CENTRE FOR DEVELOPMENT OF TELEMATICS (C-DOT), NEW DELHI NOTIFICATION NO. 62/2013, DATED 13-8-2013

SECTION 35(1)(ii) OF THE INCOME-TAX ACT, 1961 -SCIENTIFIC RESEARCH EXPENDITURE – APPROVED SCIENTIFIC RESEARCH ASSOCIATIONS/INSTITUTIONS – CENTRE FOR DEVELOPMENT OF TELEMATICS (C-DOT), NEW DELHI

NOTIFICATION NO. 62/2013 [F. NO. 203/60/2004-ITA-II], DATED 13-8-2013

It is hereby notified for general information that the organization “Centre for Development of Telematics (C-DOT), New Delhi (PAN-AAATC3895K) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act), read with Rules 5C and 5D of the Income-tax Rules, 1962 (said Rules), from 1-4-2002 onwards in the category of ‘Scientific Research Association’, subject to the following conditions, namely:-

(i)

The sole objective of the approved ‘Scientific Research Association’ shall be to undertake scientific research;

(ii)

The approved organization shall carry out scientific research activity by itself;

(iii)

The approved organization shall maintain separate books of account in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288 of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;

(iv)

The approved organization shall maintain a separate statement of donations received and amounts applied for scientific research in respect of concerned Departments and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.

2. The Central Government shall withdraw the approval if the approved organization:-

(a)

fails to maintain separate books of account referred to in sub-paragraph (iii) of paragraph 1; or

(b)

fails to furnish its audit report referred to in sub-paragraph (iii) of paragraph 1; or

(c)

fails to furnish its statement of the donations received and sums applied for scientific research referred to in sub-paragraph (iv) of paragraph 1; or

(d)

ceases to carry on its research activities or its research activities are not found to be genuine; or :

(e)

ceases to conform to and comply with the provisions of clause (ii) of sub-section (1) of section 35 of the said Act read with rules 5C and SD of the said Rules.

Reference: Section 35 of the income Tax Act, 1961

Expenditure on scientific research.

(1) In respect of expenditure on scientific research, the following deductions shall be allowed—

(i)  any expenditure (not being in the nature of capital expenditure) laid out or expended on scientific research related to the business.

 [Explanation.—Where any such expenditure has been laid out or expended before the commencement of the business (not being expenditure laid out or expended before the 1st day of April, 1973) on payment of any salary [as defined in Explanation 21 below sub-section (5) of section 40A] to an employee engaged in such scientific research or on the purchase of materials used in such scientific research, the aggregate of the expenditure so laid out or expended within the three years immediately preceding the commencement of the business shall, to the extent it is certified by the prescribed authority to have been laid out or expended on such scientific research, be deemed to have been laid out or expended in the previous year in which the business is commenced ;]

 (ii)  [an amount equal to  [one and three-fourth] times of any sum paid] to a [research association] which has as its object the undertaking of scientific research or to a university, college or other institution to be used for scientific research :

7[Provided that such association, university, college or other institution for the purposes of this clause—

(A)   is for the time being approved, in accordance with the guidelines, in the manner and subject to such conditions as may be prescribed; and

(B)   such association, university, college or other institution is specified as such, by notification8 in the Official Gazette, by the Central Government;]

9[(iia)  an amount equal to one and one-fourth times of any sum paid to a company to be used by it for scientific research:

Provided that such company—

(A)   is registered in India,

(B)   has as its main object the scientific research and development,

(C)   is, for the purposes of this clause, for the time being approved by the prescribed authority in the prescribed manner, and

(D)  fulfils such other conditions as may be prescribed10;]

 (iii) [an amount equal to one and one-fourth times of 14[any sum paid to a research association which has as its object the undertaking of research in social science or statistical research or to a university]], college or other institution to be used for research in social science or statistical research :

 [Provided that 16[such association, university], college or other institution for the purposes of this clause—

(A)   is for the time being approved, in accordance with the guidelines, in the manner and subject to such conditions as may be prescribed; and

(B)   16[such association, university], college or other institution is specified as such, by notification17 in the Official Gazette, by the Central Government.]

18[Explanation.—The deduction, to which the assessee is entitled in respect of any sum paid to a 19[research association], university, college or other institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to the association, university, college or other institution referred to in clause (ii) or clause (iii) has been withdrawn;]

(iv)  in respect of any expenditure of a capital nature on scientific research related to the business carried on by the assessee, such deduction as may be admissible under the provisions of sub-section (2) :

20[Provided that the 19[research association], university, college or other institution referred to in clause (ii) or clause (iii) shall make an application in the prescribed form and manner to the 21[Central Government]for the purpose of grant of approval, or continuance thereof, under clause (ii) or, as the case may be, clause (iii) :

Provided further that the 21[Central Government]may, before granting approval under clause (ii) or clause (iii), call for such documents (including audited annual accounts) or information from the 19[research association], university, college or other institution as it thinks necessary in order to satisfy itself about the genuineness of the activities of the 19[research association], university, college or other institution and that 22[Government] may also make such inquiries as it may deem necessary in this behalf :

Provided also that any 23[notification issued, by the Central Government under clause (ii) or clause (iii), before the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President†, shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years] (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification:]

24[Provided also that where an application under the first proviso is made on or after the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President†, every notification under clause (ii) or clause (iii) shall be issued or an order rejecting the application shall be passed within the period of twelve months from the end of the month in which such application was received by the Central Government.]

(2) For the purposes of clause (iv) of sub-section (1),—

25[(i)  in a case where such capital expenditure is incurred before the 1st day of April, 1967, one-fifth of the capital expenditure incurred in any previous year shall be deducted for that previous year; and the balance of the expenditure shall be deducted in equal instalments for each of the four immediately succeeding previous years ;

(ia)  in a case where such capital expenditure is incurred after the 31st day of March, 1967, the whole of such capital expenditure incurred in any previous year26 shall be deducted for that previous year :]

27[Provided that no deduction shall be admissible under this clause in respect of any expenditure incurred on the acquisition of any land, whether the land is acquired as such or as part of any property, after the 29th day of February, 1984.]

28[Explanation 1].—Where any capital expenditure has been incurred before the commencement of the business, the aggregate of the expenditure so incurred within the three years immediately preceding the commencement of the business shall be deemed to have been incurred in the previous year in which the business is commenced.

27[Explanation 2.—For the purposes of this clause,—

(a)  “land” includes any interest in land ; and

(b)  the acquisition of any land shall be deemed to have been made by the assessee on the date on which the instrument of transfer of such land to him has been registered under the Registration Act, 1908 (16 of 1908), or where he has taken or retained the possession of such land or any part thereof in part performance of a contract of the nature referred to in section 53A29 of the Transfer of Property Act, 1882 (4 of 1882), the date on which he has so taken or retained possession of such land or part ;]

(ii)  notwithstanding anything contained in clause (i), where an asset representing expenditure of a capital nature 30[incurred before the 1st day of April, 1967,] ceases to be used in a previous year for scientific research related to the business and the value of the asset at the time of the cessation, together with the aggregate of deductions already allowed under clause (i) falls short of the said expenditure, then—

(a)  there shall be allowed a deduction for that previous year of an amount equal to such deficiency, and

(b)  no deduction shall be allowed under that clause for that previous year or for any subsequent previous year ;

(iii)  if the asset mentioned in clause (ii) is sold, without having been used for other purposes, in the year of cessation, the sale price shall be taken to be the value of the asset at the time of the cessation ; and if the asset is sold, without having been used for other purposes, in a previous year subsequent to the year of cessation, and the sale price falls short of the value of the asset taken into account at the time of cessation, an amount equal to the deficiency shall be allowed as a deduction for the previous year in which the sale took place ;

(iv)  where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under 31[clause (ii) of sub-section (1)] of section 32 for the same 32[or any other] previous year in respect of that asset ;

(v)  where the asset 33[mentioned in clause (ii)] is used in the business after it ceases to be used for scientific research related to that business, depreciation shall be admissible under 34[clause (ii) of sub-section (1)] of section 32.

35[(2A) 36Where 37[, before the 1st day of March, 1984,] the assessee pays any sum 38[(being any sum paid with a specific direction that the sum shall not be used for the acquisition of any land or building or construction of any building)] to a scientific research association or university or college or other institution referred to in clause (ii) of sub-section (1) 39[or to a public sector company] to be used for scientific research undertaken under a programme approved in this behalf by the prescribed authority40 having regard to the social, economic and industrial needs of India, then,—

(a)  there shall be allowed a deduction of a sum equal to one and one-third times the sum so paid ; and

(b)  no deduction in respect of such sum shall be allowed under clause (ii) of sub-section (1) for the same or any other assessment year.]

41[Explanation.—For the purposes of this sub-section, “public sector company” shall have the same meaning as in clause (b) of the Explanation below sub-section (2B) of section 32A.]

42[(2AA) 43Where the assessee pays any sum to a National Laboratory 44[or a 45[University or an Indian Institute of Technology or a specified person] with a specific direction that the said sum shall be used for scientific research undertaken under a programme approved in this behalf by the prescribed authority46, then—

(a)  there shall be allowed a deduction of a sum equal to 47[two] times the sum so paid ; and

(b)  no deduction in respect of such sum shall be allowed under any other provision of this Act :

48[Provided that the prescribed authority shall, before granting approval, satisfy itself about the feasibility of carrying out the scientific research and shall submit its report to the Director General in such form as may be prescribed.49]

50[Explanation 1.—The deduction, to which the assessee is entitled in respect of any sum paid to a National Laboratory, University, Indian Institute of Technology or a specified person for the approved programme referred to in this sub-section, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to,—

(a)  such Laboratory, or specified person has been withdrawn; or

(b)  the programme, undertaken by the National Laboratory, University, Indian Institute of Technology or specified person, has been withdrawn.]

51[Explanation 52[2].—For the purposes of this section,—

(a)  “National Laboratory” means a scientific laboratory functioning at the national level under the aegis of the Indian Council of Agricultural Research, the Indian Council of Medical Research, the Council of Scientific and Industrial Research, the Defence Research and Development Organisation, the Department of Electronics, the Department of Bio-Technology or the Department of Atomic Energy and which is approved as a National Laboratory by the prescribed authority in such manner as may be prescribed ;

(b)  “University” shall have the same meaning as in Explanation to clause (ix) of section 47 ;

(c)  “Indian Institute of Technology” shall have the same meaning as that of “Institute” in clause (g) of section 353 of the Institutes of Technology Act, 1961 (59 of 1961)];

54[(d)  “specified person” means such person as is approved by the prescribed authority.]

55[(2AB)(1) Where a company engaged in the business of 56[bio-technology or in 57[any business of manufacture or production of any article or thing, not being an article or thing specified in the list of the Eleventh Schedule]] incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority58, then, there shall be allowed a deduction of 59[a sum equal to 60[two] times of the expenditure] so incurred.

61[Explanation.—For the purposes of this clause, “expenditure on scientific research”, in relation to drugs and pharmaceuticals, shall include expenditure incurred on clinical drug trial, obtaining approval from any regulatory authority under any Central, State or Provincial Act and filing an application for a patent under the Patents Act, 1970 (39 of 1970).]

(2) No deduction shall be allowed in respect of the expenditure mentioned in clause (1) under any other provision of this Act.

(3) No company shall be entitled for deduction under clause (1) unless it enters into an agreement with the prescribed authority for co-operation in such research and development facility and for audit of the accounts maintained for that facility.

(4) The prescribed authority shall submit its report in relation to the approval of the said facility to the Director General in such form and within such time as may be prescribed.]

62[(5) No deduction shall be allowed in respect of the expenditure referred to in clause (1) which is incurred after the 31st day of March, 63[2017].

64[(6) No deduction shall be allowed to a company approved under sub-clause (C) of clause (iia) of sub-section (1) in respect of the expenditure referred to in clause (1) which is incurred after the 31st day of March, 2008.]

65[(2B)(a) Where 66[, before the 1st day of March, 1984,] an assessee has incurred any expenditure (not being in the nature of capital expenditure incurred on the acquisition of any land or building or construction of any building) on scientific research undertaken under a programme approved in this behalf by the prescribed authority having regard to the social, economic and industrial needs of India, he shall, subject to the provisions of this sub-section, be allowed a deduction of a sum equal to one and one-fourth times the amount of the expenditure certified by the prescribed authority to have been so incurred during the previous year.

(b) Where a deduction has been allowed under clause (a) for any previous year in respect of any expenditure, no deduction in respect of such expenditure shall be allowed under clause (i) of sub-section (1) or clause (ia) of sub-section (2) for the same or any other previous year.

(c) Where a deduction is allowed for any previous year under this sub-section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed in respect of that asset under 67[clause (ii) of sub-section (1)] of section 32 for the same or any subsequent previous year.

(d) Any deduction made under this sub-section in respect of any expenditure on scientific research in excess of the expenditure actually incurred shall be deemed to have been wrongly made for the purposes of this Act if the assessee fails to furnish within one year of the period allowed by the prescribed authority for completion of the programme, a certificate of its completion obtained from that authority, and the provisions of sub-section (5B) of section 155 shall apply accordingly.]

68[(3) If any question arises under this section as to whether, and if so, to what extent, any activity constitutes or constituted, or any asset is or was being used for, scientific research, the Board shall refer the question to—

(a)  the Central Government, when such question relates to any activity under clauses (ii) and (iii) of sub-section (1), and its decision shall be final;

(b)  the prescribed authority69, when such question relates to any activity other than the activity specified in clause (a), whose decision shall be final.]

(4) The provisions of sub-section (2) of section 32 shall apply in relation to deductions allowable under clause (iv) of sub-section (1) as they apply in relation to deductions allowable in respect of depreciation.

70[(5) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers to the amalgamated company (being an Indian company) any asset representing expenditure of a capital nature on scientific research,—

(i)  the amalgamating company shall not be allowed the deduction under clause (ii) or clause (iii) of sub-section (2); and

(ii)  the provisions of this section shall, as far as may be, apply to the amalgamated company as they would have applied to the amalgamating company if the latter had not so sold or otherwise transferred the asset.]]

INTEREST ON BONDS/DEBENTURES – SPECIFIED COMPANIES AUTHORIZED TO ISSUE TAX-FREE, SECURED, REDEEMABLE, NON-CONVERTIBLE BONDS DURING F.Y. 2013-14 SUBJECT TO SPECIFIED CONDITIONS NOTIFICATION NO. 61/2013[F.NO.178/37/2013-(ITA-I)]/SO 2424(E), DATED 8-8-2013

Tax Free Bond Issue of Cochin Ship Yard Limited(CSL), Ennore Port Limited (EPL) Tax Free Bond, Airport Authority of India Limited(AAI) Tax Free Bond Issue, Indian Infrastructure Finance Company Limited (IIFCL) Tax Free Bond Issue 2013, Indian Renewable Energy Development Agency Limited (IREDA) Tax Free Bond Issue, Rural Electrification Corporation Limited(REC) Tax Free Bond Issue 2013, National Housing Bank (NHB) Tax Free Bond Issue 2013, Power Finance Corporation Limited (PFC) Tax Free Bond Issue 2013, Indian Railway Finance Corporation Limited (IRFC) Tax Free Bond Issue 2013, National Highways Authority of India (NHAI) Tax Free Bond Issue 2013, NHPC Limited (formerly known as National Hydroelectric Power Corporation Ltd.) Tax Free Bond Issue 2013, NTPC Limited (formerly known as National Thermal Power Corporation) Tax Free Bond. Details Like Issue Size, Eligibility, Tenure, Rate of Tax Free Bonds

SECTION 10(15), ITEM (h) OF SUB-CLAUSE (iv) OF THE INCOME-TAX ACT, 1961 – EXEMPTIONS – INTEREST ON BONDS/DEBENTURES – SPECIFIED COMPANIES AUTHORIZED TO ISSUE TAX-FREE, SECURED, REDEEMABLE, NON-CONVERTIBLE BONDS DURING F.Y. 2013-14 SUBJECT TO SPECIFIED CONDITIONS

NOTIFICATION NO. 61/2013[F.NO.178/37/2013-(ITA-I)]/SO 2424(E), DATED 8-8-2013

In exercise of the powers conferred by item (h) of sub-clause (iv) of clause (15) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby authorises the entities mentioned in column (2) of the following Table, to issue, during the financial year 2013-14, tax-free, secured, redeemable, non-convertible bonds, aggregating to amounts mentioned in column (3) of the said table, subject to the conditions, namely; –

Eligibility.

1. The following shall be eligible to subscribe to the bonds:—

(a)

Retail Individual Investors (RIIs);

(b)

Qualified Institutional Buyers (QIBs);

(c)

Corporates.- (including statutory corporations), trusts, partnership firms, limited liability partnerships, Co-operative banks, regional rural banks and other legal entities, subject to compliance with their respective applicable legislations; and

(d)

High Networth Individuals (HNIs).

Tenure of bonds.

2. The tenure of the bonds shall be ten, fifteen or twenty years.

Permanent Account Number.

3. It shall be mandatory for the subscribers to furnish their Permanent Account Number to the issuer.

Rate of interest.

4. (1) There shall be a ceiling on the coupon rates based on the reference Government security (G-sec) rate.

(2) The reference G-sec rate shall be the average of the base yield of G-sec for equivalent maturity reported by Fixed Income Money Market and Derivative Association of India (FIMMDA) on a daily basis (working day) prevailing for two weeks ending on Friday immediately preceding the filing of the final prospectus with the Exchange or Registrar of Companies (ROC) in case of public issue and the issue opening date in case of private placement.

(3) The ceiling coupon rate for AAA rated issuers shall be the reference G-sec rate less 55 basis points in case of RIIs and reference G-sec rate less 80 basis points in case of other investor segments referred to at (b), (c) and (d) of paragraph 1 above.

(4) In case the rating of the issuer entity is AA+, the ceiling rate shall be 10 basis points above the ceiling rate for AAA rated entities as given in clause (3).

(5) In case the rating of the issuer entity is AA or AA-, the ceiling rate shall be 20 basis points above the ceiling rate for AAA rated entities as given in clause(3).

(6) These ceiling rates shall apply for annual payment of interest and in case the schedule of interest payment is altered to semi-annual, the interest rates shall be reduced by 15 basis points.

(7) The higher rate of interest, applicable to RIIs, shall not be available in case the bonds are transferred by RIIs to non retail investors.

Issue expense and brokerage.

5. (1) In the case of private placement, the total issue expense shall not exceed 0.25 per cent of the issue size and in case of public issue it shall not exceed 0.65 per cent of the issue size.

(2) The issue expense would include all expenses relating to the issue like brokerage, advertisement, printing, registration etc.

Public issue.

6. (1) At least 70 per cent of the aggregate amount of bonds issued by each entity shall be raised through public issue and the same shall not be applicable in case of entities where the aggregate amount of bonds as per column (3) of the table is less than rupees five hundred crore.

(2) 40 per cent of such public issue shall be earmarked for RIIs.

Private placement.

7. (1) While adopting the private placement route to issue the bonds, each entity shall adopt the book building approach except for those mentioned in sub-paragraph (2) except as per regulation II of the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations 2008, wherein bids shall be sought on the coupon rate subject to a ceiling specified by the entity and the allotment shall be made at the price bid.

(2) The issuers shall earmark suitable amounts within their private placement allocation for placing with Sovereign Wealth Funds, Pension and Gratuity Funds without the requirement of book building procedure:

Provided that in the event of any non-response, the issuers shall be free to offer the un-subscribed amount through book building route under private placement in domestic market.

(3) The bonds shall be paid for and issued at a premium but with a fixed coupon so that the instrument can be traded under a single International Securities Identification Number (ISIN) and the yield shall be worked out based on the price quoted and then allotment shall be done for the best price (lowest yield).

(4) The ceiling rate of the interest shall either be equal to or lower than the rate mentioned in paragraph 4 above.

(5) While calling for bids, there shall be no limit on the number of arrangers who can bid for the issue.

Repayment of bonds.

8. (1) The issuer entity shall submit a financing plan to the Ministry of Finance to demonstrate its ability to repay the borrowed funds once the repayment becomes due.

(2) The financing plan referred in sub-paragraph (1) shall be submitted to the Infra-Finance Section, Infrastructure Division, Department of Economic Affairs, Ministry of Finance, within three months of closure of the issue, duly supported by a resolution of the respective entity’s Board of Directors.

Selection of merchant bankers.

9. (1) The merchant bankers shall be selected through competitive bidding process with transparent pre-qualification criteria and the final selection shall be based on evaluation of financial bids.

(2) The benefit under section 10 of the Income-tax Act, 1961 (43 of 1961) shall be admissible only if the holder of such bonds register his name and the holding with the entity.

(3) The issue shall be made in compliance with the public issue requirements specified in the Companies Act, 1956 (1 of 1956) and Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 including inter alia, the filing of a prospectus with the Registrar of Companies, as applicable.

TABLE

Sl. No.

Entities

Allocated amount of bonds (Rs. in Crore)

(1)

(2)

(3)

1

Cochin Ship Yard Limited(CSL)

250

2

Ennore Port Limited (EPL)

500

3

Airport Authority of India Limited(AAI)

500

4

Indian Infrastructure Finance Company Limited (IIFCL)

10,000

5

Indian Renewable Energy Development Agency Limited (IREDA)

1000

6

Housing and Urban Development Corporation Limited (HUDCO)

5000

7

Rural Electrification Corporation Limited(REC)

5000

8

National Housing Bank (NHB)

3000

9

Power Finance Corporation Limited (PFC)

5000

10

Indian Railway Finance Corporation Limited (IRFC)

10,000

11

National Highways Authority of India (NHAI)

5000

12

NHPC Limited (formerly known as National Hydroelectric Power Corporation Ltd.)

1000

13

NTPC Limited (formerly known as National Thermal Power Corporation)

1750

Explanation.—For the purposes of this notification,—

(1)

Qualified Institutional Buyers shall have the same meaning as assigned to them in the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000.

(2)

Retail individual Investors means those individual investors, Hindu Undivided Family (through Karta ), and Non-Resident Indians (NRIs), on repatriation as well as non-repatriation basis, applying for upto rupees ten lakh in each issue and individual investors investing more than rupees ten lakh shall be classified as High Networth Individuals.

(3)

The bonds issued to NRIs shall be subject to the provisions of Notification No. FEMA 4/2000-RB dated 3rd May, 2000 and Notification No. FEMA 20/2000-RB dated 3rd May, 2000, issued under clause (b) of sub-section (3) of section 6 and section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), as amended from time to time.

(4)

The credit rating referred to in paragraph 4 of this notification shall mean the credit rating, as assigned by a credit rating agency which is approved by the Securities and Exchange Board of India as well as the Reserve Bank of India and where an entity has been rated differently, by more than one rating agency, the lower of the two ratings shall be considered.

Reference: Section 10 of the income Tax Act, 1961

Incomes not included in total income.

. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—

(1)  agricultural income ;

2(23[subject to the provisions of sub-section (2) of section 64,] any sum received by an individual as a member of a Hindu undivided family, where such sum has been paid out of the income of the family, or, in the case of any impartible estate, where such sum has been paid out of the income of the estate belonging to the family ;

4[(2A)  in the case of a person being a partner of a firm which is separately assessed as such, his share in the total income of the firm.

Explanation.—For the purposes of this clause, the share of a partner in the total income of a firm separately assessed as such shall, notwithstanding anything contained in any other law, be an amount which bears to the total income of the firm the same proportion as the amount of his share in the profits of the firm in accordance with the partnership deed bears to such profits ;]

 [(4)  (i) in the case of a non-resident, any income by way of interest on such securities or bonds as the Central Government may, by notification in the Official Gazette7, specify in this behalf, including income by way of premium on the redemption of such bonds :

8[Provided that the Central Government shall not specify, for the purposes of this sub-clause, such securities or bonds on or after the 1st day of June, 2002;]

 [10(ii) in the case of an individual, any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with  [the Foreign Exchange Management Act, 1999 (42 of 1999)], and the rules made thereunder :

Provided that such individual is a person resident outside India as defined in clause (q) of section 2 of the said Act or is a person who has been permitted by the Reserve Bank of India to maintain the aforesaid Account ;]]

13[(4B) in the case of an individual, being a citizen of India or a person of Indian origin, who is a non-resident, any income from interest on such savings certificates issued 14[before the 1st day of June, 2002] by the Central Government as that Government may, by notification in the Official Gazette15, specify in this behalf :

Provided that the individual has subscribed to such certificates in convertible foreign exchange remitted from a country outside India in accordance with the provisions of 15a[the Foreign Exchange Management Act, 1999 (42 of 1999)], and any rules made thereunder.

Explanation.—For the purposes of this clause,—

(a)  a person shall be deemed to be of Indian origin if he, or either of his parents or any of his grandparents, was born in undivided India ;

(b)  “convertible foreign exchange” means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of 15a[the Foreign Exchange Management Act, 1999 (42 of 1999)], and any rules made thereunder ;]

16[(5)  in the case of an individual, the value of any travel concession or assistance received by, or due to, him,—

(a)  from his employer for himself and his family, in connection with his proceeding on leave to any place in India ;

(b)  from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service,

subject to such conditions as may be prescribed17 (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government :

Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.

Explanation.—For the purposes of this clause, “family”, in relation to an individual, means—

(i)  the spouse and children of the individual ; and

(ii)  the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual; ]

(5A)  18[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

(5B)  19[Omitted by the Finance Act, 2002, w.e.f. 1-4-2003;]

 (6)  in the case of an individual who is not a citizen of India,—

(i)  20[***]

21[(ii)  the remuneration received by him as an official, by whatever name called, of an embassy, high commission, legation, commission, consulate or the trade representation of a foreign State, or as a member of the staff of any of these officials, for service in such capacity :

Provided that the remuneration received by him as a trade commissioner or other official representative in India of the Government of a foreign State (not holding office as such in an honorary capacity), or as a member of the staff of any of those officials, shall be exempt only if the remuneration of the corresponding officials or, as the case may be, members of the staff, if any, of the Government resident for similar purposes in the country concerned enjoys a similar exemption in that country :

Provided further that such members of the staff are subjects of the country represented and are not engaged in any business or profession or employment in India otherwise than as members of such staff ;]

(iii)  to (v) [Sub-clause (ii) substituted for sub-clauses (ii) to (v) by the Finance Act, 1988, w.e.f. 1-4-1989;]

(vi)  the remuneration received by him as an employee of a foreign enterprise for services rendered by him during his stay in India, provided the following conditions are fulfilled—

(a)  the foreign enterprise is not engaged in any trade or business in India ;

(b)  his stay in India does not exceed in the aggregate a period of ninety days in such previous year ; and

(c)  such remuneration is not liable to be deducted from the income of the employer chargeable under this Act ;

(via)  22[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

 (vii)  23[Omitted by the Finance Act, 1993, w.e.f. 1-4-1993;]

(viia)  24[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

(viii)  any income chargeable under the head “Salaries” received by or due to any such individual being a non-resident as remuneration for services rendered in connection with his employment on a foreign ship where his total stay in India does not exceed in the aggregate a period of ninety days in the previous year ;

(ix)  25[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

(x)  26[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

27[(xi)  the remuneration received by him as an employee of the Government of a foreign State during his stay in India in connection with his training in any establishment or office of, or in any undertaking owned by,—

(i)  the Government ; or

(ii)  any company in which the entire paid-up share capital is held by the Central Government, or any State Government or Governments, or partly by the Central Government and partly by one or more State Governments ; or

(iii)  any company which is a subsidiary of a company referred to in item (ii) ; or

(iv)  any corporation established by or under a Central, State or Provincial Act ; or

(v)  any society registered under the Societies Registration Act, 1860 (14 of 1860), or under any other corresponding law for the time being in force and wholly financed by the Central Government, or any State Government or State Governments, or partly by the Central Government and partly by one or more State Governments ;]

28[(6A) where in the case of a foreign company deriving income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the Indian concern after the 31st day of March, 1976 29[but before the 1st day of June, 2002] 30[and,—

(a)  where the agreement relates to a matter included in the industrial policy, for the time being in force, of the Government of India, such agreement is in accordance with that policy ; and

(b)  in any other case, the agreement is approved by the Central Government,

the tax on such income is payable, under the terms of the agreement, by Government or the Indian concern to the Central Government, the tax so paid].

Explanation.—For the purposes of this clause 31[and clause (6B)],—

(a)  “fees for technical services” shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9 ;

(b)  “foreign company” shall have the same meaning as in section 80B ;

(c)  “royalty” shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;]

31[(6B) where in the case of a non-resident (not being a company) or of a foreign company deriving income (not being salary, royalty or fees for technical services) from Government or an Indian concern in pursuance of an agreement entered into 32[before the 1st day of June, 2002] by the Central Government with the Government of a foreign State or an international organisation, the tax on such income is payable by Government or the Indian concern to the Central Government under the terms of that agreement or any other related agreement approved 32[before that date] by the Central Government, the tax so paid ;]

33[(6BB) where in the case of the Government of a foreign State or a foreign enterprise deriving income from an Indian company engaged in the business of operation of aircraft, as a consideration of acquiring an aircraft or an aircraft engine (other than payment for providing spares, facilities or services in connection with the operation of leased aircraft) on lease under 34[an agreement entered into after the 31st day of March, 1997 but before the 1st day of April, 1999, or entered into after the 35[31st day of March, 36[2007]] and approved by the Central Government in this behalf] and the tax on such income is payable by such Indian company under the terms of that agreement to the Central Government, the tax so paid.

Explanation.—For the purposes of this clause, the expression “foreign enterprise” means a person who is a non-resident;]

37[(6C)  any income arising to such foreign company, as the Central Government may, by notification38 in the Official Gazette, specify in this behalf, by way of39[royalty or]fees for technical services received in pursuance of an agreement entered into with that Government for providing services in or outside India in projects connected with security of India ;]

(7)  any allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India for rendering service outside India ;

(8)  in the case of an individual who is assigned to duties in India in connection with any co-operative technical assistance programmes and projects in accordance with an agreement entered into by the Central Government and the Government of a foreign State (the terms whereof provide for the exemption given by this clause)—

(a)  the remuneration received by him directly or indirectly from the Government of that foreign State for such duties, and

(b)  any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the Government of that foreign State ;

40[(8A)  in the case of a consultant—

(a)  any remuneration or fee received by him or it, directly or indirectly, out of the funds made available to an international organisation [hereafter referred to in this clause and clause (8B) as the agency] under a technical assistance grant agreement between the agency and the Government of a foreign State ; and

(b)  any other income which accrues or arises to him or it outside India, and is not deemed to accrue or arise in India, in respect of which such consultant is required to pay any income or social security tax to the Government of the country of his or its origin.

Explanation.—In this clause, “consultant” means—

(i)  any individual, who is either not a citizen of India or, being a citizen of India, is not ordinarily resident in India ; or

(ii)  any other person, being a non-resident,

engaged by the agency for rendering technical services in India in connection with any technical assistance programme or project, provided the following conditions are fulfilled, namely :—

(1)  the technical assistance is in accordance with an agreement entered into by the Central Government and the agency ; and

(2)  the agreement relating to the engagement of the consultant is approved by the prescribed authority41 for the purposes of this clause ;

(8B)  in the case of an individual who is assigned to duties in India in connection with any technical assistance programme and project in accordance with an agreement entered into by the Central Government and the agency—

(a)  the remuneration received by him, directly or indirectly, for such duties from any consultant referred to in clause (8A) ; and

(b)  any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the country of his origin, provided the following conditions are fulfilled, namely :—

(i)  the individual is an employee of the consultant referred to in clause (8A) and is either not a citizen of India or, being a citizen of India, is not ordinarily resident in India ; and

(ii)  the contract of service of such individual is approved by the prescribed authority42 before the commencement of his service ;]

(9)  the income of any member of the family of any such individual as is referred to in clause (843[or clause (8A) or, as the case may be, clause (8B)] accompanying him to India, which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such member is required to pay any income or social security tax to the Government of that foreign State 43a[or, as the case may be, country of origin of such member];

44[45(10)  46(i) any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applicable to the members of the defence services ;

(ii)  any gratuity received under the Payment of Gratuity Act, 1972 (39 of 1972), to the extent it does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of section 447 of that Act ;

(iii)  any other gratuity received by an employee on his retirement or on his becoming incapacitated prior to such retirement or on termination of his employment, or any gratuity received by his widow, children or dependants on his death, to the extent it does not, in either case, exceed one-half month’s salary for each year of completed service4849[calculated on the basis of the average salary for the ten months immediately preceding the month in which any such event occurs, subject to such limit50 as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government] :

Provided that where any gratuities referred to in this clause51 are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this clause 52[shall not exceed the limit so specified] :

Provided further that where any such gratuity or gratuities was or were received in any one or more earlier previous years also and the whole or any part of the amount of such gratuity or gratuities was not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this clause 52[shall not exceed the limit so specified] as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years.

53[* * *]

Explanation.54[In this clause, and in clause (10AA)], “salary” shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule ;]

55[56(10A57(i) any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable 58[to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the defence services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority] or a corporation established by a Central, State or Provincial Act ;

(ii) any payment in commutation of pension received under any scheme of any other employer, to the extent it does not exceed—

(a)  in a case where the employee receives any gratuity, the commuted value of one-third of the pension which he is normally entitled to receive, and

(b)  in any other case, the commuted value of one-half of such pension,

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 ;

59[* * *]

60[ (iii) any payment in commutation of pension received from a fund under clause (23AAB) ;]

61[62(10AA) (i) any payment received by an employee of the Central Government or a State Government as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his 63retirement 64[whether] on superannuation or otherwise ;

(ii) any payment of the nature referred to in sub-clause (i) received by an employee, other than an employee of the Central Government or a State Government, in respect of so much of the period of earned leave at his credit at the time of his retirement 64[whether] on superannuation 63or otherwise as does not exceed 65[ten] months, calculated on the basis of the average salary drawn by the employee during the period of ten months immediately preceding his retirement 64[whether] on superannuation or otherwise, 66[subject to such limit as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit67 applicable in this behalf to the employees of that Government] :

Provided that where any such payments are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this sub-clause 68[shall not exceed the limit so specified] :

Provided further that where any such payment or payments was or were received in any one or more earlier previous years also and the whole or any part of the amount of such payment or payments was or were not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this sub-clause 69[shall not exceed the limit so specified], as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years.

70[* * *]

Explanation.—For the purposes of sub-clause (ii),—

71[* * *] the entitlement to earned leave of an employee shall not exceed thirty days for every year of actual service rendered by him as an employee of the employer from whose service he has retired ;

72[* * *]

73[(10B)  any compensation received by a workman under the Industrial Disputes Act, 1947 (14 of 1947), or under any other Act or Rules, orders or notifications issued thereunder or under any standing orders or under any award, contract of service or otherwise, 74[at the time of his retrenchment :

Provided that the amount exempt under this clause shall not exceed—

 (i)  an amount calculated in accordance with the provisions of 75clause (b) of section 25F of the Industrial Disputes Act, 1947 (14 of 1947) ; or

76[(ii)  such amount, not being less than fifty thousand rupees, as the Central Government may, by notification77 in the Official Gazette, specify in this behalf,]

whichever is less :

Provided further that the preceding proviso shall not apply in respect of any compensation received by a workman in accordance with any scheme which the Central Government may, having regard to the need for extending special protection to the workmen in the undertaking to which such scheme applies and other relevant circumstances, approve in this behalf.]

Explanation.—For the purposes of this clause—

(a)  compensation received by a workman at the time of the closing down of the undertaking in which he is employed shall be deemed to be compensation received at the time of his retrenchment ;

(b)  compensation received by a workman, at the time of the transfer (whether by agreement or by operation of law) of the ownership or management of the undertaking in which he is employed from the employer in relation to that undertaking to a new employer, shall be deemed to be compensation received at the time of his retrenchment if—

(i)  the service of the workman has been interrupted by such transfer ; or

(ii)  the terms and conditions of service applicable to the workman after such transfer are in any way less favourable to the workman than those applicable to him immediately before the transfer ; or

(iii)  the new employer is, under the terms of such transfer or otherwise, legally not liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer ;

78(c) the expressions “employer” and “workman” shall have the same meanings as in the Industrial Disputes Act, 1947 (14 of 1947);]

79[(10BB) any payments made under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (21 of 1985), and any scheme framed thereunder except payment made to any assessee in connection with the Bhopal Gas Leak Disaster to the extent such assessee has been allowed a deduction under this Act on account of any loss or damage caused to him by such disaster ;]

80[(10BC) any amount received or receivable from the Central Government or a State Government or a local authority by an individual or his legal heir by way of compensation on account of any disaster, except the amount received or receivable to the extent such individual or his legal heir has been allowed a deduction under this Act on account of any loss or damage caused by such disaster.

Explanation.—For the purposes of this clause, the expression “disaster” shall have the meaning assigned to it under clause (d) of section 281 of the Disaster Management Act, 2005 (53 of 2005);]

82[(10C83any amount received84 85[or receivable]by an employee of—

(i)  a public sector company ; or

(ii)  any other company ; or

(iii)  an authority established under a Central, State or Provincial Act ; or

(iv)  a local 86[authority ; or]

87[(v) a co-operative society ; or

(vi)  a University established or incorporated by or under a Central, State 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 388 of the Institutes of Technology Act, 1961 (59 of 1961) ; or

89[(viia)  any State Government; or]

90[(viib)  the Central Government; or]

91[(viic)  an institution, having importance throughout India or in any State or States, as the Central Government may, by notification in the Official Gazette92, specify in this behalf; or]

(viii)  such institute of management as the Central Government may, by notification93 in the Official Gazette, specify in this behalf,]

94[on his] 95[voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in sub-clause (i), a scheme of voluntary separation, to the extent such amount does not exceed five lakh rupees] :

Provided that the schemes of the said companies or authorities 96[or societies or Universities or the Institutes referred to in sub-clauses (vii) and (viii)], as the case may be, governing the payment of such amount are framed in accordance with such guidelines (including inter alia criteria of economic viability) as may be 97prescribed 98[***]:

Provided further that where exemption has been allowed to an employee under this clause for any assessment year, no exemption thereunder shall be allowed to him in relation to any other assessment year :]

99[Provided also that where any relief has been allowed to an assessee under section 89 for any assessment year in respect of any amount received or receivable on his voluntary retirement or termination of service or voluntary separation, no exemption under this clause shall be allowed to him in relation to such, or any other, assessment year;]

99a[(10CC) in the case of an employee, being an individual deriving income in the nature of a perquisite, not provided for by way of monetary payment, within the meaning of clause (2) of section 17, the tax on such income actually paid by his employer, at the option of the employer, on behalf of such employee, notwithstanding anything contained in section 20099b of the Companies Act, 1956 (1 of 1956);]

99c[(10D)  any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy, other than—

(a) any sum received under sub-section (3) of section 80DD or sub-section (3) of section 80DDA *; or

(b)  any sum received under a Keyman insurance policy; or

(c)  any sum received under an insurance policy issued on or after the 1st day of April, 2003 99d[but on or before the 31st day of March, 2012] in respect of which the premium payable for any of the years during the term of the policy exceeds twenty per cent of the actual capital sum assured99d[; or]

99d[(d)  any sum received under an insurance policy issued on or after the 1st day of April, 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds ten per cent of the actual capital sum assured:]

Provided that the provisions of 1[sub-clauses (c) and (d)] shall not apply to any sum received on the death of a person:

Provided further that for the purpose of calculating the actual capital sum assured under 2[sub-clause (c)], effect shall be given to the3[Explanation to sub-section (3) of section 80C or the Explanation to sub-section (2A) of section 88, as the case may be].

The following third proviso shall be inserted after the second proviso to sub-clause (d) of clause (10D) of section 10 by the Finance Act, 2013, w.e.f. 1-4-2014 :

Provided also that where the policy, issued on or after the 1st day of April, 2013, is for insurance on life of any person, who is—

(i) a person with disability or a person with severe disability as referred to in section 80U; or

(ii) suffering from disease or ailment as specified in the rules made under section 80DDB,

the provisions of this sub-clause shall have effect as if for the words “ten per cent”, the words “fifteen per cent” had been substituted.

4[Explanation 1].For the purposes of this clause, “Keyman insurance policy” means a life insurance policy taken by a person on the life of another person who is or was the employee of the first-mentioned person or is or was connected in any manner whatsoever with the business of the first-mentioned person 4a[and includes such policy which has been assigned to a person, at any time during the term of the policy, with or without any consideration];]

5[Explanation 2.—For the purposes of sub-clause (d)the expression “actual capital sum assured” shall have the meaning assigned to it in theExplanation to sub-section (3A) of section 80C;]

(11)  any payment from a provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies 6[or from any other provident fund set up by the Central Government and notified7 by it in this behalf in the Official Gazette];

(12)  the accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule ;

8[(13) any payment from an approved superannuation fund made—

(i)  on the death of a beneficiary ; or

(ii)  to an employee in lieu of or in commutation of an annuity on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement ; or

(iii)  by way of refund of contributions on the death of a beneficiary ; or

(iv)  by way of refund of contributions to an employee on his leaving the service in connection with which the fund is established otherwise than by retirement at or after a specified age or on his becoming incapacitated prior to such retirement, to the extent to which such payment does not exceed the contributions made prior to the commencement of this Act and any interest thereon;]

8a[8b(13A) any special allowance specifically granted to an assessee by his employer to meet expenditure actually incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee, to such extent 8c[* * *] as may be prescribed9 having regard to the area or place in which such accommodation is situate and other relevant considerations.]

10[Explanation.—For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply in a case where—

(a)  the residential accommodation occupied by the assessee is owned by him ; or

(b)  the assessee has not actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by him ;]

11[(14) (i) any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred12 in the performance of the duties of an office or employment of profit1314[as may be prescribed], to the extent to which such expenses are actually incurred for that purpose ;

(ii) any such allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit13are ordinarily performed by him or at the place where he ordinarily resides, or to compensate him for the increased cost of living, 15[as may be prescribed and to the extent as may be prescribed] :]

16[Provided that nothing in sub-clause (ii) shall apply to any allowance in the nature of personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to the place of his posting or residence ;]

(14A)17[***]

(15)  18[(i) income by way of interest, premium on redemption or other payment on such securities, bonds, annuity certificates, savings certificates, other certificates issued by the Central Government and deposits as the Central Government may, by notification19 in the Official Gazette, specify in this behalf, subject to such conditions and limits as may be specified in the said notification ;]

20[(iib21[in the case of an individual or a Hindu undivided family,] interest on such Capital Investment Bonds as the Central Government may, by notification22 in the Official Gazette, specify in this behalf :]

23[Provided that the Central Government shall not specify, for the purposes of this sub-clause, such Capital Investment Bonds on or after the 1st day of June, 2002;]

24[(iic) in the case of an individual or a Hindu undivided family, interest on such Relief Bonds25 as the Central Government may, by notification in the Official Gazette, specify in this behalf ;]

26[(iid) interest on such bonds, as the Central Government may, by notification27 in the Official Gazette, specify, arising to—

(a)  a non-resident Indian, being an individual owning the bonds ; or

(b)  any individual owning the bonds by virtue of being a nominee or survivor of the non-resident Indian ; or

(c)  any individual to whom the bonds have been gifted by the non-resident Indian :

Provided that the aforesaid bonds are purchased by a non-resident Indian in foreign exchange and the interest and principal received in respect of such bonds, whether on their maturity or otherwise, is not allowable to be taken out of India :

Provided further that where an individual, who is a non-resident Indian in any previous year in which the bonds are acquired, becomes a resident in India in any subsequent year, the provisions of this sub-clause shall continue to apply in relation to such individual :

Provided also that in a case where the bonds are encashed in a previous year prior to their maturity by an individual who is so entitled, the provisions of this sub-clause shall not apply to such individual in relation to the assessment year relevant to such previous year :

28[Provided also that the Central Government shall not specify, for the purposes of this sub-clause, such bonds on or after the 1st day of June, 2002.]

Explanation.—For the purposes of this sub-clause, the expression “non-resident Indian” shall have the meaning assigned to it in clause (e) of section 115C;]

(iii) interest on securities held by the Issue Department of the Central Bank of Ceylon constituted under the Ceylon Monetary Law Act, 1949;

29[(iiia) interest payable to any bank incorporated in a country outside India and authorised to perform central banking functions in that country on any deposits made by it, with the approval of the Reserve Bank of India, with any scheduled bank.

Explanation.—For the purposes of this sub-clause, “scheduled bank” shall have the meaning assigned to it in 30[clause (ii) of the Explanation to clause (viia) of sub-section (1) of section 36];]

31[(iiib) interest payable to the Nordic Investment Bank, being a multilateral financial institution constituted by the Governments of Denmark, Finland, Iceland, Norway and Sweden, on a loan advanced by it to a project approved by the Central Government in terms of the Memorandum of Understanding entered into by the Central Government with that Bank on the 25th day of November, 1986;]

32[(iiic) interest payable to the European Investment Bank, on a loan granted by it in pursuance of the framework-agreement for financial co-operation entered into on the 25th day of November, 1993 by the Central Government with that Bank;]

(iv) interest payable—

33[(a) by Government or a local authority on moneys borrowed by it before the 1st day of June, 2001 from, or debts owed by it before the 1st day of June, 2001 to, sources outside India;]

(b)  by an industrial undertaking in India on moneys borrowed by it under 34[a loan agreement entered into before the 1st day of June, 2001 with any such financial institution] in a foreign country as may be approved35 in this behalf by the Central Government by general or special order ;

36(c) by an industrial undertaking in India on any moneys borrowed or debt incurred by it 37[before the 1st day of June, 2001]in a foreign country in respect of the purchase outside India of raw materials 38[or components] or capital plant and machinery, 39[to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf40, having regard to the terms of the loan or debt and its repayment.]

41[42[Explanation 1.]—For the purposes of this item, “purchase of capital plant and machinery” includes the purchase of such capital plant and machinery under a hire-purchase agreement or a lease agreement with an option to purchase such plant and machinery.]

43[Explanation 2.—For the removal of doubts, it is hereby declared that the usance interest payable outside India by an undertaking engaged in the business of ship-breaking in respect of purchase of a ship from outside India shall be deemed to be the interest payable on a debt incurred in a foreign country in respect of the purchase outside India;]

44[(d)  by the Industrial Finance Corporation of India established by the Industrial Finance Corporation Act, 1948 (15 of 1948), or the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964), 45[or the Export-Import Bank of India established under the Export-Import Bank of India Act, 1981 (28 of 1981),] 46[or the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987),] 47[or the Small Industries Development Bank of India established under section 3 of the Small Industries Development Bank of India Act, 1989 (39 of 1989),] or the Industrial Credit and Investment Corporation of India [a company formed and registered under the Indian Companies Act, 1913 (7 of 1913)], on any moneys borrowed by it from sources outside India 48[before the 1st day of June, 2001],to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan and its repayment;]

49[(e) by any other financial institution established in India or a banking company 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), on any moneys borrowed by it from sources outside India 50[before the 1st day of June, 2001]under a loan agreement approved by the Central Government where the moneys are borrowed either for the purpose of advancing loans to industrial undertakings in India for purchase outside India of raw materials or capital plant and machinery or for the purpose of importing any goods which the Central Government may consider necessary to import in the public interest, to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan and its repayment;]

51[(f) by an industrial undertaking in India on any moneys borrowed by it in foreign currency from sources outside India under a loan agreement approved by the Central Government 52[before the 1st day of June, 2001]having regard to the need for industrial development in India, to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan and its repayment;

53[(fa)  by a scheduled bank 54[***] 55[to a non-resident or to a person who is not ordinarily resident within the meaning of sub-section (6)† of section 6] on deposits in foreign currency where the acceptance of such deposits by the bank is approved by the Reserve Bank of India.

56[Explanation.—For the purposes of this item, the expression “scheduled bank” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), 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 any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a co-operative bank;]

57[(g) by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes, 58[being a company eligible for deduction under clause (viii) of sub-section (1) of section 36] on any moneys borrowed by it in foreign currency from sources outside India under a loan agreement approved by the Central Government59[before the 1st day of June, 2003], to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan and its repayment.]

Explanation.—For the purposes of 60[items (f61[, (fa)] and (g)], the expression 62“foreign currency” shall have the meaning assigned to it in62a[the Foreign Exchange Management Act, 1999 (42 of 1999)];]

63[(h)  by any public sector company in respect of such bonds or debentures and subject to such conditions, including the condition that the holder of such bonds or debentures registers his name and the holding with that company, as the Central Government may, by notification64 in the Official Gazette, specify in this behalf;]

65[(i)  by Government on deposits made by an employee of the Central Government or a State Government 66[or a public sector company], in accordance with such scheme as the Central Government may, by notification67 in the Official Gazette, frame in this behalf, out of the moneys due to him on account of his retirement, whether on superannuation or otherwise.]

68[69[Explanation 1].—For the purposes of this sub-clause, the expression “industrial undertaking” means any undertaking which is engaged in—

(a)  the manufacture or processing of goods; or

70[(aa)  the manufacture of computer software or recording of programme on any disc, tape, perforated media or other information device; or]

(b)  the business of generation or distribution of electricity or any other form of power; or

71[(ba)  the business of providing telecommunication services; or]

(c)  mining; or

(d)  the construction of ships; or

72[(da)  the business of ship-breaking; or]

73[(e)  the operation of ships or aircrafts or construction or operation of rail systems.]]

74[Explanation 1A.—For the purposes of this sub-clause, the expression “interest” shall not include interest paid on delayed payment of loan or on default if it is in excess of two per cent per annum over the rate of interest payable in terms of such loan.]

75[Explanation 2.—For the purposes of this clause, the expression “interest” includes hedging transaction charges on account of currency fluctuation;]

76[(v) interest on—

(a)  securities held by the Welfare Commissioner, Bhopal Gas Victims, Bhopal, in the Reserve Bank’s SGL Account No. SL/DH 048;

(b)  deposits for the benefit of the victims of the Bhopal gas leak disaster held in such account, with the Reserve Bank of India or with a public sector bank, as the Central Government may, by notification77 in the Official Gazette, specify, whether prospectively or retrospectively but in no case earlier than the 1st day of April, 1994 in this behalf.

Explanation.—For the purposes of this sub-clause, the expression “public sector bank” shall have the meaning assigned to it in the Explanation to clause (23D);]

78[(vi) interest on Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government;]

79[(vii) interest on bonds—

(a)  issued by a local authority or by a State Pooled Finance Entity; and

(b)  specified by the Central Government by notification80 in the Official Gazette.

Explanation.—For the purposes of this sub-clause, the expression “State Pooled Finance Entity” shall mean such entity which is set up in accordance with the guidelines for the Pooled Finance Development Scheme notified by the Central Government in the Ministry of Urban Development;]

81[(viii) any income by way of interest received by a non-resident or a person who is not ordinarily resident, in India on a deposit made on or after the 1st day of April, 2005, in an Offshore Banking Unit82 referred to in clause (u) of section 2 of the Special Economic Zones Act, 2005;]

83[(15A) any payment made, by an Indian company engaged in the business of operation of aircraft, to acquire an aircraft or an aircraft engine (other than a payment for providing spares, facilities or services in connection with the operation of leased aircraft) on lease83a from the Government of a foreign State or a foreign enterprise under an agreement 84[85[, not being an agreement entered into between the 1st day of April, 1997 and the 31st day of March, 1999,] and] approved by the Central Government in this behalf :

86[Provided that nothing contained in this clause shall apply to any such agreement entered into on or after the 87[1st day of April, 88[2007]].]

Explanation.—For the purposes of this clause, the expression “foreign enterprise” means a person who is a non-resident;]

89(16 90scholarships granted to meet the cost of education;

91[(17)  any income by way of—

(i)  daily allowance received by any person by reason of his membership of Parliament or of any State Legislature or of any Committee thereof; 92[* * *]

93[(ii)  any allowance received by any person by reason of his membership of Parliament under the Members of Parliament (Constituency Allowance) Rules, 1986;

94[(iii)  any constituency allowance received by any person by reason of his membership of any State Legislature under any Act or rules made by that State Legislature;]]]

95[(17A) any payment made, whether in cash or in kind,—

(i)  in pursuance of any award instituted in the public interest by the Central Government or any State Government or instituted by any other body and approved96 by the Central Government in this behalf; or

(ii)  as a reward by the Central Government or any State Government for such purposes as may be approved96 by the Central Government in this behalf in the public interest;]

97[(18)  any income by way of—

(i)  pension received by an individual who has been in the service of the Central Government or State Government and has been awarded “Param Vir Chakra” or “Maha Vir Chakra” or “Vir Chakra” or such other gallantry award as the Central Government may, by notification98 in the Official Gazette, specify in this behalf;

(ii)  family pension received by any member of the family of an individual referred to in sub-clause (i).

Explanation.—For the purposes of this clause, the expression “family” shall have the meaning assigned to it in the Explanation to clause (5);]

(18A)  99[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

1[(19)  family pension received by the widow or children or nominated heirs, as the case may be, of a member of the armed forces (including para-military forces) of the Union, where the death of such member has occurred in the course of operational duties, in such circumstances and subject to such conditions, as may be prescribed2;]

3[(19A)  the annual value of any one palace in the occupation of a Ruler, being a palace, the annual value whereof was exempt from income-tax before the commencement of the Constitution (Twenty-sixth Amendment) Act, 1971, by virtue of the provisions of the Merged States (Taxation Concessions) Order, 1949, or the Part B States (Taxation Concessions) Order, 1950, or, as the case may be, the Jammu and Kashmir (Taxation Concessions) Order, 1958:

Provided that for the assessment year commencing on the 1st day of April, 1972, the annual value of every such palace in the occupation4 of such Ruler during the relevant previous year shall be exempt from income-tax;]

5(20)  the income of a local authority which is chargeable under the head 6[* * *] “Income from house property”, “Capital gains” or “Income from other sources” or from a trade or business carried on by it which accrues or arises from the supply of a commodity or service 7[(not being water or electricity) within its own jurisdictional area or from the supply of water or electricity within or outside its own jurisdictional area].

8[Explanation.—For the purposes of this clause, the expression “local authority” means—

(i)  Panchayat as referred to in clause (d) of article 243 of the Constitution9; or

(ii)  Municipality as referred to in clause (e) of article 243P of the Constitution10; or

(iii)  Municipal Committee and District Board,

legally entitled to, or entrusted by the Government with, the control or management of a Municipal or local fund; or

(iv)  Cantonment Board as defined in section 311 of the Cantonments Act, 1924 (2 of 1924);]

(20A)  12[***]

13[14(21)  15any income of a 16[research association] for the time being approved for the purpose of clause (ii17[or clause (iii)]of sub-section (1) of section 35:

Provided that the 16[research association]—

(a)  applies its income, or accumulates it for application, wholly and exclusively to the objects for which it is established, and the provisions of sub-section (2) and sub-section (3) of section 11 shall apply in relation to such accumulation subject to the following modifications, namely :—

(i)  in sub-section (2),—

(1)  the words, brackets, letters and figure “referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation to that sub-section” shall be omitted;

(2)  for the words “to charitable or religious purposes”, the words “for the purposes of 18[scientific research or research in social science or statistical research]” shall be substituted;

(3)  the reference to “Assessing Officer” in clause (a) thereof shall be construed as a reference to the “prescribed authority” referred to in clause (ii17[or clause (iii)]of sub-section (1) of section 35;

(ii)  in sub-section (3), in clause (a), for the words “charitable or religious purposes”, the words “the purposes of 18[scientific research or research in social science or statistical research]” shall be substituted; and

19[(b) does not invest or deposit its funds, other than—

(i)  any assets held by the 20[research association] where such assets form part of the corpus of the fund of the association as on the 1st day of June, 1973;

(ii)  any assets (being debentures issued by, or on behalf of, any company or corporation), acquired by the 20[research association] before the 1st day of March, 1983;

(iii)  any accretion to the shares, forming part of the corpus of the fund mentioned in sub-clause (i), by way of bonus shares allotted to the 20[research association];

(iv)  voluntary contributions received and maintained in the form of jewellery, furniture or any other article as the Board may, by notification in the Official Gazette, specify,

for any period during the previous year otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11:]

21[Provided further that the exemption under this clause shall not be denied in relation to voluntary contribution, other than voluntary contribution in cash or voluntary contribution of the nature referred to in clause (b) of the first proviso to this clause, subject to the condition that such voluntary contribution is not held by the 20[research association], otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11, after the expiry of one year from the end of the previous year in which such asset is acquired or the 31st day of March, 1992, whichever is later:

Provided also] that nothing contained in this clause shall apply in relation to any income of the 20[research association], being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of account are maintained by it in respect of such business:]

22[Provided also that where the 20[research association]is approved by the Central Government and subsequently that Government is satisfied that—

(i)  the 20[research association]has not applied its income in accordance with the provisions contained in clause (a) of the first proviso; or

(ii)  the 20[research association]has not invested or deposited its funds in accordance with the provisions contained in clause (b) of the first proviso; or

(iii)  the activities of the 20[research association]are not genuine; or

(iv)  the activities of the 23[research association]are not being carried out in accordance with all or any of the conditions subject to which such association was approved,

it may, at any time after giving a reasonable opportunity of showing cause against the proposed withdrawal to the concerned association, by order, withdraw the approval and forward a copy of the order withdrawing the approval to such association and to the Assessing Officer;]

 (22)  24[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

(22A)  25[Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]

26[(22B)  any income of such news agency set up in India solely for collection and distribution of news as the Central Government may, by notification27 in the Official Gazette, specify in this behalf:

Provided that the news agency applies its income or accumulates it for application solely for collection and distribution of news and does not distribute its income in any manner to its members:

Provided further that any notification issued by the Central Government under this clause shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification:]

28[Provided also that where the news agency has been specified, by notification, by the Central Government and subsequently that Government is satisfied that such news agency has not applied or accumulated or distributed its income in accordance with the provisions contained in the first proviso, it may, at any time after giving a reasonable opportunity of showing cause, rescind the notification and forward a copy of the order rescinding the notification to such agency and to the Assessing Officer;]

 (23)  29[Omitted by the Finance Act, 2002, w.e.f. 1-4-2003;]

30[31(23A) any income (other than income chargeable under the head 32[* * *] “Income from house property” or any income received for rendering any specific services or income by way of interest or dividends derived from its investments) of an association or institution established in India having as its object the control, supervision, regulation or encouragement of the profession of law, medicine, accountancy, engineering or architecture or such other profession33 as the Central Government may specify in this behalf, from time to time, by notification in the Official Gazette:

Provided that—

(i)  the association or institution applies its income, or accumulates it for application, solely to the objects for which it is established; and

(ii)  the association or institution is for the time being approved34 for the purpose of this clause by the Central Government by general or special order:]

35[Provided further that where the association or institution has been approved by the Central Government and subsequently that Government is satisfied that—

(i)  such association or institution has not applied or accumulated its income in accordance with the provisions contained in the first proviso; or

(ii)  the activities of the association or institution are not being carried out in accordance with all or any of the conditions subject to which such association or institution was approved,

it may, at any time after giving a reasonable opportunity of showing cause against the proposed withdrawal to the concerned association or institution, by order, withdraw the approval and forward a copy of the order withdrawing the approval to such association or institution and to the Assessing Officer;]

36[(23AA) any income received by any person on behalf of any Regimental Fund or Non-Public Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependants;]

37[(23AAA) any income received by any person on behalf of a fund established, for such purposes as may be notified38 by the Board in the Official Gazette, for the welfare of employees or their dependants and of which fund such employees are members if such fund fulfils the following conditions, namely :—

(a)  the fund—

(i)  applies its income or accumulates it for application, wholly and exclusively to the objects for which it is established; and

(ii)  invests its funds and contributions and other sums received by it in the forms or modes specified in sub-section (5) of section 11;

(b)  the fund is approved by the Commissioner in accordance with the rules39 made in this behalf:

Provided that any such approval shall at any one time have effect for such assessment year or years not exceeding three assessment years as may be specified in the order of approval;]

40[(23AAB) any income of a fund, by whatever name called, set up by the Life Insurance Corporation of India on or after the 1st day of August, 1996 41[or any other insurer] under a pension scheme,—

(i)  to which contribution is made by any person for the purpose of receiving pension from such fund;

(ii)  which is approved by the Controller of Insurance 42[or the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), as the case may be].

Explanation.—For the purposes of this clause, the expression “Controller of Insurance” shall have the meaning assigned to it in clause (5B) of section 2 of the Insurance Act, 1938 (4 of 1938)43;]

44[(23B) any income of an institution constituted as a public charitable trust or registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India, and existing solely for the development of khadi or village industries or both, and not for purposes of profit, to the extent such income is attributable to the business of production, sale, or marketing, of khadi or products of village industries:

Provided that—

(i)  the institution applies its income, or accumulates it for application, solely for the development of khadi or village industries or both; and

(ii)  the institution is, for the time being, approved for the purpose of this clause by the Khadi and Village Industries Commission:

Provided further that the Commission shall not, at any one time, grant such approval for more than three assessment years beginning with the assessment year next following the financial year in which it is granted:

45[Provided also that where the institution has been approved by the Khadi and Village Industries Commission and subsequently that Commission is satisfied that—

(i)  the institution has not applied or accumulated its income in accordance with the provisions contained in the first proviso; or

(ii)  the activities of the institution are not being carried out in accordance with all or any of the conditions subject to which such institution was approved,

it may, at any time after giving a reasonable opportunity of showing cause against the proposed withdrawal to the concerned institution, by order, withdraw the approval and forward a copy of the order withdrawing the approval to such institution and to the Assessing Officer.]

Explanation.—For the purposes of this clause,—

(i)  “Khadi and Village Industries Commission” means the Khadi and Village Industries Commission established under the Khadi and Village Industries Commission Act, 1956 (61 of 1956);

(ii)  46“khadi” and “village industries” have the meanings respectively assigned to them in that Act;]

47[(23BB) any income of an authority (whether known as the Khadi and Village Industries Board or by any other name) established in a State by or under a State or Provincial Act for the development of khadi or village industries in the State.

Explanation.—For the purposes of this clause, 46“khadi” and “village industries” have the meanings respectively assigned to them in the Khadi and Village Industries Commission Act, 1956 (61 of 1956);]

47[(23BBA) any income of any body or authority (whether or not a body corporate or corporation sole) established, constituted or appointed by or under any Central, State or Provincial Act which provides for the administration of any one or more of the following, that is to say, public religious or charitable trusts or endowments (including maths, temples, gurdwaras, wakfs, churches, synagogues, agiaries or other places of public religious worship) or societies for religious or charitable purposes registered as such under the Societies Registration Act, 1860 (21 of 1860), or any other law for the time being in force:

Provided that nothing in this clause shall be construed to exempt from tax the income of any trust, endowment or society referred to therein;]

48[(23BBB) any income of the European Economic Community derived in India by way of interest, dividends or capital gains from investments made out of its funds under such scheme49 as the Central Government may, by notification in the Official Gazette, specify in this behalf.

Explanation.—For the purposes of this clause, “European Economic Community” means the European Economic Community established by the Treaty of Rome of 25th March, 1957;]

50[(23BBC) any income of the SAARC Fund for Regional Projects set up by Colombo Declaration issued on the 21st day of December, 1991 by the Heads of State or Government of the Member Countries of South Asian Association for Regional Cooperation established on the 8th day of December, 1985 by the Charter of the South Asian Association for Regional Cooperation;]

51[(23BBD) any income of the Secretariat of the Asian Organisation of the Supreme Audit Institutions registered as “ASOSAI-SECRETARIAT” under the Societies Registration Act, 1860 (21 of 1860) for 52[ten previous years relevant to the assessment years beginning on the 1st day of April, 2001 and ending on the 31st day of March, 2011];

(23BBE) any income of the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);]

53[(23BBF) any income of the North-Eastern Development Finance Corporation Limited, being a company formed and registered under the Companies Act, 1956 (1 of 1956) :

Provided that in computing the total income of the North-Eastern Development Finance Corporation Limited, the amount to the extent of—

(i)  twenty per cent of the total income for assessment year beginning on the 1st day of April, 2006;

(ii)  forty per cent of the total income for assessment year beginning on the 1st day of April, 2007;

(iii)  sixty per cent of the total income for assessment year beginning on the 1st day of April, 2008;

(iv)  eighty per cent of the total income for assessment year beginning on the 1st day of April, 2009;

(v)  one hundred per cent of the total income for assessment year beginning on the 1st day of April, 2010 and any subsequent assessment year or years,

shall be included in such total income;]

54[(23BBG) any income of the Central Electricity Regulatory Commission constituted under sub-section (1) of section 76 of the Electricity Act, 2003 (36 of 2003);]

55[(23BBH) any income of the Prasar Bharati (Broadcasting Corporation of India) established under sub-section (1) of section 3 of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990 (25 of 1990);]

56[57(23C) any income58 received by any person on behalf of—

(i)  the Prime Minister’s National Relief Fund; or

(ii)  the Prime Minister’s Fund (Promotion of Folk Art); or

(iii)  the Prime Minister’s Aid to Students Fund; 59[or]

60[(iiia)  the National Foundation for Communal Harmony; or]

61[(iiiab)  any university or other educational institution62 existing62 solely62 for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government; or

(iiiac)  any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, and which is wholly or substantially financed by the Government; or

(iiiad)  any university or other educational institution62 existing62 solely62 for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed63; or

(iiiae)  any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, if the aggregate annual receipts of such hospital or institution do not exceed the amount of annual receipts as may be prescribed63; or]

64[(iv65any other fund or institution established for charitable purposes 66[which may be approved by the prescribed authority67], having regard to the objects of the fund or institution and its importance throughout India or throughout any State or States; or

(v)  68any trust (including any other legal obligation) or institution wholly for public religious purposes or wholly for public religious and charitable purposes, 69[which may be approved by the prescribed authority70], having regard to the manner in which the affairs of the trust or institution are administered and supervised for ensuring that the income accruing thereto is properly applied for the objects thereof;

71[(vi) any university or other educational institution72 existing72 solely72 for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved73 by the prescribed authority74; or

(via)  any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiac) or sub-clause (iiiae) and which may be approved75 by the prescribed autho-rity76 :]

Provided that the fund or trust or institution 77[or any university or other educational institution78 or any hospital or other medical institution] referred to in sub-clause (iv) or sub-clause (v77[or sub-clause (vi) or sub-clause (via)] shall make an application in the prescribed form79 and manner to the prescribed authority80 for the purpose of grant of the exemption, or continuance thereof, under sub-clause (iv) or sub-clause (v81[or sub-clause (vi) or sub-clause (via)]:

82[Provided further that the prescribed authority, before approving any fund or trust or institution or any university or other educational institution or any hospital or other medical institution, under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), may call for such documents (including audited annual accounts) or information from the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, as it thinks necessary in order to satisfy itself about the genuineness of the activities of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, and the prescribed authority may also make such inquiries as it deems necessary in this behalf:]

Provided also that the fund or trust or institution 83[or any university or other educational institution84 or any hospital or other medical institution] referred to in sub-clause (iv) or sub-clause (v83[or sub-clause (vi) or sub-clause (via)]—

85[(a)   applies its income, or accumulates it for application, wholly and exclusively to the objects for which it is established and in a case where more than fifteen per cent of its income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five years; and]

86[(b)  does not invest or deposit its funds, other than—

(i)  any assets held by the fund, trust or institution 87[or any university or other educational institution88 or any hospital or other medical institution] where such assets form part of the corpus of the fund, trust or institution 89[or any university or other educational institution or any hospital or other medical institution] as on the 1st day of June, 1973;

90[(ia)  any asset, being equity shares of a public company, held by any university or other educational institution or any hospital or other medical institution where such assets form part of the corpus of any university or other educational institution or any hospital or other medical institution as on the 1st day of June, 1998;]

(ii)  any assets (being debentures issued by, or on behalf of, any company or corporation), acquired by the fund, trust or institution 91[or any university or other educational institution92 or any hospital or other medical institution] before the 1st day of March, 1983;

(iii)  any accretion to the shares, forming part of the corpus mentioned in sub-clause (i93[and sub-clause (ia)], by way of bonus shares allotted to the fund, trust or institution 91[or any university or other educational institution or any hospital or other medical institution] ;

(iv)  voluntary contributions received and maintained in the form of jewellery, furniture or any other article as the Board may, by notification in the Official Gazette, specify,

for any period during the previous year otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11:]

Provided also that the exemption under sub-clause (iv) or sub-clause (v) shall not be denied in relation to any funds invested or deposited before the 1st day of April, 1989, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not continue to remain so invested or deposited after the 30th day of March, 94[1993] :

95[Provided also that the exemption under sub-clause (vi) or sub-clause (via) shall not be denied in relation to any funds invested or deposited before the 1st day of June, 1998, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not continue to remain so invested or deposited after the 30th day of March, 2001 :]

96[Provided also that the exemption under sub-clause (iv) or sub-clause (v95[or sub-clause (vi) or sub-clause (via)] shall not be denied in relation to voluntary contribution, other than voluntary contribution in cash or voluntary contribution of the nature referred to in clause (b) of the third proviso to this sub-clause, subject to the condition that such voluntary contribution is not held by the trust or institution 97[or any university or other educational institution or any hospital or other medical institution], otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11, after the expiry of one year from the end of the previous year in which such asset is acquired or the 31st day of March, 1992, whichever is later:]

Provided also that nothing contained in sub-clause (iv) or sub-clause (v98[or sub-clause (vi) or sub-clause (via)] shall apply in relation to any income of the fund or trust or institution 98[or any university or other educational institution or any hospital or other medical institution], being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of account are maintained by it in respect of such business:

Provided also that any 99[notification issued by the Central Government under sub-clause (iv) or sub-clause (v), before the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President*, shall, at any one time1, have effect for such assessment year or years, not exceeding three assessment years] (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification:]

2[Provided also that where an application under the first proviso is made on or after the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President,* every notification under sub-clause (iv) or sub-clause (v) shall be issued or approval under 3[sub-clause (iv) or sub-clause (v) or] sub-clause (vi) or sub-clause (via) shall be granted or an order rejecting the application shall be passed within the period of twelve months from the end of the month in which such application was received:

Provided also that where the total income, of the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), without giving effect to the provisions of the said sub-clauses, exceeds the maximum amount which is not chargeable to tax in any previous year, such trust or institution or any university or other educational institution or any hospital or other medical institution shall get its accounts audited in respect of that year by an accountant as defined in theExplanation below sub-section (2) of section 288 and furnish along with the return of income for the relevant assessment year, the report of such audit in the prescribed form4 duly signed and verified by such accountant and setting forth such particulars as may be prescribed:]

5[Provided also that any amount of donation received by the fund or institution in terms of clause (d) of sub-section (2) of section 80G 6[in respect of which accounts of income and expenditure have not been rendered to the authority prescribed under clause (v) of sub-section (5C) of that section, in the manner specified in that clause, or] which has been utilised for purposes other than providing relief to the victims of earthquake in Gujarat or which remains unutilised in terms of sub-section (5C) of section 80G and not transferred to the Prime Minister’s National Relief Fund on or before the 31st day of March, 7[2004] shall be deemed to be the income of the previous year and shall accordingly be charged to tax:]

8[***]

9[Provided also that where the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) does not apply its income during the year of receipt and accumulates it, any payment or credit out of such accumulation to any trust or institution registered under section 12AA or to any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall not be treated as application of income to the objects for which such fund or trust or institution or university or educational institution or hospital or other medical institution, as the case may be, is established :

Provided also that where the fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) is notified by the Central Government 10[or is approved by the prescribed authority, as the case may be,] or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via), is approved by the prescribed authority and subsequently that Government or the prescribed authority is satisfied that—

(i)  such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not—

(A) applied its income in accordance with the provisions contained in clause (a) of the third proviso; or

(B) invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or

(ii)  the activities of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution—

(A) are not genuine; or

(B) are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved,

it may, at any time after giving a reasonable opportunity of showing cause against the proposed action to the concerned fund or institution or trust or any university or other educational institution or any hospital or other medical institution, rescind the notification or, by order, withdraw the approval, as the case may be, and forward a copy of the order rescinding the notification or withdrawing the approval to such fund or institution or trust or any university or other educational institution or any hospital or other medical institution and to the Assessing Officer:]

11[Provided also that in case the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in the first proviso makes an application on or after the 1st day of June, 2006 for the purposes of grant of exemption or continuance thereof, such application shall be 12[made on or before the 30th day of September of the relevant assessment year] from which the exemption is sought :]

13[Provided also that any anonymous donation referred to in section 115BBC on which tax is payable in accordance with the provisions of the said section shall be included in the total income :]

14[Provided also that all pending applications, on which no notification has been issued under sub-clause (iv) or sub-clause (v) before the 1st day of June, 2007, shall stand transferred on that day to the prescribed authority and the prescribed authority may proceed with such applications under those sub-clauses from the stage at which they were on that day:]

15[Provided also that the income of a trust or institution referred to in sub-clause (iv) or sub-clause (v) shall be included in its total income of the previous year if the provisions of the first proviso to clause (15) of section 2 become applicable to such trust or institution in the said previous year, whether or not any approval granted or notification issued in respect of such trust or institution has been withdrawn or rescinded;]

16[(23D17[18[19[subject to the provisions of Chapter XII-E, any income of]—]

(i)  a Mutual Fund registered under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or regulations made thereunder;

(ii)  such other Mutual Fund set up by a public sector bank or a public financial institution or authorised by the Reserve Bank of India and subject to such conditions as the Central Government may, by notification20 in the Official Gazette, specify in this behalf.]

Explanation.—For the purposes of this clause,—

(a)  the expression “public sector bank” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corres-ponding new Bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Under-takings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Under-takings) Act, 1980 (40 of 1980) 21[and a bank included in the category “other public sector banks” by the Reserve Bank of India];

(b)  the expression “public financial institution” shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956)22;]

23[(c)  the expression 24“Securities and Exchange Board of India” shall have the meaning assigned to it in clause (a) of sub-section (1) of section 2 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);]

The following clause (23DA) shall be inserted after clause (23D) of section 10 by the Finance Act, 2013, w.e.f. 1-4-2014 :

(23DA)  any income of a securitisation trust from the activity of securitisation.

Explanation.—For the purposes of this clause,—

(a) “securitisation” shall have the same meaning as assigned to it,—

(i)  in clause (r) of sub-regulation (1) of regulation 224a of the Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) and the Securities Contracts (Regulation) Act, 1956 (42 of 1956); or

(ii)  under the guidelines on securitisation of standard assets issued by the Reserve Bank of India;

(b) “securitisation trust” shall have the meaning assigned to it in the Explanation below section 115TC;

    (23E) 25[Omitted by the Finance Act, 2002, w.e.f. 1-4-2003;]

26[(23EA) any income 27[, by way of contributions received from recognised stock exchanges and the members thereof,] of such Investor Protection Fund set up by recognised stock exchanges in India, either jointly or separately, as the Central Government may, by notification28 in the Official Gazette, specify in this behalf:

Provided that where any amount standing to the credit of the Fund and not charged to income-tax during any previous year is shared, either wholly or in part, with a recognised stock exchange, the whole of the amount so shared shall be deemed to be the income of the previous year in which such amount is so shared and shall accordingly be chargeable to income-tax;]

29[(23EB) any income of the Credit Guarantee Fund Trust for Small 30[***] Industries, being a trust created by the Government of India and the Small Industries Development Bank of India established under sub-section (1) of section 3 of the Small Industries Development Bank of India Act, 1989 (39 of 1989), for five previous years relevant to the assessment years beginning on the 1st day of April, 2002 and ending on the 31st day of March, 2007;]

31[(23EC) any income, by way of contributions received from commodity exchanges and the members thereof, of such Investor Protection Fund set up by commodity exchanges in India, either jointly or separately, as the Central Government may, by notification in the Official Gazette, specify in this behalf:

Provided that where any amount standing to the credit of the said Fund and not charged to income-tax during any previous year is shared, either wholly or in part, with a commodity exchange, the whole of the amount so shared shall be deemed to be the income of the previous year in which such amount is so shared and shall accordingly be chargeable to income-tax.

Explanation.—For the purposes of this clause, “commodity exchange” shall mean a “registered association” as defined in clause (jj) of section 2 of the Forward Contracts (Regulation) Act, 1952 (74 of 1952)32;]

The following clause (23ED) shall be inserted after clause (23EC) of section 10 by the Finance Act, 2013, w.e.f. 1-4-2014 :

(23ED) any income, by way of contributions received from a depository, of such Investor Protection Fund set up in accordance with the regulations by a depository as the Central Government may, by notification in the Official Gazette, specify in this behalf:

Provided that where any amount standing to the credit of the Fund and not charged to income-tax during any previous year is shared, either wholly or in part with a depository, the whole of the amount so shared shall be deemed to be the income of the previous year in which such amount is so shared and shall, accordingly, be chargeable to income-tax.

Explanation.—For the purposes of this clause,—

(i)  “depository” shall have the same meaning as assigned to it in clause (e) of sub-section (1) of section 232a of the Depositories Act, 1996 (22 of 1996);

(ii)  “regulations” means the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) and the Depositories Act, 1996 (22 of 1996);

33[(23F) any income by way of dividends or long-term capital gains of a venture capital fund or a venture capital company from investments made by way of equity shares in a venture capital undertaking :

Provided that such venture capital fund or venture capital company is approved for the purposes of this clause by the prescribed autho-rity34 in accordance with the rules35 made in this behalf and satisfies the prescribed conditions :

Provided further that any approval by the prescribed authority shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years, as may be specified in the order of approval :

36[Provided also that nothing contained in this clause shall apply in respect of any investment made after the 31st day of March, 1999.]

37[* * *]

37[* * *]

Explanation.—For the purposes of this clause,—

(a)  “venture capital fund” means such fund, operating under a trust deed registered under the provisions of the Registration Act, 1908 (16 of 1908), established to raise monies by the trustees for investments mainly by way of acquiring equity shares of a venture capital undertaking in accordance with the prescribed guidelines;

(b)  “venture capital company” means such company as has made investments by way of acquiring equity shares of venture capital undertakings in accordance with the prescribed guidelines;

38[(c)  “venture capital undertaking” means such domestic company whose shares are not listed in a recognised stock exchange in India and which is engaged in the business of generation or generation and distribution of electricity or any other form of power or engaged in the business of providing telecommunication services or in the business of developing, maintaining and operating any infrastructure facility or engaged in the manufacture or production of such articles or things (including computer software) as may be notified39 by the Central Government in this behalf; and

(d)  “infrastructure facility” means a road, highway, bridge, airport, port, rail system, a water supply project, irrigation project, sanitation and sewerage system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette and which fulfils the conditions specified in sub-section (4A) of section 80-IA;]

40[(23FA) any income by way of dividends 41[, other than dividends referred to in section 115-O], or long-term capital gains of a venture capital fund or a venture capital company from investments made by way of equity shares in a venture capital undertaking :

Provided that such venture capital fund or venture capital company is approved, for the purposes of this clause, by the Central Government on an application made to it in accordance with the rules42 made in this behalf and which satisfies the prescribed conditions :

Provided further that any approval by the Central Government shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years, as may be specified in the order of approval :

43[Provided also that nothing contained in this clause shall apply in respect of any investment made after the 31st day of March, 2000.]

Explanation.—For the purposes of this clause,—

(a)  “venture capital fund” means such fund, operating under a trust deed registered under the provisions of the Registration Act, 1908 (16 of 1908), established to raise monies by the trustees for investments mainly by way of acquiring equity shares of a venture capital undertaking in accordance with the prescribed guidelines;

(b)  “venture capital company” means such company as has made investments by way of acquiring equity shares of venture capital undertakings in accordance with the prescribed guidelines; and

(c)  “venture capital undertaking” means such domestic company whose shares are not listed in a recognised stock exchange in India and which is engaged in the—

(i)  business of—

(A) software;

(B) information technology;

(C) production of basic drugs in the pharmaceutical sector;

(D) bio-technology;

(E) agriculture and allied sectors; or

(F) such other sectors as may be notified44 by the Central Government in this behalf; or

(ii)  production or manufacture of any article or substance for which patent has been granted to the National Research Laboratory or any other scientific research institution approved by the Department of Science and Technology;]

45[(23FB) any income of a venture capital company or venture capital fund 46[from investment] in a venture capital undertaking.

47[Explanation.—For the purposes of this clause,—

(a) “venture capital company” means a company which—

(A)   has been granted a certificate of registration, before the 21st day of May, 2012, as a Venture Capital Fund and is regulated under the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 (hereinafter referred to as the Venture Capital Funds Regulations) made under the Securities and Exchange Board of India Act, 1992 (15 of 1992); or

(B)  has been granted a certificate of registration as Venture Capital Fund as a sub-category of Category I Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 (hereinafter referred to as the Alternative Investment Funds Regulations) made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), and which fulfils the following conditions, namely:—

 (i)  it is not listed on a recognised stock exchange;

 (ii) it has invested not less than two-thirds of its investible funds in unlisted equity shares or equity linked instruments of venture capital undertaking; and

(iii) it has not invested in any venture capital undertaking in which its director or a substantial shareholder (being a beneficial owner of equity shares exceeding ten per cent of its equity share capital) holds, either individually or collectively, equity shares in excess of fifteen per cent of the paid-up equity share capital of such venture capital undertaking;

(b) “venture capital fund” means a fund—

(A)   operating under a trust deed registered under the provisions of the Registration Act, 1908 (16 of 1908), which—

(I)  has been granted a certificate of registration, before the 21st day of May, 2012, as a Venture Capital Fund and is regulated under the Venture Capital Funds Regulations; or

(II) has been granted a certificate of registration as Venture Capital Fund as a sub-category of Category I Alternative Investment Fund under the Alternative Investment Funds Regulations and which fulfils the following conditions, namely:—

(i)  it has invested not less than two-thirds of its investible funds in unlisted equity shares or equity linked instruments of venture capital undertaking;

(ii)  it has not invested in any venture capital undertaking in which its trustee or the settler holds, either individually or collectively, equity shares in excess of fifteen per cent of the paid-up equity share capital of such venture capital undertaking; and

(iii)  the units, if any, issued by it are not listed in any recognised stock exchange; or

(B)  operating as a venture capital scheme made by the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963);

(c) “venture capital undertaking” means—

(i)  a venture capital undertaking as defined in clause (n) of regulation 2 of the Venture Capital Funds Regulations48-49; or

(ii) a venture capital undertaking as defined in clause (aa) of sub-regulation (1) of regulation 2 of the Alternative Investment Funds Regulations48-49;]

50[***]

(23G51[Omitted by the Finance Act, 2006, w.e.f. 1-4-2007;]

52[53(24) any income chargeable under the heads “Income from house property” and “Income from other sources” of—

(a)  a registered union within the meaning of the Trade Unions Act, 1926 (16 of 1926), formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen;

(b)  an association of registered unions referred to in sub-clause (a);]

(25) (i)  interest on securities which are held by, or are the property of, any provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies, and any capital gains of the fund arising from the sale, exchange or transfer of such securities;

(ii)  any income received by the trustees on behalf of a recognised provident fund;

(iii)  any income received by the trustees on behalf of an approved superannuation fund;

54[(iv) any income received by the trustees on behalf of an approved gratuity fund;]

55[(v) any income received—

(a)  by the Board of Trustees constituted under the Coal Mines Provident Funds and Miscellaneous Provisions Act, 1948 (46 of 1948), on behalf of the Deposit-linked Insurance Fund established under section 3G of that Act; or

(b)  by the Board of Trustees constituted under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), on behalf of the Deposit-linked Insurance Fund established under section 6C of that Act;]

56[(25A) any income of the Employees’ State Insurance Fund set up under the provisions of the Employees’ State Insurance Act, 1948 (34 of 1948);]

57[(2658in the case of a member of a 59Scheduled Tribe as defined in clause (25) of article 366 of the Constitution, residing60 in any area specified60 in Part I or Part II of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution or in the 61[States of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura] or in the areas covered by notification No. TAD/R/35/50/109, dated the 23rd February, 1951, issued by the Governor of Assam under the proviso to sub-paragraph (3) of the said paragraph 20 [as it stood immediately before the commencement of the North-Eastern Areas (Reorganisation) Act, 1971 (81 of 1971)] 62[or in the Ladakh region of the State of Jammu and Kashmir], any income which accrues or arises to him,—

(a)  from any source in the areas 63[or States aforesaid], or

(b)  by way of dividend or interest on securities;]

64[(26A) any income accruing or arising to any person 65[* * *] from any source in the district of Ladakh or outside India in any previous year relevant to any assessment year commencing before the 1st day of April, 66[1989], where such person is resident in the said district in that previous year :

Provided that this clause shall not apply in the case of any such person unless he was resident in that district in the previous year relevant to the assessment year commencing on the 1st day of April, 1962.

67[Explanation 1].—For the purposes of this clause, a person shall be deemed to be resident in the district of Ladakh if he fulfils the requirements of sub-section (1)68 or sub-section (2) or sub-section (3) or sub-section (4) of section 6, as the case may be, subject to the modifications that—

(i)  references in those sub-sections to India shall be construed as references to the said district; and

(ii)  in clause (i) of sub-section (3), reference to Indian company shall be construed as reference to a company formed and registered under any law for the time being in force in the State of Jammu and Kashmir and having its registered office in that district in that year.]

69[Explanation 2.—In this clause, references to the district of Ladakh shall be construed as references to the areas comprised in the said district on the 30th day of June, 1979;]

(26AA70[* * *]

71[(26AAA72in case of an individual, being a Sikkimese, any income which accrues or arises to him—

(a)  from any source in the State of Sikkim; or

(b)  by way of dividend or interest on securities:

Provided that nothing contained in this clause shall apply to a Sikkimese woman who, on or after the 1st day of April, 2008, marries an individual who is not a Sikkimese.

Explanation.—For the purposes of this clause, “Sikkimese” shall mean—

(i)  an individual, whose name is recorded in the register maintained under the Sikkim Subjects Regulation, 1961 read with the Sikkim Subject Rules, 1961 (hereinafter referred to as the “Register of Sikkim Subjects”), immediately before the 26th day of April, 1975; or

(ii)  an individual, whose name is included in the Register of Sikkim Subjects by virtue of the Government of India Order No. 26030/36/90-I.C.I., dated the 7th August, 1990 and Order of even number dated the 8th April, 1991; or

(iii)  any other individual, whose name does not appear in the Register of Sikkim Subjects, but it is established beyond doubt that the name of such individual’s father or husband or paternal grand-father or brother from the same father has been recorded in that register;]

 [(26AAB) any income of an agricultural produce market committee or board constituted under any law for the time being in force for the purpose of regulating the marketing of agricultural produce;]

 [(26B) any income of a corporation established by a Central, State or Provincial Act or of any other body, institution or association (being a body, institution or association wholly financed by Government) where such corporation or other body or institution or association has been established or formed for promoting the interests of the  [members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them].

 [Explanation.—For the purposes of this clause,—

(a)   Scheduled Castes” and “Scheduled Tribes” shall have the meanings respectively assigned to them in clauses (24) and (25) of article 366 of the Constitution;

(b)  “backward classes” means such classes of citizens, other than the Scheduled Castes and the Scheduled Tribes, as may be notified—

(i)  by the Central Government; or

(ii)  by any State Government,

as the case may be, from time to time;]

 [(26BB) any income of a corporation established by the Central Government or any State Government for promoting the interests of the members of a minority community.

Explanation.—For the purposes of this clause, “minority community” means a community notified as such by the Central Government in the Official Gazette in this behalf;]

 [(26BBB) any income of a corporation established by a Central, State or Provincial Act for the welfare and economic upliftment of ex-servicemen being the citizens of India.

Explanation.—For the purposes of this clause, “ex-serviceman” means a person who has served in any rank, whether as combatant or non-combatant, in the armed forces of the Union or armed forces of the Indian States before the commencement of the Constitution (but excluding the Assam Rifles, Defence Security Corps, General Reserve Engineering Force, Lok Sahayak Sena, Jammu and Kashmir Militia and Territorial Army) for a continuous period of not less than six months after attestation and has been released, otherwise than by way of dismissal or discharge on account of misconduct or inefficiency, and in the case of a deceased or incapacitated ex-serviceman includes his wife, children, father, mother, minor brother, widowed daughter and widowed sister, wholly dependant upon such ex-serviceman immediately before his death or incapacitation;]

 [(27) any income of a co-operative society formed for promoting the interests of the members of either the Scheduled Castes or Scheduled Tribes or both referred to in clause (26B) :

Provided that the membership of the co-operative society consists of only other co-operative societies formed for similar purposes and the finances of the society are provided by the Government and such other societies;]

(28)  [* * *]

(29)  [Omitted by the Finance Act, 2002, w.e.f. 1-4-2003;]

 [(29A) any income accruing or arising to—

(a)  the Coffee Board constituted under section 4 of the Coffee Act, 1942 (7 of 1942) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1962 or the previous year in which such Board was constituted, whichever is later;

(b)  the Rubber Board constituted under sub-section (1) of section 4 of the Rubber Board Act, 1947 (24 of 1947) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1962 or the previous year in which such Board was constituted, whichever is later;

(c)  the Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1962 or the previous year in which such Board was constituted, whichever is later;

(d)  the Tobacco Board constituted under the Tobacco Board Act, 1975 (4 of 1975) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1975 or the previous year in which such Board was constituted, whichever is later;

(e)  the Marine Products Export Development Authority established under section 4 of the Marine Products Export Development Authority Act, 1972 (13 of 1972) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1972 or the previous year in which such Authority was constituted, whichever is later;

(f)  the Agricultural and Processed Food Products Export Development Authority established under section 4 of the Agricultural and Processed Food Products Export Development Act, 1985 (2 of 1986) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1985 or the previous year in which such Authority was constituted, whichever is later;

(g)  the Spices Board constituted under sub-section (1) of section 3 of the Spices Board Act, 1986 (10 of 1986) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1986 or the previous year in which such Board was constituted, whichever is later;]

 [(h)  the Coir Board established under section 4 of the Coir Industry Act, 1953 (45 of 1953);]

 [(30)  in the case of an assessee who carries on the business of growing and manufacturing tea in India, the amount of any subsidy received from or through the Tea Board under any such schemefor replantation or replacement of tea bushes  [or for rejuvenation or consolidation of areas used for cultivation of tea] as the Central Government may, by notification in the Official Gazette, specify:

Provided that the assessee furnishes to the  [Assessing] Officer, along with his return of income for the assessment year concerned or within such further time as the  [Assessing] Officer may allow, a certificate from the Tea Board as to the amount of such subsidy paid to the assessee during the previous year.

Explanation.—In this clause, “Tea Board” means the Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953);]

 [(31)  in the case of an assessee who carries on the business of growing and manufacturing rubber, coffee, cardamom or such other commodity in India, as the Central Government may, by notification in the Official Gazette, specify in this behalf, the amount of any subsidy received from or through the concerned Board under any such scheme for replantation or replacement of rubber plants, coffee plants, cardamom plants or plants for the growing of such other commodity or for rejuvenation or consolidation of areas used for cultivation of rubber, coffee, cardamom or such other commodity as the Central Government may, by notification in the Official Gazette, specify:

Provided that the assessee furnishes to the Assessing Officer, along with his return of income94 for the assessment year concerned or within such further time as the Assessing Officer may allow, a certificate from the concerned Board, as to the amount of such subsidy paid to the assessee during the previous year.

Explanation.—In this clause, “concerned Board” means,—

(i)  in relation to rubber, the Rubber Board constituted under section 4 of the Rubber Act, 1947 (24 of 1947),

(ii)  in relation to coffee, the Coffee Board constituted under section 4 of the Coffee Act, 1942 (7 of 1942),

(iii)  in relation to cardamom, the Spices Board constituted under section 3 of the Spices Board Act, 1986 (10 of 1986),

(iv)  in relation to any other commodity specified under this clause, any Board or other authority established under any law for the time being in force which the Central Government may, by notification in the Official Gazette, specify in this behalf;]

 [(32)  in the case of an assessee referred to in sub-section (1A) of section 64, any income includible in his total income under that sub-section, to the extent such income does not exceed one thousand five hundred rupees in respect of each minor child whose income is so includible;]

 [(33) any income arising from the transfer of a capital asset, being a unit of the Unit Scheme, 1964 referred to in Schedule I to the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002)97 and where the transfer of such asset takes place on or after the 1st day of April, 2002;]

 [(34) any income by way of dividends referred to in section 115-O;

99[***]

The following clause (34A) shall be inserted after clause (34) of section 10 by the Finance Act, 2013, w.e.f. 1-4-2014 :

(34A) any income arising to an assessee, being a shareholder, on account of buy back of shares (not being listed on a recognised stock exchange) by the company as referred to in section 115QA;

(35)  any income by way of,—

(a)  income received in respect of the units of a Mutual Fund specified under clause (23D); or

(b)  income received in respect of units from the Administrator of the specified undertaking; or

(c)  income received in respect of units from the specified company:

Provided that this clause shall not apply to any income arising from transfer of units of the Administrator of the specified undertaking or of the specified company or of a mutual fund, as the case may be.

Explanation.—For the purposes of this clause,—

(a)  “Administrator” means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002)1;

(b)  “specified company” means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002)1;

The following clause (35A) shall be inserted after clause (35) of section 10 by the Finance Act, 2013, w.e.f. 1-4-2014 :

(35A) any income by way of distributed income referred to in section 115TA received from a securitisation trust by any person being an investor of the said trust.

Explanation.—For the purposes of this clause, the expressions “investor” and “securitisation trust” shall have the meanings respectively assigned to them in the Explanation below section 115TC;

(36)  any income arising from the transfer of a long-term capital asset, being an eligible equity share in a company purchased on or after the 1st day of March, 2003 and before the 1st day of March, 2004 and held for a period of twelve months or more.

Explanation.—For the purposes of this clause, “eligible equity share” means,—

(i)  any equity share in a company being a constituent of BSE-500 Index of the Stock Exchange, Mumbai as on the 1st day of March, 2003 and the transactions of purchase and sale of such equity share are entered into on a recognised stock exchange in India;

(ii)  any equity share in a company allotted through a public issue on or after the 1st day of March, 2003 and listed in a recognised stock exchange in India before the 1st day of March, 2004 and the transaction of sale of such share is entered into on a recognised stock exchange in India;]

2[(37)  in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the head “Capital gains” arising from the transfer of agricultural land, where—

(i)  such land is situate in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of section 2;

(ii)  such land, during the period of two years immediately preceding the date of transfer, was being used for agricultural purposes by such Hindu undivided family or individual or a parent of his;

(iii)  such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India;

(iv)  such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1st day of April, 2004.

Explanation.—For the purposes of this clause, the expression “compensation or consideration” includes the compensation or consideration enhanced or further enhanced by any court, Tribunal or other authority;

(38)  any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund where—

(a)  the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force3; and

(b)  such transaction is chargeable to securities transaction tax under that Chapter :

4[Provided that the income by way of long-term capital gain of a company shall be taken into account in computing the book profit and income-tax payable under section 115JB.]

Explanation.—For the purposes of this clause, “equity oriented fund” means a fund—

(i)  where the investible funds are invested by way of equity shares in domestic companies to the extent of more than 5[sixty-five] per cent of the total proceeds of such fund; and

(ii)  which has been set up under a scheme of a Mutual Fund specified under clause (23D) :

Provided that the percentage of equity shareholding of the fund shall be computed with reference to the annual average of the monthly averages of the opening and closing figures;]

6[(39) any specified income, arising from any international sporting event held in India, to the person or persons notified7 by the Central Government in the Official Gazette, if such international sporting event—

(a)  is approved by the international body regulating the international sport relating to such event;

(b)  has participation by more than two countries;

(c)  is notified7 by the Central Government in the Official Gazette for the purposes of this clause.

Explanation.—For the purposes of this clause, “the specified income” means the income, of the nature and to the extent, arising from the international sporting event, which the Central Government may notify7 in this behalf;

(40)  any income of any subsidiary company by way of grant or otherwise received from an Indian company, being its holding company engaged in the business of generation or transmission or distribution of power if receipt of such income is for settlement of dues in connection with reconstruction or revival of an existing business of power generation:

Provided that the provisions of this clause shall apply if reconstruction or revival of any existing business of power generation is by way of transfer of such business to the Indian company notified under sub-clause (a) of clause (v) of sub-section (4) of section 80-IA;

(41)  any income arising from transfer of a capital asset, being an asset of an undertaking engaged in the business of generation or transmission or distribution of power where such transfer is effected on or before the 31st day of March, 2006, to the Indian company notified under sub-clause (a) of clause (v) of sub-section (4) of section 80-IA;]

8[(42)  any specified income arising to a body or authority which—

(a)  has been established or constituted or appointed under a treaty or an agreement entered into by the Central Government with two or more countries or a convention signed by the Central Government;

(b)  is established or constituted or appointed not for the purposes of profit;

(c)  is notified by the Central Government in the Official Gazette9 for the purposes of this clause.

Explanation.—For the purposes of this clause, “specified income” means the income, of the nature and to the extent, arising to the body or authority referred to in this clause, which the Central Government may notify9 in this behalf;]

10[(43)  any amount received by an individual as a loan, either in lump sum or in instalment, in a transaction of reverse mortgage referred to in clause (xvi) ofsection 47;]

11[(44) any income received by any person for, or on behalf of, the New Pension System Trust established on the 27th day of February, 2008 under the provisions of the Indian Trusts Act, 1882 (2 of 1882);]

12[(45) any allowance or perquisite, as may be notified13 by the Central Government in the Official Gazette in this behalf, paid to the Chairman or a retired Chairman or any other member or retired member of the Union Public Service Commission;]

14[(46)  any specified income arising to a body or authority or Board or Trust or Commission (by whatever name called) which—

(a)  has been established or constituted by or under a Central, State or Provincial Act, or constituted by the Central Government or a State Government, with the object of regulating or administering any activity for the benefit of the general public;

(b)  is not engaged in any commercial activity; and

(c)  is notified15 by the Central Government in the Official Gazette for the purposes of this clause.

Explanation.—For the purposes of this clause, “specified income” means the income, of the nature and to the extent arising to a body or authority or Board or Trust or Commission (by whatever name called) referred to in this clause, which the Central Government may, by notification in the Official Gazette, specify in this behalf;

(47)  any income of an infrastructure debt fund, set up in accordance with the guidelines as may be prescribed,16 which is notified by the Central Government in the Official Gazette for the purposes of this clause;]

17[(48)  any income received in India in Indian currency by a foreign company on account of 17a[sale of crude oil to any person] in India:

Provided that—

(i)  receipt of such income in India by the foreign company is pursuant to an agreement or an arrangement entered into by the Central Government or approved by the Central Government;

(ii)  having regard to the national interest, the foreign company and the agreement or arrangement are notified17b by the Central Government in this behalf; and

(iii)  the foreign company is not engaged in any activity, other than receipt of such income, in India;]

NATIONAL INSTITUTE OF MENTAL HEALTH AND NEURO SCIENCE (NIMHANS) BANGALORE NOTIFICATION NO. 60/2013 [F. NO. 203/36/2012-ITA-II], DATED 7-8-2013

National Institute of Mental Health and Neuro Science (NIMHANS) Bangalore, (PAN-AABTN6120B) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961.

SECTION 35(1)(ii) OF THE INCOME-TAX ACT, 1961 – SCIENTIFIC RESEARCH EXPENDITURE – APPROVED SCIENTIFIC RESEARCH ASSOCIATIONS/INSTITUTIONS – NATIONAL INSTITUTE OF MENTAL HEALTH AND NEURO SCIENCE (NIMHANS) BANGALORE

NOTIFICATION NO. 60/2013 [F. NO. 203/36/2012-ITA-II], DATED 7-8-2013

It is hereby notified for general information that “National Institute of Mental Health and Neuro Science (NIMHANS) Bangalore, (PAN-AABTN6120B) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act), read with Rules 5C and 5E of the Income-tax Rules, 1962 (said Rules), for 2012-2013 onwards in the category of ‘University, College or Other Institution’, subject to the following conditions, namely:—

(i)

The sums paid to the approved organization shall be utilized for scientific research;

(ii)

The approved organization shall carry out scientific research through its faculty members or its enrolled students;

(iii)

The approved organization shall maintain separate books of account in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288 of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;

(iv)

The approved organization shall maintain a separate statement of donations received and amounts applied for scientific research in respect of concerned Departments and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.

2. The Central Government shall withdraw the approval if the approved organization:-

(a)

fails to maintain separate books of account referred to in sub-paragraph (iii) of paragraph 1; or

(b)

fails to furnish its audit report referred to in sub-paragraph (iii) of paragraph 1; or

(c)

fails to furnish its statement of the donations received and sums applied for scientific research referred to in sub-paragraph (iv) of paragraph 1; or

(d)

ceases to carry on its research activities or its research activities are not found to be genuine; or

(e)

ceases to conform to and comply with the provisions of clause (ii) of sub-section (1) of section 35 of the said Act read with rules 5C and 5E of the said Rules

Reference: Section 35 of the income Tax Act, 1961

Expenditure on scientific research.

(1) In respect of expenditure on scientific research, the following deductions shall be allowed—

(i)  any expenditure (not being in the nature of capital expenditure) laid out or expended on scientific research related to the business.

 [Explanation.—Where any such expenditure has been laid out or expended before the commencement of the business (not being expenditure laid out or expended before the 1st day of April, 1973) on payment of any salary [as defined in Explanation 21 below sub-section (5) of section 40A] to an employee engaged in such scientific research or on the purchase of materials used in such scientific research, the aggregate of the expenditure so laid out or expended within the three years immediately preceding the commencement of the business shall, to the extent it is certified by the prescribed authority to have been laid out or expended on such scientific research, be deemed to have been laid out or expended in the previous year in which the business is commenced ;]

 (ii)  [an amount equal to  [one and three-fourth] times of any sum paid] to a [research association] which has as its object the undertaking of scientific research or to a university, college or other institution to be used for scientific research :

7[Provided that such association, university, college or other institution for the purposes of this clause—

(A)   is for the time being approved, in accordance with the guidelines, in the manner and subject to such conditions as may be prescribed; and

(B)   such association, university, college or other institution is specified as such, by notification8 in the Official Gazette, by the Central Government;]

9[(iia)  an amount equal to one and one-fourth times of any sum paid to a company to be used by it for scientific research:

Provided that such company—

(A)   is registered in India,

(B)   has as its main object the scientific research and development,

(C)   is, for the purposes of this clause, for the time being approved by the prescribed authority in the prescribed manner, and

(D)  fulfils such other conditions as may be prescribed10;]

 (iii) [an amount equal to one and one-fourth times of 14[any sum paid to a research association which has as its object the undertaking of research in social science or statistical research or to a university]], college or other institution to be used for research in social science or statistical research :

 [Provided that 16[such association, university], college or other institution for the purposes of this clause—

(A)   is for the time being approved, in accordance with the guidelines, in the manner and subject to such conditions as may be prescribed; and

(B)   16[such association, university], college or other institution is specified as such, by notification17 in the Official Gazette, by the Central Government.]

18[Explanation.—The deduction, to which the assessee is entitled in respect of any sum paid to a 19[research association], university, college or other institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to the association, university, college or other institution referred to in clause (ii) or clause (iii) has been withdrawn;]

(iv)  in respect of any expenditure of a capital nature on scientific research related to the business carried on by the assessee, such deduction as may be admissible under the provisions of sub-section (2) :

20[Provided that the 19[research association], university, college or other institution referred to in clause (ii) or clause (iii) shall make an application in the prescribed form and manner to the 21[Central Government]for the purpose of grant of approval, or continuance thereof, under clause (ii) or, as the case may be, clause (iii) :

Provided further that the 21[Central Government]may, before granting approval under clause (ii) or clause (iii), call for such documents (including audited annual accounts) or information from the 19[research association], university, college or other institution as it thinks necessary in order to satisfy itself about the genuineness of the activities of the 19[research association], university, college or other institution and that 22[Government] may also make such inquiries as it may deem necessary in this behalf :

Provided also that any 23[notification issued, by the Central Government under clause (ii) or clause (iii), before the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President†, shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years] (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification:]

24[Provided also that where an application under the first proviso is made on or after the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President†, every notification under clause (ii) or clause (iii) shall be issued or an order rejecting the application shall be passed within the period of twelve months from the end of the month in which such application was received by the Central Government.]

(2) For the purposes of clause (iv) of sub-section (1),—

25[(i)  in a case where such capital expenditure is incurred before the 1st day of April, 1967, one-fifth of the capital expenditure incurred in any previous year shall be deducted for that previous year; and the balance of the expenditure shall be deducted in equal instalments for each of the four immediately succeeding previous years ;

(ia)  in a case where such capital expenditure is incurred after the 31st day of March, 1967, the whole of such capital expenditure incurred in any previous year26 shall be deducted for that previous year :]

27[Provided that no deduction shall be admissible under this clause in respect of any expenditure incurred on the acquisition of any land, whether the land is acquired as such or as part of any property, after the 29th day of February, 1984.]

28[Explanation 1].—Where any capital expenditure has been incurred before the commencement of the business, the aggregate of the expenditure so incurred within the three years immediately preceding the commencement of the business shall be deemed to have been incurred in the previous year in which the business is commenced.

27[Explanation 2.—For the purposes of this clause,—

(a)  “land” includes any interest in land ; and

(b)  the acquisition of any land shall be deemed to have been made by the assessee on the date on which the instrument of transfer of such land to him has been registered under the Registration Act, 1908 (16 of 1908), or where he has taken or retained the possession of such land or any part thereof in part performance of a contract of the nature referred to in section 53A29 of the Transfer of Property Act, 1882 (4 of 1882), the date on which he has so taken or retained possession of such land or part ;]

(ii)  notwithstanding anything contained in clause (i), where an asset representing expenditure of a capital nature 30[incurred before the 1st day of April, 1967,] ceases to be used in a previous year for scientific research related to the business and the value of the asset at the time of the cessation, together with the aggregate of deductions already allowed under clause (i) falls short of the said expenditure, then—

(a)  there shall be allowed a deduction for that previous year of an amount equal to such deficiency, and

(b)  no deduction shall be allowed under that clause for that previous year or for any subsequent previous year ;

(iii)  if the asset mentioned in clause (ii) is sold, without having been used for other purposes, in the year of cessation, the sale price shall be taken to be the value of the asset at the time of the cessation ; and if the asset is sold, without having been used for other purposes, in a previous year subsequent to the year of cessation, and the sale price falls short of the value of the asset taken into account at the time of cessation, an amount equal to the deficiency shall be allowed as a deduction for the previous year in which the sale took place ;

(iv)  where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under 31[clause (ii) of sub-section (1)] of section 32 for the same 32[or any other] previous year in respect of that asset ;

(v)  where the asset 33[mentioned in clause (ii)] is used in the business after it ceases to be used for scientific research related to that business, depreciation shall be admissible under 34[clause (ii) of sub-section (1)] of section 32.

35[(2A) 36Where 37[, before the 1st day of March, 1984,] the assessee pays any sum 38[(being any sum paid with a specific direction that the sum shall not be used for the acquisition of any land or building or construction of any building)] to a scientific research association or university or college or other institution referred to in clause (ii) of sub-section (1) 39[or to a public sector company] to be used for scientific research undertaken under a programme approved in this behalf by the prescribed authority40 having regard to the social, economic and industrial needs of India, then,—

(a)  there shall be allowed a deduction of a sum equal to one and one-third times the sum so paid ; and

(b)  no deduction in respect of such sum shall be allowed under clause (ii) of sub-section (1) for the same or any other assessment year.]

41[Explanation.—For the purposes of this sub-section, “public sector company” shall have the same meaning as in clause (b) of the Explanation below sub-section (2B) of section 32A.]

42[(2AA) 43Where the assessee pays any sum to a National Laboratory 44[or a 45[University or an Indian Institute of Technology or a specified person] with a specific direction that the said sum shall be used for scientific research undertaken under a programme approved in this behalf by the prescribed authority46, then—

(a)  there shall be allowed a deduction of a sum equal to 47[two] times the sum so paid ; and

(b)  no deduction in respect of such sum shall be allowed under any other provision of this Act :

48[Provided that the prescribed authority shall, before granting approval, satisfy itself about the feasibility of carrying out the scientific research and shall submit its report to the Director General in such form as may be prescribed.49]

50[Explanation 1.—The deduction, to which the assessee is entitled in respect of any sum paid to a National Laboratory, University, Indian Institute of Technology or a specified person for the approved programme referred to in this sub-section, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to,—

(a)  such Laboratory, or specified person has been withdrawn; or

(b)  the programme, undertaken by the National Laboratory, University, Indian Institute of Technology or specified person, has been withdrawn.]

51[Explanation 52[2].—For the purposes of this section,—

(a)  “National Laboratory” means a scientific laboratory functioning at the national level under the aegis of the Indian Council of Agricultural Research, the Indian Council of Medical Research, the Council of Scientific and Industrial Research, the Defence Research and Development Organisation, the Department of Electronics, the Department of Bio-Technology or the Department of Atomic Energy and which is approved as a National Laboratory by the prescribed authority in such manner as may be prescribed ;

(b)  “University” shall have the same meaning as in Explanation to clause (ix) of section 47 ;

(c)  “Indian Institute of Technology” shall have the same meaning as that of “Institute” in clause (g) of section 353 of the Institutes of Technology Act, 1961 (59 of 1961)];

54[(d)  “specified person” means such person as is approved by the prescribed authority.]

55[(2AB)(1) Where a company engaged in the business of 56[bio-technology or in 57[any business of manufacture or production of any article or thing, not being an article or thing specified in the list of the Eleventh Schedule]] incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority58, then, there shall be allowed a deduction of 59[a sum equal to 60[two] times of the expenditure] so incurred.

61[Explanation.—For the purposes of this clause, “expenditure on scientific research”, in relation to drugs and pharmaceuticals, shall include expenditure incurred on clinical drug trial, obtaining approval from any regulatory authority under any Central, State or Provincial Act and filing an application for a patent under the Patents Act, 1970 (39 of 1970).]

(2) No deduction shall be allowed in respect of the expenditure mentioned in clause (1) under any other provision of this Act.

(3) No company shall be entitled for deduction under clause (1) unless it enters into an agreement with the prescribed authority for co-operation in such research and development facility and for audit of the accounts maintained for that facility.

(4) The prescribed authority shall submit its report in relation to the approval of the said facility to the Director General in such form and within such time as may be prescribed.]

62[(5) No deduction shall be allowed in respect of the expenditure referred to in clause (1) which is incurred after the 31st day of March, 63[2017].

64[(6) No deduction shall be allowed to a company approved under sub-clause (C) of clause (iia) of sub-section (1) in respect of the expenditure referred to in clause (1) which is incurred after the 31st day of March, 2008.]

65[(2B)(a) Where 66[, before the 1st day of March, 1984,] an assessee has incurred any expenditure (not being in the nature of capital expenditure incurred on the acquisition of any land or building or construction of any building) on scientific research undertaken under a programme approved in this behalf by the prescribed authority having regard to the social, economic and industrial needs of India, he shall, subject to the provisions of this sub-section, be allowed a deduction of a sum equal to one and one-fourth times the amount of the expenditure certified by the prescribed authority to have been so incurred during the previous year.

(b) Where a deduction has been allowed under clause (a) for any previous year in respect of any expenditure, no deduction in respect of such expenditure shall be allowed under clause (i) of sub-section (1) or clause (ia) of sub-section (2) for the same or any other previous year.

(c) Where a deduction is allowed for any previous year under this sub-section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed in respect of that asset under 67[clause (ii) of sub-section (1)] of section 32 for the same or any subsequent previous year.

(d) Any deduction made under this sub-section in respect of any expenditure on scientific research in excess of the expenditure actually incurred shall be deemed to have been wrongly made for the purposes of this Act if the assessee fails to furnish within one year of the period allowed by the prescribed authority for completion of the programme, a certificate of its completion obtained from that authority, and the provisions of sub-section (5B) of section 155 shall apply accordingly.]

68[(3) If any question arises under this section as to whether, and if so, to what extent, any activity constitutes or constituted, or any asset is or was being used for, scientific research, the Board shall refer the question to—

(a)  the Central Government, when such question relates to any activity under clauses (ii) and (iii) of sub-section (1), and its decision shall be final;

(b)  the prescribed authority69, when such question relates to any activity other than the activity specified in clause (a), whose decision shall be final.]

(4) The provisions of sub-section (2) of section 32 shall apply in relation to deductions allowable under clause (iv) of sub-section (1) as they apply in relation to deductions allowable in respect of depreciation.

70[(5) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers to the amalgamated company (being an Indian company) any asset representing expenditure of a capital nature on scientific research,—

(i)  the amalgamating company shall not be allowed the deduction under clause (ii) or clause (iii) of sub-section (2); and

(ii)  the provisions of this section shall, as far as may be, apply to the amalgamated company as they would have applied to the amalgamating company if the latter had not so sold or otherwise transferred the asset.]]

DOUBLE TAXATION AGREEMENT – AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION WITH FOREIGN COUNTRIES – ORIENTAL REPUBLIC OF URUGUAY NOTIFICATION NO. 53/2013 [F.NO.500/138/2002-FTD-II]/SO 2081(E), DATED 5-7-2013

SECTION 90 OF THE INCOME-TAX ACT, 1961 – DOUBLE TAXATION AGREEMENT – AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION WITH FOREIGN COUNTRIES – ORIENTAL REPUBLIC OF URUGUAY

NOTIFICATION NO. 53/2013 [F.NO.500/138/2002-FTD-II]/SO 2081(E), DATED 5-7-2013

Whereas, an Agreement between the Government of the Republic of India and the Government of the Oriental Republic of Uruguay for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital was signed in India on the 8th day of September, 2011 (hereinafter referred to as the Agreement);

And whereas, the date of entry into force of the Agreement is the 21st day of June, 2013, being sixty days from the date of the later of the notifications of completion of the procedures as required by the respective laws for entry into force of the Agreement, in accordance with paragraph 2 of Article 31 of the Agreement;

Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that all the provisions of the Agreement between the Government of the Republic of India and the Government of the Oriental Republic of Uruguay for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital, as set out in the Annexure hereto, shall be given effect to in the Union of India with effect from the 1st day of April, 2014.

AGREEMENT

BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF INDIA

AND

THE GOVERNMENT OF THE ORIENTAL REPUBLIC OF URUGUAY

FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION

OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

The Government of the Republic of India and the Government of the Oriental Republic of Uruguay, desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital and with a view to promoting economic co-operation between the two countries have agreed as follows:

ARTICLE 1

PERSONS COVERED

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2

TAXES COVERED

1. This Agreement shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political sub-divisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property and taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

3. The existing taxes to which the Agreement shall apply are in particular:

(a)

in the case of India:

(i)

the income-ax, including any surcharge thereon;

(ii)

the wealth-tax;
(hereinafter referred to as “Indian tax”);

(b)

in the case of Uruguay:

(i)

the tax on business income (Impuesto a las Rentas de las Actividades Economicas -IRAE);

(ii)

the personal income-tax (Impuesto a las Rentas de las Personas Fisicas -IRPF);

(iii)

the non-residents income-tax (Impuesto a las Rentas de las No. Residentes -IRNR) ;

(iv)

the tax for social security assistance (Impuesto de Asistencia a la Seguridad
Social -IASS); and

(v)

the capital tax (Impuesto al Patrimonio -IP);
(hereinafter referred to as ” Uruguayan tax”).

4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.

ARTICLE 3

GENERAL DEFINITIONS

1. For the purposes of this Agreement, unless the context otherwise requires:

(a)

the term “India” means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with International law, including the U.N. Convention on the Law of the Sea;

(b)

the term “Uruguay” means the territory of the Oriental Republic of Uruguay, and when used in a geographical sense includes the airspace, the maritime areas, under Uruguayan sovereign rights or jurisdiction in accordance with International Law and National law;

(c)

the terms “Contracting State” and “the other Contracting State” mean the Republic of India or the Oriental Republic of Uruguay as the context requires;

(d)

the term “person” includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States;

(e)

the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

(f)

the term ” enterprise” applies to the carrying on of any business;

(g)

the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

(h)

the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State except when the ship or aircraft is operated solely between places in the other Contracting State;

(i)

the term “competent authority” means:

(i)

in India: the Finance Minister, Government of India, or his authorized representative;

(ii)

in Oriental Republic of Uruguay the Ministry of Economy and Finance or its authorized representative.

(j)

the term “national” means:

(i)

any individual possessing the nationality or citizenship of a Contracting State;

(ii)

any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

(k)

the term “tax” means Indian or Uruguayan tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty or fine imposed relating to those taxes;

(l)

The term “fiscal year” means:

(i)

in the case of India: the financial year beginning on the 1st day of April:

(ii)

in the case of Uruguay: the calendar year beginning on the 1st day of January for the purposes of individuals and the taxable period of 12 months for other persons.

2. As regards the application of the Agreement at any time by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies and any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

ARTICLE 4

RESIDENT

1. For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion of a similar nature and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a)

he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

(b)

if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;

(c)

if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

(d)

if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.

ARTICLE 5

PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

(a)

a place of management;

(b)

a branch;

(c)

an office;

(d)

a factory;

(e)

a workshop;

(f)

a sales outlet;

(g)

a warehouse in relation to a person providing storage facilities for others;

(h)

a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; and

(i)

a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. (a) A building site or construction, installation or assembly project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activities last 183 days or more.

(b) The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or connected project) within the country for a period or periods aggregating more than 90 days within any 12-month period.

4. Notwithstanding the preceding provisions of this Article the term “permanent establishment” shall be deemed not to include:

(a)

the use of facilities solely for the purpose of storage, display of goods or merchandise belonging to the enterprise;

(b)

the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display;

(c)

the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d)

the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

(e)

the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

(f)

the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 7 applies – is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

(a)

has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are .limited to those mentioned in paragraph 4 which, if exercised through a fixed plate of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph, or

(b)

has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise;

(c)

habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself.

6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies.

7. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph.

8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

ARTICLE 6

INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a Contracting State from immovable property situated in the other Contracting State may be taxed in that other State.

2. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircrafts shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

ARTICLE 7

BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the tax laws of that State.

4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be inaccordance with the principles contained in this Article.

5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 8

SHIPPING AND AIR TRANSPORT

1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in International traffic shall be taxable only in that State.

2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.

3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an International operating agency.

ARTICLE 9

ASSOCIATED ENTERPRISES

1. Where

(a)

an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b)

the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

2. Where a Contracting State includes in the profits of an enterprise of the State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

3. The provisions of paragraph 2 shall not apply where judicial, administrative or other legal proceedings have resulted in a final ruling that by actions giving rise to an adjustment of profits under paragraph 1, one of the enterprises concerned is liable to penalty with respect to fraud, gross negligence or wilful default.

ARTICLE 10

DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3. The term “dividends” as used in this Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

ARTICLE 11

INTEREST

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned by:

(a)

the Government, a political sub-division or a local authority of the other Contracting State; or

(b)

(i) in the case of India, the Reserve Bank of India, the Export-Import bank of India, the National Housing bank; and
(ii) in the case of Uruguay, Banco Central del Uruguay, Banco de la Republica Oriental del Uruguay, Banco Hipotecario del Uruguay; or

(c)

any other institution as may be agreed upon from time to time between the Competent authorities of the Contracting States through exchange of letters.

4. The term “interest” as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 12

ROYALTIES AND FFES FOR TECHNICAL SERVICES

1. Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties or fees for technical services is a resident of the other Contracting State the tax so charged shall not exceed 10 per cent of the gross amount of the royalties or fees for technical services.

3. (a) The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

(b) The term “fees for technical services” as used in this Article means payments of any kind, other than those mentioned in Articles 14 and 15 of this Agreement as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.

4. The provisions of paragraph 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

5. (a) Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority, or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

(b) Where under sub-paragraph (a) royalties or fees for technical services do not arise in one of the Contracting States, and the royalties relate to the use of, or the right to use, the right or property, or the fees for technical services relate to services performed, in one of the Contracting States, the royalties or fees for technical services shall be deemed to arise in that Contracting State.

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 13

CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.

3. Gains from the alienation of ships or aircraft operated in International traffic, or movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the alienator is a resident.

4. Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State.

5. Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State.

6. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4 and 5, shall be taxable only in the Contracting State of which the alienator is a resident.

ARTICLE 14

INDEPENDENT PERSONAL SERVICES

1. Income derived by an individual who is a resident of a Contracting State from the performance of professional services or other independent activities of a similar character shall be taxable only in that except in the following circumstances when such income may also be taxed in the other Contracting State:

(a)

if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income us is attributable to that fixed base may be taxed in that other State; or

(b)

if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any period of 12 months; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.

2. The term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, surgeons, dentists and accountants.

ARTICLE 15

DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

(a)

the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and

(b)

the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

(c)

the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in International traffic, by an enterprise of a Contracting State may be taxed in that State.

ARTICLE 16

DIRECTORS’ FEES

Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17

ARTISTES AND SPORTSPERSONS

1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from personal activities as such exercised in the other Contracting State, may be taxed in that other State.

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. The provisions of paragraphs 1 and 2, shall not apply to income from activities performed in a Contracting State by entertainers or sportspersons if the activities are substantially supported by public funds of one or both of the Contracting States or of political sub-divisions or local authorities thereof. In such a case, the income shall be taxable only in the Contracting State of which the entertainer or sportsperson is a resident.

ARTICLE 18

PENSIONS

Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

ARTICLE 19

GOVERNMENT SERVICE

1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State.

(b) However, Salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

(i)

is a national of that State; or

(ii)

did not become a resident of that State solely for the purpose of rendering the services.

2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to Salaries, wages and other similar remuneration and to pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof.

ARTICLE 20

PROFESSORS, TEACHERS AND RESEARCH SCHOLARS

1. A professor, teacher or research scholar who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college or other similar approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding 2 years from the date of his first arrival in that other State.

2. This Article shall apply to income from research only if such research is undertaken by the individual in the public interest and not primarily for the benefit of some private person or persons.

3. For the purposes of this Article, an individual shall be deemed to be a resident of a Contracting State if he is resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year.

ARTICLE 21

STUDENTS

1. A student who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State an who is present in that other Contracting State solely for the purpose of his education or training, shall besides grants and scholarships be exempt from tax in that other State on:

(a)

payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and

(b)

remuneration which he derives from an employment which he exercises in the other Contracting State if the employment is directly related to his studies.

2. The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article, for more than six consecutive years from the date of his first arrival for the purposes of his education or training in that other State.

ARTICLE 22

OTHER INCOME

1. Items of income of a resident of a Contracting State, wherever arising, not dealt within the foregoing Articles of this Agreement shall be taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt within the foregoing articles of this Agreement and arising in the other Contracting State may also be taxed in that other State.

ARTICLE 23

TAXATION OF CAPITAL

1. Capital represented by immovable property referred to in Article 6 owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

2. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State.

3. Capital represented by ships and aircraft operated in International traffic and by movable property pertaining to the operation of such ships and aircraft shall be taxable only in the Contracting State of which the enterprise owning such property is a resident.

4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

ARTICLE 24

METHODS FOR ELIMINATION OF DOUBLE TAXATION

Double taxation shall be eliminated as follows:

1. In India:

(a)

Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in Uruguay, India shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in Uruguay.
Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable to the income which may be taxed in Uruguay.

(b)

Where a resident of India owns capital which, in accordance with the provisions of the Agreement may be taxed in Uruguay, India shall allow as a deduction from the tax on wealth of that resident an amount equal to the capital tax paid in Uruguay.
Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable to the capital which may be taxed in Uruguay.

(c)

Where in accordance with any provision of the Agreement income derived or wealth owned by a resident of India is exempt from tax in India, India may nevertheless, in calculating the amount of tax on the remaining income or wealth of such resident, take into account the exempted income or wealth.

2. In Uruguay:

(a)

Where a resident of Uruguay derives income which, in accordance with the provisions of this Agreement, may be taxed in India, Uruguay shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in India.
Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable to the income which may be taxed in India.

(b)

Where a resident of Uruguay owns wealth which, in accordance with the provisions of the Agreement may be taxed in India, Uruguay shall allow as a deduction from the tax on capital of that resident an amount equal to the Wealth tax paid in India.
Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable to the wealth which may be taxed in India.

(c)

Where in accordance with any provision of the Agreement income derived or capital owned by a resident of Uruguay is exempt from tax in Uruguay, Uruguay may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.

ARTICLE 25

NON-DISCRIMINATION

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties, fees for technical services and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.

4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

5. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

ARTICLE 26

MUTUAL AGREEMENT PROCEDURE

1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 25, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.

2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives, of the competent authorities of the Contracting States.

ARTICLE 27

EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such information (including documents or certified copies of the documents) as is foreseeably relevant for carrying out the provisions of this Agreement or of the domestic laws concerning taxes covered by this Agreement insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

2. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including Courts and Administrative Bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes covered by the Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public Court proceedings or in judicial decisions.

3. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

(a)

to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b)

to supply information (including documents or certified copies of the documents) which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c)

to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

4. If information is requested by a Contracting State in accordance with this article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

ARTICLE 28

ASSISTANCE IN THE COLLECTION OF TAXES

1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 & 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.

2. The term “revenue claim” as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political sub-divisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.

3. When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State, that revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.

4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if at the time when such measures are applied, the revenue claim is not enforceable in the first mentioned State or is owed by a person who has a right to prevent its collection.

5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall only be brought before the Courts or Administrative Bodies of that State. Nothing in this Article shall be construed as creating or providing any right to such proceedings before any Court or Administrative Body of the other Contracting State.

7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be

(a)

in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or

(b)

in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection

The competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request

8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:

(a)

to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b)

to carry out measures which would be contrary to public policy (ordre public);

(c)

to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;

(d)

to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.

ARTICLE 29

LIMITATION OF BENEFITS

1. The provisions of this Agreement shall in no case prevent a Contracting State from the application of the provisions of its domestic laws and measures concerning tax avoidance or evasion.

2. Except as otherwise provided in this Article, a person (other than an individual), which is a resident of a Contracting State and which derives income from the other Contracting State shall be entitled to all the benefits of this Agreement otherwise accorded to residents of a Contracting State only if such a person has the qualifications as defined in paragraph 2 and meets the other conditions of this Agreement for the obtaining of any of such benefits.

3. A person of a contracting state is a qualified person for a fiscal year only if such a person is either:

(a)

Governmental entity; or

(b)

a company incorporated in either of the Contracting States, if-

(i)

the principal class of its shares is listed on a recognised stock exchange as defined in paragraph 6 of this Article and is regularly traded on one or more recognised stock exchanges, or

(ii)

at least 50% of the aggregate vote or value of the shares in the company is owned directly or indirectly by one or more individuals residents of either of the Contracting States or/and by other persons incorporated in either of the Contracting States, atleast 50% of the aggregate vote or value of the shares or beneficial interest of which is owned directly or indirectly by one or more individuals residents of either of the Contracting States; or

(c)

a partnership or association of persons, at least 50% or more of whose beneficial interests is owned by one or more individuals residents of either of the Contracting States or/and by other persons incorporated in either of the Contracting States, at least 50% of the aggregate vote or value of the shares or beneficial interest of which is owned directly or indirectly by one or more individuals residents of either of the Contracting States; or

(d)

A charitable institution or other tax exempt entity whose main activities are carried on in either of the Contracting States.

Provided that the persons mentioned above will not be entitled to the benefits of the Agreement if more than 50% of the person’s gross income for the taxable year is paid or payable directly or indirectly to persons who are not residents of either of the Contracting States in the form of payments that are deductible for the purpose of computation of tax covered by this Agreement in the person’s state of residence (but not including arm’s length payment in the ordinary course of business for services or tangible property and payments in respect of financial obligations to a bank incurred in connection with a transaction entered into with the Permanent Establishment of the bank situated in either of the Contracting States).

4. The provisions of paragraphs 2 and 3 shall not apply and a resident of a Contracting State will be entitled to benefits of the Agreement with respect to an item of income derived from the other State, if the person actively carries on business in the State of residence (other than the business of making or managing investments for the resident’s own account unless these activities are banking, insurance or security activities) and the income derived from the other Contracting States is derived in connection with or is incidental to that business and that resident satisfies the other conditions of this Agreement for the obtaining of such benefits.

5. A resident of a Contracting State shall nevertheless be granted the benefits of the Agreement if the Competent Authority of the other Contracting State determines that the establishment or acquisition or maintenance of such person and the conduct of its operations did not have as one of its principal purposes the obtaining of benefits under the Agreement.

6. For the purposes of this Article the term ‘recognised stock exchange’ means

(a)

in India, any stock exchange which for the time being is recognized by the Central Government under section 4 of the Securities Contracts (Regulation) Act, 1956; and

(b)

in the Oriental Republic of Uruguay, the Bolsa de Valores de Montevideo and the Bolsa Electronica de Valores S.A; and

(c)

any other stock exchange which the Competent Authorities agree to recognise for the purposes of this Article.

7. Notwithstanding anything contained in this Article, a person shall not be entitled to the benefits of this Agreement if its affairs were arranged in such a manner as if it was the main purpose or one of the main purposes to avoid taxes to which this Agreement applies.

ARTICLE 30

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

ARTICLE 31

ENTRY INTO FORCE

1. The Contracting States shall notify each other in writing, through diplomatic channels, of the completion of the procedures required by the respective laws for the entry into force of this Agreement.

2. This Agreement shall enter into force sixty days after the date of the later of the notifications referred to in paragraph 1 of this Article

3. The provisions of this Agreement shall have effect:

(a)

In India,

(i)

in respect of income derived in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enters into force; and

(ii)

in respect of wealth which is held on the last day of any fiscal year on or after the first day of April next following the calendar year in which the Agreement enters into force;

(b)

In Uruguay,

(i)

in respect of income derived in any fiscal year beginning on or after the first day of January next following the calendar year in which the Agreement enters into force;

(ii)

in respect of capital which is held on the last day of any fiscal year on or after the first day of January next following the calendar year in which the Agreement enters into force.

ARTICLE 32

TERMINATION

This Agreement shall remain in force indefinitely until terminated by one of the contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiration of five years from the date on which the Agreement enters into force. In such event, the Agreement shall cease to have effect:

(a)

In India,

(i)

in respect of income derived in any fiscal year on or after the first day of April next following the calendar year in which the notice is given; and

(ii)

in respect of wealth which is held on the last day of any fiscal year on or after the first day of April next following the calendar year in which the notice is given;

(b)

In Uruguay,

(i)

in respect of income derived in any fiscal year on or after the first day of January next following the calendar year in which the notice is given; and

(ii)

in respect of capital which is held on the last day of any fiscal year on or after the first day of January next following the calendar year in which the notice is given.

IN WITNESS WHERE OF the undersigned, duly authorized thereto, have signed this Agreement.

DONE in duplicate at New Delhi this 8th day of September, 2011, each in the Hindi, Spanish and English languages, all texts being equally authentic. In case of divergence of interpretation, the English text shall prevail.

PROTOCOL

At the signing today of the Agreement between the Republic of India and the Oriental Republic of Uruguay for the Avoidance of Double Taxation and the prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, the undersigned have agreed upon the following provisions, which shall form an integral part of the Agreement:

I.

It is understood that the last sentence of paragraph 1 of Article 4 (Resident) does not exclude from the scope of this agreement, any person who is liable to tax, in the Oriental Republic of Uruguay by virtue of the application of the principle of territorial source.

II.

With reference to Article 8(Shipping and Air Transport), it is understood that, profits derived by a transportation enterprise which is a resident of a Contracting State from the use, maintenance, or rental of containers (including trailers and other equipment for the transport of containers) used for the transport of goods or merchandise in International traffic shall be taxable only in that Contracting State unless the containers are used solely within the other Contracting State.

III.

With reference to Article 8 (Shipping and Air Transport), it is understood that, interest on investments directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft if they are integral to the carrying on of such business, and the provisions of Article 11 (Interest) shall not apply in relation to such interest.

IV.

With reference to Article 8 (Shipping and Air Transport) and Article 13(Capital gains), it is understood that notwithstanding anything contained therein read with the domestic law of the Contracting States lead to a situation where an income is not taxable in the resident State, the source State shall retain the right to tax such income.

V.

It is understood that the provisions of Article 25 (Non-discrimination) shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of other Contracting State has in the first mentioned State at a rate of tax which is higher than that imposed on the profits of a similar company of that first mentioned State, nor as being in conflict with the provisions of paragraph 3 of Article 7 (Business Profits).

VI.

With reference to Article 27 on Exchange of Information, it is understood that India may share the information received under paragraph 1 of that Article from Uruguay in respect of a resident of India, with other law enforcement agencies of Government of India or its Parliament.

VII.

With reference to Article 31 (Entry into Force), it is understood that the provisions of Article 27 (Exchange of Information) shall have effect, relating to any fiscal year, next following the calendar year in which the Agreement enters into force.

IN WITNESS WHEREOF, the undersigned, being duly authorized by their respective Governments, have signed this Protocol.

Done in duplicate at New Delhi, this 8th day of September , 2011, in the English, Spanish and Hindi languages, all texts equally authentic. In case of divergence between the texts, the English text shall prevail.

Reference: Section 90 of the income Tax Act, 1961

Agreement with foreign countries or specified territories.

. (1) The Central Government may enter into an agreement with the Government of any country outside India or specified territory outside India,—

(a)  for the granting of relief in respect of—

 (i)  income on which have been paid both income-tax under this Act and income-tax in that country or specified territory, as the case may be, or

(ii)  income-tax chargeable under this Act and under the corresponding law in force in that country or specified territory, as the case may be, to promote mutual economic relations, trade and investment, or

(b)  for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country or specified territory, as the case may be, or

(c)  for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under this Act or under the corresponding law in force in that country or specified territory, as the case may be, or investigation of cases of such evasion or avoidance, or

(d)  for recovery of income-tax under this Act and under the corresponding law in force in that country or specified territory, as the case may be,

and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement.

(2) Where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, as the case may be, under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee.

The following sub-section (2A) shall be inserted after sub-section (2) of section 90 by the Finance Act, 2013, w.e.f. 1-4-2016 :

(2A) Notwithstanding anything contained in sub-section (2), the provisions of Chapter X-A of the Act shall apply to the assessee even if such provisions are not beneficial to him.

(3) Any term used but not defined in this Act or in the agreement referred to in sub-section (1) shall, unless the context otherwise requires, and is not inconsistent with the provisions of this Act or the agreement, have the same meaning as assigned to it in the notification issued by the Central Government in the Official Gazette in this behalf.

 [(4) An assessee, not being a resident, to whom an agreement referred to in sub-section (1) applies, shall not be entitled to claim any relief under such agreement unless  [a certificate of his being a resident] in any country outside India or specified territory outside India, as the case may be, is obtained by him from the Government of that country or specified territory.]

 [(5) The assessee referred to in sub-section (4) shall also provide such other documents and information, as may be prescribed.]

Explanation 1.—For the removal of doubts, it is hereby declared that the charge of tax in respect of a foreign company at a rate higher than the rate at which a domestic company is chargeable, shall not be regarded as less favourable charge or levy of tax in respect of such foreign company.

Explanation 2.—For the purposes of this section, “specified territory” means any area outside India which may be notified as such by the Central Government.]

 [Explanation 3.—For the removal of doubts, it is hereby declared that where any term is used in any agreement entered into under sub-section (1) and not defined under the said agreement or the Act, but is assigned a meaning to it in the notification issued under sub-section (3) and the notification issued thereunder being in force, then, the meaning assigned to such term shall be deemed to have effect from the date on which the said agreement came into force.]

SUBSTITUTION OF RULE 37BB AND FORM NOS. 15CA AND 15CB NOTIFICATION NO. 58/2013 [F.NO.149/119/2012-SO(TPL)]/SO 2363(E), DATED 5-8-2013

INCOME-TAX (TWELFTH AMENDMENT) RULES, 2013 – SUBSTITUTION OF RULE 37BB AND FORM NOS. 15CA AND 15CB: NOTIFICATION NO. 58/2013 [F.NO.149/119/2012-SO(TPL)]/SO 2363(E), DATED 5-8-2013

In exercise of the powers conferred by sub-section (6) of section 195 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (12th Amendment) Rules, 2013.

(2) They shall come into force on the 1st day of October, 2013.

2. In the Income-tax Rules, 1962 (hereafter referred to as the said rules), for rule 37BB, the following rule shall be substituted, namely:—

“37BB. Furnishing of information by the person responsible for making payment to a non-resident, not being a company, or to a foreign company—(1) The person responsible for making any payment to a non-resident, not being a company, or to a foreign company shall furnish the following, namely:—

(i)

the information in Part A of Form No.15CA, if the amount of payment does not exceed fifty thousand rupees and the aggregate of such payments made during the financial year does not exceed two lakh fifty thousand rupees;

(ii)

the information in Part B of Form No.15CA , if the payment is not chargeable to tax and is of the nature specified in column (3) of the specified list ;

(iii)

the information in Part C of Form No.15CA for payments other than the payments referred in clause (i) and clause (ii) after obtaining—

(a)

a certificate in Form No. 15CB from an accountant as defined in the Explanation below sub-section (2) of section 288; or

(b)

a certificate from the Assessing Officer under section 197; or

(c)

an order from the Assessing Officer under sub-section (2) or sub-section (3) of section 195.

(2) The information in Form No. 15CA shall be furnished by the person electronically to the website designated by the Income-tax Department and thereafter signed printout of the said form shall be submitted to the authorised dealer, prior to remitting the payment.

(3) An income-tax authority may require the authorised dealer to furnish the signed printout referred to in sub-rule (2) for the purposes of any proceedings under the Act.

(4) The Director General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture, transmission of data and shall also be responsible for the day-to-day administration in relation to furnishing the information in the manner specified.

Explanation. – For the purposes of this rule,—

(a)

‘authorised dealer’ means a person authorised as an authorised dealer under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999 (42 of 1999);

(b)

the specified list refers to the payments of the nature as indicated below:

SPECIFIED LIST

Sl.No.

Purpose code as per RBI

Nature of payment

(1)

(2)

(3)

1

S0001

Indian investment abroad -in equity capital (shares)

2

S0002

Indian investment abroad -in debt securities

3

S0003

Indian investment abroad -in branches and wholly owned subsidiaries

4

S0004

Indian investment abroad -in subsidiaries and associates

5

S0005

Indian investment abroad -in real estate

6

S0011

Loans extended to Non-Residents

7

S0101

Advance payment against imports

8

S0102

Payment towards imports-settlement of invoice

9

S0103

Imports by diplomatic missions

10

S0201

Payments for surplus freight or passenger fare by foreign shipping companies operating in India.

11

S0202

Payment for operating expenses of Indian shipping companies operating abroad.

12

S0203

Freight on imports – Shipping companies

13

S0204

Freight on exports – Shipping companies

14

S0206

Booking of passages abroad – Shipping companies

15

S0208

Operating expenses of Indian Airlines companies operating abroad

16

S0209

Freight on imports – Airlines companies

17

S0212

Booking of passages abroad – Airlines companies

18

S0213

Payments on account of stevedoring, demurrage, port handling charges etc.

19

S0301

Remittance towards business travel.

20

S0302

Travel under basic travel quota (BTQ)

21

S0303

Travel for pilgrimage

22

S0304

Travel for medical treatment

23

S0305

Travel for education (including fees, hostel expenses etc.)

24

S0401

Postal services

25

S0501

Construction of projects abroad by Indian companies including import of goods at project site

26

S0601

Payments for life insurance premium

27

S0602

Freight insurance – relating to import and export of goods

28

S0603

Other general insurance premium

29

S1011

Payments for maintenance of offices abroad

30

S1201

Maintenance of Indian embassies abroad

31

S1202

Remittances by foreign embassies in India

32

S1301

Remittance by non-residents towards family maintenance and savings

33

S1302

Remittance towards personal gifts and donations

34

S1303

Remittance towards donations to religious and charitable institutions abroad

35

S1304

Remittance towards grants and donations to other governments and charitable institutions established by the governments.

36

S1305

Contributions or donations by the Government to international institutions

37

S1306

Remittance towards payment or refund of taxes.

38

S1501

Refunds or rebates or reduction in invoice value on account of exports

39

S1503

Payments by residents for international bidding”.

3. In the said rules, in Appendix II, for Form No.15CA and Form No. 15CB, the following Forms shall be substituted, namely:-

FORM NO. 15CA (See rule 37BB)Information to be furnished for payments to a non-resident not being a company, or to a foreign company
Form No. 15CB

(See rule 37BB)

Certificate of an accountant 

1.  To be signed and verified by an accountant (other than an employee) as defined in the Explanation below sub-section (2) of section 288 of Income-tax Act, 1961.

Reference: Section 195 of the income Tax Act, 1961

Other sums

 [(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest  [(not being interest referred to in section 194LB or section 194LC)] section 194LD]  [***] or any other sum chargeable under the provisions of this Act20 (not being income chargeable under the head “Salaries”  [***]) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :

 [Provided that in the case of interest payable by the Government or a public sector bank within the meaning of clause (23D) of section 10 or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode :]

 [Provided further that no such deduction shall be made in respect of any dividends referred to in section 115-O.]

 [Explanation 1].—For the purposes of this section, where any interest or other sum as aforesaid is credited to any account, whether called “Interest payable account” or “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]

 [Explanation 2.—For the removal of doubts, it is hereby clarified that the obligation to comply with sub-section (1) and to make deduction thereunder applies and shall be deemed to have always applied and extends and shall be deemed to have always extended to all persons, resident or non-resident, whether or not the non-resident person has—

 (i)  a residence or place of business or business connection in India; or

(ii)  any other presence in any manner whatsoever in India.]

(2) Where the person responsible for paying any such sum chargeable under this Act (other than ] salary) to a non-resident considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application to the  [Assessing] Officer to determine,  [by general or special order], the appropriate proportion of such sum so chargeable, and upon such determination, tax shall be deducted under sub-section (1) only on that proportion of the sum which is so chargeable.

 (3) Subject to rules made under sub-section (5), any person entitled to receive any interest or other sum on which income-tax has to be deducted under sub-section (1) may make an application in the prescribed form to the 5[Assessing] Officer for the grant of a certificate authorising him to receive such interest or other sum without deduction of tax under that sub-section, and where any such certificate is granted, every person responsible for paying such interest or other sum to the person to whom such certificate is granted shall, so long as the certificate is in force, make payment of such interest or other sum without deducting tax thereon under sub-section (1).

(4) A certificate granted under sub-section (3) shall remain in force till the expiry of the period specified therein or, if it is cancelled by the Assessing] Officer before the expiry of such period, till such cancellation.

(5) The Board may, having regard to the convenience of assessees and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an application may be made for the grant of a certificate under sub-section (3) and the conditions subject to which such certificate may be granted and providing for all other matters connected therewith.]

 [(6) The person referred to in sub-section (1) shall furnish the information relating to payment of any sum in such form and manner as may be prescribed37 by the Board.]

 [(7) Notwithstanding anything contained in sub-section (1) and sub-section (2), the Board may, by notification in the Official Gazette, specify a class of persons or cases, where the person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, shall make an application to the Assessing Officer to determine, by general or special order, the appropriate proportion of sum chargeable, and upon such determination, tax shall be deducted under sub-section (1) on that proportion of the sum which is so chargeable.]

AMENDMENT IN RULE 21AB AND INSERTION OF FORM 10F NOTIFICATION NO. 57/2013 [F.NO.142/16/2013-TPL]/SO 2331(E), DATED 1-8-2013

INCOME-TAX (ELEVENTH AMENDMENT) RULES, 2013 – AMENDMENT IN RULE 21AB AND INSERTION OF FORM 10F

NOTIFICATION NO. 57/2013 [F.NO.142/16/2013-TPL]/SO 2331(E), DATED 1-8-2013

In exercise of the powers conferred by section 90 and section 90A read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (11th Amendment) Rules, 2013.

(2) They shall be deemed to have come into force with effect from the 1st day of April, 2013.

2. In the Income-tax Rules, 1962,—

(a)

in rule 21AB, for sub-rules (1) and (2), the following sub-rules shall be substituted namely:—
“(1) Subject to the provisions of sub-rule (2), for the purposes of sub-section (5) of section 90 and sub-section (5) of section 90A , the following information shall be provided by an assessee in Form No. 10F, namely:—

(i)

Status (individual, company, firm etc.) of the assessee;

(ii)

Nationality (in case of an individual) or country or specified territory of incorporation or registration (in case of others);

(iii)

Assessee’s tax identification number in the country or specified territory of residence and in case there is no such number, then, a unique number on the basis of which the person is identified by the Government of the country or the specified territory of which the asseessee claims to be a resident;

(iv)

Period for which the residential status, as mentioned in the certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A, is applicable; and

(v)

Address of the assessee in the country or specified territory outside India, during the period for which the certificate, as mentioned in (iv) above, is applicable.
(2) The assessee may not be required to provide the information or any part thereof referred to in sub-rule (1) if the information or the part thereof, as the case may be, is contained in the certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A.
(2A) The assessee shall keep and maintain such documents as are necessary to substantiate the information provided under sub-rule (1) and an income-tax authority may require the assessee to provide the said documents in relation to a claim by the said assessee of any relief under an agreement referred to in sub-section (1) of section 90 or sub-section (1) of section 90A, as the case may be.”;

(b)

in Appendix II, after Form No. 10E, the following Form shall be inserted, namely:-

“FORM NO. 10F

[See sub-rule (1) of rule 21AB]

Information to be provided under sub-section (5) of section 90 or

sub-section (5) of section 90A of the Income-tax Act, 1961

I……………………………… *son/daughter of Shri……………………………… in the capacity of ……………………………… (designation) do provide the following information, relevant to the previous year……………………………… *in my case/in the case of……………………………… for the purposes of sub-section (5) of * section 90/section 90A:—

SI.No.

Nature of information

:

Details#

(i)

Status (individual; company, firm etc.) of the assessee

:

(ii)

Permanent Account Number (PAN) of the assessee if allotted

:

(iii)

Nationality (in the case of an individual) or Country or specified territory of incorporation or registration (in the case of others)

:

(iv)

Assessee’s tax identification number in the country or specified territory of residence and if there is no such number, then, a unique number on the basis of which the person is identified by the Government of the country or the specified territory of which the assessee claims to be a resident

:

(v)

Period for which the residential status as mentioned in the certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A is applicable

:

(vi)

Address of the assessee in the country or territory outside India during the period for which the certificate, mentioned in (v) above, is applicable

:

2. I have obtained a certificate to in sub-section (4) of section 90 of sub-section (4) of section 90A from the Government of ……………………………… (name of country or specified territory outside India)

Signature: ………………………………

Name: ………………………………

Address: ………………………………

Permanent Account Number: ………………………………

Verification

I……………………………… do hereby declare that to the best of my knowledge and belief what is stated above is correct complete and is truly stated.

Verified today the ……………………………… day of………………………………

………………………………

Signature of the person providing the information

Place: ………………………………

Notes :

1. *Delete whichever is not applicable.

2. #Write N.A. if the relevant information forms part of the certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A.

Reference: Section 90 of the income Tax Act, 1961

Agreement with foreign countries or specified territories.

. (1) The Central Government may enter into an agreement with the Government of any country outside India or specified territory outside India,—

(a)  for the granting of relief in respect of—

 (i)  income on which have been paid both income-tax under this Act and income-tax in that country or specified territory, as the case may be, or

(ii)  income-tax chargeable under this Act and under the corresponding law in force in that country or specified territory, as the case may be, to promote mutual economic relations, trade and investment, or

(b)  for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country or specified territory, as the case may be, or

(c)  for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under this Act or under the corresponding law in force in that country or specified territory, as the case may be, or investigation of cases of such evasion or avoidance, or

(d)  for recovery of income-tax under this Act and under the corresponding law in force in that country or specified territory, as the case may be,

and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement.

(2) Where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, as the case may be, under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee.

The following sub-section (2A) shall be inserted after sub-section (2) of section 90 by the Finance Act, 2013, w.e.f. 1-4-2016 :

(2A) Notwithstanding anything contained in sub-section (2), the provisions of Chapter X-A of the Act shall apply to the assessee even if such provisions are not beneficial to him.

(3) Any term used but not defined in this Act or in the agreement referred to in sub-section (1) shall, unless the context otherwise requires, and is not inconsistent with the provisions of this Act or the agreement, have the same meaning as assigned to it in the notification issued by the Central Government in the Official Gazette in this behalf.

 [(4) An assessee, not being a resident, to whom an agreement referred to in sub-section (1) applies, shall not be entitled to claim any relief under such agreement unless  [a certificate of his being a resident] in any country outside India or specified territory outside India, as the case may be, is obtained by him from the Government of that country or specified territory.]

 [(5) The assessee referred to in sub-section (4) shall also provide such other documents and information, as may be prescribed.]

Explanation 1.—For the removal of doubts, it is hereby declared that the charge of tax in respect of a foreign company at a rate higher than the rate at which a domestic company is chargeable, shall not be regarded as less favourable charge or levy of tax in respect of such foreign company.

Explanation 2.—For the purposes of this section, “specified territory” means any area outside India which may be notified as such by the Central Government.]

 [Explanation 3.—For the removal of doubts, it is hereby declared that where any term is used in any agreement entered into under sub-section (1) and not defined under the said agreement or the Act, but is assigned a meaning to it in the notification issued under sub-section (3) and the notification issued thereunder being in force, then, the meaning assigned to such term shall be deemed to have effect from the date on which the said agreement came into force.]

SENIOR CITIZENS SAVINGS SCHEMES (AMENDMENT) RULES NOTIFICATION NO.GSR 402(E) [F.NO.4/2/2013-NS-II], DATED 25-6-2013

SENIOR CITIZENS SAVINGS SCHEMES (AMENDMENT) RULES, 2013 – AMENDMENT IN RULE 7

NOTIFICATION NO.GSR 402(E) [F.NO.4/2/2013-NS-II], DATED 25-6-2013

In exercise of the powers conferred by section 15 of the Government Savings Banks Act, 1873 (5 of 1873), the Central Government hereby makes the following rules further to amend the Senior Citizens Savings Scheme Rules, 2004, namely: –

1. (1) These rules may be called the Senior Citizens Savings Scheme (Amendment) Rules, 2013.

(2) They shall deemed to have come into force on the 1st day of April, 2013.@

2. In the Senior Citizens Savings Scheme Rules, 2004, in rule 7, in sub-rule (1), after the existing proviso, following proviso shall be inserted, namely:-

“Provided further that in the case of a deposit made under these rules on or after the 1st day of April, 2013, it shall bear interest at the rate of 9.2 per cent per annum from the date of deposit”.

@ It is certified that the interests of no deposit holder would be prejudicially affected by the retrospective effect given to the notification.

Reference: Section 15 of THE GOVERNMENT SAVINGS BANKS ACT, 1873

Download or Read Government Saving Banks Act, 1873

Reference: Section 15 of the income Tax Act, 1961

Salaries.

The following income shall be chargeable to income-tax under the head “Salaries”—

 (a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not;

 (b) any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him;

 (c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year.

 [Explanation 1].—For the removal of doubts, it is hereby declared that where any salary paid in advance is included in the total income of any person for any previous year it shall not be included again in the total income of the person when the salary becomes due.

 [Explanation 2.—Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as “salary” for the purposes of this section.]

INTEREST – NOTIFIED RATE OF INTEREST ON SUBSCRIPTIONS MADE TO SAID FUND ON OR AFTER 1-4-2013 NOTIFICATION NO.GSR 401(E) [F.NO.3/3/2013-NS.II], DATED 25-6-2013

SECTION 5 OF THE PUBLIC PROVIDENT FUND ACT, 1968 – INTEREST – NOTIFIED RATE OF INTEREST ON SUBSCRIPTIONS MADE TO SAID FUND ON OR AFTER 1-4-2013

NOTIFICATION NO.GSR 401(E) [F.NO.3/3/2013-NS.II], DATED 25-6-2013

In pursuance of section 5 of the Public Provident Fund Act, 1968, (23 of 1968) the Central Government hereby notifies that the subscriptions made to the fund on or after the 1st day of April, 2013 and the balances at the credit of the subscriber shall bear interest at the rate of 8.7 per cent per annum.

Reference: Section 5 of the income Tax Act, 1961

Scope of total income.

 (1) Subject to the provisions of this Act, the total income51 of any previous year of a person who is a resident includes all income from whatever source derived which—

(a)  is received or is deemed to be received57 in India in such year by or on behalf of such person ; or

(b)  accrues or arises or is deemed to accrue or arise to him in India during such year ; or

(c)  Accrues or arises to him outside India during such year :

Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6) of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India.

(2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which—

(a)  is receivedor is deemed to be received in India in such year by or on behalf of such person ; or

(b)  accrues or arisesor is deemed to accrue or arise to him in India during such year.

Explanation 1.—Income accruing or arising outside India shall not be deemed to be received57 in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India.

Explanation 2.—For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued58 or arisen58 or is deemed to have accrued5 or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India.

Post office Recurring Deposit Rate of Interest and Maturity Amount, DATED 25-6-2013

Post office Recurring Deposit Rate of Interest and Maturity Amount for deposit made on or after 1st April 2013

TABLE 50  (See Rule 10)

Amount, inclusive of interest, payable on an account opened on or after the 1st,day of April, 2013 and continued, with monthly deposits, beyond the maturity period or maturity period as extended under sub-rule (1) of rule 7.

Number of completed years for which the account continued

Amount (Rupees) repayable on an account of Rs. 10 denomination

One year

933.77

Two years

1139.21

Three years

1362.24

Four years

1604.37

Five years

1867.24

Note: the amount repayable on an account of any other denomination shall be proportionate to the amount specified above.

TABLE 51

(See Rule 11)

Amount, inclusive of interest, repayable on an account opened on or after the 1st, day of April, 2013 and continued, without any fresh monthly deposits, beyond the maturity period or maturity period as extended under sub-rule (1) of rule 7.

Number of completed years for which the account continued

Amount (Rupees) repayable on an account of Rs. 10 denomination

One year

808.27

Two years

877.47

Three years

952.60

Four years

1034.17

Five years

1122.71

Note: The amount repayable on an account of any other denomination shall be proportionate to the amount specified above.

TABLE 52

(See Rule 12)

Amount, payable to legal heir or nominee on the death of the depositor in a Five Year Recurring Deposit Account opened on or after the 1st day of April, 2013.

Number of deposits made

Amount (Rupee) for denomination of Rs.10

Number, or deposits made

Amount (Rupees) for denomination of Rs.10

1 to 11

Deposits made

36

409.00

12

125.43

37

422.52

13

136.35

38

435.49

14

147.34

39

448.55

15

158.41

40

461.70

16

169.55

41

474.95

17

180.77

42

488.28

18

192.06

43

501.70

19

203.44

44

515.21

20

214.88

45

528.82

21

226.41

46

542.52

22

238.02

47

556.32

23

249.70

48

570.21

24

261.46

49

584.19

25

273.30

50

598.28

26

285.23

51

612.46

27

297.23

52

626.73

28

309.32

53

641.10

29

321.48

54

655.58

30

333.73

55

670.15

31

346.07

56

684.82

32

358.48

57

699.59

33

370.98

58

714.47

34

 383.57

59

729.45

35

396.24

60

744.53

Note: The amounts shall be proportionate for other denominations .

POST OFFICE RECURRING DEPOSIT (AMENDMENT) RULES, 2013 – AMENDMENT IN RULES 9, 10, 11 AND 12

NOTIFICATION NO.GSR 398(E) [F.NO.2/2/2013-NS-II], DATED 25-6-2013

In exercise of the powers conferred by Section 15 of the Government Savings Banks Act, 1873 (5 of 1873), the Central Government hereby makes the following rules further to amend the Post Office Recurring Deposit Rules, 1981, namely: –

1. (1) These rules may be called the Post Office Recurring Deposit (Amendment) Rules, 2013.

(2) They shall deemed to have come into force on the 1st day of April, 2013.@

2. In the Post Office Recurring Deposit Rules, 1981 (hereinafter referred to as the said rules), in rule 9, –

(a)

in the Schedule under clause (a) of sub-rule (1), for the last entry, the following entries shall be substituted, namely:-
“From 1-4-2012 to 31-3-2013 (both dates inclusive) ….746.51
From 1-4-2013 onwards ….744.53″

(b)

in the Schedule under clause (a) of sub-rule (2), for the last entry, the following entries shall be substituted, namely:-
“From 1-4-2012 to 31-3-2013 (both dates inclusive) ….746.51
From 1-4-2013 onwards ….744.53″;

3. In rule 10 of the said rules, in sub-rule (2), in items (a) and (c), for the words and figures “Tables 1, 2, 11, 13, 17, 20, 22, 26, 29, 32, 35, 38, 41, 44 or 47”, the words and figures “Tables 1, 2, 11, 13, 17, 20, 22, 26, 29, 32, 35, 38, 41, 44, 47 or 50” shall be substituted.

4. In rule 11 of the said rules, in sub-rule (2), in items (b) and (c), for the words and figures “Tables 3, 4, 12, 14, 18, 21, 23, 27, 30, 33, 36, 39, 42, 45 or 48”, the words and figures “Tables 3, 4, 12, 14, 18, 21, 23, 27, 30, 33, 36, 39, 42, 45, 48 or 51” shall be substituted.

5. In rule 12 of the said rules, –

(a)

in sub-rule (1), in item (b), in sub-item (ii), for the words and figures “Tables 5, 6, 7, 8, 9 10, 15, 16, 19, 24, 25, 28, 31, 34, 37, 40, 43, 46 or 49”, the words and figures “Tables 5, 6, 7, 8, 9,10, 15, 16, 19,24,25,28,31,34,37,40,43,46, 49 or 52” shall be substituted.

(b)

in sub-rule (3) and sub-rule (4), for the words and figures “Tables 5, 6, 7, 8, 9, 10, 15, 16, 19, 24, 25, 28, 31, 34, 37, 40, 43, 46 or 49”, the words and figures “Tables 5, 6, 7, 8, 9, 10, 15, 16, 19, 24, 25, 28, 31, 34, 37, 40, 43, 46, 49 or 52” shall be substituted.

6. After Table 49 of the said rules, the following Tables shall be inserted, namely:—

“TABLE 50

(See Rule 10)

Amount, inclusive of interest, payable on an account opened on or after the 1st,day of April, 2013 and continued, with monthly deposits, beyond the maturity period or maturity period as extended under sub-rule (1) of rule 7.

Number of completed years for which the account continued

Amount (Rupees) repayable on an account of Rs. 10 denomination

One year

933.77

Two years

1139.21

Three years

1362.24

Four years

1604.37

Five years

1867.24

Note: the amount repayable on an account of any other denomination shall be proportionate to the amount specified above.

TABLE 51

(See Rule 11)

Amount, inclusive of interest, repayable on an account opened on or after the 1st, day of April, 2013 and continued, without any fresh monthly deposits, beyond the maturity period or maturity period as extended under sub-rule (1) of rule 7.

Number of completed years for which the account continued

Amount (Rupees) repayable on an account of Rs. 10 denomination

One year

808.27

Two years

877.47

Three years

952.60

Four years

1034.17

Five years

1122.71

Note: The amount repayable on an account of any other denomination shall be proportionate to the amount specified above.

TABLE 52

(See Rule 12)

Amount, payable to legal heir or nominee on the death of the depositor in a Five Year Recurring Deposit Account opened on or after the 1st day of April, 2013.

Number of deposits made

Amount (Rupee) for denomination of Rs.10

Number, or deposits made

Amount (Rupees) for denomination of Rs.10

1 to 11

Deposits made

36

409.00

12

125.43

37

422.52

13

136.35

38

435.49

14

147.34

39

448.55

15

158.41

40

461.70

16

169.55

41

474.95

17

180.77

42

488.28

18

192.06

43

501.70

19

203.44

44

515.21

20

214.88

45

528.82

21

226.41

46

542.52

22

238.02

47

556.32

23

249.70

48

570.21

24

261.46

49

584.19

25

273.30

50

598.28

26

285.23

51

612.46

27

297.23

52

626.73

28

309.32

53

641.10

29

321.48

54

655.58

30

333.73

55

670.15

31

346.07

56

684.82

32

358.48

57

699.59

33

370.98

58

714.47

34

 383.57

59

729.45

35

396.24

60

744.53

Note: The amounts shall be proportionate for other denominations .

@ It is certified that the interests of no deposit holder would be prejudicially affected by the retrospective effect given to the notification.

INCOME BY WAY OF INTEREST ON CERTAIN BONDS AND GOVERNMENT SECURITIES – NOTIFIED RATES OF INTEREST ON RUPEE DENOMINATED BOND OF AN INDIAN COMPANY NOTIFICATION NO. 56/2013 [F.NO.149/81/2013-TPL]/SO 2311(E), DATED 29-7-2013

SECTION 194LD OF THE INCOME-TAX ACT, 1961 – INCOME BY WAY OF INTEREST ON CERTAIN BONDS AND GOVERNMENT SECURITIES – NOTIFIED RATES OF INTEREST ON RUPEE DENOMINATED BOND OF AN INDIAN COMPANY

NOTIFICATION NO. 56/2013 [F.NO.149/81/2013-TPL]/SO 2311(E), DATED 29-7-2013

In exercise of the powers conferred by the proviso to sub-section (2) of section 194LD of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the following rates of interest in respect of rupee denominated bond of an Indian company, namely :-

(i)

in case of bonds issued before the 1st day of July, 2010, the rate of interest shall not exceed 500 basis points (bps) over the Base Rate of State Bank of India as on the lst day of July, 2010.

(ii)

in case of bonds issued on or after the 1st day of July, 2010, the rate of interest shall not exceed 500 basis points (bps) over the Base Rate of State Bank of India applicable on the date of issue of the said bonds.

Reference: Section 194 of the income Tax Act, 1961

Income by way of interest on certain bonds and Government securities.

 (1) Any person who is responsible for paying to a person being a Foreign Institutional Investor or a Qualified Foreign Investor, any income by way of interest referred to in sub-section (2), shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent.

(2) The income by way of interest referred to in sub-section (1) shall be the interest payable on or after the 1st day of June, 2013 but before the 1st day of June, 2015 in respect of investment made by the payee in—

 (i)  a rupee denominated bond of an Indian company ; or

 (ii)  a Government security:

Provided that the rate of interest in respect of bond referred to in clause (i) shall not exceed the rate as may be notified by the Central Government in this behalf.

Explanation.—For the purpose of this section,—

(a) “Foreign Institutional Investor” shall have the meaning assigned to it in clause (a) of the Explanation to section 115AD;

(b) “Government security” shall have the meaning assigned to it in clause (b) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(c) “Qualified Foreign Investor” shall have the meaning assigned to it in the Circular No. Cir/IMD/DF/14/2011, dated the 9th August, 2011, as amended from time to time, issued by the Securities and Exchange Board of India, under section 11 of the Securities and Exchange Board of India Act, 1992 (15 of 1992).]