterprises within the meaning of section 162;
   • (b) any transaction of the nature described in section 163(1) and (2) shall be deemed to be an international transaction within the meaning of section 163,

and the provisions of sections 161, 162, 163, 165 [except the benefit of variation specified in sections 165(3)(a)(ii)], 166, 167, 171, 172 and 173 shall apply accordingly.

1. (3) Irrespective of anything to the contrary in this Act, no deduction shall be allowed—
   • (a) for any payment made to any financial institution located in a notified jurisdictional area, unless the assessee furnishes an authorisation in the prescribed form authorising the Board or any other income-tax authority acting on its behalf to seek relevant information from the said financial institution on behalf of such assessee; and
   • (b) for any other expenditure or allowance (including depreciation) arising from the transaction with a person located in a notified jurisdictional area, unless the assessee maintains such other documents and furnishes such information as may be prescribed, in this behalf.
2. (4) Irrespective of anything to the contrary in this Act, if, in any tax year, the assessee has received or credited any sum from any person located in a notified jurisdictional area and—
   • (a) the assessee does not provide any explanation about the source of the said sum in the hands of such person or in the hands of the beneficial owner (if such person is not the beneficial owner of the said sum); or
   • (b) the explanation provided by the assessee, in the opinion of the Assessing Officer, is not satisfactory,

then such sum shall be deemed to be the income of the assessee for that tax year.

1. (5) Irrespective of anything to the contrary in this Act, if any person located in a notified jurisdictional area is entitled to receive any sum or income or amount on which tax is deductible under Chapter XIX-B, the tax shall be deducted at the highest of the following rates—
   • (a) at the rate or rates in force;
   • (b) at the rate specified in the relevant provisions of this Act;
   • (c) at the rate of 30%.
2. (6) For the purposes of this section,—
   • (a) "person located in a notified jurisdictional area" shall include,—
   • (i) a person who is resident of the notified jurisdictional area;
   • (ii) a person, not being an individual, which is established in the notified jurisdictional area; or
   • (iii) a permanent establishment of a person not falling in sub-clause (i) or (ii), in the notified jurisdictional area;
   • (b) "permanent establishment" shall have the meaning assigned to it in section 173(c);
   • (c) "transaction" shall have meaning assigned to it in section 173(e).

1. (1) Irrespective of anything contrary in this Act, any expenditure by way of interest or similar payment in respect of excess interest, as specified in sub-section (4), shall not be deductible in computation of income chargeable under the head "Profits and gains of business or profession", if,—
   • (a) it is paid or payable by an Indian company or a permanent establishment of a foreign company in India, in respect of any debt issued by an associated enterprise which is a non-resident; and
   • (b) the sum of such expenditure in a tax year exceeds one crore rupees.
2. (2) Where a lender, not being an associated enterprise, has issued a debt referred to in sub-section (1), such debt shall be deemed to have been issued by an associated enterprise if an associated enterprise has—
   • (a) provided an implicit or explicit guarantee to the lender in respect of such debt; or
   • (b) deposited a corresponding and matching funds with such lender.
3. (3) The provisions of this section shall not apply to—
   • (a) interest paid in respect of a debt issued by a lender which is a permanent establishment in India of a non-resident engaged in the business of banking;
   • (b) an Indian company or a permanent establishment of a foreign company which is engaged in the business of banking or insurance or a Finance Company located in any International Financial Services Centre, or such class of non-banking financial companies as may be notified by the Central Government in this behalf.
4. (4) For the purposes of sub-section (1), the expression "excess interest" means the total interest paid or payable in excess of 30% of earnings before interest, taxes, depreciation and amortisation of the borrower in the tax year or the interest paid or payable to associated enterprises for that tax year, whichever is less.
5. (5) Interest expenditure not wholly deducted against income under the head "Profits and gains of business or profession" for any tax year shall be—
   • (a) carried forward to the following tax year or years; and
   • (b) allowed as a deduction against the profits and gains, if any, of any business or profession carried on by it and assessable for such tax year, to the extent of maximum allowable interest expenditure as per sub-section (4).
6. (6) The interest expenditure referred to in sub-section (5) shall not be carried forward for more than eight tax years immediately succeeding the tax year for which the excess interest expenditure was first computed.
7. (7) For the purposes of this section,—
   • (a) "debt" means any loan, financial instrument, finance lease, financial derivative, or any arrangement that gives rise to interest, discounts or other finance charges that are deductible in the computation of income chargeable under the head "Profits and gains of business or profession";
   • (b) "Finance Company" means a finance company as defined in regulation 2(1)(e) of the International Financial Services Centres Authority (Finance Company) Regulations, 2021 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019) and which satisfies such conditions and carries on such activities, as may be prescribed;
   • (c) "permanent establishment" shall have the meaning assigned to it in section 173(c).

CHAPTER XI

GENERAL ANTI-AVOIDANCE RULE

1. (1) Irrespective of anything contained in this Act, an arrangement entered into by an assessee may be declared to be an impermissible avoidance arrangement and the consequence in relation to tax arising from it may be determined subject to the provisions of this Chapter.
2. (2) The provisions of this Chapter may be applied to any step in, or a part of, the arrangement as they are applicable to the arrangement.

1. (1) An impermissible avoidance arrangement means an arrangement, the main purpose of which is to obtain a tax benefit, and it—
   • (a) creates rights, or obligations, which are not ordinarily created between persons dealing at arm's length;
   • (b) results, directly or indirectly, in the misuse, or abuse, of the provisions of this Act;
   • (c) lacks commercial substance or is deemed to lack commercial substance under section 180, in whole or in part; or
   • (d) is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes.
2. (2) An arrangement shall be presumed, unless it is proved to the contrary by the assessee, to have been entered into, or carried out, for the main purpose of obtaining a tax benefit, if the main purpose of a step in, or a part of, the arrangement is to obtain a tax benefit, irrespective of the fact that the main purpose of the whole arrangement is not to obtain a tax benefit.

1. (1) An arrangement shall be deemed to lack commercial substance, if—
   • (a) the substance or effect of the arrangement as a whole, is inconsistent with, or differs significantly from, the form of its individual steps or a part; or
   • (b) it involves or includes—
   • (i) round trip financing;
   • (ii) an accommodating party;
   • (iii) elements that have effect of offsetting or cancelling each other;
   • (iv) a transaction which is conducted through one or more persons and disguises the value, location, source, ownership or control of funds which is the subject matter of such transaction;
   • (c) it involves the location of an asset or of a transaction or of the place of residence of any party which is without any substantial commercial purpose other than obtaining a tax benefit (but for the provisions of this Chapter) for a party; or
   • (d) it does not have a significant effect upon the business risks or net cash flows of any party to the arrangement apart from any effect attributable to the tax benefit that would be obtained (but for the provisions of this Chapter).
2. (2) In sub-section (1), round trip financing includes any arrangement in which, through a series of transactions—
   • (a) funds are transferred among the parties to the arrangement; and
   • (b) such transactions do not have any substantial commercial purpose other than obtaining the tax benefit (but for the provisions of this Chapter),

without having any regard to—

1. (A) whether or not the funds involved in the round trip financing can be traced to any funds transferred to, or received by, any party in connection with the arrangement;
   • (B) the time, or sequence, in which the funds involved in the round trip financing are transferred or received; or
   • (C) the means by, or manner in, or mode through, which funds involved in the round trip financing are transferred or received.
2. (3) The following may be relevant but shall not be sufficient for determining whether an arrangement lacks commercial substance or not:—
   • (a) the period or time for which the arrangement (including operations therein) exists;
   • (b) the fact of payment of taxes, directly or indirectly, under the arrangement;
   • (c) the fact that an exit route (including transfer of any activity or business or operations) is provided by the arrangement.

1. (1) If an arrangement is declared to be an impermissible avoidance arrangement, then, the consequences, in relation to tax, of the arrangement, including denial of tax benefit or a benefit under a tax treaty, shall be determined, in the manner as deemed appropriate in the circumstances of the case.
2. (2) The consequences of an arrangement declared to be an impermissible avoidance arrangement as referred to in sub-section (1) shall include but shall not be limited to the following:—
   • (a) disregarding, combining or recharacterising any step in, or a part or whole of, the impermissible avoidance arrangement;
   • (b) treating the impermissible avoidance arrangement as if it had not been entered into or carried out;
   • (c) disregarding any accommodating party or treating any accommodating party and any other party as one and the same person;
   • (d) deeming persons who are connected persons in relation to each other to be one and the same person for the purposes of determining tax treatment of any amount;
   • (e) reallocating amongst the parties to the arrangement—
   • (i) any accrual, or receipt, of a capital nature or revenue nature; or
   • (ii) any expenditure, deduction, relief or rebate;
   • (f) treating—
   • (i) the place of residence of any party to the arrangement; or
   • (ii) the situs of an asset or of a transaction,

at a place other than the place of residence, location of the asset or location of the transaction as provided under the arrangement; or

1. (g) considering or looking through any arrangement by disregarding any corporate structure.
2. (3) In this section,—
   • (a) any equity may be treated as debt or vice versa;
   • (b) any accrual, or receipt, of a capital nature may be treated as of revenue nature or vice versa; or
   • (c) any expenditure, deduction, relief or rebate may be recharacterised.

In this Chapter, in determining whether a tax benefit exists,—

1. (a) the parties who are connected persons in relation to each other may be treated as one and the same person;
   • (b) any accommodating party may be disregarded;
   • (c) the accommodating party and any other party may be treated as one and the same person;
   • (d) the arrangement may be considered or looked through by disregarding any corporate structure.

The provisions of this Chapter shall apply—

1. (a) in addition to, or in lieu of, any other basis for determination of tax liability;
   • (b) as per such guidelines and subject to such conditions, as may be prescribed.

For the purposes of this Chapter, unless the context otherwise requires,—

1. (1) "accommodating party" means a party to an arrangement, if the main purpose of the direct or indirect participation of that party in the arrangement, in whole or in part, is to obtain, directly or indirectly, a tax benefit (but for the provisions of this Chapter) for the assessee whether or not the party is a connected person in relation to any party to the arrangement;
2. (2) "arrangement" means any step in, or a part or whole of, any transaction, operation, scheme, agreement or understanding, whether enforceable or not, and includes the alienation of any property in such transaction, operation, scheme, agreement or understanding;
3. (3) "asset" includes property, or right, of any kind;
4. (4) "benefit" includes a payment of any kind whether in tangible or intangible form;
5. (5) "connected person" means any person who is connected directly or indirectly to another person and includes,—
   • (a) any relative of the person, if such person is an individual;
   • (b) any director of the company or any relative of such director, if the person is a company;
   • (c) any partner or member of a firm or association of persons or body of individuals or any relative of such partner or member, if the person is a firm or association of persons or body of individuals;
   • (d) any member of the Hindu undivided family or any relative of such member, if the person is a Hindu undivided family;
   • (e) any individual who has a substantial interest in the business of the person or any relative of such individual;
   • (f) a company, firm or an association of persons or a body of individuals, whether incorporated or not, or a Hindu undivided family having a substantial interest in the business of the person or any director, partner, or member of the company, firm or association of persons or body of individuals or family, or any relative of such director, partner or member;
   • (g) a company, firm or association of persons or body of individuals, whether incorporated or not, or a Hindu undivided family, whose director, partner, or member has a substantial interest in the business of the person, or family or any relative of such director, partner or member;
   • (h) any other person who carries on a business, if—
   • (i) the person being an individual, or any relative of such person, has a substantial interest in the business of that other person; or
   • (ii) the person being a company, firm, association of persons, body of individuals, whether incorporated or not, or a Hindu undivided family, or any director, partner or member of such company, firm or association of persons or body of individuals or family, or any relative of such director, partner or member, has a substantial interest in the business of that other person;
6. (6) "fund" includes—
   • (a) any cash;
   • (b) cash equivalents; and
   • (c) any right, or obligation, to receive or pay, the cash or cash equivalent;
7. (7) "party" includes a person or a permanent establishment which participates or takes part in an arrangement;
8. (8) "relative" shall have the meaning assigned to it in section 92(5)(g);
9. (9) a person shall be deemed to have a substantial interest in the business, if,—
   • (a) in a case where the business is carried on by a company, such person is, at any time during the financial year, the beneficial owner of equity shares carrying at least 20% of the voting power; or
   • (b) in any other case, such person is, at any time during the financial year, beneficially entitled to at least 20% of the profits of such business;
10. (10) "step" includes a measure or an action, particularly one of a series taken in order to deal with or achieve a particular thing or object in the arrangement;
11. (11) "tax benefit" includes,—
    • (a) a reduction or avoidance or deferral of tax or other amount payable under this Act; or
    • (b) an increase in a refund of tax or other amount under this Act; or
    • (c) a reduction or avoidance or deferral of tax or other amount that would be payable under this Act, as a result of a tax treaty; or
    • (d) an increase in a refund of tax or other amount under this Act as a result of a tax treaty; or
    • (e) a reduction in total income; or
    • (f) an increase in loss,

in the relevant tax year or any other tax year;

1. (12) "tax treaty" means an agreement referred to in section 159(1) or (2).

CHAPTER XII

MODE OF PAYMENT IN CERTAIN CASES, ETC.

1. (1) No person shall take or accept from another person any loan or deposit or specified sum, except through—
   • (a) an account payee cheque; or
   • (b) account payee bank draft; or
   • (c) electronic clearing system through a bank account; or
   • (d) any other prescribed electronic mode,

if,—

1. (i) the amount or the aggregate amount of such loan, deposit, or specified sum; or
   • (ii) the amount or the aggregate amount of any previously taken or accepted loan or deposit or specified sum by such person from such another person, which is remaining unpaid, whether due for repayment or not, as on the date of taking or accepting such amount as referred to in clause (i); or
   • (iii) the aggregate of the amounts referred to in clauses (i) and (ii),

is Rs. 20000 or more.

1. (2) Sub-section (1) shall not apply to loans or deposits or specified sums taken or accepted from or by,—
   • (a) the Government;
   • (b) any banking company, post office savings bank, or co-operative bank;
   • (c) any corporation established by a Central, State or Provincial Act;
   • (d) any Government company as defined under section 2(45) of the Companies Act, 2013 (18 of 2013);
   • (e) any institution, association, or body or class of institutions, associations or bodies notified by the Central Government.
2. (3) The provisions of sub-section (1) shall not apply to any loan or deposit or specified sum where, the person taking or accepting such loan or deposit or specified sum and person from whom such loan or deposit or specified sum is taken or accepted, both, have agricultural income and neither has any income chargeable to tax under this Act.
3. (4) In sub-section (1), "Rs. 200000" shall be substituted for "Rs. 20000" in the case of any deposit or loan, where—
   • (a) such deposit is accepted by a primary agricultural credit society or a primary co-operative agricultural and rural development bank from its member; or
   • (b) such loan is taken from a primary agricultural credit society or primary co-operative agricultural and development bank by its member.
4. (5) For the purposes of this section, the expression "loan or deposit" means loan or deposit of money.

1. (1) No person shall receive an amount of Rs. 200000 or more—
   • (a) in aggregate from a person in a day; or
   • (b) in respect of a single transaction; or
   • (c) in respect of transactions relating to one event or occasion from a person,

except through—

1. (i) an account payee cheque; or
   • (ii) account payee bank draft; or
   • (iii) electronic clearing system through a bank account; or
   • (iv) any other electronic mode, as may be prescribed.
2. (2) Sub-section (1) shall not apply to—
   • (a) any receipt by Government, any banking company, post office savings bank or co-operative bank;
   • (b) transactions of the nature referred to in section 185;
   • (c) such other persons or class of persons or receipts, as may be notified by the Central Government.

Every person shall provide facility for accepting payment, through electronic modes as may be prescribed, in addition to other electronic modes, if any, being provided by him, where—

1. (a) such person is carrying on business or profession; and
   • (b) total sales, turnover or gross receipts in such business or profession exceeds fifty crore rupees during the immediately preceding tax year.

1. (1) No branch of a banking company or co-operative bank and no other company or co-operative society and no firm or other person shall repay—
   • (a) any loan or deposit made with it; or
   • (b) any specified advance received by it,

except through—

1. (i) an account payee cheque;
   • (ii) account payee bank draft drawn in the name of the person who has made the loan or deposit or paid the specified advance; or
   • (iii) by use of electronic clearing system through a bank account, or any other prescribed electronic mode,

if, —

1. (A) the loan or the deposit or specified advance, together with the interest, if any, payable thereon; or
   • (B) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or co-operative bank or, as the case may be, the other company or co-operative society or the firm or other person (either individually or jointly) on the date of such repayment together with interest, if any, payable thereon; or
   • (C) the aggregate amount of the specified advances received by such person (either individually or jointly) on the date of such repayment together with the interest, if any, payable thereon,

is Rs. 20000 or more.

1. (2) Irrespective of the provision in sub-section (1), a branch of a banking company or co-operative bank, may also make the repayment by crediting such loan or deposit to the savings bank account or current account, if any, with such branch of the person to whom such loan or deposit has to be repaid.
2. (3) Sub-section (1) shall not apply to repayment of any loan, deposit, or specified advance taken or accepted from—
   • (a) Government;
   • (b) any banking company, post office savings bank, or co-operative bank;
   • (c) any corporation established by a Central, State, or Provincial Act;
   • (d) any Government company as defined in section 2(45) of the Companies Act, 2013 (18 of 2013);
   • (e) any institution, association, or body or class of institutions, associations or bodies notified by the Central Government.
3. (4) In sub-section (1), "Rs. 200000" shall be substituted for "Rs. 20000" in the case of any deposit or loan where—
   • (a) such deposit is repaid to a member by a primary agricultural credit society or a primary co-operative agricultural and rural development bank; or
   • (b) such loan is repaid by a member to a primary agricultural credit society or a primary co-operative agricultural and rural development bank.
4. (5) For the purposes of this section, the expression "loan or deposit" means any loan or deposit of money which is repayable after notice or repayable after a period and, in the case of a person other than a company, includes loan or deposit of any nature.

For the purposes of this Chapter, unless the context otherwise requires,—

1. (a) "banking company" means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act;
   • (b) "primary agricultural credit society", and "primary co-operative agricultural and rural development bank" shall have the meanings respectively assigned to them in section 150;
   • (c) "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place;
   • (d) "specified advance" means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place.

CHAPTER XIII

DETERMINATION OF TAX IN SPECIAL CASES

A.—Determination of tax in certain special cases

Where there is included in the total income of an assessee any income on which no income-tax is payable under the provisions of this Act, the assessee shall be entitled to a deduction, from income-tax with which he is chargeable on his total income, of an amount equal to the income-tax calculated at the average rate of income-tax on the amount on which no income-tax is payable.

Where the accumulated balance due to an employee participating in a recognised provident fund is included in his total income, owing to the provisions of paragraph 8 of Part A of Schedule XI not being applicable, the Assessing Officer shall calculate the total of the various sums of tax as per the provisions of paragraph 9 thereof.

1. (1) Irrespective of anything contained in any other provisions of this Act, the total undisclosed income of the block period, determined under section 294 shall be chargeable to tax at the rate of 60%.
2. (2) The tax chargeable under sub-section (1) shall be increased by a surcharge, if any, levied by any Central Act.

1. (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 income specified in column B of the Table below, the income-tax payable shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B.

TABLE

1. (2) Where the gross total income of the resident employee—
   • (a) consists only of income by way of dividends in respect of Global Depository Receipts referred to in sub-section (1) (Table: Sl. No. 1), no deduction shall be allowed to him under any other provision of this Act;
   • (b) includes any income referred to in sub-section (1) (Table: Sl. No. 1 or 2),—
   • (i) the gross total income shall be reduced by such income; and
   • (ii) 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.
2. (3) The section 72(6) shall not apply for computation of long-term capital gains arising out of the transfer of long-term capital asset, being Global Depository Receipts referred to in sub-section (1) (Table: Sl. No. 2).
3. (4) 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 or in an International Financial Services Centre and issued to investors against the issue of,—
   • (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; or
   • (iii) ordinary shares of issuing company, being a company incorporated outside India, if such depository receipt or certificate is listed and traded on any International Financial Services Centre;
   • (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;
   • (e) "specified knowledge based industry or service" means—
   • (i) information technology software; or
   • (ii) information technology service; or
   • (iii) entertainment service; or
   • (iv) pharmaceutical industry; or
   • (v) bio-technology industry; or
   • (vi) any other industry or service, as specified by the Central Government, by notification;
   • (f) "subsidiary" shall have the same meaning as assigned to it in section 2(87) of the Companies Act, 2013 (18 of 2013) and includes subsidiary incorporated outside India.

1. (1) Irrespective of anything contained in any other provision of this Act, where the total income of an assessee as mentioned in column B of the Table below, includes income of the nature specified in column C of the said Table, the income-tax payable by such assessee, for a tax year, shall be the aggregate of—
   • (a) income-tax calculated on income mentioned in column C, at the rate mentioned in column D, subject to the conditions specified in column E; and
   • (b) income-tax with which the assessee would have been chargeable had his total income been reduced by income mentioned in column C thereof.

TABLE

Winnings (other than from any online game) from—

1. (a) lottery; or
   • (b) crossword puzzle; or
   • (c) race including horse race (not being income from the activity of owning and maintaining race horses); or
   • (d) card game and other game of any sort; or
   • (e) gambling or betting of any form or nature.
   • (a) No deduction in respect of any expenditure or allowance shall be allowed to the eligible assessee under any provision of this Act in computing his income referred to in column C;
   • (b) an option for taxation of income by way of royalty in respect of a patent developed and registered in India is exercised in the prescribed manner, on or before the due date specified under section 263(1) for furnishing the return of income for the relevant tax year;
   • (c) where an option is exercised under clause (b) and the eligible assessee does not offer its income for taxation as per the provisions of columns C and D for any of the five tax years, succeeding such tax year, then such assessee shall not be eligible to claim the benefit of the provisions of columns C and D for five tax years subsequent to the tax year in which such income has not been offered to tax as per such provisions.
   • (a) No deduction in respect of any expenditure (other than cost of acquisition, if any) or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing the income referred to in column C; and
   • (b) no set off of loss from transfer of the virtual digital asset computed herein shall be allowed against income computed under any provision of this Act to the assessee and such loss shall not be allowed to be carried forward to succeeding tax years.
2. (2) For the purposes of this section,—
   • (a) "carbon credit", in respect of one unit, means reduction of one tonne of carbon dioxide emissions or emissions of its equivalent gases which is validated by the United Nations Framework on Climate Change and which can be traded in market at its prevailing market price;
   • (b) "computer resource" shall have the same meaning as assigned to it in section 2(1)(k) of the Information Technology Act, 2000 (21 of 2000);
   • (c) "developed" means at least 75% of the expenditure incurred in India by the eligible assessee for any invention in respect of which patent is granted under the Patents Act, 1970 (39 of 1970) (herein referred to as the Patents Act);
   • (d) "horse race" shall have the meaning assigned to it in section 94(6);
   • (e) "internet" means the combination of computer facilities and electromagnetic transmission media including related equipment and software, comprising the interconnected worldwide network of computer networks that transmits information based on a protocol for controlling such transmission;
   • (f) "invention" shall have the same meaning as assigned to it in section 2(1)(j) of the Patents Act;
   • (g) "lump sum" includes an advance payment on account of such royalties which is not returnable;
   • (h) "online game" means a game that is offered on the internet and is accessible by a user through a computer resource including any telecommunication device;
   • (i) "patent" shall have the same meaning as assigned to it in section 2(1)(m) of the Patents Act;
   • (j) "patented article" and "patented process" shall have the same meanings as respectively assigned to them in section 2(1)(o) of the Patents Act;
   • (k) "patentee" means the person, being the true and first inventor of the invention, whose name is entered in the patent register as the patentee, as per the Patents Act, and includes every such person, being the true and first inventor of the invention, where more than one person is registered as patentee under that Act in respect of that patent;
   • (l) "royalty", in respect of a patent, means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains" or consideration for sale of product manufactured with the use of patented process or the patented article for commercial use) for the—
   • (i) transfer of all or any rights (including the granting of a licence) in respect of a patent; or
   • (ii) imparting of any information concerning the working of, or the use of, a patent; or
   • (iii) use of any patent; or
   • (iv) rendering of any services in connection with the activities referred to in sub-clauses (i) to (iii);
   • (m) "true and first inventor" shall have the same meaning as assigned to it in section 2(1)(y) of the Patents Act; and
   • (n) for the purposes of sub-section (1) (Table: Sl. No. 4), the term "transfer" as defined in section 2(109), shall apply to any virtual digital asset, whether capital asset or not.

1. (1) Where the total income of an assessee—
   • (a) includes any income referred to in section 102 or 103 or 104 or 105 or 106 and reflected in the return of income furnished under section 263; or
   • (b) determined by the Assessing Officer includes any income referred to in any of the said section 102 or 103 or 104 or 105 or 106, if such income is not covered under clause (a),

the income-tax payable shall be the aggregate of—

1. (i) income-tax calculated on the income referred to in clauses (a) and (b), at the rate of 24[30%]; and
   • (ii) income-tax with which the assessee would have been chargeable had his total income been reduced by income referred to in clause (i).
2. (2) Irrespective of anything contained in this Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing his income referred to in sub-section (1)(a) and (b).

B.—Special provisions relating to tax on capital gains

1. (1) Where the total income of an assessee includes any income chargeable under the head "Capital gains", arising from the transfer of a short-term capital asset—
   • (a) being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust; and
   • (b) the transaction of sale of such equity share or unit is chargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004), then,

the tax payable by the assessee on the total income, subject to the provisions of sub-section (2), shall be the aggregate of—

1. (i) income-tax calculated on such short-term capital gains at the rate of 20%;
   • (ii) income-tax payable on the balance amount of the total income as if such balance amount were the total income of the assessee.
2. (2) In the case of an individual or a Hindu undivided family, being a resident, where the total income, as reduced by short-term capital gains computed under sub-section (1), is below the maximum amount which is not chargeable to income-tax, then,—
   • (a) such short-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax; and
   • (b) the tax on the balance of such short-term capital gains shall be computed at the rate as applicable in sub-section (1)(i).
3. (3) The provisions of sub-section (1)(b) shall not apply to a transaction undertaken on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in foreign currency.
4. (4) Where the gross total income of an assessee includes any short-term capital gains referred to in sub-section (1), the deduction under Chapter VIII shall be allowed from the gross total income as reduced by such capital gains.
5. (5) For the purposes of this section, the expression "equity oriented fund" shall have the meaning assigned to it in section 198.

1. (1) Where the total income of an assessee includes any income arising from the transfer of a long-term capital asset which is chargeable under the head "Capital gains", the tax payable by the assessee on the total income, subject to sub-sections (2), (3) and (4), shall be the aggregate of—
   • (a) income-tax payable on the total income as reduced by such long-term capital gains, had the total income, as so reduced, been his total income; and
   • (b) income-tax calculated on such long-term capital gains at the rate of 12.5%.
2. (2) In the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by long-term capital gains computed under sub-section (1) is below the maximum amount which is not chargeable to income-tax, then,—
   • (a) such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax; and
   • (b) the tax on the balance of such long-term capital gains shall be computed at the rate as referred in sub-section (1).
3. (3) In the case of an individual or a Hindu undivided family, being a resident, in the case of transfer of a long-term capital asset, being land or building, or both, which was acquired before the 23rd July, 2024, the excess income-tax computed as per the following formula shall be ignored:—

E = A – B where—

excess income-tax to be ignored;

income-tax computed under sub-section (1)(b);

income-tax computed under sub-section (1)(b) taking the rate as 20% and the capital gains is computed by taking the cost of acquisition as "indexed cost of acquisition" and the cost of improvement as "indexed cost of improvement".

1. (4) In the case of an assessee being a non-resident (not being a company) or a foreign company, the long-term capital gains arising from the transfer of a capital asset, being unlisted securities or shares of a company not being a company in which the public are substantially interested, shall be computed without giving effect to the provisions under section 72(6).
2. (5) Where the gross total income of an assessee includes any income arising from the transfer of a long-term capital asset, the gross total income shall be reduced by such income and the deduction under Chapter VIII shall be allowed as if the gross total income as so reduced were the gross total income of the assessee.
3. (6) For the purposes of this section,—
   • (a) "securities" shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
   • (b) "listed securities" means the securities which are listed on any recognised stock exchange in India;
   • (c) "unlisted securities" means securities other than listed securities;
   • (d) "indexed cost of acquisition" and "indexed cost of improvement" shall have the meanings respectively assigned to them in section 72.

1. (1) Irrespective of anything contained in section 197, the tax payable by an assessee on his total income shall be determined as per the provisions of sub-section (2), if—
   • (a) the total income includes any income chargeable under the head "Capital gains";
   • (b) the capital gains arise from the transfer of a long-term capital asset being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust;
   • (c) securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004) has—
   • (i) in a case where the long-term capital asset is in the nature of an equity share in a company, been paid on acquisition and transfer of such capital asset; or
   • (ii) in a case where the long-term capital asset is in the nature of a unit of an equity oriented fund or a unit of a business trust, been paid on transfer of such capital asset.
2. (2) The tax payable by the assessee on the total income referred to in sub-section (1) shall be the aggregate of—
   • (a) income-tax calculated on such long-term capital gains exceeding Rs. 125000 at the rate of 12.5%; and
   • (b) income-tax payable on the total income as reduced by long-term capital gains referred to in sub-section (1) as if the total income so reduced were the total income of the assessee.
3. (3) In the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by long-term capital gains computed under sub-section (1) is below the maximum amount which is not chargeable to income-tax, then,—
   • (a) such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax; and
   • (b) the tax on the balance of such long-term capital gains shall be computed at the rate as referred to in sub-section (2).
4. (4) The condition specified in sub-section (1)(c) shall not apply to a transfer undertaken on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transfer is received or receivable in foreign currency.
5. (5) The Central Government may, by notification, specify the nature of acquisition in respect of which the provisions of sub-section (1)(c)(i) shall not apply.
6. (6) Where the gross total income of an assessee includes any long-term capital gains referred to in sub-section (1), the deduction under Chapter VIII shall be allowed from the gross total income as reduced by such capital gains.
7. (7) Where the total income of an assessee includes any long-term capital gains referred to in sub-section (1), the rebate under section 156 shall be allowed from the income-tax on the total income as reduced by tax payable on such capital gains.
8. (8) For the purposes of this section, the expression "equity oriented fund" means a fund set up under a scheme of a mutual fund specified in Schedule VII (Table: Sl. No. 20 or 21) or under a scheme of an insurance company comprising unit linked insurance policies to which exemption in Schedule II (Table: Sl. No. 2) does not apply and—
   • (i) in a case where the fund invests in the units of another fund which is traded on a recognised stock exchange,—
   • (A) a minimum of 90% of the total proceeds of such fund is invested in the units of such other fund; and
   • (B) such other fund also invests a minimum of 90% of its total proceeds in the equity shares of domestic companies listed on a recognised stock exchange; and
   • (ii) in any other case, a minimum of 65% of the total proceeds of such fund is invested in the equity shares of domestic companies listed on a recognised stock exchange,

and, for the purposes of this clause,—

1. (I) the percentage of equity shareholding or unit held in respect of the fund, shall be computed with reference to the annual average of the monthly averages of the opening and closing figures;
   • (II) in case of a scheme of an insurance company comprising unit linked insurance policies to which exemption in Schedule II (Table: Sl. No. 2) does not apply, the minimum requirement of 90% or 65%, as the case may be, is required to be satisfied throughout the term of such insurance policy.

C.—New tax regime

1. (1) Irrespective of anything contained in this Act, but subject to the provisions of Parts A, B, E and this Part (other than sections 200 and 201) of this Chapter, the income-tax payable in respect of the total income of a person, being a domestic company, for any tax year, shall, at the option of such person, be computed at the rate of 25% subject to the following conditions:—
   • (a) the company has been set-up and registered on or after the 1st March, 2016;
   • (b) the company is not engaged in any business other than the business of manufacture or production of any article or thing and research in relation to, or distribution of, such article or thing manufactured or produced by it; and
   • (c) the total income of the company has been computed,—
   • (i) without any deduction under—
   • (A) section 45(2) or 47(1)(b); or
   • (B) Chapter VIII-C, other than the provisions of section 146; or
   • (C) sections specified in section 205(1)(a) to (g);
   • (ii) without set off of any loss carried forward from any earlier tax year, if such loss is attributable to any of the deductions referred to in sub-clause (i).
2. (2) The loss referred to in sub-section (1)(c)(ii) shall be deemed to have been given full effect to and no further deduction for such loss shall be allowed for any subsequent year.
3. (3) The provisions of this section shall not apply unless an option is exercised by the person in the manner as may be prescribed on or before the due date specified under section 263(1) for furnishing the first of the returns of income which such person is required to furnish and such option once exercised, shall apply to subsequent tax years.
4. (4) Once the option under sub-section (3) has been exercised for any tax year, it cannot be subsequently withdrawn for the same or any other tax year, except where the person exercises option under section 200.

1. (1) Irrespective of anything contained in this Act but subject to the provisions of Parts A, B, E and this Part (other than sections 199 and 201) of this Chapter, the income-tax payable for a tax year shall be at the rate of 22%, at the option of a person being a domestic company, in respect of the total income of such person computed in the following manner:—
   • (a) without any deduction under—
   • (i) section 45(2) or 47(1)(b); or
   • (ii) Chapter VIII other than provisions of section 146 or 148; or
   • (iii) sections specified in section 205(1)(a) to (g);
   • (b) without set off of any loss carried forward or depreciation from any earlier tax year, if such loss or depreciation is attributable to any of the deductions referred to in clause (a);
   • (c) without set off of any loss or allowance for unabsorbed depreciation deemed so under section 116, if such loss or depreciation is attributable to any of the deductions referred to in clause (a).
2. (2) Where the person fails to satisfy the requirements contained in sub-section (1) in any tax year, the option shall become invalid in respect of the said tax year and subsequent years and other provisions of the Act shall apply, as if the option had not been exercised for such tax year and for subsequent years.
3. (3) The loss and depreciation referred to in sub-section (1)(b) and (c) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year.
4. (4) In case of a person, having a Unit in the International Financial Services Centre, which has exercised option under sub-section (5), the requirements contained in sub-section (1) shall be modified to the extent that the deduction as referred to in section 147 shall be available to such Unit subject to fulfilment of the conditions contained in that section.
5. (5) The provisions of this section shall not apply unless the option is exercised by the person in such manner as may be prescribed on or before the due date specified under section 263(1) for furnishing the return of income and such option once exercised, shall apply to subsequent tax years.
6. (6) Once the option under this section has been exercised for any tax year, it shall not be subsequently withdrawn for the same or any other tax year.
7. (7) In case of a person, being a domestic company, where the option exercised by it under section 201, has been rendered invalid due to violation of the conditions contained in section 205(2)(b) or (c) or (d), such person may exercise the option under this section.

1. (1) Irrespective of anything contained in this Act, but subject to the provisions of Parts A, B, E and this Part (other than sections 199 and 200) of this Chapter, the income-tax payable in respect of the total income of an assessee, being a domestic company, specified in column B of the Table below, shall, at the option of such assessee, be computed at the rates specified in column C, if the conditions contained in column D thereof are fulfilled.

TABLE

1. (a) 15% on the total income other than the income mentioned in clauses (b), (c) and (d);
   • (b) 22% (without any deduction or allowance in respect of any expenditure or allowance) on such income,—
   • (i) which has neither been derived from nor is incidental to manufacturing or production of an article or thing; and
   • (ii) in respect of which no specific rate of tax has been provided separately under Parts A, B, E and this Part of this Chapter;
   • (c) 22% on short-term capital gains derived from transfer of a capital asset on which no depreciation is allowable under this Act;
   • (d) 30% on the income deemed so under section 205(4).

Such domestic company—

1. (a) exercises the option in the manner provided in sub-section (2);
   • (b) has been set-up and registered on or after the 1st October, 2019;
   • (c) has commenced manufacturing or production of an article or thing on or before the 31st March, 2024;
   • (d) the total income of which is computed as per the provisions of sub-section (3); and
   • (e) fulfils all the conditions provided in sub-section (5) of this section and section 205(2).
2. (2) The option under this section shall be exercised by the assessee in the manner prescribed subject to the following conditions:—
   • (a) it shall be exercised on or before the due date specified under section 263(1) for furnishing first of the returns of income for any tax year;
   • (b) such option, once exercised, shall apply to subsequent tax years;
   • (c) once the option has been exercised for any tax year, it shall not be subsequently withdrawn for the same or any other tax year; and
   • (d) where the assessee fails to fulfil the conditions contained in sub-section (1) (Table: Sl. No. 1.D) in any tax year,—
   • (i) the option shall become invalid in respect of such tax year and subsequent tax years; and
   • (ii) the other provisions of this Act shall apply, as if the option had not been exercised for that tax year and subsequent tax years.
3. (3) For the purposes of sub-section (1), the total income of the assessee shall be computed,—
   • (a) without any deduction under—
   • (i) section 45(2) or 47(1)(b); or
   • (ii) Chapter VIII other than section 146 or 148; or
   • (iii) sections specified in section 205(1)(a) to (g);
   • (b) without set off of any loss or allowance for unabsorbed depreciation deemed so under section 116, if such loss or depreciation is attributable to any of the deductions referred to in clause (a).
4. (4) While computing the income of the assessee, the loss and depreciation, or both, as specified in sub-section (3)(b) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation, or both, shall be allowed for any subsequent year.
5. (5) In case of an amalgamation, option under this section shall remain valid in case of the amalgamated company only and if the conditions contained in sub-section (1) (Table: Sl. No. 1.D) are continued to be fulfilled by such company.

1. (1) Irrespective of anything contained in this Act other than Chapter XVII-B but subject to Parts A, B, E and this Part of this Chapter, the income-tax payable by a person, being—
   • (a) an individual; or
   • (b) a Hindu undivided family; or
   • (c) an association of persons (other than a co-operative society); or
   • (d) a body of individuals, whether incorporated or not; or
   • (e) an artificial juridical person referred to in section 2(77)(g),

in respect of the total income for a tax year, shall, unless the person exercises the option in the manner provided under sub-section (4), be computed at the rate of tax given in the following Table:—

TABLE

1. (2) For the purposes of sub-section (1), the total income of the assessee shall be computed—
   • (a) without any exemption or deduction under—
   • (i) Schedule III (Table: Sl. No. 5 or 6 or 7 or 8 or 11 or 17);
   • (ii) Schedule III (Table: Sl. No. 12 or 13) (other than those as may be prescribed for this purpose);
   • (iii) 25[***]
   • (iv) section 19(1) (Table: Sl. No. 1);
   • (v) section 22(1)(b), in respect of properties referred to in section 21(6);
   • (vi) section 33(8);
   • (vii) section 48;
   • (viii) section 49;
   • (ix) section 45(3)(a) or (b) or (c);
   • (x) section 46;
   • (xi) section 47(1)(a); and
   • (xii) Chapter VIII other than the provisions of section 124(1) and 124(2), or 125(2) or 146; and
   • (b) without set off of—
   • (i) any loss carried forward or depreciation from any earlier tax year, if such loss or depreciation is attributable to any of the deductions referred to in clause (a); or
   • (ii) any loss under the head "Income from house property" with any other head of income; and
   • (c) without any exemption or deduction for allowances or perquisite, called by any name, provided under any other law in force.
2. (3) The loss and depreciation referred to in sub-section (2)(b) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year.
3. (4) Nothing contained in sub-section (1) shall apply to a person, where an option is exercised by such person under this section, in such manner as may be prescribed, for any tax year, and such option is exercised,—
   • (a) in case of a person having income from business or profession,—
   • (i) on or before the due date specified under section 263(1) for furnishing the returns of income for such tax year;
   • (ii) such option, once exercised, shall apply to subsequent tax years;
   • (iii) such option, once exercised, may be withdrawn only once for a tax year other than the tax year for which it was exercised; and
   • (iv) after such withdrawal, the person shall never be eligible to exercise the option under this sub-section, except where such person ceases to have any income from business or profession, and in such a case the option under clause (b) shall be available;
   • (b) in case of a person not having income from business or profession, along with the return of income to be furnished under section 263(1) for the tax year.
4. (5) In case of a person, having a Unit in the International Financial Services Centre, the provisions of sub-section (2) shall be modified to the extent that deduction under section 147 shall be available to such Unit subject to fulfilment of the conditions contained in that section.

1. (1) Irrespective of anything contained in this Act but subject to the provisions of Part A, B, E and this Part (other than section 204) of this Chapter, the income-tax payable for a tax year shall be at the rate of 22%, at the option of a person being a co-operative society resident in India, in respect of the total income of such person computed in the following manner:—
   • (a) without any deduction under—
   • (i) Chapter VIII other than the provisions of section 146 26[or 150]; or
   • (ii) sections specified in section 205(1)(a) to (g);
   • (b) without set off of any loss carried forward or depreciation from any earlier tax year, if such loss or depreciation is attributable to any of the deductions referred to in clause (a).
2. (2) Where a person fails to satisfy the requirements contained in sub-section (1) in any tax year, the option shall become invalid in respect of the said tax year and subsequent tax years and other provisions of the Act shall apply, as if the option had not been exercised for such tax year and for subsequent tax years.
3. (3) The loss and depreciation referred to in clause (b) of sub-section (1) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent tax year.
4. (4) In case of a person, having a Unit in the International Financial Services Centre, which has exercised option under sub-section (5), the requirements contained in sub-section (1) shall be modified to the extent that the deduction under section 147 shall be available to such Unit subject to fulfilment of the conditions contained in the said section.
5. (5) The provisions of this section shall not apply unless the option is exercised by the person in the prescribed manner on or before the due date specified under section 263(1) for furnishing the return of income and such option once exercised shall apply to subsequent tax years.
6. (6) Once the option under this section has been exercised for any tax year, it shall not be subsequently withdrawn for the same or any other tax year.

26[(7) In case of an assessee, being a co-operative society, which has exercised option under sub-section (5), the requirements contained in sub-section (1) shall be modified to the extent that the deduction under section 149(2)(d)(ii) shall be available to such assessee as does not exceed the amount of dividend distributed by it to its members at least one month before the due date for filing the return of income under section 263(1).]

1. (1) Irrespective of anything contained in this Act but subject to the provisions of Part A, B, E and this Part (other than section 203) of this Chapter, the income-tax payable in respect of the total income of an assessee, being a co-operative society, resident in India, engaged in the business of manufacture or production of any article or thing, shall at the option of such assessee, be computed at the rates specified in column A of the said Table, if the conditions contained in column B thereof are fulfilled.

TABLE

1. (a) 15% on the total income other than the income mentioned in clauses (b), (c) and (d);
   • (b) 22% (without any deduction or allowance in respect of any expenditure or allowance) on such income,—
   • (i) which has neither been derived from nor is incidental to manufacturing or production of an article or thing; and
   • (ii) in respect of which no specific rate of tax has been provided separately under this Part;
   • (c) 22% on short-term capital gains derived from transfer of a capital asset on which no depreciation is allowable under this Act;
   • (d) 30% on the income deemed so under section 205(4).

Such co-operative society—

1. (a) exercises the option in the manner provided in sub-section (2);
   • (b) has been set-up and registered on or after the 1st April, 2023;
   • (c) has commenced manufacturing or production of an article or thing on or before the 31st March, 2024;
   • (d) the total income of which is computed as per the provisions of sub-section (3); and
   • (e) fulfils all the conditions provided in section 205(2).
2. (2) The option under this section shall be exercised by the assessee in the manner as may be prescribed subject to the following conditions:—
   • (a) it shall be exercised on or before the due date specified under section 263(1) for furnishing the first of the returns of income for any tax year; and
   • (b) such option, once exercised, shall apply to subsequent tax years;
   • (c) once the option has been exercised for any tax year, it shall not be subsequently withdrawn for the same or any other tax year;
   • (d) where the assessee fails to fulfil the conditions contained in sub-section (1) (Table: Sl. No. 1.B) in any tax year,—
   • (i) the option shall become invalid in respect of such tax year and subsequent tax years; and
   • (ii) the other provisions of this Act shall apply, as if the option had not been exercised for that tax year and subsequent tax years.
3. (3) For the purposes of sub-section (1), the total income of the assessee shall be computed,—
   • (a) without any deduction under—
   • (i) Chapter VIII other than the provisions of section 146 27[ or 150]; or
   • (ii) sections specified in section 205(1)(a) to (g);
   • (b) without set off of any loss carried forward or depreciation from earlier tax year, if such loss or depreciation is attributable to any of the deductions referred to in clause (a).
4. (4) While computing the income of the assessee, the loss and depreciation, or both, as specified in sub-section (3)(b) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation, or both, shall be allowed for any subsequent year.

27[(5) In case of an assessee, being a co-operative society, which has exercised option under sub-section (2), the requirements contained in sub-section (3) shall be modified to the extent that the deduction under section 149(2)(d)(ii) shall be available to such assessee as does not exceed the amount of dividend distributed by it to its members at least one month before the due date for filing the return of income under section 263(1).]

1. (1) For the purposes of sections 199(1)(c)(i)(C), 200(1)(a)(iii), 201(3)(a)(iii), 203(1)(a)(ii) and 204(3)(a)(ii), the total income shall be computed without any deduction or exemption, under the following provisions:—
   • (a) section 33(8);
   • (b) section 45(3)(a) or (b) or (c);
   • (c) section 46;
   • (d) section 47(1)(a);
   • (e) section 48;
   • (f) section 49; and
   • (g) section 144.
2. (2) For the purposes of section 201 or 204, the following conditions shall apply to the assessee:—
   • (a) its business is not formed by splitting up, or the reconstruction, of a business already in existence, unless it is formed as a result of the re-establishment, reconstruction or revival of the business of any such undertaking as is referred to in section 140(4) in the circumstances and within the period specified in the said section;
   • (b) it does not use any machinery or plant, previously used for any purpose, other than—
   • (i) permitted machinery or plant used outside India;
   • (ii) machinery or plant or any part thereof previously used for any purpose and the total value of such machinery or plant or any part thereof put to use by the assessee does not exceed 20% of the total value of the machinery or plant used by such assessee;
   • (c) in case of a domestic company, it does not use any building previously used as a hotel or a convention centre, in respect of which deduction under section 80-ID of the Income-tax Act, 1961 (43 of 1961) has been claimed and allowed;
   • (d) it is not engaged in any business other than the business of manufacture or production of any article or thing and research in relation to, or distribution of, such article or thing manufactured or produced by it,

and, if any difficulty arises in fulfilling any of the conditions contained in clause (b) or (c) or (d), the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty and to promote manufacturing or production of article or thing using new plant and machinery.

1. (3) Every guideline issued by the Board under sub-section (2) shall be laid 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 such guideline or both Houses agree that the guideline, should not be issued, the guideline 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 guideline.
2. (4) For the purposes of sections 201 and 204,—
   • (a) where it appears to the Assessing Officer that, owing to the close connection between the person to which the said 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 such business, then the Assessing Officer shall, in computing the profits and gains of such business for the purposes of this section, take profits as may be reasonably deemed to have been derived therefrom, and where the said arrangement involves a specified domestic transaction referred to in section 164, profits from such transaction shall be determined having regard to the arm's length price as defined in section 173(a); and
   • (b) the amount, being profits in excess of the profits determined by the Assessing Officer under clause (a), shall be deemed to be the income of the person and shall be chargeable at the rates specified in section 201(1) [Table: Sl. No. 1.C(d)] or 204(1) [Table: Sl. No. 1.A(d)], as the case may be.
3. (5) For the purposes of this Part,—
   • (a) the business of manufacture or production of any article or thing shall include the business of generation of electricity but shall not include business of—
   • (i) development of computer software in any form or in any media; or
   • (ii) mining; or
   • (iii) conversion of marble blocks or similar items into slabs; or
   • (iv) bottling of gas into cylinder; or
   • (v) printing of books or production of cinematograph film; or
   • (vi) any other business as may be notified by the Central Government in this behalf; and
   • (b) the expressions,—
   • (i) "hotel" and "convention centre" shall have the meanings respectively assigned to them in clause (b) and clause (a) of section 80-ID(6) of the Income-tax Act, 1961 (43 of 1961);
   • (ii) "permitted machinery and plant used outside India" means the machinery or plant, which was previously used outside India by any other person, if the following conditions are fulfilled:—
   • (A) such machinery or plant was not, at any time previous to the date of the installation, 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 before the date of installation of machinery or plant by the person;
   • (iii) "unabsorbed depreciation" shall have the meaning assigned to it in section 116(13)(e); and
   • (iv) "Unit" shall have the same meaning as assigned to it in section 2(zc) of the Special Economic Zones Act, 2005 (28 of 2005).

D.—Special provisions relating to minimum alternate tax and alternate minimum tax

1. (1) (a) Irrespective of anything contained in any other provision of this Act, where in the case of an assessee being a company, the income-tax payable on the total income as computed under this Act for a tax year is less than the minimum alternate tax payable for such tax year, then—
   • (i) the book profit shall be deemed to be the total income of that assessee for such tax year; and
   • (ii) the assessee shall be liable to pay income-tax equal to the minimum alternate tax.
   • (b) For the purposes of clause (a), the expressions "minimum alternate tax" means the amount of tax computed on the book profit—
   • (i) in case of a company being a unit located in an International Financial Services Centre and deriving its income solely in convertible foreign exchange, at the rate of 9%;
   • (ii) in case of any other company, at a rate of 28[14%].
   • (c) For the purposes of this section, "book profit" means the profit as shown in the statement of profit and loss for the relevant tax year prepared as per clause (f), as increased by—
   • (i) income-tax paid or payable and the provision therefor, if any such amount is debited to the statement of profit and loss, where income-tax shall include—
   • (A) any interest charged under this Act;
   • (B) surcharge, if any, as levied under the Central Acts;
   • (C) Education Cess on income-tax, if any, as levied under the Central Acts; and
   • (D) Secondary and Higher Education Cess on income-tax, if any, as levied under the Central Acts;
   • (ii) the amounts carried to any reserves, called by any name, if any such amount is debited to the statement of profit and loss;
   • (iii) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities, if any such amount is debited to the statement of profit and loss;
   • (iv) the amount by way of provision for losses of subsidiary companies, if any such amount is debited to the statement of profit and loss;
   • (v) dividends paid or proposed, if any such amount is debited to the statement of profit and loss;
   • (vi) expenditure relatable to any income to which provisions of section 11 apply or any expenditure out of regular income of a registered non-profit organisation referred in section 335, if any such amount is debited to the statement of profit and loss;
   • (vii) depreciation, if any such amount is debited to the statement of profit and loss;
   • (viii) deferred tax and the provision therefor, if any such amount is debited to the statement of profit and loss;
   • (ix) the amount or amounts set aside as provision for diminution in the value of any asset, if any such amount is debited to the statement of profit and loss;
   • (x) the amount standing in revaluation reserve relating to revalued asset on the retirement or disposal of such asset, if any such amount is not credited to the statement of profit and loss,

and as reduced by—

1. (xi) the amount withdrawn from any reserve or provision (excluding a reserve created before the 1st April, 1997 otherwise than by way of a debit to the statement of profit and loss), where,—
   • (A) any such amount is credited to the statement of profit and loss; and
   • (B) the book profit of such year has been increased by those reserves or provisions out of which the said amount was withdrawn;
   • (xii) income to which any of the provisions of section 11 apply or any regular income of a registered non-profit organisation referred in section 335, if any such amount is credited to the statement of profit and loss;
   • (xiii) depreciation debited to the statement of profit and loss excluding the depreciation on account of revaluation of assets;
   • (xiv) the amount withdrawn from revaluation reserve and credited to the statement of profit and loss, to the extent it does not exceed depreciation on account of revaluation of assets referred to in sub-clause (xiii);
   • (xv) deferred tax, if any such amount is credited to the statement of profit and loss;
   • (xvi) loss brought forward (excluding depreciation) or unabsorbed depreciation, whichever is less, as per books of account, except, where either of such amount is nil, in case of a company other than the company referred to in clause (d)(vi) and (vii),

and as further adjusted by the amounts referred to in clause (d).

1. (d) While computing the book profit under this section, the following amounts shall be further adjusted:—
   • (i) in case of a company being a member of association of persons or body of individuals having income being share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable as per the provisions of section 310, then—
   • (A) the amount or amounts of expenditure relatable to such income if debited to the statement of profit and loss, is to be added; and
   • (B) the amount being income if credited to the statement of profit and loss, is to be reduced;
   • (ii) in case of a foreign company having income accruing or arising from—
   • (A) capital gains arising on transactions in securities; or
   • (B) the interest, dividend, royalty or fees for technical services chargeable to tax at the rate or rates specified in Chapter XIII,

and the income-tax payable thereon as per the provisions of this Act, other than the provisions of this Part, is at a rate less than the rate specified in clause (b), then—

1. (I) the amount or amounts of expenditure relatable to such income if debited to the statement of profit and loss, is to be added; and
   • (II) the amount being income if credited to the statement of profit and loss, is to be reduced;
   • (iii) in case of a company, which has transferred any capital asset, being share of a special purpose vehicle to a business trust,—
   • (I) the following amounts, if debited to the statement of profit and loss, are to be added:—
   • (A) the amount representing the notional loss on transfer of such capital asset, to a business trust in exchange of units allotted by the trust referred to in section 70(1)(zi); or
   • (B) the amount representing the notional loss resulting from any change in carrying amount of the said units; or
   • (C) the loss on transfer of units referred to in section 70(1)(zi);
   • (II) the following amounts, if credited to the statement of profit and loss, are to be reduced:—
   • (A) the amount representing the notional gain on transfer of such capital asset, to a business trust in exchange of units allotted by the trust referred to in section 70(1)(zi); or
   • (B) the amount representing the notional gain resulting from any change in carrying amount of the said units; or
   • (C) the gain on transfer of units referred to in section 70(1)(zi);
   • (iv) in case of a company that has transferred units referred to in section 70(1)(zi) and, where the gain or loss on such transfer has been computed by taking into account—
   • (A) the cost of the shares exchanged with units referred to in section 70(1)(zi); or
   • (B) the carrying amount of the shares at the time of exchange, if such shares are carried at a value other than the cost through statement of profit and loss,

then, the gain on transfer of such units is to be added, and the loss on transfer of such units is to be reduced;

1. (v) in case of a company whose total income includes income by way of royalty in respect of a patent which is chargeable to tax under section 194(1)—
   • (A) the amount or amounts of expenditure relatable to such royalty income, if any such amount is debited to the statement of profit and loss, is to be added; and
   • (B) the income by way of such royalty, is to be reduced;
   • (vi) in case of a company, where the Tribunal, on an application moved by the Central Government under section 241 of the Companies Act, 2013 (18 of 2013) has after suspension of the Board of Directors of such company has nominated new directors under section 242 of the said Act, the aggregate amount of unabsorbed depreciation and loss (excluding depreciation) brought forward of such company and its subsidiary and the subsidiary of such subsidiary, is to be reduced;
   • (vii) in case of a company against whom corporate insolvency resolution process has been admitted by the Adjudicating Authority under section 7 or 9 or 10 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the aggregate amount of unabsorbed depreciation and loss (excluding depreciation) brought forward, is to be reduced;
   • (viii) in case of a company being a sick industrial company under section 17(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), as it stood immediately before its repeal by the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (1 of 2004), the profits for the period commencing from the tax year in which such company has become a sick industrial company and ending with the tax year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses, is to be reduced;
   • (ix) in case of a company, whose financial statements are drawn up in compliance with the Indian Accounting Standards specified in Annexure to the Companies (Indian Accounting Standards) Rules, 2015 made under the Companies Act, 2013 (18 of 2013), the amounts mentioned in column A of the Table below shall be added and the amounts mentioned in column B of the said Table below are to be reduced:

TABLE

1. (e) For the purposes of the Table in clause (d)(ix),—
   • (i) the amount referred to in columns A and B of serial number 1 of the said Table shall be the other comprehensive income in the statement of profit and loss under the head "Items that will not be re-classified to profit or loss", excluding—
   • (A) revaluation surplus for assets as per the Indian Accounting Standards 16 and Indian Accounting Standards 38; or
   • (B) gains or losses from investments in equity instruments designated at fair value through other comprehensive income as per the Indian Accounting Standards 109,

and the amount or the aggregate of the amounts referred to in sub-clause (i)(A) and (B) for the tax year or any of the preceding tax years, and relatable to such investment or asset, in the tax year in which the said investment or asset is retired, disposed, realised or otherwise transferred;

1. (ii) the distribution referred to in columns A and B of serial number 2 of the said Table shall be the distribution of non-cash assets to shareholders in a demerger as per Appendix A of the Indian Accounting Standards 10;
   • (iii) the amount referred to in columns A and B of serial number 4 of the said Table shall be the amount which is relatable to the asset or investment referred to in clause (t)(vi)(B) to (E) for the tax year in which such asset or investment is retired, disposed, realised or otherwise transferred;
   • (iv) the amount referred to in columns A and B of serial number 5 of the said Table shall be the transition amount which is relatable to the foreign operations referred to in clause (t)(vi)(F) for the tax year in which such foreign operation is disposed or otherwise transferred.
   • (f) For the purposes of book profit under clause (c), every company shall prepare its statement of profit and loss for the relevant tax year in the following manner:—
   • (i) in case of an insurance or banking company, or a company engaged in the generation or supply of electricity, or any other class of company for which a form of financial statement has been specified under the enactment governing such class of company, as per the provisions of such enactment;
   • (ii) in all other cases, as per the provisions of Schedule III to the Companies Act, 2013 (18 of 2013).
   • (g) While preparing the annual accounts including statement of profit and loss by the company, the—
   • (i) accounting policies;
   • (ii) accounting standards adopted for preparing such accounts including statement of profit and loss; and
   • (iii) method and rates adopted for calculating the depreciation,

shall be the same as have been adopted for the purpose of preparing such accounts including statement of profit and loss and laid before the company at its annual general meeting as per the provisions of section 129 of the Companies Act, 2013 (18 of 2013), or correspond to the accounting policies, accounting standards and the method and rates for calculating the depreciation which have been adopted for preparing such accounts including statement of profit and loss for, such financial year or part of such financial year falling within the relevant tax year, where the company has adopted or adopts the financial year which is different from the tax year under this Act.

1. (h) In the case of a resulting company, where the property and the liabilities of the undertaking or undertakings being received by it are recorded at values different from the values appearing in the books of account of the demerged company immediately before the demerger, any change in such value shall be ignored for the purpose of computation of book profit of the resulting company under this sub-section.
   • (i) In the case of an assessee being a company, where—
   • (i) there is an increase in book profit of the tax year due to income of past year or years included in the book profit on account of—
   • (A) an advance pricing agreement entered into by the assessee under section 168; or
   • (B) a secondary adjustment required to be made under section 170; and

the assessee has not utilised the credit of tax paid under section 115JAA of the Income-tax Act, 1961 (43 of 1961), in any subsequent tax year ending on or before the 31st March, 2026,]

the Assessing Officer shall, on an application made to him in this behalf by the assessee,—

1. (I) recompute the book profit of the past year or years and tax payable under this sub-section, if any, by the assessee during the tax year in such manner, as may be prescribed; and
   • (II) the provisions of section 287 shall, so far as may be, apply and the period of four years specified in sub-sections (7) and (8) of that section shall be reckoned from the end of the tax year in which the said application is received by the Assessing Officer.
   • (j) Irrespective of anything contained in any other provisions of this Act, no interest shall be payable to an assessee on the refund arising on account of clause (i).
   • (k) Nothing contained in clause (a) shall affect the determination of the amounts, in relation to the relevant tax year, to be carried forward to the subsequent year or years under the provisions of section 33(11) or 111 or 112(1) or 113 or 115.
   • (l) The provisions of this sub-section shall not be applicable to any assessee, being a foreign company, where—
   • (i) the assessee is a resident of a country or a specified territory with which India has an agreement referred to in section 159(1) or the Central Government has adopted any agreement under section 159(2) and the assessee does not have a permanent establishment in India as per 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 sub-clause (i) and the assessee is not required to seek registration under any law for the time being in force relating to companies; or
   • (iii) the total income of the assessee comprises solely of profits and gains from business referred to in section 61(2) 30[***], and such income has been offered to tax at the rates specified in the respective sections.
   • (m) 31[***]
   • (n) 31[***]
   • (o) 31[***]
   • (p) 31[***]
   • (q) The provisions of this 32[sub-section] shall not apply to a person,—
   • (i) being a company having income accruing or arising from life insurance business referred to in section 194(1) (Table: Sl. No. 6); or
   • (ii) who has exercised the option under section 200(5) or section 201(2).
   • (r) 33[***]
   • (s) Every company to 34[which this sub-section] applies, shall furnish a report in the prescribed form from an accountant, certifying that the book profit in its case has been computed as per the provisions of this section—
   • (i) before the specified date referred to in section 63; or
   • (ii) along with the return of income furnished in response to a notice under section 268(1).
   • (t) For the purposes of this sub-section,—
   • (i) "Adjudicating Authority" shall have the same meaning as assigned to it in section 5(1) of the Insolvency and Bankruptcy Code, 2016 (31 of 2016);
   • (ii) "convergence date" means the first day of the first Indian Accounting Standards reporting period as defined in the Indian Accounting Standards 101;
   • (iii) "net worth" shall have the meaning assigned to it in section 3(1)(ga) of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), as it stood immediately before its repeal by the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (1 of 2004);
   • (iv) "private company" and "unlisted public company" shall have the meanings respectively assigned to them in the Limited Liability Partnership Act, 2008 (6 of 2009);
   • (v) "securities" shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
   • (vi) "transition amount" means the amount or the aggregate of the amounts adjusted in the other equity (excluding capital reserve and securities premium reserve) on the convergence date, but not including the following:—
   • (A) amount or aggregate of the amounts adjusted in the other comprehensive income on the convergence date which shall be subsequently re-classified to the profit or loss;
   • (B) revaluation surplus for assets as per the Indian Accounting Standards 16 and Indian Accounting Standards 38 adjusted on the convergence date;
   • (C) gains or losses from investments in equity instruments designated at fair value through other comprehensive income as per the Indian Accounting Standards 109 adjusted on the convergence date;
   • (D) adjustments relating to items of property, plant and equipment and intangible assets recorded at fair value as deemed cost as per paragraphs D5 and D7 of the Indian Accounting Standards 101 on the convergence date;
   • (E) adjustments relating to investments in subsidiaries, joint ventures and associates recorded at fair value as deemed cost as per paragraph D15 of the Indian Accounting Standards 101 on the convergence date; and
   • (F) adjustments relating to cumulative translation differences of a foreign operation as per paragraph D13 of the Indian Accounting Standards 101 on the convergence date;
   • (vii) "Tribunal" shall have the same meaning as assigned to it in section 2(90) of the Companies Act, 2013 (18 of 2013);
   • (viii) "Unit" means a unit established in an International Financial Services Centre;
   • (ix) "year of convergence" means the tax year within which the convergence date falls; and
   • (x) a company shall be a subsidiary of another company, if such other company holds more than half in the nominal value of equity share capital of the company.
2. (2) (a) Irrespective of anything contained in this Act, where the regular income-tax payable for a tax year by a person, other than a company, is less than the alternate minimum tax payable for such tax year, then,—
   • (i) the adjusted total income shall be deemed to be the total income of that person for such tax year; and
   • (ii) he shall be liable to pay income-tax equal to the alternate minimum tax.
   • (b) For the purposes of this sub-section,—
   • (i) "adjusted total income" shall be the total income before giving effect to clause (a), as increased by deductions claimed, if any, under—
   • (I) any section (other than section 149) included in Chapter VIII-C;
   • (II) section 46 as reduced by depreciation allowable as per the provisions of section 33, as if no deduction was allowed in respect of the assets on which the deduction under that section is claimed;
   • (ii) "alternate minimum tax" means the amount of tax computed on adjusted total income,—
   • (I) in case of an assessee being a unit located in an International Financial Services Centre and deriving its income solely in convertible foreign exchange, at the rate of 9%;
   • (II) in case of an assessee being a co-operative society, at the rate of 15%;
   • (III) in any other case, at a rate of 18.5%;
   • (iii) "regular income-tax" means the income-tax payable for a tax year by a person on his total income in accordance with the provisions of this Act other than the provisions of this sub-section;
   • (iv) "Unit" means a unit established in an International Financial Services Centre.
   • (c) The provisions of this sub-section shall apply to a person who has claimed any deduction under any section (other than section 149) included in Chapter VIII-C or section 46.
   • (d) The provisions of this sub-section shall not apply to—
   • (i) a person, who has exercised the option under section 203(5) or section 204(2);
   • (ii) a person, whose income-tax payable in respect of the total income of such person is computed under section 202(1);
   • (iii) an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person referred to in section 2(77)(g), if the adjusted total income of such person does not exceed twenty lakh rupees; or
   • (iv) any specified fund referred to in Schedule VI (Note 1).
   • (e) Where any tax is paid under clause (a) by an assessee, then, credit shall be allowed to him of an amount which shall be the excess of alternate minimum tax over the regular income-tax payable of that year.
   • (f) While allowing credit under clause (e),—
   • (i) no interest shall be payable on the tax credit so allowed; and
   • (ii) where tax credit in respect of any income-tax paid in any country or specified territory outside India, under section 159(1) or (2), allowed against the alternate minimum tax payable exceeds such tax credit admissible against the regular income-tax payable by the assessee, then, while computing the credit under clause (e), such excess amount shall be ignored.
   • (g) Tax credit determined under clause (e) shall be carried forward and—
   • (i) set off in a year, when the regular income-tax exceeds the alternate minimum tax; and
   • (ii) such set off in respect of brought forward tax credit shall be allowed for any tax year to the extent of the excess of regular income-tax over the alternate minimum tax for that tax year,

and such carry forward shall not be allowed beyond the fifteenth tax year immediately succeeding the tax year in which the tax credit becomes allowable under clause (e).

1. (h) Where as a result of any order passed under this Act, tax payable under this Act is reduced or increased, tax credit allowed under clause (e) shall also be reduced or increased accordingly.
   • (i) Irrespective of anything contained in clause (c) or clause (d), the credit for tax paid under clause (a) shall be allowed in accordance with the provisions of clauses (e), (f), (g) and (h).
   • (j) Every person to which this sub-section applies, shall furnish a report in the prescribed form from an accountant, certifying that the adjusted total income and alternate minimum tax in its case have been computed as per the provisions of this sub-section before the specified date referred to in section 63.

35[(3)(a) The provisions of this sub-section shall be applicable only to an assessee, being a domestic company, that has exercised the option under section 200(5) or section 201(2) for a tax year, beginning on or after the 1st April, 2026.

1. (b) Where any amount of credit, in respect of tax paid, was allowed to be carried forward to the assessee under the provisions of section 115JAA of the Income-tax Act, 1961 (43 of 1961), as on 31st March, 2026,––
   • (i) such credit brought forward shall be allowed to be set off in any tax year to the extent of 25% of the tax payable on the total income computed as per the other provisions of this Act for that tax year;
   • (ii) the remaining credit shall be carried forward to the subsequent tax year; and
   • (iii) such carry forward or set off of tax credit shall not be allowed beyond the fifteenth tax year immediately succeeding the tax year in which the tax credit first became allowable under section 115JAA of the Income-tax Act, 1961 (43 of 1961).
   • (c) Where, as a result of any order passed under this Act, tax payable under this Act is decreased or increased, as the case may be, tax credit allowed to be set off under clause (b) shall also be decreased or increased, accordingly.
   • (d) In case of conversion of a private company or unlisted public company into a limited liability partnership under the Limited Liability Partnership Act, 2008 (6 of 2009), the provisions of clauses (a) and (b) shall not apply to the successor limited liability partnership.
2. (4) (a) The provisions of this sub-section shall be applicable only to an assessee, being a foreign company.
   • (b) Where, any amount of credit in respect of tax paid was allowed to be carried forward to the assessee under the provisions of section 115JAA of the Income-tax Act, 1961 (43 of 1961), as on 31st March, 2026,––
   • (i) such tax credit shall be carried forward and set off in a tax year, when tax payable on the total income computed as per the provisions of this Act exceeds the minimum alternate tax computed as per provisions of sub-section (1);
   • (ii) such set off in respect of brought forward tax credit shall be allowed for any tax year to the extent of the difference between the tax liability on the total income computed as per the other provisions of this Act and the minimum alternate tax for that tax year; and
   • (iii) such carry forward or set off of tax credit shall not be allowed beyond the fifteenth tax year immediately succeeding the tax year in which the tax credit first became allowable under section 115JAA of the Income-tax Act, 1961 (43 of 1961).
   • (c) Where, as a result of any order passed under this Act, tax payable under this Act is decreased or increased, as the case may be, tax credit allowed to be set off under clause (b) shall also be decreased or increased, accordingly.
   • (d) In case of conversion of a private company or unlisted public company into a limited liability partnership under the Limited Liability Partnership Act, 2008 (6 of 2009), the provisions of clauses (a) and (b) shall not apply to the successor limited liability partnership.
3. (5) Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee mentioned in this section.]

E.—Special provisions relating to non-residents and foreign companies

1. (1) The income-tax payable on the total income of a non-resident (not being a company) or of a foreign company, which includes any income specified in the column B of the Table below, shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B.

TABLE

1. (2) Where the total income of a non-resident (not being a company) or of a foreign company, includes any income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made with Government or an Indian concern after the 31st March, 1976, other than income referred to in section 59(1), and—
   • (a) the agreement is approved by the Central Government where such agreement is with an Indian concern; or
   • (b) where the agreement relates to a matter included in the industrial policy, for the time being in force, of the Government of India, it is as per that policy,

then, subject to the provisions of sub-section (3), the income-tax payable shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B of the Table below:—

TABLE

1. (3) Where the royalty referred to in sub-section (2) is in consideration for the transfer or grant of all or any rights (including the granting of a licence)—
   • (a) in respect of copyright in any book to an Indian concern; or
   • (b) in respect of any computer software to a person resident in India,

then the provisions of sub-section (2) shall apply in relation to such royalty without application of provisions of clause (a) or (b) of that sub-section.

1. (4) For the purposes of this section,—
   • (a) "computer software" means any computer programme recorded on any disc, tape, perforated media or other information storage device; or any customised 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;
   • (b) "fees for technical services" shall have the meaning assigned to it in section 9;
   • (c) "royalty" shall have the meaning assigned to it in section 9
2. (5) No deduction in respect of any expenditure or allowance shall be allowed under sections 28 to 58, 60 and 61 and section 93 for computing income referred to in sub-sections (1) and (2).
3. (6) Where the gross total income of an assessee—
   • (a) consists only of the income referred to in sub-section (1) (Table: SI. No. 1 to 7), no deduction shall be allowed under Chapter VIII and Schedule XV;
   • (b) includes any income referred to in sub-section (1) (Table: Sl. No. 1 to 7), the gross total income shall be reduced by such income and the deduction under Chapter VIII shall be allowed as if such reduced amount were the gross total income of the assessee.
4. (7) The provisions of sub-section (6) shall not apply to a deduction allowed to Unit of an International Financial Services Centre under section 147.
5. (8) It shall not be necessary for an assessee to furnish a return of income under section 263(1), if—
   • (a) the total income during the tax year consisted only of income referred to in sub-section (1) (Table: Sl. Nos. 1 to 7) and sub-section (2) (Table: Sl. Nos. 1 and 2); and
   • (b) the tax deductible at source under the provisions of Chapter XIX-B has been deducted from such income at a rate not less than the rate specified in sub-sections (1) and (2).

1. (1) The income-tax payable on the total income of an assessee, being an overseas financial organisation (herein referred to as Offshore Fund), which includes income specified in column B of the Table below, shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B.

TABLE

1. (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 58, 60 and 61 or section 93(1)(a) or (e) or under Chapter VIII;
   • (b) includes any income referred to in clause (a),—
   • (i) the gross total income shall be reduced by such income; and
   • (ii) the deduction under Chapter VIII shall be allowed as if the gross total income so reduced were the gross total income of the assessee.
2. (3) For the purposes of this section,—
   • (a) "overseas financial organisation" means any fund, institution, association or body, whether incorporated or not, established under the laws of a country outside India,—
   • (i) which has entered into an arrangement for investment in India with any public sector bank or public financial institution or a mutual fund specified in Schedule VII (Table: Sl. No. 20 or 21); and
   • (ii) such arrangement is approved by the Securities and Exchange Board of India, established under the Securities and Exchange Board of India Act, 1992 (15 of 1992), for this purpose;
   • (b) "public financial institution" shall have the same meaning as assigned to it in section 2(72) of the Companies Act, 2013 (18 of 2013);
   • (c) "unit" means unit of,—
   • (i) a mutual fund specified in Schedule VII (Table: Sl. No. 20 or 21); or
   • (ii) the Unit Trust of India.

1. (1) The income-tax payable, on the total income of an assessee, being a non- resident, which includes income specified in column B of the Table below, shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B.

TABLE

1. (a) bonds of an Indian company issued as per such scheme as may be notified by the Central Government; or
   • (b) bonds of a public sector company sold by the Government,and purchased in foreign currency.
   • (a) issued as per such scheme as may be notified by the Central Government against the initial issue of shares of an Indian company and purchased in foreign currency through an approved intermediary; or
   • (b) 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
   • (c) issued or re-issued as per a scheme as may be notified by the Central Government, against the existing shares of an Indian company purchased in foreign currency through an approved intermediary.
2. (2) Where the gross total income of the non-resident—
   • (a) consists only of income by way of interest or dividends in respect of—
   • (i) bonds referred to in sub-section (1) (Table: Sl. No. 1); or
   • (ii) Global Depository Receipts referred to in sub-section (1) (Table: Sl. No. 2),

no deduction shall be allowed under sections 28 to 58, 60 and 61 or section 93(1)(a) or (e) or under Chapter VIII;

1. (b) includes any income referred to in sub-section (1) (Table: Sl. No. 1) to (Table: Sl. No. 3),—
   • (i) the gross total income shall be reduced by the such income; and
   • (ii) the deduction under Chapter VIII shall be allowed as if the gross total income so reduced, were the gross total income of the assessee.
2. (3) The provisions of section 72(6) shall not apply for 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 sub-section (1) (Table: Sl. No. 3).
3. (4) It shall not be necessary for a non-resident to furnish a return of his income under section 263(1), if—
   • (a) his total income during the tax year consisted only of income referred to in sub-section (1) (Table: Sl. No. 1) and (Table: Sl. No. 2); and
   • (b) the tax deductible at source under the provisions of Chapter XIX-B has been deducted from such income.
4. (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, as per the provisions of sub-section (1), the provisions of that sub-section shall apply to such Global Depository Receipts or bonds.
5. (6) For the purposes of this section,—
   • (a) "approved intermediary" means an intermediary which is approved as per a scheme as may be notified by the Central Government; and
   • (b) "Global Depository Receipts" shall have the meaning assigned to it in section 193(4)(a).

1. (1) The income-tax payable on the total income of an assessee, being a specified fund or Foreign Institutional Investor, which includes income referred to in column B of the Table below, shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B.

TABLE

1. (a) 20% in case of Foreign Institutional Investor;
   • (b) 10% in case of specified fund.
2. (2) In case of specified fund, provisions of this section shall apply only to the extent of income that is attributable to units held by non-resident (not being a permanent establishment of such non-resident in India) calculated in the manner as may be prescribed, irrespective of the provisions of sub-section (1).
3. (3) Irrespective of anything contained in sub-section (1), where the specified fund is an investment division of an offshore banking unit, the provisions of this section shall apply to the extent of income that is attributable to such investment division referred to in clause (g)(ii) of Note 1 of the Table in Schedule VI as a Category-I portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), calculated in such manner as may be prescribed.
4. (4) Where the gross total income of the specified fund or Foreign Institutional Investor—
   • (a) consists only of income in respect of securities referred in sub-section (1) (Table: Sl. No. 1), no deduction shall be allowed to it under sections 28 to 58, 60 and 61 or section 93(1)(a) or (e) or under Chapter VIII;
   • (b) includes any income referred to in sub-section (1) (Table: Sl. No. 1) to (Table: Sl. No. 5),—
   • (i) the gross total income shall be reduced by the amount of such income; and
   • (ii) the deduction under Chapter VIII shall be allowed as if the gross total income as so reduced, were the gross total income of the specified fund or Foreign Institutional Investor.
5. (5) The provisions of section 72(6) shall not apply for the computation of capital gains arising out of the transfer of securities referred to in sub-section (1) (Table: Sl. No. 2) to (Table: Sl. No. 5).
6. (6) For the purposes of this section,—
   • (a) "Foreign Institutional Investor" means such investor as specified in a notification by the Central Government;
   • (b) "permanent establishment" shall have the meaning assigned to it in section 173(c);
   • (c) "securities" shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
   • (d) "specified fund" shall have the meaning assigned to it in Schedule VI [Note 1].

1. (1) Where the total income of an assessee,—
   • (a) being a sportsman (including an athlete), who is not a citizen of India and is a non-resident, includes any income received or receivable by way of—
   • (i) participation in India in any game [other than a game the winnings from which are taxable as specified in section 194(1) (Table: Sl. No. 1)] or sport; or
   • (ii) advertisement; or
   • (iii) contribution of articles relating to any game or sport in India in newspapers, magazines or journals; or
   • (b) being a non-resident sports association or institution, includes any amount guaranteed to be paid or payable to such association or institution in relation to any game, other than a game the winnings from which are taxable as specified in section 194(1) (Table: Sl. No. 1) or sport played in India; or
   • (c) being an entertainer, who is not a citizen of India and is a non-resident, includes any income received or receivable from his performance in India,

then, the aggregate of income-tax payable by the assessee shall be computed at the rate specified in the column C applied on the corresponding income specified in column B:—

TABLE

1. (2) No deduction in respect of any expenditure or allowance shall be allowed under any provision of this Act in computing the income referred to in sub-section (1).
2. (3) It shall not be necessary for the assessee to furnish a return of his income under section 263(1), if—
   • (a) his total income during the tax year consisted only of income referred to in sub-section (1); and
   • (b) the tax deductible at source under the provisions of Chapter XIX-B has been deducted from such income.