CHAPTER XII
Determination of tax in certain special
cases
60[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 61[R2] [Assessing] Officer shall calculate the total
of the various sums of 62[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.
63[R4] [Tax
on long-term capital gains.
64[R5] 112. (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 shall be the aggregate
of,—
(a) in the case of
an individual or a Hindu undivided family, 65[R6] [being
a resident,]—
(i) the
amount of income-tax payable on the total income as reduced by the amount of
such long-term capital gains, had the total income as so reduced been his total
income ; and
(ii) the amount of
income-tax calculated on such long-term capital gains at the rate of twenty per
cent :
Provided
that where the total income as reduced by such long-term capital gains is below
the maximum amount which is not chargeable to income-tax, then, 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 the tax on the balance of such long-term capital gains shall be computed at
the rate of twenty per cent ;
(b) in the case of
a 66[R7] [domestic]
company,—
(i) the
amount of income-tax payable on the total income as reduced by the amount of
such long-term capital gains, had the total income as so reduced been its total
income ; and
(ii) the amount of
income-tax calculated on such long-term capital gains at the rate of 67[R8] [twenty]
per cent :
68[R8] [***]
69[R9] [(c) in the case of a non-resident (not being
a company) or a foreign company,—
(i) the
amount of income-tax payable on the total income as reduced by the amount of
such long-term capital gains, had the total income as so reduced been its total
income ; and
(ii) the amount of
income-tax calculated on such long-term capital gains at the rate of twenty per
cent ;]
70[R10] [(d)] in any other case 71[R11] [of a resident],—
(i) the
amount of income-tax payable on the total income as reduced by the amount of
long-term capital gains, had the total income as so reduced been its total
income ; and
(ii) the amount of
income-tax calculated on such long-term capital gains at the rate of 72[R12] [twenty] per cent.
74[R14] [Provided
that where the tax payable in respect of any income arising from the transfer
of a long-term capital asset, being listed securities 75[R15] [or unit],
exceeds ten per cent of the amount of capital gains before giving effect to the
provisions of the second proviso to section 48, then, such excess shall be
ignored for the purpose of computing the tax payable by the assessee.
76[R16] [Explanation.—For the purposes of this sub-section,—
(a) “listed
securities” means the securities—
(i) as defined in clause (h) of section 277[R17] of the Securities Contracts (Regulation)
Act, 1956 (32 of 1956); and
(ii) listed in any recognised stock exchange in India;
(b) “unit” shall
have the meaning assigned to it in clause (b) of Explanation to
section 115AB.]]
(2) Where
the gross total income of an assessee includes any income [R17] Substituted by the Finance Act, 2000, w.e.f.
1-4-2000. Prior to its substitution, Explanation, as inserted by
the Finance Act, 1999, w.e.f. 1-4-2000, read as under :
‘Explanation.—For the purposes of this sub-section, “listed securities”
means the securities—
(a) as
defined in clause (h) of section 2 of the Securities Contracts
(Regulation) Act, 1956 (32 of 1956); and
(b) listed
in any recognised stock exchange in India.’arising from the transfer of a long-term capital
asset, the gross total income shall be reduced by the amount of such income and
the deduction under Chapter VI-A shall be allowed as if the gross total income
as so reduced were the gross total income of the assessee.
(3) Where the total income of an assessee
includes any income arising from the transfer of a long-term capital asset, the
total income shall be reduced by the amount of such income and the rebate under
section 88 shall be allowed from the income-tax on the total income as so
reduced.
Tax on interest on National Savings Certificates (First Issue).
112A. [Omitted
by the Finance Act, 1988, w.e.f. 1-4-1989. Original section 112A was inserted
by the Finance (No. 2) Act, 1965, w.e.f. 11-9-1965 and later on 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.]
78[R18] [Tax in the
case of block assessment of search cases.
113. The
total undisclosed income of the block period, determined under section 158BC,
shall be chargeable to tax at the rate of sixty per cent:]
79[R19] [Provided
that the tax chargeable under this section shall be increased by a
surcharge, if any, levied by any Central Act and applicable in the assessment
year relevant to the previous year in which the search is initiated under
section 132 or the requisition is made under section 132A.]
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.
115. 80[R20] [Omitted
by the Finance Act, 1987, w.e.f. 1-4-1988.]
81[R21] [Tax on dividends,
royalty and technical service fees in the case of foreign companies.
82[R22] 115A. 83[R23] [(1) Where the total income of—
(a) a non-resident
(not being a company) or of a foreign company, includes any income by way of—
(i) dividends 84[R24] [other
than dividends referred to in section 115-O]
; or
(ii) interest
received from Government or an Indian concern on monies borrowed or debt
incurred by Government or the Indian concern in foreign currency ; or
(iii) income received in respect of units, purchased in foreign
currency, of a Mutual Fund specified under clause (23D) of section 10 or
of the Unit Trust of India, the
income-tax payable shall be aggregate of—
(A) the amount of
income-tax calculated on the amount of income by way of dividends 84[R25] [other
than dividends referred to in section 115-O],
if any, included in the total income, at the rate of twenty per cent ;
(B) the amount of income-tax calculated on
the amount of income by way of interest referred to in sub-clause (ii),
if any, included in the total income, at the rate of twenty per cent ;
(C) the amount of income-tax calculated on
the income in respect of units referred to in sub-clause (iii), if any,
included in the total income, at the rate of twenty per cent ; and
(D) the amount of income-tax with which he or
it would have been chargeable had his or its total income been reduced by the amount of income referred to in sub-clause (i), sub-clause (ii) and sub-clause (iii)
;
(b) 85[R26] [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 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, the agreement
is approved by the Central Government or where it relates to a matter included
in the industrial policy, for the time being in force, of the Government of
India, the agreement is in accordance with that policy, then, subject to the
provisions of sub-sections (1A) and (2), the income-tax payable shall be the
aggregate of,—
86[R27] [(A) 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 if such royalty is received in pursuance of an agreement
made on or before the 31st day of May, 1997 and twenty per cent where such
royalty is received in pursuance of an agreement made after the 31st day of
May, 1997;
(B) 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 thirty per cent if such fees for technical services are
received in pursuance of an agreement made on or before the 31st day of May,
1997 and twenty per cent where such fees for technical services are received in
pursuance of an agreement made after the 31st day of May, 1997; and]
(C) the amount of
income-tax with which it would have been chargeable had its total income been
reduced by the amount of income by way of royalty and fees for technical
services.
Explanation.—For the purposes of
this section,—
(a) “fees for
technical services” shall have the same meaning as in Explanation 2 to
clause (vii) of sub-section (1) of section 9 ;
(b) “foreign 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 Explanation 2 to clause (vi) of sub-section (1) of
section 9 ;
(d) “Unit Trust of India” means the Unit
Trust of India established under the Unit Trust of India Act, 1963 (52 of
1963).]
87[R28] [(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 88[R29] [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 89[R30] [90[R31] [the
agreement is approved by the Central Government or where it relates to a
matter] included in the industrial policy, for the time being in force, of the
Government of India, the agreement is in accordance with that policy]
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 :
91[R32] [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 India under an Open General Licence.]
92[R33] [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.]
93[R34] [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 94[R35] [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.]
95[R36] [(3) No deduction in respect of any expenditure
or allowance shall be allowed to the assessee under sections 28 to 44C and
section 57 in computing his or its income referred to in sub-section (1).
(4) Where in the case of an assessee referred
to in sub-section (1),—
(a) the gross total
income consists only of the income referred to in clause (a) of that
sub-section, no deduction shall be allowed to him or it under Chapter VI-A;
(b) the gross total income includes any
income referred to in clause (a) of that sub-section, 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.
(5) It shall not be necessary for an
assessee referred to in sub-section (1) to furnish under sub-section (1) of
section 139 a return of his or its income if—
(a) his or its total income in respect of
which he or it is assessable under this Act during the previous year consisted
only of income referred to in clause (a) of sub-section (1); and
(b) the tax
deductible at source under the provisions of Chapter XVII-B has been deducted
from such income.]
96[R37] [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 97[R38] [***]or clause (i) or clause (iii) of section 57 or under
Chapter VI-A 98[R39] [and nothing contained in the provisions of
the second proviso to section 48 shall apply to income referred to in clause (b)
of sub-section (1)];
(b) includes any income referred to in
clause (a), the gross total income shall be reduced by the amount of
such income and the deduction under Chapter VI-A shall be allowed as if the
gross total income as so reduced were the gross total income of the assessee.
Explanation.—For the purposes of
this section,—
(a) “overseas financial organisation”
means any fund, institution, associa-tion 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 99[R40] [Securities and Exchange Board of India,
established under the Securities and Exchange Board of India Act, 1992 (15 of
1992),] for this purpose;
(b) “unit” means
unit of a mutual fund specified under clause (23D) of section 10 or of
the Unit Trust of India;
(c) “foreign
currency”1[R41] 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 4A2[R42] 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)].
3[R43] [Tax on income from
bonds or Global Depository Receipts purchased in foreign currency or capital
gains arising from their transfer.
115AC.(1) Where
the total income of an assessee, being a non-resident, includes—
(a) income by way of
interest on bonds of an Indian company issued in accordance with such scheme as
the Central Government may, by notification in the Official Gazette4[R44] ,
specify in this behalf, or on bonds of a public sector company sold by the Government,
and purchased by him in foreign currency; or
(b) income by way of dividends 5[R45] [, other than dividends referred to in
section 115-O, ] on Global Depository Receipts—
(i) issued
in accordance with such scheme as the Central Government may, by notification
in the Official Gazette4[R46] ,
specify in this behalf, against the initial issue of shares of an Indian
company and purchased by him in foreign currency through an approved
intermediary; or
(ii) issued against
the shares of a public sector company sold by the Government and purchased by
him in foreign currency through an approved intermediary; or
(iii) 6 [R47] [issued
or] re-issued in accordance with such scheme as the Central Government may, by
notification in the Official Gazette4[R48] , specify
in this behalf, against the existing shares of an Indian company purchased by
him in foreign currency through an approved intermediary; or
(c) income by way
of long-term capital gains arising from the transfer of bonds referred to in
clause (a) or, as the case may be, Global Depository Receipts referred
to in clause (b), the income-tax payable shall be the aggregate of—
(i) the
amount of income-tax calculated on the income by way of interest or dividends 8[R50]
[, other than dividends
referred to in section 115-O] , as the case may be, in
respect of bonds referred to in clause (a) or Global Depository Receipts
referred to in clause (b), if any, included in the total income, at the
rate of ten per cent;
(ii) the amount of income-tax calculated on
the income by way of long-term capital gains referred to in clause (c),
if any, at the rate of ten per cent; and
(iii) the amount of
income-tax with which the non-resident would have been chargeable had his
total income been reduced by the amount of income referred to in clauses (a),
(b) and (c).
(2) Where the gross total income of the
non-resident—
(a) consists only of income by way of
interest or dividends 8[R51]
[, other than dividends
referred to in section 115-O] in respect of bonds referred to in
clause (a) of sub-section (1) or, as the case may be, Global Depository
Receipts referred to in clause (b) of that sub-section, no deduction
shall be allowed to him under sections 28 to 44C or clause (i)
or clause (iii) of section 57 or under Chapter VI-A;
(b) includes any
income referred to in clause (a) or clause (b) or clause (c)
of sub-section (1), the gross total income shall be reduced by the amount of
such income and the deduction under Chapter VI-A shall be allowed as if the
gross total income as so reduced, were the gross total income of the assessee.
(3) Nothing contained in the
first and second provisos to section 48 shall apply for the computation of
long-term capital gains arising out of the transfer of long-term capital asset,
being bonds or Global Depository Receipts referred to in clause (c) of
sub-section (1).
(4) It shall not be
necessary for a non-resident to furnish under sub-section (1) of section 139 a
return of his income if—
(a) his total income in respect of which he is assessable under
this Act during the previous year consisted only of income referred to in
clauses (a) and (b) of sub-section (1); and
(b) the tax deductible at source under
the provisions of Chapter XVII-B has been deducted from such income.
(5) Where the assessee
acquired Global Depository Receipts or bonds in an amalgamated or resulting
company by virtue of his holding Global Depository Receipts or bonds in the
amalgamating or demerged company, as the case may be,
in accordance with the provisions of sub-section (1), the provisions of that
sub-section shall apply to such Global Depository Receipts or bonds.
Explanation.—For the purposes of this section,—
(a) “approved intermediary” means an intermediary who is approved
in accordance with such scheme as may be notified8a [R52] by
the Central Government in the Official Gazette;
(b) “Global
Depository Receipts” shall have the same meaning as in clause (a) of
the Explanation to section 115ACA.]
9[R53] [Tax on income from Global depository
receipts purchased in foreign
currency or capital gains arising from their transfer.
115ACA. 10[R54] [(1) Where the total income of an assessee,
being an individual, who is a resident and an employee of an Indian company
engaged in specified knowledge based industry or service, or an employee of its
subsidiary engaged in specified knowledge based industry or service (hereafter
in this section referred to as the resident employee), includes—
(a) income by way of
dividends 11[R55] [, other than dividends referred to in
section 115-O, ]
on Global Depository Receipts of an Indian company engaged in specified
knowledge based industry or service, issued in accordance with such Employees’
Stock Option Scheme as the Central Government may, by notification in the
Official Gazette11a[R56] ,
specify in this behalf and purchased by him in foreign currency; or
(b) income by way of long-term capital gains arising from the
transfer of Global Depository Receipts referred to in clause (a), the
income-tax payable shall be the aggregate of—
(i) the
amount of income-tax calculated on the income by way of dividends 11[R57] [, other than dividends referred to in section
115-O, ] in respect of Global Depository Receipts
referred to in clause (a), if any, included in the total income, at the
rate of ten per cent;
(ii) the amount of
income-tax calculated on the income by way of long-term capital gains referred
to in clause (b), if any, at the rate of ten per cent; and
(iii) the amount of income-tax with which the resident employee
would have been chargeable had his total income been reduced by the amount of
income referred to in clauses (a) and (b).
Explanation.—For the purposes of this sub-section,—
(a) “specified knowledge based industry or service” means—
(i) information technology software;
(ii) information technology service;
(iii) entertainment service;
(iv) pharmaceutical industry;
(v) bio-technology
industry; and
(vi) any other industry or service, as may be specified by the
Central Government, by notification in the Official Gazette;
(b) “subsidiary”
shall have the meaning assigned to it in section 411b[R58] of the Companies Act, 1956 (1 of 1956) and includes
subsidiary incorporated outside India.]
(2) Where the gross total income of the
resident employee—
(a) consists only of income by way of
dividends 12[R59] [, other than dividends referred to in section
115-O, ] in respect of Global Depository Receipts
referred to in clause (a) of sub-section (1), no deduction shall be allowed
to him under any other provision of this Act;
(b) includes any
income referred to in clause (a) or clause (b) of sub-section
(1), the gross total income shall be reduced by the amount of such income and
the deduction under any provision of this Act shall be allowed as if the gross
total income as so reduced were the gross total income of the assessee.
(3) Nothing contained in the
first and second provisos to section 48 shall apply for the computation of
long-term capital gains arising out of the transfer of long-term capital asset,
being Global Depository Receipts referred to in clause (b) of
sub-section (1).
Explanation.—For the purposes of this section,—
(a) “Global
Depository Receipts” means any instrument in the form of a depository receipt or certificate
(by whatever name called) created by the Overseas Depository Bank outside India
and issued to non-resident investors against the issue of ordinary shares or
foreign currency convertible bonds of issuing company;
(b) “information technology service” means any service which
results from the use of any information technology software over a system of
information technology products for realising value
addition;
(c) “information
technology software” means any representation of instructions, data, sound or
image, including source code and object code, recorded in a machine readable
form and capable of being manipulated or providing inter-activity to a user, by
means of an automatic data processing machine falling under heading information
technology products but does not include non-information technology products;
(d) “Overseas Depository Bank” means a bank authorised by the issuing company to issue Global
Depository Receipts against issue of Foreign Currency Convertible Bonds or
ordinary shares of the issuing company.]
13[R60] [Tax on income of Foreign Institutional Investors from securities or
capital gains arising from their transfer.
115AD. (1) Where
the total income of a Foreign Institutional Investor includes—
14[R61] [(a) income 15[R62] [other
than income by way of dividends referred to in section 115-O] received
in respect of securities (other than unit referred to in section 115AB); or]
(b) income by way of short-term or long-term capital gains
arising from the transfer of such securities, the income-tax payable shall be
the aggregate of—
(i) the
amount of income-tax calculated on the income in respect of securities referred
to in clause (a), if any, included in the total income, at the rate of
twenty per cent;
(ii) the amount of income-tax calculated on the
income by way of short-term capital gains referred to in clause (b), if
any, included in the total income, at the rate of thirty per cent;
(iii) the amount of income-tax calculated on the
income by way of long-term capital gains referred to in clause (b), if
any, included in the total income, at the rate of ten per cent; and
(iv) the amount of
income-tax with which the Foreign Institutional Investor would have been
chargeable had its total income been reduced by the amount of income referred
to in clause (a) and clause (b).
(2) Where the gross total income of the
Foreign Institutional Investor—
(a) consists only of income in respect of
securities referred to in clause (a) of sub-section (1), no deduction
shall be allowed to it under sections 28 to 44C or clause (i)
or clause (iii) of section 57 or under Chapter VI-A;
(b) includes any income referred to in
clause (a) or clause (b) of sub-section (1), the gross total
income shall be reduced by the amount of such income and the deduction under
Chapter VI-A shall be allowed as if the gross total income as so reduced, were
the gross total income of the Foreign Institutional Investor.
(3) Nothing contained in the first and
second provisos to section 48 shall apply for the computation of capital gains
arising out of the transfer of securities referred to in clause (b) of
sub-section (1).
Explanation.—For the purposes of
this section,—
(a) the expression
“Foreign Institutional Investor” means such investor as the Central Government
may, by notification in the Official Gazette16[R63] , specify in this behalf;
(b) the expression “securities”17[R64] shall have the meaning assigned to it in
clause (h) of section 2 of the Securities Contracts (Regulation) Act,
1956 (42 of 1956).]
18[R65] [Tax on profits
and gains of life insurance business.
115B. 19[R66] [(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.]
20[R67] [(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 21[R68] [the
previous years relevant to the assessment years commen-cing
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 notification22 [R69] in
the Official Gazette, specify in this behalf :
Provided that where the assessee makes during the said
previous 23[R70] [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.]
24[R71] [Tax on winnings from lotteries, crossword puzzles, 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 25[R72] [thirty] 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.]
26[R73] [Tax on non-resident sportsmen or sports associations.
115BBA. (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 wherefrom are taxable under section 115BB) 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 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.]
27[R74] [Tax on income from units of an open-ended equity oriented fund of the
Unit Trust of India or of Mutual Funds.
115BBB. (1) Where
the total income of an assessee includes any income from units of an open-ended
equity oriented fund of the Unit Trust of India or of a Mutual Fund, the
income-tax payable shall be the aggregate of—
(a) the
amount of income-tax calculated on income from units of an open-ended equity
oriented fund of the Unit Trust of India or of a Mutual Fund, at the rate of
ten per cent; and
(b) 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 (a).
(2) Nothing contained in sub-section (1)
shall apply in relation to any income from units of an open-ended equity
oriented fund of the Unit Trust of India or of the Mutual Fund arising after
the 31st day of March, 2003.
Explanation.—For
the purposes of this section, the expressions “Mutual Fund”, “open-ended equity
oriented fund” and “Unit Trust of India” shall have the meanings respectively
assigned to them in the Explanation
to section 115T.]
[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]Inserted by the Finance Act, 1992, w.e.f. 1-4-1993. Earlier section 112 was 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.
[R5]See also Circular No. 721, dated 13-9-1995.
[R6]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995.
[R7]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995.
[R8]Substituted for “thirty” by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997. Earlier “thirty” was substituted for “forty” by the Finance Act, 1994, w.e.f. 1-4-1995.
[R9]Inserted
by the Finance Act, 1994, w.e.f. 1-4-1995.
[R10]Existing clause (c) relettered as clause (d) by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989
[R11]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995.
[R12]Substituted for “thirty” by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R13]The Explanation omitted by the Finance Act, 1995,
w.e.f. 1-4-1996. Prior to its omission, the Explanation read as under :
‘Explanation.—For the purposes of
this sub-section,—
(a) “venture
capital company” means such company as is engaged in providing finance to
venture capital undertakings mainly by way of acquiring equity shares of such
undertakings or, if the circumstances so require, by way of advancing loans to
such undertakings, and is approved by the Central Government in this behalf ;
(b) “venture
capital undertaking” means such company as the prescribed authority may, having
regard to the following factors, approve for the purposes of this sub-section,
namely :—
(1) the total investment in the company does not exceed ten crore rupees or such other higher amount as may be
prescribed ;
(2) the company does not have adequate financial resources to
undertake projects for which it is otherwise professionally or technically equipped
; and
(3) the company seeks to employ any technology which will result in significant improvement over the existing technology in India in any field and the investment in such technology involves high risk.’
[R14]Inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R15]Inserted
by the Finance Act, 2000, w.e.f. 1-4-2000.
[R16]Substituted by the Finance Act, 2000, w.e.f. 1-4-2000. Prior to its substitution, Explanation, as inserted by the Finance Act, 1999, w.e.f. 1-4-2000, read as under :
‘Explanation.—For the purposes of
this sub-section, “listed securities” means the securities—
(a) as defined in clause (h) of
section 2 of the Securities Contracts (Regulation) Act, 1956 (32 of 1956); and
(b) listed in any recognised stock exchange in India.’
[R17]For definition of “securities
[R18]Inserted by the Finance Act, 1995, w.e.f. 1-7-1995. Earlier section 113 dealing with “Tax in the case of non-resident” was omitted by the Finance Act, 1965, w.e.f. 1-4-1965
[R19]Inserted
by the Finance Act, 2002, w.e.f. 1-6-2002.
[R20]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 :
‘115. Tax on capital gains in case of
companies.—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).’
[R21]Inserted
by the Finance Act, 1976, w.e.f. 1-6-1976.
[R22]See also Circular No. 473, dated 29-10-1986, Circular No. 740, dated 17-4-1996 and Circular No. 742, dated 2-5-1996.
[R23]Substituted by the Finance Act, 1994, w.e.f. 1-4-1995. Prior to substitution, sub-section (1), as amended by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1977/1-4-1978, the Finance Act, 1983, w.e.f. 1-6-1983, the Finance Act, 1986, w.e.f. 1-4-1987, the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989 and the Finance Act, 1992, w.e.f. 1-6-1992, read as under :
‘(1) Subject to the provisions of 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
(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
(ab) income
received in respect of units, purchased in foreign currency, of a Mutual Fund
specified under clause (23D) of section 10 ; or
(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, the
agreement is approved by the Central Government or where it relates to a matter
included in the industrial policy, for the time being in force, of the
Government of India, the agreement is in accordance with that policy,
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 ;
(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 ;
(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 ;
(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 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), clause (aa)
and clause (b).
Explanation.—For the purposes of
this section,—
(a) “fees for technical
services” shall have the same meaning as in Explanation 2 to clause (vii)
of sub-section (1) of section 9 ;
(b) “foreign 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 Explanation 2 to clause (vi) of sub-section (1) of section 9.’
[R24]The italicised words shall be inserted by the Finance Act,
2003, w.e.f. 1-4-2004. Words “other than dividends referred to in
section 115-O” were omitted by the Finance Act, 2002, w.e.f. 1-4-2003. Earlier
the quoted words were inserted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R25]The italicised words shall be inserted by the Finance Act, 2003, w.e.f. 1-4-2004. Words “other than dividends referred to in section 115-O” were omitted by the Finance Act, 2002, w.e.f. 1-4-2003. Earlier the quoted words were inserted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R26]Words “a non-resident (not being a company) or a foreign company, includes any income by way of royalty or fees for technical services other than income referred to in sub-section (1) of section 44DA” shall be substituted for “a foreign company, includes any income by way of royalty or fees for technical services” by the Finance Act, 2003, w.e.f. 1-4-2004.
[R27] Substituted by the Finance Act,
1997, w.e.f. 1-4-1998. Prior to their substitution, sub-clauses (A) and
(B) read as under :
“(A) 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 ;
(B) 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 thirty per cent ; and”
[R28]Inserted
by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978.
[R29]Inserted
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R30]Substituted
for “and approved by the Central Government” by the Finance Act, 1992, w.e.f.
1-6-1992.
[R31]Substituted for “approved by the Central Government or where the agreement relates to a matter” by the Finance Act, 1994, w.e.f. 1-4-1995.
[R32]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R33]Renumbered
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R34]Inserted
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R35]Substituted
for “purposes of the proviso” by the Finance (No. 2) Act, 1991, w.e.f.
1-4-1991.
[R36]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995.
[R37]Inserted
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R38]Words “or sub-section (2) of section 48” omitted by the Finance Act, 1992, w.e.f. 1-4-1993
[R39]Inserted by the Finance Act, 1992, w.e.f. 1-4-1993.
[R40]Substituted for “Central Government” by the Finance Act, 2001, w.e.f. 1-6-2001.
[R41]For definition of “foreign currency”
[R42]For text of section 4A of the Companies Act, 1956, and notified institutions thereunder, see Appendix One.
[R43]Substituted by the Finance Act, 2001, w.e.f. 1-4-2002.
Prior to its substitution, section 115AC, as inserted by the Finance Act, 1992,
w.e.f. 1-4-1993 and amended by the Finance (No. 2) Act, 1996, w.e.f. 1-10-1996,
Finance Act, 1997, w.e.f. 1-4-1998 and Finance Act, 1999, w.e.f. 1-4-2000, read
a under:
“115AC. Tax on income from bonds or
shares purchased in foreign currency or capital gains arising from their
transfer.—(1) Where the total income of an assessee, being a non-resident,
includes—
(a) income
by way of interest or dividends other than dividends referred to in section
115-O, on bonds or shares of an Indian company issued in accordance with such
scheme as the Central Government may, by notification in the Official Gazette,
specify in this behalf
or on bonds or shares of a
public sector company, sold by the Government and purchased by him in
foreign currency; or
(b) income by way of long-term capital gains arising from the
transfer of bonds or, as the case may be, shares referred to in clause (a),
the
income-tax payable shall be the aggregate of—
(i) the amount of income-tax calculated on the income by way
of interest or dividends other than dividends referred to in section 115-O, as
the case may be, in respect of bonds or shares 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, at the rate of ten per cent; and
(iii) the amount of income-tax with which the non-resident would have been chargeable had his total income been reduced by the amount of income referred to in clause (a) and clause (b).
(2) Where the gross total income of the
non-resident—
(a) consists
only of income by way of interest or dividends other than dividends referred to
in section 115-O in
respect of bonds or, as the case may be, shares referred to in clause (a)
of sub-section (1), no deduction shall be allowed to him under sections 28 to
44C or clause (i) or clause (iii) of section 57 or under Chapter VI-A;
(b) includes
any income referred to in clause (a) or clause (b) of sub-section
(1) the gross total income shall be reduced by the amount of such income and
the deduction under Chapter VI-A shall be allowed as if the gross total income
as so reduced, were the gross total income of the assessee.
(3) Nothing contained in the first and
second provisos to section 48 shall apply for the computation of long-term
capital gains arising out of the transfer of long-term capital asset, being
bonds or shares referred to in clause (b) of sub-section (1).
(4) It shall not be necessary for a
non-resident to furnish under sub-section (1) of section 139 a return of his
income if—
(a) his
total income in respect of which he is assessable under this Act during the
previous year consisted only of income referred to in clause (a) of
sub-section (1); and
(b) the tax deductible at source under the provisions of Chapter
XVII-B has been deducted from such income.
(5) Where the assessee acquired shares or bonds in an amalgamated or resulting company by virtue of his holding shares or bonds in the amalgamating or demerged company, as the case may be, in accordance with the provisions of sub-section (1), the provisions of the said sub-section shall apply to such shares or bonds.”
[R44]Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme has been notified—Notification No. SO 987(E), dated 10-9-2002.
[R45]The italicised words shall be inserted by the Finance Act,
2003, w.e.f. 1-4-2004. Earlier the words “, other than dividends
referred to in section 115-O,” were omitted by the Finance Act, 2002,
w.e.f. 1-4-2003.
[R46]Issue of
Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository
Receipt Mechanism) Scheme has been notified—Notification No. SO 987(E), dated
10-9-2002.
[R47]Inserted by the Finance Act, 2002, w.e.f. 1-4-2002.
[R48]Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme has been notified—Notification No. SO 987(E), dated 10-9-2002.
[R49]Omitted by the Finance Act, 2002, w.e.f. 1-4-2002. Prior to its omission, clause (iv) read as under :
“(iv) issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, and purchased by him in foreign currency through an approved intermediary, against the shares of an Indian company arising out of disinvestment by such company in its subsidiary company, and the shares of both such Indian companies are listed in a recognised stock exchange in India; or”
[R50]The italicised words shall be inserted by the Finance Act, 2003, w.e.f. 1-4-2004. Earlier the words “, other than dividends referred to in section 115-O” were omitted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R51]The italicised words shall be inserted by the Finance Act,
2003, w.e.f. 1-4-2004. Earlier the words “, other than dividends
referred to in section 115-O” were omitted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R52]See Issue of Foreign Currency Convertible Bonds & Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 - Notification No. SO 987(E), dated 10-9-2002.
[R53]Inserted
by the Finance Act, 1999, w.e.f. 1-4-2000.
[R54]Substituted by the Finance Act, 2001, w.e.f. 1-4-2001. Prior to its substitution, sub-section (1) read as under :
“(1) Where the total income of an assessee, being an individual, who is a resident and an employee of an Indian company engaged in information technology software and information technology services (hereafter in this section referred to as the resident employee), includes—
(a) income by way of dividends, other than dividends referred to in section 115-O, on Global Depository Receipts of an Indian company engaged in information technology software and information technology services, issued in accordance with such employees’ stock option scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf and purchased by him in foreign currency; or
(b) income by way of long-term capital gains arising from the transfer of Global Depository Receipts referred to in clause (a),
the income-tax payable shall be the aggregate of—
(i) the amount of income-tax calculated on the income by way of dividends, other than dividends referred to in section 115-O, in respect of Global Depository Receipts referred to in clause (a), if any, included in the total income, at the rate of ten per cent;
(ii) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause (b), if any, at the rate of ten per cent; and
(iii) the amount of income-tax with which the resident employee would have been chargeable had his total income been reduced by the amount of income referred to in clauses (a) and (b).”
[R55]The italicised words shall be inserted by the Finance Act, 2003, w.e.f. 1-4-2004. Earlier the words “, other than dividends referred to in section 115-O,” were omitted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R56]For notified scheme, see Income-tax Act.
[R57]The italicised words shall be inserted by the Finance Act,
2003, w.e.f. 1-4-2004. Earlier the words “, other than dividends
referred to in section 115-O,” were omitted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R58]For
definition of “subsidiary” under section 4 of the Companies Act, see Appendix
One.
[R59]The italicised words shall be inserted by the Finance Act,
2003, w.e.f. 1-4-2004. Earlier the words “, other than dividends
referred to in section 115-O,” were omitted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R60]Inserted by the Finance Act, 1993, w.e.f. 1-4-1993.
[R61]Substituted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999. Prior to its substitution,
clause (a), as amended by the Finance Act, 1997, w.e.f. 1-4-1998, read
as under :
“(a) income other than income by way of dividends referred to in section 115-O received in respect of securities (other than units referred to in section 115AB) listed in a recognised stock exchange in India in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and any rules made thereunder; or”
[R62]The italicised words shall be inserted by the Finance Act, 2003, w.e.f. 1-4-2004. Words “other than income by way of dividends referred to in section 115-O” were omitted by the Finance Act, 2002, w.e.f. 1-4-2003. Earlier the quoted words were inserted by the Finance Act, 1999, w.e.f. 1-4-1999.
[R63]For list of notified Foreign Institutional Investors, see Direct Taxes Circulars
[R64]For definition of “securities
[R65]Inserted
by the Finance Act, 1976, w.e.f. 1-6-1976.
[R66]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989.
[R67]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989.
[R68]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.
[R69]For notified Social Security Fund, see Income-tax Act.
[R70]Substituted
for “year” by the Finance Act, 1989, w.e.f. 1-4-1990.
[R71]Inserted
by the Finance Act, 1986, w.e.f. 1-4-1987.
[R72]Substituted
for “forty” by the Finance Act, 2001, w.e.f. 1-4-2002.
[R73]Inserted
by the Direct Tax Laws
(Second Amendment) Act, 1989, w.e.f. 1-4-1990.
[R74]Inserted
by the Finance Act, 2002, w.e.f. 1-4-2003.