Chapter XII
Determination of tax in certain special
cases
93[R1] [Determination of tax
where total income includes income on which no tax is payable.
110. 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 the amount of 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.]
Tax on accumulated
balance of recognised provident fund.
111. (1) 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 rule 8 of Part A of the Fourth Schedule not being applicable, the 94[R2] [Assessing] Officer shall calculate the total of the various sums of 95[R3] [tax] in accordance with the provisions of sub-rule (1) of rule 9 thereof.
(2) Where the accumulated balance due to an employee participating in a recognised provident fund which is not included in his total income under the provisions of rule 8 of Part A of the Fourth Schedule becomes payable, super-tax shall be calculated in the manner provided in sub-rule (2) of rule 9 thereof.
Tax on
compensation.
112. [Omitted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 and replaced by section 80S. Before its omission, the section was first amended by the Finance Act, 1965, w.e.f. 1-4-1965 and then by the Finance (No. 2) Act, 1965, w.e.f. 11-9-1965.]
Tax on interest on National Savings
Certificates (First Issue).
96[R4] 112A. [Omitted by the Finance Act, 1988, w.e.f. 1-4-1989. Original section was inserted by the Finance (No. 2) Act, 1965, w.e.f. 11-9-1965.]
Tax in the case of
non-resident.
113. [Omitted by the Finance Act, 1965, w.e.f. 1-4-1965.]
Tax on capital
gains in cases of assessees other than companies.
114. [Omitted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 and reintroduced with material modifications in section 80T. Section 114 was substituted first by the Finance (No. 2) Act, 1962, w.e.f. 1-4-1962 and later on amended by the Finance Act, 1964, w.e.f. 1-4-1964, the Finance Act, 1965, w.e.f. 1-4-1965, the Finance (No. 2) Act, 1965, w.e.f. 11-9-1965 and the Finance Act, 1966, w.e.f. 1-4-1966.]
Tax on capital
gains in case of companies.
97[R5] 115. [Omitted by the Finance Act, 1987, w.e.f. 1-4-1988.]
98[R6] [Tax on dividends, royalty and technical service fees in the case of foreign companies.
99[R7] 115A. (1) Subject to the provisions of 1[R8] sub-sections (1A) and (2)], where the total income of an assessee, being a foreign company, includes any income by way of—
(a) dividends; or
2[R9] [(aa) interest received from Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency; or]
3[R10] [(ab) income received in respect of units, purchased in foreign currency, of a Mutual Fund specified under clause (23D) of section 10; or]
4[R11] [(b) royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the Indian concern after the 31st day of March, 1976, and where such agreement is with an Indian concern, such agreement is approved by the Central Government,]the income-tax payable shall be the aggregate of—
(i) the amount of income-tax calculated on the amount of income by way of dividends, if any, included in the total income, at the rate of twenty-five per cent;
2[R12] [(ia) the amount of income-tax calculated on the income by way of interest referred to in clause (aa), if any, included in the total income, at the rate of twenty-five per cent;]
5[R13] [(ib) the amount of income-tax calculated on the income in respect of units referred to in clause (ab), if any, included in the total income, at the rate of twenty-five per cent;]
6[R14] [(ii) the amount of income-tax calculated on the income by way of royalty, if any, included in the total income, at the rate of thirty per cent;]
(iii) the amount of income-tax calculated on the income by way of fees for technical services, if any, included in the total income, at the rate of 7[R15] [thirty per cent]; and
(iv) the amount of income-tax with which it would have been chargeable had its total income been reduced by the amount of income referred to in clause (a) 8[R16] [, clause (aa)] and clause (b).
Explanation : For the purposes of this section,—
(a) “fees for technical services” shall have the same meaning as in 9[R17] [Explanation 2] to clause (vii) of sub-section (1) of section 9;
8[R19] [11[R20] [(b)] “foreign currency” shall have the same meaning as in the Explanation below item (g) of sub-clause (iv) of clause (15) of section 10;]
(c) “royalty” shall have the same meaning as in 9[R21] [Explanation 2] to clause (vi) of sub-section (1) of section 9.
12[R22] [(1A) Where the royalty referred to in clause (b) of sub-section (1) is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book to an Indian concern 12a[R23] [or in respect of any computer software to a person resident in India], the provisions of sub-section (1) shall apply in relation to such royalty as if the words “and approved by the Central Government” occurring in the said clause had been omitted :
Provided that such book is on a subject, the books on which are permitted, according to the Import Trade Control Policy of the Government of India for the period commencing from the 1st day of April, 1977, and ending with the 31st day of March, 1978, to be imported into India under an Open General Licence :
12a[R24] [Provided further that such computer software is permitted according to the Import Trade
Control Policy of the Government of India for the time being in force to be
imported into
12b[R25] [Explanation 1] : In this sub-section, “Open General Licence” means an Open General Licence issued by the Central Government in pursuance of the Imports (Control) Order, 1955.]
12a[R26] [Explanation 2 : In this sub-section, the expression “computer software” shall have the meaning assigned to it in clause (b) of the Explanation to section 80HHE.]
(2) Nothing contained in sub-section (1) shall apply in relation to any income by way of royalty received by a foreign company from an Indian concern in pursuance of an agreement made by it with the Indian concern after the 31st day of March, 1976, if such agreement is deemed, for the 12c[R27] [Purposes of the first proviso] to clause (vi) of sub-section (1) of section 9, to have been made before the 1st day of April, 1976; and the provisions of the annual Finance Act, for calculating, charging, deducting or computing income-tax shall apply in relation to such income as if such income had been received in pursuance of an agreement made before the 1st day of April, 1976.]
The following section shall be inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992 :
Tax on income from units purchased in foreign
currency or capital gains arising from their transfer.
115AB. (1) Where the total income of an assessee, being an overseas financial organisation (hereinafter referred to as Offshore Fund) includes—
(a) income received in respect of units purchased in foreign currency; or
(b) income by way of long-term capital gains arising from the transfer of units purchased in foreign currency,the income-tax payable shall be the aggregate of—
(i) the amount of income-tax calculated on the income in respect of units referred to in clause (a), if any, included in the total income, at the rate of ten per cent;
(ii) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause (b), if any, included in the total income, at the rate of ten per cent; and
(iii) the amount of income-tax with which the Offshore Fund would have been chargeable had its total income been reduced by the amount of income referred to in clause (a) and clause (b).
(2) Where the gross total income of the Offshore Fund,—
(a) consists only of income from units or income by way of long-term capital gains arising from the transfer of units, or both, no deduction shall be allowed to the assessee under sections 28 to 44C or sub-section (2) of section 48 or clause (i) or clause (iii) of section 57 or under Chapter VI-A;
(b) includes any income referred to in clause (a), the gross total income shall be reduced by the amount of such income and the deduction under Chapter VI-A shall be allowed as if the gross total income as so reduced were the gross total income of the assessee.
Explanation : For the purposes of this section,—
(a) “overseas financial organisation” means any fund, institution, association or body, whether incorporated or not, established under the laws of a country outside India, which has entered into an arrangement for investment in India with any public sector bank or public financial institution or a mutual fund specified under clause (23D) of section 10 and such arrangement is approved by the Central Government for this purpose;
(b) “unit” means unit of a mutual fund specified under clause (23D) of section 10 or of the Unit Trust of India;
(c) “foreign currency” shall have the meaning as in the Foreign Exchange Regulation Act, 1973 (46 of 1973);
(d) “public sector bank” shall have the meaning assigned to it in clause (23D) of section 10;
(e) “public financial institution” shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956);
(f) “Unit Trust of India” means the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963).
13[R28] [Tax on profits and gains of life insurance business.
115B. 14[R29] [(1)] Where the total income of an assessee includes any profits and gains from life insurance business, the income-tax payable shall be the aggregate of—
(i) the amount of income-tax calculated on the amount of profits and gains of the life insurance business included in the total income, at the rate of twelve and one-half per cent; and
(ii) the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the amount of profits and gains of the life insurance business.]
15[R30] [(2) Notwithstanding anything contained in sub-section (1) or in any other law for the time being in force or any instrument having the force of law, the assessee shall, in addition to the payment of income-tax computed under sub-section (1), deposit, during 16[R31] [the previous years relevant to the assessment years commencing on the 1st day of April, 1989 and the 1st day of April, 1990], an amount equal to thirty-three and one-third per cent of the amount of income-tax computed under clause (i) of sub-section (1), in such social security fund (hereafter in this sub-section referred to as the security fund), as the Central Government may, by notification17[R32] in the Official Gazette, specify in this behalf :
Provided that where the assessee makes during the said previous 18[R33] [years] any deposit of an amount of not less than two and one-half per cent of the profits and gains of the life insurance business in the security fund, the amount of income-tax payable by the assessee under the said clause (i) shall be reduced by an amount equal to two and one-half per cent of such profits and gains and, accordingly, the deposit of thirty-three and one-third per cent required to be made under this sub-section shall be calculated on the income-tax as so reduced.]
19[R34] [Tax on winnings from lotteries, crossword puzzles, and races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever.
115BB. Where the total income of an assessee includes any income by way of winnings from any lottery or crossword puzzle or race including horse race (not being income from the activity of owning and maintaining race horses) or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, the income-tax payable shall be the aggregate of—
(i) the amount of income-tax calculated on income by way of winnings from such lottery or crossword puzzle or race including horse race or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, at the rate of forty per cent; and
(ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).
Explanation : For the purposes of this section, “horse race” shall have the same meaning as in section 74A.]
20[R35] [Tax on non-resident sportsmen or sports associations.
115BBA.(1) Where the total income of an assessee,—
(a) being a sportsmen (including an athlete), who is not a
citizen of
(i) participation in
(ii) advertisement; or
(iii) contribution of articles relating to any game or sport in
(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 wherefrom are taxable under section 115BB) or
sport played in India, the income-tax payable by the assessee shall be
the aggregate of—
(i) the amount of income-tax calculated
on income referred to in clause (a)
or clause (b) at the rate of
ten per cent; and
(ii) the amount of income-tax with which the assessee would have
been chargeable had the total income of the assessee been reduced by the amount
of income referred to in clause (a)
or clause (b) :
Provided that 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 clause (a) or clause (b).
(2) It shall not be necessary for the assessee to furnish under sub-section (1) of section 139 a return of his income if—
(a) his total income
in respect of which he is assessable
under this Act during the previous year consisted only of income referred to in
clause (a)
or clause (b) of sub-section
(1); and
(b) the tax deductible at source under the provisions of Chapter
XVII-B has been deducted from such income.]
[R1]Substituted by the Finance Act, 1965, w.e.f. 1-4-1965.
[R2]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R3]Substituted for “income-tax and super-tax” by the Finance Act, 1965, w.e.f. 1-4-1965.
[R4]Prior to its omission, section 112A, as amended by the
Finance Act, 1966, w.e.f. 1-4-1966, Finance (No. 2) Act, 1967, w.e.f. 1-4-1968,
Taxation Laws (Amendment) Act, 1970, with retrospective effect from
1-4-1968/1969 and Finance Act, 1973, with retrospective effect from 1-4-1972,
stood as under :
‘Where
the total income of an assessee, not being a company, includes any interest on
National Savings Certificates (First Issue), the tax payable by him on his
total income shall be—
(a) the
amount of income-tax payable on the total income as reduced by the amount of
such inclusion, had the total income so reduced been his total income; plus
(b) the amount of income-tax calculated
on the amount of such interest included in the total income at the average rate
of income-tax which would have been applicable to the total income if the
amount of such interest and the amount of compensation or other payment
referred to in sub-clause (a)
or sub-clause (b) or sub-clause
(c) of clause (ii) of section 28 and of the capital
gains, if any, had not formed part of it;
(c) [***]
Explanation 1 : [***]
Explanation 2 : For the purposes of this section and section 193, “National Savings Certificates (First Issue)” includes “National Savings Certificates (First Issue)”—Bank Series.’
[R5]Omitted section 115, as amended by the Finance (No. 2)
Act, 1962, w.e.f. 1-4-1962, the Finance Act, 1964, w.e.f. 1-4-1964, the Finance
Act, 1965, w.e.f. 1-4-1965, the Finance Act, 1966, w.e.f. 1-4-1966, the Finance
(No. 2) Act, 1971, w.e.f. 1-4-1972, the Finance (No. 2) Act, 1974, w.e.f.
1-4-1975, the Finance Act, 1976, w.e.f. 1-4-1977 and the Finance Act, 1985,
w.e.f. 1-4-1986, stood as under :
‘Where
the total income of a company includes any income chargeable under the head
“Capital gains” relating to capital assets other than short-term capital assets
(such income being hereinafter referred to as long-term capital gains), the
income-tax payable shall be the aggregate of—
(i) the
amount of income-tax calculated on the amount of long-term capital gains
included in the total income—
(a) on so much of the amount of such
long-term capital gains as relate to buildings or lands or any rights in
buildings or lands, at the rate of fifty per cent; and
(b) on the
balance of such long-term capital gains, if any, at the rate of forty per cent;
and
(ii) the amount of income-tax with which it would have been chargeable had its total income been reduced by the amount of long-term capital gains referred to in clause (i).’
[R6]Inserted by the Finance Act, 1976, w.e.f. 1-6-1976.
[R7]See also Circular No. 473, dated 29-10-1986.
[R8]Substituted for “sub-section (2)” by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978.
[R9]Inserted by the Finance Act, 1983, w.e.f. 1-6-1983.
[R10]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R11]Substituted by the Finance Act, 1983, w.e.f. 1-6-1983.
[R12]Inserted by the Finance Act, 1983, w.e.f. 1-6-1983.
[R13]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R14]Substituted for the following clause (ii) by the Finance Act, 1986, w.e.f.
1-4-1987.
“(ii) the
amount of income-tax calculated on the income by way of royalty, if any,
included in the total income—
(1) on so much of the amount of such
income as consists of lump sum consideration for the transfer outside India of,
or the imparting of information outside India in respect of, any data,
documentation, drawing, or specification relating to any patent, invention,
model, design, secret formula or process or trade mark or similar property, at
the rate of twenty per cent;
(2) on the balance of such income, if any, at the rate of forty per cent;”
[R15]Substituted for “forty per cent” by the Finance Act, 1986, w.e.f. 1-4-1987.
[R16]Inserted by the Finance Act, 1983, w.e.f. 1-6-1983.
[R17]Substituted for “the Explanation” by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1977.
[R18]Clause (b)
omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Prior to
its omission clause (b) stood
as under :
‘(b) “foreign company” shall have the same meaning as in section 80B;’
[R19]Inserted by the Finance Act, 1983, w.e.f. 1-6-1983.
[R20]Relettered, ibid.
[R21]Substituted for “the Explanation” by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1977.
[R22]Inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978.
[R23]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R24]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R25]Renumbered, ibid.
[R26]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R27]Substituted for “purposes of the proviso” by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R28]Inserted by the Finance Act, 1976, w.e.f. 1-6-1976.
[R29]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989.
[R30]Inserted, ibid.
[R31]Substituted for “the previous year relevant to the assessment year commencing on the 1st day of April, 1989” by the Finance Act, 1989, w.e.f. 1-4-1990.
[R33]Substituted for “year” by the Finance Act, 1989, w.e.f. 1-4-1990.
[R34]Inserted by the Finance Act, 1986, w.e.f. 1-4-1987.
[R35]Inserted by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1990.