The Central Board of Direct Taxes (CBDT) has notified the Income-tax Rules, 2026 through Notification No. G.S.R. 198(E) dated 20 March 2026 to operationalise the provisions of the Income-tax Act, 2025. The rules will come into force from 1 April 2026 and provide the procedural framework for implementation of the new tax law, including valuation methods, reporting requirements, administrative procedures, and compliance mechanisms.
The rules cover several important areas of tax administration. They prescribe conditions for recognition of stock exchanges for derivative trading, including maintenance of client identification data, transaction audit trails for seven tax years, and reporting of modified transactions. They also provide procedures for notification of zero coupon bonds issued by infrastructure companies and funds, including eligibility conditions, credit rating requirements, and timelines for utilisation of funds. The rules clarify the determination of holding period of capital assets in specific cases such as conversion of securities or restructuring of foreign branches.
Further, the rules introduce mechanisms for determining income of non-residents where exact income cannot be ascertained, prescribe thresholds for significant economic presence of non-resident digital businesses, and establish detailed methods for computing fair market value of assets in cross-border transactions. The rules also provide the formula for attribution of income to assets located in India in indirect transfer cases and prescribe a method for calculating expenditure relating to exempt income.
A substantial portion of the rules deals with valuation of employee perquisites, including residential accommodation, motor cars, loans, gifts, and other benefits.
The rules also notify various compliance forms in Appendix III, including Form No. 1 for reporting modified stock exchange transactions, Form No. 2 for application for notification of zero coupon bonds, Form No. 3 for accountant certification of investment of bond proceeds, and Form No. 4 for reporting income attributable to assets located in India.
Together, the rules and forms create a comprehensive compliance framework supporting the implementation of the new income-tax regime.
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
Notification No. 22/2026 – Income Tax | Dated: 20th March, 2026
G.S.R. 198(E).—In exercise of powers conferred by section 533 of the Income-tax Act, 2025 (30 of 2025), the Central Board of Direct Taxes hereby makes the following rules, namely:–
1. Short title and commencement.–(1) These rules may be called the Income-tax Rules, 2026.
(2) They shall come into force on the 1st April, 2026.
2. Definitions.– (1) In these rules, unless the context otherwise requires,—
a. “Act” means the Income-tax Act, 2025 (30 of 2025);
b. “authorised bank” means any bank as may be appointed by the Reserve Bank of India as its agent under the provisions of sub-section (1) of section 45 of the Reserve Bank of India Act, 1934 (2 of 1934);
c. “Form” means a Form in Appendix III appended to these rules;
d. “section” means a section of the Act.
(2) Words and expressions used herein and not defined but defined in the Act shall have the meanings respectively assigned to them in the Act.
3. Arrangements for declaration and payment of dividends within India.–The arrangements referred to in section 2(42) to be made by a company for the declaration and payment of dividends (including dividends on preference shares) within India shall be as follows:
a. the share-register of the company for all shareholders shall be regularly maintained at its principal place of business within India, in respect of any tax year from a date not later than the 1st April of such year;
b. the general meeting for passing the accounts of the tax year and for declaring any dividends in respect thereof shall be held only at a place within India; and
c. the dividends declared, if any, shall be payable only within India to all shareholders.
4. Conditions that a stock exchange is required to fulfil to be notified as a recognised stock exchange under section 2(92).– For the purposes of section 2(92), a stock exchange shall fulfil the following conditions in respect of trading in derivatives:-
a. the stock exchange shall have the approval of the Securities and Exchange Board of India established under the Securities and Exchange Board of India Act, 1992 (15 of 1992) in respect of trading in derivatives and shall function in accordance with the guidelines or conditions laid down in this behalf by the Securities and Exchange Board of India;
b. the stock exchange shall ensure that the particulars of the client (including unique client identity number and Permanent Account Number) are duly recorded and stored in its databases;
c. the stock exchange shall maintain a complete audit trail of all transactions (in respect of cash and derivative market) for a period of seven tax years on its system;
d. the stock exchange shall ensure that transactions (in respect of cash and derivative market) once registered in the system are not erased;
e. the stock exchange shall ensure that the transactions (in respect of cash and derivative market) once registered in the system, are modified only in cases of genuine error; and
f. the stock exchange shall maintain data regarding all transactions (in respect of cash and derivative market) registered in the system which have been modified and submit a monthly statement in Form No. 1 to the Director General of Income-tax (Systems), within fifteen days from the last day of each month to which such statement relates.
5. Procedure for notification of a recognised stock exchange for the purposes of section 2(92).– (1) An application for notification of a stock exchange as a recognised stock exchange for the purposes of section 2(92) may be made to the Member (Income Tax), Central Board of Direct Taxes, New Delhi.
(2) The application referred to in sub-rule (1) shall be accompanied with the following documents,:-
a. approval granted by the Securities and Exchange Board of India for trading in derivatives;
b. up-to-date rules, bye-laws and trading regulations of the stock exchange;
c. confirmation regarding fulfilling the conditions referred to in clause (b) to (f) of rule 4; and
d. such other information as the stock exchange may like to place before the Central Government.
(3) The Central Government may call for such other information from the applicant as it deems necessary for taking a decision on the application.
(4) The Central Government, after examining the information furnished by the stock exchange under sub-rule (2) or sub-rule (3), shall notify the stock exchange as a recognised stock exchange for the purposes of section 2(92) or issue an order rejecting the application before the expiry of six months from the end of the month in which the application is received.
(5) The notification referred to in sub-rule (4) shall be effective until the approval granted by the Securities and Exchange Board of India is withdrawn or expires, or the said notification is rescinded by the Central Government.
6. Method of determination of period of holding of capital assets in certain cases.– (1) For the purposes of section 2(101)(c)(D), the period for which such capital asset is held by an assessee, shall be determined in accordance with the provisions of this rule.
(2) For the capital asset mentioned in column B of the Table below, the period for which the capital asset is held by
the assessee shall be determined in accordance with column C thereof:
Table
| Sl.No. | Nature of Assets | Period of holding |
| A | B | C |
| 1. | Shares or debentures of a company, which becomes the property of the assessee under the circumstances mentioned in section 70(1)(z). | The period of holding shall include the period for which the bond, debenture, debenture-stock or deposit certificate, as the case may be, was held by the assessee prior to the conversion. |
| 2. | Capital asset declared under the Income Declaration Scheme, 2016 made under the Finance Act, 2016 (28 of 2016). | (i) In the case of an immovable property, the period for which such property is held is to be reckoned from the date on which such property is acquired, if the date of acquisition is evidenced by a deed registered with any authority of a State Government; and
(ii) in any other case, the period for which such asset is held shall be reckoned from the 1st June, 2016. |
| 3. | Capital asset which became the property of the Indian subsidiary company in consequence to conversion of a branch of a foreign company referred to in section 219(1). | The period of holding shall include the following:
(iii) the period for which the asset was held by the said branch of the foreign company; or (iv) the period for which the asset was held by the previous owner, if any, who has acquired the capital asset by a mode of acquisition referred to in section 73(1) [Sl.No.1. C.A] or section 219(1). |
(3) In case of the amount which is chargeable to income-tax as income of a specified entity under section 67(10) under the head ―Capital gains‖,–
(a) the amount or a part of it shall be considered to be from transfer of short-term capital asset, if it is attributed to,–
i. the capital asset which is short-term capital asset at the time of taxation of amount under section 67(10); or
ii. capital asset forming part of block of asset; or
iii. capital asset being self-generated asset and self-generated goodwill as defined in section 67(11); and
(b) the amount or a part of it shall be considered to be from transfer of long-term capital asset or assets, if it is attributed to capital asset which is not covered by sub-clause (i) of clause (a) and is long-term capital asset at the time of taxation of amount section 67(10).
7. Procedure for notification of zero coupon bond.– (1) An application by an entity, being an infrastructure capital company or infrastructure capital fund or infrastructure debt fund or a public sector company under section 2(112), for notification of any zero coupon bond proposed to be issued by it shall be made in Form No.2 at least three months before the date of issue of such bond.
(2) An application made under sub-rule (1) shall not be made for notification of a bond which is to be issued beyond a period of two financial years following the financial year in which such application is made.
(3) An application made under sub-rule (1) shall be disposed of within a period of six months from the end of the month in which such application was received.
(4) Every application, under sub-rule (1), shall be accompanied by the following documents:—
a. where the application is made by any infrastructure capital company or infrastructure debt fund or a public sector company, being a Government company defined under section 2(45) of the Companies Act, 2013 (18 of 2013), a copy of certificate of incorporation under the said Act;
b. where the application is made by any infrastructure capital fund, a copy of the trust deed registered under the provisions of the Registration Act, 1908 (16 of 1908); and
c. where the application is made by a public sector company, being any corporation, established by or under any Central Act or State Act or Provincial Act, a copy of the relevant Act.
(5) The Central Government, while specifying a zero coupon bond, by notification, shall satisfy itself that the following conditions are fulfilled:—
(a) the period of life of the bond is not less than ten years and not more than twenty years;
(b) the entity proposing to issue a zero coupon bond has an investment grade rating from at least two credit rating agencies registered under section 12(1A) of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(c) necessary arrangement has been made by the said entity for listing the zero coupon bond in a recognised stock exchange in India;
(d) the entity shall furnish an undertaking along with the application that the money realised on issue of the zero coupon bond shall be invested by it in the following manner,:—
i. 25% or more of such realisation before the end of the financial year immediately following the financial year in which the bond is issued;
ii. the balance of such realisation within a period of four financial years immediately following the financial year in which the bond is issued; and
(e) where the application is made by an infrastructure debt fund, such fund shall along with the application, submit an undertaking that a sinking fund shall be maintained for the interest which will accrue on all the zero coupon bonds subscribed and such interest shall be invested in Government security as defined under section 2(f) of the Government Securities Act, 2006 (38 of 2006).
(6) The Central Government, after having satisfied itself about fulfilling of the conditions referred to in this rule, shall specify the bond, by notification, giving therein, inter alia, the following particulars:—
a. name of the bond;
b. period of life of the bond;
c. the time schedule of the issue of the bond;
d. the amount to be paid on maturity or redemption of the bond;
e. the discount; and
f. the number of bonds to be issued.
(7) The Central Government may, if the applicant fails to fulfil the conditions referred to in this rule, reject the application for notification after giving a reasonable opportunity of being heard.
(8) Every entity shall submit within two months from the end of each financial year referred to in sub-rule (5)(d), a certificate from an accountant as defined in section 515(3)(b), specifying the amount invested in each year in Form No. 3.
(9) The Central Government shall have the power to withdraw the notification, if the applicant fails to fulfil any of the conditions referred to in this rule.
(10) For the purposes of this rule,—
i. “discount” and “period of life of the bond” shall have the meanings respectively assigned to them in section 32(d)(i) and (ii); and
ii. “infrastructure debt fund” shall mean the infrastructure debt fund as may be notified by the Central Government under Schedule VII[Table Sl. No. 46].
8. Computation of period of stay in India for an Indian citizen, being a member of the crew of a foreign bound ship.— (1) For the purposes of section 6(6), in case of an individual, being a citizen of India and a member of the crew of a foreign bound ship, the period or periods of stay in India in respect of an eligible voyage, shall not include the period computed under sub-rule (2).
(2) The period referred to in sub-rule (1) shall be the period beginning on the date entered into the Continuous Discharge Certificate in respect of joining the ship by the said individual for the eligible voyage and ending on the date entered into the Continuous Discharge Certificate in respect of signing off by that individual from the ship in respect of such voyage.
(3) For the purposes of this rule, —
a. “Continuous Discharge Certificate” shall have the same meaning as assigned to it in the Merchant Shipping (Continuous Discharge Certificate-cum-Seafarer’s Identity Document) Rules, 2001 made under the Merchant Shipping Act, 1958 (44 of 1958);
b. “eligible voyage” shall mean a voyage undertaken by a ship engaged in the carriage of passengers or freight in international traffic, where —
i. for the voyage having originated from any port in India, has as its destination any port outside India; and
ii. for the voyage having originated from any port outside India, has as its destination any port in India.
9. Determination of income in case of non-residents.— In any case in which the Assessing Officer is of opinion that the actual amount of the income accruing or arising to any non-resident person, whether directly or indirectly, through or from —
a. any asset or source of income in India; or
b. any property in India; or
c. any business connection in India,
cannot be definitely ascertained, the amount of such income for the purposes of assessment to income-tax may be calculated —
i. at such percentage of the turnover so accruing or arising as the Assessing Officer may consider to be reasonable; or
ii. on any amount which bears the same proportion to the total profits and gains of the business of such person (such profits and gains being computed in accordance with the provisions of the Act), as the receipts so accruing or arising bear to the total receipts of the business; or
iii. in such other manner as the Assessing Officer may deem suitable.
10. Definition of terms for rules 11 and 12.— For the purposes of rules 11 and 12, —
(a) “accountant” —
(i) means an accountant referred to in section 515(3)(b), who fulfils the following conditions: —
(A) if he is pursuing the profession of accountancy individually or is a valuer then —
I. he has professional experience of not less than ten years; and
II. his annual receipt in the year preceding the year in which valuation is undertaken, from the exercise of profession, exceeds fifty lakh rupees;
(B) if he is a member or partner in any entity engaged in rendering accountancy or valuation services then, the annual receipt of the entity in the year preceding the year in which valuation is undertaken exceeds three crore rupees;
(ii) includes any valuer recognised for undertaking similar valuation by the government of the country, where the foreign company or the entity is registered or incorporated or any of its agencies, who fulfils the following conditions: —
A. the condition referred to in items (A) and (B) of clause (a)(i);
B. if he is a member or partner in any entity engaged in rendering accountancy or valuation services then, the entity or its affiliates have presence in more than two countries;
(b) ―balance sheet”, —
(1) (A) in relation to an Indian company, means the balance-sheet of such company (including the notes annexed thereto and forming part of the accounts) as drawn up on the specified date which has been audited under the laws relating to companies in force; and
(B) in any other case, it means the balance-sheet of the company or the entity (including the notes annexed thereto and forming part of the accounts) as drawn up on the specified date and submitted to the relevant authority outside India under the laws in force of the country in which the foreign company or the entity is registered or incorporated; and
ii. where, —
A. finalisation of accounts is pending as on specified date for the purposes of items (A) and (B) of sub-clause (i), it means an interim balance-sheet drawn up as on the specified date and approved by the board of directors of the company or an equivalent body in case of any other entity; and
B. the specified date is the date referred to in section 9(10)(d)(ii), it means the balance sheet as drawn up on the specified date and certified by an accountant;
(c) “book value of the liabilities” means the value of liabilities as shown in the balance-sheet of the company or the entity, as the case may be, excluding the paid-up capital in respect of equity shares or members’ interest and the general reserves and surplus and security premium related to the paid-up capital;
(d) “connected person” shall have the meaning assigned to it in section 184(5);
(e) “foreign company or entity” means a company or entity registered or incorporated outside India;
(f) “observable price” in respect of a share quoted on a stock exchange shall be the higher of the following: —
i. the average of the weekly high and low of the closing prices of the shares quoted on the said stock exchange during the six months period preceding the specified date; or
ii. the average of the weekly high and low of the closing price of the shares quoted on the said stock exchange during the two weeks preceding the specified date;
(g) “right of management or control” shall include the right to appoint majority of the directors or to control the management or policy decision exercisable by a person or persons acting individually or together, directly or indirectly, including by virtue of shareholding or management rights or shareholders agreements or voting agreements or in any other manner;
(h) “specified date” shall have the meaning assigned to it in section 9(10)(d);
(i) “telegraphic transfer buying rate” shall have the meaning assigned to it in rule 207; and
(j) the expressions ―merchant banker” and ―recognised stock exchange” shall have the meaning respectively assigned to them in rule 56.
11. Fair market value of assets in certain cases.— (1) The fair market value of asset, tangible or intangible, as on the specified date, held directly or indirectly by a foreign company or entity, for the purposes of section 9(10) shall be computed as per this rule with reference to the specified date.
(2) Where the asset is a share of an Indian company listed on a recognised stock exchange on the specified date, the fair market value of the share shall be the observable price of such share on the stock exchange so, however, that —
(a) if the share is held as part of the shareholding which confers, directly or indirectly, any right of management or control in the said company, the fair market value of the share shall be determined using the following formula: —
Fair market value = (A+B)/C
Where, —
A = the market capitalisation of the company on the basis of observable price of its shares quoted on the recognised stock exchange;
B = the book value of liabilities of the company; and
C = the total number of outstanding shares; or
(b) if, on the specified date, the share is listed on more than one recognised stock exchange, the observable price of the share shall be computed with reference to the recognised stock exchange which records the highest volume of trading in the share during the tax year.
(3) Where the asset is a share of an Indian company not listed on a recognised stock exchange on the specified date, the fair market value of the share shall be —
a. the fair market value as determined by a merchant banker or an accountant as per any internationally accepted valuation methodology for valuation of shares on arm’s length basis; and
b. increased by the liability, if any, considered in such determination as per clause (a).
(4) Where the asset is an interest in a partnership firm or an association of persons, its fair market value shall be determined in the following manner: —
a. the value of such firm or association of persons, shall be determined by a merchant banker or an accountant as per any internationally accepted valuation methodology as increased by the liability, if any, considered in such determination;
b. the value so computed in clause (a), as is equal to the amount of its capital, shall be allocated among its partners or members in the same proportion in which the capital has been contributed by them;
c. the residue of the value shall be allocated among the partners or members as per the agreement of partnership firm or association of persons for distribution of assets in the event of dissolution of the firm or association;
d. in the absence of agreement, as specified in clause (c), the residual value shall be allocated in proportion in which the partners or members are entitled to share profits; and
e. the sum total of the amount so allocated as per clauses (a) to (d) to a partner or member shall be treated as the fair market value of the interest of that partner or member in the firm or the association of persons, as the case may be.
(5) The fair market value of the asset other than those referred to in sub-rules (2), (3) and (4) shall be the price it would fetch, if sold in the open market as determined by a merchant banker or an accountant and increased by the liability, if any, considered in such determination.
(6) The fair market value of all the assets of a foreign company or an entity on the specified date, if conditions specified in column B of the following Table are fulfilled, shall be determined as per column C thereof: —
Table
| Sl. No. |
Conditions | Fair Market Value |
| A | B | C |
| 1. | Where the transfer of share of, or interest in, the foreign
company or entity is for the purpose of such transfer. |
Fair market value of all assets = A+B
Where, — A = Market capitalisation of the foreign company or entity computed on the basis of the full value of consideration for transfer of the share or interest; and B = book value of the liabilities of the company or the entity as on the specified date as certified by a merchant banker or an accountant. |
| 2. | Where the share of the
foreign company or entity is listed on a stock exchange on the specified date. |
Fair market value of all the assets = A+B
Where, — A = Market capitalisation of the foreign company or entity computed on the basis of the observable price of the share on the stock exchange where the share of the foreign company or the entity is listed; and B = book value of the liabilities of the company or the entity as on the specified date. |
| 3. | Where the share is listed on
more than one stock |
Fair market value of all the assets = A+B
Where, — A = Market capitalisation of the foreign company or entity computed on the basis of the observable price of the share on the stock exchange which records the highest volume of trading in the share during the period considered for determining the price; and B = book value of the liabilities of the company or the entity. |
| 4. | Where the share in the
foreign company or entity is not listed on a stock |
Fair market value of all the assets = A+B
Where, — A = fair market value of the foreign company or the entity as on the specified date as determined by a merchant banker or an accountant as per the internationally accepted valuation methodology; and B = value of liabilities of the company of the entity if any, considered for the determination of fair market value in A. |
(7) Where fair market value has been determined on the basis of any interim balance sheet referred to in rule 10(b)(ii), then the fair market value shall be appropriately modified after finalisation of the relevant financial statement as per the applicable laws and all the provisions of this rule and rules 12 and 235 shall apply accordingly.
(8) For determining the fair market value of any asset located in India, being a share of an Indian company or interest in a partnership firm or association of persons, all the assets and business operations of the said company or partnership firm or association of persons shall be taken into account whether such assets or business operation are located in India or outside.
(9) The rate of exchange for calculation in foreign currency, of the value of assets located in India and expressed in rupees shall be the telegraphic transfer buying rate of such currency as on the specified date.
Determination of income attributable to assets in India.— (1) The income from transfer outside India of a share of, or interest in, a company or an entity referred to in section 9(10)(a) attributable to assets located in India, shall be determined with reference to the specified date, by the following formula: —
B
A X_______
C
Where, —
A = Income from the transfer of the share of, or interest in, the company or the entity computed as per the provisions of the Act, as if, such share or interest is located in India;
B = fair market value of assets located in India as on the specified date from which the share or interest referred to in A derives its value substantially, computed as per rule 11; and
C = fair market value of all the assets of the company or the entity as on the specified date, computed as per rule 11.
(2) If the transferor of the share of, or interest in, the company or the entity referred to in sub-rule (1) fails to provide the information required for the application of the formula in the said sub-rule, then the income from the transfer of such share or interest shall be determined in such manner as the Assessing Officer may deem suitable.
(3) The transferor of the share of, or interest in, a company or an entity referred to in sub-rule (1), shall obtain and furnish along with the return of income a report in Form No. 4 duly signed and verified by an accountant providing the basis of the apportionment as per the formula and certifying that the income attributable to assets located in India has been correctly computed.
13. Threshold for purposes of significant economic presence.— (1) For the purposes of section 9(9)(d)(i), the aggregate amount of payments from transactions carried out by a non-resident with any person in India, in respect of any goods, service or property including provision for download of data or software in India during the tax year, shall be two crore rupees.
(2) For the purposes of section 9(9)(d)(ii), the number of users with whom systematic and continuous business activities are solicited or who are engaged in interaction shall be ₹ 300000.
14. Method for determining amount of expenditure in relation to income not includible in total income.–(1) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts:—
a. the amount of expenditure directly relating to income which does not form part of total income; and
b. an amount equal to 1% of the annual average of the monthly averages of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income.
(2) The amounts referred to in sub-rule (1) shall not exceed the total expenditure claimed by the assessee.
15. Valuation of perquisites.–(1) For the purpose of computing the income chargeable under the head “Salaries”, the value of perquisites provided by the employer, either directly or indirectly, to the assessee (herein referred to as the employee) or to any member of his household by reason of his employment, shall be determined in accordance with the provisions of this rule.
(2) (a) The value of residential accommodation provided by the employer, for the purpose of section 17(1)(a) and (b), during the tax year, in the circumstances referred in column B of the following Table I, shall be determined in accordance with the column C or column D thereof, as the case may be:
Table I
| Sl. No. | Circumstances | Where accommodation is unfurnished | Where accommodation is furnished | ||
| A. | B. | C. | D. | ||
| (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. | Value of perquisite is determined as per the provisions of sub-rule (2)(e). | ||
| (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 forty lakhs as per 2011 census in respect of the period during which the said accommodation was occupied by the employee during the tax year as reduced by the rent, if any, actually paid by the employee; |
Value of perquisite is determined as per the provisions of sub-rule (2)(e). |
|
| (ii) | 7.5% of salary in cities having population exceeding fifteen lakhs but not exceeding forty lakhs as per 2011 census in respect of the period during which the said accommodation was occupied by the employee during the tax year as reduced by the rent, if any, actually paid by the employee; and |
||||
| (v) | 5% of salary in other areas, in respect of the period during which the said accommodation was occupied by the employee during the tax year as reduced by the rent, if any, actually paid by the employee. | ||||
| (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, in respect of the period during which the said accommodation was occupied by the employee during the tax year, whichever is lower, as reduced by the rent, if any, actually paid by the employee. |
Value of perquisite is determined as per the provisions of sub-rule (2)(e). |
||
| (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. | Actual charges paid or payable to such hotel or 24% of salary paid or payable for the tax year for the period during which such accommodation is provided, whichever is lower, as reduced by the rent, if any, actually paid or payable by the employee. | ||
(b) The provisions of this sub-rule shall not 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; which —
i. 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. is located in a remote area.
(c) 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 Table I for a period not exceeding ninety days and thereafter the value of perquisite shall be charged for both such accommodations as provided in the said Table I.
(d) Where the accommodation is owned 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 tax year, the amount calculated in accordance with Table I:Sl. No. 2(a) or (b) shall not exceed the amount so calculated for the first tax year, as multiplied by the amount which is a ratio of the Cost Inflation Index for the tax year for which the amount is calculated and the Cost Inflation Index for the tax year in which the accommodation was initially provided to the employee.
(e) For the purposes of this sub-rule, where the accommodation is furnished;–
i. the value of perquisite as determined under Table I: Sl. Nos. 1 and 2. C be increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment), as reduced by any charges paid or payable for the same by the employee during the tax year; and
ii. if such furniture is hired from a third party, the value of perquisite would be the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the tax year.
(f) 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 Table 1: Sl. No. 2(a), as if the accommodation is owned by the employer.
(g) For the purposes of clause (d);
i. “Cost Inflation Index” means the index as may be notified by the Central Government under section 72(8)(a);
ii. “first tax year” means the tax year 2023-2024, or the tax year in which the accommodation was provided to the employee, whichever is later.
(3)(a) The value of perquisite by way of use of motor car to an employee by an employer, in the circumstances as referred in column B of the following Table II, shall be determined in accordance with column C or column D thereof, as the case may be:
Table II
VALUE OF PERQUISITE PER CALENDAR MONTH
| Sl. No. |
Circumstances | Where cubic capacity of engine does not exceed 1.6 litres or the motor car is an electric vehicle |
Where cubic capacity of engine exceeds 1.6 litres |
|
| A | B | C | D | |
| (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; |
no value, if the documents specified in sub-rule (3)(c) are maintained by the employer |
no value, if the documents specified in sub-rule (3)(c) are maintained by the employer; | |
| (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; | actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant tax 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. |
actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant tax 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. | |
| (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 | ₹ 5000 (plus ₹3000, if | ₹ 7000 (plus ₹3000, if chauffeur | ||
|
maintenance and running are met or reimbursed by the |
chauffeur is also provided to run the motor car by the employer) | is also provided to run the motor car by the employer); | ||
| (ii)
the expenses on running and maintenance for |
₹ 2000 (plus ₹ 3000, if chauffeur is also provided by the employer to run the motor car by the employer). |
₹ 3000 (plus ₹3000, if chauffeur is also provided to run the motor car by the employer). | ||
| (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— | |||
| (d) | such reimbursement is for the use of the vehicle wholly and exclusively for official purposes; |
no value, if the documents specified in sub-rule (3)(c) are maintained by the employer |
no value, if the documents specified in sub-rule (3)(c) are maintained by the employer; | |
| (e) | 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. | the actual amount of
expenditure incurred by the employer as reduced by the amount specified in Sl. No. (1)(c)(i) above, if the |
the actual amount of expenditure incurred by the employer as reduced by the amount specified in Sl. No. (1)(c)(i) above, if the conditions mentioned in sub-rule (3)(c) are fulfilled. |
|
| (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 | |||
| (f) | such reimbursement is for the use of the vehicle wholly and exclusively for official purposes; |
no value, if the documents specified in sub-rule (2)(c) are maintained by the employer | not applicable; | |
| (g) | such reimbursement is for the use of vehicle partly for official purposes and partly for personal or private purposes of the employee. | the actual amount of
expenditure incurred by the employer as reduced by the amount of ₹3000 if the conditions mentioned in sub-rule (3)(c) are fulfilled. |
||
(b) Where an employer owns or hires one or more motor cars and allows the employee or any member of his household to use them for the purposes other than wholly and exclusively in the performance of his duties, the value of perquisite shall be the amount calculated as below:
i. for one car, in accordance with Table II: Sl. No. (1)(c)(i) ;and
ii. for other cars, in accordance with Table II: Sl. No. (1)(b).
(c) If the employer or employee claims that the motor vehicle is used solely for official duties or that the actual expenses for running and maintaining the employee-owned motor vehicle for official purposes exceed the deductible amounts in Table II: Sl. No. 2(b) or 3(b), he may claim a higher amount for official use and in this case, the value of the perquisite shall be the actual amount of expenses paid or reimbursed by the employer, minus the higher amount attributed to official use of the vehicle provided that the following conditions are fulfilled: —
i. 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; and
ii. the employer gives a certificate to the effect that the expenditure was incurred wholly and exclusively for the performance of official duties.
(d) For the purposes of this sub-rule, the normal wear and tear of a motor car shall be taken at 10% per annum of the actual cost of the motor car or cars.
(4) The value of benefit provided by the employer to the employee or any member of his household for goods, services or utilities, as referred to in column B of the following Table III, shall be computed in accordance with column C thereof:
Table III
| Sl. No. | Nature of goods, services or utilities |
Value of benefit of the goods, services or utilities provided |
| A | B | C |
| 1. | Services of a sweeper, a gardener, a watchman or a personal attendant. |
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. |
| 2 | (a) Supply of gas, electric energy or water for the consumption of the employee‘s household by purchasing them from any outside agency. |
The amount paid by the employer to the agency supplying the gas, electric energy or water, as reduced by any amount paid by the employee in respect of such services. |
| (b) Supply of gas, electric energy or water for the consumption of the employee‘s household made from resources owned by the employer, without purchasing them from any outside agency |
The amount of the manufacturing cost per unit incurred by the employer, as reduced by any amount paid by the employee in respect of such services. | |
| 3 | (t) Provision of free or concessional educational facilities for any member of the employee‘s household. |
The amount of expenditure incurred by the employer in this regard, as reduced by any amount paid or recovered from the employee on that account. |
| (u) Provision of free or concessional educational facilities for any member of employee household, where the educational institution is itself maintained and owned by the employer. |
Cost of such education in a similar institution in or near the locality, as reduced by any amount paid or recovered from the employee on that account, where the cost of such education or value of such benefit per child exceeds ₹3,000 per month. | |
| (a) Provision of free educational facilities for any member of employees’ household in any other educational institution by reason of his employment. |
Cost of such education in a similar institution in or near the locality, as reduced by any amount paid or recovered from the employee on that account, where the cost of such education or value of such benefit per child exceeds ₹3,000 per month. | |
| 4. | Provision by an employer who is engaged in the carriage of passengers or goods, to any employee (not being an employee of
an airline or the railways) or to any member of his |
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. |
(5)(a) In terms of provisions contained in section 17(1)(e), the value of other benefits or amenities of the nature referred to in Column B of the following Table IV shall be determined in accordance with column C and subject to conditions provided in Column D thereof:
Table IV
| Sl. No. |
Nature of other benefits or amenities |
Value of perquisite |
Conditions |
| A | B | C | D |
| 1. | Benefit 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 tax year by the employer or any person on his behalf. |
It shall be the sum equal to the interest computed at the annual rate charged by the State Bank of India, constituted
under the State |
(a) No value would be charged if such loans are made available for medical treatment in respect of diseases specified in rule 18 or where the amount of loans is not exceeding ₹2,00,000 in the aggregate; and
(b)where the benefit relates to the loans made available for medical treatment referred to in clause (a), 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. |
| 2. | 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 277. |
It shall be the sum equal to the amount of the expenditure incurred by such employer in that behalf. | (v) 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; or |
| (w) 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 be an amenity; or |
|||
| (x) 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 as reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity. | |||
| 3.
|
The value of free food and non- alcoholic beverages provided by the employer to an employee. | It shall be the amount of expenditure incurred by such employer as reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity. | This provision shall not apply to (y) free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers usable only at eating joints, to the extent the value thereof in either case does not exceed ₹200 per meal; or
(z) tea or snacks provided during working hours; or (aa) free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation. |
| 4. | The value of any gift, or voucher, or token (in lieu of gift) received by the employee or by member of his household) on ceremonial occasions or otherwise from the employer. |
It shall be the sum equal to the amount of such gift. | It shall be “nil”, if the value of such gift, voucher or token, as the case may be, is below ₹ 15,000 in aggregate during the tax year. |
| 5. | 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. |
It shall be the amount 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. | There shall be no value of such benefit, where expenses are incurred wholly and exclusively for official purposes and the conditions specified in sub-rule (5)(b) are fulfilled. |
| 6. | 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. |
It shall be determined to be the actual amount of expenditure incurred or reimbursed by such employer on that account and the amount so determined shall be reduced by the amount, if any paid or recovered from the employee for such benefit or amenity. |
(bb) 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; and |
| (cc) the provision given in column C of Sl. No. 6 shall not apply, if such expenditure is incurred wholly and exclusively for business purposes and the following conditions are fulfilled:–
(viii) conditions in sub-rule (5)(b) are fulfilled; and (vii) use of health club, sports and similar facilities are provided uniformly to all employees by the employer. |
|||
| 7.
|
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, computers, tablets and mobile phones) belonging to the employer or hired by him. | It shall be
determined at |
|
| 8. | The value of benefit to the employee arising from the transfer of any movable asset belonging to the employer directly or indirectly to the employee or any member of his household. | It shall be determined to be the amount representing the actual cost of such assets to the employer as reduced by the cost of normal wear and tear and as further reduced by the amount, if any, paid or recovered from the employee being the consideration for such transfer. |
The cost of normal wear and tear shall be calculated at the rate of
(dd) 50% in case of computers and electronic items, by reducing balance method; (c) 20% in the case of motor cars, by reducing balance method; and (ee) 10% in case of other assets, of the cost of the asset for each completed year during which such asset was put to use by the employer. |
| 9. | The value of any other benefit or amenity, service, right or privilege provided by the employer, except expenses on telephones, including a mobile phone. | It 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. |
(b) For the purposes of clause (a) of Table IV: Sl. Nos. 5 and 6 .C, the following conditions need to be satisfied:–
i. 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;
ii .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.
(6) For the purposes of section 17(1)(d), 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 as follows:–
a. in a case where, on the date of the exercising of the option, the share in the company is listed on a recognised 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, subject to the provisions of clause (b);
b. in a case where, on the date of exercising of the option, the share is listed on more than one recognised stock exchanges, the fair market value shall be the average of the opening price and closing price of the share on the recognised stock exchange which records the highest volume of trading in the share;
c. in a case 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—
i. 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
ii. 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 recognised stock exchange;
(d) 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.
(7) For the purposes of section 17(1)(d), 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 may be determined by a merchant banker on the specified date.
(8) For the purposes of this rule—
(a) “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;
(b) “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, and where the stock exchange quotes both “buy” and “sell” prices, the closing price shall be the “sell” price of the last settlement;
(c) “entertainment” includes hospitality of any kind and also, expenditure on business gifts other than free samples of the employer‘s own product with the aim of advertising to the general public;
(d) “hotel” includes licensed accommodation in the nature of motel, service apartment or guest house;
(e) “maximum outstanding monthly balance” means the aggregate outstanding balance for each loan as on the last day of each month.
(f) “member of household” shall include—
i. spouse;
ii. children and their spouses;
iii. parents; and
iv. servants and dependants;
(g) “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);
(h) “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 and where the stock exchange quotes both “buy” and “sell” prices, the opening price shall be the “sell” price of the first settlement;
(i) “recognised stock exchange” shall have the same meaning assigned to it in section 2(f) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(j) “remote area”, specified in sub-rule (1)(b), means any area other than an area which is located—
i. within the local limits of; or
ii. within a distance, measured aerially, of thirty kilometers from the local limits of, any municipality or a cantonment board having a population of one lakh or more based on the 2011 census;
(k) “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:—
i. dearness allowance or dearness pay, unless it enters into the computation of superannuation or retirement benefits of the employee concerned;
ii. employer’s contribution to the provident fund account of the employee;
iii. allowances, which are exempted from payment of tax;
iv. the value of perquisites specified in section 17(1);
v. any payment or expenditure specifically excluded under section 17(2); and
vi. 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;
(l) “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 one hundred and eighty days earlier than the date of the exercising.
16. Annual accretion referred to in section 17(1)(i).– (1) For the purposes of section 17(1)(i), annual accretion by way of interest, dividend or any other amount of similar nature during the tax year (herein referred to as the current tax year) to the balance of the credit of the fund or scheme referred to in section 17(1)(h), shall be the amount or aggregate of amounts computed in accordance with the following formula: —
TP = (PC/2) × R + (PC1 + TP1) × R
Where,–
TP = Taxable perquisite under section 17(1)(i) for the current tax year;
TP1 = aggregate of taxable perquisite under section 17(1)(i) for the tax year or years commencing on or after the 1st April, 2020 other than the current tax year;
PC = aggregate amount of principal contribution made by the employer in excess of ₹ 750000 lakhs to the specified fund or scheme during the tax year;
PC1 = aggregate amount of principal contribution made by the employer in excess of ₹ 750000 to the specified fund or scheme for the tax year or years commencing on or after the 1 st April, 2020 other than the current tax year;
R = I/ F(avg.);
I = aggregate amount of income accrued during the current tax year in the specified fund or scheme account;
F(avg.) = aggregate amount of balance to the credit of the specified fund or scheme on the first day of the current tax year plus the aggregate amount of balance to the credit of the specified fund or scheme on the last day of the current tax year, divided by two.
(2) For the purposes of this rule,–
a. “specified fund or scheme” means a fund or scheme referred to in section 17(1)(h);
b. where the aggregate amount of TP1 and PC1 exceed the aggregate amount of balance to the credit of the specified fund or scheme on the first day of the current tax year, then the excess amount shall be ignored for the purpose of computing the aggregate amount of TP1 and PC1.
17. Salary income for purposes of section 17(1)(c)(ii).– For the purposes of section 17(1)(c)(ii), the prescribed income under the head “Salaries” shall be ₹ 400000.
18. Exemption of medical benefits from perquisite value in respect of medical treatment of prescribed diseases or ailments in hospitals approved by Chief Commissioner. –(1) In granting approval to any hospital other than a hospital for Indian system of medicine and homeopathic treatment for the purposes of section 17(2)(b)(ii), the Principal Chief Commissioner or Chief Commissioner shall satisfy himself that the hospital is registered with the local authority and fulfils the following requirements:—
(a) the building used for the hospital complies with the municipal bye-laws in force;
(b) the rooms are well ventilated, lighted and are kept in clean and hygienic conditions;
(c) at least ten iron spring beds are provided for patients;
(d) at least one properly equipped operation theatre is provided, with minimum floor space of one hundred and eighty square feet and with a separate sterilisation room;
(e) at least one labour room is provided, with minimum floor space of one hundred and eighty square feet, in case the hospital provides medical service for maternity cases;
(f) aseptic conditions are maintained in the operation theatre and the labour room;
(g) a duty room is provided for the nursing staff on duty;
(h) adequate space for storage of medicines, food articles, equipments and such other articles is provided;
(i) the water used in the hospital or nursing home is fit for drinking;
(j) adequate arrangements are made for isolating septic and infectious patients;
(k) the hospital is provided with and maintains—
i. high pressure sterilizer and instrument sterilizer;
ii. oxygen cylinders and necessary attachments for giving oxygen;
iii. adequate surgical equipments, instruments and apparatus including intravenous apparatus;
iv. a pathological laboratory for testing of blood, urine and stool;
v. electro-cardiogram monitoring system; and
vi. stand-by generator for use in case of power failure;
(l) there is at least one qualified doctor available on duty round the clock for every twenty beds or fraction thereof;
(m) in hospitals providing intensive care unit facilities, there are at least two qualified doctors available on duty round the clock exclusively for such intensive care unit;
(n) one nurse is on duty round the clock for every five beds or a fraction thereof;
(o) in hospitals providing intensive care unit facilities, there are at least four nurses provided exclusively for every four beds or fraction thereof for such intensive care unit; and
(p) the hospital maintains record of health of every patient containing information about the patient’s name, address, occupation, sex, age, date of admission, date of discharge, diagnosis of disease and treatment undertaken.
(2) In granting approval to any hospital for Indian system of medicine and homeopathic treatment for the purposes of 17(2)(b)(ii), the Principal Chief Commissioner or Chief Commissioner shall satisfy himself that the hospital fulfils the conditions specified in the Office Memorandum dated the 6th June, 2002, issued by the Department of Indian Systems of Medicine and Homeopathy, Ministry of Health and Family Welfare for approval of private hospitals for Indian system of medicine and homeopathic treatment to Central Government Health Scheme beneficiaries and the Central Government employees.
(3) For the purposes of section 17(2)(b)(ii), the prescribed diseases or ailments shall be the following:—
a. cancer;
b. tuberculosis;
c. acquired immunity deficiency syndrome;
d. disease or ailment of the heart, blood, lymph glands, bone marrow, respiratory system, central nervous system, urinary system, liver, gall bladder, digestive system, endocrine glands or the skin, requiring surgical operation;
e. ailment or disease of the eye, ear, nose or throat, requiring surgical operation;
f. fracture in any part of the skeletal system or dislocation of vertebrae requiring surgical operation or orthopaedic treatment;
g. gynaecological or obstetric ailment or disease requiring surgical operation, caesarean operation or laparoscopic intervention;
h. ailment or disease of the organs mentioned at (d), requiring medical treatment in a hospital for at least three continuous days;
i. gynaecological or obstetric ailment or disease requiring medical treatment in a hospital for at least three continuous days;
j. burn injuries requiring medical treatment in a hospital for at least three continuous days;
k. mental disorder – neurotic or psychotic – requiring medical treatment in a hospital for at least three continuous days;
l. drug addiction requiring medical treatment in a hospital for at least seven continuous days; and
m. anaphylactic shocks including insulin shocks, drug reactions and other allergic manifestations requiring medical treatment in a hospital for at least three continuous days.
(4) For the purposes of this rule,—
a. “nurse” means a person who holds a certificate of a recognised Nursing Council and is registered under any law for the registration of nurses;
b. “qualified doctor” means a person who holds a degree recognised by the Medical Council of India and is registered by the Medical Council of any State; and
c. “surgical operation” includes treatment by modern methodology such as angioplasty, dialysis, lithotripsy, laser or cryo-surgery.
19. Gross total income for purposes of section 17(3)(b).– For the purposes of section 17(3)(b), the prescribed gross total income shall be ₹ 800000.
20. Procedure for purposes of section 19 [Table: Sl.No.12] relating to voluntary retirement or voluntary separation.– (1) Subject to the conditions specified in sub-rules (2) and (3), the amount received at the time of voluntary retirement or voluntary separation can be claimed as deduction for the purposes of section 19 [Table: Sl.No.12] by an employee of—
i. a public sector company; or
ii. any other company; or
iii. an authority established under a Central Act or State Act or Provincial Act; or
iv. a local authority; or
v. a co-operative society; or
vi. a University established or incorporated by or under a Central Act or State Act or Provincial Act, and an institution declared to be a University under section 3 of the University Grants Commission Act, 1956 (3 of 1956); or
vii. an Indian Institute of Technology within the meaning of clause (g) of section 3 of the Institutes of Technology Act, 1961 (59 of 1961); or
viii. an institution, having importance throughout India or in any State or States, as the Central Government may, by notification in the Official Gazette, specify in this behalf; or
ix. such other institute of management as the Central Government may, by notification, specify in this behalf.
(2) The deduction under sub-rule (1) is allowable only if the scheme of voluntary retirement framed by the aforesaid company or authority or co-operative society or University or institute, as the case may be, or if the scheme of voluntary separation framed by a public sector company, (herein referred to as ‗the scheme‘) is in accordance with the following requirements:–
i. the scheme applies to an employee who has completed ten years of service or completed forty years of age;
ii. the scheme applies to all employees (by whatever name called) including workers and executives of a company or of an authority or of a co-operative society, as the case may be, excepting directors of a company or of a co-operative society;
iii. the scheme has been drawn to result in overall reduction in the existing strength of the employees;
iv. the vacancy caused by the voluntary retirement or voluntary separation is not to be filled up;
v. the retiring employee of a company shall not be employed in another company or concern belonging to the same management; and
vi. the amount receivable on account of voluntary retirement or voluntary separation of the employee does not exceed either A or B, where,–
A= 3*N*S;
B = M*S; and
N= Number of completed years of service;
M = balance months of service left before the date of his retirement on superannuation;
S= salary at the time of retirement.
(3) In case an amount is received by an employee of a public sector company under the scheme of voluntary separation framed by such public sector company, the requirement of sub-rule (2)(i) shall not be applicable.
(4) In this rule, the expression “salary‖ includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.
21. Unrealised rent. — For the purposes of section 21(4), the amount of rent which the owner cannot realise shall be equal to the amount of rent receivable by the assessee 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; and
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 futile.
22. Computation of aggregate average advances for purposes of section 31(1) [Table: Sl. No.1] for deduction for provision of bad and doubtful debt.– (1) For the purposes of section 31(1)[Table: Sl. No. 1], the aggregate average advances made by the rural branches of a scheduled bank shall be determined as follows:–
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 tax 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); and
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.
(2) In this rule the expressions, “rural branch” and “scheduled bank” shall have the meanings respectively assigned to them in sections 66(26) and 2(98).
23. Computation of pro rata amount of discount on a zero coupon bond for purpose of section 32(d).– (1) For the purposes of section 32(d), the pro rata amount of discount on a zero coupon bond shall be computed in the following manner:—
(a) the period of life of the bond shall be converted into number of calendar months and, for this purpose, where the calendar month in which the bond is issued or the bond matures or is redeemed, contains a part of a calendar month then, —
i. if such part is fifteen days or more than fifteen days, it shall be increased to one calendar month; and
ii. if such part is less than fifteen days, it shall be ignored;
(b) the amount of discount shall be divided by the number of calendar months determined in accordance with clause (a); and
(c) where one or more than one calendar month out of calendar months determined in accordance with clause (a) is or are included in a tax year, the amount determined in accordance with clause (b) shall be multiplied by the number of calendar months so included and the amount so arrived at shall be taken to be the pro rata amount of discount for that tax year.
24. Notification of infrastructure facility for the purposes of section 32(e).– The following conditions shall be fulfilled by a public facility to be eligible to be notified as an infrastructure facility under section 32(e):—
(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 Act 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 section 80-IA (4)(i) of the Income Tax Act, 1961 (43 of 1961), as it existed prior to its repeal; and
(c) it has started or starts operating and maintaining such infrastructure facility on or after the 1st April, 1995.
25. Depreciation.– (1) Subject to the provisions of sub-rule (7), the allowance under section 33(3), in respect of depreciation of any block of assets specified in column (2) of the Table in Appendix I shall be calculated at the percentages specified in the column (3) of the said Table 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 tax year.
(2) The allowance under section 33(3) in respect of depreciation of any block of assets with respect to the persons mentioned in Column B of the following Table shall not exceed 40% of the written down value of such block of assets, if conditions mentioned in column C thereof are fulfilled:—
Table
| Sl. No. | Person | Conditions to be fulfilled |
| A | B | C |
| 1. | Domestic company | Which has exercised option under– (a) section
199(3); or (b) section 200(5); or (hh) section 201(2). |
| 2. | (ii) Individual or
Hindu undivided family; or (jj) association of persons or a body of individuals, whether incorporated or not; or (kk) artificial juridical person referred to in section 2(77)(g). |
Whose income is chargeable to tax under section 202(1). |
| 3. | Cooperative society resident in India | Which has exercised option under–
(d) section 203(5); or (e) section 204(2). |
(3) The allowance under section 33(2) in respect of depreciation of assets acquired on or after 1st April, 1977 specified in column (2) of the Table in Appendix II, shall be calculated at the percentage specified in the column (3) thereof on the actual cost to the assessee as are used for the purposes of the business of the assessee at any time during the tax year.
(4) The aggregate depreciation allowed under section 33(2), in respect of any asset for different tax years shall not exceed the actual cost of the said asset.
(5) The undertaking specified in section 33(2) may, at its option, be allowed depreciation under sub-rule (1) read with Appendix I instead of the depreciation specified in Appendix II, if option is exercised on or before the due date for furnishing the return of income under section 263(1)(c) for the tax year in which it begins to generate power.
(6) Any option under sub-rule (5) once exercised, shall be final and shall apply to all the subsequent tax years.
(7) Where any new machinery or plant is installed during the tax year commencing on or after the 1st April, 1987, for the purposes of business of manufacture or production of any article or thing and such article or thing—
i. is manufactured or produced by using any technology (including any process) or other know- how developed in; or
ii. 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% of written down value, if the following conditions are fulfilled:—
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 tax 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 Schedule XIII to the Act.
(8) For the purposes of sub-rule (7),–
a. “laboratory financed by the Government” means a laboratory owned by any body including a society registered under the Societies Registration Act, 1860 (2 of 1860) and financed wholly or mainly by the Government;
b. “public sector company” means any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in section 2(45) of the Companies Act, 2013 (18 of 2013); 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.
26. 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 specified banking and online mode or through such other
electronic mode as provided in rule 48.– (1) No disallowance under section 36(4) shall be made and no payment shall be deemed to be the profits and gains of business or profession under section 36(5) where a payment or aggregate of payments made to a person in a day, otherwise than by a specified banking or online mode or through such other electronic mode as provided in rule 48, exceeds ten thousand rupees, in the following cases and circumstances:-
(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); or
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); or
iii. any co-operative bank or land mortgage bank; or
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); or
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; or
ii. a mail or telegraphic transfer through a bank; or
iii. a book adjustment from any account in a bank to any other account in that or any other bank; or
iv. a bill of exchange made payable only to a bank;
(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 392, 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) 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;
(k) 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.
(2) For the purposes of this rule,–
(a) the term “bank”, in clause (c) and clause (g), 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; and
(b) “authorised dealer” or “money changer”, in clause (k), means a person authorised as an authorised dealer or a money changer to deal in foreign currency or foreign exchange under any law in force.
27. Form of statement to be furnished regarding certain preliminary expenses eligible for deduction under section 44.– (1) The statement containing particulars of expenditure required to be furnished under section 44(3) shall be in Form No. 5 for each tax year.
(2) Form No. 5 shall be furnished to the Director General of Income-tax (Systems) or any person authorised by him, one month prior to the due date for furnishing the return of income as specified under section 263(1).
28. Form of audit report for claiming deduction for certain preliminary expenses under section 44 and expenditure for prospecting certain minerals under section 51.– The report of audit of the accounts of an assessee, other than a company or a co-operative society, under section 44(6) or section 51(7), shall be furnished in Form No. 6.
29. Prescribed authority and process of approval for expenditure on scientific research under section 45(1)(a)(ii) and (2).– (1) For the purposes of clause (b) read with clause (a)(ii) of section 45(1), the prescribed authority shall be Principal Chief Commissioner of Income tax (Exemptions) in concurrence with the Secretary, Department of Scientific and Industrial Research, Government of India.
(2) For the purposes of section 45(2),––
(a) the prescribed authority shall be Secretary, Department of Scientific and Industrial Research, Government of India;
(b) no company shall be entitled for deduction under said section, unless it enters into an agreement with the prescribed authority for co-operation in research and development facility and fulfils such conditions with regard to maintenance of books of account and audit thereof and furnishing of reports in the manner provided in this rule;
(c) the application for entering into an agreement specified in clause (b) shall be made by a company in Form No.11;
(d) the prescribed authority shall,––
i. if he is satisfied that the conditions mentioned in section 45(2) and specified in this sub-rule are fulfilled, pass an order in writing in Form No. 14, approving the facility within four months from the end of the month in which application is received;
ii. where an application is rejected, a reasonable opportunity of being heard shall be granted to the company; and
iii. furnish a copy of such order to the Chief Commissioner of Income-tax having jurisdiction over such company;
(e) approval of expenditure incurred on in-house research and development facility by a company shall be subject to the following conditions,:—
(i) the facility should not relate purely to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or activities of similar nature;
(ii) the prescribed authority shall furnish electronically its report––
A. in relation to the approval of in-house research and development facility in Part A of Form No. 12;
B. quantifying the expenditure incurred on in-house research and development facility by the company during the tax year and eligible for deduction under section 45(2) in Part B of Form No. 12;
(iii) the report in Form No. 12 referred to in sub-clause (ii) shall be furnished electronically by the prescribed authority to the Chief Commissioner of Income-tax having jurisdiction over such company within one hundred and twenty days,—
A. of the grant of the approval, in a case referred to in sub-clause (ii)(A);
B. of the submission of the audit report, in a case referred to in sub-clause (ii)(B);
(iv) the company shall maintain separate books of account for each approved facility which shall be audited annually;
(v) a report of audit in Form No. 13 shall be furnished electronically to the Secretary, Department of Scientific and Industrial Research on or before the due date specified in section 263(1)(c) for furnishing the return of income, for each succeeding tax year;
(vi) the company shall attach copy of such audited annual account with the return of income to be filed under section 263(1)(a) for each tax year;
(vii) the company shall ensure that the capital and revenue expenditure on in-house research and development facility is reflected in the schedules or notes to accounts in the audited financial statement of the company prepared for the purposes of its annual report and for the purposes of computation of income-tax; and
(viii) the assets acquired by the approved facility shall be utilised only for the approved purpose and shall not be disposed of without the approval of the Secretary, Department of Scientific and Industrial Research.
(3) For the purposes of this rule, ―audited‖ means the audit of accounts by an accountant, as defined in section 515(3)(b).
30. Prescribed authority and process of approval for expenditure on scientific research under section 45(3)(c). – (1) For the purposes of section 45(3)(c)(i) to (iii), the head of the National Laboratory or the University or the Indian Institute of Technology, as the case may be, shall be the prescribed authority.
(2) For the purposes of section 45(3)(c)(iv), the Principal Scientific Adviser to the Government of India shall be the prescribed authority.
(3) The application for obtaining approval of scientific research programme under section 45(3)(c) shall be made by a sponsor in Form No. 7.
(4) The prescribed authority shall, if he is satisfied that it is feasible to carry out the scientific research programme then, subject to other conditions specified in this rule, pass an order in writing in Form No. 8, approving such programme within two months from the end of the month in which application is received, to be effective for such period not exceeding five tax years.
(5) For the purposes of sub-rule (4), the Principal Scientific Adviser to the Government of India may authorise an officer, not below the rank of a Deputy Secretary, to issue such order, after the scientific research programme has been approved by him.
(6) A reasonable opportunity of being heard shall be granted to the sponsor before rejecting an application.
(7) Approval of a scientific research programme under section 45(3)(c) 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 National Laboratory, University, Indian Institute of Technology or specified person, as the case may be, shall maintain a separate account for each approved programme;
(c) the account shall be audited annually and a copy thereof shall be furnished to the Chief Commissioner of Income-tax having jurisdiction over the sponsor on or before the due date specified in section 263(1)(c) for furnishing the return of income, for each succeeding tax year;
(d) the following information or statement or report shall be submitted to the Chief Commissioner of Income-tax having jurisdiction over the sponsor:––
A. a report in Form No. 10 by the prescribed authority within a period of three months from the date of granting approval to the programme showing progress of implementation of the approved programme and actuals of expenditure incurred thereon, by the sponsor and the National Laboratory, University, Indian Institute of Technology or specified person, as the case may be;
B. 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, jointly by the sponsor and the National Laboratory, University, Indian Institute of Technology or specified person, on completion of the approved programme;
C. a copy of the audited statement of accounts for the approved programme, by the Head of the National Laboratory, University or Indian Institute of Technology or the Principal Scientific Adviser to the Government of India, within six months of the completion of the programme;
(e) the prescribed authority shall not extend the duration of the programme or approve any escalation in costs; and
(f) the assets acquired by the National Laboratory, University, Indian Institute of Technology or specified person, for executing the approved programme shall not be disposed of without the approval of the Chief Commissioner of Income-tax having jurisdiction over the sponsor.
(8) 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 in Form No. 9.
(9) The sponsor, may, at least three months before the expiry of the effective period of the order passed under sub-rule (4), make an application to the prescribed authority for passing a fresh order.
(10) For the purposes of this rule,
i. “audited” means the audit of accounts by an accountant, as defined in the section 515(3)(b); and
ii. “sponsor” means a person who makes an application in Form No. 7.
31. Furnishing of statement of particulars in respect of donation and certificate to donor under section 45(4)(a).– (1) For the purposes of section 45(4)(a), the deduction in respect of any sum paid to the research association, University, college or other institution referred to in 45(3)(a) or the company referred to in 45(3)(b) shall not be allowed, unless such research association, University, college or other institution or company––
(a) prepares statement in Form No. 15 for each tax year and deliver or cause to be delivered to the Director General of Income-tax (Systems) or the person authorised by him; and
(b) furnish to the donor, a certificate specifying the amount of donation in Form No. 16
(2) The research association, University, college or other institution or company shall, while aggregating the amounts for determining the sums received for reporting in respect of any person, —
a. take into account all the donations of the same nature paid by that person during the tax year; and
b. proportionately attribute the value of the donation or the aggregated value of all the donations to all the persons, in a case where the donation is recorded in the name of more than one person and where no proportion is specified by the donors, attribute equally to all the donors.
(3) The person who is authorised to verify the return of income under section 265 shall verify Form No. 15.
(4) Statement of particulars in Form No. 15 and the certificate to the donor in Form No. 16 shall be furnished on or before the 31st May, immediately following the tax year in which the donation is received.
32. Procedure, form and manner in respect of approval under section 45(4) read with section 45(3)(a) for deduction for expenditure on scientific research by a research association.– (1) An application for approval under section 45(4)(b) in Form No. 17 shall be made to the Commissioner of Income-tax having jurisdiction over the applicant, at any time during the financial year immediately preceding the tax year from which the approval is sought.
(2) Where approval is sought—
i. from the tax year 2026-2027; or
ii. from the tax year in which the applicant is incorporated,
the application for approval may be made at any time during the said tax year.
(3) The person who is authorised to verify the return of income under section 265, as applicable to the applicant shall verify Form No. 17.
(4) If the research association claims an exemption as per Schedule III [Table: Sl. No. 23], then the Annexure to Form No. 17 shall also be filled out.
(5) The applicant shall send a copy of the application to Member (IT), Central Board of Direct Taxes accompanied by its acknowledgement receipt as evidence of having furnished the application as per sub-rule (1).
(6) Where an application is made under sub-rule (1), every notification under section 45(4)(b) shall be issued or an order rejecting the application shall be passed by the Central Government recording reasons therefor in writing, within twelve months from the end of the quarter in which such application was received in the office of Member (IT), CBDT.
(7) Any notification issued by the Central Government under section 45(4)(b) shall, at any time, have effect for such tax year or years, not exceeding five tax years as may be specified in such notification.
(8) If any defect is noticed in the application, 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 end of the month in which application is received in his office.
(9) The applicant shall remove the deficiency referred to in sub-rule (8) within a maximum period of one month from the end of the month in which the deficiency letter is served and if the applicant fails to remove such deficiency within the period so allowed, the Commissioner of Income-tax shall send his recommendation for treating the application as invalid to the Member (IT), Central Board of Direct Taxes.
(10) The Central Government, if satisfied, may pass an order, for reasons to be recorded in writing, treating the application as invalid.
(11) If the application 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 research association or University or college or other institution and send his recommendation to the Member (IT), CBDT for grant of approval or rejection of the application before the expiry of the period of three months from the end of the quarter in which the application was received in his office.
(12) The Central Government may, before granting approval under section 45(4)(b), 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.
(13) The Central Government may withdraw the approval granted under section 45(4)(b), 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 specified under rule 33 or rule 34.
(14) 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.
(15) 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 having jurisdiction over the applicant.
(16) The applicant, may, at least three months before the expiry of the effective period of the notification issued under sub-rule (6), make an application to the Commissioner of Income-tax having jurisdiction over the applicant for issue of a fresh notification.
33. Conditions subject to which approval is to be granted to a research association for deduction for expenditure on scientific research under section 45(4) read with section 45(3)(a).– (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 section 45(4)(b) shall––
a. maintain books of account;
b. get such books audited by an accountant as defined in the section 515(3)(b); and
c. furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax having jurisdiction over the research association, by the due date of furnishing the return of income under section 263(1).
(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 section 263(1), furnish a statement to the Commissioner of Income-tax containing—
a. a detailed note on the research work undertaken by it during the tax year;
b. a summary of research articles published in national or international journals during the tax year;
c. any patent or other similar rights applied for or registered during the tax year; and
d. programme of research projects to be undertaken during the forthcoming tax year and the financial allocation for such programme.
(6) If it is found by the Commissioner of Income-tax 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), to the Central Government within six months from the date of furnishing the return of income under section 263(1).
34. Conditions subject to which approval is to be granted to a University, college or other institution for deduction for expenditure on scientific research under section 45(4) read with section 45(3)(a).– (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 section 45(4)(b), shall–
a. 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;
b. reflect therein the amount used for carrying out research;
c. get such books of account audited by an accountant, as defined in the section 515(3)(b); and
d. 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 section 263(1).
(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).
(5) The University, college or other institution shall, by the due date of furnishing the return of income under section 263(1), furnish a statement to the Commissioner of Income-tax containing—
a. a detailed note on the research work undertaken by it during the tax year;
b. a summary of research articles published in national or international journals during the tax year;
c. any patent or other similar rights applied for or registered during the tax year;
d. the programme of research projects to be undertaken during the forthcoming tax year and the financial allocation for such programme.
(6) If it is found by the Commissioner of Income-tax 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 (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) to the Central Government within six months from the date of furnishing the return of income under section 263(1).
35. Prescribed authority, procedure, form, manner and conditions for approval by a company for deduction for expenditure on scientific research under section 45(3)(b).– (1) For the purposes section 45(3)(b), the prescribed authority shall be the Chief Commissioner of Income-tax having jurisdiction over the applicant.
(2) The procedure, form and manner in respect of approval under section 45(3)(b) shall be as under:—
(a) An application for approval under section 45(3)(b) by a company shall be made in Form No. 17 to the Commissioner of Income-tax having jurisdiction over the applicant, at any time during the financial year immediately preceding the tax year from which the approval is sought.
(b) where approval is sought—
i. from the tax year 2026-2027;
ii. from the tax year in which the applicant is incorporated,
application for approval may be made at any time during the said tax year.
(c) The person who is authorised to verify the return of income under section 265, as applicable to the applicant shall verify Form No. 17.
(d) The applicant shall send a copy of the application to the prescribed authority, accompanied by the acknowledgement receipt as evidence of having furnished the application as per sub-rule (2)(a).
(e) Every order for approval under section 45(3)(b) shall be issued, or an order rejecting the application shall be passed, within a period of twelve months from the end of the quarter in which the application was received in the Office of the Chief Commissioner of Income-tax.
(f) If any defect is noticed in the application in Form No. 17, 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 end of the month in which application is received in his office.
(g) The applicant shall remove the deficiency within a maximum period of one month from the end of the month in which the deficiency letter is served and if the applicant fails to remove the deficiency within the period so allowed, the Commissioner of Income-tax shall send his recommendation for treating the application as invalid to the Chief Commissioner of Income-tax.
(h) The Chief Commissioner of Income-tax may, after examining the re-commendations referred to in clause (g), pass an order that the application is invalid.
(i) 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 from the end of the quarter in which the application was received in his office.
(j) The Chief Commissioner of Income-tax may, before granting approval under section 45(3)(b), call for such documents or information from the applicant as he considers necessary and may get any inquiry made for verification of the genuineness of the activity of the applicant.
(k) The Chief Commissioner of Income-tax may, under section 45(3)(b), pass an order granting approval to the company, or for reasons to be recorded in writing, reject the application.
(l) The Chief Commissioner of Income-tax, as referred in sub-rule (1), may withdraw the approval granted under section 45(3)(b), 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.
(m) 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.
(n) 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.
(o) Any order passed by the Chief Commissioner of Income-tax under this rule shall, at any one time, have effect for such tax year or years, not exceeding five tax years, as may be specified in the order.
(p) The applicant, may, at least three months before the expiry of the effective period of the order issued under sub-rule (2)(e), make an application to the Commissioner of Income-tax having jurisdiction over the applicant for passing a fresh order.
(3) Approval to a company under section 45(3)(b) shall be subject to the following conditions:—
(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 section 45(3)(b), 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 as defined under section 515(3)(b), 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 section 263(1)(c).
(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 clause (c);
(e) subsequent to approval, the company shall, every year, by the due date of furnishing the return of income under section 263(1)(c), furnish a statement to the Commissioner of Income-tax having jurisdiction over the case containing the following information:—
i. a detailed note on the research work undertaken by it during the tax year;
ii. a summary of research articles published in national or international journals during the tax year;
iii. any patents or other similar rights applied for or registered during the tax year;
iv. programme of research projects to be undertaken during the forthcoming year and the financial allocation for such subjects; and
(f) if it is found by the Commissioner of Income-tax 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 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 tso 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 section 263(1).
36. Procedure for notification of an affordable housing project as a specified business under section 46(11)(d)(vii) and a semiconductor wafer fabrication manufacturing unit as a specified business under section 46(11)(d)(xiii).– (1) The applicant shall apply for notification of––
a. an affordable housing project (herein referred to as ―the project”) as a specified business under section 46(11)(d)(vii), in Form No. 18; or
b. a semiconductor wafer fabrication manufacturing unit (herein referred to as ―the unit”) as a specified business under section 46(11)(d)(xiii), in Form No. 19.
(2) The notification mentioned in sub-rule (1) shall be in accordance in with the following procedure,:––
(a) the person shall apply for notification of the project or the unit in Form No. 18 or Form No. 19, as the case may be, to Member (IT), Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, New Delhi;
(b) if any defect is noticed in the application or if any relevant document, as required is not attached, a deficiency letter may be served on the applicant;
(c) the applicant shall remove the deficiency within one month from the end of the month in which such deficiency letter is served;
(d) where the applicant fails to remove the deficiency within the period specified in clause (c), the Board, if satisfied, may pass an order treating the application as invalid;
(e) the Board may, before granting approval, call for such details, documents or information from the applicant as well as from the income-tax authorities and other Departments or agencies, as it may deem fit;
(f) the Board may issue the notification granting approval to the project or the unit, as the case may be, or reject the application, after recording the reasons for rejection in writing;
(g) the Board may withdraw the approval in the case of a project or a unit, if it is satisfied that––
i. the assessee has ceased its activities relating to the specified business; or
ii. such activities are not genuine or are not being carried out in accordance with all or any of the conditions under section 46 or under this rule;
(h) the Board may also withdraw the approval in respect of a unit under section 46(11)(d)(xiii), if it is satisfied that the approval granted by the competent authority on the recommendations of the Appraisal Committee under the Modified Special Incentive Package Scheme of the Department of Electronics and Information Technology has been withdrawn;
(i) an opportunity of being heard shall be given to the applicant, if an order invalidating or rejecting the application or withdrawing the approval or cancellation of the notification, were to be passed; and
(j) a copy of order mentioned in clause (i) shall be communicated to the applicant as well as the Assessing Officer and the Commissioner having jurisdiction over the applicant;
(3) The applicant mentioned in sub-rule (1) shall maintain separate books of account with complete details of all capital expenditure incurred during the tax year for which it intends to claim the said deduction under section 46 and shall file the relevant income-tax returns by the due date to avail the tax benefit under the said section.
(4) A project notified under section 46(11)(d)(vii) or a unit notified under section 46(11)(d)(xiii), as the case may be, shall continue to be governed by the provisions of this rule to the extent it is not in contravention with the provisions of the Act.
(5) A project shall be considered for notification under section 46(11)(d)(vii), if it fulfils the following conditions,:––
(a) the project shall have prior sanction of the competent authority empowered under the Scheme of Affordable Housing in Partnership framed by the Ministry of Housing and Urban Affairs, Government of India;
(b) the date of commencement of operations of the project shall be on or after the 1st April 2011;
(c) the project shall be on a plot of land with a minimum area of one acre and out of the total allocable rentable area of the project, the affordable housing units shall comprise of at least–
i. 30% for Economically Weaker Section (EWS) category;
ii. 60% for Economically Weaker Section (EWS) and Lower Income Group (LIG) categories; and
iii. 90% for Economically Weaker Section (EWS), Lower Income Group (LIG) and Middle Income Group (MIG) categories;
(d) the remaining 10% or less of the total allocable rentable area of the project may comprise of other residential or commercial units;
(e) the design, layout and specifications of the project to be developed and built shall be approved by the State Government or Union territory Administration or its designated implementing agency; and
(f) the project shall be completed within a period of five years from the end of the tax year in which the project is sanctioned by the competent authority mentioned in clause (a).
(6) A unit shall be considered for notification under section 46(11)(d)(xiii), if it fulfils the following conditions:––
a. the unit shall be exclusively for the manufacture of semiconductor wafer fabrications;
b. the unit shall have prior approval of the competent authority on the recommendations of Appraisal Committee under the Modified Special Incentive Package Scheme notified by the Department of Electronics and Information Technology, Ministry of Communications and Information Technology, Government of India;
c. the date of commencement of operations, being the date on which the commercial production of the unit commences, shall be on or after the 1st April 2014; and
d. the unit may have one or more manufacturing facilities, but all the facilities shall be located in India.
(7) For the purposes of sub-rule (5),––
(a) “affordable housing units” shall be of the following categories:
| Category | Rentable Area (in square metres) | |
| Specified cities | Other cities | |
| Economically Weaker Sections (EWS) | Up to 25 | Up to 30 |
| Low Income Group (LIG) | Greater than 25 and up to 50 | Greater than 30 and up to 60 |
| Middle Income Group (MIG) | Greater than 50 and up to 70 | Greater than 60 and up to 85; |
(b) “date of commencement of operations” means the date on which the project is sanctioned by the competent authority empowered under the Scheme of Affordable Housing in Partnership framed by the Ministry of Housing and Urban Affairs, Government of India, for a project to be considered for notification under section 46(11)(d)(vii);
(c) “housing unit” means an independent residential unit with separate facilities for living, cooking and sanitary requirements, distinctly separated from other residential units within the building –
i. directly accessible from an outer door or through an interior door in a shared hallway and not by walking through another household’s living space; and
ii. excluding any shared dining areas;
(d) “project” means an affordable housing project;
(e) “rentable area” means the carpet area at any floor level, including the carpet area of kitchen, pantry, store, lavatory, bathroom, 50% of unglazed verandah and 100% of glazed verandah, in accordance with the provisions of the Indian Standard – Method of Measurement of Plinth, Carpet and rentable Areas of Buildings, IS 3861:2002, formulated and published by the Bureau of Indian Standards;
(f) “specified cities” mean–
i. the urban agglomerations comprising of the area included on the basis of the latest census, of Greater Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Bangalore, Ahmedabad;
ii. the districts of Faridabad, Gurgaon, Gautham Budh Nagar, Ghaziabad, Gandhinagar; and
iii. the city of Secunderabad; and
(g) “total allocable rentable area” means the total rentable area of all the proposed housing units or non- housing units but excluding the areas earmarked for common facilities and services.
(8) For the purposes of sub-rule (6),––
a. “competent authority” means the authority approving the unit under the Modified Special Incentive Package Scheme notified by the Government of India, Ministry of Communications and Information Technology, Department of Electronics and Information Technology;
b. “date of commencement of operations” means the date on which the commercial production of the unit commences;
c. “semiconductor wafer fabrications” means integrated circuits which are covered in the National Industrial Classification, 2008 under Division 26; Group 261; Class 2610; Sub-class 26103; and
d. “unit” means a manufacturing facility for semiconductor wafer fabrications.
37. Procedure for approval of agricultural extension project under section 47(1)(a).– (1) The agricultural extension project (herein referred as the project) shall be considered for notification, if it fulfils the following conditions,:—
a. the project shall be undertaken by an assessee for training, education and guidance of farmers;
b. the project shall have prior approval of the Ministry of Agriculture and Farmers Welfare, Government of India; and
c. an expenditure (not being expenditure in the nature of cost of any land or building) exceeding the amount of ₹ 25,00,000 is expected to be incurred for the project.
(2) Before undertaking any project, an assessee shall make an application in Form No. 20 to the Member (IT), CBDT for notification of such project under section 47(1)(a).
(3) The application referred to in sub-rule (2) shall also be accompanied by–
a. a letter approving the project and specifying the amount of expenditure expected to be incurred on the project, from the Ministry of Agriculture and Farmers Welfare, Government of India;
b. a detailed note on the agricultural extension project to be undertaken by the assessee; and
c. details of the expenditure expected to be incurred on the project and expected date of completion of the project.
(4) Where any defect is noticed in the application referred to in sub-rule (2) or a relevant document is not attached thereto, the Board shall, before the expiry of one month from the end of the month in which the application is received in its office, intimate the defect to the applicant for its rectification.
(5) The applicant shall remove the defect within a period of one month form the end of the month in which intimation letter is served on him.
(6) Where the applicant fails to remove the deficiency within the period mentioned in sub-rule (5), the Board shall, within one month from the time period specified in the said sub-rule, pass an order treating the application as invalid.
(7) If the application is complete in all respects, the Board shall, within two months from the end of the quarter in which it receives such application, issue a notification under section 47(1)(a) in Form No. 21 specifying the project, subject to the conditions mentioned in rule 38 or such other conditions, as it may deem fit, to be effective for such period not exceeding three tax years.
(8) The assessee, may, at least three months before the expiry of the effective period of the notification issued under sub-rule (7), make an application to the Board for notification of such project for a further period.
(9) The Board shall, after receiving the application under sub-rule (8), call for a report from the Commissioner of Income-tax, having jurisdiction over the case regarding the activities of the project during the period of notification and fulfilment of conditions specified in rule 38 including any other conditions, if any, subject to which the project was notified under sub-rule (7).
(10) On being satisfied with the report received under sub-rule (9) on the project, the Board may, within two months from the end of the quarter in which it receives application referred to in sub-rule (8), notify the said project for a further period not exceeding three tax years.
(11) The Board may, on being satisfied that––
a. the assessee has ceased its activities, or that its activities are not genuine; or
b. its activities are not being carried out in accordance with all or any of the relevant provisions of this rule or rule 38; or
c. 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 revocation of the notification issued under sub-rule (7) or sub-rule (10) after providing a reasonable opportunity of being heard.
(12) A copy of notification, approval, rejection, or cancellation shall be communicated to–
a. the applicant;
b. the Ministry of Agriculture and Farmers Welfare, Government of India;
c. the Commissioner of Income-tax having jurisdiction over the applicant;
d. the Department of Agriculture of the concerned State; and
e. the Agricultural Technology Management Agency of the concerned district.
38. Conditions for notification of agricultural extension projects under section 47(1)(a).– (1) The assessee undertaking an agricultural extension project (herein referred as the project) shall maintain separate books of account of the project notified under section 47(1)(a) and get such books of account audited by an accountant as defined under section 515(3)(b).
(2) The audit report referred to in sub-rule (1) shall include comments of the auditor on the true and fair view of the books of account maintained for the project, the genuineness of the activities of the project, and fulfilment of the conditions specified in the relevant provisions of the Act, the rules, or a notification issued under rule 37.
(3) The assessee shall not accept an amount exceeding the amount approved in the notification from the beneficiary under the eligible project for training, education, guidance, or any material distributed for such training, education or guidance.
(4) The assessee shall not derive any direct or indirect benefit from the notified project except for the deduction of eligible expenditure in accordance with section 47(1)(a), rule 37 and this rule.
(5) The expenses, eligible for deduction under section 47(1)(a), shall be all expenses incurred wholly and exclusively for undertaking an eligible project as reduced by
a. the amount received from the beneficiary;
b. the cost of any land or building;
c. any expenditure on the project that is reimbursed or reimbursable to the assessee by any person, whether directly or indirectly.
(6) The assessee shall, on or before the due date of furnishing the return of income under section 263(1), furnish the following to the Commissioner of Income-tax having jurisdiction over the assessee:–
(a) the audited statement of accounts of the project for the tax year along with the audit report and the amount of deduction claimed under section 47(1)(a);
b. a note on the project undertaken during the tax year, the programme of the project to be undertaken during the current year, and the financial allocation for such programme; and
c. a certificate from the Ministry of Agriculture and Farmers Welfare, Government of India, regarding the genuineness of the project undertaken by the assessee during the tax year.
(7) If it is found by the Commissioner of Income-tax that—
a. the assessee has not maintained separate books of account for the project or has not got such books of account audited by an accountant in accordance with sub-rule (1); or
b. the assessee has not furnished the documents referred to in sub-rule (6); or
c. the assessee has ceased to carry out activities of the project; or
d. the activities of the project of the assessee are not genuine; or
e. the activities of the project are not being carried out in accordance with the relevant provisions of the Act, rules, or the conditions subject to which the notification was issued under rule 37,
he may, after making appropriate inquiries, furnish a report on the circumstances referred to in clauses (a) to (e) to the Board for appropriate action as per the provisions of rule 37(11).
39. Procedure for approval of skill development projects under section 47(1)(b).– (1) A skill development project (herein referred as the project) shall be considered for notification, if it is undertaken by an eligible company and the project is undertaken in a separate facility in a training institute.
(2) Before undertaking any project, the eligible company shall make an application in Form No. 22 to the National Council for Vocational Education and Training (herein referred to as ―National Council‖) for notification of such project under section 47(1)(b).
(3) A copy of the application shall also be sent to the Commissioner of Income-tax having jurisdiction over the applicant, along with an acknowledgment receipt as evidence of furnishing of application to the National Council.
(4) The application shall be accompanied by–
a. a letter of concurrence from the training institute in which the project is to be undertaken;
b. a detailed note on the skill development project to be undertaken by the eligible company; and
c. details of the expenditure expected to be incurred on the project and expected date of completion of the project.
(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 National Council shall, before the expiry of one month from the end of the month in which the application is received in its office, intimate the defect to the applicant for its rectification.
(6) The applicant shall remove the defect within a period of one month from the end of the month in which the intimation letter for removal of the deficiency is served.
(7) Where the applicant fails to remove the deficiency within the period mentioned in sub-rule (6), the National Council shall send its recommendation for treating the application as invalid to the Board.
(8) On receipt of the recommendation of the National Council under sub-rule (7), the Board, if satisfied, may pass an order treating the application as invalid.
(9) If the application is complete in all respects,–
i. the National Council 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 relating to skill development; and
ii. send its recommendation to the Board for grant of approval or rejection of the application before the expiry of two months from the end of the month in which the application, complete in all respects, was received in its office.
(10) The Commissioner of Income-tax having jurisdiction over the applicant shall send his recommendation to the National Council for grant of approval or rejection of the application, after considering the compliance of the applicant with the various provisions of the Act before the expiry of one month from the end of the month in which the copy of the application was received in his office.
(11) If the National Council recommends the grant of approval under sub-rule (9), the Board shall within two months from the end of the quarter in which it receives the report from the National Council, issue a notification in Form No. 23 under section 47(1)(b), specifying the project, subject to conditions mentioned in rule 40 or such other conditions, as it may deem fit, to be effective for such period not exceeding three tax years.
(12) If the National Council recommends the rejection of the application under sub-rule (9), the Board shall pass an order rejecting the application.
(13) If the Board is satisfied with the activities of the project during the period of notification, it may notify the said project for a further period in consultation with the National Council.
(14) If the Board is satisfied that––
a. the eligible company or the training institute has ceased its activities, or that its activities are not genuine; or
b. that its activities are not being carried out in accordance with––
i. all or any of the relevant provisions of the Act or this rule or rule 40; or
ii. the conditions subject to which the notification was issued,
it may pass an order for revocation of the notification issued under sub-rule (11) or sub-rule (13) after providing a reasonable opportunity of being heard.
(15) A copy of notification, approval, rejection, or cancellation shall be communicated to–
a. the applicant;
b. the National Council;
c. the training institute; and
d. the Commissioner of Income-tax having jurisdiction over the applicant.
40. Conditions subject to which a skill development project is to be notified under section 47(1)(b).– (1) The company undertaking a skill development project (herein referred as the project) shall maintain separate books of account for the project notified under section 47(1)(b) and get such books of account audited by an accountant as defined in section 515(3)(b).
(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 the project, the genuineness of the activities of the project, and the fulfilment of the conditions specified in the relevant provisions of the Act, rules, or the conditions mentioned in a notification issued under rule 39.
(3) A project in respect of existing employees of the company shall not be eligible for notification under section 47(1)(b), where the training of such employees commences after six months of their recruitment.
(4) The expenses, eligible for deduction under section 47(1)(b), shall be all expenses incurred wholly and exclusively for undertaking an eligible project as reduced by–
a. the cost of any land or building; and
b. any expenditure on the project that is reimbursed or reimbursable to the assessee by any person, whether directly or indirectly.
(5) The company shall, on or before the due date of furnishing the return of income under section 263(1), furnish the audited statement of accounts of the project for the tax year along with the audit report and the amount of deduction claimed under section 47(1)(b), to the Commissioner of Income-tax having jurisdiction over the company.
(6) If it is found by the Commissioner of Income-tax that—
a. the company has not maintained separate books of account for the project or has not got such books of account audited by an accountant in accordance with sub-rule (1); or
b. the company has not furnished the documents referred to in sub-rule (5); or
c. the company has ceased to carry out activities of the project; or
d. the activities of the project of the company are not genuine; or
e. the activities of the project of the company are not being carried out in accordance with the relevant provisions of the Act, rules, or the conditions subject to which the notification was issued under rule 39,
he shall, after making appropriate inquiries, furnish a report on the circumstances referred to in clauses (a) to (e) to the Board for appropriate action under rule 39(14).
(7) If the National Council for Vocational Education and Training is not satisfied about the genuineness of the activities of the notified project, it shall send its recommendation to the Board for appropriate action under rule 39(14).
(8) For the purposes of this rule and rule 39,– (a)”eligible company” means a company, which is-
i. engaged in the business of manufacture or production of any article or thing, not being an article or thing mentioned at serial numbers 1 and 2 of the list of articles or things specified in the Thirteenth Schedule; or
ii. engaged in providing the following services:
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 and 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; and
31. travel and tourism, including guides or ticketing or sales or cab drives;
b. “National Council for Vocational Education and Training‖ means the National Council constituted by the Ministry of Skill Development and Entrepreneurship vide Notification No. SD-17/113/2017-E&PW dated 05.12.2018;
c. “State Council for Vocational Training” means a State Council for Training in Vocational Trades established by a State Government; and
d. “training institute” means a training institute–
(i) set up by the Central Government or a State Government or a local authority;
(ii) affiliated to a State Council for Vocational Training;
(iii) affiliated to, or approved by, or empanelled by, the National Council for Vocational Education and Training;
(iv) affiliated to, or approved by, or empanelled by, the Central Government and certified by the National Council for Vocational Education and Training as having training standards equivalent to training institutes affiliated to the National Council for Vocational Education and Training; or
(v) affiliated to, or approved by or empanelled by, the State Government and certified by the National Council for Vocational Education and Training or a State Council for Vocational Training as having training standards equivalent to training institutes affiliated to the National Council for Vocational Education and Training or, as the case may be, the State Council for Vocational Training.
41. Expenditure for obtaining right to use spectrum for telecommunication services.– (1) For the purposes of section 52(7)(a) read with section 52(1)[Table: Sl. No. 3], the term “actually paid” shall mean,—
a. 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 tax year in which the liability for the expenditure was incurred, according to the method of accounting regularly employed by the assessee; or
b. 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 tax 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 sub-rule (1)(b), 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 the Department of Telecommunications terminates the allotment or assignment of spectrum, the Assessing Officer, in exercise of power vested in him under section 52(5), shall re-compute the total income of the assessee for the tax year in which the deduction has been claimed and granted to him by deeming that—
a. the total spectrum fee paid up to the date of termination is the amount “actually paid”; and
b. the spectrum was in force up to the date of its termination for the purpose of determining the number of tax years as required by section 52(1)[Table: Sl. No. 3, C. D].
42. Special provision regarding interest on bad and doubtful debt of specified financial institution.– (1) The provisions of section 56 shall apply in the case of every public financial institution, scheduled bank, State Financial Corporation and State Industrial Investment Corporation, if its income from interest is related to following categories of bad or doubtful debts,:––
(a) in relation to a loan or advance, where,––
i. interest or instalment of principal remains overdue for a period of more than one hundred and eighty days; or
ii. the account remains out of order in respect of an overdraft or cash credit; or
iii. the bill remains overdue for a period of more than one hundred and eighty days in the case of bills purchased and discounted; or
iv. the instalment of principal or interest thereon remains overdue for two crop seasons for short duration crops; or
v. the instalment of principal or interest thereon remains overdue for one crop season for long duration crops; or
vi. the amount of liquidity facility remains outstanding for more than one hundred and eighty days for a securitisation transaction undertaken in terms of the Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021; or
vii. in respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of one hundred and eighty days from the specified due date for payment; and
(b) in relation to an account, where,––
i. a working capital borrowal account with irregular drawings for a continuous period of one hundred and eighty days even though the unit may be working or the borrower’s financial position is satisfactory and for this purposes the outstanding in the account based on drawing power calculated from stock statements older than six months would be deemed as irregular; or
ii. the regular or ad hoc credit limits have not been reviewed or renewed within one hundred and eighty days from the due date or date of ad hoc sanction; or
iii. there is erosion in the value of security and the realisable value of the security is less than 50% of the value assessed by the bank or accepted by Reserve Bank of India at the time of last inspection; or
iv. the realisable value of the security, as assessed by the bank or approved valuers or Reserve Bank of India is less than 10% of the outstanding in the borrowal accounts.
(2) The provisions of section 56 shall apply in the case of every public company, where its income by way of interest pertains to the following category of bad and doubtful debts,:––
(a) (i) doubtful asset, that is, a debt which has remained a non-performing asset of the nature specified in sub-clause (ii) for a period exceeding two years;
(ii) non-performing asset referred to in sub-clause (i) shall be the following:––
A. an asset, in respect of which, interest has remained overdue for a period of more than one hundred and eighty days;
B. a term loan (other than the one granted to an agriculturist or to a person whose income is dependent on the harvest of crops) inclusive of unpaid interest, when the instalment is overdue for a period of more than one hundred and eighty days or more or on which interest amount remained overdue for a period of more than one hundred and eighty days;
C. a demand or call loan, which remained overdue for a period of more than one hundred and eighty days from the date of demand or call or on which interest amount remained overdue for a period of more than one hundred and eighty days;
D. a bill which remains overdue for a period of more than one hundred and eighty days;
E. the interest in respect of a debt or the income on receivables under the head ‘other current assets’ in the nature of short-term loans or advances, which facility remained overdue for a period of more than one hundred and eighty days;
F. any dues on account of sale of assets or services rendered or reimbursement of expenses incurred, which remained overdue for a period of more than one hundred and eighty days;
G. the lease rental and hire purchase instalment, which has become overdue for a period of more than one hundred and eighty days;
H. a term loan granted to an agriculturist or to a person, whose income is dependent on the harvest of crops, if the instalment of principal or interest thereon remains unpaid––
(I) for two crop seasons beyond the due date if the income of the borrower is dependent on short duration crops; or
(II) for one crop season beyond the due date if the income of the borrower is dependent on long duration crop;
(I) in respect of loans, advances and other credit facilities (including bills purchased and discounted), the balance outstanding under the credit facilities (including accrued interest) made available to the same borrower or beneficiary when any of the above credit facilities becomes non-performing asset; and
(b) loss asset, that is, an asset which has been identified as loss asset and considered as uncollectible but has not been written off by the assessee.
(3) For the purposes of this rule––
(a) an overdraft or cash credit account shall be treated as ―out of order” if––
i. the outstanding balance in the overdraft or cash credit account remains continuously in excess of the sanctioned limit or drawing power for one hundred and eighty days; or
ii. the outstanding balance in the overdraft or cash credit account is less than the sanctioned limit or drawing power but there are no credits continuously for one hundred and eighty days, or the outstanding balance in the overdraft or cash credit account is less than the sanctioned limit or drawing power but credits are not enough to cover the interest debited during the previous one hundred and eighty days period;
(b) “long duration crop” means crop with crop season longer than one year;
(c) “public company” means a company,––
i. which is a public company within the meaning of section 2(71) of the Companies Act, 2013 (18 of 2013);
ii. whose main object is carrying on the business of providing long-term finance for construction or purchase of house in India for residential purposes; and
iii. which is registered under section 29A of the National Housing Bank Act, 1987 (53 of 1987) or in accordance with the Housing Finance Companies (NHB) Directions, 1989 or Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 issued by the local Government.
(d) “short duration crop” means crop which is not a long duration crop;
(e) “the crop season for each crop” means the period up to harvesting of the crops raised, as may be as determined by the State Level Bankers‘ Committee in each State;
43. Form of report of audit to be furnished under section 59(4) for computation of royalty and fee for technical services.– The report of audit of accounts of a non-resident (not being a company) or a foreign company for computation of royalty and fee for technical services, which is required to be furnished under section 59(4), shall be in Form No. 24.
44. Conditions to be fulfilled by a non-resident, engaged in the business of operation of cruise ships under section 61(2) [Table: Sl. No. 2].— For the purposes of section 61(2) [Table: Sl. No. 2], a non-resident assessee, engaged in the business of operation of cruise ships shall, —
a. operate a passenger ship having a carrying capacity of more than two hundred passengers or length of seventy-five meters or more, for leisure and recreational purposes and having appropriate dining and cabin facilities for passengers;
b. operate such ship on scheduled voyage or shore excursion touching at least two sea ports of India or same sea ports of India twice;
c. operate such ship primarily for carrying passengers and not for carrying cargo; and
d. operate such ship as per the procedure and guidelines if any, issued by the Ministry of Tourism or Ministry of Ports, Shipping and Waterways.
45. Conditions to be fulfilled by a resident company for purposes of section 61(2) [Table: Sl. No. 6].— (1) For the purposes of section 61(2) [Table: Sl. No. 6], a resident company shall, —
a. be establishing or operating electronics manufacturing facility or a connected facility for manufacturing or producing electronic goods, article or thing in India under any scheme notified by the Central Government in the Ministry of Electronics and Information Technology and as modified from time to time; and
b. not become ineligible for the such scheme at any time of the tax year for which tax is to be calculated for the income of the non-resident.
(2) For the purposes of this rule, ‗electronics goods‘ shall mean goods covered under any scheme referred to in sub-rule (1), including their supply chain ecosystem.
46. Maintenance of books of account under section 62.– (1) Every person required to keep and maintain books of account and other documents under section 62(1)(b) shall maintain such books of account and other documents that enable the Assessing Officer to compute his total income under the Act.
(2) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or profession of authorised representative or film artist, shall keep and maintain the books of account and other documents specified in sub-rule (4).
(3) The provisions of sub-rule (2) shall not apply–
i. in relation to any tax year in the case of any person, if his total gross receipts in the profession do not exceed ₹ 150000 in any one of the three years immediately preceding the tax year; or
ii. where the profession has been newly set up in the tax year, his total gross receipts in the profession for that year are not likely to exceed the said amount.
(4) The books of account and other documents referred to in sub-rule (2) shall be the following:—
a. a cash book; or
b. a journal, if the accounts are maintained according to the mercantile system of accounting; or
c. a ledger; or
d. for sums equal to or exceeding two hundred and fifty rupees, copies of bills or receipts issued by him; or
e. original bills and receipts in respect of expenditure equal to or exceeding two hundred and fifty rupees incurred by the person and issued to him; or
f. payment vouchers prepared and signed by the person, where the expenditure incurred does not exceed two hundred and fifty rupees, and the cash book maintained by the person does not contain adequate particulars in respect of such expenditure;
(5) In this rule,—
(a) “authorised representative” means a person who represents any other person, on payment of any fee or remuneration before–
i. any Tribunal; or
ii. any authority constituted or appointed by or under any law for the time being in force;
but does not include an employee of the person so represented or a person carrying on legal profession or a person carrying on the profession of accountancy;
(b) “cash book” means a record of all cash receipts and payments, kept and maintained day-to-day and giving the cash balance in hand at the end of each day or at the end of a specified period not exceeding a month;
(c) “film artist” means any person engaged in his professional capacity in the production of a cinematograph film whether produced by him or by any other person, as—
i. an actor; or
ii. a cameraman; or
iii. a director, including an assistant director; or
iv. a music director, including an assistant music director; or
v. an art director, including an assistant art director; or
vi. a dance director, including an assistant dance director; or
vii. an editor; or
viii. a singer; or
ix. a lyricist; or
x. a story writer; or
xi. a screen-play writer; or
xii. a dialogue writer; or
xiii. a dress designer.
(6) A person carrying on medical profession shall, in addition to the books of account and other documents specified in sub-rule (4), keep and maintain the following:—
i. a daily case register in Form No. 25;
ii. an inventory under broad heads, as on the first and the last day of the tax year, of the stock of drugs, medicines and other consumable accessories used for the purpose of his profession;
(7) The books of account and other documents specified in sub-rules (1), (4) and (6) other than those relating to a tax year which has come to an end shall be kept and maintained by the person at–
a. the place where he is carrying on the profession; or
b. where the profession is carried on in more places than one, at the principal place of his profession; or
c. if the person keeps and maintains separate books of account in respect of each place where the profession is carried on, such books of account and other documents may be kept and maintained at the respective places at which the profession is carried on.
(8) The books of account and other documents specified in sub-rules (1), (4) and (6) maintained in electronic mode shall remain accessible in India at all times, and the backup of such books of account and other documents maintained in electronic mode, shall be kept on a daily basis in servers physically located in India.
(9) The books of account and other documents specified in sub-rules (1), (4) and (6) shall be kept and maintained for a period of seven tax years from the end of the relevant tax year.
(10) Where the assessment in relation to any tax year has been reopened under section 279 or under section 147 of the Income-tax Act, 1961 (43 of 1961), as it existed prior to its repeal, all the books of account and other documents which were kept and maintained at the time of reopening of the assessment shall continue to be so kept and maintained till the assessment, so reopened has been completed.
47. Report of audit of accounts to be furnished under section 63.– (1) The report of audit of the accounts of a person required to be furnished under section 63 shall,—
(a) in the case of a person who carries on business or profession and who is required by or under any law other than the Act to get his accounts audited, be in Part A of Form No. 26;
(b) in the case of a person who carries on business or profession, but not being a person referred to in clause (a), shall be in Part B of Form No. 26.
(2) The particulars required to be furnished under section 63 shall also be in Part C and D of Form No. 26.
(3) The report of audit furnished under this rule may be revised by the person by obtaining a revised report of audit from an accountant as defined in section 515(3)(b), duly signed and verified by such accountant, and shall furnish it before the end of the relevant financial year succeeding the tax year for which the report pertains, if there is payment by such person after furnishing of the report under sub-rules (1) and (2) which necessitates recalculation of the disallowance under section 35 or section 37.
48. Other electronic modes of payment.– For the purposes of Schedule VIII [Table: Sl.No. 1. D(d)], section 66(32), section 146(5)(a)(ii)(B), sections 185, 186 and 188, the other electronic modes of payment shall be the following:—
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);
h. BHIM (Bharat Interface for Money) Aadhaar Pay; and
i. Tier-III: Full KYC Central Bank Digital Currency wallets, P-CBDC, Wholesale/Cross-border CBDC.
49. Computation of capital gains for purposes of section 67(5).– (1) If a person receives any amount under a specified unit-linked insurance policy, including any bonus allocated on such policy, then the capital gains arising from receipt of such amount in situations referred in column B of the following Table shall be computed according to column C thereof;
Table
| Sl. No. | Situations | Capital gains |
| A | B | C |
| 1. | Where the amount is received for the first time during the tax year | A-B
Where, A=the amount received for the first time, including the amount allocated by way of bonus on such policy; and B=the aggregate of the premium paid during the term of the specified unit linked insurance policy till the date of receipt of the amounts referred to as ‘A’. |
| 2. | Where the amount is received during the tax year, at any time after the receipt of the amount as referred to in Sl.No.1 | C-D
Where, — C=the amount received during the tax year, at any time after the receipt of the amount as referred to in Sl.No.1, including the amount allocated by way of bonus on such policy excluding the amount that has already been considered for calculation of taxable amount under this sub-rule during the earlier tax year or years; and D =the aggregate of the premium paid during the term of the specified unit linked insurance policy till the date of receipt of the amount referred to as ‘C’, as reduced by the premium that has already been considered for calculation of taxable amount under this sub-rule during the earlier tax year or years. |
(2) The capital gains as computed under sub-rule (1) shall be deemed to be the capital gains arising from the transfer of a unit of an equity-oriented fund set up under a scheme of an insurance company that includes unit linked insurance policies.
(3) In this rule, the expression “specified unit linked insurance policy” means any unit linked insurance policy referred to in section 2(22)(c).
50. Attribution of income taxable under section 67(10) to capital assets remaining with the specified entity, under section 72.– (1) For the purposes of section 72(5), the amount chargeable to income-tax as income of specified entity under section 67(10), shall be attributed to capital asset remaining with the specified entity in the manner provided in this rule.
(2) Where the aggregate of the value of money and the fair market value of the capital asset received by the specified person from the specified entity, in excess of balance in his capital account, chargeable to tax under section 67(10) relates to revaluation of any capital asset or valuation of self-generated asset or self-generated goodwill, of the specified entity, the amount attributable to the capital asset remaining with the specified entity for purpose of section 72(5) shall be–
A= B*(C/D).
Where,–
A= the amount attributable to the capital asset remaining with the specified entity for purpose of section 72(5);
B= amount charged under section 67(10);
C= increase in, or recognition of, value of the asset remaining with the specified entity, because of revaluation or valuation; and
D= aggregate of increase in, or recognition of, value of all assets because of the revaluation or valuation.
(3) Where the aggregate of the value of money and the fair market value of the capital asset received by the specified person from the specified entity, is in excess of the balance in his capital account, charged to tax under section 67(10) does not relates to revaluation of any capital asset or valuation of self-generated asset or self-generated goodwill, of the specified entity, the amount charged to tax under section 67(10) shall not be attributed to any capital asset for the purposes of section 72(5).
(4) Irrespective of anything contained in sub-rule (2) or sub-rule (3), where the aggregate of the value of money and the fair market value of the capital asset received by the specified person from the specified entity, in excess of balance in his capital account, charged to tax under section 67(10) relate only to the capital asset received by the specified person from the specified entity, the amount charged to tax under section 67(10) shall not be attributed to any capital asset for the purposes of section 72(5).
(5) The specified entity shall furnish the details of amount attributed to capital asset remaining with the specified entity in Form No. 27.
(6) The person who is authorised to verify the return of income of the specified entity under section 265 shall verify Form No. 27.
(7) Form No. 27 shall be furnished on or before the due date referred to in section 263(1)(c) for the tax year in which the amount is chargeable to tax under section 67(10).
(8) For the purposes of this rule,–
(a) the amount chargeable to tax under section 67(10) shall relate to revaluation of any capital asset or valuation of self-generated asset or self-generated goodwill, of the specified entity, if the revaluation is based on a valuation report obtained from a registered valuer as defined in rule 56 (f);
(b) the specified entity shall not be entitled for the depreciation on–
i. the increase in value of an asset on account of its revaluation; or
ii the recognition of the value of a self-generated asset or self-generated goodwill, due to its valuation; and
(c) the expressions “self-generated asset” and “self-generated goodwill” shall have the meanings respectively assigned to them in section 67(11)(b).
51. Other conditions required to be fulfilled by the original fund.– (1) For the purposes of section 70(2) [Table: Sl No.5, C(a)(A)(iv)], the original fund, in a case where a capital asset is transferred to a resultant fund being a Category III Alternative Investment Fund, shall fulfil the condition that the aggregate participation or investment in the original fund, either directly or indirectly, by persons resident in India does not exceed 5% of the corpus of such fund at the time of such transfer.
(2) For the purpose of sub-rule (1) the expressions “original fund” and “resultant fund” shall have the meanings respectively assigned to them in section 70(2) [Table: Sl No.5, C(a) and (c)].
52. Rate of exchange for conversion of rupees into foreign currency and reconversion of foreign currency into rupees for purpose of computation of capital gains under section 72.– (1) For the purpose of computing capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company, in the case of an assessee who is a non-resident, the rate of exchange shall be, in the circumstances referred to in column B of the following table, as per column C thereof:—
Table
| S.No | Circumstances | Rate of Exchange |
| A | B | C |
| 1. | For converting the cost of acquisition of the capital asset | The average of the telegraphic transfer buying rate and telegraphic transfer selling rate of the foreign currency initially utilised in the purchase of the said asset, as on the date of its acquisition. |
| 2. | For converting the expenditure incurred wholly and exclusively in connection with the transfer of the capital asset referred to in Sl.No. 1, | The average of the telegraphic transfer buying rate and telegraphic transfer selling rate of the foreign currency initially utilised in the purchase of the said asset, as on the date of transfer of the capital asset. |
| 3. | For converting the full value of consideration received or accruing as a result of the transfer of the capital asset referred to in Sl.No. 1, | The average of the telegraphic transfer buying rate and telegraphic transfer selling rate of the foreign currency initially utilised in the purchase of the said asset, as on the date of transfer of the capital asset. |
| 4. | For converting the capital gains computed in the foreign currency initially utilised in the purchase of the capital asset into rupees, | The telegraphic transfer buying rate of such currency, as on the date of transfer of the capital asset. |
(2) For the purposes of this rule,–
a. “telegraphic transfer buying rate” shall have the meaning assigned to it in rule 206; and
b. “telegraphic transfer selling rate”, in relation to a foreign currency, means the rate of exchange adopted by the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), for selling such currency where such currency is made available by that bank through telegraphic transfer.
53. Computation of fair market value of capital assets for purposes of section 77.– (1) For the purposes of section 77(3)(b), the fair market value of the capital assets shall be the FMV1 determined under sub-rule (2) or FMV2 determined under sub-rule (3), whichever is higher.
(2) The FMV1 shall be the fair market value of the capital assets transferred by way of slump sale determined in accordance with the formula—
A+B+C+D – L,
Where,
A = book value of all the assets (other than jewellery, artistic work, shares, securities and immovable property) as appearing in the books of accounts of the undertaking or the division transferred by way ofslump sale as reduced by the following amount which relate to such undertaking or the division, —
i. any amount of income-tax paid, if any, as reduced by the amount of income-tax refund claimed, if any; and
ii. any amount shown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset;
B = the price which the jewellery and artistic work would fetch if sold in the open market on the basis of the valuation report obtained from a registered valuer;
C = fair market value of shares and securities as determined in the manner provided in rule 57;
D = the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property; and
L= book value of liabilities as appearing in the books of account of the undertaking or the division transferred by way of slump sale, but not including the following amounts which relates to such undertaking or division, namely: —
i. the paid-up capital in respect of equity shares;
ii. the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company;
iii. reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation;
iv. any amount representing provision for taxation, other than amount of income-tax paid, if any, as reduced by the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;
v. any amount representing provisions made for meeting liabilities, other than ascertained liabilities; and
vi. any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares.
(3) FMV2 shall be the fair market value of the consideration received or accruing as a result of transfer by way of slump sale determined in accordance with the formula—
E+F+G+H,
Where,
E = value of the monetary consideration received or accruing as a result of the transfer;
F = fair market value of non-monetary consideration received or accruing as a result of the transfer represented by property referred to in rule 57 [Table: Sl.Nos. 1 to 5] determined in the manner provided in the said rule for the said property;
G = the price which the non-monetary consideration received or accruing as a result of the transfer represented by property, other than immovable property, which is not covered in rule 57 (Table: Sl.No. 1 to 5), would fetch if sold in the open market on the basis of the valuation report obtained from a registered valuer, in respect of property; and
H = the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property in case the non-monetary consideration received or accruing as a result of the transfer is represented by the immovable property.
(4) The fair market value of the capital assets under sub-rules (2) and (3) shall be determined on the date of slump sale and for this purpose valuation date referred to in rule 57 shall also mean the date of slump sale.
(5) For the purposes of this rule,–
a. “artistic work” means archaeological collections, drawings, paintings, sculptures or any work of art; and
b. the expressions “registered valuer” and “securities” shall have the meanings as respectively assigned to them in rule 56.
54. Form of report of an accountant in respect of slump sale.– In case of a slump sale under section 77(4), every assessee is required to submit a report from an accountant as defined in section 515(3)(b), in Form No. 28 before the specified date referred to in section 63.
55. Conditions for reference to Valuation Officers under section 91(1)(b).– For the purposes of Section 91(1)(b)(i),–
a. the percentage of the value of the asset shall be 15%; and
b. the amount shall be ten lakh rupees.
56. Meaning of expressions used in determination of fair market value.– For the purposes of this rule and rule 57,
(a) ―balance sheet”, in relation to any company, means, —
i. in relation to an Indian company, the balance sheet of such company (including the notes annexed thereto and forming part of the accounts) as drawn up on the valuation date which has been audited by the auditor of the company appointed under the laws relating to companies in force; and
ii. in relation to a company, not being an Indian company, the balance sheet of the company (including the notes annexed thereto and forming part of the accounts) as drawn up on the valuation date which has been audited by the auditor of the company, if any, appointed under the laws in force of the country in which the company is registered or incorporated;
(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) “quoted shares or securities” in relation to shares or securities means a share or security quoted on any recognised stock exchange with regularity from time to time, where the quotations of such shares or securities are based on current transaction made in the ordinary course of business;
(d) “recognised stock exchange” shall have the same meaning as assigned to it in section 2(f) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(e) “registered dealer” means a dealer who is registered under Central Sales Tax Act, 1956 (74 of 1956) or general sales tax law for the time being in force in any State including value added tax laws;
(f) “registered valuer” shall have the same meaning as assigned to it in section 513;
(g) “securities” shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(h) “unquoted shares and securities”, in relation to shares or securities, means shares and securities which are not quoted shares or securities; and
(i) ―valuation date” means the date provided in the Table below:
Table
| Sl. No | Section | Valuation date |
| A | B | C |
| 1. | Section 92 | Date on which property or consideration, as the case may be, referred to in section 92 is received by the assessee. |
| 2. | Section 79 | Date on which the capital asset, being share of a company other than a quoted share, referred to in section 79, is transferred. |
| 3. | Section 26(2)(j) | Date on which the inventory is converted, or treated, as a capital asset. |
57. Determination of fair market value.– For the purpose of following sections referred to in column B of the Table below, the fair market value of the property of the nature referred to column C shall be determined in the manner provided in column D thereof:
Table
| Sl. No | Section | Nature of Property | Manner of determination of Fair Market Value |
| A | B | C | D |
| 1 | Sections 26(2)(j) and 92. |
Jewellery | (a) The price which such jewellery would fetch, if sold in the open market on the valuation date; or
(b) if the jewellery is received by way of purchase from a registered dealer on the valuation date, the invoice value of such jewellery; or (c) if the jewellery is received by any other mode and its value exceeds ₹50,000, the assessee may obtain a report from a registered valuer regarding the price it would fetch, if sold in the open market on the valuation date. |
| 2 | Sections 26(2)(j) and 92. |
Archaeological collections,
drawings, paintings, sculptures or any work of art (herein |
(d) The price which such artistic work would fetch, if sold in the open market on the valuation date; or
(e) if the artistic work is received by way of purchase from a registered dealer on the valuation date, the invoice value of such artistic work; or (f) if the artistic work is received through any other means and its value exceeds ₹50,000, the assessee may obtain a report from a registered valuer regarding the price it would fetch, if sold in the open market on the valuation date. |
| 3 | Sections 26(2)(j) and 92. |
Quoted shares and securities | (a) If the quoted shares and securities are received by way of transaction carried out through any recognised stock exchange, the fair market value of such shares and securities shall be the transaction value as recorded in such stock exchange; or
(b) if such quoted shares and securities are received by way of transaction carried out other than through any recognised stock exchange, their fair market shall be– (A)the lowest price of such shares and securities quoted on any recognised stock exchange on the valuation date; and (B) in cases, where on the valuation date, there is no trading in shares and securities on any recognised stock exchange, the lowest price of such shares and securities on any recognised stock exchange on a date immediately preceding the valuation date when such shares and securities were traded on such stock exchange. |
| 4
|
Sections
26(2)(j), 72 and 92.
|
Unquoted equity shares
|
Fair market value of unquoted equity shares = (A + B + C +
D – L) × (PV)/(PE) Where,– A = book value of all the assets as appearing in the books of the company (other than jewellery, artistic work, shares, securities and immovable property) in the balance sheet as reduced by– (g) any amount of income-tax paid, if any, less the amount of income-tax refund claimed, if any; and (h) any amount shown as asset including the unamor-tised amount of deferred expenditure which does not represent the value of any asset; B = the price which the jewellery and artistic work would fetch, if sold in the open market on the basis of the valuation report obtained from a registered valuer; C = fair market value of shares and securities as determined in the manner provided in this rule; D = the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property; and L = book value of liabilities shown in the balance sheet, but not including the following amounts:– (i) the paid-up capital in respect of equity shares; (i) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company; (ii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation; (iii) any amount representing provision for taxation, other than amount of income-tax paid, if any, less the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto; (iv) any amount representing provisions made for meeting liabilities, other than ascertained liabilities; and (v) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares; PV = the paid-up value of such equity shares; and PE = total amount of paid-up equity share capital as shown in the balance sheet. |
| 5 | Sections
26(2)(j), 72 and 92. |
Unquoted shares and securities (other than equity shares in a company) which are not listed in any recognised stock exchange | The price it would fetch, if sold in the open market on the valuation date and the assessee may obtain a report from a merchant banker or an accountant in respect of such valua-tion. |
| 6 | Section 26(2)(j) | Immovable property being land or building or both | The value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in the respect of such immovable property on the valuation date. |
| 7 | Section 26(2)(j) | Any other property other than referred to at Sl. Nos. 1 to 6 above. | The price that such property would ordinarily fetch on sale in the open market on the valuation date. |
58. Prescribed class of persons for the purpose of section 92(3)(i) and section 79.– (1) The provisions of section 92(2)(m) shall not apply to class of persons referred to in column B of the following Table, where such persons receive assets in the nature referred to in column C, subject to satisfaction of the conditions specified in column D thereof:
Table
| S. No | Class of persons | Nature of Asset | Conditions |
| A | B | C | D |
| 4. | Resident of an
unauthorised colony in the National Capital |
Any immovable
property being land or building, or both. |
Where the Central Government by notification,
regularised the transactions of such immovable |
| 5. | Shareholder. | Any movable
property, being unquoted shares, of a company or its subsidiary or the subsidiary of such subsidiary |
(i) Where the Tribunal, on an application moved by the Central Government under section 241 of the Companies Act, 2013 (18 of 2013), has suspended the Board of Directors of such company and has appointed new directors nominated by the Central Government under section 242 of the said Act; and
(j) where the share of the company or its subsidiary or the subsidiary of such subsidiary has been received by the shareholder pursuant to a resolution plan approved by the Tribunal under section 242 of the Companies Act, 2013 (18 of 2013) after affording a reasonable opportunity of being heard to the jurisdictional Principal Commissioner or |
| 3 | Investor or the Investor bank | Any movable
property, being equity shares, of the |
Where the said share has been allotted by the reconstructed bank under the Scheme at a price specified in paragraph 3(3) of the Scheme. |
| 4 | Any person from a
public sector company or the Central Government or any |
Any movable
property, being equity shares of a public |
Such shares have been received under strategic disinvestment |
| 5 | The fund management entity of the resultant fund. | Any movable
property, being shares or units or interest in the resultant fund. |
The shares or units have been received in lieu of shares or units or interest held by the investment manager entity in the original fund, pursuant to the relocation, subject to the following conditions:–
(k) not less than 90% of shares or units or interest in the fund management entity of the resultant fund are held by the same entities or persons, in the same proportion as held by them in the investment manager entity of the original fund; and (l) not less than 90% of the aggregate of shares or units or interest in the investment manager entity of the original fund was held by such entities, or persons. |
(2) The provisions of section 79 shall also not apply to the transfer of any movable property of the nature mentioned in sub-rule (1) [Table: Sl. No. 2] where the conditions mentioned therein are satisfied.
(3) For the purposes of–
(a) sub-rule (1) [Table: Sl.No. 1],–
i. “resident” means a person having physical possession of property on the basis of a registered sale deed or latest set of power of attorney, agreement to sale, will, possession letter and other documents including documents evidencing payment of consideration in respect of a property in unauthorised colonies and includes their legal heirs but does not include a tenant, licensee or permissive user; and
ii. “unauthorised colony” shall have the same meaning as assigned to it in clause (b) of section 2 of the National Capital Territory of Delhi (Recognition of Property Rights of Residents in Unauthorised Colonies) Act, 2019 (45 of 2019);
(b) sub-rule (1) [Table: Sl.No. 2],–
i. a company shall be a subsidiary of another company, if such other company holds more than half in nominal value of the equity share capital of the company; and
ii. “Tribunal” shall have the same meaning as assigned to it in section 2(90) of the Companies Act, 2013 (18 of 2013);
(c) sub-rule (1) [Table: Sl.No. 3],–
i. “investor” shall have the same meaning as assigned to it in paragraph 2(1)(b) of the Scheme;
ii. “investor bank” shall have the same meaning as assigned to it in paragraph 2(1)(c) of the Scheme;
iii. “reconstructed bank” shall have the same meaning as assigned to it in paragraph 2(1)(d) of the Scheme; and
iv. “Scheme” means Yes Bank Limited Reconstruction Scheme, 2020.
(d) sub-rule (1) [Table: Sl.No. 4], ―strategic disinvestment‖ shall have the same meaning as assigned to it in section 116(3)(c); and
(e) sub-rule (1), [Table: Sl.No. 5]- –
i. the expressions “relocation”, “original fund” and “resultant fund” shall have the meanings respectively assigned to them in section 70(2) [Table: Sl. No.5];
ii. “fund management entity” shall have the same meaning as assigned to it in regulation 2(p) of the International Financial Services Centres Authority (Fund Management) Regulations, 2022 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019); and
iii. “investment manager entity” means the fund manager of the original fund regulated by the respective regulation of the jurisdiction in which the original fund is located.
59. Computation of income chargeable to tax under section 92(2)(l).– (1) For the purposes of section 92(2)(l), if a person receives any sum, including the amount allocated by way of bonus, during a tax year under a life insurance policy, then the income chargeable to tax under the said section shall be computed in the following manner:—
(i) where the sum is received for the first time under the life insurance policy during the tax year (herein referred to as first tax year), the income chargeable to tax in the first tax year shall be computed in accordance with the formula—
A-B
Where, —
A = the sum or aggregate of sum received under the life insurance policy during the first tax year; and
B = the aggregate of the premium paid during the term of the life insurance policy till the date of receipt of the sum in the first tax year that has not been claimed as deduction under any other provision of the Act; and
(ii) where the sum is received under the life insurance policy during the tax year subsequent to the first tax year (hereinafter referred to as subsequent tax year), the income chargeable to tax in the subsequent tax year shall be computed in accordance with the formula, —
C-D
Where, —
C = the sum or aggregate of sum received under the life insurance policy during the subsequent tax year; and
D = the aggregate of the premium paid during the term of the life insurance policy till the date of receipt of the sum in the subsequent tax year not being premium which—
a. has been claimed as deduction under any other provision of the Act; or
b. is included in amount ‘B’ or amount ‘D’ of this sub-rule in any of the year or years preceding the tax year.
(2) For the purposes of this rule, the sum received under a life insurance policy shall mean any amount, by whatever name called, received under such policy that is not excluded from the total income of the tax year in accordance with the provisions of Schedule II [Table: Sl.No.2], other than the sum—
a. received under a unit linked insurance policy; or
b. being the income referred to in section 92(2)(d).
60. Conditions for carrying forward or set-off of accumulated loss and unabsorbed depreciation allowance in case of amalgamation.– (1) The conditions referred to in section 116(4)(b)(iii) shall be the following:—
(a) the amalgamated company, owning an industrial undertaking of the amalgamating company by way of amalgamation, shall–
i. achieve the level of production of at least 50% of the installed capacity of the said undertaking before the end of four years from the date of amalgamation; and
ii. continue to maintain the said minimum level of production till the end of five years from the date of amalgamation; and
(b) the amalgamated company shall furnish to the Assessing Officer a certificate in Form No. 29, duly verified by an accountant as defined in section 515(3)(b), with reference to the books of account and other documents showing particulars of production, along with the return of income for the relevant tax year during which the prescribed level of production is achieved and for subsequent relevant tax years falling within five years from the date of amalgamation.
i. For the purposes of sub-rule (1)(a), the Central Government, on an application made by the amalgamated
company, may relax the condition of achieving the level of production or the period during which the same is to be achieved, or both, in suitable cases having regard to the genuine efforts made by the amalgamated company to attain the prescribed level of production and the circumstances preventing such efforts from achieving the same.
ii. For the purposes of this rule, “installed capacity” means the capacity of production existing on the date of amalgamation;
61. Certificate of a medical authority in respect of autism, cerebral palsy and multiple disabilities for the purposes of deduction under section 127 and section 154.– (1) For the purposes of section 127(9)(e) and 154(3), the medical authority responsible for certifying “autism”, “cerebral palsy”, “multiple disabilities”, “person with disability” and “severe disability” referred to in clauses (a), (c), (h), (j) and (o) of section 2, respectively of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999), shall be the following:—
a. a Neurologist having a degree of Doctor of Medicine (MD) in Neurology (in case of children, a Paediatric Neurologist having an equivalent degree); or
b. a Civil Surgeon or Chief Medical Officer in a Government hospital.
(2) For the purposes of sections 127(6), 127(7) and 154(2)(c), the assessee shall furnish along with the return of income, a copy of the certificate issued by the relevant medical authority,–
a. if the person has a disability or severe disability such as autism, cerebral palsy, or multiple disability, in Form No. 30; or
b. in all other cases, the prescribed form mentioned in notifications No. 16-18/97-NI.1, dated the 1st June, 2001, and No. 16-18/97-NI.1, dated the 18th February, 2002, as published in the Gazette of India, shall be submitted as per the Guidelines for the evaluation of various disabilities and certification procedures outlined in the Persons with Disabilities (Equal Opportunities, Protection of Rights, and Full Participation) Act, 1995 (1 of 1996).
(3) If the disability is temporary and needs to be reevaluated after a certain period, the certificate shall be valid for the period starting from the tax year during which the certificate was issued and ending with the tax year during which the validity of such certificate expires.
62. Issuance of prescription in respect of certain diseases and ailments for the purpose of deduction under section 128.– (1) For the purposes of claiming deduction under section 128, the prescription for medical treatment in respect of eligible diseases or ailments mentioned in column B of the following table shall be obtained from the specialists as mentioned in the corresponding column C thereof:
Table
| Sl. No. | Eligible diseases or ailments | Specialists for purpose of issuing prescription |
| A | B | C |
| 1. | Neurological Diseases where the disability level has been certified to be of 40% and above—
(i) Dementia; (ii) Dystonia Musculorum Deformans; (iii) Motor Neuron Disease; (iv) Ataxia; (v) Chorea; (vi) Hemiballismus; (vii) Aphasia; and (i) Parkinsons Disease. |
A Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology. |
| 2. | Malignant cancers. | An Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology. |
| 3. | Full Blown Acquired Immuno-Deficiency Syndrome (AIDS). | Any specialist having a post-graduate degree in General or Internal Medicine. |
| 4. | Chronic renal failure. | A Nephrologist having a Doctorate of Medicine (D.M.) degree in Nephrology or a Urologist having a Master of Chirurgiae (M.Ch.) degree in Urology. |
| 5. | Haematological disorders:
(viii) Haemophilia; (ix) Thalassaemia. |
A specialist having a Doctorate of Medicine (D.M.) degree in Haematology. |
(2) The prescription for eligible diseases or ailments mentioned in column B of the Table in sub-rule (1) may also be issued by a specialist holding a degree equivalent to the degree mentioned in column C thereof, if such equivalent degree is recognised by the Medical Council of India.
(3) In cases, where a patient is receiving treatment at a government hospital for specified diseases or ailments, the prescription may be issued by a full-time specialist with a post-graduate degree in General or Internal Medicine, or any equivalent degree recognised by the Medical Council of India.
(4) The prescription referred to in sub-rule (1) shall be issued in the following format:–
Name of the patient
Age of the patient
Description of Disease/ Ailment
Certified by:
Signature of Specialist:
Name:
Qualification:
Address:
Registration Number:
Name and address of the hospital, if the specialist is working in a government hospital.
63. Prescribed authority for approval of a University or any educational institution of national eminence for purposes of section 133.– (1) For the purpose of section 133(1)(a)(vii), the prescribed authority for granting of approval shall be the Principal Chief Commissioner of Income-tax (Exemptions).
(2) The prescribed authority shall grant approval with the concurrence of –
a. the Secretary, University Grants Commission for a University or any non-technical institution of national eminence; and
b. the Secretary, All India Council of Technical Education for any technical institution of national eminence.
(3) For the purposes of sub-rule (2), —
(a) “All India Council of Technical Education” means the All India Council of Technical Education established under section 3 of the All India Council for Technical Education Act, 1987 (52 of 1987); and
(b) “University Grants Commission” means the University Grants Commission established under section 4 of the University Grants Commission Act, 1956 (3 of 1956).
64. Procedure for specifying an association or institution for purposes of notification under section 133(1)(a)(xxiv).– (1) In specifying an association or institution for notification under section 133(1)(a)(xxiv), the Central Government shall satisfy itself that such association or institution —
a. has as its object the control, supervision, regulation or encouragement in India of the games or sports notified under section 133(7)(e);
b. has a proven record of dedication to the development of infrastructure or promotion of sports or games for at least a period of three years;
c. does not distribute any part of its income in any manner to its members, except as grants to any association or institution affiliated to it;
d. applies the amount received by way of donation referred to in section 133(1)(a)(xxiv) for purposes of development of infrastructure for games or sports in India or for sponsoring of games or sports in India; and
e. maintains regular accounts of its receipt and expenditure and files its return of income regularly.
(2) The notification issued by the Central Government under section 133(1)(a)(xxiv) shall be effective for up to three tax years, including any assessments for tax years prior to the notification date, as specified in the notification.
65. Conditions for claim for deduction under section 134. –For the purposes of claiming deduction under section 134 in respect of rent paid, the assessee shall file declaration in Form No. 31.
66. Furnishing of audit report for claiming deduction under section 46 or 138 or 139 or 140 or 141 or 142 or 143 or 144.– (1) For the purposes of claiming deduction under sections 46 or 138 or 139 or 140 or 141 or 142 or 143 or 144, the accounts of the eligible business for the tax year for which the deduction is claimed shall be audited by an accountant as defined in section 515(3)(b), before the specified date referred to in section 63 and the assessee shall furnish by that date the report of such audit duly signed and verified by such accountant.
(2) The report of the audit of the accounts of an assessee, which is required to be furnished under sub-rule (1), shall be in Form No. 32.
(3) A separate report shall be furnished by each undertaking or enterprise of the assessee claiming deduction under section 46 or 138 or 139 or 140 or 141 or 142 or 143 or 144 and shall be accompanied by the profit and loss account and balance sheet of the undertaking or enterprise as if the undertaking or the enterprise were a distinct entity.
(4) The said Form No. 32 shall be accompanied by the relevant documents as given in column D wherever applicable, as per the relevant sections in column B and the relevant part as mentioned in column C shall be filled, as specified in the following table, duly certified wherever applicable:
Table
| Sl. No |
Section | Relevant Part of Form |
Relevant documents to be attached |
| A | B | C | D |
| 1. | 46 | B1 | Copy of the agreement entered into with the Central Government, State Government, or a local authority. |
| 2. | 138 | B2 | Copy of Form No. 10CCB of the Income-tax Rules, 1962 made under the Income-tax Act, 1961, as it existed prior to its repeal, of developer |
| 3. | 139 | B3 | Copy of the notification of the Special Economic Zone (SEZ). |
| 4. | 140 | B4 | Copy of certificate issued by the Inter-Ministerial Board of Certification. |
| 5. | 141 | B5 | Copy of approval certificate and completion certificate of the Housing Project, Copy of the notification of the scheme by the Board. |
| 6. | 142 | B6 | Copy of approval certificate and completion certificate of the Housing Project |
| 7. | 142 | B6 | Copy of notification issued under section 80-IBA of the Income-tax Act, 1961, as it existed prior to its repeal in the case of a Rental Housing Project |
| 8. | 143 | B7 | Copy of the agreement entered into with the Central Government, State Government, or a local authority. |
67. Form of particulars to be furnished along with return of income for claiming deduction under section 144.– The particulars, which are required to be furnished by the assessee along with the return of income regarding the amount credited to a Special Economic Zone Reinvestment Allowance Reserve Account and utilisation of the said amount shall be in Form No. 33.
68. Furnishing of report under section 146.– Report of an accountant as defined in section 515(3)(b), which is required to be furnished by the assessee under section 146(3)(c) along with the return of income shall be in Form No. 34.
69. Report of accountant to be furnished under section 147(4)(a).– The report of the accountant, as defined in section 515(3)(b), which is required to be furnished by the assessee under section 147(4)(a), shall be in Form No. 35
70. Form of certificate to be furnished under section 151(5). – (1) For the purposes of claim of deduction under section 151, the assessee shall be required to furnish a certificate in Form No. 36 along with the return of income.
(2) The person responsible for making the payment to the assessee, shall verify the certificate in Form No. 36.
71. Prescribed authority and form of certificate to be furnished under section 152(5).– For the purposes of section 152(5),–
a. the prescribed authority shall be the Controller referred to in section 2(1)(b) of the Patents Act, 1970 (39 of 1970); and
b. the assessee shall be required to furnish a certificate in Form No. 37 from the prescribed authority along with the return of income.
72. The prescribed authority and form of certificate to be furnished under sections 151(6) and section 152(6).– For the purposes of sections 151(6) and 152(6),–
a. the prescribed authority shall be the Reserve Bank of India or another authorised authority under current laws regulating foreign exchange transactions; and
b. the certificate shall be furnished in Form No. 38.
73. Relief under section 157(1), when salary is paid in arrears or in advance, gratuity, etc.–(1) Where, the total income of an assessee for any tax year (referred to as the relevant tax year in this rule) is assessed at a rate higher than the rate at which it would otherwise have been assessed, on account of receipts in relevant tax year as specified in column B of the following Table, the relief admissible under section 157(1) shall be as specified in column C thereof:
Table
| Sl.No. | Receipts | Relief |
| A. | B. | C. |
| 1. | Any portion of salary received in arrears or in advance or, any portion of family pension received in arrears (herein referred to as the ―additional salary‖ or ―additional family pension‖, as the case may be). | Relief = A-B, if A exceeds B, where –
A=C-D; B=Aggregate of E; E=F-G and the computation of relief shall be carried out in the following steps. Step-1: Where the additional salary or additional family pension relates to one or more tax years, the tax years to which the additional salary or additional family pension relates and the amount relating to each such tax year shall first be ascertained. Step 2: Calculate A=C-D, Where,– C = tax on total income of the relevant tax year; D= tax on total income, as reduced by the additional salary or additional family pension, as if the total income so reduced were the total income of the relevant tax year; and A = tax on the additional salary or additional family pension for the relevant tax year. Step-3: Calculate E = F – G, Where,– G = tax payable in respect of the total income of each tax year ascertained in Step-1; F= tax payable on the total income of such tax year as increased by the amount relating to such tax year as ascertained in Step-1, as if the total income so increased were the total income of that tax year; and E= tax on the additional salary or additional family pension for each tax year ascertained in Step-1. Step-4: B = aggregate of tax on the additional salary or additional family pension. Calculate “B” to be the total of tax on the additional salary or additional family pension, which was ascertained as E in Step 3 for all tax years ascertained in Step 1. |
| 2. | Gratuity received in respect of past services extending over a period of greater than or equal to five years but less than fifteen years. | Relief = G x (R1 -RAvg), if R1 exceeds R Avg
Where,– G = gratuity received in the relevant tax year R1 = average rate of tax on the total income including gratuity amount received in Y1: RAvg = ( R2+R3)/2; R2 = average rate of tax on the total income for Y2 as increased by one-half of the gratuity R3= average rate of tax on the total income for Y3 as increased by one-half of the gratuity received, as if the income so increased were the total income of that tax year; Y1 = relevant tax year, Y2= tax year immediately preceding Y1, and Y3 = tax year immediately preceding Y2. |
| 3. | Gratuity received in respect of past services extending over a period of not less than fifteen years. | Relief = G x (R1 -RAvg), if R1 exceeds R Avg.
Where,– G = gratuity received in the relevant tax year; R1 = average rate of tax on the total income including gratuity amount received in Y1; RAvg =( R2+R3+R4)/3; R2 = average rate of tax on the total income for Y2 as increased by one-third of the gratuity R3= average rate of tax on the total income for Y3 as increased by one-third of the gratuity received, as if the income so increased were the total income of that tax year; R4= average rate of tax on the total income for Y4 as increased by one-third of the gratuity Y1 = relevant tax year; Y2 = tax year immediately preceding Y1; Y3 = tax year immediately preceding Y2; and Y4 = tax year immediately preceding Y3. |
| 4. | Compensation received from the employer or
the former employer at or in connection with the termination of employment after continuous service for not less than three years and where the unexpired portion of term of employment is also not less than three years |
Relief = C x (R1-RAvg), if R1 exceeds R Avg. Where,–
C = compensation amount received in the relevant tax year; R1 = average rate of tax on the total income including compensation amount received in Y1; RAvg =( R2+R3+R4)/3; R2= average rate of tax on the total income for Y2 as increased by one-third of the compensation amount received, as if the income so increased were the total income of that tax year; R3= average rate of tax on the total income for Y3 as increased by one-third of the compensation amount received, as if the income so increased were the total income of that tax year; and R4= average rate of tax on the total income for Y4 as increased by one-third of the compensation amount received, as if the income so increased were the total income of that tax year; Y1 = relevant tax year, Y2 = tax year immediately preceding Y1, Y3 = tax year immediately preceding Y2, and Y4 = tax year immediately preceding Y3 |
| 5. | Commutation of pension received | Relief = P x (R1-RAvg), if R1 exceeds R Avg. Where –
P = amount of commutation of pension; R1 = average rate of tax on the total income including amount of commutation of pension received in Y1; RAvg =( R2+R3+R4)/3; R2= average rate of tax on the total income for Y2 as increased by one-third of the amount of commutation of pension received, as if the income so increased were the total income of that tax year; R3= average rate of tax on the total income for Y3 as increased by one-third of the amount of commutation of pension received, as if the income so increased were the total income of that tax year; and R4= Average rate of tax on the total income for Y4 as increased by one-third of the amount of commutation of pension received, as if the income so increased were the total income of that tax year; Y1 = relevant tax year; Y2 = tax year immediately preceding Y1; Y3 = tax year immediately preceding Y2; and Y4 = tax year immediately preceding Y3. |
(2) In case of any other receipts, the Board may, having regard to the circumstances of the case, allow such relief as it deems fit.
(3) To claim relief under section 157(1), the assessee shall furnish the particulars specified in Form No. 39 on or before the due date specified under section 263(1)(c).
(4) Where the assessee, being a Government servant or an employee in a company, co-operative society, local authority, university, institution, association or body, is entitled to relief under section 157(1), he may furnish the particulars specified in Form No. 39 to the person responsible for making the payment referred to in section 392(1).
74. Taxation of income from retirement benefit account maintained in a notified country. – (1) If a specified person has income accrued in a specified account or accounts during a tax year, such income shall, at his option, be included in his total income of the tax year in which income from the said account or accounts is taxed upon withdrawal or redemption, as the case may be, in the notified country.
(2) Where the option has been exercised by a specified person under sub-rule (1), the total income of the specified person for the tax year in which income is taxable under sub- rule (1) shall not include the income which, —
a. has already been included in the total income of such specified person in any of the earlier tax years during which such income accrued and tax thereon has been paid in accordance with the provisions of the Act; or
b. was not taxable in India, in the tax year during which such income accrued, on account of,—
i. such specified person being a non-resident, or not ordinarily resident as referred to in section 6(13), during that tax year; or
ii. application of the Double Taxation Avoidance Agreement, if any, and the foreign tax paid on such income, if any, shall be ignored for the purposes of computation of the foreign tax credit under rule 76.
(3) The option under sub-rule (1) by the specified person shall be exercised
i. in respect of all the specified accounts maintained by the specified person; and
ii. in Form No. 40, which shall be furnished on or before the due date specified under section 263(1)(c).
(4) In a case where the specified person becomes a non-resident during any relevant tax year, then—
i. the option exercised under the sub-rule (1) shall be deemed to have never been exercised with effect from the relevant tax year; and
ii. the income which has accrued in the specified account or accounts during the period, beginning with the tax year in respect of which the option under the said sub-rule was exercised and ending with the tax year immediately preceding the relevant tax year, shall be taxable during the tax year immediately preceding the relevant tax year, and tax shall be paid on or before the due date of filing the return of income for the relevant tax year.
(5) Subject to the provisions of sub-rule (4), once the option is exercised for a specified account or accounts in respect of a tax year under sub-rule (1) in Form No. 40, it shall apply to all subsequent tax years and cannot be subsequently withdrawn for the tax year for which the option was exercised, or for any subsequent tax year.
(6) For this rule,—
a. the expressions “notified country”, “specified account” and “specified person” shall have the meanings respectively assigned to them in section 158(2);
b. “relevant tax year” means the tax year during which the specified person becomes non-resident subsequent to the tax year in respect of which option under sub-rule (1) has been exercised.
75. Other documents and information to be provided for claiming double taxation relief under section 159(1) and (2).— (1) For the purposes of claiming any double taxation relief under an agreement mentioned in section 159(1) or (2), the other documents and information to be provided by an assessee (not being a resident) under section 159(8)(b) shall be as per Form No. 41.
(2) The assessee shall keep and maintain such documents as are necessary to substantiate the information provided in Form No. 41 and the income-tax authority may call for the said documents to verify the claim of relief.
(3) An assessee, being a resident in India, for obtaining a certificate of residence for the purposes of an agreement referred to in section 159(1) and (2) shall make an application in Form No. 42 to the Assessing Officer.
(4) The Assessing Officer, on receipt of the application and on being satisfied in this behalf, shall issue a certificate of residence in Form No. 43.
76. Foreign tax credit.— (1) An assessee, being a resident shall be allowed a credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the tax year in which the income corresponding to such tax has been offered to tax or assessed to tax in India, in the manner and to the extent as specified in this rule.
(2) In a case, where income on which foreign tax has been paid or deducted, is offered to tax in more than one tax year, credit of foreign tax shall be allowed across those tax years in the same proportion in which the income is offered to tax or assessed to tax in India.
(3) The foreign tax referred to in sub-rule (1) shall mean, —
(a) in respect of a country or specified territory outside India with which India has entered into an agreement for the relief or avoidance of double taxation of income in terms of section 159, the tax covered under the said agreement;
(b) in respect of any other country or specified territory outside India, the tax payable under the law in force in that country or specified territory in the nature of income-tax referred to in section 160(3)(a).
(4) The credit under sub-rule (1) shall be available against the amount of tax, surcharge and cess payable under the Act, but not in respect of any sum payable by way of interest, fee or penalty.
(5) No credit under sub-rule (1) shall be available in respect of any amount of foreign tax or part thereof, which is disputed in any manner by the assessee, subject to the provisions of sub-rule (6).
(6) If the assessee, within six months from the end of the month in which the dispute is fmally settled, furnishes evidence of settlement of dispute and an evidence to the effect that the liability for payment of such foreign tax has been discharged by him and furnishes an undertaking that no refund in respect of such amount has directly or indirectly been claimed or shall be claimed, the credit of such disputed tax shall be allowed for the year in which such income is offered to tax or assessed to tax in India.
(7) The credit of foreign tax shall be the aggregate of the amounts of credit computed separately for each source of income arising from a particular country or specified territory outside India and shall be given effect to in the following manner: —
(a) the credit shall be the lower of the tax payable under the Act on such income and the foreign tax paid on such income, so, however, that where the foreign tax paid exceeds the amount of tax payable in accordance with the provisions of the agreement for relief or avoidance of double taxation, such excess shall be ignored;
(b) the credit shall be determined by conversion of the currency of payment of foreign tax at the telegraphic transfer buying rate on the last day of the month immediately preceding the month in which such tax has been paid or deducted.
(8) In a case where any tax is payable under the provisions of section 206, the credit of foreign tax shall be allowed against such tax in the same manner as is allowable against any tax payable under the provisions of the Act other than the provisions of the said sections (herein referred to as the normal provisions).
(9) Where the amount of foreign tax credit available against the tax payable under the provisions of section 206 exceeds the amount of tax credit available against the normal provisions, then, while computing the amount of credit under section 206(1)(m) to (p) and section 206(2)(e) to (h), in respect of the taxes paid under section 206(1) and (2), as the case may be, such excess shall be ignored.
(10) Credit of any foreign tax shall be allowed on furnishing the following documents by the assessee: —
(a) a statement of income from the country or specified territory outside India offered for tax for the tax year and of foreign tax deducted or paid on such income in Form No. 44 and verified in the manner specified therein; and
(b) certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the assessee, —
(i) from the tax authority of the country or specified territory outside India; or
(ii) from the person responsible for deduction of such tax; or
(iii) signed by the assessee.
(11) The certificate or statement furnished by the assessee in sub-rule (10)(b) shall be valid, if it is accompanied by —
(a) an acknowledgement of online payment or bank counter foil or challan for payment of tax where the payment has been made by the assessee; or
(b) proof of deduction, where the tax has been deducted.
(12) The statement in Form No. 44 referred to in sub-rule (10)(a) and the certificate or the statement referred to in sub-rule (10)(b) shall be furnished within twelve months from the end of the relevant tax year in which the income referred to in sub-rule (1) has been offered to tax or assessed to tax in India and the return for such tax year has been furnished within the time specified under section 263(1) or (4), subject to the provisions of sub-rule (13).
(13) Where the return has been furnished under section 263(6)(a), the statement in Form No. 44 referred to in sub-rule (10)(a) and the certificate or the statement referred to in sub-rule (10)(b), to the extent it relates to the income included in the updated return, shall be furnished on or before the date on which such return is furnished.
(14) Form No. 44 shall also be furnished in a case, where the carry backward of loss of the current year or revision of return or similar statement, the case may be, of any year or any other reason results in refund of foreign tax for which credit has been claimed in any tax year or tax years.
(15) For the purposes of sub-rule (6), the assessee shall furnish an intimation in Form No. 45 and evidence of settlement of dispute including evidence of payment of tax.
(16) Form No. 44 shall be verified by an accountant defined in section 515(3)(b), —
(a) where the assessee is a company; or
(b) in all other cases, where the amount of foreign tax paid outside India for a tax year equals or exceeds Z 100000.
(17) Form No. 45 shall be verified by an accountant defined in section 515(3)(b) in a case, where Form No. 44 filed for the relevant tax year was required to be verified by an accountant under sub-rule (16).
(18) For the purposes of this rule, the expression “telegraphic transfer buying rate” shall have the meaning assigned to it in rule 207.
77. Meaning of expressions used in determination of arm’s length price.— For the purpose of this rule and rules 78 to 84, —
(a) “associated enterprise” shall have the meaning assigned to it in section 162;
(b) “enterprise” shall have the meaning assigned to it in section 173(b) and shall, for the purposes of a specified domestic transaction, include a unit, or an enterprise, or an undertaking or a business of a person who undertakes such transaction;
(c) “property” includes goods, articles or things, and intangible property;
(d) “services” include financial services;
(e) “transaction” includes a number of closely linked transactions; and
(f) “uncontrolled transaction” means a transaction between enterprises other than associated enterprises, whether resident or non-resident.
78. Other method for determination of arm’s length price.— For the purposes of section 165(1)(f), the other method for determination of the arm’s length price in relation to an international transaction or a specified domestic transaction shall be any method which takes into account the price, which —
(a) has been charged or paid; or
(b) would have been charged or paid,
for the same or similar uncontrolled transaction, with or between non-associated enterprises, under similar circumstances, considering all the relevant facts.
79. Determination of arm’s length price under section 165.— (1) For the purposes of section 165(2), the arm’s length price in relation to an international transaction or a specified domestic transaction shall be determined by any of the following methods provided in this sub-rule, being the most appropriate method, in the manner specified therein.
(a) comparable uncontrolled price method, by which, —
(i) the price charged or paid for property transferred or services provided in a comparable uncontrolled transaction, or a number of such transactions, is identified;
(ii) such price is adjusted to account for differences, if any, between an international transaction or a specified domestic transaction and the comparable uncontrolled transactions or between the enterprises entering into such transactions, which could materially affect the price in the open market; and
(iii) the adjusted price arrived at under sub-clause (ii) is taken to be an arm’s length price in respect of the property transferred or services provided in the international transaction or the specified domestic transaction; or
(b) resale price method, by which, —
(i) the price at which property purchased or services obtained by the enterprise from an associated enterprise is resold or are provided to an unrelated enterprise, is identified;
(ii) such resale price is reduced by the amount of a normal gross profit margin accruing to the enterprise or to an unrelated enterprise from the purchase and resale of the same or similar property or from obtaining and providing the same or similar services, in a comparable uncontrolled transaction, or a number of such transactions;
(iii) the price so arrived at is further reduced by the expenses incurred by the enterprise directly in connection with the purchase of property or obtaining of services;
(iv) the price so arrived at is adjusted to take into account the functional and other differences, including differences in accounting practices, if any, between the international transaction or the specified domestic transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of gross profit margin in the open market; and
(v) the adjusted price arrived at under sub-clause (iv) is taken to be an arm’s length price in respect of the transaction of purchase of property or obtaining of the services by the enterprise from its associated enterprise; or
(c) cost plus method, by which, —
(i) the direct and indirect costs of production incurred by the enterprise in respect of property transferred or services provided to an associated enterprise, are determined;
(ii) the amount of a normal gross profit mark-up on such costs (computed according to the same accounting norms) arising from the transfer or provision of the same or similar property or services by the enterprise, or by an unrelated enterprise, in a comparable uncontrolled transaction, or a number of such transactions, is determined;
(iii) the normal gross profit mark-up referred to in sub-clause (ii) is adjusted to take into account the functional and other differences, if any, between the international transaction or the specified domestic transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect such profit mark-up in the open market;
(iv) the costs referred to in sub-clause (i) are increased by the adjusted profit mark-up arrived at under sub-clause (iii); and
(v) the sum so arrived at is taken to be an arm’s length price in relation to the supply of the property or provision of services by the enterprise; or
(d) profit split method, which may be applicable mainly, in, —
(i) an international transaction or a specified domestic transaction involving either the transfer of unique intangibles or unique and valuable contributions by each of the enterprises involved in the transaction; or
(ii) multiple international transactions or specified domestic transactions which are so inter-related that they cannot be evaluated separately for the purpose of determining the arm’s length price of any one transaction, under which the following two approaches may be used —
(A) contribution profit split method, by which, —
(I) the combined net profit of the associated enterprises arising from the international transaction or the specified domestic transaction in which they are engaged, is determined;
(II) the relative contribution made by each of the associated enterprises to the earning of such combined net profit, is then evaluated on the basis of the functions performed, assets employed or to be employed and risks assumed by each enterprise and on the basis of reliable external market data, which indicates how such contribution would be evaluated by unrelated enterprises performing comparable functions in similar circumstances;
(III) the combined net profit is then split amongst the enterprises in proportion to their relative contributions, as evaluated under sub-item (II); and
(IV) the profit thus apportioned to the assessee is taken into account to arrive at an arm’s length price in relation to the international transaction or the specified domestic transaction;
(B) residual profit split method, by which, —
(I) the combined net profit of the associated enterprises arising from the international transaction or the specified domestic transaction in which they are engaged, is determined;
(II) the combined net profit referred to in sub-item (I) may, in the first instance, be partially allocated to each enterprise so as to provide it with an arm’s length return appropriate for the contributions which can be reliably benchmarked using comparable uncontrolled transactions,
(III) the residual net profit remaining after such allocation may be split amongst the enterprises in proportion to their relative contributions in the manner specified under items (II) and (III) of item (A); and
(IV) the aggregate of the net profit allocated to the enterprise for contributions which can be reliably benchmarked using comparable uncontrolled transactions in together with the residual net profit apportioned to that enterprise on the basis of its relative contributions shall be taken into account to arrive at an arm’s length price in relation to the international transaction or the specified domestic transaction; or
(e) transactional net margin method, by which, —
(i) the net profit margin realised by the enterprise from an international transaction or a specified domestic transaction entered into with an associated enterprise is computed in relation to costs incurred or sales effected or assets employed or to be employed by the enterprise or having regard to any other relevant base;
(ii) the net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same base;
(iii) the net profit margin referred to in sub-clause (ii) arising in comparable uncontrolled transactions is adjusted to take into account the differences, if any, between the international transaction or the specified domestic transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of net profit margin in the open market;
the net profit margin realised by the enterprise and referred to in sub-clause (i) is established to be the same as the net profit margin referred to in sub-clause (iii); and
the net profit margin thus established is then taken into account to arrive at an arm’s length price in relation to the international transaction or the specified domestic transaction; or
(f) any other method as provided in rule 78.
(2) For the purposes of sub-rule (1), the comparability of an international transaction or a specified domestic transaction with an uncontrolled transaction shall be judged with reference to the following factors (herein referred to as the comparability factors): —
(a) the characteristics of the property transferred or services provided in either transaction;
(b) the functions performed, taking into account assets employed or to be employed and the risks assumed, by the respective parties to the transactions;
(c) the contractual terms (whether or not such terms are formal or in writing) of the transactions which lay down explicitly or implicitly how the responsibilities, risks and benefits are to be divided between the respective parties to the transactions; and
(d) the conditions prevailing in the markets in which the respective parties to the transactions operate, including the geographical location, depth and size of the markets, the laws and Government orders in force, costs of labour and capital in the markets, overall economic development, level of competition and whether the markets are wholesale or retail.
(3) An uncontrolled transaction shall be comparable to an international transaction or a specified domestic transaction, if—
(a) none of the differences, if any, between the transactions being compared, or between the enterprises entering into such transactions, are likely to materially affect the price or cost charged or paid in, or the profit arising from, such transactions in the open market; or
(b) reasonably accurate adjustments can be made to eliminate the material effects of such differences.
(4) The data to be used in analysing the comparability of an uncontrolled transaction with an international transaction or a specified domestic transaction shall be the data relating to the financial year (hereinafter in this rule and in rule 81 referred to as the current year) in which the international transaction or the specified domestic transaction.
(5) In a case where the most appropriate method for determination of the arm’s length price of an international transaction or a specified domestic transaction is resale price method or cost-plus method or transactional net margin method, then, irrespective of anything contained in sub-rule (4), the data to be used for analysing the comparability of an uncontrolled transaction with an international transaction or a specified domestic transaction shall be —
(a) the data relating to the current year; or
(b) the data relating to the first preceding year, if the data relating to the current year is not available at the time of furnishing the return of income by the assessee for the tax year; and where the data relating to the current year is subsequently available at the time of determination of arm’s length price of an international transaction or a specified domestic transaction during the course of any assessment proceeding for the tax year, then, such data shall be used for such determination irrespective of the fact that the data was not available at the time of furnishing the return of income of the relevant tax year.
80. Most appropriate method.— (1) For the purposes of section 165(2)(a), the most appropriate method shall be the method which is best suited to the facts and circumstances of each particular international transaction or specified domestic transaction and which provides the most reliable measure of an arm’s length price in relation to the international transaction or the specified domestic transaction, as the case may be.
(2) The following factors shall be taken into account for selecting the most appropriate method: —
(a) the nature and class of the international transaction or the specified domestic transaction;
(b) the class or classes of associated enterprises entering into the transaction and the functions performed by them taking into account assets employed or to be employed and risks assumed by such enterprises;
(c) the availability, coverage and reliability of data necessary for application of the method;
(d) the degree of comparability existing between the international transaction or the specified domestic transaction and the uncontrolled transaction and between the enterprises entering into such transactions;
(e) the extent to which reliable and accurate adjustments can be made to account for differences, if any, between the international transaction or the specified domestic transaction and the comparable uncontrolled transaction or between the enterprises entering into such transactions; and
(f) the nature, extent and reliability of assumptions required to be made in application of a method.
81. Determination of arm’s length price in certain cases.— (1) Where in respect of an international transaction or a specified domestic transaction, the application of the most appropriate method referred to in section 165(3)(b) results in determination of more than one price, the arm’s length price in respect of such transactions shall be computed in accordance with the provisions of this rule.
(2) A dataset shall be constructed by placing the prices referred to in sub-rule (1) in an ascending order and the arm’s length price shall be determined on the basis of the dataset so constructed.
(3) For the purposes of sub-rule (2), where the most appropriate method is the resale price method, cost plus method, or transactional net margin method, and where the comparable uncontrolled transaction undertaken by an enterprise, not being the enterprise undertaking such transactions referred to in sub-rule (1), has been identified using data relating to—
(a) the current year, and the said enterprise has undertaken the same or similar comparable uncontrolled transaction, in either or both of the two financial years immediately preceding the current year, then, —
(i) the price in respect of such transaction in such year (or years) shall be determined by applying the most appropriate method in the similar manner as applied in the current year; and
(ii) the weighted average of such prices, as computed under sub-rule (5), shall be included in the dataset under sub-rule (2) instead of price referred to in sub-rule (1);
(b) the financial year immediately preceding the current year (if the data relating to current tax year is not available at the time of furnishing return of income for that year), and the said enterprise has undertaken the same or similar comparable uncontrolled transaction in the financial year immediately preceding the two financial years, then—
(i) the price in respect of such transaction shall be determined by applying the most appropriate method in the similar manner as it was applied in the financial year immediately preceding the current year; and
(ii) the weighted average of such prices, as computed under sub-rule (5), shall be included in the dataset under sub-rule (2) instead of price referred to in sub-rule (1).
(4) Where the use of data relating to the current year, in terms of rule 79(5), establishes that—
(a) the enterprise has not undertaken the same or similar uncontrolled transaction during the current year; or
(b) the uncontrolled transaction undertaken during the current year is not a comparable uncontrolled transaction,
then, irrespective of anything else, neither the price nor the weighted average of prices of the comparable uncontrolled transactions shall be included in the dataset.
(5) Where an enterprise has undertaken comparable uncontrolled transactions in more than one financial year, the weighted average of the prices of such transactions for the purposes of sub-rules (2), (3) and (4) shall be computed based on the method used for determination of prices as specified in column B of the following Table and by assigning weights to the factors specified in column C thereof: —
Table
| SL No. | Method | Factors to which weight is assigned |
| A | B | C |
| 1. | Resale price method. | Quantum of sales considered for arriving at the respective prices. |
| 2. | Cost plus method. | Quantum of costs considered for arriving at the respective prices. |
| 3. | Transactional net margin method. | Quantum of costs incurred, sales effected, assets employed or to be employed, or any other base considered for arriving at the respective prices. |
(6) Where the most appropriate method is comparable uncontrolled price method or resale price method or cost plus method or transactional net margin method and the dataset constructed in accordance with sub-rule (2) consists of six or more entries, an arm’s length range beginning from the 35th percentile of the dataset and ending on the 65th percentile of the dataset shall be constructed and, if the price at which the international transaction or the specified domestic transaction has actually been undertaken is —
(a) within such arm’s length range, such price shall be deemed to be the arm’s length price;
(b) outside such arm’s length range, the median of the dataset shall be used to compute the arm’s length price.
(7) Where the provisions of sub-rule (6) are not applicable, the arm’s length price shall be —
(a) the arithmetical mean of all the values included in the dataset; or
(b) the price at which such transaction has actually been undertaken, if the variation between the arm’s length price so determined and the price at which the international transaction or the specified domestic transaction has actually been undertaken does not exceed such percentage, not exceeding 3% of the latter, as may be notified in this behalf by the Central Government.
(8) For the purposes of this rule, —
(a) “median” of the dataset, having values arranged in an ascending order, shall be —
(i) the lowest value in the dataset where at least 50% of the values are less than or equal to it; or
(ii) the arithmetic mean of such lowest value and the value immediately succeeding it in the dataset, if the number of all values that are equal to or less that the aforesaid value is a whole number;
(b) (i) “35th percentile” of a dataset, having values arranged in an ascending order, shall be —
(A) the lowest value in the dataset such that at least 35% of the values included in the dataset are equal to or less than such value; or
(B) the arithmetic mean of such lowest value and the value immediately succeeding it in the dataset, if the number of all values that are equal to or less that the aforesaid value is a whole number; and
(ii) “65th percentile” of a dataset, having values arranged in an ascending order, shall be —
(A) the lowest value in the dataset such that at least 65% of the values included in the dataset are equal to or less than such value; or
(B) the arithmetic mean of such lowest value and the value immediately succeeding it in the dataset, if the number of all values that are equal to or less that the aforesaid value is a whole number.
Illustration 1
Enterprise X has undertaken controlled transaction with its associated enterprises during the current year. After taking into account the facts and circumstances, transactional net margin method has been selected as the most appropriate method, enterprise X has been selected as the tested party, and the ratio of operating profit (OP) to operating expense (OE) has been selected as the profit level indicator (PLI). The data of the comparable uncontrolled transactions is available for the current year under consideration at the time of furnishing return of income by the assessee and based on the same, seven non-associated enterprises have been identified to have undertaken the comparable uncontrolled transactions in the current year. All the identified comparable enterprises have also undertaken comparable uncontrolled transactions in a period of two years preceding the current year. The weighted average PLI calculation for each non-associated enterprise shall be as follows:
| Sl. No. | Name of non- associated enterprise |
Year 1 | Year 2 | Year 3 [Current Year] |
Aggregation of OE and OP | Weighted Average PLI |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| 1. | A | OE = 100 | OE = 150 | OE = 225 | Total OE = 475 | OP/OE = 12% |
| OP = 12 | OP = 10 | OP = 35 | Total OP = 57 | |||
| 2. | B | OE = 80 | OE = 125 | OE = 100 | Total OE = 305 | OP/OE = 8.2% |
| OP = 10 | OP = 5 | OP = 10 | Total OP = 25 | |||
| 3. | C | OC=E = 250 | OE = 230 | OE = 250 | Total OE = 730 | OP/OE= 9% |
| OP = 22 | OP = 26 | OP = 18 | Total OP = 66 | |||
| 4. | D | OE = 180 | OE= 220 | OE = 150 | Total OE = 550 | OP/OE = 6% |
| OP = (-)9 | OP = 22 | OP = 20 | Total OP = 33 | |||
| 5. | E | OE = 140 | OE = 100 | OE = 125 | Total OE = 365 | OP/OE = 2.2% |
| OP = 21 | OP = (-) 8 | OP = (-) 5 | Total OP = 8 | |||
| 6. | F | OE = 160 | OE= 120 | OE = 140 | Total OE = 420 | OP/OE = 11.9% |
| OP = 21 | OP = 14 | OP = 15 | Total OP = 50 | |||
| 7. | G | OE = 150 | OE = 130 | OE = 155 | Total OE = 435 | OP/OE = 10.57% |
| OP = 21 | OP = 12 | OP = 13 | Total OP = 46 |
From the above, the dataset will be constructed by arranging the weighted average values of PLI in an ascending order as follows:
| Sl. No. | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| Values | 2.2% | 6% | 8.2% | 9% | 10.57% | 11.9% | 12% |
For deriving the arm’s length range, the data place of 35th and 65th percentile shall be computed in the following manner:
Total number of data points in dataset x (35/100)
Total number of data points in dataset x (65/100)
Thus, the data place of the 35th percentile = 7 x 0.35 = 2.45.
Since this is not a whole number, the next higher data place, that is, the value at the 3rd place would have at least 35% of the values below it. The 35th percentile, is therefore, value at the 3rd place, that is, 8.2%.
The data place of the 65th percentile is = 7 x 0.65 = 4.55.
Since this is not a whole number, the next higher data place, that is, the value at the5th place would have at least 65% of the values below it. The 65th percentile is therefore value at 5th place, that is, 10.57%.
The arm’s length range will be beginning at 8.2% and ending at 10.57%.
Therefore, if the PLI in case of the enterprise X that has undertaken the international transaction or the specified domestic transaction is equal to or more than 8.2% and less than or equal to 10.57%, the price at which such international transaction or the specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price. No adjustment shall be required.
However, if the PLI in case of the enterprise X is lower than the 35th percentile of the arm’s length range, that is, 8.2%, then for the purpose of determining the arm’s length price, the median of the dataset shall be used. The median will be first determined in the following manner:
The data place of median is calculated by first computing the total number of data point in the dataset x (50/100). In this case it is 7 x 0.5 = 3.5.
Since this is not a whole number, the next higher data place, that is, the value at the 4th place in the dataset would have at least 50% of the values below it (median).
The median in this case is 9%. Therefore, the PLI at arm’s length shall be 9% and the controlled transaction shall be adjusted so as to yield this PLI for the controlled enterprise X.
Illustration 2
In case of the Enterprise X referred to in Illustration 1, the data of the current year is available only in respect of non-associated enterprises A, C, E, F and G at the time of furnishing the return of income by the assessee. In respect of non-associated enterprises B and D, the data of the financial year preceding the tax year is available at the time of furnishing the return of income and the same has been used to identify comparable uncontrolled transactions undertaken by enterprises B and D. Further, if these seven non-associated enterprises have also undertaken comparable uncontrolled transactions in either or both of the two financial years immediately preceding the tax year then such data has been included in the dataset. The weighted average PLI calculation for each non-associated enterprise shall be as follows:
| Sl. No. |
Name of non- associated enterprise |
Year 1 | Year 2 | Year 3 [Tax Year] |
Aggregation of OE and OP | Weighted Average PLI |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| 1 | A | OE = 100 | OE = 150 | OE = 225 | Total OE = 475 | OP/OE = 12% |
| OP = 12 | OP = 10 | OP = 35 | Total OP = 57 | |||
| 2 | B | OE = 80 | OE = 125 | Data not available |
Total OE = 205 | OP/OE= 7.31% |
| OP = 10 | OP = 5 | Total OP = 15 | ||||
| 3 | C | OE = 250 | OE = 230 | OE = 250 | Total OE = 730 | OP/OE = 9% |
| OP = 22 | OP = 26 | OP = 18 | Total OP = 66 | |||
| 4 | D | Data not available |
OE = 220 | Data not available |
Total OE = 220 | OP/OE = 10% |
| OP = 22 | Total OP = 22 | |||||
| 5 | E | Data not available |
Data not available |
OE = 125 | Total OE = 125 | OP/OE = (-) 4% |
| OP = (-) 5 | Total OP = (-)5 | |||||
| 6 | F | OE = 160 | OE = 120 | OE = 140 | Total OE = 420 | OP/OE = 11.9% |
| OP = 21 | OP = 14 | OP = 15 | Total OP = 50 | |||
| 7 | G | OE = 150 | OE = 130 | OE = 155 | Total OE = 435 | OP/OE= 10.57% |
| OP = 21 | OP = 12 | OE = 13 | Total OP = 46 |
From the above, the dataset will be constructed by arranging the weighted average values of PLI in an ascending order as follows:
| Sl. No. | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| Values | (-)4% | 7.31% | 9% | 10% | 10.57% | 11.9% | 12% |
If during the course of assessment proceedings, the data of the tax year becomes available and the use of such data indicates that non-associated enterprise B cannot be considered as a comparable under rule 79(3)(ii) and (iii), then the data in respect of enterprise B shall not be included in the dataset. The data for tax year in respect of enterprise D shall be included in the dataset. Further, if the data available at this stage identifies a new comparable uncontrolled transaction undertaken by enterprise H, then, it shall be included in the revised dataset. The weighted average PLI calculation for each non-associated enterprise shall be as below:
| Sl. No. | Name of non- associated enterprise | Year 1 | Year 2 | Year 3 [tax Year] | Aggregation of OE and OP | Weighted Average PLI |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| 1 | A | OE = 100 | OE = 150 | OE = 225 | Total OE = 475 | OP/OE = 12% |
| OP = 12 | OP = 10 | OP = 35 | Total OP = 57 | |||
| 2 | C | OE = 250 | OE = 230 | OE = 250 | Total OE = 730 | OP/OE = 9% |
| OP = 22 | OP = 26 | OP = 18 | Total OP = 66 | |||
| 3 | D | Data not available | OE = 220 | OE = 150 | Total OE = 370 | OP/OE =11.35% |
| OP = 22 | OP = 20 | Total OP = 42 | ||||
| 4 | E | Data not available | Data not available | OC = 125 | Total OC = 125 | OP/OC = (-)4% |
| OP = (-) 5 | Total OP = (-)5 | |||||
| 5 | F | OC = 160 | OC = 120 | OC = 140 | Total OC = 420 | OP/OC = 11.9% |
| OP = 21 | OP = 14 | OP = 15 | Total OP = 50 | |||
| 6 | G | OC = 150 | OC = 130 | OC = 155 | Total OC = 435 | OP/OC = 10.57% |
| OP = 21 | OP = 12 | OP = 13 | Total OP = 46 | |||
| 7 | H | OC = 150 | Data not available | OC = 80 | Total OC = 230 | OP/OC =9.56% |
| OP = 12 | OP = 10 | Total OP = 22 |
From the above, the dataset will be constructed by arranging the weighted average values of PLI in an ascending order as follows:
| Sl. No. | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| Values | (-)4% | 9% | 9.56% | 10.57% | 11.35% | 11.9% | 12% |
The calculation of the arm’s length range and the arm’s length price shall then be performed in the same manner as that described in Illustration 1.
Illustration 3
In a given case, comparable uncontrolled price method has been selected as the most appropriate method and 20 comparable uncontrolled transactions have been identified. The dataset of 20 prices, arranged in ascending order, is as under:
| Sl. No. | Profits (in Z Thousands) |
| 1 | 2 |
| 1 | 42.00 |
| 2 | 43.00 |
| 3 | 44.00 |
| 4 | 44.50 |
| 5 | 45.00 |
| 6 | 45.25 |
| 7 | 47.00 |
| 8 | 48.00 |
| 9 | 48.15 |
| 10 | 48.35 |
| 11 | 48.45 |
| 12 | 48.48 |
| 13 | 48.50 |
| 14 | 49.00 |
| 15 | 49.10 |
| 16 | 49.35 |
| 17 | 49.50 |
| 18 | 49.75 |
| 19 | 50.00 |
| 20 | 50.15 |
Applying the formula given in the Illustration 1, the data place of the 35th and 65th percentile is determined as follows:
35th percentile place = 20 x (35/100) = 7th.
65th percentile place = 20 x (65/100) = 13th.
Since the 35th percentile place is a whole number, it shall be the average of the prices at the 7th and next higher, that is, 8th place. This is (47000+48000)/2 = Z 47500.
Similarly, the 65th percentile will be average of 13th and 14th place prices. This is (48500+49000)/2 = Z 48750.
The median of the range (the 50th percentile place) = 20 x (50/100) = 10th
Since the 50th percentile place is a whole number, it shall be the average of the prices at the 10th and next higher, that is, 1 1 th place. This is (48350+48450)/2 = Z 48400.
Thus, the arm’s length range in this case shall be from Z 47500 to Z 48750.
Consequently, any controlled transaction whose price is equal to or more than Z 47500 but less than or equal to Z 48750 shall be considered to be within the arm’s length range. If such price is not within the arm’s length range, then, for the purpose of determining the arm’s length price, the median of the dataset shall be used.
82. Exercise of option for determination of arm’s length price for multiple years in a single proceeding.— (1) The option or options as per section 166(9)(a) may be exercised by an assessee for determination of arm’s length price for multiple year in a single proceeding by furnishing Form No. 46 for two consecutive tax years (the second tax year and the third tax year, respectively) immediately following the tax year (the first tax year) in respect of which reference has been made in its case under the said section.
(2) The Form No. 46, in respect of international transactions or specified domestic transactions shall be furnished, within the period, beginning from the end of the third tax year and ending on the 30th June succeeding the third tax year.
Every Form No. 46 furnished in sub-rule (2) shall be accompanied by a certificate from the accountant, as defined in section 515(3)(b), in Form No. 47.
In a case where the international transactions or the specified domestic transactions fulfil the conditions prescribed in sub-rule (5), the Transfer Pricing Officer shall, within one month from the end of month in which such option or options are exercised, pass an order, in writing, declaring whether the option or options exercised in Form No. 46 are valid or invalid.
(5) For the purposes of sub-rule (4) the prescribed conditions are as under, —
(a) the international transactions or the specified domestic transactions (herein referred to as the relevant transactions) in the second and third tax year for which option or options has been exercised in Form No. 46, should be similar to the international transactions or the specified domestic transactions in the first tax year;
(b) the relevant transactions shall be treated to be similar, if they satisfy the following conditions: —
(i) there is no change in the method to determine the arm’s length price for the relevant transactions;
(ii) the functions performed, taking into account assets employed and the risks assumed, by the parties in respect of the relevant transactions remain materially consistent;
(iii) in respect of the relevant transactions, the business activities, the relevant fmancial, tax, and accounting methods; and classification of the assessee, in case of a company, remained materially the same;
(iv) the option or options exercise would be applicable even when there is a change in the business result or holding structure of the associated enterprise, or change in the associated enterprise, provided there is no material change in the relevant transaction and no material change in the functions performed, taking into account assets employed and the risks assumed; and
(v) there is no change in the contractual terms (whether or not such terms are formal or in writing) of the relevant transactions, which explicitly or implicitly laid down how the responsibilities, risks and benefits are to be divided between the parties to the relevant transactions.
(c) the assessee has furnished in the first and the second tax years, —
(i) report from the accountant under section 172 on or before the specified date referred to in that section; and
(ii) return of income on or before the due date referred to in section 263(1);
(d) the assessee shall undertake to furnish for the third tax year, —
(i) report from the accountant, as defined in section 515(3)(b), under section 172 on or before the specified date referred to in that section; and
(ii) return of income on or before the due date referred to in section 263(1);
(e) the case of the assessee for the first, second and the third tax years is not covered under the provisions of Chapter XVI-B; and
(f) none of the associated enterprises relevant to the transactions is a resident of a jurisdiction which has been notified under section 176.
(6) If the assessee objects to the order of the Transfer Pricing Officer under sub-rule (4) declaring the option to be invalid, it may file its objections with the Commissioner, to whom the Transfer Pricing Officer is subordinate, within fifteen days of receipt of the order of the Transfer Pricing Officer.
(7) On receipt of the objection referred to in sub-rule (6), the Commissioner shall after providing an opportunity of being heard to the assessee pass appropriate orders in respect of the validity, or otherwise, of the option exercised by the assessee and cause a copy of the said order to be served on the assessee and the Transfer Pricing Officer.
(8) In a case where, during the proceedings under section 166, it is found that the information provided by the assessee in the Form No. 46 is inaccurate or not bona fide or the accountant, as defined in section 515(3)(b), furnishes the certificate in Form No. 47 to the same effect or conditions as specified in sub-rule (5) are not met, the order passed under sub- rule (4) shall be cancelled.
(9) Before cancelling the order passed under sub-rule (4), the Transfer Pricing Officer shall give the assessee a reasonable opportunity of being heard and take the approval from the Commissioner before cancelling the order.
(10) Where the option or options exercised by the assessee, are declared as invalid under sub-rule (4) or the order passed under the said sub-rule is cancelled by the Transfer Pricing Officer, the Transfer Pricing Officer shall proceed to determine the arm’s length price for the first tax year, for which reference has been received under section 166(1).
83. Time period for repatriation of excess money under section 170(2) and computation of interest income under section 170(4) pursuant to secondary adjustments.— (1) For the purposes of section 170(2)(b), the time limit for repatriation of excess money or part thereof in the circumstances mentioned in column B of the following Table shall be on or before ninety days from the date mentioned in column C thereof:
TABLE
| Si. No. |
Circumstances | Date |
| A | B | C |
| 1. | Primary adjustments to transfer price have been made suo motu by the assessee in his return of income. | Due date of furnishing of return |
| under section 263(1). | ||
| 2. | Primary adjustments to transfer price as determined in the order of Assessing Officer or the appellate authority has been accepted by the assessee. | Date of the order of Assessing Officer or the appellate authority, as the case may be. |
| 3. | Primary adjustment to transfer price is determined by an advance pricing agreement entered into by the assessee under section 168 in respect of a tax year on or before the due date of furnishing of return for the relevant tax year. | Due date of furnishing of return under section 263(1). |
| 4. | Primary adjustment to transfer price is determined by an advance pricing agreement entered into by the assessee under section 168 in respect of a tax year after the due date of furnishing of return for the relevant tax year. | End of the month in which the advance pricing agreement has been entered into. |
| 5. | Option is exercised by the assessee as per the safe harbour rules under section 167. | Due date of furnishing of return under section 263(1). |
| 6. | Primary adjustment to transfer price is determined by the resolution ar- rived at under mutual agreement procedure under a Double Taxation Avoidance Agreement entered into under section 159 (1) or (2). | Date of order giving effect un-der rule 121(10) to such resolution. |
(2) The imputed per annum interest income on excess money or part thereof, which is not repatriated within the time limit as per sub-rule (1) shall be computed —
(a) at the one-year marginal cost of fund lending rate of the State Bank of India as on the 1st April of the relevant tax year plus 325 basis points in the cases where the international transaction is denominated in Indian rupee; or
(b) at the reference rate of the relevant foreign currency, as defined in rule 89(3), as on the 30th September of the relevant tax year plus 300 basis points in the cases where the international transaction is denominated in foreign currency.
(3) The interest referred to in sub-rule (2) shall be chargeable on excess money or part thereof which is not repatriated in cases referred to in column B of the Table in sub-rule (1) from the date mentioned in column C thereof.
(4) For this rule, the exchange rate for conversion of the value of international transactions denominated in foreign currency into Indian rupees, shall be the telegraphic transfer buying rate of such currency on the last day of the tax year in which the transaction was undertaken and the “telegraphic transfer buying rate” shall have the meaning assigned to in rule 207.
84. Information and documents to be kept and maintained under section 171(1).— (1) Every person who has entered into an international transaction or a specified domestic transaction, shall keep and maintain the following information and documents: —
(a) a description of the ownership structure of the assessee enterprise with details of shares or other ownership interest held therein by other enterprises for the contemporaneous period;
(b) a profile of the multinational group of which the asses see enterprise is a part along with the name, address, legal status and country of tax residence of each of the enterprises comprised in the group with whom international transaction or a specified domestic transaction, have been entered into by the assessee, and ownership linkages among them;
(c) a broad description of the business of the assessee and the industry in which the assessee operates, and of the business of the associated enterprises with whom the assessee has transacted;
(d) the nature and terms (including prices) of international transaction or a specified domestic transaction entered into with each associated enterprise, details of property transferred or services provided and the quantum and the value of each such transaction or class of such transaction;
(e) a description of the functions performed, risks assumed and assets employed or to be employed by the assessee and by the associated enterprises involved in the international transaction or the specified domestic transaction;
(f) a record of the economic and market analyses, forecasts, budgets or any other financial estimates prepared by the assessee for the business as a whole and for each division or product separately, which may have a bearing on the international transaction or the specified domestic transaction entered into by the asses see;
(g) a record of uncontrolled transactions taken into account for analysing their comparability with the international transaction or a specified domestic transaction entered into, including a record of the nature, terms and conditions relating to any uncontrolled transaction with third parties which may be of relevance to the pricing of the international transaction or a specified domestic transaction, as the case may be;
(h) a record of the analysis performed to evaluate comparability of uncontrolled transactions with the international transaction or the specified domestic transaction;
(i) a description of the methods considered for determining the arm’s length price in relation to each international transaction or specified domestic transaction or class of transactions, the method selected as the most appropriate method along with explanations as to why such method was so selected, and how such method was applied in each case;
(j) a record of the actual working carried out for determining the arm’s length price, including details of the comparable data and financial information used in applying the most appropriate method, and adjustments, if any, which were made to account for differences between the international transaction or the specified domestic transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions;
(k) the assumptions, policies and price negotiations, if any, which have critically affected the determination of the arm’s length price;
(l) details of the adjustments, if any, made to transfer prices to align them with arm’s length prices determined under these rules and consequent adjustment made to the total income for tax purposes; and
(m) any other information, data or document, including information or data relating to the associated enterprise, which may be relevant for determination of the arm’s length price.
(2) Nothing contained in sub-rule (1) shall apply to an international transaction in a case where the aggregate value, as recorded in the books of account, of international transactions entered into by the assessee during the tax year does not exceed one crore rupees.
(3) For application of sub-rule (2), the assessee shall be required to substantiate, on the basis of material available, that income arising from international transactions entered into by him has been computed in accordance with section 161.
(4) The provisions of sub-rule (1) shall not apply to an eligible specified domestic transaction referred to in rule 96 in the case of an eligible assessee referred to in rule 95, and in such case—
(a) the eligible assessee, referred to in rule 95(a), shall keep and maintain the following information and documents: —
(i) a description of the ownership structure of the assessee enterprise with details of shares or other ownership interest held therein by other enterprises for the contemporaneous period;
(ii) a broad description of the business of the assessee and the industry in which the assessee operates, and of the business of the associated enterprises with whom the assessee has transacted;
(iii) the nature and terms (including prices) of specified domestic transactions entered into with each associated enterprise and the quantum and value of each such transaction or class of such transaction;
(iv) a record of proceedings, if any, before a regulatory commission and orders of such commission relating to the specified domestic transaction;
(v) a record of the actual working carried out for determining the transfer price of the specified domestic transaction;
(vi) the assumptions, policies and price negotiations, if any, which have critically affected the determination of the transfer price; and
(vii) any other information, data or document, including information or data relating to the associated enterprise, which may be relevant for determination of the transfer price;
(b) the eligible assessee, referred to in rule 95(b), shall keep and maintain the following information and documents: —
(i) a description of the ownership structure of the assessee co-operative society with details of shares or other ownership interest held therein by the members;
(ii) description of members including their addresses and period of membership;
(iii) the nature and terms (including prices) of specified domestic transactions entered into with each member and the quantum and value of each such transaction or class of such transaction;
(iv) a record of the actual working carried out for determining the transfer price of the specified domestic transaction;
(v) the assumptions, policies and price negotiations, if any, which have critically affected the determination of the transfer price;
(vi) the documentation regarding price being routinely declared in transparent manner and being available in public domain; and
(vii) any other information, data or document which may be relevant for determination of the transfer price.
(5) The information specified in sub-rules (1) and (4) shall be supported by authentic documents, which may include the following: —
(a) official publications, reports, studies and data bases from the Government of the country of residence of the associated enterprise, or of any other country;
(b) reports of market research studies carried out and technical publications brought out by institutions of national or international repute;
(c) price publications including stock exchange and commodity market quotations;
(d) published accounts and financial statements relating to the business affairs of the associated enterprises;
(e) agreements and contracts entered into with associated enterprises or with unrelated enterprises in respect of transactions similar to the international transactions or the specified domestic transactions, as the case may be;
(f) letters, emails and other correspondence, documenting any terms negotiated between the assessee and the associated enterprise;
(g) documents generally issued in connection with various transactions under the accounting practices followed.
(6) The information and documents specified under sub-rules (1), (2), (3) and (4), should, as far as possible, be contemporaneous and shall exist on the specified date referred to in section 173(d).
(7) For the purposes of sub-rule (6), where a relevant transaction continues to have effect beyond one tax year, fresh documentation need not be maintained separately in respect of each tax year, unless there is any significant change in
(a) the nature or terms of such transaction; or
(b) underlying assumptions; or
(c) any other factor affecting the transfer price,
and in case of such a change, fresh documentation shall be maintained, bringing out its impact on pricing under sub-rules (1), (2) (3) and (4).
(8) The information and documents specified in sub-rules (1) to (4) shall be kept and maintained for a period of nine years from the end of the relevant tax year.
85. Report from an accountant to be furnished under section 172.— (1) The report from an accountant, as defined in section 515(3)(b), required to be furnished under section 172 by every person who has entered into an international transaction or a specified domestic transaction during a tax year, shall be in Form No. 48 and be verified in the manner indicated therein.
(2) The report referred to in sub-rule (1) shall be furnished at least one month prior to the due date of furnishing return of income as per section 263(1)(c).
86. Definitions for safe harbour rules for international transactions.— For the purposes of this rule and rules 87 to 93, —
(a) “accountant” —
(i) means an accountant referred to in section 515(3)(b), who fulfils the following conditions: —
(A) if he is pursuing the profession of accountancy individually or is a valuer then —
(I) he has professional experience of not less than ten years; and
(II) his annual receipt in the year preceding the year in which cost certification is undertaken, from the exercise of profession, exceeds fifty lakh rupees;
(B) if he is a member or partner in any entity engaged in rendering accountancy or valuation services then, the annual receipt of the entity in the year preceding the year in which cost certification is undertaken exceeds three crore rupees;
(ii) includes any person recognised for undertaking cost certification by the government of the country, where the associated enterprise is registered or incorporated or any of its agencies, who fulfils the following conditions: —
(A) the condition referred to in clause (a)(i)(A) and (B); and
(B) if he is a member or partner in any entity engaged in rendering accountancy or valuation services then, the entity or its affiliates have presence in more than two countries;
(b) “contract research and development services wholly or partly relating to software development” means the following: —
(i) research and development producing new theorems and algorithms in the field of theoretical computer science; or
(ii) development of information technology at the level of operating systems, programming languages, data management, communications software and software development tools; or
(iii) development of internet technology; or
(iv) research into methods of designing, developing, deploying or maintaining software; or
(v) software development that produces advances in generic approaches for capturing, transmitting, storing, retrieving, manipulating or displaying information; or
(vi) experimental development aimed at filling technology knowledge gaps, as may be necessary to develop a software programme or system; or
(vii) research and development on software tools or technologies in specialised areas of computing (image processing, geographic data presentation, character recognition, artificial intelligence and such other areas); or
(viii) upgradation of existing products, where source code has been made available by the principal, except where the source code has been made available to carry out routine functions like debugging of the software;
(c) “core auto components” means—
(i) engine and engine parts, including piston and piston rings, engine valves and parts cooling systems and parts and power train components; or
(ii) transmission and steering parts, including gears, wheels, steering systems, axles and clutches; or
(iii) suspension and braking parts, including brake and brake assemblies, brake linings, shock absorbers and leaf springs; or
(iv) lithium-ion batteries for use in electric or hybrid electric vehicles;
(d) “corporate guarantee” means explicit corporate guarantee extended by a company to its wholly owned subsidiary being a non-resident in respect of any short-term or long-term borrowing, but does not include letter of comfort, implicit corporate guarantee, performance guarantee or any other guarantee of similar nature;
(e) “data centre” means a dedicated secure space within a building or centralised location, where computing and networking equipment is concentrated for the purpose of collecting, storing, processing, distributing or allowing access to large amounts of data;
(f) “data centre services” means the services provided by a data centre through the use of physical infrastructure including land, buildings, mechanical electrical power equipment, cooling system, security and information technology infrastructure including servers, computers, storage systems, operating systems, security solutions, network and associated software platforms, networking and other equipment, human resource in India;
(g) “generic pharmaceutical drug” means a drug that is comparable to a drug already approved by the regulatory authority in dosage form, strength, route of administration, quality and performance characteristics and intended use;
(h) “information technology enabled services” means any of the following business process outsourcing services provided mainly with the assistance or use of information technology: —
(i) back office operations; or
(ii) call centres or contact centre services; or
(iii) data processing and data mining; or
(iv) insurance claim processing; or
(v) legal databases; or
(vi) creation and maintenance of medical transcription excluding medical advice; or
(vii) translation services; or
(viii) payroll; or
(ix) remote maintenance or recovery; or
(x) revenue accounting; or
(xi) support centres; or
(xii) website services; or
(xiii) data search integration and analysis; or
(xiv) remote education excluding education content development; or
(xv) clinical database management services excluding clinical trials,
but does not include any research and development services whether or not in the nature of contract research and development services.
(i) “intra-group loan” means loan advanced to an associated enterprise being a non-resident, where the loan —
(a) is not advanced by an enterprise, being a financial company including a bank or a financial institution or an enterprise engaged in lending or borrowing in the normal course of business; and
(b) does not include credit line or any other loan facility which has no fixed term for repayment;
(j) “knowledge process outsourcing services” means any of the following business process outsourcing services provided mainly with the assistance or use of information technology requiring application of knowledge and advanced analytical and technical skills: —
(i) geographic information system; or
(ii) human resources services; or
(iii) engineering and design services; or
(iv) animation or content development and management; or
(v) business analytics; or
(vi) financial analytics; or
(vii) market research,
but does not include any research and development services, whether or not in the nature of contract research and development services;
(k) “low value-adding intra-group services” means services that are performed by one or more members of a multinational enterprise group on behalf of one or more other members of the same multinational enterprise group and which —
(i) are in the nature of support services;
(ii) are not part of the core business of the multinational enterprise group, that is, such services neither constitute the profit-earning activities nor contribute to the economically significant activities of the multinational enterprise group;
(iii) are not in the nature of shareholder services or duplicate services;
(iv) neither require the use of unique and valuable intangibles nor lead to the creation of unique and valuable intangibles;
(v) neither involve the assumption or control of significant risk by the service provider nor give rise to the creation of significant risk for the service provider; and
(vi) do not have reliable external comparable services that can be used for determining their arm’s length price,
but does not include the following services: —
(A) research and development services;
(B) manufacturing and production services;
(C) information technology (software development) services;
(D) knowledge process outsourcing services;
(E) business process outsourcing services;
(F) purchasing activities of raw materials or other materials that are used in the manufacturing or production process;
(G) sales, marketing and distribution activities;
(H) financial transactions;
(I) extraction, exploration, or processing of natural resources; and
(J) insurance and reinsurance;
(l) “non-core auto components” means auto components other than core auto components;
(m) “no tax or low tax country or territory” means a country or territory in which the maximum rate of income-tax is less than 15%;
(n) “operating expense” means —
(i) the costs incurred in the tax year by the assessee in relation to the international transaction during the course of its normal operations including costs relating to Employee Stock Option Plan or similar stock-based compensation provided for by the associated enterprises of the assessee to the employees of the asses see;
(ii) reimbursement to associated enterprises of expenses incurred by the associated enterprises on behalf of the assessee at cost;
(iii) amounts recovered from associated enterprises on account of expenses incurred by the assessee on behalf of those associated enterprises and which relate to normal operations of the assessee at cost; and
(iv) depreciation and amortisation expenses relating to the assets used by the assessee,
but does not include —
(A) interest expense;
(B) provision for unascertained liabilities;
(C) pre-operating expenses;
(D) loss arising on account of foreign currency fluctuations;
(E) extraordinary expenses;
(F) loss on transfer of assets or investments other than assets, on which depreciation is included in the operating expense;
(G) expense on account of income-tax; and
(H) other expenses not relating to normal operations of the assessee;
(o) “operating revenue” means the revenue earned by the assessee in the tax year in relation to the international transaction during the course of its normal operations including costs relating to Employee Stock Option Plan or similar stock-based compensation provided for by the associated enterprises of the assessee to the employees of the assessee, but does not include —
(i) interest income;
(ii) income arising on account of foreign currency fluctuations;
(iii) income on transfer of assets or investments other than assets, on which depreciation is included in the operating expense;
(iv) refunds relating to income-tax;
(v) provisions written back;
(vi) extraordinary incomes; and
(vii) other incomes not relating to normal operations of the assessee;
(p) “operating profit margin” in relation to operating expense means the ratio of operating profit, being the operating revenue in excess of operating expense, to the operating expense expressed in terms of percentage;
(q) “relevant tax year” means the tax year for which the option for safe harbour is validly exercised;
(r) “software development services” mean —
(i) business application software and information system development using known methods and existing software tools; or
(ii) ancillary or support services for existing systems; or
(iii) converting or translating computer languages; or
(iv) adding user functionality to application programmes; or
(v) debugging of systems; or
(vi) adaptation of existing software; or
(vii) preparation of user documentation;
but does not include any research and development services whether or not in the nature of contract research and development services.
87. Eligible assessee for safe harbour rules for international transactions.— (1) Subject to the provisions of sub-rules (2) and (3), the “eligible assessee” means a person who has exercised a valid option for application of safe harbour rules in accordance with rule 90, and—
(a) is engaged in providing information technology services consisting of any one or more of the following: —
(i) software development services; or
(ii) information technology enabled services; or
(iii) knowledge process outsourcing services; or
(iv) contract research and development services wholly or partly relating to software development,
with insignificant risk, to a non-resident associated enterprise (hereinafter referred to as foreign principal); or
(b) has made any intra-group loan; or
(c) has provided a corporate guarantee; or
(d) is engaged in providing contract research and development services wholly or partly relating to generic pharmaceutical drugs, with insignificant risk, to a foreign principal; or
(e) is engaged in the manufacture and export of core or non-core auto components and where 90% or more of total turnover during the relevant tax year is in the nature of original equipment manufacturer sales; or
(f) is in receipt of low value-adding intra-group services from one or more members of its group; or
(g) has provided data centre services to a foreign company.
(2) For the purposes of identifying an eligible assessee, with insignificant risk, referred to in sub-rule (1)(a), the Director General of Income-tax (Systems) shall have regard to the following factors: —
(a) the foreign principal performs most of the economically significant functions involved, including the critical functions, such as, —
(i) conceptualisation;
(ii) design of the product; and
(iii) providing the strategic direction and framework,
either through its own employees or through its other associated enterprises, while the eligible assessee carries out the work assigned to it by the foreign principal;
(b) the capital and funds and other economically significant assets including the intangibles required, are provided by the foreign principal or its other associated enterprises, and the eligible assessee is only provided a remuneration for the work carried out by it;
(c) the eligible assessee works under the direct supervision of the foreign principal or its associated enterprise which not only has the capability to control or supervise but also actually controls or supervises research or product development or the activities carried out through its strategic decisions to perform core functions as well as by monitoring activities on a regular basis;
(d) the eligible assessee does not assume or has no economically significant realised risks, and if a contract shows that the foreign principal is obligated to control the risk but the conduct shows that the eligible assessee is doing so, the contractual terms shall not be the final determinant;
(e) the eligible assessee has no ownership right, legal or economic, on any intangible generated or on the outcome of any intangible generated or arising during the course of rendering of services or on the outcome of the research, which vests with the foreign principal as evident from the contract and the conduct of the parties.
(3) For the purpose of identifying an eligible assessee, with insignificant risk, referred to in sub-rule (1)(d), the Director General of Income-tax (Systems) or the Assessing Officer or the Transfer Pricing Officer, as the case may be, shall have regard to the following factors: —
(a) the foreign principal performs most of the economically significant functions involved in research or product development cycle, including the critical functions such as;
(i) conceptualisation;
(ii) design of the product; and
(iii) providing the strategic direction and framework,
either through its own employees or through its other associated enterprises while the eligible assessee carries out the work assigned to it by the foreign principal;
(b) the foreign principal or its other associated enterprises provides, —
(i) the funds or capital;
(ii) other economically significant assets including intangibles required for research or product development; and
(iii) a remuneration to the eligible assessee for the work carried out by it;
(c) the eligible assessee works under the direct supervision of the foreign principal or its other associated enterprise which has not only the capability to control or supervise but also actually controls or supervises research or product development, through its strategic decisions to perform core functions as well as by monitoring activities on a regular basis;
(d) the eligible assessee does not assume or has no economically significant realised risks, and if a contract shows that the foreign principal is obligated to control the risk but the conduct shows that the eligible assessee is doing so, the contractual terms shall not be the final determinant;
(e) the eligible assessee has no ownership right, legal or economic, on the outcome of the research which vests with the foreign principal and which is evident from the contract as well as the conduct of the parties.
88. Eligible international transactions for safe harbour.— An “eligible international transaction” means an international transaction between the eligible assessee and its associated enterprise, one of which is necessarily a nonresident, and which comprises of —
(a) provision of information technology services consisting of any one or more of the following: —
(i) provision of software development services; or
(ii) provision of information technology enabled services; or
(iii) provision of knowledge process outsourcing services; or
(iv) provision of contract research and development services wholly or partly relating to software development; or
(b) advance of intra-group loan; or
(c) provision of corporate guarantee, where the amount guaranteed, —
(i) does not exceed one hundred crore rupees; or
(ii) exceeds one hundred crore rupees, and the credit rating of the associated enterprise, done by an agency registered with the Securities and Exchange Board of India, is of the adequate to highest safety; or
(d) provision of contract research and development services, wholly or partly, relating to generic pharmaceutical drugs; or
(e) manufacture and export of core auto components; or
(f) manufacture and export of non-core auto components; or
(g) receipt of low value-adding intra-group services from one or more members of its group; or
(h) provision of the data centre services.
89. Safe harbour for eligible international transactions.— (1) The transfer price declared by an eligible assessee in respect of an eligible international transaction for a tax year shall be accepted by the income-tax authorities, if —
(a) the option exercised by the said assessee is not held to be invalid under rule 90; and
(b) it is in accordance with the circumstances as specified in sub-rule (2).
(2) The circumstances referred to in sub-rule (1) in respect of the eligible international transaction specified in column B of the following Table shall be as specified in column C thereof:
Table
| SL No. |
Eligible International Transaction | Circumstances |
| A | B | C |
| 1. | Provision of information technology services. | The operating profit margin declared by the eligible assessee from the eligible international transaction in relation to operating expense incurred is not less than 15.5%, where the aggregate operating revenue of such transaction entered into during the tax year does not exceed a sum of two thousand crore rupees. |
| 2. | Advancing of intra-group loans where the amount of loan is denominated in Indian Rupees (rupees). | The interest rate declared in relation to the eligible international transaction entered into during the tax year is not less than the one-year marginal cost of funds lending rate of State Bank of India as on the 1st April of the relevant tax year plus —
(i) 175 basis points, where the associated enterprise has credit rating between AAA to A or its equivalent; or (ii) 325 basis points, where the associated enterprise has credit rating of BBB-, BBB or BBB+ or its equivalent; or (iii) 475 basis points, where the associated enterprise has credit rating between BB to B or its equivalent; or (iv) 625 basis points, where the associated enterprise has credit rating between C to D or its equivalent; or (v) 425 basis points, where credit rating of the associated enterprise is not available and the amount of loan advanced to the associated enterprise including loans to all associated enterprises in Indian Rupees does not exceed a sum of one hundred crore rupees in the aggregate as on the 31st March of the relevant tax year. |
| 3. | Advancing of intra-group loans where the amount of loan is denominated in foreign currency. | The interest rate declared in relation to the eligible international transaction entered into during the tax year is not less than the reference rate of the relevant foreign currency as on the 30th September of the relevant tax year plus —
(a) if amount of loan advanced to the associated enterprise including loans to all associated enterprises does not exceed a sum equivalent to two hundred and fifty crore rupees (Indian rupees) in the aggregate as on 31st March of the relevant tax year, — (i) 150 basis points, where the associated enterprise has a credit rating of AAA, AA+, AA, AA-, A+, A, A- or equivalent; or (ii) 300 basis points, where the associated enterprise has credit rating of BBB+, BBB, BBB- or equivalent; or (iii) 400 basis points, where the associated enterprise has a credit rating of BB+, BB, BB-, B+, B, B-, C+, C, C-, D or equivalent or where the credit rating of the associated enterprise is not available; (b) if amount of loan advanced to the associated enterprise including loans to all associated enterprises exceeds a sum equivalent to two hundred and fifty crore rupees (Indian rupees) in the aggregate as on the 31st March of the relevant tax year, — (i) 150 basis points, where the associated enterprise has a credit rating of AAA, AA+, AA, AA-, A+, A, A- or equivalent; or (ii) 300 basis points, where the associated enterprise has credit rating of BBB+, BBB, BBB- or equivalent; or (iii) 450 basis points, where the associated enterprise has a credit rating of BB+, BB, BB-, B+, B, B- or equivalent; or (iv) 600 basis points, where the associated enterprise has credit rating of C+, C, C-, D or equivalent or where the credit rating of the associated enterprise is not available. |
| 4. | Providing corporate guarantee. | The commission or fee declared in relation to the eligible international transaction entered into during the tax year is at the rate not less than 1% per annum on the amount guaranteed. |
| 5. | Provision of contract research and development services, wholly or partly, relating to generic pharmaceutical drugs. | The operating profit margin declared by the eligible assessee from the eligible international transaction entered into during the tax year in relation to operating expense incurred is not less than 24%, where the aggregate operating revenue of such transaction does not exceed a sum of three hundred crore rupees. |
| 6. | Manufacture and export of core auto components. | The operating profit margin declared by the eligible assessee from the eligible international transaction entered into during the tax year in relation to operating expense is not less than 12%. |
| 7. | Manufacture and export of noncore auto components. | The operating profit margin declared by the eligible assessee from the eligible international transaction entered into during the tax year in relation to operating expense is not less than 8.5%. |
| 8. | Receipt of low value-adding
intragroup services. |
The aggregate amount of the low value adding intra-group services during the tax year, including a mark-up not exceeding 5%, does not exceed a sum of ten crore rupees, and the method of cost pooling, the exclusion of shareholder costs and duplicate costs from the cost pool and the reasonableness of the allocation keys used for allocation of costs to the assessee by the overseas associated enterprise, is certified by an accountant. |
| 9. | Provision of the data centre services. | The operating profit margin declared by the eligible assessee from the eligible international transaction entered into during the tax year in relation to operating expense is not less than 15%. |
(3) For the purposes of this rule, —
(a) “reference rate” means, —
(i) for US dollar, 6-month Term Secured Overnight Financing Rate (SOFR), currently administered by Chicago Mercantile Exchange (CME), as increased by 45 basis points;
(ii) for Euro, 6-month Euro Inter Bank Offered Rate (EURIBOR), currently administered by European Money Markets Institute;
(iii) for UK Pound Sterling, 6-month Term Sterling Overnight Index Average (SONIA), currently administered by ICE Benchmark Administration or Refinitiv, as increased by 30 basis points;
(iv) for Japanese Yen, 6-month Tokyo Term Risk Free Rate (TORF), currently benchmarked by QUICK Benchmarks Inc, as increased by 10 basis points;
(v) for Australian dollar, 6-month Bank Bill Swap Rates (BBSW) currently administered by Australian Securities Exchange; and
(vi) for Singapore dollar, 6-month Compounded Singapore Overnight Rate Average (SORA), currently administered by Monetary Authority of Singapore, as increased by 45 basis points;
(b) “credit rating” means the credit rating assigned to the associated enterprise by a Securities and Exchange Board of India registered and Reserve Bank of India accredited credit rating agency, which is applicable for the relevant tax year, so however that—
(i) where the associated enterprise has only one credit rating, then such rating shall be taken as its credit rating; or
(ii) where the associated enterprise has a credit rating from more than one such credit rating agency, then the least of such ratings shall be taken as its credit rating.
(4) The provisions of sub-rules (1) and (2) shall apply for a block period of three tax years commencing from the tax year 2026-2027 and shall continue to apply for block periods subsequent to the aforesaid block period, unless modified.
(5) No comparability adjustment and allowance under section 165(3)(a)(ii) shall be made to the transfer price declared by the eligible assessee and accepted under sub-rules (1) and (2).
(6) The provisions of sections 171 and 172 in respect of an international transaction shall apply irrespective of the fact that the assessee exercises his option for safe harbour in respect of such transaction.
90. Procedure relating to transactions other than provision of information technology services.— (1) For the purposes of exercise of the option for safe harbour, —
(a) the assessee shall furnish Form No. 49, complete in all respects, to the Assessing Officer on or before the due date specified in section 263(1)(c) for furnishing the return of income for the relevant tax year; and
(b) the return of income for the said tax year is furnished by the assessee on or before the date of furnishing of Form No. 49.
(2) On receipt of Form No. 49, the Assessing Officer shall verify whether—
(a) the assessee exercising the option is an eligible assessee; and
(b) the transaction in respect of which the option is exercised is an eligible international transaction, before the option for safe harbour by the assessee is treated to be validly exercised.
(3) Where the Assessing Officer doubts the valid exercise of the option for the safe harbour by an assessee, he shall make a reference to the Transfer Pricing Officer for determination of the eligibility of the assessee or the international transaction, or both, for the purposes of the safe harbour.
(4) For the purposes of sub-rule (3), the Transfer Pricing Officer may require the assessee, by notice in writing, to furnish such information or documents or other evidence as he may consider necessary, and the assessee shall furnish the same within the time specified in such notice.
(5)Where—
(a) the assessee does not furnish the information or documents or other evidence required by the Transfer Pricing Officer; or
(b) the Transfer Pricing Officer finds that the assessee is not an eligible assessee; or
(c) the Transfer Pricing Officer fmds that the international transaction in respect of which the option referred to in sub-rule (1) has been exercised is not an eligible international transaction,
the Transfer Pricing Officer shall, by order in writing, declare the option exercised by the assessee under sub-rule (1) to be invalid, after giving a reasonable opportunity of being heard to the assessee, and cause a copy of the said order to be served on the assessee and the Assessing Officer.
(6) If the assessee objects to the order of the Transfer Pricing Officer under sub-rule (5) declaring the option to be invalid, he may file his objections with the Commissioner, to whom the Transfer Pricing Officer is subordinate, within fifteen days of receipt of the order of the Transfer Pricing Officer.
(7) On receipt of the objection referred to in sub-rule (6), the Commissioner shall after providing a reasonable opportunity of being heard to the assessee, pass appropriate orders in respect of the validity, or otherwise of the option exercised by the assessee and cause a copy of the said order to be served on the assessee and the Assessing Officer.
(8) In a case, where option exercised by the assessee has been held to be valid, the Assessing Officer shall proceed to verify whether the transfer price declared by the assessee in respect of the relevant eligible international transactions is in accordance with the circumstances specified in rule 89(2) and, if it is not in accordance with the said circumstances, the Assessing Officer shall adopt the operating profit margin or rate of interest or commission specified in the said rule.
(9) For the purposes of this rule, —
(i) no reference under sub-rule (3) shall be made by an Assessing Officer after expiry of a period of two months from the end of the month in which Form No.49 is received by him;
(ii) no order under sub-rule (5) shall be passed by the Transfer Pricing Officer after expiry of a period of two months from the end of the month in which the reference from the Assessing Officer under sub-rule (3) is received by him; and
(iii) the order under sub-rule (7) shall be passed by the Commissioner within a period of two months from the end of the month in which the objection filed by the assessee under sub-rule (6) is received by him.
(10) If the Assessing Officer or the Transfer Pricing Officer or the Commissioner, as the case may be, does not make a reference or pass an order, within the time specified in sub-rule (9), then the option for safe harbour exercised by the assessee shall be treated as valid.
(11) Form No. 49 shall be furnished electronically either under digital signature or through electronic verification code and shall be verified by the person who is authorised to verify the return of income of the assessee under section 265.
(12) The Assessing Officer may make a reference under section 166 in respect of international transaction other than the eligible international transaction.
91. Procedure relating to transactions of provision of information technology services.— (1) Where option for safe harbour is exercised in respect of eligible international transaction being provision of information technology services, such option for safe harbour, once exercised validly, shall continue to remain in force for a period of five consecutive tax years.
(2) For the purposes of safe harbour in respect of eligible international transaction referred to in sub-rule (1), the threshold of two thousand crore rupees of the aggregate operating revenue shall be tested for the first of the five consecutive tax years.
(3) For exercising option for safe harbour, the assessee shall furnish Form No. 49, complete in all respects, to the Director General of Income-tax (Systems) for the first of the five consecutive tax years for which option for safe harbour is proposed to be exercised on or before the due date of furnishing of return of income, as specified in section 263(1)(c), for the aforesaid first tax year.
(4) After furnishing of Form No. 49, verification in respect of the following shall be done electronically: —
(a) the assessee exercising the option is an eligible assessee;
(b) the transaction in respect of which the option is exercised is an eligible international transaction; and
(c) the exercise of option is valid.
(5) After verification, the assessee shall be intimated within a period of two months from the end of the month in which the option for safe harbour is exercised, about the acceptance or the rejection of the option exercised, as the case may be.
(6) The option for exercise of safe harbour shall not be rejected unless the assessee is provided an opportunity to remove defects, if any, in the application filed.
(7) Where an option for safe harbour is rejected electronically, the assessee shall be provided reasons for the same.
(8) Where an option for safe harbour is accepted, the assessee shall furnish return of income in accordance with the safe harbour provisions for each of the five consecutive tax years on or before the due date specified in section 263(1)(c).
(9) The option shall not remain in force in respect of any tax year, if the assessee withdraws the option for safe harbour, by furnishing a declaration to that effect.
(10) The withdrawal of option referred to in sub-rule (9) shall not be made after the expiry of six months from the end of the first tax year.
(11) Where the assessee withdraws the option for safe harbour by furnishing a declaration referred to in sub-rule (9) the option shall not remain in force for tax year for which assessee has withdrawn the option and for subsequent tax years.
(12) Where an assessee withdraws the option for safe harbour, he shall not be eligible to again exercise the option for safe harbour upto the period of expiry of five consecutive tax years referred to in sub-rule (1).
(13) The assessee shall, in respect of each of the four consecutive tax years following the first tax year, furnish a statement on or before the due date of furnishing return of income of that tax year as specified in section 263(1)(c), providing details of eligible transactions, their quantum and profit margins.
(14) The Assessing Officer may make a reference under section 166 in respect of international transaction other than the eligible international transaction.
(15) Form No. 49 shall be furnished electronically either under digital signature or through electronic verification code.
(16) Form No. 49 shall be certified by the chief executive officer or chairman and managing director of the assessee and verified by the person who is authorised to verify the return of income of the assessee under section 265.
(17) The Director General of Income-tax (Systems) shall, with the approval of the Board, lay down the data structure, standards, format and procedure of furnishing and verification of such Forms, statements, order, declaration, including any modification, if required.
92. Safe harbour rules for international transactions not to apply in certain cases.— Nothing contained in rule 86, 87, 88, 89, 90 or 91 shall apply in respect of eligible international transactions entered into with an associated enterprise located in any country or territory notified under section 176, or in a no tax or low tax country or territory.
93. Mutual agreement procedure not to apply where safe harbour for international transactions is accepted.—Where transfer price in relation to an eligible international transaction, declared by an eligible assessee, is accepted by the income-tax authorities under section 167, the assessee shall not be entitled to invoke mutual agreement procedure under an agreement for avoidance of double taxation entered into with a country or specified territory outside India, as referred to under section 159.
94. Definitions for safe harbour rules for specified domestic transaction.— For the purposes of this rule and rules 95 to 98,
(a) “Appropriate Commission” shall have the same meaning as assigned to it in section 2(4) of the Electricity Act, 2003 (36 of 2003); and
(b) “Government company” shall have the same meaning as assigned to it in section 2(45) of the Companies Act, 2013 (18 of 2013).
95. Eligible assessee for safe harbour rules for specified domestic transactions.— An “eligible assessee” means a person who has exercised a valid option for application of safe harbour rules in accordance with the provisions of rule 97, and —
(a) is a Government company engaged in the business of generation, supply, transmission or distribution of electricity; or
(b) is a co-operative society engaged in the business of procuring and marketing milk and milk products.
96. Eligible specified domestic transaction for safe harbour.— An “eligible specified domestic transaction” means a specified domestic transaction undertaken by an eligible assessee and which comprises of: —
(a) supply of electricity; or
(b) transmission of electricity; or
(c) wheeling of electricity; or
(d) purchase of milk or milk products by a co-operative society from its members.
97. Safe harbour for eligible specified domestic transaction.— (1) The transfer price declared by an eligible assessee in respect of an eligible specified domestic transaction for a tax year shall be accepted by the income-tax authorities, if, —
(a) the option exercised by the said assessee is treated to be validly exercised under rule 98; and
(b) it is in accordance with the circumstances as specified in sub-rule (2).
(2) The circumstances referred to in sub-rule (1) in respect of the eligible specified domestic transaction specified in column B of the following Table shall be as specified in column C thereof:
Table
| SL No. |
Eligible specified domestic Transaction |
Circumstances |
| A | B | C |
| 1. | Supply of electricity,
transmission of electricity, |
The tariff in respect of supply of electricity, transmission of electricity, wheeling of electricity, as the case may be, is determined or the methodology for determination of the tariff is approved by the Appropriate Commission in accordance with the provisions of the Electricity Act, 2003 (36 of 2003). |
| 2. | Purchase of milk or milk products. | The price of milk or milk products is determined at a rate which is fixed on the basis of the quality of milk, namely, fat content and Solid Not Fat (SNF) content of milk and —
(a) the said rate is irrespective of — (i) the quantity of milk procured; or (ii) the percentage of shares held by the members in the cooperative society; or (iii) the voting power held by the members in the society; and (b) such rates are routinely declared by the co-operative society in a transparent manner and are available in public domain.
|
(3) No comparability adjustment and allowance under section 165(3)(a)(ii) shall be made to the transfer price declared by the eligible assessee and accepted under sub-rule (1).
(4) The provisions of sections 171 and 172 in respect of a specified domestic transaction shall apply irrespective of the fact that the assessee exercises his option for safe harbour in respect of such transaction.
98. Procedure governing safe harbour rules for specified domestic transactions.— (1) For the purposes of exercising of the option for safe harbour, —
(a) the assessee shall furnish Form No. 49, complete in all respects, to the Assessing Officer on or before the due date specified in section 263(1)(c) for furnishing the return of income for the relevant tax year; and
(b) the return of income for the relevant tax year is to be furnished by the assessee on or before the date of furnishing of Form No. 49.
(2) On receipt of Form No. 49, the Assessing Officer shall verify whether—
(a) the assessee exercising the option is an eligible assessee; and
(b) the transaction in respect of which the option is exercised is an eligible specified domestic transaction,
before the option for safe harbour by the assessee is treated to be validly exercised.
(3) Where the Assessing Officer doubts the valid exercise of the option for the safe harbour by an assessee, he may require the assessee, by notice in writing, to furnish such information or documents or other evidence as he may consider necessary, and the assessee shall furnish the same within the time specified in such notice.
(4) Where —
(a) the assessee does not furnish the information or documents or other evidence required by the Assessing Officer; or
(b) the Assessing Officer finds that the assessee is not an eligible assessee; or
(c) the Assessing Officer finds that the specified domestic transaction in respect of which the option referred to under sub-rule (1) has been exercised is not an eligible specified domestic transaction; or
(d) the tariff is not in accordance with the circumstances specified under rule 97,
the Assessing Officer shall, by order in writing, declare the option exercised by the assessee under sub-rule (1) to be invalid, after giving a reasonable opportunity of being heard to the assessee, and cause a copy of the said order to be served on the assessee.
(5) If the assessee objects to the order of the Assessing Officer under sub-rule (4) declaring the option to be invalid, he may file his objections with the Principal Commissioner or the Commissioner, as the case may be, to whom the Assessing Officer is subordinate, within fifteen days of receipt of the order of the Assessing Officer.
(6) On receipt of the objection referred to in sub-rule (5), the Principal Commissioner or the Commissioner, as the case may be, shall after providing a reasonable opportunity of being heard to the assessee, pass appropriate orders in respect of the validity or otherwise of the option exercised by the assessee and cause a copy of the said order to be served on the assessee and the Assessing Officer.
(7) For the purposes of this rule, —
(a) no order under sub-rule (4) shall be made by an Assessing Officer after expiry of a period of three months from the end of the month in which Form No. 49 is received by him; and
(b) the order under sub-rule (6) shall be passed by the Principal Commissioner or Commissioner, as the case may be, within a period of two months from the end of the month in which the objection filed by the assessee under sub-rule (5) is received by him.
(8) If the Assessing Officer or the Principal Commissioner or the Commissioner, as the case may be, does not pass an order within the time specified under sub-rule (7), then the option for safe harbour exercised by the assessee shall be treated as valid.
(9) Form No. 49 shall be furnished electronically either under digital signature or through electronic verification code and shall be verified by the person who is authorised to verify the return of income of the assessee under section 265.
(10) The Assessing Officer may make a reference under section 166 in respect of specified domestic transaction other than the eligible specified domestic transaction.
99. Definitions for safe harbour rules for income attribution in case of income from business and profession.—For the purposes of this rule and rules 100 to 102, —
(a) “contract manufacturer” means an Indian company who produces specified electronic goods on behalf of any foreign company in a custom bonded area;
(b) “custom bonded area” means a warehouse as referred to in section 65 of the Customs Act, 1962;
(c) “eligible assessee” means —
(i) a foreign company engaged in the business of diamond mining which has exercised an option for application of safe harbour rules in accordance with rule 100; or
(ii) a foreign company which stores components in a warehouse in a custom bonded area for providing them to a contract manufacturer to be used for manufacturing of specified electronic goods;
(d) “eligible business” means —
(i) a business of selling raw diamonds in any notified special zone as referred under section 9(9)(c)(ii)(C); or
(ii) the business activity of storage of components in a warehouse in a custom bonded area for sale to a contract manufacturer to be used for manufacturing of specified electronic goods;
(e) “gross receipts” means, —
(i) in a case referred to clause (d)(i), the aggregate of —
(A) the amount paid or payable to the eligible assessee or to any person on his behalf on account of sale of raw diamonds by such eligible assessee; and
(B) the amount received or deemed to be received by the eligible assessee or by any person on his behalf on account of sale of raw diamonds by such eligible assessee;
(ii) in a case referred to clause (d)(ii), the aggregate of —
(A) the amount paid or payable to the eligible assessee or to any person on his behalf on account of sale of components in a warehouse in a custom bonded area to the contract manufacturer to be used for manufacturing of specified electronic goods; and
(B) the amount received or deemed to be received by the eligible assessee or by any person on his behalf on account of sale of components in a warehouse in a custom bonded area to the contract manufacturer to be used for manufacturing of specified electronic goods;
(f) “raw diamonds” means diamonds that are —
(i) uncut or unpolished;
(ii) unassorted;
(iii) unworked or simply sawn, cleaved or bruted;
(iv) not conflict diamonds as defined by the Kimberley Process;
(v) accompanied by Kimberley Process Certificate issued by the Kimberley Process authority in the exporting country; and
(vi) falling under Tariff Heading 7102 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975);
(g) “relevant tax year” means the tax year in which the option for safe harbour is exercised;
(h) “specified electronic goods” shall mean —
(i) mobile phones; or
(ii) laptops, all-in-one personal computers and tablets; or
(iii) servers and ultra small form factor (USSF); or
(iv) sub-assemblies to the finished goods mentioned in clause (i) to (iii); or
(v) hearables and wearables and accessories related to the fmished goods mentioned in clause (i) to (iii).
100. Safe harbour for income attribution in case of income from business and profession.— (1) The income-tax authorities shall accept the option for safe harbour exercised by an eligible assessee in any relevant tax year under rule 101, where the income declared by such assessee from an eligible business is in accordance with the circumstances as specified under sub-rule (2), unless such safe harbour is declared invalid under the provisions of rule 101(3).
(2) In respect of the eligible business mentioned in column B of the following Table, the circumstances referred to in sub-rule (1) shall be as specified in column C thereof:
Table
| Sl. No. | Eligible business | Circumstances |
| A | B | C |
| 1. | Selling of raw diamonds. | The profits and gains of the eligible business chargeable to tax under the head “Profits and gains of business or profession” shall be 4% or more of the gross receipts from such business. |
| 2. | The business activity of storage of components in a warehouse in a custom bonded area for sale to a contract manufacturer. | The profits and gains of the eligible business chargeable to tax under the head “Profits and gains of business or profession” shall be 2% or more of the gross receipts from such business. |
(3) Where the eligible assessee has exercised the option for safe harbour under rule 101 in respect of the eligible business in any relevant tax year and such option is not declared invalid under the said rule,—
(a) any deduction allowable under the provisions of sections 28 to 34, 44 to 49, 51, 52, Schedule IX and Schedule X shall be deemed to have been already given full effect to and no further deduction under those sections or Schedules shall be allowed;
(b) the written down value of any asset of such business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for such tax year;
(c) no set off of unabsorbed depreciation under section 33(11) or carried forward loss under section 112(1) shall be allowed to such assessee; and
(d) no set off of loss from other business under section 108(1) or other head under section 109 shall be allowed to such assessee for income chargeable to tax under the head “Profits and gains of business or profession” in respect of such business.
(4) The provisions of sections 171 and 172 shall apply in respect of an international transaction or specified domestic transaction, if the eligible assessee enters into such transaction while carrying on the eligible business.
(5) For the purposes of this rule, the expressions, “international transaction” and “specified domestic transaction” shall have the meanings respectively assigned to them in sections 163 and 164.
101. Procedure governing safe harbour rules for income attribution in case of income from business and profession.— (1) For exercising option for safe harbour, the assessee shall furnish Form No. 49, complete in all respects, to the Assessing Officer before furnishing the return of income under section 263 for the relevant tax year.
(2) The income from eligible business shall be determined in accordance with the provisions of the Act without having regard to the provisions of rule 100(2), where the assessee does not exercise option for safe harbour under rule 100(1).
(3) The Assessing Officer may declare the option for safe harbour as invalid by an order in writing, where the assessee has—
(a) availed the safe harbour by furnishing incorrect facts; or
(b) concealed facts related to his business.
(4) The Assessing Officer shall afford a reasonable opportunity of being heard to the assessee before declaring the option for safe harbour invalid under sub-rule (3).
(5) The Assessing Officer shall serve a copy of the order referred to under sub-rule (3) to the assessee and the other provisions of the Act shall apply accordingly.
(6) Form No. 49 shall be furnished electronically either under digital signature or through electronic verification code and shall be verified by the person who is authorised to verify the return of income of the assessee under section 265.
102. Mutual agreement procedure not to apply where safe harbour for income attribution in case of income from business and profession is exercised.— The assessee shall not be entitled to invoke mutual agreement procedure under an agreement for avoidance of double taxation as referred to in section 159 in relation to an eligible business, if the assessee has exercised the option for safe harbour under rule 101 in respect of such business and such option is not declared invalid under the said rule.
103. Meaning of expressions used in matters in respect of advance pricing agreement.— For the purposes of this rule and rules 104 to 120, —
(a) “agreement’ means an advance pricing agreement entered into between the Board and the applicant, with the approval of the Central Government, as referred to in section 168(1);
(b) “application” means an application for advance pricing agreement made under rule 106;
(c) “applicant” means a person who has made an application;
(d) “bilateral agreement” means an agreement between the Board and the applicant, subsequent to, and based on, any agreement referred to in rule 122 between the competent authority of India with the competent authority of the other country regarding the most appropriate transfer pricing method or the arms’ length price;
(e) “competent authority of India” means an officer authorised by the Central Government for the purpose of discharging the functions relating to any agreement entered into under section 159 of the Act;
(f) “covered transaction” means the international transaction or transactions for which agreement has been entered into;
(g) “critical assumptions” means the factors and assumptions which are so critical and significant, that if changed, the parties to the agreement shall not continue to be bound by the agreement;
(h) “most appropriate transfer pricing method” means a transfer pricing method, referred to in section 165(1), being the most appropriate, having regard to the nature of transaction or class of transaction or class of associated persons or function performed by such persons or such other relevant factors specified by the Board under rules 79 and 80;
(i) “multilateral agreement” means an agreement between the Board and the applicant, subsequent to, and based on, any agreement referred to in rule 122 between the competent authority of India with the competent authorities of the other countries regarding the most appropriate transfer pricing method or the arms’ length price;
(l) “rollback year” means any tax year, falling within the period not exceeding four tax years, preceding the first of the tax years referred to in section 168(4);
(k) “tax treaty” means an agreement under section 159 for the avoidance of double taxation;
(l) “team” means advance pricing agreement team consisting of income-tax authorities as constituted by the Board and including such number of experts in economics, statistics, law or any other field as may be nominated by the Principal Chief Commissioner of Income-tax (International Taxation); and
(m) “unilateral agreement” means an agreement between the Board and the applicant, which is neither a bilateral nor a multilateral agreement.
104. Persons eligible to apply.— A person shall be eligible to enter into an agreement under these rules, if he —
(a) has undertaken an international transaction; or
(b) is contemplating to undertake an international transaction.
105. Pre-filing consultation.— (1) An eligible person may make an application in Form No. 50 to the Principal Chief Commissioner of Income-tax (International Taxation) for a pre-filing consultation.
(2) On receipt of the application, the team shall hold pre-filing consultation with the eligible person who has applied under sub-rule (1).
(3) The competent authority of India or his representative shall be associated in pre-filing consultation involving bilateral or multilateral agreement.
(4) The pre-filing consultation shall, among other things, —
(a) determine the scope of the agreement;
(b) identify transfer pricing issues;
(c) determine the suitability of international transaction for the agreement; and
(d) discuss broad terms of the agreement.
(5) The pre-filing consultation shall—
(a) neither bind the Board or the eligible person who has applied under sub-rule (1) to enter into an agreement or initiate the agreement process;
(b) nor be deemed to mean that the person has applied for entering into an agreement.
(6) The provisions of this rule shall not apply in the case of renewal of the agreement.
106. Application for advance pricing agreement.— (1) An eligible person may furnish an application in Form No. 51 along with requisite fee of twenty lakh rupees for entering into an agreement.
(2) The application shall be furnished to Principal Chief Commissioner of Income-tax (International Taxation) in case of unilateral agreement and to the competent authority of India, in case of bilateral or multilateral agreement.
(3) The application may be filed by the eligible person at any time—
(a) before the first day of the first tax year for which the application is made, in respect of transactions which are of a continuing nature from dealings that are already occurring; or
(b) before undertaking the transaction in respect of remaining transactions.
(4) The application shall be accompanied by the proof of payment of fees of twenty lakh rupees.
107. Withdrawal of application for agreement.— (1) The applicant may withdraw the application for agreement at any time before the finalisation of the terms of the agreement by furnishing an intimation to the Principal Chief Commissioner of Income-tax (International Taxation), in case of unilateral agreement and to the competent authority of India, in case of bilateral or multilateral agreement.
(2) The fee paid shall not be refunded on withdrawal of application by the applicant.
108. Preliminary processing of application.— (1) Application filed in Form No. 51 shall be complete in all respects and accompanied by requisite documents.
(2) The Principal Chief Commissioner of Income-tax (International taxation), in the case of a unilateral agreement and competent authority of India, in the case of bilateral or multilateral agreement shall serve a deficiency letter on the applicant, if —
(a) any defect is noticed in the application in Form No. 51; or
(b) any relevant document is not attached thereto; or
(c) the application is not in accordance with understanding reached in pre-filing consultation referred to in rule 105.
(3) The deficiency letter in sub-rule (2) shall be served on the applicant within one month from the end of the month in which the application has been received.
(4) The applicant shall remove the deficiency or modify the application within a period of thirty days from the date of receipt of the deficiency letter.
(5) The Principal Chief Commissioner of Income-tax (International Taxation) or the competent authority of India, as the case may be, on being satisfied, may pass an order providing that application shall not be allowed to be proceeded with, if the application is defective and defect is not removed by applicant in accordance with sub-rule (4).
(6) The order referred to in sub-rule (5) shall be passed after providing a reasonable opportunity of being heard to the applicant.
(7) In a case where an application is not allowed to be proceeded with under sub-rule (5), the fee paid by the applicant shall be refunded.
109. Procedure.— (1) If the application referred to in rule 108 has been allowed to be proceeded with, the team or the competent authority of India, or his representative, shall process the same in consultation and discussion with the applicant in accordance with provisions of this rule.
(2) For the purposes of sub-rule (1), the team, or the competent authority of India, or its representative may,—
(a) hold meetings with the applicant on such time and date as it deems fit; or
(b) call for additional document or information or material from the applicant; or
(c) visit the applicant’s business premises; or
(d) make such inquiries as it deems fit in the circumstances of the case.
(3) In the case of a unilateral agreement, the proceedings referred to in sub-rule (2) may, where it is possible, be completed within a period of one year from the end of the financial year in which application referred to in rule 108 has been allowed to be proceeded with.
(4) For the purpose of sub-rule (1), the applicant may provide further document and information for consideration of the team, or the competent authority of India, or his representative.
(5) For bilateral or multilateral agreement, the competent authority shall forward the application to the Principal Chief Commissioner of Income-tax (International Taxation), who shall assign it to one of the teams.
(6) The team, to whom the application has been assigned under sub-rule (4), shall carry out the enquiry and prepare a draft report which shall be forwarded by the Principal Chief Commissioner of Income-tax (International Taxation) to the competent authority of India.
(7) If the applicant makes a request for bilateral or multilateral agreement in the application, the competent authority of India shall in addition to the procedure provided in this rule, invoke the procedure provided in rule 122.
(8) The Principal Chief Commissioner of Income-tax (International Taxation) (for unilateral agreement) or the competent authority of India (for bilateral or multilateral agreement) and the applicant shall prepare a proposed mutually agreed draft agreement enumerating the result of the process referred to in sub-rule (1) including the effect of the arrangement referred to in rule 122(5) which has been accepted by the applicant in accordance with rule 122(8).
(9) The agreement shall be entered into by the Board with the applicant after its approval by the Central Government.
(10) Once an agreement has been entered into, the Principal Chief Commissioner of Income-tax (International Taxation) or the competent authority of India, as the case may be, shall cause a copy of the agreement to be sent to the Commissioner of Income-tax having jurisdiction over the assessee.
(11) Where no agreement has been entered within a period of three years from the end of the financial year in which application referred to in rule 108 is furnished then the Board may direct that the proceedings in respect of such an application shall be treated as closed, if—
(a) the applicant has not provided any document or information or material relevant, as required under sub-rule (2)(ii), for proceeding with the application; or
(b) the applicant fails to comply with any direction issued for holding meeting, facilitating the visit of premise, or making of inquiries in terms of sub-rule (2).
(12) The directions under sub-rule (11) shall be given after providing a reasonable opportunity of being heard to the applicant.
(13) Where an application is made for a unilateral advance pricing agreement where the primary covered transaction is the provision of information technology services referred to in rule 89(2) [Table: Sl. No. 1] and the agreement is not entered into within a period of two years from the end of the quarter in which the application is made, the proceedings in respect of such an application shall be treated as closed.
(14) For the purposes of sub-rule (13), the assessee may request for an additional period of six months beyond the time limit mentioned therein and, in such case, the aforesaid time limit shall be extended by an additional period of six months.
(15) Where the proceedings are closed, the fee paid by the applicant under rule 106 shall not be refunded.
110. Terms of the agreement.— (1) An agreement may among other things, include—
(a) the international transactions covered by the agreement;
(b) the agreed transfer pricing methodology, if any;
(c) determination of arm’s length price, if any;
(d) the manner in which the arm’s length price is to be determined, if any;
(e) definition of any relevant term to be used in clause (b), (c) or (d);
(f) critical assumptions;
(g) rollback provisions referred to in rule 111; and
(h) the conditions, if any, other than provided in the Act or these rules.
(2) The agreement shall not be binding on the Board or the assessee, if there is a change in any of critical assumptions or failure to meet conditions subject to which the agreement has been entered into.
(3) The binding effect of agreement shall cease only if any party has given due notice to the concerned other party or parties.
(4) In case there is a change in any of the critical assumptions or failure to meet the conditions subject to which the agreement has been entered into, the agreement may be revised or cancelled, as the case may be.
(5) The assessee which has entered into an agreement shall give a notice in writing of such change in any of the critical assumptions or failure to meet conditions to the Principal Chief Commissioner of Income-tax (International Taxation), as soon as it is practicable to do so.
(6) The Board shall give a notice in writing of such change in critical assumptions or failure to meet conditions to the assessee, as soon as it comes to the knowledge of the Board.
(7) The revision or the cancellation of the agreement shall be in accordance with rules 115 and 116, respectively.
111. Roll back of Agreement.— (1) Subject to the provisions of this rule, the agreement may provide for determining the arm’s length price in relation to an international transaction, or specify the manner in which such arm’s length price shall be determined during the rollback year (herein referred to as the rollback provision).
(2) The rollback provision shall be subject to the following: —
(a) the international transaction is same as the international transaction to which the agreement (other than the rollback provision) applies;
(b) the return of income for the relevant rollback year has been or is furnished by the applicant within the time specified in section 263(1)(c);
(c) the report in respect of the international transaction had been furnished within the time specified in clause (b);
(d) the applicability of rollback provision, in respect of an international transaction, has been requested by the applicant for all the rollback years in which the said international transaction has been undertaken by the applicant; and
(e) the application seeking rollback in Form No. 51 has been made in accordance with sub-rule (5).
(3) Irrespective of anything contained in sub-rule (2), the rollback provision shall not be provided in respect of an international transaction for a rollback year, if—
(a) the determination of arm’s length price of the said international transaction for the said year has been subject matter of an appeal before the Appellate Tribunal and the Appellate Tribunal has passed an order disposing of such appeal at any time before signing of the agreement; or
(b) the application of rollback provision has the effect of reducing the total income or increasing the loss, as the case may be, of the applicant as declared in the return of income of the said year.
(4) Where the rollback provision specifies the manner in which arm’s length price shall be determined in any rollback year, then such manner shall be the same as the manner which has been agreed to be provided for determination of arm’s length price of the same international transaction to be undertaken in any tax year to which the agreement applies, not being a rollback year.
(5) The applicant may, if he desires to enter into an agreement with rollback provision, furnish along with the application, the request for the same in Form No. 51 with proof of payment of an additional fee of Z 500000.
112. Amendments to application.— (1) An applicant may request in writing for an amendment to an application at any stage, before the finalisation of the terms of the agreement.
(2) The Principal Chief Commissioner of Income-tax (International Taxation) (for unilateral agreement) or the competent authority of India (for bilateral or multilateral agreement) may, allow the amendment to the application, if such an amendment does not have effect of altering the nature of the application as originally filed.
113. Furnishing of annual compliance report.— (1) The assessee shall furnish an annual compliance report to the Principal Chief Commissioner of Income-tax (International Taxation) for each year covered in the agreement.
(a) The annual compliance report shall be in Form No. 52.
(b) The assessee shall file the annual compliance report for each year covered in the agreement, within thirty days of the due date of filing the income-tax return for that year, or within ninety days of entering into an agreement, whichever is later and send it to Principal Chief Commissioner of Income-tax (International Taxation).
(c) The Principal Chief Commissioner of Income-tax (International Taxation) shall send one copy of annual compliance report to the competent authority of India, one copy to the Commissioner of Income-tax who has the jurisdiction over the income-tax assessment of the assessee and one copy to the Transfer Pricing Officer having the jurisdiction over the assessee.
114. Compliance audit of agreement.— (1) The Transfer Pricing Officer in respect of arms’ length price and having the jurisdiction over the assessee shall carry out the compliance audit of the agreement for each of the year covered in the agreement.
(2) For the purposes of sub-rule (1), the Transfer Pricing Officer may require—
(a) the assessee to substantiate compliance with the terms of the agreement, including satisfaction of the critical assumptions, correctness of the supporting data or information and consistency of the application of the transfer pricing method; and
(b) the assessee to submit any information, or document, to establish that the terms of the agreement has been complied with.
(3) The Transfer Pricing Officer shall submit the compliance audit report, for each year covered in the agreement, to the Principal Chief Commissioner of Income-tax (International Taxation) in case of unilateral agreement and to the competent authority of India, in case of bilateral or multilateral agreement, mentioning therein his findings as regards compliance by the assessee with terms of the agreement.
(4) The Principal Chief Commissioner of Income-tax (International Taxation) shall forward the report to the Board, where there is finding of failure on part of assessee to comply with terms of agreement and cancellation of the agreement is required.
(5) The compliance audit report shall be furnished by the Transfer Pricing Officer within six months from the end of the month in which the Annual Compliance Report referred to in rule 113 is received by such officers.
(6) The regular audit of the covered transactions shall not be undertaken by the Transfer Pricing Officer, if an agreement has been entered into under rule 109, except where the agreement has been cancelled under rule 116.
115. Revision of an agreement.— (1) An agreement, subsequent to it having been entered into, may be revised by the Board, if, —
(a) there is a change in critical assumptions or failure to meet a condition subject to which the agreement has been entered into; or
(b) there is a change in law that modifies any matter covered by the agreement but is not of the nature which renders the agreement to be non-binding; or
(c) there is a request from competent authority of the other country requesting revision of agreement, in case of bilateral or multilateral agreement.
(2) An agreement may be revised by the Board, either suo motu, or on request of the assessee, or the competent authority of India, or the Principal Chief Commissioner of Income-tax (International Taxation).
(3) Except when the agreement is proposed to be revised on the request of the assessee, the agreement shall not be revised unless an opportunity of being heard has been provided to the assessee and the assessee is in agreement with the proposed revision.
(4) In case the assessee is not in agreement with the proposed revision, the agreement may be cancelled in accordance with rule 116.
(5) In case the Board is not in agreement with the request of the assessee for revision of the agreement, the Board shall reject the request in writing giving reason for such rejection.
(6) For the purpose of arriving at the agreement for the proposed revision, the procedure provided in rule 109 may be followed, so far as they apply.
(7) The revised agreement shall include the date till which the original agreement is to apply and the date from which the revised agreement is to apply.
116. Cancellation of an agreement.— (1) An agreement shall be cancelled by the Board for any of the following reasons:
(a) the compliance audit referred to in rule 114 has resulted in the fmding of failure on the part of the assessee to comply with the terms of the agreement; or
(b) the assessee has failed to file the annual compliance report in time; or
(c) the annual compliance report furnished by the assessee contains material errors; or
(d) the agreement is to be cancelled under rule 115(4) or rule 117(7).
(2) The Board shall give a reasonable opportunity of being heard to the assessee, before proceeding to cancel an application.
(3) The competent authority of India shall communicate with the competent authority of the other country or countries and provide reason for the proposed cancellation of the agreement in case of bilateral or multilateral agreement.
(4) The order of cancellation of the agreement shall be in writing and shall provide reasons for cancellation and for non-acceptance of submission of the assessee, if any.
(5) The order of cancellation shall also specify the effective date of cancellation of the agreement, where applicable.
(6) The order under section 168(7), declaring the agreement as void ab initio, on account of fraud or misrepresentation of facts, shall be in writing and shall provide reason for such declaration and for non-acceptance of submission of the assessee, if any.
(7) The order of cancellation shall be intimated to the Assessing Officer and the Transfer Pricing Officer, having jurisdiction over the assessee.
117. Procedure for giving effect to rollback provision of an Agreement.— (1) The effect to the rollback provisions of an agreement shall be given in accordance with this rule.
(2) The applicant shall furnish modified return of income referred to in section 169 in respect of a rollback year to which the agreement applies along with the proof of payment of any additional tax arising as a consequence of and computed in accordance with the rollback provision.
(3) The modified return referred to in sub-rule (2) shall be furnished along with the modified return to be furnished in respect of first of the tax years for which the agreement has been requested for in the application.
(4) If any appeal filed by the applicant is pending before the Commissioner (Appeals), Appellate Tribunal or the High Court for a rollback year, on the issue which is the subject matter of the rollback provision for that year, the said appeal to the extent of the subject covered under the agreement shall be withdrawn by the applicant before furnishing the modified return for the said year.
(5) If any appeal filed by the Assessing Officer or the Commissioner is pending before the Appellate Tribunal or the High Court for a rollback year, on an issue which is subject matter of the rollback provision for that year, the said appeal to the extent of the subject covered under the agreement shall be withdrawn by the Assessing Officer or the Commissioner, as the case may be, within three months of filing of modified return by the applicant.
(6) The applicant, the Assessing Officer or the Commissioner, shall inform the Dispute Resolution Panel, or the Commissioner (Appeals), or the Appellate Tribunal, or the High Court, as the case may be, the fact of an agreement containing rollback provision having been entered into along with a copy of the same as soon as it is practicable to do so.
(7) In case effect cannot be given to the rollback provision of an agreement in accordance with this rule, for any rollback year to which it applies, on account of failure on the part of applicant, the agreement shall be cancelled.
118. Relief in tax payable under section 206(1) due to operation of section 206(1)(i).— (1) For the purposes of section 206(1)(i), the tax payable by the assessee company under section 206(1), for the tax year referred to in that section, shall be reduced by the following amount, namely: —
(A-B) – (C-D),
Where, —
A = tax payable by the assessee company under section 206(1) on the book profit of the tax year including the past income and where there is no tax payable, the value shall be taken as zero;
B = tax payable by the assessee company under section 206(1) on the book profit of the tax year excluding the past income and where there is no tax payable, the value shall be taken as zero;
C = aggregate of tax payable by the assessee company under section 206(1) on the book profit of past year or years, referred to in item D, after increasing the book profit with the relevant past income of such year or years and where there is no tax payable, the value shall be taken as zero; and
D = aggregate of tax payable by the assessee company under section 206(1) on the book profit of those past year or years to which the past income belongs and where there is no tax payable, the value shall be taken as zero.
(2) If the value of (A-B) – (C-D) is negative, its value shall be deemed to be zero.
(3) For the purposes of sub-rule (1) past income shall be the amount of income of past year or years included in the book profit of the tax year on account of an advance pricing agreement entered into by the assessee under section 168 or on account of secondary adjustment required to be made under section 170.
(4) On application of provision of sub-rule (1), the tax credit allowed to the assessee under section 206(1)(m) shall be reduced by the amount allowed under sub-rule (1).
(5) A claim for relief under section 206(1)(i) shall be made by an assessee company in Form No. 53 by uploading signed printout of said Form in the manner specified by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, and which shall be verified by the person who is authorised to verify the return of income of the assessee company under section 265.
119. Renewing an agreement.— Request for renewal of an agreement may be made as a new application in Form No. 54 for agreement, using the same procedure as outlined in these rules except pre-filing consultation as referred to in rule 105.
120. Miscellaneous.— (1) Mere filing of an application for an agreement under these rules shall not prevent the operation of Chapter X of the Act for determination of arms’ length price under that Chapter till the agreement is entered into.
(2) The negotiation between the competent authority of India and the competent authority of the other country or countries, in case of bilateral or multilateral agreement, shall be carried out in accordance with the provisions of the tax treaty between India and the other country or countries.
121. Application seeking to give effect to terms of any agreement under section 533(2)(p) and procedure for giving effect to decision under agreement.— (1) Where an assessee, who is a resident of India, is aggrieved by any action of the tax authorities of any country or specified territory outside India which, according to him, is not in accordance with the terms of agreement with such other country or specified territory, he may make an application to the competent authority of India seeking to invoke the mutual agreement procedure, if provided in such agreement, in Form No. 55.
(2) Where a reference has been received from the competent authority of any country or specified territory outside India under any agreement with that country or specified territory with regard to any action taken by any income-tax authority in India or by the tax authorities of such country or specified territory, the competent authority of India shall communicate its acceptance or non-acceptance for taking up the reference under mutual agreement procedure to the competent authority of the other country or specified territory.
(3) The competent authority of India shall, on issues contained in Form No. 55 or in the reference from the competent authority of a country or specified territory outside India, —
(a) call for the relevant records and additional document from the income-tax authorities or the assessee or his authorised representative in India; or
(b) have a discussion with such authorities or assessee or representative, to understand the actions taken by the income-tax authorities in India or outside that are not in accordance with the terms of the agreements between India and the other country or specified territory.
(4) The competent authority of India shall endeavour to arrive at a mutually agreeable resolution of the tax disputes, arising from such actions of the income-tax authorities, in accordance with the agreement between India and the other country or specified territory within an average time period of twenty-four months.
(5) In case the mutual agreement procedure is invoked on account of action taken by any income-tax authority in India, the resolution arrived at under sub-rule (4) in a tax year shall not result in decreasing the income or increasing the loss, as the case may be, of the assessee in India, as declared by him in the return of income of the said year.
(6) If a resolution is arrived at under sub-rule (4) between the competent authority of India and that of the other country or specified territory, the same shall be communicated in writing to the assessee.
(7) The assessee shall communicate his acceptance or non-acceptance of the resolution in writing to the competent authority of India within one month from the end of the month in which communication has been received under sub-rule (6).
(8) The acceptance of the resolution by the assessee shall be accompanied by proof of withdrawal of appeal, if any, pending on the issues that were the subject matter of the resolution arrived at under sub-rule (4).
(9) On receipt of acceptance under sub-rule (7), the competent authority of India shall communicate the resolution arrived at under sub-rule (4) and the acceptance by the assessee along with proof of withdrawal of appeal, if any, submitted by the assessee under sub-rule (8), to the Principal Chief Commissioner or the Chief Commissioner, as the case may be, who in turn shall forward it to the Assessing Officer.
(10) On receipt of communication under sub-rule (9), the Assessing Officer shall give effect to the resolution arrived at under sub-rule (4), by an order in writing, within one month from the end of the month in which the communication was received by him and intimate the assessee about the tax payable determined by him, if any.
(11) The assessee shall pay the tax as determined under sub-rule (10) within the time allowed by the Assessing Officer and shall submit the proof of payment of taxes to the Assessing Officer, who shall then proceed to withdraw the pending appeal, if any, pertaining to subject matter of the resolution under sub-rule (4), which was filed by the Assessing Officer or the Principal Commissioner or Commissioner or any other income-tax authority.
(12) A copy of the order under sub-rule (10), shall be sent to the competent authority of India and to the assessee.
(13) The amount of tax, interest or penalty already determined shall be adjusted in accordance with the resolution arrived at under sub-rule (4) and in the manner provided under the Act or the rules made thereunder to the extent that such manner is not contrary to the resolution arrived at.
(14) For the purposes of this rule, the “competent authority of India” means an officer authorised by the Central Government for the purposes of discharging the functions as provided under this rule.
112. Procedure to deal with requests for bilateral or multilateral advance pricing agreements.— (1) Where a person has made request for a bilateral or multilateral advance pricing agreement in an application filed in Form No. 51 in accordance with rule 106, the request shall be dealt with subject to provisions of this rule.
(2) The process for bilateral or multilateral advance pricing agreement shall commence only if the associated enterprise located outside India has initiated process of advance pricing agreement with the competent authority of the other country.
(3) On intimation of request of the applicant for a bilateral or multilateral agreement, the competent authority of India shall consult and ascertain willingness of the competent authority of other country or countries, as the case may be, for initiation of negotiation for this purpose.
(4) In case of willingness of the competent authority of other country or countries, as the case may be, the competent authority of India shall enter into negotiation in this behalf and endeavour to reach mutually acceptable terms with the competent authority of the other country or countries, as the case may be.
(5) Upon reaching an agreement after consultation, the competent authority of India shall formalise a mutual agreement procedure arrangement with the competent authority of other country or countries, as the case may be, and intimate the same to the applicant.
(6) In case of failure to reach agreement on mutually acceptable terms as mentioned in sub-rule (4), the applicant shall be informed of the same.
(7) The applicant shall not be entitled to be part of discussion between competent authority of India and the competent authority of the other country or countries, as the case may be, but the applicant may communicate or meet the competent authority of India for the purpose of entering into an advance pricing agreement.
(8) The applicant shall convey acceptance or otherwise of the agreement within one month from the end of the month in which communication has been received.
(9) If the applicant does not accept the agreement, it may, —
(a) continue the advance pricing agreement process without the benefit of the mutual agreement procedure; or
(b) withdraw the application in accordance with rule 107.
123. Maintenance and furnishing of information and document by constituent entity of an international group under section 171.— (1) Every person, being a constituent entity of an international group shall, —
(a) if the consolidated group revenue of the international group, of which such person is a constituent entity, as reflected in the consolidated financial statement of the international group for the accounting year, exceeds five hundred crore rupees; and
(b) the aggregate value of international transactions, —
(i) during the accounting year, as per the books of account, exceeds fifty crore rupees; or
(ii) in respect of purchase, sale, transfer, lease or use of intangible property during the accounting year, as per the books of account, exceeds ten crore rupees,
keep and maintain the following information and documents of the international group: —
(A) a list of all entities of the international group along with their addresses;
(B) a chart depicting the legal status of the constituent entity and ownership structure of the entire international group;
(C) a description of the business of international group during the accounting year including —
(I) the nature of the business or businesses;
(II) the important drivers of profits of such business or businesses;
(III) a description of the supply chain for the five largest products or services of the international group in terms of revenue and any other products including services amounting to more than 5% of consolidated group revenue;
(IV) a list and brief description of important service arrangements made among members of the international group, other than those for research and development services;
(V) a description of the capabilities of the main service providers within the international group;
(VI) details about the transfer pricing policies for allocating service costs and determining prices to be paid for intra-group services;
(VII) a list and description of the major geographical markets for the products and services offered by the international group;
(VIII) a description of the functions performed, assets employed and risks assumed by the constituent entities of the international group that contribute at least 10% of the revenues or assets or profits of such group; and
(IX) a description of the important business restructuring transactions, acquisitions and divestments;
(D) a description of the overall strategy of the international group for the development, ownership and exploitation of intangible property including location of principal research and development facilities and their management;
(E) a list of all entities of the international group engaged in development and management of intangible property along with their addresses;
(F) a list of all the important intangible property or groups of intangible property owned by the international group along with the names and addresses of the group entities that legally own such intangible property;
(G) a list and brief description of important agreements among members of the international group related to intangible property, including cost contribution arrangements, principal research service agreements and license agreements;
(H) a detailed description of the transfer pricing policies of the international group related to research and development and intangible property;
(I) a description of important transfers of interest in intangible property, if any, among entities of the international group, including the name and address of the selling and buying entities and the compensation paid for such transfers;
(J) a detailed description of the financing arrangements of the international group, including the names and addresses of the top ten unrelated lenders;
(K) a list of group entities that provide central financing functions, including their place of operation and of effective management;
(L) a detailed description of the transfer pricing policies of the international group related to financing arrangements among group entities;
(M) a copy of the annual consolidated financial statement of the international group; and
(N) a list and brief description of the existing unilateral advance pricing agreements and other tax rulings in respect of the international group for allocation of income among countries.
(2) The information and document specified in sub-rule (1) shall be furnished to the Joint Director referred to in rule 124(1), in Form No. 56, on or before the due date for furnishing the return of income as specified under section 263(1)(c).
(3) The constituent entity shall furnish Part A of Form No. 56 even if the conditions specified in sub-rule (1) are not satisfied.
(4) Where there are more than one constituent entities of an international group required to file the information and document in sub-rule (2), then Form No. 56 may be furnished by any one constituent entity, if, —
(a) the international group has designated such entity for this purpose; and
(b) the information has been conveyed in Form No. 57 to the Joint Director referred to in rule 124(1) in this behalf, thirty days before the due date of furnishing the Form No. 56.
(5) The information and documents specified in sub-rule (1) shall be kept and maintained for a period of nine years from the end of the relevant tax year.
(6) The rate of exchange for the calculation of the value in rupees of the consolidated group revenue in foreign currency shall be the telegraphic transfer buying rate of such currency on the last day of the accounting year.
(7) In this rule, —
(a) the expressions “accounting year”, “consolidated fmancial statement” and “international group” shall have the meanings respectively assigned to them in section 511(10); and
(b) “telegraphic transfer buying rate” shall have the meaning assigned in rule 207.
124. Furnishing of report in respect of an international group under section 511.— (1) The income-tax authority for the purposes of section 511 shall be the Joint Director, as may be designated by the Director General of Income-tax (Systems).
(2) The notification under section 511(1) shall be made in Form No. 58 two months prior to the due date for furnishing of report as specified under sub-section (2) of the said section.
(3) Every parent entity or the alternate reporting entity, as the case may be, resident in India, shall, for every reporting accounting year, furnish the report referred to in section 511(2) in Form No. 59.
(4) The period for furnishing of the report under section 511(4) by the constituent entity, referred to in that sub-section shall be twelve months from the end of the reporting accounting year.
(5) In case the parent entity of the constituent entity is resident of a country or territory, where, there has been a systemic failure of the country or territory and the said failure has been intimated to such constituent entity, the period for submission of the report shall be six months from the end of the month in which said systemic failure has been intimated.
(6) The information required to be conveyed under section 511(5) regarding the designated constituent entity shall be furnished in Form No. 60.
(7) For the purposes of section 511(8), the total consolidated group revenue of the international group shall be six thousand four hundred crore rupees.
(8) Where the total consolidated group revenue of the international group, as reflected in the consolidated financial statement, is in foreign currency, the rate of exchange for the calculation of the value in rupees of such total consolidated group revenue shall be the telegraphic transfer buying rate of such currency on the last day of the accounting year preceding the accounting year.
(9) Any revision or correction in the report furnished in the Form No. 59 shall be made by furnishing an intimation to the Director General of Income-tax (Systems).
(10) For the purposes of this rule, —
(a) the expressions “accounting year”, “consolidated financial statement” and “international group” shall have the meanings respectively assigned to them in section 511(10); and
(b) “telegraphic transfer buying rate” shall have the meaning assigned in rule 207.
125. Furnishing of authorisation and maintenance of documents, etc. for the purposes of section 176.— (1) For the purposes of section 176(3)(a), the authorisation to be submitted by the assessee, shall be in Form No. 61.
(2) The assessee shall cause the first copy of the filled up Form No. 61 to be deposited with or transmitted to the financial institution referred in section 176(3)(a).
(3) The second copy of the filled up Form No. 61 along with the evidence of the first copy of said form having been deposited or transmitted to the financial institution shall be submitted by the assessee to the Assessing Officer having jurisdiction over him.
(4) For the purposes of ensuring that the authorisation in Form No. 61 is legally enforceable, the assessee shall take all necessary steps as are required under any law in force in India or outside India.
(5) For the purposes of section 176(3)(b), the assessee who has entered into a transaction with a person located in a notified jurisdictional area (herein referred to as the specified person) shall, in addition to information and documents referred to in rule 84(1), keep and maintain the following information and documents, namely: —
(a) a description of the ownership structure of the specified person, including name and address of individuals or other entities, whether located in the notified jurisdictional area or outside, having directly or indirectly more than 10% shareholding or ownership interests;
(b) a profile of the multinational group of which the specified person is a part along with the name, address, legal status and country of tax residence of each of the enterprises comprised in the group with whom the assessee has entered into a transaction, and ownership linkage among them;
(c) a broad description of the business of the specified person and the industry it operates in;
(d) any other information, data or document, which may be relevant for the transaction with the specified person.
(6) The information and documents specified in sub-rule (5) shall be for the period upto the due date of filing of return of income under section 263(1)
(7) The information and documents specified in sub-rule (5) shall be kept and maintained for a period of eight years from the end of the financial year succeeding the relevant tax year.
1632 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
126. Conditions and activities for finance company located in any International Financial Services Centre for section 177.— (1) For the purposes of section 177(7)(b), the finance company located in any International Financial Services Centre shall only carry out one or more of the following activities, namely: —
(a) lending in the form of loans, commitments and guarantees, credit enhancement, securitisation, or financial lease; or
(b) factoring and forfaiting of receivables; or
(c) functions of Global or Regional Corporate Treasury Centre such as borrowings, lending, hedging of currency or commodity risk or investments, cash management, structured credit, intra group fmancing, financial budgeting and similar other such treasury services and activities.
(2) The interest being paid by such finance company, being the borrower, in respect of any debt issued by a nonresident, shall be in foreign currency.
(3) For the purposes of this rule, —
(a) “finance company” means a fmance company as defined in regulation 2(1)(e) of the International Financial Services Centres Authority (Finance Company) Regulations, 2021 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019); and
(b) “International Financial Services Centre” shall have the meaning as assigned to it in section 2(q) of the Special Economic Zones Act, 2005 (28 of 2005).
127. Determination of consequences of impermissible avoidance arrangement.— For the purposes of section 181, where a part of an arrangement is declared to be an impermissible avoidance arrangement, the consequences in relation to tax shall be determined with reference to such part only.
128. Chapter XI relating to General Anti Avoidance Rule not to apply in certain cases.— (1) The provisions of Chapter XI shall not apply to —
(a) an arrangement, where the aggregate tax benefit in the relevant tax year, to all the parties to the arrangement does not exceed a sum of three crore rupees;
(b) a Foreign Institutional Investor, —
(i) who is an assessee under the Act;
(ii) who has not taken benefit of an agreement referred to in section 159; and
(iii) who has invested in listed securities, or unlisted securities, with the prior permission of the competent authority, in accordance with the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), in relation to such investments;
(c) a person, being a non-resident, in relation to investment made by him by way of offshore derivative instruments or otherwise, directly or indirectly, in a Foreign Institutional Investor;
(d) any income accruing or arising to, or deemed to accrue or arise to, or received or deemed to be received by, any person from transfer of investments made before the 1st April, 2017 by such person.
(2) Without prejudice to the provisions of sub-rule (1)(d), the provisions of Chapter XI shall apply to any arrangement, irrespective of the date on which it has been entered into, in respect of the tax benefit obtained from the arrangement on or after the 1st April, 2017.
(3) For the purposes of this rule, —
(a) “Foreign Institutional Investor” shall have the meaning assigned to it in the section 210(6)(a);
(b) “offshore derivative instrument” shall have the same meaning as assigned to it in the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(c) “Securities and Exchange Board of India” shall have the same meaning as assigned to it in section 2(1)(a) of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(d) “tax benefit”, as defined in section 184(11) and computed in accordance with Chapter XI, shall be with reference to—
(i) section 184(11)(a) to (e), the amount of tax; and
(ii) section 184(11)(f), the tax that would have been chargeable had the increase in loss referred to therein been the total income.
129. Notice and Forms for reference under section 274.— (1) For the purposes of section 274(1), before making a reference to the Commissioner, the Assessing Officer shall issue a notice to the assessee seeking objections, if any, as to the applicability of provisions of Chapter XI in his case.
(2) The notice referred to in sub-rule (1) shall contain the following: —
(a) details of the arrangement to which the provisions of Chapter XI are proposed to be applied;
(b) the tax benefit arising under the arrangement;
(c) the basis and reason for considering that the main purpose of the identified arrangement is to obtain tax benefit;
(d) the basis and the reasons why the arrangement satisfies the conditions in section 179(1)(a) to (d); and
(e) the list of documents and evidence relied upon in respect of clauses (c) and (d).
(3) The reference by the Assessing Officer to the Commissioner under section 274(1) shall be in Form No. 62.
(4) Where the Commissioner is satisfied that the provisions of Chapter XI are not required to be invoked with reference to an arrangement, he shall record his satisfaction regarding the applicability of the provisions of Chapter XI in Form No. 63 and issue directions to the Assessing Officer in Form No. 63, after considering —
(a) the reference received from the Assessing Officer under section 274(1); or
(b) the reply of the assessee in response to the notice issued under section 274(2).
(5) The Commissioner, before making a reference to the Approving Panel under section 274(4), shall, —
(a) record his satisfaction regarding the applicability of the provisions of Chapter XI in Form No. 64; and
(b) seek specific factual report in writing from the International Financial Service Centre Authority, where the assessee is an entity located in an International Financial Service Centre.
(6) The Commissioner or Principal Commissioner shall make a reference under section 274(4) to an Approving panel in Form No. 64 with such other documents as deemed fit, with all being submitted in four sets, either in Hindi or English.
130. Time limits.— (1) For the purposes of section 274, the Commissioner shall—
(a) not issue directions under section 274(3) after the expiry of one month from the end of the month in which the date of compliance of the notice issued under section 274(2) falls;
(b) not make any reference to the Approving Panel under section 274(4) after the expiry of two months from the end of the month in which the final submission of the assessee in response to the notice issued under section 274(2) is received;
(c) issue directions to the Assessing Officer in Form No. 63, —
(i) in the case referred to rule 129(4)(a), within a period of one month from the end of month in which the reference is received by him; and
(ii) in the case referred to in rule 129(4)(b), within a period of two months from the end of month in which the final submission of the assessee in response to the notice issued under section 274(2) is received by him.
131. Procedure before Approving Panel.— (1) Upon receipt of reference under rule 129, the Chairperson of the Approving Panel shall cause, —
(a) the reference to be circulated among the other members within seven days from the date of receipt of such reference; and
(b) a notice to be issued to both the Assessing Officer and the assessee, affording a reasonable opportunity of being heard, specifying therein the date and place of hearing.
(2) The meetings of the Approving Panel shall take place at such place as the Approving Panel may decide.
132. Remuneration.— (1) For attending the meeting of an Approving Panel, the Chairperson and other members of the said Panel shall be entitled to —
(a) a sitting fee of Z 6000 per day; and
(b) travelling allowances including transportation charges for local travel and daily allowances (including accommodation) as admissible to an officer of the rank of Secretary to the Government of India.
(2) The expenditure of an Approving Panel shall be met from the budgetary grants of the Department of Revenue in the Ministry of Finance of the Central Government.
133. Modes of payment for the purpose of section 187. — Every person, carrying on business or profession, if his total sales, turnover or gross receipts, as the case may be, in business or profession exceeds fifty crore rupees during the immediately preceding tax year shall provide facility for accepting payment through the following electronic modes, in addition to the facility for other electronic modes of payment, if any, being provided by such person:—
(i) Debit Card powered by RuPay;
(ii) Unified Payments Interface (UPI) (BHIM-UPI);
(iii) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code); and
(iv) Tier-III: Full KYC Central Bank Digital Currency wallets, P-CBDC, Wholesale or Cross-border CBDC.
134. Exercise of option for taxation of royalty income from patent under section 194(1)[Table: SL No. 2].— (1) For the purpose of exercising the option for taxation of income as royalty in respect of a patent developed and registered in India, by an eligible assessee under section 194(1)[Table: Sl. No. 2], the eligible assessee shall furnish Form No. 65.
(2) The form referred to in sub-rule (1) shall be furnished on or before the due date specified in section 263(1)(c) for filing the return of income for the relevant tax year, if the option is exercised for that tax year.
135. Calculation of net winnings from online games for purpose of section 194(1)[Table: SL No. 5].— (1) Net winnings from online games during the tax year, for the purposes of section 194(1)[Table: Sl. No. 5], shall be calculated using the following formula:—
Net winnings = (A+D) – (B+C)
Where,—
A = aggregate amount withdrawn from the user account during the tax year;
B = aggregate amount of non-taxable deposit made in the user account by the assessee during the tax year;
C = opening balance of the user account at the beginning of the tax year; and
D = closing balance of the user account at the end of the tax year.
(2) Net winnings comprised in the first withdrawal during the tax year, for the purposes of section 393(3)[Table: Sl. No. 2], shall be calculated using the following formula,:—
Net winnings = A – (B+C)
Where,—
A = amount withdrawn from the user account;
B = aggregate amount of non-taxable deposit made in the user account by the owner of such account during the tax year, till the time of such withdrawal; and
C = opening balance of the user account at the beginning of the tax year.
(3) Net winnings in the formula given in sub-rule (2) shall be zero, if the sum of amounts B and C is equal to or greater than the amount A.
(4) Net winnings comprised in each subsequent withdrawal during the tax year, for the purposes of section 393(3)[Table: Sl. No. 2], shall be calculated using the following formula:—
Net winnings = A – (B+C+E)
Where,—
A = aggregate amount withdrawn from the user account during the tax year till the time of subsequent withdrawal including the amount of such subsequent withdrawal;
B = aggregate amount of non-taxable deposit made in the user account by the owner of such account during the tax year, till the time of such subsequent withdrawal;
C = opening balance of the user account at the beginning of the tax year; and
E = net winnings comprised in the earlier withdrawal or withdrawals computed under sub-rule (2), or under this sub-rule, during the tax year till the time of subsequent withdrawal, if tax has been deducted in accordance with the provisions of section 393(3)[Table: Sl. No. 2] on winnings comprised in such withdrawal or withdrawals.
(5) Net winnings in the formula given in sub-rule (4) shall be zero, if the sum of amounts B, C and E is equal to or greater than the amount A.
(6) Net winnings comprised in the user account at the end of the tax year, for the purposes of section 393(3)[Table: Sl. No. 2], shall be calculated using the following formula:—
Net winnings = (A+D) – (B+C+E)
Where,—
A = aggregate amount withdrawn from the user account during the tax year;
B = aggregate amount of non-taxable deposit made in the user account by the owner of such account during the tax year;
C = opening balance of the user account at the beginning of the tax year;
D = closing balance of the user account at the end of the tax year; and
E = net winnings comprised in the earlier withdrawal or withdrawals computed under sub-rule (2) or (4), during the tax year, if tax has been deducted in accordance with the provisions of section 393(3)[Table: Sl. No. 2)] on winnings comprised in such withdrawal or withdrawals.
(7) Net winnings in the formula given in sub-rule (6) shall be zero, if the sum of amounts B, C and E is equal to or greater than the sum of amount A and D.
(8) For the purposes of this rule,—
(a) “non-taxable deposit” means the amount deposited by the user in his user account and which is not taxable;
(b) “taxable deposit” means any amount deposited in the user account, which is not a non-taxable deposit and includes any amount paid directly to the user not through the user account; and
(c) “withdrawal” means any amount withdrawn by the user from any user account.
(9) For the removal of doubts, it is hereby clarified that—
(a) the user account shall include every account of user, by whatever name called, which is registered with the online gaming intermediary and where any taxable deposit, non-taxable deposit or the winnings made by the user is credited and withdrawal by the user is debited;
(b) whenever there is payment to the user in kind or in cash, or partly in kind and partly in cash, which is not from the user account, the provisions of this rule shall apply to calculate net winnings by deeming that the money equivalent to such payment has been deposited as taxable deposit in the user account and the equivalent amount has been withdrawn from the user account at the same time and shall accordingly be included in amount A;
(c) whenever there are multiple user accounts of the same user, each user account shall be considered for the purposes of calculating net winnings and the deposit, withdrawal or balance in the user account shall mean the aggregate of deposit, withdrawal or balance in all user accounts respectively;
(d) whenever there are multiple user accounts of the same user, transfer from one user account to another user account, maintained with the same online gaming intermediary, of the same user shall not be considered as withdrawal or deposit, as the case may be, for the purposes of deducting tax under section 393(3)[Table: Sl. No. 2];
(e) whenever there is taxable deposit in the form of bonus, referral bonus, incentives, promotional money or discount, by whatever name called, and such deposit can only be used for playing the online games and not for withdrawal or any other purposes, such deposit shall be ignored for the purposes of calculation of net winnings and shall not be included in amount B or C or D; and
(f) whenever any bonus, referral bonus, incentives, promotional money or discount, by whatever name called, is not considered as part of amount B or C or D under clause (e) and subsequently they are recharacterised and allowed to be withdrawn, they shall be deemed as taxable deposit at the time of such recharacterisation and it shall be deemed that the equivalent amount has been deposited in the user account at that time.
136. Exercise or withdrawal of option for new tax regime.— The option to be exercised or withdrawn under the provisions specified in column B of the following Table, by a person specified in column C thereof, for any tax year shall be in the return of income to be furnished under section 263(1) for such tax year:
Table
| SL No. | Section | Person |
| A | B | C |
| 1. | 199(3) | Manufacturing domestic company. |
| 2. | 200(5) | Domestic company. |
| 3. | 201(2) | New manufacturing domestic company. |
| 4. | 202(4) | Individual or Hindu undivided family, or an association of persons (other than a cooperative society) or a body of individuals, whether incorporated or not, or an artificial juridical person. |
| 5. | 203(5) | Resident co-operative society. |
| 6. | 204(2) | New manufacturing co-operative society. |
137. Form of report for computation of book profit of companies.— The report of an accountant as defined under section 515(3)(b), which is required to be furnished by the assessee under section 206(1)(s) shall be made in Form No. 66.
138. Form of report for computation of adjusted total income by certain persons other than a company.—The report of an accountant as defined under section 515(3)(b), which is required to be furnished by the assessee under section 206(2)(j), shall be made in Form No. 67.
139. Computation of exempt income of specified fund attributable to units held by non-resident under Schedule VI [Table: SL Nos. 1 to 4] to Act.— (1) For the purposes of Schedule VI [Table: Sl. Nos. 1 to 4] to the Act, exempt income of specified fund attributable to units held by non-resident (not being the permanent establishment of a non-resident in India) shall be computed in accordance with the following formula: —
(A x r1)+(B x r2)+(C x r3)+(D x r4)
Where, —
A = any income accrued or arisen to, or received by a specified fund as a result of transfer of capital asset referred to in section 70(1)(r), on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in convertible foreign exchange, as referred to in Schedule VI [Table: Sl. No. 1] to the Act;
B = any income accrued or arisen to, or received by a specified fund as a result of transfer of securities (other than shares in a company resident in India), as referred to in Schedule VI [Table: Sl. No. 2] to the Act;
C = any income accrued or arisen to, or received by a specified fund from securities issued by a non-resident (not being a permanent establishment of a non-resident in India) and where such income otherwise does not accrue or arise in India, as referred to in Schedule VI [Table: Sl. No. 3] to the Act;
D = any income accrued or arisen to, or received by a specified fund from a securitisation trust which is chargeable under the head “Profits and gains of business or profession”, as referred to in Schedule VI [Table: Sl. No. 4] to the Act;
rl = ratio of the aggregate of daily assets under management of the specified fund held by non-resident unit holders (not being the permanent establishment of a non-resident in India) to the aggregate of daily total assets under management of the specified fund, from the date of acquisition of the capital asset referred to in section 70(1)(r) to the date of transfer of such capital asset;
r2 = ratio of the aggregate of daily assets under management of the specified fund held by non-resident unit holders (not being the permanent establishment of a non-resident in India) to the aggregate of daily total assets under management of the specified fund, from the date of acquisition of the security (other than shares in a company resident in India) to the date of transfer of such security;
r3 = ratio of the assets under management in the specified fund held by non-resident unit holders (not being the permanent establishment of a non-resident in India) to the total asset under management of the specified fund, as on the date of receipt of such income from securities issued by a non- resident (not being a permanent establishment of a non-resident in India) and where such income otherwise does not accrue or arise in India; and
r4 = ratio of the assets under management in the specified fund held by non-resident unit holders (not being the permanent establishment of a non-resident in India) to the total assets under management of the specified fund, as on the date of receipt of such income from a securitisation trust which is chargeable under the head “Profits and gains of business or profession”.
(2) The specified fund shall furnish an annual statement of exempt income in Form No. 68 electronically under digital signature on or before the due date specified under section 263(1)(c) and duly verified in the manner indicated therein.
(3) The income attributable to units held by a non-resident (not being the permanent establishment of a non-resident in India) in a specified fund shall not be exempt under section 11(1) read with Schedule VI [Table: Sl. Nos. 1 to 4] to the Act unless the specified fund complies with sub-rule (2).
(4) For the purposes of this rule, —
(a) “assets under management” means the closing balance of the value of assets or investments of the specified fund as on a particular date;
(b) “International Financial Service Centre” shall have the same meaning as assigned to it in section 2(q) of the Special Economic Zones Act, 2005 (28 of 2005); and
(c) the expressions “permanent establishment”, “securities”, “specified fund” and “unit” shall have the meanings respectively assigned to them in Note 1 below Schedule VI of the Act.
140. Determination of income of a specified fund attributable to units held by non-residents under section 210(2).— (1) For the purposes of section 210(2), the income of a specified fund by way of short-term or long-term capital gains, referred to in section 210(1) [Table: Sl. Nos. 2 to 5], that is attributable to the units held by a nonresident (other than the permanent establishment of a non-resident in India), shall be calculated using the following formula:—
A=B x C
Where,—
A = income attributable to the units held by non-resident (not being the permanent establishment of a nonresident in India);
B = income arising from transfer of the security; and
C = ratio of the aggregate of daily “assets under management” of the specified fund held by non- resident unit holders (not being the permanent establishment of a non-resident in India) to the aggregate of daily total “assets under management” of the specified fund, from the date of acquisition of the security to the date of transfer of such security.
(2) For the purposes of section 210(2), the income of a specified fund by way of income received in respect of securities referred to in section 210(1)[Table: Sl. No. 1], that is attributable to the units held by a non-resident (other than the permanent establishment of a non-resident in India) shall be calculated using the following formula:—
X=Y * Z
Where,—
X = income attributable to the units held by non-resident (not being the permanent establishment of a nonresident in India);
Y = income received in respect of securities; and
Z = ratio of the “assets under management” in the specified fund held by non-resident unit holders (not being the permanent establishment of a non-resident in India) to the total “asset under management” of the specified fund, as on the date of receipt of such income.
(3) The specified fund shall furnish an annual statement of income eligible for concessional taxation in Form No. 69, on or before the due date specified under section 263(1)(c).
(4) The income of a specified fund referred to in section 210(1), attributable to the units held by a non-resident (other than the permanent establishment of a non-resident in India), shall not be eligible for tax rates specified in section 210 unless such fund complies with sub-rule (3).
(5) For the purpose of this rule, the expressions,—
(a) “assets under management” means the closing balance of the value of assets or investments of the specified fund as on a particular date;
(b) “permanent establishment” shall have the same meaning as assigned to it in section 173(c);
(c) “securities” shall have the meaning assigned to it in Schedule VI [Note 1(e)] to the Act;
(d) “specified fund” shall have the meaning assigned to it in Schedule VI [Note 1(g)(i)] to the Act; and
(e) “units” shall have the meaning assigned to it in Schedule VI [Note 1(j)] to the Act.
141. Computation of exempt income of specified fund, attributable to investment division of an offshore banking unit under Schedule VI [Table: Sl. Nos. 1 to 4] to Act.— (1) For the purposes of Schedule VI [Table: Sl. Nos. 1 to 4] to the Act, exempt income of specified fund attributable to the investment division of an offshore banking unit shall be computed in accordance with the following formula: —
A+B+C+D
Where, —
A = any income accrued or arisen to, or received by the eligible investment division as a result of transfer of a capital asset referred to in section 70(1)(r) held by it, on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in convertible foreign exchange;
B = any income accrued or arisen to, or received by the eligible investment division as a result of transfer of securities held by it (other than shares in a company resident in India);
C = any income accrued or arisen to, or received by the eligible investment division from securities held by it and issued by a non-resident (not being a permanent establishment of a non-resident in India) and where such income otherwise does not accrue or arise in India; and
D = any income accrued or arisen to, or received by the eligible investment division from a securitisation trust, which is chargeable under the head “Profits and gains of business or profession”.
(2) Any expenditure incurred in relation to income referred to in A or B or C or D referred to in sub-rule (1) shall not be allowed as deduction from any other income under any provision of the Act, irrespective of the fact that such expenditure has not been allowed as deduction against income referred to in the said A or B or C or D.
(3) The eligible investment division shall furnish an annual statement of exempt income in Form No. 70 electronically under digital signature on or before the due date specified under section 263(1)(c) and duly verified in the manner indicated therein.
(4) For the purposes of this rule, —
(a) “eligible investment division” means a registered investment division which fulfils the conditions specified in rule 142;
(b) “investment division of an offshore banking unit” shall have the meaning assigned to it in Schedule VI [Note 1(b)] to the Act;
(c) “securities” shall have the meaning assigned to it in Schedule VI [Note (1)(e)];
(d) “specified date”, in relation to the accounts of the registered investment division of any tax year, means a date one month prior to the due date specified under section 263(1)(c) for the said tax year; and
(e) “specified fund” shall have the meaning assigned to it in Schedule VI [Note (1)(g)] to the Act.
142. Conditions referred to in Schedule VI [Note 1(g)(ii)(B)] to Act required to be fulfilled by an investment division of an offshore banking unit.— (1) For the purposes of Schedule VI [Note 1(g)(ii)(B)] to the Act, an investment division of an offshore banking unit shall fulfil the following conditions: —
(a) it shall maintain separate accounts for the registered investment division reflecting the true and fair accounts of all transactions relating to the investment division and which shall ensure that direct and indirect expenses relating to the incomes referred to in rule 141 and other incomes, are properly recorded, accounted for and apportioned thereto;
(b) it shall get the accounts referred to in clause (a), audited by an accountant before the specified date and such accountant shall furnish by that date the report of such audit in Form No. 71, electronically under digital signature, and duly verified in the manner indicated therein;
(c) it shall maintain proper documentation in respect of —
(i) inbound remittance for buying and selling the investments; and
(ii) the use of inward remittance made to India;
(d) it shall maintain bank statement of all accounts of the registered investment division;
(e) it shall maintain contract notes relating to purchase and sale of securities by the registered investment division; and
(f) it shall maintain a statement of securities issued by the custodian.
(2) The income of a specified fund attributable to an eligible investment division shall not be exempt under section 11(1) read with Schedule VI [Table: Sl. Nos. 1 to 4] to the Act unless it complies with sub-rule (1)(b) and rule 141(3).
(3) For the purposes of this rule, —
(a) “accountant” shall have the meaning assigned to it in section 515(3)(b);
(b) “investment division of an offshore banking unit” shall have the meaning assigned to it in Schedule VI [Note 1(b)] to the Act;
(c) “registered investment division” shall mean an investment division of an offshore banking unit which fulfils the condition specified in Schedule VI [Note 1(g)(ii)(A)];
(d) “securities” shall have the meaning assigned to it in Schedule VI [Note (1)(e)] to the Act; and
(e) “specified date”, in relation to the accounts of the registered investment division of any tax year, means a date one month prior to the due date specified under section 263(1)(c) for the said tax year.
143. Determination of income of a specified fund attributable to investment division of an offshore banking unit under section 210(3).— (1) For the purposes of section 210(3), income of a specified fund, being the investment division of an offshore banking unit shall be computed in accordance with the following formula: —
A+B+C+D+E
Where, —
A = income from securities, held by the eligible investment division, as referred to in section 210(1) [Table: Sl. No. 1];
B = income by way of short-term capital gain referred to in section 210(1)[Table: Sl. No. 2], accrued or arisen to, or received by the eligible investment division as a result of transfer of a security, other than that referred to in section 196, and held by such investment division;
C = income by way of short-term capital gain referred to in section 210(1)[Table: Sl. No. 3], accrued or arisen to, or received by the eligible investment division as a result of transfer of security referred to in section 196, and held by such investment division;
D = income by way of long-term capital gain referred to in section 210(1)[Table: Sl. No. 4], accrued or arisen to, or received by the eligible investment division as a result of transfer of a security, other than that referred to in section 198, and held by such investment division;
E = income by way of long-term capital gain referred to in section 210(1)[Table: Sl. No. 5], accrued or arisen to, or received by the eligible investment division, as a result of transfer of a security referred to in section 198, and held by such investment division.
(2) Any expenditure incurred in relation to income referred to in A or B or C or D or E in sub-rule (1) shall not be allowed as a deduction from any other income under any provision of the Act, even if such expenditure has not been allowed as a deduction from income referred to in the said A or B or C or D or E.
(3) The eligible investment division shall furnish an annual statement of income, eligible for taxation under section 210(3), in Form No. 70 on or before the due date specified under section 263(1)(c).
(4) The income of an eligible investment division referred to in section 210(1)[Table: Sl. Nos. 1 to 5] shall not be eligible for tax rates specified therein unless the eligible investment division meets the requirement of sub-rule (3).
(5) For the purposes of this rule,—
(a) “eligible investment division” means an investment division of an offshore banking unit which fulfils the conditions specified in Schedule VI [Note 1(g)(ii)(A) and (B)] to the Act;
(b) “investment division of an offshore banking unit” shall have the meaning assigned to it in Schedule VI [Note 1(b)] to the Act;
(c) “securities” shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(d) “specified fund” shall have the meaning assigned to it in Schedule VI [Note 1(g)(ii)] to the Act.
144. Other conditions required to be fulfilled by a specified fund as referred to in Schedule VI [Note 1(g)(i)] to Act.— (1) For the purposes of Schedule VI [Note 1(g)(i)] to the Act, the “other conditions” required to be fulfilled by a specified fund shall be that —
(a) the unit holder of the specified fund, other than the sponsor or manager of such fund, who becomes a resident under section 6(2) to (7) in any tax year subsequent to the tax year in which such unit or units were issued, shall cease to be a unit holder of such specified fund within a period of three months from the end of the tax year in which he becomes a resident;
(b) for the purposes of clause (a), the specified fund shall maintain the following documents in respect of its unit holders: —
(i) name of the unit holder;
(ii) tax identification number of the unit holder in the country of residence at the time the units were issued;
(iii) permanent account number, if available;
(iv) total number of units held;
(v) total value of units held;
(vi) whether unit holder is a sponsor or a manager;
(vii) the tax year in which the unit holder became resident; and
(viii) date of exit from specified fund.
(2) The specified fund shall certify that it has fulfilled the conditions under sub-rule (1) and furnish information in respect of units held by residents in the annual statement of exempt income in Form No. 68.
(3) The income attributable to units held by a non-resident (not being the permanent establishment of a non-resident in India) in a specified fund shall not be exempt under section 11(1) read with Schedule VI [Table: Sl. Nos. 1 to 4] to the Act unless the specified fund complies with sub-rule (2).
(4) For the purposes of this rule, “specified fund” shall have the same meaning as assigned to it in Schedule VI [Note 1(g)] to the Act.
145. Statements under sections 221(4), 222(2), 223(5) and 224(9).— (1) The statement of income credited or paid or distributed by an entity as referred to in the column B of the following Table shall be furnished by the person responsible for crediting or paying or distributing such income on behalf of such entity to the Principal Commissioner or the Commissioner of Income-tax, within whose jurisdiction the principal office of such entity is situated, electronically in the Form No. mentioned in the column C, duly verified by an accountant, as defined in section 515(3)(b), in the manner indicated therein; and to the recipient of such income mentioned in column D in the Form No. mentioned in the column E of the said Table:
Table
| Sl. No. |
Type of entity | Form for furnishing statement to Principal Commissioner or Commissioner of Income-tax |
Person to whom statement is to be furnished | Form for furnishing statement to recipient of income |
| A | B | C | D | E |
| 1. | Venture Capital Company or the Venture Capital Fund. | 74. | The person who is liable to tax in respect of such income. | 75. |
| 2. | Business trust. | 76. | Unit holder. | 77. |
| 3. | Investment fund. | 79. | The person who is liable to tax in respect of such income. | 78. |
| 4. | Securitisation trust. | 72. | The person who is liable to tax in respect of such income. | 73. |
(2) The statement to the Principal Commissioner or the Commissioner of Income-tax shall be furnished by the 15th June of the financial year succeeding the tax year during which the income is paid or credited or distributed and the statement to the recipient of income shall be furnished by the 30th June of the financial year succeeding the tax year during which the income is paid or credited or distributed.
(3) The statement to the recipient of income shall be furnished after generating and downloading the same from the web portal specified by the Director General of Income-tax (Systems) or the person authorised by him and duly verified by the person paying or crediting or distributing the income in the manner indicated therein.
146. Rules related to application for exercising the option for tonnage tax scheme and other matters related to it.– For the purposes of Tonnage Tax Scheme under Chapter XIII-G of the Act:––
(a) an application under section 231(1) to opt for the Tonnage Tax Scheme, or under section 231(10) for renewing the option for the Tonnage Tax Scheme, as the case may be, shall be made in Form No. 80 and shall be verified as specified therein;
(b) deemed tonnage under section 227(4)(b) in respect of an arrangement mentioned in column B of the
following Table shall be computed on the basis as specified in column C thereof:
Table
| Sl. No. | Arrangement | Basis of computation |
| A | B | C |
| 1 | Purchase of slots and slot charter | 2.5 TEU = 1 Net Tonnage (1 NT), where TEU is Twenty foot Equivalent Unit (Container of this size). |
| 2 | Sharing of break-bulk vessel | (i) Where cargo is restricted by volume, 19 cubic meter (cbm) = 1 net tonnage (1 NT); and
(ii) where cargo is restricted by weight, 14 metric tons = 1 net tonnage (1 NT); |
(c) the incidental activities referred to in section 228 (7) shall be the following,: —
(i) maritime consultancy charges;
(ii) income from loading or unloading of cargo;
(iii) ship management fees or remuneration received for managed vessels; and
(iv) maritime education or recruitment fees;
(d) the limit for charter-in of tonnage of the qualifying ships referred to in section 232(15) to (20) during any tax year, shall be computed by dividing the total number of chartered-in ton days by the total number of ton days operated by the company; and
(e) the audit report of a qualified company, required to be furnished under section 232(21)(b) shall be in Form No. 81.
147. Publication and circulation of orders of Board under section 239(3)(a). — Any general or special order of the Board issued under section 239(3)(a), the publication and circulation of which is, in the opinion of the Board, necessary in the public interest, shall be published and circulated in one or more of the following modes :—
(a) publication of the order in the Official Gazette; or
(b) dispatching copies of the order to Chambers of Commerce and other trade or professional associations which are, for the time being, borne on the mailing list of the Board; or
(c) displaying copies of the order on the notice board of the office of every Chief Commissioner or Commissioner or Joint Commissioner and Assessing Officer; or
(d) uploading the copies of the order in the official website of the Income Tax Department and, circulation through official social media handles or other digital outreach platforms maintained by the Department.
148. Search and Seizure under section 247. — (1) The powers of search and seizure under section 247 shall be exercised in accordance with sub-rules (2) to (21).
(2) The authorisation under—
(a) section 247(1) by the approving authority, as is empowered by the Board in this behalf, or any Joint Director or Joint Commissioner, so authorised by such approving authority, shall be in Form No. 82;
(b) section 247(2) by a Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, shall be in Form No. 83; and
(c) section 247(3) by a Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, shall be in Form No. 84.
(3) Every authorisation referred to in sub-rule (2) shall be in writing under the signature of the officer issuing the authorisation and shall bear his seal.
(4) Any person in charge of or in any building, place, vessel, vehicle or aircraft authorised to be searched shall, on demand by the authorised officer and on production of the authority, allow him free ingress thereto and afford all reasonable facilities for a search therein.
(5) If ingress into such building or place cannot be obtained by the authorised officer, even after notification of his authority and the purpose and demand of admittance has been duly made, it shall be lawful for the authorised officer, —
(i) to enter such building or place and search therein; and
(ii) in order to effect an entrance into such building or place for search therein, to break open any outer or inner door or window of any building or place, if required, whether that of the person to be searched or of any other person, with such assistance of police officers or of officers of the Central Government, or of both, or of any person or entity as referred to in section 247(5)(b), as may be required.
(6) If ingress into any vessel, vehicle or aircraft authorised to be searched cannot be obtained by the authorised officer,
(a) it shall be lawful for the authorised officer to stop any such vessel or vehicle or, in the case of an aircraft, compel it to stop or land, and search any part of the vessel, vehicle or aircraft; or
(b) even after notification of his authority and purpose and demand of admittance has been duly made, it shall be lawful for the authorised officer, in order to affect an entrance into such vessel, vehicle or aircraft for search therein, to break open any outer or inner door or window of such building, place, vessel, vehicle or aircraft, whether that of the person to be searched or of any other person, with such assistance of police officers or of officers of the Central Government or of both, or of any person or entity as referred to in section 247(5)(b), as may be required.
(7) If any building, place, vessel, vehicle or aircraft authorised to be searched is occupied by a woman, who according to custom does not appear in public, the authorised officer shall, before entering such building, place, vessel, vehicle or aircraft, give notice to such woman that she is at liberty to withdraw and shall afford her every reasonable facility for withdrawing.
(8) The authorised officer may require any person, who is the owner of or has the immediate possession or control of any box, locker, safe, almirah or any other receptacle or access to computer system situate in such building, place, vessel, vehicle or aircraft, to allow access, including by opening the same, to inspect or examine its contents, or any information stored therein.
(9) Where the keys of such box, locker, safe, almirah or any other receptacle or access code to such computer system are not available or where such person fails to comply with requirement mentioned in sub-rule (8), the authorised officer may cause any action to be taken, including the breaking open of such box, locker, safe, almirah, other receptacle, or overriding the access code to such computer system, which he may consider necessary for carrying out all or any of the purposes specified in the authority issued under sub-rule (2).
(10) Any person referred to in section 247(1)(iv) may be searched by the authorised officer with such assistance as he may consider necessary for carrying out all or any of the purposes specified in the authority issued under sub-rule (2) and where such person is a woman, the search shall be made by another woman with a strict regard to decency.
(11) Before making a search, the authorised officer shall,—
(a) where a building or place is to be searched, call upon two or more respectable persons who are inhabitants of the locality in which the building or place to be searched is situate, or of any other locality if no such inhabitant of the said locality is available or willing to be a witness to the search; and
(b) where a vessel, vehicle or aircraft is to be searched, call upon any two or more respectable persons, to attend and witness the search and may issue an order in writing to them or any of them so to do.
(12) Any person who, without reasonable cause, refuses or neglects to attend and witness a search under section 247, when called upon to do so by an order in writing delivered or tendered to him, may be considered to have committed an offence under section 222 of the Bharatiya Nyaya Sanhita, 2023(45 of 2023) and suitable proceedings can be initiated against such person.
(13) The search shall be made in the presence of the witnesses referred to in sub-rule (11) and the following shall be signed by such witnesses:-
(a) the statement made under section 247(6) by any person; and
(b) a list of all assets seized and material seized, prepared by the authorised officer, in the course of such search.
(14) No person witnessing a search shall be required to attend as a witness of the search in any proceedings under the Act, unless specially summoned.
(15) The occupant of the building, place, vessel, vehicle or aircraft searched (including the person in charge of such vessel, vehicle or aircraft or some person on his behalf), shall be permitted to attend during the search and a copy of the lists prepared under sub-rule (13) shall be delivered to such occupant or person.
(16) When any person is searched under section 247 (1) (iv), a list of all assets seized and material seized shall be prepared and a copy thereof shall be delivered to such person.
(17) The authorised officer shall place or cause to be placed, all the assets seized and material seized during the search, except money and the books of account and documents, which are in physical form, in a package or packages, and shall list them with the details of such assets and materials seized and placed therein.
(18) Every package shall bear an identification mark and the seal of the authorised officer, and the occupant of the building, place, vessel, vehicle or aircraft (including the person in charge of such vessel, vehicle or aircraft or any other person on his behalf) searched, shall also be permitted to place his seal or signature on them and a copy of the list with details of such packages, along with details of such assets and materials seized and placed therein, shall be delivered to such occupant or person.
(19) The authorised officer may convey all the assets and materials seized, including the package or packages, if any, referred to in sub-rule (17), the list of assets and materials seized and statements recorded during the search to the office of any income-tax authority not below the rank of Income-tax Officer (herein referred to as the Custodian). Any money seized in the search may also be deposited with the custodian.
(20) (a) The Custodian shall take such steps, as he may consider necessary, for the safe custody of all the assets and materials which has been handed over to him under sub-rule (19).
(b) The Custodian may deposit, for safe custody, all or any of the packages, preferably, in the strong room maintained by the office of the Director General, or where strong room facility is not available, in safe deposit lockers hired by the Director General or Principal Director or Director or Chief Commissioner or Principal Commissioner or Commissioner, in the State Bank of India or any of its subsidiaries or any other nationalised (or authorised) bank, for the said purpose.
(c) The strong room or safe deposit locker referred to in clause (b) shall be operated jointly by two officers nominated by the Director General.
(d) Where any money has been deposited with the Custodian, he may credit the money, or remit the money through the nearest branch of the Reserve Bank of India or the State Bank of India or of its subsidiaries or any authorised bank for being credited, in the Personal Deposit Account of the Director General or Principal Director or Director or Chief Commissioner or Principal Commissioner or Commissioner, in the branch of the Reserve Bank of India or the State Bank of India or of its subsidiaries or any authorised bank, at the place where the office of such authority is situate.
(21) (a) Whenever any sealed package is required to be opened for any of the purposes of the Act, the authorised officer may, unless he is himself the Custodian, requisition the same from the Custodian and on receipt of the requisition, such package or packages, as the case may be, shall be delivered to him by the Custodian and the authorised officer, after giving a reasonable notice to the person (from whose custody the contents of such package were seized) to be present, may break any seal and open such package in the presence of two respectable witnesses, and such person, if present.
(b) The person referred to in clause (a) shall be permitted to be present till all or any of the contents of such package are placed in a fresh package or packages and sealed in the manner specified in sub-rules (17) and (18) or delivered to such person or the Custodian, as the case may be.
(22) The Assessing Officer to whom the assets and materials seized have been handed over under section 251(1) shall have all the powers conferred on the authorised officer under sub-rules (19) and (21).
149. Procedure to requisition services under section 247(5) and to make a reference under section 247(9). — (1) Every Principal Chief Commissioner or the Chief Commissioner or the Principal Director General or the Director General, as the case may be, may approve —
(a) any person or entity, whose services may be requisitioned for the purposes of section 247(5)(b); or
(b) the Valuation Officer, the person registered under section 514, or any person or entity or registered valuer, to whom reference may be made for the purposes of section 247(9), on the basis of an application made by such person or entity or registered valuer, or on a reference made by Joint Director or Joint Commissioner or Additional Director or Additional Commissioner or Director or Commissioner or Principal Director or Principal Commissioner, or on his own motion.
(2) The authorised officer, as referred to in section 247(5) or (9), may requisition the services of or make a reference to one or more of the persons approved under sub-rule (1), for the purposes of section 247(5)(b) or (9).
(3) The application referred to in sub-rule (1) shall be made in Form No. 85.
(4) The application referred to in sub-rule (3) shall be disposed of by the Principal Chief Commissioner or the Chief Commissioner or the Principal Director General or the Director General, as the case may be, within six months from the end of the month in which such application is made thereby granting approval or rejecting the same.
(5) The Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General may, on grant of approval to a person or entity or registered valuer as provided in sub-rule (1), issue a Designated Approval Number to such person or entity or registered valuer, as the case may be.
(6) For the purposes of section 247(5) or (9), in a case where the authorised officer considers it necessary or expedient to do so, he may requisition the services of or make a reference to a person or entity or registered valuer who is not approved as per sub-rule (1), after recording reasons for the same, and within a period of thirty days of such requisition, obtain approval of the Principal Chief Commissioner or the Chief Commissioner or the Principal Director General or the Director General, as the case may be.
(7) For the purposes of this rule, “registered valuer” means any valuer registered by or under any law in force.
(8) For the purposes of sub-rule (5) of this rule, a “Designated Approval Number” means a number so issued, having alphanumeric characters.
150. Valuation under section 247(9). — (1) For the purposes of section 247(9), the fair market value of the property shall be determined in the following manner: —
(a) the value of an immovable property, being land or building or both, shall be in accordance with the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of such immovable property, along with the cost of construction and improvements, if any, on the date or dates on which such property is required to be valued as per the reference made under section 247(9);
(b) the value of jewellery, archaeological collections, drawings, paintings, sculptures, any work of art, shares or securities referred to in rule 57, shall be the value determined in the manner provided in said rule and for this purpose, the reference to the valuation date in the rules 56 and 57 shall be the date or dates on which such property is required to be valued as per the reference made under section 247(9); and
(c) the value of property, —
(i) other than those covered in clauses (a) and (b); or
(ii) where valuation as specified in the said clauses is not feasible, shall be the price that such property would ordinarily fetch on sale in the open market on the date or dates on which such property is required to be valued as per the reference made under section 247(9).
(2) The Valuation Officer, the person registered under section 514, or any person or entity approved under section 247(9), to whom the reference for valuation has been made by the authorised officer under the provisions of section 247(9), shall submit the report of valuation in Form No. 170 to such authorised officer.
151. Requisition of books of account, etc. under section 248. — (1) The authorisation under section 248(1) by the Director General or Director or the Chief Commissioner or Commissioner shall be made in Form No. 86, shall be in writing under the signature of the officer issuing the authorisation and shall bear his seal.
(2) The officer authorised to make a requisition under section 248(1) (herein referred to as the requisitioning officer) shall make the requisition in writing to the officer or authority referred to in section 248(1)(a) or (b) or (c) (herein referred to as the delivering officer or authority) calling upon the delivering officer or authority to deliver the books of account or other documents, or assets or computer system containing information specified in the requisition to him, which shall be accompanied by a copy of the authorisation made in Form No. 86 and a copy of the requisition, along with a copy of the said authorisation, shall be forwarded to the person referred to in section 248(1)(a) or (b) or (c).
(3) (a) The delivering officer or authority shall prepare a list of books of account or other documents, or assets or computer system containing information delivered to the requisitioning officer;
(b) before effecting delivery of books of account or other documents, or assets or computer system containing the information so requisitioned, the delivering officer or authority shall place or cause to be placed such things, except money and the books of account and documents in physical form, in a package or packages which shall be listed with details of such things and placed therein;
(c) every package referred to in clause (b) shall bear an identification mark and seal, of the requisitioning officer or of any other income-tax authority not below the rank of Income-tax Officer, on his behalf and also of the delivering officer or authority;
(d) the person referred to in section 248(1)(a) or (b) or (c), as the case may be, or any other person on his behalf shall also be permitted to place his seal or signature on the said package or packages; and
(e) a copy of the list prepared under clause (b) shall be delivered to such person and a copy thereof shall also be forwarded by the delivering officer to the approving authority.
(4) The provisions of sub-rules (19) to (22) of rule 148 and rule 152 shall, so far as may be, apply as if the things delivered to the requisitioning officer under section 248 had been seized under section 247(1) by the requisitioning officer from the custody of the person referred to in section 248(1)(a) or (b) or (c), as the case may be, and the said rules and sub-rules shall be read, as if for the words “the authorised officer” occurring therein, shall be read the words “the requisitioning officer” were substituted.
152. Release of remaining assets under section 250. — Any assets or proceeds thereof which remain after the liabilities referred to in section 250(1) are discharged, shall be forthwith made over or paid to the person, from whose custody the assets were seized, in the presence of two respectable witnesses.
153. Distraint and sale. — Where any distraint and sale of movable property are to be effected by any Assessing Officer or Tax Recovery Officer authorised for the purpose, such distraint and sale shall be made, as far as may be, in the same manner as attachment and sale of any movable property attachable by actual seizure, and the provisions of rule 225 relating to attachment and sale shall, so far as may be, apply in respect of such distraint and sale.
154. Form of information under section 254(1). — The information under section 254(1) shall be furnished in Form No. 87.
155. Disclosure of information related to assessees under section 258(2). — (1) The application to the Chief
Commissioner or Commissioner under section 258(2) for information relating to an assessee in respect of any assessment made either under the Act or under the Income Tax Act, 1961 (43 of 1961), as it existed prior to its repeal, shall be made in Form No. 88.
(2) The information under section 258(2) shall be furnished by the Chief Commissioner or Commissioner in Form No. 89.
(3) Where it is not possible for the Chief Commissioner or Commissioner to furnish the information asked for by the applicant under section 258(2) owing to the fact that the relevant assessment has not been completed, he shall inform the applicant in Form No. 90.
(4) Where the Chief Commissioner or Commissioner are satisfied that it is not in the public interest to give or cause to be given the information asked for, he shall intimate the fact to the applicant in Form No. 91.
156. Prescribed income-tax authority under section 259. — The prescribed income-tax authority under section 259 shall be an Income-tax authority not below the rank of Assistant Commissioner of Income-tax, who has been authorised by the Central Board of Direct Taxes to act as such authority for the purposes of that section.
157. Persons Exempt from obtaining Permanent Account Number under section 262.— (1) The provisions of section 262 shall not apply to a non-resident (not being a company or a foreign company) who has, during a tax year, made investment in a specified fund, if the following conditions are met: —
(a) such non-resident does not earn any income in India other than the income from the investment in the specified fund during the tax year;
(b) the income-tax due on such income of non-resident is deducted at source and remitted to the Central Government by the specified fund at the rates specified sections 393(1) [Table: Sl. No. 4(iii)], 393(2) [Table: Sl. No. 8] and 393(4) [Table: Sl. No. 14]; and
(c) the non-resident furnishes the following details and documents to the specified fund: —
(i) name, email id and contact number;
(ii) address in the country or specified territory outside India of which he is a resident;
(iii) a declaration that he is a resident of a country or specified territory outside India; and
(iv) Tax Identification Number (TIN) in the country or specified territory of his residence, and where no such number is available, then a unique number on the basis of which the non-resident is identified by the government of that country or the specified territory.
(2) The specified fund shall —
(a) furnish a quarterly statement for the quarter of the financial year, in which the details and documents referred to in sub-rule (1)(c) are received by it, in Form No. 92 electronically to the Director General of Income-tax (Systems) or a person authorised by him; and
(b) upload the declaration of foreign residency as referred to in sub-rule (1)(c)(iii) within fifteen days from the end of the quarter of the financial year to which such statement relates.
(3) The provisions of section 262 shall not apply to a non-resident, being an eligible foreign investor, who has made transaction only in capital assets referred to in section 70(1)(r), which are listed on a recognised stock exchange located in any International Financial Services Centre and the consideration on such transfer of capital asset is paid or payable in foreign currency, if the following conditions are fulfilled: —
(a) the eligible foreign investor does not earn any income in India, other than the income from transfer of a capital asset referred to in section 70(1)(r);
(b) the eligible foreign investor furnishes the following details and documents to the stock broker through which the transaction is made: —
(i) name, email id, and contact number;
(ii) address in the country or specified territory outside India of which he is a resident;
(iii) a declaration that he is a resident of a country or specified territory outside India; and
(iv) Tax Identification Number (TIN) in the country or specified territory of his residence, and where no such number is available, then a unique number on the basis of which the non-resident is identified by the Government of that country or the specified territory.
(4) The stock broker shall —
(a) furnish a quarterly statement for the quarter of the financial year, in which the details and documents referred to in sub-rule (3) are received by it, in Form No. 92 electronically to the Director General of Income-tax (Systems) or a person authorised by him; and
(b) upload the foreign residency declaration as referred to in sub-rule (3)(b)(iii) within fifteen days from the end of such quarter of the financial year to which such statement relates.
(5) For the purposes of this rule, —
(a) “eligible foreign investor” means a non-resident who operates in accordance with the Securities and Exchange Board of India, Circular IMD/HO/FPIC/CIR/P/2017/003, dated 4th January, 2017;
(b) “International Financial Services Centre” shall have the meaning assigned to it in section 2(q) of the Special Economic Zones Act, 2005 (28 of 2005);
(c) “specified fund” shall have the meaning assigned to in Schedule VI [Note (1)(g)] to the Act; and
(d)”stock broker” means a person having trading rights in a recognised stock exchange located in any International Financial Services Centre and the member of such exchange.
158. Application for allotment of a Permanent Account Number. — (1) An application under section 262 for allotment of a Permanent Account Number shall be made in Form No. 93, Form No. 94, Form No. 95 and Form No. 96, as the case maybe, in accordance with sub-rule (8).
(2) An applicant may also apply for allotment of a Permanent Account Number through a common application form as maybe, notified by the Central Government.
(3) Any person, who has not been allotted a Permanent Account Number, but possesses the Aadhaar number may apply for allotment of the Permanent Account Number under section 262(1) or (2) or (11) to the authorities mentioned in sub-rule (4) by intimating his Aadhaar number.
(4) The Director General of Income-tax (Systems) shall, on receipt of information under sub-rule (3), authenticate the Aadhaar number for that purpose.
(5) An application referred to in sub-rule (1) shall be made,—
(i) in cases where the function of allotment of Permanent Account Number under section 262 has been assigned by the Chief Commissioner or Commissioner to any particular Assessing Officer, to that Assessing Officer; and
(ii) in any other case, to the Assessing Officer having jurisdiction to assess the applicant.
(6) For the purposes of sub-rule(5), the Assessing officer shall include an income tax authority who is assigned the duty of allotting Permanent Account Number by the Director General of Income-tax (Systems).
(7) The application referred to in sub-rule (1) shall be made by the person specified in Column B of the following Table within the time specified in column C thereof:
Table
| Sl. No. |
Person | Time within which application for allotment of Permanent Account Number is to be made |
| A | B | C |
| 1 | Where the total income of the person or the total income of any other person in respect of which he is assessable under the Act during any tax year exceeds the maximum amount which is not chargeable to income-tax and he has not been allotted any Permanent Account Number. | On or before the 31st May of the tax year immediately succeeding the tax year, for which such income is assessable. |
| 2 | A person not falling under Sl. No. 1, but carrying on any busi- ness or profession, the total sales, turnover or gross receipts of which are or is likely to exceed ₹ 500000 in any tax year and who has not been allotted any Permanent Account Number. | Before the end of that tax year. |
| 3 | A person who is required to furnish a return of income under section 349 and who has not been allotted any Permanent Account Number. | Before the end of the tax year. |
| 4 | A person who is entitled to receive any sum or income or amount, on which tax is deductible or collectible under Chapter XIX-B in any tax year. | Before the end of such tax year. |
| 5 | A person, being a resident, other than an individual, which enters into a tax transaction of an amount aggregating to ₹ 250000 or more in a tax and which has not been allotted any Permanent Account Number. | On or before the 31st May, immediately following such tax year. |
| 6 | A person, who is the managing director, director, partner, trus- tee, author, founder, karta, chief executive officer, principal officer or office bearer of the person referred to in Sl. No. 5 or any person competent to act on behalf of the person referred to in the said serial number and who has not been allotted any Permanent Account Number. | On or before the 31st May, immediately following the tax year in which the per-son referred to in Sl. No. 5 enters into financial transaction specified therein. |
| 7 | A person who intends to enter into the transaction prescribed under section 262(1)(f) and section 262(9)(a). | At least seven days before the date on which he intends to enter into the said transaction. |
(8)(a) The application referred to in sub-rules (1) and (3), in respect of an individual who is a citizen of India, shall be filled in the Form 93, and shall be accompanied by the documents mentioned in the following Table for proof of identity, address and date of birth:
Table
| Sl. No. |
Nature of Document | Proof of Identity |
Proof of Address |
Date of Birth ( bearing the name, date, month and year of birth) |
| A. Copy of:– | ||||
| 1. | AADHAAR card | Yes | Yes | No |
| 2. | Indian Passport | Yes | Yes | Yes |
| 3. | Driving Licence | Yes | Yes | Yes |
| 4. | Elector‘s Photo Identity Card issued by the Election Commission of India | Yes | Yes | Yes |
| 5. | Ration card having photograph of the applicant | Yes | No | No |
| 6. | Transgender Identity Card or certificate issued under the Transgender Persons (Protection of Rights) Act, 2019 having photograph of the applicant | Yes | Yes | Yes |
| 7. | Photo identity card issued by the Central Government or a State Government or a Public Sector Undertaking | Yes | No | Yes |
| 8. | Pensioner Card issued by Government, having photograph of the applicant | Yes | No | No |
| 9. | Central Government Health Scheme Card or Ex-servicemen Contributory Health Scheme photo card | Yes | No | Yes |
| 10. | Indian Passport of spouse bearing name of the person | No | Yes | No |
| 11. | Post office passbook having address of the applicant | No | Yes | No |
| 12. | Domicile certificate issued by the Government | No | Yes | Yes |
| 13. | Allotment letter of accommodation issued by the Central Government or State Government of not more than three years old | No | Yes | No |
| 14. | Property registration document | No | Yes | No |
| 15. | Latest property tax assessment order | No | Yes | No |
| 16. | Electricity bill (Not more than three months old) | No | Yes | No |
| 17. | Landline telephone or broadband connection bill(Not more than three months old) | No | Yes | No |
| 18. | Water bill(Not more than three months old) | No | Yes | No |
| 19. | Consumer gas connection card or book or piped gas bill(Not more than three months old) | No | Yes | No |
| 20. | Bank account statement as per Note 2 (Not more than three months old) | No | Yes | No |
| 21. | Depository account statement(Not more than three months old) | No | Yes | No |
| 22. | Credit card statement(Not more than three months old) | No | Yes | No |
| 23. | For individuals born on and after 1st October, 2023 birth certificate issued by the municipal authority or any office authorised to issue birth and death certificate by the Registrar of Birth and Deaths or the Indian Consulate as defined in clause (d) of sub-section (1) of section 2 of the Citizenship Act, 1955 (57 of 1955); | No | No | Yes |
| 24. | Birth certificate issued by the municipal authority, or any office authorised to issue birth and death certificate by the Registrar of Birth and Deaths or the Indian Consulate as defined in clause (d) of sub-section (1) of section 2 of the Citizenship Act, 1955 (57 of 1955) | No | No | Yes |
| 25. | Pension payment order | No | No | Yes |
| 26. | Marriage certificate issued by the Registrar of Marriages | No | No | Yes |
| 27. | Matriculation certificate or mark sheet of recognised board | No | No | Yes |
| B. Or original of: | ||||
| 1. | Certificate of identity signed by a Member of Parliament or Member of Legislative Assembly or Municipal Councilor or a Gazetted Officer, as the case may be | Yes | No | No |
| 2. | Bank certificate, on the letter head from the branch (along with the name, stamp and copy of employee ID of the issuing officer) containing duly attested photograph and bank account number of the applicant. | Yes | No | No |
| 3. | Certificate of address signed by a Member of Parliament or Member of Legislative Assembly or Municipal Councilor or a Gazetted Officer, as the case may be | No | Yes | No |
| 4. | Employer certificate. | No | Yes | No |
| 5. | Affidavit sworn before a Magistrate stating the date of birth | No | No | Yes |
| Note 1: In case of a person being a minor, in addition to Aadhaar of the minor, any of the above listed do c-uments of any of the parents or guardian of such minor shall be deemed to be the proof of identity.
Note 2: In case of an Indian citizen residing outside India, copy of bank account statement in country of residence or copy of non-resident external bank account statements shall be the proof of address. Note 3: In case of a minor, any of the above listed documents of any of the parents or guardian of such minor shall be deemed to be the proof of address. |
||||
(b) The application referred to in sub-rules (1) and (3), in respect of an applicant mentioned in column B of the following Table, shall be filled in the Form mentioned in column C of the said table, and shall be accompanied by the documents mentioned in column D thereof, as proof of identity, address and date of birth or date of incorporation of such applicant:
Table
| Sl. No. |
Applicant | Form | Documents as proof of identity, address and date of birth or date of incorporation |
| A | B | C | D |
| 1 | Hindu undivided family | Form No. 94 | (a) Original affidavit by the karta of the Hindu Undivided Family duly authenticated by a Notary Public or Oath Commissioner or Judicial Magistrate stating the name, father’s name, Aadhaar number or Permanent Account Number and address of all the coparceners on the date of application; and(b) a copy of any document applicable in the case of an individual specified in serial number 1, in respect of karta of the Hindu undivided family, as proof of identity, address and date of birth. |
| 2 | Company registered in India | Form No. 94 | (a) Copy of Certificate of Registration issued in India by the Registrar of Companies; or
(b) corporate identity number allotted by the Registrar under section 7 of the Companies Act, 2013 (18 of 2013). |
| 3 | Limited Liability Partnership formed or registered in India | Form No. 94 | (a) Copy of Certificate of Registration issued in India by the Registrar of Limited Liability Partnerships; or
(b) LLP identification number allotted in India by the Registrar under the Limited Liability Partnership Act, 2008(6 of 2009). |
| 4 | Firm (other than Limited Liability Partnership) formed or registered in India | Form No. 94 | (a) Copy of Certificate of Registration issued in India by the Registrar of Firm; or
(b) copy of partnership deed. |
| 5 | Trusts formed or registered in India | Form No. 94 | (a) Copy of trust deed; or
(b)Copy of Certificate of Registration Number issued by Charity Commissioner. |
| 6 | Association of persons (other than trusts) or body of individuals formed or registered in India | Form No. 94 | (a) Copy of agreement; or
(b) copy of Certificate of Registration Number is-sued by Charity Commissioner or Registrar of Cooperative Society or any other competent authority; or (c) any document originating from any Central Government or State Government Department, establishing identity and address of such person. |
| 7 | Local authority or artificial juridical person formed or registered in India | Form No. 94 | Any document originating from any Central Government or State Government Department establishing identity and address of such person. |
| 8 | Any person on behalf of the Central Government or State Government or Union Terri- tory Administration | Form No. 94 | Certificate in original from the Head of the Department or Pay and Accounts Officer or Zonal Accounts Officer or District Treasury Officer or Cheque Drawing and Disbursing Officer. |
| 9 | Individuals not being a citizen of India | Form No. 95 | (i) Proof of identity :—
(a) Copy of passport; or (b) copy of person of Indian Origin card issued by the Government of India; or (c) copy of Overseas Citizenship of India Card issued by Government of India; or (d) copy of other national or citizenship Identification Number or Taxpayer Identification Number duly attested by “Apostille” (in respect of countries which are signatories to the Hague Apostille Convention of 1961) or by Indian embassy or High Commission or Consulate in the country where the applicant is located or au- theorized officials of overseas branches of Scheduled Banks registered in India. (ii) Proof of date of birth: — (a) Copy of passport; or (b) copy of person of Indian Origin card issued by the Government of India; or (c) copy of Overseas Citizenship of India Card issued by Government of India; or (d) copy of other national or citizenship Identification Number or Taxpayer Identification Number containing date, month and year of birth duly attested by “Apostille” (in respect of countries which are signatories to the Hague Apostille Convention of 1961) or by Indian embassy or High Commission or Consulate in the country where the applicant is located or authorised officials of overseas branches of Scheduled Banks registered in India; or (e) birth certificate issued by the municipal authority or any office authorised to issue birth and death certificate by the Registrar of Birth and Deaths or the Indian Consulate as defined in clause (d) of sub-section (1) of section 2 of the Citizenship Act, 1955 (57 of 1955); or (f) copy of birth certificate containing date, month and year of birth issued by any foreign authority and duly attested by “Apostille” (in respect of countries which are signatories to the Hague Apostille Convention of 1961) or by Indian embassy or High Commission or Consulate in the country where the applicant is located or authorised officials of overseas branches of Scheduled Banks registered in India. (iii) Proof of address:— (a) copy of passport; or (b) copy of person of Indian Origin card issued by the Government of India; or (c) copy of Overseas Citizenship of India Card issued by Government of India; or (d) copy of other national or citizenship Identification Number or Taxpayer Identification Number duly attested by “Apostille” (in respect of countries which are signatories to the Hague Apostille Convention of 1961), or by Indian embassy or High Commission or Consulate in the country where the applicant is located or authorised officials of overseas branches of Scheduled Banks registered in India; or (e) copy of bank account statement in the country of residence; or (f) copy of Non-resident External bank account statement in India; or (g) copy of certificate of residence in India or Residential permit issued by the State Police Authority; or (h) copy of the registration certificate issued by the Foreigner’s Registration Office showing Indian address; or (i) copy of visa granted and copy of appointment letter or contract from Indian Company and Certificate (in original) of Indian Address issued by the employer. |
| 10 | Limited Liability Partner- ship registered outside India | Form No. 96 | (a) Copy of Certificate of Registration issued in the country where the applicant is located, duly attested by “Apostille” (in respect of countries which are signatories to the Hague Apostille Convention of 1961), or by Indian embassy or High Commission or consulate in the country where the applicant is located, or authorised officials of overseas branches of Scheduled Banks registered in India; or
(b) copy of registration certificate issued in India or of approval granted to set up office in India by Indian Authorities. |
| 11 | Company registered outside India | Form No. 96 | (a) Copy of Certificate of Registration issued in the country where the applicant is located, duly attested by “Apostille” (in respect of countries which are signatories to the Hague Apostille Convention of 1961) or by Indian embassy or High Commission or consulate in the country where the applicant is located, or authorised officials of overseas branches of Scheduled Banks registered in India; or
(b) copy of registration certificate issued in India or of approval granted to set up office in India by Indian Authorities. |
| 12 | Firm formed or registered outside India | Form No. 96 | (a) Copy of Certificate of Registration issued in the country where the applicant is located, duly attested by “Apostille” (in respect of countries which are signatories to the Hague Apostille Convention of 1961), or by Indian embassy or High Commission or Consulate in the country where the applicant is located, or authorised officials of overseas branches of Scheduled Banks registered in India; or
(b) copy of registration certificate issued in India or of approval granted to set up office in India by Indian Authorities. |
| 13 | Association of persons (Trusts) formed outside | Form No. 96 | (a) Copy of Certificate of Registration issued in the country where the applicant is located, duly attested by “Apostille” (in respect of countries which are signatories to the Hague Apostille Convention of 1961), or by Indian embassy or High Commission or consulate in the country where the applicant is located, or authorised officials of overseas branches of Scheduled Banks registered in India; or
(b) copy of registration certificate issued in India or of approval granted to set up office in India by Indian authorities. |
| 14 | Association of persons (other than Trusts) or body of individuals or local authority or person formed or any other entity (by whatever name called) registered outside India |
Form No. 96 | (a) Copy of Certificate of Registration issued in the country where the applicant is located, duly attested by “Apostille” (in respect of countries which are signatories to the Hague Apostille Convention of 1961), or by Indian embassy or High Commission or consulate in the country where the applicant is located, or authorised officials of overseas branches of Scheduled Banks registered in India; or
(b) copy of registration certificate issued in India or of approval granted to set up office in India by Indian Authorities. |
(9) Every person who has been allotted Permanent Account Number and who, in accordance with the provisions of section 262(6)(a), is required to intimate his Aadhaar number, shall intimate his Aadhaar number to the Director General of Income-tax (Systems) or the person authorised by the said authority.
(10) Every person who, in accordance with the provisions of section 262(6)(a), is required to intimate his Aadhaar number to the prescribed authority in the prescribed form and manner, failed to do so by 30th June 2023, shall, at the time of subsequent intimation of his Aadhaar number to the prescribed authority, be liable to pay, by way of fee, an amount equal to ₹ 1000.
(11) The Director General of Income-tax (Systems) shall specify the classes of persons, forms, guidelines, standards and formats along with procedure for safe and secure transmission of forms and formats under sub-rule (2) in relation to furnishing application for allotment of the Permanent Account Number.
(12) The Director General of Income-tax (Systems) shall specify the forms and formats along with procedure in relation to furnishing correction application under section 262(4).
(13) The Director General of Income-tax (Systems) shall specify the formats, guidelines and standards along with procedure, for the verification of documents filed with the application under sub-rule (8), intimation of Aadhaar number in sub-rule (9) and issue of Permanent Account Number for ensuring secure capture and transmission of data in such format and standards and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing of the application forms for allotment of Permanent Account Number, intimation of Aadhaar number and issue of Permanent Account Number.
(14) The Director General of Income-tax (Systems) shall lay down the formats, guidelines and standards along with procedure for,—
(a) intimation of Aadhaar number under sub-rule (3); or
(b) authentication of Aadhaar number under sub-rule (4); or
(c) obtaining demographic information of an individual from the Unique Identification Authority of India,
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 or intimation or quoting or authentication of Aadhaar number or obtaining of demographic information of an individual from the Unique Identification Authority of India, for allotment of Permanent Account Number and issue thereof.
159. Transactions in relation to which Permanent Account Number is to be quoted or applied for purposes of section 262(1)(f) and 262(10)(c) and (e). — (1) Every person shall quote his Permanent Account Number in all documents, pertaining to the transactions specified in column 2 for value of transaction specified in column 3 of the following Table : —
Table
| Sl.no. | Nature of transaction | Value of transaction | Person receiving or issuing the document in relation to transaction in column (2) |
| 1 | 2 | 3 | 4 |
| 1. | Making an application to any banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) or to any other company or institution, for issue of a credit card. | All such transactions. | (i) Manager or officer of a banking company or co-operative bank; or
(ii) the principal officer of the (iii) the principal officer of the institution, as the case may be. |
| 2. | Opening of an account with a depository, participant, custodian of securities or any other person registered under section 12(1A) of the Securities and Exchange Board of India Act, 1992 (15 of 1992). |
All such transactions. | The depository, participant, custodian of securities or any other person registered under section 12(1A) of the Securities and Exchange Board of India Act, 1992 (15 of 1992). |
| 3. | Payment to the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934) for acquiring bonds issued by it. | Amount exceeding ₹ 50000. | The officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934), or of any agency bank authorised by the Reserve Bank of India. |
| 4. | Payment to a Mutual Fund for purchase of its units. | Amount exceeding ₹ 50000. | The trustee or any other person duly authorised by the trustee of a Mutual Fund. |
| 5. | A contract for sale or purchase of securities (other than shares) as defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956). |
Amount exceeding ₹ 100000 per transaction. |
(i) The principal officer of the company; or(ii) stock-broker, sub-broker, share transfer agent, banker to an issue, trustee of a trust deed, registrar to issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediaries registered under section 12(1) of the Securities and Exchange Board of India Act, 1992 (15 of 1992),as the case may be. |
| 6. | Deposit with
(i) a banking company or a co- operative bank to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act); or (ii) post office. |
Cash deposits aggregating to ten lakh rupees or more in a financial year, in one or more account of a person | (i) Manager or officer of a banking company or co- operative bank; or
(ii) postmaster; or (iii) the principal officer of the institution, as the case may be. |
| 7. | Withdrawal with —
(i) a banking company or a co- operative bank to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act); or (ii) post office. |
Cash withdrawals aggregating to ten lakh rupees or more in a financial year, in one or more account of a person | (i) Manager or officer of a banking company or co- operative bank; or
(ii) postmaster; or (iii) the principal officer of the institution, as the case may be. |
| 8. | Sale or purchase of —
(i) motor vehicle or vehicle, as defined in section 2(28) of the Motor Vehicles Act 1988 (59 of 1988), which requires registration by a registering (ii) motor cycle as defined in |
Amount exceeding ₹ 500000. | The person who sells the motor vehicle or motor cycle. |
| 9. | Sale or purchase, by any person, of shares of a company not listed in recognised stock exchange. | Amount exceeding ₹ 100000 per transaction | The principal officer of a company issuing such shares |
| 10. | Payment to a company or an institution for acquiring debentures or bonds issued by it. | Amount exceeding ₹ 50000 | The principal officer of a company or an
institution issuing such bonds or |
| 11. | Purchase or sale or gift or joint development agreement by any person of any immovable property. | Amount exceeding
twenty lakh rupees or valued by stamp valuation authority |
Inspector-General appointed under section 3 of the Registration Act, 1908 (16 of 1908) or Registrar or Sub- Registrar appointed under section 6 of that Act. |
| 12. | Opening an account other than a time- deposit referred in Sl. No. 13 and a Basic Savings Bank Deposit Account with
(i) a banking company; or (ii) a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act). |
All such transactions. | (i) Manager or officer of a banking company or co-operative bank; or
(ii) the principal officer of the institution, as the case may be. |
| 13. | A time deposit with —
(i) a banking company or a co- operative bank to which the Banking Regulation Act, 1949 (10 of 1949), applies (including (ii) a post office; or (ii) a Nidhi referred to in section 406 of the Companies Act, 2013 (18 of 2013); or (iii) a non-banking financial company which holds a certificate of |
Amount exceeding ₹ 50000 or aggregating to more than ₹ 500000 during a financial year. | (i) Manager or officer of a banking company or co-operative bank; or
(ii) postmaster; or (iii) the principal officer of the company; or (iv) the principal officer of the institution, as the case may be. |
| 14. | Commencement of account-based relationship with an insurer as defined in section 2(9) of the Insurance Act, 1938 (4 of 1938) | All such transactions where insurance premium exceeds ₹ 50000 during a financial year. | The manager or officer of an insurer. |
| 15. | Payment to
(i) a hotel or restaurant; or (ii) a convention Centre; or (iii) a banquet hall; or (iv) any person engaged in event management, against a bill or bills at any one time. |
Payment in cash of an
amount exceeding ₹ |
The person issuing the document
including the bill. |
| 16. | Sale or purchase by any person, of goods or services of any nature other than those specified at Sl. Nos. 1 to 15, if any. | Amount exceeding ₹ 200000 per transaction. | The person issuing document including the bill. |
(2) In respect of transactions mentioned in column (2) of the Table in sub-rule (1) —
(a) any person who is a minor, not having any income chargeable to tax, and who enters into any of the said transactions, shall quote the Permanent Account Number of his father or mother or guardian, as the case may be, in the document pertaining to the said transaction;
(b) any person, not being a company or a firm, and who does not have a Permanent Account Number, entering into any of the transactions mentioned at Sl. Nos. 11 to 16, shall make a declaration in Form No. 97 giving therein the particulars of such transaction;
(c) out of the transactions mentioned in clause (ii), a foreign company entering into transactions at Sl. No. 12 or 13 in an IFSC banking unit, who does not have —
(I) a Permanent Account Number; and
(II) any income chargeable to tax in India, shall make a declaration in Form No. 97.
(3) For the purposes of section 262(1)(f), any person, not being a company or a firm, and who does not have Permanent Account Number, entering into—
(a) any of the transactions mentioned at Sl. No. 1 to 10;
(b) transaction mentioned at Sl. No. 11, where amount of immovable property exceeds forty-five lakh rupees or more, or its value as per stamp valuation authority referred to in section 78 of the Registration Act, 1908 (16 of 1908) exceeds forty-five lakh rupees, shall apply for Permanent Account Number.
(4) The provisions of sub-rule (3) shall not apply in a case, —
(a) where the person carrying out transactions as per Sl. Nos. 1 to 10 of column (2) of the Table in sub-rule (1), is a non-resident (not being a company) or a foreign company;
(b) the transaction is entered into with an IFSC banking unit; and
(c) such non-resident (not being a company) or the foreign company does not have any income chargeable to tax in India.
(5) The person referred to in column (4) of Table in sub-rule (1), who has received or issued any document, shall ensure that—
(a) Permanent Account Number after verification, has been duly and correctly mentioned therein or as the case may be, a declaration in Form No. 97 has been duly furnished with complete particulars;
(b) the valid Permanent Account Number or the fact of furnishing of Form No. 97, is duly mentioned in the records maintained for the transactions referred to in column (2) of Table in sub-rule (1); and
(c) the Permanent Account Number or the details of Form No. 97 are linked and mentioned in any information furnished to the income-tax authority or any other authority or agency under any provision of the Act or any rule made thereunder.
(6) The provisions of sub-rule (1) shall not apply to the following class or classes of persons:—
(a) the Central Government, State Governments and the consular offices; and
(b) the non-residents referred to in section 2(72) in respect of the transactions referred to against Sl. No. 1 or 3 or 15 or 16 of the Table.
(7) For the purposes of this rule,-
(a) “IFSC banking unit” means a financial institution defined under section 3(1)(c) of the International Financial Services Centres Authority Act, 2019 (50 of 2019), that is licensed or permitted by the International Financial Services Centres Authority to undertake permissible activities under the International Financial Services Centres Authority (Banking) Regulations, 2020; and
(b) “time deposit” means any deposit which is repayable on the expiry of a fixed period.
(8) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall lay down the formats and standards along with procedure as regards the manner of authentication of Permanent Account Number.
160. Time and manner in which persons referred to in rule 159 shall furnish a statement containing particulars of Form No. 97. — (1) Every person referred to in sub-rule (2), who has received any declaration in Form No. 97 in relation to a transaction specified in column 2 of the Table in rule 159, shall—
(a) furnish a statement in Form No. 98 containing particulars of declaration to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation) through online transmission of electronic data to a server designated for this purpose and obtain an acknowledgement number; and
(b) retain Form No. 97 for a period of six years from the end of the financial year in which the transaction was undertaken.
(2)The persons referred to in sub-rule (1) shall be —
(a) No. 11 or 12 or 13 or 14; and
(b) No. 15 or 16 and who is required to get his accounts audited under section 58, of the column 4 of the Table in rule 159.
(3) The statement referred to in sub-rule (1)(i) shall,—
(a) where the declarations are received by the 30th September, be furnished by the 31st October of that year; and
(b) where the declarations are received by the 31st March, be furnished by the 30th April of the financial year immediately following the financial year in which the form is received.
(4) The statement referred to in sub-rule (1)(i) shall be verified—
(a) in a case where the person furnishing the statement is an assessee as defined in section 2(11), by a person specified in section 265;
(b) in any other case, by the person referred to in column (4) of the Table in rule 159.
161. Transactions for purposes of section 262(9)(a). — (1) For the purposes of section 262(9)(a), every person shall, at the time of entering into a transaction specified in column 2 of the following Table, quote his Permanent Account Number in documents pertaining to such transaction, and every person specified in column 3 of the said Table, who receives such document, shall ensure that the said number has been duly quoted and authenticated:
Table
| Sl. No. | Nature of transaction | Person |
| 1 | 2 | 3 |
| 1. | Cash deposit or deposits aggregating to twenty lakh rupees or more in a financial year, in one or more account of a person with —
(i) a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Office |
(i) A banking company or a cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Master General as referred to in section 2(j) of the Indian Post Office Act, 1898 (6 of 1898) (as it existed prior to its repeal) or the Regional Head as referred in the Post Office Rules, 2024 framed under the Post Office Act, 2023 (43 of 2023). |
| 2. | Cash withdrawal or withdrawals aggregating to twenty lakh rupees or more in a financial year, in one or more account of a person with,—
(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies |
|
| (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Office |
(i) A banking company or a cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Master General as referred to in section 2(j) of the Indian Post Office Act, 1898 (6 of 1898) (as it existed prior to its repeal) or the Regional Head as referred in the Post Office Rules, 2024 framed under the Post Office Act, 2023 (43 of 2023). |
|
| 3. | Opening of a current account or cash credit account by a person with,—
(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Office |
(i) A banking company or a cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Master General as referred to in section 2(j) of the Indian Post Office Act, 1898 (6 of 1898) (as it existed prior to its repeal) or the Regional Head as referred in the Post Office Rules, 2024 framed under the Post Office Act, 2023 (43 of 2023). |
(2) The provisions of sub-rule (1) shall not apply in a case where the person carrying out transaction in column 2 of Table is the Central Government, a State Government or a consular office.
(3) The provisions of sub-rule (1) shall not apply in a case,—
(a) where the person, carrying out transaction as per Sl. Nos. 1 to 3 of column (2) of Table is a non-resident (not being a company) or a foreign company;
(b) the transaction is entered into with an IFSC banking unit; and
(c) such non-resident (not being a company) or the foreign company does not have any income chargeable to tax in India.
(4) For the purposes of sub-rule (3), “IFSC banking unit” shall have the meaning assigned to it in rule 159(7)(a).
(5) The Permanent Account Number of an individual shall be submitted to the Principal Director General of Income-tax (Systems), or the Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems), or the Director General of Income-tax (Systems) with the approval of the Board, for the purposes of authentication referred to in section 262.
(6) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall lay down the formats and standards along with procedure for authentication of Permanent Account Number.
162. When PAN becomes inoperative under section 262(6). — (1) If a person who had been allotted a Permanent Account Number (PAN) and was required to intimate his Aadhaar number under section 262(6), but failed to do so, then his Permanent Account Number being inoperative, he shall be liable for payment of fees in accordance with rule 158.
(2) Where the person referred to in sub-rule(1) has intimated his Aadhaar number under section 262(6), after payment of fees in accordance with rule 158, his Permanent Account Number shall become operative within thirty days from the date of intimation of Aadhaar number.
(3) A person, whose Permanent Account Number has become inoperative under sub-rule(1), shall be liable for the following consequences for the period commencing from the date of commencement of this rule till the date it becomes operative: —
(a) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made;
(b) interest shall not be payable on such refund for the period, beginning with the date of commencement of this rule and ending with the date on which it becomes operative;
(c) where tax is deductible or collectible at source under Chapter XIX-B in case of such person, such tax shall be deducted or collected, as the case may be, at higher rate, in accordance with provisions of section 397(2);
(4) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall specify the formats and standards along with the procedure for verifying the operational status of Permanent Account Number under sub-rules (1) and (2).
163. Conditions for furnishing return of income by persons other than a company or firm referred to in section 263(1)(a)(x). — (1) The conditions required to be fulfilled in a tax year for the purposes of furnishing return of income in respect of a person other than a company or firm referred to in section 263(1)(a)(x), shall be the following :—
(a) if he has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current accounts maintained with a banking company or a co-operative bank; or
(b) if he has incurred expenditure of an amount or aggregate of the amounts exceeding ₹ 200000 for himself or any other person for travel to a foreign country; or
(c) if he has incurred expenditure of an amount or aggregate of the amounts exceeding ₹ 100000 towards consumption of electricity; or
(d) if his total sales, turnover or gross receipts, as the case may be, in the business exceeds sixty lakh rupees; or
(e) if his total gross receipts in profession exceeds ten lakh rupees; or
(f) if the aggregate of tax deducted at source and tax collected at source, in the case of such person is ₹ 25000 or more, and in the case of individual resident of the age of sixty years or more, the amount shall be taken as ₹ 50000 or more; or
(g) if he has deposited in his one or more savings bank account, in aggregate, fifty lakh rupees or more.
(2) For the purposes of this rule, the expression ―travel to a foreign country” does not include travel to the neighbouring countries or to such places of pilgrimage as the Board may specify in this behalf, by notification.
164. Forms, eligibility, verification etc. in respect of return of income. — (1) The return of income required to be furnished under section 263(1) or section 268(1)(a) or section 280, relating to the tax year commencing on the 1st April, 2026, shall be in accordance with the provisions of this rule.
(2) Subject to the provisions of sub-rule (3), return of income shall be in Form SAHAJ (ITR-1) and be verified in the manner indicated therein in the case of a person being an individual, who is a resident other than not ordinarily resident and where the total income includes income chargeable to income-tax, under the head —
(a) “Salaries” or income in the nature of family pension as defined in section 93(1)(d); or
(b) “Income from house property”, where the assessee does not own more than two house property and does not have any brought forward loss or loss to be carried forward under the head; or
(c) “Income from other sources”, except winnings from lottery or income from race horses and does not have any loss under the head; or
(d)”Capital gains”, where assessee has only long-term capital gains under section 198 not exceeding ₹ 125000 and does not have any brought forward loss or loss to be carried forward under the head.
(3) A person shall not be eligible to file ITR-1, if he —
(a) has assets (including financial interest in any entity) located outside India; or
(b) has signing authority in any account located outside India; or
(c) has income from any source outside India; or
(d) has income to be apportioned in accordance with provisions of section 10; or
(e) has claimed deduction under section 93, other than deduction claimed under clause (d) of sub-section (1) of the said section; or
(f) is a director in any company; or
(g) has held any unlisted equity share at any time during the tax year; or
(h) is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee; or
(i) has claimed any relief of tax under section 159 or deduction of tax under section 160; or
(j) has agricultural income, exceeding ₹ 5000 ; or
(k) has total income, exceeding fifty lakh rupees; or
(l) is a person in whose case tax has been deducted under section 393(3) [Table : Sl No. 5]; or
(m) is a person in whose case payment or deduction of tax has been deferred under section 391(2) or section 392(3); or
(n) has any income of the nature on which the tax is determinable as per the provisions of Part A of Chapter XIII of the Act.
(4) Return of income shall be in the case of a person being an individual not being an individual to whom sub-rule (2) applies or a Hindu undivided family, where the total income does not include income under the head business or profession, be in Form No. ITR-2 and be verified in the manner indicated therein;
(5) Subject to the provisions of sub-rule (6), return of income shall be in Form SUGAM (ITR-4) and be verified in the manner indicated therein, in the case of a person being an individual or a Hindu undivided family, who is a resident other than not ordinarily resident, or a firm, other than limited liability partnership firm, which is a resident, –
–
(a) deriving income under the head “Profits or gains of business or profession” and such income is computed in accordance with special provisions referred to in section 58 for computation of such income; and
(b) has, ―Capital gains”, if any, where assessee has only long-term capital gains under section 198 not exceeding ₹ 125000.
(6) A person shall not be eligible to file ITR-4, if he —
(a) has assets (including financial interest in any entity) located outside India; or
(b) has signing authority in any account located outside India; or
(c) has income from any source outside India; or
(d) has income to be apportioned in accordance with provisions of section 10; or
(e) has claimed deduction under section 93, other than deduction claimed under section 93(1)(d) thereof; or
(f) is a director in any company; or
(g) has held any unlisted equity share at any time during the tax year; or
(h) has total income, exceeding fifty lakh rupees; or
(i) owns more than two house properties, the income of which is chargeable under the head “Income from house property”; or
(j) has any brought forward loss or loss to be carried forward under any head of income; or
(k) is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee; or
(l) has claimed any relief of tax under section 159 or deduction of tax under clause (d) of sub-section (1) of the said; or
(m) has agricultural income, exceeding ₹ 5000; or
(n) has income of the nature specified in section 17(1)(d) on which tax is payable or deductible under section 391(2) or section 392(3); or
(o) has any income of the nature on which the tax is determinable as per provisions of Part A of Chapter XIII of the Act.
(7) Return of income shall be in Form No. ITR-3 and be verified in the manner indicated therein in the case of a person being an individual or a Hindu undivided family other than the individual or a Hindu undivided family referred to in sub-rule (2) or sub-rule (4) or sub-rule (5) and having income under the head ―Profits or gains of business or profession”.
(8) The return of income shall be in Form No. ITR-5 and be verified in the manner indicated therein in the
case of a person not being an individual or a Hindu undivided family or a company or a person to which sub-rule (10) applies.
(9) The return of income shall be in Form No. ITR-6 and be verified in the manner indicated therein in the case of a company not being a company to which sub-rule (10) applies;
(10) The return of income shall be in Form No. ITR-7 and be verified in the manner indicated therein, in the case of a person including a company, whether or not registered under section 25 of the Companies Act, 1956 (1 of 1956) or section 8 of the Companies Act, 2013(18 of 2013) ,required to file a return under section 349 or Schedule VIII [Table :Sl. No. 1. D(f)] or section 263(1)(a)(iv) or (v).
(11) The return of income shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax, if any, claimed to have been deducted or collected at source, or the advance tax, or tax on self-assessment, if any, claimed to have been paid, or any document or copy of any account or form or report of audit required to be attached with the return of income under any of the provisions of the Act.
(12) The return of income referred to in sub-rule (1) shall be furnished by a person mentioned in column 2 of the following Table in the manner specified in column 3 thereof:
Table
| Sl. No. | Person | Manner of furnishing return of income |
| 1 | 2 | 3 |
| 1. | Company | Electronically under digital signature. |
| 2 | Any person whose accounts are required to be audited under section 63 | (a) Electronically under digital signature; or
(b) transmitting the data electronically in the return under electronic verification code. |
| 3. | Any person other than person referred in Sl. Nos. 1, 2 and 4 | (a) Electronically under digital signature; or
(b) transmitting the data electronically in the return under electronic verification code; or (c) transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V. |
| 4. | An individual of the age of eighty years or more at any time during the tax year, who furnishes return in Form No. SAHAJ (ITR- 1) or Form No. SUGAM (ITR-4) | (a) Electronically under digital signature; or
(b) transmitting the data electronically in the return under electronic verification code; or (c) transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V; or (d) paper form. |
(13) For the purposes of sub-rule (12), “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).
(14) Where a return of income relates to the tax year commencing on the 1st April, 2025 or any earlier tax year, it shall be furnished in the appropriate form as applicable in that tax year.
165. Furnishing of updated return of income under section 263(6) read with sub-section (2) of said section. —
(1) The return of income to be furnished by any person, eligible to file such return under section 263(6), shall be in the Form ITR-UN and be verified in the manner indicated therein.
(2) ITR-UN shall be furnished by a person mentioned in column 2 of the following Table in the manner specified in column 3 thereof:
Table
| Sl. No. | Person | Manner of furnishing return of income |
| 1 | 2 | 3 |
| 1. | Company | Electronically under digital signature. |
| 2 | Any person whose accounts are required to be audited under section 63 | (a) Electronically under digital signature; or
(b) transmitting the data electronically in the return under electronic verification code. |
| 3. | Any person other than person referred in Sl. Nos. 1 and 2 | (a) Electronically under digital signature; or
(b) transmitting the data electronically in the return under electronic verification code; or (c) transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V. |
(3) For the purposes of sub-rule (2), the expression “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).
166. Conditions for treating a return as defective return under section 263(7). — (1) A return of income shall be regarded as defective, if any of the following conditions is satisfied: —
(a) all fields, parts, schedules, statements, and columns in the return of income, as applicable to the case of the assessee, have not been duly filled in, including those relating to computation of income chargeable under applicable heads of income, computation of gross total income and total income; or
(b) the report of the audit, in auditable cases, referred to in section 63, has not been furnished prior to the filing of the return of income; or
(c) if the return of income is furnished under section 263(6), the details of payment of tax as per section 267 are not duly filled in the return; or
(d) the brought forward credit of minimum alternate tax (MAT) or alternate minimum tax (AMT) claimed in the return is not in accordance with the carry forward of MAT or AMT in the latest return, as the case may be, allowed to the assesse.
(2) The Board may notify, the class or classes of persons, to which any of the conditions specified in clauses (a) to (d) of sub-rule (1), shall not apply or shall apply with such modifications, as may be specified in such notification.
167. Form of appeal to Joint Commissioner (Appeals) or Commissioner (Appeals) under section 358. —
(1) An appeal to the Joint Commissioner (Appeals) or the Commissioner (Appeals) shall be made in Form No. 99.
(2) Form No. 99 shall be furnished in the following manner: —
(a) in the case of a person who is required to furnish return of income electronically under rules 164 and 180, —
(i) by furnishing the form electronically under digital signature, if the return of income is furnished under digital signature;
(ii) by furnishing the form electronically through electronic verification code in a case not covered under item (i);
(b) in a case where the assessee has the option to furnish the return of income in paper form, by furnishing the form electronically in accordance with clause (a).
(3) The form of appeal referred to in sub-rule (1), shall be verified by the person who is authorised to verify the return of income under section 265, as applicable to the assessee.
(4) Any document accompanying Form No. 99 shall be furnished in the manner in which the said Form is furnished.
168. Prescribed person for verification of return for purposes of section 265 [Table: Sl. Nos. 3 and 9]. —
(1) For the purpose of verification of return under section 265 [Table: Sl. Nos. 3 and 9], ―any other person‖, shall be the person appointed by the Adjudicating Authority for discharging the duties and functions of an interim resolution professional, a resolution professional, or a liquidator, as the case may be, under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and the rules and regulations made thereunder.
(2) For the purposes of this rule, “Adjudicating Authority” shall have the same meaning as assigned to it in section 5(1) of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).
169. Form of verification for furnishing information under section 268(1)(c). — The information which a person is required by the Assessing Officer to furnish under section 268(1)(c) shall be verified in the following manner :— “I declare that to the best of my knowledge and belief, the information furnished in the statement/statements is correct and complete and other particulars shown therein are truly stated”.
170. Prescribed income-tax authority under section 268(3) for issue of notice under sub-section (1) thereof. — The prescribed income-tax authority under section 268(3), for issue of notice under sub-section (1) of the said section, shall be an income-tax authority not below the rank of Income-tax Officer who has been authorised by the Central Board of Direct Taxes to act as such authority for the purposes of section 268(3).]
171. Forms for report of audit or inventory valuation under section 268(5).— (1) The report of audit of the accounts of an assessee, which is required to be furnished under section 268(5)(i), shall be in Form No. 100.
(2) The report of inventory valuation of an assessee, which is required to be furnished under section 268(5)(ii), shall be in Form No. 101.
172. Procedure for purposes of determining expenses for audit or inventory valuation.—
(1) Every Chief Commissioner of Income-tax shall, for the purposes of 268(5)(i) and (ii), shall maintain a panel of—
(a) accountants, out of the persons referred to in section 515(3)(b); and
(b) cost accountants, out of the persons referred to in section 268(13).
(2) Where the Assessing Officer directs—
(a) for audit under section 268(5)(i); or
(b) for inventory valuation under section 268(5)(ii), the expenses of, and incidental to, audit or inventory valuation (including the remuneration of the accountant or cost accountant, qualified assistants, semi-qualified and other assistants, who may be engaged by such accountant or cost accountant), shall not be less than ₹ 3750 and not more than ₹ 7500 (both inclusive) for every hour of the period as specified by the Assessing Officer under section 268(8) or (9) or (10), as the case may be.
(3) The period referred to in sub-rule (2) shall be specified in terms of the number of hours required for completing the report.
(4) The accountant or cost accountant referred to in section 268(5)(i) or (ii), shall maintain a time-sheet and submit it to the Chief Commissioner of Income-tax or Commissioner of Income-tax, along with the bill.
(5) The Chief Commissioner of Income-tax or the Commissioner of Income-tax shall ensure that the number of hours claimed for billing purposes is commensurate with the size and quality of the report submitted by the accountant or cost accountant.
173. Jurisdiction of Valuation Officers as per section 2(110) read with section 269. — (1) For the purposes of section 2(110) read with section 269, —
(a) Regional Valuation Officers shall exercise, within such areas as the Board may direct, general supervision over the work of District Valuation Officers, Valuation Officers and Assistant Valuation Officers;
(b) District Valuation Officers, Valuation Officers and Assistant Valuation Officers shall perform the functions of a Valuation Officer in respect of such areas and in relation to such class of assets, properties or investments, as the Board may direct; and
(c) subject to the provisions of sub-rules (5) and (6),where under any directions issued under sub-rule (1)(b), the functions of a Valuation Officer in relation to any class of assets, being buildings or lands or any rights in buildings or lands, in respect of any area have been assigned to a District Valuation Officer, Valuation Officer and an Assistant Valuation Officer, such functions shall be performed by the respective officer mentioned in column B of the following Table, for the assets or properties or investment with value specified in the corresponding entry in column C thereof:
Table
| Sl. No. | Officer who will perform valuation | Value of asset |
| A | B | C |
| 1 | District Valuation Officer | More than five crore rupees |
| 2 | Valuation Officer | More than one crore rupees and up to five crore rupees |
| 3 | Assistant Valuation officer | Up to one crore rupees |
(2) The value of any asset, for the purposes of sub-rule (1)(c) shall be, where a reference is made under section 78(2), the stamp duty value of the capital asset.
(3) The value of any asset, for the purposes of sub-rule (1)(c) shall be, where a reference is made under section 91(1), the value claimed by the assessee.
(4) The value of any asset, for the purposes of sub-rule (1)(c) shall be —
(a) the latest value as declared in the return of income of the assessee for any tax year; and
(b) where no value is ascertainable as per the return of income of the assessee for any tax year, the functions of District Valuation Officers, Valuation Officers and Assistant Valuation Officers, as the case may be, shall be performed in accordance with the direction of District Valuation Officers.
(5) The District Valuation Officer referred to in Table [Sl. No.1] having jurisdiction in respect of the area may, if he considers it necessary or expedient so to do for the purpose of proper and efficient management of the work of valuation, himself perform such functions in relation to any asset referred to in Table [Sl. No.2].
(6) The Valuation Officer referred to in Table [Sl. No.2] having jurisdiction in respect of the area may, if he considers it necessary or expedient so to do for the purpose of proper and efficient management of the work of valuation, himself perform such functions in relation to any asset referred to in Table [Sl. No.3].
(7) For the purposes of sub-rule (1)(c), the value of the assets, properties or investments referred to therein shall be in respect of the asset as a whole, whether owned by the assessee individually or jointly.
174. Day and time for inspection by Valuation Officers, etc., as per section 269(3). — (1) For the purposes of section 269(3), on any day except public holidays, at any time between 6 a.m. and 6 p.m., the Valuation Officer, or any engineer, or overseer, or surveyor, or assessor, authorised by him, by order in writing in this behalf, may, –
(a) enter any land within the limits of the area assigned to the Valuation Officer; or
(b) enter any land, building, or other place belonging to or occupied by any person in connection with whose assessment a reference has been made to the Valuation Officer; or
(c) inspect any asset in respect of which a reference has been made to the Valuation Officer.
(2) The expression ―public holiday‖ includes Sundays, and any other day declared by the Central Government, by notification, to be a public holiday.
175. Prescribed authority for issue of notice under section 270(8). — The prescribed authority under section 270(8) shall be an income-tax authority not below the rank of an Income-tax Officer, who has been authorised by the Central Board of Direct Taxes to act as income-tax authority for the purposes of section 270(8).
176. Procedure for faceless assessment, reassessment or recomputation under section 273(1) . —
(1) The assessment, reassessment or recomputation under section 270(10) or section 271 or section 279, as the case may be, in respect of cases as specified by the Board under section 273(2), shall be made in a faceless manner, in accordance with the procedure in this rule.
(2) The procedure for faceless assessment, reassessment or recomputation shall be the following: —
(a) the National Faceless Assessment Centre shall assign the case selected for faceless assessment under section 273 to a specific assessment unit through an automated allocation system;
(b) the National Faceless Assessment Centre shall intimate the assessee that the assessment in his case shall be completed in accordance with the procedure laid down under this rule;
(c) a notice under section 268(1) or section 270(8) shall be served on the assessee through the National Faceless Assessment Centre, requiring the assessee to furnish his response within the date specified therein to the National Faceless Assessment Centre, which shall forward such response to the assessment unit;
(d) where a case is assigned to the assessment unit under sub-rule (2)(a), it may make a request through the National Faceless Assessment Centre for—
(i) obtaining further information, documents or evidence from the assessee or any other person; or
(ii) conducting of enquiry or verification by a verification unit; or
(iii) seeking technical assistance by referring to the technical unit in respect of determination of arm’s length price, valuation of property, withdrawal of registration, approval, exemption or any other technical matter;
(e) where a request under sub-rule (2)(d)(i) is made—
(i) the National Faceless Assessment Centre shall serve an appropriate notice or requisition on the assessee or any other person for obtaining the information, documents or evidence required by the assessment unit;
(ii) the assessee or any other person shall file his response within the time specified therein, or within such time as may be extended on an application made in this regard, to the National Faceless Assessment Centre; and
(iii) the National Faceless Assessment Centre shall forward such response to the assessment unit;
(f) where a request under sub-rule (2)(d)(ii) or (iii) is made, the National Faceless Assessment Centre shall, through an automated allocation system, assign the request to —
(i) a verification unit for conducting enquiry or verification; and
(ii) a technical unit for seeking technical assistance;
(g) the National Faceless Assessment Centre shall send the report received from the verification unit or technical unit, as the case may be, to the assessment unit from which the request was received as referred in sub-rule (2)(f);
(h) where the assessee fails to comply with the notice served under sub-rule (2)(e) or the notice issued under section 268(1) or section 270(8), the National Faceless Assessment Centre shall intimate such failure to the assessment unit;
(i) the assessment unit, through the National Faceless Assessment Centre, shall serve a notice under section 271 upon the assessee referred to in sub-rule (2)(h), providing an opportunity to show cause as to why the assessment should not be completed to the best of its judgment;
(j) the assessee shall furnish his response to the notice served under sub-rule (2)(i) within the time specified therein or within the extended time, if any, to the National Faceless Assessment Centre, which shall forward the same to the assessment unit;
(k) where the assessee fails to furnish his response to the notice served under sub-rule (2)(i) within the
specified or extended time, the National Faceless Assessment Centre shall intimate such failure to the assessment unit;
(l) the assessment unit shall, after considering all relevant material available on record, prepare—
(i) an income or loss determination proposal where no variation prejudicial to the assessee is proposed and send a copy of the same to the National Faceless Assessment Centre; or
(ii) in any other case, a show cause notice stating the variations prejudicial to the interest of the assessee proposed to be made to the income of the assessee and calling upon him to submit as to why the proposed variation should not be made and serve such notice, on the assessee, through the National Faceless Assessment Centre;
(m) the assessee shall file his reply to the show cause notice referred in sub-rule (2)(l)(ii) within the time specified or such extended time, as the case may be, to the National Faceless Assessment Centre, which shall forward the same to the assessment unit;
(n) where the assessee fails to file a response within the specified or extended time, , as the case may be, the National Faceless Assessment Centre shall intimate such failure to the assessment unit;
(o) the assessment unit shall, after considering the response received under sub-rule (2)(m) or after receipt of intimation under sub-rule (2)(n), as the case may be, and taking into account all relevant material available on record, prepare an income or loss determination proposal and send the same to the National Faceless Assessment Centre;
(p) upon receipt of the income or loss determination proposal referred to in sub-rule(2)(l)(i) or (2)(o), the National Faceless Assessment Centre may, on the basis of the guidelines issued by the Board, —
(i) convey to the assessment unit to prepare a draft order in accordance with such proposal; or
(ii) assign the proposal to a review unit to review such proposal through an automated allocation system;
(q) the review unit shall conduct review of the income or loss determination proposal assigned to it by the National Faceless Assessment Centre under sub-rule (2)(p)(ii) and prepare a review report, which shall be sent to the National Faceless Assessment Centre;
(r) the National Faceless Assessment Centre shall forward the review report referred in sub-rule (2)(q) to the assessment unit, which had proposed the income or loss determination proposal;
(s) the assessment unit shall, after considering such review report, accept or reject some or all of the modifications proposed therein, and after recording reasons in case of rejection of such modifications, prepare a draft order and send the same to the National Faceless Assessment Centre;
(t) the assessment unit shall send the draft order prepared under sub-rule (2)(p)(i) or sub-rule (2)(s) to the National Faceless Assessment Centre;
(u) in case of an eligible assessee, as mentioned in section 275(1), where any variation prejudicial to his interest is proposed, the National Faceless Assessment Centre shall serve the draft order upon the assessee;
(v) in any case other than that referred to in sub-rule (2)(u), the National Faceless Assessment Centre shall convey the assessment unit to pass a final assessment order in accordance with the draft order;
(w) the assessment unit shall pass the final assessment order and initiate penalty proceedings, if any, and send the same to the National Faceless Assessment Centre;
(x) upon receiving the final assessment order as per sub-rule (2)(w), the National Faceless Assessment Centre shall serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment;
(y) where a draft order is served as per sub-rule (2)(u), the assessee shall—
(i) file acceptance of the variations to the National Faceless Assessment Centre; or
(ii) file his objections to the variations before the Dispute Resolution Panel and the National Faceless Assessment Centre within the period specified in section 275(2);
(z)upon receipt of acceptance or upon no objection being filed within time specified in section 275(2) from the eligible assessee, the National Faceless Assessment Centre shall intimate the assessment unit to complete the assessment on the basis of draft order;
(aa)the assessment unit shall, upon receipt of intimation under sub-rule (2)(z), pass the assessment order in accordance with the draft order within the time period mentioned in section 275(4) and initiate penalty proceedings, if any, and send the order to the National Faceless Assessment Centre;
(ab) where objections are filed with the Dispute Resolution Panel under sub-rule (2) (y)(ii), the National Faceless Assessment Centre shall forward such intimation along with a copy of objection to the assessment unit;
(ac) the National Faceless Assessment Centre shall, in a case referred to in sub-rule (2)(ab), upon receipt of the directions issued by the Dispute Resolution Panel under section 275(5), forward such directions to the assessment unit;
(ad)the assessment unit shall, in conformity with the directions issued by the Dispute Resolution Panel under section 275(5), complete the assessment within the time allowed in section 275(13) and initiate penalty proceedings, if any, and send a copy of the assessment order to the National Faceless Assessment Centre;
(ae) the National Faceless Assessment Centre shall, upon receipt of the assessment order referred to in sub-rule (2)(aa) or (ad) as the case may be, serve a copy of such order and notice for initiating penalty proceedings, if any, on the assessee, along with the demand notice, specifying the sum payable by, or the amount of refund due to, the assessee on the basis of such assessment;
(af)after completion of assessment, the National Faceless Assessment Centre shall transfer all the electronic records to the Assessing Officer having jurisdiction over the assessee;
(ag) if, at any stage of proceedings before it, the assessment unit having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assesse, and the interests of the revenue, is of the opinion that it is necessary to do so, it may, upon recording its reasons in writing, refer the case to the National Faceless Assessment Centre stating that the provisions of section 268(5) may be invoked; and
(ah) the function of verification unit under this section may also be performed by a verification unit located in any other faceless center set up under the provisions of this Act or under any scheme notified under the provisions of the Act, and the request for verification may also be assigned through the National Faceless Assessment Centre to such verification unit.
(3) For the purposes of faceless assessment, reassessment or recomputation—
(a) an electronic record shall be authenticated by—
(i) the National Faceless Assessment Centre by way of an electronic communication; or
(ii) the assessment unit or verification unit or technical unit or review unit, as the case may be, by affixing digital signature; or
(iii) the assessee or any other person, by affixing his digital signature or under electronic verification code, or by logging into his registered account in the designated portal;
(b) every notice or order or any other electronic communication shall be delivered to the addressee, being the assessee by—
(i) placing an authenticated copy thereof in the registered account of the assessee; or
(ii) sending an authenticated copy thereof to the registered email address of the assessee or his authorised representative; or
(iii) uploading an authenticated copy on the Mobile App of the assessee, and followed by a real time alert;
(c) every notice or order or any other electronic communication shall be delivered to the addressee, being any other person by sending an authenticated copy to his registered email address, followed by a real time alert;
(d) the assessee shall file his response to any electronic communication through his registered account, and the response shall be deemed authenticated once an acknowledgement is sent by the National Faceless Assessment Centre containing the hash result generated upon successful submission of response;
(e) the time and place of dispatch and receipt of electronic record shall be determined as per provisions of section 13 of the Information Technology Act, 2000 (21 of 2000);
(f) no personal appearance, either in person or through authorised representative, shall be required in connection with any proceedings before any unit set up under section 273;
(g) in a case where a variation is proposed in the income or loss determination proposal or the draft order, and an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per such income or loss determination proposal, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority of the relevant unit;
(h) where the request for personal hearing has been received, the income-tax authority of relevant unit shall allow such hearing, through the National Faceless Assessment Centre, which shall be conducted exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board;
(i) subject to section 273(8), any examination or recording of the statement of the assessee or any other person (other than the statement recorded in the course of survey under section 253) shall be conducted by an income-tax authority in the relevant unit, exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board;
(j) the Board shall establish suitable facilities for video conferencing or video telephony including telecommunication application software which supports video conferencing or video telephony at such locations as may be necessary, so as to ensure that the assessee, or his authorised representative, or any other person is not denied the benefit of faceless assessment merely on the consideration that such assessee or his authorised representative, or any other person does not have access to video conferencing or video telephony at his end;
(k) the Principal Chief Commissioner or the Principal Director General, as the case may be, in-charge of the National Faceless Assessment Centre shall, with the prior approval of the Board, lay down the standards, procedures and processes for effective functioning of the National Faceless Assessment Centre and the units set up, in an automated and mechanized environment.
(4) For the purposes of section 273 and this rule, unless the context otherwise requires—
(a) “addressee” shall have the same meaning as assigned to it in clause (b) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);
(b) “authorised representative” shall have the meaning assigned to it in section 515(3)(a);
(c) “automated allocation system” means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources;
(d) “computer resource” shall have the same meaning as assigned to it in clause (k) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);
(e) “computer system” shall have the same meaning as assigned to it in clause (l) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);
(f) “computer resource of assessee” shall include assessee’s registered account in designated portal of the Income-tax Department, the Mobile App linked to the registered mobile number of the assessee, or the registered email address of the assessee with his email service provider;
(g) “digital signature” shall have the same meaning as assigned to it in clause (p) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);
(h) “Dispute Resolution Panel” shall have the meaning assigned to it in section 275(17)(a);
(i) “electronic record” shall have the same meaning as assigned to it in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);
(j) “electronic verification code” means a code generated for the purpose of electronic verification as per the data structure and standards specified by the Principal Director General or Director General, as the case may be, in-charge of information technology;
(k) “eligible assessee” shall have the meaning assigned to it in section 275(17)(b);
(l) “email” or “electronic mail” and “electronic mail message” means a message or information created or transmitted or received on a computer, computer system, computer resource or communication device including attachments in text, image, audio, video and any other electronic record, which may be transmitted with the message;
(m) “hash function” and “hash result” shall have the same meaning respectively assigned to them in the Explanation to section 3(2) of the Information Technology Act, 2000 (21 of 2000);
(n) “Mobile app” means the application software of the Income-tax Department developed for mobile devices which is downloaded and installed on the registered mobile number of the assessee;
(o) “real time alert” means any communication sent to the assessee, by way of Short Messaging Service on his registered mobile number, or by way of update on his Mobile App, or by way of an email at his registered email address, so as to alert him regarding delivery of an electronic communication;
(p) “registered e-mail address” means the e-mail address at which an electronic communication may be delivered or transmitted to the addressee, including—
(i) the e-mail address available in the electronic filing account of the addressee registered in designated portal; or
(ii) the e-mail address available in the last income-tax return furnished by the addressee; or
(iii) the e-mail address available in the Permanent Account Number database relating to the addressee; or
(iv) in the case of addressee, being an individual who possesses the Aadhaar number, the e-mail address of the addressee available in the database of the Unique Identification Authority of India; or
(v) in the case of addressee being a company, the e-mail address of the company as available on the official website of the Ministry of Corporate Affairs; or
(vi) any e-mail address made available by the addressee to the income-tax authority or any person authorised by such authority;
(q) “registered mobile number” of the assessee means the mobile number of the assessee, or his authorised representative, appearing in the user profile of the electronic filing account registered by the assessee in the designated portal; and
(r) “video conferencing or video telephony” means the technological solutions for the reception and transmission of audio-video signals by users at different locations, for communication between people in real-time.
177. Modified return of income in respect of business reorganisation under section 314. — (1) The modified return of income to be furnished by a successor entity to a business reorganisation, as referred to in section 314, for a tax year, shall be in the Form ITR-A and verified in the manner specified therein.
(2) ITR-A shall be furnished electronically under the digital signature.
(3) If the assessment or reassessment proceedings for a tax year to which the order of the business reorganisation applies have been completed or are pending on the date of furnishing ITR-A, the Assessing Officer shall, pass an order modifying the total income of the relevant tax year determined in such assessment or reassessment, or proceed to complete the assessment or reassessment proceedings, as the case may be, in accordance with the order of the business reorganisation and the ITR-A so furnished.
178. Application under section 288(1)[Table: Sl. No. 11] regarding credit of tax deduction at source.— (1) The application required to be made by the assessee under section 288(1)[Table: Sl. No. 11] shall be in Form No. 102.
(2) Form No. 102 shall be furnished to the Director General of Income-tax (Systems) or the person authorised by him.
(3) The Director General of Income-tax (Systems) or any person authorised by him shall forward Form No. 102 to the Assessing Officer.
179. Notice of demand under section 289. — (1) The notice of demand under section 289 shall be in Form No. 103, subject to the provisions of sub-rule (2).
(2) The notice of demand under section 289, to be served upon the assessee in pursuance of an order under section 407, shall be in Form No. 151.
180. Return of income in respect of block assessment under section 294(1) . — (1) The return of income required to be furnished by any person under section 294(1)(a), relating to any search initiated under section 247 or requisition made under section 248 shall be in the Form ITR-BN and be verified in the manner indicated therein.
(2) ITR-BN shall be furnished by a person, mentioned in column 2 of the following Table in the manner specified in column 3 thereof:
Table
| Sl. No | Person | Manner of furnishing return of income |
| 1 | 2 | 3 |
| 1 | Company | Electronically under digital signature. |
| 2 | Any person other than a company | (A) Electronically under digital signature; or
(B) transmitting the data electronically in the return under electronic verification code. |
(3) For the purposes of sub-rule (2), “electronic verification code” shall have the meaning assigned to it in rule 165.
(4) In a case where claim of credit of the tax payments is made against undisclosed income of the block period other than by way of self-assessment tax for the block period, claim of such credits and the allowability thereof shall be subject to the verification by and satisfaction of, the Assessing Officer.
(5) The Principal Director-General of Income-tax (Systems) or 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 evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the return in the manners specified in column 3 of the Table in sub-rule (2).
181. Common application for registration of non-profit organisation or for approval for the purposes of deduction under section 133(1)(b)(ii).— (1) An application for registration under section 332 or approval under section 354, in such cases as specified in column B of the following Table shall be made in the Form specified in column C, to the authority specified in column D thereof:
Table
| Sl. No. |
Case | Form No. | Authority |
| A | B | C | D |
| 1. | Application for provisional registrar- tion or approval is made under:
(a) section 332(3) (Table: Sl. No. (b) section 354(2) (Table: Sl. No. 1) |
104 | Commissioner being Commissioner of In-come Tax (CPC). |
| 2. | Application for registration or approval is made under:
(a) section 332(3) (Table: Sl. Nos. 2 to 7); or (b) section 354(2) (Table: Sl. Nos. 2 to 5) |
105 | Principal Commissioner or Commissioner having jurisdiction over the applicant. |
(2) The application shall be accompanied by the documents, information and undertakings as specified in the Form relevant to such application.
(3) The application shall be —
(a) 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 sub-clause (i); and
(b) verified by the person who is authorised to verify the return of income under section 265, as applicable to the applicant.
(4) On receipt of an application in Form No. 104, the Commissioner of Income Tax (CPC), shall pass an order in writing in Form No. 106, by issuing a 16-digit alphanumeric Unique Registration Number (URN) and granting registration under section 332(8) or granting approval under section 354(4), or both.
(5) The Form 104 shall be considered non-est and shall not be further proceeded with where the activities have commenced or it has been registered under any specified provision.
(6) The registration or approval granted in Form No. 106 and Unique Registration Number (URN), issued under sub-rule (4), may be cancelled by the Principal Commissioner or Commissioner, as referred to in sub-rule (1) [Table: Sl. No. 2] after providing an opportunity of being heard to the applicant, if, at any point of time it is noticed that Form No. 104, —
(a) contains any false or incorrect information; and
(b) does not comply with the requirements of sub-rule (3).
(7) Where the registration or approval granted or URN issued under sub-rule (4) is cancelled by the Principal Commissioner or Commissioner, such registration or approval or URN shall be considered to have never been granted or issued.
(8) The applicant may surrender the registration or approval granted under sub-rule (4) if the applicant —
(a) has not claimed benefits, in its return of income for any tax year including the tax year in which such surrender of registration or approval is made, under, –
(i) Part B of Chapter XVII of the Act; or
(ii) section 10(23C)(iv) or (v) or (vi) or (via) of the Income-tax Act, 1961 (43 of 1961), as it existed prior to its repeal; or
(iii) section 11 or section 12 of the Income-tax Act, 1961 (43 of 1961), as it existed prior to its repeal; and
(b) gives an undertaking that no claim of benefits shall be made in the return of income for any tax year under the provisions referred to in clause (a).
(9) Where applicant surrenders the registration or approval as per the provisions of sub-rule (8), such registration or approval shall be deemed to have never been granted.
(10) On receipt of an application in Form No. 105, the Principal Commissioner or Commissioner, shall pass an order in writing in Form No. 107, for any of the following: —
(a)issuing a 16-digit alphanumeric Unique Registration Number (URN) and granting registration or approval; or
(b) rejecting the application; or
(c) rejecting the application and also cancelling the registration or approval; or
(d) granting registration or approval under one section code as mentioned in Form and rejecting the application under the other section code mentioned in the application.
(11) The applicant shall be allowed to withdraw the application for registration or approval if such a request for withdrawal is made within seven days of filing of application.
(12) Where an order in Form No. 107 (herein referred to as the earlier order) has been issued by rejecting the application or cancelling the registration or approval or both, the applicant may re-apply in Form No. 105 within one month from the end of the month in which said order is passed, if the following conditions are satisfied: —
(a) such rejection or cancellation is on account of —
(i) failure of the applicant to provide all or any of the documents or information as sought by the Principal Commissioner or Commissioner under section 332(7); or
(ii) not availing an opportunity of being heard; or
(iii) ineligibility of the applicant on account of certain terms contained in the trust deed;
(b) the applicant has provided the reasons for —
(i) the failure to provide necessary information or documents; or
(ii) not availing the opportunity to be heard; or
(iii) ineligibility of the applicant on account of certain terms contained in the trust deed which has been modified on or before the date of re-application; and
(c) the applicant gives an undertaking that he —
(i) has not made any appeal against the earlier order or has withdrawn the appeal filed before any appellate authority against such order; and
(ii) shall not file any appeal before any appellate authority against the earlier order.
(13) The applicant shall be allowed only one time opportunity to re-apply under sub-rule (12).
(14) The re-application made under sub-rule (12), where the order was issued under section 332(7)(b) or 354(3)(b), shall be considered to be a fresh application and the time limit for passing order shall continue to be governed by the provisions of section 332(3) or 354(2), as the case may be, and the provisions of this rule shall apply accordingly.
(15) Where the applicant notices that the application in the Form No. 105 has been made by furnishing an erroneous section code or erroneous nature of activity as specified in the said Form, —
(a) the applicant may furnish a request for correction before the Principal Commissioner or the Commissioner, at any time before passing of the order in Form No. 107; and
(b) the Principal Commissioner or the Commissioner on receipt of such request, may allow such correction.
(16) In this rule, ―specified provision‖ shall have the meaning assigned to it in section 355(m).
182. Manner of computation of gains of commercial activities under sections 335(e), 344, 345 and 346.— For the purposes of section 335(e), gains of any commercial activity permissible under sections 344, 345 and 346, carried out by a registered non-profit organisation for a tax year, shall be computed in the following manner: —
(a) such commercial activity shall be treated as if it is entity separate from the registered non-profit organisation;
(b) separate books of accounts are maintained for such activities; and
(c) gains from such commercial activity during the tax year shall be computed as per the provisions of Part D of Chapter IV of the Act.
183. Manner of computation of any portion of income applied by a registered non-profit organisation, directly or indirectly, for benefit of any related person.— (1) For the purposes of section 337 [Table: Sl. No. 2], any income or part thereof, applied directly or indirectly for the benefit of any related person during the tax year, shall be computed in the manner as provided in sub-rule (2), in the following circumstances: —
(a) if any part of the income or property of the registered non-profit organisation is, or continues to be, lent to any related person for any period during the tax year without adequate security; or
(b) if any part of the income or property of the registered non-profit organisation is, or continues to be, lent to any related person for any period during the tax year without adequate interest; or
(c) if any land, building or other property of the registered non-profit organisation is, or continues to be, made available for the use of any related person, for any period during the tax year without charging adequate rent or other compensation; or
(d) if any amount is paid by way of salary, allowance or otherwise during the tax year to any related person out of the resources of the registered non-profit organisation for services rendered by that person to such registered non-profit organisation and the amount so paid is in excess of what may be reasonably paid for such services; or
(e) if any services or goods or both are made available by any registered non-profit organisation to any related person during the tax year without adequate consideration or other compensation; or
(f) if any share, security or other property is purchased by or on behalf of the registered non-profit organisation from any related person during the tax year for consideration which is more than adequate; or
(g) if any share, security or other property is sold by or on behalf of the registered non-profit organisation to any related person during the tax year for consideration which is less than adequate; or
(h) if any income of the registered non-profit organisation, where the aggregate of the income exceeds ₹ 1000, is diverted during the tax year in favour of any related person; or
(i) if any property of the registered non-profit organisation, where value of the property exceeds ₹ 1000, is diverted during the tax year in favour of any related person; or
(j) if any funds of the registered non-profit organisation are, or continue to remain, invested for any period during the tax year (not being a period before the 1st day of January, 1971), in any concern in which any related person has a substantial interest.
(2) The income referred to in sub-rule (1) shall be the value of any benefit or facility granted or provided free of cost or at concessional rate to the related person.
(3) For the purposes of this rule, the expression ―related person‖ shall have the meaning assigned to it in section 355(h).
184. Exercise of options by a registered non-profit organisation under section 341(7) for deemed application under section 341(5).— (1) The option to be exercised in accordance with provisions of section 341(7) for any tax year shall be exercised in Form No. 108 on or before the due date specified under section 263(1) for furnishing the return of income.
(2) The option in Form No. 108 shall be furnished electronically, either under digital signature or electronic verification code.
185. Furnishing of statement by registered non-profit organisation under section 342(1) for accumulating or setting apart any part of its regular income.— (1) The statement to be furnished to the Assessing Officer under section 342(1) shall be furnished in Form No. 109 on or before the due date specified under section 263(1) for furnishing the return of income.
(2) The statement in Form No. 109 shall be furnished electronically, either under digital signature or electronic verification code.
186. Application under section 342(5) for change of purpose for which income has been accumulated or set apart.— (1) Where a registered no-profit organisation has accumulated or set apart any part of its regular income in accordance with the provisions of section 342(1), it may request the Assessing Officer for the change of purpose for which such income is accumulated or set apart, by furnishing an application to the Assessing Officer in Form No. 110.
(2) Form No. 110, shall be —
(a) furnished electronically —
(i) under digital signature, if the return of income is required to be furnished under digital signature; or
(ii) through electronic verification code in a case not covered under sub-clause (i); and
(b) verified by the person who is authorised to verify the return of income under section 265, as applicable to the applicant.
(3) The Assessing Officer may, on an application received under sub-rule (1) and subject to the provisions of section 342(2), allow the registered non-profit organisation to apply its income for such other charitable or religious purposes in India which are in conformity with its objects, in Form No. 111.
187. Books of account and other documents to be kept and maintained by a registered non-profit organisation.— (1) Every registered non-profit organisation which is required to keep and maintain books of account and other documents under section 347 shall keep and maintain the following: —
(a) books of account, which shall include: —
(i) cashbook; or
(ii) ledger; or
(iii) journal; or
(iv) copies of bills, whether machine numbered or otherwise serially numbered, wherever such bills are issued by the assessee, and copies or counter foils of machine numbered or otherwise serially numbered receipts issued by the assessee; or
(v) original bills wherever issued to the person and receipts in respect of payments made by the person; or
(vi) any other book that may be required to be maintained in order to give a true and fair view of the state of affairs of the person and explain the transactions effected;
(b) books of account, as referred to in clause (a) for business undertaking referred in section 344;
(c) books of account, as referred to in clause (a) for business carried on by the assessee other than the business undertaking referred in section 344;
(d) other documents for maintaining —
(i) record of all the projects and institutions run by the person containing details of their name, address and objectives;
(ii) record of income of the person during the tax year in respect of —
(I) charitable or religious activity, for which it is registered;
(II) any property, deposit or investment held by such registered non-profit organisation;
(III) voluntary contributions received;
(IV) any commercial activity permissible under sections 344, 345 and 346;
(V) specified income, as referred to in section 337; and
(VI) residual income as referred in section 355(j);
(iii) record of the following, out of the income of the person during the tax year: —
(I) application of income, in India, containing details of amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(II) amount credited or paid to any registered non-profit organisation, containing details of their name, address, permanent account number and the object for which such credit or payment is made;
(III) application of income outside India containing details of amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(IV) deemed application of income referred to in section 341(5) containing details of the reason for availing such deemed application;
(V) income accumulated or set apart as per the provisions of section 342(1) which has not been applied or deemed to be applied containing details of the purpose for which such income has been accumulated;
(VI) money invested or deposited in the forms and modes referred to in section 350; and
(VII) money invested or deposited in the forms and modes other than those referred to in section 350;
(iv) record of the following, out of the income of the person of any tax year preceding the current tax year: —
(I) application out of the income accumulated or set apart containing details of year of accumulation, amount of application during the tax year out of such accumulation, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(II) application out of the deemed application of income referred to in section 341(5), for any preceding tax year, containing details of year of deemed application, amount of application during the tax year out of such deemed application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(III) application, other than the application referred in items (I) and (II), out of income accumulated during any preceding tax year containing details of year of accumulation, amount of application during the tax year out of such accumulation, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(IV) money invested or deposited in the forms and modes referred to in section 350;
(V) money invested or deposited in the forms and modes other than those referred to in section 350;
(v) record of donations made with a specific direction that they shall form part of the corpus, in respect of —
(I) the donations received during the tax year containing details of name of the donor, address, Permanent Account Number (if available) and Aadhaar number (if available);
(II) application out of such donations referred to in item (I) containing details of amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(III) amount credited or paid towards corpus to any registered non-profit organisation, out of such donation received during the tax year containing details of their name, address, Permanent Account Number and the object for which such credit or payment is made;
(IV) the forms and modes referred to in section 350 in which such voluntary contribution, received during the tax year, is invested or deposited;
(V) money invested or deposited in the forms and modes other than those referred to in section 350 in which such donation, received during the tax year, is invested or deposited;
(VI) application out of such donation, received during any tax year preceding the tax year, containing details of the amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(VII) amount credited or paid towards corpus to any registered non-profit organisation, out of such donation received during any tax year preceding the tax year, containing details of their name, address, Permanent Account Number and the object for which such credit or payment is made;
(VIII) the forms and modes referred to in section 350 in which such voluntary contribution, received during any tax year preceding the tax year, is invested or deposited;
(IX) money invested or deposited in the forms and modes, other than those referred to in section 350 in which such voluntary contribution, received during any tax year preceding the tax year, is invested or deposited; and
(X) amount invested or deposited back into a donation (which was applied during any preceding tax year and not claimed as application) including details of the forms and modes referred to in section 350 in which such voluntary contribution is invested or deposited;
(vi) record of donations received for the purpose of renovation or repair of temple, mosque, gurdwara, church or other place notified under section 133(1)(b)(vi), which are being treated as corpus as referred in section 340, in respect of, —
(I) the donations received during the tax year containing details of name of the donor, address, Permanent Account Number (if available) and Aadhaar number (if available);
(II) donation received during any tax year preceding the tax year, treated as corpus during the tax year, containing details of name of the donor, address, Permanent Account Number (if available) and Aadhaar number (if available);
(III) application out of such donation referred to in items (I) and (II) containing details of amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(IV) amount credited or paid towards corpus to any registered non-profit organisation, out of such donation received during the tax year containing details of their name, address, Permanent Account Number and the object for which such credit or payment is made;
(V) the forms and modes referred to in section 350 in which such corpus, received during the tax year, is invested or deposited;
(VI) money invested or deposited in the forms and modes other than those referred to in section 350 in which such corpus, received during the tax year, is invested or deposited;
(VII) application out of such corpus, received during any tax year preceding the tax year, containing details of amount of application, name and address of the person to whom any creditor payment is made and the object for which such application is made;
(VIII) amount credited or paid towards corpus of any registered non-profit organisation, out of such donation received during any tax year preceding the tax year, containing details of their name, address, Permanent Account Number and the object for which such credit or payment is made;
(IX) the forms and modes referred to in section 350 in which such corpus, received during any tax year preceding the tax year, is invested or deposited; and
(X) the money invested or deposited in the forms and modes other than those referred to in section 350 in which such corpus, received during any tax year preceding the tax year, is invested or deposited;
(vii) record of loans and borrowings, —
(I) containing information regarding amount and date of loan or borrowing, amount and date of repayment, name of the person from whom was loan taken, address of lender, Permanent Account Number and Aadhaar number (if available) of the lender;
(II) application out of such loan or borrowing containing details of amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(III) application out of such loan or borrowing, received during any tax year preceding the tax year, containing details of amount of application, name and address of the person to whom any credit or payment is made; and
(IV) repayment of such loan or borrowing (which was applied during any preceding tax year and not claimed as application) during the tax year;
(viii) record of properties held by the assessee, with respect to the following: —
(I) immovable properties containing details of —
A. nature, address of the properties, cost of acquisition of the asset, registration documents of the asset; and
B. transfer of such properties, the net consideration utilised in acquiring the new capital asset; and
(II) movable properties including details of the nature and cost of acquisition of the asset;
(ix) record of related person as referred to in section 355(h), —
(I) containing details of their name, address, Permanent Account Number and Aadhaar number (if available);
(II) transactions undertaken by the registered non-profit organisation with related personas referred to in section 355(h) containing details of date and amount of such transaction, nature of the transaction and documents to the effect that such transaction is, directly or indirectly, not for the benefit of such specified person; and
(x) any other documents containing any other relevant information.
(2) The books of account and other documents specified in sub-rule (1) may be kept in written form or in electronic form or in digital form or as printouts of data stored in electronic form, or in digital form, or any other form of electromagnetic data storage device.
(3) Subject to the provisions of sub-rule (4), the books of account and other documents specified in sub-rule (1) shall be kept and maintained by the registered non-profit organisation at its registered office.
(4) All or any of the books of account and other documents referred to in sub-rule(1), may be kept at such other place in India as the management may decide by way of a resolution and where such solution is passed, the registered non-profit organisation shall, within seven days thereof, intimate the jurisdictional Assessing Officer in writing, giving the full address of that other place and such intimation shall be duly signed and verified by the person who is authorised to verify the return of income.
(5) Subject to the provisions of sub-rule (6), the books of account and other documents specified in sub-rule (1) shall be kept and maintained for a period of six years from the end of the relevant tax year.
(6) Where the assessment in relation to any tax year has been reopened under section 279 within the period specified in section 282, the books of account and other documents which were kept and maintained at the time of reopening of the assessment, shall continue to be so kept and maintained till the assessment so reopened has become final.
188. Report of audit in case of registered non-profit organisations under section 348.— The report of the audit of the accounts, required to be furnished under section 348, shall be furnished in Form No. 112, one month prior to the due date of furnishing the return of income under section 263(1).
189. Method of valuation for the purposes of computing fair market value of assets and liabilities under section 352(2) for accreted income.— (1) For the purposes of section 352(2), the aggregate fair market value of the total assets of the specified person, shall be the aggregate of the fair market value of all the assets in the balance sheet, as reduced by—
(a) tax paid; and
(b) any amount shown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset.
(2) For the purpose of sub-rule (1), the fair market value of the asset shall be determined in the following manner: —
(I) valuation of shares and securities:
(a) the fair market value of quoted share and securities shall be the following: —
(i) the average of the lowest and highest price of such shares and securities quoted on a recognised stock exchange as on the specified date; or
(ii) where on the specified date, there is no trading in such shares and securities on a recognised stock exchange, the average of the lowest and highest price of such shares and securities on the recognised stock exchange, on a date immediately preceding the specified date when such shares and securities were traded on the recognised stock exchange;
(b) the fair market value of unquoted equity shares shall be the value, on the specified date as determined in accordance with the following formula: —
Fair market value of unquoted equity shares =
(A+B – L) × (PV)
(PE)
Where, —
A = book value of all the assets in the balance sheet (other than bullion, jewellery, precious stone, artistic work, shares, securities and immovable property) as reduced by—
(i) tax paid; and
(ii) any amount shown in the balance sheet as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset;
B = fair market value of bullion, jewellery, precious stone, artistic work, shares, securities and immovable property as determined in the manner provided in this rule;
L = book value of liabilities shown in the balance sheet, but not including the following amounts: —
(i) representing contingent liabilities other than arrears of dividends payable in respect of the paid-up capital in respect of equity shares;
(ii) the amount set apart for payment of dividends on preference shares and equity shares;
(iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation;
(iv) any amount representing provision for taxation, other than tax paid, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;
(v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities;
(vi) any amount cumulative preference shares;
PE = total amount of paid-up equity share capital as shown in the balance sheet; and
PV = the paid-up value of such equity share,
(c) the fair market value of shares and securities, other than equity shares, shall be estimated to be the price it would fetch, if sold in the open market on the specified date on the basis of the valuation report from a merchant banker or an accountant in respect of such valuation;
(II) the fair market value of an immovable property shall be higher of the following, namely: —
(a) the price that the property shall ordinarily fetch, if sold in the open market on the specified date on the basis of the valuation report from a registered valuer; and
(b) stamp duty value as on the specified date;
(III) the fair market value of a business undertaking, held by a specified person, shall be its net assets determined in accordance with the following formula: —
Fair market value = (A + B – L), which shall be determined in the manner provided in clause (I)(b); and
(IV) the fair market value of any asset, other than those referred to in clauses (I), (II) and (III), shall be the price that the asset shall ordinarily fetch, if sold in the open market on the specified date on the basis of valuation report from a —
(a) registered valuer; or
(b) valuer, who is a member of any one of the following professional valuer bodies, where no valuer is registered for valuation of the said assets:
(i) Institution of Valuers; or
(ii) Institution of Surveyors (Valuation Branch); or
(iii) Institution of Government Approved Valuers; or
(iv) Practicing Valuers Association of India; or
(v) the Indian Institution of Valuers; or
(vi) Centre for Valuation Studies, Research and Training; or
(vii) Royal Institute of Chartered Surveyors: India Chapter; or
(vii) American Society of Appraisers, United States of America; or
(viii) Appraisal Institute, United States of America; or
(ix) a valuer who is appointed by any public sector bank or public sector undertakings for valuation purposes.
(3) For the purpose of section 352(2), the total liability of the specified person shall be the book value of liabilities in the balance sheet on the specified date but not including any of the following amounts: —
(a) capital fund or accumulated funds or corpus, by whatever name called; or
(b) reserves or surpluses or excess of income over expenditure, by whatever name called; or
(c) any amount representing contingent liability; or
(d) any amount representing provisions made for meeting liabilities, other than ascertained liabilities; or
(e) any amount representing provision for taxation, other than tax paid, to the extent of the excess over the income-tax payable with reference to the income in accordance with the law applicable thereto.
(4) For the purposes of this rule, —
(a) “accountant” shall have the meaning assigned to it in section 515(3)(b);
(b) “balance sheet” in relation to any specified person, means the balance sheet of such specified person (including the notes annexed thereto and forming part of the accounts) as drawn up on the specified date which has been audited by an accountant;
(c) “merchant banker” means a 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);
(d) “quoted share or security” in relation to share or security means a share or security quoted on any recognised stock exchange with regularity from time to time, where the quotations of such shares or securities are based on current transaction made in the ordinary course of business;
(e) “recognised stock exchange” shall have the meaning assigned to it in section 2(f) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(f) “registered valuer” means a person registered as a valuer under section under section 514;
(g) “securities” shall have the meaning assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(h) “specified date” means the date specified in column C of the Table in section 352(4);
(i) “specified person” shall have the meaning assigned to it in section 355(l);
(j) “stamp duty value” means the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property;
(k) “tax paid” means any amount of income-tax paid as deduction or collection at source or as advance tax payment, as reduced by the amount of income-tax claimed as refund under the Act; and
(l) “unquoted share and security”, in relation to share or security, means share or security which is not a quoted share or security.
190. Furnishing of statement of particulars in respect of donation and certificate to donor under section 354(1).— (1) For the purposes of section 354(1)(e) or (f), the prescribed Income Tax Authority shall be the Director General of Income-tax (Systems).
(2) Statement of particulars, required to be furnished by any registered non-profit organisation or a person referred to in Schedule VII [Table: Sl. No. 1] to the Act (herein referred to as the done) under section 354(1)(e) or (f), shall be furnished in respect of each financial year, in Form No. 113 and shall be verified in the manner indicated therein.
(3) The done shall, while aggregating the amounts for determining the sums received for reporting in respect of any person, —
(a) take into account all the donations of the same nature paid by that person during the financial year; and
(b) proportionately attribute the value of the donation or the aggregated value of all the donations to all the persons, in a case where the donation is recorded in the name of more than one person and where no proportion is specified by the donors, attribute equally to all the donors.
(4) Form No. 113 shall be furnished electronically —
(a) under digital signature, if the return of income is required to be furnished under digital signature; or
(b) through electronic verification code in any other case.
(5) The person who is authorised to verify the return of income under section 265, as applicable to the donee, shall verify Form No. 113.
(6) The statement of particulars shall be furnished on or before the 31st May, immediately following the financial year in which the donation is received.
(7) For the purposes of section 354(1)(g), the done shall furnish the certificate to the donor specifying the amount of donation received from such donor during the financial year in Form No. 114.
(8) The certificate to the donor shall be furnished on or before the 31st May, immediately following the financial year in which the donation is received.
191. Mode of service of any order referred to in section 358(3)(b). — (1) The intimation of any order referred to in section 358(3)(b), shall be served in the same manner as is laid down in section 501 for the service of a notice or requisition.
(2) Any other order, not being a notice or requisition, which is to be sent or communicated to, or served on, any person shall be sent, communicated or served either by post, or as if it were a summons issued by a Court under the Bharatiya Nyaya Sanhita, 2023 (46 of 2023).
192. Production of additional evidence before Joint Commissioner (Appeals) and Commissioner (Appeals) under section 533(2)(x) . — (1) The appellant shall not be entitled to produce before the Joint Commissioner (Appeals) or the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances : —
(a) where the Assessing Officer has refused to admit evidence, which ought to have been admitted; or
(b) where the appellant was prevented by sufficient cause from producing the evidence, which he was called upon to produce by the Assessing Officer; or
(c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence, which is relevant to any ground of appeal; or
(d) where the Assessing Officer has made the order appealed against, without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.
(2) No evidence shall be admitted under sub-rule (1) unless the Joint Commissioner (Appeals) or the Commissioner (Appeals) records in writing, the reasons for its admission.
(3) The Joint Commissioner (Appeals) or the Commissioner (Appeals) shall not take into account any evidence produced under sub-rule (1), unless the Assessing Officer has been allowed a reasonable opportunity—
(a) to examine the evidence or document or to cross-examine the witness produced by the appellant; or
(b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.
(4) Nothing contained in this rule shall affect the power of the Joint Commissioner (Appeals) or the Commissioner (Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause, including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer) under section 360(1)(a), or the imposition of penalty under section 439.
193. Form of appeal and memorandum of cross-objections to Appellate Tribunal under section 362. — (1) An appeal under section 362(1) or (2) to the Appellate Tribunal shall be made in Form No.115, and where the appeal is made by the assessee, the form of appeal, the grounds of appeal and the form of verification appended thereto, shall be signed by the person specified in rule 167(3).
(2) A memorandum of cross-objections under section 362(4) to the Appellate Tribunal shall be made in Form No. 116, and where the memorandum of cross-objection is made by the assessee, the form of memorandum of cross-objections, the grounds of cross-objections and the form of verification appended thereto, shall be signed by the person specified in rule 167(3).
194. Declaration under section 375. — (1) The declaration referred to in section 375(1) shall be in Form No. 117, and shall be verified in the manner indicated therein.
(2) The declaration and the verification referred to in sub-rule (1) shall be signed by the person specified in rule 167(3).
(3) The declaration referred to in sub-rule (1) shall, —
(a) in a case where it is furnished to the Joint Commissioner (Appeals) or the Commissioner (Appeals), be in duplicate; and
(b) in a case where it is furnished to the Appellate Tribunal, be in triplicate.
195. Application under section 376 to defer filing of appeal before Appellate Tribunal or the jurisdictional High Court. — The application referred to in section 376(2), required to be made before the Appellate Tribunal or the jurisdictional High Court, as the case may be, shall be made in Form No. 118 by the Assessing Officer.
196. Constitution of Dispute Resolution Committee under section 379. — (1) The Central Government shall constitute a Dispute Resolution Committee for every region of Principal Chief Commissioner of Income-tax for dispute resolution, as provided under section 379.
(2) Each Dispute Resolution Committee shall consist of three members, as given under: —
(a) two members shall be retired officers from the Indian Revenue Service (Income-tax), who have held the post of Commissioner of Income-tax or any equivalent or higher post for five years or more; and
(b) one ex-officio member, who shall be an officer not below the rank of Principal Commissioner of Income-tax or Commissioner of Income-tax as specified by the Board.
(3) The members shall be appointed by the Central Government for a period of three years.
(4) The Central Government may fix a sum to be paid as fee to both members, specified in sub-rule (2)(a), on a per case basis, along with a sitting fee, so decided by the Board.
(5) The decision of the Dispute Resolution Committee shall be by majority.
(6) The Central Government may, for reasons to be recorded in writing and after giving a reasonable opportunity of being heard, remove any member from the Dispute Resolution Committee.
197. Application for resolution of dispute before the Dispute Resolution Committee under section 379. — (1) An application to the Dispute Resolution Committee shall be made in Form No. 119 by the person, who opts for dispute resolution under section 379 in respect of dispute arising from any variation in the specified order in his case and who fulfils the specified conditions.
(2) Every application in connection with resolution of dispute shall be accompanied by a fee of ₹ 1000.
198. Power to reduce or waive penalty imposable or grant immunity from prosecution or both under section 379. — (1) The Dispute Resolution Committee shall, upon receipt of intimation as per paragraph 4(1)(xix) of the e-Dispute Resolution Scheme, 2022, for the reasons to be recorded in writing and subject to such conditions as it may think fit to impose, grant to the person who made the application for dispute resolution under section 379 reduction or waiver of penalty imposable, or immunity from prosecution, or both, in respect of the order which is the subject matter of resolution, if it is satisfied that such person has—
(i) paid the tax due on the returned income in full; and
(ii) co-operated with the Dispute Resolution Committee in the proceedings before it.
(2) No immunity shall be granted by the Dispute Resolution Committee in a case where the proceedings for the prosecution for an offence have been initiated before the date of receipt of the application as referred to in paragraph 4(1)(i) of the e-Dispute Resolution Scheme, 2022.
(3) An immunity or reduction or waiver of penalty granted to a person under sub-rule (1) shall stand withdrawn, if such person fails to comply with any of the conditions subject to which the immunity or reduction or waiver of penalty was granted and thereupon the provisions of the Act shall apply as if such immunity or reduction or waiver of penalty had never been granted.
199. Definitions. — For the purposes of rules 196 to 198,—
(a) “specified order” in relation to a dispute under section 379 means, —
(i) a draft order as referred to in section 275 (1); or
(ii) an intimation under section 270(1) or section 399(1), where the assessee or the deductor or the collector objects to the adjustments made in the said order; or
(iii) an order of assessment or reassessment, except an order passed in pursuance of directions of the Dispute Resolution Panel; or
(iv) an order made under section 287 having the effect of enhancing the assessment or reducing the loss; or
(v) an order made under section 398 and in respect of which the following conditions are satisfied:—
(A) the aggregate sum of variations proposed or made in such order does not exceed ten lakh rupees and for such purposes, the variation shall refer to the amount on which tax has not been deducted or collected;
(B) the return has been furnished by the assessee for the tax year relevant to such order and the total income as per such return does not exceed fifty lakh rupees; and
(C) the order in the case of the assessee is not based on —
(a) a search initiated under section 247 or requisition made under section 248 in the case of the assessee or any other person; or
(b) survey carried out under section 253; or
(c) information received under an agreement referred to in section 159 ;
(b) the “specified conditions” in relation to an applicant under section 379 means, —
(A) where he is not a person in respect of whom an order of detention has been made under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974) and when —
(I) such order of detention, on which the provisions of section 9 or section 12A of the said Act do not apply, has been revoked on the report of the Advisory Board under section 8 of the said Act or before the receipt of the report of the Advisory Board; or
(II) such order of detention on which the provisions of section 9 of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the review under section 9(3), or on the report of the Advisory Board under section 8, read with section 9(2), of the said Act; or
(III) such order of detention, on which the provisions of section 12A of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the first review under sub-section (3) of the said section, or on the basis of the report of the Advisory Board under section 8, read with section 12A(6) of the said Act; or
(IV) such order of detention has not been set aside by a court of competent jurisdiction; or
(B) where he is not a person in respect of whom prosecution for any offence punishable under the provisions of the Bharatiya Nyaya Sanhita, 2023 (45 of 2023) or the Unlawful Activities (Prevention) Act, 1967 (37 of 1967) or the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985) or the Prohibition of Benami Transactions Act, 1988 (45 of 1988) or the Prevention of Corruption Act, 1988 (49 of 1988) or the Prevention of Money-laundering Act, 2002 (15 of 2003) has been instituted and he has been convicted of any offence punishable under any of those Acts; or
(C) where he is not a person in respect of whom prosecution has been initiated by an income-tax authority for any offence punishable under the provisions of the Act or the Bharatiya Nyaya Sanhita, 2023 (45 of 2023) or for the purpose of enforcement of any civil liability under any law for the time being in force, or such person has been convicted of any such offence consequent upon the prosecution initiated by an income-tax authority; or
(D) where he is not a person who is notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (27 of 1992); or
(E) where he is not a person in respect of whom proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015) have been initiated for the tax year for which resolution of dispute is sought;
(c) “specified person” for the purposes of section 379 of the Act shall be a person who fulfils the specified conditions.
200. Application for obtaining an advance ruling under section 383. — (1) An application for obtaining an advance ruling under section 383(1), shall be made by a resident or a non- resident applicant in Form No. 120 and verified in the manner indicated therein in accordance with this rule.
(2) The fees payable along with the application for advance ruling shall be in accordance with the following Table:
Table
| S. No. |
Specific condition or category as per Chapter XVIII-D (2) | Amount of transaction of one or more transaction for which ruling is sought |
Fee |
| A | B | C | D |
| 1. | Seeking advance rulings in relation to the tax liability arising out of a transaction undertaken or proposed to be undertaken by a non-resident applicant under sub-clause (i) of section 380(a) or resident applicant under sub-clause (ii) thereof. | Amount less than one hundred crore rupees. | ₹200000 |
| Amount between one hundred crore rupees and three hundred crore rupees. | ₹500000 | ||
| Amount more than three hundred crore rupees. | Ten lakh
rupees |
||
| 2. | Seeking advance rulings in relation to the tax liability of a resident applicant, arising out of a transaction undertaken or proposed to be undertaken by a resident applicant under section 380(a)(iii) | Amount between one hundred crore rupees and three hundred crore rupees. | ₹500000 |
| Amount more than three hundred crore rupees. | Ten lakh
rupees |
||
| 3. | Any other applicant | In all cases | ₹10000 |
(3) The application referred to in sub rule (1), the verification appended thereto, the annexures and the statements and documents accompanying the application shall be furnished electronically and shall be signed or digitally signed in the following manner:—
(a) where the applicant is a person required to furnish a return of income under the Act, the application and accompanying documents shall be signed or digitally signed by the person who is authorised to verify such return under section 265, and shall be furnished electronically—
(i) under digital signature, if the return of income is required to be furnished under digital signature; or
(ii) through electronic verification code, in any other case; or
(b) where the applicant is not a person required to furnish a return of income under the Act, the application and accompanying documents shall be signed or digitally signed by any person duly authorised by the applicant for this purpose and holding a valid power of attorney, and may be furnished using digital signature or electronic verification code as specified by the Board.
(4) Every application in the Form, as applicable, shall be accompanied by the proof of payment of fees as
specified in sub-rule (2).
201. Certification of copies of advance rulings pronounced by Board for Advance Rulings under section 384(8). — The copy of the advance ruling pronounced by the Board, to be sent to the applicant and to the Commissioner having jurisdiction over his case, shall be certified to be true copy thereof by the Commissioner or Deputy Commissioner or Board for Advance Rulings, as the case may be.
202. Form and manner of filing appeal to High Court on ruling pronounced or order passed by Board for Advance Rulings under section 389(1). — The form and manner of filing appeal to the High Court under section 389(1) against a ruling pronounced or order passed by the Board for Advance Rulings by the assessee, or the Assessing Officer on the directions of the Commissioner, shall be the same as provided in the applicable procedure laid down by the jurisdictional High Court for filing an appeal to that High Court.
203. Credit for tax deducted or collected at source.— (1) The credit for tax deducted at source or tax collected at source shall be given, on the basis of information relating to deduction or collection of tax furnished by the deductor or collector to the income-tax authority or the person authorised by such authority, in the following manner:––
(a) tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XIX of the Act, shall be given to the person to whom payment has been made or whose account has been credited (herein referred to as deductee); and
(b) tax collected at source and paid to the Central Government in accordance with the provisions of Chapter XIX of the Act, shall be given to the person from whom tax has been collected or whose account has been debited (herein referred to as collected).
(2) Where the deductee files a declaration with the deductor that the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee or where the collected files a declaration with the collector that the income of the collected is assessable in the hands of any person other than the collected,—
(a) the deductor or collector shall report the tax deduction or collection in the name of the other person in the information relating to deduction or collection of tax referred to in sub-rule (1); and
(b) accordingly credit for such tax deducted or collected at source, as the case may be, shall be given to the other person and not to the deductee or collected.
(3) The declaration filed by the deductee or collected under sub-rule (2) shall contain the name, address, Permanent Account Number of the other person to whom credit is to be given, details of payment or credit in relation to which credit is to be given and reasons for giving credit to such person, and such declaration shall be kept in custody by the deductor or collector.
(4) The deductor or collector shall issue the certificate for deduction or collection of tax at source to the person in whose name credit is shown in the information relating to deduction or collection of tax referred to in sub-rule (1) and shall keep the certificate of deduction in his custody.
(5) The credit for tax deducted or collected at source and paid to the Central Government, shall be given for tax year for which the income is assessable to tax.
(6) (i) Where tax has been deducted at source and paid to the Central Government and the income corresponding to such tax is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax.
(ii) Where tax has been collected at source and paid to the Central Government and the lease or license is relatable to more than one year, credit for tax collected at source shall be allowed across those years to which the lease or license relates in the same proportion.
(7) Irrespective of anything contained in sub-rules (1) to (6), for the purposes of section 393 (3) [Table: Sl. No. 5] and section 394(1) [Table: Sl. Nos. 6, 7 and 8], credit for tax so deducted or collected at source shall be given to the person from whose account tax is deducted or collected, as the case may be and paid to the Central Government account for the tax year in which such tax deduction or collection is made.
(8) Credit for tax deducted or collected at source and paid to the account of the Central Government shall be granted on the basis of the information referred in sub-rule (1) and the information in the return of income in respect of the claim for the credit, subject to verification in accordance with the risk management strategy formulated by the Board from time to time.
204. Furnishing of particulars for deduction of tax at source from income under head ―Salaries‖.— (1) The assessee may furnish the following particulars in Form No. 122 to the person responsible for making the payment referred to in sub-section (1) of section 392, for the purpose of making deduction under the said sub-section:—
(a) any income under the head “Salaries” due or received by the assessee, from any other employer or employers during the tax year;
(b) any loss under the head “Income from house property” for the same tax year;
(c) any income chargeable under any head of income other than “Salaries”, not being a loss under any such head [other than the loss specified in clause (b)] for the same tax year; and
(d) any tax deducted or collected at source under Chapter XIX-B of the Act for the same tax year.
(2) The person responsible for paying any income chargeable under the head “Salaries” shall furnish to the person to whom such payment is made, a statement giving correct and complete particulars of perquisites or profits in lieu of salary and the value thereof in—
(a) the relevant columns provided in Form No. 130, if the amount of salary paid or payable to the employee for the tax year is not more than ₹ 150000; or
(b) Form No. 123, if the amount of salary paid or payable to the employee for the tax year is more than ₹ 150000.
(3) “Salary” for the purposes of this rule shall have the same meaning as given in rule 15.
205. Furnishing of evidence of claims by employee under section 392(5)(b) for deduction of tax from income under head ―Salaries‖.— (1) The assessee shall furnish to the person responsible for making payment under section 392(1), the evidence or the particulars of the claims referred to in sub-rule (2) in Form No. 124, for the purpose of estimating his income or for computing the tax required to be deducted at source.
(2) In respect of the claim specified in column B of the following Table, the assessee shall furnish the evidence or the particulars specified in column C thereof:
Table
| Sl. No. | Nature of claims | Evidence or particulars |
| A | B | C |
| 1 | House rent allowance. | Name, address and Permanent Account Number of the landlord or landlords, where the aggregate rent paid during the tax year exceeds ₹ 100000 and relationship with the landlord, if any. |
| 2 | Leave travel concession or assistance. | Evidence of expenditure. |
| 3 | Deduction of interest under the head “Income from house property”. | Name, address and Permanent Account Number of the lender. |
| 4 | Deduction under Chapter VIII. | Evidence of investment or expenditure. |
206. Rate of exchange for conversion into rupees of income expressed in foreign currency.– (1) The rate of exchange for the calculation of the value in rupees of any income, accruing or arising or deemed to accrue or arise to the assessee in foreign currency, or received or deemed to be received by him or on his behalf in foreign currency, shall be the telegraphic transfer buying rate of such currency as on the specified date.
(2) For the purposes of this rule-
(a)”telegraphic transfer buying rate” shall have the meaning assigned to it in rule 207; and
(b) (i) the “specified date” in respect of the nature of income referred in column B of the following Table shall be as given in column C:
Table
| Sl. No. |
Types of Income | Specified Date |
| A | B | C |
| 1. | Income chargeable under the head “Salaries”. | Last day of the month, immediately preceding the month in which salary is due, or is paid in advance, or arrears. |
| 2. | Income by way of interest on securities. | Last day of the month, immediately preceding the month in which the income is due. |
| 3. | Income chargeable under the heads “Income from house property”, “Profits and gains of business or profession” (not being income referred to in Sl.No. 4), and “Income from other sources” (excluding dividends and interest on securities). | Last day of the tax year of the assessee. |
| 4. | Income chargeable under the head “Profits and gains of business or profession” in the case of a non-resident engaged in the business of operation of ships. | Last day of the month, immediately preceding the month in which the income is deemed to arise in India. |
| 5. | Income by way of dividends. | Last day of the month, immediately preceding the month in which dividend is declared, distributed, or paid by the company. |
| 6. | Income chargeable under the head ―Capital gains”. | Last day of the month, immediately preceding the month of in which the capital asset in the table is transferred; |
(ii) the specified date, in respect of income referred to in sub-clause (ii), payable in foreign currency and from which tax has been deducted at source under rule 207, shall be the date on which the tax was required to be deducted under the provisions of the Chapter XIX-B.
(3) Nothing contained in sub-rule (1) shall apply in respect of income referred to in sub-rule (2)(b) [Table:Sl.No. 3], where such income is received in, or brought into India by the assessee or on his behalf before the specified date, in accordance with the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973).
207. Rate of exchange for purpose of deduction of tax at source on income payable in foreign currency.— (1) For the purpose of deduction of tax at source on any income payable in foreign currency as specified in sub-rule (2), the rate of exchange for calculation of the value in rupees shall be the telegraphic transfer buying rate of such currency as on the date on which such tax is required to be deducted under the provisions of Chapter XIX-B of the Act; but where the telegraphic transfer buying rate is not published on such date, the last such published rate may be taken.
(2) The provisions of sub-rule (1) shall be applicable in respect of income payable—
(a) to an assessee outside India; or
(b) to a Unit located in an International Financial Services Centre; or
(c) by a Unit located in an International Financial Services Centre, to an assessee in India.
(3) For the purposes of this rule,—
(a) “International Financial Services Centre” shall have the same meaning as assigned to it in section 2(q) of the Special Economic Zones Act, 2005 (28 of 2005);
(b) “telegraphic transfer buying rate”, in relation to a foreign currency, means the rate or rates of exchange adopted by the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), for buying such currency, having regard to the guidelines specified from time to time by the Reserve Bank of India for buying such currency, where such currency is made available to that bank through a telegraphic transfer; and
(c) “Unit” shall have the meaning assigned to it in section 2(zc) of the Special Economic Zones Act, 2005 (28 of 2005).
208. Furnishing of declaration and evidence of claims by specified senior citizen under section 393(1) [Table: Sl. No. 8(iii)].— (1) The declaration under section 402(39)(c) read with section 393 (1) [Table: Sl. No. 8(iii)], may be furnished by the specified senior citizen to the specified bank in Form No. 125.
(2) The specified bank shall, after giving effect to the deduction allowable under Chapter VIII and rebate allowable under section 156, compute the total income of such specified senior citizen for the relevant tax year and deduct income-tax on such total income, on the basis of the rates in force.
(3) The effect to the deduction allowable under Chapter VIII shall be given based on the evidence furnished by the specified senior citizen during the tax year.
(4) The declaration referred to in sub-rule (1) and evidence for claiming deduction under Chapter VIII referred to in sub-rule (3) shall be properly maintained by the Specified Bank and shall be made available to the Chief Commissioner of Income-tax, as and when required.
209. Application by payee for certificate authorising receipt of interest and other sums without deduction of tax.— (1) Any person, as mentioned in column B of the following Table, entitled to receive any interest or any other sum of the nature specified in section 393(2) [Table: Sl. No. 17], on fulfilment of the conditions specified in column C thereof, may make an application in Form No. 126, for grant of a certificate under section 395(1) authorising him to receive without deduction of tax, any such income or sum as specified in column D thereof:
Table
| Sl. No. |
Person | Conditions | Nature of income or sum |
| A | B | C | D |
| 1. | Banking company or an insurer (as defined in section (2)(9)(d) of Insurance Act, 1938 (4 of 1938)), which is not a domestic company, and which carries on operations in India through a branch. | (a) The person concerned has been regularly assessed to income-tax in India and has furnished the returns of income for last five tax years for which such returns became due on or before the date on which the application under this rule is made;
(b) he is not in default or deemed to be in default in respect of any tax (including advance tax and tax payable under section 266), interest, penalty, fine, or any other sum payable under the Act; and (c) the interest or other sum is |
Any income by way of interest, not being interest on securities (other than interest payable on securities referred to in section 393(4) [Table: Sl. No. 6]), or any other sum, not being dividends. |
| 2. | Any person other than the person referred to in Sl. No. 1 who carries on a business or profession in India through a branch. | (a) The conditions specified in Sl. No. 1;
(b) he has been carrying on business or profession in India continuously for a period of not less than five years immediately preceding the date of the application; and (c) the value of the fixed assets in India of such business or profession as shown in his books of account for the tax year, which ended immediately before the date of the application, or where the accounts in respect of such tax year have not been made up before the said date, the tax year immediately |
Any sum not being interest or dividends. |
(2) The certificate granted by the Assessing Officer under section 395(1) shall be valid for the tax year specified therein, unless it is cancelled by him at any time before the expiry of the said tax year.
(3) An application for a fresh certificate may be made, if required, after the expiry of validity of the earlier certificate, or within three months before the expiry thereof.
210. Condition for no deduction of tax at source from income in respect of units of non-residents referred to in section 393(2) [Table: Sl. No. 10] read with section 393(4) [Table: Sl. No. 15].— Income payable in respect of units of the Unit Trust of India to a non-resident Indian or a non-resident Hindu undivided family, shall not be subject to deduction of tax at source, where such units have been acquired from the Unit Trust of India out of the funds in a non-resident (External) account, maintained with any bank in India or by remittance of funds in foreign currency, in accordance, in either case, with the provisions of the Foreign Exchange Management Act , 1999 (42 of 1999), and the rules made thereunder.
211. Declaration by person claiming receipt of certain incomes without deduction of tax under section 393(6).
— (1) A declaration under section 393(6) shall be furnished in Form No. 121.
(2) The declaration referred to in sub-rule (1) may be furnished in any of the following manner:—
(a) electronically after duly verifying through an electronic process; or
(b) in paper form.
(3) The person responsible for paying any income or sum of any nature referred to in section 393(6), shall allot a unique identification number to each declaration received by him in Form No. 121, during every quarter of the financial year in accordance with the procedures, formats and standards specified by the Director General of Income-tax (Systems).
(4) The person responsible for paying any income or sum of any nature referred to in section 393(6), shall furnish the statement of deduction of tax referred to in rule 219, containing the particulars of declaration received by him during each quarter of the tax year along with the unique identification number referred to in sub-rule (3), regardless of the fact that no tax has been deducted in the said quarter.
(5) Subject to the provisions at sub-rule (4), an income-tax authority may, before the end of seven years from the end of the tax year in which the declaration has been received, require the person referred to in sub-rule (3) to furnish or make available the declaration for the purposes of verification or any proceeding under the Act.
212. Declaration by a buyer for no collection of tax at source under section 394(2).— (1) A declaration under section 394(2), certifying that the goods being purchased as referred to in section 394(1) [Table: Sl. Nos. 1 to 5] are to be utilised for the purposes of manufacturing, processing or producing articles or things and not for trading purposes, shall be in Form No. 127 and shall be verified in the manner indicated therein.
(2) The declaration referred to in sub-rule (1) shall be furnished in duplicate to the person responsible for collecting tax.
(3) The person referred to in sub-rule (2) shall deliver or cause to be delivered to the Chief Commissioner of Income-tax or the Commissioner of Income-tax, one copy of the declaration referred to in sub-rule (1), on or before the 7th day of the month, succeeding the month in which the declaration is furnished to him.
(4) For the purposes of sub-rule (3), the Chief Commissioner of Income-tax or the Commissioner of Income-tax means the Chief Commissioner of Income-tax or Commissioner of Income-tax to whom the Assessing Officer, having jurisdiction to assess the person referred to in sub-rule (2), is subordinate.
213. Application for grant of certificates for deduction or collection of income-tax at any lower rates, or no deduction of income-tax.— (1) An application shall be made in Form No. 128 for grant of a certificate for —
(a) the deduction of income-tax at any lower rates, or no deduction of income-tax, under sub-section (1) of section 395; or
(b) the collection of income-tax at any lower rates under sub-section (3) of the said section.
(2) The provisions of sub-rule (1) may not be applicable to the person, who is eligible for a certificate of no deduction of tax in respect of income or sum specified under rule 209.
(3) The Assessing Officer may issue the certificate specified in sub-rule (1), after taking into consideration the following:—
(a) tax payable on the estimated income for the tax year under consideration;
(b) tax paid or payable on the returned income, assessed income or estimated income, as the case may be, of last four tax years;
(c) existing liability under the Act, and the Income-tax Act, 1961 (43 of 1961) (as it existed prior to its repeal); and
(d) advance tax payments, taxes deducted or collected at source at the credit of the taxpayer as on the date of application for the tax year for which application is made.
(4) In case of a person being a specified entity, as referred to in section 263(9)(c), or a registered non-profit organisation, the Assessing Officer, before issue of certificate specified under sub-rule (1), shall in addition to conditions specified in sub-rule (3), take into consideration the following:—
(a) the specified entity is approved for the purpose of exemption from income-tax as on the date of application and also as on date of grant of certificate for that tax year; and
(b) the person concerned has furnished the returns of income for last four tax years, for which such returns became due on or before the date on which the application under sub-rule (1) is made.
(5) In a case, where a certificate is to be issued in respect of dividend income referred to in section 393(1) [Table: Sl. No. 7], the following conditions shall also be required to be fulfilled, in addition to conditions specified in sub-rule (3): ––
the shares in respect of which the certificate is sought shall be shares in public companies; and
(i) such shares stand in the name of the applicant and are beneficially owned by him and the dividends therefrom are not includible in total income of any other person under sections 96 to 99; or
(ii) such shares stand in the name of the applicant and are held by him on behalf of a registered non-profit organisation and the dividends therefrom are exempt from tax under Chapter XIX-B of the Act.
(6) The certificate specified under sub-rule (5) shall cease to operate from the date of notice to the company for transfer of shares mentioned therein to another person, to the extent of income corresponding to the shares so transferred.
(7) The certificate specified under this rule shall be valid for such period of the tax year, as may be specified in the certificate, unless it is cancelled by the Assessing Officer at any time before the expiry of the specified period.
(8) The certificate shall be issued in the name of the person responsible for deducting or collecting the tax, under advice to the applicant and shall be valid only in respect of––
(a) a specified payment from the specified deductor, to the extent of the amount specified in the certificate; and
(b) a specified receipt from the specified collector, to the extent of the amount specified in the certificate.
(9) Where the number of persons responsible for deducting the tax is likely to exceed one hundred and details of such persons are not available with the applicant at the time of making application, the certificate for deduction of income-tax at lower rate may be issued in the name of the applicant authorising him—
(a) to receive specified payments at appropriate rate of deduction;
(b) to generate appropriate certificate and provide to the person responsible for deducting tax; and
(c) such certificate shall be generated from the portal of the Income-tax Department.
214. Application by payer for grant of certificate under section 395(2) or section 400(3) for determination of appropriate proportion of sum (other than salary), payable to non-resident, chargeable in case of recipients.—
(1) An application by a person for determination of appropriate proportion of sum chargeable in the case of non-
resident recipient under section 395(2) or section 400(3), shall be made in Form No. 129.
(2) The Assessing Officer shall examine, whether the sum being paid or credited by such person to the non-resident is chargeable to tax under the provisions of the Act read with the relevant Double Taxation Avoidance Agreement, if any, and—
(a) where the whole of such sum would not be the income chargeable in case of the non-resident recipient, he shall proceed to determine the appropriate proportion of such sum chargeable to tax; and
(b) issue a certificate thereof for tax deduction under section 393(2) [Table: Sl. No. 17].
(3) The Assessing Officer shall issue the certificate specified in sub-rule (2), after taking into consideration the following in relation to the recipient:—
(a) tax payable on estimated income of the relevant tax year;
(b) tax payable on the assessed or returned or estimated income, as the case may be, of preceding four tax years;
(c)existing liability under the Act, and the Income-tax Act, 1961(43 of 1961) (as it existed prior to its repeal); and
(d) advance tax payment, tax deducted at source and tax collected at source for the relevant tax year, till the date of making application or till the date of issuance of certificate.
(4) The certificate shall be valid only for the payment to non-resident named therein and for such period of the tax year as may be specified in the certificate, unless it is cancelled by the Assessing Officer at any time before the expiry of the specified period.
(5) An application for a fresh certificate may be made by the assessee after the expiry of the period of validity of the earlier certificate, or within three months before the expiry thereof.
215. Certificate of tax deducted or collected at source to be furnished under section 395(4).— (1) The certificate of deduction or collection of tax at source by any person under Chapter XIX-B of the Act or the certificate of payment of tax by the employer on behalf of the employee under section 392(2)(a), corresponding to sections under which deductions, payments or collections are made as referred to in column B of the following table, shall be furnished to the employee, or payee, or buyer, or licensee, or lessee, as the case may be, after generating and downloading the same from the web portal specified by the Director General of Income-tax (Systems) or the person authorised by him, in the Form as referred in column C thereof and within the time specified in corresponding entry in column D of the said Table:
Table
| Sl. No. |
Section under which tax deducted, paid or collected |
Form | Due date |
| A | B | C | D |
| 1 | Deduction or payment of tax under sections 392 [Other than sub-section (7) thereof] and 393(1) [Table: Sl.No.8 (iii)]. | 130 | By the 15th of June of the financial year immediately following the tax year in which the income was paid and tax deducted. |
| 2 | Deduction under sections 392(7), 393(1)
(other than [Table: Sl. Nos. (2)(i), (3)(i),
|
131 | Within fifteen days from the due date for furnishing statement of tax deducted at source under rule 219. |
| 3 | Deduction under section 393(1)––
(i) [Table: Sl. No. (2)(i)]; (ii) [Table: Sl. No. (3)(i)]; (iii) [Table: Sl. No. (6)(ii)]; and (i) [Table: Sl. No. (8)(vi)]. |
132 | Within fifteen days from the due date for furnishing challan cum statement in Form No. 141. |
| 4 | Collection under section 394(1). | 133 | Within fifteen days from the due date for furnishing statement of tax collected at source under rule 219. |
(2) If an assessee is employed by more than one employer during the year, each of the employers shall issue Part A and B of the certificate in Form No. 130, pertaining to the period for which such assessee was employed with each of the employers and Part C may be issued by each of the employers or the last employer at the option of the assessee.
(3) The deductor or collector may issue a duplicate certificate in Form No. 130 or Form No. 131 or Form No. 133, as the case may be, if the deductee or collecte has lost the original certificate so issued and makes a request for issuance of a duplicate certificate and such duplicate certificate is certified as duplicate by the deductor or collector.
(4) Where a certificate is to be furnished in Form No. 130, or Form No. 131, or Form No. 132, or Form No. 133, the deductor may, at his option, use digital signatures to authenticate such certificates.
(5) In case of certificates issued under sub-rule (4), the person furnishing the certificate shall ensure that—
(a) once the certificate is digitally signed, the contents of the certificates are not amenable to change; and
(b) the certificates have a control number and a log of such certificates is maintained by the deductor.
(6) For the purposes of this rule, challan identification number means the number comprising the Basic Statistical Returns (BSR) Code of the Bank branch where the tax has been deposited, the date on which the tax has been deposited and Challan Serial Number given by the bank.
(7) The certificate shall be generated and downloaded in accordance with the procedures, formats and standards specified under rule 332.
216. Application for allotment of a tax deduction and collection account number.— (1) The application under section 397(1)(a) for the allotment of a tax deduction and collection account number shall be made in––
(a) Form No. 134, in case of a Government entity; or
(b) Form No. 135, in case of a person other than a Government entity.
(2) An application for allotment of a tax deduction and collection account number may also be made through a common application form as notified by the Central Government, by such persons as mentioned in the said notification.
(3) An application referred to in sub-rule (1) or (2) shall be made to such officer to whom function of allotment of tax deduction and collection account number under section 397(1)(a) has been assigned by the Director General of Income-tax (Systems).
(4) The application referred to in sub-rule (1) or (2) shall be made––
(a) prior to the deduction or collection of tax; and
(b) where it has not been so made, then within thirty days from the end of the month in which the tax was deducted or collected, as the case may be.
(5) The application referred to in sub-rule (1) shall be accompanied by the documents mentioned in column D of the Table under sub-rule (8) of rule 158, as proof of identity, address and date of birth or date of incorporation, as the case may be, in respect of an applicant mentioned in column B of the said Table.
(6) For the purposes of this rule, ―Government entity‖ means––
(a) an entity of the Central Government; or
(b) an entity of the State Government; or
(c) any local authority (Central Government); or
(d) any local authority (State Government),
but shall not include any company or any statutory or autonomous body constituted by any Act of the Central Government or State Government.
217. Conditions under section 397(2)(c) for non-application of deduction of tax at higher rate, in case of non-residents.— (1) The provisions of section 397(2)(b)(i) shall not apply to a non-resident, not being a company, or a foreign company (the deductee), where such deductee does not have a Permanent Account Number, in respect of payments in the nature of interest, royalty, fees for technical services, dividend and payments on transfer of any capital asset, if the deductee furnishes the details and the documents specified in sub-rule (2) to the deductor.
(2) The details and documents referred to in sub-rule (1) shall be the following:—
(a) name, e-mail id, contact number;
(b) address in the country or specified territory outside India of which the deductee is a resident;
(c) a certificate of his being resident in any country or specified territory outside India from the Government of that country or specified territory, if the law of that country or specified territory provides for issuance of such certificate; and
(d) Tax Identification Number of the deductee in the country or specified territory of his residence and in case no such number is available, then a unique number on the basis of which the deductee is identified by the Government of that country or the specified territory of which he claims to be a resident.
(3) The provisions of section 397(2)(b)(i) shall also not apply in respect of payments made to a person being a non-resident, not being a company, or a foreign company, if such person is not required to apply for PAN in view of the provisions of section 262 and rules prescribed therein.
218. Time and mode of payment to Government account of tax deducted or collected at source or tax paid under section 392(2)(a).— (1) All sums deducted or collected under the provisions of Chapter XIX-B of the Act or construed as deductible under section 392(2), by an office of the Government, shall be paid to the credit of the Central Government—
(a) on the same day, where the tax is paid without production of an income-tax challan; and
(b) on or before seven days from the end of the month in which the deduction or collection is made or income-tax is due under section 392(2)(a), where tax is paid accompanied by an income-tax challan.
(2) All sums deducted or collected under the provisions of Chapter XIX-B of the Act by deductor or collectors or construed as deductible under section 392(2), as the case may be, other than an office of the Government, shall be paid to the credit of the Central Government—
(a) on or before 30th April, where the income or amount is credited or paid, or debited or received in the month of March; and
(b) in any other case, on or before seven days from the end of the month in which—
(i) the deduction or collection is made; or
(ii) income-tax is due under section 392(2)(a).
(3) Irrespective of anything contained in sub-rules (1) and (2), where any sum is deducted under section 393(1) in respect of following nature of income or sum,—
(a) any income by way of rent (section 393(1) [Table: Sl. No. (2)(i)]); or
(b) any consideration for transfer of any immovable property (other than agricultural land) (section 393(1) [Table: Sl. No. (3)(i)]); or
(c) any sum–
(i) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract; or
(ii) by way of fees for professional services; or
(iii) by way of commission [not being insurance commission referred to in section 393(1) [Table:
Sl. No. (1)(i)] or brokerage,
section 393(1) [Table: Sl. No. (6)(ii)];
(d) any sum by way of consideration for transfer of a virtual digital asset (section 393(1) [Table: Sl. No. (8)(vi)]);
the payment of such sum to the credit of the Central Government, shall be made within a period of thirty days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 141.
(4) Irrespective of anything contained in sub-rule (2), in special cases, the Assessing Officer may, with the prior approval of the Joint Commissioner of Income-tax, permit quarterly payment of the tax deducted under section 392(1) or 393(1) [Table: Sl. Nos. (1)(i) and (ii), and 5(ii) and (iii)] for the quarters of the tax year specified to in column B of the following Table by the date referred to in column C of thereof:
Table
| Sl. No. | Quarter of the financial year ended on | Date for quarterly payment |
| A | B | C |
| 1. | 30th June. | 7th July. |
| 2. | 30th September. | 7th October. |
| 3. | 31st December. | 7th January. |
| 4. | 31st March. | 30th April. |
(5) In the case of an office of the Government, where tax has been paid to the credit of the Central Government without the production of a challan,—
(a) the Pay and Accounts Officer or the District Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person, by whatever name called, to whom the deductor or collector reports the tax so deducted or collected and who is responsible for crediting such sum to the credit of the Central Government, shall submit a statement in Form No. 137; and
(b) such statement shall be submitted to the Director General of Income-tax (Systems) or any other person authorised by him.
(6) Statement referred to in sub-rule (5) shall be furnished—
(a) on or before the 30th April, where the statement relates to the month of March; and
(b) in any other case, on or before fifteen days from the end of relevant month.
(7) The persons referred to in sub-rule (5), shall intimate the number (herein referred to as the Book Identification Number), generated by the Director General of Income-tax (Systems), or any other person authorised by him, to each of the deductors or collectors in respect of whom the sum deducted or collected has been credited.
(8) The persons referred to in sub-rule (5), shall––
(a) obtain an Account Office Identification Number (AIN) for filing Form No. 137;
(b) file Form 136 for obtaining Account Office Identification Number (AIN);
(9) Where tax is to be deposited along with an income-tax challan, it shall be remitted into any branch of the Reserve Bank of India or of the State Bank of India or of any authorised bank.
(10) Where tax is to be deposited along with an income-tax challan by persons referred to in rule 333 or where tax is to be deposited along with by an income-tax challan cum statement in accordance with sub-rule (3), it shall be remitted electronically into the Reserve Bank of India or the State Bank of India or any authorised bank.
(11) The Director General of Income-tax (Systems), shall specify the procedure, formats and standards for the purposes of remitting the amount electronically to the Reserve Bank of India or the State Bank of India or any authorised bank, and shall be responsible for the day-to-day administration in relation to the remitting of the amount electronically in the manner so specified.
219. Statement of deduction or collection of tax at source under section 397(3)(b):— (1) Every person responsible for deduction of tax or collection of tax at source under Chapter XIX-B of the Act with respect to the sections referred in column B of the following Table, shall, as per section 397(3)(b), deliver, or cause to be delivered, to the Director General of Income-tax (Systems) or the person authorised by him, the quarterly statements in the Form as referred to in column C thereof:
Table
| Sl. No. |
Section under which tax deducted, paid or collected | Form |
| A | B | C |
| 1 | Section 392 [other than section 392(7)] and section 393(1) [Table: Sl. No. 8(iii)]. | 138. |
| 2 | Sections 392(7), 393(2) and 393(3), in respect of the deductee who is a non-resident, not being a company or a foreign company or a resident but not ordinarily resident. | 144. |
| 3 | Sections 392(7), 393(1) (other than [Table: Sl. No. 8(iii)]) and 393(3), in respect of the deductee other than the deductee referred to in Sl. No. 2. | 140. |
| 4 | Section 394(1). | 143. |
(2) Where under the guidelines issued under section 400(2) read with section 393(1) [Table: Sl. No. (8)(vi)], the exchange has agreed to pay tax in relation to a transaction of transfer of a virtual digital asset, owned by it, as an alternative to tax required to be deducted by the buyer of such asset under section 393(1) [Table: Sl. No.(8)(vi)], the exchange shall deliver or cause to be delivered, a quarterly statement of such transactions in Form No. 142.
(3) The exchange referred to in sub-rule (2) shall, at the time of preparing the quarterly statement in Form No. 142, furnish particulars of the amount paid or credited, on which tax was not deducted in accordance with guidelines issued under section 400(2).
(4) The statements referred to in sub-rules (1) and (2) for the quarter of the financial year ending with the date specified in column B of the following Table shall be furnished by the due date specified in the corresponding entry in column C thereof:
Table
| Sl. No. |
Date of ending of quarter of financial year |
Due date |
| A | B | C |
| 1. | 30th June. | 31st July of the financial year. |
| 2. | 30th September. | 31st October of the financial year. |
| 3. | 31st December. | 31st January of the financial year. |
| 4. | 31st March. | 31st May of the financial year immediately following the tax year in which the deduction or collection, as the case may be, is required to be made. |
(5) Irrespective of anything contained in sub-rule (1) or (2) or (4), a challan-cum-statement in Form No. 141 shall be furnished within thirty days from the end of the month in which the deduction is made by the person responsible for deduction of tax under the following sections:
(a) section 393(1) [Table Sl. No. (2)(i)];
(b) section 393(1) [Table Sl. No. (3)(i)];
(c) section 393(1) [Table Sl. No. (6)(ii)]; and
(d) section 393(1) [Table Sl. No. (8)(vi)].
(6) A claim for refund, for the sum paid to the credit of the Central Government under Chapter XIX-B of the Act shall be furnished by the deductor in Form No. 139.
(7) In cases, where the trustees of an approved superannuation fund pay any contributions made by an employer, including interest on such contributions, to an employee during his life-time, they shall send within two months from the end of the financial year to the Director General of Income-tax (Systems) or the person authorised by him, a statement giving the following particulars:—
(a) name of the superannuation fund;
(b) name and address of the employee;
(c) the period for which the employee has contributed to the superannuation fund;
(d) the amount of contribution repaid on account of principal and interest;
(e) the average rate of deduction of tax during the preceding three years; and
(f) the amount of tax deducted on repayment.
(8) A duly-signed verification in the following Form shall be annexed to the statement referred to in sub-rule (1):
FORM OF VERIFICATION
We/I, the trustee(s) of the above named fund, do declare that what is stated in the above statement is true to the best of our/my information and belief.
(9) For the purposes of sub-rule (2),—
(a) “exchange” means a person that operates an application or platform for transfer of virtual digital assets, which matches buy and sell trades and execute the same on their application or platform; and
(b) “virtual digital asset” shall have meaning assigned to it in section 2(111).
220. Furnishing of information for payment to a non-resident, not being a company, or to a foreign company.—
(1) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum
chargeable under the Act, shall furnish the following:—
(a) information in Part A of Form No. 145, if the amount of payment or the aggregate of such payments, as the case may be, made during the tax year does not exceed ₹ 500000;
(b) information in Part B of Form No. 145, if the amount of payment or the aggregate of such payments exceeds ₹ 500000 and where a certificate or order is obtained from the Assessing Officer under section 395(1) or (2);
(c) information in Part C of Form No. 145, if the amount of payment or the aggregate of such payments exceeds ₹ 500000 and where a certificate in Form No. 146 from an accountant as defined in section 515(3)(b) is obtained, but where information in Part B of the said Form has been furnished, no information is required to be furnished in Part C of the said Form.
(2) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum which is not chargeable under the provisions of the Act, shall furnish the information in Part D of Form No. 145.
(3) No information shall be required to be furnished for any sum that is not chargeable under the Act, irrespective of sub-rule (2), if,—
a. the remittance is made by an individual and it does not require prior approval of Reserve Bank of India as per the provisions of section 5 of the Foreign Exchange Management Act, 1999 (42 of 1999) read with Schedule III to the Foreign Exchange (Current Account Transaction) Rules, 2000 made under the said Act; or
b. the remittance is made by a Unit of an International Financial Services Centre referred to in section 147(1)(b); or
c. the remittance is of the nature specified in column C of the specified list below:
| SL No. |
Purpose code as per Reserve Bank of India |
Nature of payment |
| A | B | C |
| 1 | 50001 | Indian investment abroad – in equity capital(shares). |
| 2 | 50002 | Indian investment abroad – in debt securities. |
| 3 | 50003 | Indian investment abroad – in branches and wholly owned subsidiaries. |
| 4 | 50004 | Indian investment abroad – in subsidiaries and associates. |
| 5 | 50005 | Indian investment abroad – in real estate. |
| 6 | 50011 | Loans extended to non-residents. |
| 7 | S0101 | Advance payment against imports. |
| 8 | 50102 | Payment towards import (settlement of invoice). |
| 9 | 50103 | Imports by diplomatic missions. |
| 10 | 50104 | Intermediary trade. |
| 11 | 50190 | Imports below 2500000. – (For use by Exchange Control Department offices). |
| 12 | 50202 | Payment for operating expenses of Indian shipping companies operating abroad. |
| 13 | 50208 | Operating expenses of Indian Airlines companies operating abroad. |
| 14 | 50212 | Booking of passages abroad – Airlines companies. |
| 15 | 50301 | Remittance towards business travel. |
| 16 | 50302 | Travel under basic travel quota (BTQ). |
| 17 | 50303 | Travel for pilgrimage. |
| 18 | 50304 | Travel for medical treatment. |
| 19 | 50305 | Travel for education (including fees, hostel expenses etc.). |
| 20 | 50401 | Postal services. |
| 21 | 50501 | Construction of projects abroad by Indian companies including import of goods at project site. |
| 22 | 50602 | Freight insurance – relating to import and export of goods. |
| 23 | S1011 | Payments for maintenance of offices abroad. |
| 24 | S1201 | Maintenance of Indian embassies abroad. |
| 25 | 51202 | Remittances by foreign embassies in India. |
| 26 | S1301 | Remittance by non-residents towards family maintenance and savings. |
| 27 | 51302 | Remittance towards personal gifts and donations. |
| 28 | 51303 | Remittance towards donations to religious and charitable institutions abroad. |
| 29 | 51304 | Remittance towards grants and donations to other Governments and charitable institutions established by the Governments. |
| 30 | 51305 | Contributions or donations by the Government to international institutions. |
| 31 | S1306 | Remittance towards payment or refund of taxes. |
| 32 | S1501 | Refunds or rebates or reduction in invoice value on account of exports. |
| 33 | S1503 | Payments by residents for international bidding. |
(4) The information in Form No. 145 shall be furnished,—
a. electronically under digital signature in accordance with the procedures, formats and standards specified by the Director General of Income-tax (Systems) under rule 332 and thereafter the said Form shall be submitted to the authorised dealer electronically or otherwise, prior to remitting the payment; or
b. electronically in accordance with the procedures, formats and standards specified by the Director General of Income-tax (Systems) under rule 332 and thereafter a signed printout of the said Form shall be submitted to the authorised dealer electronically or otherwise, prior to remitting the payment.
(5) An income-tax authority may require the authorised dealer to furnish a copy of Form No. 145 referred to in sub-rule (4)(b) for the purposes of any proceedings under the Act.
(6) A quarterly statement, for each quarter of the financial year shall be furnished in respect of all remittances referred to in sub-rules (1), (2) and (3) by—
a. the authorised dealer in Form No. 147; or
b. a Unit of an International Financial Services Centre referred to in 147(1)(b), responsible for paying to a non-resident (not being a company) or to a foreign company, in Form No. 148,
to the Director General of Income-tax (Systems) or the person authorised by him, within fifteen days from the end of the quarter of the tax year to which such statement relates.
(7) For the purposes of this rule,—
(a) “authorised dealer” means a person authorised as an authorised dealer under section 10(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) ;
(b)”International Financial Services Centre” shall have the same meaning as assigned to it in section 2(q) of the Special Economic Zones Act, 2005 (28 of 2005); and
(c)”Unit” shall have the same meaning as assigned to it in section 2(zc) of the Special Economic Zones Act, 2005 (28 of 2005).
221. Form for furnishing certificate of accountant under Section 398(2) for person responsible for deduction or collection of tax as per section 394(1)[Table: SL No. 1 to 5 and 9] not to be deemed to be an assessee in default:— (1) The certificate from an accountant, as defined in section 515(3)(b), under section 398(2) shall be furnished,—
a. in Form No. 149, for non-deduction or short deduction of tax; and
b. in Form no. 150, for non-collection or short collection of tax.
(2) Form No. 149 or Form No. 150 referred to in sub-rule (1) shall be furnished to the Director General of Income-tax (Systems) or the person authorised by him.
222. Notice of demand under section 289. — Irrespective of anything contained in rule 179, the notice of demand under section 289 to be served upon the assessee in pursuance of an order under section 407, shall be in Form No. 151.
223. Estimate of advance tax under section 407(8). — The intimation, which an assessee has to send to the Assessing Officer under section 407(8), shall be in Form No. 152.
224. Form of statement under section 413 or section 414.— A statement under section 413 or section 414 shall be drawn up by the Tax Recovery Officer in Form No. 153.
225. Procedure for recovery of tax for the purposes of sections 413 and 475.—
(1) Definitions: In this rule, unless the context otherwise requires, —
a. “certificate”, except in sub-rules (7), (44), (65) and 66 (b), means the certificate drawn up by the Tax Recovery Officer under section 413 in respect of any assessee referred to in that section;
b. “defaulter” means the assessee mentioned in the certificate;
c. “execution”, in relation to a certificate, means recovery of arrears in pursuance of the certificate;
d. “movable property” includes growing crops;
e. “officer” means a person authorised to make an attachment or sale under this rule; and
f. “share in a corporation” includes stock, debenture-stock, debentures or bonds.
(2) Issue of notice: When a certificate has been drawn up by the Tax Recovery Officer for the recovery of arrears under this rule, the Tax Recovery Officer shall cause to be served upon the defaulter a notice requiring the defaulter to pay the amount specified in the certificate, within fifteen days from the date of service of the notice and intimating that in default steps would be taken to realise the amount under this rule.
(3) When certificate may be executed: (a) Subject to the provisions of clauses (b) and (c), no step in execution of a certificate shall be taken until the period of fifteen days has elapsed, since the date of the service of the notice required by sub-rule (2);
(b) if the Tax Recovery Officer is satisfied that the defaulter is likely to conceal, remove or dispose of the whole or any part of such of his movable property as would be liable to attachment in execution of a decree of a Civil Court and that the realisation of the amount of the certificate would in consequence be delayed or obstructed, he may at any time direct, for reasons to be recorded in writing, an attachment of the whole or any part of such property; and
(c) if the defaulter, whose property has been so attached, furnishes security to the satisfaction of the Tax Recovery Officer, such attachment shall be cancelled from the date on which such security is accepted by the Tax Recovery Officer.
(4) Mode of recovery: If the amount mentioned in the notice is not paid within the time specified therein or within such further time as the Tax Recovery Officer may grant in his discretion, the Tax Recovery Officer shall proceed to realise the amount by one or more of the following modes:
a. by attachment and sale of movable property of the defaulter;
b. by attachment and sale of immovable property of the defaulter;
c. by arrest of the defaulter and his detention in prison;
d. by appointing a receiver for the management of the movable and immovable properties of the defaulter.
(5) Interest, costs and charges recoverable: There shall be recoverable, in the proceedings in execution of every certificate, —
a. such interest upon the amount of tax or penalty or other sum to which the certificate relates as is payable in accordance with section 411(3); and
b. all charges incurred in respect of—
i. the service of notice upon the defaulter to pay the arrears, and of warrants and other processes; and
ii. all other proceedings taken for realising the arrears.
(6) Title of Purchaser: (a) Where property is sold in execution of a certificate, there shall vest in the purchaser merely the right, title and interest of the defaulter at the time of the sale, even though the property itself is specified. (b) Where immovable property is sold in execution of a certificate, and such sale has become absolute, the right, title and interest of the purchaser shall be deemed to have vested in him from the time when the property is sold, and not from the time when the sale becomes absolute.
(7) Suit against purchaser shall not be maintainable on the ground of purchase being made on behalf of plaintiff: (a) No suit shall be maintained against any person claiming title under a purchase certified by the Tax Recovery Officer in the manner laid down in this rule, on the ground that the purchase was made on behalf of the plaintiff or on behalf of someone through whom the plaintiff claims.
(b) Nothing in this rule shall bar a suit to obtain a declaration that the name of any purchaser, certified as aforesaid, was inserted in the certificate fraudulently or without the consent of the real purchaser, or interfere with the right of a third person to proceed against that property, though ostensibly sold to the certified purchaser, on the ground that it is liable to satisfy a claim of such third person against the real owner.
(8) Disposal of proceeds of execution: (a) Whenever assets are realised by sale or otherwise in execution of a certificate, the proceeds shall be disposed of in the following manner, namely :—
i. they shall first be adjusted towards the amount due under the certificate in execution of which the assets were realised and the costs incurred in the course of such execution;
ii. if there remains a balance, after the adjustment referred to in item (i), the same shall be utilised for satisfaction of any other amount recoverable from the assessee under the Act, which may be due on the date on which the assets were realised; and
iii. the balance, if any, remaining after the adjustments under sub-clauses (i) and (ii) shall be paid to the defaulter.
(b) If the defaulter disputes any adjustment under sub-rule 8(a)(ii), the Tax Recovery Officer shall determine the dispute.
(9) General bar to jurisdiction of Civil Courts, save where fraud alleged: (a) Subject to provisions of clause (b) and except as otherwise expressly provided in the Act, every question arising between the Tax Recovery Officer and the defaulter or their representatives, relating to the execution, discharge or satisfaction of a certificate , or relating to the confirmation or setting aside by an order under the Act, of a sale held in execution of such certificate, shall be determined, not by suit, but by order of the Tax Recovery Officer before whom such question arises; and
(b) a suit may be brought in a Civil Court in respect of any such question upon the ground of fraud.
(10) Property exempt from attachment: (a) All such property as is by the Code of Civil Procedure, 1908 (5 of 1908), exempted from attachment and sale in execution of a decree of a Civil Court, shall be exempt from attachment and sale under this rule; and
(b) decision of the Tax Recovery Officer as to what property is so entitled to exemption shall be conclusive.
(11) Investigation by Tax Recovery Officer: (a) Where any claim is preferred to, or any objection is made to, the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection, but no such investigation shall be made where the Tax Recovery Officer considers that the claim or objection was designedly or unnecessarily delayed;
(b) where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it, pending the investigation of the claim or objection, upon such terms as to security, or otherwise as the Tax Recovery Officer shall deem fit;
(c) the claimant or objector shall adduce evidence to show—
i. in the case of immovable property, at the date of the service of the notice issued under this rule to pay the arrears; or
ii. in the case of movable property, at the date of the attachment, that he had some interest in, or was possessed of, the property in question.
(d) where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at the said date, in the possession of the defaulter or of some person in trust for him, or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale;
(e) where the Tax Recovery Officer is satisfied that the property was, at the said date, in the possession of the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim; and
(f) where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a Civil Court to establish the right, which he claims to the property in dispute; but, subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive.
(12) Removal of attachment on satisfaction or cancellation of certificate: Where—
a. the amount due, with costs and all charges and expenses resulting from the attachment of any property or incurred in order to hold a sale, are paid to the Tax Recovery Officer; or
b. the certificate is cancelled, the attachment shall be deemed to be withdrawn and, in the case of immovable property, the withdrawal shall, if the defaulter so desires, be proclaimed at his expense, and a copy of the proclamation shall be affixed in the manner provided in this rule for a proclamation of sale of immovable property.
(13) Officer entitled to attach and sell: The attachment and sale of movable property and the attachment and sale of immovable property may be made by such persons, as the Tax Recovery Officer may from time to time direct.
(14) Defaulting purchaser answerable for loss on resale: Any deficiency of price, which may happen on a resale by reason of default of the purchaser, and all expenses incurred in connection to such resale, shall be certified to the Tax Recovery Officer by the officer holding the sale, and shall, at the instance of either the Tax Recovery Officer or the defaulter, be recoverable from the defaulting purchaser under the procedure prescribed in this rule, but no such application shall be entertained unless filed within fifteen days from the date of resale.
(15) Adjournment or stoppage of sale: (a) The Tax Recovery Officer may, in his discretion, adjourn any sale hereunder to a specified day and hour; and the officer conducting any such sale may, in his discretion, adjourn the sale, recording his reasons for such adjournment, but where the sale is made in, or within the precincts of, the office of the Tax Recovery Officer, no such adjournment shall be made without the leave of the Tax Recovery Officer.
(b) where a sale of immovable property is adjourned under clause (a) for a longer period than one calendar month, a fresh proclamation of sale in this rule shall be made unless the defaulter consents to waive it;
(c) every sale shall be stopped if, before the lot is knocked down, the arrears and costs (including the costs of the sale) are tendered to the officer conducting the sale, or proof is given to his satisfaction that the amount of such arrears and costs has been paid to the Tax Recovery Officer, who ordered the sale.
(16) Private alienation to be void in certain cases: (a) Where a notice has been served on a defaulter under sub-rule (2), the defaulter or his representative in interest shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him, except with the permission of the Tax Recovery Officer, nor shall any Civil Court issue any process against such property in execution of a decree for the payment of money; and
(b) where an attachment has been made under this rule, any private transfer or delivery of the property attached or of any interest therein and any payment to the defaulter of any debt, dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment.
(17) Prohibition against bidding or purchase by officer.— No officer or other person having any duty to perform in connection with any sale under this rule shall, either directly or indirectly, bid for, acquire or attempt to acquire any interest in the property sold.
(18) Prohibition against sale on holidays.— No sale in this rule shall take place on a Sunday or other general holiday recognised by the State Government or on any day, which has been notified by the State Government to be a local holiday for the area in which the sale is to take place.
(19) Assistance by police: Any officer authorised to attach or sell any property or to arrest the defaulter, or charged with any duty to be performed in this rule, may apply to the officer-in-charge of the nearest police station for such assistance as may be necessary in the discharge of his duties, and the authority to whom such application is made, shall depute sufficient number of police officers for providing such assistance.
(20) Entrustment of certain functions by Tax Recovery Officer: A Tax Recovery Officer may, with the previous approval of the Joint Commissioner, entrust any of his functions as the Tax Recovery Officer to any other officer lower than him in rank (not being lower in rank than an Inspector of Income-tax) and such officer shall, in relation to the functions so entrusted to him, be deemed to be a Tax Recovery Officer.
(21) Warrant and service of copy of warrant: Except as otherwise provided in this rule, when any movable property is to be attached, the officer shall be furnished by the Tax Recovery Officer (or other officer empowered by him in that behalf), a warrant in writing and signed with his name specifying the name of the defaulter and the amount to be realised and the officer shall cause a copy of the warrant to be served on the defaulter.
(22) Attachment: If, after service of the copy of the warrant, the amount is not paid forthwith, the officer shall proceed to attach the movable property of the defaulter.
(23) Property in possession of defaulter: Where the property to be attached is a movable property (other than agricultural produce) in the possession of the defaulter, the attachment shall be made by actual seizure, and the officer shall keep the property in his own custody or the custody of one of his subordinates and shall be responsible for due custody thereof, but when the property seized is subject to speedy and natural decay, or when the expense of keeping it in custody is likely to exceed its value, the officer may sell it at once.
(24) Agricultural produce: (a) Where the property to be attached is agricultural produce, the attachment shall be made by affixing a copy of the warrant of attachment,—
i. where such produce is growing crop, on the land on which such crop has grown, or
ii. where such produce has been cut or gathered, on the threshing floor or place for treading out grain or the like, or fodder-stack, on or in which it is deposited,
and another copy on the outer door or on some other conspicuous part of the house in which the defaulter ordinarily resides, or with the leave of the Tax Recovery Officer, on the outer door or on some other conspicuous part of the house in which he carries on business or personally works for gain, or in which he is known to have last resided or carried on business or personally worked for gain; and
(b) the produce shall, thereupon, be deemed to have passed into the possession of the Tax Recovery Officer.
(25) Provisions as to agricultural produce under attachment: (a) Where agricultural produce is attached, the Tax Recovery Officer shall make such arrangements for the custody, watching, tending, cutting and gathering thereof, as he may deem sufficient and he shall have power to defray the cost of such arrangement;
(b) subject to such conditions, as may be imposed by the Tax Recovery Officer in this behalf, either in the order of attachment or in any subsequent order, the defaulter may tend, cut, gather and store the produce and do any other act necessary for maturing or preserving it and, if the defaulter fails to do all or any of such acts, any person appointed by the Tax Recovery Officer in this behalf may, subject to the like conditions, do all or any of such acts, and the costs incurred by such person shall be recoverable from the defaulter as if they were included in the certificate;
(c) agricultural produce attached as a growing crop shall not be deemed to have ceased to be under attachment or to require re-attachment merely because it has been severed from the soil;
(d) where an order for the attachment of a growing crop has been made at a considerable time before the crop is likely to be fit to be cut or gathered, the Tax Recovery Officer may suspend the execution of the order for such time as he thinks fit, and may, in his discretion, make a further order prohibiting the removal of the crop pending the execution of the order of attachment; and
(e) a growing crop which from its nature does not admit of being stored shall not be attached under this rule at any time less than twenty days before the time at which it is likely to be fit to be cut or gathered.
(26) Debts and shares, etc: (a) In the case of—
i. a debt not secured by a negotiable instrument; or
ii. a share in a corporation; or
iii. other movable property not in the possession of the defaulter, except property deposited in, or in the custody of, any court, the attachment shall be made by a written order prohibiting, —
A. in the case of the debt, the creditor from recovering the debt and the debtor from making payment thereof until the further order of the Tax Recovery Officer;
B. in the case of the share, the person in whose name the share may be standing from transferring the same or receiving any dividend thereon; and
C. in the case of any other movable property, the person in possession of the same from giving it over to the defaulter;
b. a copy of such order shall be affixed on some conspicuous part of the office of the Tax Recovery Officer, and another copy shall be sent, in the case of the debt, to the debtor, in the case of the share, to the proper officer of the corporation, and in the case of any other movable property, to the person in possession of the same; and
c. a debtor prohibited under sub-rule 26(a)(iii)(A), may pay the amount of his debt to the Tax Recovery Officer, and such payment shall discharge him as effectually as payment to the party entitled to receive the same.
(27) Attachment of decree: (a) The attachment of a decree of a Civil Court for the payment of money or for sale in enforcement of a mortgage or charge, shall be made by the issue of a request to the Civil Court in writing to stay the execution of the decree until and unless—
i. the Tax Recovery Officer withdraws such request; or
ii. the Tax Recovery Officer or the defaulter applies to the Court receiving such request to execute the decree;
(b) where a Civil Court receives an application under clause (a)(ii), it shall, on the application of the Tax Recovery Officer or the defaulter and subject to the provisions of the Code of Civil Procedure, 1908 (5 of 1908), proceed to execute the attached decree and apply the net proceeds in satisfaction of the certificate.
(3) The Tax Recovery Officer shall be deemed to be the representative of the holder of the attached decree, and to be entitled to execute such attached decree in any manner lawful for the holder thereof.
28. Share in movable property: Where the property to be attached consists of the share or interest of the defaulter in movable property belonging to him and another as co-owners, the attachment shall be made by a notice to the defaulter prohibiting him from transferring the share or interest or charging it in any way.
29. Salary of Government servants: Attachment of the salary or allowances of servants of the Government or a local authority may be made in the manner provided, in rule 48 of Order 21 of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), and the provisions of the said rule shall, for the purposes of this rule, apply subject to such modifications, as may be necessary.
30. Attachment of negotiable instrument: Where the property is a negotiable instrument not deposited in a court nor in the custody of a public officer, the attachment shall be made by actual seizure, and the instrument shall be brought before the Tax Recovery Officer and held subject to his orders.
31. Attachment of property in custody of court or public officer: Where the property to be attached is in the custody of any court or public officer, the attachment shall be made by a notice to such court or officer, requesting that such property, and any interest or dividend becoming payable thereon, may be held subject to the further orders of the Tax Recovery Officer by whom the notice is issued, but if such property is in the custody of a court, any question of title or priority arising between the Tax Recovery Officer and any other person, not being the defaulter, claiming to be interested in such property by virtue of any assignment, attachment or otherwise, shall be determined by such court.
32. Attachment of partnership property: (a) Where the property to be attached consists of an interest of the defaulter, being a partner, in the partnership property, the Tax Recovery Officer may make an order charging the share of such partner in the partnership property and profits with payment of the amount due under the certificate, and may, by the same or subsequent order, appoint a receiver of the share of such partner in the profits, whether already declared or accruing, and of any other money which may become due to him in respect of the partnership, and direct accounts and inquiries and make an order for the sale of such interest or such other order as the circumstances of the case may require; and
(b) the other persons shall be at liberty at any time to redeem the interest charged, or in the case of a sale being directed, to purchase the same.
33. Inventory: In the case of attachment of movable property by actual seizure, the officer shall, after attachment of the property, prepare an inventory of all the property attached, specifying in it, the place where it is lodged or kept, and shall forward the same to the Tax Recovery Officer and a copy of the inventory shall be delivered by the officer to the defaulter.
34. Attachment not to be excessive: The attachment by seizure shall not be excessive, that is to say, the property attached shall be as nearly as possible proportionate to the amount specified in the warrant.
35. Seizure between sunrise and sunset: Attachment by seizure shall be made after sunrise and before sunset and not otherwise.
36. Power to break open doors, etc: (a) If admission is not given, the officer may break open any inner or outer door or window of any building and enter any building in order to seize any movable property, where the officer has reasonable grounds to believe that such building contains movable property liable to seizure under the warrant and the officer has notified his authority and intention of breaking open; and
(b) the officer shall give all reasonable opportunity to women to withdraw.
37. Sale: The Tax Recovery Officer may direct that any movable property attached under this rule or such portion thereof as may seem necessary to satisfy the certificate, shall be sold.
38. Issue of proclamation: When any sale of movable property is ordered by the Tax Recovery Officer, the Tax Recovery Officer shall issue a proclamation, in the language of the district, of the intended sale, specifying the time and place of sale and whether the sale is subject to confirmation or not.
39. Proclamation how made: (a) The proclamation shall be made by any customary mode, —
(i) in the case of property attached by actual seizure—
A. in the village in which the property was seized, or, if the property was seized in a town or city, then, in the locality in which it was seized; and
B. at such other places as the Tax Recovery Officer may direct;
(ii) in the case of property attached otherwise than by actual seizure, in such places, if any, as the Tax Recovery Officer may direct; and
(b) a copy of the proclamation shall also be affixed in a conspicuous part of the office of the Tax Recovery Officer.
40. Sale after fifteen days: Except where the property is subject to speedy and natural decay, or when the expense of keeping it in custody is likely to exceed its value, no sale of movable property under this rule shall, without the consent in writing of the defaulter, take place, until after the expiry of at least fifteen days calculated from the date on which a copy of the sale proclamation was affixed in the office of the Tax Recovery Officer.
41. Sale of agricultural produce: (a) Subject to provisions of clause (b), where the property to be sold is agricultural produce, the sale shall be held, —
i. if such produce is a growing crop, on or near the land on which such crop has grown; or
ii. if such produce has been cut or gathered, at or near the threshing floor or place for treading out grain or the like, or fodder-stack, on or in which it is deposited;
(b) the Tax Recovery Officer may direct the sale to be held at the nearest place of public resort, if he is of opinion that the produce is thereby likely to sell to greater advantage;
(c) where on the produce being put up for sale, —
i. a fair price, in the estimation of the person holding the sale, is not offered for it; and
ii. the owner of the produce, or a person authorised to act on his behalf, applies to have the sale postponed till the next day or, if a market is held at the place of sale, the next market day, the sale shall be postponed accordingly, and shall be then completed, whatever price may be offered for the produce.
42. Special provisions relating to growing crops: (a) Where the property to be sold is a growing crop and the crop from its nature admits of being stored but has not yet been stored, the day of the sale shall be so fixed as to admit of the crop being made ready for storing before the arrival of such day, and the sale shall not be held until the crop has been cut or gathered and is ready for storing; and
(b) where the crop from its nature does not admit of being stored, or can be sold to a greater advantage in an unripe stage, such as, green wheat, it may be sold before it is cut and gathered, and the purchaser shall be entitled to enter on the land, and to do all that is necessary for the purpose of tending or cutting or gathering the crop.
43. Sale to be by auction: The property shall be sold by public auction in one or more lots, as the officer may consider advisable, and if the amount to be realised by sale is satisfied by the sale of a portion of the property, the sale shall be immediately stopped with respect to the remainder of the lots.
44. Sale by public auction: (a) Where movable property is sold by public auction, the price of each lot shall be paid at the time of sale, or as soon after as the officer holding the sale directs, and in default of payment, the property shall forthwith be resold;
(b) on payment of the purchase-money, the officer holding the sale shall grant a certificate specifying the property purchased, the price paid and the name of the purchaser, and the sale shall become absolute; and
(c) where the movable property to be sold is a share in goods belonging to the defaulter and a co-owner and two or more persons, of whom one is such co-owner, respectively, bid the same sum for such property or for any lot, the bidding shall be deemed to be the bidding of the co-owner.
45. Irregularity not to vitiate sale, but any person injured may sue: No irregularity in publishing or conducting the sale of movable property shall vitiate the sale, but any person sustaining substantial injury by reason of such irregularity due to any other person may institute a suit in a civil court against such other person for compensation, or (if such other person is the purchaser) for the recovery of the specific property and for compensation in default of such recovery.
46. Negotiable instruments and shares in a corporation: Irrespective of anything contained in this rule, where the property to be sold is a negotiable instrument or a share in a corporation, the Tax Recovery Officer may, instead of directing the sale to be made by public auction, authorise the sale of such instrument or share through a broker;
47. Order for payment of coin or currency notes to the Assessing Officer: Where the property attached is current coin or currency notes, the Tax Recovery Officer may, at any time during the continuance of the attachment, direct that such coins or notes shall be credited to the Central Government and the amount so credited shall be dealt with in the manner specified in sub-rule (8).
48. Attachment: The attachment of the immovable property of the defaulter shall be made by an order, prohibiting the defaulter from transferring or charging the property in any way and prohibiting all persons from taking any benefit under such transfer or charge.
49. Service of notice of attachment: A copy of the order of attachment shall be served on the defaulter.
50. bProclamation of attachment: The order of attachment shall be proclaimed at some place on or adjacent to the property attached, by any customary mode, and a copy of the order shall be affixed on a conspicuous part of the property and on the notice board of the office of the Tax Recovery Officer.
51. Attachment to relate back from the date of service of notice: Where any immovable property is attached under this rule, the attachment shall relate back to, and take effect from, the date on which the notice to pay the arrears, issued under this rule, was served upon the defaulter.
52. Sale and proclamation of sale: (a) The Tax Recovery Officer may direct that any immovable property, which has been attached, or such portion thereof as may seem necessary to satisfy the certificate, shall be sold; and
(b) where any immovable property is ordered to be sold, the Tax Recovery Officer shall cause a proclamation of the intended sale to be made in the language of the district, where such immovable property is situated.
53. Contents of proclamation: A proclamation of sale of immovable property shall be drawn up after notice to the defaulter, and shall state the time and place of sale, and shall specify, as fairly and accurately as possible, —
a. the property to be sold;
b. the revenue, if any, assessed upon the property or any part thereof;
c. the amount for the recovery of which the sale is ordered;
d. the reserve price, if any, below which the property may not be sold; and
e. any other thing which the Tax Recovery Officer considers it material for a purchaser to know, in order to judge the nature and value of the property.
54. Mode of making proclamation: (a) Every proclamation for the sale of immovable property shall be made at some place on, or near, such property by beat of drum or other customary mode, and a copy of the proclamation shall be affixed on a conspicuous part of the property and also upon a conspicuous part of the office of the Tax Recovery Officer;
(b) where the Tax Recovery Officer so directs, such proclamation shall also be published in the Official Gazette or in a local newspaper, or in both, and the cost of such publication shall be deemed to be costs of the sale; and
(c) where the property is divided into lots for the purpose of being sold separately, it shall not be necessary to make a separate proclamation for each lot, unless proper notice of the sale cannot, in the opinion of the Tax Recovery Officer, otherwise be given.
55. Time of sale: No sale of immovable property in this rule shall, without the consent in writing of the defaulter, take place until after the expiration of at least thirty days, calculated from the date on which a copy of the proclamation of sale has been affixed on the property or in the office of the Tax Recovery Officer, whichever is later.
56. Sale to be by auction: The sale shall be by public auction to the highest bidder and shall be subject to confirmation by the Tax Recovery Officer, but no sale under this rule shall be made if the amount bid by the highest bidder is less than the reserve price, if any, specified under sub-rule (53)(iv).S
57. Deposit by purchaser and resale in default: (a) On every sale of immovable property, the person declared to be the purchaser shall pay, immediately after such declaration, a deposit of 25% on the amount of his purchase money, to the officer conducting the sale; and, in default of such deposit, the property shall forthwith be resold; and
(b) the full amount of purchase money payable shall be paid by the purchaser to the Tax Recovery Officer on or before the fifteenth day from the date of the sale of the property.
58. Procedure in default of payment: In default of payment within the period mentioned in the sub-rule (57), the deposit may, if the Tax Recovery Officer thinks fit, after defraying the expenses of the sale, be forfeited to the Government, and the property shall be resold, and the defaulting purchaser shall forfeit all claims to the property or to any part of the sum for which it may subsequently be sold.
59. Authority to bid: (a) Where the sale of a property, for which a reserve price has been specified under sub-rule (53)(d), has been postponed for want of a bid of an amount not less than such reserve price, it shall be lawful for an Assessing Officer, if so, authorised by Chief Commissioner or Commissioner in this behalf, to bid for the property on behalf of the Central Government at any subsequent sale;
(b) all persons bidding at the sale shall be required to declare, if they are bidding on their own behalf or on behalf of their principals and in the latter case, they shall be required to deposit their authority, and in default their bids shall be rejected; and
(c) where the Assessing Officer referred to in clause (a) is declared to be the purchaser of the property at any subsequent sale, nothing contained in sub-rule (57) shall apply to the case and the amount of the purchase price shall be adjusted towards the amount specified in the certificate.
60. Application to set aside sale of immovable property on deposit: (a) Where immovable property has been sold in execution of a certificate, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale, on his depositing—
i. the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, with interest thereon at the rate of 15% per annum, calculated from the date of the proclamation of sale to the date when the deposit is made; and
ii. for payment to the purchaser, as penalty, a sum equal to 5% of the purchase money, but not less than Z 1; and
(b) where a person makes an application under sub-rule (61) for setting aside the sale of his immovable property, he shall not, unless he withdraws that application, be entitled to make or prosecute an application under this rule.
61. Application to set aside sale of immovable property on ground of non-service of notice or irregularity: (a) Subject to the provisions of clauses (b) and (c), where any immovable property has been sold in execution of a certificate, such Income-tax Officer as may be authorised by the Chief Commissioner or Commissioner in this behalf, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale of the immovable property on the ground that notice was not served on the defaulter to pay the arrears as required by this rule or on the ground of a material irregularity in publishing or conducting the sale;
(b) no sale shall be set aside on any such ground unless the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of the non-service or irregularity; and
(c) an application made by a defaulter under this rule shall be disallowed unless the applicant deposits the amount recoverable from him in the execution of the certificate.
62. Setting aside sale where defaulter has no saleable interest: At any time within thirty days of the sale, the purchaser may apply to the Tax Recovery Officer to set aside the sale on the ground that the defaulter had no saleable interest in the property sold.
63. Confirmation of sale: (a) Where no application is made for setting aside the sale under the foregoing rules, or where such an application is made and disallowed by the Tax Recovery Officer, the Tax Recovery Officer shall (if the full amount of the purchase money has been paid) make an order confirming the sale, and, thereupon, the sale shall become absolute; and
(b) where such application is made and allowed, and if, in the case of an application made to set aside the sale on deposit of the amount, penalty and charges, the deposit is made within thirty days from the date of the sale, the Tax Recovery Officer shall make an order setting aside the sale, but, no order shall be made unless notice of the application has been given to the persons affected thereby.
64. Return of purchase money in certain cases: Where a sale of immovable property is set aside, any money paid or deposited by the purchaser on account of the purchase, together with the penalty, if any, deposited for payment to the purchaser, and such interest as the Tax Recovery Officer may allow, shall be paid to the purchaser.
65. Sale certificate: (a) Where a sale of immovable property has become absolute, the Tax Recovery Officer shall grant a certificate specifying the property sold, and the name of the person who at the time of sale is declared to be the purchaser; and
(b) such certificate shall state the date on which the sale became absolute.
66. Postponement of sale to enable defaulter to raise amount due under certificate: (a) Where an order for the sale of immovable property has been made, if the defaulter can satisfy the Tax Recovery Officer that there is reason to believe that the amount of the certificate may be raised by the mortgage or lease or private sale of such property, or some part thereof, or of any other immovable property of the defaulter, the Tax Recovery Officer may, on his application, postpone the sale of the property comprised in the order for sale, on such terms, and for such period as he thinks proper, to enable him to raise the amount;
(b) subject to provisions of clauses (c) and (d), in such case, the Tax Recovery Officer shall grant a certificate to the defaulter, authorising him, within a period to be mentioned therein, and irrespective of anything contained in this rule, to make the proposed mortgage, lease or sale;
(c) all moneys payable under such mortgage, lease or sale shall be paid, not to the defaulter, but to the Tax Recovery Officer; and
(d) no mortgage, lease or sale under this rule shall become absolute until it has been confirmed by the Tax Recovery Officer.
67. Fresh proclamation before re-sale: Every re-sale of immovable property, in default of payment of the purchase money within the period allowed for such payment, shall be made after the issue of a fresh proclamation in the manner and for the period hereinbefore provided for the sale.
68. Bid of co-sharer to have preference: Where the property sold is a share of undivided immovable property, and two or more persons, of whom one is a co-sharer, respectively bid the same sum for such property or for any lot, the bid shall be deemed to be the bid of the co-sharer.
69. Acceptance of property in satisfaction of amount due from the defaulter: (a) Without prejudice to the provisions contained in this rule, an Assessing Officer, duly authorised by the Chief Commissioner of Income-tax or Commissioner of Income-tax in this behalf, may accept in satisfaction of the whole or any part of the amount due from the defaulter the property, the sale of which has been postponed for the reason mentioned in sub-rule (59)(a), at such price as may be agreed upon between the Assessing Officer and the defaulter;
(b) where any property is accepted under clause(a), the defaulter shall deliver possession of such property to the Assessing Officer and the date on which the possession of the property is delivered to the Assessing Officer, the property shall vest in the Central Government and that Government shall, where necessary, intimate the concerned Registering Officer appointed under the Registration Act, 1908 (16 of 1908), accordingly; and
(c) where the price of the property agreed upon under clause (a), exceeds the amount due from the defaulter, such excess shall be paid by the Assessing Officer to the defaulter within a period of three months from the date of delivery of possession of the property and where the Assessing Officer fails to pay such excess amount within the said period, the Central Government shall, for the period commencing on the expiry of such period and ending with the date of payment of the amount remaining unpaid, pay simple interest at 0.5% for every month or part of the month to the defaulter on such amount.
70. Time limit for sale of attached immovable property: (a) Subject to the provisions of clauses (b) and (c), no sale of immovable property shall be made under this rule after the expiry of seven years from the end of the financial year in which the order giving rise to a demand of any tax, interest, fine, penalty or any other sum, for the recovery of which the immovable property has been attached, has become final in terms of the provisions of Chapter XVIII of the Act;
(b) the Board may, for reasons to be recorded in writing, extend the aforesaid period for a further period not exceeding three years;
(c) where the immovable property is required to be re-sold due to the amount of highest bid being less than the reserve price or under the circumstances mentioned in sub-rule (57) or sub- rule (58), or where the sale is set aside under sub-rule (61), the period of limitation for the sale of the immovable property shall stand extended by one year;
(d) Subject to the provisions of clause (e), in computing the period of limitation under clause (a), the period—
i. during which the levy of the tax, interest, fine, penalty or any other sum is stayed by an order or injunction of any court; or
ii. during which the proceedings of attachment or sale of the immovable property are stayed by an order or injunction of any court; or
iii. commencing from the date of the presentation of any appeal against the order passed by the Tax Recovery Officer under this rule and ending on the day the appeal is decided, shall be excluded;
(e) in cases, where immediately after the exclusion of the period, the period of limitation for the sale of the immovable property is less than one hundred and eighty days, such remaining period shall be extended to one hundred and eighty days and the period of limitation shall be deemed to be extended accordingly;
(f) where any immovable property has been attached under this rule before the 1st June, 1992, and the order giving rise to a demand of any tax, interest, fine, penalty or any other sum, for the recovery of which the immovable property has been attached, has also become conclusive or final before the said date, that date shall be deemed to be the date on which the said order has become conclusive or, as the case may be, final; and
(g) where the sale of immovable property is not made in accordance with the provisions of clause (a), the attachment order in relation to the said property shall be deemed to have been vacated on the expiry of the time of limitation specified under this rule.
71. Appointment of receiver for business: (a) Where the property of a defaulter consists of a business, the Tax Recovery Officer may attach the business and appoint a person as receiver to manage the business;
(b) attachment of a business under this rule shall be made by an order prohibiting the defaulter from transferring or charging the business in any way and prohibiting all persons from taking any benefit under such transfer or charge, and intimating that the business has been attached under this rule; and
(c) a copy of the order of attachment shall be served on the defaulter, and another copy shall be affixed on a conspicuous part of the premises in which the business is carried on and on the notice board of the office of the Tax Recovery Officer.
72. Appointment of receiver for immovable property: Where immovable property is attached, the Tax Recovery Officer may, instead of directing a sale of the property, appoint a person as receiver to manage such property.
73. Powers of receiver: (a) Where any business or other property is attached and taken under management under this rule, the receiver shall, subject to the control of the Tax Recovery Officer, have such powers as may be necessary for the proper management of the property and the realisation of the profits, or rents and profits, thereof; and
(b) the profits, or rents and profits, of such business or other property, shall, after defraying the expenses of management, be adjusted towards discharge of the arrears, and the balance, if any, shall be paid to the defaulter.
74. Withdrawal of management: The attachment and management under this rule may be withdrawn at any time at the discretion of the Tax Recovery Officer, or if the arrears are discharged, by receipt of such profits and rents by the Tax Recovery Officer or are otherwise paid to him.
75. Notice to show cause: (a) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Tax Recovery Officer has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Tax Recovery Officer, for reasons recorded in writing, is satisfied—
i. that the defaulter, with the object or effect of obstructing the execution of the certificate, has, after the drawing up of the certificate by the Tax Recovery Officer, dishonestly transferred, concealed, or removed any part of his property; or
ii. that the defaulter has, or has had since the drawing up of the certificate by the Tax Recovery Officer, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same;
(b) irrespective of anything contained in clause (a), a warrant for the arrest of the defaulter may be issued by the Tax Recovery Officer, if the Tax Recovery Officer is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate, the defaulter is likely to abscond or leave the local limits of the jurisdiction of the Tax Recovery Officer;
(c) where appearance is not made in obedience to a notice issued and served under clause (a), the Tax Recovery Officer may issue a warrant for the arrest of the defaulter;
(d) a warrant of arrest issued by a Tax Recovery Officer under clauses (b) and (c), may also be executed by any other Tax Recovery Officer within whose jurisdiction the defaulter may, for the time being be found;
(d) every person arrested in pursuance of a warrant of arrest under this rule shall be brought before the Tax Recovery Officer issuing the warrant as soon as practicable and in any event, within twenty-four hours of his arrest (exclusive of the time required for the journey), but if the defaulter pays the amount entered in the warrant of arrest as due and the costs of the arrest to the officer arresting him, such officer shall at once release him; and
(e) for the purposes of this sub-rule, where the defaulter is a Hindu undivided family, the karta thereof shall be deemed to be the defaulter.
76. Hearing: When a defaulter appears before the Tax Recovery Officer in obedience to a notice to show cause or is brought before the Tax Recovery Officer under sub-rule (75), the Tax Recovery Officer shall give the defaulter a reasonable opportunity of showing cause why he should not be committed to the civil prison.
77. Custody pending hearing: Pending the conclusion of the inquiry, the Tax Recovery Officer may, in his discretion, order the defaulter to be detained in the custody of such officer as the Tax Recovery Officer may think fit or release him on his furnishing security to the satisfaction of the Tax Recovery Officer for his appearance when required.
78. Order of detention: (a) Subject to the provisions of clause (b), upon the conclusion of the inquiry, the Tax Recovery Officer may make an order for the detention of the defaulter in the civil prison and shall in that event cause him to be arrested, if he is not already under arrest;
(b) in order to give the defaulter an opportunity of satisfying the arrears, the Tax Recovery Officer may, before making the order of detention, leave the defaulter in the custody of the officer arresting him or of any other officer for a specified period not exceeding fifteen days, or release him on his furnishing security to the satisfaction of the Tax Recovery Officer for his appearance at the expiration of the specified period, if the arrears are not so satisfied; and
(c) when the Tax Recovery Officer does not make an order of detention under clause (a), he shall, if the defaulter is under arrest, direct his release.
79. Detention in and release from prison: (a) Subject to provisions of clause (b), every person detained in civil prison in execution of a certificate, may be so detained, —
i. where the certificate is for a demand of an amount exceeding two hundred and fifty rupees, for a period of six months; and
ii. in any other case, for a period of six weeks;
(b) the aforesaid person shall be released from such detention,—
i. on the amount mentioned in the warrant for his detention being paid to the officer-in-charge of the civil prison; or
ii. on the request of the Tax Recovery Officer on any ground other than the grounds mentioned in sub-rules (80) and (81); and
(c) a defaulter released from detention under this rule shall not, merely by reason of his release, be discharged from his liability for the arrears, but he shall not be liable to be rearrested under the certificate in execution of which he was detained in the civil prison.
80. Release: (a) The Tax Recovery Officer may order the release of a defaulter who has been arrested in execution of a certificate upon being satisfied that he has disclosed the whole of his property and has placed it at the disposal of the Tax Recovery Officer and that he has not committed any act of bad faith; and
(b) if the Tax Recovery Officer has ground for believing that the disclosure made by a defaulter under clause (a) is untrue, he may order the rearrest of the defaulter in execution of the certificate, but the period of his detention in the civil prison shall not in the aggregate exceed that authorised by sub-rule (79).
81. Release on ground of illness: (a) At any time after a warrant for the arrest of a defaulter has been issued, the Tax Recovery Officer may cancel it on the ground of his serious illness;
(b) where a defaulter has been arrested, the Tax Recovery Officer may release him if, in the opinion of the Tax Recovery Officer, he is not in a fit state of health to be detained in the civil prison;
(c) where a defaulter has been committed to civil prison, he may be released therefrom by the Tax Recovery Officer on the ground of the existence of any infectious or contagious disease, or on the ground of his suffering from any serious illness; and
(d) a defaulter released under this rule may be rearrested, but the period of his detention in the civil prison shall not in the aggregate exceed that authorised by sub-rule (79).
82. Entry into dwelling house: For the purpose of making an arrest under this rule—
i. no dwelling house shall be entered after sunset and before sunrise;
ii. no outer door of a dwelling house shall be broken open unless such dwelling house or a portion thereof is in the occupancy of the defaulter and he or other occupant of the house refuses or in any way prevents access thereto; but, when the person executing any such warrant has duly gained access to any dwelling house, he may break open the door of any room or apartment, if he has reason to believe that the defaulter is likely to be found there; and
iii. no room, which is in the actual occupancy of a woman who, according to the customs of the country, does not appear in public, shall be entered into unless the officer authorised to make the arrest has given notice to her that she is at liberty to withdraw and has given her reasonable time and facility for withdrawing.
83. Prohibition against arrest of women or minors, etc: The Tax Recovery Officer shall not order the arrest and detention in civil prison of—
i. a woman; or
ii. any person who, in his opinion, is a minor or of unsound mind.
84. Officers deemed to be acting judicially: Every Chief Commissioner of Income-tax or Commissioner of Income-tax, Tax Recovery Officer or other officer acting under this rule shall, in the discharge of his functions, be deemed to be acting judicially within the meaning of the Judicial Officers Protection Act, 1850 (18 of 1850) or the Judges Protection Act, 1985 (59 of 1985).
85. Power to take evidence: Every Chief Commissioner of Income-tax or Commissioner of Income-tax, Tax Recovery Officer or other officer acting under the provisions of this rule shall have the powers of a Civil Court (while trying a suit) for the purpose of receiving evidence, administering oaths, enforcing the attendance of witnesses and compelling the production of documents.
86. Continuance of certificate: No certificate shall cease to be in force by reason of the death of the defaulter.
87. Procedure on death of defaulter: If at any time, after the certificate is drawn up by the Tax Recovery Officer, the defaulter dies, the proceedings in this rule (except arrest and detention) may be continued against the legal representative of the defaulter, and the provisions of this rule shall apply, as if the legal representative were the defaulter.
88. Appeals: (a) An appeal from any original order passed by the Tax Recovery Officer under this rule, not being an order which is conclusive, shall lie to the Chief Commissioner of Income-tax or Commissioner of Income-tax;
(b) every appeal under this rule shall be presented within thirty days from the date of the order appealed against;
(c) pending the decision of any appeal, execution of the certificate may be stayed, if the appellate authority so directs, but not otherwise; and
(d) irrespective of anything contained in clause (a), where a Chief Commissioner of Income-tax or Commissioner of Income-tax is authorised to exercise powers as such in respect of any area, then, all appeals against the orders passed before the date of such authorisation by any Tax Recovery Officer, authorised to exercise powers as such in respect of that area, or an area which is included in that area, shall lie to such Chief Commissioner of Income-tax or Commissioner of Income-tax.
89. Review: Any order passed under this rule may, after notice to all persons interested, be reviewed by the Chief Commissioner of Income-tax or Commissioner of Income-tax or Tax Recovery Officer or other officer who made the order, or by his successor in office, on account of any mistake apparent from the record.
90. Recovery from surety: Where any person under this rule has become surety for the amount due by the defaulter, he may be proceeded against in this rule as if he were the defaulter.
91. Subsistence allowance: (a) When a defaulter is arrested or detained in the civil prison, the sum payable for the subsistence of the defaulter from the time of arrest until he is released shall be borne by the Tax Recovery Officer;
(b) such sum shall be calculated on the scale fixed by the State Government for the subsistence of judgment-debtors arrested in execution of a decree of a Civil Court; and
(c) sums payable under this sub-rule shall be deemed to be costs in the proceeding, but the defaulter shall not be detained in the civil prison or arrested on account of any sum so payable.
92. Forms: The Board may specify the form to be used for any order, notice, warrant, or certificate to be issued under this rule.
93. Power to issue guidelines: (a) The Board may issue guidelines, consistent with the provisions of the Act to regulate the procedure to be followed by the Chief Commissioner of Income-tax or Commissioner of Income-tax, Tax Recovery Officers and other officers acting under this rule;
(b) In particular, and without prejudice to the generality of the power conferred by clause (a), such order may provide for all or any of the following matters: —
i. the area within which Chief Commissioners or Commissioners or Tax Recovery Officers may exercise jurisdiction;
ii. the manner in which any property sold in this rule may be delivered;
iii. the execution of a document or the endorsement of a negotiable instrument or a share in a corporation, by or on behalf of the Tax Recovery Officer, where such execution or endorsement is required to transfer such negotiable instrument or share to a person who has purchased it under a sale in this rule;
iv. the procedure for dealing with resistance or obstruction offered by any person to a purchaser of any immovable property sold in this rule, in obtaining possession of the property;
v. the fees to be charged for any process issued in this rule;
vi. the scale of charges to be recovered in respect of any other proceeding taken in this rule;
vii. recovery of poundage fee;
viii. the maintenance and custody, while under attachment, of livestock or other movable property, the fees to be charged for such maintenance and custody, the sale of such livestock or property, and the disposal of proceeds of such sale; and
ix. the mode of attachment of business.
94. Saving regarding charge: Nothing specified in this rule shall affect any provision of the Act, whereunder the tax is a first charge upon any asset.
95. Power to remove difficulties: If any difficulty arises in carrying out the proceedings for the recovery of tax, the Board may issue general or special orders, which appear to it to be necessary or expedient for the purpose of removing the difficulty.
226. Tax recovery officer to exercise or perform certain powers and functions of an Assessing Officer under section 413.— (1) The Chief Commissioner of Income-tax or the Commissioner of Income-tax may, by general or special order in writing, authorise a Tax Recovery Officer to exercise or perform the powers and functions conferred on or assigned to an Assessing Officer under section 287 for rectifying any mistake apparent from record, in respect of an order passed by the Assessing Officer, consequent to which a sum is payable and the Tax Recovery Officer has drawn a certificate under section 413 in respect of such sum.
(2) The Tax Recovery Officer shall exercise or perform such powers and functions concurrently with the Assessing Officer.
227. Prescribed authority for tax clearance certificates under section 420.— (1) For the purposes of section 420(1), the prescribed authority shall be the Chief Commissioner of Income-tax or the Director-General of Income-tax, as the case may be, who has jurisdiction over the persons not domiciled in India or any other income-tax authority authorised by such Chief Commissioner of Income-tax or Director-General of Income-tax in this behalf.
(2) For the purposes of section 420(3), the prescribed authority shall be the Chief Commissioner of Income-tax having jurisdiction over the persons domiciled in India or any other income-tax authority authorised by him in this behalf.
(3) For the purposes of section 420(5), an application for certificate shall be filed to the Assessing Officer who has jurisdiction to assess such person.
228. Forms and certificates for the purposes of section 420.— (1) An undertaking to be furnished to the prescribed authority by a person not domiciled in India from the persons referred to in clause (i) or (ii) of the longline in section 420(1), as the case may be, shall be in Form No. 154.
(2) A no-objection certificate to be issued by the prescribed authority under section 420(1) shall be in Form No. 155 and shall be valid for the period mentioned therein.
(3) The information to be furnished by a person domiciled in India shall be in Form No. 156.
(4) Every application under section 420(4) shall be made in Form No. 157.
(5) Every application under section 420(5) may be made in Form No. 158.
(6) A tax clearance certificate issued under section 420(5) shall be in Form No. 159 and shall be valid for the period mentioned therein.
(7) A copy of the undertaking referred to in sub-rule (1) and the no-objection certificate referred to in sub-rule (2) shall be forwarded to the Chief Commissioner of Income-tax or Director General of Income-tax, as the case may be, having jurisdiction over the persons referred to in section 420(1).
229. Production of certificate under section 420.— (1) Any person leaving India shall, at the request of any Customs Officer, produce to him for examination, the tax clearance certificate or the exemption certificate, as the case maybe.
230. Refund claim under section 434.— A claim for refund under section 434 shall be made in Form No. 160, by the claimant himself or through a duly authorised agent, and shall be accompanied by a copy of an agreement or other arrangement referred to in section 434.
231. Form of application under section 440.— An application to the Assessing Officer to grant immunity from imposition of penalty under section 439 and from initiation of proceedings under section 478 or section 479 shall be made in Form No. 161.
232. Service of notice, summons, requisition, order and other communication under section 501.— (1) For the purposes of section 501(1), the addresses (including the address for electronic mail or electronic mail message) to which a notice, or summons, or requisition, or order, or any other communication, under the Act (herein referred to as the communication) may be delivered or transmitted, shall be as per sub-rule (2).
(2) The addresses referred to in sub-rule (1)—
(a) for any communication delivered or transmitted in the manner provided under section 501(1)(a) or (b) shall be—
i. the address available in the PAN database of the addressee; or
ii. the address given in the income-tax return to which the communication relates; or
iii. the address available in the last income-tax return furnished by the addressee; or
iv. the address of the assessee as furnished in Form No. 98 under rule 160 or Form 165 under rule 237; or
v. in the case of addressee being a company, the address of the registered office as given on the website of the Ministry of Corporate Affairs; or
vi. the address available in the records of Unique Identification Authority of India or any authority or Department of Central Government or State Government or Local Self Government; or
vii. the address available in the records of any public service; utility provider; or
viii. the address furnished in any correspondence with any of the authorities or entities mentioned in (vi) and (vii),
but such communication shall not be delivered or transmitted to the address mentioned in items (i) to (viii), where the addressee furnishes in writing any other address for the purposes of communication to the income- tax authority or any person authorised by such authority issuing the communication;
(b) for any communication delivered or transmitted electronically shall be—
i. the email address available in the income-tax return furnished by the addressee to which the communication relates; or
ii. the email address available in the last income-tax return furnished by the addressee; or
iii. the registered mail address available in the e-filing portal of the assessee; or
iv. the e mail address given while making application for PAN; or
v. in the case of addressee being a company, the e-mail address of the company as available on the website of Ministry of Corporate Affairs; or
vi. any e-mail address given by the addressee to the income tax authority or any person authorised by such income-tax authority; or
vii. the e mail address available in the records.
(3) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall specify the procedure, formats and standards for ensuring secure transmission of electronic communication and shall also be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to such communication.
233. Authentication of notices and other documents.— (1) Every notice or other document communicated in electronic form by an income-tax authority under the Act shall be deemed to be authenticated, —
(a) in case of electronic mail or electronic mail message (herein referred to as the e-mail), if the name and office of such income-tax authority—
i. is printed on the e-mail body and if the notice or other document is in the e-mail body itself; or
ii. is printed on the attachment to the e-mail and if the notice or other document is in the attachment,
and the e-mail is issued from the designated e-mail address of such income-tax authority;
(b) in case of an electronic record, if the name and office of the income-tax authority—
i. is displayed as a part of the electronic record and if the notice or other document is contained as text or remark in the electronic record itself; or
ii. is printed on the attachment in the electronic record and if the notice or other document is in the attachment,
and such electronic record is displayed on the designated website.
(2) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall specify the designated e-mail address of the income-tax authority, the designated website and the procedure, formats and standards for ensuring authenticity of the communication.
(3) For the purposes of this rule, the expressions—
a. “electronic mail” and “electronic mail message” shall have the same meanings as respectively assigned to them in the Explanation to section 66A of the Information Technology Act, 2000 (21 of 2000); and
b. “electronic record” shall have the same meaning as assigned to it in section 2(1)(t) of the said Act.
234. Furnishing of annual statement by a non-resident having liaison office in India.— (1) The annual statement as provided under section 505 for every financial year, shall be furnished in Form No. 162 within eight months from the end of such financial year.
(2) The annual statement referred to in sub-rule (1) shall be furnished in electronic form along with digital signature, duly verified by the Chartered Accountant or the person authorised in this behalf by the non-resident person, who shall be known as the authorised signatory.
235. Information or documents to be furnished under section 506.— (1) Every Indian concern referred to in section 506 shall, for the purposes of the said section, maintain and furnish the information and documents in accordance with this rule.
(2) The information shall be furnished in Form No. 163, electronically under digital signature to the Assessing Officer having jurisdiction over the Indian concern, within a period of ninety days from the end of the financial year in which any transfer of the share of, or interest in, foreign company or entity referred to in section 9(10)(a) has taken place and where such transaction in respect of the share or the interest has the effect of directly or indirectly transferring the rights of management or control in relation to the Indian concern, the information shall be furnished in the said form within ninety days of that transaction.
(3) The Indian concern shall maintain the following along with its English translation, as required, and produce the same when called upon to do so by any income-tax authority in the course of any proceeding to substantiate the information furnished under sub-rule (2): —
(a) details of the immediate holding company or entity, intermediate holding company or companies or entity or entities and ultimate holding company or entity of the Indian concern;
(b) details of other entities in India of the group of which the Indian concern is a constituent;
(c) the holding structure of the shares of, or the interest in, the foreign company or entity before and after the transfer;
(d) any transfer contract or agreement entered into in respect of the share of, or interest in, any foreign company or entity that holds any asset in India through, or in, the Indian concern;
(e) financial and accounting statements of the foreign company or entity which directly or indirectly holds the assets in India through, or in, the Indian concern for two years prior to the date of transfer of the share or interest;
(f) information relating to the decision or implementation process of the overall arrangement of the transfer;
(g) information in respect of the foreign company or entity and its subsidiaries, relating to —
i. the business operation;
ii. personnel;
iii. finance and properties;
iv. internal and external audit or the valuation report, if any, forming basis of the consideration in respect of share, or the interest;
(h) the asset valuation report and other supporting evidence to determine the place of location of the share or interest being transferred;
(i) the details of payment of tax outside India, which relates to the transfer of the share or interest;
(j) the valuation report in respect of Indian asset and total assets duly certified by a merchant banker or accountant, as defined in section 515(3)(b), with supporting evidence; and
(k) documents which are issued in connection with the transactions under the accounting practices followed.
(4) Where there is more than one Indian concern that are constituent entities of a group, the information may be furnished by any one Indian concern, if, —
a. the group has designated such Indian concern to furnish information on behalf of all other Indian concerns that are constituent of the group; and
b. the information regarding the designated Indian concern has been conveyed in writing on behalf of the group to the Assessing Officer.
(5) Nothing contained in this rule shall have effect, if the designated Indian concern fails to furnish the information in accordance with the provisions of this rule.
(6) The Director General Income-tax (Systems) shall send one copy of the Form No. 163 to the Assessing Officer having jurisdiction over the transferor mentioned therein, whose income is chargeable to tax as per section 9(10).
(7) The information and documents specified in sub-rule (3) shall be kept and maintained for a period of eight years from the end of relevant tax year.
(8) For the purposes of this rule, —
a. “constituent entity” shall have the meaning assigned to it in section 511(10)(d);
b. “group” shall have the meaning assigned to it in section 511(10)(e);
c. “immediate holding company or entity” means the company or the entity that directly maintains the controlling interest in the Indian concern;
d. “intermediate holding company or entity” means a company or an entity that has controlling interest in another company or entity and is itself controlled by, or is subsidiary of, another company or entity; and
e. “ultimate holding company or entity” means a company or an entity that has ultimate control of the Indian concern, directly or indirectly, and such company or entity is not itself controlled by, or is subsidiary of, any other company or entity.
236. Form of statement to be furnished by producers of cinematograph films or persons engaged in specified activity.— (1) The statement required to be furnished under section 507 by a person carrying on production of cinematograph film or engaged in specified activity, or both, shall be in Form No. 164 for each tax year.
(2) Form No. 164 shall be furnished within sixty days from the end of the tax year.
(3) For the purpose of section 507, the prescribed authority shall be the Director General of Income-tax (Systems) or any person authorised by him.
(4) The Director General of Income-tax (Systems) or any person authorised by him shall forward Form No. 164 to the Assessing Officer.
(5) For the purposes of this rule, “specified activity” shall have the meaning assigned to it in section 507(3).
237. Furnishing of statement of financial transaction.— (1) The statement of financial transaction required to be furnished under section 508(1) shall be furnished in respect of all transactions as specified in sub-rule (2) in a financial year in Form No. 165 and shall be verified in the manner indicated therein.
(2) The statement referred to in sub-rule (1) shall be furnished by every person mentioned in column (4) of the following Table in respect of all the transactions of the nature specified in the corresponding entry in column 2 and the value specified in the corresponding entry in column 3 of the said Table, in accordance with the provisions of sub-rule (3), which are registered or recorded by him:
Table
| Sl. No. | Nature of transaction | Value of transaction | Class of person (reporting person) |
| 1 | 2 | 3 | 4 |
| 1. | (a) Payment made in cash for purchase of bank drafts or pay orders or banker’s cheque. | Amount, in a financial year in one or more account of a person, aggregating to— (a) ten lakh rupees or more, for a person having Permanent Account Number; or (b) ₹ 500000 or more, for a person not having Permanent Account Number. | A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act). |
| 1. | (b) Payments made in cash or otherwise for purchase of pre-paid instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007). | Amount aggregating to ten lakh rupees or more during the financial year. | — |
| (c) Cash deposits or cash withdrawals (including through bearer’s cheque) in or from one or more current account of a person. | Amount aggregating to fifty lakh rupees or more in a financial year. | — | |
| 2. | Cash deposits in one or more accounts (other than a current account and time deposit) of a person. | Cash deposits in a financial year in one or more account of a person, aggregating to—
(a) ten lakh rupees or more for a person having Permanent Account Number; or (b) Z 500000 or more fora person not having Permanent Account Number. |
(a) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act) ; or (b) Post Master General as referred to in section 2(j) of the Indian Post Office Act, 1898 (6 of 1898) (as it existed prior to its repeal) or the Regional Head as referred in the Post Office Rules, 2024 framed under the Post Office Act, 2023 (43 of 2023). |
| 3. | One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person. | Amount aggregating to ten lakh rupees or more in a financial year, for a person. | (a) A banking company or a co- operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act); or
(b) Post Master General as referred to in section 2(j) of the Indian Post Office Act, 1898 (6 of 1898) (as it existed prior to its repeal) or the Regional Head as referred in the Post Office Rules, 2024 framed under the Post Office Act, 2023 (43 of 2023); or (c) Nidhi referred to in section 406 of the Companies Act, 2013 (18 of 2013); or (d) a non-banking financial company which holds a certificate of registration under section 45-IA of the Reserve Bank of India Act, 1934 (2 of 1934), to hold or accept deposit from public. |
| 4. | Payments made by any person against bills raised in respect of one or more credit cards issued to that person, in a financial year. | Amount aggregating to—
(i) Z 100000 or more, in cash; or (ii) ten lakh rupees or more, by any other mode. |
A banking company or a co- operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the said Act) or any other company or institution issuing credit card. |
| 5. | Receipt from any person for acquiring bonds or debentures issued by the company or institution (other than the amount received on account of renewal of the bond or debenture issued by that company). | Amount aggregating to ten lakh rupees or more in a financial year, for a person. | A company or institution issuing bonds or debentures. |
| 6 | Receipt from any person for acquiring shares (including share application money) issued by the company. | Amount aggregating to ten lakh rupees or more in a financial year, for a person. | A company issuing shares. |
| 7. | Buy back of shares from any person (other than the shares bought in the open market). | Amount or value aggregating to ten lakh rupees or more in a financial year. | A company listed on a recognised stock exchange purchasing its own securities under section 68 of the Companies Act, 2013 (18 of 2013). |
| 8.
|
Receipt from any person for sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency, through a debit or credit card or through issue of traveler’s cheque or draft or any other instrument. |
Amount, in a financial year in one or more account of a person, aggregating to, —
(a) ten lakh rupees or more for a person having Permanent Account Number; or (b) Z 500000 or more for a person not having Permanent Account Number. |
Authorised person as referred to in section 2(c) of the Foreign Exchange Management Act, 1999 (42 of 1999). |
| 9. | Purchase or sale or gift or joint development agreement of an immovable property by any person. |
(a) Amount of forty-five lakh rupees or more; or(b) stamp duty value referred to in section 2(105) of the Act at forty-five lakh rupees or more. | Inspector-General appointed under section 3 of the Registration Act, 1908 (16 of 1908) or Registrar or Sub-Registrar appointed under section 6 of the said Act. |
| 10. | Purchase of a stamp paper by any person. | (a) Amount of Z 200000 or more in one transaction for a person having Permanent Account Number; or(b) Z 100000 or more in one transaction for a person not having Permanent Account Number. |
Stock Holding Corporation of India Limited. |
| 11. | Receipt from any person against insurance premium | Amount, in a financial year in one or more account of a person, aggregating to, —
(a) Z 500000 or more for a person having Permanent Account Number; or (b) Z 250000 or more for a person not having Permanent Account Number. |
Insurer as defined in section 2(9) of the Insurance Act, 1938 (4 of 1938). |
| 12. | Receipt of cash payment for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 11, if any.) |
Amount exceeding Z 200000. | Any person who is liable for audit under section 63. |
(3) The reporting person mentioned in column 4 of the Table under sub-rule (2) (other than the persons at Sl. Nos. 9,10 and 12) shall, while aggregating the amounts for determining the threshold amount for reporting in respect of any person as specified in column 3 of the said Table,—
(a) take into account all the accounts of the same nature as specified in column 2 of the said Table maintained in respect of that person during the financial year;
(b) aggregate all the transactions of the same nature as specified in column 2 of the said Table recorded or maintained in respect of that person during the fmancial year;
(c) attribute the entire value of the transaction or the aggregated value of all the transactions to all the person, in a case where the account is maintained or transaction is recorded in the name of more than one person; and
(d) apply the threshold limit separately to deposits and withdrawals in respect of transaction specified in item (c) under column 2, against Sl. No. 1 of the said Table.
(4) (a) The return in Form No. 165 referred to in sub-rule (1) shall be furnished to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation), through online transmission of electronic data to a server designated for this purpose under the digital signature of the person specified in sub-rule (8) and in accordance with the data structure specified in this regard by the Principal Director General of Income-tax (Systems) and in case of a reporting person, being a Post Master General or a Registrar or an Inspector General referred to in sub-rule (2), the said Form may be furnished in a computer readable media, including a Compact Disc or Digital Video Disc (DVD), along with the verification in Form-V on paper.
(b) The Board may designate an officer as Information Statement Administrator, not below the rank of a Joint
Director of Income-tax, for the purposes of day to day administration in relation to the furnishing of returns or statements.
(5) The statement of financial transactions referred to in sub-rule (1) shall be furnished on or before the 31st May, immediately following the financial year in which the transaction is registered or recorded.
(6) For the purposes of pre-filing the return of income, a statement of financial transaction under section 508(1) containing information relating to capital gains on transfer of listed securities or units of Mutual Funds, dividend distributed and interest paid or credited mentioned in column 2 of the following Table shall be furnished by the persons mentioned in column 4 of the said Table in such Form, at such frequency, and in such manner, as may be specified by the Principal Director General of Income Tax (Systems) or the Director General of Income Tax (Systems), as the case may be, with the approval of the Board:
Table
| Sl. No. | Nature of transaction | Value of
transaction |
Class of person (reporting person) |
| 1 | 2 | 3 | 4 |
| 1. | Capital gains on transfer of listed securities or units of Mutual Funds. | All transactions | (a) A recognised stock exchange; or
(b) a depository as defined in section 2(1)(e) of the Depositories Act, 1996 (22 of 1996); or (c) a recognised Clearing Corporation; or (d) a Registrar to an issue and share transfer agent registered under section 12(1) of the Securities and Exchange Board of India Act, 1992 (15 of 1992). |
| 2. | Dividend distributed | All transactions | A company. |
| 3. | Interest paid or credited | All transactions | (a) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 the said Act); or
(b) the Post Master General as referred to in section 2(j) of the Indian Post Office Act, 1898 (6 of 1898) (as it existed prior to its repeal) or the Regional Head as referred in the Post Office Rules, 2024 framed under the Post Office Act, 2023 (43 of 2023); or (c) a non-banking financial company which holds a certificate of registration under section 45-IA of the Reserve Bank of India Act, 1934 (2 of 1934), to hold or accept deposit from public. |
(7) (a) Every reporting person mentioned in column 4 of the Table under sub-rule (2) and column 4 of the Table under sub-rule (6), shall communicate to the Principal Director General of Income-tax (Systems) the name, designation, address and telephone number of the Designated Director and the Principal Officer and obtain a registration number. (b) It shall be the duty of every person specified in column 4 of the Table under sub-rule (2) and column 4 of the Table under sub-rule (6), its Designated Director, Principal Officer and employees to observe the procedure and the manner of maintaining information as specified by its regulator and ensure compliance with the obligations imposed under section 508 and rules 159, 160 and 161 and this rule.
(8) The statement of financial transaction referred to in sub-rules (1) and (6) shall be signed, verified and furnished by—
a. a person who holds a valid power of attorney from such Designated Director as specified in sub-rule (7), where the reporting person is a non-resident; and
b. the Designated Director in all other cases.
(9) For the purposes of this rule,—
(a) “Designated Director” means a person designated by the reporting person to ensure overall compliance with the obligations imposed under section 508 and rules 159, 160 and this rule and includes—
i. the Managing Director or a whole-time Director, as defined in the Companies Act, 2013 (18 of 2013), duly authorised by the Board of Directors if the reporting person is a company; or
ii. the managing partner, if the reporting person is a partnership firm; or
iii. the proprietor, if the reporting person is a proprietorship concern; or
iv. the managing trustee, if the reporting person is a trust; or
v. a person or individual, as the case may be, who controls and manages the affairs of the reporting entity if the reporting person is, an unincorporated association or, a body of individuals or, any other person;
(b) “digital signature” means a digital signature issued by any Certifying Authority authorised to issue such certificates by the Controller of Certifying Authorities;
(c) “listed securities” means the securities which are listed on any recognised stock exchange in India;
(d) “Mutual Fund” means a Mutual Fund as referred to in Schedule VII(20) and (21) of the Act;
(e) “Principal Officer” means an officer designated by the reporting person referred to in the Table in sub-rule (2) and in the Table in sub-rule (6);
(f) “recognised clearing corporation” shall have the same meaning as assigned to it in regulation 2(1)(o) of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 made under the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(g) “recognised stock exchange” shall have the same meaning as assigned to it in section 2(f) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(h) “Regulator” means a person or an authority or a Government, which is vested with the power to license, authorise, register, regulate or supervise the activity of the reporting person referred to in the Table in sub-rule (2) and in the Table in sub-rule (6);
(i) “securities” shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).
238. Definitions.— For the purposes of this rule and rules 239 and 240,—
(1) “financial account” means an account (other than an excluded account) maintained by a financial institution, and includes—
(i) a depository account;
(ii) a custodial account;
(iii) in the case of an investment entity, any equity or debt interest in the fmancial institution. Explanation.— For the purposes of this sub-clause “fmancial account” shall not include any equity interest or debt interest in an entity that is an investment entity solely because it, —
a. renders investment advice to, and acts on behalf of; or
b. manages portfolios for, and acts on behalf of,
a customer for the purpose of investing, managing, or administering financial assets deposited in the name of the customer with a financial institution that is not a non-participating financial institution other than such entity;
(iv) in the case of a financial institution not described in sub-clause (iii), any equity or debt interest in the financial institution, if the class of interests was established with a purpose of avoiding reporting in accordance with rule 239 and, in case of a U.S. reportable account, if the value of the debt or equity interest is determined, directly or indirectly, primarily by reference to assets that give rise to U.S. source withhold able payments; and
(v) any cash value insurance contract and any annuity contract issued or maintained by a financial institution, other than a non-investment-linked, non-transferable immediate life annuity that is issued to an individual and monetises a pension or disability benefit provided under an account that is an excluded account.
Explanation. —For the purposes of this clause, —
(a) “depository account” includes any commercial, checking, savings, time, or thrift account, or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar instrument maintained by a financial institution in the ordinary course of a banking or similar business and also an amount held by an insurance company pursuant to a guaranteed investment contract or similar agreement to pay or credit interest thereon but for an account other than a U.S. reportable account,—
A. the provisions of this clause shall apply with the effect that the phrase “financial Institution in the ordinary course of a banking or similar business” shall be substituted by the phrase “depository institution”;
B. a depository account shall also include, —
i. an account or notional account that represents all specified electronic money products held for the benefit of a customer; and
ii. an account that holds one or more central bank digital currencies for the benefit of a customer.
Explanation. — For the purposes of clause (a) of the Explanation to Rule 238(1), “central bank digital currencies” shall have the same meaning as assigned in rule 241;
(b) “custodial account” means an account (other than an insurance contract or annuity contract) for the benefit of another person that holds one or more financial assets;
(c) “equity interest” in a financial institution, being—
(i) a partnership firm, means either a capital or profits interest in the partnership firm;
(ii) a trust, means any interest held by any person treated as a settlor or beneficiary of all or a portion of the trust, or any other natural person exercising ultimate effective control over the trust;
Explanation. —A person will be treated as a beneficiary of a trust if he has the right to receive directly or indirectly a mandatory distribution or may receive, directly or indirectly, a discretionary distribution from the trust.
(d) “insurance contract” means a contract (other than an annuity contract) under which the issuer agrees to pay an amount upon the occurrence of a specified contingency involving mortality, morbidity, accident, liability, or property risk;
(e) “annuity contract” means a contract under which the issuer agrees to make payments for a period of time determined in whole or in part by reference to the life expectancy of one or more individuals;
(f) “cash value insurance contract” means an insurance contract (other than an indemnity reinsurance contract between two insurance companies) that has a cash value and in case of a U.S. reportable account such value is greater than an amount equivalent to fifty thousand U.S. dollars.
Explanation. —For the purposes of this clause, a single premium life insurance contract which does not permit an amount to be paid on surrender or termination of the contract and which does not allow amounts to be borrowed under or with regard to the contract, shall not constitute a cash value insurance contract;
(g) “cash value” means the greater of—
i. the amount that the policyholder is entitled to receive upon surrender or termination of the contract (determined without reduction for any surrender charge or policy loan); and
ii. the amount the policyholder can borrow under or with regard to the contract, but does not include an amount payable under an insurance contract, —
A. solely by reason of the death of an individual insured under a life insurance contract including a refund of a previously paid premium provided such refund is a limited risk refund; or
B. as a personal injury or sickness benefit or other benefit providing indemnification of an economic loss incurred upon the occurrence of the event insured against; or
C. as a refund of a previously paid premium (less cost of insurance charges whether or not actually imposed) under an insurance contract (other than a life insurance contract or an annuity contract) due to cancellation or termination of the contract, decrease in risk exposure during the effective period of the contract, or arising from the correction of a posting or similar error with regard to the premium for the contract; or
D. as a policyholder dividend (other than a termination dividend) provided that the dividend relates to an insurance contract under which the only benefits payable are described in sub-clause (B); or
E. as a return of an advance premium or premium deposit for an insurance contract for which the premium is payable at least annually if the amount of the advance premium or premium deposit does not exceed the next annual premium which will be payable under the contract;
(ga) for the purposes of clause (g) of Explanation to sub-rule (1), the provisions contained in sub-clause (A) and sub-clause (E) shall not apply in case of a U.S. reportable account;
(h) “excluded account” means, —
(i) a retirement account or pension account that satisfies the following requirements: —
A. the account is subject to regulation as a personal retirement account or is part of a registered or regulated retirement or pension plan for the provision of retirement or pension benefits (including disability or death benefits);
B. the account is tax-favoured where contributions to the account that would otherwise be subject to tax are deductible or excluded from the gross total income of the account holder or taxed at a reduced rate, or taxation of investment income from the account is deferred or taxed at a reduced rate;
C. information reporting is required to the income-tax authorities with respect to the account;
D. withdrawals are conditioned on reaching a specified retirement age, disability, or death, or penalties apply to withdrawals made before such specified events; and
E. either annual contributions are limited to an amount equivalent to fifty thousand U.S. dollars or less, or there is maximum lifetime contribution limit to the account of an amount equivalent to one million U.S. dollars or less, in each case applying the rules specified in rule 240 for account aggregation and currency translation. —A financial account that otherwise satisfies the requirements of item (E) will not fail to satisfy such requirements solely because such financial account may receive assets or funds transferred from one or more financial accounts that meet the requirements of sub-clause (i) or (ii) or from one or more retirement or pension funds that meets with the requirements of clause (E), (F) or (G) of Explanation to clause (5);
(ii) an account that satisfies the following requirements: —
A. the account is subject to regulation as a savings vehicle for purposes other than for retirement, or the account (other than U.S. reportable account) is subject to regulation as an investment vehicle for purposes other than for retirement and is regularly traded on an established securities market;
B. the account is tax-favoured where contributions to the account that will otherwise be subject to tax are deductible or excluded from the total income of the account holder or taxed at a reduced rate, or taxation of investment income from the account is deferred or taxed at a reduced rate;
C. withdrawals are conditioned on meeting specific criteria related to the purpose of the investment or savings account (for example, the provision of educational or medical benefits), or penalties apply to withdrawals made before such criteria are met; and
D. annual contributions are limited to an amount equivalent to fifty thousand U.S. dollars or less, applying the rules specified in rule 240 for account aggregation and currency translation.
Explanation.—A financial account that otherwise satisfies the requirements of item (D) will not fail to satisfy such requirements solely because such financial account may receive assets or funds transferred from one or more financial accounts that meet the requirements of sub-clause (i) or (ii) or from one or more retirement or pension funds that meets with the requirements of clause (E), (F) or (G) of Explanation to clause (5) of this rule;
(iii) an account established under the Senior Citizens Savings Scheme Rules, 2004 made under the Government Savings Banks Act, 1873 (5 of 1873);
(iv) a life insurance contract with a coverage period that will end before the insured individual attains age of ninety years, provided that the contract satisfies the following requirements:
A. periodic premiums, which do not decrease over time, are payable at least annually during the period the contract is in existence or until the insured attains age of ninety years, whichever is shorter;
B. the contract has no contract value that any person can access (by withdrawal, loan, or otherwise) without terminating the contract;
C. the amount (other than a death benefit) payable upon cancellation or termination of the contract cannot exceed the aggregate premiums paid for the contract, less the sum of mortality, morbidity, and expense charges (whether or not actually imposed) for the period or periods of the contract’s existence and any amounts paid prior to the cancellation or termination of the contract; and
D. the contract is not held by a transferee for value;
(v) an account that is held solely by an estate if the documentation for such account includes a copy of the deceased’s will or death certificate;
(vi) an account established in connection with any of the following:
(A) a court order or judgment;
(B) a sale, exchange, or lease of real or personal property, provided that the account satisfies the following requirements:—
a. the account is funded solely with a down payment, earnest money, deposit in an amount appropriate to secure an obligation directly related to the transaction, or a similar payment, or is funded with a financial asset that is deposited in the account in connection with the sale, exchange, or lease of the property;
b. the account is established and used solely to secure the obligation of the purchaser to pay the purchase price for the property, the seller to pay any contingent liability, or the lessor or lessee to pay for any damages relating to the leased property as agreed under the lease;
c. the assets of the account, including the income earned thereon, will be paid or otherwise distributed for the benefit of the purchaser, seller, lessor, or lessee (including to satisfy such person’s obligation) when the property is sold, exchanged, or surrendered, or the lease terminates;
d. the account is not a margin or similar account established in connection with a sale or exchange of a financial asset; and
e. the account is not associated with a depository account referred to in sub-clause (vii);
(C) an obligation of a fmancial institution servicing a loan secured by real property to set aside a portion of a payment solely to facilitate the payment of taxes or insurance related to the real property at a later time;
(D) an obligation of a financial institution solely to facilitate the payment of taxes at a later time;
(E) a foundation or capital increase of a company provided that the account satisfies the following requirements: —
i. the account is used exclusively to deposit capital that is to be used for the purpose of the foundation or capital increase of a company, as prescribed by law;
ii. any amounts held in the account are blocked until the Reporting Financial Institution obtains an independent confirmation regarding the foundation or capital increase;
iii. the account is closed or transformed into an account in the name of the company after the foundation or capital increase;
iv. any repayments resulting from a failed foundation or capital increase, net of service provider and similar fees, are made solely to the persons who contributed the amounts;
v. the account has not been established more than 12 months ago; and
vi. the account is not a U.S. reportable account;
(vii) in the case of an account other than a U.S. reportable account, a depository account that satisfies the following requirements:—
A. the account exists solely because a customer makes a payment in excess of a balance due with respect to a credit card or other revolving credit facility and the overpayment is not immediately returned to the customer; and
B. beginning on or before the 31st December, 2015, the financial institution implements its policies and procedures either to prevent a customer from making an overpayment in excess of an amount equivalent to fifty thousand U.S. dollars, or to ensure that any customer overpayment in excess of an amount equivalent to fifty thousand U.S. dollars is refunded to the customer within sixty days, in each case applying the rules specified in rule 240 for account aggregation and currency translation and for this purpose, a customer overpayment does not refer to credit balances to the extent of disputed charges but includes credit balances resulting from merchandise returns;
(viii) a depository account, other than U.S. reportable account, which represents all specified electronic money products held for the benefit of a customer, if the rolling average 90 day end-of-day aggregate account balance or value during any period of 90 consecutive days did not exceed USD 10,000 at any day during the calendar year or other appropriate reporting period;
(2) “financial asset” includes a security (for example, a share of stock in a corporation; partnership or beneficial ownership interest in a widely held or publicly traded partnership or trust; note, bond, debenture, or other evidence of indebtedness), partnership interest, commodity, swap (for example, interest rate swaps, currency swaps, basis swaps, interest rate caps, interest rate floors, commodity swaps, equity swaps, equity index swaps, and similar agreements), insurance contract or annuity contract, or any interest (including a futures or forward contract or option) in a security, partnership interest, commodity, swap, insurance contract, or annuity contract but “financial asset” shall not include a non-debt and direct interest in an immovable property and for an account other than a U.S. reportable account, “financial asset” shall also include any interest (including a futures or forward contract or option) in a relevant crypto-asset;
(3) “financial institution” means a custodial institution, a depository institution, an investment entity, or a specified insurance company.
Explanation. —For the purposes of this clause, —
a. “custodial institution” means any entity that holds, as a substantial portion of its business, financial assets for the account of others and where its income attributable to the holding of financial assets and related financial services equals or exceeds twenty per cent of its gross income during the three financial years preceding the year in which determination is made or the period during which the entity has been in existence, whichever is less;
b. “depository institution” means any entity that accepts deposits in the ordinary course of a banking or similar business but for an account other than a U.S. reportable account, “depository institution” shall also include an entity that holds specified electronic money products or central bank digital currencies for the benefit of customers;
c. “investment entity” means any entity, —
(A) that primarily conducts as a business one or more of the following activities or operations for or on behalf of a customer: —
i. trading in money market instruments (cheques, bills, certificates of deposit, derivatives, etc.); foreign exchange; exchange, interest rate and index instruments; transferable securities; or commodity futures trading; or
ii. individual and collective portfolio management; or
iii. otherwise investing, administering, or managing financial assets or money on behalf of other persons but for an account other than U.S. reportable account, the provisions of this item, —
a. shall apply with the effect that the phrase “financial assets” shall be substituted by the phrase “financial assets or relevant crypto-assets”;
b. shall not include the provision of services effectuating exchange transactions for or on behalf of customers.
Explanation. —For the purposes of item(iii), the term “exchange transaction” shall have the same meaning as assigned in rule 241;
(B) the gross income of which is primarily attributable to investing, reinvesting, or trading in financial assets, if the entity is managed by another entity that is a depository institution, a custodial institution, a specified insurance company, or an investment entity mentioned in sub-clause (A) of this clause;
Explanation 1.— An entity is treated as primarily conducting as a business one or more of the activities described in sub-clause (A) of this clause, or an entity’s gross income is primarily attributable to investing, reinvesting, or trading in financial assets for purposes of sub-clause (B) of this clause, if the entity’s gross income attributable to the relevant activities equals or exceeds fifty per cent of the gross income of the entity during the shorter of the three-year period ending on 31st March of the year preceding the year in which the determination is made or the period during which the entity has been in existence.
Explanation 2.—The term “investment entity” shall not include an entity that is an active non-financial entity merely because it meets any of the criteria provided in sub-clause (iv), (v), (vi) or (vii) of clause (A) of Explanation to clause (6) of this rule but for an account other than a U.S. reportable account, the provisions of sub-clause (B) and Explanation 1 shall apply with the effect that the phrase “financial assets” shall be substituted by the phrase “financial assets or relevant crypto-assets”;
d. “specified insurance company” means any entity that is an insurance company (or the holding company of an insurance company) that issues, or is obligated to make payments with respect to, a Cash Value Insurance Contract or an Annuity Contract;
(4) “non-participating financial institution” means a financial institution defined in clause (r) of Article 1 of the agreement between the Government of the Republic of India and the Government of the United States of America to improve international tax compliance and to implement Foreign Account Tax Compliance Act of the United States of America (hereinafter referred to as the FATCA agreement), but does not include, —
a. an Indian financial institution; or
b. other jurisdiction, being a jurisdiction that has in effect an agreement with the United States of America to facilitate the implementation of Foreign Account Tax Compliance Act (hereinafter referred to as other partner jurisdiction), financial institution,
other than a financial institution treated as a non-participating financial institution pursuant to sub-paragraph (b) of paragraph 2 of Article 5 of the FATCA agreement or the corresponding provision in an agreement between the United States of America and other partner jurisdiction;
(5) “non-reporting financial institution” means any financial institution that is, —
(a) a Governmental entity, International Organisation or Central Bank, other than
i. with respect to a payment that is derived from an obligation held in connection with a commercial financial activity of a type engaged in by a specified insurance company, custodial institution, or depository institution; or
ii. with respect to the activity of maintaining central bank digital currencies for account holders which are not financial institutions, governmental entities, international organisations or central banks but the provisions of this item shall apply in respect of an account other than a U.S. reportable account;
(b) a Treaty Qualified Retirement Fund; a Broad Participation Retirement Fund; a Narrow Participation Retirement Fund; or a Pension Fund of a Governmental entity, International Organization or Central Bank;
(c) a non-public fund of the armed forces, Employees’ State Insurance Fund, a gratuity fund or a provident fund;
(d) an entity that is an Indian financial institution only because it is an investment entity, provided that each direct holder of an equity interest in the entity is a fmancial institution referred to in sub-clauses (a) to (c), and each direct holder of a debt interest in such entity is either a depository institution (with respect to a loan made to such entity) or a financial institution referred to in sub-clauses (a) to (c);
(e) a qualified credit card issuer;
(f) an investment entity established in India that is a financial institution only because it, —
I. renders investment advice to, and acts on behalf of; or
II. manages portfolios for, and acts on behalf of; or
III. executes trades on behalf of, a customer for the purposes of investing, managing, or administering funds or securities deposited in the name of the customer with a financial institution other than a non-participating financial institution;
(g) an exempt collective investment vehicle;
(h) a trust established under any law for the time being in force to the extent that the trustee of the trust is a reporting financial institution and reports all information required to be reported under rule 239 with respect to all reportable accounts of the trust;
(i) a financial institution with a local client base, in case of any U.S. reportable account;
(j) a local bank, in case of any U.S. reportable account;
(k) a financial institution with only low value accounts, in case of any U.S. reportable account;
(l) sponsored investment entity and controlled foreign corporation, in case of any U.S. reportable account; or
(m) sponsored closely held investment vehicle, in case of any U.S. reportable account.
(n) a qualified non-profit entity in respect of an account other than a U.S. reportable account;
Explanation. —For the purpose of this clause, —
(A) “Governmental entity” means the Government of a country or territory, any political sub-division
of a country or territory (including a State, province, county, or municipality), or any wholly owned agency or instrumentality or controlled entity of a country or territory or of any one or more of the foregoing (where each is also a “Governmental entity”) and includes the integral parts, controlled entities, and political subdivisions of such country or territory.
Explanation. —For the purpose of clause (A), —
(i) Subject to provisions of clauses (iii) and (iv), an “integral part” of a country or territory
means any person, organisation, agency, bureau, fund, instrumentality, or other body, by whatever name called, that constitutes a governing authority of a country or territory and the net earnings of the governing authority must be credited to its own account or to other accounts of the country or territory, with no portion inuring to the benefit of any private person but integral part does not include any individual, who is a sovereign, official, or administrator acting in a private or personal capacity;
(ii) Subject to the provisions of clauses (iii) and (iv), a controlled entity means an entity that is
separate in form from the country or territory or that otherwise constitutes a separate juridical entity; so, however, that,—
a. the entity is wholly owned and controlled by one or more Governmental entities directly or through one or more controlled entities;
b. the entity’s net earnings are credited to its own account or to the accounts of one or more Governmental entities, with no portion of its income inuring to the benefit of any private person; and
c. the entity’s assets vest in one or more Governmental entities upon dissolution;
(iii) the income does not inure to the benefit of private persons if such persons are the intended
beneficiaries of a Governmental programme, and the programme activities are performed for the general public with respect to the common welfare or relate to the administration of a Department of Government;
(iv) income is considered to inure to the benefit of private persons if the income is derived
from Governmental entity engaged in a commercial business, such as a commercial banking business, which provides financial services to private persons;
(B) “International Organisation” means any international organization or wholly owned agency or instrumentality thereof including any inter-Governmental organisation, —
a. that is comprised primarily of Governments;
b. that has in effect a headquarters or substantially similar agreement with India; and
c. the income of which does not inure to the benefit of private persons;
(C) “Central Bank” means a bank that is by law or Government sanction the principal authority, other than the Government of the country or territory itself, issuing instruments intended to circulate as currency including an instrumentality that is separate from the Government of the country or territory, whether or not owned in whole or in part by that country or territory;
(D) “Treaty Qualified Retirement Fund” means a fund established in India, provided that the fund is entitled to benefits under an agreement between India and the United States of America on income that it derives from sources within the United States of America (or would be entitled to such benefits if it derived any such income) as a resident of India that satisfies any applicable limitation on benefits requirement, and is operated principally to administer or provide pension or retirement benefits;
(E) “Broad Participation Retirement Fund” means a fund established to provide retirement, disability, or death benefits, or any combination thereof, to beneficiaries who are current or former employees (or persons nominated by such employees) of one or more employers in consideration for services rendered but the fund, —
i. does not have any beneficiary with a right to more than five per cent of the fund’s assets;
ii. is subject to Government regulation and provides information reporting to the income-tax authorities; and
iii. satisfies at least one of the following requirements: —
a. the fund is generally exempt from tax on investment income, or taxation of such income is deferred or taxed at a reduced rate, due to its status as a retirement or pension plan;
b. the fund receives at least fifty per cent of its total contributions other than transfer of assets from other plans referred to in clauses (D) to (G) or from retirement and pension accounts referred to in sub-clause (i) of clause (h) of Explanation to clause (1) from the sponsoring employers;
c. distributions or withdrawals from the fund are allowed only in the event of retirement, disability or death except rollover distributions to other retirement funds referred to in clauses (E) to (G), or retirement and pension accounts referred to in sub-clause (i) of clause (h) of Explanation to clause (1), or penalties which apply to distributions or withdrawals made before such events; or
d. contributions (other than permitted make-up contributions) by employees to the fund are limited by reference to earned income of the employee or may not exceed an amount equivalent to fifty thousand U.S. dollars annually, applying the procedures set forth in rule 240 for account aggregation and currency translation;
(F) “Narrow Participation Retirement Fund” means a fund established to provide retirement, disability, or death benefits to beneficiaries who are current or former employees (or persons nominated by such employees) of one or more employers in consideration for services rendered; so, however, that,
i. the fund has less than fifty participants;
ii. the fund is sponsored by one or more employers who are not investment entities or passive non-financial entities;
iii. the employee and employer contributions to the fund other than transfer of assets from retirement and pension accounts referred to in sub-clause (i) of clause (h) of Explanation to clause (1) are limited by reference to earned income and compensation of the employee, respectively;
iv. participants who are not residents in India are not entitled to more than twenty per cent of the fund’s assets; and
v. the fund is subject to Government regulation and provides information reporting to the income-tax authorities;
(G) “Pension Fund of a Governmental entity, International Organisation or Central Bank” means a fund established by a Governmental entity, International Organisation or Central Bank to provide retirement, disability or death benefits to beneficiaries or participants who are current or former employees (or persons nominated by such employees), or who are not current or former employees, if the benefits provided to such beneficiaries or participants are in consideration of personal services rendered to the Governmental entity, International Organisation or Central Bank;
(H) “non-public fund of the armed forces” means a fund established in India as a regimental fund or non-public fund by the armed forces of the Union of India for the welfare of the current and former members of the armed forces and whose income is exempt from tax under Schedule VII(1) of the Act;
(I) “Employees’ State Insurance Fund” means the fund established as Employees’ State Insurance Fund under the provisions of the Employees’ State Insurance Act, 1948 (34 of 1948), to provide medical expenses of low-income factory workers in India;
(J) “gratuity fund” means a fund established under the Payment of Gratuity Act, 1972 (39 of 1972), to provide for the payment of a gratuity to certain types of employees of an Indian employer specified in the Payment of Gratuity Act, 1972;
(K) “provident fund” means a fund established under the Provident Funds Act, 1925 (19 of 1925) or the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) to provide current and former employees of Indian employers retirement benefits in consideration for services rendered but that fund, —
i. does not have any beneficiary with a right to more than five per cent of the fund’s assets;
ii. is subject to Government regulation and provides annual information reporting about its beneficiaries to the income-tax authorities;
iii. is generally exempt from tax on investment income due to its status as a provident fund; and
iv. contributions (other than permitted make-up contributions) by employees to the fund are limited by reference to earned income of the employee or may not exceed an amount equivalent to fifty thousand U.S. dollars annually, applying the procedures set forth in rule 240 for account aggregation and currency translation;
(L) “qualified credit card issuer” means a financial institution satisfying the following requirements: —
i. it is a financial institution only because it is an issuer of credit cards and accepts deposits only when a customer makes a payment in excess of a balance due with respect to the card and the overpayment is not immediately returned to the customer; and
ii. beginning on or before the 1st July, 2014, the financial institution implements policies and procedures either to prevent a customer from making an overpayment in excess of an amount equivalent to fifty thousand U.S. dollars or to ensure that any customer overpayment in excess of an amount equivalent to fifty thousand U.S. dollars is refunded to the customer within sixty days, in each case applying the rules set forth in rule 240 for account aggregation and currency translation.
Explanation. —For the purpose of this sub-clause, a customer overpayment does not refer to credit balances to the extent of disputed charges but includes credit balances resulting from merchandise returns;
(M) “exempt collective investment vehicle” means an investment entity that is regulated as a collective
investment vehicle, provided that all of the interests in the collective investment vehicle are held by or through persons other than,—
i. those referred to in sub-clauses (a) to (c) of clause (6); and
ii. a non-participating financial institution.
Explanation. —An investment entity which is regulated as a collective investment vehicle does not fail to qualify under this clause as an exempt collective investment vehicle, only because it has issued physical shares in bearer form; so, however, that—
i. the collective investment vehicle has not issued, and does not issue, any physical shares in bearer form after the 31st December, 2012;
ii. the collective investment vehicle retires all such shares upon surrender;
iii. the collective investment vehicle performs the due diligence procedures set forth in rule 240 and reports any information required to be reported with respect to any such shares when such shares are presented for redemption or other payment; and
iv. the collective investment vehicle has in place policies and procedures to ensure that such shares are redeemed or immobilised as soon as possible, and in any event prior to the 1st January, 2017;
(N) “financial institution with a local client base” means a financial institution satisfying the following
requirements: —
i. it has been granted a licence and is regulated as a financial institution under any law for the time being in force;
ii. the financial institution does not have a fixed place of business outside India.
Explanation. —For the purposes of this sub-clause, a fixed place of business does not include a location that is not advertised to the public and from which the financial institution performs only administrative support functions; and
iii. the financial institution does not solicit customers or account holders outside India.
Explanation. —For the purpose of this sub-clause, a financial institution shall not be considered to have solicited customers or account holders outside India merely because the financial institution,—
(a) operates a website, provided that the web site does not specifically indicate that the financial institution provides financial accounts or services to non-residents, and does not otherwise target or solicit customers or account holders who are resident of any country or territory outside India for tax purposes; or
(b) advertises in print media or on a radio or television station which is distributed or aired primarily within India but is also incidentally distributed or aired in other countries, provided that the advertisement does not specifically indicate that the financial institution provides financial accounts or services to non-residents, and does not otherwise target or solicit customers or account holders who are resident of any country or territory outside India for tax purposes;
iv. the financial institution is required under any law for the time being in force to identify resident account holders for purposes of either information reporting or withholding of tax with respect to financial accounts held by residents or for purposes of satisfying the due diligence requirements under the Prevention of Money-laundering Act, 2002 (15 of 2003);
v. at least ninety eight per cent of the financial accounts by value maintained by the financial institution are held by residents;
vi. beginning on or before the 30th June, 2014, the policies and procedures of the financial institution are consistent with those set forth in rule 240, to prevent the financial institution from providing a financial account to any non-participating financial institution and to monitor whether the financial institution opens or maintains a financial account for any reportable person who is not a resident of India (including a non-resident who was a resident of India when the financial account was opened but subsequently ceases to be a resident of India) or any passive non-financial entity with controlling persons who are reportable persons;
vii. such policies and procedures explicitly provide that if any financial account held by a reportable person who is not a resident of India or by a passive non-financial entity with controlling persons who are reportable persons who are not resident of India is identified, the financial institution shall report such financial account as would be required if the financial institution was a reporting financial institution or close such financial account;
viii. with respect to a pre-existing account held by an individual who is not a resident of India or by an entity, the financial institution shall review those pre-existing accounts in accordance with the procedures set forth in rule 240 applicable to pre-existing accounts to identify any reportable account or financial account held by a non-participating financial institution, and shall report such financial account as would be required if the financial institution were a reporting financial institution or close such financial account;
ix. each related entity of the financial institution that is a financial institution must be incorporated or organised in India and, with the exception of any related entity that is a retirement fund referred to in clauses (D) to (G) of this Explanation, satisfies the requirements set forth in this clause; and
x. the financial institution must not have policies or practices which discriminate against opening or maintaining financial accounts for individuals who are specified U.S. persons and residents of India;
(O) “local bank” means a financial institution satisfying the following requirements: —
i. the financial institution operates only as (and is licensed and regulated under any law for the time being in force) a bank, or a credit union or similar cooperative credit organisation which is operated without profit;
ii. the business of the financial institution consists primarily of receiving deposits from and making loans to, with respect to a bank, unrelated retail customers and, with respect to a credit union or similar cooperative credit organisation, members, provided that no member has a greater than five per cent interest in such credit union or cooperative credit organisation;
iii. the financial institution satisfies the requirements set forth in sub-clauses (ii) and (iii) of clause (N), provided that, in addition to the limitations on the website referred to in sub-clause (iii) of clause (N), the website does not permit the opening of a financial account;
iv. the financial institution does not have more than an amount equivalent to one hundred seventy-five million U.S. dollars in assets on its balance sheet, and the financial institution and any related entity, taken together, does not have more than an amount equivalent to five hundred million U.S. dollars in total assets on its consolidated or combined balance sheets; and
v. any related entity must be incorporated or organised in India, and any related entity that is a financial institution, with the exception of any related entity that is a retirement fund referred to in clauses (D) to (G) or a financial institution with only low-value accounts referred to in clause (P), must satisfy the requirements set forth in this clause. Explanation.—Regional Rural Banks constituted under the Regional Rural Bank Act, 1976 (21 of 1976), Urban Cooperative Banks constituted under respective State Cooperative Societies Acts or Multi State Cooperative Societies Act, State Cooperative Banks or District Central Cooperative Banks constituted under respective State Cooperative Societies Act and Local Area Banks licensed under the Banking Regulations Act, 1949 (10 of 1949) and regulated and registered as public limited companies under the Companies Act, 1956 (1 of 1956) or Companies Act, 2013 (18 of 2013), that satisfy the requirement under sub-clause (iv) shall be treated as local bank for the purpose of this clause;
(P) “financial institution with only low-value accounts” means a financial institution satisfying the following requirements: —
i. the financial institution is not an investment entity;
ii. no financial account maintained by the financial institution or any related entity has a balance or value in excess of an amount equivalent to fifty thousand U.S. dollars, applying the procedures prescribed in rule 240 for account aggregation and currency translation; and
iii. the financial institution does not have more than fifty million U.S. dollars in assets on its balance sheet, and the financial institution and any related entities, taken together, do not have more than fifty million U.S. dollars in total assets on their consolidated or combined balance sheets;
(Q) “sponsored investment entity and controlled foreign corporation” means a financial institution described in the following sub-clauses: —
(i) a financial institution is a sponsored investment entity if—
a. it is an investment entity established in India that is not a qualified intermediary (being an intermediary that is a party to a withholding agreement with the United States of America), withholding foreign partnership, or withholding foreign trust; and
b. an entity has agreed with the financial institution to act as a sponsoring entity for the financial institution;
(ii) a financial institution is a sponsored controlled foreign corporation if—
a. the financial institution is a controlled foreign corporation established under any law for the time being in force in India that is not a qualified intermediary (being an intermediary which is a party to a withholding agreement with the United States of America), withholding foreign partnership, or withholding foreign trust;
b. the financial institution is wholly owned, directly or indirectly, by a reporting U.S. financial institution referred to in Article 1 of the FATCA agreement that agrees to act, or requires an affiliate of the financial institution to act, as a sponsoring entity for the financial institution; and
c. the financial institution shares a common electronic account system with the sponsoring entity that enables the sponsoring entity to identify all account holders and payees of the financial institution and to access all account and customer information maintained by the financial institution including, but not limited to, customer identification information, customer documentation, account balance, and all payments made to the account holder or payee,
and that complies with the following requirements: —
I. the sponsoring entity is authorised to act on behalf of the financial institution (such as a fund manager, trustee, corporate director, or managing partner) to fulfil applicable registration requirements of the United States of America;
II. the sponsoring entity has registered as a sponsoring entity with the United States of America;
III. if the sponsoring entity identifies any U.S. reportable account with respect to the financial institution, the sponsoring entity registers the financial institution pursuant to applicable registration requirements of the United States of America on or before the 31st December, 2015 or the date that is ninety days after such U.S. reportable account is first identified, whichever is later;
IV. the sponsoring entity agrees to perform, on behalf of the financial institution, all due diligence, withholding, reporting, and other requirements that the financial institution would have been required to perform if it were a reporting financial institution;
V. the sponsoring entity identifies the financial institution and includes the identifying number of the financial institution (obtained by following applicable registration requirements of the United States of America) in all its reporting completed on the financial institution’s behalf; and
VI. the sponsoring entity has not had its status as a sponsor revoked;
(R) “sponsored, closely held investment vehicle” means a financial institution satisfying the following requirements: —
i. it is a financial institution only because it is an investment entity and is not a qualified intermediary (being an intermediary that is a party to a withholding agreement with the United States of America), withholding foreign partnership, or withholding foreign trust;
ii. the sponsoring entity is a reporting U.S. financial institution referred to in Article 1 of the FATCA agreement, reporting financial institution, or participating foreign financial institution defined in Annex II of the FATCA agreement, is authorised to act on behalf of the financial institution (such as a professional manager, trustee, or managing partner), and agrees to perform, on behalf of the financial institution, all due diligence, withholding, reporting, and other requirements which the financial institution would have been required to perform if it were a reporting financial institution;
iii. the financial institution does not act as an investment vehicle for unrelated parties;
iv. twenty or less than twenty individuals own all the debt interests and equity interests in the financial institution (other than debt interests owned by participating foreign financial institution defined in Annex II of the FATCA agreement and non-reporting financial institutions and equity interests owned by an entity if that entity owns hundred per cent of the equity interests in the financial institution and is itself a sponsored financial institution described in this clause); and
v. the sponsoring entity complies with the following requirements: —
a. it has been registered as a sponsoring entity in terms of the Foreign Account Tax Compliance Act of the United States of America;
b. the sponsoring entity agrees to perform, on behalf of the financial institution, all due diligence, withholding, reporting, and other requirements that the financial institution would have been required to perform if it were a reporting financial institution and retains documentation collected with respect to the financial institution for a period of six years;
c. the sponsoring entity identifies the financial institution in all its reporting completed on the financial institution’s behalf; and
d. the sponsoring entity has not had its status as a sponsor revoked;
(S) “Qualified Non-Profit Entity” means an entity resident in India that has obtained confirmation by the Income-tax Department or other governmental authority of India that such entity meets all of the following conditions: —
i. it is established and operated in India exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or it is established and operated in India and it is a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare;
ii. it is exempt from income tax in India;
iii. it has no shareholders or members who have a proprietary or beneficial interest in its income or assets;
iv. the applicable laws of India or the entity’s formation documents do not permit any income or assets of the entity to be distributed to, or applied for the benefit of, a private person or a noncharitable entity other than pursuant to the conduct of the entity’s charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the entity has purchased; and
v. the applicable laws of India or the entity’s formation documents require that, upon the entity’s liquidation or dissolution, all of its assets be distributed to a Governmental entity or other entity that meets the conditions set out in (i) to (v), or escheat to the Government of India or any political subdivision thereof;
(6) “reportable account” means a financial account which has been identified, pursuant to the due diligence procedures provided in rule 240, as held by, —
a. a reportable person; or
b. an entity, not based in United States of America, with one or more controlling persons that is a specified U.S. person; or
c. a passive non-financial entity with one or more controlling persons that is a person described in sub-clause (b) of clause (8) of this rule.
Explanation. —For the purpose of this clause, —
(A) “active non-financial entity” means any non-financial entity which fulfils any of the following criteria: —
i. less than fifty per cent of the entity’s gross income for the preceding financial year is passive income and less than fifty per cent of the assets held by the entity during the preceding financial year are assets that produce or are held for the production of passive income; or
ii. the stock of the entity is regularly traded on an established securities market or the non-financial entity is a related entity of an entity, the stock of which is regularly traded on an established securities market.
Explanation. —For the purpose of this sub-clause, an established securities market means an exchange that is recognised and supervised by a Governmental authority in which the securities market is located and that has a meaningful annual value of shares traded on the exchange;
iii. the entity is a Governmental entity, an International Organization, a Central Bank, or an entity wholly owned by one or more of these entities; or
iv. substantially all of the activities of the entity consist of holding (in whole or in part) the outstanding stock of, or providing financing and services to, one or more subsidiaries that engage in trades or businesses other than the business of a financial institution but an entity shall not qualify for this status if it functions as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes; or
v. the entity is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a financial institution, provided that the entity shall not qualify for this exception after the date that is twenty four months after the date of the initial organisation of the entity; or
vi. the entity was not a financial institution in the past five years, and is in the process of liquidating its assets or is reorganising with intent to continue or recommence operations in a business other than that of a financial institution; or
vii. the entity primarily engages in financing and hedging transactions with, or for, related entities which are not financial institutions, and does not provide financing or hedging services to any entity which is not a related entity, provided that the group of any such related entities is primarily engaged in a business other than that of a financial institution; or
viii. the entity fulfils all of the following requirements: —
a. it is established and operated in India exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or it is established and operated in India and it is a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare;
b. it is exempt from income-tax in India;
c. it has no shareholders or members who have a proprietary or beneficial interest in its income or assets;
d. the applicable laws of the entity’s country or territory of residence or the entity’s formation documents do not permit any income or assets of the entity to be distributed to, or applied for the benefit of, a private person or non-charitable entity other than pursuant to the conduct of the entity’s charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the entity has purchased; and
e. the applicable laws of the entity’s country or territory of residence or the entity’s formation documents require that, upon the entity’s liquidation or dissolution, all of its assets must be distributed to a Governmental entity or other non-profit organization, or escheat to the Government of the entity’s country or territory of residence or any political sub-division thereof.
Explanation. —For the purpose of this sub-clause, the following shall be treated as fulfilling the criteria provided in the said sub-clause: —
I. an Investor Protection Fund referred to in Schedule III (27) of the Act; and
II. an Investor Protection Fund referred to in Schedule III (28) of the Act;
(B) “controlling person” means the natural person who exercises control over an entity and includes a beneficial owner as determined under sub-rule (3) of rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 under the prevention of Money-Laundering Act, 2002 (15 of 2003).
Explanation 1. —In determining the beneficial owner, the procedure specified in the following circular as amended from time to time shall be applied: —
i. AML.BC. No.71/14.01.001/2012-13, issued on the 18th January, 2013 by the Reserve Bank of India; or
ii. CIR/MIRSD/2/2013, issued on the 24th January, 2013 by the Securities and Exchange Board of India; or
iii. IRDA/SDD/GDL/CIR/019/02/2013, issued on the 4th February, 2013 by the Insurance Regulatory and Development Authority.
Explanation 2. —In the case of a trust, the controlling person means the settlor, the trustees, the protector (if any), the beneficiaries or class of beneficiaries, and any other natural person exercising ultimate effective control over the trust, and in the case of a legal arrangement other than a trust, the said expression means the person in equivalent or similar position;
(C) “non-financial entity” means any entity that is not a financial institution;
(D) “passive non-financial entity” means, —
i. any non-financial entity which is not an active non-financial entity; or
ii. an investment entity described in sub-clause (B) of clause (c) of the Explanation to clause (3), which is not located in any of the jurisdictions specified by the Central Board of Direct Taxes in this behalf; or
iii. not a withholding foreign partnership or a withholding foreign trust;
(E) an entity is a “related entity” of another entity if either entity controls the other entity, or the two entities are under common control.
Explanation. —For the purpose of this clause control includes direct or indirect ownership of more than fifty per cent of the votes and value in an entity;
(F) Subject to the provisions of clause (G),”passive income” includes income by way of, —
i. dividends;
ii. interest;
iii. income equivalent to interest;
iv. rents and royalties (other than rents and royalties derived in the active conduct of a business conducted, at least in part, by employees of the non-financial entity);
v. annuities;
vi. the excess of gains over losses from the sale or exchange of financial assets;
vii. the excess of gains over losses from transactions (including futures, forwards, options, and similar transactions) in any financial assets;
viii. the excess of foreign currency gains over foreign currency losses;
ix. net income from swaps; or
x. amounts received under cash value insurance contracts:
(G) Passive income will not include, in the case of a non-financial entity that regularly acts as a dealer in financial assets, any income from any transaction entered into in the ordinary course of such dealer’s business as such a dealer.
(7) “relevant crypto-asset” shall have the same meaning as assigned in rule 241;
(8) “reporting financial institution” means, —
a. a financial institution (other than a non-reporting financial institution) which is resident in India, but excludes any branch of such institution, that is located outside India; and
b. any branch, of a financial institution (other than a non-reporting financial institution) which is not resident in India, if that branch is located in India;
(9) “reportable person” means, —
a. one or more specified U.S. persons; or
b. one or more persons other than, —
i. an entity the stock of which is regularly traded on one or more established securities markets;
ii. any entity that is a related entity of an entity mentioned in item (i);
iii. a Governmental entity;
iv. an international organisation;
v. a Central bank; or
vi. a financial institution,
that is a resident of any country or territory outside India (except the United States of America) under the tax laws of such country or territory or an estate of a decedent who was a resident of any country or territory outside India (except the United States of America) under the tax laws of such country or territory;
(10) “Specified Electronic Money Product” means any product that satisfies following criteria: —
a. it is a digital representation of a single fiat currency;
b. it is issued on receipt of funds for the purpose of making payment transactions;
c. it is represented by a claim on the issuer denominated in the same fiat currency;
d. it is accepted in payment by a natural or legal person other than the issuer; and
e. it is, by virtue of regulatory requirements to which the issuer is subject, redeemable at any time and at par value for the same fiat currency upon request of the holder of the product.
Explanation — For the purposes of this clause, —
i. “Specified Electronic Money Product” does not include a product created for the sole purpose of facilitating the transfer of funds from a customer to another person pursuant to instructions of the customer;
ii. A product is not created for the sole purpose of facilitating the transfer of funds if, in the ordinary course of business of the transferring Entity, either the funds connected with such product are held longer than 60 days after receipt of instructions to facilitate the transfer, or, if no instructions are received, the funds connected with such product are held longer than 60 days after receipt of the funds;
iii. “fiat currency” shall have the same meaning as assigned in rule 241.
(11) “specified U.S. person” means a U.S. person, other than the persons referred to in sub-clauses (i) to (xiii) of clause (ff) of Article 1 of the FATCA agreement;
(12) “U.S. person” means, —
(a) an individual, being a citizen or resident of the United States of America;
(b) a partnership or corporation organized in the United States of America or under the laws of the United States of America or any State thereof;
(c) a trust if, —
i. a court within the United States of America would have authority under applicable law to render orders or judgments concerning substantially all issues regarding administration of the trust; and
ii. one or more U.S. persons have the authority to control all substantial decisions of the trust; or
(d) an estate of a decedent who was a citizen or resident of the United States of America;
13) “U.S. reportable account” means a financial account maintained by a reporting financial institution and, pursuant to the due diligence procedures provided in rule 240, is identified to be held by one or more specified U.S. persons or by an entity not based in the United States of America with one or more controlling persons which is a specified U.S. Person;
14)”U.S. source withhold able payment” means any payment of interest (including any original issue discount), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, and other fixed or determinable annual or periodical gains, profits, and income, if such payment is from sources within the United States of America but a U.S. source withhold able payment shall not include any payment that is not treated as a withhold able payment in relevant Treasury Regulations of the United States of America;
15) “withholding foreign partnership” means a foreign partnership that has entered into a withholding agreement with the United States of America in which it agrees to assume primary withholding responsibility for all payments which are made to it for its partners, beneficiaries or owners;
16) “withholding foreign trust” means a foreign trust that has entered into a withholding agreement with the United States of America in which it agrees to assume primary withholding responsibility for all payments which are made to it for its partners, beneficiaries or owners.
239. Information to be maintained and reported.—
(1) The following information shall be maintained and reported by a reporting financial institution in respect of each reportable account: —
(a) the name, address, taxpayer identification number (assigned to the account holder by the country or territory of his residence for tax purposes) and date and place of birth (in the case of an individual) of each reportable person, that is an account holder of the account but that in the case of an account other than a U.S. reportable account, a reporting financial institution shall also,—
I. maintain and report whether the account holder has provided a valid self-certification;
II. report whether the account is a joint account, including the number of joint account holders;
(b) in the case of any entity which is an account holder and which, after application of due diligence procedures as provided in rule 240, is identified as having one or more controlling persons that is a reportable person, —
i. the name and address of the entity, taxpayer identification number assigned to the entity by the country or territory of its residence; and
ii. the name, address, date and place of birth of each such controlling person and taxpayer identification number assigned to such controlling person by the country or territory of his residence.
but that in the case of an account other than a U.S. reportable account, a reporting financial institution shall also, —
I. maintain and report the role(s) by virtue of which each reportable person is a controlling person of the entity and whether a valid self-certification has been provided for each reportable person;
II. report whether the account is a joint account, including the number of joint account holders;
(c) the account number (or functional equivalent in the absence of an account number), but that in the case of an account other than a U.S. reportable account, a reporting financial institution shall also maintain and report the type of account and whether the account is a pre-existing account or a new account;
(d) the account balance or value (including, in the case of a cash value insurance contract or annuity contract, the cash value or surrender value) at the end of relevant calendar year or, if the account was closed during such year, immediately before closure;
(e) in the case of any custodial account, –
i. the total gross amount of interest, the total gross amount of dividends, and the total gross amount of other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year; and
ii. the total gross proceeds from the sale or redemption of financial assets paid or credited to or with respect to the account during the calendar year with respect to which the reporting financial institution acted as a custodian, broker, nominee, or otherwise as an agent for the account holder;
(f) in the case of any depository account, the total gross amount of interest paid or credited to the account during the relevant calendar year;
(g) in the case of any account other than that referred to in clause (e) or (f), the total gross amount paid or credited to the account holder with respect to the account during the relevant calendar year with respect to which the reporting financial institution is the obligor or debtor, including the aggregate amount of any redemption payments made to the account holder during the relevant calendar year;
(h) in the case of any account held by a non-participating financial institution, for calendar years 2015 and 2016, the name of each non-participating fmancial institution to which payments have been made and the aggregate amount of such payments;
but the information to be reported, —
i. with respect to calendar year 2014, is the information referred to in clauses (a), (b), (c) and (d), with regard to U.S. reportable accounts;
ii. with respect to calendar year 2015, is the information referred to in clauses (a), (b), (c), (d), (f), (g), (h) and sub-clause (i) of clause (e), with regard to U.S. reportable accounts;
iii. with respect to calendar year 2016, is the information referred to in clauses (a) to (h), with regard to all reportable accounts;
iv. with respect to calendar year 2017 and subsequent years, is the information referred to in clauses (a) to (g), with regard to all reportable accounts;
v. with respect to each U.S. reportable account which is maintained by a reporting financial institution as on the 30th June, 2014, the taxpayer identification number of any relevant person is not required to be reported if such taxpayer identification number is not in the records of the reporting financial institution.
(i) in the case of an account other than U.S. reportable account, where any equity interest is held in an investment entity that is a legal arrangement, the roles by virtue of which the reportable person is an equity interest holder.
(2) For the purposes of sub-rule (1),-
a. “account holder” means the person listed or identified as the holder of a financial account by the financial institution that maintains the account:
Provided that a person, other than a financial institution, holding a financial account for the benefit or on account of another person as agent, custodian, nominee, signatory, investment advisor, or intermediary, is not treated as holding the account, and such other person is treated as holding the account:
Provided further that in the case of a cash value insurance contract or an annuity contract, the account holder is any person entitled to receive a payment upon the maturity of the contract or any person entitled to access the cash value or change the beneficiary of the contract and if no person can access the cash value or change the beneficiary, the account holder is any person named as the owner in the contract and any person with a vested entitlement to payment under the terms of the contract;
b. “taxpayer identification number” means a number assigned to a person in the country or territory in which he is resident for tax purposes and includes a functional equivalent in case no such number is assigned.
(3) Where the person is a resident of more than one country or territory outside India under the tax laws of such country or territory, the reporting financial institution shall maintain the taxpayer identification number in respect of each such country or territory.
(4) Irrespective of sub-rule (1), with respect to each reportable account which is a pre-existing account, the taxpayer identification number or date of birth is not required to be reported if such taxpayer identification number or date of birth is not in the records of the reporting financial institution but the reporting fmancial institution shall obtain the taxpayer identification number and date of birth with respect to, —
a. pre-existing accounts by the 31st December, 2016 and shall report it with respect to calendar year 2017 and subsequent years; and
b. an account other than a U.S. reportable account, whenever it is required to update the information relating to the pre-existing account pursuant to the rules made under The Prevention of Money-Laundering Act, 2002.
(5) Irrespective of sub-rule (1) and sub-rule (4), the taxpayer identification number is not required to be reported if,-
i. a taxpayer identification number (including its functional equivalent) is not issued by the relevant country or territory outside India in which the person is resident for tax purposes or;
ii. the domestic law of the relevant country or territory outside India does not require the collection of the taxpayer identification number issued by such country or territory.
(6) Irrespective of sub-rule (1), the place of birth is not required to be reported unless it is available in the electronically searchable data maintained by the reporting financial institution.
(7) Irrespective of sub-rule (1)(e)(ii) and unless the reporting financial institution elects otherwise with respect to any clearly identified group of accounts, the gross proceeds from the sale or redemption of a financial asset are not required to be reported to the extent such gross proceeds from the sale or redemption of such financial asset are reported by the reporting financial institution under the Crypto-Asset Reporting Framework but the provisions of this sub-rule shall apply in respect of an account other than U.S. reportable account.
(8) The statement of reportable account required to be furnished under section 508(1)(k) shall be furnished by a reporting financial institution in respect of each account which has been identified, pursuant to due diligence procedure specified in rule 240, as a reportable account but where pursuant to such due diligence procedures no account is identified as a reportable account, a nil statement shall be furnished by the reporting financial institution.
(9) The statement referred to in sub-rule (8) shall be furnished in Form No. 166 and in such manner, as may be specified by the Principal Director General of Income Tax (Systems) or the Director General of Income Tax (Systems), as the case may be, with the approval of the Board for every calendar year by the 31st day of May following that year;
(10) (a) The statement referred to in sub-rule (8) shall be furnished to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation) through online transmission of electronic data to a server designated for this purpose under the digital signature in accordance with the data structure specified in this regard by the Principal Director General of Income-tax (Systems).
Explanation. — For the purposes of this sub-rule, “digital signature” means a digital signature issued by any Certifying Authority authorised to issue such certificates by the Controller of Certifying Authorities.
(b) Principal Director General of Income Tax (Systems) shall specify the procedures, data structures and standards for ensuring secure capture and transmission of data, evolving and implementing appropriate security, archival and retrieval policies.
(11) (a) Every reporting financial institution shall communicate to the Principal Director General of Income-tax (Systems) the name, designation and communication details of the Designated Director and the Principal Officer and obtain a registration number;
(b) The statement referred to in sub-rule (8) shall be signed, verified and furnished by the Designated Director of the reporting financial institution on the basis of information available with the institution: Provided that where the reporting financial institution is a non-resident, the statement may be signed, verified and furnished by a person who holds a valid power of attorney from such Designated Director;
(c) It shall be the duty of every reporting financial institution, its Designated Director, Principal Officer and employees to observe the procedure and the manner of maintaining information as specified by its regulator.
Explanation. – For the purposes of this sub-rule, –
(a) “Designated Director” means a person designated by the reporting financial institution to ensure overall compliance with the obligations imposed under section 508 and the rules made thereunder and includes—
i. the Managing Director or a whole-time Director, as defined in the Companies Act, 2013 (18 of 2013), duly authorised by the Board of Directors if the reporting financial institution is a company;
ii. the managing partner if the reporting financial institution is a partnership firm;
iii. the proprietor if the reporting financial institution is a proprietorship concern;
iv. the managing trustee if the reporting financial institution is a trust;
v. a person or individual, as the case may be, who controls and manages the affairs of the reporting financial institution if the reporting financial institution is an association of persons or a body of individuals, or any other person;
(b) “Principal Officer” means an officer designated by the reporting financial institution;
(c) “regulator” means a person or an authority or a Government which is vested with the power to licence, authorise, register, regulate or supervise the activities of the reporting financial institution.
(12)(a) The regulator referred to in sub-rule (11)(c) shall issue instructions or guidelines to, —
(i) incorporate the requirements of reporting and due diligence procedure specified under rules 238 to 240;
(ii) provide the procedure and manner of maintaining the information by the reporting financial institution; and
(iii) ensure the availability of the information referred to in sub-rule (1) with the reporting financial institution for meeting its reporting obligation, if such information is not maintained by it under any rule or regulation issued by the regulator.
(b) Every reporting financial institution shall maintain information in respect of financial accounts in accordance with the procedure and manner as may be specified by its regulator from time to time so as to enable reporting of information prescribed under this rule and perform due diligence procedure specified under rule 240.
(13) Irrespective of sub-rule (1)(b) and sub-rule (1)(i) of this rule, with respect to each reportable Account other than a U.S. reportable account that is maintained by a reporting financial institution as of 31st December 2025 and for reporting periods ending by the second calendar year following such date, information with respect to the role(s) by virtue of which each reportable person is a controlling person or equity interest holder of the entity is only required to be reported if such information is available in the electronically searchable data maintained by the reporting financial institution.
240. Due diligence requirement.—
1. An account shall be treated as a reportable account beginning as on the date it is identified as such pursuant to the due diligence procedure specified in sub-rules (3) to sub-rule (8) and, unless otherwise provided, information with respect to a reportable account shall be reported annually in the calendar year following the calendar year to which the information relates.
2. For the purpose of this rule,-
(a) “documentary evidence” includes any of the following:-
i. a certificate of residence issued by an authorised Government body, including a Government agency or a municipality, of the country or territory in which the payee claims to be a resident;
ii. with respect to an individual, any valid identification issued by an authorized Government body, including a Government agency or a municipality, that includes the individual’s name and is particularly used for identification purposes;
iii. with respect to an entity, any official documentation issued by an authorized Government body, including a Government agency or a municipality, which includes the name of the entity and either the address of its principal office in the country or territory in which it claims to be a resident or the country or territory in which the entity was incorporated or organized;
iv. any financial statement, third-party credit report, bankruptcy filing, or a report of the Government agency regulating the securities market;
(b) “high value account” means a pre-existing individual account with a balance or value that,-
i. in case of a U.S. reportable account, exceeds an amount equivalent to one million U.S. dollars as on the 30th June, 2014 or 31st December of any subsequent year; and
ii. in case of other reportable account, exceeds an amount equivalent to one million U.S. dollars as on the 31st December, 2015 or 31st December of any subsequent year;
(c) “lower value account” means a pre-existing individual account with a balance or value that,-
i. in case of a U.S. reportable account, exceeds an amount equivalent to fifty thousand U.S. dollars but does not exceed an amount equivalent to one million U.S. dollars as on the 30th June, 2014; and
ii. in case of other reportable account, does not exceed an amount equivalent to one million U.S. dollars as on the 31st December, 2015;
(d) “new account” means a financial account maintained by a reporting financial institution opened on or after,
i. in case of a U.S. reportable account, the 1st July, 2014; and
ii. in case of other reportable account, the 1st January, 2016 or, if the account is treated as a financial account solely by virtue of the amendments to the Common Reporting Standard, on or after 1st January 2026;
(e) “new entity account” means a new account held by one or more entities;
(f) “new individual account” means a new account held by one or more individuals;
(g) “other reportable account” means a reportable account which is not a U.S. reportable account;
(h) “pre-existing account” means a financial account maintained by a reporting financial institution as on,-
I. in case of a U.S. reportable account, the 30th June, 2014; and
II. in case of other reportable account, the 31st December, 2015 or, if the account is treated as a financial account solely by virtue of the amendments to the Common Reporting Standard, as of 31st December 2025;
(i) “pre-existing entity account” means a pre-existing account held by one or more entities;
(i) “pre-existing individual account” means a pre-existing account held by one or more individuals;
(k) where a balance or value threshold is to be determined at the end of a calendar year, the relevant balance or value shall be determined as on the last day of the reporting period which ends with or within that calendar year.
(3) The due diligence procedure for the purposes of identifying reportable accounts among pre-existing individual accounts shall be the following:-
(a) a pre-existing individual account is not required to be reviewed, identified or reported, if,-
(i) in case of a U.S. reportable account,-
A. the balance or value as on the 30th June, 2014, does not exceed an amount equivalent to fifty thousand U.S. dollars, subject to sub-clause (vi) of clause (c) of this sub-rule; or
B. which is a cash value insurance contract or an annuity contract, the balance or value does not exceed an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014, subject to sub-clause (vi) of clause (c) of this sub-rule; or
C. which is a cash value insurance contract or an annuity contract, the reporting financial institution, under any other law for the time being in force in India or of the United States of America, is prevented from selling such contract to a person who is a resident of the United States of America;
(ii) in case of other reportable account, which is a cash value insurance contract or an annuity contract, the reporting financial institution, under any other law for the time being in force in India, is prevented from selling such contract to a person who is not a resident of India for tax purposes;
(b) with respect to lower value accounts among pre-existing individual accounts the following procedures shall apply:-
(i) the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for any of the following indicia, and apply provisions contained in sub-clauses (ii) to (v):-
A. identification of the account holder as a resident of any country or territory outside India for tax purposes or unambiguous indication of a place of birth in the United States of America; or
B. current mailing or residence address (including a post office box) in any country or territory outside India; or
C. one or more telephone numbers in a country or territory outside India and no telephone number in India; or
D. in case of U.S. reportable account, any standing instructions to transfer funds to an account maintained in a country or territory outside India and in case of other reportable account, any standing instructions (other than with respect to a depository account) to transfer funds to an account maintained in a country or territory outside India; or
E. currently effective power of attorney or signatory authority granted to a person with an address in a country or territory outside India; or
F. a “hold mail” instruction or “in-care-of’ address in a country or territory outside India if the reporting fmancial institution does not have any other address on file for the account holder;
(ii) if none of the indicia listed in sub-clause (i) are discovered in the electronic search, then no further action is required until there is a change in circumstances which results in one or more indicia being associated with the account, or the account becomes a high value account;
(iii) if any of the indicia listed in items (A) to (E) of sub-clause (i) are discovered in the electronic search, or if there is a change in circumstances which results in one or more indicia being associated with the account, then the reporting financial institution shall treat the account holder as resident for tax purposes of each such country or territory for which an indicium is identified, unless it elects to apply sub-clause (v) and one of the exceptions in the said sub-clause applies with respect to that account;
(iv) if a “hold mail” instruction or “in-care-of’ address is discovered in the electronic search and no other address and none of the other indicia listed in items (A) to (E) of sub-clause (i) are identified for the account holder, the reporting financial institution shall apply the paper record search referred to in sub-clause (ii) of clause (c), or seek to obtain from the account holder a self-certification or documentary evidence to establish the residence or residences for tax purposes of such account holder but if the paper search fails to establish an indicium and the attempt to obtain the self-certification or documentary evidence is not successful, the reporting financial institution shall report the account as an undocumented account;
(v) irrespective of a finding of indicia under sub-clause (i), a reporting financial institution is not required to treat an account holder as a resident, for tax purposes,-
(A) of United States of America if, the account holder’s information unambiguously indicates a place of birth in the United States of America and the reporting financial institution obtains, or has previously reviewed and maintains a record of,-
I. a self-certification that the account holder is neither a citizen of the United States of America nor its resident for tax purposes;
II. a passport or other Government-issued identification evidencing the account holder’s citizenship or nationality in a country other than the United States of America; and
III. a copy of the account holder’s certificate of loss of nationality of the United States of America or a reasonable explanation of-
1. the reason, the account holder does not have such a certificate despite relinquishing citizenship of the United States of America; or
2. the reason, the account holder did not obtain citizenship of the United States of America at birth;
(B) of any country or territory outside India if, the account holder’s information contains a current mailing or residence address in any country or territory outside India, one or more telephone numbers in any country or territory outside India (and no telephone number in India) or standing instructions (with respect to fmancial accounts other than depository accounts) to transfer funds to an account maintained in any country or territory outside India, the reporting financial institution obtains, or has previously reviewed and maintains a record of,-
I. a self-certification from the account holder of the country or territory or countries or territories of residence for tax purposes of such account holder that does not include any country or territory outside India; and
II. documentary evidence establishing the account holder’s non-reportable status;
(C) of any country or territory outside India if, the account holder’s information contains a currently effective power of attorney or signatory authority granted to a person with an address in a country or territory outside India, or one or more telephone numbers in any country or territory outside India (if an Indian telephone number in also associated with the account), the reporting financial institution obtains, or has previously reviewed and maintains a record of-
(I) a self-certification from the account holder of the country or territory or countries or territories of residence of such account holder that does not include any country or territory outside India; or
(II) documentary evidence establishing the account holder’s non-reportable status;
(c) with respect to high value accounts among pre-existing individual accounts the following enhanced review procedures shall apply:-
(i) the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for any of the indicia described in sub-clause (i) of clause (b);
(ii) if the reporting financial institution’s electronically searchable databases do not capture all of the information referred to in sub-clause (iii) of this clause, then the reporting financial institution shall also review the current customer master file and, to the extent not contained in the current customer master file, the following documents associated with the account and obtained by the reporting financial institution during the last five years for any of the indicia provided in sub-clause (i) of clause (b),-
A. the most recent documentary evidence collected with respect to the account;
B. the most recent account opening contract or documentation;
C. the most recent documentation obtained by the reporting financial institution pursuant to rules framed under the Prevention of Money-laundering Act, 2002 (15 of 2003) or any other law for the time being in force;
D. any power of attorney or signature authority forms currently in effect; and
E. in case of U.S. reportable account, any standing instructions to transfer funds currently in effect and in case of other reportable account any standing instructions (other than with respect to a depository account) to transfer funds currently in effect;
but where the electronically searchable databases include fields for, and capture all the information referred to in sub-clause (iii) of this clause, then review of the customer master file and documents referred to above shall not be required;
(iii) a reporting financial institution is not required to perform the paper record search referred in sub-clause (ii) of this clause to the extent the reporting financial institution’s electronically searchable information includes the following:-
A. the account holder’s residence status for tax purposes;
B. the account holder’s residence address and mailing address currently on file with the reporting financial institution;
C. the account holder’s telephone number or numbers currently on file, if any, with the reporting financial institution;
D. in the case of financial accounts other than depository accounts, whether there are standing instructions to transfer funds in the account to another account (including an account at another branch of the reporting financial institution or another financial institution);
E. whether there is a current “in-care-of’ address or “hold mail” instruction for the account holder; and
F. whether there is any power of attorney or signatory authority for the account;
(iv) in addition to the electronic and paper record searches provided in sub-clauses (i) to (iii) of this clause, the reporting financial institution shall treat as a reportable account any high value account assigned to a relationship manager (including any financial accounts aggregated with that high value account) if the relationship manager has actual knowledge that the account holder is a reportable person;
(v) after application of review procedures specified in sub-clauses (i) to (iv) if,-
(A) none of the indicia referred to in sub-clause (i) of clause (b) are discovered, and the account is not identified as held by a reportable person as per sub-clause (iv), then further action is not required until there is a change in circumstances which results in one or more indicia being associated with the account;
(B) any of the indicia referred to in items (A) to (E) of sub-clause (i) of clause (b) are discovered, or if there is a subsequent change in circumstances which results in one or more indicia being associated with the account, then the reporting financial institution shall treat the account as a reportable account with respect to each country or territory outside India for which an indicium is identified unless it elects to apply sub-clause (v) of clause (b) and one of the exceptions in the said sub-clause applies with respect to that account;
(C) a “hold mail” instruction or “in-care-of’ address is discovered in the electronic search and no other address and none of the other indicia referred to in items (A) to (E) of sub-clause (i) of clause (b) are identified for the account holder, the reporting financial institution shall obtain from such account holder a self-certification or documentary evidence to establish the residence or residences for tax purposes of the account holder but if the reporting financial institution cannot obtain such self-certification or documentary evidence, it shall report the account as an undocumented account;
(vi) if a pre-existing individual account is not a high value account as on the 30th June, 2014 (for U.S. reportable account), or as the case may be, 31st December, 2015 (for other reportable account), but becomes a high value account as on the last day of year 2015 (for U.S. reportable account) or last day of any subsequent calendar year (for all reportable accounts), the reporting financial institution shall complete the enhanced review procedures specified in this clause with respect to such account within the calendar year following the year in which the account becomes a high value account and if based on such review the account is identified as a reportable account, the reporting financial institution shall report the required information about such account with respect to the year in which it is identified as a reportable account and subsequent years on an annual basis, unless the account holder ceases to be a reportable person;
(vii) once a reporting financial institution applies the enhanced review procedures specified in this clause to a high value account, the reporting financial institution is not required to reapply such procedures, other than an inquiry by the relationship manager provided in sub-clause (iv), to the same high value account in any subsequent year unless the account is undocumented where the reporting financial institution shall re-apply them annually until such account ceases to be undocumented;
(viii) if there is a change of circumstances with respect to a high value account which results in one or more indicia referred to in sub-clause (i) of clause (b) being associated with the account, then the reporting financial institution must treat the account as a reportable account with respect to each such country or territory outside India for which an indicium is identified unless it elects to apply sub-clause (v) of clause (b) and one of the exceptions in the said sub-clause applies with respect to that account;
(ix) a reporting financial institution shall implement procedures to ensure that a relationship manager identifies any change in circumstances of an account and where the relationship manager is informed that the account holder has a new mailing address in any country or territory outside India, the reporting financial institution is required to treat the new address as a change in circumstances and, if it elects to apply sub-clause (v) of clause (b), then it is required to obtain the appropriate documentation from the account holder;
(d) review of pre-existing individual account, —
i. in case of a U.S. reportable account which is high value account as on the 30th June, 2014, shall be completed by the 31st December, 2015 and if based on this review such account is identified as a U.S. reportable account after the 31st December, 2014 and on or before the 31st December, 2015, the reporting fmancial institution is not required to report information about such account with respect to calendar year 2014, but shall report information about the account on an annual basis thereafter;
ii. in case of a U.S. reportable account which is low value account as on the 30th June, 2014, shall be completed by the 30th June, 2016 and in case of other reportable account which is high value account as on the 31st December, 2015, shall be completed by the 31st December, 2016;
iii. in case of other reportable account that is low value account as on the 31st December, 2015, must be completed by the 30th June, 2017;
(e) any pre-existing individual account which has been identified as a reportable account under this sub-rule shall be treated as a reportable account in all subsequent years, unless the account holder ceases to be a resident of any country or territory outside India as per tax laws of such jurisdiction.
(4) The following procedures shall apply for purposes of identifying reportable accounts among new individual accounts:-
(a) unless the reporting financial institution elects otherwise, the following new individual accounts are not required to be reviewed, or reported as U.S. reportable accounts:-
i. a depository account unless the account balance exceeds an amount equivalent to fifty thousand U.S. dollars at the end of any calendar year;
ii. a cash value insurance contract unless the cash value exceeds an amount equivalent to fifty thousand U.S. dollars at the end of any calendar year;
(b) in case of a new individual account,-
i. in respect of a U.S. reportable account, which does not fall under sub-clauses (i) and (ii) of clause (a), upon account opening or within ninety days after the end of the calendar year in which the account ceases to be covered under sub-clauses (i) and (ii) of clause (a); and
ii. in respect of other reportable account, upon account opening, the reporting financial institution shall obtain a self-certification, which may be part of the account opening documentation, that allows the reporting financial institution to determine the account holder’s residence or residences for tax purposes and confirms the reasonableness of such self-certification based on the information obtained by the reporting financial institution in connection with the opening of the account, including any documentation collected in accordance with Prevention of Money-laundering (Maintenance of Records) Rules, 2005 under the prevention of Money-Laundering Act, 2002 (15 of 2003);
(c) where the self-certification obtained under clause (b) of this sub-rule establishes that the account holder is resident for tax purposes in a country or territory outside India, the reporting financial institution shall treat the account as a reportable account and the self-certification shall also include the account holder’s taxpayer identification number with respect to such country or territory outside India, subject to rule 239(5), and date of birth;
(d) where a self-certification has been obtained under clause (b) of this sub-rule for a new individual account and if there is a change of circumstances with respect to such account which causes the reporting financial institution to know, or have reason to know, that the said self-certification is incorrect or unreliable, the reporting fmancial institution shall not rely on the said self-certification and shall obtain a valid self-certification that establishes the residence or residences for tax purposes of the account holder but if the reporting financial institution is unable to obtain a valid self-certification, the reporting financial institution shall treat the account as a reportable account with respect to each such country or territory outside India for which an indicium is identified.
(5) The following procedures shall apply for purposes of identifying reportable accounts among pre-existing entity accounts:-
(a) unless the reporting financial institution elects otherwise, either with respect to all pre-existing entity accounts or, separately, with respect to any clearly identified group of such accounts, a preexisting entity account with an aggregate account balance or value which does not exceed an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account), or as the case may be, 31st December, 2015 (in case of other reportable account), is not required to be reviewed, identified, or reported as a reportable account until the aggregate account balance or value exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as of the last day of any subsequent calendar year;
(b) a pre-existing entity account that has an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account), or as the case may be, 31st December, 2015 (in case of other reportable account), and a pre-existing entity account that does not exceed an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account), or as the case may be, 31st December, 2015 (in case of other reportable account) but the aggregate account balance or value exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as of the last day of any subsequent calendar year, shall be reviewed in accordance with the procedure provided in clause (d) of this sub-rule;
(c) with respect to pre-existing entity accounts referred to in clause (b), only accounts which are held by,-
i. one or more entities which are reportable persons; or
ii. passive non-financial entity with one or more controlling persons who are reportable persons, shall be treated as reportable accounts but the accounts held by non-participating financial institutions for which aggregate payments as provided in clause (h) of sub-rule (1) of rule 239 are reported shall be treated as reportable accounts;
(d) for pre-existing entity accounts referred to in clause (b) with respect to which reporting is required, a reporting financial institution, to determine whether the account is held by one or more reportable persons, or by a passive non-financial entity with one or more controlling persons who are reportable persons, or by non-participating financial institutions, shall apply the following review procedures:-
(i) to determine whether the entity is a reportable person, the reporting financial institution shall,-
(A) review information maintained for regulatory or customer relationship purposes including information collected in accordance with the rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003) to determine whether the information indicates that the account holder is a reportable person.
Explanation.- For the purpose of this sub-clause, information indicating that the account holder is a resident of any country or territory outside India as per tax laws of such country or territory includes a place of incorporation or organisation, or an address in a country or territory outside India;
(B) treat the account as a reportable account, if the information as per item (A) indicates that the account holder is a reportable person, unless it obtains a self-certification from the account holder, or reasonably determines based on information in its possession or that is publicly available, that the account holder is not a reportable person but if the information as per item (A) indicates that the account holder is an entity not based in the United States of America which is a financial institution, or the reporting financial institution verifies the account holder’s Global Intermediary Identification Number, then the account shall not be treated as a U.S. reportable account;
(ii) treat the account holder as a non-participating financial institution if,-
A. the account holder is an Indian financial institution or other partner jurisdiction financial institution and treated by the United States of America as a non-participating financial institution;
B. the account holder, being a financial institution, is not an Indian financial institution or other partner jurisdiction financial institution, unless the reporting financial institution,-
I. obtains a self-certification from the account holder that it is a financial institution referred to in sub-clauses (a) to (m) of clause (5) of rule 238; or
II. in the case of participating foreign financial institution defined in Annex II of the FATCA agreement or a financial institution referred to in sub-clauses (e) to (m) of clause (5) of rule 238, verifies the account holder’s Global Intermediary Identification Number;
(iii) the reporting financial institution shall determine whether the account holder is a passive non-financial entity with one or more controlling persons who are resident of any country or territory outside India as per tax laws of such country or territory and in making these determinations the reporting financial institution shall follow the following procedures:-
(A) for purposes of determining whether the account holder is a passive non-financial entity, the reporting financial institution shall obtain a self-certification from the account holder to establish its status, unless it has information in its possession or which is publicly available, based on which it can reasonably determine that the account holder is an active non-financial entity or a financial institution other than an investment entity referred to in sub-clause (B) of clause (c) of Explanation to clause (3) of rule 238;
(b) for purposes of determining the controlling persons of an account holder, a reporting financial institution may rely on information collected and maintained in accordance with the rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003);
(C) for purposes of determining whether a controlling person of a pre- existing account of passive non-financial entity is a reportable person, a reporting financial institution may rely on,-
I. information collected and maintained in accordance with rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003) in the case of pre-existing entity account held by one or more non-financial entity with an aggregate balance or value which does not exceed an amount equivalent to one million U.S. dollars; or
II. a self-certification from the account holder or such controlling person of the passive non-financial entity with an account balance or value which exceeds an amount equivalent to one million U.S. dollars;
(D) if any controlling person of a passive non-financial entity is a resident of
any country or territory outside India for tax purposes, the account shall be treated as a reportable account;
(e) the following additional procedures shall be applicable to pre-existing entity accounts:-
i. review of pre-existing entity accounts with an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account) shall be completed by the 30th June, 2016 and review of pre-existing entity accounts with an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 31st December, 2015 (in case of other reportable account) shall be completed by the 31st December, 2016;
ii. review of pre-existing entity accounts with an aggregate account balance or value which does not exceed an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account), or as the case may be, 31st December, 2015 (in case of other reportable account), but exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 31st December of a subsequent year, shall be completed within the calendar year following the year in which the aggregate account balance or value exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars;
iii. if there is a change of circumstances with respect to a pre-existing entity account that causes the reporting financial institution to know, or have reason to know, that the self-certification or other documentation associated with the account is incorrect or unreliable, the reporting financial institution shall re-determine the status of the account in accordance with the procedures set forth in clause (d) of this sub-rule.
(6) The following procedures shall apply for purposes of identifying reportable accounts and accounts held by nonparticipating financial institutions among new entity accounts:-
(a) a reporting financial institution, to determine whether the new entity account is a reportable account, shall apply the following review procedures:
(i) determine whether the entity is a reportable person and for that the reporting financial institution shall,-
A. obtain a self-certification, which may be part of the account opening documentation, that allows the reporting financial institution to determine the account holder’s residence or residences for tax purposes and confirm the reasonableness of such self-certification based on the information obtained by the reporting financial institution in connection with the opening of the account, including any documentation collected in accordance with the rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003) but if the entity certifies that it has no residence for tax purposes, the reporting financial institution may rely on the address of the principal office of the entity to determine the residence of the account holder;
B. treat the account as a reportable account, if the information as per item (A) indicates that the account holder is a reportable person, unless it reasonably determines based on information in its possession or which is publicly available, that the account holder is not a reportable person but if the information as per item (A) indicates that the account holder is an Indian financial institution, or partner jurisdiction financial institution, which is not a non-participating financial institution or a participating foreign financial institution or a non-reporting financial institution then the account shall not be treated as a U.S. reportable account;
(ii) determine whether the account holder is a passive non-financial entity with one or more controlling persons who are reportable persons and in making these determinations the reporting financial institution shall follow the following procedures:-
(A) for purposes of determining whether the account holder is a passive non-financial entity, the reporting financial institution shall rely on a self-certification from the account holder to establish its status, unless it has information in its possession or that is publicly available, based on which it can reasonably determine that the account holder is not a passive non-financial entity;
(B) for purposes of determining the controlling persons of an account holder, a reporting financial institution may rely on information collected and maintained in accordance with the rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003) but in the case of an account other than a U.S. reportable account, if the reporting financial institution is not legally required to collect and maintain information in accordance with the rules made under The Prevention of Money-laundering Act, 2002 (15 of 2003), it must apply substantially similar procedures for the purpose of determining the controlling persons;
(C) for purposes of determining whether a controlling person of a passive non-financial entity is a reportable person, a reporting financial institution may rely on a self-certification from the account holder or such controlling person;
(b) the reporting financial institution shall determine whether the account holder is a non-participating financial institution and in such case any payment to the account holder shall be reported as per clause (h) of sub-rule (1) of rule 239.
(7) The following additional procedures shall apply in implementing the due diligence requirement specified in sub-rules (1) to (6):-
(a) a reporting financial institution, —
I. may not rely on a self-certification or documentary evidence if the reporting financial institution knows or has reason to know that the self-certification or documentary evidence is incorrect or unreliable;
II. in the case of an account other than a U.S. reportable account, in exceptional circumstances where a self-certification cannot be obtained by a reporting financial institution in respect of a new account in time to meet its due diligence and reporting obligations with respect to the reporting period during which the account was opened, must apply the due diligence procedures as applicable for the pre-existing accounts to such new accounts, until such self-certification is obtained and validated;
(b) a reporting financial institution may presume that an individual beneficiary (other than the owner) of a cash value insurance contract or an annuity contract receiving a death benefit is not a reportable person and may treat such fmancial account as other than a reportable account unless the reporting financial institution has actual knowledge, or reason to know, that the beneficiary is a reportable person but if a reporting financial institution has actual knowledge, or reason to know, that the beneficiary is a reportable person, it shall follow the procedures specified in clause (b) of sub-rule (3);
Explanation.- For the purposes of this clause, a reporting financial institution shall be deemed to have reason to know that a beneficiary of a cash value insurance contract or an annuity contract is a reportable person if the information collected by the reporting financial institution and associated with the beneficiary contains indicia specified in clause (b) of sub-rule (3).
(c) the following procedures relating to aggregation of account balance and currency shall apply:-
(i) for purposes of determining the aggregate balance or value of financial accounts held by an individual, a reporting financial institution shall be required to aggregate all financial accounts maintained by it, or by a related entity, but only to the extent that the computerised systems of that reporting financial institution links the financial accounts by reference to a data element such as client number or taxpayer identification number, and allows account balances or values to be aggregated;
(ii) for purposes of determining the aggregate balance or value of financial accounts held by an entity, a reporting financial institution shall be required to take into account all financial accounts which are maintained by it, or by a related entity, but only to the extent that the computerised systems of that reporting financial institution links the financial accounts by reference to a data element such as client number or taxpayer identification number, and allows account balances or values to be aggregated;
(iii) for purposes of determining the aggregate balance or value of financial accounts held by a person to determine whether a financial account is a high value account, a reporting financial institution shall also be required, in the case of any financial accounts that a relationship manager knows, or has reason to know, are directly or indirectly owned, controlled, or established (other than in a fiduciary capacity) by the same person, to aggregate all such accounts;
(iv) for the purposes of rules 238, 239 and this rule, any account maintained in rupees or in any permissible currency (other than the United States Dollar) as designated by the Reserve Bank of India shall be converted to United States Dollar at the end of the reporting period as per the reference rates of the Reserve Bank of India and such converted amount in the United States Dollar shall be used for determining the balance or value of a financial account provided in such rules.
Explanation 1.- For the purposes of this clause each holder of a jointly held financial account shall be attributed the entire balance or value of the jointly held financial account for purposes of applying the aggregation requirements.
(8) In case of a U.S. reportable account opened on or after the 1st July, 2014 but before the date of entry into
force of FATCA agreement, irrespective of the due diligence procedures specified in sub-rule (4) or sub-rule (6) of this rule for new accounts, the reporting fmancial institution may, in lieu of the procedures specified in the said sub-rules, apply the following alternative procedures:-
(a) within one year after the date of entry into force of the FATCA agreement, reporting financial institutions shall,-
(i) with respect to a new individual account opened on or after the 1st July, 2014 but before the date of entry into force of FATCA agreement, request the self-certification specified in sub-rule (4) and confirm the reasonableness of such self-certification consistent with the procedures specified in sub-rule (4); and
(ii) with respect to a new entity account opened on or after the 1st July, 2014 but before the date of entry into force of FATCA agreement, perform the due diligence procedures specified in sub-rule (6) and request for information as necessary to document the account, including any self-certification, required under sub-rule (6);
(b) the reporting financial institution shall report on any new account which is identified pursuant to
clause (a) of this sub-rule as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable, by the date which is the later of,-
i. the 31st of May next following the date on which the account is identified as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable; and
ii. forty-five days after the account is identified as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable but the information required to be reported with respect to such a new account shall be information which would have been reportable had the new account been identified as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable, as of the date the account was opened;
(c) by the date that is one year after the date of entry into force of the FATCA agreement. reporting
financial institutions shall close any new account described in clause (a) for which it was unable to collect the required self-certification or other documentation in accordance with the procedure specified in clause (b) but in addition, by such date, the reporting financial institutions shall-
(i) with respect to such closed accounts which prior to such closure were new individual accounts (without regard to whether such accounts were high value accounts), perform the due diligence procedure specified in clause (c) of sub-rule (3), or
(ii) with respect to such closed accounts which prior to such closure were new entity accounts, perform the due diligence procedures specified in sub-rule (5); and
(d) the reporting financial institution shall report the information specified in rule 239 in respect of any closed account which is identified under clause (c) as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable, by the date that is the later of,-
i. the 31st of May next following the date on which the account is identified as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable; and
ii. forty-five days after the account is identified as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable;
but in respect of all new entity accounts or a clearly identified group of such accounts which are U.S. reportable accounts opened on or after the 1st July, 2014, and before the 1st January, 2015 the reporting financial institution may, in lieu of the procedure specified in clauses (a) to (d), treat such accounts as pre-existing entity accounts and apply the due diligence procedure related to preexisting entity accounts specified in sub-rule (5) without regard to the account balance or value threshold specified in clause (a) of sub-rule (5).
(9) For the purposes of rule 238, 239 and this rule, exchange of any information in respect of any transaction in relevant crypto-assets is only for the limited purposes of administration of taxes by the relevant jurisdiction.
241. Definitions for purposes of rules 242, 243 and 244.— For the purposes of rules 242, 243 and 244,—
(1) “Anti Money Laundering or Know Your Customer Procedures” means the customer due diligence procedures of a reporting crypto-asset service provider as provided under the Prevention of Money Laundering Act, 2002 (15 of 2003);
(2) “branch” means a unit, business or office of a reporting crypto-asset service provider that is treated as a branch under the regulatory regime of a country or territory, or that is otherwise regulated under the laws of such country or territory as separate from other offices, units, or branches of the reporting crypt° -asset service provider;
(3) for the purposes of clause (2), all units, businesses, or offices of a reporting crypto-asset service provider in a single country or territory shall be treated as a single branch;
(4) “entity” means a legal person or a legal arrangement, such as a company or partnership firm or trust or foundation;
(5) “excluded person” means—
a. an entity, the stock of which is regularly traded on one or more established securities markets; or
b. any entity that is a related entity of an entity described in sub-clause (a); or
c. a Governmental entity; or
d. an international organisation; or
e. a Central Bank; or
f. a financial institution other than an investment entity described in clause (6)(d)(ii);
(6) for the purposes of clause (5),—
(a) “financial institution” means a custodial institution or a depository institution or an investment entity or a specified insurance company;
(b) “custodial institution” means any entity that holds, as a substantial portion of its business, financial assets for the account of others and where its gross income attributable to the holding of financial assets and related financial services equals or exceeds 20% of the gross income of the entity during the shorter of—
i. the three-year period that ends on the 31st December (or the final day of a non-calendar year accounting period), prior to the year in which the determination is being made; or
ii. the period during which the entity has been in existence;
(c) “depository institution” means any entity that—
(i) accepts deposits in the ordinary course of a banking or similar business; or
(ii) holds specified electronic money products or Central Bank Digital Currencies for the benefit of customers;
(d) “investment entity” means any entity [other than an active entity on account of meeting any of the criteria mentioned in items (ii) to (v) of clause (16) (1)]:—
(i) that primarily conducts as a business, any one or more of the following activities or operations for or on behalf of a customer:—
(A) trading in money market instruments (cheques, bills, certificates of deposit, derivatives, etc.), foreign exchange, exchange, interest rate and index instruments, transferable securities, or commodity futures trading; or
(B) individual and collective portfolio management; or
(C) otherwise investing, administering, or managing financial assets, money, or relevant crypto-assets on behalf of other persons; or
(ii) the gross income of which is primarily attributable to investing or reinvesting or trading in financial assets or relevant crypto-assets, if the entity is managed by another entity, that is, a depository institution or a custodial institution or a specified insurance company or an investment entity described in item (i);
(e) (i) for the purposes of sub-clause (d), an entity is treated as primarily conducting as a business, any one or more of the activities described in item (i) of the said sub-clause, or gross income of an entity is treated as primarily attributable to investing or reinvesting or trading in financial assets or relevant crypto-assets in item (ii) of the said sub-clause, if the gross income of the entity attributable to the relevant activities equals or exceeds 50% of the gross income of the entity during the shorter of—
(A) the three-year period ending on the 31st December (or the final day of a non-calendar year accounting period) of the year preceding the year in which the determination is made; or
(B) the period during which the entity has been in existence;
(ii) for the purposes of sub-clause (d)(i)(C), the term “otherwise investing, administering, or managing financial assets, money, or relevant crypto-assets on behalf of other persons”, does not include the provision of services for effecting exchange transactions for or on behalf of customers;
(iii) the provisions of sub-clause (d) shall be interpreted in a manner consistent with similar language set forth in the definition of “financial institution” in the Financial Action Task Force Recommendations, as updated in June, 2019 pertaining to virtual asset service providers and as further updated from time to time;
(f) “specified insurance company” means any entity that is an insurance company (or the holding company of an insurance company) that issues, or is obligated to make payments with respect to, a cash value insurance contract or an annuity contract;
(g) “governmental entity” means the government of a country or territory or any political sub-division of a country or territory (which, for the avoidance of doubt, includes a state, province, county, or municipality), or any wholly owned agency or instrumentality of a country or territory or of any one or more of the foregoing including the integral parts, controlled entities and political sub-divisions of such country or territory;
(h) for the purposes of sub-clause (g),—
(i) “integral part” of a country or territory means any person or organisation or agency or bureau or fund or instrumentality or other body, however designated, that constitutes a governing authority of a country or territory, where the net earnings of the governing authority shall be credited to its own account or to other accounts of the country or territory, with no portion enuring to the benefit of any private person, but does not include any individual who is a sovereign or official or administrator acting in a private or personal capacity;
(ii) “controlled entity” means an entity that is separate in form from the country or territory or that otherwise constitutes a separate juridical entity, provided that—
(A) the entity is wholly owned and controlled by one or more governmental entities directly or through one or more controlled entities;
(B) the entity’s net earnings are credited to its own account or to the accounts of one or more governmental entities, with no portion of its income enuring to the benefit of any private person; and
(C) the entity’s assets vest in one or more governmental entities upon dissolution;
(iii) income does not enure to the benefit of private persons if such persons are the intended beneficiaries of a governmental programme, and the programme activities are performed for the general public with respect to the common welfare or relate to the administration of some phase of government;
(iv) irrespective of anything contained in item (iii) above, income is considered to enure to the benefit of private persons if the income is derived from the use of a governmental entity to conduct a commercial business, such as a commercial banking business, that provides financial services to private persons;
(i) “international organisation” means any international organisation or wholly owned agency or instrumentality thereof, including any inter-governmental organisation or a supranational organisation—
i. that is comprised primarily of governments;
ii. that has in effect a headquarters or substantially similar agreement with India; and
iii. the income of which does not enure to the benefit of private persons;
(j) “Central Bank” means an institution that is, by law or government sanction, the principal authority, other than the government of the country or territory itself, issuing instruments intended to circulate as currency and may include an instrumentality that is separate from the government of the country or territory, whether or not owned, in whole or in part, by the country or territory;
(k) “financial asset” includes—
i. a security (for example, a share of stock in a corporation, partnership or beneficial ownership interest in a widely held or publicly traded partnership or trust, note, bond, debenture, or other evidence of indebtedness), partnership interest, commodity, swap (for example, interest rate swaps, currency swaps, basis swaps, interest rate caps, interest rate floors, commodity swaps, equity swaps, equity index swaps, and similar agreements), insurance contract or annuity contract; or
ii. any interest (including a futures or forward contract or option) in a security, relevant crypt° – asset, partnership interest, commodity, swap, insurance contract, or annuity contract,
but, it does not include a non-debt and direct interest in an immovable property;
(l) “equity interest” means—
i. in the case of a partnership that is a financial institution, either a capital or profits interest in the partnership;
ii. in the case of a trust that is a financial institution, where any person is treated as a settlor or beneficiary of all or a portion of the trust, or any other natural person exercising ultimate effective control over the trust, such person shall be considered to be holding equity interest in such trust;
(m) for the purposes of sub-clause (1)(ii), a reportable person shall be treated as being a beneficiary of a trust, if such reportable person has the right to receive directly or indirectly a mandatory distribution, or may receive directly or indirectly, a discretionary distribution from the trust;
(n) “insurance contract” means a contract (other than an annuity contract) under which the issuer agrees to pay an amount upon the occurrence of a specified contingency involving mortality, morbidity, accident, liability, or property risk;
(o) “annuity contract” means a contract under which the issuer agrees to make payments for a period of time determined, in whole or in part, by reference to the life expectancy of one or more individuals and it also includes a contract that is considered to be an annuity contract in accordance with the law, regulation, or practice of the country or territory in which the contract was issued, and under which the issuer agrees to make payments for a term of years;
(p) “cash value insurance contract” means an insurance contract (other than an indemnity reinsurance contract between two insurance companies) that has a cash value;
(q) “cash value” means the greater of—
(A) the amount that the policyholder is entitled to receive upon surrender or termination of the contract (determined without reduction for any surrender charge or policy loan); and
(B) the amount the policyholder can borrow under or with regard to the contract; but does not include an amount payable under an insurance contract in the following circumstances:
I. solely by reason of the death of an individual insured under a life insurance contract; or
II. as a personal injury or sickness benefit or other benefit providing indemnification of an economic loss incurred upon the occurrence of the event insured against; or
III. as a refund of a previously paid premium (less cost of insurance charges whether or not actually imposed) under an insurance contract (other than an investment-linked life insurance or annuity contract) due to cancellation or termination of the contract, decrease in risk exposure during the effective period of the contract, or arising from the correction of a posting or similar error with regard to the premium for the contract; or
IV. as a policyholder dividend (other than a termination dividend) provided that the dividend relates to an insurance contract under which the only benefits payable are described in sub-item (II) above; or
V. as a return of an advance premium or premium deposit for an insurance contract for which the premium is payable at least annually if the amount of the advance premium or premium deposit does not exceed the next annual premium that will be payable under the contract;
(7) “partner jurisdiction” means any country or territory outside India that has put in place equivalent legal requirements and that is specified by the Central Government, by notification;
(8) “related entity” means an entity which—
a. either controls the other entity; or
b. the two entities are under common control, and for this purpose, control includes direct or indirect ownership of more than 50% of the vote and value in an entity;
(9) “relevant crypto-asset” means any crypto-asset—
i. that is not a Central Bank Digital Currency; or
ii. that is not a specified electronic money product; or
iii. for which the reporting crypto-asset service provider has adequately determined that it cannot be used for payment or investment purposes;
(10) for the purposes of clause (9),—
(a) “crypto-asset” shall have the meaning assigned to it in section 2(111)(d);
(b) “digital representation of value” means that a crypto-asset shall represent a right to value, and that the ownership of, or right to, such value can be traded or transferred to other individuals or entities in a digital manner;
(c) “Central Bank Digital Currency” means any digital fiat currency issued by a Central Bank;
(d) “specified electronic money product” means any crypto-asset that is—
i. a digital representation of a single fiat currency;
ii. issued on receipt of funds for the purpose of making payment transactions;
iii. represented by a claim on the issuer denominated in the same fiat currency;
iv. accepted in payment by a natural or legal person other than the issuer; and
v. redeemable at any time and at par value for the same fiat currency upon request of the holder of the product, by virtue of regulatory requirements to which the issuer is subject to, but does not include a product created for the sole purpose of facilitating the transfer of funds from a customer to another person pursuant to instructions of the customer;
(e) for the purposes of sub-clause (d), a product is not created for the sole purpose of facilitating the transfer of funds if, in the ordinary course of business of the transferring entity,—
i. the funds connected with such product are held longer than sixty days after receipt of instructions to facilitate the transfer; or
ii. if no instructions are received, the funds connected with such product are held longer than sixty days after receipt of the funds;
(11) “relevant transaction” means any—
a. exchange transaction; and
b. transfer of relevant crypto-assets;
(12) for the purposes of clause (11),—
(a) “exchange transaction” means any—
i. exchange between relevant crypto-assets and fiat currencies; and
iii. exchange between one or more forms of relevant crypto-assets;
(b) “reportable retail payment transaction” means a transfer of relevant crypto-assets in consideration of goods or services for a value exceeding fifty thousand USD;
(c) “transfer” means a transaction that moves a relevant crypto-asset either from or to the crypto-asset address or account of one crypto-asset user, other than one maintained by the reporting crypto-asset service provider on behalf of the same crypto-asset user, where, based on the knowledge available to the reporting crypto-asset service provider at the time of transaction, the reporting crypto-asset service provider cannot determine that the transaction is an exchange transaction;
(d) “fiat currency” means the official currency of a country or territory, issued by such country or territory, or by the designated Central Bank or monetary authority of such country or territory, as represented by physical banknotes or coins or by money in different digital forms, including bank reserves and Central Bank Digital Currencies, including commercial bank money and electronic money products (including specified electronic money products);
(13) “reporting crypto-asset service provider” means any individual or entity that, as a business, provides a service for effecting exchange transactions for or on behalf of customers, including by acting as a counterparty, or as an intermediary, to such exchange transactions, or by making available a trading platform;
(14) for the purposes of clause (13), —
i. a service effecting exchange transactions includes any service through which the customer can receive relevant crypto-assets for fiat currencies, or vice versa, or exchange relevant crypto-assets for other relevant crypto-assets;
ii. the phrase “as a business” excludes individuals or entities who carry out a service on infrequent basis for non-commercial reasons and in determining “as a business”, reference can be made to the relevant rules of each country or territory;
iii. “as a counterparty” or “as an intermediary” includes—
A. dealers acting for their own account to buy and sell relevant crypto- assets to customers;
B. operators of crypto-asset Automated Teller Machines, permitting the exchange of relevant crypto-assets for fiat currencies or other relevant crypto-assets through such Automated Teller Machines;
C. crypto-asset exchanges that act as market makers and take a bid-ask spread as a transaction commission for their services;
D. brokers in relevant crypto-assets, where they act on behalf of clients to complete orders to buy or sell an interest in relevant crypto-assets; and
E. individuals or entities subscribing one or more relevant crypto-assets;
iv. “trading platform” includes any software program or application that allows users to effect (either partially or in their entirety) exchange transactions;
(15) “reportable user” means a crypto-asset user that is a reportable person;
(16) for the purposes of clause (15),—
(a) “crypto-asset user” means—
i. an individual or entity that is a customer of a reporting crypto-asset service provider for the purposes of carrying out relevant transactions;
ii. where an individual or entity (other than a financial institution or a reporting crypto-asset service provider), acts as a crypto-asset user for the benefit or account of another individual or entity as agent, custodian, nominee, signatory, investment advisor, or intermediary, such other individual or entity, so however that the first mentioned individual or entity shall not be treated as a crypto-asset user;
ii. where a reporting crypto-asset service provider provides a service for effecting reportable retail payment transactions for or on behalf of a merchant, the customer that is the counterparty to the merchant for such reportable retail payment transaction;
(b) for the purposes of item (iii) of sub-clause (a), the reporting crypto-asset service provider is required to verify the identity of such customer by virtue of the reportable retail payment transaction pursuant to Prevention of Money Laundering Act, 2002(15 of 2003);
(c) “individual crypto-asset user” means a crypto-asset user that is an individual;
(d) “pre-existing Individual crypto-asset user” means an individual crypto-asset user that has established a relationship with the reporting crypto-asset service provider as of the 31st December, 2025;
(e) “entity crypto-asset user” means a crypto-asset user that is an entity;
(f) “pre-existing entity crypto-asset user” means an entity crypto-asset user that has established a relationship with the reporting crypto-asset service provider as of the 31st December, 2025;
(g) “reportable person” means—
i. an entity or an individual that is resident in a country or territory outside India under the tax laws of such country or territory; or
ii. an estate of a decedent that was a resident of a country or territory outside India, other than excluded person;
(h) for the purposes of sub-clause (g), an entity such as a partnership, limited liability partnership or similar legal arrangement that has no residence for tax purposes shall be treated as resident in the jurisdiction in which its place of effective management is situated;
(i) “controlling persons” means—
A. the natural persons who exercise control over an entity;
B. in the case of a trust, the settlor(s), the trustee(s), the protector(s)(if any), the beneficiary(ies) or class(es) of beneficiaries, and any other natural person(s) exercising ultimate effective control over the trust;
C. in the case of a legal arrangement other than a trust, persons in equivalent or similar positions, and the expression “controlling persons” shall be interpreted in a manner consistent with the 2012 Financial Action Task Force Recommendations, as updated in June 2019 pertaining to virtual asset service providers and as further updated from time to time;
(j) for the purposes of sub-clause (i)(B), the settlor(s), the trustee(s), the protector(s)(if any), the beneficiary(ies) or class(es) of beneficiaries, shall always be treated as controlling persons of a trust, regardless of whether or not any of them exercises control over the trust;
(k) for the purposes of sub-clause (i)(C), reporting crypto-asset service providers shall identify controlling persons through similar customer due diligence procedures as those required for trusts, with a view to achieving appropriate levels of reporting;
(l) “active entity” means any entity that meets any of the following criteria:—
(i) less than 50% of the gross income of the entity for the preceding calendar year (or for the preceding non-calendar accounting period) is passive income and less than 50% of the assets held by the entity during the preceding calendar year (or the preceding non-calendar accounting period) are assets that produce or are held for the production of passive income; or
(ii) substantially all of the activities of the entity consist of holding (in whole or in part) the outstanding stock of, or providing financing and services to, one or more subsidiaries that engage in trades or businesses other than the business of a financial institution, except that an entity does not qualify for this status if the entity functions (or holds itself out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes; or
(iii) the entity is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a financial institution, provided that the entity does not qualify for this exception after twenty-four months from the date of the initial organisation of the entity; or
(iv) the entity was not a financial institution in the past five years, and is in the process of liquidating its assets or is reorganising with the intent to continue or recommence operations in a business other than that of a financial institution; or
(v) the entity primarily engages in financing and hedging transactions with, or for, related entities that are not financial institutions, and does not provide financing or hedging services to any entity that is not a related entity, provided that the group of such related entities is primarily engaged in a business other than that of a financial institution; or
(vi) the entity meets all of the following requirements:–
(A) it is established and operated in the country or territory (outside India) of its residence exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes, or it is established and operated in the country or territory (outside India) of its residence and it is a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare;
(B) it is exempt from income tax in the country or territory (outside India) of its residence;
(C) it has no shareholders or members who have a proprietary or beneficial interest in its income or assets;
(D) the applicable laws of the country or territory (outside India) of its residence or the formation documents of the entity do not permit any income or assets of the entity to be distributed to, or applied for the benefit of, a private person or non-charitable entity other than pursuant to the conduct of the charitable activities of the entity, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the entity has purchased; and
(E) the applicable laws of the country or territory (outside India) of its residence or the formation documents of the entity require that, upon the liquidation or dissolution of the entity, all of its assets be distributed to a Governmental entity or other non-profit organisation, or escheat to the Government of the country or territory (outside India) of its residence or any political subdivision thereof;
(m) for the purposes of item (i) of sub-clause (l), ―passive income‖ includes the portion of gross income that consists of:––
(i) dividends; or
(ii) interest; or
(iii) income equivalent to interest or dividends; or
(iv) rents and royalties, other than rents and royalties derived in the active conduct of a business conducted, at least in part, by employees of the Entity; or
(v) annuities; or
(vi) income derived from relevant crypto-assets; or
(vii) the excess of gains over losses from the sale or exchange of relevant crypto-assets or financial assets; or
(viii) the excess of gains over losses from transactions (including futures, forwards, options, and similar transactions) in any relevant crypto-assets or financial assets; or
(ix) the excess of foreign currency gains over foreign currency losses; or
(x) net income from swaps; or
(xi) amounts received under cash value insurance contracts; and
(n) for the purposes of sub-clause (l)(ii), ―substantially all” means 80% or more;
(17) “telegraphic transfer buying rate”, in relation to a fiat currency (other than Indian Rupee), means the rate or rates of exchange adopted by the State bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), for buying such currency, having regard to the guidelines specified from time to time by the Reserve Bank of India for buying such currency, where such currency is made available to that bank through a telegraphic transfer; and
(18) ”TIN” means Taxpayer Identification Number (or functional equivalent in the absence of a Taxpayer Identification Number) assigned to the crypto-asset user in the country or territory in which he is a resident for tax purposes.
242. Obligation for reporting transaction of crypto-asset under section 509.— (1) A reporting crypto-asset service provider is subject to the reporting requirements under rule 243 and due diligence requirements under rule 244, if it is––
(a) an entity or individual resident for tax purposes in India; or
(b) an entity that is incorporated or organised under the laws of India; or
(c) an entity that either has legal personality in India or has an obligation to file return of income under section 263; or
(d) an entity managed from India; or
(e) an entity or individual that has a regular place of business in India.
(2) A reporting crypto-asset service provider shall be subject to the reporting requirements under rule 243 and due diligence requirements under rule 244 with respect to relevant transactions effected through a branch based in India.
(3) A reporting crypto-asset service provider is not required to complete the reporting requirements under rule 243 and due diligence requirements under rule 244 in India,––
(a) where it is an entity,––
(i) pursuant to sub-rule (1)(b) to (e), if such requirements are completed by such reporting crypto-asset service provider in a partner jurisdiction by virtue of it being resident for tax purposes in such partner jurisdiction;
(ii) pursuant to sub-rule (1)(d) and (e), if such requirements are completed by such reporting crypto-asset service provider in a partner jurisdiction by virtue of it being––
(A) an entity that is incorporated or organised under the laws of such partner jurisdiction; or
(B) an entity that either has legal personality in the partner jurisdiction or has an obligation to file tax returns or tax information returns to the tax authorities in partner jurisdiction with respect to the income of such entity; or
(iii) pursuant to sub-rule (1)(e), if such requirements are completed by such reporting crypto-asset service provider in a partner jurisdiction by virtue of it being managed from such partner jurisdiction; or
(b) where it is an individual, pursuant to sub-rule (1)(e), if such requirements are completed by such reporting crypto-asset service provider in a partner jurisdiction by virtue of it being resident for tax purposes in such partner jurisdiction; or
(c) pursuant to clause (a) or clause (b) or clause (c) or clause (d) or clause (e) of sub-rule (1), if it has lodged a notification with India in a format specified by India confirming that such requirements are completed by such reporting crypto-asset service provider under the rules of a partner jurisdiction pursuant a substantially similar nexus that it is subject to in India; or
(d) with respect to relevant transactions that are effected through a branch in a partner jurisdiction, if such requirements are completed by such branch in such partner jurisdiction.
243. Reporting requirements for transaction of crypto-asset under section 509.— (1) For each relevant calendar year starting on or after the 1st January, 2026 and subject to the obligations of the reporting crypto-asset service provider under section 242 and due diligence procedures under section 244, the following information shall be maintained and reported by the reporting crypto-asset service providers in respect of crypto-asset users that are reportable users, or that have controlling persons that are reportable persons:––
(a) the name, address, country(s) or territory(s) of residence, TIN(s) and date and place of birth (in the case of an individual) of each reportable user;
(b) in the case of a reportable user that is identified as having more than one country or territory of residence, the country or territory of residence and TIN to be reported are of all such country(s) or territory(s) of residence and all TIN(s) identified by the reporting crypto-asset service provider;
(c) in case any entity is identified as having one or more controlling persons that is a reportable person, after application of the due diligence procedures, the name, address, country(s) or territory(s) of residence and TIN(s) of the entity and the name, address, country(s) or territory(s) of residence, TIN(s) and the date and place of birth of each reportable person, as well as, the role(s) by virtue of which each reportable person is a controlling person of the entity;
(d) the name, address and Permanent Account Number of the reporting crypto-asset service provider;
(e) for each type of relevant crypto-asset with respect to which it has effected relevant transactions during the relevant calendar year,-
(i) the full name of the type of relevant crypto-asset;
(ii) the aggregate gross amount paid, the aggregate number of units and the number of relevant transactions in respect of acquisitions against fiat currency;
(iii) the aggregate gross amount received, the aggregate number of units and the number of relevant transactions in respect of disposals against fiat currency;
(iv) the aggregate fair market value, the aggregate number of units and the number of relevant transactions in respect of acquisitions against other relevant crypto-assets;
(v) the aggregate fair market value, the aggregate number of units and the number of relevant transactions in respect of disposals against other relevant crypto-assets;
(vi) the aggregate fair market value, the aggregate number of units and the number of reportable retail payment transactions;
(vii) the aggregate fair market value, the aggregate number of units and the number of relevant transactions, and sub-divided by the transfer type known by the reporting crypto-asset service provider, in respect of transfers to the reportable user not covered by sub-clauses (ii) and (iv);
(viii) the aggregate fair market value, the aggregate number of units and the number of relevant transactions, and sub-divided by the transfer type known by the reporting crypto-asset service provider, in respect of transfers by the reportable user not covered by sub-clauses (iii), (v) and (vi);
(ix) the aggregate fair market value, as well as the aggregate number of units in respect of transfers by the reportable crypto-asset user effectuated by the reporting crypto-asset service provider to wallet addresses not known by the reporting crypto-asset service provider to be associated with a virtual asset service provider or financial institution.
(2) (a) Irrespective of anything contained in clauses (a) and (b) of sub-rule (1), the TIN is not required to be reported, if ––
(i) a TIN is not issued by the country or territory outside India in which reportable user is resident for tax purposes; or
(ii) the domestic law of the country or territory outside India does not require the collection of the TIN issued by such country or territory in which reportable user is resident for tax purposes; and
(b) for the purposes of clause (a), a TIN is considered not to be issued by a country or territory outside India ––
(A) where such country or territory does not issue a TIN nor a functional equivalent in the absence of TIN; or
(B) where such country or territory has not issued a TIN to a particular individual or entity.
(3) Irrespective of anything contained in clauses (a) to (c) of sub-rule (1), the place of birth is not required to be reported unless the reporting crypto-asset service provider is otherwise required to obtain and report it under domestic law.
(4) The information reported must identify the fiat currency in which each amount is reported.
(5) The statement of relevant transactions required to be furnished under sub-section (1) of section 509, shall be furnished by a reporting crypto-asset service provider in respect of each crypto-asset user or controlling person which has been identified, as a reportable user or reportable person, as the case may be.
(6) Where, pursuant to the due diligence procedure specified in rule 244, no crypto-asset user or controlling person is identified as a reportable user or reportable person, a nil statement shall be furnished by the reporting crypto-asset service provider.
(7) The statement referred to in sub-rules (5) and (6) shall be furnished in Form No. 167 by the 31st of May of the calendar year following the year to which the information relates.
(8) (a) For the purposes of sub-clauses (ii) and (iii) of sub-rule (1)(e),––
(i) the reporting crypto-asset service providers shall report the amount paid or received by the reportable user net of transaction fees;
(ii) the amounts paid or received shall be reported in Indian Rupee;
(iii) where amounts were paid or received in fiat currencies (other than Indian Rupee),–
(A) they shall be reported in Indian Rupee, converted at the time of each relevant transaction; and
(B) the rate of conversion for calculation of value of such fiat currency in Indian Rupee shall be the telegraphic transfer buying rate of such fiat currency as on date on which relevant transaction takes place;
(iv) the reporting crypto-asset service provider shall aggregate, that is, sum up, all transactions attributable to each reporting category for each type of relevant crypto-asset;
(v) an acquisition or disposal is any transaction effected by the reporting crypto-asset service provider where the reportable user obtains or alienates a relevant crypto-asset, irrespective of whether such asset is obtained or delivered from or to a third-party seller, or from or to the reporting crypto-asset service provider itself; and
(vi) where a reportable user acquires or disposes of a relevant crypto-asset against fiat currency, and the reporting crypto-asset service provider does not have actual knowledge of the underlying fiat currency consideration, such transactions shall be reported upon as transfers sent to or by a reportable user under sub-clauses (vii) and (viii) of sub-rule (1)(e), respectively.
(b) For the purposes of sub-clauses (iv) and (v) of sub-rule (1)(e),––
(i) the reporting crypto-asset service providers shall report the fair market value of the relevant crypto-asset acquired or disposed, net of transaction fees;
(ii) the fair market value shall be determined and reported in Indian Rupee, valued at the time of each relevant transaction;
(iii) for the purposes of sub-clause (ii),––
(A) a reporting crypto-asset service provider shall rely on applicable crypto-asset to Indian Rupee trading pairs, that it maintains to determine the fair market value of both relevant crypto-assets; or
(B) where a difficult-to-value relevant crypto-asset is exchanged for a relevant crypto-asset that can be readily valued, the valuation in Indian Rupee of the relevant crypto-asset against which the difficult-to-value relevant crypto-asset is exchanged shall be relied upon to establish Indian Rupee value for the difficult-to-value relevant crypto-asset;
(iv) the reporting crypto-asset service provider shall aggregate, that is, sum up, all transactions attributable to each reporting category;
(v) all crypto-asset-to-crypto-asset transactions conducted by the same reporting crypto-asset service provider are subject to reporting under both said sub-clauses;
(vi) where a reportable user effects a crypto-asset-to-crypto-asset transaction, although the reporting crypto-asset service provider does not have actual knowledge of the relevant crypto-asset acquired or disposed, such transactions shall be reported upon as transfers sent to or by a reportable user under sub-clauses (vii) and (viii) of sub-rule(1)(e), respectively.
(c) For the purposes of sub-clause (vi) of sub-rule (1)(e), ––
(i) the customer of the merchant for, or on behalf of, whom the reporting crypto-asset service provider is providing a service effecting reportable retail payment transactions shall be treated as the crypto-asset user (subject to the conditions specified in the definition of crypto-asset user), and therefore, as the reportable user, in addition to the merchant;
(ii) the aggregate information with respect to reportable retail payment transactions by the customer of the merchant shall not be included in the aggregate information reported with respect to Transfers under sub-clause (viii) of sub-rule (1)(e); and
(iii) the aggregate information with respect to transfers that do not constitute reportable retail payment transactions solely by virtue of not meeting the de minimis threshold, shall be included in the aggregate information reported with respect to transfers under sub-clauses (vii) and (viii) of sub-rule (1)(e), respectively.
(d) For the purposes of sub-clause (ix) of sub-rule (1)(e),––
(i) the reporting crypto-asset service provider shall not be required to report the aggregate number of units or the aggregate fair market value of transfers, under this sub-clause, in case the reporting crypto-asset service provider knows that the wallet address to which the relevant crypto-asset is transferred is associated with a virtual asset service provider or financial institution, as defined in the Financial Action Task Force Recommendations;
(ii) a reporting crypto-asset service provider shall be required to collect and retain within its records, for a period not less than seven years, any external wallet addresses (including other equivalent identifiers) associated with transfers of relevant crypto-assets; and
(iii) the reporting of wallet addresses associated with transfer of relevant crypto-assets shall not be required.
(e) For the purposes of sub-clauses (vi), (vii), (viii) and (ix) of sub-rule(1)(e),––
(i) the fair market value shall be determined and reported in Indian Rupee, using the valuation method as specified in sub-clause (ii);
(ii) in performing the valuation, the reporting crypto-asset service provider shall use as a reference, the values of relevant crypto-asset and Indian Rupee trading pairs it maintains to determine the fair market value of the relevant crypto-asset at the time it is transferred;
(iii) where the reporting crypto-asset service provider effecting the transfer does not maintain an applicable reference value of the relevant crypto-asset and Indian Rupee trading pairs, the following valuation methods shall be relied upon:––
(A) firstly, the internal accounting book values maintained by the reporting crypto-asset service provider with respect to the relevant crypto-asset shall be used;
(B) if a book value is not available, a value provided by third-party companies or websites that aggregate current prices of relevant crypto-assets shall be used, if the valuation method used by that third party is reasonably expected to provide a reliable indicator of value;
(C) if neither of the methods specified in item (A) and (B) is available, the most recent valuation of the relevant crypto-asset by the reporting crypto-asset service provider shall be used; and
(D) if a value can still not be attributed, a reasonable estimate may be applied as a measure of last resort;
(iv) with respect to each relevant crypto-asset for which the Reporting crypto-asset service provider has relied on an alternative valuation method outlined in sub-clause (iii), the method shall be indicated in Form No. 167;
(v) the information reported shall also identify the fiat currency in which each amount is reported; and
(vi) the reporting crypto-asset service provider shall aggregate, that is, sum up, all transactions attributable to each reporting category for each type of relevant crypto-asset.
(9) The statement referred to in this rule shall be furnished to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation) through online transmission of electronic data, to a server designated for this purpose under the digital signature, in accordance with the data structure specified in this regard by the Director General of Income-tax (Systems).
(10) For the purposes of sub-rule (9), “digital signature” means a digital signature issued by any Certifying Authority authorised to issue such certificates by the Controller of Certifying Authorities.
(11) (a) Every reporting crypto asset service provider shall communicate to the Director General of Income-tax (Systems), the name, designation and communication details of the designated director and the principal officer and obtain a number for enabling furnishing of statement referred to in sub-rules (5) and (6).
(b) The statement referred to in this rule shall be signed, verified and furnished by the designated director of the reporting crypto-asset service provider on the basis of information available with the reporting crypto-asset service provider, but, where the reporting crypto-asset service provider is a non-resident, such statement may be signed, verified and furnished by a person who holds a valid power of attorney from such designated director.
(12) For the purposes of sub-rule (11),––
(a) “designated director” means a person designated by the reporting crypto-asset service provider to ensure overall compliance with the obligations imposed under section 509 and the rules made thereunder and includes—
(i) the Managing Director or a whole-time Director, as defined in the Companies Act, 2013 (18 of 2013), duly authorised by the Board of Directors if the reporting crypto-asset service provider is a company; or
(ii) the managing partner, if the reporting crypto-asset service provider is a partnership firm; or
(iii) the proprietor, if the reporting crypto-asset service provider is a proprietorship concern; or
(iv) the managing trustee, if the reporting crypto-asset service provider is a trust; or
(v) a person or individual, as the case may be, who controls and manages the affairs of the reporting crypto-asset service provider, if the reporting crypto-asset service provider is an association of persons or a body of individuals, or any other person; and
(b) “principal officer” means an officer designated by the reporting crypto-asset service provider;
244. Due diligence procedures under section 509.— (1) A crypto-asset user is treated as a reportable user beginning as of the date it is identified as such, pursuant to the due diligence procedures specified in this rule.
(2) The following procedures shall apply for the purposes of determining whether the individual crypto-asset user is a reportable user:–
(a) when establishing the relationship with the individual crypto-asset user, or with respect to pre-existing individual crypto-asset users within twelve months on and from the 1st January, 2026, the reporting crypto-asset service provider shall––
(i) obtain a self-certification that allows the reporting crypto-asset service provider to determine the residence(s) of individual crypto-asset users for tax purposes; and
(ii) confirm the reasonableness of such self-certification based on the information obtained by the reporting crypto-asset service provider, including any documentation collected pursuant to Anti Money Laundering or Know Your Customer Procedures;
(b) if at any point there is a change of circumstances with respect to an individual crypto-asset user that causes the reporting crypto-asset service provider to know, or have reason to know, that the original self-certification is incorrect or unreliable, then the reporting crypto-asset service provider––
(i) shall not rely on the original self-certification;
(ii) shall obtain a valid self-certification, or a reasonable explanation; and
(iii) the documentation supporting the validity of the original self-certification, as may be appropriate.
(3) For the purposes of determining whether––
(a) the entity crypto-asset user is a reportable user; or
(b) an entity, other than an excluded person or an active entity, with one or more controlling persons who are the reportable persons, the following procedures shall apply:––
(i) when establishing the relationship with the entity crypto-asset user, or with respect to pre-existing entity crypto-assets users within twelve months on and from the 1st January, 2025, the reporting crypto-asset service provider shall––
(A) obtain a self-certification that allows the reporting crypto-asset service provider to determine the residence(s) of the entity crypto-asset user for tax purposes; and
(B) confirm the reasonableness of such self-certification based on the information obtained by the reporting crypto-asset service provider, including any documentation collected pursuant to Anti Money Laundering or Know Your Customer Procedures;
(ii) if the entity crypto-asset user certifies that it has no residence for tax purposes, the reporting crypto-asset service provider shall rely on the place of effective management or on the address of the principal office to determine the residence of the entity crypto-asset user; and
(iii) if the self-certification indicates that the entity crypto-asset user is resident in a country or territory outside India, the reporting crypto-asset service provider shall treat the entity crypto-asset user as a reportable user, unless it reasonably determines based on the self-certification or on information in its possession or that is publicly available, that the entity crypto-asset user is an excluded person.
(4) With respect to an entity crypto-asset user, other than an excluded person, the reporting crypto-asset service provider shall determine whether it has one or more controlling persons who are reportable persons, unless it determines that the entity crypto-asset user is an active entity, based on a self-certification from the entity crypto-asset user.
(5) For the purposes of determining the controlling persons of the entity crypto-asset user,––
(a) a reporting crypto-asset service provider may rely on the information collected and maintained pursuant to Anti Money Laundering or Know Your Customer Procedures, provided that such procedures are consistent with the 2012 Financial Action Task Force Recommendations, as updated in June, 2019 pertaining to virtual asset service providers and as further updated from time to time; and
(b) where the reporting crypto-asset service provider is not legally required to apply the Anti Money Laundering or Know Your Customer Procedures, that are consistent with the 2012 Financial Action Task Force Recommendations, as updated in June, 2019 pertaining to virtual asset service providers, it shall apply substantially similar procedures for the purposes of determining the controlling persons.
(6) For the purposes of determining whether a controlling person is a reportable person, a reporting crypto-asset service provider shall rely on a self-certification from the entity crypto-asset user or such controlling person that allows the reporting crypto-asset service provider to determine the residence(s) of the controlling person for tax purposes and confirm the reasonableness of such self-certification based on the information obtained by the reporting crypto-asset service provider, including any documentation collected pursuant to the Anti Money Laundering or Know Your Customer Procedures.
(7) If at any point, there is a change of circumstances with respect to an entity crypto-asset user or its controlling persons that causes the reporting crypto-asset service provider to know, or have reason to know, that the original self-certification is incorrect or unreliable, then the reporting crypto-asset service provider––
(a) shall not rely on the original self-certification;
(b) shall obtain a valid self-certification, or a reasonable explanation; and
(c) the documentation supporting the validity of the original self-certification, as may be appropriate.
(8) A self-certification provided by an individual crypto-asset user or controlling person is valid only if it is signed or otherwise positively affirmed by the individual crypto-asset user or controlling person, it is dated at the latest at the date of receipt and it contains the following information with respect to the individual crypto-asset user or controlling person:
(a) first and last name;
(b) residence address;
(c) country(s) or territory(s) of residence for tax purposes;
(d) with respect to each reportable person, the TIN with respect to each country or territory outside India in which it is a resident for tax purposes; and
(e) date of birth.
(9) A self-certification provided by an entity crypto-asset user is valid only if it is signed or otherwise positively affirmed by the crypto-asset user, it is dated at the latest at the date of receipt and it contains the following information with respect to the entity crypto-asset user:
(a) legal name;
(b) address;
(c) country(s) or territory(s) of residence for tax purposes;
(d) with respect to each reportable person, the TIN with respect to each country or territory outside India in which it is a resident for tax purposes;
(e) in case of an entity crypto-asset user other than an active entity or an excluded person, the information specified in sub-rule (8) with respect to each controlling person of the entity crypto-asset user, unless such controlling person has provided a self-certification pursuant to the said sub-rule, as well as the role(s) by virtue of which each reportable person is a controlling person of the entity, if not already determined on the basis of the Anti Money Laundering or Know Your Customer Procedures; and
(f) if applicable, the information as to the criteria it meets to be treated as an active entity or excluded person.
(10) Irrespective of anything contained in sub-rules (8) and (9), the TIN is not required to be collected––
(a) if the country or territory of residence of the reportable person does not issue a TIN to the reportable person; or
(b) the domestic law of the relevant country or territory outside India does not require the collection of the TIN issued by such country or territory.
(11) A reporting crypto-asset service provider may rely on a third party to fulfil the due diligence obligations set out in this rule, but such obligations remain the responsibility of the reporting crypto-asset service provider.
(12) A reporting crypto-asset service provider shall maintain all documentation and data for a period of not less than seven tax years after the end of the period within which the reporting crypto-asset service provider shall report the information required to be reported pursuant to rule 243.
(13) (a) For the purposes of sub-rule (2),—
(i) where an individual is resident for tax purposes in two or more countries or territories outside India, all such country(s) or territory(s) of residence are to be declared in a self-certification and the reporting crypto-asset service provider shall treat the individual crypto-asset user as a reportable user in respect of each such country or territory outside India;
(ii) a reporting crypto-asset service provider is considered to have confirmed the ―reasonableness‖ of a self-certification if, in the course of establishing a relationship with an individual crypto-asset user and upon review of the information obtained in connection with the establishment of the relationship (including any documentation collected pursuant to the Anti Money Laundering or Know Your Customer Procedures), it does not know or have reason to know that the self-certification is incorrect or unreliable;
(iii) where the self-certification fails the reasonableness test referred to in sub-clause (ii), the reporting crypto-asset service provider shall obtain either a valid self-certification, or a reasonable explanation and documentation (as appropriate) supporting the reasonableness of the self-certification, and retain a copy or a notation of such explanation and documentation before providing services effectuating relevant transactions to the individual crypto-asset user;
(iv) for the purposes of sub-rule (2)(b), a reporting crypto-asset service provider is said to have reason to know that a self-certification is unreliable or incorrect, if its knowledge of relevant facts or statements contained in the self-certification or other documentation is such that a reasonably prudent person in the position of the reporting crypto-asset service provider would question the claim being made;
(v) a reporting crypto-asset service provider also has reason to know that a self-certification is unreliable or incorrect, if there is information in the documentation or in the files of the reporting crypto-asset service provider that conflicts with the claim of the person regarding its status;
(vi) a reporting crypto-asset service provider has reason to know that a self-certification provided by a person is unreliable or incorrect, if the self-certification is incomplete with respect to any item on the self- certification that is relevant to the claims made by the person, the self-certification contains any information that is inconsistent with the claim of the person, or the reporting crypto-asset service provider has other information that is inconsistent with the claim of the person;
(vii) a reporting crypto-asset service provider that relies on a service provider to review and maintain a self-certification is considered to know or have reason to know the facts within the knowledge of the service provider;
(viii) a reporting crypto-asset service provider may not rely on documentation provided by a person, if the documentation does not reasonably establish the identity of the person presenting the documentation;
(ix) a reporting crypto-asset service provider may not rely on documentation, if the documentation contains information that is inconsistent with the claim of the person as to its status, the reporting crypto -asset service provider has other information that is inconsistent with the status of the person, or the documentation lacks information necessary to establish the status of the person;
(x) the expression ―change of circumstances” includes any change that results in the addition of information relevant to the status of an individual crypto-asset user or otherwise conflicts with the status of such user, or any change or addition of information to any profile associated with such individual crypto-asset user, if such change or addition of information affects the status of the individual crypto-asset user;
(xi) a change of circumstances affecting the self-certification provided to the reporting crypto-asset service provider will terminate the validity of the self-certification with respect to the information that is no longer reliable, until the information is updated;
(xii) where a change of circumstances occurs, the reporting crypto-asset service provider shall not rely on the original self-certification and shall obtain either—
(A) a valid self-certification that establishes the residence(s) for tax purposes of the individual crypto-asset user; or
(B) a reasonable explanation and documentation supporting the validity of the original self-certification (and retain a copy or a notation of such explanation and documentation);
(xiii) a self-certification shall become invalid on the date the reporting crypto-asset service provider holding the self-certification knows or has reason to know that the circumstances affecting the correctness of the self-certification have changed;
(xiv) a reporting crypto-asset service provider may choose to treat a person as having the same status that it had prior to the change in circumstances until the earlier of ninety calendar days from the date that the self-certification became invalid due to the change in circumstances, the date that the validity of the self-certification is confirmed, or the date that a new self-certification is obtained;
(xv) where a reporting crypto-asset service provider cannot obtain a confirmation of the validity of the original self-certification or a valid self-certification during such ninety-day period, the reporting crypto-asset service provider shall treat the individual crypto-asset user as resident of the country(s) or territory(s) in which the individual crypto-asset user claimed to be resident in the original self-certification and the country(s) or territory(s) in which the individual crypto-asset user may be resident as a result of the change in circumstances;
(xvi) a reporting crypto-asset service provider may rely on a self-certification without having to inquire into possible changes of circumstances that may affect the validity of the statement, unless it knows or has reason to know that the circumstances have changed;
(xvii) a reporting crypto-asset service provider may retain an original, certified copy, or photocopy (including a microfiche, electronic scan or similar means of electronic storage) or electronic copy of the self-certification;
(xviii) a reporting crypto-asset service provider may treat a self-certification as valid, irrespective of whether the self-certification contains an inconsequential error, if the reporting crypto-asset service provider has sufficient documentation on file to supplement the information missing from the self-certification due to the error and the documentation relied upon to cure the inconsequential error shall be conclusive.
(b) For the purposes of sub-rule (3),—
(i) ―publicly available” information includes information published by an authorised government body of a country or territory, such as––
(A) information in a list published by a tax administration; or
(B) information in a publicly accessible register maintained or authorised by an authorised government body of such country or territory; or
(C) information disclosed on an established securities market;
(ii) if an entity is subject to tax as a resident in more than one country or territory outside India, all country(s) or territory(s) of residence are to be declared in a self-certification and the reporting crypto-asset service provider shall treat the entity crypto-asset user as a reportable user in respect of each such country or territory outside India;
(iii) reporting crypto-asset service provider is considered to have confirmed the ―reasonableness‖ of a self-certification if, in the course of establishing a relationship with the entity crypto-asset user and upon review of the information obtained in connection with the establishment of the relationship (including any documentation collected pursuant to the Anti Money Laundering or Know Your Customer Procedures), it does not know or have reason to know that the self-certification is incorrect or unreliable;
(iv) in case a self-certification fails the reasonableness test, the reporting crypto-asset service provider shall obtain either–
(A) a valid self-certification; or
(B) a reasonable explanation and documentation supporting the reasonableness of the self-certification before providing services effecting relevant transactions to the entity crypto-asset user.
(c) For the purposes of sub-rules (8) and (9), a self-certification may be signed (or otherwise positively affirmed) by any person authorised to sign on behalf of the individual crypto-asset user or controlling person under domestic law.
(d) For the purposes of sub-rule (11), the following situations apply in which reporting crypto-asset service provider shall rely on documentation of a third party to fulfil its due diligence obligations:––
(i) with respect to documentation collected by third party service providers, agents or where a reporting crypto-asset service provider relies on documentation of an acquired business; and
(ii) with respect to the situation, where a reporting crypto-asset service provider relies on other reporting crypto-asset service providers that handle the same relevant transaction.
(14) For the purposes of rules 241, 242, 243 and this rule, exchange of any information in respect of any transaction in relevant crypto-asset shall be only for the limited purposes of administration of taxes by the relevant jurisdiction.
245. Annual Information Statement.— (1) The Director General of Income-tax (Systems) or any person authorised by him shall, under section 510, upload in the registered account of the assessee, an annual information system Form No. 168 containing the following information, which is in his possession within ninety days from the end of the month in which the information is received by him:
(a) information relating to tax deducted or collected at source;
(b) information relating to specified financial transaction;
(c) information relating to payment of taxes;
(d) information relating to demand and refund;
(e) information relating to pending proceedings;
(f) information relating to completed proceedings; and
(g) any other information authorised under sub-rule (2).
(2) The Board may also authorise the Director General of Income-tax (Systems) or any person authorised by him to upload any information received from any officer, authority or body performing any function under any law in force or the information received under an agreement referred to in section 159 or the information received from any other person to the extent as it may deem fit in the interest of the revenue, in the annual information statement referred to in sub-rule (1).
246. Application for registration as valuer under section 514.— (1) An application for registration as a valuer under section 514(2) shall be made in Form No. 169 and shall be verified in the manner specified therein and shall be accompanied by a non-refundable fee of ₹ 10000.
(2) Where an application for registration as a valuer is pending before the authorities mentioned in section 514(2), immediately before the 1st April, 2026, such application shall be considered as if it has been filed under sub-rule (1) and no further payment of fee shall be required in such a case.
(3) In case any person has become ineligible for making an application for registration as a valuer in view of the qualifications specified in the provisions of rule 247, the fee already paid by the applicant shall be refunded on an application made by him to the authorities mentioned in section 514(2).
(4) Where a person is already registered as a valuer under Wealth-tax Act, 1957 (27 of 1957) holding a valid certificate of registration as on the 31st March, 2026, he will continue to be a registered valuer under section 514, but that he is required to update his details by filing application as referred in sub-rule (1) by the 30th September, 2026, and in such a case, upon filing such application the registration shall be granted by the concerned authority in section 514, if the application is complete in all respects.
(5) For the purposes of sub-rule (4), the application may not be accompanied with any fee.
(6) Where a person is registered as a valuer under section 514, he shall be required to qualify in an examination within a period, as may be specified in this behalf by the Central Government, by notification.
(7) Where a person fails to qualify the examination as per sub-rule (6) within the specified period, the registration under section 514 shall stand cancelled with effect from the end of such specified period.
247. Qualification of registered valuer for the purposes of section 514.— (1) For the purposes of section 514(2), the qualifications for registration as valuers, for different classes of assets shall be as specified in sub-rules (2) to (9). (2) The qualifications for registration as valuers, for classes of assets mentioned in column B of the following Table shall be as specified in column C of the said Table:
Table
| S. No. | Class of Asset | Qualification |
| A | B | C |
| 1. | Immovable property (other than agricultural lands, plantations, forests, mines and quarries) | The applicant shall—
(a) (i) be a graduate in civil engineering, architecture or town planning from a recognised University; or (ii) be a post-graduate in valuation of real estate from a recognised University; or (iii) possess a qualification recognised by the Central Government for recruitment to superior services or posts under the Central Government in the field of civil engineering, architecture or town planning; and (b) (i) be a person formerly employed— (A) in a post under Government as a Gazetted officer; or (B) in a post under any other employer carrying a remuneration of not less than ₹ 50000 per month, and, in either case, shall have retired or resigned from such employment after having rendered service for not less than ten years (or three years, if he possesses a post-graduate degree in valuation of real estate from a recognised University) as a valuer, architect or town planner, or in the field of construction of buildings, designing of structures, or development of land; or (ii) as a professor, reader or lecturer in a university, college or any otherinstitution preparing students for a degree in civil engineering, architecture or town planning, or for any qualification referred to in clause (a), and must have retired or resigned from such employment after having taught for not less than ten years (or three years, if he possesses a post-graduate degree in valuation of real estate from a recognised University) any of the subjects of valuation, quantity surveying, building construction, architecture, or town planning; OR The applicant shall have been in practice as a consulting engineer, valuer of real estate, surveyor or architect for a period of not less than ten years (or three years, if he possesses a post-graduate degree in valuation of real estate from a recognised University) and must have acquired experience in any of the following fields: (a) valuation of buildings and urban lands; or (b) quantity surveying in building construction; or (c) architectural or structural designing of buildings or town planning; or (d) construction of buildings or development of land; and his gross receipts from such practice shall not be less than ₹ 100000 in any three of the five preceding years (or in any two of the three preceding years, if he possesses a post-graduate degree in valuation of real estate from a recognised University), immediately preceding the year in which the application for registration as a valuer is made by him. |
| 2 | Agricultural lands (other than plantations mentioned at serial number 3) | The applicant shall be a—
(a) graduate in agricultural science of a recognised University and shall have worked as a farm valuer for a period of not less than five years; or (b) person formerly employed in a post under the Government as a Collector, Deputy Collector, Settlement Officer, Land Valuation Officer, Superintendent of Land Records, Agricultural Officer, Registrar under the Registration Act, 1908 (16 of 1908), or any other officer of equivalent rank performing similar functions and shall have to be retired or resigned from such employment after having rendered service in any one or more of said the posts for an aggregate period of not less than five years. |
| 3 | Coffee plantation, tea plantation, rubber plantation or, cardamom plantation |
The applicant shall—
(a) have, for a period of not less than five years, owned, or acted as manager of a coffee, tea, rubber or, as the case may be, cardamom plantation having an area under plantation of not less than four hectares in the case of a cardamom plantation or forty hectares in the case of any other plantation; or (b) be a person formerly employed in a post under the Government as a Collector, Deputy Collector, Settlement Officer, Land Valuation Officer, Superintendent of Land Records, Agricultural Officer, Registrar under the Registration Act, 1908 (16 of 1908), or any other officer of equivalent rank performing similar functions and shall have retired or resigned from such employment after having rendered service in any one or more of the said posts for an aggregate period of not less than five years, out of which, not less than three years shall be in areas, wherein coffee, tea, rubber or, as the case may be, cardamom is extensively grown. |
| 4 | Forest | The applicant shall be a person formerly employed in a post under the Government and shall have to be retired or resigned from such employment after having rendered service for not less than five years in a Gazetted post requiring specialised knowledge in forestry. |
| 5 | Mines and quarries | The applicant shall be a—
(a) graduate in mining of a recognised university, or must possess a qualification recognised by the Central Government for recruitment to superior services or posts under the Central Government in the field of mining; and (b) person formerly employed in a — (A)post under Government as a Gazetted officer; or (B) post under any other employer carrying a remuneration of not less than ₹ 50000 per month, and, in either case, shall have to be retired or resigned from such employment after having rendered service as a mining engineer for not less than ten years. |
| 6 | Stocks, shares, debentures, securities, shares in partnership firms and of business assets, including goodwill but excluding those mentioned at serial numbers 1 to 5 and 7 to 10 |
The applicant shall—
(a) be a member of the Institute of Chartered Accountants of India, or the Institute of Cost Accountants of India, or the Institute of Company Secretaries of India; or (b) possess a Master of Business Administration or Post Graduate Diploma in Business Management with specialisation in Finance; or (c) be a post graduate in Finance; and (i) have been in practice in a discipline, which is relevant for valuation of stocks, shares, debentures, securities, shares in partnership firms and of business assets, including goodwill, etc., for a period of not less than ten years and his gross receipts from such practice should not be less than ₹ 100000 in any three of the five preceding years, immediately preceding the year in which the application for registration as a valuer is made by him; or (ii) be a person formerly employed— (A) in a post under Government as a Gazetted officer, or (B) in a post under any other employer carrying a remuneration of not less than ₹ 50000 per month, and, in either case, shall have to be retired or resigned from such employment after having rendered service for a period of not less than ten years in the field of audit and accounts or taxation work, or (d) in a discipline which is relevant for valuation of stocks, shares, debentures, securities, shares in partnership firms and of business assets, including goodwill etc., carrying a remuneration of not less than ₹ 100000 per month and must have retired or resigned from such employment after having rendered service for a period of not less than ten years. |
| 7 | Machinery and plant | The applicant shall—
(a) (i) be a graduate or post-graduate in Mechanical, Electrical, Electronic and Communication, Electronic and Instrumentation, Production, Chemical, Textiles, Leather, Metallurgy, Aeronautical Engineering, or Valuation of Plant and Machinery from a recognised University; or (ii) possess a qualification recognised by the Central Government for recruitment to superior services or posts under the Central Government in the field of mechanical or electrical engineering; (b) be a person formerly employed— (i) in a post under Government as a Gazetted officer; or‘ (ii) in a post under any other employer carrying a remuneration of not less than ₹50000 per month, and, in either case, shall have to be retired or resigned from such employment after having rendered service as a mechanical or electrical or electronic and communication or electronic and instrumentation or production or chemical or textiles or leather or metallurgy or aeronautical engineer or valuer of machinery and plant for a period of not less than ten years (or three years, if he possesses a post-graduate degree in valuation of machinery and plant from a recognised University; or (iii) as a professor, reader or lecturer in a University, college or institution preparing students for a degree in mechanical or electrical or electronic and communication or electronic and instrumentation or production or chemical or textiles or leather or metallurgy or aeronautical engineering or for any qualification referred to in clause (a), and shall have to be retired or resigned from such employment after having taught for a period of not less than ten years (or three years, if he possesses a post-graduate degree in valuation of machinery and plant from a recognised University); OR The applicant shall have been in practice as a consulting engineer or valuer of machinery and plant for a period of not less than ten years and must have acquired experience in the valuation of machinery and plant and his gross receipts from such practice shall not be less than ₹ 100000 in any three of the five preceding years (or in any two of the three preceding years, if he possesses a post-graduate degree in valuation of machinery and plant from a recognised University), immediately preceding the year in which the application for registration as a valuer is made by him. |
| 8 | Jewellery | The applicant shall have been, for a period of not less than five years, a sole proprietor or partner in a partnership firm carrying on jewellery business which has on an average an annual turnover of not less than fifty lakhs rupees or profit, including fees for valuation, of not less than ₹ 500000 in the last three of the five preceding years, immediately preceding the year in which the application for registration as a valuer is made by him. |
| 9 | Works of art | The applicant shall have—
(a) specialisation by virtue of his academic and professional pursuits in the particular line of art, for the works of which he seeks to be registered as a valuer; and (b) served in any one or more of the following capacities:— (i) Director General or Superintending Archaeologist of the Archaeological Survey of India; or(ii) Director of National Museum, New Delhi, Salar Jung Museum, Hyderabad, Prince of Wales Museum, Bombay, Indian Museum, Calcutta, Asutosh Museum, Calcutta, Madras Museum, Madras or Bharat Kala Bhavan, Varanasi; or(iii) principal of a Government School of Art; or(iv) member of the Art Purchase Committee of any of the museums referred to in sub-clause (ii), or of the Lalit Kala Akademi. |
| 10 | Life interest, reversions and interest in expectancy | The applicant shall—
(a) be a graduate of a recognised University; and (b) have— (i) been in practice as an actuary under the Insurance Act, 1938 (4 of 1938), for a period of not less than ten years; or (ii) rendered continuous service for a period of not less than ten years as an actuary under Government or in the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956); or (iii) practised as an actuary or served as such under Government or in the Life Insurance Corporation of India referred to in sub-clause (ii) for an aggregate period of not less than ten years. |
(3) The qualifications for a valuer for assets, other than the assets covered in sub-rule (2), shall be determined by the Principal Chief Commissioner or Chief Commissioner, or the Principal Director General or Director General, to whom application for getting registered as a valuer has been submitted and the decision of Principal Chief Commissioner or Chief Commissioner, or the Principal Director General or Director General in this regard shall be conclusive.
(4) No person shall qualify for registration as a valuer, other than as a valuer of works of art or virtual digital assets or other class of assets as may be specified by the Board in this behalf, if he is employed under Government or any other employer.
(5) Irrespective of anything contained in sub-rules (1) to (4), no person shall qualify for registration as a valuer if,—
(a) he has been dismissed or removed from Government service; or
(b) he has been convicted of an offence connected with any proceeding under the Income-tax Act, 1961 (43 of 1961) (as it existed prior to its repeal), or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958) (as it existed prior to its repeal), or a penalty has been imposed on him under section 271(1)(iii) or section 273(i) or section 270A or section 271J of the Income-tax Act, 1961(43 of 1961) (as it existed prior to its repeal), or under section 439 or section 463 of the Act, or under section 18(1)(iii) of the Wealth-tax Act, 1957 (27 of 1957) or section 17(1) of the Gift-tax Act, 1958 (18 of 1958) (as it existed prior to its repeal); or
(c) he is an undischarged insolvent; or
(d) he has been convicted of any offence and sentenced to a term of imprisonment; or
(e) he has been found guilty of misconduct in his professional capacity, where he is a member of any association or institution established in India having as its object the control, supervision, regulation or encouragement of the profession of engineering, architecture, accountancy, or company secretaries or such other profession as the Board may specify in this behalf, by notification, by such association or institution; or
(f) he is a minor; or
(g) he has been declared to be of unsound mind; or
(h) he has not been found fit to be registered as a valuer, which shall be decided based on reasons to be recorded in writing, after granting an opportunity of being heard to the person or entity concerned; or
(i) he is an undischarged bankrupt or has applied to be adjudicated as bankrupt.
(6) The requirement laid down in any of the foregoing sub-rules that the applicant should have, for a period of not less than ten years or five years, as the case may be,—
(a) rendered service in any capacity; or
(b) taught any subject; or
(c) practised any profession; or
(d) gained experience in any other capacity or field,
as specified therein, shall be deemed to have been fulfilled, if the period for which the applicant has rendered such service, taught such subject, practised such profession or otherwise gained experience in such other capacity or field, taken either singly or collectively, is not less than ten years or five years, as the case may be, in the foregoing sub-rules.
(7) For the purposes of this rule, the expressions “recognised University” means any of the following Universities or institutions:—
(a) any University in India established by law in force; or
(b) any educational institution recognised by the University Grants Commission (UGC), by notification; or
(c) any foreign university or educational institution, the degree of which is recognised as equivalent to a degree conferred by an Indian University, as determined by the Association of Indian Universities (AIU).
(8) For the purposes of this rule, where the membership of any institution is recognised by the Central Government as a qualification for the purpose of recruitment to civil services or posts under the Central Government in any field, such membership shall not be regarded as a requisite qualification for the purposes of this rule, unless the membership has been granted on the basis of passing the examinations conducted by the institution.
(9) The application referred to in rule 246(1) may be disposed of by the Principal Chief Commissioner or Chief Commissioner, or the Principal Director General or Director General either by granting approval or rejecting the same, within six months from the end of the month in which such application is made.
(10) The Principal Chief Commissioner or Chief Commissioner, or the Principal Director General or Director General may call for any relevant information from the person who has applied for getting registered as a valuer under section 514, before disposing his application referred to in rule 246(1).
248. Charging of fee and submission of valuation report under section 514.— (1) Subject to the provisions of sub-rules (2) and (3), the fees to be charged by a registered valuer for valuation of any asset shall not exceed the amount calculated at the following rates:––
| (a) | on the first ₹ 500000 of the asset as valued | 1/2 % of the value; |
| (b) | on the next ten lakhs rupees of the asset as valued | 1/5 % of the value; |
| (c) | on the next forty lakhs rupees of the asset as valued | 1/10 % of the value; and |
| (d) | on the balance of the asset as valued | 1/20 % of the value. |
(2) Where two or more assets are required to be valued by a registered valuer at the instance of an assessee, all such assets shall be deemed to constitute a single asset for the purposes of calculating the fees payable to such registered valuer.
(3) Where the amount of fees calculated in accordance with sub-rules (1) and (2) is less than ₹ 5000, the registered valuer may charge ₹ 5000 as his fees.
(4) The report of valuation by a registered valuer in respect of any asset under section 514(3), shall be in the Form No. 170.
249. Removal from register of names of valuers and restoration. — (1) 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 may remove the name of any person from the register of valuers where he is satisfied, after giving that person a reasonable opportunity of being heard and after such further inquiry, if any, as he thinks fit to make, —
(a) that his name has been entered in the register by error or on account of misrepresentation or suppression of a material fact;
(b) that he has been convicted of any offence and sentenced to a term of imprisonment or has been guilty of any malpractice or misconduct in his professional capacity which, in the opinion of 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, renders him unfit to be kept in the register.
(2) 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 may, on application and on sufficient cause being shown, restore to the register the name of any person removed therefrom.
(3) Without prejudice to the provisions of sub-rules (1) and (2), 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 shall, once in five years review the performance of all the registered valuers and may remove the name of any person from the Register of Valuers where he is satisfied, after giving that person a reasonable opportunity of being heard and after such further inquiry, if any, as he thinks fit to make, that his performance is such that his name should not remain on the Register of Valuers.
(4) 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 may himself conduct the inquiry referred to in sub-rule (1) or (3) or appoint an Inquiry Officer not below the rank of Joint Commissioner of Income-tax to conduct such inquiry, and for the purposes of such inquiry, 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 and the Inquiry Officer so appointed shall have the same powers as are vested in a court under the Bharatiya Nyaya Sanhita, 2023 (45 of 2023), when trying a suit in respect of the following matters, namely:—
(a) discovery and inspection;
(b) enforcing the attendance of any person including any officer of a banking company and examining him on oath;
(c) compelling the production of books of account and other documents;
(d) issuing commission.
250. Definitions for the purposes of rules 251 to 268.— For the purposes of rules 251 to 268,—
(a) “adjudicating authority” shall have the same meaning as assigned to it in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016);
(b) “authorised income-tax practitioner” means any authorised representative as defined in section 515(3)(a)(v) or (vi);
(c) “prescribed authority” for the purpose of section 515(5)(b) shall be the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Commissioner of Income-tax or Commissioner of Income-tax having jurisdiction over the case in the proceedings connected with which the income-tax practitioner is alleged to be guilty of misconduct;
(d)”register” means the register of income-tax practitioners referred to in rule 255; and
(e) “specified authority” shall be the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Commissioner of Income-tax or Commissioner of Income-tax, as the case may be.
251. Accountancy examinations recognised.— The following accountancy examinations are recognised for the purposes of section 515(3)(a)(v):—
(1) the National Diploma in Commerce, awarded by the All-India Council for Technical Education under the Ministry of Education, New Delhi, provided the diploma-holder has taken Advanced Accountancy and Auditing as an elective subject for the Diploma Examination;
(2) Government Diploma in Company Secretaryship, awarded by the Department of Company Affairs, under the Ministry of Corporate Affairs, New Delhi;
(3) final examination of the Institute of Company Secretaries of India, New Delhi;
(4) the final examination of The Institute of Cost Accountants of India constituted under the Cost and Works Accountants Act, 1959 (23 of 1959);
(5) the departmental examinations conducted by or on behalf of the Central Board of Direct Taxes for Assessing Officers, Class I or Group ‘A’, Probationers, or for Assessing Officers, Class II or Group ‘B’, Probationers, or for promotion to the post of Assessing Officers, Class II or Group ‘B’, as the case may be; and
(6) the Revenue Audit Examination for Section Officers conducted by the Office of the Comptroller and Auditor General of India.
252. Educational qualifications prescribed.— The following educational qualifications are prescribed for the purposes of section 515(3)(a)(vi):—
(1) A degree in Commerce or Law, conferred by any University in India established by law currently in force, or a deemed university, or an institution with the authority to confer degrees under the University Grants Commission Act, 1956 (3 of 1956).
(2) A degree in Commerce or Law, conferred by any foreign university or educational institution, which is recognised as equivalent to a degree conferred by an Indian University, as determined by the Association of Indian Universities (AIU).
253. Nature of business relationship.— For the purposes of section 515(3)(b)(ii)(H), the term “business relationship” shall be construed as any transaction entered into for a commercial purpose, other than —
(A) commercial transactions which are in the nature of professional services permitted to be provided by an auditor or audit firm under the Act and the Chartered Accountants Act, 1949 (38 of 1949) and the rules or regulations made under the said Acts; and
(B) commercial transactions that are conducted in the normal course of business of the company at a fair market price, such as the sale of products or services to the auditor as a customer in the regular operation of business, by companies involved in telecommunications, airlines, hospitals, hotels, and other similar industries.
254. Appearance by Authorised Representative in certain cases.— For the purposes of section 515(3)(a)(ix), any other person, in respect of a company or a limited liability partnership, shall be the person appointed by the Adjudicating Authority for discharging the duties and functions of an interim resolution professional, a resolution professional, or a liquidator, as the case may be, under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and the rules and regulations made thereunder.
255. Register of income-tax practitioners.— Every specified authority shall maintain a register, of authorized income-tax practitioners to whom certificates of registration have been issued by him under rule 257, in such form and in such manner as may be specified by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be, with the prior approval of the Board.
256. Application for registration.— (1) Any person, who wishes to have his name entered as an authorised income-tax practitioner in the register, shall apply to the Chief Commissioner of Income-tax or Commissioner of Income-tax within whose area of jurisdiction he has been practising.
(2) The application shall be made in Form No. 171 and shall be accompanied by documentary evidence regarding his eligibility for income-tax practice under section 515(3)(a)(v) or (vi) or (vii) or (viii).
(3) The applicant shall also furnish such further information as the Chief Commissioner of Income-tax or Commissioner of Income-tax may require in connection with the disposal of the application.
(4) Where a person is already registered as income-tax practitioner under the Income-tax Act, 1961(43 of 1961) (as it existed prior to its repeal) holding a valid certificate of registration as on 31st March, 2026, he shall continue to be a registered income-tax practitioner under section 515, but he shall be required to update his details by filing application referred in sub-rule (1) by the 30th September, 2026, and in such a case, upon filing such application, the registration shall be granted by the concerned authority under section 515, if the application is complete in all respects.
257. Certificate of registration.— If the specified authority is satisfied that the applicant fulfils the requirements of section 515(3)(a)(v) or (vi) or (vii) or (viii) and has been practicing before income-tax authorities for not less than one year on the date of the application, the specified authority shall enter the name of the applicant in the register, in such form and manner as may be specified by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be, with the prior approval of the Board and issue him a certificate of registration .
258. Cancellation of certificate.— (1) A certificate of registration shall stand cancelled when the name of the holder of the certificate is removed from the register under these rules.
(2) When the name of the holder of the certificate is removed from the register, the Chief Commissioner of Income-tax or Commissioner of Income-tax maintaining the register shall notify the fact of such removal to the authorised income-tax practitioner concerned and also to other Chief Commissioners of Income-tax or Commissioners of Income-tax (who shall notify the fact of the removal to the income-tax authorities subordinate to them) and to the Appellate Tribunal.
259. Cancellation of certificate obtained by misrepresentation.— (1) If at any time the specified authority is satisfied that the certificate of registration was obtained through misrepresentation as to an essential fact, he shall order the removal of the name of the income-tax practitioner from the register.
(2) An order under sub-rule (1) shall not be passed unless the authorised income-tax practitioner has been given a reasonable opportunity of being heard regarding in the proposed removal.
260. Removal of name of authorised income-tax practitioner who is insolvent or on whom penalty has been imposed.— The name of a person, which has been entered in the register,–
(a) shall be removed from the register during the period for which he is disqualified to represent an assessee in the circumstances as referred to in section 515(4)(b) or (c); and
(b)shall be re-entered only after the completion of the period.
261. Prescribed authority to order an inquiry.— An order disqualifying an authorised income-tax practitioner from representing an assessee under section 515(5)(b) shall be passed only after an inquiry, held as far as may be, in accordance with rules 262 to 267.
262. Charge-sheet.— (1) Where the prescribed authority, on the basis of information in its possession, is of the opinion that prima facie an authorised income-tax practitioner is guilty of misconduct in connection with any income-tax proceedings, it shall frame definite charges against the income-tax practitioner and shall communicate them in writing to him, together with a statement of the allegations in support of the charges.
(2) The authorised income-tax practitioner shall be required to submit within such time as may be specified by the prescribed authority, a written statement of his defence and also to state whether he desires to be heard in person.
263. Inquiry Officer.— The prescribed authority shall, unless it proposes to conduct the inquiry itself, appoint an Inquiry Officer, not below the rank of an Assistant Commissioner of Income-tax, to conduct the inquiry and shall inform the authorised income-tax practitioner of the appointment of such an Inquiry Officer.
264. Proceedings before Inquiry Officer.— (1) On receipt of the written statement of defence, or if no such statement is received within the time specified, the Inquiry Officer shall inquire into such of the charges as are not admitted.
(2) The Inquiry Officer shall, in the course of the inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material in regard to the charges.
(3) The authorised income-tax practitioner shall be entitled to cross-examine witnesses examined in support of the charges and to give evidence in person.
(4) If the Inquiry Officer declines to examine any witness on the ground that his evidence is not relevant or material, he shall record his reasons in writing.
(5) At the conclusion of the inquiry, the Inquiry Officer shall prepare a report of the inquiry, recording his findings on each of the charges together with the reasons therefor.
265. Order of the prescribed authority.— (1) The prescribed authority shall consider the report of the Inquiry Officer and record its findings on each charge and, where it does not agree with the findings of the Inquiry Officer, shall record the reasons for its disagreement.
(2) If the prescribed authority is satisfied on the basis of its findings on the report of the Inquiry Officer that the authorised income-tax practitioner is guilty of misconduct in connection with any income-tax proceedings, it shall pass an order directing that the authorised income-tax practitioner shall be disqualified to represent an assessee under section 515(1) for such period as it may determine and his name shall be removed from the register for that period.
(3) The prescribed authority shall, while communicating its order under sub-rule (2) furnish to the authorised income-tax practitioner, a copy of the report of the Inquiry Officer and a statement of its findings together with the reasons for disagreement, if any, with the findings of the Inquiry Officer.
266. Procedure if no Inquiry Officer appointed.— The procedure prescribed in rules 264 and 265 shall also apply, to the extent possible, to the prescribed authority, if it itself conducts the inquiry without appointing an Inquiry Officer.
267. Change of Inquiry Officer.— If it becomes necessary to change the Inquiry Officer during an inquiry, the prescribed authority may appoint another Inquiry Officer not below the rank of an Assistant Commissioner of Income-tax and the proceedings shall continue with the new Inquiry Officer from the point where they were left by his predecessor.
268. Powers of prescribed authority and Inquiry Officer.— For the purposes of any proceedings under rules 261 to 267, the prescribed authority and the Inquiry Officer shall have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters: –
(a) discovery and inspection;
(b) enforcing the attendance of any person including any officer of a banking company and examining him on oath;
(c) compelling the production of books of account and other documents; and
(d) issuing commissions.
269. Procedure to be followed in calculating interest under section 533(2)(u).— In calculating the interest payable by the assessee or the interest payable by the Central Government to the assessee under any provision of the Act,—
(a) where interest is to be calculated on annual basis, the period for which such interest is to be calculated shall be rounded off to a whole month or months and for this purpose any fraction of a month shall be ignored; and the period so rounded off shall be deemed to be the period in respect of which the interest is to be calculated;
(b) where the interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be a full month and the interest shall be so calculated; and
(c) the amount of tax, penalty or other sum, in respect of which such interest is to be calculated, shall be rounded off to the nearest multiple of ₹ 100 rupees and for this purpose any fraction of ₹ 100 shall be ignored and the amount so rounded off shall be deemed to be the amount in respect of which the interest is to be calculated.
270. Determination of income, being partly from agricultural and partly from business.— (1) In terms of section 533(2)(b)(i), in case of income, which is partially agricultural income and partially from business, the market value of any agricultural produce which has been raised by the assessee, or received by him as rent in kind, shall be allowed as a deduction, where —
(a) such agricultural produce has been utilised as a raw material in such business; or
(b) sale receipts of such agricultural produce are included in the accounts of the business.
(2) No further deduction shall be made in respect of any expenditure incurred by the assessee as a cultivator or receiver of rent-in-kind.
(3) For the purposes of sub-rule (1) ―market value‖ shall be deemed to be, —
(a) where agricultural produce is ordinarily sold in the market in its raw state, or after application to it of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render it fit to be taken to market, the value calculated according to the average price at which it has been so sold during the relevant tax year; and
(b) where agricultural produce is not ordinarily sold in the market in its raw state or after application to it of any process referred to in clause (a), the aggregate of —
(i) the expenses of cultivation;
(ii) the land revenue or rent paid for the area in which it was grown; and
(iii) such amount as the Assessing Officer finds, having regard to all the circumstances in each case, to represent a reasonable profit.
271. Income from manufacture of rubber, coffee and tea.— (1) In terms of section 533(2)(b)(i), incomes specified in column B of the following Table, shall be computed as if it were incomes derived from business and the percentage of such incomes specified in column C thereof shall be deemed to be the income liable to tax.
Table
| Sl. No. |
Nature of income | Percentage |
| A | B | C |
| 1. | Income derived from the sale of centrifuged latex or cenex or latex-based crepes (such as pale latex crepe) or brown crepes (such as estate brown crepe, remilled crepe, smoked blanket crepe or flat bark crepe) or technically specified block rubbers manufactured or processed from field latex or coagulum obtained from rubber plants grown by the seller in India | 35% |
| 2. | Income derived from the sale of coffee grown and cured by the seller in India | 25% |
| 3. | Income derived from the sale of coffee grown, cured, roasted, and grounded by the seller in India with or without mixing chicory or other flavouring ingredients, | 40% |
| 4. | Income derived from the sale of tea grown and manufactured by the seller in India | 40% |
(2) In computing the income specified in sub-rule (1), an allowance shall be made in respect of the cost of planting rubber plants, coffee plants and tea bushes, as the case may be, in replacement of plants or bushes that have died or become permanently useless in an area already planted, if such area has not previously been abandoned.
(3) For the purposes of determining such cost referred to in sub-rule (2), no deduction shall be made in respect of the amount of any subsidy, which, under the provisions mentioned in Schedule III [Table: Sl. No. 21] to the Act is not includible in the total income.
(4) For the purposes this rule, the expression ―curing‖ shall have the same meaning as assigned to it in section 3(d) of the Coffee Act, 1942 (7 of 1942).
272. Deduction in respect of expenditure on production of feature films.— (1) In computing the profits and gains of the business of production of feature films carried on by a person (herein referred to as the film producer), the deduction in respect of the cost of production of a feature film certified for release by the Board of Film Censors in a tax year shall be allowed in accordance with the provisions of sub-rules (2) to (4).
(2) Where a feature film is certified for release by the Board of Film Censors in any tax year and in such tax year,—
(a) the film producer sells all rights of exhibition of the film, the entire cost of production of the film shall be allowed as a deduction in computing the profits and gains of such tax year; or
(b) the film producer—
(i) himself exhibits the film on a commercial basis in all or some of the areas; or
(ii) sells the rights of exhibition of the film in respect of some of the areas; or
(iii) himself exhibits the film on a commercial basis in certain areas and sells the rights of exhibition of the film in respect of all or some of the remaining areas,
and the film is released for exhibition on a commercial basis at least ninety days before the end of such tax year, the entire cost of production of the film shall be allowed as a deduction in computing the profits and gains of such tax year.
(3) Where a feature film is certified for release by the Board of Film Censors in any tax year and in such tax year, the film producer—
(a) himself exhibits the film on a commercial basis in all or some of the areas; or
(b) sells the rights of exhibition of the film in respect of some of the areas; or
(c) himself exhibits the film on a commercial basis in certain areas and sells the rights of exhibition of the film in respect of all or some of the remaining areas,
and the film is not released for exhibition on a commercial basis at least ninety days before the end of such tax year, the cost of production of the film in so far as it does not exceed—
(i) the amount realised by the film producer by exhibiting the film on a commercial basis; or
(ii) the amount for which the rights of exhibition are sold; or
(iii) the aggregate of the amounts realised by the film producer by exhibiting the film and by the sale of the rights of exhibition,
shall be allowed as a deduction in computing the profits and gains of such tax year and the balance, if any, shall be carried forward to the next following tax year and allowed as a deduction in that year.
(4) Where, during the tax year in which a feature film is certified for release by the Board of Film Censors, and the film producer––
(a) does not himself exhibit the film on a commercial basis; or
(b) does not sell the rights of exhibition of the film,
no deduction shall be allowed in respect of the cost of production of the film in computing the profit and gains of such tax year and entire cost of production shall be carried forward to the next following tax year and allowed as a deduction in that year.
(5) Irrespective of anything contained sub-rules (1) to (4), the deduction under this rule shall not be allowed unless,—
(a) in a case, where the film producer—
(i) has himself exhibited the feature film on a commercial basis; or
(ii) has sold the rights of exhibition of the feature film; or
(iii) has himself exhibited the feature film on a commercial basis in some areas and has sold the rights of exhibition of the feature film in respect of all or some of the remaining areas,
the amount realised by exhibiting the film, or the amount for which the rights of exhibition have been sold or, as the case may be, the aggregate of such amounts, is credited in the books of account maintained by him in respect of the year in which the deduction is admissible; or
(b) in a case, where the film producer has transferred the rights of exhibition of the feature film on a minimum guarantee basis, the minimum amount guaranteed and the amount, if any, received or due in excess of the guaranteed amount, or where the film producer follows cash system of accounting, the amount received towards the minimum guarantee and the amount, if any, received in excess of the guaranteed amount, are credited in the books of account maintained by him in respect of the year in which the deduction is admissible.
(6) Where the Assessing Officer is of the opinion that—
(a) the rights of exhibition of the feature film have been transferred by a mode not covered by this rule; or
(b) having regard to the facts and circumstances of the case, it is not practicable to apply the provisions of this rule,
he may allow deduction in respect of cost of production of the film in such other manner as he may consider suitable.
(7) For the purposes of this rule,—
(a) sale of the rights of exhibition of a feature film includes the lease of such rights or their transfer on a minimum guarantee basis; and
(b) the rights of exhibition of a feature film shall be considered to have been sold only on the date,—
(i) when the positive prints of the film are delivered by the film producer to the purchaser of such rights; or
(ii) when the negative of the film is delivered by the film producer to the film distributors defined in rule 273, where in terms of the agreement between the film producer and the film distributor, the positive prints are to be made by the film distributor.
(8) In this rule,—
(a) “Board of Film Censors” means the Board of Film Censors constituted under the Cinematograph Act, 1952 (37 of 1952); and
(b) “cost of production”, in relation to a feature film, means the expenditure incurred on the production of the film, not being—
(i) the expenditure incurred for the preparation of the positive prints of the film; and
(ii) the expenditure incurred in connection with the advertisement of the film after it is certified for release by the Board of Film Censors,
and the cost of production of a feature film shall be reduced by the amount of subsidy received under any Government scheme, where such amount has not been included in the total income of the assessee for any tax year.
273. Deduction in respect of expenditure on acquisition of distribution rights of feature films.— (1) In computing the profits and gains of the business of production of feature films carried on by a person (herein referred to as the film distributor), the deduction in respect of the cost of acquisition of a feature film certified for release by the Board of Film Censors in a tax year shall be allowed in accordance with the provisions of sub-rules (2) to (4). (2) Where a feature film is acquired by the film distributor in any tax year and in such tax year,—
(a) the film distributor sells all rights of exhibition of the film, the entire cost of acquisition of the film shall be allowed as a deduction in computing the profits and gains of such tax year; or
(b) the film distributor—
(i) himself exhibits the film on a commercial basis in all or some of the areas; or
(ii) sells the rights of exhibition of the film in respect of some of the areas; or
(iii) himself exhibits the film on a commercial basis in certain areas and sells the rights of exhibition of the film in respect of all or some of the remaining areas,
and the film is released for exhibition on a commercial basis at least ninety days before the end of such tax year, the entire cost of acquisition of the film shall be allowed as a deduction in computing the profits and gains of such tax year.
(3) Where a feature film is acquired by the film distributor in any tax year and in such tax year, the film distributor—
(a) himself exhibits the film on a commercial basis in all or some of the areas; or
(b) sells the rights of exhibition of the film in respect of some of the areas; or
(c) himself exhibits the film on a commercial basis in certain areas and sells the rights of exhibition of the film in respect of all or some of the remaining areas,
and the film is not released for exhibition on a commercial basis at least ninety days before the end of such tax year, the cost of acquisition of the film, in so far as it does not exceed—
(i) the amount realised by the film distributor by exhibiting the film on a commercial basis; or
(ii) the amount for which the rights of exhibition are sold; or
(iii) the aggregate of the amounts realised by the film distributor by exhibiting the film and by the sale of the rights of exhibition,
shall be allowed as a deduction in computing the profits and gains of such tax year and the balance, if any, shall be carried forward to the next following tax year and allowed as a deduction in that year.
(4) Where, during the tax year in which a feature film is acquired by the film distributor, and–
(a) he does not himself exhibit the film on a commercial basis; or
(b) does not sell the rights of exhibition of the film,
no deduction shall be allowed in respect of the cost of acquisition of the film in computing the profit and gains of such tax year and entire cost of acquisition shall be carried forward to the next following tax year and allowed as a deduction in that year.
(5) Irrespective of anything contained in sub-rules (1) to (4), the deduction under this rule shall not be allowed unless,—
(a) in a case, where the film distributor—
(a) has himself exhibited the feature film on a commercial basis; or
(b) has sold the rights of exhibition of the feature film; or
(c) has himself exhibited the feature film on a commercial basis in some areas and has sold the
rights of exhibition of the feature film in respect of all or some of the remaining areas, the amount realised by exhibiting the film, or the amount for which the rights of exhibition have been sold or, as the case may be, the aggregate of such amounts, is credited in the books of account maintained by him in respect of the year in which the deduction is admissible; and
(b) in a case, where the film distributor has transferred the rights of exhibition of the feature film on a minimum guarantee basis, the minimum amount guaranteed and the amount, if any, received or due in excess of the guaranteed amount or where the film distributor follows cash system of accounting, the amount received towards the minimum guarantee and the amount, if any, received in excess of the guaranteed amount, are credited in the books of account maintained by him in respect of the year in which the deduction is admissible.
(6) For the purposes of this rule,—
(a) the sale of the rights of exhibition of a feature film includes the lease of such rights or their transfer on a minimum guarantee basis;
(b) the rights of exhibition of a feature film shall be considered to have been sold only on the date when the positive prints of the film are delivered by the film distributor to the purchaser of such rights;
(c) distributor shall include a sub-distributor; and
(d) “cost of acquisition”, in relation to a feature film, means the amount paid by the film distributor to the film producer or to another distributor under an agreement entered into by the film distributor with such film producer or such other distributor, as the case may be, for acquiring the rights of exhibition and, where the rights of exhibition have been acquired on a minimum guarantee basis, the minimum amount guaranteed, not being—
(i) the amount of expenditure incurred by the film distributor for the preparation of the positive prints of the film; and
(ii) the expenditure incurred by him in connection with the advertisement of the film.
274. Procedure for investment fund for availing benefit under section 9(12) read with Schedule I to Act.— (1) Where the investment in a fund has been made directly by an institutional entity, the number of members and the participation interest in such fund shall be determined by looking through the said entity, if it, —
(a) independently satisfies the conditions mentioned in paragraphs 1(1)(c), (e), (f) and (g) of Schedule I to the Act;
(b) has been set up solely for the purpose of pooling funds and investment thereof; and
(c) is resident of a country or specified territory with which an agreement referred to in section 159 has been entered into or is established or incorporated, or registered in a country or a specified territory notified by the Central Government in this behalf.
(2) A fund shall not be denied the benefit of being an eligible fund for the purposes of Schedule I to the Act, if, —
(a) non-fulfilment of any of the conditions specified in paragraphs 1(1)(c), (d) and (e) of the Schedule I to the Act, —
(i) is for reasons beyond the control of the fund and it does not exceed a period of ninety days; or
(ii) does not exceed a period of eighteen months, beginning from the date on which the fund is setup or is not beyond the final closing of the fund, whichever is earlier, and bona fide efforts are made to satisfy the conditions specified in the paragraph 1(1)(c), (d) and (e) of Schedule I to the Act; or
(iii) is for the reason that the fund is in the process of being wound up and it does not exceed one year beginning from the date on which the process of winding up has begun; or
(b) there is delay in furnishing the statement referred to in paragraph 1(4) of Schedule I to the Act and such delay does not exceed a period of ninety days.
(3) For the purposes of paragraph 1(1)(k) of Schedule I to the Act, a fund shall be said to be controlling or managing a business carried out by any entity, if it directly or indirectly holds such rights which results in the fund holding more than 26% of the total share capital or voting power or interest in the entity, as the case may be.
(4) The amount of remuneration to be paid by the fund to a fund manager, referred to in paragraph 1(1)(m) of Schedule I to the Act, shall not be less than the amount calculated in the following manner: —
(a) where the fund is Category-I foreign portfolio investor referred to in item (i) or (ii) or (iii), and sub-item (III) of item (iv) of clause (a) of regulation of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), the amount of remuneration shall be 0.10% of the asset under management; and
(b) in other cases, the amount of remuneration, shall be —
(i) 30% of the asset under management; or
(ii) 10% of profits derived by the fund in excess of the specified hurdle rate from the fund management activity undertaken by the fund manager, where it is entitled only to remuneration linked to the income or profits derived by the fund; or
(iii) 50% of the management fee, whether in the nature of fixed charge or linked to the income or profits derived by the fund from the management activity undertaken by the fund manager, paid by such fund in respect of the fund management activity undertaken by the fund manager, as reduced by the amount incurred towards operational expenses including distribution expenses, if any, where the fund is also making payment of management fee to any other fund manager.
(5) Where the amount of remuneration is lower than the amount arrived at under sub-rule (4), the fund may apply to the Member, Central Board of Direct Taxes referred to in rule 275(2), seeking approval of the Board under said rule for that lower amount to be the amount of remuneration and, upon receipt of such application, the Board if satisfied, considering the relevant facts, may approve such lower amount to be the amount of remuneration.
(6) Where an application is made under sub-rule (5), the provisions of rule 275(3) to (12) shall, mutatis mutandis, apply to the said application as they apply to application made under sub-rule (2) of the said rule.
(7) The fund manager shall, in addition to any report required to be furnished by it under section 172, obtain a report from the accountant, as defined in section 515(3)(b), in respect of activity undertaken for the fund and furnish such report on or before the specified date in Form No. 172, duly verified by such accountant in the manner indicated therein and all the provisions of the Act shall apply as if it is a report to be furnished under section 172.
(8) For the purposes of paragraph 1(3)(a) of Schedule I to the Act, a fund manager shall not be considered to be a connected person of the fund merely for the reason that the fund manager is undertaking fund management activity of the said fund.
(9) For the purposes of paragraph 1(3)(d) of Schedule I to the Act, any remuneration paid to the fund manager, by the fund, which is in the nature of fixed charge and not dependent on the income or profits derived by the fund from the fund management activity undertaken by the fund manager, shall not be included in the profits referred to in the said clause, if –
(a) the conditions specified in paragraph 1(1)(m) of Schedule I to the Act are satisfied; and
(b) such fixed charge has been agreed by the fund manager in writing at the beginning of the relevant fund management activity.
(10) For the purposes of this rule, —
(a) “asset under management” means the annual average of the monthly average of the opening and closing balances of the value of such part of the fund as managed by the fund manager;
(b) “management fee” means the amount as mentioned in the certificate obtained from an accountant as defined in rule 10(a), for this purpose; and
(c) “specified hurdle rate” means a pre-defined threshold beyond which the fund agrees to pay a share of the profits earned by the fund from the fund management activity undertaken by the fund manager.
275. Approval of the investment fund at its option for purposes of section 9(12).— (1) An investment fund, may at its option, seek approval of the Board regarding its eligibility for the purposes of section 9(12).
(2) The fund seeking approval, may make an application, in writing, enclosing relevant documents and evidence, to the Member, Central Board of Direct Taxes, having supervision and control over the work of Foreign Tax and Tax Research Division.
(3) The application referred to in sub-rule (2) shall be made three months before the beginning of the tax year for which the fund seeks the approval.
(4) The Board shall notify a committee headed by a Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax and consisting of two other Income-tax authorities, not below the rank of Commissioner, to examine the application and submit recommendations regarding grant of approval or otherwise and the conditions thereof, if any, subject to which such approval is to be granted.
(5) The committee on behalf of the Board may, before giving its recommendation, call for such documents or information from the investment fund, the Income-tax authorities and other Departments or agencies, as it may deem fit.
(6) The Board, on the basis of the recommendations of the committee, shall, within two months from the end of the month in which the application has been made, —
(a) by an order in writing, grant approval to the fund subject to such conditions as it may deem fit; or
(b) for reasons to be recorded in writing, reject the application.
(7) The approval once granted, subject to any condition specified in this behalf, shall be applicable for the tax year referred to in sub-rule (3) and subsequent tax years, unless it is withdrawn by the Board.
(8) The benefit of section 9(12) shall not be denied to an eligible investment fund, which has been granted approval, for any tax year for which the approval is in force and has not been withdrawn.
(9) The Board may withdraw the approval granted to any fund, if it is satisfied that —
(a) the approval has been obtained on the basis of misrepresentation of facts or fraud; or
(b) the conditions mentioned in section 9(12) and Schedule I to the Act and the guidelines specified under paragraph 5 of the said Schedule are not fulfilled; or
(c) any condition, subject to which approval was granted, has been violated.
(10) No order rejecting the application or withdrawing the approval, shall be passed without giving a reasonable opportunity of being heard and such order shall be communicated to the –
(a) fund;
(b) the Assessing Officer; and
(c) the Principal Commissioner of Income-tax or the Commissioner of Income-tax having jurisdiction over the fund.
276. Statement to be furnished by eligible investment fund under section 9(12) read with Schedule I to the Act.— (1) The statement required under paragraph 1(4) of Schedule I to the Act shall be furnished to the Assessing Officer electronically under digital signature, for every financial year by the eligible investment fund in Form No. 173, duly verified in the manner indicated therein.
(2) The Assessing Officer referred to in sub-rule (1) shall be the Assessing Officer who has the jurisdiction over the fund or would have had the jurisdiction had the fund been assessable to tax in India but for the provisions of section 9(12).
277. Calculation of taxable interest relating to contribution in a provident fund or recognised provident fund, exceeding specified limit.– (1) Taxable interest under Schedule II [Table: Sl. Nos. 3 and 4. C] to the Act shall be computed as the interest accrued in the taxable contribution account during the tax year.
(2) For the purpose of calculation of taxable interest under sub-rule (1), separate accounts within the provident fund account shall be maintained during the tax year 2021-2022 and all subsequent tax years for taxable contribution and non-taxable contribution made by a person.
(3) For the purposes of this rule,—
(a) non-taxable contribution account shall be the aggregate of the following:—
(i) closing balance in the account as on 31st March, 2021;
(ii) any contribution made by the person in the account during the tax year 2021-2022 and subsequent tax years, which is not included in the taxable contribution account; and
(iii) interest accrued on sub-clauses (i) and (ii), as reduced by the withdrawal, if any, from such account;
(b) taxable contribution account shall be the aggregate of the following:—
(i) contribution made by the person in a tax year in the account during the tax year 2021-2022 and subsequent tax years, which is in excess of the threshold limit; and
(ii) interest accrued on sub-clause (i), as reduced by the withdrawal, if any, from such account;
(c) ―taxable interest‖ means the income by way of interest accrued during the tax year which is not exempt from inclusion in the total income of a person; and
(d) the threshold limit for the purposes of clause (b)(i) shall mean,–
(i) 2500000 where no contribution is made by the employer of such person; and
(ii) 2250000 in other cases.
278. Conditions for purposes of Schedule III [Table: Sl. No. 8] to the Act.– (1) The amount exempted under Schedule III [Table: Sl. No. 8] to the Act in respect of the value of travel concession or assistance received by or due to the individual from his employer or former employer for himself and his family, in connection with his proceeding—
(a) on leave to any place in India; or
(b) to any place in India after retirement from service or after the termination of his service, shall be the amount actually incurred on the performance of such travel, subject to the following conditions:—
(i) where the journey is performed by air, the amount shall not exceed the fare admissible for the class of travel to which the employee is entitled, by the shortest route to the place of destination;
(ii) where places of origin of journey and destination are connected by rail and the journey is performed by any mode of transport other than by air, an amount not exceeding the air-conditioned first-class rail fare by the shortest route to the place of destination; and
(iii) where the places of origin of journey and destination or part thereof are not connected by rail and the journey is performed between such places, the amount eligible for exemption shall be,—
(A) where a recognised public transport system exists, an amount not exceeding the 1st class or deluxe class fare, as the case may be, on such transport by the shortest route to the place of destination; and
(B) where no recognised public transport system exists, and no specific rates have been prescribed either by the Directorate of Transport of the concerned State or of any neighbouring State, an amount calculated at the rate of ₹30 per kilometre, for the distance of the journey by the shortest route shall be admissible.
(2) The exemption referred to in sub-rule (1) shall be available to an individual in respect of two journeys performed in a block of four calendar years commencing from the calendar year 2022.
(3) Where such travel concession or assistance is not availed of by the individual during any such block of four calendar years, an amount in respect of the value of the travel concession or assistance, if any, first availed of by the individual during first calendar year of the immediately succeeding block of four calendar years shall be eligible for exemption.
(4) The amount in respect of the value of the travel concession or assistance referred to in sub-rule (3) shall not be taken into account in determining the eligibility of the amount in respect of the value of the travel concession or assistance in relation to the number of journeys under sub-rule (2).
(5) The exemption referred to in sub-rule (1) shall not be available to more than two surviving children of an individual.
(6) The provisions of sub-rule (5) shall not apply in respect of children born before 1st October, 1998, and also in case of multiple births after one child.
279. Limits for the purposes of Schedule III [Table: Sl.No. 11] to the Act.– (1) The amount, which is not to be included in the total income of an assessee in respect of the special allowance referred to in Schedule III [Table: Sl.No. 11] to the Act, shall be the least of the following:
(a) the actual amount of such allowance received by the assessee in respect of the relevant period; or
(b) the amount by which the expenditure actually incurred by the assessee in payment of rent in respect of residential accommodation occupied by him exceeds one-tenth of the amount of salary due to the assessee for the relevant period; or
(c) in case of an assessee employed in the location mentioned in column B of the following Table, an amount equal to such percentage of salary, mentioned in column C thereof, due to the assessee in respect of the relevant period:—
Table
| Sl. No. |
Location of residential accommodation | Percentage of salary | ||
| A | B | C | ||
| 1. | Mumbai, Kolkata, Hyderabad, Pune, Bengaluru. | Delhi, Chennai, Ahmedabad and | 50% | |
| 2. | Any other place. | 40% | ||
(2) In this rule,–
(a) “relevant period” means the period during which the said accommodation was occupied by the assessee during the tax year; and
(b) “salary‖ includes dearness allowance, if provided for under the terms of employment, but excludes all other allowances and perquisites.
280. Allowances for purposes of Schedule III [Table: Sl. Nos. 12 and 13] to the Act.– (1) The following, by whatever name called, shall be the allowances for the purposes of Schedule III [Table: Sl. No. 12] to the Act:–
(a) any allowance granted to meet the cost of travel on tour or on transfer; or
(b) any sum paid in connection with transfer, packing and transportation of personal effects on such transfer; or
(c) any allowance, whether granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty; or
(d) any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit where no free conveyance is provided by the employer; or
(e) any allowance granted to meet the expenditure incurred on a helper where such helper is engaged for the performance of the duties of an office or employment of profit; or
(f) any allowance granted for encouraging the academic, research and training pursuits in educational and research institutions; or
(g) any allowance granted to meet the expenditure incurred on the purchase or maintenance of uniform for wear during the performance of the duties of an office or employment of profit.
(2) The following, by whatever name called, shall be the allowances for the purposes of Schedule III [Table: Sl. No. 13] to the Act and the extent thereof shall be the following;—
Sl. No. |
Name of allowance |
Place at which allowance is exempt |
Extent to which
|
|||
A |
B |
C |
D |
|||
1. |
Any Special Compensatory (Remote Locality)
|
(a) |
Andaman and Nicobar Islands:Middle Andamans, North Andaman, Little Andaman, South Andaman (including Port Blair), Nicobar and Narcondum islands. |
₹ 7000 per month, when not claimed exemption mentioned at Sl. No. 4 ,5 or 9. |
||
(b) |
Throughout Arunachal Pradesh |
|||||
(c) |
Himachal Pradesh |
|||||
(i) |
Chamba District(A)Pangi Tehsil(B) Bharmour Tehsil. |
|||||
(ii) |
Kinnaur District. |
|||||
(iii) |
Kangra District;Areas of Bara Bhagal and Chhota Bhangal. |
|||||
(iv) |
Kullu District;15/20 Area of Nirmand Tehsil, comprising the Gram Panchayats of Kharga, Kushwar and Sarga. |
|||||
(v) |
Lahaul and Spiti District; Entire area of Lahaul and Spiti. |
|||||
(vi) |
Shimla District;(A)15/20 Area of Rampur Tehsil Comprising of Panchayats of Kott, Labana-Sadana, Sarpara and Chandi-Branda.(B) Dodra-Kawar Tehsil.(C) Gram Panchayats of Darkali in Rampur, Kashapath Tehsil and Munish.(D)Ghori Chaibis of Pargana Sarahan. |
|||||
(d) |
Jammu and Kashmir and Ladakh |
|||||
(i) |
Kathua District; Niabat Bani, Lohi , Malhar and Macchodi. |
|||||
(ii) |
Udhampur District: |
|||||
(A)Dudu Basantgarh, Lander Bhamag iilaqa, Thakrakote and Nagote.(B) All areas in Mahore Tehsil.Areas up to Goel from Kamban side and Areas upto Arnas from Keasi side in Tehsil Mahore. |
||||||
(iii) |
Doda District:Illaqas of Padder and Niabat Nowgam in Kashmire Tehsil. |
|||||
(iv) |
Leh District:(C) Noyama and Nobre.(D)Zanskar.(E) All other places in the District. |
|||||
(v) |
Baramulla District:Entire Gurez-Nirabat, Tangdar Sub-division andKeran Illaqa.Matchill. |
|||||
(e) |
Lakshadweep:Entire Union territory. |
|||||
(a) |
Mizoram:Chimptuipui District and Lunglei District. |
|||||
(b) |
Sikkim:
|
|||||
(c) |
Uttarakhand:Areas under Chamoli, Pithoragarh, Uttarkashi,
|
|||||
(d) |
Nagaland:Throughout Nagaland. |
|||||
(e) |
Tripura:Difficult areas of Tripura. |
|||||
2. |
Any Special Compensatory(Remote Locality)
|
(a) |
Himachal Pradesh |
₹ 4500 permonth,when not claimed exemption mentioned at Sl. No. 4 ,5 or 9. |
||
(i) |
Chamba District:(F) Jhandru Panchayat in Bhartiyat Tehsil,(G)Churah Tehsil(H)Dalhousie Town (including Banikhet proper) |
|||||
(ii) |
Kullu District:(I) Outer Seraj (excluding Villages of Jakat-Khana and Burow in Nirmand Tehsil).(J) Entire District (excluding outer Seraj area and Pargana of Pandrabis but including villages Jakat-Khana and Burao of Tehsil Nirmand). |
|||||
(iii)(A)Bv. |
Mandi District:(K)Chhuhar Valley (Jogindernagar Tehsil)(A) Following Panchayats in Thunag Tehsil: Bagraa, Chhatri, Chhotdhar, Daragushain, Gatoo, Gharyas, Janjheli, Jaryar, Johar Kalhani Kalwan, Kholanal, Loth, Silibagi, Samachan, Thachdhar, Tachi and Thana.(L) Following Panchayats of Dharampur Block: Binga, Kamlah, Saklana, Tanyar and Tarakholah(M) Following Panchayats of Karsog Tehsil;Balidhar, Bagra, Gopalpur, Khajol, Mahog,Mehudi, Manj, Pekhi, Sainj, Sarahan and Teban. (E) Following Panchayats of Sundernagar Tehsil: Bohi, Batwara, Dhanyara, Paura-Kothi, Seri and Shoja.Kangra District:Dharamsala Town and the following offices located outside its Municipal limits but included in Dharamsala Town for purposesof eligibility to Special Compensatory
|
|||||
(B) Shimla Town and its suburbs (Dhalli, Jatog, Kasumpti, Mashobra, Taradevi and Tutu). |
||||||
(vi) |
Sirmaur District |
|||||
(A) |
Following Panchayats:(iii) Bani, Bakhali (Pachhad Tehsil).(iv) Bharog, Bheneri (Paonta Tehsil).(i) Birla (Nahan Tehsil).(i) Dibber (Pachhad Tehsil).(i) Thana Kasoga (Nahan Tehsil). |
|||||
(B) |
Thansgiri Tract. |
|||||
(vii) |
Solan DistrictMangal Panchayat. |
|||||
(b) |
Jammu and Kashmir; and Ladakh |
|||||
(i) |
Areas in Poonch and Rajouri Districts excluding the towns of Poonch and Rajouri and Sunderbani and other Urban areas in the two districts. |
|||||
(ii) |
Areas not included in Table: Sl.No. 1 and clause (b)(i) but which are within a distance of 8 km from the line of actual control or at places whichmay be declared as qualifying for Border
|
|||||
(c) |
Manipur:
|
|||||
(d) |
Mizoram:Entire Aizwal District. |
|||||
(e) |
Tripura:Entire State other than areas included in Table: Sl.No. 1. |
|||||
3. |
Any Special Compensatory(Remote Locality)
|
(a) |
Himachal Pradesh:The remaining areas of Himachal Pradesh not includedin Sl. Nos. 1 and 2. |
₹1500 per month, when not claimed exemption mentioned at Sl. No. 4 and 5 or 9. |
||
(b) |
Meghalaya:Entire State covered in Meghalaya. |
|||||
(c) |
Assam:Entire State covered in Assam. |
|||||
(d) |
West Bengal:Working in Sundarban areas of South Dampier Hodge‘s line, namely, Bhagatush Khali (Rampura), Kumirmari (Bagna), Jhinga Khali, Sajnakhali, Gosaba, Amlamathi (Bidya), Canning, Kultali, Piyali, Nalgaraha, Raidighi,Bhanchi, Pather Partima, Bhagabatpur, Saptmukhi,Namkhana, Sikarpur, Kakdwip, Sagar, Mausini,Kalinagar, Haroa, Hingalganj, Basanti, Kuemari,
|
|||||
(e) |
Scheduled tribal area and bad climate areas in States where Scheduled tribal area allowance and bad climate allowance is admissible by the order of State Governments. |
|||||
4. |
Compensatory Field AreaAllowance. |
(a) |
Following areas in Arunachal Pradesh :— |
₹13500 per month. |
||
(i) |
Tirap and Changlang Districts; |
|||||
(ii) |
All areas North of line joining point 4448 in LZ 4179-Nukme Dong MS 3272-Sepla MT 2969-Palin MO 9213-Daporijo NR 5841-Along NL 1273-Hunli NM 3196-Tidding Tuwi MT 6369-Hayuliang NN 0170-Tawaken MT 8136-
|
|||||
(b) |
Throughout Manipur and Nagaland. |
|||||
(f) |
Following areas in Sikkim :—All areas North and North East of line joining Phalut LV 4750-Gezing LV 7059-Mangkha LV 6160-Penlang La LW 0666-Rangli LW 1448-BP 1 in LW 2453 on Indo-Bhutan Border, all inclusive. |
|||||
(g) |
Following areas in Himachal Pradesh :All areas East of line joining Umasila NV 3951-Udaipur NY 8663-Manikaran SB 2300-Pir Parbati Pass TA 1459-Taranda TA 2335-Barasua Pass TA 8801, all inclusive. |
|||||
(a) |
Following areas in Uttarakhand :—All areas North and North-East of line joining Barasua (Pass Gangnani TG 1362-Govind Ghat TG 0937-Tapovan TH 1822-Musiari (TN 8982-Relagad TO 2466, all inclusive. |
|||||
(h) |
Following areas in Jammu and Kashmir and Ladakh:— |
|||||
(iii) |
Areas North and East of line joining Zojila MU 3036-Baralachala NE 6672 along the Great Himalayan Range, all inclusive. |
|||||
(iv) |
All areas West of line joining point 1556 in NR 5470-Gulmarg MT 3105-Naushara MY 3105-Ringapat MT 2133-Handwara MT 2043-Laingyal MT 2339-Point 8405 in NG 4565-North of line joining point 8403-Bunakut MT 5453-Razan NN 2239-Zojila, all inclusive; |
|||||
(ii) |
All areas West of line joining tip of Chicken Neck RD 7073-Canal junction RD 6364-Mawa Brahmana RD 6183-Chauki RD 6393-Road junction RD 6499-Baramgala MY 3854-Point 1556 in NR 5470, all inclusive. |
|||||
5. |
Compensatory ModifiedField Area Allowance. |
(i) |
Following areas in Punjab and Rajasthan:—Areas West of line joining Jessai, Barmer, Jaisalmer, Pokharan, Udasar, Mahajan Ranges, Suratgarh, Lalgarh, Jattan, Abohar, Govindgarh, Fazilka, Jandiala Guru, Moga, Dholewal, Deas, Bir Sarangwal, Hussainiwala, Dera Baba Nanak, Laisain pulge upto the international border, all inclusive. |
|||
(j) |
Following area in Haryana :—
|
|||||
(k) |
Following areas in Himachal Pradesh :—Areas North of line joining Narkhanda, Keylong uptofield area line and high-altitude line. |
|||||
(l) |
Following areas in Arunachal Pradesh and Assam :— |
|||||
(i) |
Cachar and North Cachar Districts of Assam including Silchar; |
|||||
(ii) |
All areas of Arunachal Pradesh and Assam North of river Brahmaputra except Tejpur – Misamari and Field Areas. |
|||||
(e) |
Throughout Mizoram and Tripura. |
|||||
(f) |
Following areas in Sikkim and West Bengal :—Areas Northwards of line joining Sevoke LV 9112-Burdong LV 985-Sherwani LV 9453 -Bagrakot LW 0113-Damdim LW 1109-New Mal-Hasimara-QB 7894 Ganga Ram Tea Estate QA 1377 upto the High Altitude line/field area line/international border, all inclusive. |
|||||
(g) |
Following areas in Uttarakhand :—Areas North of line joining Uttarkashi, Karan Prayag, Gauchar, Joshimath, Chamoli, Rudra Prayag, Askote, Charamgad, Dharchula, Kausani and Narendra Nagar upto international border, all inclusive. |
|||||
(h) |
Following areas in Jammu and Kashmir :— |
|||||
(i) |
Areas West of line joining Pattan, Baramulla, Kupwara, Drugmula, Panges, Mankes, Buniyar, Pantha Chowk, Khanabal, Anantnag, Khundru and Khru upto the existing High altitude line, all inclusive. |
|||||
(ii) |
Areas West of line joining – BP-19, Brahmanadi-Bari, Jindra, Dhansal, Katra, Sanjhi Chatt, Batote, Patnitop, Ramban and Banihal upto the existing High altitude line, all inclusive. |
|||||
6. |
Any allowance granted to an employee working in any transport system to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place, where such employee is not in receipt of daily allowance. |
Whole of India. |
70% of such allowance up to a maximum of ₹25000 per month. |
|||
7. |
Children Education Allowance. |
Whole of India. |
₹3000 per month per child up to a maximum of
|
|||
8. |
Any allowance granted to an employee to meet the hostel expenditure on his child. |
Whole of India. |
₹9000 per month per child up to a maximum of
|
|||
9. |
Any special allowance in the nature of counter-insurgency allowance granted to the
|
Whole of India. |
₹22000 per month. |
|||
10. |
Transport allowance granted to an employee, who is
|
Whole of India. |
i) Metro Cities: ₹15000 plus dearness allowance thereon per
|
|||
11. |
Any special allowance in thenature of high altitude(uncongenial climate)allowance granted to the
|
(a) For altitude of 9,000 to 15,000 feet and altitude below 9000 feet with uncongenial climate.(b) For altitude above 15,000 feet.(c) All locations of Union territories of Jammu and Kashmir, and Ladakh, and the States of Sikkim and Uttarakhand. |
₹4500 per month.₹7000 per month.₹30000 per month. |
|||
12. |
Underground allowance granted to an employee who is working in uncongenial, unnatural climate in
|
Whole of India. |
15% of Basic Pay. |
|||
13. |
Any special allowance granted to the members of the armed forces in the nature of special compensatory highly active field area allowance. |
Whole of India |
₹22000 per month. |
|||
14. |
Any special allowance granted to the member of the armed forces in the nature of Island (duty) allowance or Island Special Duty
|
(m) Areas Around the Capital Town (Port Blair, Kavaratti and Agatti)(a) Difficult Areas-North and Middle Andaman, South Andaman, Excluding Port Blair, Entire Lakshadweep Except Kavaratti, Agatti and Minicoy.(n) More Difficult Areas – Little Andaman, Nicobar group of Islands, Narcodum Islands, East Islands and Minicoy. |
10% of basic pay.16% of basic pay.20% of basic pay. |
|||
15. |
Siachen Allowance granted to the members of the armed forces. |
Siachen area of Ladakh. |
₹42500 per month. |
|||
(3) An employee, being an assessee, who has exercised an option under section 202(4) shall be entitled to exemption only in respect of allowances mentioned in sub-rule (1)(a) to (d) and in sub-rule (2) [Table: Sl. No. 10], to the extent and subject to the conditions, if any, specified therein.
281. Circumstances and conditions for purposes of Schedule III [Table: Sl. No 16] to the Act.– (1) For the purposes of Schedule III (Table: Sl.No. 16) to the Act, the circumstances of death of a member of the armed forces (including para-military forces) of the Union in the course of operational duties shall be the following:—
a. acts of violence or kidnapping or attacks by terrorists or anti-social elements; or
b. action against extremists or anti-social elements; or
c. enemy action in international war; or
d. action during deployment with a peace keeping mission abroad; or
e. border skirmishes; or
f. laying or clearance of mines including enemy mines including mine sweeping operations; or
g. explosions of mines while laying operationally oriented mine-fields or lifting or negotiating mine-fields laid by the enemy or own forces in operational areas near international borders or the line of control; or
h. in the aid of civil power in dealing with natural calamities and rescue operations; and
i. in the aid of civil power in quelling agitation or riots or revolts by demonstrators.
(2) The Head of the Department, where the deceased member of the armed forces (including para-military forces) last served, or the service headquarters, shall certify that the death of such member occurred in the course of operational duties in circumstances as mentioned in sub-rule (1).
282. Notification of pension fund and other conditions to be satisfied by the pension fund.— (1) The pension fund mentioned in Schedule V [Table: Sl. No. 7.Note 5(a)(iii)] to the Act shall be required to satisfy the following other conditions: —
(a) it shall be regulated under the law of a foreign country including the laws made by any of its political constituents being a province, State or local body, by whatever name called, under which it is created or established, as the case may be;
(b) it shall be responsible for administering or investing the assets for meeting the statutory obligations and defined contributions of one or more funds or plans established for providing retirement, social security, employment, disability, death benefits or any similar compensation to the participants or beneficiaries of such funds or plans, as the case may be;
(c) the condition in clause (b) shall be deemed to have been satisfied with respect to assets being administered or invested, if the following conditions are satisfied: —
i. value of such assets is not more than 10% of the total value of the assets administered or invested by such fund;
ii. such assets are wholly owned directly or indirectly by the Government of a foreign country; and
iii. such assets vests in the Government of such foreign country upon dissolution;
(d) the earnings and assets of the pension fund are used only for meeting statutory obligations and defined contributions for participants or beneficiaries of funds or plans referred to in clause (b) and no portion of the earnings or assets of the pension fund inures any benefit to any other private person;
(e) the provisions of clause (d) shall not apply to any payment made to creditors or depositors for loan taken or borrowing for the purposes other than for making investment in India;
(f) the provisions of clause (d) shall not apply to earning from the assets referred to in clause (c), if the said earning are credited either to the account of the Government of that foreign country or to any other account designated by such Government so that no portion of the earnings inures any benefit to any private person;
(g) it shall intimate the details in respect of each investment made by it in India during the quarter within one month from the end of the quarter in Form No. 175;
(h) it shall file return of income on or before the due date specified under section 263 (1)(c) and furnish a compliance certificate in Form No. 176 from an accountant as defined in section 515(3)(b) along with such return; and
(i) the expression loans and borrowings mentioned in this sub-rule shall have the meaning assigned to them in Schedule V [Table: Sl. No. 7.Note 5(c)] to the Act.
(2) For the purposes of notification under Schedule V [Table: Sl. No. 7.Note 5(a)(iii)(D)] to the Act, the pension fund shall make an application in Form No. 174 enclosing therewith relevant documents and evidence, to the Member, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, New Delhi having supervision and control over the work of Foreign Tax and Tax Research Division.
283. Computation of minimum investment and exempt income for purposes of Schedule V [Table: Sl. No. 7] to Act.— (1) For the purposes of Schedule V [Table: Sl. No. 7] to the Act, the percentages referred to in Notes 5(e), (f) and (g) of the said Table, and the exempt income referred to in clauses (e), (f) and (g) of column D thereof shall be calculated in accordance with this rule.
(2) (a) The percentage referred to in Schedule V [Table: Sl. No. 7.Note 5(e)] to the Act shall be calculated in the following manner: —
(A+B+C)
_______ × 100
D
Where, —
A = aggregate of eligible investments, appearing in the balance sheet of the eligible Alternative Investment Fund as on the last date of all the financial years starting from the financial year 2021-2022 and ending on the financial year immediately preceding the relevant tax year, made in one or more eligible infrastructure entity or in an eligible InvIT;
B = aggregate of eligible investments, appearing in the balance sheet of the eligible Alternative Investment Fund as on the last date of all the financial years starting from the financial year 2021-2022 and ending on the financial year immediately preceding the relevant tax year, made in one or more eligible domestic companies, multiplied by the percentage for those domestic company or companies determined in accordance with sub-rule (3);
C = aggregate of eligible investments appearing in the balance sheet of the eligible Alternative Investment Fund as on the last date of all the financial years starting from the financial year 2021-2022 and ending on the financial year immediately preceding the relevant tax year, made in one or more eligible Non-Banking Financial Companies, multiplied by the percentage for those non-banking financial company or companies determined in accordance with sub-rule (4); and
D = aggregate of eligible investments appearing in the balance sheet of the eligible Alternative Investment Fund as on the last date of all the financial years starting from the financial year 2021-2022 and ending on the financial year immediately preceding the relevant tax year;
b. in a case, where the relevant tax year is the year in which the first investment is made by the eligible Alternative Investment Fund, the above amounts shall be calculated using the aggregate of eligible investments, appearing in its balance sheet of the relevant tax year as on the last date of that year; and
c. for the purposes of this sub-rule, the amounts A, B and C shall also include eligible investments which may not be includible in these amounts as on the date of calculation but would have been included if the calculation was carried out anytime within three months after the date of receipt of such eligible investments by the eligible Alternative Investment Fund.
(3) (a) The percentage referred to in Schedule V [Table: Sl. No. 7.Note 5(f)] to the Act shall be calculated in the following manner:—
E
× 100
F
Where, —
E = aggregate of eligible investments, appearing in the balance sheet of the eligible domestic company as on the last date of all the financial years starting from the financial year 2021-2022 and ending on the financial year immediately preceding the relevant tax year, made in one or more eligible infrastructure entity; and
F = aggregate of eligible investments appearing in the balance sheet of the eligible domestic company as on the last date of all the financial years starting from the financial year 2021-2022 and ending on the financial year immediately preceding the relevant tax year;
b. in a case, where the relevant tax year is the year in which the first investment is made by the eligible domestic company, the above amounts shall be calculated using the aggregate of eligible investments, appearing in its balance sheet of the relevant tax year as on the last date of that year; and
c. for the purposes of this sub-rule, the amount E shall also include eligible investments which may not be includible in these amounts as on the date of calculation but would have been included if the calculation was carried out anytime within three months after the date of receipt of such eligible investments by the eligible domestic company.
(4) (a) The percentage referred to in Schedule V [Table: Sl. No. 7.Note 5(g)] to the Act shall be calculated in the following manner: —
G
× 100
H
Where, —
G = aggregate of eligible lending, appearing in the balance sheet of the eligible Non-Banking Financial Company as on the last date of all the financial years starting from the financial year 2021-2022 and ending with the financial year immediately preceding the relevant tax year, made to one or more eligible infrastructure entity; and
H = aggregate of eligible lending appearing in the balance sheet of the eligible Non-Banking Financial Company as on the last date of all the financial years starting from the financial year 2021-2022 and ending on the financial year immediately preceding the relevant tax year;
(b) in a case, where the relevant tax year is the year in which the first debt or loan is extended by the eligible Non-Banking Financial Company, the above amounts shall be calculated using the aggregate of eligible lending appearing in its balance sheet of the relevant tax year as on the last date of that year.
(5) For the purposes of sub-rules (2), (3) and (4), the percentages referred therein for the relevant tax year 2031-2032 and for subsequent relevant tax years shall be deemed to have been satisfied if the same is satisfied for the relevant tax year 2030-2031.
(6) For the purposes of exempt income referred to in Schedule V [Table: Sl. No. 7.D(e)] to the Act, —
a. the income accrued or arisen or attributed to, or received by the specified person, who is a unit holder of an eligible Alternative Investment Fund, out of investment made in that fund, shall be chargeable to income-tax in the same manner as if it were the income accrued or arisen or attributed to, or received by, such person had the investment made by such investment fund been made directly by him;
b. the calculation of exempt income of the specified person arising from the investment in such fund during the relevant tax year shall be made in the following manner:—
I+J+K+L
Where, —
I = income accrued or arisen or attributed or received during the relevant tax year, computed in accordance with the provisions of the Act, from the eligible investments made by the eligible Alternative Investment Fund in eligible infrastructure entity, out of any investment made by the specified person on or after the date of notification of the specified person under the said clause;
J = income accrued or arisen or attributed or received during the relevant tax year, computed in accordance with the provisions of the Act, from the investments made by the eligible Alternative Investment Fund in one or more eligible domestic companies, out of any investment made by the specified person multiplied by N and divided by O, where N and O shall have the value assigned to them in sub-rule (7) for each of such domestic company;
K = income accrued or arisen or attributed or received during the relevant tax year, computed in accordance with the provisions of the Act, from the investments made by the eligible Alternative Investment Fund in one or more eligible Non-Banking Financial Companies, out of any investment made by the specified person multiplied by Q and divided by R, where Q and R shall have the value assigned to them in sub-rule (8) for each such non-banking financial company; and
L = income accrued or arisen or attributed or received during the relevant tax year, computed in accordance with the provisions of the Act, from the eligible investments made by the eligible Alternative Investment Fund in eligible InvIT, out of any investment made by the specified person on or after the date of notification of the specified person under the said clause.
(7) For the purposes of Schedule V [Table: Sl. No. 7.D(f)] to the Act, the exempt income during the relevant tax year shall be calculated in the following manner: —
M
_______ × N
O
Where, —
M = income accrued or arisen or attributed or received during the relevant tax year, computed in accordance with the provisions of the Act, from the investment made by the specified person in one or more eligible domestic companies;
N = aggregate of eligible investments, appearing in the balance sheet of the eligible domestic company as on the last date of the tax year immediately preceding the relevant tax year (last date of the relevant tax year, if eligible investment has been made during the relevant tax year for the first time), made by eligible domestic company in one or more eligible infrastructure entity, out of investment made by the specified person on or after the date of notification of the specified person under the said clause; and
O = aggregate of investments, appearing in the balance sheet of the eligible domestic company as on the last date of the tax year immediately preceding the relevant tax year (last date of the relevant tax year, if eligible investment has been made during the relevant tax year for the first time), out of any investment made by the specified person.
(8) For the purposes of Schedule V [Table: Sl. No. 7.D(g)] to the Act, the exempt income during the relevant tax year shall be calculated in the following manner: —
P
× Q
R
Where, —
P = income accrued or arisen or attributed or received during the relevant tax year, computed in accordance with the provisions of the Act, from the investment made by the specified person in one or more eligible Non-Banking Financial Companies;
Q = aggregate of eligible lending appearing in the balance sheet of the eligible Non-Banking Financial Company as on the last date of the tax year immediately preceding the relevant tax year (last date of the relevant tax year, if eligible lending has been made during the relevant tax year for the first time) made by eligible Non-Banking Financial Company to one or more eligible infrastructure entity, out of any investment made by the specified person on or after the date of notification of the specified person under the said clause; and
R = aggregate of lending appearing in the balance sheet of the eligible Non-Banking Financial Company as on the last date of the tax year immediately preceding the relevant tax year (last date of the relevant tax year, if eligible lending has been made during the relevant tax year for the first time) out of any investment made by the specified person.
9. Every eligible Alternative Investment Fund, eligible domestic company and eligible Non-Banking Financial Company, which has received funds from any specified person, either directly or through eligible Alternative Investment Fund, shall furnish the details of funds received from specified persons in Form No. 177 for each tax year during which such funds or any part thereof remains invested in such Alternative Investment Fund, domestic company and non-banking finance company.
10. The Form No. 177 referred to in sub-rule (9), shall be furnished electronically either under a digital signature or through an electronic verification code and shall be verified by the person who is authorised to verify the return of income of such Alternative Investment Fund, domestic company and non-banking finance company under section 265.
11. The Form No. 177 referred to in sub-rule (9), shall be furnished on or before the due date referred to in section 263(1)(c) for the tax year in which the eligible investments have been first received from the specified person and all subsequent tax years till the eligible investment received from the specified person is returned.
12. In this rule, the expressions—
(a) “specified person”, “eligible infrastructure entity”, “eligible Alternative Investment Fund”, “eligible domestic company”, “eligible Non- Banking Financial Company”, “eligible InvIT” shall have the meanings respectively assigned to them in Schedule V [Table: Sl. No. 7.Note 5] of the Act;
(b) “balance sheet” means the balance-sheet (including the notes annexed thereto and forming part of the accounts) drawn up as on 31st March of the relevant tax year which, —
i. gives a true and fair view of the state of affairs;
ii. complies with applicable accounting standards; and
iii. has been audited by the auditor of the —
A. eligible Alternative Investment Fund as per the provisions of regulation 20(5) of Securities and Exchange Board of India (Alternate Investment Fund) Regulations, 2012 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992); or
B. eligible domestic companies as per the provisions of section 139 of the Companies Act, 2013 (18 of 2013);
(c) “eligible investment” means an investment which has been made by an, —
i. eligible Alternative Investment Fund on or after the 1st April, 2020, but on or before the 31st March, 2030; or
ii. eligible domestic company on or after the 1st April, 2021, but on or before the 31st March, 2030;
(d) “eligible lending” means lending made by an eligible Non-Banking Financial Company on or after the 1st April, 2020, but on or before the 31st March, 2030;
(e) “investment” means movable and immovable assets, including current and non-current investments, loans and advances and cash and cash equivalents; and
(f) “relevant tax year” means —
i. the tax year for which the income exempt under Schedule V [Table: Sl. No. 7] to the Act is to be calculated;
ii. the tax year 2030-2031, for the purposes of sub-rule (5), even if exempt income under Schedule V [Table: Sl. No. 7] to the Act is not required to be calculated for that year.
284. Conditions for the purpose of Schedule VI [Table: Sl. No. 5] to the Act.– (1) The income accrued or arisen to, or received by, a non-resident as a result of—
a. transfer of non-deliverable forward contracts or offshore derivative instruments or over-the-counter derivatives; or
b. distribution of income on offshore derivative instruments or over-the-counter derivatives, under Schedule VI [Table: Sl. No. 5] of the Act, shall be exempted subject to fulfilment of the following conditions:—
i. the non-deliverable forward contract or offshore derivative instrument or over- the-counter derivative is entered into by the non-resident with an offshore banking unit of an International Financial Services Centre, which holds a valid certificate of registration granted under International Financial Services Centers Authority (Banking) Regulations, 2020 made under the International Financial Services Centres Authority Act, 2019 (40 50 of 2019), by the International Financial Services Centres Authority or any foreign portfolio investor being a unit of an International Financial Services Centre; and
ii. such contract, instrument or derivative is not entered into by the non-resident through or on behalf of its permanent establishment in India.
2. The offshore banking unit or the foreign portfolio investor shall ensure that the condition provided in sub- rule (1)(ii) is complied with.
3. For the purposes of this rule,—
a. “derivative” shall have the same meaning as assigned to it in section 2(ac) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
b. “foreign portfolio investor” means a person registered under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992).
c. “non-deliverable forward contract” means a contract for the difference between an exchange rate agreed before and the actual spot rate at maturity, with the spot rate being taken as the domestic rate or a market determined rate and such contract being settled with a single payment in a foreign currency;
d. “offshore banking unit” means a banking branch Unit located in an International Financial Services Centre;
e. “offshore derivative instrument” shall have the same meaning as assigned to it in regulation 2(1)(o) of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992);
f. “over-the-counter derivatives” means a derivative contract that is not traded on an exchange but instead is privately negotiated between a purchaser and a seller; and
g. “permanent establishment” shall have the meaning assigned to it in section 173(c).
285. Computation of exempt income in nature of capital gains in connection with relocation of original fund, etc. — (1) For the purpose of Schedule VI [Table: Sl. No. 10] to the Act, income of the nature of capital gains, arising or received by a specified fund, which is attributable to units held by non-resident (not being a permanent establishment of a non-resident in India) in such specified fund shall be computed as under: —
(a) where the specified fund files Form No. 178 in accordance with sub-rule (2), the income exempt under Schedule VI [Table: Sl. No. 10] to the Act = [(A×B)/C], where, —
A = income of the nature of capital gains, arising or received by a specified fund, which is on account of transfer of shares of a company resident in India, by the specified fund and where such shares were received by the specified fund, being resultant fund, in relocation from the original fund, or from its wholly owned special purpose vehicle, and where such capital gains would not be chargeable to tax if the relocation had not taken place;
B = aggregate of daily assets under management of the specified fund, which are held by non-resident unit holders (not being the permanent establishment of a non-resident in India), from the date of acquisition of the share of a company resident in India by the specified fund to the date of transfer of such share; and
C = aggregate of daily total assets under management of the specified fund, from the date of acquisition of the share of a company resident in India by the specified fund to the date of transfer of such share; and
(b) if Form No. 178 is not filed by the specified fund, the exempt income shall be nil.
2. The specified fund shall furnish an annual statement of exempt income in Form No. 178 electronically under digital signature on or before the due date, which is duly verified in the manner indicated therein.
3. It shall get the annual statement referred to in sub-rule (2), certified by an accountant as defined in section 515(3)(b), before the specified date and such accountant shall furnish by that date the certificate in Form No. 179 electronically under digital signature, which is duly verified in the manner indicated therein.
4. In this rule, the expressions —
a. “assets under management” means the closing balance of the value of assets or investments of the specified fund as on a particular date;
b. “due date” shall have the meaning assigned to it in section 263(1)(c);
c. “original fund”, “relocation”, “resultant fund”, “securities”, “specified fund” and “unit” shall have the meanings respectively assigned to them in Schedule VI to the Act;
d. “permanent establishment” shall have the meaning assigned to it in section 173(c); and
e. “specified date” in relation to the certification of the annual statement in Form No. 178, means the date one month prior to the due date;
286. Requirements for approval of a fund for welfare of employees and their dependents under Schedule VII [Table: Sl. No. 2] to Act.— (1) Any fund established for such purposes as may be notified by the Board for the welfare of employees and their dependents (where such employees are member of such fund) shall be formed under a trust and it shall be evidenced by a trust deed.
(2) The contributions to the fund are to be made by the employees by way of periodical subscription.
(3) The application for approval shall be made in Form No. 180 to the Principal Commissioner of Income-tax or Commissioner of Income-tax having jurisdiction over the area or territory in which the accounts are kept and such application shall be accompanied by the documents mentioned therein.
(4) The Principal Commissioner of Income-tax or Commissioner of Income-tax, where he is satisfied that, —
a. all the conditions laid down in Schedule VII [Table: Sl. No.2] to the Act and this rule are fulfilled, he shall record such satisfaction in writing and grant approval to the fund specifying the tax year or years not exceeding three tax years for which the approval shall be valid;
b. if any of the conditions laid down in Schedule VII [Table: Sl. No.2] to the Act and this rule is not fulfilled, he shall reject the application for approval, after recording the reasons for such rejection in writing.
(5) No order of rejection of an application shall be passed without giving a reasonable opportunity of being heard.
287. Percentage of Government grant for considering any University, hospital, or any other institution, as substantially financed by the Government for purposes of Schedule VII [Table: Sl. Nos. 17 and 18] to Act.— For the purposes of Schedule VII [Table: Sl. No. 17 and 18] to the Act, any university or other educational institution, hospital or other institution referred therein, shall be considered as being substantially financed by the Government for any tax year, if the Government grant to such University or other educational institution, hospital or other institution for such tax year exceeds 50% of their total receipts including any donations during the said tax year.
288. Procedure for setting up an Infrastructure Debt Fund for purpose of exemption under Schedule VII [Table: Sl. No. 46] to Act.— (1) Every Infrastructure Debt Fund under this rule 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 raise the funds in the manner specified in column B of the following Table subject to the conditions mentioned in column C thereof:
Table
| Sl. No. | Manner of raising funds | Conditions |
| A | B | C |
| 1. | Issue rupee denominated bonds or foreign currency bonds. | (d) Such bonds must be in accordance with the directions of Re-serve 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 made under the Foreign Exchange Management Act, 1999 (42 of 1999); and
(e) in case of an investor in the said 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. |
| 2. | Issue zero coupon bonds. | (f) Such bonds shall be in accordance with rule 7; and
(g) as mentioned in clause (b) column C of Sl. No. 1. |
| 3. | Raise funds through loan route under external com- mercial borrowings. | (h) Such external commercial borrowings shall be in accordance with the directions of the Foreign Exchange Department of the Reserve Bank of India; and
(i) 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. |
4. The investment made by the Infrastructure Debt Fund in an individual project or project belonging to a group at any time, shall not exceed 20% of the corpus of the fund.
5. 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.
6. The Infrastructure Debt Fund shall file its return of income as required by section 263(1)(a) on or before the due date specified in section 263(1)(c).
7. 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 Schedule VII [Table: Sl. No. 46] to the Act.
8. In this rule, —
a. “associated enterprise” shall have the meaning assigned to it in section 162;
b. “concern” shall have the meaning assigned to it in section 2(40);
c. “corpus” means the total funds of the Infrastructure Debt Fund raised for the purpose of investment;
d. “group” means a group as defined in section 2(mm) of Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992);
e. a person shall be deemed to have substantial interest in —
i. 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% of the voting power; or
ii. a concern other than a company if he is, at any time during the tax year, beneficially entitled to not less than 20% of the income of such concern;
(f) “relative”, in relation to an individual, means—
i. spouse of the individual; or
ii. brother or sister of the individual; or
iii. brother or sister of the spouse of the individual; or
iv. brother or sister of either of the parents of the individual; or
v. any lineal ascendant or descendant of the individual; or
vi. any lineal ascendant or descendant of the spouse of the individual; or
vii. spouse of the persons referred to in sub-clauses (ii) to (vi); or
viii. any lineal descendant of a brother or sister of either the individual or of the spouse of the individual; and
(g) “specified shareholder” means a non-banking financial company, or a bank, or any other person holding, directly or indirectly, shares carrying not less than 30% of the voting power in Infrastructure Debt Fund.
289. Rules for functioning of an electoral trust.— (1) An electoral trust referred to in Schedule VIII [Table: Sl. No. 2] to the Act shall function in accordance with the provisions of this rule.
(2) The electoral trust may receive voluntary contributions from—
a. an individual who is a citizen of India; or
b. a company which is registered in India; or
c. a firm or Hindu undivided family or an association of persons or a body of individuals, resident in India.
(3) The electoral trust shall accept contributions only by way of an account payee cheque drawn on a bank or account payee bank draft or by electronic transfer to its bank account and shall not accept any contribution in cash.
(4) The electoral trust shall not accept any contribution without the Permanent Account Number of the contributor, who is a resident and the passport number in the case of a citizen of India, who is not a resident.
(5) A receipt indicating the following shall be issued by the trust immediately on receipt of any contribution: —
a. name and address of the contributor;
b. Permanent Account Number of the contributor or passport number in the case of a citizen who is not a resident;
c. amount and mode of contribution including name and branch of the Bank and date of receipt of such contribution;
d. name of the electoral trust;
e. Permanent Account Number of the electoral trust;
f. date and number of approval by the prescribed authority; and
g. name and designation of the person issuing the receipt.
(6) The electoral trust shall not accept contributions—
a. from an individual, who is not a citizen of India, or from any foreign entity whether incorporated or not; or
b. from any other electoral trust which has been registered as a company under section 8 of the Companies Act, 2013 (18 of 2023) and approved as an electoral trust under the Electoral Trusts Scheme, 2013; or
c. from a Government Company as defined in section 2(45) of the Companies Act, 2013(18 of 2013); or
(d) from a foreign source as defined in section 2(j) of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010).
(7) A political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951) shall be an eligible political party and an electoral trust shall distribute funds only to the eligible political parties.
(8) (a) The electoral trust may, for the purposes of managing its affairs, spend up to 5% of the total contributions received in a year subject to an aggregate limit of ₹ 500000 in the first year of incorporation and ₹ 300000 in subsequent years;
b. the total contributions received in any tax year along with the surplus from any earlier tax year, if any, as reduced by the amount spent on managing its affairs, shall be the distributable contributions for the tax year; and
c. an electoral trust shall be required to distribute the distributable contributions for a tax year, referred to in clause (b), to the eligible political parties before the 31st March of the said tax year, subject to the condition that at least 95% of the total contributions received during the tax year along with the surplus brought forward from earlier tax year, if any, are distributed.
(9) The trust shall obtain a receipt from the eligible political party indicating the name of the political party, its Permanent Account Number, registration number, amount of fund received from the trust, date of the receipt and name and designation of person signing such receipt.
(10) The electoral trust shall not utilise any contributions for the direct or indirect benefit of the members or contributors, or for any of the following persons: —
a. the members (including members of its Executive Committee, Governing Committee or Board of Directors) of the electoral trust; or
b. any relative of such Members; or
c. where such member or contributor is a Hindu undivided family, a member of that Hindu undivided family; or
d. any person who has made a contribution to the trust; or
e. any person referred to in section 355(h); or
f. any concern in which any of the persons referred to in clauses (a), (b), (c), (d) and (e) has a substantial interest.
(11) (a) An electoral trust shall keep and maintain such books of account and other documents in respect of its receipts, distributions and expenditure as may enable the computation of its total income in accordance with the provisions of the Act;
(b) The electoral trust shall also maintain a list of persons from whom contributions have been received and to whom the same have been distributed, containing the name, address and Permanent Account Number of each such person along with the details of the amount and mode of its payment including the name and branch of the bank.
(12) Every electoral trust shall get its accounts audited by an accountant, as defined in section 515(3)(b), and furnish the audit report in Form No. 181 along with particulars forming part of its Annexure, to the Director General of Income Tax (Systems) on or before the due date specified for furnishing the return of income under section 263(1)(c).
(13) The Form No. 181 referred to in sub-rule (12), shall be furnished electronically, —
a. under digital signature, if the return of income is required to be furnished under digital signature; or
b. through electronic verification code, in a case not covered under clause (a).
(15) An electoral trust shall maintain a regular record of proceedings of all meetings and decisions taken therein.
16. Every electoral trust shall furnish a certified copy of list of contributors and a list of political parties, to whom sums were distributed in the manner specified in sub-rule (8), to the Director General of Income Tax (Systems), every tax year along with the audit report as stipulated under sub-rule (12).
17. Any change in the shareholders, subsequent to the approval granted under the Electoral Trusts Scheme, 2013 shall be intimated to the Board within thirty days of such change.
290. Report of audit of accounts to be furnished under Schedule IX read with section 48 for deduction for tea development account, coffee development account and rubber development account.— The report of audit of the accounts of an assessee, which is required to be furnished under paragraph 2 of Schedule IX to the Act read with section 48, shall be in Form No. 182.
291. Report of audit of accounts to be furnished under Schedule X read with section 49 for deduction for site restoration fund.— The report of audit of the accounts of an assessee, which is required to be furnished under paragraph 2 of Schedule X to the Act read with section 49, shall be in Form No. 183.
292. Investment of fund moneys.– (1) All contributions to a provident fund, whether made by the employer or the employees, or transferred from an individual account of the employee in a recognized provident fund maintained by a former employer, or accrued as interest or otherwise, shall be invested in the instruments given in column 2 of the following Table subject to the percentages given in column 3 thereof:
Table
| Sl. No. | Investment | Percentage amount to be invested in items referred to in column 2 |
| 1 | 2 | 3 |
| 2. | Government Securities and Related Investments. | Minimum 45%. |
| 3. | Debt Instruments and Related Investments. | Minimum 35%. |
| 4. | Short-term Debt Instruments and Related Investments. | Up to 5%. |
| 5. | Equities and Related Investments. | Minimum 5%. |
| 6. | Asset Backed, Trust Structured and Miscellaneous Investments. | Up to 5%. |
(2) The nature of investments referred to in sub-rule (1) shall have their respective meanings as specified in notification number S.O. 1433(E), dated the 29th of May, 2015, issued by the Ministry of Labour and Employment, Government of India in this behalf, as amended from time to time, and the said investments shall be subject to such conditions as specified in the said notification.
(3) Any funds that are not invested in the manner specified under sub-rule(1) may be deposited into–
a. a Post Office Savings Bank Account in India; or
b. a current account or Savings Bank Account with any scheduled bank.
(4) For the purposes of this rule,—
a. the expression “Government securities” shall have the same meaning as assigned to it in section 2(f) of the Government Securities Act, 2006 (38 of 2006);
b. the manner of investment specified in sub-rule (1) shall apply to the aggregate amount of moneys with the fund in the tax year;
c. moneys received on transfer, maturity or realisation of any security or deposit forming part of a fund or by withdrawal from any account in a bank (including a Post Office Savings Bank Account) shall be deemed to be moneys accruing to the fund; and
d. “scheduled bank” means–
(i) the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955); or
ii. a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959) ; or
iii. a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980) ; or
iv. any other bank, being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934).
293. Nomination.– (1) An employee may be permitted by the trustees of the provident fund to nominate one or more persons to receive the amount held in the provident fund in the event of the death of such employee and such nomination shall be made in Form No. 184.
2. If an employee nominates more than one person under sub-rule (1), he shall, specify in his nomination the amount or share payable to each of the nominees in a way that the whole of the amount that may stand to his credit in the provident fund.
3. Where an employee has a family at the time of making a nomination, the nomination shall be in favour of one or more persons belonging to his family and any nomination made by an employee in favour of a person not belonging to his family shall be invalid.
4. If, at the time of making a nomination, the employee does not have a family, the nomination may be in favour of any person or persons, but if the employee later gains a family, then such nomination shall be invalid and the employee may then make a new nomination in favour of one or more persons from his family.
5. If the nomination is in favour of a minor, whether partly or fully, the member may appoint an adult family member as the guardian of the minor nominee in the event of the death of such member and if, there are no adult family members available, the member may choose any other person to be the guardian of the minor nominee.
6. An employee may modify a nomination at any time by providing written notice to the trustees in Form No. 184 and, if the nominee dies before the employee, the nomination shall revert back to the employee who may then make a new nomination for that interest.
7. A nomination or its modification shall take effect to the extent that it is valid on the date on which it is received by the trustees.
8. For the purposes of this rule, “family” means,–
a. in the case of a male member, his wife, his children, whether married or unmarried, his dependant parents and his deceased son’s widow and children; and
b. in the case of a female member, her husband, her children, whether married or unmarried, her dependant parents, her husband’s dependant parents and her deceased son’s widow and children.
294. Accounts.– (1) The accounts of a provident fund shall be prepared at intervals of not more than twelve months.
(2) An account shall be maintained for each subscriber to the fund and it shall include the particulars shown in Part-A of Form No. 185.
(3) Where the accounts of a provident fund are kept outside India, certified copies of the accounts shall be supplied not later than the 15th June in each year or any other subsequent date fixed by the Assessing Officer to a local representative of the employer in India.
(4) An abstract of the individual account for the tax year of each employee participating in a provident fund shall be furnished by the trustees in Part-B of Form No. 185–
a. to the Assessing Officer of the area in which the accounts of the fund are kept, or if the accounts are kept outside India, to the Assessing Officer of the area in which the local headquarters of the employer are situated; and
b. by the 15th June in each year or any other subsequent date fixed by the Assessing Officer.
(5) The account to be made under the provisions of paragraph 11(1) of Part A of Schedule XI to the Act shall show in respect of each employee,–
a. the total salary paid to the employee during the period of his participation in the provident fund;
b. the total contributions;
c. the total interest which has accrued thereon; and
d. so far as may be, the percentage of the salary of the employee in accordance with which contributions have been made by the employer and employee.
(6) Every employer shall, as soon as possible, after the close of each financial year, send to each member, a statement of his account in the fund showing the following details:
(a) opening balance at the beginning of the period;
b. amount contributed during the year;
c. the total amount of interest credited at the end of the period or debited in the period; and
d. the closing balance at the end of the period.
295. Assigning or creating a charge on beneficial interest in a recognized provident fund.– If an employee assigns or creates a charge on their beneficial interest in a recognised provident fund, the Assessing Officer shall give notice to the employee upon learning of the assignment or charge, which shall inform the employee that if he does not cancel the assignment or charge within two months of receiving the notice, the consideration received for such assignment or charge shall be deemed to be income received by the employee in the tax year in which the Assessing Officer became aware of the situation, and shall be assessed accordingly.
296. Application for recognition.– (1) An application for recognition shall be made by the employer maintaining a provident fund, for which recognition is sought and shall be accompanied by the following documents: —
a. a copy of the original trust deed if any; and
b. a copy of the rules of the fund.
(2) The application referred to in sub-rule (1) shall be submitted through the Assessing Officer of:–
a. the area in which the accounts of the fund are kept; or
b. if the accounts are kept outside India the area in which the local headquarters of the employer are situated.
(3) The application shall be furnished in Form No. 186 and shall be verified in the manner specified therein.
(4) A fund which has been granted recognition on or before 31st March, 2006 and has not applied for recognition thereafter shall make a fresh application in Form No. 186 through the Assessing Officer referred to in sub-rule (2).
297. Order of recognition.– (1) An order according recognition to a provident fund shall take effect from the first day of the month immediately following the month in which the application for recognition is received by the income-tax authority concerned, unless, at the request of the employer, the first day of any later month in the same financial year is specified:
(2) In accordance with sub-rule (1), if the approving authority is satisfied that there was sufficient reason for the delay in submitting the application, he may accord recognition to the fund from a date not earlier than the 1st April of the financial year in which the application is made.
298. Withdrawal of recognition.– (1) The approving authority has the right to revoke recognition given to a provident fund if it fails to meet the conditions outlined in Part A of the Fourth Schedule to the Income-tax Act, 1961, as it existed prior to its repeal, or Part A and Part C of Schedule XI to the Act or subsequent conditions set after recognition was granted under the said Act of 1961 and the Act and if the exemption granted under section 17 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) is withdrawn under sub-section (4) of section 17 of the same Act, the recognition may be withdrawn.
(2) Before withdrawing recognition, the approving authority shall give an opportunity to the employer and the trustees of the fund to show cause why recognition should not be withdrawn.
299. Exemption from tax when recognition withdrawn.– If the approving authority withdraws recognition from a provident fund, the balance to the credit of each employee at the end of the financial year before the withdrawal of recognition shall, subject to the provisions of paragraph 9 of Part A of Schedule XI to the Act, be paid to him free of tax at the time when such employee receives the accumulated balance due to him, and the remaining accumulated balance due to him shall be subject to tax as if the fund had never been recognised.
300. Appeal under paragraph 13(1) of Part A of Schedule XI to the Act.– An appeal under paragraph 13(1) of Part A of Schedule XI to the Act shall be made in Form No. 187 and shall be verified in the manner indicated therein and shall be accompanied by a fee of ₹ 1000.
301. Definitions for purposes of rules 302 to 315.– For the purposes of rules 302 to 315 the expressions,–
(a) ―approving authority’ means the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
(b)”beneficiary” means a person referred to in paragraph 3(b) of Part B of Schedule XI to the Act for whom provision of annuity is made;
c. “fund” means a superannuation fund or a part of a superannuation fund which includes a fund, by whatever name called, established or constituted with a sole purpose of making payment of pension or family pension by the employer to his employees; and
d. “trust” means the trust under which the superannuation fund is established and the expression “trustee” means a trustee thereof.
302. Conditions regarding trust and trustees.– (1) The fund and the trust shall be established in India.
2. The trust shall have at least two trustees, provided that a company as defined in section 2(20) of the Companies Act, 2013 (18 of 2013) shall not be appointed as a trustee without the prior approval of the approving authority.
3. The trustees of the fund shall be a resident in India and any trustee who leaves India permanently shall vacate his office.
303. Investment of fund moneys.– (1) All moneys contributed to the fund, or received or accrued by way of interest, or otherwise, may be–
a. deposited in a Post Office Savings Bank Account in India; or
b. deposited in a current account or a savings account with any scheduled bank; or
c. utilised in accordance with rule 307 for making payments under a scheme of insurance or for purchase of annuities referred to in that rule;
(2) Any funds not deposited or used as mentioned in sub-rule (1) shall be invested in accordance with the notification of the Ministry of Finance, (Department of Financial Services) number F. No. 11/14/2013–PR, dated the 2nd March, 2015 published in the Gazette of India, Extraordinary, Part I, Section 1 as amended from time to time.
304. Admission of directors to a fund.– A director of a company, as defined in section 2(20) of the Companies Act, 2013 (18 of 2013), may only receive benefits from the fund, if he is a whole-time bona fide employee of the company and does not beneficially own shares in the company carrying more than 5% of the total voting power.
305. Ordinary annual contributions.– The yearly contribution of the employer to a fund for each employee shall not exceed 27% of their salary for each year as reduced by any contributions the employer made to a provident fund for the same employee during that year, whether recognised or not.
306. Initial contributions.– For purposes of the deduction allowable under section 29(1)(a), subject to any condition which the Board may think fit to specify, the initial contribution of the employer to a superannuation fund for the past services of an employee shall not exceed the total of 27% of the salary of the employee for each year of past service, as reduced by the contributions of the employer to a provident fund (recognised or unrecognised), if any, for the same employee for each such year.
307. Scheme of insurance or annuity.– (1) For the purpose of providing the annuities for the beneficiaries, the trustees shall—
a. enter into a scheme of insurance with the Life Insurance Corporation established under the Life Insurance Corporation Act, 1956 (31 of 1956) or any other insurer as defined in section 2(58) of the Act; or
b. accumulate the contributions in respect of each beneficiary and purchase an annuity from the said Life Insurance Corporation of India or any other insurer at the time of the retirement or death of each employee, or on his becoming incapacitated prior to retirement.
(2) The provisions of sub-rule (1) shall not apply to a fund established or constituted, under an irrevocable trust, which has its sole purpose to make payment of pension or family pension, in accordance with the rules or regulations made under the following enactments:—
a. the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970); or
b. the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980); or
c. the State Bank of India Act, 1955(23 of 1955); or
d. the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959); or
e. the National Bank for Agriculture and Rural Development Act, 1981(61 of 1981); or
f. the Industrial Development Bank of India Act, 1964 (18 of 1964);
g. the Export-Import Bank of India Act, 1981(28 of 1981); or
h. the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984); or
i. the Small Industries Development Bank of India Act, 1989(39 of 1989); or
j. the National Housing Bank Act, 1987 (53 of 1987).
308. Commutation of annuity.– Any payment in commutation of annuity shall not exceed—
a. in a case where the employee receives any gratuity, the commuted value of one-third of the annuity which he is normally entitled to receive, and
b. in any other case, the commuted value of one-half of such annuity, such commuted value being determined having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality.
309. Beneficiary not to have any interest in insurance and employer not to have any interest in moneys of fund.– (1) No beneficiary shall have any interest in any insurance policy taken out by the trustees under the rules of a fund and he shall be entitled only to an annuity from the fund.
(2) No money belonging to the fund shall be receivable by the employer under any circumstances nor shall the employer have any lien or charge on the fund.
310. Penalty, where employee assigns or charges interest in fund.– Where an employee assigns or creates a charge upon his beneficial interest in a fund, the Assessing Officer shall give notice to the employee that if he does not secure the cancellation of the assignment or charge within two months of the date of receipt of the notice, the consideration received for such assignment or charge shall be deemed to be income received by him in the tax year in which the fact became known to the Assessing Officer and shall be assessed, accordingly.
311. Arrangements on winding up, etc., of business.– When the business of the employer is to be closed or discontinued, the trustees shall, with the prior approval of and subject to the conditions imposed by the approving authority, make suitable arrangements for providing annuities to current employees, or to their widows, children, or dependents in the event of their death.
312. Arrangements for winding up, etc., of fund.– Any arrangements for the winding up of the fund or for its amalgamation with another fund shall be subject to the prior approval of, and subject to such conditions as may be imposed by the approving authority.
313. Application of approval.– Every application for approval of a Superannuation fund under paragraph 4(1) of Part B of Schedule XI to the Act shall be made in Form No. 188 and shall be verified in the manner indicated therein.
314. Amendment of rules, etc., of fund.– No alteration in the rules, constitution, objects or conditions of an approved fund shall be made without the prior approval of the approving authority.
315. Appeal under paragraph 9(1) of Part B of Schedule XI to the Act in case of superannuation fund.– An appeal under paragraph 9(1) of Part B of Schedule XI to the Act shall be made in Form No. 187 and shall be verified in the manner indicated therein and shall be accompanied by a fee of ₹ 1000.
316. Definitions for purposes of rules 317 to 329.– For the purposes of rules 317 to 329, the expressions–
a. ―approving authority‖ means the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
b. “beneficiary” means a person referred to in paragraph 3(b) of Part B of Schedule XI to the Act for whom provision of gratuity is made;
c. “fund” means a “gratuity fund”; and
d. “trust” means the trust under which the fund is established and the expression “trustee” means a trustee thereof.
317. Conditions regarding trust and trustees.– (1) The fund and the trust shall be established in India.
2. The trust shall have at least two trustees provided that a company as defined in section 2(20) of the Companies Act, 2013 (18 of 2013) shall not be appointed as a trustee without the prior approval of the approving authority.
3. The trustees of the fund shall be a resident in India and any trustee who leaves India permanently shall vacate his office.
318. Investment of fund moneys.– (1) All moneys contributed to the fund or received or accrued by way of interest, or otherwise, may be–
a. deposited in a Post Office Savings Bank Account in India; or
b. deposited in a current account or in a savings account with any scheduled bank; or
(c) utilised for the purpose of making contributions under Group Gratuity Scheme entered into with the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956) or any other insurer as defined in section 2(58) of the Act;
(2) Any funds not deposited or used as mentioned above shall be invested in accordance with the notification of the Ministry of Finance, (Department of Financial Services) number F. No. 11/14/2013–PR, dated the 2nd March, 2015 published in the Gazette of India, Extraordinary, Part I, Section 1, as amended from time to time.
319. Nomination– (1) An employee may be allowed by the trustees of the gratuity fund to make a nomination in Form 184 or in a form as near thereto as may be necessary conferring on one or more persons, the right to receive the amount of gratuity in the event of his death, before that amount becomes payable or, having become payable, has not been paid.
2. If an employee nominates more than one person under sub-rule (1), he shall, in his nomination, specify the amount or share payable to each of the nominees in such manner as to cover the whole of the amount of gratuity that may be payable in the event of his death.
3. Where an employee has a family at the time of making a nomination, the nomination shall be in favour of one or more persons belonging to his family and any nomination made by such employee in favour of a person not belonging to his family, shall be invalid.
4. If at the time of making a nomination, the employee has no family, the nomination may be in favour of any person or persons, but if the employee subsequently acquires a family, such nomination shall forthwith be deemed to be invalid and the employee may be allowed to make a fresh nomination in favour of one or more persons belonging to his family.
5. A nomination made by an employee may, at any time, be modified by him after giving a written notice to the trustees of his intention of doing so in Form 184 or in a form as near thereto as may be and, if, the nominee predeceases the employee, the interest of the nominee shall revert to the employee, who may thereupon make a fresh nomination in respect of such interest.
6. A nomination or its modification shall take effect to the extent it is valid on the date on which it is received by the trustees.
7. Where the nomination is wholly or partly in favour of a minor, the member may, for the purposes of this rule appoint a major person of his family, to be the guardian of the minor nominee in the event of the member predeceasing the nominee and the guardian so appointed, and where there is no major person in the family, the member may, at his discretion, appoint any other person to be a guardian of the minor nominee.
8. For the purposes of this rule, “family”, in relation to an employee, shall be deemed to consist of –
a. in the case of a male employee, himself, his wife, his children, whether married or unmarried, his dependent parents and the dependent parents of his wife and the widow and children of his predeceased son, if any; and
b. in the case of a female employee, herself, her husband, her children, whether married or unmarried, her dependent parents and the dependent parents of her husband and the widow and children of her predeceased son, if any:
320. Admission of directors to a fund.– Where the employer is a company as defined in section 2(20) of the Companies Act, 2013 (18 of 2013), a director of the company may be admitted to the benefits of the fund only if he is a whole time bona fide employee of the company and does not beneficially own shares in the company carrying more than 5% of the total voting power.
321. Ordinary annual contributions.– The ordinary annual contribution by the employer to a fund shall be made on a reasonable basis, as may be approved by the approving authority, having regard to the length of service of each employee concerned, but such contribution shall not exceed 8 13% of the salary of each employee during each year.
322. Initial contributions.– The amount to be allowed as a deduction on account of an initial contribution, which an employer may make in respect of the past services of an employee admitted to the benefits of a fund, shall not exceed
323. Assigning or creating a charge on beneficial interest in a gratuity fund.– If an employee assigns or creates a charge upon his beneficial interest in a gratuity fund, the Assessing Officer shall give notice to the employee that if he does not secure the cancellation of the assignment or charge within two months of the date of receipt of the notice, the consideration received for such assignment or charge shall be deemed to be income received by him in the tax year in which the fact became known to the Assessing Officer and shall be assessed accordingly.
324. Employer not to have interest in fund moneys.– No money belonging to the fund shall be receivable by the employer under any circumstances nor shall the employer have any lien or charge on the fund.
325. Arrangements for winding up, etc., of business.– Where the trade or undertaking of the employer is to be wound up or discontinued, the trustees shall, with the prior approval of, and subject to such conditions as may be imposed by, approving authority, make satisfactory arrangements for the payment of gratuity to the existing beneficiaries.
326. Arrangements for winding up of the fund.– Any arrangements for the winding up of the fund or for its amalgamation with another fund shall be subject to the prior approval of, and to such conditions as may be imposed by, the approving authority.
327. Application for approval.– The application for approval of a gratuity fund is required to be furnished under paragraph 4(1) of Part B of Schedule XI to the Act shall be made in Form No. 188 and shall be verified in the manner indicated therein.
328. Amendment of rules, etc., of fund.– No alteration in the rules, constitution, objects or conditions of an approved fund shall be made without the prior approval of the approving authority.
329. Appeal under Paragraph 9(1) of Part B of Schedule XI to the Act in case of gratuity fund.– An appeal under paragraph 9(1) of Part B of Schedule XI to the Act shall be made in Form No. 187 and shall be verified in the manner indicated therein and shall be accompanied by a fee of ₹1000.
330. Limits of reserve for unexpired risks.— (1) In the computation of profits and gains for any insurance business other than life insurance, the amount carried over to a reserve for unexpired risks, including any amount carried over to any such additional reserve eligible for deduction under paragraph 4(1)(d) of Schedule XIV to the Act, shall not exceed,—
a. where the insurance business relates to fire insurance or engineering insurance that covers terrorism risks, 100% of the net premium income of such business of the tax year; or
b. where the insurance business relates to fire insurance or miscellaneous insurance, other than those mentioned in clause (a), 50% of the net premium income of such business of the tax year; or
c. where the insurance business relates to marine insurance, 100% of the net premium income of such business of the tax year.
2. Any amount out of the amount carried over to such reserve or additional reserve, which is not allowed as a deduction under this rule in respect of any tax year, shall not be included in the total income for the immediately succeeding tax year in the revenue account relating to which the said amount is credited.
3. In this rule,—
a. “marine insurance” includes the Export Credit Insurance; and
b. “net premium income” refers to the premium amount received as reduced by the reinsurance premium paid during the relevant tax year.
331. Procedure for approval under Paragraph (1)(z)(i) and (ii) of Schedule XV to the Act.– (1) The Central Board of Direct Taxes, before granting approval to a public company under paragraph 1(z)(i) of Schedule XV to the Act or to a Mutual Fund under paragraph 1(z)(ii), of the said Schedule shall satisfy itself that for the entity mentioned in column B in the following Table, the application is made in the Form specified in column C with documents as mentioned in column D attached alongwith, and the application is filed within the time limit prescribed in column E thereof:
Table
| SI.No | Entity | Application Form |
Documents to be attached with the application |
Time limit for filing application |
| A | B | C | D | E |
| 1. | Public company | Form No. 189 | (ww) Copy of certificate of incorporation under the Companies Act, 2013 (18 of 2013); and
(xx) audited balance sheet, and profit and loss account, for three tax years immediately preceding the tax year in which the application is made, or for the period of its existence, |
Three months before ―the eligible issue of capital,‖ as referred to in paragraph 6(i) of Schedule XV to the Act. |
| 2. | Mutual fund |
Form No. 190. | (yy) Copy of certificate of registration
issued by the Securities and (zz) audited balance sheet, and profit and loss account, for three tax years immediately preceding the tax year in which the application is made, or for the period of its existence, |
Three months before the public issue. |
(2) The Board shall pass an order approving or denying the application, but any decision denying approval shall not be made without providing the applicant a reasonable opportunity of being heard.
(3) Every applicant shall invest all its total paid-up capital, raised through equity issue or debentures, in the following manner:–
(a) at least 25% of the capital raised shall be invested–
i. in the infrastructure facility, in the case of a public company, and
ii. in the eligible issue of capital of any company referred to in paragraph (6)(i), of Schedule XV to the Act in the case of a Mutual Fund;
(b) such investment shall be made before the end of one year from the date of approval of the Board; and
(c) the rest of the capital shall be invested in like manner within three years from the date of approval.
(4) Every applicant shall submit a certificate from an accountant, as defined in section 515(3)(b), specifying the amount invested in each tax year, from the date of approval of the Board.
(5) The Board shall have the power to withdraw the approval granted under sub-rule (2), if such applicant–
a. fails to make investments as per conditions mentioned in sub-rule (3); or
b. fails to file the certificate referred to in sub-rule (4).
332. Electronic furnishing of Forms, returns, statements, reports, orders, certificates, etc.— (1) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, may with the prior approval of the Board, specify that any of the Forms, returns, statements, reports, orders or certificates, by whatever name called, as specified in Appendix III, shall be furnished electronically—
a. under digital signature, if it is required to be furnished under digital signature; or
b. through electronic verification code in a case not covered under clause (a).
(2) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall—
a. with the approval of the Board specify the Forms, returns, statements, reports, orders, certificates referred to in sub-rule (1), which are to be furnished electronically;
b. lay down the data structure, standards and procedure of furnishing and verification of such Forms, returns, statements, reports, orders, certificates including modification in format, if required, to make it compatible for furnishing electronically; and
c. be responsible for ensuring secured capture and transmission of data, formulating and implementing appropriate security, archival and retrieval policies in relation to the said Forms, returns, statements, reports, orders and certificates.
333. Electronic payment of tax, interest, fee and penalty.— (1) The following persons shall pay electronically the tax, interest, fee and penalty on or after the date of commencement of this rule:—
a. a company; and
b. a person (other than a company), to whom the provisions of section 63 are applicable.
(2) For the purposes of this rule,—
(a) “pay electronically” shall mean, payment by way of—
i. internet banking facility of the authorised bank; or
ii. credit or debit cards; and
(b) the word “tax” shall have the meaning assigned to it in section 2(106).
5. Some of the information in the form would be pre-filled to the extent possible.
[Notification No.-22/2026/F. No. 370142/41/2025-TPL]
PANKAJ JINDAL, Jt. Secy., Tax Policy and Legislation.
please share file regarding’ CBDT Notifies Income-tax Rules 2026 and Income Tax Forms ‘ in PDF format
Simply Superb ..