Section(s) Referred: 54E ,54E(1) ,54E(1)(b)
Statute: INCOME TAX
Date of Issue: 22/6/1979
In pursuance of clause (b) of Explanation I to sub-section (1) of section 54E of the Income-tax Act, 1961 (43 of 1961), the Government of India hereby notifies the issue of 7-Year National Rural Development Bonds from the 9th July, 1979,until further notice.
2. Limit on investment.–Investment in the Bonds will be made by persons to the extent of net consideration of a long term capital asset transferred, or any additional compensation or additional compensation or additional consideration received, after the 28th day of February, 1979. “Net consideration” means the sale proceeds of the long term capital asset as reduced by an expenditure incurred wholly and exclusively in connection with such transfer.
3. 7-Year National Rural Development Bonds issued at Rs. 100.00 per cent. and redeemable at per on maturity.
(i) Price.–The issue price will be Rs. 100.00 for every Rs. 100 (Nominal).
(ii) Date of issue.–The Bonds will be on tap from the 9th July, 1979, and will be issued from the date of tender of application.
(iii) Date of repayment.–The Bonds will be repaid at par on the expiration of 7 years from the date of their issue.
4. Interest.–The Bonds will bear interest at the rate of 7-1/2 per cent. per annum. Interest will be paid annually on the completion of each period of twelve calendar months from the date of issue of Bonds.
5. Place of payment of interest.–Interest on the Bonds will be remitted by the Public Debt Offices of the Reserve Bank of India at Ahmedabad, Bangalore, Bombay (Byculla), Calcutta, Hyderabad, Jaipur, Kanpur, Madras, Nagpur, New Delhi and Patna.
6. Refunds of tax deducted at source.–Refunds of tax deducted at the time of payment of interest (at the rates prescribed by the annual Finance Acts) will be obtainable by holders of the Bonds who are not liable to tax or who are liable to tax at rates lower than the rate at which tax was deducted.
A holder who is not liable to tax or who is liable to tax at a rate lower than the prescribed rate may make an application to the Income-tax Officer having jurisdiction over his case for a certificate authorising payment of interest to him without deduction of tax, or for deduction of tax at such lower rate as may be applicable in his case.
7. Eligibility for exemption from income-tax.–Interest on all the Bonds together with interest on other Government securities and income from approved financial assets will qualify for exemption from income-tax under section 80L of the Income-tax Act, 1961 (43 of 1961), subject to a limit of Rs. 3,000.
8. Eligibility for exemption from wealth-tax.–The value of these Bonds together with the value of other Government securities and other approved financial assets will qualify for exemption under section 5 of the Wealth-tax Act, 1957 (27 of 1957), subject to a limit of Rs. 1,50,000.
9. Form.–The Bonds will be issued in the form prescribed in the notification of the Government of India in the Ministry of Finance (Department of Economic Affairs) No. GSR 389(E) dated the 22nd June, 1979.
10. Transferability.–The Bonds will be transferable by means of a transfer deed printed on the reverse of each Bond. However, the transfer shall not be deemed as complete until the name of the transferee is registered as holder of the Bond by the Public Debt Office concerned.
11. Applications for bonds.–(1) Application for the bonds must be in multiples of Rs. 10.
(2) Applications will be received at–
(a) offices of the Reserve Bank of India at Ahmedabad, Bangalore, Bombay (Fort and Byculla), Calcutta, Hyderabad, Jaipur, Kanpur, Madras, Nagpur, New Delhi and Patna ; and
(b) the following branches of the State Bank of India, Agartala Branch, Aizwal Branch, Bhopal Main Branch, Bhubaneswar Branch, Chandigarh Branch, Gangtok Branch, Gauhati Branch, Imphal Branch, Itanagar Branch, Kohima Branch, Panaji Branch, Pondicherry Branch, Port Blair Branch, Shillong Branch, Simla Branch, Srinagar Branch and Trivandrum Branch.
(3) Applications shall be submitted in duplicate in the form attached hereto or in such other form which may be so varied as the circumstances of each case may require.
(4) Applications should be accompanied by the necessary payment in the form of cash or cheque. Cheques tendered at the office of the Reserve Bank of India or the State Bank of India should be drawn in favour of the bank concerned.
By order of the President, A. C. Tiwari, Joint Secy.
[F. 4(6)-W & M/79].
To be submitted in duplicate
FORM OF APPLICATION
[See paragraph 11(3)]
I/We ———[full name(s) in block letters] herewith tender cash/cheque for Rs.——– (in words) for investment in 7-Year National Rural Development Bonds.
2. I/We hereby declare that the amount tendered represents the whole or part of the net consideration or additional compensation or additional consideration received on the transfer of the long term capital asset detailed below :–
—— Location, type and Transferee’s Date of transfer Sale proceeds Net consideration, other details of the name, or date of receipt realised or i.e., the sale capital asset address and of additional additional proceeds realised transferred Permanent compensation or compensation reduced by any if any additional or additional expenditure consideration consideration incurred wholly and received exclusively in connection with the transfer —— 1 2 3 4 5 —— Rs. Rs. ——
3. The bonds and annual interest thereon payable at———(office of Reserve/State Bank of India) may please be sent to me/us at the address mentioned below.
— (Name in full)
—— (Address) (Permanent Account No.)
Forwarded to the Commissioner of Income-tax,–(address and place)
P. Manager — Branch Manager
(1) The application should be in multiples of Re. 10. Cheque/draft should be drawn in favour of the Bank receiving the application and at the place at which the application is tendered.
(2) The application shall be signed–
(a) where the declarant is individual, by the individual himself ; where such individual is absent from India, by the individual concerned or by any other adult member of his family, or by some person duly authorised by him in this behalf ; aid where the individual is mentally incapacitated from attending to his affairs, by his guardian or by any other person competent to act on his behalf ;
(b) where the declarant is a Hindu undivided family, by the karta, and where the karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family ;
(c) where the declarant is a company, by the managing director thereof, or by an official of the company authorised in this behalf ;
(d) where the declarant is a firm, by the managing partner thereof, or where for any unavoidable reason such managing partner is not able to sign the declaration or where there is no managing partner as such, by any partner thereof, not being a minor ;
(e) where the declarant is any other association, by the principal officer thereof or any member of the association authorised in this behalf ; and
(f) where the declarant is any other person, by that person or by some person competent to act on his behalf.
(3) The Bond in the form prescribed in the notification of the Government of India in the Ministry of Finance (Department of Economic Affairs) No. GSR 389(E), dated the 22nd June, 1979, in respect of 7- Year National Rural Development Bonds will be issued in the name of the individual, Hindu undivided family as described by its name (HUF), company, firm, association or other person, as the case may be.
(4) Where the applicant’s signature is by thumb mark, it should be witnessed by two respectable persons.
(5) If the application is made in the name of a registered body, the under-noted documents, if not already registered at the Public Debt Office, should be enclosed with the investment application–
(a) Certificate of Registration/Incorporation ;
(b) Memorandum and Articles of Association or certified copies of the Rules and Regulations/Bye-laws of the company/body.
(c) Certified copy of resolution in favour of the person authorised to deal in Government securities on behalf of the company/body