Income_Tax_Act_1961

INCOME-TAX ACT, 1961* [43 OF 1961] [AS AMENDED BY FINANCE ACT, 2012] An Act to consolidate and amend the law relating to income-tax and super-tax BE it enacted by Parliament in the Twelfth Year of the Republic of India as follows :— CHAPTER I PRELIMINARY Short title, extent and commencement. 11. 2(1) This Act may be called the Income-tax Act, 1961. (2) It extends to the whole of India. (3) Save as otherwise provided in this Act, it shall come into force on the 1st day of April, 1962 Definitions. 2. In this Act, unless the context otherwise requires,— 3[(1) "advance tax" means the advance tax payable in accordance with the provisions of Chapter XVII-C;] 4[5(1A)] 6"agricultural income"7 means8— 9[(a)  any rent10 or revenue10 derived10 from land10 which is situated in India and is used for agricultural purposes;] (b)  any income derived from such land10 by— (i)  agriculture10; or (ii)  the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market10; or (iii)  the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii) of this sub-clause ; (c)  any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any process mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on : Charge of income-tax. 424. 43(1) Where any Central Act enacts that income-tax44 shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year 45in accordance with, and 46[subject to the provisions (including provisions for the levy of additional income-tax) of, this Act] in respect of the total income45 of the previous year 47[* * *] of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act. cope of total income. 485. 49(1) Subject to50 the provisions of this Act, the total income45 of any previous year of a person who is a resident includes all income from whatever source derived which— (a)  is received51 or is deemed to be received51 in India in such year by or on behalf of such person ; or (b)  accrues or arises51 or is 51deemed to accrue or arise to him in India during such year ; or (c)  accrues or arises51 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. Apportionment of income between spouses governed by Portuguese Civil Code. 5A. (1) Where the husband and wife are governed by the system of community of property (known under the Portuguese Civil Code of 1860 as "COMMUNIAO DOS BENS") in force in the State of Goa and in the Union territories of Dadra and Nagar Haveli and Daman and Diu, the income of the husband and of the wife under any head of income shall not be assessed as that of such community of property (whether treated as an association of persons or a body of individuals), but such income of the husband and of the wife under each head of income (other than under the head "Salaries") shall be apportioned equally between the husband and the wife and the income so apportioned shall be included separately in the total income of the husband and of the wife respectively, and the remaining provisions of this Act shall apply accordingly. (2) Where the husband or, as the case may be, the wife governed by the aforesaid system of community of property has any income under the head "Salaries", such income shall be included in the total income of the spouse who has actually earned it.] Residence in India. 546. For the purposes of this Act,— (1) An individual is said to be resident in India in any previous year, if he— (a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or (b) 55[* * *] (c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year. Income deemed to be received. 7. The following incomes shall be deemed to be received in the previous year :—  (i)  the annual accretion in the previous year to the balance at the credit of an employee participating in a recognised provident fund, to the extent provided in rule 6 of Part A of the Fourth Schedule ; (ii)  the transferred balance in a recognised provident fund, to the extent provided in sub-rule (4) of rule 11 of Part A of the Fourth Schedule ; 62[(iii) the contribution made, by the Central Government 63[or any other employer] in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD.] Dividend income. 8. 64[For the purposes of inclusion in the total income of an assessee,— (a)  any dividend] declared by a company or distributed or paid by it within the meaning of sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) or sub-clause (e) of clause (22) of section 2 shall be deemed to be the income of the previous year in which it is so declared, distributed or paid, as the case may be ; 65[(b) any interim dividend shall be deemed to be the income of the previous year in which the amount of such dividend is unconditionally made available by the company to the member who is entitled to it.] Income deemed to accrue or arise in India. 669. 67(1) The following incomes shall be deemed68 to accrue or arise in India :— 69(i) all income accruing or arising, whether directly or indirectly70, through or from any business connection70 in India, or through or from any property70 in India, or through or from any asset or source of income in India, 71[* * *] or through the transfer of a capital asset situate in India. 72[Explanation 1].—For the purposes of this clause— (a)  in the case of a business of which all the operations73 are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations73 carried out in India ; (b)  in the case of a non-resident, no income shall be deemed to accrue or arise in India to him through or from operations which are confined to the purchase of goods in India for the purpose of export ; 74[* * *] Incomes not included in total income. 10. 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 ; 92(2) 93[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 ; 94[(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 ;]   (3) 95[***] 96[(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 Gazette97, specify in this behalf, including income by way of premium on the redemption of such bonds : Special provision in respect of newly established undertakings in free trade zone, etc.2 10A. (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to 3manufacture or produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee : Special provisions in respect of newly established Units in Special Economic Zones. 10AA. (1) Subject to the provisions of this section, in computing the total income of an assessee, being an entrepreneur as referred to in clause (j) of section 228of the Special Economic Zones Act, 2005, from his Unit, who begins to manufacture or produce articles or things or provide any services during the previous year relevant to any assessment year commencing on or after the 1st day of April, 2006, a deduction of—   (i) hundred per cent of profits and gains derived from the export, of such articles or things or from services for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which the Unit begins to manufacture or produce such articles or things or provide services, as the case may be, and fifty per cent of such profits and gains for further five assessment years and thereafter;  (ii) for the next five consecutive assessment years, so much of the amount not exceeding fifty per cent of the profit as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account (to be called the "Special Economic Zone Re-investment Reserve Account") to be created and utilized for the purposes of the business of the assessee in the manner laid down in sub-section (2). [Special provisions in respect of newly established hundred per cent export-oriented undertakings35. 10B. (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee : pecial provisions in respect of export of certain articles or things. 10BA. (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export out of India of eligible articles or things, shall be allowed from the total income of the assessee : Meaning of computer programmes in certain cases. 10BB. The profits and gains derived by an undertaking from the production of computer programmes under section 10B, as it stood prior to its substitution by section 7 of the Finance Act, 2000 (10 of 2000), shall be construed as if for the words "computer programmes", the words "computer programmes or processing or management of electronic data" had been substituted in that section.] Special provision in respect of certain industrial undertakings in North-Eastern Region. 10C. (1) Subject to the provisions of this section, any profits and gains derived by an assessee from an industrial undertaking, which has begun or begins to manufacture or produce any article or thing on or after the 1st day of April, 1998 in any Integrated Infrastructure Development Centre or Industrial Growth Centre located in the North-Eastern Region (hereafter in this section referred to as the industrial undertaking) shall not be included in the total income of the assessee. Income61 from property held for charitable or religious purposes. 6211. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income— 63[(a) income derived from property61 held under trust wholly61 for charitable or religious purposes, to the extent to which such income61 is applied61 to such purposes in India; and, where any such income61 is 61accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart64 is not in excess of 65[fifteen] per cent of the income from such property;  (b) income derived from property held under trust in part64 only for such purposes, the trust having been created before the commencement of this Act, to the extent to which such income64 is applied to such purposes in India; and, where any such income is finally set apart for application to such purposes in India, to the extent to which the income so set apart is not in excess of 65[fifteen] per cent of the income from such property; Income of trusts or institutions from contributions. 1012. 11[(1)] 12Any voluntary contributions12a received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of section 11be deemed to be income derived from12a property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly.] Conditions for applicability of sections 11 and 12.] 1912A. 20[(1)] 21The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:—   (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form22 and in the prescribed manner to the 23[***] Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, 24[whichever is later and such trust or institution is registered under section 12AA] : 25[Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions ofsections 11 and 12 shall apply in relation to the income of such trust or institution,—  (i)  from the date of the creation of the trust or the establishment of the institution if the 26[***] Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period27aforesaid for sufficient reasons; (ii)  from the 1st day of the financial year in which the application is made, if the 28[***] Commissioner is not so satisfied:]