Guidelines for approval under clause (23G) of section 10.

2E. (1) An application for approval shall be made on or after the 1st day of June, 1998 in Form No. 56E by an enterprise to the Central Government.

(2) Every application for approval made under sub-rule (1) shall be accompanied by the following documents, namely :—

a. a copy of certificate of incorporation under the Companies Act, 1956 (1 of 1956) or a copy of the document evidencing the constitution of the enterprise and its legal status;

b. a copy of the project report or agreement in respect of the eligible business duly approved by the Central Government or any State Government or any local authority or any other statutory body, as the case may be;

c. balance sheets and profit and loss accounts for the three previous years immediately preceding the previous year in which the application has been made and also for the relevant part of the previous year in which the application has been made :

Provided that an application made under sub-rule (1) may be accompanied by the balance sheets and profit and loss accounts for less than three previous years where an enterprise has been formed at any time during the three previous years immediately preceding the previous year in which the application has been made and also for the relevant part of the previous year in which the application has been made.

(3) The Central Government shall approve an enterprise for the purposes of clause (23G) of section 10, if such enterprise is wholly engaged in the eligible business.

(4) The Central Government may, before approving an enterprise, call for such documents (including audited annual accounts) or information from the enterprise, as it thinks necessary in order to satisfy itself that such enterprise is wholly engaged in the eligible business and that Government may also make such enquiries as it may deem necessary in this behalf.

(5) The Central Government shall pass an order in writing while granting approval or refusing approval to the enterprise : Provided that no order refusing the approval shall be passed unless an opportunity of being heard has been given to the enterprise.

(6) Every enterprise approved under sub-rule (5) shall maintain books of account and get such books audited by an accountant, as defined in Explanation to sub-section (2) of section 288 and furnish the report of such audit duly signed and verified by such accountant to the Chief Commissioner of Income-tax under whose jurisdiction it is assessed, before the due date of filing of the return under sub-section (1) of section 139.

(7) Where the enterprise,—

a. ceases to carry on the eligible business; or

b. fails to maintain books of account and get such accounts audited by an accountant as required by sub-rule (6); or

c. fails to furnish the audit report as required by sub-rule (6), the Chief Commissioner of Income-tax shall, after making such enquiries as he may deem necessary, furnish a report on the circumstances referred to in

clauses (a), (b) and (c) to the Central Government, within six months from the due date of filing of return under sub-section (1) of section 139.

(8) The Central Government, on being satisfied that any or all of the circumstances referred to in clauses (a), (b) and (c) of sub-rule (7) exist, shall withdraw the approval granted under sub-rule (5) :

Provided that no order withdrawing the approval shall be passed unless an opportunity of being heard has been given to the enterprise. Explanation.— For the purposes of this rule,—

a. the expression “enterprise” means any enterprise wholly engaged in the eligible business;

b. the expression “eligible business” means the business referred to in sub-section (4) of section 80-IA or a housing project referred to in sub-section (10) of section 80-IB and which fulfils the conditions specified in the said sub-sections or a hotel project or a hospital project as defined in clauses (g) and (h) of Explanation 1 to clause (23G) of section 10.

Rule – 2F

[Guidelines for setting up an Infrastructure Debt Fund for the purpose of exemption under clause (47) of section 10.

2F.[ (1) The Infrastructure Debt Fund shall be set up as a Non-Banking Financial Company conforming to and satisfying the conditions laid down in the regulatory framework provided by the Reserve Bank of India.

(2) The funds of the Infrastructure Debt Fund shall be invested only in,—

a. post commencement operation date infrastructure projects which have completed at least one year of satisfactory commercial operations; or

b. toll-operate-transfer projects as the direct lender.]

[(3) The Infrastructure Debt Fund shall,—

i. issue rupee denominated bonds or foreign currency bonds in accordance with the directions of Reserve Bank of India and the relevant regulations under the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, as amended from time to time;

ii. issue zero coupon bonds in accordance with rule 8B; or

iii. raise funds through loan route under external commercial borrowings.

(4) The terms and conditions of, ─

a. a bond issued by the Infrastructure Debt Fund,–

(a) under clause (i) of sub-rule (3) shall be in accordance with the directions of the Reserve Bank of India and the regulations referred to in the said clause;

(ii) under clause (ii) of sub-rule (3) shall be in accordance with rule 8B; or

b. external commercial borrowings by the Infrastructure Debt Fund, under clause (iii) of sub-rule (3) shall be in accordance with the directions of the Foreign Exchange Department of the Reserve Bank of India.]

(5) In case of an investor in the aforesaid bond being a non-resident, the original or initial maturity of bond, at time of first investment by such non-resident investor, shall not be less than a period of five years.

^20a[(5A) In case of external commercial borrowings by the Infrastructure Debt Fund, the tenor shall not be less than a period of five years and such borrowings shall not be sourced from foreign branches of Indian banks.]

(6) The investment made by the Infrastructure Debt Fund in an individual project or project belonging to a group at any time, shall not exceed twenty per cent of the corpus of the fund.

^20b[(7) No investment shall be made by the Infrastructure Debt Fund in any project where its specified shareholder or the associated enterprise or the group of such specified shareholder has a substantial interest.]

8. The Infrastructure Debt Fund shall file its return of income as required by sub-section (4C) of section 139 on or before the due date.

9. In case the Infrastructure Debt Fund does not fulfil any of the conditions provided in this rule or directions of the Reserve Bank of India, all provisions of the Act shall apply as if it is not an Infrastructure Debt Fund referred to in clause (47) of section 10 of the Act.

Explanation.—For the purpose of this rule,—

(i) ” [associated] enterprise” shall have the same meaning as assigned to it in section 92A of the Act;

(ii) “concern” shall have the same meaning as in clause (a) of Explanation 3 of sub-section (22) of section 2 of the Act;

(iii) “concessionaire”, “tripartite agreement” and “project authority” respectively shall have the same meaning as assigned to them in the Infrastructure Debt Fund – Non-Banking Financial Companies (Reserve Bank) Directions, 2011;

(iv) “corpus” means the total funds of the Infrastructure Debt Fund raised for the purpose of investment;

(v) “group” means a group as defined in clause (mm) of section 2 of Securities and Exchange Board of India (Mutual Funds) Regulations, 1996;

(vi) a person shall be deemed to have substantial interest in—

a. a company if he is the beneficial owner (including beneficial ownership held by one or more of his relatives, in case the person is an individual) of shares (not being the shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than 10 per cent of the voting power; or

b. a concern other than a company if he is, at any time during the previous year, beneficially entitled to not less than 20 per cent of the income of such concern;

(vii) “relative”, in relation to an individual, means—

a. spouse of the individual;

b. brother or sister of the individual;

c. brother or sister of the spouse of the individual;

d. brother or sister of either of the parents of the individual;

e. any lineal ascendant or descendant of the individual;

f. any lineal ascendant or descendant of the spouse of the individual;

g. spouse of the persons referred to in sub-clauses (b) to (f); or

h. any lineal descendant of a brother or sister of either the individual or of the spouse of the individual;

²¹[(viii) “specified shareholder” means a non-banking financial company, or a bank, or any other person holding, directly or indirectly, shares carrying not less than thirty per cent of the voting power in Infrastructure Debt Fund.]

18. Substituted by the IT (Third Amdt.) Rules, 2025, w.e.f. 7-2-2025. Prior to their substitution, sub-rules (1) and (2) as amended by the IT (Seventeenth Amdt.) Rules, 2015, w.r.e.f. 14-5-2015, read as under:

“(1) The Infrastructure Debt Fund shall be set up as a Non-Banking Financial Company conforming to and satisfying the conditions provided by the Reserve Bank of India in the Infrastructure-Debt Fund – Non-Banking Financial Companies (Reserve Bank) Directions, 2011, vide notification No. DNBS.233/CGM (US)-2011, dated the 21st November, 2011 as amended vide notification No. DNBR.020/CGM (CDS) – 2015, dated the 14th May, 2015.

(2) The funds of the Infrastructure Debt Fund shall be invested only in Post Commencement Operation Date Infrastructure Projects which have completed at least one year of satisfactory commercial operations that are—

i. Public Private Partnership Projects and are a party to tripartite agreement with the concessionaire and the project authority for ensuring compulsory buy out and termination payment;

ii. Non-Public Private Partnership Projects and Public Private Partnership Projects without a project authority, in sectors where there is no project authority.”

19. Substituted by the IT (Third Amdt.) Rules, 2025, w.e.f. 7-2-2025. Prior to their substitution, sub-rules (3) and (4) as amended by the Income-tax (Eighth Amendment) Rules, 2022, w.e.f. 6-4-2022. read as under:

“(3) The Infrastructure Debt Fund shall issue,-

i. rupee denominated bonds or foreign currency bonds in accordance with the directions of Reserve Bank of India and the relevant regulations under the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, as amended from time to time; or

ii. zero coupon bonds in accordance with rule 8B.

(4) The terms and conditions of a bond issued by the Infrastructure Debt Fund, ─

i. under clause (i) of sub-rule (3) shall be in accordance with the directions of the Reserve Bank of India and the regulations referred to in the said clause; or

ii. under clause (ii) of sub-rule (3) shall be in accordance with rule 8B.”

20. Omitted by the IT (Seventh Amdt.) Rules, 2019, w.e.f. 16-9-2019. Prior to its omission, proviso read as under :

“Provided that the investment made by a non-resident investor in such bonds shall be subject to a lock in period of not less than three years, but the non-resident investor may transfer the bond to another non-resident investor within such lock in period.”

20a. Inserted by the IT (Third Amdt.) Rules, 2025, w.e.f. 7-2-2025.

20c. Substituted by the IT (Third Amdt.) Rules, 2025, w.e.f. 7-2-2025. Prior to its substitution, sub-rules (7) read as under:

“(7) No investment shall be made by the Infrastructure Debt Fund in any project where its sponsor or the associate enterprise or the group of such sponsor has a substantial interest.”

20c. Substituted for “associate” by the IT (Third Amdt.) Rules, 2025, w.e.f. 7-2-2025.

21. Substituted by the IT (Third Amdt.) Rules, 2025, w.e.f. 7-2-2025. Prior to its substitution, clause (viii) read as under:

‘(viii) “sponsor” means a non-banking financial company, or a bank which is allowed to act as sponsor of Infrastructure Debt Fund in accordance with the directions of Reserve Bank of India.’

Rule – 3

Valuation of perquisites.

3. For the purpose of computing the income chargeable under the head “Salaries”, the value of perquisites provided by the employer directly or indirectly to the assessee (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules, namely:—

21[(1) The value of residential accommodation provided by the employer, for the purpose of sub-clauses (i) and (ii) of sub-section (2) of section 17, during the previous year shall be determined on the basis provided in the Table I given below:

TABLE I

Sl. No.	Circumstances	Where accommodation is unfurnished	Where accommodation is furnished
(1)	(2)	(3)	(4)
(1)	Where the accommodation is provided by the Central Government or any State Government to the employees either holding office or post in connection with the affairs of the Union or of such State.	License fee determined by the Central Government or any State Government in respect of accommodation in accordance with the rules framed by such Government as reduced by the rent actually paid by the employee.	The value of perquisite as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment) or if such furniture is hired from a third party, the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year.
(2)	Where the accommodation is provided by any other employer and— (a) where the accommodation is owned by the employer, or	(i) 10% of salary in cities having population exceeding 40 lakhs as per 2011 census; (ii) 7.5% of salary in cities having population exceeding 15 lakhs but not exceeding 40 lakhs as per 2011 census; (iii) 5% of salary in other areas, in respect of the period during which the said accommodation was occupied by the employee during the previous year as reduced by the rent, if any, actually paid by the employee.	The value of perquisite as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year.
	(b) where the accommodation is taken on lease or rent by the employer.	Actual amount of lease rental paid or payable by the employer or 10% of salary, whichever is lower, as reduced by the rent, if any, actually paid by the employee.	The value of perquisite as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerator’s, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year.
(3)	Where the accommodation is provided by the employer specified in serial number (1) or (2) in a hotel (except where the employee is provided such accommodation for a period not exceeding in aggregate fifteen days on his transfer from one place to another).	Not applicable.	24% of salary paid or payable for the previous year or the actual charges paid or payable to such hotel, which is lower, for the period during which such accommodation is provided as reduced by the rent, if any, actually paid or payable by the employee:

Provided that nothing contained in this sub-rule shall apply to any accommodation temporarily provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site, or a dam site or a power generation site or an off-shore site—

(i) which, having plinth area not exceeding 1000 square feet, is located not less than eight kilometres away from the local limits of any municipality or a cantonment board; or

(ii) which is located in a remote are

Provided further that where on account of his transfer from one place to another, the employee is provided with accommodation at the new place of posting while retaining the accommodation at the other place, the value of perquisite shall be determined with reference to only one such accommodation which has the lower value with reference to the Table above for a period not exceeding ninety days and thereafter the value of perquisite shall be charged for both such accommodations in accordance with the Table:

Provided also that where the accommodation is owned ²²[or taken on lease or rent] by the employer and the same accommodation is continued to be provided to the same employee for more than one previous year, the amount calculated in accordance with Sl. No. 2(a) or 2(b) shall not exceed the amount so calculated for the first previous year, as multiplied by the amount which is a ratio of the Cost Inflation Index for the previous year for which the amount is calculated and the Cost Inflation Index for the previous year in which the accommodation was initially provided to the employee.

Explanation 1.—For the purposes of this sub-rule, where the accommodation is provided by the Central Government or any State Government to an employee who is serving on deputation with any body or undertaking under the control of such Government,—

(i) the employer of such an employee shall be deemed to be that body or undertaking where the employee is serving on deputation; and

(ii) the value of perquisite of such an accommodation shall be the amount calculated in accordance with Sl. No. (2)(a) of Table I, as if the accommodation is owned by the employer.

Explanation 2.—For the purposes of third proviso,—

(i) “Cost Inflation Index” means the index notified by the Central Government in Official Gazette under clause (v) of Explanation to section 48;

(ii) “first previous year” means the previous year 2023-2024, or the previous year in which the accommodation was provided to the employee, whichever is later.]

(2)(A) The value of perquisite by way of use of motor car to an employee by an employer shall be determined in accordance with the following Table, namely:—

TABLE II

VALUE OF PERQUISITE PER CALENDAR MONTH

Sl. No.	Circumstances	Where cubic capacity of engine does not exceed 1.6 liters	Where cubic capacity of engine exceeds 1.6 liters
(1)	(2)	(3)	(4)
(1)	Where the motor car is owned or hired by the employer and— (a) is used wholly and exclusively in the performance of his official duties; (b) is used exclusively for the private or personal purposes of the employee or any member of his household and the running and maintenance expenses are met or reimbursed by the employer. (c) is used partly in the performance of duties and partly for private or personal purposes of his own or any member of his household and — (i) the expenses on maintenance and running are met or reimbursed by the employer; (ii) the expenses on running and maintenance for private or personal use are fully met by the assessee.	No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer. Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by any amount charged from the employee for such use. Rs. 1,800 (plus Rs. 900, if chauffeur is also provided to run the motor car) Rs. 600 (plus Rs. 900, if chauffeur is also provided by the employer to run the motor car)	No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer. Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by an amount charged from the employee for such use. Rs. 2,400 (plus Rs. 900, if chauffeur is also provided to run the motor car) Rs. 900 (plus Rs. 900, if chauffeur is also provided to run the motor car)
(2)	Where the employee owns a motor car but the actual running and maintenance charges (including remuneration of the chauffeur, if any) are met or reimbursed to him by the employer and— (i) such reimbursement is for the use of the vehicle wholly and exclusively for official purposes; (ii) such reimbursement is for the use of the vehicle partly for official purposes and partly for personal or private purposes of the employee or any member of his household.	No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer. Subject to the provisions of clause (B) of this sub rule, the actual amount of expenditure incurred by the employer as reduced by the amount specified in Sl. No. (1)(c)(i) above.	No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer. Subject to the provisions of clause (B) of this sub rule, the actual amount of expenditure incurred by the employer as reduced by the amount specified in Sl. No. (1)(c)(i) above.
(3)	Where the employee owns any other automotive conveyance but the actual running and maintenance charges are met or reimbursed to him by the employer and (i)such reimbursement is for the use of the vehicle wholly and exclusively for official purposes; (ii) such reimbursement is for the use of vehicle partly for official purposes and partly for personal or private purposes of the employee.	No value : Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer. Subject to the provisions of clause (B) of this sub rule, the actual amount of expenditure incurred by the employer as reduced by the amount of Rs. 900.	Not applicable :

Provided that where one or more motor-cars are owned or hired by the employer and the employee or any member of his household are allowed the use of such motor-car or all of any of such motor-cars (otherwise than wholly and exclusively in the performance of his duties), the value of perquisite shall be the amount calculated in respect of one car in accordance with Sl. No. (1)(c)(i) of Table II as if the employee had been provided one motor-car for use partly in the performance of his duties and partly for his private or personal purposes and the amount calculated in respect of the other car or cars in accordance with Sl. No. (1)(b) of Table II as if he had been provided with such car exclusively for his private or personal purposes.

(B) Where the employer or the employee claims that the motor-car is used wholly and exclusively in the performance of official duty or that the actual expenses on the running and maintenance of the motor-car owned by the employee for official purposes is more than the amounts deductible in Sl. No. 2(ii) or 3(ii) of Table II, he may claim a higher amount attributable to such official use and the value of perquisite in such a case shall be the actual amount of charges met or reimbursed by the employer as reduced by such higher amount attributable to official use of the vehicle provided that the following conditions are fulfilled :—

(a) the employer has maintained complete details of journey undertaken for official purpose which may include date of journey, destination, mileage, and the amount of expenditure incurred thereon;

(b) the employer gives a certificate to the effect that the expenditure was incurred wholly and exclusively for the performance of official duties.

Explanation.—For the purposes of this sub-rule, the normal wear and tear of a motor-car shall be taken at 10 per cent per annum of the actual cost of the motor-car or cars.

(3) The value of benefit to the employee or any member of his household resulting from the provision by the employer of services of a sweeper, a gardener, a watchman or a personal attendant, shall be the actual cost to the employer. The actual cost in such a case shall be the total amount of salary paid or payable by the employer or any other person on his behalf for such services as reduced by any amount paid by the employee for such services.

(4) The value of the benefit to the employee resulting from the supply of gas, electric energy or water for his household consumption shall be determined as the sum equal to the amount paid on that account by the employer to the agency supplying the gas, electric energy or water. Where such supply is made from resources owned by the employer, without purchasing them from any other outside agency, the value of perquisite would be the manufacturing cost per unit incurred by the employer. Where the employee is paying any amount in respect of such services, the amount so paid shall be deducted from the value so arrived at.

(5) The value of benefit to the employee resulting from the provision of free or concessional educational facilities for any member of his household shall be determined as the sum equal to the amount of expenditure incurred by the employer in that behalf or where the educational institution is itself maintained and owned by the employer or where free educational facilities for such member of employees’ household are allowed in any other educational institution by reason of his being in employment of that employer, the value of the perquisite to the employee shall be determined with reference to the cost of such education in a similar institution in or near the locality. Where any amount is paid or recovered from the employee on that account, the value of benefit shall be reduced by the amount so paid or recovered :

Provided that where the educational institution itself is maintained and owned by the employer and free educational facilities are provided to the children of the employee or where such free educational facilities are provided in any institution by reason of his being in employment of that employer, nothing contained in this sub-rule shall apply if the cost of such education or the value of such benefit per child does not exceed one thousand rupees per month.

(6) The value of any benefit or amenity resulting from the provision by an employer who is engaged in the carriage of passengers or goods, to any employee or to any member of his household for personal or private journey free of cost or at concessional fare, in any conveyance owned, leased or made available by any other arrangement by such employer for the purpose of transport of passengers or goods shall be taken to be the value at which such benefit or amenity is offered by such employer to the public as reduced by the amount, if any, paid by or recovered from the employee for such benefit or amenity :

Provided that nothing contained in this sub-rule shall apply to the employees of an airline or the railways.

(7) In terms of provisions contained in sub-clause (viii) of clause (2) of section 17, the following other benefits or amenities and value thereof shall be determined in the manner provided hereunder:

(i) The value of the benefit to the assessee resulting from the provision of interest-free or concessional loan for any purpose made available to the employee or any member of his household during the relevant previous year by the employer or any person on his behalf shall be determined as the sum equal to the interest computed at the rate charged per annum by the State Bank of India, constituted under the State Bank of India Act, 1955 (23 of 1955), as on the 1st day of the relevant previous year in respect of loans for the same purpose advanced by it on the maximum outstanding monthly balance as reduced by the interest, if any, actually paid by him or any such member of his household:

Provided that no value would be charged if such loans are made available for medical treatment in respect of diseases specified in rule 3A of these Rules or where the amount of loans are petty not exceeding in the aggregate twenty thousand rupees:

Provided further that where the benefit relates to the loans made available for medical treatment referred to above, the exemption so provided shall not apply to so much of the loan as has been reimbursed to the employee under any medical insurance scheme.

(ii) The value of travelling, touring, accommodation and any other expenses paid for or borne or reimbursed by the employer for any holiday availed of by the employee or any member of his household, other than concession or assistance referred to in rule 2B of these rules, shall be determined as the sum equal to the amount of the expenditure incurred by such employer in that behalf. Where such facility is maintained by the employer, and is not available uniformly to all employees, the value of benefit shall be taken to be the value at which such facilities are offered by other agencies to the public. Where the employee is on official tour and the expenses are incurred in respect of any member of his household accompanying him, the amount of expenditure so incurred shall also be a fringe benefit or amenity:

Provided that where any official tour is extended as a vacation, the value of such fringe benefit shall be limited to the expenses incurred in relation to such extended period of stay or vacation. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity.

(iii) The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity:

Provided that nothing contained in this clause shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof in either case does not exceed fifty rupees per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation:

²³[Provided further that the provisions of the first proviso in respect of free food and non-alcoholic beverage provided by the employer through paid voucher shall not apply to an employee, being an assessee, who has exercised an option under sub-section (5) of section 115BAC or whose income is chargeable to tax under sub-section (1A) of section 115BAC.]

(iv) The value of any gift, or voucher, or token in lieu of which such gift may be received by the employee or by member of his household on ceremonial occasions or otherwise from the employer shall be determined as the sum equal to the amount of such gift:

Provided that where the value of such gift, voucher or token, as the case may be, is below five thousand rupees in the aggregate during the previous year, the value of perquisite shall be taken as “nil“.

(v) The amount of expenses including membership fees and annual fees incurred by the employee or any member of his household, which is charged to a credit card (including any add-on-card) provided by the employer, or otherwise, paid for or reimbursed by such employer shall be taken to be the value of perquisite chargeable to tax as reduced by the amount, if any paid or recovered from the employee for such benefit or amenity:

Provided that there shall be no value of such benefit where expenses are incurred wholly and exclusively for official purposes and the following conditions are fulfilled:—

(a) complete details in respect of such expenditure are maintained by the employer which may, inter alia, include the date of expenditure and the nature of expenditure;

(b) the employer gives a certificate for such expenditure to the effect that the same was incurred wholly and exclusively for the performance of official duties.

(vi) (A) The value of benefit to the employee resulting from the payment or reimbursement by the employer of any expenditure incurred (including the amount of annual or periodical fee) in a club by him or by a member of his household shall be determined to be the actual amount of expenditure incurred or reimbursed by such employer on that account. The amount so determined shall be reduced by the amount, if any paid or recovered from the employee for such benefit or amenity:

Provided that where the employer has obtained corporate membership of the club and the facility is enjoyed by the employee or any member of his household, the value of perquisite shall not include the initial fee paid for acquiring such corporate membership.

(B) Nothing contained in this clause shall apply if such expenditure is incurred wholly and exclusively for business purposes and the following conditions are fulfilled:—

(a) complete details in respect of such expenditure are maintained by the employer which may, inter alia, include the date of expenditure, the nature of expenditure and its business expediency;

(b) the employer gives a certificate for such expenditure to the effect that the same was incurred wholly and exclusively for the performance of official duties.

(C) Nothing contained in this clause shall apply for use of health club, sports and similar facilities provided uniformly to all employees by the employer.

(vii) The value of benefit to the employee resulting from the use by the employee or any member of his household of any movable asset (other than assets already specified in this rule and other than laptops and computers) belonging to the employer or hired by him shall be determined at 10 per cent per annum of the actual cost of such asset or the amount of rent or charge paid or payable by the employer, as the case may be, as reduced by the amount, if any, paid or recovered from the employee for such use.

Provided that in the case of computers and electronic items, the normal wear and tear would be calculated at the rate of 50 per cent and in the case of motor cars at the rate of 20 per cent by the reducing balance method.

(viii) The value of any other benefit or amenity, service, right or privilege provided by the employer shall be determined on the basis of cost to the employer under an arm’s length transaction as reduced by the employee’s contribution, if any :

Provided that nothing contained in this clause shall apply to the expenses on telephones including a mobile phone actually incurred on behalf of the employee by the employer.

(8)(i) For the purposes of sub-clause (vi) of clause (2) of section 17, the fair market value of any specified security or sweat equity share, being an equity share in a company, on the date on which the option is exercised by the employee, shall be determined in accordance with the provisions of clause (ii) or clause (iii).

(ii) In a case where, on the date of the exercising of the option, the share in the company is listed on a recognized stock exchange, the fair market value shall be the average of the opening price and closing price of the share on that date on the said stock exchange :

Provided that where, on the date of exercising of the option, the share is listed on more than one recognized stock exchanges, the fair market value shall be the average of opening price and closing price of the share on the recognised stock exchange which records the highest volume of trading in the share :

Provided further that where, on the date of exercising of the option, there is no trading in the share on any recognized stock exchange, the fair market value shall be—

(a) the closing price of the share on any recognised stock exchange on a date closest to the date of exercising of the option and immediately preceding such date; or

(b) the closing price of the share on a recognised stock exchange, which records the highest volume of trading in such share, if the closing price, as on the date closest to the date of exercising of the option and immediately preceding such date, is recorded on more than one recognized stock exchange.

(iii) In a case where, on the date of exercising of the option, the share in the company is not listed on a recognised stock exchange, the fair market value shall be such value of the share in the company as determined by a merchant banker on the specified date.

(iv) For the purpose of this sub-rule,—

(a) “closing price” of a share on a recognised stock exchange on a date shall be the price of the last settlement on such date on such stock exchange :

Provided that where the stock exchange quotes both “buy” and “sell” prices, the closing price shall be the “sell” price of the last settlement;

(b) “merchant banker” means category I merchant banker registered with Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(c) “opening price” of a share on a recognised stock exchange on a date shall be the price of the first settlement on such date on such stock exchange :

Provided that where the stock exchange quotes both “buy” and “sell” prices, the opening price shall be the “sell” price of the first settlement;

(d) “recognised stock exchange” shall have the same meaning assigned to it in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(e) “specified date” means,—

(i) the date of exercising of the option; or

(ii) any date earlier than the date of the exercising of the option, not being a date which is more than 180 days earlier than the date of the exercising.

(9) For the purposes of sub-clause (vi) of clause (2) of section 17, the fair market value of any specified security, not being an equity share in a company, on the date on which the option is exercised by the employee, shall be such value as determined by a merchant banker on the specified date.

Explanation.—For the purposes of this sub-rule, “merchant banker” and “specified date” shall have the meanings assigned to them in sub-clause (b) and sub-clause (e) respectively of clause (iv) of sub-rule (8).

(10) This rule shall come into force with effect from the 1st day of April, 2009.

Explanation.—For the purposes of this rule—

(i) “accommodation” includes a house, flat, farm house or part thereof, or accommodation in a hotel, motel, service apartment, guest house, caravan, mobile home, ship or other floating structure;

(ii) “entertainment” includes hospitality of any kind and also, expenditure on business gifts other than free samples of the employers own product with the aim of advertising to the general public;

(iii) “hotel” includes licensed accommodation in the nature of motel, service apartment or guest house;

(iv) “member of household” shall include—

(a) spouse(s),

(b) children and their spouses,

(c) parents, and

(d) servants and dependents;

24(v) “remote area”, for purposes of proviso to sub-rule (1) means any area other than an area which is located—

(a) within the local limits of ; or

(b) within a distance, measured aerially, of 30 kilometers from the local limits of, any municipality or a cantonment board having a population of 1,00,000 or more based on the 2011 census;]

(vi) “salary” includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, by whatever name called from one or more employers, as the case may be, but does not include the following, namely:—

(a) dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned;

(b) employer’s contribution to the provident fund account of the employee;

(c) allowances which are exempted from payment of tax;

(d) the value of perquisites specified in clause (2) of section 17 of the Income-tax Act;

(e) any payment or expenditure specifically excluded under proviso to sub-clause (iii) of clause (2) or proviso to clause (2) of section 17;

(f) lump-sum payments received at the time of termination of service or superannuation or voluntary retirement, like gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments;

(vii) “maximum outstanding monthly balance” means the aggregate outstanding balance for each loan as on the last day of each month.

Notes:

^21. Substituted by the IT (Eighteenth Amdt.) Rules, 2023, w.e.f. 1-9-2023 (as corrected by Corrigendum G.S.R. 636(E), dated 29-8-2023).

^22.Inserted by Corrigendum G.S.R. 636(E), dated 29-8-2023.

^23.Substituted by the IT (Tenth Amdt.) Rules, 2023, w.e.f. 21-6-2023.

^24. Substituted by the IT (Eighteenth Amdt.) Rules, 2023, w.e.f. 1-9-2023.

*************

Rule – 3B

²⁵[Annual accretion referred to in the sub-clause (viia) of clause (2) of section 17 of the Act.

3B. For the purposes of sub-clause (viia) of clause (2) of section 17 of the Act, annual accretion by way of interest, dividend or any other amount of similar nature during the previous year (hereinafter in this rule referred to as the current previous year) to balance to the credit of the fund or scheme referred to in sub-clause (vii) of clause (2) of section 17 of the Act shall be the amount or aggregate of amounts computed in accordance with the following formula, namely:—

TP = (PC/2) × R + (PC¹ + TP¹) × R

Where,

TP = Taxable perquisite under sub-clause (viia) of clause (2) of section 17 of the Act for the current previous year;

TP¹ = Aggregate of taxable perquisite under sub-clause (viia) of clause (2) of section 17 of the Act for the previous year or years commencing on or after 1st day of April, 2020 other than the current previous year (See Note);

PC = Amount or aggregate of amounts of principal contribution made by the employer in excess of Rs. 7.5 lakhs to the specified fund or scheme during the previous year;

PC¹ = Amount or aggregate of amounts of principal contribution made by the employer in excess of Rs. 7.5 lakhs to the specified fund or scheme for the previous year or years commencing on or after 1st day of April, 2020 other than the current previous year (See Note);

R = I/ Favg ;

I = Amount or aggregate of amounts of income accrued during the current previous year in the specified fund or scheme account;

Favg = (Amount or aggregate of amounts of balance to the credit of the specified fund or scheme on the first day of the current previous year + Amount or aggregate of amounts of balance to the credit of the specified fund or scheme on the last day of the current previous year)/2.

Explanation.—For the purposes of this rule, “specified fund or scheme” shall mean a fund or scheme referred to in sub-clause (vii) of clause (2) of section 17 of the Act.

Note: Where the amount or aggregate of amounts of TP1 and PC1 exceeds the amount or aggregate of amounts of balance to the credit of the specified fund or scheme on the first day of the current previous year, then the amount in excess of the amount or aggregate of amounts of the said balance shall be ignored for the purpose of computing the amount or aggregate of amounts of TP1 and PC1.]

TP = (PC/2) × R + (PC¹ + TP¹) × R

Where,

TP = Taxable perquisite under sub-clause (viia) of clause (2) of section 17 of the Act for the current previous year;

TP¹ = Aggregate of taxable perquisite under sub-clause (viia) of clause (2) of section 17 of the Act for the previous year or years commencing on or after 1st day of April, 2020 other than the current previous year (See Note);

PC = Amount or aggregate of amounts of principal contribution made by the employer in excess of Rs. 7.5 lakhs to the specified fund or scheme during the previous year;

PC¹ = Amount or aggregate of amounts of principal contribution made by the employer in excess of Rs. 7.5 lakhs to the specified fund or scheme for the previous year or years commencing on or after 1st day of April, 2020 other than the current previous year (See Note);

R = I/ Favg ;

I = Amount or aggregate of amounts of income accrued during the current previous year in the specified fund or scheme account;

Favg = (Amount or aggregate of amounts of balance to the credit of the specified fund or scheme on the first day of the current previous year + Amount or aggregate of amounts of balance to the credit of the specified fund or scheme on the last day of the current previous year)/2.

Explanation.—For the purposes of this rule, “specified fund or scheme” shall mean a fund or scheme referred to in sub-clause (vii) of clause (2) of section 17 of the Act.

Note: Where the amount or aggregate of amounts of TP1 and PC1 exceeds the amount or aggregate of amounts of balance to the credit of the specified fund or scheme on the first day of the current previous year, then the amount in excess of the amount or aggregate of amounts of the said balance shall be ignored for the purpose of computing the amount or aggregate of amounts of TP1 and PC1.]

Note:

^25.Inserted by the IT (First Amdt.) Rules, 2021, w.e.f. 1-4-2021.

Rule – 3C

¹[Salary income for the purposes of item (c) of sub-clause (iii) of clause (2) of section 17 of the Act.

3C.For the purposes of item (c) of sub-clause (iii) of clause (2) of section 17 of the Act, the prescribed income under the head “Salaries” shall be four lakh rupees.]

Rule – 3D

¹[Gross total income for the purposes of clause (vi) of Proviso to clause (2) of section 17 of the Act.

3D. For the purposes of clause (vi) of Proviso to clause (2) of section 17 of the Act, the prescribed gross total income shall be eight lakh rupees.]

Rule – 4

B.—Income from house property

Unrealised rent.

4. For the purposes of the Explanation below sub-section (1) of section 23, the amount of rent which the owner cannot realise shall be equal to the amount of rent payable but not paid by a tenant of the assessee and so proved to be lost and irrecoverable where,—

a. the tenancy is bona fide;

b. the defaulting tenant has vacated, or steps have been taken to compel him to vacate the property;

c. the defaulting tenant is not in occupation of any other property of the assessee;

d. the assessee has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or satisfies the Assessing Officer that legal proceedings would be useless.

Rule – 5

C. Profits and gains of business or profession

Depredation.

5. (1) Subject to the provisions of sub-rule (2), the allowance under clause (ii) of sub-section (1) of section 32 in respect of depreciation of any block of assets shall be calculated at the percentages specified in the second column of the Table in Appendix I to these rules on the written down value of such block of assets as are used for the purposes of the business or profession of the assessee at any time during the previous year :

²⁶[Provided that the allowance under clause (ii) of sub-section (1) of section 32 in respect of depreciation of any block of assets shall not exceed forty per cent of the written down value of such block of assets in case of —

(i) a domestic company which has exercised option under sub-section (4) of section 115EiA, or under sub-section (5) of section 115BAA, or under sub- section (7) of section 115BAB; or

(ii) an individual or a Hindu undivided family which has exercised option under sub-section (5) of section 115BAC; or

(iia) an individual or a Hindu undivided family, or an association of persons (other than a co-operative society) or a body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 whose income is chargeable to tax under sub-section (IA) of section 115BAC; or

(iii) a co-operative society resident in India which has exercised option under sub-section (5) of section 115BAD; or

(iv) a co-operative society resident in India which has exercised option under sub-section (5) of section 115BAE:1

²⁷[Provided further that, for the purposes of section 115BAA, if the following conditions are satisfied, namely:-

i. option under sub-section (5) thereof is exercised for a previous year relevant to the assessment year beginning on the 1st day of April, 2020;

ii. there is a depreciation allowance, in respect of a block of asset, from any earlier assessment year or allowance of unabsorbed depreciation deemed so under section 72A, which is attributable to the provisions in clause (iia) of sub-section (1) of section 32; and

iii. such depreciation or allowance for unabsorbed depreciation is not allowed to be set off under clause (ii) or clause (iii) of sub-section (2) thereof, the written down value of the block of asset as on the 1st day of April, 2019 shall be increased by such depreciation or allowance for unabsorbed depreciation not allowed to be set off:

Provided also that, ²⁸1for the purposes of section 115BAC Ins it stood immediately before its amendment by the Finance Act, 20231] and section 115BAD, if the following conditions are satisfied, namely:-

i. the option under sub-section (5) of the respective section is exercised for a previous year relevant to the assessment year beginning on the 1st day of April, 2021;

ii. there is a depreciation allowance, in respect of a block of asset, from any earlier assessment year which is attributable to the provisions in clause (iia) of sub-section (1) of section 32; and

iii. such depreciation is not allowed to be set off under sub-clause (a) of clause (ii) of sub-section (2) of section 115BAC or clause (ii) of sub-section (2) of section 115BAD, the written down value of the block of asset as on the 1st day of April, 2020 shall be increased by such depreciation not allowed to be set off:]

²⁹[Provided also that, where income is chargeable to tax under sub-section (IA) of section 115BAC, the written down value of the block of asset as on the 1st day of April, 2023 shall be increased by such depreciation which is attributable to clause (tia) of sub-section (1) of section 32 and which is not allowed to be set off under sub-clause (a) of clause (ti) of sub-section (2) of section 115BAC if both the following conditions are satisfied, namely:-

(i) the assessee has not exercised option under sub-section (5) for any previous year relevant to the assessment year beginning on or before the 1st day of April, 2023; and

(ii) there is a depreciation allowance in respect of a block of assets which has not been given full effect to prior to the assessment year beginning on the 1st day of April, 2024, and is attributable to the provisions of clause (tia) of sub-section (1) of section 321

(1A) The allowance under clause (i) of sub-section (1) of section 32 of the Act in respect of depreciation of assets acquired on or after 1st day of April, 1997 shall be calculated at the percentage specified in the second column of the Table in Appendix IA of these rules on the actual cost thereof to the assessee as are used for the purposes of the business of the assessee at any time during the previous year :

Provided that the aggregate depreciation allowed in respect of any asset for different assessment years shall not exceed the actual cost of the said asset : Provided further that the undertaking specified in clause (i) of sub-section (1) of section 32 of the Act may, instead of the depreciation specified in Appendix IA, at its option, be allowed depreciation under sub-rule (1) read with Appendix I, if such option is exercised before the due date for furnishing the return of income under sub-section (1) of section 139 of the Act,

a. for the assessment year 1998-99, in the case of an undertaking which began to generate power prior to 1st day of April, 1997; and

b. for the assessment year relevant to the previous year in which it begins to generate power, in case of any other undertaking :

Provided also that any such option once exercised shall be final and shall apply to all the subsequent assessment years.

(2) Where any new machinery or plant is installed during the previous year relevant to the assessment year commencing on or after the 1st day of April, 1988, for the purposes of business of manufacture or production of any article or thing and such article or thing—

a. is manufactured or produced by using any technology (including any process) or other know-how developed in, or

b. is an article or thing invented in,

a laboratory owned or financed by the Government or a laboratory owned by a public sector company or a University or an institution recognised in this behalf by the Secretary, Department of Scientific and Industrial Research, Government of India, such plant or machinery shall be treated as a part of block of assets qualifying for depreciation at the rate of 40 per cent of written down value, if the following conditions are fulfilled, namely :-

i. the right to use such technology (including any process) or other know- how or to manufacture or produce such article or thing has been acquired from the owner of such laboratory or any person deriving title from such owner;

ii. the return furnished by the assessee for his income, or the income of any other person in respect of which he is assessable, for any previous year in which the said machinery or plant is acquired, shall be accompanied by a certificate from the Secretary Department of Scientific and Industrial Research, Government of India, to the effect that such article or thing is manufactured or produced by using such technology (including any process) or other know-how developed in such laboratory or is an article or thing invented in such laboratory ; and

iii. the machinery or plant is not used for the purpose of business of manufacture or production of any article or thing specified in the list in the Eleventh Schedule to the Act.

Explanation.—For the purposes of this sub-rule,—

(a) “laboratory financed by the Government” means a laboratory owned by any body [including a society registered under the Societies Registration Act, 1860 (21 of 1860), and financed wholly or mainly by the Government ;

(b) “public sector company” means any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); and

(c) “University” means a University established or incorporated by or under a Central, State or Provincial Act and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be a University for the purposes of that Act.

Notes:

²⁶ Substituted by the IT (Tenth Amdt.) Rules, 2023, w.e.f. 21-6-2023.

²⁷ Inserted by the IT (Twenty-second Amdt.) Rules, 2020, w.e.f. 1-10-2020.

²⁸ Substituted for “for the purposes of section 115BAC” by the IT (Tenth Amdt.) Rules, 2023, w.e.f. 21-6-2023.

²⁹ Inserted by the IT (Tenth Amdt.) Rules, 2023, w.e.f. 21-6-2023.

Rule – 5A

Form of report by an accountant for claiming deduction under section 32(1)(iia).

5A. [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130).]

Rule – 5AA

Prescribed authority for investment allowance.

5AA. For the purposes of sub-section (2B) of section 32A, the “prescribed authority” shall be the Secretary, Department of Scientific and Industrial Research, Government of India.

Rule – 5AB

Report of audit of accounts to be furnished under section 32AB(5).

5AB. [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130)].

Rule – 5AC

Report of audit of accounts to be furnished under section 33AB(2).

5AC. The report of audit of the accounts of an assessee, which is required to be furnished under sub-section (2) of section 33AB shall be in Form No. 3AC.

Rule – 5AD

Report of audit of accounts to be furnished under section 33ABA(2).

5AD. The report of audit of the accounts of an assessee, which is required to be furnished under sub-section (2) of section 33ABA, shall be in Form No. 3AD.

Rule – 5B

Development rebate.

5B. The deduction to be allowed by way of development rebate in respect of any ship or machinery or plant referred to in sub-section (1A) of section 33 shall be a sum equivalent to—

a. in the case of any such ship—

i. where the ship is acquired by the assessee at any time before the expiry of seven years from the date she was built, thirty per cent of the actual cost of the ship to the assessee ; and

ii. in any other case, twenty per cent of the actual cost of the ship to the assessee ;

b. in the case of any such machinery or plant installed after the 31st day of March, 1964—

ii. where it is installed before the 1st day of April, 1966, for the purposes of business of mining coal, twenty per cent of the actual cost of the machinery or plant to the assessee ; and

iii. in any other case, ten per cent of the actual cost of the machinery or plant to the assessee.

Explanation.—In this rule, “actual cost” shall have the meaning assigned to it in clause (1) of section 43.

Rule – 5C

Guidelines, form and manner in respect of approval under clause (ii) and clause (iii) of sub-section (1) of section 35.

5C. (1) An application for approval,—

(i) under clause (ii) or clause (iii) of sub-section (1) of section 35 by a research association in 30[Form No. 3CF];

(ii) under clause (ii) or clause (iii) of sub-section (1) of section 35 by a university, college or other institution in 31[Form No. 3CF],

shall be made, at any time during the financial year immediately preceding the assessment year from which the approval is sought, to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the applicant.

³²[(1A) Form No. 3CF shall be furnished electronically, —

(i) under digital signature, if the return of income is required to be furnished under digital signature;

(ii) through electronic verification code in a case not covered under clause (i).

(1B) Form No. 3CF shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the applicant.

(1C) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall:

(i) lay down the form, data structure, standards and procedure of furnishing and verification of Form No. 3CF;

(ii) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said application made.]

(2) Annexure to the application in Form No. ³³[3CF] shall be filled out if the association claims exemption under clause (21) of section 10 of the Income-tax Act.

(3) The applicant shall send a copy of the application in Form No. ³⁴[3CF] to Member (IT), Central Board of Direct Taxes accompanied by the acknowledgement receipt as evidence of having furnished the application form in duplicate in the office of the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case.

(4) The period of one year, as specified in the fourth proviso to sub-section (1) of section 35, before the expiry of which approval is to be granted or the application is to be rejected by the Central Government shall be reckoned from the end of the month in which the application form from the applicant for approval is received in the office of Member (IT), Central Board of Direct Taxes.

(5) If any defect is noticed in the application in Form No. ³⁵[3CF] or if any relevant document is not attached thereto, the Commissioner of Income-tax or, as the case may be, the Director of Income-tax shall serve a deficiency letter on the applicant before the expiry of one month from the date of receipt of the application form in his office.

(6) The applicant shall remove the deficiency within a period of fifteen days from the date of service of the deficiency letter or within such further period which, on an application made in this behalf may be extended, so however, that the total period for removal of deficiency does not exceed thirty days, and if the applicant fails to remove the deficiency within the period of thirty days so allowed, the Commissioner of Income-tax or, as the case may be, the Director of Income-tax shall send his recommendation for treating the application as invalid to the Member (IT), Central Board of Direct Taxes.

(7) The Central Government, if satisfied, may pass an order treating the application as invalid.

(8) If the application form is complete in all respects, the Commissioner of Income-tax or, as the case may be, the Director of Income-tax, may make such inquiry as he may consider necessary regarding the genuineness of the activity of the association or university or college or other institution and send his recommendation to the Member (IT) for grant of approval or rejection of the application before the expiry of the period of three months to be reckoned from the end of the month in which the application form was received in his office.

(9) The Central Government may before granting approval under clause (ii) or clause (iii) shall call for such documents or information from the applicant as it may consider necessary and may get any inquiry made for verification of the genuineness of the activity of the applicant.

(10) The Central Government may, under sub-section (1) of section 35, issue the notification to be published in the Official Gazette granting approval to the association or university or college or other institution or for reasons to be recorded in writing reject the application.

(11) The Central Government may withdraw the approval granted under clause (ii) or clause (iii) of sub-section (1) of section 35 if it is satisfied that the research association or university or college or other institution has ceased its activities or its activities are not genuine or are not being carried out in accordance with all or any of the conditions under rule 5D or rule 5E.

(12) No order treating the application as invalid or rejecting the application or withdrawing the approval, shall be passed without giving a reasonable opportunity of being heard to the research association or university or college or other institution.

(13) A copy of the order invalidating or rejecting the application or withdrawing the approval shall be communicated to the applicant, the Assessing Officer and the Commissioner of Income-tax or, as the case may be, the Director of Income-tax.

Notes:

³⁰ Substituted for “duplicate in Form No. 3CF-I” by the IT (Sixth Amdt.) Rules, 2021, w.e.f. 1-4-2021.

³¹ Substituted for “duplicate in Form No. 3CF-II” by the IT (Sixth Amdt.) Rules, 2021, w.e.f. 1-4-2021.

³² Inserted by the IT (Sixth Amdt.) Rules, 2021, w.e.f. 1-4-2021.

³³ Substituted for “3CF-I” by the IT (Sixth Amdt.) Rules, 2021, w.e.f. 1-4-2021.

³⁴ Substituted for “3CF-I or, as the case may be, Form No. 3CF-II” by the IT (Sixth Amdt.) Rules, 2021, w.e.f. 1-4-2021. Income Tax Department Ministry of Finance, Government of India

³⁵ Substituted for “3CF-I or Form No. 3CF-II” by the IT (Sixth Amdt.) Rules, 2021, w.e.f. 1-4-2021

Rule – 5CA

³⁶[Intimation under fifth proviso to sub-section (1) of section 35.

5CA. (1) An intimation under fifth proviso to sub-section (1) of section 35 by a research association, university, college or other institution referred to in clause (ii) or clause (iii) or the company referred to in clause (iia) of said sub-section (hereinafter referred to as ‘the applicant’) shall be made in Form No.10A to the Principal Commissioner or Commissioner authorised by the Board.

(2) The application under sub-rule (1) shall be accompanied by the following documents, as required by Form No.10A, namely:—

(a) where the applicant is created or established under an instrument, self-certified copy of the instrument;

(b) where the applicant created or established otherwise than under an instrument, self-certified copy of the document evidencing the creation or establishment of the applicant;

(c) self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts or other registration document, as the case may be;

(d) self-certified copy of registration under Foreign Contribution (Regulation) Act, 2010 (42 of 2010), if the applicant is registered under such Act;

(e) self-certified copy of existing Notification granting approval under section 35.

(3) Form No. 10A shall be furnished electronically, —

(i) under digital signature, if the return of income is required to be furnished under digital signature;

(ii) through electronic verification code in a case not covered under clause (i).

(4) Form No. 10A shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the applicant.

(5) On receipt of an application in Form No. 10A, the Principal Commissioner or Commissioner, authorised by the Board shall issue a sixteen digit alphanumeric Unique Registration Number (URN) to the applicants making application as per sub-rule (1).

(6) If, at any point of time, it is noticed that Form No.10A has not been duly filled in by not providing, fully or partly, or by providing false or incorrect information or documents required to be provided under sub-rule (1) or (2) or by not complying with the requirements of sub-rule (3) or (4), the Principal Commissioner or Commissioner, after giving an opportunity of being heard, may cancel the Unique Registration Number (URN) issued under sub-rule (5) and such Unique Registration Number (URN) shall be deemed to have never been issued.

(7) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall:

(i) lay down the data structure, standards and procedure of furnishing and verification of Form No. 10A; and

(ii) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said form so furnished.]

Note:

³⁶ Inserted by the IT (Sixth Amdt.) Rules, 2021, w.e.f. 1-4-2021

Rule – 5D

Conditions subject to which approval is to be granted to a research association under clause (ii) or clause (iii) of sub-section (1) of section 35.

5D. (1) The sole object of the applicant research association shall be to undertake scientific research or research in social science or statistical research, as the case may be.

(2) The applicant research association shall carry on the research activity by itself.

(3) The research association seeking approval under clause (ii) or clause (iii) of sub-section (1) of section 35 shall maintain books of account and get such books audited by an accountant as defined in the Explanation to sub-section (2) of section 288 and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139.

(4) The research association shall maintain a separate statement of donations received and amount applied for scientific research or research in social science or statistical research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to in sub-rule (3).

(5) The research association shall, by the due date of furnishing the return of income under sub-section (1) of section 139, furnish a statement to the Commissioner of Income-tax or Director of Income-tax containing—

(i) a detailed note on the research work undertaken by it during the previous year;

(ii) a summary of research articles published in national or international journals during the year;

(iii) any patent or other similar rights applied for or registered during the year;

(iv) programme of research projects to be undertaken during the forthcoming year and the financial allocation for such programme.

(6) If the Commissioner of Income-tax or the Director of Income-tax is satisfied that the research association,—

(a) is not maintaining books of account, or

(b) has failed to furnish its audit report, or

(c) has not furnished its statement of the sums received and the sums applied for scientific research or research in social science or statistical research or a statement referred to in sub-rule (5), or

(d) has ceased to carry on its research activities, or its activities are not genuine, or

(e) is not fulfilling the conditions subject to which approval was granted to it,

he may after making appropriate enquiries furnish a report on the circumstances referred to in clauses (a) to (e) above to the Central Government within six months from the date of furnishing the return of income under sub-section (1) of section 139.

Rule – 5E

Conditions subject to which approval is to be granted to a University, College or other Institution under clause (ii) and clause (iii) of sub-section (1) of section 35.

5E. (1) The sum paid to a university, college or other institution shall be used for scientific research and research in social science or statistical research.

(2) The applicant university, college or other institution shall carry out scientific research, research in social science or statistical research through its faculty members or its enrolled students.

(3) A university or college or other institution approved under clause (ii) or clause (iii) of sub-section (1) of section 35 shall maintain separate books of account in respect of the sums received by it for scientific research or, as the case may be, for research in social science or statistical research, reflect therein the amount used for carrying out research, get such books of account audited by an accountant, as defined in the Explanation to sub-section (2) of section 288 and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139.

(4) The university or college or other institution shall maintain a separate statement of donations received and the amount used for research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to in sub-rule (3).

(4A) The university, college or other institution shall, by the due date of furnishing the return of income under sub-section (1) of section 139, furnish a statement to the Commissioner of Income-tax or Director of Income-tax containing—

(i) a detailed note on the research work undertaken by it during the previous year;

(ii) a summary of research articles published in national or international journals during the year;

(iii) any patent or other similar rights applied for or registered during the year;

(iv) programme of research projects to be undertaken during the forthcoming year and the financial allocation for such programme.

(5) If the Commissioner of Income-tax or the Director of Income-tax is satisfied that the university or college or other institution,—

(a) is not maintaining separate books of account for research activities, or

(b) has failed to furnish its audit report, or

(c) has not furnished its statement of the sums received and the sums used for research or a statement referred to in sub-rule (4A), or

(d) has ceased to carry on its research activities, or its activities are not genuine, or

(e) is not fulfilling the conditions subject to which approval was granted to it,

he may after making appropriate enquiries furnish a report on the circumstances referred to in clauses (a) to (e) above to the Central Government within six months from the date of furnishing the return of income under section 139(1).

Rule – 5F

Prescribed authority, guidelines, form, manner and conditions for approval under clause (iia) of sub-section (1) of section 35.

5F. (1) For the purposes of clause (Ha) of sub-section (1) of section 35, the prescribed authority shall be the Chief Commissioner of Income-tax having jurisdiction over the applicant.

(2) Guidelines, form and manner in respect of approval under clause (Ha) of sub-section (1) of section 35 shall be as under :—

(a) An application for approval under clause (Ha) of sub-section (1) of section 35 by a company shall be made in ³⁷[Form No. 3CF], to the Commissioner of Income-tax having jurisdiction over the applicant, at any time during the financial year immediately preceding the assessment year from which the approval is sought.

³⁸[(aa) Form No. 3CF shall be furnished electronically, —

(i) under digital signature, if the return of income is required to be furnished under digital signature;

(ii) through electronic verification code in a case not covered under clause (i).

(ab) Form No. 3CF shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the applicant.

(ac) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall:

(i) lay down the form, data structure, standards and procedure of furnishing and verification of Form No. 3CF;

(ii) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said application made.]

(b) The applicant shall send a copy of the application in Form No. ³⁹[3CF] to the prescribed authority, accompanied by the acknowledgement receipt as evidence of having furnished the application form in duplicate in the Office of the Commissioner of Income-tax having jurisdiction over the case.

(c) Every notification under clause (Ha) of sub-section (1) of section 35 shall be issued or an order rejecting the application shall be passed within a period of twelve months from the end of the month in which the application was received in the Office of the Chief Commissioner of Income-tax.

(d) If any defect is noticed in the application in Form No. ³⁹[3CF] or if any relevant document is not attached thereto, the Commissioner of Income-tax shall serve a deficiency letter on the applicant before the expiry of one month from the date of receipt of the application form in his office.

(e) The applicant shall remove the deficiency within a period of fifteen days from the date of service of the deficiency letter or within such further period which, on an application made in this behalf may be extended, so however, that the total period for removal of deficiency does not exceed thirty days, and if the applicant fails to remove the deficiency within the period of thirty days so allowed, the Commissioner of Income-tax shall send his recommendation to the Chief Commissioner of Income-tax for treating the application as invalid.

(f) The Chief Commissioner of Income-tax may, after examining the re-commendations referred to in clause (e), pass an order that the application is invalid.

(g) If the application form is complete in all respects, the Commissioner of Income-tax may, make such inquiry as he may consider necessary regarding the genuineness of the activity of the company and send his recommendation to the Chief Commissioner of Income-tax for grant of approval or rejection of the application before the expiry of the period of three months to be reckoned from the end of the month in which the application form was received in his office.

(h) The Chief Commissioner of Income-tax may, before granting approval under clause (Ha) of sub-section (1) of section 35, call for such documents or information from the applicant as it considers necessary and may get any inquiry made for verification of the genuineness of the activity of the applicant.

(i) The Chief Commissioner of Income-tax may, under sub-section (1) of section 35, issue the notification to be published in the Official Gazette granting approval to the company or for reasons to be recorded in writing reject the application.

(j) The Chief Commissioner of Income-tax may withdraw the approval granted under clause (Ha) of sub-section (1) of section 35 if he is satisfied that the company has ceased to carry on its activities or its activities are not genuine or are not being carried on in accordance with all or any of the conditions under this rule :

Provided that no order treating the application as invalid or rejecting the application or withdrawing the approval shall be passed without giving a reasonable opportunity of being heard to the company.

(k) A copy of the order invalidating or rejecting the application or withdrawing the approval shall be communicated to the applicant, the Assessing Officer and the Commissioner of Income-tax.

(3) Approval to a company under clause (Ha) of sub-section (1) of section 35 shall be subject to the following conditions, namely :—

(a) The sum paid to the company shall be used for scientific research.

(b) The applicant company shall carry on scientific research through its own employees using its own assets.

(c) A company approved under clause (Ha) of sub-section (1) of section 35 shall maintain separate books of account in respect of the sums received by it for scientific research, reflect therein the amount used for carrying on research, get such books of account audited by an accountant, and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139.

Explanation.—For the purpose of this clause “accountant” shall have the same meaning as assigned to it in Explanation to sub-section (2) of section 288 of the Act.

(d) The company shall maintain a separate statement of donations received and the amount used for research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to in sub-rule (3).

(e) Subsequent to approval, the company shall, every year, by the due date of furnishing the return of income under sub-section (1) of section 139, furnish a statement to the Commissioner of Income-tax containing the following information, namely :—

(i) a detailed note on the research work undertaken by it during the previous year;

(ii) a summary of research articles published in national or international journals during the year;

(iii) any patents or other similar rights applied for or registered during the year;

(iv) programme of research projects to be undertaken during the forthcoming year and the financial allocation for such subjects.

(f) If the Commissioner of Income-tax is satisfied that the company,—

(i) is not maintaining separate books of account for research activities; or

(ii) has failed to furnish its audit report; or

(iii) has not furnished its statement of the sums received and the sums used for research, or a statement referred to in sub-clause (e); or

(iv) has ceased to carry on its research activities, or its activities are not genuine; or

(v) is not fulfilling the conditions subject to which approval was granted to it,

he may after making appropriate enquiries, furnish a report on the circumstances referred to in sub-clauses (i) to (v) to the jurisdictional Chief Commissioner of Income-tax within six months from the date of furnishing the return of income under sub-section (1) of section 139.

Notes:

³⁷ Substituted for “duplicate in Form No. 3CF-III” by the IT (Sixth Amdt.) Rules, 2021, w.e.f. 1-4-2021.

³⁸ Clauses (aa) to (ac) inserted by the IT (Sixth Amdt.) Rules, 2021, w.e.f. 1-4-2021.

³⁹ Substituted for “3CF-III” by the IT (Sixth Amdt.) Rules, 2021, w.e.f. 1-4-2021.

Rule – 5G

⁴⁰[Option form for taxation of income from patent under section 115BBF.

5G. (1) For the purposes of exercising the option for taxation of income by way of royalty in respect of a patent developed and registered in India, by an eligible assessee under section 115BBF, the eligible assessee shall furnish Form No. 3CFA duly verified in the manner indicated therein, and the same shall be furnished by the eligible assessee in the following manner, namely:—

i. electronically under digital signature; or

ii. electronically through electronic verification code.

(2) The form referred in sub-rule (1) shall be complete in all respects and furnished on or before the due date specified in Explanation 2 below sub-section (1) of section 139 for furnishing the return of income for the relevant assessment year, in case the option is exercised for that assessment year.

(3) The Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing and verification of the Form referred in sub-rule (1).]

Rule – 6

Prescribed authority for expenditure on scientific research.

6. (1) For the purposes of clause (i) of sub-section (1) and sub-section (2A) of section 35, the prescribed authority shall be the Director General (Income-tax Exemptions) in concurrence with the Secretary, Department of Scientific and Industrial Research, Government of India.

(1A) For the purposes of sub-section (2AA) of section 35, the prescribed authority shall be—

a. in the case of a National Laboratory or a University or an Indian Institute of Technology, the head of the National Laboratory or the University or the Indian Institute of Technology, as the case may be; and

b. in the case of a specified person, the Principal Scientific Adviser to the Government of India.

(1B) For the purposes of sub-section (2AB) of section 35, the prescribed authority shall be the Secretary, Department of Scientific and Industrial Research.

(2)[***]

(3) The application for obtaining approval under sub-section (2AA) of section 35 shall be made by a sponsor in Form No. 3CG.

Explanation.—For the purposes of this rule “sponsor” means a person who makes an application in Form No. 3CG.

(4) The application required to be furnished by a company under sub-section (2AB) of section 35 shall be in Form No. 3CK.

(5) The head of the National Laboratory or the University or the Indian Institute of Technology or the Principal Scientific Adviser to the Government of India shall, if he is satisfied that it is feasible to carry out the scientific research programme then, subject to other conditions prescribed in this rule and section 35(2AA) of the Act, pass an order in writing in Form No. 3CH :

Provided that a reasonable opportunity of being heard shall be granted to the sponsor before rejecting an application :

Provided further that an order under this rule shall be passed within two months of the receipt of the application under sub-rule (1A) :

Provided also that the Principal Scientific Adviser to the Government of India may authorise an officer who is not below the rank of a Deputy Secretary to issue such order, after the scientific research programme has been approved by him.

(5A) The prescribed authority shall, if he is satisfied that the conditions provided in this rule and in sub-section (2AB) of section 35 of the Act are fulfilled, pass an order in writing in Form No. 3CM:

Provided that a reasonable opportunity of being heard shall be granted to the company before rejecting an application.

(6) The National Laboratory, University, Indian Institute of Technology or specified person shall issue a receipt of payment for carrying out an approved programme of scientific research under sub-section (2AA) in Form No. 3CI.

(7) Approval of a programme under sub-section (2AA) shall be subject to the following conditions :—

a. The programme should not relate purely to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or activities of a like nature;

b. The prescribed authority shall submit its report to the 41[Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over the sponsor] in Form No. 3CJ within a period of three months from the date of granting approval to the programme:

Provided that the officer authorised by the prescribed authority, being the Principal Scientific Adviser to the Government of India, under sub-rule (5) shall submit such report to the 41[Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over the sponsor];

c. The sponsor and the National Laboratory, University, Indian Institute of Technology or specified person, as the case may be, shall submit to the 42[Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over the sponsor] a yearly statement showing progress of implementation of the approved programme and actuals of expenditure incurred thereon;

d. The prescribed authority shall not extend the duration of the programme or approve any escalation in costs;

e. The National Laboratory, University, Indian Institute of Technology or specified person, as the case may be, shall maintain a separate account for each approved programme ; which shall be audited annually and a copy thereof shall be furnished to the 42[Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over the sponsor] by 31st day of October of each succeeding year;

f. Assets acquired by the prescribed authority for executing the approved programme shall not be disposed of without the approval of the 42[Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income- tax having jurisdiction over the sponsor];

g. On completion of the approved programme, a completion certificate along with a copy of the report on the research activities carried out and salient features of the result obtained and its further application for commercial exploitation shall be jointly submitted by the sponsor and the National Laboratory, University, Indian Institute of Technology or specified person to the 42[Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over the sponsor];

h. A copy of the audited statement of accounts for the approved programme shall be submitted by the Head of the National Laboratory, University or Indian Institute of Technology or the Principal Scientific Adviser to the Government of India to the 42[Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over the sponsor] within six months of the completion of the programme.

(7A) Approval of expenditure incurred on in-house research and development facility by a company under sub-section (2AB) of section 35 shall be subject to the following conditions, namely :—

(a) The facility should not relate purely to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or activities of a like nature;

43[(b) The prescribed authority shall furnish electronically its report,—

i. in relation to the approval of in-house research and development facility in Part A of Form No. 3CL;

ii. quantifying the expenditure incurred on in-house research and development facility by the company during the previous year and eligible for weighted deduction under sub-section (2AB) of section 35 of the Act in Part B of Form No. 3CL;

(ba) The report in Form No. 3CL referred to in clause (b) shall be furnished electronically by the prescribed authority to the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over such company within one hundred and twenty days,—

i. of the grant of the approval, in a case referred to in sub-clause (i) of clause (b);

ii. of the submission of the audit report, in a case referred to in sub-clause (ii) of clause (b);]

(c) The company shall maintain a separate account for each approved facility; which shall be audited annually and 44[a report of audit in Form No. 3CLA shall be furnished electronically to the Secretary, Department of Scientific and Industrial Research on or before the due date specified in Explanation 2 to sub-section (1) of section 139 of the Act for furnishing the return of income, for each succeeding year].

Explanation.— For the purposes of this sub-rule the expression “audited” means the audit of accounts by an accountant, as defined in the Explanation below sub-section (2) of section 288 of the Income-tax Act, 1961;

(d) Assets acquired in respect of development of scientific research and development facility shall not be disposed of without the approval of the Secretary, Department of Scientific and Industrial Research.

45[(8) For the purposes of this rule, the Principal Director General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data, and shall also be responsible for the day-to-day administration in relation to furnishing the information in the manner so specified.]

Notes:

⁴¹ Substituted for “Director General (Income-tax Exemptions)” by the IT (Tenth Amdt.) Rules, 2016, w.e.f. 1-7-2016.

⁴² Substituted for “Director General (Income-tax Exemptions)” by the IT (Tenth Amdt.) Rules, 2016, w.e.f. 1-7-2016.

⁴³ Substituted by the IT (Tenth Amdt.) Rules, 2016, w.e.f. 1-7-2016.

⁴⁴ Substituted for “a copy thereof shall be furnished to the Secretary, Department of Scientific and Industrial Research by 31st day of October of each succeeding year” by the IT (Tenth Amdt.) Rules, 2016, w.e.f. 1-7-2016.

⁴⁵ Inserted by the IT (Tenth Amdt.) Rules, 2016, w.e.f. 1-7-2016.

Rule – 6A

46[Expenditure for obtaining right to use spectrum for telecommunication services.

6A. (1) For the purpose of section 35ABA, the term “payment has actually been made” shall mean,—

(i) where an assessee has opted and been allowed by the Department of Telecommunications, Government of India to make full upfront payment of spectrum fee, the actual payment of expenditure irrespective of the previous year in which the liability for the expenditure was incurred according to the method of accounting regularly employed by the assessee;

(ii) where an assessee has opted and been allowed by the Department of Telecommunications, Government of India to make deferred payment, the amount which would have been payable by the assessee had he opted for full upfront payment of spectrum fee irrespective of the previous year in which the liability for the expenditure was incurred according to the method of accounting regularly employed by the assessee.

(2) In case of deferred payment referred to in clause (b) of sub-rule (1), where there is failure by the assessee to comply with any of the conditions specified by the scheme of the Department of Telecommunications, Government of India and Department of Telecommunications terminates the allotment or assignment of spectrum, the Assessing Officer shall, in exercise of power vested in him under sub-section (3) of section 35ABA shall re-compute the total income of the assessee for the previous year in which the deduction has been claimed and granted to him by deeming that,—

(i) the total amount of spectrum fee paid up to the date of termination is the amount of “payment actually been made”;

(ii) the spectrum was in force up to the date of its termination for the purpose of computing “relevant previous year”.]

Note:

⁴⁶ Inserted by the IT (Twenty-fourth Amdt.) Rules, 2016, w.e.f. 4-10-2016.

Rule – 6AA

Prescribed activities for export markets development allowance.

6AA. [Omitted by the IT (Thirty-second Amdt.) Rules, 1999, w.e.f. 19-11-1999.]

Rule – 6AAA

Prescribed authority for the purposes of sections 35CC and 35CCA.

6AAA. For the purposes of section 35CC and section 35CCA,—

i. the “prescribed authority” to approve the programme of rural development referred to in sub-section (1) of section 35CC and in clause (a) of sub-section (1) of section 35CCA shall be the Committee consisting of the following, namely :—

a. The Chief Commissioner or Commissioner of Income-tax who exercises jurisdiction over the State or, as the case may be, the Union territory in which the programme of rural development is to be carried out—Chairman;

b. An officer not below the rank of a Secretary to the Government of the State or, as the case may be, the Union territory in which the programme of rural development is to be carried out—Member;

ii. the “prescribed authority” to approve an association or institution referred to in clause (a) or clause (b) of sub-section (1) of section 35CCA shall be the Committee consisting of the following, namely :—

a. The Chief Commissioner or Commissioner of Income-tax, who exercises jurisdiction over the State or, as the case may be, the Union territory in which the principal office of the association or institution is situated—Chairman;

b. An officer not below the rank of a Secretary to the Government of the State or, as the case may be, the Union territory in which the principal office of the association or institution is situated—Member :

Provided that where in a case whether falling under clause (i) or clause (ii) two or more Commissioners exercise jurisdiction over the State or, as the case may be, the Union territory, the Board may, by notification in the Official Gazette, empower the Chief Commissioner or Commissioner specified in this behalf to be the Chairman of the Committee.

Explanation.—In this rule, “programme of rural development” shall have the meaning assigned to it in the Explanation to sub-section (1) of section 35CC of the Income-tax Act.

Rule – 6AAB

Statement of expenditure for claiming deduction under section 35CC.

6AAB. [Omitted by the IT (Thirty-second Amdt.) Rules, 1999, w.e.f. 19-11-1999.]

Rule – 6AAC

Prescribed authority for the purposes of section 35CCB.

6AAC. For the purposes of section 35CCB, the “prescribed authority” shall be the Secretary, Department of Environment, Government of India.

Rule – 6AAD

[Guidelines for approval of agricultural extension project under section 35CCC.

6AAD. (1) The agricultural extension project shall be considered for notification if it fulfils all of the following conditions, namely :—

i. the project shall be undertaken by an assessee for training, education and guidance of farmers;

ii. the project shall have prior approval of the Ministry of Agriculture, Government of India; and

iii. an expenditure (not being expenditure in the nature of cost of any land or building) exceeding the amount of twenty-five lakh rupees is expected to be

incurred for the project.

(2) Before undertaking any agricultural extension project, an assessee shall make an application in Form No. 3C-O to the Member (IT), Central Board of Direct Taxes for notification of such project under sub-section (1) of section 35CCC.

(3) The application referred to in sub-rule (2) shall be accompanied by the following, namely :—

a. a detailed note on the agricultural extension project to be undertaken by the assessee;

b. details of the expenditure expected to be incurred on the project and expected date of completion of the project; and

c. a letter approving the project and specifying the amount of expenditure expected to be incurred on the project from the Ministry of Agriculture,

Government of India.

(4) Where any defect is noticed in the application referred to in sub-rule (2) or a relevant document is not attached thereto, the Central Board of Direct Taxes shall, before the expiry of one month from the date of receipt of the application in its office, intimate the defect to the applicant for its rectification.

(5) The applicant shall remove the defect within a period of fifteen days from the date of such intimation or within such further period as may be extended by the Central Board of Direct Taxes, on an application made in this behalf by the applicant, so however, that the total period for removal of defect does not exceed thirty days, and if the applicant fails to remove the defect within such period as allowed, the Central Board of Direct Taxes shall pass an order treating the application as invalid.

(6) If the application form is complete in all respects, the Central Board of Direct Taxes shall, within a period of one month from the end of the month in which it receives the application form complete in all respects, issue under sub-section (1) of section 35CCC, a notification in Form No. 3CP to be published in Official Gazette specifying the agricultural extension project, subject to the conditions mentioned in rule 6AAE or such other conditions, as it may deem fit, to be effective for such period not exceeding three assessment years.

(7) The assessee, may, at least two months before the expiry of the effective period of the notification issued under sub-rule (6), make an application to the Central Board of Direct Taxes for notification of such project for a further period.

(8) The Central Board of Direct Taxes shall, after receiving the application under sub-rule (7), call for a report from the Commissioner of Income-tax or the Director of Income-tax, as the case may be, having jurisdiction over the case regarding the activities of the agricultural extension project during the period of notification and fulfilment of conditions mentioned in rule 6AAE and any other conditions subject to which the agricultural extension project was notified under sub-rule (6).

(9) On being satisfied with the report received under sub-rule (8) on the agricultural extension project, the Central Board of Direct Taxes may, within a period of three months from the end of the month in which it receives application referred to in sub-rule (7), notify the said project for a further period not exceeding three assessment years.

(10) A copy of the notification issued under sub-rule (6) or, as the case may be, under sub-rule (9) shall be sent to the applicant, the Ministry of Agriculture, Government of India, the Commissioner of Income-tax or the Director of Income-tax, as the case may be, the Department of Agriculture of the concerned State and the Agricultural Technology Management Agency of the concerned District.

(11) The Central Board of Direct Taxes may, on being satisfied that the assessee has ceased its activities, or that its activities are not genuine or that its activities are not being carried out in accordance with all or any of the relevant provisions of the Act or this rule or rule 6AAE, or its activities are not being carried out in accordance with all or any of the conditions subject to which the notification was issued, pass an order for rescission of the notification issued under sub-rule (6) or sub-rule (9).

(12) Before any order is passed treating the application as invalid or rejecting it or rescinding the notification, an opportunity of being heard in the matter shall be given to the assessee.

(13) A copy of the order invalidating or rejecting the application or rescinding the notification shall be sent to the applicant, the Ministry of Agriculture, Government of India, the Commissioner of Income-tax or the Director of Income-tax, as the case may be, the Department of Agriculture of the concerned State and Agricultural Technology Management Agency of the concerned district.]

Notes: 

47. Substituted by the IT (Third Amdt.) Rules, 2014, w.e.f. 21-3-2014.

Rule – 6AAE

Conditions subject to which an agricultural extension project is to be notified under section 35CCC.

6AAE. (1) The assessee undertaking agricultural extension project shall maintain separate books of account of the agricultural extension project notified under sub-section (1) of section 35CCC, and get such books of account audited by an accountant as defined in the Explanation below sub-section (2) of section 288.

(2) The audit report referred to in sub-rule (1) shall include the comments of the auditor on the true and fair view of the books of account maintained for agricultural extension project, the genuineness of the activities of the agricultural extension project and fulfilment of the conditions specified in the relevant provisions of the Act or the rules or the conditions mentioned in the [notification issued under sub-rule (6) or sub-rule (9) of rule 6AAD].

(3) The assessee shall not accept an amount exceeding the amount as approved in the notification from the beneficiary under the eligible agricultural extension project for training, education, guidance or any material distributed for the purposes of such training, education or guidance.

(4) The assessee shall not get any direct or indirect benefit from the notified agricultural extension project except the deduction of the eligible expenditure in accordance with the provisions of section 35CCC of the Act, rule 6AAD and this rule.

(5) All expenses (not being expenditure in the nature of cost of any land or buil-ding), as reduced by the amount received from beneficiary, if any, incurred wholly and exclusively for undertaking an eligible agricultural extension project shall be eligible for deduction under section 35CCC :

Provided that any expenditure incurred on the agricultural extension project which is reimbursed or reimbursable to the assessee by any person, whether directly or indirectly, shall not be eligible for deduction under section 35CCC.

(6) The assessee shall, on or before the due date of furnishing the return of income under sub-section (1) of section 139, furnish the following to the Commissioner of Income-tax or the Director of Income-tax, as the case may be, namely:—

a. the audited statement of accounts of the agricultural extension projects for the previous year along with the audit report and amount of deduction claimed under sub-section (1) of section 35CCC;

b. a note on the agricultural extension project undertaken by it during the previous year and the programme of agricultural extension project to be undertaken during the current year and the financial allocation for such programme; and

c. a certificate from the Ministry of Agriculture, Government of India, regarding the genuineness of the agricultural extension project undertaken by the assessee during the previous year.

(7) If the Commissioner of Income-tax or the Director of Income-tax, as the case may be, is satisfied that the,—

a. assessee has not maintained separate books of account for the agricultural extension project or has not got such books of account audited by an accountant in accordance with sub-rule (1);

b. assessee has not furnished the documents referred to in sub-rule (6);

c. assessee has ceased to carry out activities of agricultural extension project;

d. activities of agricultural extension project of the assessee are not genuine; or

e. activities of the agricultural extension project are not being carried out in accordance with the relevant provisions of the Act or the rules or the conditions subject to which the notification was issued, he may, after making appropriate inquires, furnish a report on the circumstances referred to in clauses (a) to (e) to the CBDT [for appropriate action as per the provisions of sub-rule (11) of rule 6AAD].

Notes:

48. Substituted for “notification issued under sub-rule (10) or sub-rule (11) of rule 6AAD” by the IT (Third Amdt.) Rules, 2014, w.e.f. 21-3-2014.

49. Substituted for “for appropriate action as per the provisions of sub-rule (13) of rule 6AAD” by the IT (Third Amdt.) Rules, 2014, w.e.f. 21-3-2014.

Rule – 6AAF

Guidelines for approval of skill development project under section 35CCD.

6AAF. (1) A skill development project shall be considered for notification if it is undertaken by an eligible company and the project is undertaken in separate facilities in a training institute.

(2) The eligible company, before undertaking any skill development project, shall make an application for notification of such project under sub-section (1) of section 35CCD, in duplicate, in Form No. 3CQ, to the National Skill Development Agency (hereinafter referred to as the NSDA).

(3) The eligible company shall also send a copy of the application in Form No. 3CQ to the Commissioner of Income-tax or the Director of Income-tax, as the case may be, having jurisdiction over the case, accompanied by the acknowledgement receipt as evidence of having furnished the application form in duplicate to the NSDA.

(4) The application shall be accompanied by the following, namely :—

(a) detailed note on the skill development project to be undertaken by the eligible company;

(b) details of the expenditure expected to be incurred on the project and expected date of completion of the project; and

(c) a letter of concurrence from the training institute in which the skill development project is to be undertaken.

(5) If any defect is noticed in the application referred to in sub-rule (2) or if any relevant document is not attached thereto, the NSDA shall, before the expiry of one month from the date of receipt of the application in its office, intimate the defect to the applicant for its rectification.

(6) The applicant shall remove the defect within a period of fifteen days from the date of such intimation or within such further period as, on an application made in this behalf, may be extended by the NSDA, so however, that the total period for removal of the defect does not exceed thirty days, and if the applicant fails to remove the defect within such period so allowed, the NSDA shall send its recommendation for treating the application as invalid to the CBDT.

(7) On receipt of recommendation of the NSDA under sub-rule (6), the CBDT, if satisfied, may pass an order treating the application as invalid.

(8) If the application form is complete in all respects, the NSDA may make such inquiry or call for such documents from the eligible company or the training institute as it may consider necessary for satisfying itself regarding the genuineness of the current and proposed activity of the applicant and send its recommendation to the CBDT for grant of approval or rejection of the application before the expiry of the period of two months to be reckoned from the end of the month in which the application form complete in all respects was received in its office.

(9) The Commissioner of Income-tax or the Director of Income-tax, as the case may be, having jurisdiction over the case shall send his recommendation to the NSDA for grant of approval or rejection of the application, after considering the compliance of the applicant with the various provisions of Income-tax Act, 1961 and Wealth-tax Act, 1957, before the expiry of the period of one month to be reckoned from the end of the month in which the copy of the application was received in his office.

(10) If the NSDA recommends the grant of approval under sub-rule (8), the CBDT shall, within a period of fifteen days from the end of the month in which it receives the report from the NSDA, under sub-section (1) of section 35CCD, issue a notification in Form No. 3CR to be published in the Official Gazette specifying the skill development project subject to conditions mentioned in rule 6AAG or such other conditions, as it may deem fit, to be effective for such period not exceeding three assessment years and if the NSDA recommends the rejection of the application under sub-rule (8), the CBDT shall pass an order rejecting the application.

(11) If the CBDT is satisfied with the activities of the skill development project during the period of notification, it may notify the said project for a further period in consultation with the NSDA.

(12) A copy of the notification issued under sub-rule (10) or sub-rule (11) shall be sent to the applicant, the NSDA, the training institute and the Commissioner of Income-tax or the Director of Income-tax, as the case may be, having jurisdiction over the case.

(13) The CBDT may rescind the notification issued under sub-rule (10) or sub-rule (11) at any time, if it is satisfied that the eligible company or the training institute, as the case may be, has ceased its activities or its activities are not genuine or the activities of the skill development project are not being carried out in accordance with all or any of the relevant provisions of the Act or this rule or rule 6AAG or the conditions subject to which the notification was issued.

(14) An order rescinding the notification shall not be passed unless the applicant has been given an opportunity of being heard in the matter.

(15) A copy of any order invalidating or rejecting the application or rescinding the notification shall be sent to the applicant, the training institute, the NSDA and the Commissioner of Income-tax or the Director of Income-tax, as the case may be, having jurisdiction over the case.

Rule – 6AAG

Conditions subject to which a skill development project is to be notified under section 35CCD.

6AAG. (1) The company undertaking skill development project shall maintain separate books of account of the skill development project notified under sub-section (1) of section 35CCD, and get such books of account audited by an accountant as defined in the Explanation below sub-section (2) of section 288.

(2) The audit report referred to in sub-rule (1) shall include the comments of the auditor on the true and fair view of the books of account maintained for skill development project, the genuineness of the activities of the skill development project and fulfilment of the conditions specified in the relevant provisions of the Act or the rules or the conditions mentioned in the notification issued under sub-rule (10) or sub-rule (11) of rule 6AAF.

(3) A skill development project in respect of existing employees of the company shall not be eligible for notification under sub-section (1) of section 35CCD, where the training of such employees commences after six months of their recruitment.

(4) All expenses (not being expenditure in the nature of cost of any land or building), incurred wholly and exclusively for undertaking a notified skill development project shall be eligible for deduction under section 35CCD :

Provided that any expenditure incurred on the skill development project which is reimbursed or reimbursable to the company by any person, whether directly or indirectly, shall not be eligible for deduction under section 35CCD.

(5) The company shall, on or before the due date of furnishing the return of income under sub-section (1) of section 139, furnish the audited statement of accounts of the skill development project for the previous year along with the audit report and amount of deduction claimed under sub-section (1) of section 35CCD to the Commissioner of Income-tax or the Director of Income-tax, as the case may be.

(6) If the Commissioner of Income-tax or the Director of Income-tax, as the case may be, is satisfied that the,—

(a) company has not maintained separate books of account for the skill development project or has not got such books of account audited by an accountant in accordance with sub-rule (1);

(b) company has not furnished the documents referred to in sub-rule (5);

(c) company has ceased to carry out activities of skill development project;

(d) activities of skill development project of the company are not genuine; or

(e) activities of the skill development project of the company are not being carried out in accordance with the relevant provisions of the Act or the rules or the conditions subject to which the notification was issued,

he shall, after making appropriate inquiries, furnish a report on the circumstances referred to in clauses (a) to (e) to the CBDT for appropriate action under sub-rule (13) of rule 6AAF.

(7) If the NSDA is not satisfied about the genuineness of the activities of the notified skill development project, the NSDA shall send its recommendation to the CBDT for appropriate action under sub-rule (13) of rule 6AAF.

Rule – 6AAH

Meaning of expressions used in rule 6AAF and rule 6AAG. 6AAH. For the purposes of rule 6AAF and rule 6AAG—

(i) “Eligible company” means a company, which is—

(a) engaged in the business of manufacture or production of any article or thing, not being an article or thing mentioned at serial number 1 and serial number 2 of the list of articles or things specified in the Eleventh Schedule; or

(b) engaged in providing services mentioned in column (2) of the Table below:

TABLE

S.No.	Particulars
(1)	(2)
1.	Accounting services
2.	Architect services
3.	Automobile repair or maintenance
4.	Banking, insurance and financial services including ATM installation, maintenance and operations or banking correspondents or insurance agents
5.	Beauty and cosmetology, including hair styling or manicurists or pedicurists
6.	Cable operators or Direct To Home (DTH) services
7.	Cargo Handling and stevedoring services
8.	Construction including painting or woodwork or plumbing or flooring or electrical wiring or installation or maintenance of lifts
9.	Courier services
10.	Design services including fashion or gems and jewellery or apparel or industrial designing
11.	Event management
12.	Facilities management, housekeeping, cleaning services
13.	Fire and safety services
14.	Food processing or preservation services, including post harvesting and post farm-gate skills
15.	Health and Wellness services including spa or nutritionists or weight management or health instructors or yoga or gym trainers
16.	Home decor services, landscaping
17.	Hospital and Healthcare services, such as Lab technicians, nursing and other paramedical staff
18.	Hospitality, including culinary skills or catering services
19.	Logistics and Transportation by any mode, including by air, sea, road, rail or pipelines, and related services such as driving or operation of heavy machinery equipment, forwarding agents, packers and movers
20.	Market research services
21.	Media or film or advertising
22.	Mining and extraction of mineral resources, including hydrocarbons
23.	Packaging and Warehousing, including both ambient temperature storage and cold storage, operation of Internal Container Depots and Container Freight Stations
24.	Port and maritime services such as dredging, piloting, tug boat operations, shipbuilding, ship scrapping, bunkering
25.	Power Sector Services, including those required for erection or installation or maintenance of equipment or towers, etc. in generation, transmission or distribution sector projects
26.	Private Security, including guards, supervisors, installation and maintenance of security equipment etc.
27.	Refrigeration and air-conditioning
28.	Repair and maintenance services, including Installation and servicing of household goods or white goods
29.	Retail marketing, including shop floor assistants or merchandisers
30.	Telecom services, including erection and maintenance of towers
31.	Travel and tourism, including guides or ticketing or sales or cab drives

50[(ii) “Training institute” means a training institute,—

a. set up by the Central Government or a State Government or a local authority;

b. affiliated to the National Council for Vocational Training or a State Council for Vocational Training;

c. affiliated to, or approved by, or empanelled by, the National Skill Development Agency;

d. affiliated to, or approved by, or empanelled by, the Central Government and certified by the National Council for Vocational Training as having training standards equivalent to training institutes affiliated to the National Council for Vocational Training; or

e. affiliated to, or approved by or empanelled by, the State Government and certified by the National Council for Vocational Training or a State Council for Vocational Training as having training standards equivalent to training institutes affiliated to the National Council for Vocational Training or, as the case may be, the State Council for Vocational Training.]

(iii) “National Council for Vocational Training” means the National Council for Training in Vocational Trades established by the resolution of the Government of India in the Ministry of Labour (Directorate General of Resettlement and Employment) No. TR/E.P.-24/56, dated the 21st August, 1956 and re-named as the National Council for Vocational Training by the resolution of the Government of India in the Ministry of Labour (Directorate General of Employment and Training) No. DGET/12/21/80-TC, dated the 30th September, 1981.

(iv) “State Council for Vocational Training” means a State Council for Training in Vocational Trades established by the State Government.

51[(v) “National Skill Development Agency” means the agency constituted by the Government of India vide notification No. 14/27/2012-EC, dated the 6th June, 2013.]

Notes:

⁵⁰ Substituted by the IT (Second Amdt.) Rules, 2014, w.e.f. 20-3-2014.

⁵¹ Inserted by the IT (Second Amdt.) Rules, 2014, w.e.f. 20-3-2014.

Rule – 6AB

Form of audit report for claiming deductions under sections 35D and 35E.

6AB. The report of audit of the accounts of an assessee, other than a company or a co-operative society, which is required to be furnished under sub-section (4) of section 35D or sub-section (6) of section 35E shall be in Form No. 3AE.

Rule – 6ABA

Computation of aggregate average advances for the purposes of clause (viia) of sub-section (1) of section 36.

6ABA. For the purposes of clause (viia) of sub-section (1) of section 36, the aggregate average advances made by the rural branches of a scheduled bank shall be computed in the following manner, namely :—

(a) the amounts of advances made by each rural branch as outstanding at the end of the last day of each month comprised in the previous year shall be aggregated separately;

(b) the sum so arrived at in the case of each such branch shall be divided by the number of months for which the outstanding advances have been taken into account for the purposes of clause (a);

(c) the aggregate of the sums so arrived at in respect of each of the rural branches shall be the aggregate average advances made by the rural branches of the scheduled bank.

Explanation.—In this rule, “rural branch” and “scheduled bank” shall have the meanings assigned to them in the Explanation to clause (viia) of sub-section (1) of section 36.

Rule – 6ABAA

Infrastructure facility under clause (g) of the Explanation to clause (viii) of sub-section (1) of section 36.

6ABAA. The conditions to be fulfilled by a public facility to be eligible to be notified as an infrastructure facility in accordance with the provisions of clause (g) of the Explanation to clause (viii) of sub-section (1) of section 36 shall be the following, namely :—

(a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act;

(b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility similar in nature to an infrastructure facility referred to in the Explanation to clause (i) of sub-section (4) of section 80-IA;

(c) it has started or starts operating and maintaining such infrastructure facility on or after the 1st day of April, 1995.

Rule – 6ABBA

⁵²[Other electronic modes.

6ABBA. The following shall be the other electronic modes for the purposes of clause (d) of first proviso to section 13A, clause (f) of sub-section (8) of section 35AD, sub-section (3), sub-section (3A), proviso to sub-section (3A) and sub-section (4) of section 40A, second proviso to clause (1) of section 43, sub-section (4) of section 43CA, proviso to sub-section (1) of section 44AD, second proviso to sub-section (1) of section 50C, second proviso to sub-clause (b) of clause (x) of sub-section (2) of section 56, clause (b) of first proviso of clause (i) of Explanation to section 80JJAA, section 269SS, section 269ST and section 269T, namely:—

(a) Credit Card;

(b) Debit Card;

(c) Net Banking;

(d) IMPS (Immediate Payment Service);

(e) UPI (Unified Payment Interface);

(f) RTGS (Real Time Gross Settlement);

(g) NEFT (National Electronic Funds Transfer), and

(h) BHIM (Bharat Interface for Money) Aadhaar Pay.]

Note:

⁵² Inserted by the IT (Third Amdt.) Rules, 2020, w.r.e.f. 1-9-2019.

Rule – 6ABBB

⁵³[Form of statement to be furnished regarding preliminary expenses incurred under section 35D.

6ABBB. (1) The statement containing particulars of expenditure required to be furnished under proviso to clause (a) of sub-section (2) of section 35D by the assessee shall be in Form No. 3AF for each previous year.

(2) Form No. 3AF shall be furnished one month prior to the due date for furnishing the return of income as specified under sub-section (1) of section 139.

(3) Form No. 3AF shall be furnished to the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, or any person authorised by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).

(4) Form No. 3AF, shall be furnished electronically,—

(i) under digital signature, if the return of income is required to be furnished under digital signature;

(ii) through electronic verification code in a case not covered under clause (i).

(5) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be, shall specify the procedures for furnishing Form No. 3AF and shall also be responsible for formulating and evolving appropriate security, archival and retrieval policies in relation to the form so furnished.

(6) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be, or any person authorised by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall forward Form No. 3AF to the Assessing Officer.]

Note:

⁵³ Inserted by the IT (Fourteenth Amdt.) Rules, 2023, w.e.f. 1-4-2024

Rule – 6AC

Limits and conditions for allowance of expenditure in certain cases.

6AC. [Omitted by the IT (Thirty-second Amdt.) Rules, 1999, w.e.f. 19-11-1999.]

Rule – 6B

Expenditure on advertisement.

6B. [Omitted by the IT (Thirty-second Amdt.) Rules, 1999, w.e.f. 19-11-1999.]

Rule – 6C

Expenditure on residential accommodation including guest houses.

6C. [Omitted by the IT (Amdt.) Rules, 1973, w.r.e.f. 1-4-1972. Original rule 6C was inserted by the IT (Third Amdt.) Rules, 1965 and later omitted by the IT (Fourth Amdt.) Rules, 1965. It was again inserted by the IT (Second Amdt.) Rules, 1966.]

Rule – 6D

Rule – 6DD

54[Cases and circumstances in which a payment or aggregate of payments exceeding ten thousand rupees may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as prescribed in rule 6ABBA.]

6DD. No disallowance under sub-section (3) of section 40A shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3A) of section 40A where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or 55[account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as prescribed under rule 6ABBA, exceeds ten thousand rupees] in the cases and circumstances specified hereunder, namely :—

a. where the payment is made to—

i. the Reserve Bank of India or any banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);

ii. the State Bank of India or any subsidiary bank as defined in section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959);

iii. any co-operative bank or land mortgage bank;

iv. any primary agricultural credit society or any primary credit society as defined under section 56 of the Banking Regulation Act, 1949 (10 of 1949);

v. the Life Insurance Corporation of India established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956);

b. where the payment is made to the Government and, under the rules framed by it, such payment is required to be made in legal tender;

c. where the payment is made by—

i. any letter of credit arrangements through a bank;

ii. a mail or telegraphic transfer through a bank;

iii. a book adjustment from any account in a bank to any other account in that or any other bank;

iv. a bill of exchange made payable only to a bank;

v. to vii 56-57[***]

Explanation.—For the purposes of this clause and clause (g), the term “bank” means any bank, banking company or society referred to in sub-clauses (i) to (iv) of clause (a) and includes any bank [not being a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), whether incorporated or not, which is established outside India;

d. where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee;

e. where the payment is made for the purchase of—

i. agricultural or forest produce; or

ii. the produce of animal husbandry (including livestock, meat, hides and skins) or dairy or poultry farming; or

iii. fish or fish products; or

iv. the products of horticulture or apiculture,

to the cultivator, grower or producer of such articles, produce or products;

f. where the payment is made for the purchase of the products manufactured or processed without the aid of power in a cottage industry, to the producer of such products;

g. where the payment is made in a village or town, which on the date of such payment is not served by any bank, to any person who ordinarily resides, or is carrying on any business, profession or vocation, in any such village or town;

h. where any payment is made to an employee of the assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity, retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed fifty thousand rupees;

i. where the payment is made by an assessee by way of salary to his employee after deducting the income-tax from salary in accordance with the provisions of section 192 of the Act, and when such employee—

(i) is temporarily posted for a continuous period of fifteen days or more in a place other than his normal place of duty or on a ship; and

(ii) does not maintain any account in any bank at such place or ship;

j. 58[***]

k. where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person;

l. where the payment is made by an authorised dealer or a money changer against purchase of foreign currency or travellers cheques in the normal course of his business.

Explanation.—For the purposes of this clause, the expressions “authorised dealer” or “money changer” means a person authorised as an authorised dealer or a money changer to deal in foreign currency or foreign exchange under any law for the time being in force.]

Notes:

⁵⁴ Substituted for “Cases and circumstances in which a payment or aggregate of payments exceeding twenty thousand rupees may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft.” by the IT (Third Amdt.) Rules, 2020, w.e.f. 29-1-2020.

⁵⁵ Substituted for “account payee bank draft, exceeds twenty thousand rupees” by the IT (Third Amdt.) Rules, 2020, w.e.f. 29-1-2020. 56-57. Omitted by the IT (Third Amdt.) Rules, 2020, w.e.f. 29-1-2020.

⁵⁶ Omitted by the IT (Third Amdt.) Rules, 2020, w.e.f. 29-1-2020.

Income Tax Forms

Form No. : 1

¹[Appendix IV

FORM NO. 1

[See rule 11UE (1)]

Undertaking under sub-rule (1) of rule 11UE of the Income-tax Rules, 1962

To,
Principal Commissioner/Commission
………………….. ………………………. ……………………

Sir/Madam,

I …………………………………….. (name in block letters) son/daughter of …………………………………………. designation ………………………………….. and nationality …………………………………. and related passport number………………………………….. (hereinafter referred to as “signatory”) having Permanent Account Number/Aadhaar Number (see Note 1) …………………………………………………………………. on behalf of ………………………………………… (name of the declarant) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number (see Note 2) ……………………………………….. and being duly authorised and competent to represent the declarant in this regard pursuant to Board Resolution and legal authorisation (see Note 3), as the case may be ,hereby declare as follows:

a. That specified orders have been passed or made in respect of income accruing or arising through or from the transfer of an asset or a capital asset situate in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside India made before the 28th day of May, 2012 and particulars of such specified orders are provided in Part A of the Annexure.

b. The declarant has (strike off the options that are not applicable),

i. not filed any appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings constituted under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant orders, and hereby undertakes that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such relevant order or orders are provided in Part B of the Annexure;

ii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant orders and has irrevocably withdrawn, on a with prejudice basis, all such appeals or applications or petitions or proceeding and evidence thereof is furnished herewith and hereby undertakes that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and irrevocably withdrawn with prejudice by the declarant, are provided in Part C of the Annexure;

iii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and all the appeals or applications or petitions or proceeding filed by the declarant have been disposed of and no further appeal or application or petition or proceeding has been filed by the declarant and evidence thereof is furnished herewith and hereby undertake that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and disposed of, are provided in Part C of the Annexure;

iv. filed appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant orders and one or more of such appeals or applications or petitions or proceeding are pending as on the date of this undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such appeals or applications or petitions or proceeding that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e) below. The declarant further undertakes that it shall not file any such appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such pending appeals or applications or petitions or proceeding filed by the declarant and their status as on the date of this undertaking, are provided in Part D of the Annexure;

c. The declarant has (strike off the options that are not applicable),

i. not initiated any proceeding for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant orders, and hereby undertakes that it shall not initiate any such arbitration, conciliation or mediation in future. Particulars of such relevant order or orders are provided in Part B of the Annexure;

ii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and has irrevocably, on a with prejudice basis, withdrawn any such proceeding for arbitration, conciliation or mediation, and notices given thereof and evidence thereof is furnished herewith. The declarant hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and irrevocably withdrawn with prejudice by the declarant, are provided in Part E of the Annexure;

iii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and all the arbitration, conciliation or mediation filed by the declarant have been disposed of and no further proceeding has been initiated by the declarant and evidence thereof is furnished herewith. The declarant hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and disposed of, are provided in Part E of the Annexure;

iv. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and one or more of such proceeding or notices are pending on the date of undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such proceeding or notices for arbitration, conciliation or mediation that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e) below. Particulars of such pending proceeding and notices filed by the declarant are provided in Part F of the Annexure. The declarant hereby further undertakes that it shall not initiate any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders;

v. received or got any awards, orders, judgments or any other reliefs issued in favour of the declarant, arising out of or in any way relating to the imposition of tax, interest and penalty based on the relevant order or orders, under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise and hereby undertakes to irrevocably waive any right to seek or pursue any claim or costs or declaratory relief in relation to or arising out of such awards, orders or judgments or any other relief that may have been ordered, issued or passed against India and any Indian affiliate, whether it is in proceeding initiated by the declarant or by India and any Indian affiliate. The declarant also undertakes to irrevocably waive any right to seek or pursue any claim for costs or relief in respect of any proceeding initiated by the Republic of India to set aside such award, order or judgment or any other relief issued in favour of the declarant. The declarant hereby undertakes that it shall not initiate or file any such arbitration, conciliation or mediation in future. Particulars of such awards, orders, judgment or any other relief are provided in Part G of the Annexure;

.d. The declarant has (strike off the options that are not applicable),

i. not initiated any proceeding to enforce or pursue attachments in connection with any awards, orders, judgments, any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant as referred in clause (c) of this undertaking either against the Republic of India and any Indian affiliate, and hereby undertakes that it shall not initiate any such proceeding in future. Particulars of such award, order or judgment are provided in Part B of the Annexure;

ii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgments or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. The declarant has irrevocably and with prejudice withdrawn or discontinued any such proceeding and hereby undertakes that it shall not reopen any such proceeding in future or file or initiate fresh proceeding to enforce or pursue attachments and evidence thereof is furnished herewith. Particulars of such proceeding, initiated and withdrawn or discontinued by the declarant, are provided in Part H of the Annexure;

iii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgments or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. All such proceeding filed by the declarant have been disposed of and no further proceeding has been filed by the declarant and evidence is herewith furnished and hereby undertakes that it shall not reopen any such proceeding in future or file or initiate fresh proceeding to enforce or pursue attachments. Particulars of such proceeding, initiated and disposed of, are provided in Part H of the Annexure;

iv. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgments, or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant as referred to in clause (c) of this undertaking, either against the Republic of India and any Indian affiliate and one or more of such proceeding are pending on the date of undertaking and, the declarant has obtained one or more orders from any court or other authority which remain outstanding against India and any Indian Affiliate. The declarant hereby undertakes that it shall not file in future any such proceeding to enforce or pursue attachments regarding any awards, orders, judgments, or any other relief that may have been ordered , issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant as referenced in clause (c) of this undertaking or to enforce the orders from any court or other authority which remain outstanding against Republic of India and any Indian Affiliate. The declarant further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to such outstanding order, in order to set-aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. Particulars of such proceeding are provided in Part I of the Annexure. The declarant also undertakes to irrevocably withdraw, terminate and discontinue with prejudice any and all such proceeding to enforce or pursue attachments in accordance with clause (e).

e. The declarant hereby undertakes as follows:

i. to irrevocably and with prejudice withdraw, discontinue, terminate and take all necessary steps to irrevocably and with prejudice close the pending proceeding referred in sub-clause (iv) of clause (b), sub-clause (iv) of clause (c), sub-clause (v) of clause (c) and sub-clause (iv) of clause (d) of this undertaking, as well as any other pending proceeding against India or Indian affiliates relating to the relevant order or orders and not referenced in clauses (b), (c) and (d) above, and not to pursue in any way and by any means in future the pending proceeding as referenced in clauses (b), (c), and (d) above, and any other pending proceeding relating to the relevant order or orders not referred in the above clauses and any other fresh proceeding relating to the relevant order or orders. In so acting, declarant shall act in accordance with this undertaking and in full cooperation with the Republic of India;

ii. to irrevocably terminate, release, discharge, and forever irrevocably waive any right, whether direct or indirect, and any claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, declaratory reliefs and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown previously (or in future discovered), suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist , in relation to any award, order, judgment, or any other relief as referred in clauses (b), (c) and (d) of this undertaking, against the Republic of India and all Indian affiliates, ordered, issued or passed in connection with the relevant order or orders, whether it is in proceeding initiated by the declarant or by Republic of India and any Indian Affiliate. The declarant further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to any outstanding order referenced in clause (d), in order to set-aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. For the avoidance of doubt, the declarant’s irrevocable waiver includes irrevocable waiver of any right provided by any existing ex parte, provisional, or other kind of court order permitting enforcement or attachment against the Republic of India and any Indian affiliate, in furtherance of any award, order judgment, or any other relief that may have been ordered or issued or passed by any arbitral tribunal as referred in clauses (b), (c) and (d) above. For further avoidance of doubt, the declarant also undertakes to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by Republic of India and any Indian affiliate to set aside such award, order or judgement ordered, issued or passed in favour of the declarant. Such irrevocable waiver includes, but is not limited to, any right under any relevant ex parte order;

iii. to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by the Republic of India to set aside such award, order or judgment, or any other relief issued in favour of the declarant.

f. The declarant specifically represents that all Parts of the Annexure as described in this undertaking are full and complete to the best of its knowledge.

g. The declarant hereby undertakes to irrevocably terminate, release, discharge and forever irrevocably waive any right, whether direct or indirect, and any remedies, claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, compensation, and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist, based on pursuit of any remedy or any and all claims, demands, damages, judgments, awards, costs, expenses, compensation or liabilities of any kind (whether asserted or unasserted) in relation to any facts, events, or omissions occurring from the beginning of time to the date of this undertaking and thereafter in future in relation to taxation of said income or relevant order or orders, or any related award, judgment or court order, which may otherwise be available to the declarant under any law for the time being in force, in equity, under any statute or under any agreement entered into by Republic of India with any country or territory outside Republic of India, whether for protection of investment or otherwise , whether it is in proceeding initiated by the declarant or by Republic of India and any Indian affiliate. For the avoidance of doubt, the declarant’s above waiver includes an irrevocable waiver of any claim against India and any Indian Affiliate to costs incurred or interest accrued in relation to the relevant order or orders, or any related ongoing or completed litigation, arbitration, conciliation or mediation. Moreover, for the avoidance of any doubt, the declarant hereby undertakes (for itself and on behalf of all related parties) to forgo any reliance on any right under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders.

h. The declarant further represents that as of the date of this undertaking, it has not transferred any of its claims under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders, or granted any rights, to third parties, and further undertakes to not transfer any of its claims to third parties after entering this undertaking. Where any such claim or right is transferred, the declarant confirms that it has provided the particulars of all the interested parties in Part L, and the undertakings from each of such interested parties is attached with this undertaking in accordance with Part M of the Annexure.

i. In the event that, notwithstanding the foregoing, any person asserts, brings, files or maintains any claim against the Republic of India or Indian affiliates (hereinafter collectively referred to as “releasees”) at any time on or after the date of furnishing this undertaking, the declarant shall indemnify, defend and hold harmless such releases from and against any and all costs, expenses (including attorney’s fees and court’s fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of such claim. The declarant specifically represents that, to the best of its knowledge, after—

i. the execution of this undertaking;

ii. the execution of any separate related undertaking by any other party in connection with the relevant order or orders; and

iii. irrevocable withdrawal of all pending proceeding as outlined in this undertaking, no other claim regarding the said relevant order or orders referenced above, or any related award, judgment, or court order, shall remain outstanding against the Republic of India or any Indian affiliates. To avoid any doubt, the declarant’s indemnity of releasees under this clause shall include any claim brought by any third party alleging that it has obtained the declarant’s claims under an award, judgment or court order or the relevant order or orders. An indemnity bond to this effect is attached in Part N of the undertaking.

j. For the removal of any doubt, the declarant fully assumes the risk through the indemnity in clause (i) of any omission or mistake with respect to securing releasees against any related claim by any person. If the declarant fails to obtain any release from such person, the declarant warrants that it will indemnify the Republic of India or any Indian affiliates from any defense costs, court costs, and damages. An indemnity bond to the effect of clauses (i) and (j) is annexed to the undertaking.

k. The declarant further undertakes to refrain from facilitating, procuring, encouraging or otherwise assisting any person (including but not limited to any related party or interested party) from bringing any proceeding or claims of any kind referred to in the above clauses, or any proceeding or claim of any kind related to any relevant order or orders referred to above (whether in respect of tax, interest or penalty). The declarant shall notify by a public notice or press release, at any time before furnishing intimation in Form No. 3 where this Form is required to be furnished under rule 11UF and before furnishing this undertaking in other cases, that by signing this undertaking any claims arising out of or relating to the relevant order or orders or any related award, judgment or court order, no longer subsist. Such public notice or press release shall include, among other things, confirmation that,—

i. the declarant (and its related parties) forever irrevocably forgo any reliance on any right and provisions under any award, judgment or court order pertaining to the relevant order or orders or under the relevant order or orders;

ii. the declarant has provided this undertaking, which includes a complete release of the Republic of India and any Indian Affiliates with respect to any award, judgment or court order pertaining to the relevant order or orders or under the relevant order or orders, and with respect to any claim pertaining to the relevant order or orders;

iii. the undertaking also includes an indemnity against any claims brought against the Republic of India or any India affiliate, including by related parties or interested parties, contrary to the release; and

iv. the declarant confirms it will treat any such award, judgment or court order as null and void and without legal effect to the same extent as if it had been set aside by a competent court and will not take any action or initiate any proceeding or bring any claim based on that.

l. The declarant confirms that the undertakings given herein are intended to be enforceable by the Republic of India, including so as to secure the irrevocable waiver, withdrawal or discontinuance (as appropriate) of all the proceeding and claims referred to in any of the clauses of this undertaking.

m. The declarant represents and warrants that:

i. it has full legal power and authority to execute and deliver this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j)under applicable law;

ii. the execution, delivery and performance of this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j) has been duly authorised by all necessary corporate action, including but not limited to any board resolution or similar authorisation under applicable law (see Note 3);

iii. this undertaking constitutes the legal, valid and binding obligation of the declarant, enforceable against the declarant in accordance with its terms;

iv. such authorisations described in the above sub-clauses (i), (ii) and (iii) are effective under applicable law, and to this end, letters from local counsel in the relevant jurisdictions are attached to this undertaking which confirm the legality of such authorisations under applicable law.

n. The declarant confirms that by submitting the present undertaking, it fulfills the conditions specified in the Explanation below the sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9.

o. The details of the bank account in which the refund may be credited are provided in Part J of the Annexure.

p. The details of all the interested parties are provided in Part K and Part L of the Annexure. The undertaking in Part M of the Annexure by each of such persons is attached with this undertaking. The declarant represents and warrants that:

i. all such undertakings have been executed and delivered by the person who has full legal power and authority to execute and deliver such undertakings;

ii. the execution, delivery and performance of this undertaking has been duly authorised by all necessary corporate action; and

iii. this undertaking constitutes the legal, valid and binding obligation of the declarant, enforceable against such person in accordance with its terms. Such separate, related undertakings may take the same form as this undertaking.

q. The declarant is or is not covered under sub-rule (6) of rule 11UF and in case if the declarant is not covered under said sub-rule all the conditions provided under sub-rule (2) of rule 11UE have been fulfilled.

r. This undertaking is governed by relevant Indian law and any dispute with respect to this undertaking shall be subject to Indian laws and be decided in accordance with the procedures specified in the Act under the exclusive jurisdiction of the relevant income-tax authorities, tribunals or courts in Republic of India, as the case may be, which are empowered to decide disputes under the Act.

I also confirm that I am aware of all the consequences and implications of this undertaking.

Place:…………………………………

Signature:………………………………….

Date: …………………………………………………………………………………………………………………………….

Attachments

1. The Board Resolution or legal authorisation, as the case may be, as referred to in clause (m) of the undertaking

2. An indemnity bond to the effect of clause (i) and clause (j) of the undertaking attached in Part N of the undertaking.

3. Copy of the public notice referred to in clause (k) of the undertaking, where Form No. 3 is not required to be furnished under sub-rule (6) of rule 11UF.

4. Attachments as required in different parts of the Annexure to this undertaking.

Notes

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number or Aadhaar Number or Tax Deduction Account Number of the declarant are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking shall, among other things:

a. record the signatory’s power and authority to give the undertaking on behalf of the declarant; and

b. record the declarant’s power and authority to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking.

VERIFICATION

Verified that the contents of this undertaking are true to the best of my knowledge and belief. No part of the undertaking is false and nothing has been concealed or misstated therein.

Verified at________________ place_______________ on this the_________ day________________ of ______ month_______________ , year .

Place: ……………………

Date:……………………..

Signature…………………………

Annexure

Part A– Particulars of the relevant order or orders:

Sl. No.	Assessment Year or Financial year	Income-tax Authority passing the order	Details of the order under consideration		Taxes or penalty determined	Interest	Total demand	Relief, provided in any appeal proceeding , if any	Demand recovered from the declarant	Pending demand or refund due as on date	Details of the attachments made by any Income-tax Authority
			Section and sub-section of the Income-tax Act, 1961	Date of order
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)

Part B– Particulars of the relevant order or orders covered by sub-clause (i) of clauses (b), (c) and (d) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	No appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court has been filed(refer clause (b)(i) of the undertaking).	No proceeding has been initiated for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise (refer clause (c)(i) of the undertaking).	No proceeding initiated to enforce or pursue attachments in connection with any award, order or judgment, any other relief that may have been ordered or issued or passed by any tribunal or court or other judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant against the Republic of India and Indian affiliates (refer clause (d)(i) of the undertaking).
(1)	(2)	(3)	(4)	(5)
		Applicable or Not applicable	Applicable or Not applicable	Applicable or Not applicable

Part C: Particulars of the appeals or applications or petitions or proceeding under sub-clauses (ii) and (iii) of clause (b) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding	Date of disposing of or withdrawal such appeals or applications or petitions or proceeding (Please attach a copy of order by the Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court accepting the withdrawal or disposing of)
(1)	(2)	(3)	(4)	(5)	(6)

Part D – Particulars of the appeals or applications or petitions or proceeding under sub-clause (iv) of clauses (b) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding
(1)	(2)	(3)	(4)	(5)

Part E – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clause (ii) and (iii) of clause (c) of the undertaking:

Sr. No.	Sl. No in Part A where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country) where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which the proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation	Date of disposing of or withdrawal of such proceeding for arbitration, conciliation or mediation, or notices (Please attach evidence of such disposing of or withdrawal, including order of the Tribunal or court or other judicial or quasi-judicial or administrative authority).
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part F – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clause (iv) of clause (c) of the undertaking:

Sl. No.	Sl. No in Part A where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued)	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Part G – Particulars of the award, order or judgment or any other relief under sub-clause (v) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of such award, order or judgment or any other relief	Particulars (including the name of the country) where proceeding related to such award, order, judgment or any other relief were held	Date of such award, order, judgment or any other relief along with reference number	Status of the award, order, judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)

Part H – Particulars of the proceeding to enforce any award, order or judgment or any other relief under sub-clauses (ii) and (iii) of clause (d) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief	Date of disposing of or withdrawal of proceeding to enforce such award, order or judgment or any other relief (Please attach a copy of evidence of such disposing of/withdrawal, including order of the Court or other judicial authority)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part I – Particulars of the proceeding to enforce any award, order or judgment or any other relief under sub-clause (iv) of clause (d) of the undertaking:

Sl. No.	Sl. No in Part A where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Part J – Details of bank account in Republic of India to which the refund is to be remitted

Sl. No.	Bank Name and Address	Account Number and other required details for remittance
(1)	(2)	(3)

Part K– Details of all the companies or entities in the entire chain of holding of the declarant till the ultimate holding company or entity of the declarant:

Sl. No.	Name of holding company	Percentage of the ownership by such holding company in the declarant as on the date of undertaking	If the ownership in the declarant is not held directly by such holding company, the chain of ownership with the names of all the companies in the chain of ownership
(1)	(2)	(3)	(4)

Part L- Details of all the interested parties other than the interested parties covered under Part K

Sl. No.	Name of such persons whose interest may be affected directly or indirectly by this undertaking	Nature of interest of such person	Amount of interest of such person (Rs), if available
(1)	(2)	(3)	(4)

PART M Undertaking by person(s) declared in Part K and Part L of the Undertaking

To,
Principal Commissioner/Commissioner
……………….. ……………………… ………….

Sir/Madam,

I………………….. (name in block letters) son/daughter of…………………………………………….. designation ……………….. .and nationality …………………………. .and related passport number……………………………… (hereinafter referred to as “signatory”) having Permanent Account Number/Aadhaar Number (see Note 1) ………………………………. on behalf of …………………………………. . (name of the interested party) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number (see Note 2) …………………………………………. . and being duly authorised and competent to represent the interested party in this regard pursuant to Board Resolution and legal authorisation (see Note 3), as the case may be , hereby declare as follows:

(a) The particulars of specified orders that have been passed or made in respect of income accruing or arising through or from the transfer of an asset or a capital asset situate in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside Republic of India made before the 28th day of May, 2012 in the case of declarant and the nature of interest of the interested party in such specified orders are provided in Part MA of the Annexure.

(b) The interested party has (strike off options that are not applicable):

i. not filed any appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders, and hereby undertakes that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such relevant order or orders are provided in Part MB of the Annexure;

ii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and has irrevocably, on a with prejudice basis, withdrawn all such appeals or applications or petitions or proceeding or such appeals or applications or petitions or proceeding have been disposed at any time before the date of filing Form No. 1, and hereby undertake that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and irrevocably withdrawn with prejudice by the interested party, are provided in Part MC of the Annexure.

iii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and all the appeals or applications or petitions or proceeding filed by the interested party have been disposed of and no further appeal or application or petition or proceeding has been filed by the interested party and evidence thereof is furnished herewith and hereby undertake that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and disposed of, are provided in Part MC of the Annexure.

iv. filed appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and one or more of such appeals or applications or petitions or proceeding are pending as on the date of this undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such appeals or applications or petitions or proceeding that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e) below. The interested party further undertakes that it shall not file any such appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such pending appeals or applications or petitions or proceeding filed by the interested party and their status as on the date of this undertaking, are provided in Part D of the Annexure. Particulars of any appeals or applications or petitions or proceeding as described in this clause (b) which are not covered by the sub-clauses (i) and (ii) are also provided in Part MD of the Annexure.

(c) The interested party has (strike off options that are not applicable):

i. not initiated any proceeding for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by Republic of India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders, and hereby undertakes that it shall not initiate any such arbitration, conciliation or mediation in future. Particulars of such relevant order or orders are provided in Part MB of the Annexure;

ii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and has irrevocably, on a with prejudice basis, withdrawn any such proceeding for arbitration, conciliation or mediation, and notices given thereof. The interested party hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and irrevocably withdrawn with prejudice by the interested party, are provided in Part ME of the Annexure.

iii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by Republic of India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and all the arbitration, conciliation or mediation filed by the interested party have been disposed of and no further proceeding has been initiated by the interested party and evidence thereof is furnished herewith. The interested party hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and disposed of, are provided in Part ME of the Annexure.

iv. has initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by Republic of India with any other country or territory outside Republic of India, whether for protection of investment or otherwise against the relevant order or orders and one or more of such proceeding or notices are pending on the date of undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such proceeding or notices for arbitration, conciliation or mediation that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e). Particulars of such pending proceeding and notices filed by the interested party are provided in Part F of the Annexure. The interested party hereby further undertakes that it shall not initiate any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of any proceeding for arbitration, conciliation or mediation, or notices thereof, which are not covered by the sub-clause (i) and sub- clause (ii), are also provided in Part MF of the Annexure.

v. received or got any awards, orders, judgements or any other reliefs issued in favour of the interested party, arising out of or in any way relating to the imposition of tax, interest and penalty based on the relevant order or orders, under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise and hereby undertakes to irrevocably waive any right to seek or pursue any claim or costs or declaratory relief in relation to or arising out of such awards, orders or judgments or any other relief that may have been ordered, issued or passed against India and any Indian affiliate, whether it is in proceeding initiated by the interested party or by India and any Indian affiliate. The interested party also undertakes to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by the Republic to set aside such award, order or judgment issued in favour of the interested party. The interested party hereby undertakes that it shall not initiate or file any such arbitration, conciliation or mediation in future. Particulars of such awards, orders, judgment or any other relief are provided in Part MG of the Annexure.

(d) The interested party has (strike off options that are not applicable):

i. not initiated any proceeding to enforce or pursue attachments in connection with any awards, orders, judgments, or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party as referred in clause (c) of this undertaking either against the Republic of India and any Indian affiliate, and hereby undertakes that it shall not initiate any such proceeding in future. Particulars of such award, order or judgment are provided in Part MB of the Annexure.

ii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgements or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. The interested party has irrevocably and with prejudice withdrawn or discontinued any such proceeding and hereby undertakes that it shall not reopen any such proceeding in future or file fresh proceeding to enforce or pursue attachments. Particulars of such proceeding, initiated and withdrawn or discontinued by the interested party, are provided in Part MH of the Annexure.

iii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgements or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. All such proceeding filed by the interested party have been disposed of and no further proceeding has been filed by the interested party and evidence is herewith furnished and hereby undertakes that it shall not reopen any such proceeding in future or file or initiate fresh proceeding to enforce or pursue attachments. Particulars of such proceeding, initiated and disposed of, are provided in Part MH of the Annexure.

iv. initiated proceeding to enforce or pursue attachments in respect of any awards, orders, judgments, or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party as referred to in clause (c) of this undertaking, either against the Republic of India and any Indian affiliate and one or more of such proceeding are pending on the date of undertaking and, interested party has obtained one or more orders from any court or other authority which remain outstanding against India and any Indian affiliate. The interested party hereby undertakes that it shall not file in future any such proceeding to enforce or pursue attachments regarding any awards, orders, judgments, or any other relief that may have been ordered , issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party as referenced in clause (c) of this undertaking or to enforce the orders from any court or other authority which remain outstanding against India and any Indian affiliate. The interested party further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to such outstanding order, in order to set-aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. Particulars of such proceeding, are provided in Part MI of the Annexure. Particulars of any such proceeding, to enforce or pursue attachments in connection with any awards, orders, judgments, or any other relief, which are not covered by the sub-clauses (i) and (ii), are also provided in Part MI of the Annexure. The interested party also undertakes to irrevocably withdraw, terminate and discontinue with prejudice any and all such proceeding to enforce or pursue attachments in accordance with clause (e) below.

(e) The interested party hereby undertakes as follows: –

i. to irrevocably and with prejudice withdraw, discontinue, terminate and take all necessary steps to irrevocably and with prejudice close the pending proceeding referred in sub-clause (iv) of clause (b), sub-clause (iv) of clause (c), sub-clause (v) of clause (c) and sub-clause (iv) of clause (d) of this undertaking, as well as any other pending proceeding against Republic of India or Indian affiliates relating to the relevant order or orders and not referenced in clauses (b), (c) and (d) above, and not to pursue in any way and by any means in future the pending proceeding as referenced in clauses (b), (c) and (d) and any other pending proceeding relating to the relevant order or orders not referred in the above clauses and any other fresh proceeding relating to the relevant order or orders. In so acting, interested party shall act in accordance with this undertaking and in full cooperation with the Republic of India.

ii. to irrevocably terminate, release, discharge, and forever irrevocably waive any right, whether direct or indirect, and any claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, declaratory reliefs, and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown previously (or in future discovered), suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist , in relation to any award, order, judgment, or any other relief as referred in clauses (b), (c) and (d) of this undertaking, against the Republic of India and all Indian affiliates, ordered, issued or passed in connection with the relevant order or orders, whether it is in proceeding initiated by the interested party or by India and any Indian affiliate. For the avoidance of doubt, the interested party’s irrevocable waiver includes irrevocable waiver of any right provided by any existing ex parte, provisional, or other kind of court order permitting enforcement or attachment against the Republic of India and any Indian affiliate, in furtherance of any award, order, judgment, or any other relief that may have been ordered or issued or passed by any arbitral tribunal as referred in clauses (b), (c) and (d). The interested party further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to any outstanding order referenced in clause (d), in order to set aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. For further avoidance of doubt, the interested party also undertakes to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by Republic of India and any Indian Affiliate to set aside such award, order or judgment ordered, issued or passed in favour of the interested party. Such irrevocable waiver includes, but is not limited to, any right under any relevant ex parte order.

iii. to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by the Republic of India to set aside such award, order or judgment, or any other relief issued in favour of the interested party.

(f) The interested party specifically represents that all Parts of the Annexure as described in this undertaking are full and complete to the best of its knowledge.

(g) The interested party hereby undertakes to irrevocably terminate, release, discharge, and forever irrevocably waive any right, whether direct or indirect, and any remedies, claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, compensation and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist, based on pursuit of any remedy or any and all claims, demands, damages, judgments, awards, costs, expenses, compensation or liabilities of any kind (whether asserted or unasserted) in relation to any facts, events, or omissions occurring from the beginning of time to the date of this undertaking and thereafter in future in relation to taxation of said income or relevant order or orders, or any related award, judgment or court order, which may otherwise be available to the interested party under any law for the time being in force, in equity, under any statute or under any agreement entered into by India with any country or territory outside India, whether for protection of investment or otherwise , whether it is in proceeding initiated by the interested party or by India and any Indian affiliate. For the avoidance of doubt, the interested party’s above waiver includes an irrevocable waiver of any claim against India and any Indian affiliate to costs incurred or interest accrued in relation to the relevant order or orders, or any related ongoing or completed litigation, arbitration, conciliation or mediation. Moreover, for the avoidance of any doubt, the interested party hereby undertakes to forgo any reliance on any right under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders.

(h) The interested party further represents that as of the date of this undertaking, it has not transferred any of its claims under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders, or granted any rights, to third parties, and further undertakes to not transfer any of its claims to third parties after entering this undertaking.

(i) In the event that, notwithstanding the foregoing, any person asserts, brings , files or maintains any claim against the Republic of India or Indian affiliates (hereinafter collectively referred to as “releasees”)at any time on or after the date of furnishing this undertaking, the interested party shall indemnify, defend and hold harmless such releasee from and against any and all costs, expenses (including attorneys’ fees and court’s fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of such claim. The interested party specifically represents that, to the best of its knowledge, after

i. the execution of this undertaking;

ii. the execution of any separate related undertaking by any other party in connection with the relevant order or orders; and

iii. irrevocable withdrawal of all pending proceeding as outlined in this undertaking.

no other claim regarding the said relevant order or orders referenced above, or any related award, judgment, or court order, shall remain outstanding against the Republic of India or any Indian affiliate. To avoid any doubt, the interested party’s indemnity of releases shall include any claim brought by any third party alleging that it has obtained the interested party’s claims under an award, judgment or court order or the relevant order or orders. An indemnity bond to this effect is attached in Part N of the undertaking.

(j) For the avoidance of any doubt, the interested party fully assumes the risk through the indemnity in clause (i) of any omission or mistake with respect to securing releases against any related claim by any person. If the interested party fails to obtain any release from such person, the interested party warrants that it will indemnify the Republic of India or any Indian affiliates from any defense costs, court costs, and damages. An indemnity bond to the effect of clauses (i) and (j) is annexed to the undertaking.

(k) The interested party further undertakes to refrain from facilitating, procuring, encouraging or otherwise assisting any party (including but not limited to any related party) from bringing any proceeding or claims of any kind referred to in the above clauses, or any proceeding or claim of any kind related to any relevant order or orders referred to above (whether in respect of tax, interest or penalty). The interested party shall notify by a public notice or press release, at any time before furnishing intimation in Form No. 3 where Form No. 3 is required to be furnished under rule 11UF and before furnishing this undertaking in other cases, that by signing this undertaking any claims arising out of or relating to the relevant order or orders or any related award, judgment or court order, no longer subsist. Such public notice shall include, among other things, confirmation that,-

i. the interested party forever irrevocably forgoes any reliance on any right and provisions under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders;

ii. the interested party has provided this undertaking, which includes a complete release of the Republic of India and any Indian Affiliate with respect to any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders, and with respect to any claim pertaining to the relevant order or orders;

iii. the undertaking also includes an indemnity against any claims brought against the Republic of India or any India affiliate contrary to the release; and

iv. the interested party confirms it will treat any such award, judgment, or court order as null and void and without legal effect to the same extent as if it had been set aside by a competent court and will not take any action or initiate any proceeding or bring any claim based on that.

(l) The interested party confirms that the undertakings given herein are intended to be enforceable by the Republic of India, including so as to secure the irrevocable waiver, withdrawal or discontinuance (as appropriate) of all the proceeding and claims referred to in any of the clauses of this undertaking.

(m) The interested party represents and warrants that:

i. it has full legal power and authority to execute and deliver this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j) under applicable law;

ii. the execution, delivery and performance of this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j) has been duly authorised by all necessary corporate action, including but not limited to any board resolution or similar authorisation under applicable law (see Note 3);

iii. this undertaking constitutes the legal, valid and binding obligation of the interested party, enforceable against the interested party in accordance with its terms;

iv. such authorisations described in the above sub-clauses (i), (ii) and (iii) are effective under applicable law, and to this end, letters from local counsel in the relevant jurisdictions are attached to this undertaking which confirm the legality of such authorisations under applicable law; and

(n) This undertaking is governed by relevant Indian law and any dispute with respect to this undertaking shall be subject to Indian laws and be decided in accordance with the procedures specified in the Act under the exclusive jurisdiction of the relevant Income-tax authorities, tribunals or courts in India, as the case may be, which are empowered to decide disputes under the Act.

I also confirm that, I am aware of all the consequences and implications of this undertaking.

Place: ……………….. .

Date: ……………………….. .

Signature………………………………………….

Attachments

1. The Board Resolution and legal authorisation, as referred to in clause (m) of Part M.

2. An indemnity bond to the effect of clauses (i) and (j) of Part M in Part N of the undertaking in Form No. 1;

3. Copy of the public notice referred to in clause (k) of Part M, where Form No. 3 is not required to be furnished under sub-rule (6) of rule 11UF.

4. Attachments as required in different parts of the Annexure to Part M of this undertaking

Note:

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number/Aadhaar Number or Tax Deduction Account Number of the interested party are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking shall, among other things:

a. record the Signatory’s power and authority to give the undertaking on behalf of the interested party; and

b. record the interested party’s power and authority to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking.

VERIFICATION

Verified that the contents of this undertaking are true to the best of my knowledge and belief. No part of the undertaking is false and nothing has been concealed or misstated therein.

Verified at ___________place_________ on this the ___day ____of ___month ______ ,_year ________ .

Place: ……………..

Date: ……………….

Signature…………….

Annexure

Part MA– Particulars of the relevant order or orders:

Sl. No.	Assessment Year or Financial year	Income-tax Authority passing the order	Details of the order under consideration		Nature of interest of the interested party
			Section and sub-section of the Income-tax Act, 1961	Date of order
(1)	(2)	(3)	(4)	(5)	(6)

Part MB– Particulars of the relevant order or orders covered by sub-clause (i) of clauses (b), (c) and (d) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	No appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court has been filed(refer clause (b)(i) of the undertaking).	No proceeding has been initiated for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise (refer clause (c)(i) of the undertaking).	No proceeding initiated to enforce or pursue attachments in connection with any award, order or judgment, any other relief that may have been ordered or issued or passed by any tribunal or court or other judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party against the Republic of India and Indian affiliates (refer clause (d)(i) of the undertaking).
(1)	(2)	(3)	(4)	(6)
		Applicable or Not applicable	Applicable or Not applicable	Applicable or Not applicable

Part MC – Particulars of the appeals or applications or petitions or proceeding under sub-clauses (ii) and (iii) of clause (b) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding	Date of disposing of or withdrawal of such appeals or applications or petitions or proceeding (Please attach a copy of order by the Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court accepting the withdrawal or disposing of)
(1)	(2)	(3)	(4)	(5)	(6)

Part MD – Particulars of the appeals or applications or petitions or proceeding under sub-clause (iv) of clause (b) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding
(1)	(2)	(3)	(4)	(5)

Part ME – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clauses (ii) and (iii) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued)	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which the proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation	Date of disposing of or withdrawal of such proceeding for arbitration, conciliation or mediation, or notices (Please attach evidence of such disposing or withdrawal, including order of the Tribunal or court or other judicial or quasi-judicial or administrative authority)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part MF – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clause (iv) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued)	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which the proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Part MG – Particulars of the award, order or judgment or any other relief under sub-clause (v) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of such award, order or judgment or any other relief	Particulars (Including the name of the country) where proceeding related to such award, order, judgment or any other relief were held	Date of such award, order, judgment or any other relief along with reference number	Status of the award, order, judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)

Part MH – Particulars of the proceeding to enforce any award, order or judgment or any other relief under sub-clauses (ii) and (iii) of clause (d) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief	Date of disposing of or withdrawal of proceeding to enforce such award, order or judgment or any other relief (Please attach a copy of evidence of such disposing of/withdrawal, including order of the Court or other judicial authority)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part MI – Particulars of the proceeding under sub-clause (iv) of clause (d) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Part N

INDEMNITY BOND

This Indemnity Bond (“Bond”) is made on this………….. day of……….. , 2021 by………….. (name in block letters) son/daughter of………………….. designation and nationality……………………… and related passport number…………….. (hereinafter referred to as “Signatory”) having Permanent Account Number/Aadhaar Number/Tax Deduction Account Number (See Note 1)………………. on behalf of……………. (name of the declarant or interested party, as the case may be) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number………………………… (See Note 2) and being duly authorised and competent to represent the declarant or interested party, as the case may be, in this regard pursuant to Board Resolution or legal authorisation (See Note 3), of the FIRST PART.

And

The Republic of India and any Indian affiliate (hereinafter collectively referred to as “releases”) of the OTHER PART WHEREAS:

A. The Income-tax Rules, 1962 have been amended and the Income-tax (31st Amendment) Rules, 2021 have come into force from the date of their publication in the Official Gazette.

B. The declarant or interested party, as the case may be, has filed an undertaking under sub-rule (1) of rule 11UE of the Income -tax Rules, 1962, to which this indemnity bond is annexed. Any defined terms not defined herein shall have the same meaning as the definitions given under rule 11UE and the undertaking.

C. Pursuant to the above, the declarant or interested party, as the case may be, has agreed to indemnify, defend and hold harmless the Republic of India and Indian affiliates from and against any and all costs, expenses (including attorney fees and court fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of any claim at any time after the date of furnishing the undertaking in Form No. 1 by any person, related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief, or to any dispute underlying the award, and the declarant or interested party, as the case may be, has agreed to furnish an indemnity bond to this effect, such that the declarant or interested party, as the case may be, fully assumes the risk of any omission or mistake with respect to identification and procurement of authorisations and undertakings from any related parties or interested parties as provided in the undertaking, and securing the Republic of India and Indian affiliates from any claim related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief or to the dispute underlying the award against the Republic of India or Indian affiliates in connection with the relevant order or orders.

D. Accordingly the declarant or interested party, as the case may be, is executing this Indemnity Bond in favour of the Republic of India on the terms appearing hereunder.

NOW THIS INDEMINTY BOND WITNESSETH AS FOLLOWS:

1. In the event that any person or entity asserts, brings, files or maintains any claim against any releasee at any time on or after the date of furnishing this undertaking, related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief, or to any dispute underlying the award, against the Republic of India or Indian affiliates in connection with the relevant order or orders, the declarant or interested party, as the case may be, shall indemnify, defend and hold harmless such releases from and against any and all costs, expenses (including attorney fees and court fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of such claim.

2. The declarant or interested party, as the case may be, specifically represents that, to the best of
its knowledge, after—

i. the execution of this undertaking;

ii. the execution of any separate related undertaking by any other party in connection with the relevant order or orders; and

iii. withdrawal of all pending proceeding as outlined in this undertaking,

that no other claim regarding the said relevant order or orders referenced above, or any related award, judgment, or court order, or any aspect of the dispute underlying the award shall remain outstanding against the Republic of India or other release.

Explanation I.-For the removal of any doubt, the declarant’s or interested party’s indemnity of releases under this clause shall include any claim brought by any third party alleging that it has obtained declarant’s or interested party’s, as the case may be, claims under an award, judgment or court order or the relevant order or orders.

Explanation II.- the declarant or interested party, as the case may be, fully assumes the risk through this indemnity of any omission or mistake with respect to securing releases against any related claim by any person. If the declarant or interested party, as the case may be, fails to obtain any release from such person, the declarant or interested party, as the case may be, indemnifies through this document the releases from any defense costs, court costs, and damages.

3. This Indemnity Bond shall be governed by the relevant laws of India and the Delhi High Court
shall have sole jurisdiction to entertain and try any dispute or difference arising out of or in connection with the terms of this Bond.

IN WITNESS WHEREOF the undersigned herein has signed and set his hands on this ………………. day of………… , 2021.

For and on behalf of the declarant or interested party, as the case may be,

Name and address of Witness

Signature of the Witness

1.

2.

Place:
Date:
Notes

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number or Aadhaar Number or Tax Deduction Account Number of the declarant or interested party, as the case may be, are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking shall, among other things:

(a) record the signatory’s power and authority to give the undertaking on behalf of the declarant or interested party, as the case may be; and

(b) record the declarant or interested party’s power and authority, as the case may be, to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking).]

Note:

^1.Inserted by the Income-tax (Thirty-first Amendment) Rules, 2021, w.e.f. 1-10-2021.

*******

Form No. : 2

¹[FORM NO. 2
[See rule 11UF]
Form for Certificate Under sub-rule (2) of rule 11UF

<Name of the declarant>
Address of the declarant
Sir/Madam

1. The……………………… (name of the declarant) (hereinafter referred to as the declarant) with Permanent Account Number/Aadhaar number/Tax Deduction Account Number/Company Identification Number and Taxpayer Identification Number……….. has filed an undertaking in Form No. 1 dated………. under sub-rule (1) of the rule 11UE of the rules.

2. Pursuant to the undertaking filed by the declarant in Form No. 1 under sub-rule (1) of rule 11UE, the provisions of fifth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 of the Act shall be applicable to the orders mentioned below, subject to the fulfilment of the conditions specified in said proviso read with relevant rules and fulfilment of the undertakings by the declarant in Form No. 1:

TABLE

Sl. No.	Sl. No. of the Table in Part A of Form No. 1 where the relevant order is mentioned	Assessment Year or Financial year	Income-tax Authority passing the order	Details of the order under consideration		Taxes or Penalty determined	Interest	Total demand	Relief, provided in any appeal proceeding, if any	Demand recovered from the declarant	Pending demand or refund due as on date	Details of the attachments made by any Income-tax Authority
				Section and sub-section of the Income-tax Act, 1961	Date of order
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)

3. Demand recovered, as per the column (11) of the Table above, shall be refunded to the declarant, subject to the conditions under sub-rule (2) of the rule 11UE and the provisions of the Act, without any interest as per the provisions of the sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 of the Act, attachments, if any, the details whereof are provided in column (13) of the Table, shall be revoked and appeals or applications or petitions or proceeding, if any, filed by any income-tax authority or any other person representing the Republic of India with respect to the specified orders, as per column (2) of the Table, shall be withdrawn or intimation shall be sent to the concerned person, on the issue of Form No. 4, as per the procedure provided in sub-rule (16) of rule 11UF. Further, no interest under section 244A of the Act will be payable to the declarant as per the provisions of sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 of the Act.

Certificate No…….
Place…..
Date………..

………………………….

(Principal Commissioner/Commissioner of Income-tax) ]

Note:

^1.Inserted by the Income-tax (Thirty-first Amendment) Rules, 2021, w.e.f. 1-10-2021.

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Form No. : 2A

FORM NO. 2A [Omitted by the IT (Tenth Amdt.) Rules, 2001, w.e.f. 2-7-2001. Earlier, existing Form No. 2A was inserted by the IT (Third Amdt.) Rules, 1994, w.e.f. 1-6-1994; substituted by the IT (Fourth Amdt.) Rules, 1995, w.e.f. 1-6-1995; amended by the IT (Fourth Amdt.) Rules, 1998, w.e.f. 1-4- 1998 and later on substituted by the IT (Fifth Amdt.) Rules, 2000, w.e.f. 11-5-2000.]

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Form No. : 2B

FORM NO. 2B [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 2B was inserted by the IT (Sixteenth Amdt.) Rules, 1995, w.e.f. 23-8-1995; amended by the IT (Eighth Amdt.) Rules, 1999, w.e.f. 18-5-1999, IT (Sixth Amdt.) Rules, 2000, w.e.f. 11-5-2000 and later on substituted by the IT (Fifteenth Amdt.) Rules, 2001, w.e.f. 27-7-2001.]

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Form No. : 2C

FORM NO. 2C [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 2C was inserted by the IT (Eighth Amdt.) Rules, 1997, w.e.f. 27-6-1997; substituted by the IT (Eleventh Amdt.) Rules, 1998, w.e.f. 25-8-1998; amended by the IT (Seventh Amdt.) Rules, 2000, w.e.f. 11-5-2000 and IT (Eighteenth Amdt.) Rules, 2002, w.e.f. 29-7-2002 and later on substituted IT (Sixteenth Amdt.) Rules, 2001, w.e.f. 27-7-2001.]

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Form No. : 2E

FORM NO. 2E [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 2E was inserted by the IT (Sixth Amdt.) Rules, 2003, w.e.f. 14-5-2003 and later on amended by the IT (Ninth Amdt.) Rules, 2004, w.e.f. 14-7-2004 and IT (Sixteenth Amdt.) Rules, 2005, w.e.f. 20-6-2005.

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Form No. : 3

¹[FORM NO. 3

[See rule 11UF]

Intimation for Withdrawal under sub-rule (3) of rule 11UF of the Income- tax Rules, 1962

To,

The Principal Commissioner/Commissioner

………………………………………. ……………………………….

Sir/Madam,

I……………… (name in block letters) son/daughter of ………………… designation ……………..and nationality ………………..and related passport number………………. (hereinafter referred to as “signatory”) having Permanent Account Number/Aadhaar Number ………………………(see Note 1) on behalf of …………………….. (name of the declarant) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number (see Note 2) ……………………………….. and being duly authorised and competent to represent the declarant in this regard pursuant to Board Resolution and legal authorisation (see Note 3), as the case may be, hereby confirm that the declarant has received an order in Form No. 2 dated________

Pursuant thereto, I confirm that the pending appeals or applications or petitions, arbitration, conciliation, mediation, claims or other proceeding, if any, as referred in Part D, Part F, Part G, Part I and Part M of the undertaking in Form No. 1 dated…… have been irrevocably, on a with prejudice basis, withdrawn or discontinued and are not being pursued. The evidence of action taken in this regard are enclosed herewith.

Place…………….
Date……………..

………………..
Signature/Verification

Attachments

1. Attach the Board Resolution or legal authorisation, as the case may be, as referred to in clause (m) of the undertaking.

2. Attach the evidence of action taken as referred above.

VERIFICATION

Verified that the contents of this intimation are true to the best of my knowledge and belief. No part of the intimation is false and nothing has been concealed or misstated therein.

Verified at……place………. on this the ……. day …………. of…. month……….,…year………..
Place: ……………..
Date: ……………..

Signature
………………………………..

Notes

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number or Aadhaar Number or Tax Deduction Account Number of the interested party are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking and such Board resolution or legal authorisation shall, among other things:

(a) record the signatory’s power and authority to give the undertaking on behalf of the interested party; and

(b) record the interested party’s power and authority to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking.]

Note:

^1.Inserted by the Income-tax (Thirty-first Amendment) Rules, 2021, w.e.f. 1-10-2021.

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Form No. : 3AA

FORM NO. 3AA [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 3AA was inserted by the IT (Fourteenth Amdt.) Rules, 2002, w.e.f. 1-4-2003 and later on amended by the IT (Fifteenth Amdt.) Rules, 2004, w.e.f. 1-4-2005.]

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Form No. : 3AAA

FORM NO. 3AAA [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 3AAA was inserted by the IT (Sixth Amdt.) Rules, 1986, w.e.f. 1-4-1987 and later on amended by the IT (Ninth Amdt.) Rules, 1987 and IT (Fourteenth Amdt.) Rules, 2002, w.e.f. 1-4-2003.]

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Form No. : 3AB

FORM NO. 3AB [Omitted by the IT (Thirty-second Amdt.) Rules, 1999, w.e.f. 19-11-1999. Earlier, Form No. 3AB was inserted by the IT (Amdt.) Rules, 1978 and amended by the IT (Sixth Amdt.) Rules, 1986, w.e.f. 1-4-1987.]

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Tax Reference Tables

Items reportable in the Tax Audit Report

Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc.

Items reportable in the Tax Audit Report

Taxpayers are required to maintain books of accounts and get them audited if their gross turnover or receipts during the previous year exceed the prescribed threshold limit. The requirement to keep the books of accounts is specified under Section 44AA, and to get them audited is mentioned in Section 44AB of the Income-tax Act. The purpose of a tax audit is to ensure that the taxpayer maintains proper books of account and complies with the provisions of the Income-tax Act.

The audit report under Section 44AB shall be furnished electronically at the e-filing portal in Form No. 3CA/3CB-3CD.The tax audit report has to be furnished in the forms prescribed below:

Category of Taxpayer	Form for Audit Report	Annexure to Audit Report
If the books of account of the assessee are required to be audited under any other law	Form 3CA	Form 3CD
In any other case	Form 3CB	Form 3CD

Form No. 3CA/3CB is a format of audit report, whereas Form 3CD is a Statement of particulars required to be furnished under Section 44AB of the Income-tax Act.

The disclosure and reporting in various clauses of Form 3CD are to be done as under:

Clauses	Description
Clause 1	Clause 1 of Form No. 3CD requires the tax auditor to state the name of the assessee.
Clause 2	Clause 2 of Form No. 3CD requires the tax auditor to state the address of the assessee.
Clause 3	Clause 3 of Form No. 3CD requires the tax auditor to state the PAN or Aadhaar Number of the assessee.
Clause 4	Clause 4 of Form No. 3CD requires the tax auditor to state   •  Whether the assessee is liable to pay indirect tax like excise duty, service tax, sales tax, goods and services tax, customs duty, etc.   •  If yes, please furnish the registration number or GST number, or any other identification number allotted for the same.
Clause 5	The tax auditor is to state the “status” of the assessee against clause 5. Status here means status in accordance with the definition of ‘person’ in section 2(31) of the Act. (i.e. Individual / HUF / Firm / LLP / Company / Trust / AOP/BOI / Local Authority / Artificial Juridical Person / Co-operative Society / Co-operative Bank)
Clause 6	The tax auditor is to state the “Previous year” against clause 6.
Clause 7	The tax auditor is to state the “Assessment Year” against clause 7.
Clause 8	Clause 8 requires the tax auditor to indicate the relevant clause of section 44AB under which the audit has been conducted.
Clause 8A	Clause 8A requires the tax auditor to indicate whether the assessee has opted for taxation under Section 115BA / 115BAA / 115BAB / 115BAC / 115BAD/115BAE
Clause 9	Clause 9 applies only to firms, LLPs, Association of Persons (AOPs), and Body of Individuals (BOIs). The requirements of clause 9 are as under: Clause 9(a) – Names of partners/members of firm/LLP/AOP/BOI and their Profit Sharing Ratio Clause 9(b) – Changes in partners/members or their Profit Sharing Ratio
Clause 10	Clause 10 is applicable to all assessees covered under tax audit. The requirement of clause 10 is as under: Clause 10(a) – Nature of business or profession Clause 10(b) – Clause 10(b) is applicable and question in clause 10(b) is to be answered as “Yes” only if  There is an addition of a new line of business/profession during the previous year; or  There is discontinuance of any business/profession during the previous year;
Clause 11	Clause 11(a) – Whether books of account are prescribed under section 44AA, if yes, list of books so prescribed. Clause 11(b) – List of books of account maintained and the address at which the books of account are kept. (In case books of account are maintained in a computer system, mention the books of account generated by such computer system. If the books of account are not kept at one location, please furnish the addresses of locations along with the details of books of account maintained at each location.) Clause 11(c) – List of books of account and nature of relevant documents examined. Clause 11(a) will apply only in respect of the assessees for whom books of account have been prescribed under section 44AA. However, Clause 11(b) and 11(c) shall apply to all assessees, whether or not they are assessees for whom books of account have been prescribed under section 44AA.
Clause 12	The following are the requirements of clause 12 :  Whether the profit and loss account includes any profits and gains assessable on presumptive basis [under sections 44AD, 44ADA, 44AE, 44AF (non-operative with effect from the assessment year 2011-12), 44B, 44BB, 44BBA, 44BBB, 44BBC , Chapter XII-G, First Schedule or Any other relevant section]?  If yes, the following information should be indicated against clause 12 :  The amount; and  The relevant section of the Income-tax Act, 1961.
Clause 13	Clause 13(a) – Method of accounting employed in the previous year. Clause 13(b) – Whether there had been any change in the method of accounting employed vis-a-vis the method employed in the immediately preceding previous year. Clause 13(c) – If the answer to (b) above is in the affirmative, give details of such change, and the effect thereof on the profit or loss. Clause 13(d) – Whether any adjustment is required to be made to the profits or loss for complying with the provisions of income computation and disclosure standards notified under section 145(2). Clause 13(e) – If the answer to (d) above is in the affirmative, give details of such adjustments. Clause 13(f) – Disclosure as per ICDS. Clauses 13(a) to (c) apply to all assessees. However, Clauses 13(d) to (f) apply only to assessees following the mercantile system of accounting as the ICDSs under section 145(2) apply only to assessees following the mercantile system of accounting.
Clause 14	Clause 14(a) requires the tax auditor to state the method of valuation of closing stock in the previous year. Clause 14(b) is applicable in case of deviation from the method of valuation prescribed under Section 145A and the effect thereof on the profit or loss.
Clause 15	Particulars of capital asset converted into stock-in-trade has to be reported against this clause. (i.e. Description of capital asset, Date of acquisition, Cost of acquisition, and Amount)
Clause 16	Clause 16 requires the tax auditor to report the items covered by sub-clauses (a) to (e) which have not been credited to the profit and loss account. The tax auditor is required to report under this clause only those items that can be found from a scrutiny of the books and other information made available for a tax audit. The tax auditor has no obligation to report those items which are outside the books of account and which cannot be found by normal audit procedures. Clause 16(a) requires the tax auditor to report items falling within the scope of section 28 which have not been credited to the profit and loss account. Clause 16(b) refers to refunds, proforma credits, and drawbacks of excise duty, customs duty, sales tax, VAT, service tax, GST, and other indirect taxes. Clause 16(c) requires the tax auditor to report ‘escalation claims’ not credited to the profit and loss account. Clause 16(d) requires the tax auditor to report ‘any other income’ not credited to the profit and loss account. Clause 16(e) requires the tax auditor to report capital receipts not credited to the profit and loss account. Here, sub-clauses (b) and (c) will not apply to an assessee following the cash basis of accounting. However, Other sub-clauses of clause 16 – sub-clauses (a), (d), and (e) will apply irrespective of the method of accounting followed by the assessee.
Clause 17	Reporting obligations under clause 17 apply when the following conditions are satisfied: There is a transfer by the assessee.  Transfer is of land or building or both. It does not matter whether such land or building or both is held as a capital asset or stock in trade as clause 17 refers to both section 50C and section 43CA.   Transfer is for consideration.  Such consideration is less than the stamp duty value.   Transfer is during the previous year.
Clause 18	Clause 18 requires particulars of depreciation allowable as per the Income-tax Act, 1961 in respect of each asset or block of assets, as the case may be, in the following form:- (a) Description of asset/block of assets. (b) Rate of depreciation. (c) Actual cost of written down value, as the case may be. (ca) Adjustment made to the written down value under –   (i) under the proviso to section 115BAA(3) (for assessment year 2020-21 only);   (ii) under the first proviso to section 115BAC(3) or the proviso to section 115BAD(3) (for assessment year 2021-22 only);   (iii) under the second proviso to section 115BAC(3) (for assessment year 2024-25 only). (cb) Adjustment made to the written down value of Intangible asset due to excluding the value of goodwill of a business or profession. (cc) Adjusted written-down value. (d) Additions/deductions during the year with dates; in the case of any addition of an asset, date put to use; including adjustments on account of –  Central Value Added Tax credits claimed and allowed under the Central Excise Rules, 1944, in respect of assets acquired on or after 1st March, 1994,   change in the rate of exchange of currency, and   subsidy or grant or reimbursement, by whatever name called. (e) Depreciation allowable. (f) Written down value at the end of the year.
Clause 19	Clause 19 required particulars of the amount debited to the profit and loss account and the amount admissible as per the provisions of the Income-tax Act, 1961 under Section 33AB, 33ABA, 35(1)(i), 35(1)(ii), 35(1)(iia), 35(1)(iii), 35(1)(iv), 35(2AA), 35(2AB), 35ABA, 35ABB, 35AD, 35CCA, 35CCC, 35CCD, 35D, 35DD, 35DDA, 35E, any other relevant section.
Clause 20	Clause 20(a) – Any sum paid to an employee as bonus or commission for services rendered, where such sum was otherwise payable to him as profits or dividend. [Section 36(1)(ii)] Clause 20(b) – Details of contributions received from employees for various funds as referred to in section 36(1)(va).
Clause 21	Clause 21(a) – This clause requires details of the amount debited to the profit and loss account, being in the nature of capital expenditure, personal expenditure, advertisement expenditure, etc. Clause 21(b) – Clause 21(b) sets out a format to present information of inadmissible expenses under clause (a) of section 40 sub-clause-wise. Clause 21(c) – Amounts debited to profit and loss account being, interest, salary bonus, commission, or remuneration inadmissible under section 40(b)/40(ba) and computation thereof. This clause applies only to partnership firms/Limited Liability Partnerships (LLPs)/AOPs/BOIs. Clause 21(d) –   Clause 21(d)(A) requires the tax auditor to state “On the basis of the examination of books of account and other relevant documents/evidence, whether the expenditure covered under section 40A(3) read with rule 6DDA were made by account payee cheque drawn on a bank or account payee bank draft”.   Clause 21(d)(B) of Form No.3CD requires the tax auditor to state “on the basis of the examination of books of account and other relevant documents/evidence, whether the payment referred to in section 40A(3A) read with rule 6DDA were made by account payee cheque drawn on a bank or account payee bank draft”. Clause 21(e) – This clause requires reporting of “provision for payment of gratuity not allowable under section 40A(7)”. This clause is relevant only in the context of assessees following mercantile system of accounting. Clause 21(f) – Clause 21(f) requires reporting of amounts covered by section 40A(9). Clause 21(g) – This clause requires reporting particulars of contingent liabilities. Clause 21(h) – Clause 21(h) requires reporting of “amount of deduction inadmissible in terms of section 14A on respect of expenditure incurred in relation to total income which does not form part of total income”. This clause applies to all assessees who have taxable income as well as exempt income. Clause 21(i) – clause 21(i) requires reporting of amounts inadmissible in terms of proviso to section 36(1)(iii).
Clause 22	Clause 22 requires particulars of the amount of interest inadmissible under Section 23 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 or total amount payable to micro or small enterprises under Section 15 of the MSMED Act during the previous year, along with a break-up of the amount paid within the prescribed time and the amount not paid within such time and disallowed for the year.
Clause 23	Clause 23 requires particulars of payments made to persons specified under 40A(2)(b) (i.e. Name, PAN, Relation, Nature of transaction, and Amount)
Clause 24	Clause 24 requires particulars of amounts deemed to be profits and gains under Section 32AC, 32AD, 33AB, 33ABA, or 33AC.
Clause 25	Clause 25 requires particulars of amounts deemed to be profits and gains under Section 41 and computation thereof. (i.e. Name of person, Amount of income, Section, Description of transaction, and Computation if any)
Clause 26	Clause 26 requires disclosures of sums incurred and paid which are referred to in clauses (a) to (g) [except clause (da) of section 43B(1)]. Clause 26(i)(A) – Information required In respect of any sum referred to in section 43B, the liability for which pre-existed on the first day of the previous year but was not allowable in the assessment of any preceding previous year and (for clauses other than clause (h) of section 43B) was paid during the year, or not paid during the year. Clause 26(i)(B) – Information required In respect of any sum referred to in clauses (a),(b),(c),(d),(e),(f), or (g) of section 43B, the liability for which was incurred in the previous year and was paid on or before the due date for furnishing the return of income of the previous year under section 139(1), or not paid on or before the aforesaid date. Clause 26(i)(A) and Clause 26(i)(B) are relevant only for assessees following the mercantile system of accounting.
Clause 27	Clause 27(a) – Amount of Central Value Added Tax Credits/Input Tax Credit(ITC) availed of or utilized during the previous year and its treatment in profit and loss account and treatment of outstanding Central Value Added Tax Credit/Input Tax Credit(ITC) in accounts. Clause 27(a) will apply to all assessees registered under GST/Central Excise. Clause 27(b) – Particulars of income or expenditure of the prior period credited or debited to the profit and loss account. Clause 27(b) dealing with prior period items applies only to assessees following the mercantile system of accounting.
Clause 29A	Clause 29A pertains to the amount received and forfeited which is taxable u/s 56(2)(ix).
Clause 29B	Clause 29B pertains to gifts/deemed gifts received which are taxable u/s 56(2)(x). Therefore, reporting in respect of clause 29B which pertains to ‘income from other sources’ is required only to the extent entries in relation to such income are made in books of business or profession. Tax auditor is not liable to report in respect of income covered by clause 29B if no entries in relation to that are made in books of business or profession. The reporting requirement is whether any amount is to be included as income chargeable under the head ‘Income from other sources’. If the answer is ‘yes’, the details to be furnished are (i) Nature of income and (ii) Amount.
Clause 30	Clause 30 requires particulars of any amount borrowed on hundi or any amount due thereon (including interest on the amount borrowed) repaid, otherwise than through an account payee cheque. [Section 69D]
Clause 30A	Clause 30A requires particulars about whether the primary adjustment to transfer price, as referred to in sub-section (1) of section 92CE, has been made during the previous year.
Clause 30B	Clause 30B requires particulars about whether the assessee has incurred expenditure during the previous year by way of interest or of similar nature exceeding one crore rupees as referred to in sub-section (1) of section 94B.
Clause 30C	Clause 30C requires the tax auditor to report any impermissible avoidance arrangement (IAA) entered into by the assessee (auditee). Tax Auditor is required to report under clause 30C only if the following 4 ingredients are cumulatively satisfied:  There exists an ‘arrangement’  ‘Main purpose’ or sole purpose of ‘arrangement’ is to obtain a ‘tax benefit’   Such ‘Avoidance Arrangement’ is ‘Impermissible’  Such arrangement for tax avoidance which is impermissible (Impermissible Avoidance Arrangement or IAA) has been ‘entered into’ or ‘carried out’ by the assessee
Clause 31	Clause 31(a) deals with the acceptance of loan or deposit in an amount exceeding the limit specified in section 269SS (i.e. Rs. 20,000). Clause 31(a) is not applicable in respect of the following assessees :   any banking company;   any corporation established by a Central, State, or Provincial Act;   any Government company as defined in section 617 of the Companies Act, 1956 [now section 2(45) of the Companies Act, 2013]. Clause 31(b) deals with the receipt of a specified sum i.e. money receivable as advance or otherwise in relation to the transfer of immovable property whether or not the transfer takes place. Clause 31(ba) requires reporting of particulars of each receipt in an amount exceeding the limit specified in section 269ST, in aggregate from a person in a day or in respect of a single transaction or on respect of transactions relating to one event or occasion from a person, during the previous year, where such receipt is otherwise than by a cheque or a bank draft or use of ECS through a bank account. Clause 31(bb) requires reporting of particulars of each receipt in an amount exceeding the limit specified in section 269ST as above received by a cheque or bank draft not being an account payee cheque or an account payee bank draft. Clause 31(bc) requires reporting of particulars of each payment made in an amount exceeding the limit in section 269ST, otherwise than by an account payee cheque or account payee bank draft or use of ECS, during the previous year. Clause 31(bd) requires particulars of each payment exceeding the limit specified in section 269ST, made by a cheque or bank draft, not being an account payee cheque or an account payee bank draft, during the previous year. Clause 31(c) pertains to the repayment of loans/deposits/specified advances in an amount exceeding the specified limit of Section 269T. Clause 31(d) pertains to the repayment of loans/deposits/specified advances which satisfies the following conditions : i. Repayment is made during the previous year ii. Repayment is made in an amount exceeding the limit in section 269T (i.e. Rs. 20,000) iii. Mode of repayment is immaterial – it does not matter whether the mode of repayment is section 269T compliant or not. iv. Such loans/deposits/advances repaid were received in contravention of section 269SS in the previous year i.e. these were received otherwise than by specified non-cash modes. Clause 31(e) pertains to the repayment of loans/deposits/specified advances by cheque or bank draft not crossed at all or crossed without the addition of words “account payee” and which satisfy conditions (i) to (iii) above. (Particulars at (c), (d), and (e) need not be given in the case of a repayment of any loan or deposit or any specified advance taken or accepted from the Government, Government company, banking company, or a corporation established by the Central, State or Provincial Act)”. Note: The relevant code indicating the nature of the amount/receipt/repayment is also required to be specified, where applicable.
Clause 32	Clause 32(a) requires particulars of brought forward loss or depreciation allowance. Clause 32(b) requires the tax auditor to state whether a change in shareholding of the company has taken place in the previous year due to which the losses incurred prior to the previous year cannot be allowed to be carried forward in terms of section 79. Clause 32(c) requires the tax auditor to state whether the assessee has incurred any speculation loss referred to in section 73 during the previous year, if yes, then the tax auditor is required to furnish the details of the same against clause 32(c). Clause 32(d) requires the tax auditor to report whether the assessee has incurred any loss referred to in section 73A in respect of any specified business in the previous year. If so, the tax auditor shall furnish details of the same. Clause 32(e) requires the tax auditor to state whether the company is deemed to be carrying on a speculation business as referred to in Explanation to Section 73. If yes, the tax auditor should furnish the details of speculation loss if any incurred during the previous year against clause 32(e).
Clause 33	Clause 33 prescribes a tabular format for reporting admissible deductions section-wise. Clause 33 casts a duty on the tax auditor to verify whether the assessee fulfils the conditions if any specified under the relevant provisions of the Income-tax Act, 1961 or Income-tax Rules, 1962, or any other guidelines, circular, etc., issued in this behalf.
Clause 34	Clause 34(a) requires the tax auditor to state whether the assessee is required to deduct or collect tax at source, if yes, then the tax auditor is required to furnish the details of the same against clause 34(a). Clause 34(b) requires the tax auditor to state whether the assessee is required to furnish the statement of tax deducted or tax collected, if yes, then the tax auditor is required to furnish the details of the same against clause 34(b). Clause 34(c) requires the tax auditor to state Whether the assessee is liable to pay interest under section 201(1A) or section 206C(7), if yes, then the tax auditor is required to furnish the details of the same against clause 34(c).
Clause 35	Clause 35(a) requires the quantitative details of principal items of goods traded, in case of trading concern. Clause 35(b) requires the quantitative details of the principal items of raw materials, finished products, and by-products, in case of manufacturing concern.
Clause 36	This clause is redundant with effect from the assessment year 2021-22 as the Finance Act, 2020 has abolished DDT.
Clause 36A	Clause 36A requires the tax auditor to state whether the assessee has received any amount on the nature of dividend as referred to in sub-clause (e) of clause (22) of section 2, if yes, then the tax auditor is required to furnish the details of the same.
Clause 36B	Clause 36B requires the assessee to state whether any amount has been received for buyback of shares as referred to in sub-clause (f) of clause (22) of section 2, and if yes, to furnish the amount received and the cost of acquisition of the shares bought back.
Clause 37	Clause 37 requires the tax auditor to state whether any cost audit was carried out, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the cost auditor.
Clause 38	Clause 38 requires the tax auditor to state whether any audit was conducted under the Central Excise Act, 1944, if yes, give the details, if any, of disqualification or disagreement on any matter/ item/ value/ quantity as may be reported/identified by the auditor.
Clause 39	Clause 39 requires the tax auditor to state whether any audit was conducted under section 72A of the Finance Act, 1994 in relation to the valuation of taxable services, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the auditor.
Clause 40	Clause 40 requires the details regarding total turnover, gross profit/turnover, net profit/turnover, stock-in-trade/turnover, and material consumed/finished goods produced for the previous year and the preceding previous year. The details required to be furnished for principal items of goods traded or manufactured or services rendered.
Clause 41	Clause 41 requires the details of demand raised or refund issued during the previous year under any tax laws other than the Income-tax Act, 1961 and Wealth-tax Act, 1957 along with details of relevant proceedings.
Clause 42	Clause 42(a) requires the tax auditor to state whether the assessee is required to furnish a statement in Form No. 61 or Form No. 61A or Form No. 61B. If yes, then the status of furnishing the forms by the due date, whether forms contain all details required to be reported, list of required details not included in forms are to be reported in clause 42(b) in Tabular Format.
Clause 43	Clause 43 requires the tax auditor to state whether the assessee or its parent entity or alternate reporting entity is liable to furnish the report as referred to in sub-section (2) of section 286, if yes, then the tax auditor is required to furnish the details of the same.
Clause 44	Clause 44 of Form 3CD seeks details of the total expenditure incurred during the year. The break-up needs to be given for the expenditure in respect of entities registered under GST and relating to entities not registered under GST.

Rectification, Assessment, and Appeal​

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The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

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Rectification, Assessment, and Appeal

Rectification of Mistake – If there is any mistake in the order passed by the Income-tax authorities, the said authority can rectify such mistake under section 154. The power to rectify the mistake may be exercised by the authority concerned on his own initiative or when the mistake is brought to his notice by the assessee concerned.

RECTIFICATION OF MISTAKE [SECTION 154]
Which order can be rectified?	If any mistake is apparent from the record, the Income-tax authority can rectify such mistake. The Income-tax authority can rectify the mistakes which are apparent in the following orders: (a) Any order passed by it; (b) Intimation issued after processing of Income-tax return; (c) Intimation issued after processing of statement of Tax Deducted or Tax Collected at source. The Income-tax authority cannot rectify that part of his order, which has been considered and decided in any proceeding by way of appeal or revision. However, a mistake in the order, which was not the subject matter of appeal or revision, can be rectified by the authority which has passed that order.
Who can rectify the mistake?	The power to rectify the mistake may be exercised by the authority concerned on his own initiative. The authority can exercise this power if mistake has been brought to his notice by the assessee or deductor or collector. If there is a mistake in an order passed by the Joint Commissioner (Appeals) or Commissioner (Appeals), the Joint Commissioner (Appeals) or Commissioner (Appeals) can rectify the mistake if it has been brought to his notice by the assessee or deductor or collector or the Assessing Officer. Further, if there is a mistake in an order passed by the Appellate Tribunal, the Tribunal can rectify the mistake if it has been brought to his notice by the assessee or the Assessing Officer.
Time limit for rectification of order	Order passed by Assessing Officer or CIT (Appeals) or JCIT (Appeals) An order of rectification is required to be passed within a period of 4 years from the end of the financial year in which the order (sought to be rectified) was passed. However, where an application for rectification is made by the assessee, deductor, or collector, the income tax authority is required to pass an order rectifying the mistake within a period of 6 months from the end of the month in which the application is received by it. Order passed by ITAT Where rectification is to be made by the Appellate Tribunal, it shall be made within a period of 6 months from the end of the month in which such order was passed. The rectification can be made when the mistake was brought to its notice by the assessee or the Assessing Officer. Where such rectification is prejudicial to the assessee, he shall be provided an opportunity of being heard. Order passed by TPO for determination of ALP Where Transfer Pricing Officer has passed an order, under Section 92CA, determining the Arm’s Length Price in relation to an International Transaction or specified transaction and it contains a mistake apparent from the record, the Assessing officer is required to rectify the order to correct such mistake. Such rectification can be made any time within 4 years from the end of the previous year in which the order of Transfer Pricing Officer was passed. Failure to comply with conditions of Section 35ABA Where an assessee was allowed deduction for expenditure incurred on the acquisition of any right to use spectrum for telecommunication services under Section 35ABA, but subsequently he failed to comply with the provisions of this section, the Assessing Officer shall rectify the assessment order to disallow the deduction. Such rectification can be made any time within 4 years from the end of the previous year in which failure takes place. Increase in book profit due to APA or Secondary Adjustment Where the book profit of the assessee has increased due to an advance pricing agreement or secondary adjustment, the Assessing Officer shall, on an application made by the assessee in this behalf, re-compute the book profit of the past years and tax payable thereon. Consequently, the Assessing Officer needs to amend the assessment order within 4 years from the end of the financial year in which such application is received by him. Foreign Co. fails to comply with conditions of Section 115JH Section 115JH provides that where a foreign company has been treated as resident in India in the relevant previous year, and it has not been a resident in India in any of earlier previous years, certain provisions as notified by the Central Government shall apply with exceptions, modifications, and adaptations. However, if the assessee subsequently fails to comply with any of the prescribed conditions, the Assessing Officer shall re-compute the total income of the assessee for the said previous year and make the necessary amendment in the assessment order. Such amendment can be made within 4 years from the end of the previous year in which such failure takes place. Foreign Co. fails to comply with conditions of Section 115JG Section 115JG provides that where a foreign company is engaged in the banking business in India through its branch situated in India and such branch is converted into a subsidiary company (an Indian company) then certain provisions as notified by the Central Government shall apply with exceptions, modifications and adaptations. However, if the assessee subsequently fails to comply with any of the prescribed conditions, the Assessing Officer shall re-compute the total income of the assessee for the said previous year and make the necessary amendment in the assessment order. Such amendment can be made within 4 years from the end of the previous year in which failure takes place.
Appeal against rectification order	Assessee aggrieved by a rectification order passed by the competent authority having the effect of enhancing assessment or reducing refund or order refusing to allow claim made by the assessee can prefer an appeal before CIT(A) or JCIT(A) or make an application for revision. However, the appeal cannot be preferred against an assessment order passed on the invocation of GAAR. However, the appeal shall be filed with the Income Tax Appellate Tribunal (ITAT): (a) Where rectification order is passed by the Commissioner (Appeals); (b) Where rectification order is passed by the Joint Commissioner (Appeals); (c) Where rectification order is passed against assessment orders which were passed by the assessing officer in pursuance of the directions of the Dispute Resolution Penal; or (d) Where rectification order is passed against assessment orders which were passed by the assessing officer to invoke the provisions of GAAR.

Assessment of Income – Every taxpayer has to furnish the details of his income to the Income-tax Department. These details are to be furnished by filing his return of income. Once the return of income is filed by the taxpayer, the next step is the processing of the return of income by the Income Tax Department. The Income Tax Department examines the return of income for its correctness. The process of examining the return of income by the Income Tax department is called as “Assessment”.

The assessment also includes re-assessment under section 147/148 and best judgment assessment under section 144. Under the Income-tax Law, there are four major assessments as given below:

• Assessment under section 143(1), i.e., Summary assessment.
• Assessment under section 143(3), i.e., Scrutiny assessment.
• Assessment under section 144, i.e., Best judgment assessment.
• Assessment under section 147, i.e., Income escaping assessment.

SUMMARY ASSESSMENT [SECTIONS 143(1)]
What is summary assessment?	Summary Assessment is a preliminary assessment on the basis of return submitted by the assessee. It is completed without calling the assessee and without passing a regular assessment order.
Scope of summary assessment	The summary assessment (also known as ‘Intimation’) is done through computerized processing at Centralized Processing Centre, Bengaluru. In this, all Income-tax returns filed under section 139 or in response to a notice under section 142(1) are processed to verify and fix the arithmetical errors, apparent errors, tax calculation, and tax payments. At this stage, no verification of the income is undertaken. However, if a return can’t be processed by CPC for any reason, Commissioner shall transmit such return to the Jurisdictional Assessing Officer for processing. Income-tax return is processed to compute total income or loss after making the following adjustments: However, if a return can’t be processed by CPC for any reason, Commissioner shall transmit such return to the Jurisdictional Assessing Officer for processing. 1. Any arithmetical error in the return 2. An incorrect claim apparent from any information in the return 3. Any such inconsistency in the return, with respect to the information in the return of any preceding previous year, as may be prescribed [effective from 01-04-2025] 4. Disallowance of loss claimed if return of the previous year for which set-off of loss is claimed was furnished beyond the due date 5. Disallowance of expenditure or increase in income indicated in the audit report but not considered in computing the total income in the return; 6. Disallowance of deduction claimed under Section 10AA or Chapter VI-A under the heading “C-Deductions in respect of certain in comes”, if the return of income is furnished beyond the specified due date. Meaning of ‘Incorrect Claim’ ‘An incorrect claim apparent from any information in the return’ means a claim. On the basis of an entry in the Income-tax return: (a) Which is in consistent with an other entry of the same or some other item in such return (b) In respect of which, information required to be furnished to substantiate such claim, has not been furnished (c) In respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction.
Re-computation of tax after adjustments	The CPC is required to process the return to ascertain if any tax or interest is due from the assessee or refund is due to him. It is determined after rectifying the arithmetical error or incorrect claim in the Income-tax return. Thus, the tax and interest, if any, shall be re-computed on the basis of the adjusted income. Before making any adjustment, an opportunity shall be provided to the assesses to explain and rectify the same within 30 days from the date of issue of such intimation. The response to such adjustment has to be submitted through the e-filing account of the assessee without any need to visit the income tax department. The response so received from the assessee shall be considered before making such adjustments. In case no response is received within such time, the adjustment of the amount indicated in the intimation is to be made.
Issue of intimation to the assessee	If any tax or interest is found due from the assessee, the CPC is required to send an intimation to the assessee. Intimation shall be made in writing or electronic mode. The intimation sent to him is deemed to be a ‘Notice of Demand’. The assesses is required to pay such tax within 30 days from the date of receipt of intimation failing which he is treated as an assessee-in-default. Consequently, recovery proceedings can be started against him. Where any refund is found due to the assessee on the basis of the return, the CPC is required to grant the same to the assessee and send an intimation to him.
Time limit for issue of intimation	If any sum is found due from the assessee or any sum is found due to the assessee, the CPC is required to send an intimation to him within 9 months from the end of the financial year in which the return is furnished. However, the intimation may not be issued, and acknowledgement of the return shall be deemed to be the intimation, if no sum is payable by, or refundable to, the assessee, and where no adjustment has been made.
Appeal against intimation	Assessee aggrieved by adjustments made under intimation can prefer an appeal before CIT(A) or make an application for revision.

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SCRUTINY ASSESSMNET [Section 143(3)]
What is scrutiny assessment?	Scrutiny Assessment is a detailed examination of the Income-tax return submitted by the assessee. All Income-tax returns are first examined at Centralized Processing Centre, Bengaluru which is called ‘Summary Assessment’. Thereafter, a certain percentage of tax returns are selected every year for scrutiny assessment, wherein the department verifies the correctness and completeness of income, deductions claimed, tax liability, etc. This assessment is done by passing an assessment order.
Type of scrutiny assessment	The scrutiny assessment can be either limited scrutiny or complete scrutiny. The CBDT introduced the concept of ‘Limited Scrutiny’ to limit the scope of income tax scrutiny. In such cases, the notices shall contain the issues identified for examination and the same shall be communicated to the assessee. The enquiry shall remain confined only to the specific reasons/ issues for which the case has been picked up for scrutiny. These cases shall be completed expeditiously in a limited number of hearings.
Manner of conducting scrutiny assessment	Section 144B has made it mandatory to conduct the scrutiny assessment under Section 143, the best judgment assessment under Section 144, and the re-assessment under Section 147 in a faceless manner. Such faceless assessment shall be made in respect of those territorial areas, or persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be prescribed by the Board. Therefore, the assessment of the total income or loss of the assessee under Section 143(3) shall be conducted in a faceless manner. All scrutiny assessments, other than those covered under Section 144B, shall be conducted electronically.
Time limit for issue of notice	To carry out an assessment under section 143(3), the Assessing Officer shall serve a notice on the taxpayer in accordance with provisions of section 143(2) within a period of 3 months from the end of the financial year in which the return is filed.
Deemed validity of notice served	Section 292BB provides that even an improper notice shall be deemed to be valid and served on the assessee if: (a) The assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, and (b) He has not objected to the improper service of notice before the completion of the assessment or reassessment. In such cases, the assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was: (a) not served upon him; (b) not served upon him in time; (c) served upon him in an improper manner.
Time limit for completion of scrutiny assessment	The time limit for making an assessment under Section 143(3) is 12 months from the end of the assessment year in which the income was first assessable [Applicable for the assessment year 2022-23 and onwards] Note: •  If reference is made to TPO, the period available for assessment shall be extended by 12 months. •  If the return has been furnished under section 139(8A), the order of assessment shall be passed within 12 months from the end of the financial year in which such return was furnished.
Appeal against assessment order	Assessee aggrieved by assessment order passed for scrutiny assessment can prefer an appeal before CIT(A) or make an application for revision. However, the appeal against an order passed in pursuance of directions of the Dispute Resolution Panel or an assessment order passed on the invocation of GAAR can be filed before ITAT.
Grievance against high-pitched scrutiny assessment	Assessee aggrieved by high-pitched and unreasonable additions made by the assessing officer can prefer to file a grievance before the Local Committee. The Local Committees are constituted by the CBDT in each Principal CCIT region to quickly resolve such grievances.

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BEST JUDGMENT ASSESSMENT [SECTION 144]
What is Best Judgment Assessment?	Best Judgment Assessment means the estimation of the taxable income of an assessee by the Assessing Officer on the basis of available information and resources. This assessment takes place if the assessee does not cooperate in assessment proceedings or if correct profit cannot be calculated on the basis of books of accounts maintained by the assessee. The Best Judgment Assessment can be classified into the following two categories: (a) Compulsory Best Judgment Assessment (b) Discretionary Best Judgment Assessment
What is compulsory Best Judgment Assessment?	The Assessing Officer is bound to make an assessment to the best of his judgment in the following specified cases. In case of failure to file a valid return The Assessing Officer shall make Best Judgment Assessments in the following cases: (a) The assessee failed to file the Income-tax return on or before the due date; (b) The assessee failed to file the belated return; (c) The assessee failed to file an updated return; (d) If the Assessing Officer issues a notice under Section 142 to the assessee to file the Income-tax return but he failed to file it in response to such notice. In case of failure to produce evidence If any person, after having filed a return, fails to comply with the notice issued under section 143(2) requiring his presence or production of evidence and documents, the Assessing Officer is required to make an assessment to the best of his judgment. In case of failure to get the special audit or inventory valued If any person fails to comply with the direction issued under Section 142(2A) requiring him to get his accounts audited or inventory valued, the Assessing Officer is required to make an assessment to the best of his judgment. In case of a defective return Where an assessee fails to rectify the defects within the time allowed for same, he can apply to Assessing Officer for condonation of delay in removing the defects. If such condonation is allowed and the assessee has removed the defects, the return filed by him will be treated as a valid return.
What is Discretionary Best Judgment Assessment?	If Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee or where no method of accounting or Accounting Standards have been regularly employed by the assessee, the Assessing Officer may make the assessment to the best of his judgment.
Time limit for completion of Best Judgment Assessment	The time limit for making an assessment under Section 144 is 12 months from the end of the assessment year in which the income was first assessable [Applicable for the assessment year 2022-23 and onwards] Note: •  If reference is made to TPO, the period available for assessment shall be extended by 12 months. •  If the return has been furnished under section 139(8A), the order of assessment shall be passed within 12 months from the end of the financial year in which such return was furnished.
Appeal against Best Judgment Assessment	Assessee aggrieved by the assessment order passed under this provision can prefer an appeal before CIT(A) or make an application for revision.

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INCOME ESCAPING ASSESSMENT [SECTION 147]
When can AO make re-assessment?	The Assessing Officer can make the re-assessment of an income escaping assessment if the following conditions are satisfied: (a) Any income chargeable to tax has escaped assessment for any assessment year; and (b) The assessing officer follows the provisions of Sections 148 to 153. If the above conditions are satisfied, the assessing officer can assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year. It is imperative to note that for the purpose of assessment or reassessment or re-computation under this section, the Assessing Officer can assess or reassess all those incomes which have escaped assessment and which come to his notice subsequently in the course of such proceeding notwithstanding that the procedure prescribed in Section 148A was not followed before issuing such notice for such income.
When is an income deemed to have escaped assessment?	The Assessing Officer can initiate the proceedings if he has the information which suggests that some income has escaped the assessment. Sub-section (3) of Section 148 define the situation in which an assessing officer shall be deemed to have the information which suggests that the income chargeable to tax has escaped the assessment. The notice under Section 148 can be issued by the Assessing Officer after following the procedure laid down in Section 148A. If during such process, the assessing officer concludes that the information in possession does not justify such proceedings, he may pass an order that it is not a fit case for assessment under Section 147. In other words, the assessing officer can do the re-assessment under Section 147 only if there is an income which has escaped assessment and which has been enquired in the manner laid down in Section 148A. If the Assessing Officer concludes, on the basis of his enquiry and the reply submitted by the assessee, that there is an income which has escaped assessment, he can initiate the proceedings under Section 148 and complete it under Section 147. When an information suggests that income has escaped assessment? The following information shall be deemed to be suggesting that the income chargeable to tax has escaped assessment:    Any information in the case of the assessee for the relevant assessment year as per the ‘Risk Management Strategy’ formulated by the CBDT from time to time;    Any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of the Income-tax Act;    Any information received under an agreement referred to in section 90 or section 90A;    Any information made available to the Assessing Officer under the Scheme notified under section 135A; or     Any information which requires action in consequence of the order of a Tribunal or a Court. Any information in the case of assessee emanating from survey conducted under section 133A, other than under sub-section (2A) of the section 133A, on or after 01-09-2024.
Notice to file return of income	Before issuing a notice under Section 148, the Assessing Officer shall conduct enquiries, if required, and provide an opportunity of being heard to the assessee. After considering his reply, the Assessing Officer shall decide, after passing an order, whether it is a fit case for the issue of notice under Section 148 and serve a copy of such order along with such notice on the assessee. The aforesaid procedure does not apply in case of an assessee where the Assessing Officer has received information under the scheme notified under section 135A (Faceless Collection of Information). To make an assessment or reassessment or re-computation in Section 147, a notice is required to be issued to the assessee under Section 148 requiring him to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act. The assessee shall be required to furnish the return of income within such period as specified in the notice. Such period shall not exceed 3 months from the end of the month in which such notice is issued. Such return shall be furnished in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Where the return is furnished beyond the prescribed period such return shall not be deemed to be a return under Section 139.
When can a notice be issued?	The notice can be issued only if the Assessing Officer has the information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year. Further, prior approval of the specified authority is also required to be obtained before issuing such notice by the Assessing Officer. Specified authority shall be the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director, as the case may be.
Time limit to issue notice	The notice should be issued by the Assessing Officer within the following time limit: (effective from 01-09-2024) Particulars Time Limit If escaped income is less than Rs. 50 lakh Issue of notice under section 148 to re-open assessment within 3 years and 3 months from the end of the relevant assessment year Issue of notice to show cause under section 148A within 3 years from the end of the relevant assessment year If escaped income is Rs. 50 lakh or more Issue of notice under section 148 to re-open assessment within 5 years and 3 months from the end of the relevant assessment year Issue of notice to show cause under section 148A within 5 years from the end of the relevant assessment year
Course of Action for Assessee	Co-operate with the Assessing Officer On receipt of notice under section 148A for conducting the enquiries by the Assessing Officer, the assessee should co-operate in the proceedings and file his replies which shall be important factors in deciding whether it is a fit case for the issue of notice under section 148 or not. File Income-tax return The assessee can file a fresh return of income wherein he can declare his true income. The income may be more than what he had already declared in the original return or it may be the same. Participate in the Assessment Proceedings The assessee should submit his response to the notices issued during the course of Assessment. If the Assessing Officer passes any adverse order, the assessee can go in appeal against the order of assessment.
Time limit for completion of assessment	The reassessment under Section 147 must be completed within 12 months from the end of the financial year in which notice was served.
Re-assessment proceedings to be dropped	Where an assessment has been reopened, the assessee (if he has not preferred an appeal or applied for revision) can claim that the re-assessment proceedings shall be dropped if he shows that: (a) He had been assessed on an amount, which is not lower than what he would be rightly liable for, even if income alleged to have escaped assessment had been taken into account; (b) The assessment or computation had been properly made.
Deemed validity of notice served	Section 292BB of the Income-tax Act provides that even an improper notice shall be deemed to be valid and served on the assessee if: (a) the assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, and (b) he has not objected to the improper service of notice before the completion of the assessment or reassessment. In such cases, the assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was: (a) not served upon him; (b) not served upon him in time; (a) (c) served upon him in an improper manner.
Appeal against assessment order	Assessee aggrieved by reassessment order passed under Section 147 can prefer an appeal before CIT(A) or make an application for revision. If the order is passed by an Assessing Officer (below the rank of Joint Commissioner), an assessee can file an appeal before JCIT (A). However, the appeal against an order passed in pursuance of directions of the Dispute Resolution Panel or an assessment order passed on the invocation of GAAR can be filed before ITAT.

Appeals under Income-tax law – An appeal is a process by which a person (assessee or revenue) aggrieved by an order passed by the tax authority or judicial authority, as the case may be, can challenge it before the higher judicial authorities. The party challenging such order is known as the appellant, and the other party is known as the respondent.

APPEAL TO JCIT(A) OR CIT(A) [SECTION 246 OR 246A]
Who can file an appeal?	Any assessee aggrieved by the orders passed by an Assessing Officer (below the rank of Joint Commissioner) can prefer an appeal against such order before the Joint Commissioner of Income Tax (Appeals). Further, the proviso to Section 246(1) provides that no appeal shall be filed before the JCIT(A) if an appealable order is passed by or with the prior approval of an income-tax authority above the rank of Deputy Commissioner. The Joint Commissioner of Income-tax (Appeals) and Commissioner of Income-tax (Appeals) is the first appellate authority. The taxpayer aggrieved by an assessment order, order imposing a penalty, or any other order, can file an appeal before the CIT(A) having jurisdiction over him.
Order against which appeal can be filedbefore the JCIT(A)	Section 246 specifies the orders against which an appeal can be filed before the Joint Commissioner of Income-tax (Appeals). The list of major orders against which an appeal can be preferred before the Joint Commissioner of Income-tax (Appeals) is given below: (a) An intimation issued under Section 143(1) where the assessee objects to the making of adjustment. (b) any order of assessment passed under Section 143(3) or best judgment assessment order passed under Section 144 where-   •  the assessee objects to the amount of income assessed or   •  the amount of tax determined or   •  amount of loss computed or   •  status under which he is assessed, i.e., individual, HUF, and so on; (c) An order of assessment, reassessment, or recomputation under Section 147; (d) An order being an intimation under Section 200A(1), i.e., processing of TDS statement; (e) An order being an intimation under Section 206CB(1), i.e., processing of TCS statement; (f) An order being an intimation under Section 206C(6A) treating a collector of TCS as assessee-in-default; (g) An order under Section 201 treating a deductor as an assessee in default; (h) An order imposing a penalty under Chapter XXI; (i) A rectification under Section 154 or Section 155 amending any of the orders mentioned above.
Order against which appeal can be filed before the CIT(A)	Section 246A specifies the orders against which an appeal can be filed before the Commissioner of Income-tax (Appeals). The list of major orders against which an appeal can be preferred before the Commissioner of Income-tax (Appeals) is given below: (a) Order passed against the taxpayer in a case where the taxpayer denies the liability to be assessed under Income Tax Act. (b) Intimation issued under section 143(1)(1B) where adjustments have been made in income offered to tax in the return of income. (c) Intimation issued under section 200A(1) where adjustments are made in the filed statement. (d) Assessment order passed under section 143(3) except in case of an order passed in pursuance of directions of the Dispute Resolution Panel (e) An assessment order passed under section 144. (f) Order of Assessment, Re-assessment, or Re-computation passed after reopening the assessment under section 147 except an order passed in pursuance of directions of the Dispute Resolution Panel (g) An order referred to in section 150. (h) An order of assessment or reassessment passed under section 153A or under section 158BC in case of search/seizure. (i) Order made under section 92CD(3). (j) Rectification order passed under section 154 or under section 155. (k) Order passed under section 163 treating the taxpayer as an agent of non-resident. (l) Order passed under section 170(2)/(3) assessing the successor of the business in respect of income earned by the predecessor. (m) Order passed under section 171 recording the finding about the partition of a Hindu Undivided Family. (n) Order passed by Joint Commissioner under section 115VP(3) refusing approval to opt for tonnage-tax scheme to qualifying shipping companies. (o) Order passed under section 201(1)/206C(6A) deeming the person responsible for deduction of tax at source as assessee-in-default due to failure to deduct tax at source or to collect tax at source or to pay the same to the credit of the Government. (p) Order determining refund passed under section 237. (q) Order imposing penalty under section(s) 221/271/271A/271AAA/271F/271FB/272A/272AA/272B/272BB/275(2)/158BFA(2)/271B/271BB/271C/271CA/271D/271E/271AAB. (r) Order imposing a penalty under Chapter XXI. (s) Order passed by the AO under section 239A (t) Order passed under section 158BC(1)(c) in respect of search initiated under section 132, or books of account, other documents or any assets requisitioned under section 132A, on or after 01-09-2024.
Time limit for filing appeal	As per Section 249(2), an appeal should be presented within 30 days of the following date: (a) Where the appeal relates to any assessment or penalty, the date of service of notice of demand relating to the assessment or penalty. (b) In any other case, the date on which intimation of the order sought to be appealed against is served.
Document to be submitted	•  Form No. 35 (including the statement of facts and grounds of Appeal)   •  One certified copy of the order, appealed against   •  Notice of demand in original   •  Copy of challans of fees and the details of the challan (i.e., BSR code, date of payment of fee, serial number, and amount of fee).
Fees for filing appeal	The fees for filing the appeal before the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-tax (Appeals) are as follows: Where assessed income is Amount of Fees Less than or equal to Rs. 1,00,000 Rs. 250 More than Rs. 1,00,000 but up to Rs. 2,00,000 Rs. 500 More than Rs. 2,00,000 Rs. 1,000 Where the subject matter of appeal relates to any other matter Rs. 250
Time limit for disposal of the appeal	Where it is possible, the JCIT(A) or CIT(A) shall dispose off the appeal within a period of 1 year from the end of the financial year in which the appeal is filed. The order should be issued within 15 days of the last hearing.

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APPEALTO ITAT [SECTION 253]
Introduction	Income Tax Appellate Tribunal (ITAT) is the second appellate authority under the Income-tax Act. Any appeal against an order of the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-tax (Appeals) lies with the ITAT. An order passed by the appellate tribunal shall be final unless a question of law arises out of such order.
Order against which appeal can be filed by the taxpayer	An assessee can prefer an appeal with the ITAT against the following orders: (a) Order passed by the JCIT(A) or CIT(A) under Section 250 in an appeal filed by the assessee; (b) Rectification order passed by the JCIT(A) or CIT(A) under Section 154; (c) Penalty order passed by the JCIT(A) or CIT(A) under Section 270A for under-reporting or misreporting of income; (d) Penalty order passed by the JCIT(A) or CIT(A) under Section 271A on failure to keep, maintain, or retain books of account, documents, etc., as required under Section 44AA; (e) Penalty order passed by the CIT(A) under Section 271AAB for undisclosed income unearthed during the search proceedings; (f) Penalty order passed by the JCIT(A) or CIT(A) under Section 271AAC for unexplained incomes; (g) Penalty order passed by the JCIT(A) or CIT(A) under Section 271AAD for false or omission of entry; (h) Penalty order passed by the JCIT(A) or CIT(A) under Section 271J for furnishing inaccurate information in a report or a certificate; or (i) Penalty order passed by the CIT(A) under Section 272A on failure to co-operate with Income-tax authorities or on failure to file TDS Statement or TCS Statement. (j) An order passed by the assessing officer under Section 115VZC excluding any company from the tonnage taxation Scheme; (k) Following orders passed by the Principal Commissioner or Commissioner:   •  Order under Section 12AA or Section 12AB;   •  Refusing to register the trust or institution under Section 80G;   •  Revisionary order under Section 263;   •  Penalty order under Section 270A for under-reporting or misreporting of income;   •  Penalty order under Section 272A on failure to co-operate with Income-tax authorities or on failure to file TDS Statement or TCS Statement;   •  Rectification order under section 154 to amend any of the above orders. (l) Following orders passed by the specified income-tax authorities (PCCIT, CCIT, PDGIT, DGIT, PDIT, or DIT):   •  Revisionary order under Section 263;   •  Penalty order under Section 272A on failure to co-operate with Income-tax authorities or on failure to file TDS Statement or TCS Statement ;   •  Rectification order under section 154 to amend any of the above orders. (m) An order passed by the Principal Commissioner or Commissioner under sub-clauses (iv), (v), (vi), or (via) of Section 10(23C). (n) Following assessment orders passed under the direction of DRP:   •  Scrutiny assessment under Section 143(3);   •  Income escaping assessment under Section 147;   •  Assessment in case of search and requisition under Section 153A;   •  Assessment of other person under Section 153C; or   •  Rectification order under Section 154 in respect of the above referred-to orders. (o) Following assessment orders passed by the assessing officer after obtaining approval of the Principal Commissioner or Commissioner under Section 144BA to invoke the provisions of GAAR:   •  Scrutiny assessment under Section 143(3);   •  Income escaping assessment under Section 147;   •  Assessment in case of search and requisition under Section 153A;   •  Assessment of other person under Section 153C; or   •  Rectification order under Section 154 or Section 155 in respect of the above referred-to orders.
Order against which appeal can be filed by the PCIT or CIT	If the Principal Commissioner of Income-Tax or Commissioner of Income-Tax objects to the order passed by the Joint Commissioner of Income-tax (Appeals) or the Commissioner of Income-Tax (Appeals) under section 154 or section 250, then he may direct the Assessing Officer to make an appeal to the ITAT against the orders of the Joint Commissioner of Income-tax (Appeals) or the Commissioner of Income-Tax (Appeals). This is called as departmental appeal, i.e., the Income-Tax department moving to ITAT against the order of the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-Tax (Appeals). The departmental appeal shall be allowed only in cases where the tax effect involved in the appeal exceeds Rs. 50,00,000. However, in specific circumstances, the adverse judgments can be contested on the merits by the department, even if the tax effect is less than the prescribed monetary limits. “Tax effect” means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which the appeal is intended to be filed. However, the tax will not include any interest thereon, except where the chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include a notional tax on disputed additions. In the case of penalty orders, the tax effect will mean the quantum of penalty deleted or reduced in the order to be appealed against.
Time limit for filing appeal	Appeal to ITAT is to be filed within a period of 60 days from the date on [within 2 months from the end of the month in (from 01-10-2024] which the order sought to be appealed against is communicated to the taxpayer or the Principal Commissioner of Income-Tax or Commissioner of Income-Tax (as the case may be). On receipt of the notice that an appeal has been filed before the Tribunal, the assessing officer or the assessee may file a memorandum of cross objection in Form 36A within 30 days of the receipt of the notice.
Document to be submitted	•  Form No. 36 – in triplicate.   •  Order appealed against – 2 copies (including one certified copy).   •  Order of Assessing Officer – 2 copies   •  Grounds of appeal before first appellate authority – 2 copies.   •  Statement of facts filed before first appellate authority – 2 copies.   •  In case of an appeal against the penalty order – 2 copies of the relevant assessment order.   •  In case of an appeal against an order under section 143(3), read with section 144A – 2 copies of the directions of the Joint Commissioner under section 144A.   •  In case of an appeal against the order under section 143, read with section 147 – 2 copies of the original assessment order, if any.   •  Copy of challan for payment of the fee.
Fees for filing appeal	The fees for filing the appeal before the Joint Commissioner of Income-tax (Appeals) or Commissioner of Income-tax (Appeals) are as follows: Where assessed income is Amount of Fees Less than or equal to Rs. 1,00,000 Rs. 500 More than Rs. 1,00,000 but up to Rs. 2,00,000 Rs. 1,000 More than Rs. 2,00,000 1% of assessed income* subject to a maximum of Rs. 10,000 Where Appeal is filed u/s 253(2)or a memorandum of a Cross objection referred u/s 253(4) NIL Where the application is for a stay of demand Rs. 500 Where the application is under section 254(2) Rs. 50 Where the subject matter of appeal relates to any other matter Rs. 500 * Assessed income means total income as computed by the Assessing Officer.
Time limit for disposal of the appeal	Where it is possible, the ITAT shall dispose off the appeal within a period of 4 years from the end of the financial year in which the appeal is filed.

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APPEAL TO HIGH COURT [SECTION 260A]
Introduction	High Court is the third appellate authority in the Income-tax Act. Appeal against an order passed by the Appellate Tribunal order lies with the High Court.
Order against which appeal can be filed	The appeal can be filed if the High Court is satisfied that the case involves a substantial question of law. The Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income-tax or an assessee aggrieved by an order passed by the Appellate Tribunal may file an appeal before the High Court. The departmental appeal shall be allowed only in cases where the tax effect involved in the appeal exceeds Rs. 1,00,00,000. However, in specific circumstances, the adverse judgments can be contested on the merits by the department, even if the tax effect is less than the prescribed monetary limits. “Tax effect” means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which the appeal is intended to be filed. However, the tax will not include any interest thereon, except where the chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include a notional tax on disputed additions. In the case of penalty orders, the tax effect will mean the quantum of penalty deleted or reduced in the order to be appealed against.
Time limit for filing appeal	Appeal to the High Court is to be filed within a period of 120 days from the date on which the order against which the appeal is being filed is received by the taxpayer or the PCCIT or CCIT or PCIT or CIT (as the case may be). The appeal to the High Court shall be filed in the form of a Memorandum of Appeal precisely stating therein the substantial question of law involving the appeal.
Fees for filing appeal	The fee for filing the appeal to the High Court shall be such fee as may be specified in the relevant law relating to Court fees for filing of appeals to the High Court.

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APPEAL TO SUPREME COURT [SECTION 261]
Introduction	The Supreme Court is the fourth and last appellate authority under the Income-tax Act.
Order against which appeal can be filed	Appeal against the order of the High Court lies with the Supreme Court. However, no appeal can be filed before the Supreme Court unless the High Court certifies the case fit for filing an appeal to the Supreme Court. The departmental appeal shall be allowed only in cases where the tax effect involved in the appeal exceeds Rs. 2,00,00,000. However, in specific circumstances, the adverse judgments can be contested on the merits by the department, even if the tax effect is less than the prescribed monetary limits. “Tax effect” means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which the appeal is intended to be filed. However, the tax will not include any interest thereon, except where the chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include a notional tax on disputed additions. In the case of penalty orders, the tax effect will mean the quantum of penalty deleted or reduced in the order to be appealed against.
Time limit for filing appeal	No time limit has been prescribed for filing an appeal to the Supreme Court.

Time limit for issuing different income-tax notices and completion of the assessment​

Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc.

Time limit for issuing different income-tax notices and completion of the assessment

Section	Nature of Assessment	Time Limit
		To serve/ issue notice	For completion of the Assessment
Section 143(1)	Summary Assessment	–	Within 9 months from the end of the financial year in which the return is furnished
Section 143(3)	Scrutiny Assessment	Notice to be served within 3 months from the end of the financial year in which return is furnished	Within 12 months1 from the end of the Assessment Year in which income was first assessable*
Section 144	Best Judgment Assessment	–	Within 12 months2 from the end of the Assessment Year in which income was first assessable*
Section 147	Re-assessment	• Section 148 notice to be issued within 3 years and 3 months or within 5 years and 3 months from the end of the relevant assessment year in which income has escaped assessment • Section 148A notice to be issued within 3 years or within 5 years from the end of the relevant assessment year in which income has escaped assessment	Within 12 months from the end of the financial year in which notice for re-assessment was served
–	Fresh Assessment	–	Within 12 months from the end of the financial year in which the order was received or passed
–	Giving effect to appeal results	–	Within 3 months from the end of the month in which the order was received or passed
–	For giving effect to any finding or direction	–	Within 12 months from the end of the month in which such order is received or passed
–	For the assessment of partners if the assessment is made on the firm	–	Within 12 months from the end of the month in which assessment order is passed in case of the firm

* For the purpose of completion of assessment in case of an updated return, the time limit of 12 months shall be counted from the end of the financial year in which the updated return is furnished³.

Notes: 

1. The time limit has been increased from 9 months to 12 months bythe Finance Act, 2023 with effect 01-04-2023.

2. The time limit has been increased from 9 months to 12 months bythe Finance Act, 2023 with effect 01-04-2023.

3. Inserted by the Finance Act, 2022, w.e.f. Assessment Year 2022-23. Further, the time limit has been increased from 9 months to 12 months bythe Finance Act, 2023 with effect 01-04-2023

Provisions applicable to business entities

Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc.

Provisions applicable to business entities

Income-tax Act contains provisions for the computation of income from five different sources and income from business and profession is one of them. Part D of Chapter IV of the Income-tax Act, 1961 contains provisions for the computation of profits and gains of business or profession. It is also popularly called as PGBP.

When an assessee carries on any business or profession, the income arising from such business or profession shall be calculated and taxed under the head ‘Profit and gains from Business or Profession’. The business income shall be computed in accordance with the method of accounting regularly followed by the assessee. For the computation of business income, a taxpayer can follow either mercantile system of accounting orcash basis of accounting.

Chargeability:

The following incomes are chargeable to tax under the head Profit and Gains from Business or Profession:

S. No.	Section	Particulars
1.	28(i)	Profit and gains from any business or profession carried on by the assessee at any time during the previous year
2.	28(ii)	Any compensation or other payment due to or received by any specified person
3.	28(iii)	Income derived by a trade, professional or similar association from specific services performed for its members
4.	28(iiia)	Profit on sale of a license granted under the Imports (Control) Order 1955, made under the Import Export Control Act, 1947
5.	28(iiib)	Cash assistance (by whatever name called) received or receivable by any person against exports under any scheme of the Government of India
6.	28(iiic)	Any duty of Customs or Excise repaid or repayable as drawback to any person against exports under the Customs and Central Excise Duties Drawback Rules, 1971.
7.	28(iiid)	Profit on transfer of Duty Entitlement Pass Book Scheme, under Section 5 of Foreign Trade (Development and Regulation) Act, 1992
8.	28(iiie)	Profit on transfer of Duty-Free Replenishment Certificate, under Section 5 of Foreign Trade (Development and Regulation) Act 1992
9.	28(iv)	Value of any benefits or perquisites arising from a business or the exercise of a profession.
10.	28(v)	Interest, salary, bonus, commission, or remuneration due to or received by a partner from partnership firm
11.	28(va)	a) Any sum received or receivable for not carrying out any activity in relation to any business or profession; or b) Any sum received or receivable for not sharing any know-how, patent, copyright, trademark, licence, franchise, or any other business or commercial right or information or technique likely to assist in the manufacture of goods or provision of services.
12.	28(vi)	Any sum received under a Key man Insurance policy including the sum of bonus on such policy
12A.	28(via)	Any profit or gains arising from conversion of inventory into capital asset.
13.	28(vii)	Any sum received ( or receivable) in cash or in kind, on account of any capital assets (other than land or goodwill or financial instrument) being demolished, destroyed, discarded or transferred, if the whole of the expenditure on such capital assets has been allowed as a deduction under section 35AD
14.	Explanation 2 to Section 28	Income from speculative transactions. However, it shall be deemed to be distinct and separate from any other business.
14A.	Explanation 3 to Section 28	Income from letting out of a residential house shall be chargeable to tax under the head ‘Income from house property’
15.	41(1)	•  Remission or cessation of liability in respect of any loss, expenditure, or trading liability incurred by the taxpayers •  Recovery of trading liability by the successor which was allowed to the predecessor shall be chargeable to tax in the hands of the successor. Succession could be due to amalgamation or demerger or succession of a firm succeeded by another firm or company, etc. •  Any liability which is unilaterally written off by the taxpayer from the books of accounts shall be deemed as remission or cessation of such liability and shall be chargeable to tax.
16.	41(2)	Depreciable asset in case of power generating units, is sold, discarded, demolished or destroyed, the amount by which sale consideration and/ or insurance compensation together with scrap value exceeds its WDV shall be chargeable to tax.
17.	41(3)	Where any capital asset used in scientific research is sold without having been used for other purposes and the sale proceeds together with the amount of deduction allowed under section 35 exceed the amount of the capital expenditure, such surplus or the amount of deduction allowed, whichever is less, is chargeable to tax as business income in the year in which the sale took place.
18.	41(4)	Where bad debts have been allowed as deduction under Section 36(1)(vii) in earlier years, any recovery of same shall be chargeable to tax.
19.	41(4A)	Amount withdrawn from special reserves created and maintained under Section 36(1)(viii) shall be chargeable as income in the previous year in which the amount is withdrawn.
20.	41(5)	Loss of a discontinued business or profession could be adjusted from the deemed business income as referred to in section 41(1), 41(3), (4) or (4A) without any time limit.
20A.	43AA	Any foreign exchange gain or loss arising in respect of specified foreign currency transactions shall be treated as income or loss. Such gain or loss shall be computed in accordance with notified ICDS [subject to Section 43A]
21.	43CA	Where consideration for transfer of land or building or both as stock-in-trade is less than the stamp duty value, the value so adopted shall be deemed to be the full value of consideration for the purpose of computing income under this head. However, no such adjustment is required to be made if value adopted for stamp duty purposes does not exceed 110% of the sale consideration. Note: To boost the demand in the real-estate sector and to enable the real-estate developers to sell their unsold inventory at a lower rate, the safe harbour limit is increased from existing 10% to 20% in case of transfer of residential property during the period from 12-11-2020 to 30-06-2021 by way of the first-time allotment to any person. Further, the consideration received or accruing as a result of such transfer should not exceed Rs. 2 crores.
22.	43CB	The profits and gains arising from construction contract or a contract for providing service is to be determined on the basis of percentage completion method, in accordance with the notified ICDS. In case of contract for providing services with duration of not more than 90 days, the profits and gains shall be determined on basis of project completion method. While as in case of contract for providing services with indeterminate number of acts over a specified period of time shall be determined on basis of straight line method.
23.	43D	In the case of following assessees, income by way of interest on the prescribed bad or doubtful debts is chargeable to tax in the year of receipt or in the year of credit of such income in the profit and loss account, whichever is earlier:  (a) A public financial institution;  (b) A scheduled bank;  (c) A co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank;  (d) A state financial corporation;  (e) A state Industrial investment corporation;  (f) Such class of non-banking financial companies as notified by Govt.
24	—	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 Govt. or State Govt. or any authority or body or agency to the assessee would be included in definition of income as referred to in Section 2(24). However, in the following cases subsidy or grant shall not be treated as income: i) The subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset in accordance with the provisions of Explanation 10 to clause (1) of Section 43; 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, as the case may be.

Deductions under Sections 30 to 37

Amount deductible, while computing, Profits and Gains of Business or Profession are:-

Section	Nature of expenditure	Quantum of deduction	Assessee
30	Rent, rates, taxes, repairs (excluding capital expenditure) and insurance for premises	Actual expenditure incurred excluding capital expenditure	All assessee
31	Repairs (excluding capital expenditure) and insurance of machinery, plant and furniture	Actual expenditure incurred excluding capital expenditure	All assessee
32(1)(i)	Depreciation on i) buildings, machinery, plant or furniture, being tangible assets; ii) know-how, patents, copyrights, trademarks, licenses, franchises, or any other business or commercial rights of similar nature not being goodwill of business or profession, being intangible assets	Allowed at prescribed percentage on Straight Line Method for each asset Provided that where an asset is acquired by the assessee during the previous year and is put to use for a period of less than one hundred and eighty days in that previous year, the deduction in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset.	Assessees engaged in business of generation or generation and distribution of power Note: Taxpayers engaged in the business of generation or generation and distribution of power shall have the option to claim depreciation either on basis of straight line basis method or written down value method on each block of asset.
32(1)(ii)	Depreciation on i) buildings, machinery, plant or furniture, being tangible assets; ii) know-how, patents, copyrights, trademarks, licenses, franchises, or any other business or commercial rights of similar nature not being goodwill of business or profession, being intangible assets	Allowed at prescribed percentage on WDV method for each block of asset Provided that where an asset is acquired by the assessee during the previous year and is put to use for a period of less than one hundred and eighty days in that previous year, the deduction in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset.	All assessees
32(1)(iia)	Additional depreciation on new plant and machinery (other than ships, aircraft, office appliances, second hand plant or machinery, etc.). (subject to certain conditions)	Additional depreciation shall be available @20 % of the actual cost of new plant and machinery. Provided that where an asset is acquired by the assessee during the previous year and is put to use for a period of less than one hundred and eighty days in that previous year, then deduction of additional depreciation would be restricted to 50% in the year of acquisition and balance 50% would be allowed in the next year	All assessee engaged in – manufacture or production of any article or thing; or – generation, transmission or distribution of power (if taxpayer is not claiming depreciation on basis of straight line method)
Proviso to Section 32(1)(iia)	Additional depreciation on new plant and machinery (other than ships, aircraft,office appliances, second hand plant or machinery, etc.)) (Subject to certain conditions)	Additional depreciation shall be available @35 % of the actual cost of new plant and machinery. Provided that where an asset is acquired by the assessee during the previous year and is put to use for a period of less than one hundred and eighty days in that previous year, then deduction of additional depreciation would be restricted to 50% of actual cost in the year of acquisition and balance 50% would be allowed in the next year Note: 1. Manufacturing unit should be set-up on or after 1st day of April, 2015. 2. New plant and machinery acquired and installed during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020	All assessees- where an assessee sets up an undertaking or enterprise for production or manufacture of any article or thing in any notified backward area in state of the state of Andhra Pradesh, Bihar, Telangana or West Bengal.
32AC	Deduction under section 32AC is available if actual cost of new plant and machinery acquired and installed by a manufacturing company during the previous year exceeds Rs. 25/100 Crores, as the case may be.(Subject to certain conditions)	15% of actual cost of new asset	Company engaged in business or manufacturing or production of any article or thing
32AD	Investment allowance for investment in new plant and machinery if manufacturing unit is set-up in the notified backward area in the state of Andhra Pradesh, Bihar, Telangana or West Bengal(Subject to certain conditions)	Investment allowance shall be available @15 % of the actual cost of new plant and machinery in the year of installation of new asset. Note:- 1) New asset should be acquired and installed during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020. 2) Manufacturing unit should be set-up on or after 1st day of April, 2015. 3) Deduction shall be allowed under Section 32AD in addition to deduction available under Section 32AC if assessee fulfils the specified conditions	All assessee who acquired new plant and machinery for the purpose of setting-up manufacturing unit in the notified backward area in the state of Andhra Pradesh, Bihar, Telangana or West Bengal
33AB	Amount deposited in Tea/Coffee/Rubber Development Account by assessee engaged in business of growing and manufacturing tea/Coffee/Rubber in India	Deduction shall be lower of following: a) Amount deposited in account with National Bank for Agricultural and Rural Development (NABARD) or in Deposit Account of Tea Board, Coffee Board or Rubber Board in accordance with approved scheme; or b) 40% of profits from such business before making any deduction under section 33AB and before adjusting any brought forward loss. (Subject to certain conditions)	All assessee engaged in business of growing and manufacturing tea/Coffee/Rubber
33ABA	Amount deposited in Special Account with SBI/Site Restoration Account by assessee carrying on business of prospecting for, or extraction or production of, petroleum or natural gas or both in India	Deduction shall be lower of following: a) Amount deposited in Special Account with SBI/Site Restoration Account; or b) 20% of profits from such business before making any deduction under section 33ABA and before adjusting any brought forward loss. (Subject to certain conditions)	All assessee engaged in business of prospecting for, or extraction or production of, petroleum or natural gas or both in India
35(1)(i)	Revenue expenditure on scientific research pertaining to business of assessee is allowed as deduction (Subject to certain conditions).	Entire amount incurred on scientific research is allowed as deduction. Expenditure on scientific research within 3 years before commencement of business (in the nature of purchase of materials and salary of employees other than perquisite) is allowed as deduction in the year of commencement of business to the extent certified by prescribed authority.	All assessee
35(1)(ii)	Contribution to approved research association, university, college or other institution to be used for scientific research shall be allowed as deduction (Subject to certain conditions)	100% of sum paid to such association, university, college, or other institution is allowed as deduction.	All assessee
35(1)(iia)	Contribution to an approved company registered in India to be used for the purpose of scientific research is allowed as deduction (Subject to certain conditions)	100% of sum paid to the company is allowed as deduction	All assessee
35(1)(iii)	Contribution to approved research association, university, college or other institution with objects of undertaking statistical research or research in social sciences shall be allowed as deduction (Subject to certain conditions)	100% of sum paid to such association, university, college, or other institution is allowed as deduction	All assessee
35(1)(iv) read with 35(2)	Capital expenditure incurred during the year on scientific research relating to the business carried on by the assessee is allowed as deduction (Subject to certain conditions)	Entire capital expenditure incurred on scientific research is allowed as deduction. Capital expenditure incurred within 3 years before commencement of business is allowed as deduction in the year of commencement of business. Note: i. Capital expenditure excludes land and any interest in land; ii. No depreciation shall be allowed on such assets.	All assessee
35(2AA)	Payment to a National Laboratory or University or an Indian Institute of Technology or a specified person is allowed as deduction. The payment should be made with the specified direction that the sum shall be used in a scientific research undertaken under an approved programme.	100% of payment is allowed as deduction (Subject to certain conditions).	All assessee
35(2AB)	Any expenditure incurred by a company on scientific research (including capital expenditure other than on land and building) on in-house scientific research and development facilities as approved by the prescribed authorities shall be allowed as deduction (Subject to certain conditions). Expenditure on scientific research in relation to Drug and Pharmaceuticals shall include expenses incurred on clinical trials, obtaining approvals from authorities and for filing an application for patent.	100% of expenditure so incurred shall be allowed as deduction. Note: i. Company should enter into an agreement with the prescribed authority for co-operation in such research and development and fulfils conditions with regard to maintenance of accounts and audit thereof and furnishing of reports in such manner as may be prescribed.	Company engaged in business of bio-technology or in any business of manufacturing or production of eligible articles or things
35ABA	Capital expenditure incurred and actually paid for acquiring any right to use spectrum for telecommunication services shall be allowed as deduction over the useful life of the spectrum.	Deduction will be available in equal installments starting from the year in which actual payment is made and ending in the year in which spectrum comes to an end. Note: If spectrum fee is actually paid before the commencement of business, the deduction will be available from the year in which business is commenced.	All assessee engaged in telecommunication services
35ABB	Capital expenditure incurred for acquiring any license or right to operate telecommunication services shall be allowed as deduction over the term of the license.	Deduction would be allowed in equal installments starting from the year in which such payment has been made and ending in the year in which license comes to an end.	All assessee engaged in telecommunication services
35AC	Expenditure by way of payment of any sum to a public sector company/local authority/approved association or institution for carrying out any eligible scheme or project (Subject to certain conditions).	Actual payment made to prescribed entities. However, a company can also claim deduction for expenditure incurred by it directly on eligible projects. Note:- No deduction in any A.Y. commencing on or after the 1st day of April, 2018	All assessee. However, deduction for direct expenditure is allowed only to a company
35AD	Deduction in respect of `expenditure on specified businesses, as under: a) Setting up and operating a cold chain facility b) Setting up and operating a warehousing facility for storage of agricultural produce c) Building and operating, anywhere in India, a hospital with at least 100 beds for patients d) Developing and building a housing project under a notified scheme for affordable housing e) Production of fertilizer in India (Subject to certain conditions)	150% of capital expenditure incurred for the purpose of business is allowed as deduction provided the specified business has commenced its operation on or after 01-04-2012. 100% of capital expenditure will be allowed to be deducted from the assessment year 2018-19 onwards Note: If such specified businesses commence operations on or before 31-03-2012 but after prescribed dates, deduction shall be limited to 100% of capital expenditure. Note: No deduction of any capital expenditure above Rs 10,000 shall be allowed if it is incurred in cash.	All assessee
35AD	Deduction in respect of expenditure on specified businesses, as under: a) 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; b) Building and operating, anywhere in India, a hotel of two-star or above category; c) Developing and building a housing project under a scheme for slum redevelopment or rehabilitation d) Setting up and operating an inland container depot or a container freight station e) Bee-keeping and production of honey and beeswax f) Setting up and operating a warehousing facility for storage of sugar g) Laying and operating a slurry pipeline for the transportation of iron ore h) Setting up and operating a semi-conductor wafer fabrication manufacturing unit i) Developing or maintaining and operating, or developing, maintaining and operating a new infrastructure facility (Subject to certain conditions)	100% of capital expenditure incurred for the purpose of business is allowed as deduction provided specified businesses commence operations on or after the prescribed dates. Note: No deduction of any capital expenditure above Rs 10,000 shall be allowed if the payment for such expenditure is made otherwise than by an account payee cheque/draft or ECS or through prescribed electronic mode of payment.	All assessee Note: Such deduction is available to Indian company in case of following business, namely;- i) Business of laying and operating a cross-country natural gas or crude or petroleum oil pipeline network ii) Developing or maintaining and operating or developing, maintaining and operating a new infrastructure facility.
35CCA	Payment to following Funds are allowed as deduction: a) National Fund for Rural Development; and b) Notified National Urban Poverty Eradication Fund	Actual payment to specified funds	All assessee
35CCC	Expenditure (not being cost of land/building) incurred on notified agricultural extension project for the purpose of training, educating and guiding the farmers shall be allowed as deduction, provided the expenditure to be incurred is expected to be more than Rs. 25 lakhs (Subject to certain conditions).	100% of the expenditure (Subject to certain conditions)	All assessee
35CCD	Expenditure incurred by a company (not being expenditure in the nature of cost of any land or building) on any notified skill development project is allowed as deduction (Subject to certain conditions).	100% of the expenditure (Subject to certain conditions) Note: (i) No deduction shall be allowed to a company engaged in manufacturing alcoholic spirits or tobacco products.	Company engaged in manufacturing of any article or providing specified services
35D	An Indian company can amortize certain preliminary expenses (up to maximum of 5% of cost of the project or capital employed, whichever is more) (Subject to certain conditions and nature of expenditures)	Qualifying preliminary expenditure is allowable in each of 5 successive years beginning with the previous year in which the extension of undertaking is completed or the new unit commences production or operation.	Indian Company
35D	Non-corporate taxpayers can amortize certain preliminary expenses (up to maximum of 5% of cost of the project) (Subject to certain conditions and nature of expenditures)	Qualifying preliminary expenditure is allowable in each of 5 successive years beginning with the previous year in which the extension of undertaking is completed or the new unit commences production or operation.	Resident Non-corporate assessees
35DD	Expenditure incurred after 31-3-1999 in respect of amalgamation or demerger can be amortized by an Indian Company	Expenditure is allowed as deduction in five equal installments in 5 previous years starting with the year in which amalgamation or demerger took place.	Indian Company
35DDA	Expenditure incurred under Voluntary Retirement Scheme is allowed as deduction.	Each payment under VRS is allowed as deduction in five equal installments in 5 previous years.	All assessee
35E	Qualifying expenditure incurred by resident persons on prospecting for the minerals or on the development of mine or other natural deposit of such minerals shall be allowed as deduction (Subject to certain conditions).	Eligible expenditure is allowed as deduction in ten equal installments in 10 previous years.	Resident persons
36(1)(i)	Insurance premium covering risk of damage or destruction of stocks/stores	Actual expenditure incurred	All assessee
36(1)(ia)	Insurance premium covering life of cattle owned by a member of co-operative society engaged in supplying milk to federal milk co-operative society	Actual expenditure incurred	All assessee
36(1)(ib)	Medical insurance premium paid by any mode other than cash, to insure employee’s health under (a) scheme framed by GIC of India and approved by Central Government; or (b) scheme framed by any other insurer and approved by IRDA	Actual expenditure incurred	All assessee
36(1)(ii)	Bonus or commission paid to employees which would not have been payable as profit or dividend if it had not been paid as bonus or commission	Actual expenditure incurred	All assessee
36(1)(iii)	Interest on borrowed capital (Subject to certain conditions)	Interest paid in respect of capital borrowed for the purposes of the business or profession shall be allowed as deduction. However, if capital is borrowed for acquiring an asset, then interest for any period beginning from the date on which capital was borrowed till the date on which asset was first put to use, shall not be allowed as deduction.	All assessee
36(1)(iiia)	Discount on Zero Coupon Bonds (Subject to certain conditions)	Pro-rata amount of discount on zero coupon bonds shall be allowed as deduction over the life of such bond	Specified Assessee
36(1)(iv)	Employer’s contributions to recognized provident fund and approved superannuation fund [subject to certain limits and conditions]	Actual expenditure incurred	All assessee
36(1)(iva)	Any sum paid by assessee-employer by way of contribution towards a pension scheme, as referred to in section 80CCD, on account of an employee.	Actual expenditure not exceeding 14% of the salary* of the employee *Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission	All assessee- Employer
36(1)(v)	Employer’s contribution towards approved gratuity fund created exclusively for the benefit of employees under an irrevocable trust shall be allowed as deduction (Subject to certain conditions).	Actual expenditure not exceeding 8.33% of salary of each employee	All assessee- Employer
36(1)(va)	Deposit of employee’s contributions in their respective provident fund or superannuation fund or any fund set up under Employees’ State Insurance Act, 1948	Actual amount received if credited to the employee’s account in relevant fund on or before due date specified under relevant Act	All assessee – Employer
36(1)(vi)	Allowance in respect of animals which have died or become permanently useless (Subject to certain conditions)	Actual cost of acquisition of such animals less realization on sale of carcasses of animals	All assessee
36(1)(vii)	Bad debts which have been written off as irrecoverable (Subject to certain conditions)	Actual bad debts which have been written off from books of accounts Note:- However, if amount of debt or part thereof has been taken into account in computing the income of assessee on basis of income computation and disclosure standards notified under Section 145(2) without recording the same in accounts then, such debt shall be allowed in the previous year in which such debt or part thereof becomes irrecoverable. It shall be deemed that such debt or part thereof has been written off as irrecoverable in the accounts.	All assessee
36(1)(viia)	Deductions for provision for bad and doubtful debts created by certain banks, financial institutions and non-banking financial company (Subject to certain conditions). Note Deduction in respect of bad debts actually written off under section 36(1)(vii) shall be limited to that amount of bad debts which exceed the provision for bad and doubtful debts created under section 36(1)(viia).	Deductions for provision for bad and doubtful debts shall be limited to following: (a) In case of scheduled and non-scheduled banks: Sum not exceeding aggregate of 8.5% of total income (before any deductions under this provision and Chapter VI-A) and 10% of aggregate average advances made by rural branches of such bank; (b) In case of Financial Institutions: Up to 5% of total income before any deductions under this provision and Chapter VI-A; and (c) In case of foreign banks: Up to 5% of total income before any deductions under this provision and Chapter VI-A (d) In case of non-banking financial company: Up to 5% of total income before any deduction under this provision and chapter VI-A	Banks, Public Financial Institutions, Non-banking financial company, State Financial Corporation, State Industrial Investment Corporations
36(1)(viii)	Deduction under this provisions is allowed to following entities in respect of amount transferred to special reserve account: a) Financial Corporation which is engaged in providing long-term finance for industrial or agricultural development or development of infrastructure facility in India; or b) Public company registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of residential houses in India. [Subject to certain conditions]	Deduction shall be allowed to the extent of lower of following: a) Amounts transferred to special reserve account b) 20% of profits derived from eligible business c) 200% of paid-up capital and general reserve (on last day of previous year) minus balance in special reserve account (on first day of previous year)	Specified financial corporations or public company
36(1)(ix)	Expenditure incurred by a company on promotion of family planning amongst employees is allowed as deduction	1) Entire revenue expenditure is allowed as deduction 2) Capital expenditure shall be allowed as deduction in five equal installment in five years	Company
36(1)(xii)	Any expenditure incurred by a notified corporation or body corporate constituted or established by a Central, State or Provincial Act, for the objects and purposes authorized by the respective Act is allowed as deduction	Actual expenditure incurred (not being in the nature of capital expenditure)	Notified corporations
36(1)(xiv)	Contribution to Credit Guarantee Trust Fund for micro and small industries is allowed as deduction	Actual expenditure incurred	Public Financial Institutions
36(1)(xv)	Securities Transaction Tax paid	Actual expenditure incurred if corresponding income is included as income under the head profits and gains of business or profession	All assessee
36(1)(xvi)	Amount equal to commodities transaction tax paid by an assessee in respect of taxable commodities transactions entered into in the course of his business during the previous year is allowed as deduction	Actual expenditure incurred if corresponding income is included as income under the head profits and gains of business or profession	All assessee
36(1)(xvii)	Amount of expenditure incurred by a co-operative society engaged in the business of manufacture of sugar for purchase of sugarcane.	Deduction would be allowed the extent of lower of following: a) Actual purchase price of sugarcane, or b) Price of sugarcane fixed or approved by the Government	Co-operative society engaged in the business of manufacture of sugar
36(1)(xviii)	Marked to market loss or other unexpected loss as computed in accordance with notified ICDS	Actual losses incurred	All assessee
37(1)	Any other expenditure [not being personal or capital expenditure and expenditure mentioned in sections 30 to 36] laid out wholly and exclusively for purposes of business or profession Note: (1) Expenditure incurred to provide perquisite, in whatever form to any person, irrespective of whether the recipient is engaged in any business or profession, where the acceptance of such benefit or perquisite is a violation of any rule, law or regulation, which governs the recipient, shall be deemed to have not been incurred for business or profession and accordingly, the deduction for the same shall not be available. (2) The expenditure, whether constituting an offence as per the prevailing laws in India or outside India, or prohibited by any law in force – whether in India or outside India, or to settle proceedings initiated in relation to contravention under such law as may be notified by the Central Govt,. shall not be eligible for deduction under section 37(1).	Actual expenditure incurred	All assessee
37(2B)	Expenditure on advertisement in any souvenir, brochure etc. published by a political party shall not be allowed as deduction	Not Allowed	All assessee

Amount expressly disallowed under the Act

Section	Description
40(a)(i)	Any sum (other than salary) payable outside India or to a non-resident, which is chargeable to tax in India in the hands of the recipient, shall not be allowed to be deducted if it was paid without deduction of tax at source or if tax was deducted but not deposited with the Central Government till the due date of filing of return. Where deductor has failed to deduct the tax and he is not deemed to be an assessee in default under first proviso to section 201(1), then it shall be deemed that the deductor has deducted and paid the tax on the date on which the payee has furnished his return of Income. However, if tax is deducted or deposited in subsequent year, as the case may be, the expenditure shall be allowed as deduction in that year.
40(a)(ia)	Any sum payable to a resident, which is subject to deduction of tax at source, would attract 30% disallowance if it was paid without deduction of tax at source or if tax was deducted but not deposited with the Central Government till the due date of filing of return. However, where in respect of any such sum, tax is deducted or deposited in subsequent year, as the case may be, the expenditure so disallowed shall be allowed as deduction in that year. Where deductor has failed to deduct the tax and he is not deemed to be an assessee in default under first proviso to section 201(1), then it shall be deemed that the deductor has deducted and paid the tax on the date on which the payee has furnished his return of Income.
40(a)(ib)	Any sum paid or payable to a non-resident which is subject to a deduction of Equalisation levy would attract disallowance if such sum was paid without deduction of such levy or if it was deducted but not deposited with the Central Government till the due date of filing of return. However, where in respect of any such sum, Equalisation levy is deducted or deposited in subsequent year, as the case may be, the expenditure so disallowed shall be allowed as deduction in that year. Note: This provision has been inserted by the Finance Act, 2016, w.e.f. 1-6-2016
40(a)(ii)	Any sum paid on account of any rate or tax levied on the profits and gains of business or profession is not deductible Note: Tax shall include ‘surcharge or cess’.
40(a)(iia)	Wealth-tax or any other tax of similar nature shall not be deductible
40(a)(iib)	Amount paid by way of royalty, license fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called, which is levied exclusively on (or any amount appropriated) a State Government undertaking by the State Government shall not be deductible.
40(a)(iii)	Salaries payable outside India, or in India to a non-resident, on which tax has not been paid/deducted at source is not deductible.
40(a)(iv)	Payments to provident fund or other funds for employees’ benefit shall not be deductible if no effective arrangements have been made to ensure deduction of at source from payments made from such funds to employees which shall be chargeable to tax as ‘salaries’.
40(a)(v)	Tax paid by the employer on non-monetary perquisites provided to employees is not deductible if the tax so paid is not taxable in the hands of employees by virtue of Section 10(10CC).
40(b)	Following sum paid by a partnership firm to its partners shall not be allowed to be deducted: 1) Salary, bonus, commission or remuneration paid to non-working partners; 2) Remuneration or interest paid to the partners is not in accordance with the terms of the partnership deed; 3) Remuneration or interest to partners is in accordance with the terms of the partnership deed but relates to any period prior to the date of the deed; 4) Interest to partners is in accordance with the terms of the partnership deed but exceeds 12% per annum; 5) Remuneration to partners is in accordance with the terms of the partnership deed but exceeds the following permissible limit: a) On first Rs. 6 Lakhs of book profit or in case of loss – Rs. 3,00,000 or 90% of book profit, whichever is more; b) On the balance of the book profit – 60% of book profit
40(ba)	Interest, salary, bonus, commission or remuneration paid by Association of Persons or Body of Individuals to its members shall not be allowed as deduction (Subject to certain conditions).
40A(2)	Any payment to related parties (relatives, directors, partner, member of HUF/AOP, person who has substantial interest in business of the taxpayer, etc.) in respect of any expenditure shall be disallowed to the extent such expenditure is considered excessive or unreasonable by the Assessing Officer having regard to its fair market value.
40A(3)/(3A)	An expenditure, which is otherwise deductible under any provision of the Act, shall be disallowed if payment thereof has been made otherwise than by account payee cheque/bank draft or use of electronic clearing system through a bank account or through other prescribed electronic mode of payment and it exceeds Rs. 10,000 (Rs. 35,000 in case of payment made for plying, hiring or leasing goods carriages) in a day (Subject to certain conditions and exceptions).
40A(7)	Provision for payment of gratuity to employees, other than a provision for contribution to approved gratuity fund, shall not be allowed as deduction (Subject to specified conditions). Gratuity actually paid (or payable) during the year and contribution to approved gratuity fund is allowed as deduction.
40A(9)	Any sum paid as an employer for setting up or as contribution to any fund, trust, company, AOP, BOI, Society or other institution (other than recognized provident fund, approved superannuation fund, approved gratuity fund or pension scheme referred to in section 80CCD) shall not be allowed as deduction if such contribution or payment is not required by any law.
40A(13)	No deduction shall be allowed in respect of marked to market loss or other unexpected loss except as allowable under section 36(1)(xviii).

Expenses deductible on actual payment basis

The following expenses shall be allowed as deduction if such expenditure are actually paid on or before the due date of filing of return of income:-

Section	Particulars
43B(a)	Any Tax, Duty, Cess or Fees under any Law
43B(b)	Any contribution to Provident Fund/Superannuation Fund/Gratuity Fund/Welfare Fund
43B(c)	Bonus or Commission paid to employees which would not have been payable as profit or dividend
43B(d)	Interest on Loan or Borrowings from Public Financial Institutions/State Financial Institutions etc.
43B(da)	Interest on loan from such class of NBFC as may be notified by the Central Government
43B(e)	Interest on loan or advance from bank
43B(f)	Payment of Leave Encashment
43B(g)	Sum payable to the Indian Railways for the use of railway assets
43B(h)	Sum payable to a micro or small enterprise beyond the time limit specified in Section 15 of the MSMED Act, 2006. (Note 2)

Note: 1. No deduction shall be allowed under section 43B if any interest has been converted into a debenture or any other instrument by which liability to pay interest is deferred to a future date.

2. Payment made to micro or small enterprise beyond the time limit shall be allowed as deduction only on actual payment.

Other provisions

Section	Particulars	Provision
42	Special allowance in case of business of prospecting etc. for mineral oil (including petroleum and natural gas) in relation to which the Central Government has entered into an agreement with the taxpayer for the association or participation (Subject to certain conditions).	Following deductions shall be allowed as deductions: a) Any infructuous exploration expenditure b) Expenditure on drilling or exploration activities or services, etc. c) Allowance in relation to depletion of mineral oil, etc.
43A	Special provisions consequential to changes in rate of exchange of Currency (Subject to certain conditions).	Any increase or decrease in the liability incurred in foreign currency (to acquire a capital asset) pursuant to fluctuation in the foreign exchange rates shall be adjusted with the actual cost of such asset only on actual payment of the liability.
43C	Acquisition of any asset (except stock-in-trade) by the taxpayer in the scheme of amalgamation or by way of gift, will etc.	Cost of acquisition of any asset (except stock-in-trade) acquired by the taxpayer in the scheme of amalgamation or by way of gift, will etc. from the transferor (who sold it as stock-in-trade) shall be the cost of acquisition in the hands of transferor as increased by cost of any improvement made

Provisions applicable to Non-Resident/Foreign Company

Section	Particulars	Limit of exemption or Computation of income/deduction	Available to
44B read with 172	Income from shipping business shall be computed on presumptive basis (Subject to certain conditions).	7.5% of specified sum shall be deemed to be the presumptive income	Non-resident engaged in shipping business
44BB	Income of a non-resident engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils shall be computed on presumptive basis (Subject to certain conditions).	10% of specified sum shall be deemed to be the presumptive income	Non-resident engaged in activities connected with exploration of mineral oils
44BBA	Income of a non-resident engaged in the business of operation of aircraft shall be computed on presumptive basis (Subject to certain conditions).	5% of specified sum shall be deemed to be the presumptive income	Non-resident engaged in the business of operating of aircraft
44BBB	Income of a foreign company engaged in the business of civil construction or the business of erection of plant or machinery or testing or commissioning thereof, in connection with turnkey power projects shall be computed on presumptive basis (Subject to certain conditions).	10% of specified sum shall be deemed to be the presumptive income	Foreign Company
44BBC	Presumptive taxation scheme for the business of operation of cruise ships by non-residents	20% of the specified amounts shall be deemed to be the presumptive income.`	Non-resident
44BBD	Presumptive tax scheme fornon-residents providing services or technology to a resident company in India to set up an electronics manufacturing facility or manufacture/produce electronic goods.	25% of the total amount paid or payable to the non-resident for such services or technology would be deemed presumptive income	Non-resident
44C	Deduction for Head office Expenditure (Subject to certain conditions and limits)	Deduction for head-office expenditure shall be limited to lower of following: a) 5% of adjusted total income* b) Head office exp. as attributable to business or profession of taxpayer in India * In case adjusted total income of the assessee is a loss, adjusted total income shall be substituted by average adjusted total income ** Adjusted total income or average adjusted total income shall be computed after prescribed adjustments i.e. unabsorbed depreciations, carry forward losses, etc.	Non-resident
44DA	Deduction of expenditure from royalty and FTS received under an agreement made after 31-03-2003 which is effectively connected to the PE of non-resident in India (Subject to certain conditions)	Expenditure incurred wholly and exclusively for the business of PE or fixed place of profession in India shall be allowed as deduction.	Non-resident

Accounts and Audit

Section	Particulars	Threshold
44AA	Compulsory maintenance of prescribed books of account – Specified Profession (Subject to certain conditions and circumstances)	Persons carrying on specified profession and their gross receipts exceed Rs. 1,50,000 in all the three years immediately preceding the previous year
44AA	Compulsory maintenance of books of account – Other business or profession (Subject to certain conditions and circumstances)	1) If total sales, turnover or gross receipts exceeds Rs. 25,00,000 in any one of the three years immediately preceding the previous year; or 2) If income from business or profession exceeds Rs. 2,50,000 in any one of the three years immediately preceding the previous year
44AB	Compulsory Audit of books of accounts (Subject to certain conditions and circumstances)	1) If total sales, turnover or gross receipts exceeds Rs. 1 Crore in any previous year, in case of business; Threshold limit of Rs. 1 crore shall be increased to Rs. 10 crore in case where the cash receipt and payment made during the year does not exceed 5% of total receipt or payment the business; or 2) If gross receipts exceeds Rs. 50 Lakhs in any previous year, in case of profession. Note: The provision of this section is not applicable to the person, who declares profits and gains in accordance with presumptive taxation Scheme under Section 44AD/44ADA.

Presumptive Taxation

Section	Nature of business	Presumptive income
44AD	Income from eligible business can be computed on presumptive basis if turnover of such business does not exceed two crore rupees. Note: If the amount of cash received during the previous year does not exceed 5% of the total turnover or gross receipt of such year then the threshold limit for total turnover or gross receipt shall be taken as Rs. 3,00,00,000 instead of Rs. 2,00,00,000. Note: If an assessee opts out of the presumptive taxation scheme, after a specified period, he cannot choose to revert back to the presumptive taxation scheme for a period of five assessment years thereafter. [section 44AD(4)] (Subject to conditions)	Presumptive income of eligible business shall be 8% of gross receipt or total turnover. Note: Presumptive income shall be calculated at rate of 6% in respect of total turnover or gross receipts which is received by an account payee cheque or draft or use of electronic clearing system or through any other electronic mode as may be prescribed.
44ADA	Income from eligible profession u/s 44AA(1) can be computed on presumptive basis if the total gross receipts from such profession do not exceed fifty lakh rupees in a previous year. Note:If the amount of cash received during the previous year does not exceed 5% of the total gross receipt of such year then the threshold limit for total gross receipt shall be taken as Rs. 75,00,000 instead of Rs. 50,00,000. (Subject to conditions)	Presumptive income of such profession shall be 50% of total gross receipt.
44AE	Presumptive income from business of plying, hiring or leasing of goods carriage if assessee does not own more than 10 goods carriage.	For Heavy Goods Vehicle: Rs. 1,000 per ton of gross vehicle weight for every month or part of a month during which the heavy goods vehicle is owned by assessee. For Other Goods Vehicle: Rs. 7,500 for every month or part of a month during which the goods carriage is owned by assessee. Note: ‘Heavy goods vehicle’ means goods carriage vehicle the gross vehicle weight of which exceeds 12,000 kilograms.

Deductions available under Chapter VI-A

Section	Nature of deduction	Who can claim
80C	■  Life insurance premium for policy : – in case of individual, on life of assessee, assessee’s spouse and any child of assessee – in case of HUF, on life of any member of the HUF ■  Sum paid under a contract for a deferred annuity : – in case of individual, on life of the individual, individual’s spouse and any child of the individual (however, contract should not contain an option to receive cash payment in lieu of annuity) – in case of HUF, on life of any member of the HUF ■  Sum deducted from salary payable to Government servant for securing deferred annuity or making provision for his wife/children [qualifying amount limited to 20% of salary] ■  Contributions by an individual made under Employees’ Provident Fund Scheme ■  Contribution to Public Provident Fund Account in the name of: – in case of individual, such individual or his spouse or any child of such individual – in case of HUF, any member of HUF ■  Contribution by an employee to a recognised provident fund ■  Contribution by an employee to an approved superannuation fund ■  Subscription to any notified security or notified deposit scheme of the Central Government. For this purpose, SukanyaSamriddhi Account Scheme has been notified vide Notification No. 9/2015, dated 21.01.2015. Any sum deposited during the year in SukanyaSamriddhi Account by an individual would be eligible for deduction. ■  Amount can be deposited by an individual or in the name of girl child of an individual or in the name of the girl child for whom such an individual is the legal guardian. ■  Subscription to notified savings certificates [National Savings Certificates (VIII Issue)] ■  Contribution for participation in unit-linked Insurance Plan of UTI : – in case of an individual, in the name of the individual, his spouse or any child of such individual – in case of a HUF, in the name of any member thereof ■  Contribution to notified unit-linked insurance plan of LIC Mutual Fund [Dhanaraksha 1989] – in the case of an individual, in the name of the individual, his spouse or any child of such individual – in the case of a HUF, in the name of any member thereof ■  Subscription to notified deposit scheme or notified pension fund set up by National Housing Bank [Home Loan Account Scheme/National Housing Banks (Tax Saving) Term Deposit Scheme, 2008] ■  Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full time education of any 2 of his/her children ■  Certain payments for purchase/construction of residential house property ■  Subscription to notified schemes of (a) public sector companies engaged in providing long-term finance for purchase/construction of houses in India for residential purposes/(b) authority constituted under any law for satisfying need for housing accommodation or for planning, development or improvement of cities, towns and villages, or for both ■  Sum paid towards notified annuity plan of LIC (New Jeevan Dhara/New Jeevan Dhara-I/New Jeevan Akshay/New Jeevan Akshay-I/New Jeevan Akshay-II/JeewanAkshay-III plan of LIC) or other insurer ■  Subscription to any units of any notified [u/s 10(23D)] Mutual Fund or the UTI (Equity Linked Saving Scheme, 2005) ■  Contribution by an individual to any pension fund set up by any mutual fund which is referred to in section 10(23D) or by the UTI (UTI Retirement Benefit Pension Fund) ■  Subscription to equity shares or debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions ■  Subscription to any units of any approved mutual fund referred to in section 10(23D), provided amount of subscription to such units is subscribed only in ‘eligible issue of capital’ referred to above. ■  Term deposits for a fixed period of not less than 5 years with a scheduled bank, and which is in accordance with a scheme11 framed and notified. ■  Subscription to notified bonds issued by the NABARD. ■  Deposit in an account under the Senior Citizen Savings Scheme Rules, 2004 (subject to certain conditions) ■  5-year term deposit in an account under the Post Office Time Deposit Rules, 1981 (subject to certain conditions) ■  Contribution to specified account of the pension scheme referred to in 80CCD, in case of central Government employee.	Individual/HUF

Notes:

1. Deduction is limited to whole of the amount paid or deposited subject to a maximum of Rs. 1,50,000. This maximum limit of Rs. 1,50,000 is the aggregate of the deduction that may be claimed under section 80C, 80CCCand 80CCD.

2. The sums paid or deposited need not be out of income chargeable to tax of the previous year. Amount may be paid or deposited any time during the previous year, but the deduction shall be available on so much of the aggregate of sums as do not exceed the total income chargeable to tax during the previous year.

3. Life Insurance premium is part of gross qualifying amount for the purpose of deduction under section 80C. Payment of premium which is in excess of 10 per cent (if policy is issued on or after 1-4-2013, 15% in case of insurance on life of person with disability referred to in section 80Uor suffering from disease or ailment specified in section 80DDB/ rule 11DD) of actual capital sum assured shall not be included in gross qualifying amount. The value of any premiums agreed to be returned or of any benefit by way of bonus or otherwise, over and above the sum actually assured, which is to be or may be received under the policy by any person, shall not be taken into account for the purpose of calculating the actual capital sum assured.

The limit of 10 per cent will be applicable only in the case of policies issued on or after 1-4-2012. In respect of policies issued prior to 1-4-2012, the old limit of 20 per cent of actual sum assured will be applicable.

With effect from 1-4-2013, ‘actual capital sum assured’ in relation to a life insurance policy shall mean the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account—

(i) the value of any premium agreed to be returned; or

(ii) any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person.

4. Where, in any previous year, an assessee—

(i) terminates his contract of insurance, by notice to that effect or where the contract ceases to be in force by reason of failure to pay any premium, by not reviving contract of insurance,—

(a) in case of any single premium policy, within two years after the date of commencement of insurance; or

(b) in any other case, before premiums have been paid for two years; or

(ii) terminates his participation in any unit-linked insurance plan (ULIP), by notice to that effect or where he ceases to participate by reason of failure to pay any contribution, by not reviving his participation, before contributions in respect of such participation have been paid for five years; or

(iii) transfers the house property before the expiry of five years from the end of the financial year in which possession of such property is obtained by him, or receives back, whether by way of refund or otherwise, any sum specified in that clause, then,—

(a) no deduction shall be allowed to the assessee with reference to any of such sums, paid in such previous year; and

(b) the aggregate amount of the deductions of income so allowed in respect of the previous year or years preceding such previous year, shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.

If any equity shares or debentures, with reference to the cost of which a deduction is allowed, are sold or otherwise transferred by the assessee to any person at any time within a period of three years from the date of their acquisition, the aggregate amount of the deductions of income so allowed in respect of such equity shares or debentures in the previous year or years preceding the previous year in which such sale or transfer has taken place shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.

A person shall be treated as having acquired any shares or debentures on the date on which his name is entered in relation to those shares or debentures in the register of members or of debenture-holders, as the case may be, of the public company.

5. If any amount, including interest accrued thereon, is withdrawn by the assessee from his deposit account made under (a) Senior Citizen Saving Scheme or (b) Post Office Time Deposit Rules, before the expiry of the period of five years from the date of its deposit, the amount so withdrawn shall be deemed to be the income of the assessee of the previous year in which the amount is withdrawn and shall be liable to tax in the assessment year relevant to such previous year.

The amount liable to tax shall not include the following amounts, namely:—

(i) any amount of interest, relating to deposits referred to above, which has been included in the total income of the assessee of the previous year or years preceding such previous year; and

(ii) any amount received by the nominee or legal heir of the assessee, on the death of such assessee, other than interest, if any, accrued thereon, which was not included in the total income of the assessee for the previous year or years preceding such previous year.

Section	Nature of deduction	Who can claim
(1)	(2)	(3)
80CCC	Contributions to certain pension funds of LIC or any other insurer (up to Rs. 1,50,000) (subject to certain conditions) (See Note 1 and 2)	Individual
80CCD(See Note 2)	Contribution to pension scheme notified by Central Government up to 10% of salary (subject to certain conditions and limits)(See Note 3) Contribution made by employer shall also be allowed as deduction under 80CCD(2) while computing total income of the employee. However, amount of deduction could not exceed 14% of salary where contribution is made by central/state government and 10%* of salary, where contribution is made by any other employee. *14% in case income of assessee is chargeable to tax under section 115BAC Note: Amount deposited in the minor’s account is also allowed as deduction. The deduction is allowed to the parent subject to a maximum limit of Rs 50,000.	Individual
80CCF	Amount up to Rs. 20,000, paid or deposited, during the previous years relevant to assessment year 2011-12 or 2012-13, as subscription to notified long-term infrastructure bonds	Individual/HUF
80D(See Note 4)	Amount paid (in any mode other than cash) by an individual or HUF to LIC or other insurer to effect or keep in force an insurance on the health of specified person. An individual can also make payment to the Central Government health scheme and/or on account of preventive health check-up (subject to limit) ■  specified person means: – In case of Individual – self, spouse, dependent children or parents – In case of HUF – Any member thereof ■  Deduction for preventive health check-up shall not exceed in aggregate Rs. 5,000. ■  Payment on account of preventive health check-up may be made in cash.	Individual/HUF
80DD	Deduction of Rs. 75,000 (Rs. 1,25,000 in case of severe disability) to a resident individual/HUF where (a) any expenditure has been incurred for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability [as defined under Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995] (w.e.f. assessment year 2005-06 including autism, cerebral palsy and multiple disability as referred to in National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities Act, 1999), or (b) any amount is paid or deposited under an approved scheme framed in this behalf by the LIC or any other insurer or the Administrator or the specified company for the maintenance of a dependent, being a person with disability (subject to certain conditions)	Resident Individual/HUF
80DDB	Expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions(See Note 5)	Resident Individual/HUF
80E	Amount paid out of income chargeable to tax by way of payment of interest on loan taken from financial institution/approved charitable institution for pursuing higher education (subject to certain conditions) (maximum period : 8 years) (See Note 6)	Individual
80EE	Interest payable on loan taken by an individual from any financial institution for the purpose of acquisition of a residential house property subject to certain condition. (Maximum deduction 50,000)	Individual
80EEA	Interest payable on loan taken by an individual, who is not eligible to claim deduction under 80EE, from any financial institution for the purpose of acquisition of a residential house property subject to certain condition. (Maximum deduction 1,50,000)	Individual
80EEB	Interest payable on loan taken by an individual from any financial institution for the purpose of purchase of an electric vehicle subject to certain condition. (Maximum deduction 1,50,000)	Individual
80G	Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc. [amount of deduction is 50 per cent of net qualifying amount]. 100 per cent of qualifying donations to National Defence Fund, Prime Minister’s National Relief Fund, Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) Prime Minister’s Armenia Earthquake Relief Fund, Africa (Public Contributions – India) Fund, National Children’s Fund (from 1-4-2014), Government or approved association for promoting family planning, universities and approved educational institutions of national eminence, National Foundation for Communal Harmony, Chief Minister’s Earthquake Relief Fund (Maharashtra), ZilaSakshartaSamitis, National or State Blood Transfusion Council, Fund set up by State Government to provide medical relief to the poor, Army Central Welfare Fund, Indian Naval Benevolent Fund and Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, National Illness Assistance Fund, Chief Minister’s Relief Fund or the Lt. Governor’s Relief Fund in respect of any State or Union Territory, National Sports Fund to be set up by Central Govt., National Cultural Fund, Fund for Technology Development and Application, Indian Olympic Association, etc., fund set up by State Government of Gujarat exclusively for providing relief to victims of earthquake in Gujarat, National Trust for Welfare of Persons with Autism, Cerebral palsy, Mental retardation and Multiple Disabilities, and sums paid between 26-1-2001 and 30-9-2001 to any eligible trust, institution or fund for providing relief to Gujarat earthquake victims, the Swachh Bharat Kosh and the Clean Ganga Fund (from assessment year 2015-16) and National Fund for Control of Drug Abuse (from assessment year 2016-17) [subject to certain conditions and limits](See Note 7)	All assessees
80GG	Rent paid in excess of 10% of total income for furnished/unfurnished residential accommodation (subject to maximum of Rs. 5,000 p.m. or 25% of total income, whichever is less) (subject to certain conditions)	Individuals not receiving any house rent allowance
80GGB	Sum contributed to any political party/electoral trust(See Note 8)	Indian company
80GGC	Sum contributed to any political party/electoral trust (See Note 8)	All assessees, other than local authority and artificial juridical person wholly or partly funded by Government
	For certain incomes
80-IA	Profits and gains from industrial undertakings engaged in infrastructure facility, telecommunication services, industrial park, development of Special Economic Zone, power undertakings, etc. (subject to certain conditions and limits) No deduction under this section shall be available to an enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April, 2017.	All assessees
80-IAB	Profits and gains derived by undertaking/enterprise from business of developing a Special Economic Zone notified on or after 1-4-2005 (subject to certain conditions and limits) No deduction under this section shall be available to an assessee, being a developer, where the development of Special Economic Zone begins on or after the 1st day of April, 2017.	Assessee being Developer of SEZ
80-IAC	Profit and gains derived by an eligible start-up from specified business on or after 1-4-2017 (subject to certain conditions)(See Note 9)	Company and LLP
80-IB	Profits and gains from industrial undertakings, cold storage plant, hotel, scientific research & development, mineral oil concern, housing projects, cold chain facility, multiplex theatres, convention centres, ships, etc. (subject to certain conditions and limits)	All assessees No deduction shall be available to an enterprise which commence the business activity on or after 1-4-2017.
80-IBA	Profits and gains derived by assessee from the business of developing and building affordable housing projects. (subject to certain conditions)	All assessees
80-IC	Profits and gains derived by an undertaking or an enterprise in special category States (Himachal Pradesh, Uttaranchal, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura) (subject to certain limits, time limits and conditions), (a) which has begun or begins to manufacture or produce any article or thing, not being any article or thing specified in the Thirteenth Schedule, or which manufactures or produces any article or thing, not being any article or thing specified in the Thirteenth Schedule and undertakes substantial expansion during the specified period. (b) which has begun or begins to manufacture or produce any article or thing specified in the Fourteenth Schedule or commences any operation specified in that Schedule, or which manufactures or produces any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule and undertakes substantial expansion during the specified period	All assessees
80-ID	Profits and gains from business of hotels and convention centres in specified areas (subject to certain conditions).	All assessees
80-IE	Deduction in respect of certain undertakings in North Eastern States.	All assessees
80JJA	Entire income from business of collecting and processing or treating of bio-degradable waste for generating power, or producing bio-fertilizers, bio-pesticides or other biological agents or for producing bio-gas, making pellets or briquettes for fuel or organic manure (for 5 consecutive assessment years)	All assessees
80JJAA	Deduction of 30% of additional employee cost in respect of employment of new employees. Additional employee cost means total emoluments paid or payable to additional employees employed during the previous year. Deduction shall be allowed for first three Assessment Years including the Assessment Year relevant to previous year in which such employment is provided. (Subject to certain other condition)	Assessee to whom section 44AB applies
80LA	Certain incomes of Scheduled banks/banks incorporated outside India having Offshore Banking Units in a Special Economic Zone/Units of International Financial Services Centre (subject to certain conditions and limits)	Scheduled Banks/banks incorporated outside India/Units of International Financial Services Centre
80M	Inter-corporate dividend shall be allowed to be reduced from total income of company receiving the dividend if same is further distributed to shareholders one month prior to the due date of filing of return.	Domestic Company
80P	Specified incomes [subject to varying limits specified in sub-section (2)]	Co-operative societies
80QQB	Royalty income of author of certain specified category of books (up to Rs. 3,00,000) (subject to certain conditions)	Resident Individual – Author
80RRB	Royalty on patents up to Rs. 3,00,000 in the case of a resident individual who is a patentee and is in receipt of income by way of royalty in respect of a patent registered on or after 1-4-2003 (subject to certain conditions).	Resident individuals
80TTA	Interest on deposits in savings bank accounts (up to Rs. 10,000 per year)	Individuals/HUFs (except Senior Citizen)
80TTB	Interest on deposit in saving account or fixed deposit (uptoRs. 50,000 per year)	Senior citizen
80U	Deduction of Rs. 75,000 to a resident individual who, at any time during the previous year, is certified by the medical authority to be a person with disability [as defined under Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995] [w.e.f. assessment year 2005-06 including autism, cerebral palsy, and multiple disabilities as defined under National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities Act, 1999] [in the case of a person with severe disability, allowable deduction is Rs. 1,25,000] (subject to certain conditions).	Resident individuals

Note:

1. Where deduction is claimed under this section, deduction in relation to same amount cannot be claimed under section 80C.

2. section 80CCE provides that the aggregate amount of deductions under section 80C, section 80CCC and section 80CCD(1) shall not, in any case, exceed Rs. 1,50,000

With effect from assessment year 2015-16, amended sub-section (1) has clarified that a non-government employee can claim deduction under section 80CCD even if his date of joining is prior to January 1, 2004.

3. With effect from the assessment year 2012-13 section 80CCEis amended so as to provide that contribution made by the Central Government or any other employer to a pension scheme under sub-section (2) of section 80CCD shall not be included in the limit of deduction of Rs. 1,50,000 provided under section 80CCE.

With effect from assessment year 2016-17, sub-section (1A) of section 80CCD which laid down maximum deduction limit of Rs. 1,00,000 (under sub-section (1)) has been deleted.

Further, a new sub-section (1B) is inserted to provide for additional deduction to the extent of Rs. 50,000. The additional deduction is not subject to ceiling limit of Rs. 1,50,000 as provided under section 80CCE.

However, it is to be noted that addition deduction of Rs. 50,000 shall not be allowed in respect of contribution which is considered for deduction under section 80CCD(1), i.e., within limit of 10% of salary/gross total income

Any payment from NPS to an employee because of closure or his opting out of the pension scheme is chargeable to tax. However, with effect from the assessment year 2017-18, the whole amount received by the nominee from NPS on death of the assessee shall be exempt from tax.

4. Section 80D is amended by the Finance Act, 2018. From assessment year 2019-20 onwards the deduction under Section 80D will be available as per the limit specified below:

	Individual	HUF
	For self, spouse and dependent children : Rs. 25,000 (Rs. 50,000 if person insured is a senior citizen*);	Premium up to Rs. 25,000 (Rs. 50,000 if member insured is a senior citizen) paid to insure any member of the family.
	For parents of the assessee : (Additional) Rs. 25,000 (Rs. 50,000 if person insured is a senior citizen)	NA
	Medical expenditure if no amount is paid in respect of health insurance-Rs.50,000 (only in case of senior citizen)	Medical expenditure if no amount is paid in respect of health insurance-Rs.50,000 (only in case of senior citizen)
	Aggregate amount of deduction cannot exceed Rs.1,00,000 in any case	Aggregate amount of deduction cannot exceed Rs.50,000 in any case.

*’Senior citizen’ means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.

5. Maximum deduction is Rs. 40,000 (Rs. 1,00,000 where expenditure is incurred for a senior citizen [w.e.f assessment year 2019-20])

With effect from assessment year 2016-17, the taxpayer shall be required to obtain a prescription from a specialist doctor (not necessarily from a doctor working in a Government hospital) for availing this deduction.

6. Scope of ‘higher education’ is enlarged with effect from assessment year 2010-11 to cover any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, Board or university recognised by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so.

With effect from 1-4-2010 the scope of expression ‘relative’ has also been enlarged to cover the student for whom the taxpayer is the legal guardian.

7. With effect from 1-4-2013 no deduction shall be allowed in respect of donation of any sum exceeding two thousand rupees unless such sum is paid by any mode other than cash.

8. With effect from 1-4-2014 deduction will not be allowed if sum is contributed in cash.

9. With effect from Assessment Year 2018-19:

i. ‘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.

ii. “Eligible start-up” means a company or a limited liability partnership engaged in eligible business which fulfils the following conditions, namely:

• • it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2030
  • the total turnover of its business does not exceed 100 crore rupees in the previous years in which deduction is claimed; and
  • it holds a certificate of eligible business from the Inter-Ministerial Board of Certification as notified in the Official Gazette by the Central Government.

Tax rates for last 10 years

Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc.

Tax rates for last 10 years

➢ Income-tax Rates for Individuals and HUFs

➢ Income-tax Rates for Firms (Including LLPS)

➢ Income-tax Rates for AOP/BOI/AJP

➢ Income-tax Rates for Companies

➢ Income-tax Rates for Co-Operative Societies

Various exemptions available from capital gains​

Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc.

Various exemptions available in respect of Capital Gains

Particulars	Section 54	Section 54B	Section 54D	Section 54EC	Section 54EE	Section 54F	Section 54G	Section 54GA	Section 54GB
Eligible Assessee	Individuals and Hindu Undivided Family (HUFs)	Individuals and Hindu Undivided Family (HUFs)	Any assessee	Any assessee	Any assessee	Individuals and Hindu Undivided Family (HUFs)	Any assessee	Any assessee	Individuals and Hindu Undivided Family (HUFs)
Qualifying Asset	Residential House Property	Agricultural land	Land or building forming part of an Industrial undertaking transferred by way of compulsory acquisition	Land or building or both	Any Capital Asset	Any Capital Asset other than residential house property	Plant, machinery, land, or building, or any right in land or building used for the purpose of an industrial undertaking situated in an urban area	Plant, machinery, land, or building, or any right in land or building used for the purpose of an industrial undertaking situated in an urban area	Residential property (i.e. a house or plot of land)
Nature of Capital Gains	Long Term Capital Gains (LTCG)	Long or Short Term Capital Gains (LTCG/STCG)	Long or Short Term Capital Gains (LTCG/STCG)	Long Term Capital Gains (LTCG)	• Long Term Capital Gains (LTCG)	Long Term Capital Gains (LTCG)	Long or Short Term Capital Gains (LTCG/STCG)	Long or Short Term Capital Gains (LTCG/STCG)	Long Term Capital Gains (LTCG)
Investment in new Property	Residential House Property in India	Agricultural land	Land or building for the purposes of shifting or re-establishing the undertaking or setting up another industrial undertaking	•  National Highway Authority of India (NHAI Bonds) •  Rural Electrification Corporation Limited (REC Bonds) •  Any other bond notified by the Central Government	Units of Notified Fund	Residential house property located in India	New plant or machinery, purchase or construct a building, shift the original asset in to a non-urban area	New plant or machinery, purchase or construct a building, shift the original asset in SEZ	equity shares of an ‘eligible company’ or ‘eligible start-up’ However, the eligible company buy new asset within 1 year after the date of subscription of shares.
Maximum amount of exemption allowed	lower of: •  Amount of long-term capital gains or •  Amount invested in new house property and deposited in capital gain account scheme [Note 1]	lower of: •  Amount of capital gains; or •  Amount of investment in new agricultural land[including the amount deposited in Capital Gains Account Scheme]	lower of: •  Amount of capital gains; or •  Amount of investment in new land or building [including the amount deposited in Capital Gains Account Scheme]	lower of: •  The amount of long-term capital gains; or •  The amount invested in specified bonds; or •  Rs. 50,00,000	lower of: •  Amount of long-term capital gains; •  Amount invested in specified assets; or •  Rs. 50,00,000	If net consideration is invested in new house property – the entire capital gain will be exempt from taxation. If partial consideration is invested in new house property – the exemption will be granted in proportion to the amount invested. [Note 1]	lower of: •  Amount of capital gains; or •  Aggregate of amount invested in new assets, expenses on transfer or establishment and amount deposited in capital gain account scheme	lower of: •  Amount of capital gains; or •  Aggregate of amount invested in new assets, expenses on transfer or establishment and amount deposited in deposit scheme	Amount of capital gain
Time Limit for making investment in new Property	•  Purchase: 1 year before or 2 years after the date of transfer •  Construction: within 3 years from the date of transfer	within 2 years after the date of transfer of original asset	within a period of 3 years after the date of compulsory acquisition	within 6 months of the transfer of the land, building, or both	within 6 months of the transfer of the long term capital asset	•  Purchase: 1 year before or 2 years after the date of transfer •  Construction: within 3 years from the date of transfer	within 1 year before or 3 years after the date of transfer	within 1 year before or 3 years after the date of transfer	Before the due date for furnishing of income-tax return.
Time limit to deposit in Capital Gains Account Scheme (CGAS)	On or before the due date of filing the return of income	On or before the due date of filing the return of income	On or before the due date of filing the return of income	–	–	On or before the due date of filing the return of income	On or before the due date of filing the return of income	On or before the due date of filing the return of income	–
Withdrawal of Exemption	•  Amount deposited in CGAS not utilised in the prescribed time; •  Transfer of new house within 3 years	•  Amount deposited in CGAS not utilised in the prescribed time; •  Transfer of new agricultural land within 3 years	•  Amount deposited in CGAS not utilised in the prescribed time; •  Transfer of new land or building within 3 Years	•  Transfer of bonds within 5 years; or •  Conversion of bonds within 5 Years	•  Transfer of new asset within 3 years; or •  Conversion of bonds into money within 3 Years	•  Acquisition of Second House; •  Amount deposited in CGAS not utilised in the prescribed time; •  Transfer of new house within 3 Years	•  Amount deposited in CGAS not utilised in the prescribed time; •  Transfer of new asset within 3 years	•  Amount deposited in CGAS not utilised in the prescribed time; •  Transfer of new asset within 3 years	•  Shares of the eligible company sold by the assessee; •  New Asset sold by the eligible company; •  Amount deposited by eligible company in CGAS not utilised in the prescribed time;

* The Central Government has notified bonds redeemable after five years and issued on or after 1st day of April, 2025 by ‘Housing and Urban Development Corporation Limited (HUDCO)’ as ‘long-term specified asset’ for section 54EC.[Notification no. 31/2025, dated 07-04-2025]

Note 1: Cost of new assetcannot exceed Rs. 10 crore. Further, if no investment is made by assessee in new asset and sum is deposited in capital gain account scheme, the maximum amount shall be taken into consideration is Rs. 10 crore for the purpose of exemption. (Applicable from Assessment Year 2024-25).

List of ICDS and its reconciliations with Accounting Standards​

Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc.